[Congressional Record Volume 167, Number 67 (Monday, April 19, 2021)]
[House]
[Pages H1924-H1927]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              ELIMINATE BARRIERS TO INNOVATION ACT OF 2021

  Mr. PERLMUTTER. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 1602) to direct the Commodity Futures Trading Commission and 
the Securities and Exchange Commission to jointly establish a digital 
asset working group, and for other purposes.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 1602

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Eliminate Barriers to 
     Innovation Act of 2021''.

     SEC. 2. WORKING GROUP TO SUPPORT INNOVATION WITH RESPECT TO 
                   DIGITAL ASSETS.

       (a) Establishment.--Not later than 90 days after the date 
     of the enactment of this section, the Securities and Exchange 
     Commission and the Commodity Futures Trading Commission shall 
     jointly establish a working group (to be known as the ``SEC 
     and CFTC Working Group on Digital Assets'') to carry out the 
     report required under subsection (c)(1).
       (b) Membership.--
       (1) In general.--The Working Group shall be composed of 
     members appointed in accordance with paragraph (2).
       (2) Appointment of members.--
       (A) Representatives of commissions.--The Securities and 
     Exchange Commission and the Commodity Futures Trading 
     Commission shall each appoint an equal number of employees of 
     each such Commission to serve as members of the Working 
     Group.
       (B) Representatives of nongovernmental stakeholders.--
       (i) Appointment.--The Securities and Exchange Commission 
     and the Commodity Futures Trading Commission shall each 
     appoint an equal number of nongovernmental representatives to 
     serve as members of the Working Group, except that such 
     number of members may not be greater than or equal to the 
     number of members appointed under subparagraph (A).
       (ii) Required members.--The members of the Working Group 
     appointed under clause (i) shall include at least one 
     representative from each of the following:

       (I) Financial technology companies that provide products or 
     services involving digital assets.
       (II) Financial firms under the jurisdiction of the 
     Securities and Exchange Commission or the Commodity Futures 
     Trading Commission.
       (III) Institutions or organizations engaged in academic 
     research or advocacy relating to digital asset use.
       (IV) Small businesses engaged in financial technology.
       (V) Investor protection organizations.
       (VI) Institutions and organizations that support investment 
     in historically-underserved businesses.

       (C) No compensation for members of the working group.--
       (i) Federal employee members.--All members of the Working 
     Group appointed under subparagraph (A) shall serve without 
     compensation in addition to that received for their services 
     as officers or employees of the United States.
       (ii) Non-federal members.--All members of the Working Group 
     appointed under subparagraph (B) shall serve without 
     compensation.
       (c) Report.--
       (1) In general.--Not later than 1 year after the date of 
     the enactment of this section, the Working Group shall submit 
     to the Securities and Exchange Commission, the Commodity 
     Futures Trading Commission, and the relevant committees a 
     report that contains--
       (A) an analysis of--
       (i) the legal and regulatory framework and related 
     developments in the United States relating to digital assets, 
     including--

       (I) the impact that lack of clarity in such framework has 
     on primary and secondary markets in digital assets; and
       (II) how the domestic legal and regulatory regimes relating 
     to digital assets impact the competitive position of the 
     United States; and

       (ii) developments in other countries related to digital 
     assets and identification of how these developments impact 
     the competitive position of the United States; and
       (B) recommendations--
       (i) for the creation, maintenance, and improvement of 
     primary and secondary markets in digital assets, including 
     for improving the fairness, orderliness, integrity, 
     efficiency, transparency, availability, and efficacy of such 
     markets;
       (ii) for standards concerning custody, private key 
     management, cybersecurity, and business continuity relating 
     to digital asset intermediaries; and
       (iii) for best practices to--

       (I) reduce fraud and manipulation of digital assets in 
     cash, leveraged, and derivatives markets;
       (II) improve investor protections for participants in such 
     markets; and
       (III) assist in compliance with anti-money laundering and 
     countering the financing of terrorism obligations under the 
     Bank Secrecy Act.

