[Senate Hearing 117-609]
[From the U.S. Government Publishing Office]


                                                          S. Hrg. 117-609

                 LEGISLATIVE HEARING TO REVIEW S. 4760,
                        THE DIGITAL COMMODITIES
                        CONSUMER PROTECTION ACT

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                                HEARING

                               BEFORE THE

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           September 15, 2022

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry
           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]           

                  Available on http://www.govinfo.gov/
                  
                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
51-390 PDF                  WASHINGTON : 2024                    
          
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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY


                 DEBBIE STABENOW, Michigan, Chairwoman
PATRICK J. LEAHY, Vermont            JOHN BOOZMAN, Arkansas
SHERROD BROWN, Ohio                  MITCH McCONNELL, Kentucky
AMY KLOBUCHAR, Minnesota             JOHN HOEVEN, North Dakota
MICHAEL F. BENNET, Colorado          JONI ERNST, Iowa
KIRSTEN E. GILLIBRAND, New York      CINDY HYDE-SMITH, Mississippi
TINA SMITH, Minnesota                ROGER MARSHALL, Kansas
RICHARD J. DURBIN, Illinois          TOMMY TUBERVILLE, Alabama
CORY BOOKER, New Jersey              CHARLES GRASSLEY, Iowa
BEN RAY LUJAN, New Mexico            JOHN THUNE, South Dakota
RAPHAEL WARNOCK, Georgia             DEB FISCHER, Nebraska
                                     MIKE BRAUN, Indiana

                 Erica Chabot, Majority Staff Director
                    Jessica L. Williams, Chief Clerk
               Fitzhugh Elder IV, Minority Staff Director
                            
                            
                            C O N T E N T S

                              ----------                              

                      Thursday, September 15, 2022

                                                                   Page

Hearing:

Legislative Hearing to Review S. 4760, the Digital Commodities 
  Consumer Protection Act........................................     1

                              ----------                              

                    STATEMENTS PRESENTED BY SENATORS

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan...     1
Boozman, Hon. John, U.S. Senator from the State of Arkansas......     3

                               WITNESSES
                                Panel I

Behnam, Hon. Rostin, Chairman, Commodity Futures Trading 
  Commission, Washington, D.C....................................     4

                                Panel II

Phillips, Todd, Director, Financial Regulation and Corporate 
  Governance, Center for American Progress, Washington, D.C......    30
Warren, Sheila, Chief Executive Officer, Crypto Council for 
  Innovation, San Francisco, CA..................................    32
Parker, Christine, Vice President and Deputy General Counsel, 
  Coinbase, San Francisco, CA....................................    34
Tarbert, Heath, Ph.D., Chief Legal Officer, Citadel Securities, 
  Chicago, IL....................................................    35
Dixon, Denelle, Chief Executive Officer, Stellar Development 
  Foundation, San Francisco, CA..................................    37
                              ----------                              

                                APPENDIX

Prepared Statements:
    Behnam, Hon. Rostin..........................................    50
    Phillips, Todd...............................................    53
    Warren, Sheila...............................................    72
    Parker, Christine............................................    93
    Tarbert, Heath, Ph.D.........................................   108
    Dixon, Denelle...............................................   124

Document(s) Submitted for the Record:
Stabenow, Hon. Debbie:
    Arkansas Advocates for Children and Families, letter of 
      support....................................................   136

Question and Answer:
Behnam, Hon. Rostin:
    Written response to questions from Hon. John Boozman.........   140
    Written response to questions from Hon. Raphael Warnock......   140
    Written response to questions from Hon. John Hoeven..........   141
    Written response to questions from Hon. Charles Grassley.....   143
    Written response to questions from Hon. John Thune...........   145
Phillips, Todd:
    Written response to questions from Hon. Cory Booker..........   146
Warren, Sheila:
    Written response to questions from Hon. Cory Booker..........   149
    Written response to questions from Hon. John Hoeven..........   152
Parker, Christine:
    Written response to questions from Hon. Cory Booker..........   155
Tarbert, Heath, Ph.D.:
    Written response to questions from Hon. John Boozman.........   157
    Written response to questions from Hon. John Hoeven..........   157
Dixon, Denelle:
    Written response to questions from Hon. Cory Booker..........   160

 
LEGISLATIVE HEARING TO REVIEW S. 4760, THE DIGITAL COMMODITIES CONSUMER 
                             PROTECTION ACT

                              ----------                              


                      THURSDAY, SEPTEMBER 15, 2022

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:04 a.m., in 
room 215, Dirksen Senate Office Building, Hon. Debbie Stabenow, 
Chairwoman of the Committee, presiding.
    Present: Senators Stabenow, Brown, Klobuchar, Gillibrand, 
Smith, Durbin, Booker, Warnock, Boozman, Hoeven, Ernst, 
Marshall, Tuberville, Grassley, Thune, Fischer, and Braun.

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE 
    OF MICHIGAN, CHAIRWOMAN, U.S. COMMITTEE ON AGRICULTURE, 
                    NUTRITION, AND FORESTRY

    Chairwoman Stabenow. Good morning. I call this hearing to 
order of the U.S. Senate Committee on Agriculture, Nutrition, 
and Forestry to order. So pleased to see all of our colleagues 
here for this really important hearing and discussion.
    We are here today because a rapidly increasing number of 
Americans are investing in cryptocurrencies; yet, there is no 
Federal oversight over the tokens that make up the majority of 
this market.
    Just as quickly as these assets have risen in popularity, 
we have seen their value drop. As a result, hardworking 
Americans have lost billions of dollars, dollars they use to 
support their families, keep roofs over their heads, and nestle 
away for hard-earned retirement. In the past few months alone, 
numerous companies have gone bankrupt, and the value of some 
widely traded coins has dwindled to cents on a dollar. 
Meanwhile, $1.9 billion worth of cryptocurrency was stolen in 
hacks in the first seven months of this year alone, up 60 
percent from this time last year.
    At the same time, it is important to recognize that 
cryptocurrencies and blockchain technology offer an alternative 
to using large financial institutions. One-third of Americans 
who have bought or traded crypto earn less than $60,000 a year, 
some of them--some of whom lack trust in these institutions or 
find them too costly. They simply cannot afford, though, to 
lose their savings because of a lack of guardrails in these 
markets, and that is where we come in our responsibility as 
overseeing Federal regulators.
    We need to have clear, consistent rules of the road that 
allow good actors to innovate and grow while, first and 
foremost, keeping customers safe. As the committee with 
oversight over one of our Nation's two market regulators, it is 
our job to ensure that we bring the necessary protections to 
this marketplace.
    Together with my partner, Senator Boozman, and with 
colleagues, Senators Booker, Thune, Ernst, and Gillibrand, we 
have introduced the Digital Commodities Customer Protection 
Act. This bill gives the Commodity Futures Trading Commission 
(CFTC) oversight over digital assets that act like commodities, 
such as Bitcoin and Ether, that currently have no Federal 
oversight. This is a glaring hole in our financial system, and 
I believe we must close it.
    Our bipartisan bill will require that all digital commodity 
platforms register with the CFTC. This will set a uniform 
national standard and allow the CFTC to catch fraud before it 
happens. As its name suggests, our bill is focused on consumer 
protection. It will require that platforms segregate and 
safeguard customer assets, hold sufficient capital, and abide 
by rigorous cybersecurity standards. It will eliminate many of 
the conflicts of interest in this market, and it will mandate 
that platforms speak truthfully about the risks of trading 
digital commodities and do not engage in misleading 
advertising.
    The CFTC is the right regulator for the job. Congress gave 
the Agency oversight over the swaps market in Dodd-Frank, and 
it responded by setting the global standard. Our nation's 
derivatives markets have been a mainstay for our producers 
during recent supply chain disruptions and elevated commodity 
prices. We will hear today from Chairman Behnam shortly about 
how the CFTC has been a leader in policing the crypto markets 
for fraud and abuse.
    This week, we received a letter from former Republican CFTC 
Chairman, Christopher Giancarlo, expressing his support for the 
bipartisan bill, and without objection, I would enter this into 
the record. So, ordered.

    [The following document can be found on page 136 in the 
appendix.]

    Chairwoman Stabenow. This bill also gives the Agency 
additional resources to get this job done right, which is so 
important.
    Finally, it recognizes that other financial agencies have 
critical roles to play in regulating digital assets, also 
important. I am pleased to see Chairman Gensler's recent 
comments about how the CFTC and SEC can work together to make 
this market work just as we did in putting together Dodd-Frank, 
and we have had productive discussions with SEC staff about the 
bill, which we appreciate and will continue.
    As President Biden has recognized, this is a big 
responsibility with a lot at stake, and it is going to take all 
of us at the table working together. At our table today will be 
some of the brightest leaders in this space, and I look forward 
to hearing from each of you on how we can continue to bring 
transparency and accountability to this marketplace while still 
enabling the innovation that makes this technology so 
promising.
    I would like to turn now to my colleague and partner, 
Senator Boozman, for his opening remarks.

STATEMENT OF HON. JOHN BOOZMAN, U.S. SENATOR FROM THE STATE OF 
    ARKANSAS, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND 
                            FORESTRY

    Senator Boozman. Well, thank you so much, Madam Chair, and 
it is great to be with you today as we examine S. 4760, the 
Digital Commodities Consumer Protection Act (DCCPA). This bill, 
which I am proud to co-sponsor with the Chairwoman as well as 
Senators Thune and Booker, will bring much-needed regulatory 
certainty to the growing digital commodity ecosystem. As this 
industry continues to grow, questions remain about the proper 
role Federal regulators will play. I believe regulation must 
ensure market integrity and consumer protection while also 
fostering an environment that encourages innovation. I believe 
our bill gives the CFTC the authority to do just those things.
    Currently, the digital assets spot or cash markets are 
subject to a patchwork of regulations at the State and the 
Federal level. This is simply inadequate for market structure 
and consumer protection perspectives. It is without question 
that digital commodities and related technologies will continue 
to play an important role in the global economy for decades to 
come. As a result, now is the time to provide regulatory 
certainty to the market and create a framework that makes sense 
from both a domestic and an international perspective.
    It is imperative that both Congress and regulators work 
with industry and consumer advocates to ensure the laws and 
regulations for market participants are created through a 
transparent process that results in a clearly understood set of 
rules. Anything less hurts everyone. Regulation by enforcement 
without any meaningful engagement with market participants is 
no way to police the industry. It is unfair to stakeholders who 
operate in good faith but are then punished because they have 
not been given clear rules of the road.
    Ultimately, this Committee's goal is to establish a 
framework that allows industry to innovate and grow while 
providing the CFTC the resources necessary to write and enforce 
rules that protect consumers and provide retail participants 
the ability to fully understand the functions of the 
commodities they are buying and selling.
    I hope today's hearing provides an opportunity for both 
Chairman Behnam and our esteemed panel of stakeholders to weigh 
in on the most important features of our bill, including 
constructive recommendations to improve the bill, as we look 
forward to a committee markup in the near future.
    In closing, I am confident the CFTC can rise to the 
challenge to be the right fit for an expanded regulatory role 
in the digital commodities spot market, and I am confident that 
we can work together to protect consumers and allow this ever 
growing technology to flourish.
    I want to thank Chairwoman Stabenow for her leadership and 
look forward to today's discussion and hearing from our 
witnesses.
    Before I conclude, I would like to welcome one staffer to 
the Committee and then thank another staffer who will be 
leaving shortly. First, I would like to welcome Erica Chabot. 
Erica is the new Majority Staff Director for Chairwoman 
Stabenow but is certainly no stranger to the Senate. For the 
last 20 years, she has served Senator Leahy, a member and 
former Chairman of this Committee, who we all know and are 
going to miss as he retires. We really look forward to Erica 
and look forward to her service to the Committee.
    Second, I would like to thank Darin Guries of my staff for 
his exceptional service to the Senate and Committee. Darin is a 
native Kansan and has spent the last 15 years working for the 
Senate. For the last seven, he has worked for the Agriculture 
Committee, first for Senator Roberts and now for me.
    The legislation that we are discussing today is largely the 
product of bipartisan negotiations led by Darin and Lucy, 
working hand in hand to, I think, produce a very, very good 
product.
    The Committee and the Senate have greatly benefited from 
Darin's expertise, judgment, and charm. We will miss Darin as 
he leaves the Senate. I wish him great success and many thanks 
for his service. We are trying not to be bitter over the people 
that have hired him, but it is okay.
    Thank you, Madam Chair.
    Chairwoman Stabenow. Well, thank you, Senator Boozman, and 
thank you so much for recognizing Erica. We are so pleased to 
have her here. Welcome, welcome.
    Darin, he may think he is leaving, but actually I think we 
are not going to let him. Right in the middle of all this? 
Really. Oh, my goodness.
    I do so appreciate our wonderful staffs. We have been so 
fortunate on the Committee, past, present, with some of the 
smartest, hardworking people that there are. We very much work 
in partnership and certainly on this bill. That has been hand-
in-glove, and we really appreciate all of that.
    Well, let me turn now to our first witness. Rostin Behnam 
is Chairman of the Commodity Future Trading Commission and 
certainly no stranger to this Committee either. Prior to his 
time leading the Commission, Chairman Behnam has served as a 
commissioner. He has served since 2017 on the Commission and 
prior to that was a valuable member of our staff on the 
Agriculture Committee.
    Welcome, Chairman Behnam, and we recognize you for five 
minutes of testimony.

 STATEMENT OF THE HONORABLE ROSTIN BEHNAM, CHAIRMAN, COMMODITY 
          FUTURES TRADING COMMISSION, WASHINGTON, D.C.

