Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, delivered the following testimony in front of the House Rules Committee to strongly oppose three deeply flawed Republican crypto bills, including H.R. 3633, the “CALAMITY Act,” S. 1582, the “UNSTABLE Act,” and H.R. 1919, the “Anti-Innovation Act.” The three bills are scheduled for a vote on the House floor later this week.
As prepared for delivery
“Thank you, Chairwoman Foxx, Ranking Member McGovern, and Members of the Committee.
Earlier this month, Republicans pushed through Trump’s Big Billionaire Bailout that strips healthcare from 17 million Americans, shutters hospitals, and will starve 12 million people by taking away their food assistance. These cuts to vital programs for America’s most vulnerable add up to $1.3 trillion—the exact cost of the tax cut Republicans are handing out to the richest 1 percent of Americans.
I’m honestly not surprised that the Republicans’ next order of business is a billion dollar handout to the President himself.
Late last year, despite President Trump previously calling crypto a scam, he and his family have launched a multi-billion dollar crypto empire. Trump has sold hundreds of millions of so-called meme-coins, offered access to a dinner with him, and private tours of the White House, for those people who own the most coins. Even the First Lady has her own coin. It was reported that Trump has made $350 million in March on the trading fees alone from those memecoins.
But his family’s crypto empire hasn’t stopped there. His crypto company World Liberty Financial launched a stablecoin, that you mentioned Mr. Govern— called USD1 in April. And shortly thereafter, the Abu-Dhabi-backed investment firm, MGX, bought $2 billion of Trump’s coin to make an investment in Binance. Trump and his family will make tens of millions of dollars on that transaction from the interest earnings.
Trump’s family has also launched a bitcoin mining operation, crypto exchange traded funds, a crypto exchange, and reportedly, even a digital wallet for consumers to hold their crypto coins.
And of course all of this comes at the same time that the Trump Administration has taken away the independence of the financial regulators, as I alluded to, like SEC, the Fed, and the bank regulators. He fired independent directors at the credit union regulator just because they were Democrats. And he issued Executive Order 14255, which now requires all rules written by the financial regulators to be reviewed and approved by the White House Budget Office.
And this week, the House will consider three crypto bills that would literally hand over to the President the ability to write the rules he wants, to oversee his stablecoins, his memecoins, and his other crypto operations.
Surely, each of you can see how this is a blatant conflict of interest, right?
Well, Democrats do. It is why I introduced the Stop Trump in Crypto Act to ban the President, Vice President, and Members of Congress from issuing, trading, or owning crypto. I and many of my Democratic colleagues have also offered amendments to all of these bills to ban the President and all elected officials from crypto while they are in office.
If we do not ban elected officials, including the President or Vice President, from owning crypto or issuing their own coins, each of us will be complicit in these conflicts of interest and potential corruption.
And, yet, even if we adopted my amendment to stop the crypto con, there are still several other problems with these bills, which I will now discuss.
H.R. 3633, the so-called CLARITY Act, but which should be called the CALAMITY Act, and S. 1582, which is ironically called the GENIUS Act, create giant loopholes in our federal financial laws that would put consumers and investors at risk. They both handcuff the very regulators we rely on to protect consumers and investors and increase the chance of another costly financial crisis, like the one in 2008 that led to trillions of dollars of wealth being wiped out, and millions of Americans losing their homes, their jobs, and their retirement savings. I was here, I served on one of the conference committees, and I tell you, we should never want to go through what we went through with that. It is notable that 15 years to the month after Congress passed the Dodd-Frank Act to prevent another financial crisis, House Republicans want to lay the foundation for the very next one.
Let me explain how the CLARITY Act clearly harms investors.
First, the definition of ‘digital commodity,’ which is the linchpin of the entire bill, is profoundly flawed. On first blush, it seems to exempt securities. But then the bill includes a so called ‘rule of construction,’ which is an instruction to courts and agencies how to interpret the law, that says, no presumption shall exist that a digital asset or a digital commodity is a security merely because it offers voting rights, could appreciate with the effort of the decentralized governance system, or rises in value because people actually use the blockchain network. In other words, the characteristics of a security that the Supreme Court has long recognized are stripped here.
