[Congressional Record Volume 169, Number 21 (Wednesday, February 1, 2023)]
[Senate]
[Pages S183-S184]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             CRYPTOCURRENCY

  Mr. DURBIN. Mr. President, before he leaves, let me commend my 
colleague from Louisiana. His role as a substitute teacher is one I 
greatly admire.
  I thank you for sharing that with us today. I am sure it gives you 
great insight into education--greater than some--and I am going to 
accept your challenge and try to find a way to be a substitute teacher 
myself along the way, if they will have me. But thank you for that 
statement.
  It has been almost 100 years since the Great Depression. It was a 
terrible time in American history. Businesses failed right and left. 
Families lost all of their savings. There were runs on banks, 
businesses failing. It was a horrible moment.
  Luckily for us, the leadership of Franklin Roosevelt appeared in 
1933, when he was sworn in as President of the United States, and we 
made some significant basic changes. One of them we still benefit from 
today: Federal deposit insurance.
  If you go to a recognized legal bank in America, a regulated bank, 
under our Federal guidelines, there is an insurance policy that says 
that even if this bank goes bust, we are going to be there to protect 
much of your savings, maybe all of them, depending on how much you have 
invested in that bank.
  We were tested during the savings and loan crisis a few decades ago, 
and we kept our promise. We paid people back when the savings 
institutions they were invested in failed.
  But there are areas where you can invest your own personal savings 
where there is no insurance policy. You are on your own. The stock 
market is one of them.
  By and large, when you buy stock, if you don't make money on it, that 
is your personal loss. But even when it comes to the stock market, the 
companies that are in that stock market doing business in America are 
largely subject to regulation. So we know, at least, that the books 
they are presenting have to be legal and be accurate in their 
disclosures. It is just the basics of government regulation.
  However, there are some areas where you can bet your money or invest 
your money where there is no protection and no regulation. I want to 
speak to one of those areas at this moment. This area has been called 
the ``new money,'' ``digital cash,'' and some have called it ``the way 
of the future.'' I have another name for it: reckless, predatory, 
foolish, and dangerous. I am referring, of course, to cryptocurrency, 
the latest scam to rip off millions of hard-working Americans to the 
tune of billions of dollars.
  In under a decade, this industry has skyrocketed in popularity, raked 
in big bucks for its leading speculators, before exploding into dust 
for all the world to see.
  Let me tell you about crypto's terrible, horrible, no-good, very bad 
year--2022. Let's start with the most popular cryptocurrency, Bitcoin. 
In 2022, the currency cratered, losing more than 60 percent of its 
value in 1 year.
  To put it in perspective, if you bought one Bitcoin at the start of 
2022 and held on to it today, you would be down $25,000. Think of all 
the Americans who could have held on to that cash for family needs or 
to cover a downpayment on their first home. Their money is gone. There 
is no insurance. It is just an investment that disappeared.
  They are not alone. The disaster began last May with a financial 
meltdown known as ``crypto winter.'' If you are one of the millions of 
consumers--millions--who were convinced by those well-respected 
financial advisers--Matt Damon, Larry David, and LeBron James--to buy 
into crypto, you don't need me to tell you what happened next.
  In a matter of months, more than $2 trillion vanished from this 
industry. One crypto firm after another folded. Even a so-called 
``stablecoin,'' which claims to offer great stability, went bust.
  Then, in the fall, came the mighty collapse of the exchange FTX. Its 
founder, Sam Bankman-Fried, spent years cultivating the reputation of a 
selfless wunderkind and entrepreneur. He claimed crypto and the FTX 
platform would democratize finance, that he was giving a leg up to the 
little guy, finally, and sticking it to the barons of traditional 
finance.
  It was all a lie. While Sam Bankman-Fried was burning millions of 
dollars branding himself as some noble disruptor, the reality is he was 
stealing his own users' money to fund his own risky bets.
  Here is the worst part. For Americans who were scammed into investing 
in FTX, there is little hope of retrieving any of their money.
  Earlier this week, Annie Lowrey wrote a piece in The Atlantic, 
sharing the story of one FTX user whose money was stolen. His name was 
Greg Sanders. Greg has actually been a crypto investor for quite a 
while, a pretty vigilant investor too. He even protected his assets 
with a technique he calls ``cold storage.''
  So Greg knew about the risk with trading crypto. He knew those assets 
were loosely regulated, if regulated at all, and he knew about the 
volatility of the market. But Greg never expected that the company he 
trusted to safeguard his money would end up stealing it. He lost nearly 
$10,000 when FTX collapsed, and, like millions of others, he hasn't 
gotten any money back.
  Here is what he said about his experience: ``FTX was legitimized in 
the public eye . . . I saw the Tom Brady commercials,'' Greg said. ``I 
saw the Major League Baseball umpires'' with FTX's name on their 
uniforms. ``Its name was on the Miami Heat arena. There was so much 
legitimatization from the public, and it lent credence to the idea that 
this was a safe place,'' to put your money.
  Thankfully, Greg says he will be OK. He has a good-paying job and 
enough money saved to pay his bills.
  But stop for a second and think about Americans who are not that 
lucky.