    Mr. Behnam. Thank you. Chairwoman Stabenow, Ranking Member 
Boozman, and members of the Committee, appreciate the 
opportunity to be here before you today to discuss the Digital 
Commodities Consumer Protection Act.
    Last February, when I testified before this Committee, I 
noted that the unique characteristics of the growing digital 
asset industry necessitated a comprehensive Federal regulatory 
regime. I believe that to be more true today and thank the 
Committee for taking steps to address these needs through the 
DCCPA. I have directed staff at the CFTC to analyze what 
additional needs we would have to support its implementation.
    Digital asset commodity cash markets have significant 
speculative retail participation, often use high levels of 
leverage, and largely rely on platform-based custody 
arrangements outside of the traditional regulated banking 
sector. Market participants may perceive themselves to be 
interacting with exchanges and intermediaries regulated like 
those in other traditional financial markets, but the reality 
is quite different. Since I last testified, over $1 trillion in 
market value has been lost in conjunction with the failure of 
several large, high profile firms operating in the shadows. One 
lesson is that leverage, interconnected markets, and contagion 
can wreak the same havoc in the digital asset ecosystem that 
they do in our traditional financial markets.
    As I have publically stated several times, including to 
this Committee, many digital assets constitute commodities. As 
recognized by the DCCPA, the CFTC's expertise and experience 
make it the right regulator for the digital asset commodity 
market. The CFTC facilitates customer protections through its 
principles-based market oversight and disclosure regime aimed 
at ensuring transparency, integrity, and security of 
transactions. These structures inform customers about who they 
are dealing with and provide clarity on the risks of 
participating in our markets.
    In requiring digital commodity brokers, dealers, and 
custodians to join a registered futures association, the DCCPA 
acknowledges the key role that self-regulatory organizations, 
like the National Futures Association, play in safeguarding the 
integrity of markets.
    The CFTC has often adapted its oversight capabilities to 
meet the demands of evolving markets. Most notably, in the wake 
of the 2008 financial crisis, Congress provided the CFTC 
authority over approximately 95 percent of the swaps market, 
serving as the cornerstone of a robust regulatory regime for 
the $350 trillion swaps market.
    Returning to the digital asset market, since 2014, the CFTC 
has brought almost 60 enforcement cases, including a recent 
matter involving a $1.7 billion fraudulent Bitcoin scheme. With 
a lack of full visibility into the digital commodity asset 
market, the Agency's enforcement program has had to lean 
primarily on tips and complaints from the public to identify 
fraud and manipulation. The Agency has developed a deep 
understanding of this novel market and the underlying 
innovations that fuel it, hiring specialists, forming internal 
task forces and work groups, leveraging public-private 
partnerships, and most recently, restructuring the CFTC's 
Financial Technology Hub into the Office of Technology 
Innovation.
    The DCCPA leverages the historical strength of the CFTC as 
a market regulator by requiring registration and supervision of 
digital commodity platforms and digital commodity 
intermediaries as is required in CFTC-regulated derivatives 
markets. Digital commodity facilities will be subject to 
compliance with core principles prescribing, among other 
things, that the platforms establish and enforce rules 
minimizing conflicts of interest, prohibiting abusive trade 
practices, establishing system safeguards to minimize 
cybersecurity and other operational risks, ensuring the 
financial integrity of transactions and intermediaries, and 
protecting customer funds.
    Critically, all digital commodity platforms must maintain 
adequate financial, operational, and managerial resources, 
segregate customer funds, and comply with Commission 
requirements for the treatment of customer assets. These tools 
have proven effective in preserving customer funds and market 
operations in times of instability, uncertainty, or market 
misconduct.
    The DCCPA directly addresses the increased role of retail 
participants in the digital commodity asset markets by 
directing the Commission to adopt customer protection rules, 
requiring digital commodity platforms to disclose to customers 
material conflicts of interest and material risks of trading 
digital commodities, establishing duties to communicate in a 
fair and balanced manner, and establishing standards for the 
platforms' marketing and advertising. With the additional 
resources contemplated by the funding mechanism in the bill, 
and a clear mandate for customer education and outreach to 
ensure that our efforts reach all demographics, the CFTC can 
swiftly effectuate this new regime.
    On September 21st, 1922, nearly 100 years ago to the day, 
the Grain Futures Act of 1922 was signed into law, which led to 
the near immediate establishment of the then CFTC. With that 
legislative accomplishment, this Committee and the Congress 
swiftly responded to a policy need that arose on the heels of 
emerging risks to American consumers because of then new 
financial markets and products, technological innovation, and 
the promise of economic development.
    With the CFTC's rich history overseeing commodity markets, 
coupled with its expertise and track record, which rests on a 
firm foundation as a forceful and disciplined cop on the beat, 
the Agency stands ready to tackle these new risks and 
opportunities one century later.
    Thank you, and I look forward to answering your questions.

    [The prepared statement of Mr. Behnam can be found on page 
50 in the appendix.]

