McCollum Vote on H.R. 4763
Ms. McCollum: Mr. Speaker, 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.
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.
Thank you, and I yield back.