       (2) Report limited to sec and cftc authorities.--The 
     analysis and recommendations provided under subparagraphs (A) 
     and (B) of paragraph (1) may only relate to the laws, 
     regulations, and related matters that are under the primary 
     jurisdiction of the Securities and Exchange Commission or the 
     Commodity Futures Trading Commission.
       (d) Nonapplicability of FACA.--The Federal Advisory 
     Committee Act (5 U.S.C. App.) shall not apply to the Working 
     Group.
       (e) Termination.--
       (1) In general.--The Working Group shall terminate on the 
     date that is 1 year after the date of the enactment of this 
     section, except that the Chairman of the Securities and 
     Exchange Commission and the Chairman of the Commodity Futures 
     Trading Commission may, jointly, extend the Working Group for 
     a longer period, not to exceed one year.
       (2) Second report in the case of extension.--In the case of 
     an extension of the Working Group under paragraph (1), the 
     Working Group shall, not later than the last day of such 
     extension, submit to the Securities and Exchange Commission, 
     the Commodity Futures Trading Commission, and the relevant 
     committees a report that contains an update to the analysis 
     and recommendations required under subparagraphs (A) and (B) 
     of subsection (c)(1).
       (f) Definitions.--In this section:
       (1) Bank secrecy act.--The term ``Bank Secrecy Act'' 
     means--
       (A) section 21 of the Federal Deposit Insurance Act (12 
     U.S.C. 1829b);
       (B) chapter 2 of title I of Public Law 91-508 (12 U.S.C. 
     1951 et seq.); and
       (C) subchapter II of chapter 53 of title 31, United States 
     Code.
       (2) Historically-underserved businesses.--The term 
     ``historically-underserved businesses'' means women-owned 
     businesses, minority-owned businesses, and rural businesses.
       (3) Relevant committees.--The term ``relevant committees'' 
     means--
       (A) the Committee on Financial Services of the House of 
     Representatives;
       (B) the Committee on Banking, Housing, and Urban Affairs of 
     the Senate;
       (C) the Committee on Agriculture of the House of 
     Representatives; and
       (D) the Committee on Agriculture, Nutrition, and Forestry 
     of the Senate.
       (4) Working group.--The term ``Working Group'' means the 
     working group established under subsection (a).

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Colorado (Mr. Perlmutter) and the gentleman from North Carolina (Mr.

[[Page H1925]]

McHenry) each will control 20 minutes.
  The Chair recognizes the gentleman from Colorado.


