[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.
____________________