    Chairwoman Stabenow. Thank you very much, Mr. Chairman. As 
you have indicated and I have spoken about as well, 
cryptocurrencies are traded largely by everyday Americans right 
now. Some people have voiced concern that the CFTC does not 
have a customer protection mandate and, therefore, may not have 
the tools that you need to protect these retail customers. 
Could you respond to that?
    Mr. Behnam. Thank you, Senator. Before I get into any 
details, I would say, unequivocally, the Commodity Exchange Act 
and the rules that the Commission promulgates from the law 
directly support customer protections, full stop and without 
question.
    In thinking about the layers, because I think there are 
several layers to the customer protection regime at the CFTC, I 
think it is important to identify each. At the sort of 
foundational level is the law itself and the rules that we 
implement, which are more prescriptive and more specific 
requirements for the registered entities, which you do in your 
bill. The core principles can be anything from system 
safeguards which directly address cybersecurity and operational 
risks, and this is directly about protecting customer funds and 
customer assets.
    Conflicts of interest, something you noted, which is a big 
concern in this issue area, a core principle, we would have to 
ensure registered entities which your bill contemplates, 
whether it is the trading platforms, the brokers, the dealers, 
the custodians, are serving the best interest of the client or 
the customer only and no one else.
    We have core principles about reporting and recordkeeping. 
This is information flow that comes to the Agency so that we 
can monitor, for example, disruptive trading practices and 
making sure that the market is free from fraud and 
manipulation, also prohibiting contracts being listed on 
trading platforms that are readily susceptible to manipulation.
    These are just a few of the nearly two dozen core 
principles which make up the regime and ultimately are 
manifested through the rules we prescribe.
    I would say the second layer is how do we make sure that 
our regulated entities are complying with these rules and 
regulations. We do this through a series of inspections, 
examinations, and investigations. We work in tandem with our 
partner, the National Futures Association, which again is 
another provision you include in the Act, to create a self 
regulatory regime to ensure that the individuals and 
institutions that are regulated by our market are complying 
with the law, and we make sure that they have the adequate 
proficiency and information they need to comply with the law.
    The third thing I will mention is enforcement. We have to 
ensure that individuals are held accountable for breaking the 
law. This is, obviously, one of the key components of our 
requirements as a civil litigator.
    Within our Agency--and, Chairwoman, you know this--we have 
struggled with funding over the past decade or so, and I have 
looked at some data points. In the past 10 fiscal years, our 
average budget has just been over $240 million per year. In 
that same period, this 10-year period, the Division of 
Enforcement has assessed penalties, on average, of over $1.5 
billion per, so a six times-plus return on investment for the 
American taxpayer in enforcement penalties.
    A few months ago, I had the privilege of standing next to 
the Attorney General as he announced settlement with one of the 
largest commodity trading advisors that had manipulated oil 
markets. This was a civil and criminal case brought by Justice 
and the CFTC, over $1 billion. In this time, we need to ensure 
our energy markets are free of fraud and manipulation. That 
case was brought by the CFTC.
    LIBOR, a benchmark, a financial benchmark which underpins 
trillions of dollars of financial contracts, student loans, 
mortgages, over 10 years ago was found to be fraudulent. The 
setting standard for setting the benchmark itself, which is in 
these trillions of dollars of financial contracts, was 
manipulated. Billions of dollars of fines assessed against 
financial institutions across the globe. That case was 
uncovered just downtown at the CFTC.
    These are some examples of the work we do, from the rules 
set and the implementation, the law, how we enforce it, and the 
accountability. I think layered on top of that, which are all 
things you include in the bill, which is extremely important, 
is the bankruptcy protection which is another amendment to your 
bill to the bankruptcy code and is extremely important. We 
prioritize customer funds and customer assets above all else, 
above creditors and above security holders.
    This in total, I think, as a very robust, very 
comprehensive customer protection regime, has worked in our 
derivatives market very well for decades and, I think, as you 
contemplate in your bill, will work as well in the digital 
commodity market.
    Chairwoman Stabenow. Let me just ask one other question. 
Thank you so much. The President has talked about a whole of 
government response to the regulation of digital assets and 
this new innovation. Take just a moment about how you would 
move forward in working. Obviously, two very important 
agencies, CFTC, SEC. Again, we did it in Dodd-Frank. We have 
got two great regulators. Just speak about, as you move forward 
in this space, how you will craft your regulations and how you 
see working together.
    Mr. Behnam. Chairwoman, you know, it is not going to be any 
different than what we have done before, and you alluded to it, 
whether it was 2010 with Dodd-Frank or even going back 40 years 
with security futures and commodity futures. We are constantly 
talking at the highest level, the Chair, Enforcement, the 
different divisions. We naturally have intersections between 
our markets. We have dually registered entities, whether it is 
the intermediaries, the broker-dealers, and the FCMs or the 
investment managers. We have to work together to make this work 
because, otherwise, the markets would not work like they should 
and like they are intended. We have a long history of this.
    I do not think we need to try to fix something that is 
working right now, and I think it is all about communication, 
transparency, and understanding at a high level what the goal 
is. Right? This is not about us at the CFTC. It is not about 
the SEC. It is about the regulatory framework. It is about 
financial markets. It is about protecting customers. If we keep 
that goal in mind, I think we will be able to accomplish what 
we are tasked with.
    Chairwoman Stabenow. Thank you very much.
    Senator Boozman.
    Senator Boozman. Thank you, Madam Chair, and I appreciate 
your questioning concerning enforcement. That is one of the 
things that, you know, comes up in regard to the bill. Does the 
CFTC have the ability? Are they a strong enough enforcer?
    I think you answered that question very, very well, 
explaining your role and the great job that you are doing with 
the resources that you have and punching so far above your 
weight and, yet, while still enabling protecting the customer 
while still enabling innovation. Again, thank you for, again, a 
great response in that regard.
    Another thing that comes up is user fees on derivatives 
market activities, and I had the opportunity of being on the 
Subcommittee on Appropriations that has to do with that and 
really champion efforts to make clear that the CFTC does not 
have the authority to impose user fees on derivatives market 
activities. That said, our current bill authorizes the CFTC to 
impose a user fee only on digital commodity platforms. Do you 
agree that our bill, as written, prevents any application of a 
user fee onto derivatives market activity?
    Mr. Behnam. Senator, in short, the answer is yes, that the 
law--that the bill is drafted prescriptively to ensure that the 
fee would only be assessed on the digital commodity platforms 
and not on traditional derivatives market entities.
    Senator Boozman. Right. It would take congressional 
authorization to do that.
    Mr. Behnam. Correct.
    Senator Boozman. In fact, further, do you believe that it 
is clear that the only user fee precedent, you know, as a 
result of this bill is to say that it would take additional 
legislation to authorize a user fee in the traditional 
derivatives market the CFTC oversees?
    Mr. Behnam. Yes.
    Senator Boozman. Very good. I also want to thank you and 
your staff. They have done a very, very good job in providing 
technical assistance not only with this bill but, again, you 
know, just through the many years that we have worked with 
them.
    One of the suggestions we have heard from numerous industry 
stakeholders is about the definition of dealer. Because our 
bill is intended to protect retail consumers, it is not our 
intent to cover proprietary trading firms who invest only for 
their own accounts to be covered under the definition of 
dealer. As currently written, do you believe our legislation 
covers this kind of nonretail consumer facing market activity?
    Mr. Behnam. Senator, good question, and I think I agree 
with you in principle that we are trying to focus on retail 
customers. In this case, yes, the principal trading firms, or 
the ``prop traders'' as they are more commonly known, would be 
exempt from the dealer definition, and that is consistent with 
what the Act and this Committee and the Commission have done 
with respect to traditional swap dealers. That is my 
interpretation, and I think it is drafted appropriately to 
create that carve-out for proprietary traders.
    Senator Boozman. Very good. Well, I think I am going to 
yield back my time in the interest of getting all of the 
questions. We appreciate your answers. As an old staffer, you 
understand the importance of actually answering questions. 
Again, thank you very much.
    Mr. Behnam. Thank you, Senator.
    Chairwoman Stabenow. Well, thank you very much, Senator 
Boozman. Since I went over a few moments, I think we are now 
back to even. Thank you very much for that.
    I will now turn to Senator Klobuchar, and then I believe 
Senator Ernst will be here shortly, and she would be next. 
Senator Klobuchar.
    Senator Klobuchar. Thank you very much, Chairwoman, and 
thank you as well, Senator Boozman.
    Chairman, I think we have talked about this before. I 
appreciated you visiting my office as well. As you mentioned in 
your testimony, these are volatile markets. I think we all saw 
that big time when we saw that when digital currencies were 
approaching their highest values and the companies were 
spending all the millions, maybe even more, on the celebrity 
endorsements. I think we all saw the Super Bowl ads. Many 
first-time buyers were convinced to invest just in time for the 
market to crash, and there are people who are trading on these 
unregulated platforms that they may not even realize it. Many 
of the investors have not even traded on platforms like this 
before.
    Could you talk a little bit more about how these underlying 
markets work and why you think the CFTC is in a position to 
oversee such a volatile market? I know you have done such 
things before. Without regulation, what recourse do consumers 
have who have been scammed or defrauded by crypto brokers? Kind 
of two different questions.
    Mr. Behnam. Thanks, Senator. I think in response to your 
first question, in many respects, you know, the markets and the 
way that the unregulated digital asset platforms are set up and 
operate are very similar to the way our traditional markets 
operate, but, as you point out, they are unregulated. The 
regulation is limited to FinCEN at Treasury and some State 
money transmitter licenses, but we do not have that market 
regulatory structure which provides that transparency and that 
lens into how the markets are operating.
    Notwithstanding some obvious custody issues because this 
technology is so unique in how you custody the actual 
underlying token, the market structure is largely the same. I 
think as we contemplate this bill it is about bringing and 
shedding light on this marketplace that is otherwise in the 
dark, and we would apply the same principles that we have for 
decades that have worked quite well.
    You talk about volatility, and I think that is in part---
you know, we are seeing correlations between the digital asset 
market and traditional equities markets and bond markets, but I 
also think that with regulation we will probably see reduced 
volatility because you will have more participants and sort of 
tighter spreads between individuals willing to buy and sell 
these digital assets.
    I think it is implementing our core principles, 
implementing the rules that we found to be very successful and 
effective, focusing on customer protections, focusing on 
protecting customer money, but implementing these core 
principles that are around trading practices, disruptive 
trading practices----
    Senator Klobuchar. Okay.
    Mr. Behnam [continuing]. ensuring financial resources so 
that the platform can do what they are intended to do.
    Senator Klobuchar. All right. A June FTC report indicated 
that, since 2021, $575 million of the crypto fraud losses 
reported to the FTC were about bogus investment opportunities. 
I referred to some of this in my last questions. Many of these 
originated on social media platforms like Instagram and 
Facebook. Could you talk about the interaction with the 
platforms, what their role is, and what more could be done on 
that front?
    I really do not know what your answer is going to be on 
this. I just noticed these numbers in my briefings.
    Mr. Behnam. Yes, Senator, it is a very difficult area 
because we do not have a lens into the trading platforms so we 
are relying on customers. As I stated in my statement, every 
case that we brought, 60 enforcement cases, has been brought to 
us through complaints. We do not have that vision and that lens 
into the trading platforms.
    Senator Klobuchar. You are saying the bill would help to 
give you the transparency into it.
    Mr. Behnam. It would provide the authority to the CFTC to 
regulate markets, and this volatility, the fraud, the 
manipulation, much of it would probably go away because we now 
have a regulator, a cop on the beat, and this would deter 
activity by bad actors.
    Senator Klobuchar. Okay. There is a lot of bad actor 
activity going on, on social media platforms, as you know. This 
is not the only thing. A cop on the beat would be unique 
compared to a lot of the things going on.
    When considering the environmental impacts of the 
significant energy that is required to mine cryptocurrencies, 
like Bitcoin, there is a lot of questions regarding the 
sustainability of cryptocurrencies. Can you speak to the way 
that this bill approaches the environmental impacts of 
cryptocurrencies?
    Mr. Behnam. Thank you, Senator. The bill provides and 
requires the CFTC to draft a report within 6 months and report 
back to this Committee and the House Ag Committee in 
consultation with other U.S. regulators, most notably, those 
that have expertise in the energy space, and I think this is 
the appropriate approach to this issue.
    We have heard the statistics about the amazing amount of 
energy used to mine coins. I would say that an event occurred 
last night with Ethereum, which is going to reduce energy 
consumption, a step in the right direction but certainly not 
resolving the problem.
    I think at its core the report will stand as a basic 
starting point so that we can examine what the issues are, 
where the energy usage is occurring, and what is the 
correlation between the energy usage and the outcome, the 
mining of the tokens. From there, I think that would lead to 
future policy discussions, potentially disclosures, and 
hopefully, incentives to move away from carbon-intensive energy 
sources.
    Senator Klobuchar. Well, thank you very much. I have a lot 
of faith in you, Mr. Chairman, and look forward to working with 
Senators Stabenow and Boozman and others on this.
    I did want to point out before we turn it back that we have 
with us the winning pitcher of the congressional softball game, 
Senator Gillibrand, who got four strikeouts--Joni knows. She 
used to play on this team--and, against all odds, beat the 
press that we will just say was significantly younger as we had 
two grandmothers on our team. The congressional team beat the 
press, and we should be very pleased with Senator Gillibrand's 
performance as a pitcher. She was incredible.
    Chairwoman Stabenow. All right. Way to go. That is 
terrific. Thank you.
    All right, Senator Ernst.
    Senator Ernst. Oh, wonderful. Thank you very much, 
Chairwoman Stabenow and Ranking Member Boozman. Today's 
hearing, it is extremely interesting. I think we have probably 
got a lot of viewers out there that are interested as well.
    Chairman, thank you for being here. We have heard all of 
these concerns. The cryptocurrency companies are being pushed 
out of the U.S. to other jurisdictions due to the lack of 
regulatory clarity. I would like you to walk through a little 
bit more how the bill would address those concerns and 
encourage American competitiveness but then why also should we 
want to promote the U.S. as a leader and an attractive 
jurisdiction for cryptocurrency companies. What benefit does 
this bring to every American, even those that are not engaged 
in cryptocurrency?
    Mr. Behnam. Thanks, Senator. Yes, for sure, I have heard 
probably many of the anecdotes you have heard about companies 
needing to move overseas because of the regulatory uncertainty. 
I think this bill in many respects is one element of the larger 
digital asset-crypto ecosystem, but it is certainly a huge step 
forward given the size of the market that you contemplate 
regulating.
    I think with that regulatory certainty the innovators, the 
entrepreneurs are going to have more incentives to consider 
staying within the U.S., raising capital here, and starting 
their businesses here. It is the regulatory certainty. It is 
the understanding that the law will be clear and they know how 
it will impact and intersect with their business and not fear 
something unknown in the future.
    To your second point, you know, I view this in many 
respects like any technological disruption or innovation that 
has occurred for decades. I mentioned the Grain Futures Act 
from 100 years ago in my opening statement. It was a different 
time when our farmers and ranchers were creating futures 
markets, and that was technological innovation at the time.
    Here we are 100 years later with a very different 
technological innovation, but I think it is important, at a 
minimum, despite where the technology may go. I cannot predict 
the success or failure of it, but there certainly is demand. 
There is certainly optimism. I think there is a vision for it 
to be implemented into our economy. When you have those core 
fundamentals being discussed and being outlined, then I think 
it is important, collectively, as elected officials and as 
regulators, we do what we can to balance customer protections 
against innovation and supporting the technology.
    Senator Ernst. If you could describe for us, what would 
happen if we do not move on this in the next six months, if we 
do not move in the next year? What is the potential there?
    Mr. Behnam. It is always difficult to give an exact 
timeline to when things may shift within the marketplace. I 
think, quite frankly, the U.S. does a very good job--and I will 
speak only from a financial regulatory position--of balancing 
the need to move cautiously to ensure that we are embedding the 
principles that have worked well for our capital markets and 
our derivatives markets for over a hundred years, and that 
means moving slowly, thoughtfully, but moving and making sure 
we are advancing the conversation and giving entrepreneurs and 
innovators a sense of what the direction the country is going 
to take from a policy perspective.
    We have to balance the ``Oh, if you do not do something 
now, we are going to move overseas.'' You know? I take that 
with a grain of salt.
    We have to have the conversation. We have to engage. We 
have to come up with a framework and set a timeline and a 
pathway so that these innovators, these entrepreneurs can do 
what they do best, and I think we are on that path. This is 
certainly a step in the right direction. It is a very positive 
step, and I think if we continue to do that we will be able to 
preserve these entities, these companies, these entrepreneurs 
within the U.S.
    Senator Ernst. Fantastic. I really appreciate it.
    I want to echo what Senator Klobuchar said. Thank you, 
Senator Gillibrand, for leading such a great team and a great 
victory. I have played women's softball, congressional softball 
for many years. I was not able to make the game last night. We 
lost all the years that I played, and they won last night. What 
is the common denominator there? Anyway, thank you, Kirsten. 
Great victory.
    Thank you, Chairman.
    Mr. Behnam. Thank you.
    Chairwoman Stabenow. Well, thank you so much.
    I do--I am going to turn to the winning pitcher of last 
night's game and a leader of it, Senator Gillibrand.
    Senator Gillibrand. Thank you, Madam Chairwoman.
    Thank you to Amy and thank you to Joni. Amy is our 
commentator, so she keeps the crowd very lively, which is very 
important. Joni has the best arm of the whole team. You better 
come back next year so we can keep our winning.
    Chairman Behnam, thank you so much for your leadership on 
this issue. Thank you for being willing to work with this 
Committee, for you being willing to work with me on my 
legislation as well. This bill that we are looking at, I think, 
can be transformational. I think it is timely. I think it is 
urgent. I think it is necessary to create stability in a market 
that is growing.
    I talk to a lot of colleagues about cryptocurrency, 
blockchain, Web3, and they say, well, is this going to go away? 
It is here for good. It is part of the world economic 
community.
    The question that we have as a Committee right now is: Are 
we going to be part of the solution, or are we not?
    What is needed so much right now are rules of the road. We 
just need rules of the road so market participants, so 
innovators, so businesses can have basic clarity on how to 
create their businesses, what level of oversight and 
accountability will be effective, how to create basic safety 
and soundness, how to create consumer protection. You being 
part of this process has been absolutely essential to getting 
this bill written and to getting where it is today for the 
Committee. I am very, very optimistic.
    I would like you to continue along with the line that 
Senator Ernst started about why is this relevant now. This bill 
takes jurisdiction over the commodities part of 
cryptocurrencies. Some cryptocurrencies are securities. Digital 
assets can take many forms. SEC has a regulatory 
responsibility. CFTC will have a regulatory responsibility. IRS 
will have a regulatory responsibility and so will thoughts and 
ideas on cybersecurity, which I will address after this 
question.
    What I would like you to talk about is: How does this bill 
fit into the broader framework? Why is getting this bill done 
now so essential? Why and how does getting this bill done now 
allow us to build on it to do the rest of the regulatory 
frameworks, to then go and look at the Banking Committee and 
try to do stablecoins, go and look at the Banking Committee to 
try to get SEC regulation for those digital assets that are 
securities? Talk about why this piece matters now.
    Mr. Behnam. Senator, thanks for the question. You know, you 
rightfully point out that this is one piece of the puzzle. We 
all have a role to play. We all have our pieces to contribute 
to the larger puzzle. I have been lucky to participate in the 
Principles Working Group, the Financial Stability Oversight 
Council, other international fora, and this is a big issue.
    You mentioned stablecoins. This is a predominantly, 
prudentially, banking-regulated issue. The security tokens. 
There are thousands of security tokens that innovators are 
creating and that we need to address. There are issues around 
payments, custody, settlement, so many different elements of 
this larger digital asset ecosystem that in many respects is 
interconnected. As much as their own little silo, they are all 
interconnected.
    I think this is an important bill because, you know, you 
expressly outlined Bitcoin and Ether and commodity tokens. That 
will be a significant majority of the digital asset 
marketplace, and I think it will push the conversation forward 
so that we can continue to have policy around the different 
areas of the digital asset space clarified and complete because 
as much as this will bring clarity, transparency, and most 
importantly, as you point out, customer protections to this 
particular market, which is significant, the other elements 
need to be completed, too.
    We need to complete the larger puzzle because if we are 
going to see advancements in the technology and the innovation 
coupled with the customer protections, the market resilience, 
and ultimately, financial stability depending on the size of 
the market, we need to have this patchwork all plugged together 
so that we have the full lens into that space from a regulatory 
perspective and from a prudential perspective.
    Senator Gillibrand. Thank you, Mr. Chairman. Along the 
lines that I mentioned on cyber, when I first became involved 
in this issue, it was through my role on the Intelligence 
Committee, and so obviously, addressing things like cyber 
threats, fraud, theft, privacy breaches, and other technology-
based crimes facilitated through Web3 applications by foreign 
adversaries is top of mind for me.
    Can you talk a little bit about the work that you and your 
Agency are undertaking to be ready to address these types of 
threats and what needs to be done in the future to ensure 
security of the commodities market?
    Mr. Behnam. Thanks, Senator. You know, cybersecurity is top 
of mind at the Agency right now. We are a financial market 
regulator that has systemically important registrants. As I 
mentioned in my earlier responses and in my statement, we have 
core principles which drive our rules and regulation. The core 
principle around system safeguards directly relates to 
cybersecurity. We have to build operational resilience within 
the institutions, the regulated institutions. Thankfully, the 
DCCPA addresses this specifically, prescriptively mentions 
cybersecurity.
    We are leveraging the tools, the expertise we have. We 
understand that we are going to have to up our game because 
from a markets perspective the cyber resilience and cyber 
issues are largely the same but this technology, specifically 
the custody element, how do we hold these tokens, and the 
unique nature of the technology is going to require some deep 
thinking. It is going to require new hires and new expertise in 
the space. Those are the areas that I am concentrated on.
    Using the resources that the bill provides will be critical 
to ensure that we can recruit, retain, and build out that 
infrastructure so that we have a cyber-resilient system. As we 
have seen in the past with the Colonial Pipeline or others, 
digital assets will be a vulnerable point, will be a touchpoint 
for bad actors to try to attack the U.S. through different 
systemically important infrastructure.
    Senator Gillibrand. Thank you, Mr. Chairman.
    Thank you, Madam Chairwoman.
    Chairwoman Stabenow. Thank you very much.
    Senator Tuberville.
    Senator Tuberville. Thank you very much, Madam Chair, 
Senator Boozman. Thank you all for doing this. We need this; we 
need this bill. We need to regulate. We got people out there 
investing in this and do not have a clue what they are doing, 
including me. There is not a handful of people in this room 
right now that really understand what we are talking about, and 
I have been to hours of seminars and read books. It is 
complicated, and we need to help the American people. Thank 
you. Thank you all for doing this.
    Mr. Chairman, thank you for being here. Thank you for being 
accessible and the hard work that you are doing. Some of your 
counterparts in some of these other agencies could learn from 
you and your accessibility.
    Just a few questions. You know, I recently learned that 
over 90 percent of all crypto trades are executed outside the 
United States. Our country dominates equity and bond and 
derivatives trading. Why are we so far behind in this?
    Mr. Behnam. Senator, as I was talking to Senator Ernst, it 
is a great question. I think we are moving at a good clip, but 
we are certainly not moving as fast as others. I think we have 
to balance the need to preserve the financial integrity, the 
financial resilience that has made our capital and derivatives 
markets the best in the world but also making sure that we are 
giving a clear sense to the marketplace that we are moving 
forward.
    There are several jurisdictions around the world which will 
naturally use this as an opportunity. They think that this is a 
way to increase economic development so that they are going to 
either lower standards or lower their sort of regulatory bar so 
that they have more individuals or institutions coming into 
their jurisdiction, and that is fair.
    I think from a U.S. perspective, given our size, given our 
legal structure, and given the accountability through 
enforcement, we can move at a clip that is safe, that is 
cautious, that is thoughtful, but has to be deliberate.
    I agree with you, and I get your sense that we need to move 
forward. This is a step in the right direction. We need to 
continue this conversation and see this through the finish line 
so that we have that certainty for market participants so that 
they can start the business there and that statistic which you 
named, having that volume greater outside of the U.S. as 
opposed to inside of the U.S., can be flipped.
    Senator Tuberville. You know, other countries are starting 
their digital currencies, including our biggest adversary, 
China. What do you think about that, and what is their 
regulatory system going to look like? Have you read anything on 
that?
    Mr. Behnam. Senator, you know, I want to--I certainly 
recognize that, and I am very aware of what is going on. There 
are a number of issues that--or approaches, I would say, that 
China is taking that I do not think we should or are taking 
here in the U.S., specifically around privacy issues.
    With that, I know that the Federal Reserve and the 
Chairman, Chair Powell, is working very carefully and 
thoughtfully, not unlike what I said earlier, to contemplate 
the idea of what a digital dollar would look like. It is a 
balance. It is a lot of technical issues, monetary policy 
issues, and infrastructure issues that have to be really worked 
through, thoughtfully and comprehensively, before we can push 
that out in either a beta mode or in full.
    I think we are moving at the right clip. It has got to be 
cautious, but we are keeping an eye on the ball, engaging, and 
moving the conversation forward.
    Senator Tuberville. If we were to pass this bill tomorrow, 
do you have the assets to implement this?
    Mr. Behnam. Senator, one of the great elements and 
provisions of the bill is the user fee, which Senator Boozman 
pointed to, the Chairwoman did as well. This is a critical 
component of this bill. With the user fee that is exclusively 
focused on the digital platforms, we would be able to implement 
the bill.
    Senator Tuberville. How is your relationship with SEC?
    Mr. Behnam. Historically and presently, it has always been 
very positive. I speak regularly with Chair Gensler, and I know 
my staff does as well. We have to work together. We are 
building off a relationship that is decades old. In order for 
us to serve customers, taxpayers, and market participants, we 
have to work together well, and I think we are doing a good job 
at that.
    Senator Tuberville. I think one of our biggest protections 
in this area is going to be education, people really understand 
what is going on, because as I said earlier a lot of us are 
behind. You know? It is pretty complicated, obviously.
    I am starting to see digital ATM machines in my State. What 
are your thoughts on that?
    Mr. Behnam. Senator--and I do want to commend the Alabama 
Security Commission. You know, they have been very forward 
thinking and very thoughtful about, obviously, at the State 
level, protecting customers. We have worked very closely with 
them, so I appreciate that relationship.
    There are a lot of things emerging. I have seen the same 
sort of ATM machines that you are pointing out, and yes, this 
concerns me. I think on the one hand we have to let individuals 
make choices, but I think collectively, as policymakers, we 
have to make sure that the individuals are informed, they are 
informed with facts, and that they can make the most informed 
decisions about what they are doing with their capital and how 
they are allocating it.
    That is--what concerns me today is that we are not doing 
that right now because this market is operating in the shadows. 
We do our best at the CFTC to put advisories and customer 
alerts on our website, but it is simply not enough. We have to 
leverage States and work with their individuals who are really 
boots on the ground, to get individuals at, you know, VFWs, 
town halls, churches, schools, to get information, to have 
access to information, so that when they go to that ATM they 
know what they are doing and they can make the most informed 
decision. We are not there right now, but this bill takes a 
step to accomplish that.
    Senator Tuberville. Thank you. I am like Senator 
Gillibrand. People think this is a phase. This is not a phase. 
This is not going away. You are at the head of this, and we 
hope we can help you in any way. We are behind you 100 percent, 
and we just want to continue to be educated and market it the 
right way and regulate it. I think that is going to be a big 
key.
    Thank you, Madam Chair.
    Mr. Behnam. Thank you.
    Chairwoman Stabenow. Well, thank you, Senator, and I agree. 
That is why we have the legislation. It is our job to make sure 
that those things are in place.
    Senator Smith and then Senator Fischer.
    Senator Smith. Great. Thank you, Madam Chair and Ranking 
Member, and I want to just let you know I appreciate the work 
that you are doing with this bill to address the regulatory 
gaps that we have, particularly when we are thinking about 
digital commodities.
    You know, it is interesting. Along with my colleagues, 
Senator Brown and Senator Warnock, I have the privilege of 
sitting on both this Committee and the Banking, Housing 
Committee. In fact, Chair Gensler is testifying in front of the 
Banking Committee as we speak, which is where I am going to be 
going next, not on this topic specifically.
    I do think that this gives us a unique view, an important 
view, not only of the spot and derivatives markets for digital 
asset commodities but also the market overall. I would like to 
dive in a little bit on how this can work together.
    I appreciate what you are saying, Chair Behnam, about the 
importance of having a comprehensive approach and also the fact 
that your Agency has worked with SEC together for many, many 
years. Could you just talk in a little bit more detail about 
how you see--with this bill and the needs for regulation and 
other capacities around digital assets, how you see that 
working together, coming together?
    Mr. Behnam. Well, Senator, it is a good question. I think 
as I was pointing out to Senator Gillibrand, this bill is a 
huge step in the right direction, but there are going to be--
there are missing components. There are other parts that we 
need to address around stablecoins, around the securities law, 
around payments and settlement and what not.
    I think it creates clarity around the commodity markets and 
around the definition of what a digital commodity is, and just 
by virtue of that--and I think the definition is drafted quite 
well because it, you know, very clearly talks about a digital 
form of personal property, it excludes physical commodities, it 
excludes securities, and it excludes dollars or, essentially, a 
digital dollar, something that is backed by the U.S. 
Government. With that framework, we then have at the CFTC a 
sense of what constitutes a digital commodity.
    In the inverse, you know, my colleagues across town or at 
prudential regulators could then use this bill as a marker for 
how the rest of the patchwork or the puzzle may look, and I 
think that is extremely helpful in the process of identifying 
what is a commodity, what is a security, what is a stablecoin, 
and how everything should fit within each different regulator 
that oversees financial markets.
    Senator Smith. What would be--just as an example, what 
would be the implications of having--you know, you have one 
platform. You have digital assets being offered on that 
platform, side by side, that are regulated under different 
regimes. Are there implications to that? Is that something we 
should be thinking about?
    Mr. Behnam. Well, you know, in many respects--so you would 
probably have dually registered platforms. In a case where you 
had a security token and a commodity token, the trading 
platform would be regulated by both the CFTC and the SEC.
    Depending on how the platform wanted to list the contracts, 
they would either be siloed within a commodities space, a 
securities space; you could potentially segregate the customer 
accounts and the custodian sort of services that you are 
providing to the client. Alternatively, you could have a single 
account, an omnibus account, for a client that services both 
the securities side and commodities side.
    It may sound complicated, but with the efficiencies of 
technology and, quite frankly, the experience we have had in 
the swaps market--we have security swaps. We have commodity 