                             General Leave

  Mr. PERLMUTTER. Mr. Speaker, I ask unanimous consent that all Members 
have 5 legislative days within which to revise and extend their remarks 
on this legislation and to insert extraneous material thereon.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Colorado?
  There was no objection.
  Mr. PERLMUTTER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 1602, the Eliminate Barriers 
to Innovation Act of 2021.
  Digital assets are a fast-growing but poorly understood area of 
finance and technology, and I believe this bipartisan legislation will 
help Americans, small businesses, fintechs, and financial institutions 
using digital assets to better understand the legal and regulatory 
landscape.
  Last Congress, the Committee on Financial Services established the 
Task Force on Financial Technology, which was chaired by Congressman 
Lynch, who is co-leading this bipartisan bill with Ranking Member 
McHenry. I thank both of them for their hard work on this legislation.
  We must look carefully and diligently at how digital asset markets 
are used, as they present unique challenges to regular retail 
investors.
  Cryptocurrencies, security tokens, and other digital assets, 
including those utilizing blockchain and distributed ledger technology, 
are new technologies. How we regulate investment in them will be one of 
the most important questions in the financial services space.
  If digital assets are used by retail investors, we must ensure these 
products provide adequate protections, disclosures, and notifications 
to make sure ordinary investors are not defrauded or have their 
household finances ruined due to excessive volatility.
  This is especially important during this unprecedented COVID-19 
crisis, with many people struggling financially and possibly drawn to 
risky investments or scams.
  This bill would require the Securities and Exchange Commission and 
the Commodity Futures Trading Commission to establish a working group 
on digital assets. The working group will investigate the legal and 
regulatory framework and best practices related to digital assets. The 
working group will report to Congress on its findings to help this body 
and the public better address these evolving markets.
  I thank Representative Lynch and Representative McHenry for their 
thoughtful and bipartisan approach to this legislation, and I look 
forward to the work of the SEC and the CFTC on this important issue.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McHENRY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of my bill, the Eliminate Barriers to 
Innovation Act. This a bipartisan bill that addresses the much-needed 
collaboration between the Commodity Futures Trading Commission and the 
Securities and Exchange Commission.
  What we have is a regulation of commodities through one entity of our 
Federal Government here in the United States and regulation of 
securities by another entity of our government. What we need is 
conversation between those two entities about the nature of digital 
assets and cryptocurrencies.
  We have neither a security nor a commodity in what is a new creation 
of digital assets. Now what we see with the CFTC is that everything is 
a commodity in their worldview, and the Securities Exchange Commission 
thinks: Well, you are close. Everything is actually a security.
  They each want to regulate something that is not in their nature to 
regulate or not in the substance of their capacity to regulate. We have 
neither fish nor fowl, neither security nor what the Commodity Futures 
Trading Commission wants to regulate in their world. So, you have 
neither fish nor fowl when it comes to this new creation of 
cryptocurrencies.
  The fact is that the ``Bitcoin Whitepaper,'' written by Satoshi 
Nakamoto, as they call themselves, is more than a decade old. What we 
have seen in that time period is the valuation of bitcoin, and then 
things that are like bitcoin that use an encrypted ledger system in the 
blockchain and tokenization to open up the value of that new creation 
of a blockchain, that new creation of cryptocurrencies is now valued 
over $2 trillion globally.
  Most of that innovation has happened outside of the United States 
because we don't have a legal and regulatory framework that is 
permissive of the raising of capital in order to develop those 
technologies. So, people in the United States, American citizens, are 
missing out on innovation and the potential economic upside of those 
innovations.
  I would say this is one of the few pieces of technology in the last 
100 years that Americans have not been the drivers of. In fact, we are 
reacting a lot to what is happening globally.
  I thank my colleague, Mr. Lynch, for his thoughtful engagement on 
this bill and his important structural changes to make sure this can be 
a bipartisan bill. Those conversations really are that balance between 
economic opportunity and growth that a lot of us on the Republican side 
want to emphasize at all costs, frankly, and then the protection of our 
citizens that some on the left want to have at all costs.
  Mr. Speaker, striking that balance is really necessary for us as 
legislators. Let's just be pragmatic and honest about it. Mr. Lynch has 
brought some nice changes to this bill that actually will enable it to 
be a bipartisan vote, I hope.
  Mr. Speaker, what this bill does, with our colleagues from the House 
Committee on Agriculture, is it requires the Securities and Exchange 
Commission and the Commodity Futures Trading Commission to establish a 
working group focused on digital assets. This is the first step to 
opening the dialogue between our regulators and market participants and 
will move to much-needed clarity.

  The fact is that this working group will produce a report within a 
year that includes an analysis of the domestic regulatory framework 
necessary for the development of cryptocurrencies and digital assets 
here in the United States. It is really important that we get our act 
together, that we be technology-permissive, that we ensure that it is 
legitimate money raised here, that our existing laws are adhered to, 
but that we adapt and change and don't allow the debate between the 
CFTC, which sees everything as fish, and the Securities and Exchange 
Commission, which sees everything as fowl.
  When we look at this new entity, which is neither fish nor fowl, we 
have to have a small regulatory framework for that.
  Mr. Speaker, I urge my colleagues to support this bill, and I reserve 
the balance of my time.
  Mr. PERLMUTTER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Massachusetts (Mr. Lynch).
  Mr. LYNCH. Mr. Speaker, I thank the gentleman from Colorado for 
yielding.
  Mr. Speaker, I rise to speak in support of the Eliminate Barriers to 
Innovation Act. It has been 12 years since the cryptocurrency bitcoin 
was first introduced. Since then, digital assets have proliferated 
around the world. By one estimate, there are more than 4,000 
cryptocurrencies and other digital tokens in use today.
  While we haven't yet encountered a large-scale crisis, the lack of 
clarity in cryptocurrency regulation has become a real barrier in 
developing a framework to optimize the potential benefits of this 
technology.
  U.S. financial regulations historically have been developed in 
response to financial disasters. We had the creation of the FDIC, which 
followed over 1,000 bank failures during the Depression. Similarly, the 
development of the CFPB occurred after the 2008 financial crisis.
  This bill, H.R. 1602, is an opportunity for Congress and our 
regulators to act proactively toward financial innovation rather than 
to address gaps in our regulatory framework after the fact. Digital 
assets have the potential to make transactions more efficient, improve 
the raising of capital for small businesses, and increase inclusion 
across our financial system. However, the rapid rise of this technology 
has

