[Congressional Record Volume 170, Number 91 (Friday, May 24, 2024)]
[Extensions of Remarks]
[Pages E561-E562]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      FINANCIAL INNOVATION AND TECHNOLOGY FOR THE 21ST CENTURY ACT

                                 ______
                                 

                          HON. BETTY McCOLLUM

                              of minnesota

                    in the house of representatives

                        Wednesday, May 22, 2024

  Ms. McCOLLUM. Mr. Chair, I rise in opposition to H.R. 4763, the 
Financial Innovation and Technology for the 21st Century Act.
  While I am opposed to this bill, I am not opposed to the concept of 
crypto itself. But I have concerns about how crypto is currently 
regulated and believe that H.R. 4763 falls short of creating an 
effective regulatory framework. H.R. 4763 would also result in the 
massive deregulation of the securities market, not just for crypto but 
for traditional securities as well. This deregulation would remove 
protections provided by existing securities law to protect crypto 
investors and consumers and remove disclosure requirements that are 
designed to help investors make informed decisions. Additionally. H.R. 
4763 would preempt state laws, disarming state regulators in Minnesota 
who are often on the frontlines against fraud.
  H.R. 4763 lacks necessary protections for crypto consumers and 
investors. As of today, the crypto asset industry does not comply with 
existing securities laws and regulations, allowing consumers to be 
defrauded. In fact, the Consumer Financial Protection Bureau (CFPB) 
received more than 8,300 complaints related to crypto between 2018-
2022. Roughly forty percent of those complaints were reporting frauds 
and scams. This bill will only exacerbate this issue. We must reject 
H.R. 4763 and work to create a regulatory framework that will protect 
everyday investors and consumers.

[[Page E562]]

  Crypto is the currency of choice for our foreign adversaries, 
terrorist groups, drug and human traffickers, child sex abusers, and 
ransomware attackers. These bad actors chose to use crypto because they 
know the industry does comply with securities laws and regulations, 
allowing the groups to circumvent regulatory, supervisory, and 
enforcement regimes. Congress should be considering legislation that 
will make it harder for these bad actors to access currency, not 
allowing loopholes to persist. We must ensure to be sure that crypto is 
not used as the black market for bad actors.
  Crypto asset platforms, where customers buy and sell crypto assets, 
are known to use vertical product and service integration, creating 
conflicts of interests for the platforms. Some crypto asset platforms 
blend exchange, brokerage, market making, and clearing agency functions 
in their platform. This vertical integration of products and services 
has long been prohibited in traditional markets because it leads to 
risks for investors. We saw this loophole exploited in 2022 when FTX's 
CEO, Sam Bankman-Fried, used its affiliated trading firm, Alameda 
Research, as a market maker, allowing FTX to transfer billions of 
dollars in customer accounts to Alameda. Sam Bankman-Fried is now 
serving a 25-year prison sentence for defrauding consumers. H.R. 4763 
bakes in these existing conflicts of interest, allowing crypto asset 
platforms like FTX to continue to work against their customers' best 
interest for their own gains.
  Rather than putting forward a bill that would severely undermine the 
functioning of our capital markets, Congress should instead consider a 
comprehensive regulatory framework for crypto that will promote the 
responsible development of these digital assets while protecting 
American consumers and investors. I urge my colleagues to reject H.R. 
4763.

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