swaps. We have security futures. We have commodity futures. We 
have done this before. We have dual registrants, from 
investment advisors to broker-dealers and futures commission 
merchants.
    We are not reinventing the wheel. There is a level of 
complexity we can certainly figure out with--in partnership 
with the private sector but, of course, with our sister agency 
to ensure that we are doing it in the most efficient way but, 
ultimately, the most productive way from a customer protection 
and market resilience perspective.
    Senator Smith. Your view is that while there might be some 
complexity to that that is complexity that can be addressed 
through good coordination and--good coordination between the 
agencies.
    Mr. Behnam. Absolutely.
    Senator Smith. Yes. As I understand it, the bill takes the 
regulatory structure for commodities that exists and applies it 
to digital assets that are being marketed to retail investors. 
Could you talk about--yet, your Agency does not have--does not 
work directly with retail investors. Could you talk about how 
that framework will apply to retail investors and how you can 
address how that works for retail investors?
    Mr. Behnam. Yes, you are absolutely right, Senator, that 
the majority of our investors, our customers, our market 
participants are institutional. We do have a fair amount of 
retail participation in our market. We work closely with the 
National Futures Association, which is an SRO, which is 
contemplated in this bill, to make sure that we have boots on 
the ground, that we have appropriate disclosures. We have the 
core principles, which I have mentioned a couple times, about 
you know, preventing contracts that are readily susceptible to 
manipulation, protecting customers, making sure that 
information is getting to customers through disclosures.
    I would say that, as you sit on both the Banking and this 
Committee, this distinction needs to be drawn, and I have said 
this before. Commodities have a very different disclosure 
regime and requirement than a security does. Security 
requirements require, in good faith, bridging of information 
gaps between an issuer of a security and an investor. That is 
because there is management. There is a centralized management. 
There is a financial statement. Any of these things that we see 
in reports from the SEC, quarterly, annual, or period. That 
does not exist on the commodities side.
    What we have to do is protect markets, make sure markets 
remain transparent, fair, orderly, and that customers 
understand market-based risk as they decide how to allocate 
capital.
    Senator Smith. Thank you very much.
    Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you.
    Senator Fischer.
    Senator Fischer. Thank you, Madam Chair.
    We have seen reports that the SEC Chairman Gensler has said 
he is working with the CFTC on a formal memorandum of 
understanding which would create one rulebook between 
regulators for the regulation of digital assets and digital 
asset exchanges. My question to you, Mr. Chairman: How 
important is it that we have that one notebook between all the 
regulators?
    Mr. Behnam. Senator, thank you. It is a great question. I 
think it is important that we have a mutual understanding 
between regulators, especially the two market regulators, us 
and the SEC, about how we are going to collectively regulate 
markets. Regardless of the type of market or the financial 
asset, there always is an intersection between the two 
regulators because you are going to have dually registered 
entities or individuals. It is very important that we have this 
mutual understanding in the form of an MOU or just a handshake 
agreement in certain times because we need to know what and how 
we are going to contemplate these different financial assets 
within the context of the law.
    That said----
    Senator Fischer. Are you working on an MOU right now?
    Mr. Behnam. Currently, we are not working on an MOU. I 
know, you know, Chairman Gensler and I talk frequently. We 
understand what may occur within the context of the securities 
laws if entities were to be registered as securities platforms 
or securities ICOs, and if there is a situation where we need 
to work on an MOU-type document I certainly would be open to it 
and willing to make sure that it works for market participants.
    Senator Fischer. Have you reached out at this point to try 
and do that?
    Mr. Behnam. I----
    Senator Fischer. Does Congress have to provide guidance on 
that? Are you able to do that on your own?
    Mr. Behnam. No. Yes, we are able to do that. We have 
several MOUs between the two agencies on enforcement matters or 
other matters of mutual interest.
    Senator Fischer. Okay. Nebraska passed a law that was 
introduced by our newest Congressman, Congressman Mike Flood, 
when he was in the Nebraska legislature, and it allows digital 
asset depositories to be created, which have allowed State 
chartered banks in Nebraska to offer services to customers who 
have those digital assets. Nebraska is just the second State to 
pass that legislation.
    As we see these digital assets grow, questions will 
continue to be raised about how they should be regulated and 
the role that State regulators play alongside the Federal 
regulators, particularly as it relates to protecting and 
educating investors, as Senator Tuberville was referring to. 
Can you discuss your views on that relationship between the 
State regulators and the CFTC, please?
    Mr. Behnam. Thanks, Senator. I would say, as a former State 
regulator myself, having State regulators is so important as a 
matter, and I used this phrase with Senator Tuberville, ``boots 
on the ground.'' Right? We in Washington do not have the 
capacity or the resources to have that comprehensive reach 
across the country, whether it is in Nebraska, California, or 
any other State. The State regulators play a key role, and that 
partnership is so critical to make sure that those individuals 
at the State regulator are touching individuals at the local 
level, at the county level or the district level.
    We have a very close relationship through MOUs, actually, 
with NASAA, which is essentially a national association of 
securities regulators. Crypto is top of mind right now, and it 
has been for several years. I think the bill does a very good 
job from a markets perspective in preempting States from 
registering the entities that the bill contemplates, but what 
it does do is it preserves States' authority over anti fraud, 
which is a critical authority for States attorney generals to 
have for bad actors at a local level.
    We will continue to use the relationships, the existing 
relationships we have with State regulators and understand that 
they play a critical role in making sure that information and 
disclosure and education is received by local investors but 
also those protections around fraud are preserved.
    Senator Fischer. Have you had any contact with States at 
this point in time? Has Nebraska reached out to you or the 
other States who may be looking at passing similar laws? Have 
they contacted you at all on this for any kind of guidance?
    Mr. Behnam. I have spoken with the Alabama State Security 
Commissioner, in part, because we have known each other for a 
number of years in my professional capacity and his as well. He 
is also the president of this association I said, the national 
association of State securities regulators. He may act as the 
sort of voice for the larger association and each individual 
State member. I did speak at the annual fly in they had a few 
months ago.
    I have not heard from Nebraska. I would certainly welcome 
the opportunity to build a relationship, to talk with them, to 
learn what they are doing, and to support them with the 
resources and the expertise we have.
    Senator Fischer. Okay. Thank you, sir.
    Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you very much.
    Senator Durbin.
    Senator Durbin. Thank you, Madam Chairman.
    Chairman Behnam, thanks for coming here. Representing the 
city of Chicago, I am more familiar with the CFTC than some 
members, and I think you do a great job.
    Mr. Behnam. Thank you.
    Senator Durbin. In fact, because of your good work, we have 
been able to establish global leadership in many areas, 
particularly when it comes to the Mercantile Exchange and the 
futures market. People trust it. It has a level of integrity 
that makes a difference. There is global competition, but we 
seem to do pretty well in that competition. The question is 
whether or not we can establish the same standard of integrity 
when it comes to this whole crypto world.
    I was surprised in preparing for this to learn that one in 
five Americans has invested in or traded cryptocurrency. Your 
testimony notes the fact that a significant number of these 
investors are lower-income individuals who took quite a hit 
recently. It is no wonder that the average American is 
interested in this. After all, respected investment advisors 
like Matt Damon and Larry David have told them this is a good 
investment, everybody is doing it, and everybody is winning.
    We know the reality, and you pointed out the reality. That 
is not the case when we look at the record. Over the last year, 
the value of the crypto market has fallen below $1 trillion, 
losing about 70 percent of its value. Bitcoin alone has seen 
its value plummet below $20,000 from a peak of $67,000. In 
June, Celsius, a crypto platform, suspended customer 
withdrawals and transfers, filed for bankruptcy. In May, the 
``stablecoin'' Terra collapsed, resulting in a $300 billion 
loss across crypto markets; yet, it was marketed as a 
``stablecoin.''
    Do not get me wrong. There is risk in speculation, and it 
applies to a lot of different circumstances. Lucky for us that 
cryptocurrencies have not been inextricably tied to our banking 
system or a $2 trillion loss would have been felt in a 
different way.
    Now we have companies like Fidelity saying they are going 
to include Bitcoins and cryptocurrency in retirement accounts. 
If we went through another meltdown as we did this last year 
with retirement accounts and life savings at stake, it would 
have much greater impact.
    I would say my concern is this. I am glad we are talking 
about regulation. We have to have it. I worry that we are doing 
enough to salve our conscience, that we are doing something, 
but not doing enough to put up guardrails and stop signs on the 
``Crypto Express.''
    This term ``regulatory certainty,'' I have run into that 
before as a term, that if we do not provide regulatory 
certainty to this industry they will leave. They will go to 
Malta or El Salvador or Portugal or somewhere. Really? Do you 
think that is a possibility?
    Mr. Behnam. It is, but it is not a concern of mine. 
Senator, I appreciate the point. It is what I said to Senator 
Ernst. We in the U.S. have to balance our approach to 
regulation, and we have done this very well for decades. We 
have to be deliberate. We have to be cautious. We have to be 
patient and instill the principles of regulatory foundations 
that have made our capital markets, our derivatives markets, 
including the Board of Trade, the best in the world.
    I do think coupled with that caution and deliberation we do 
need to move forward. We need to engage. We need to understand 
that this is a new technology that is disrupting financial 
markets.
    Senator Durbin. How much money does CFTC need to regulate 
cryptocurrency?
    Mr. Behnam. Senator, I think about a year ago--I think it 
was my November hearing before this Committee. It could have 
been February, and I apologize for not knowing specifically--I 
said $100 million. I used that number because that was 
approximately the number that we received over the past few 
years since the financial crisis and what our funding level 
went prior to the financial crisis to after the financial 
crisis.
    In an effort to get a more specific number, I had my staff 
work on this exercise specifically for a number of months. We 
have come up with $112 million over the first three years, 
divided not equally. We would be weighted on the front end of 
the three-years. This would be for rulemaking. This would be 
for hiring. This would be for training, expertise. This would 
be with outreach.
    Senator Durbin. What is your current annual budget?
    Mr. Behnam. Current annual budget is $320 million.
    Senator Durbin. You are talking about a substantial 
infusion through the user fee of $112 million.
    Mr. Behnam. $112 million over three years. The first year 
would be about $40 million.
    Senator Durbin. Really?
    Mr. Behnam. Yes. We did calculations based on the 
rulemakings and some of the reports that are due and then the 
engagement with the industry.
    Senator Durbin. Well, I would like to talk to you about 
that because I honestly believe that you are lowballing it, 
that if you are serious about regulation of an industry where 
one in five Americans now has invested and had some risk, and 
we are now getting into retirement accounts----
    Mr. Behnam. Yes.
    Senator Durbin [continuing]. and 401(k)'s and the like, and 
the major brokers like Fidelity and others are starting to 
include this in their plan, there is a lot more exposure and a 
lot more risk than just a year or two ago.
    Mr. Behnam. Senator, I welcome the conversation. We did 
sort of off-the-cuff analysis based on examinations of who is 
registered with FinCEN and just doing a survey of markets. This 
is certainly not a hard number, and you may be right. I 
certainly would welcome an upward movement of that funding 
level, but I did want to come back with some evidence to 
support a number as opposed to just saying $100 million, which 
is what I did last time.
    Time will tell, and I do not know how the market will 
either consolidate or grow after this bill would be passed. It 
is hard for me to give an exact number, but I just wanted to do 
my best to defend a number that I am sharing with the 
Committee.
    Senator Durbin. This number, whatever it may be, is going 
to be generated from the crypto world in a user fee.
    Mr. Behnam. Exactly.
    Senator Durbin. Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you very much.
    Senator Thune and then Senator Booker.
    Senator Thune. Thank you, Chairwoman Stabenow and Ranking 
Member Boozman, for holding today's legislative hearing to 
consider the Digital Commodities Consumer Protection Act. I 
also want to thank both of you for your leadership on this 
legislation and on the responsible regulation of digital 
commodities.
    Technology continues to transform digital commodities, and 
it is critical the Federal Government has the proper tools to 
regulate this growing market and to provide certainty when it 
comes to digital commodity platforms, which is why I am an 
original co-sponsor of the bill that we are considering today. 
It would clarify the regulatory uncertainty surrounding 
cryptocurrencies and give the CFTC explicit authority to 
establish rules and regulations to oversee digital commodities 
and establish guardrails for the market, which I think we all 
agree needs to happen.
    I want to thank all the witnesses who are here today, for 
your input. I look forward to working with my colleagues on 
this Committee to advance what I think is very important 
legislation.
    Mr. Chairman, in your testimony, you highlighted the 
regulatory role CFTC has played over the digital asset 
commodity market in recent years. Could you sort of walk us 
through--and I do not have a lot of time--fairly quickly 
through CFTC's experience and successes in regulating digital 
commodities?
    Mr. Behnam. Thank you, Senator. Yes, we have been 
overseeing this market through mostly an enforcement mechanism 
since 2014, utilizing our fraud and manipulation authority. We 
have brought over 60 enforcement cases, some as large as $1.7 
billion, $100 million, $40 million, again, some of the largest 
incumbent crypto firms. We, since 2017, have delisted futures 
contracts relating to digital assets, Bitcoin, Ether, and 
others. We are continuing to see even in the past few years 
native or incumbent crypto firms purchasing CFTC-regulated 
entities or licensed entities.
    The move is swift. It is quick. It is forcing us to learn, 
to up our game, and to leverage our expertise, and I think that 
puts us in a good position to implement this bill and oversee 
the market.
    Senator Thune. Given that, just what you shared, the CFTC's 
recent enforcement actions and efforts, what is your response 
to concerns that the CFTC is not equipped to play the lead 
regulatory role for digital commodities?
    Mr. Behnam. Well, I do not think that statement is really 
backed by facts, I think, if anyone took some time to look at 
what we have done over the past few years going back to 2014. I 
shared with Chairwoman Stabenow some of our enforcement 
statistics at large. We are one of the toughest cops on the 
beat across the globe. We have expertise because of our 
experience with this technology. I think with the user fee that 
is included within the bill we would be able to leverage that 
authority, hire the right individuals, train existing 
individuals, and really hit the ground running, and do what we 
need it to do.
    Senator Thune. Let me ask again quickly, and I know that 
you have probably addressed this issue already. Where would you 
say the United States ranks globally in terms of digital asset 
and blockchain technology, and if enacted, what effect would 
this legislation have on U.S. competitiveness in this space?
    Mr. Behnam. Senator, you know, naturally, because of the 
size of our markets, the capital available through venture 
capital and fundraising and private equity, you know, we are 
always at the top, but I think there are other jurisdictions 
that have taken a very aggressive approach to this technology, 
hoping to sort of capture the innovators within their 
jurisdiction.
    As Senator Durbin pointed out, I think that comes with 
risks, and that is not something I support moving or 
arbitraging our regulatory system. I think we do it very well 
here in the U.S., of moving cautiously and deliberately, but as 
I said, we have to move forward.
    I do think this bill, if passed, would create the 
authority, give regulatory certainty, and I think give 
incentives to innovators and entrepreneurs to stay here in the 
U.S. and leverage the venture capital, the private equity, and 
the legal infrastructure, the enforceability of the law, which 
really is one of the most important things of all within global 
jurisdictions, and elevate our status within other countries 
regarding this technology.
    Senator Thune. One of the objectives of the bill--and we 
all talk about this--is how essential it is that there be 
strong, robust consumer protections to protect customers in the 
digital asset marketplace from fraud and manipulation. Can you 
kind of just speak to how this legislation would help buildupon 
the CFTC's already robust customer protection and enforcement 
actions?
    Mr. Behnam. Yes, Senator. It is a great question, but it 
really is built on multiple layers. It is the core principles 
which is reporting and recordkeeping. It is conflicts of 
interest. It is cybersecurity through system safeguards. It is 
prohibition of listing contracts that are susceptible to 
manipulation. It is this baseline, foundational level that 
pushes us toward writing more prescriptive rules and then 
enforcing those rules through inspections, examinations, 
investigations, and then ultimately, if someone breaks the law, 
keeping them accountable and making sure that we are deterring 
future actions.
    It is a series. It is a layered customer protection regime. 
It is largely replicating what we do now and what has been very 
successful for decades, and I have no doubt that this regime 
that we do in traditional derivatives could be applied as 
equally and as successfully in digital assets.
    Senator Thune. All right. Thank you, Madam Chair. My time 
is expired.
    Thank you, Mr. Chairman.
    Chairwoman Stabenow. Thank you very much.
    Senator Booker.
    Senator Booker. Madam Chairwoman, Ranking Member, I am 
really grateful for your leadership in this space, and I am 
honored to be a partner on what I think is an important bill.
    I just want to say, first and foremost, it is good to see 
you, another bald Jersey boy doing okay.
    Just really quickly, I am really optimistic, not 
necessarily about the coins and the commodities, but the 
technology underlying all of his opens up a whole new realm of 
possibility for Web3 when it comes to blockchain.
    We have some real issues and concerns right now that I 
think this bill addresses. We have seen scams being perpetrated 
by outright fraudsters, taking advantage of eager investors. We 
have seen risky projects with inadequate disclosures, not 
giving consumers chances to accurately evaluate the assets they 
are purchasing with their hard-earned money. We have seen these 
advertisements, which some of my colleagues have already talked 
about, promising guaranteed profits and almost seeming like 
hucksters as they put forward.
    We do not have significant guardrails right now. We do not 
have transparency that we need right now. We need better 
regulations, and so there is only three things to do as 
Congress.
    We can do nothing, which would allow a lot of this to 
continue. There are some people that want to create rules that 
basically make it illegal or impossible for everyday people to 
access tokens, strangling a market.
    We could undermine the strong securities laws and customer 
protections that already exist in the financial sector, opening 
floodgates that would enrich a select few, creating chaos and 
uncertainty for businesses and regular people alike.
    Or, we can do what this bill does, which is dig in with the 
goal of allowing this space to thrive for innovation to occur 
but also give solid protections that would curb scams, frauds, 
increase transparency, accountability, and increase the safety 
and the strength of our financial system. That is why this 
bill, to me, is so utterly important, and doing nothing is 
unacceptable.
    I just want you to address some of the criticisms I hear 
out there specifically about the CFTC. Some people say that 
this is just going to be some kind of ``light touch'' 
regulation in the crypto market without the real capacity to 
hold bad actors accountable and bring stability. You know, 
Chairman, what do you have to say to those who think the CFTC, 
with this legislation, would bring a regulatory touch that 
would be too light and how you as Chair will work with Chairman 
Gensler and other commissioners of the SEC to make sure that 
there are strong regulatory provisions in place?
    Mr. Behnam. Thanks, Senator. You know, I said this to the 
Chairwoman; I could unequivocally say, you know, our rules are 
based on customer protections.
    The data, if someone took time, who is drawing this 
narrative that we are weak or ``light touch,'' if they took 
time to see what the CFTC does, if they took time to examine 
how our rules are structured and what they are based on, and 
the success of the markets, which Senator Durbin was pointing 
out, they would know that we are one of the toughest cops on 
the beat in the world, and we are known for that. Our 
enforcement statistics speak for themselves, returning six 
times what our budget is every year for the past 10 years.
    These are the individuals within the Agency that--these are 
sophisticated contracts, too, whether it is swaps, futures, or 
options. I mentioned a case against a commodity trader: very, 
very sophisticated trading strategies, manipulative trading 
strategies to create some arbitrage or some net benefit between 
cash and futures markets.
    Senator Booker. Just for the sake of time, with the extra 
resources as well, you would be able to do even more 
significant enforcement as well.
    I just want to shift to another big criticism----
    Mr. Behnam. Sure. Yes.
    Senator Booker [continuing]. that I hear a lot about the 
energy consumption----
    Mr. Behnam. Yes.
    Senator Booker [continuing]. involved in crypto even though 
some people are moving away from proof of work. I just want you 
to touch on that real quick about--obviously, President Biden 
has tried to address this. What would you be able to do as a 
result of this legislation even more so to deal with this?
    Mr. Behnam. Thanks, Senator. You know, as a first starting 
point, the bill is very effective in requiring us to write a 
report. It requires us to consult and work with other 
regulators within the U.S. Government, specifically those who 
have expertise in physical energy markets, do tooth-and-nail 
examination of what the energy consumption is, how it relates 
to the output and the utility of the technology, and then come 
back to this Committee in 6 months with a report of what our 
recommendations are to either create a disclosure regime or 
incentives for folks, as you mentioned, indirectly to move away 
from proof of work, to move to proof of stake or other methods 
to reduce carbon emission consumption.
    Senator Booker. The last thing I just want to really cover 
really quickly with you is some part of the bill, and I have 
been so grateful to the Chairwoman for allowing me to help to 
shape this. I am concerned about equity issues that are out 
there, the disparities in wealth that we have in this country 
that are persisting. Women, African Americans are 
overrepresented right now and participating in the world of 
digital assets, which is concerning given the lack of 
regulation that we are looking. It also is something that I 
think could actually help to create more opportunity for 
democratization of wealth in our Nation.
    This bill directs the CFTC to examine racial, ethnic, and 
gender demographics of customers participating in the digital 
markets and to use that information to inform your rulemaking. 
Do you want to comment on that provision of the bill real quick 
for me?
    Mr. Behnam. Senator, I am extremely excited about it, and I 
am excited--you know, I am very proud that I created the first 
Chief Diversity Officer at the CFTC a few months ago. We have 
moved the Office of Customer Education within our Public 
Affairs Office. We now have an infrastructure to leverage what 
the bill requires us to do to have a wider outreach to 
communities, lower-income communities, historically 
marginalized communities, and get boots on the ground to 
educate, to inform, to do the outreach so that we understand 
where these pockets of speculative investors are, where these 
individuals are, who are risking capital without being informed 
about the risks associated with this technology.
    That is going to be a priority of mine. I certainly look 
forward to working with you, but I think we are in a good place 
right now with some actions that have been taken in the past 
year. This bill's authority, coupled with the user fee, should 
really springboard us to get information out to consumers.
    Senator Booker. Thank you. Damn it, you make Jersey proud. 
You are not quite Bon Jovi-Bruce level, man, but you are 
climbing the hill.
    I am not going to be able to stay for the next panel 
because I have got sickle cell work to do. I just want to say, 
thank you, Chairwoman. The next panel does not have quite the 
Jersey authenticity, but there are some really good folks----
    Chairwoman Stabenow. Really good.
    Senator Booker [continuing]. and I hope great conversations 
with you all here. Thanks.
    Chairwoman Stabenow. Thank you so much for your input in 
general on the bill but specifically on those provisions that 
are very important as we go forward to evaluate impact. Thank 
you very much for all of your leadership.
    Senator Booker. Thank you.
    Chairwoman Stabenow. Senator Hoeven.
    Senator Hoeven. Thank you, Madam Chairman. I appreciate it 
very much.
    Chairman Behnam, thanks for being here. Appreciate it. Now 
you are going to be regulating in the spot market versus 
futures. Can you tell me what your thoughts are in regard to 
that? Is that going to make a difference for you in a 
significant way, and does it portend other future regulation in 
the spot market?
    Mr. Behnam. Senator, thanks for the question. I do not 
think it portends future regulation in the cash market or the 
spot market. I think, as I have said a few times, this 
particular commodity market is unique as it relates to 
traditional agricultural, energy, or metal commodity markets 
because it is highly speculative and it is retail-oriented, and 
that is why I think we have a very important role to play in 
this specific commodity market as compared to some more 
traditional commodity markets?
    Senator Hoeven. Thank you. How should this work? I mean, 
there is going to be multiple agencies now that have a role. 
What should that look like? Not just your role, but how do you 
interface with others so we do not end up with one of these 
bureaucratic mazes that nobody can figure out what is going on 
or who is responsible for what? Which is not only difficult for 
the providers but for the consumers.
    Mr. Behnam. Sure.
    Senator Hoeven. What should it look like in your opinion?
    Mr. Behnam. Senator, I think it needs to look like what we 
do now in traditional financial markets because--and I will 
just use our sister market regulator agency, the SEC, as an 
example, but we have relationships with the banking regulators 
because we have dually registered entities as well. We have 
been forced to work together for the better part of 50 years 
with them because the registrants, the market participants have 
access and intersections with both our markets. They are dually 
registered as advisors for, you know, commodity pools or 
investment pools. They are dually registered as broker-dealers 
or futures commission merchants.
    We have the framework and the foundation to do exactly what 
we have been doing for decades in this space, and I have no 
doubt that we will be able to do it successfully. There is good 
will, good faith. We can get to it. I think ultimately the 
reason why I think it is going to work well and the reason why 
I think it has worked well is most clearly demonstrated in the 
fact that the U.S. has the strongest, deepest, largest capital 
markets and derivatives markets. If we did not do our job well 
from a regulatory perspective in matching these differences, we 
would not have those statistics and that data to support it.
    Senator Hoeven. Are you interfacing now with those other 
agencies that will be involved in the oversight regulatory 
function, and is there a blueprint as to how that interface 
will work? Are there other bills with other committees of 
jurisdiction that you are coordinating with this legislation?
    Mr. Behnam. Senator, I am mostly working--I have the most 
contact with the SEC and Chairman Gensler because of the 
relationship we have through our markets.
    I work closely with all other Federal regulators. Both from 
a professional level, it is important to do it, but through the 
President's Working Group and the Financial Stability Oversight 
Council. We are working on several projects focused on the 
digital asset area. President Biden's EO has forced us, 
thankfully, to work on these issues specifically. We will 
continue to do it.
    We do not have any set structure necessarily now because 
there is a little bit of a vacuum in terms of what regulation 
might look like. We have seen several bills, most notably on 
stablecoin, some on cash markets.
    But this, as I said to Senator Gillibrand, is a step in the 
right direction. It needs to be moved as quickly as possible, 
one piece of the puzzle, but I think as that puzzle becomes 
more clear and we see what the landscape is going to be then we 
will be able to credibly move forward as regulators and lay out 
the plan of how we are going to work together and how we are 
going to put this out in an effective way.
    Senator Hoeven. Who, legislatively, makes sure that that 
package of legislation pulling in, you know, all these agencies 
actually works?
    Mr. Behnam. Senator----
    Senator Hoeven. Who does that versus, you know, various 
committees of jurisdiction, various agencies each kind of doing 
their thing?
    Mr. Behnam. I would say the best blueprint to look at now, 
the most recent one, is Dodd-Frank and after the financial 
crisis. This Committee played the most important and the sole 
role in Title VII, which was the derivatives title, but there 
were multiple titles to the Dodd-Frank bill which affected 
several financial regulators which we work currently with.
    Senator Hoeven. Yes, well, not everybody is a fan of Dodd-
Frank or the CFPB, so I am not sure.
    Mr. Behnam. I appreciate that, but it has been still a 
blueprint of how Congress passes the law, multiple 
jurisdictions, multiple agencies, and then we need to work 
together to implement the law in an effective way with 
appropriate oversight on a continual basis.
    Senator Hoeven. Right. I do think that coordination is 
important to get a--particularly with the complexity of 
cryptocurrency. You know? I mean, we are all still trying to 
understand it. Right?
    Mr. Behnam. Agree.
    Senator Hoeven. One other question. I know the MERC is 
concerned about it, but you know, you have not used the user 
fee concept before. Obviously, that is something we are very 
familiar with because of FDA. You know, I serve on Ag 
Appropriations, so we deal with that all the time. It has good 
aspects, and it has some that are not as good.
    What is your thought on now for the first time actually 
using that user fee concept?
    Mr. Behnam. I think, structurally, it should not be very 
difficult to implement. I think it is critically important that 
the user fee is structured in a way where we have to work with 
appropriators to set the level of what we can assess in terms 
of fees. We will not be able to just assess fees individual or 
independently. We have to work in coordination, which I think 
is consistent with most user fees assessed right now.
    Overall, Senator, I would say it is critically important. 
We will not be able to do the job the bill requires us to do 
unless we have the resources to do it.
    Senator Hoeven. Thank you. Appreciate it.
    Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you very much. Seeing no further 
questions from colleagues for Chairman Behnam, we want to thank 
you very much for joining us today. Look forward to continuing 
to work with you.
    We will take a moment to bring up our witnesses, our second 
panel. We are so pleased that all of you are with us.
    I will indicate that we will see a vote starting shortly, 
which will just mean you will see us coming and going. It does 
not mean that Senator Boozman does not like what you are saying 
or that I do not like what you are saying. We will be going 
back and forth, and probably have other colleagues as well, so 
I do not believe that has started yet.
    Welcome. Appreciate all of you taking the time to be with 
us, and I will begin our introductions.
    First, I want to welcome Todd Phillips, the Director of 
Financial Regulation and Corporate Governance at the Center for 
American Progress, is experienced in both Congress and the 
executive branch, having served as an attorney for the Federal 
Deposit Insurance Corporation and the Administrative Conference 
of the United States and on the staff of the Oversight and 
Reform Committee of the U.S. House of Representatives, so we 
welcome you.
    Sheila Warren is the CEO of the Crypto Council for 
Innovation, a digital asset trade association. Prior to joining 
CCI, Ms. Warren served as the World Economic Forum's Deputy 
Global Head of Data, Blockchain, and Digital Assets, with a 
focus on making the crypto industry more inclusive, equitable, 
and sustainable, so thank you so much for being with us.
    Christine Parker is Vice President and Deputy General 
Counsel for Coinbase, the largest U.S.-based cryptocurrency 
exchange. Ms. Parker recently joined Coinbase from Reed Smith, 
where she was a partner in the Fintech Practice Group and 
before that practiced at Sullivan & Cromwell, and she is no 
stranger to Congress, having worked as counsel to Senator 
Schumer. We will not hold that against you. Welcome.
    Denelle Dixon is the CEO of the Stellar Development 
Foundation, a nonprofit that seeks to create equitable access 
to global financial systems. Before joining Stellar, Ms. Dixon 
was the COO of Mozilla and General Counsel and Legal Advisor in 
private equity and technology.
    I am now going to turn to Senator Boozman for our last 
introduction.
    Senator Boozman. Thank you, Madam Chair. Our next 
bipartisan witness is Dr. Heath Tarbert. Dr. Tarbert is the 
Chief Legal Officer of Citadel Securities, where he is 
responsible for the global legal compliance, surveillance, 
regulatory affairs, and corporate governance functions for one 
of the world's leading market makers.
    Dr. Tarbert served as the 14th Chair and Chief Executive of 
the Commodity Futures Trading Commission and Vice Chairman of 
the International Organization of Securities Commissions. 
During his tenure, the CFTC advanced 41 final rules and 21 
proposals, 90 percent of them on a bipartisan basis. The CFTC 
also set numerous records in enforcement and more than 20 
actions supporting liquidity and orderly trading.
    Before joining the CFTC, Dr. Tarbert was Assistant 
Secretary of Treasury for International Markets and served as a 
Supreme Court clerk, Associate White House Counsel, and Special 
Counsel to the Senate Banking Committee.
    Thank you for joining us, and thank you for all of the 
witnesses. This is just an outstanding panel, so thank you, 
Madam Chair.
    Chairwoman Stabenow. Yes, thank you. Yes. Absolutely, we 
are so pleased you are all here, and we will recognize each of 
our witnesses for 5 minutes. We welcome any other information 
you would like to give to the Committee as well, in writing.
    We will begin with Mr. Phillips. Welcome.