[[Page H1926]]

created some concerns and questions about consumer protection and about 
how to ensure that we gain the benefits of this innovation while 
mitigating potential risks.
  This bill, H.R. 1602, will create critical collaboration between the 
SEC, the CFTC, and Congress on the topic of digital assets. It will 
bring our regulators, small businesses, fintech companies, and investor 
protection groups to the same table to discuss cybersecurity investor 
protections and the creation of inclusive and transparent markets. In 
short, our hope is that this bill will help get the regulatory 
framework of digital assets right before a crisis occurs.
  Mr. Speaker, I thank the ranking member, Mr. McHenry, for working on 
this bill and also Chairwoman Waters for her support.
  Mr. Speaker, I urge my colleagues to vote ``yes.''
  Mr. PERLMUTTER. Mr. Speaker, I know the gentleman will forgive me, 
but I listed a lot of people on the SAFE Banking Act that I want to 
thank. One person who I forgot, and I would be remiss, is Mr. Denny 
Heck, who is now Lieutenant Governor of Washington and who was also 
instrumental in putting that together.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McHENRY. Mr. Speaker, I concur that our colleague, Mr. Heck, was 
instrumental in these debates. I miss his lively debates in committee 
markup, but, frankly, given the sick burns he has given me there, I 
think I am better off with him as Lieutenant Governor. But I concur 
with the gentleman from Colorado (Mr. Perlmutter).
  Mr. Speaker, I yield 2 minutes to the gentleman from Pennsylvania 
(Mr. Thompson), the ranking member of the Committee on Agriculture.
  Mr. THOMPSON of Pennsylvania. Mr. Speaker, I thank the gentleman for 
yielding.
  Mr. Speaker, I rise today to express my support of the Eliminate 
Barriers to Innovation Act offered by my friend from North Carolina and 
the ranking member of the Committee on Financial Services, Mr. McHenry.
  The CFTC and the SEC have a long history of collaboration in 
financial market regulation. The working group created through this 
legislation will continue to build on this good work.
  Digital assets present unique new questions for regulators: How and 
where do these assets fit into the existing regulatory regime? What new 
standards are needed to continue to meet our bedrock principle of 
customer protection? Where do the CFTC and the SEC need to adjust their 
regulations to address the novel features and purposes of digital 
assets?
  While both the CFTC and the SEC are hard at work applying their 
statutory responsibilities and regulations to these digital assets, the 
disruptive, novel nature of these new type of assets demand a more 
holistic examination. This working group, with its mix of CFTC, SEC, 
and nongovernmental members, will be well placed to examine these 
important questions.
  The Eliminate Barriers to Innovation Act is a step forward in 
providing clear rules of the road for the creation, exchange, custody, 
and use of the full sweep of these new assets.
  Mr. Speaker, I thank the ranking member, Mr. McHenry, and his staff 
for working with us at the House Committee on Agriculture on 
refinements to improve this legislation.
  I cannot close, though, without singing the praises of the CFTC. The 
Commission has been focused on this explosion in new technology from 
the very beginning. The Commission created LabCFTC almost 4 years ago, 
and it remains the premier Federal fintech office.
  They have proven themselves to be an agile regulator and adept at 
understanding new technologies and their implications. The Committee on 
Agriculture has welcomed these developments and sought to strengthen 
the CFTC's authorities and resources to meet the challenges in 
regulating these new financial products. The bill before us today 
complements these efforts.
  Mr. Speaker, I look forward to working with Mr. McHenry and 
Chairwoman Waters on this and other legislation and oversight to build 
upon this work. I urge my colleagues to support financial innovation 
and vote ``yes'' on this important legislation.