[[Page S184]]

More than half of our Nation's families cannot afford a $1,000 
emergency, and those same families, who struggle to make ends meet, 
have been targeted by the crypto ad campaigns Greg mentioned.

  In fact, leaders of the crypto industry have explicitly marketed 
their products to unbanked and underbanked Americans, those who do not 
have access to traditional financial services.
  Now, this is a problem that disproportionately affects Black and 
Brown Americans, who have historically been outside the financial 
system. So along comes crypto and its leading fabulists, like Sam 
Bankman-Fried. These grifters cloak themselves in the language of 
inclusion and accessibility, promising that crypto is open to everybody 
and operates ``without discrimination.''
  Well, in a way, they are right. When the crypto industry melted down, 
everybody got hurt, especially all of the Black and Brown Americans, 
who were more likely than White Americans to invest in crypto. It seems 
the cynical ad campaigns worked.
  So as a new year begins, where do we stand with crypto? The industry 
is hoping the dust will settle, that things will quiet down. Maybe it 
will even blow over, and everybody will forget the damage of 2022.
  Guess again. Our Federal regulators are coming to life, and they are 
bringing down the hammer on crypto.
  I want to commend Securities and Exchange Commission Chair Gary 
Gensler. He is doing his part to protect the integrity of our capital 
markets and to hold bad actors accountable. In the past month alone, 
the SEC has filed charges against two major crypto companies for 
burning their investors.
  And there are other cops on the beat too. On Friday, the Federal 
Reserve rejected an application from a crypto company called Custodia 
for a deposit account at the central bank and denied its request to 
become a member of the Federal Reserve System. In denying the 
application, the Federal Board wrote that Custodia ``proposed to engage 
in novel and untested crypto activities . . . on open, public and/or 
decentralized networks.''
  As we have learned, that would be a recipe for disaster. So I am glad 
both the Fed and the SEC, among others, are working to insulate our 
broader financial system and protect investors from the instability of 
crypto.
  But, now, it is time for wiser minds in finance to come to their 
senses, and it starts with Fidelity. To think the crypto industry has 
entranced one of the largest 401(k) providers in the world is shocking. 
Yet that is exactly what happened.
  This past summer, Fidelity announced it would allow retirement plan 
sponsors to offer plan participants exposure to Bitcoin.
  Remember, Bitcoin alone lost more than 60 percent of its value last 
year. Now imagine if your 401(k) lived or died by the value of Bitcoin. 
That is unacceptable for 40 million Americans who invest with Fidelity, 
and I am one of them. Many of them are relying on those investments to 
retire in dignity.
  So that is why last year I sent a letter, along with Senators Warren 
and Smith, to Fidelity CEO Abigail Johnson. We respectfully asked her 
to reconsider this ill-advised decision on crypto.
  We received a response in which Fidelity said: ``respectfully 
disagree[d] with the assertion that bitcoin cannot meet the higher 
standards applicable to retirement accounts.''
  So after the collapse of FTX, I thought: Let's send another letter to 
Fidelity and see if they have a change of heart.
  We figured that at least diversifying from crypto would be a no-
brainer at that point. Apparently not, because we still haven't 
received a response.
  Hard-working Americans who entrust Fidelity with their retirement 
savings expect more. They deserve better than Ponzi schemes and endless 
volatility. The financial future and stability of millions of their 
customers--and many others--is on the line. It is time to do the right 
thing and be honest about cryptocurrency. There should be more 
transparency, accountability, and enough regulation so that we know 
they are telling the truth.
  And let me close with one point. I was at a hearing with the 
Agriculture Committee where we were discussing the issue from a 
different perspective, whether Bitcoin and similar objects were 
commodities, subject to regulation by the Commodity Futures Trading 
Commission, an Agency I know well from the financial industry in 
Chicago.
  I left that hearing after some critical remarks about cryptocurrency, 
and a reporter stopped me in the hall, and she said to me: How much 
money have you received in political contributions from FTX?
  I said: None.
  She said: You are wrong. Look again.
  I looked. It was over $7,000--money that I did not solicit but banked 
not knowing what was behind that money. We have given that money to 
charity, as you might expect.
  But they have more friends in high places than they have really good 
arguments for their product.
  I think that we have got to be thoughtful and mindful as politicians 
that this industry has a lot of money riding on this bet, and we have 
got to be careful that we don't become so beholden to them that we lose 
our clear-eyed look at an entity that has hurt so many people already 
and is likely to do more in the future.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut.

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