STATEMENT OF TODD PHILLIPS, DIRECTOR, FINANCIAL REGULATION AND 
CORPORATE GOVERNANCE, CENTER FOR AMERICAN PROGRESS, WASHINGTON, 
                              D.C.

    Mr. Phillips. Thank you. Chairwoman Stabenow, Ranking 
Member Boozman, and members of the Committee, thank you for the 
opportunity to discuss the Digital Commodities Consumer 
Protection Act. I applaud your collaboration and the work of 
your staff in its development and am pleased to support this 
bipartisan bill which would provide much-needed regulatory 
oversight of the digital commodities markets.
    In recent years, crypto assets have grown significantly in 
usage and prominence in the economy and culture. The expansion 
can likely be explained not only by the innovativeness of the 
underlying technology but also a general hype and narrative 
that crypto is revolutionizing the financial system. However, 
practices such as market manipulation, ``rug pulls,'' fraud, 
and outright theft plague crypto markets. According to one 
estimate $2.9 billion worth of crypto was stolen in the first 4 
months of 2022 alone. These types of problems pose significant 
risks to retail investors who, in some cases, invest their life 
savings into crypto and might reasonably assume that they are 
protected from these threats by the routine Federal regulations 
that apply to other financial assets.
    One reason these harms occur is because there is a lack of 
Federal regulation for crypto commodities. Crypto assets are 
largely either securities or commodities. If a token is a 
security a plethora of essential investor protections apply. If 
it is a commodity, the CFTC only has limited anti-fraud and 
manipulation authority over it. Because the crypto industry 
maintains that most crypto assets are commodities, issuers, 
exchanges, and depositories are largely not enforcing the 
securities laws' guardrails to protect retail investors.
    The question of whether a crypto asset is a security or a 
commodity is a facts-and-circumstances determination that is 
appropriately left to the courts. I expect many crypto assets 
to be deemed securities and the platforms that list them to be 
subject to SEC rules. However, at least one crypto asset, 
Bitcoin, is a commodity, meaning that the securities laws will 
not apply. Today, Bitcoin accounts for nearly 40 percent of the 
crypto market by volume, and we lack a regulatory regime for 
it.
    Further, although some courts have applied legal tests to 
declare specific crypto assets as securities, the case law is 
in its infancy. If courts deem some or most crypto assets 
commodities, Federal regulators would be hamstrung in their 
ability to regulate them.
    Under these circumstances, the Digital Commodities Consumer 
Protection Act provides a much-needed and right-sized 
regulatory framework for decentralized digital commodities and 
grants the CFTC the desperately needed authority to oversee 
these markets. Here are some of the bill's most important 
provisions:
    First, while the DCCPA grants the CFTC regulatory authority 
over digital commodities, the bill excludes from the definition 
anything that is a security. Existing securities laws would 
appropriately continue applying to crypto assets deemed 
securities with oversight from the SEC.
    Second, the DCCPA would implement consumer protections for 
digital commodities, including prohibitions from trading 
platforms listing assets that are readily susceptible to 
manipulation, from engaging in fraudulent, deceptive, or 
manipulative practices, from trading against their clients or 
insider trading, and more. These are protections that currently 
apply to the securities markets.
    Further, whereas investors in securities have ready access 
to a variety of written disclosures, investors in crypto 
commodities are largely limited to scouring projects' discord 
servers for inconsistent and unverifiable information. To 
address the lack of consolidated disclosures, the DCCPA would 
require crypto commodity platforms to disclose conspicuous and 
plain language information about listed assets to customers.
    The DCCPA would also protect investors by requiring 
platforms to hold customer assets in segregated funds, not 
comingled with the platforms' property, and would update the 
bankruptcy code to better protect platforms' clients.
    Third, the DCCPA would require the CFTC to help address the 
effects of crypto on both climate change and financial 
inclusion. The bill would require the CFTC to examine the 
energy consumption used in connection with the most widely 
traded crypto commodities and publish those estimates. This 
information could help incentivize token issuers to migrate to 
more energy efficient blockchains and miners to utilize cleaner 
electricity as investors migrate their capital following the 
environmental impacts of their investments.
    The bill also would require the CFTC to study the 
participation of historically underserved communities in crypto 
markets and use this information to inform its customer 
protection regulations.
    Although my written testimony contains several suggestions 
for amendments, the DCCPA is a critical step in the right 
direction, and I applaud the Chair, Ranking Member, and 
Senators Booker and Thune for developing this bill. I highly 
support the Digital Commodities Consumer Protection Act, and I 
encourage this Committee and Congress to approve this 
bipartisan bill.
    Thank you. I am happy to answer any questions.