                              {time}  1715

  Mr. PERLMUTTER. Mr. Speaker, I have no further speakers, and I 
reserve the balance of my time.
  Mr. McHENRY. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Minnesota (Mrs. Fischbach), a member of the House Agriculture Committee 
and a leader on agriculture issues.
  Mrs. FISCHBACH. Mr. Speaker, I thank my colleague from North Carolina 
for yielding to me.
  Mr. Speaker, I rise today in support of the Eliminate Barriers to 
Innovation Act. As the ranking member of the Commodity Exchanges, 
Energy, and Credit Subcommittee, I am looking forward to digging in on 
the many issues surrounding digital assets, particularly digital 
commodities.
  Digitally native assets represent a new way for people to interact 
with each other and potentially organize productive activities. 
Whatever promise this innovative technology may hold, it will not be 
realized if it is subjected to outdated and unworkable regulations.
  One of the great strengths our financial system in the U.S. has is 
that the rules are well-formed, longstanding, and fit for purpose. 
While we may argue about the details, the basic principles of the U.S. 
financial markets, and the rules which apply to legacy assets, are well 
understood.
  Digital assets, on the other hand, present new challenges. While the 
principles won't change, the rules that bring those principles into 
effect may have to change.
  This working group will give the CFTC, the SEC, and the market 
participants a critical venue to examine those principles and bring 
needed clarity to the application of existing rules on digital asset 
transactions.
  Mr. Speaker, I urge my colleagues to support this bill.
  Mr. PERLMUTTER. Mr. Speaker, I reserve the balance of my time.
  Mr. McHENRY. Madam Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I thank my colleague, Mr. Lynch, for his leadership on 
this important issue and the issues of financial technology.
  Frankly, one of the healthier conversations we get to have on the 
Financial Services Committee is on the nature and the deployment of the 
technology. It is neither the pure conversation of less or more 
regulation. It is a completely different scope of what we are doing in 
terms of laws that ensure that we have financial inclusion and allow 
offers for products to be cheaper, more affordable, and more widely 
distributed across the country. So I think this is a healthy thing for 
us to have this conversation on the Financial Services Committee.
  This bill today is an important working group between the CFTC and 
the Security and Exchange Commission. That conversation between these 
two agencies, I hope, will bring us a new permissive regulatory 
framework for digital assets here in the United States and allow for 
the wider deployment and development of cryptocurrencies and all the 
technologies that are underlying those cryptocurrencies, those huge 
opportunity sets for American consumers in the development of these new 
assets in this first generation, but also the wire deployment of these 
technologies, whether it is in driverless vehicles or in the nature of 
how we interact with each other in the financial markets.
  There are huge opportunities around digital assets, and this is the 
first step in Congress having a smart regulatory framework here in the 
United States for digital assets.
  Mr. Speaker, I urge the adoption of the bill, and I yield back the 
balance of my time.
  Mr. PERLMUTTER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I commend Mr. McHenry and Mr. Lynch for their bipartisan 
work on this legislation directing the SEC and the CFTC to work 
together with all relevant stakeholders to study the use of digital 
assets.
  The working group created by this legislation will, undoubtedly, 
benefit the American public on this important topic.
  Mr. Speaker, I urge all Members to support this legislation by voting 
``yes'' on this bill, and I yield back the balance of my time.

[[Page H1927]]

  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Colorado (Mr. Perlmutter) that the House suspend the 
rules and pass the bill, H.R. 1602.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. BISHOP of North Carolina. Mr. Speaker, on that I demand the yeas 
and nays.
  The SPEAKER pro tempore. Pursuant to section 3(s) of House Resolution 
8, the yeas and nays are ordered.
  Pursuant to clause 8 of rule XX, further proceedings on this motion 
are postponed.

                          ____________________