A crypto company can call what would have been a security today a quote ‘digital commodity,’ and walk away from the disclosure, antifraud, liability, and corporate governance protections that investors have relied on for ninety years. And it goes the other way too. A blue chip company like Apple or Google could decide to issue tokens—instead of stock—on the blockchain, and exempt themselves from the securities laws. In fact, just last week, the former Chairman of the CFTC said, under this bill, companies would be free to do just that. Second, an issuer may self-certify, jam the SEC, and then escape all investor protections enforced by the SEC. SEC staff have called the timeline to review these so-called self-certifications unworkable given staffing levels and the complexity of these arrangements.
Third, does anyone not remember FTX and that fraud? This bill allows crypto exchanges to redirect their customers’ funds for the benefit of the exchange. Moreover, an exchange can commingle customer assets and engage in proprietary trading under vague exceptions for ‘convenience,’ or ‘operational needs,’ or ‘risk management.’ These are practices that enabled FTX to commit billions of dollars of fraud, and which are banned by U.S. securities laws.
Fourth, there is a new exemption that allows anyone to raise up to $50 million dollars per year from the public by issuing crypto without audited financial statements, or even being required to use the funds for the crypto project.
The last point I’ll make on this bill is this: if Congress truly wanted the CFTC to regulate crypto, then we should at least give the agency the resources it needs to enforce the law. Instead, the CLARITY Act gives only four years of funding to the CFTC to implement the bill and no free-standing authority to go after fraud, market manipulation, or other investor harming practices, similar to the authorities the SEC has today.
Likewise, the GENIUS Act creates the appearance of a federal framework for stablecoins, but does not provide the Federal government with the authority to ensure all stablecoin issuers comply with the law. The bill also creates risks for consumers who will be stuck in a lengthy bankruptcy process if a stablecoin ever fails.
Without these protections, there will be devastating losses not just for crypto consumers, but also for non-crypto investors who are trying to save for college, home ownership, retirement, or other milestones.
Additionally, these bills endanger our national security. The CLARITY Act does not address the illicit finance and other crimes commonly seen in the crypto space since it does not provide nearly enough direction to agencies for the level of financial crimes and noncompliance expected for companies that bring significant risk of money laundering, terror finance, and fraud. Nor does it provide funds for Federal agencies to examine and enforce our national security laws. And the GENIUS Act leaves the door wide open for foreign firms that present a major national security threat, including targets of sanctions, all to appease those in the Trump family’s inner circle, which has ties to those shady entities.
That is why I, along with other House Democrats, have submitted many amendments to these dangerous bills. One interesting point is that even Chairman Hill himself inserted language at the end of the so-called CLARITY Act that actually amends the Senate-passed GENIUS Act. You may be asking why he would do that, when both bills are before us today. He could just offer his amendments to the GENIUS Act.
House Republicans have given up our power, as the United States House of Representatives, to work the will of our Members on behalf of our constituents and make changes to any legislation that the Senate sends us. Instead, we are simply taking the language directly from the Senate with no amendments, even when the Chairman and other House Members know the bill is flawed. Unfortunately, because President Trump demanded the bill be passed without any changes, that’s what the Republican Congress will do.
One of Chairman Hill’s changes to the GENIUS Act addresses a key concern I have had from the beginning, which is that Facebook and any other Big Tech company should not be allowed to issue their own currency. That would violate a longstanding separation of banking and commerce in financial regulation, and our Chairman’s amended language would help close this loophole. Unfortunately, the GENIUS ACT that will come to the floor this week allows Elon Musk’s X to issue its own stablecoin, and creates a pathway for Facebook to do the same.
Those aren’t the only dangerous bills before us today. The House is also considering H.R. 1919, what I call the ‘Anti-Innovation Act,’ which would immediately halt and prohibit the United States from exploring the potential benefits of a central bank digital currency, or CBDC. JPMorgan Chase has estimated that $100 billion could be saved in cross-border every year if a wholesale CBDC is utilized. As other countries race ahead and compete to develop and implement CBDCs to harness what could prove to be a critical tool in the evolving global financial landscape, this bill would keep the U.S. behind the starting line.
Let me reiterate:
A vote for these bills is a vote to give Trump the pen and write rules to help him put more money in his family’s pockets.
A vote for these bills is a vote for consumer and investor harm.
A vote for these bills is a vote to plant the seeds for the next financial crisis.
A vote for these bills is a vote to endanger our national security.
That is why I will be voting NO on the CLARITY Act, the GENIUS Act, and the ANTI-CBDC bill, and I urge Members of this Committee to also vote no.
Thank you, and I look forward to your questions.”
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