    [The prepared statement of Mr. Phillips can be found on 
page 53 in the appendix.]

    Chairwoman Stabenow. Thank you so much.
    We will now hear from Ms. Warren. Welcome.

  STATEMENT OF SHEILA WARREN, CHIEF EXECUTIVE OFFICER, CRYPTO 
           COUNCIL FOR INNOVATION, SAN FRANCISCO, CA

    Ms. Warren. Thank you. Chairwoman Stabenow, Ranking Member 
Boozman, members of the Committee, thank you for the 
opportunity to testify today on both the tremendous benefits 
and opportunities associated with the adoption of digital 
assets in the United States. I am grateful for the engagement 
leadership shown by so many on this Committee.
    There is a pressing need for regulatory clarity that 
promotes innovation while protecting consumers. The legislation 
being considered today can provide some of the certainty needed 
to help spur international economic growth, create jobs, 
improve financial inclusion, and enhance privacy and security.
    I am pleased to represent the Crypto Council, a global 
alliance of industry leaders across digital assets and the Web3 
space. We use an evidence-based approach to support 
institutions and leaders worldwide who are shaping and 
encouraging the responsible regulation of this innovation.
    Over the past two decades, my time as an attorney, 
entrepreneur, product builder, and NGO executive has focused on 
the intersection of technology, law, diversity and inclusion, 
civil rights, and Web3. Over the 6 years, I have worked across 
16 countries of leaders to advance the responsible and 
inclusive adoption of this new technology.
    Now I see crypto as this generation's best chance of 
addressing inequity in current financial and technical systems. 
Crypto can provide a more equal playing field for people in 
communities that do not have meaningful access to these 
systems. As we shift to a more ownership-based global digital 
economy, the building of an open and transparent regulatory 
framework is crucial. The DCCPA is a pivotal step in achieving 
the clarity and oversight that are greatly needed, and I 
applaud this Committee for its bipartisan work on this 
legislation.
    Crypto improves efficiency and accessibility, reduces 
costs, and removes frictions from financial transactions. 
Cross-border payments underpinned by blockchains could save 
about four billion U.S. dollars a year. For example, 
remittances comprise a $630 billion market globally, with high 
fees of 6 percent according to the World Bank. By contrast, 
crypto service providers can process remittance payments with 
fees of one to three percent, a significant cost savings to 
consumers.
    Crypto also represents an unprecedented opportunity to 
increase financial equity. A Federal Reserve study found that 
nearly 20 percent of Americans have neither access to a bank 
account nor adequate access to financial services through other 
means, and this problem is significantly higher among those who 
are low-income, less educated, or racial minorities. This is, 
in part, because these groups often do not trust traditional 
banks, as a recent FDIC survey found. By contrast, a 2021 
Morning Consult poll found that in the United States 37 percent 
of the underbanked population and 12 percent of people without 
access to financial services reported owning crypto currency. 
An ownership-based model is key to providing meaningful 
opportunities to these historically excluded populations.
    In the case of foreign aid, within days of the invasion of 
Ukraine, crypto was a catalyst and bridge to crucial financial 
support. Roughly $100 million in crypto donations enabled 
purchases of medical supplies and essentials before the bulk of 
foreign aid could arrive.
    The reality is that crypto is global by nature. Simply put, 
other countries are not waiting for the United States to act. 
The European Union recently came to a landmark political 
agreement on their Markets in Crypto Assets package. The United 
Kingdom has set out its plan ``to make the UK a global crypto 
asset technology hub.'' South Korea's Digital Asset Basic Act 
is set to be in shape by the first half of 2023. It is clear 
that China is already poised to leverage its Digital Yuan as a 
tool to achieve its foreign policy goals in emerging markets 
and beyond.
    Relatedly, forward-looking regulation is paramount to 
national security. Financial services have always represented 
an important lever for the U.S. Government, and risks will be 
heightened if U.S. companies become less predominant in this 
space. Proactive policymaking now is critical to maintain a 
competitive position.
    Of course, in an industry this complex, details are 
important. It will be critical to thoroughly study things like 
decentralized finance, or DeFi, prior to including them in 
formal policymaking. It will also be equally important that the 
SEC, as we have heard, act as a regulatory partner to the CFTC 
and that the question, what is a security, is definitively 
answered through the appropriate legislative process.
    I was particularly excited to see the report on 
historically underserved communities and the energy reports 
included in this proposal. I believe the actual facts that 
these reports surface will show that crypto can be a tool to 
support and impact critical policy goals in these spaces.
    Thank you again for the opportunity to discuss these 
important questions. I look forward to answering your 
questions.

    [The prepared statement of Ms. Warren can be found on page 
72 in the appendix.]

    Chairwoman Stabenow. Thank you very much.
    Ms. Parker, welcome.

   STATEMENT OF CHRISTINE PARKER, VICE PRESIDENT AND DEPUTY 
          GENERAL COUNSEL, COINBASE, SAN FRANCISCO, CA

    Ms. Parker. Thank you. Good morning, Chairwoman Stabenow, 
Ranking Member Boozman, and members of the Committee. Thank you 
for inviting me to testify about the Digital Commodities 
Consumer Protection Act and the need for a comprehensive 
regulatory regime for crypto.
    My name is Christine Parker, and I am the Vice President 
and Deputy General Counsel for Regulatory Legal at Coinbase. 
Prior to joining Coinbase, I was a lawyer in private practice 
where I focused on commodities, derivatives, and digital 
assets. I spent years advising clients on the regulatory and 
compliance obligations associated with Title VII of Dodd-Frank 
as well as the Commodity Exchange Act, more generally. I also 
had the pleasure of working for Senate Majority Leader Chuck 
Schumer for five years prior to joining a private practice.
    I believe that we are at a crossroads when it comes to 
crypto. The U.S. Government can either create a regulatory 
framework that embraces the transformative nature of crypto and 
protect consumers or it can impose an unworkable regulatory 
framework that will push technological innovation and the jobs 
of the future overseas, a trend that we are already seeing.
    I would caution members who are skeptical about crypto that 
the second path will lead to the unfortunate reality in which 
retail U.S. investors will continue to access Web3 but will be 
forced to do so through unregulated foreign companies that are 
not obligated to comply with the anti-money laundering consumer 
protection and safety standards that define U.S. financial 
markets.
    As the largest crypto trading platform in the United States 
and the only one that is a U.S. public company, we are 
committed to the first path. That is why we applaud Chairwoman 
Stabenow, Ranking Member Boozman, and the other co-sponsors for 
introducing a bill we believe will create a robust framework 
for the effective regulation of digital assets. I also want to 
thank the staff of the Committee for their hard work and focus 
in solving the technological challenges presented in drafting 
this legislation.
    The current regulatory environment for crypto is complex 
and disjointed. At the Federal level, the government has relied 
on laws that have not kept up with the technology. At the State 
level, laws and regulations for digital assets have emerged in 
recent years with little consistency across jurisdictions.
    The bill amends the Commodity Exchange Act to create a 
much-needed framework for spot markets for digital asset 
commodities. The framework would fill an existing gap in 
Federal oversight and lead to a more consistent consumer 
protection across the country.
    The bill, importantly, draws on the CFTC's existing 
framework for regulating futures and derivatives, which is 
comprehensive and well understood. To that point, I note that 
Coinbase operates a CFTC-regulated DCM, CFTC-regulated 
exchange, and we are hopefully a few months away from operating 
our own CFTC-regulated futures commission merchant.
    The bill defines digital commodities to include, but 
critically, not limited to, Bitcoin and Eth. The bill does not, 
however, cut the Gordian knot as to what is or is not a digital 
asset security. That is one of the fundamental issues that 
remains unsolved today. What is a digital asset? Is it a 
currency, a commodity, a security, all of those, or something 
entirely different?
    At Coinbase, we employ a rigorous listing process to 
determine if an asset is legal, compliant, and secure before we 
list it on our platform. Key to that analysis is whether or not 
the asset has characteristics that would make it a security 
under U.S. securities laws. We have approved and currently list 
219 assets for trading, and we are confident that they are not 
securities. However, this process is not scalable across the 
industry, and it forces Coinbase to reject many assets that we 
might otherwise lawfully be permitted to list.
    We believe the bill could be strengthened by further 
defining digital asset commodities to ensure assets that do not 
meet the definition of securities are regulated by the CFTC and 
not by enforcement through the SEC. We urge Congress to draw 
these distinct lines between the different types of digital 
assets to ensure they are overseen by the appropriate Federal 
regulator. Statutory clarity would help existing and new market 
participants confidently offer new innovations to consumer in a 
safe and reliable way.
    In sum, Coinbase believes the Digital Commodities Consumer 
Protection Act creates a strong foundation for the regulation 
of digital assets. We understand the bill will continue to 
evolve, particularly as the full Senate considers the other 
issues and agencies that intersect with the regulation of 
digital assets, and we will continue working with all 
interested parties to pass a law as soon as possible in this 
important area.
    I look forward to answering your questions.

