U.S. House of Representatives Republicans are forging ahead with legislation to establish regulations for U.S. crypto markets, dissecting that effort in a pair of hearings on Wednesday, but Democrats insist the complex bill is hurried, flawed and fails to address a chief complaint: their accusations that President Donald Trump is engaged in crypto corruption.
The House Financial Services Committee and House Agriculture Committee both examined the changes contemplated by Digital Asset Market Clarity Act, with witnesses in the financial committee including two former chairmen of the Commodity Futures Trading Commission and a former acting chairman of the Securities and Exchange Commission.
Republican lawmakers praised the bill as an urgently needed, long-awaited answer to both the digital assets industry’s desperation for clear rules and also to the concerns that crypto innovations will continue to flee overseas if the U.S. fails to match the regulatory work that’s moved far ahead in other jurisdictions, including in Europe and Asia.
“This is the future, and we better get our act together,” said Representative Bill Huizenga, the vice chairman of the House Financial Services Committee, who argued the status quo is offering consumers zero protections.
Crypto bills in both the House and the U.S. Senate in this and the previous congressional session have cleared multiple voting tests to demonstrate significant bipartisan support. However, Democratic lawmakers who have been among those yes votes in committees and on the House and Senate floors have suggested that the potential conflicts-of-interest demonstrated in President Donald Trump’s personal crypto business interests must be addressed to maintain that support.
Representative Jim Himes, a Connecticut Democrat who was once a banker at financial giant Goldman Sachs Group Inc., said he’s in that category.
“The way to deal with the Trump stuff is to make sure that this bill has — literally — platinum consumer protections,” he said, citing money-laundering constraints and also conflict-of-interest language for public officials. “I will not vote yes on this thing unless it does.”
Democrats have openly accused Trump of corruption in his crypto dealings, in which he and his family are reportedly collecting millions in profits and fees from the industry — including anonymous foreign investors — as the federal government debates how to regulate those same activities the Trumps are involved in.
Almost all the Republicans on the financial-services panel maintained a distance from the Democrats’ chief complaint, only mentioning Trump’s name when praising his administration for its crypto support. Then Representative Andy Barr of Kentucky leapt into the fray directly, admonishing the Democrats’ “carelessly thrown-out accusation and this baseless politically motivated attack against President Trump.”
“They know that the president’s assets are in a blind trust managed by his children who are not members of the administration,” Barr contended, though blind trusts are formal agreements that leave their beneficiaries with no knowledge of their investments — not a description of Trump’s relationship with his family business. The lawmaker said the Democrats’ opposition is “about them opposing American leadership in crypto.”
Himes criticized Barr’s “ill-advised and cheap shot that we are engaging in politics.”
Democrats also raised other issues with the 236-page Clarity Act, arguing that they haven’t had enough time to get a handle on the hugely complex legislation, that it doesn’t focus enough on protections for consumers, falls short on dealing with crypto in illicit finance and potentially leaves loopholes for existing securities firms to use the new rules to dodge regulation.
“On the one hand, we’re trying to protect people investing in crypto, but on the other hand, we’re doing things that may undermine protections in our traditional securities markets,” said witness Timothy Massad, a former CFTC chairman who now focuses on digital assets at Harvard University’s Kennedy School of Government.
“We must not screw up existing securities regulations or standards,” Himes said, asking why the bill’s special securities-regulation exemptions for certain investment contracts for digital commodities need to exist, arguing that the legislation’s exemptions might be abused by sophisticated securities lawyers.
But committee Chairman French Hill argued this bill is “more robust” on consumer and market protections than the predecessor legislation in the last session, which drew yes votes from 71 Democrats in the House.
While the House may be able to more easily advance controversial legislation, the Senate generally requires wide bipartisan support to clear its particular hurdles. So, Democrats there must be on board before the market structure bill can become law.
Next week, the Clarity Act may get a markup in Hill’s committee — a formal session in which legislation is debated and amended before potentially being advanced to the overall House. The financial services panel’s ranking Democrat, Representative Maxine Waters, said on Wednesday that this next stage could come on June 10.
Read More: U.S. House Republicans Officially Introduce Crypto Market Structure Bill
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