    [The prepared statement of Ms. Parker can be found on page 
93 in the appendix.]

    Chairwoman Stabenow. Thank you very much.
    Dr. Tarbert, welcome.

STATEMENT OF HEATH TARBERT, PH.D., CHIEF LEGAL OFFICER, CITADEL 
                    SECURITIES, CHICAGO, IL

    Mr. Tarbert. Chairwoman Stabenow, Ranking Member Boozman, 
and distinguished members of the Committee, thank you for 
inviting me. I dealt with digital assets as CFTC Chair, and I 
am here today as Chief Legal Officer of Citadel Securities, one 
of the world's leading market makers. It is great to be back to 
support the Committee's historic work on digital commodities.
    As I see it, the Digital Commodities Consumer Protection 
Act achieves three essential goals.
    No. 1, it addresses a critical gap in the CFTC's 
jurisdiction. While I was CFTC Chair, we brought nearly 20 
crypto-related enforcement cases to protect market integrity, 
but we could not write any rules to stop bad behavior before it 
happened. The CFTC just does not have that authority.
    A number of States have attempted to fill the gap, but the 
patchwork of differing regulatory regimes is simply ill suited 
for a national market. That has, unfortunately, been 
demonstrated by the so called ``crypto winter.'' Many of the 
most vulnerable Americans have suffered massive losses as a 
result of hacks, bankruptcies, and outright fraud.
    This bill addresses that glaring regulatory gap. It would 
grant the CFTC authority to directly regulate digital commodity 
trading. That would help these markets grow responsibly. They 
would have the same kinds of regulatory guardrails that have 
made our other financial markets the envy of the world.
    We at Citadel Securities are proud of our 20-year track 
record of reducing cost, increasing transparency, improving 
resilience, and broadening access in markets here and around 
the world. With rules of the road in place for digital 
commodities, Citadel Securities and other traditional players 
are more likely to get off the sidelines and get on the field. 
They would bring real stability to these markets and replace 
the bucket shops and boiler rooms.
    No. 2, the bill promotes U.S. leadership in digital asset 
markets. It would help Americans by enhancing customer 
protection, focusing specifically on abusive trading practices, 
a lack of transparency, and conflicts of interest. In addition, 
all platforms would be subject to financial and system 
safeguard requirements to improve their resilience, and 
optional self certification of new exchange products would 
encourage responsible American innovation.
    No. 3, this bill is designed to stand the test of time. Let 
us start with the obvious. This is a bipartisan bill, and 
history teaches that laws with broad bipartisan support are 
more likely to weather political change.
    Another enduring feature is the bill's appropriate use of 
principles based regulation. The bill would allow reasonable, 
yet flexible compliance with core principles.
    It would also avoid the loopholes that inevitably come when 
regulations are too detailed to keep up with markets undergoing 
rapid change. Relatedly, the bill would supplement the CFTC's 
new authority with a self-regulatory first line of defense.
    Finally, the bill recognizes the important contributions of 
regulators other than the CFTC. It also will not tie Congress's 
hands on the many other issues digital assets raise for the 
U.S. financial system.
    All in all, this bill is a huge step forward. At the same 
time, I think there are at least three ways the bill could be 
fine-tuned.
    First, the Committee should refine the definitions of 
digital commodity brokers and dealers. This is to avoid 
sweeping in firms that are not considered broker-dealers in 
other well-regulated markets.
    Second, the bill should have safeguards to protect those 
who trade digital commodities that have been self-certified or 
otherwise approved but then are later reclassified as 
securities.
    Third, I recognize that when principles needed fleshing out 
in the past, the CFTC proactively wrote rules or provided 
guidance, but I think Congress should make its intent crystal 
clear that the bill does not grant a license for reactive 
rulemaking by enforcement.
    As the legislation moves ahead, my colleagues and I at 
Citadel Securities look forward to discussing these and other 
aspects of the bill. We also look forward to sharing our 
expertise in improving investor protection, transparency, and 
market resilience.
    Let me end by saying, paradoxically, that 2022 looks a lot 
like 1922. A hundred years ago, this very Committee helped to 
create the Grain Futures Act. Passed in September 1922, it 
established the Grain Futures Commission, an early forerunner 
of the CFTC. The problem then was strikingly similar to the one 
now; futures in wheat, corn, and other grains emerged as a 
truly national financial market, but they were subject to a 
patchwork of conflicting State laws that failed to protect 
Americans.
    The answer then is the answer now: a robust, yet flexible, 
regulatory framework that provides clarity and coherence for 
everyone. I, therefore, applaud the Committee and your staff 
for advancing this critically important initiative and thank 
you so much for having me.

    [The prepared statement of Mr. Tarbert can be found on page 
108 in the appendix.]

    Chairwoman Stabenow. Thank you very much.
    Ms. Dixon, welcome.

 STATEMENT OF DENELLE DIXON, CHIEF EXECUTIVE OFFICER, STELLAR 
           DEVELOPMENT FOUNDATION, SAN FRANCISCO, CA

    Ms. Dixon. Good morning, Chairwoman Stabenow, Ranking 
Member Boozman, and members of the Committee. Thank you for 
inviting me to testify today. I am so honored to be here, and I 
look forward to discussing the Digital Commodities Consumer 
Protection Act.
    My name is Denelle Dixon, and I am the CEO and Executive 
Director of the Stellar Development Foundation. Before I speak 
about the opportunities that are presented by the DCCPA, I 
would like to share a bit more about the Stellar Development 
Foundation and the Stellar Network and, most importantly, the 
real-world solutions built with this technology.
    The Stellar Development Foundation, or SDF, was established 
alongside the Stellar Network in 2014 with the mission of 
creating equitable access to the global financial system by 
using the underlying technology presented by Stellar. The 
Stellar Network is an open, permissionless, decentralized 
ledger, or a blockchain network, optimized for payments and 
asset issuance, particularly useful with stablecoins in 
payments.
    Today, rather than talking about the things that we read 
about in the press with respect to trading or speculation, I 
would like to highlight a payment service that was built on 
Stellar, launched in the dead of the ``crypto winter'' this 
summer. In June, MoneyGram, Circle, and a growing number of 
digital wallets launched a first-of-its-kind global service 
that enables anyone to convert cash to digital assets without a 
bank, without a bank account, and without a credit card.
    This service utilizes the Stellar blockchain and Circle's 
USDC coin--it is a stablecoin--to allow cash funding and payout 
in different currencies all around the world. The Stellar 
Network provides the digital rails to make payments fast and 
secure. USDC provides a truly stable digital asset and while 
MoneyGram provides a global network of cash-in and cash-out 
locations. This is true interoperability with the existing 
financial system.
    In practical terms, what this means is that an immigrant 
farm worker in Michigan or Kansas or California or anywhere in 
the world can send her hard-earned cash to her family and to 
her home country without experiencing outsized fees or 
uncertain wait times. She can walk into a local MoneyGram 
location, typically a supermarket or a pharmacy, with $100 in 
cash, and in minutes, from start to finish, she can convert 
that $100 into virtual dollars in USDC, and that is deposited 
directly into her digital wallet. On the other side of the 
transaction, her parents could visit their local MoneyGram 
location and cash out of their own USDC from their digital 
wallet that she sent to them into their local fiat currency 
when they need that.
    This is available right now and is being used right now. 
This novel service gives neglected, unbanked, underbanked, and 
cash-reliant populations a pathway to enter the digital 
economy.
    Let me turn now to the legislation. The DCCPA goes a long 
way toward allowing the kind of regulatory framework that will 
offer the opportunity for these types of payment services to 
be--to flourish and, also, by identifying the CFTC as the spot 
market regulator. The Agency's history of vetting and approving 
new products demonstrates it is well suited for this type of 
responsibility.
    We also applaud the focus on consumer protection and 
education and its inclusion of the study on energy consumption 
related to digital commodities.
    It is also encouraging to see that this bill sets out a 
process for listing stablecoins and that it is consistent with 
the PWG report with payment stablecoins not being included as 
securities. We agree with that, and they are necessary for 
payments. Rightfully, the DCCPA has defined a digital commodity 
while recognizing the SEC's jurisdiction.
    Unfortunately, it fails to address the fundamental question 
that plagues this industry and has for far too long. When is a 
digital asset considered a commodity versus a security? The 
Howey Test does not include a clear definition, and it was not 
an agency-created rule. The industry desperately needs a 
definition, and the DCCPA is the perfect vehicle for it. Not 
all digital assets are created equal.
    As an example of the challenges we face defining digital 
assets, I reference the Minnesota and Iowa State Fairs in my 
written testimony, which require tickets in order to experience 
the full fair experiences much like you need digital assets to 
engage with particular networks and services.
    We need a practice, principles-based framework that focuses 
on asset functionality. With an appropriate and clear policy 
and regulatory framework, digital assets and blockchain have 
great potential to improve access to financial services for 
millions of people. I believe that the DCCPA is a consequential 
step toward creating this vision.
    Thank you again for the opportunity to testify today.

    [The prepared statement of Ms. Dixon can be found on page 
124 in the appendix.]

    Chairwoman Stabenow. Thank you very much and very much 
appreciate all of these suggestions about further ways that we 
can improve this legislation, so thank you very much.
    Let me start with Mr. Phillips. One of the important goals, 
of course, of the legislation is to make sure that we are 
bringing the trading of digital assets under Federal oversight, 
that we are bringing all of it. We know the Securities and 
Exchange Commission regulates securities, and we want them to 
do that and want them to do their work. Not all, as we know, of 
the digital assets are securities. What are the risks for 
Congress, or what are the risks for consumers, actually, if 
Congress does not pass legislation giving the CFTC oversight 
over digital commodities?
    Mr. Phillips. Yes, thank you, Senator. There are so many 
risks to consumers that, we have seen over the past couple of 
years. Consumers have lost millions, hundreds of millions, 
billions of dollars through scams, through ``rug pulls,'' 
through hacks, and this bill would enable the CFTC to write 
appropriate rules to protect consumers against all of those 
things.
    For example, the access to exchange data feeds would allow 
the CFTC to use technology to find market manipulation and 
enforce its anti-fraud and anti-manipulation authorities. It 
would require platforms to provide appropriate disclosures. It 
would allow the CFTC to write enforceable rules around 
cybersecurity protections for the various platforms. This bill 
would do so much to protect customers, and I appreciate the 
fact that all these provisions are in the bill.
    Chairwoman Stabenow. Thank you very much.
    Ms. Warren, we know that a large number of individuals, as 
you have indicated, including those in historically underserved 
communities, are using and trading crypto right now. Our bill, 
of course, directs the CFTC to study the racial, ethnic, and 
gender demographics of traders--Senator Booker already spoke to 
this--and use data to educate, to really inform around outreach 
and education during--in rulemaking efforts, actually.
    Drawing on your experience in the industry and the 
nonprofit sector, do you have recommendations for the CFTC 
about how to do outreach so that we can really reach all of 
these customers?
    Ms. Warren. I certainly do, Senator, and thank you for the 
question. I think it is critically important to begin with 
community need. I am the co-founder of something, a project 
called the Crypto Research and Design Lab, which uses tech 
ethnography to center these communities that have been 
historically underserved or even fully excluded by formal 
financial and technical systems, to articulate what exactly 
their needs are and how crypto can be a tool of support and 
provide the kind of financial access that they so desperately 
need both for themselves and their families.
    I think it is critical that this kind of analysis inform 
everything from disclosure regimes, which need to be in plain 
language, very clear, so that consumers can make the risk 
assessments that they themselves are best qualified to make in 
determining how crypto can best serve them and their families. 
I think that engaging in factual analysis is critically 
important, but beginning with the communities themselves is of 
paramount importance.
    In addition, I think we need to have education that begins 
focusing on not just crypto itself but on fundamental and 
baseline digital literacy, and that is something I think needs 
to be seen and spread throughout our community college system, 
our post-secondary in general but even in secondary schools, to 
ensure that Americans are prepared for the global digital 
economy regardless of their background and regardless of the 
opportunities they have through being, you know, from wealthier 
families or from higher-income populations.
    Chairwoman Stabenow. Thank you very much.
    Ms. Dixon, colleagues on the House Financial Services 
Committee are working on a bill to regulate stablecoins, as we 
know. How would that legislation interact with our bill giving 
the CFTC the authority to regulate digital commodities?
    Ms. Dixon. Thank you, Senator. It is such a great 
opportunity to be able to have these bills work together.
    Having a clear definition of what truly is a stablecoin is 
so important. We already see in this bill there is a process 
for listing stablecoins, but it is really important because a 
lot of what we read about in the early days of the summer 
focused on things that were labeled stablecoins but not were 
not one-to-one backed with fiat, did not have audit 
requirements, did not have the transparency that we think is 
important not just for American consumers but also for 
businesses who want to leverage these stablecoins, as I 
mentioned in the MoneyGram example.
    Creating that very clear definition of what is a 
stablecoin, holding those assets in a secured financial 
depository account, making sure that you cannot have--that if 
you do have a run on the bank that there is not going to be a 
problem for the constituents that choose to get their money 
out, these are all really, really important pieces that we 
think need to be addressed.
    We see not just the bill in the House but also the proposal 
that Senators Gillibrand and Lummis put together with respect 
to stablecoins and defining stablecoins.
    We would love to see the idea that we continue to have 
innovation in this space, but it is regulated innovation around 
stablecoins.
    Chairwoman Stabenow. Thank you very much. I have numerous 
other questions, but I am going to stop at this point. I am 
going to go and vote and leave the Committee in the capable 
hands of Senator Boozman.
    So, don't mess it up.
    Senator Boozman.
    [Presiding.] I am getting a little responsibility. That is 
great.
    Senator Gillibrand, would you like to go now, or do you 
want to--this is our star pitcher, so we will defer to her.
    Chairwoman Stabenow. That is right.
    Senator Gillibrand. Thank you, Senator.
    Senator Boozman. Would you like to go now and then vote?
    Senator Gillibrand. Yes. Then I will go vote, yes. I 
wanted--Ms. Warren, I wanted to talk a little bit about DeFi 
because this is an area where I think we could improve this 
bill. Right now, for those who are focused on this issue, 
decentralized finance has enormous opportunity to improve 
innovation, to work collectively toward creating more financial 
inclusivity, as many of you have testified about, fewer 
intermediaries, more opportunities of all income levels to 
engage in the financial system.
    While this bill does include decentralized finance in its 
regulatory framework, I do not know that it is being treated in 
the way it would need to be treated to actually continue to 
participate. I want to talk a little bit more, specifically for 
the benefit of the staff who are working on the next iteration 
of this bill, what you would suggest laying out in terms of 
protocols that would apply and map for decentralized finance 
better than the definitions right now that seem to be overly 
broad and encompassing too many things that do not really 
apply.
    Ms. Warren. Thank you, Senator. I agree; I think that the 
definition proposed as now is, frankly, a bit unworkable in 
terms of how DeFi actually operates. I think it is important to 
note that crypto is not a monolith and so DeFi--I have been in 
this space full-time now for almost six years, and DeFi did not 
exist when I entered this space, as a concept. It was brand, 
brand new.
    We are really at a point where the cutting edge of 
innovation is reflected in what we are seeing in this space, 
and the market has not even had time to decide which models 
make sense, let alone settle into parameters and models that 
are consistent across different kinds of offerings and services 
here.
    I echo your sentiment that this is a critically important 
edge for financial inclusion in our system. It is going to 
provide, I believe over time, increasing advantages to those 
who simply cannot access other forms of financial services 
because they have been, again, historically underserved as the 
report that is named in the DCCPA so aptly--it is so aptly 
named.
    I think what is also really important is to ensure that 
DeFi remains in the United States as a locus of innovation. The 
concern that I have, which I have shared with you previously, 
is that we are going to see offshoring of this innovation space 
in a way that, as our colleagues on the panel have noted, is 
going to not embed the principles-based frameworks that are so 
critical to ensure that Americans receive the adequate 
protections that they need and deserve, let alone the global 
citizenry that is going to benefit from this innovation.
    As a general matter, you know, we do recommend that this is 
a space that requires a lot of study and requires a lot of 
focus on what is happening, what is coming, the trajectory 
here, but also a bit more time for the space to settle a bit 
before we try to box it into something that may wind up cutting 
off avenues that could benefit tremendous groups of people.
    Senator Gillibrand. Can you just explain it a little more 
in detail because a lot of people do not understand the 
difference? If you have a DeFi protocol that never takes 
custody of assets, does it need to make sure they are not 
comingled, like a bank or something more in a traditional 
finance basis?
    Can you explain the difference and why these definitions, 
unfortunately, may include and, therefore, exclude DeFi 
entirely? Can you just explain the difference for the 
Committee, particularly for Chairman Boozman and the staff, so 
they understand why it needs a separate study for this part and 
to make sure it is not being excluded?
    Ms. Warren. Swept up, really, in these unworkable 
definitions.
    Senator Gillibrand. Yes.
    Ms. Warren. The way that DeFi works is it is basically an 
immediate pass-through. It enables a precise peer-to-peer 
connection between two parties that are engaging in a 
transaction without a centralized intermediary that is in the 
middle of that. Then it is software, and it is not an entity.
    Senator Gillibrand. Then it is software, and it is not an 
entity.
    Ms. Warren. Exactly right.
    Senator Gillibrand. It is not like a group of people 
managing an organization. It is a software program.
    Ms. Warren. That is exactly right. It is code. It is code 
that is actually governing this exchange. That leads to a lot 
of exciting innovation, but it is also challenging to figure 
out how do you create a framework around that because 
everything that has come before--we have talked a lot about 
1922. This is about as opposite from that kind of model as you 
could get because there is not an entity in the middle of this 
that is directing the flow of funds and pointing, you know, 
things to where they ought to go. It is code that is 
essentially conducting that same service and providing that 
same opportunity.
    We do--it does behoove us, I think, to think very carefully 
about the precedent that is being set when we think about a 
code base that is serving a primary financial service function. 
How ought we to think about regulation there in a way that 
protects consumers but again retains that innovation edge and, 
most importantly, ensures that a principles-based framework 
that is grounded in historical--the U.S. historical approach of 
financial services is underlying all of that?
    Senator Gillibrand. Thank you, Ms. Warren.
    Mr. Phillips, I want to thank you as well for your 
leadership and the work you have done with this Committee and 
with my staff on writing portions of this legislation in terms 
of ideas and thoughtfulness.
    I want to talk a little bit about the issue that people 
have concerns about, about energy use and the way this bill 
will create a study and a protocol to create better disclosures 
perhaps or other recommendations so that the participants can 
make informed choices.
    Can you talk a little bit about how you do that, which 
other regulatory agencies, such as FERC, we may ask for 
information from, and explain how we are doing that and how you 
think ultimately it will help long-term?
    Mr. Phillips. Absolutely, Senator. Thank you. This bill 
would require the CFTC to conduct a study, along with other 
regulators, examining the energy impacts of a variety of 
digital asset commodities. In addition to studying and creating 
recommendations for Congress and the Agency on how to reduce 
those energy impacts, it would also require the CFTC to list 
the energy impacts of a variety of different digital asset 
commodities so that investors can see those disclosures and 
accordingly make investing decisions.
    If there is a token that has an extremely high energy 
impact compared to a similar token, it is reasonable to believe 
that investors would move to the lower energy-intensive asset, 
incentivizing the higher energy ones to reduce their energy 
impacts by moving to a different blockchain or doing something 
else, reducing the overall impact of energy usage in the crypto 
market overall.
    As for other regulators that the CFTC should speak with in 
doing this, I would recommend consulting with FERC, which has 
oversight of the nation's energy markets, the Securities and 
Exchange Commission, which I would want to also examine the 
energy impacts of digital asset securities, and potentially the 
bank regulators and FSOC, who oversee other parts of the 
digital asset markets.
    Senator Gillibrand. Thank you.
    Thank you, Mr. Chairman. I have more questions if you want 
me to filibuster, but if you have questions, your turn.
    Senator Boozman. If you want to ask another question, you 
are welcome.
    Senator Gillibrand. I have one more, yes.
    Senator Boozman. As long as they do not get mad at you over 
on the floor.
    Senator Gillibrand. Hopefully not. One more. Ms. Warren, I 
have one more. I want to talk a little bit about what happened 
after the days of Russia's invasion of Ukraine. People were 
concerned that cryptocurrency would be used by Russian 
oligarchs to evade sanctions, but that actually was not the 
story that we heard. It winded up being a very important 
example of how this industry and blockchain technology can be a 
solution for families, countries, unstable governments that 
need resources, to get them quickly.
    I thought Ms. Dixon made some excellent points about 
remittances and how important that is for world financial 
markets. I care very deeply about access to capital for 
communities that are disadvantaged and are unbanked or 
underbanked and then the banking community does not serve it.
    I would like you to augment Ms. Dixon's testimony and talk 
about some of the really positive stories about how this 
industry and this technology can transform who has access to 
capital at urgent times of need, and I think you can use the 
Ukraine example as one but whatever ones you want to add to the 
record.
    Ms. Warren. Well, I think that is the most acute because I 
think there is really no question--and I do not mean to sound 
dramatic about this. There is really no question we would be in 
a very different situation in that conflict if the crypto 
community had not mobilized in response to a request, a 
specific request, from the Ukrainian government all the way up 
to the President's office, asking for crypto donations to 
bridge and serve as a catalyst while the international 
community could provide the badly needed aid, the billion 
dollars of aid that actually has resulted in where we are and 
the ability of the Ukrainian people to stand up to this brutal 
invasion.
    There is no question crypto was a bridge. It was a 
catalyst. It was essential and critical in order to give the 
international community time to use traditional financial means 
to provide this kind of capital. We know because we can see on 
what is called a block explorer where that money went, who it 
was given to, and also what it was used for. We know based on 
all the accounts that come from the Ukrainian government this 
was medical supplies. It was, in some cases, arms. It was just 
things that were critically, vitally important at that crucial 
time.
    In addition, we have seen crypto be a critical tool for 
activists, those who are working in some cases with the U.S. 
Government against rogue States, to actually provide money, 
whether it is money to get them securely out of a country at 
times when their lives are in political--they are in crisis 
because of political happenings around them. We have seen this 
all over the place.
    We have also seen women in times of trouble, and 
Afghanistan is probably a really great example of this, maybe 
the best, where in a patriarchal society, where when the 
Taliban came in, they were looking to basically seize and 
appropriate funds and the community was using crypto, 
particularly women were using crypto in a way to shield assets 
from that seizure, which is critical and again provided the 
ability for people in that country to resist the authoritarian 
regime that was being pushed upon them.
    Those are examples that I think are located in other 
countries but they are so critical, and they underlie, in my 
opinion, the nature of crypto and why it is so important, to 
your point, in times of crisis.
    The reality is that here in the United States we certainly 
have communities in crisis as well. These may not be the 
examples that are, you know, as popular or as noted because 
they are quieter examples, and they maybe are not as dramatic 
in terms of the opposition that is being faced. Nevertheless, 
there are communities here that also have been unable to get 
access to basic financial services that are turning to crypto. 
The numbers speak for themselves, and we quoted them already.
    Whether or not you are in an acute situation or a crisis, I 
do find that preserving the opportunities that this particular 
innovation represents is of critical importance, and again, 
grounding that in the principles-based frameworks that underlie 
the American financial system are also of critical importance.
    Senator Gillibrand. I just want to thank the entire panel. 
I appreciate your testimony and the information you are giving 
to this panel about the urgency and the importance and the 
benefits of really creating these regulatory frameworks now. 
Thank you so much.
    Senator Boozman. Thank you.
    Mr. Phillips, we appreciate the good work that you and your 
organization are doing in trying to educate the public as to 
what we are trying to accomplish here. This topic is something 
that is anything but easy to understand.
    One of the things that we are hearing is, you know, from 
some of the other consumer advocacy groups is that somehow this 
would erode the SEC's authority to police the crypto market and 
the CFTC is ill prepared to ensure retail consumers are 
protected. Would you agree our bill specifically defers to the 
SEC when it comes to those digital assets deemed securities and 
only looks to provide the CFTC regulatory authority over 
digital commodities?
    The other thing that we are hearing along with that is that 
somehow, you know, they would be underfunded, they would not be 
able to do this. You might, you know, reiterate the importance 
of user fees and that that would be fine.
    Again, like I say, those are two of the major things that 
we are hearing. If you would address that, it would be helpful.
    Mr. Phillips. Sure. Thank you, Senator. This bill, as I 
read it, specifically defers authority over crypto securities 
to the Securities and Exchange Commission and reserves for the 
CFTC authority over those assets that are crypto commodities. 
My understanding is that since introduction there have been one 
or two places where it has been identified that the SEC's 
authority may be impinged, and in my written testimony I make 
recommendations to address that.
    I want the SEC to retain authority over securities----
    Senator Boozman. Right.
    Mr. Phillips [continuing]. and CFTC authority over 
commodities.
    I also think that the CFTC, with this bill, would have the 
regulatory capacity and expertise to be able to address these 
markets. The CFTC is an excellent regulator. The commissioners 
and the Chairman are excellent regulators, and I think they 
have the best interest of customers, crypto customers, in mind.
    As for the underfunding, I think all of our regulators need 
additional resources. I encourage Congress to, if it enacts 
this bill, to also increase the CFTC's budget. I do think that 
the user fees that the CFTC would be able to collect would 
perhaps make it easier for Congress to increase the budget to a 
point where the CFTC can appropriately regulate this industry.
    On the first panel, we heard Chairman Behnam mention that 
he expects that the CFTC would need an increase of $112 million 
over three years. That sounds like an excellent bang for the 
buck to get these assets appropriately regulated.
    Senator Boozman. Very good. Thank you.
    Ms. Warren, I was going to ask you a question about the 
DeFi, but I think, you know, I appreciate the discussion that 
you and Senator Gillibrand, you know, had. Certainly that is 
something that we are very concerned with getting that right, 
so we appreciate that.
    Ms. Parker, your testimony discusses the current regulatory 
framework under which a cryptocurrency exchange operates. 
Please speak about the various State and Federal regulators of 
Coinbase, where there might be gaps particularly relating to 
consumer protection measures, and why it makes sense to provide 
the CFTC with exclusive, mandatory Federal regulation of 
digital commodities as set forth in the bill.
    Ms. Parker. Thanks, Senator. That is a great question. I 
will say there are many State and Federal regulators that 
regulate Coinbase. One of our big challenges is particularly 
with respect to consumer protection, is that it generally falls 
to the State banking regulators under the money transmitter 
licenses to carry that mandate.
    It is not so much that we are unregulated in this space or 
there are gaps in the regulation. It is that it is not 
consistent across States, and in particularly, I would point to 
our disclosure requirements. Each State has its own set of 
disclosure requirements for consumers. Not all are tailored to 
digital assets.
    This bill solves a critical gap in the sense that it would 
bring in a unitary Federal regulator with a consistent--that 
would provide a consistent set of consumer protection 
requirements that would apply equally to all consumers and 
would do so in a way that is tailored to the nature of the 
market and the assets. And you know, the CFTC has been active 
in this space for a number of years, but this regulation fills 
the gap with respect to commodities transactions in the spot 
market. We would certainly welcome, you know, that role for the 
CFTC in this space.
    Senator Boozman. Good. Thank you.
    Dr. Tarbert, your testimony raises an important point, how 
this Committee may provide further certainty to market 
participants who comply with the bill's registration 
requirements for listing a digital commodity but somehow, 
subsequently, run into an SEC threat to reclassify what appears 
to be a digital commodity as a security. How can we address 
that problem?
    Mr. Tarbert. Thank you so much, Senator, and for your 
leadership on this important issue. I think that is really the 
key here. You know, many established market participants in 
other markets, like Citadel Securities, are looking for that 
clarity and coherence. And as you say, one of the issues could 
be if something is reclassified after the fact. We would want 
the kind of certainty that comes through a safe harbor or 
something during the time in which we are trading those 
instruments to be able later on to not face, you know, civil 
litigation, other kinds of enforcement actions for a change by 
the regulator itself.
    Senator Boozman. Very good.
    Ms. Dixon, again, another thing--and this has been 
discussed already, but I think it is important because it does 
come up. It is my understanding the energy consumption required 
for proof of work, consensus mechanism, transaction validations 
can be significant, which is why I am glad our legislation 
looks to study the issue. What is your view on measuring energy 
usage related to various consensus mechanisms in the crypto 
space?
    Ms. Dixon. Thank you so much for the question, Senator 
Boozman, and thank you for your leadership and that of your 
staff on this. The environmental--and what the bill presupposes 
about the study that needs to be done with respect to the 
environmental impact of all the different consensus mechanisms 
is so important. It is something that we do in lots of other 
industries to be able to figure out the benefits and the harm 
that each of the industries or each of the different challenges 
bring to the United States.
    All consensus mechanisms are not alike, but importantly, 
what we can do and what we are hopeful that this study does is 
create a framework for how to measure the carbon output and 
figure out what we need to do as an industry to even further 
improve it. We just saw last night, I think it was at 2:34 a.m. 
in Eastern time, where Ethereum moved from proof of work to 
proof of stake. That was already a momentous shift from that in 
terms of demonstrating the increased sustainability for that 
network by moving to proof of stake.
    I think, again, not all consensus mechanisms are created 
equally, but if we think about a framework, which we have 
done--by the way, we have engaged PWC to create that kind of 
framework to consider how you should--and we have done it with 
respect to the Stellar Network, what pieces of the Stellar 
Network and what pieces of the transaction should be viewed 
when you are looking at the sustainability impact as a whole.
    We welcome that kind of framework. We think that the 
industry needs that to be able to create consistency and to 
understand really, truly, the value and also the potential harm 
and what we can do to improve on it.
    Senator Boozman. Good. Thank you very much.
    Madam Chair?
    Chairwoman Stabenows.
    [Presiding.] Well, thank you very much, Senator Boozman.
    Thanks so much to all of you, and we appreciate your 
testimony and look forward to continuing to work with you, and 
also appreciate so much Chairman Behnam and his leadership at 
the CFTC, which is going to be so critical moving forward.
    We saw last year a lot of volatility in the marketplace, 
and we have a bill that is going to address that, to make 
digital commodities safer for Americans to use and to trade 
and, again, investing in and supporting the innovation and the 
opportunities as well. I think this is a really important 
opportunity for us to move forward, and I am hoping our 
colleagues will join us on this bipartisan bill so we can get 
the CFTC to work.
    Again, thank you.
    The record will remain open for five business days for 
members to submit additional questions or statements.
    Without further comment, the meeting is adjourned. Thank 
you.

    [Whereupon, at 12:28 p.m., the Committee was adjourned.]

      
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