▶ 0:26:52The committee will come to order. Without objection, the chair is authorized to declare a recess of the committee at any time. Without objection, all members shall have five legislative days within which to submit additional materials to the chair. for inclusion in the record. We will now proceed to today's business. I recognize myself for an opening statement. Good morning.
▶ 0:27:12Today's markup covers a wide range of bipartisan priorities, leveling the playing field for smaller financial institutions, improving housing, modernizing crowdfunding exemptions, and continuing our work to bring clarity to the digital asset ecosystem. Last week, this committee held a thoughtful and constructive hearing on our digital asset market structure legislation, the Clarity Act.
▶ 0:27:38As we all know, for years, the digital asset ecosystem has been plagued by regulatory uncertainty. The absence of clear rules of the road have not only stifled innovation, but discouraged entrepreneurs and confused investors and consumers. Digital assets and blockchain technology have the potential to fundamentally reshape how we interact interact with the internet.
▶ 0:28:03These innovations can unlock opportunity, empower individuals and expand access to the financial system. But we need a regulatory framework in place that in order to experience those benefits. The clarity act addresses this headon. It draws clear lines between the SEC and the CFTC providing jurisdictional certainty. It fosters innovation and protects consumers.
▶ 0:28:31Today and moving forward, we have the opportunity to bring long desired and muchneeded clarity to the digital asset market. We will also consider bills designed to support small businesses, provide more oversight of HUD, protect the privacy of home buyers, and much more. For example, Representative John Rose's Home Buyer Privacy Protection Act would protect potential home buyers from unsolicited sales tactics.
▶ 0:28:59Representative Monica Dela Cruz's HUD Transparency Act would require the Inspector General of HUD to testify annually before Congress, providing us much needed transparency. Representative Dan Muer's amendment for crowdfunding enhancement and small business support act would increase access to capital for small businesses and startups.
▶ 0:29:23Each bill considered today is aimed at reducing barriers, empowering communities, strengthening accountability, and ultimately will pay dividends for the American people. I thank the staff, the members from both sides of the aisle, from both the financial services and agriculture committees for their months of time and diligent work to get these bills where they are today. I yield back.
▶ 0:29:50I now recognize the ranking member of our full committee for an opening statement. Good morning and thank you, Chairman Hill. As we sit here, Trump has violated the sovereignty of my state of California, federalizing the National Guard and sending the Marines into Los Angeles.
▶ 0:30:09This is completely unacceptable to Los Angelenos, but should also be unacceptable to you because Trump also said he wants troops everywhere in America. As troop as Trump perverts our national guard and military, he is also perverting basic ethics standards and conflicts of interest through his use and abuse of crypto as a result of his crypto schemes.
▶ 0:30:40His net worth has skyrocketed to 5.6 billion dollar of which according to Forbes 1.2 two billion is from his crypto scams. This is while our constituents are struggling to pay their mortgage or rent and put food on the table.
▶ 0:31:01And Republicans are making Americans lives worse by ramming through this big ugly bill to slash funding for food stamps, Medicare, and Medicaid so that billionaires like the world's worst Elon Musk, can get a tax cut. This isn't Trump derangement syndrome. This is Trump destruction syndrome. Because everything this president touches, he destroys.
▶ 0:31:32This committee should be focused on this unfolding coup, thievery and bribery, and the economic crisis hitting American families. Instead, Republicans are jamming through the Calamity Act, which will not only legitimize Trump's corruption, but also creates enormous loopholes that expose investors, to fraud, and weakens our national security.
▶ 0:31:59This bill is bad for startups, giving even more power to mega banks and crypto giants. And despite industry's requests for clarity, this bill creates vague new definitions that will result in endless litigation. And while the bill's sponsors say this is the most significant rewrite of securities laws since 1933, the committee hasn't bothered to invite the chairman of the SEC to testify.
▶ 0:32:27In fact, this same SEC chair has refused to provide Democrats with his thoughts on the bill. I suppose he's decided that if he can't say something nice, he won't say anything at all or Trump won't allow him to say anything. It is for this reason that Democrats are doing everything we can to make sure the public knows what's in this bill.
▶ 0:32:50We held a minority day hearing to give voice to investor advocates, securities experts, and national security experts. We've written several letters demanding investigations into the numerous schemes the president and his family are engaged in. Yesterday, committee Democrats hosted a page turn which academics and experts.
▶ 0:33:11I'm also I've also introduced my bill, the stop Trump in crypto act to block the president, vice president, members of Congress, and their immediate families from engaging in cryptoc corruption and blatant conflicts of interest. And today we're offering several amendments to stop the harm in this bill. But let's call this bill what it is.
▶ 0:33:33It is a rushed, complicated, unnecessary legislation that ignores the rampant cryptoc corruption happening down the street while leaving our nation's investors out to dry. We need to go back to the drawing board on this one. It is ironic that as we consider the Calamity Act, which is sure to lead to the next financial crisis, if passed, we're also considering Mr. Green's bill, which responds to the failures of the second, third, and fourth largest banks in American history.
▶ 0:34:03And after today, I urge the chairman to bring up the other Democratic bills that respond to those bank failures, many of which the Republicans have supported. I'm also pleased that we will consider Representative Batty's bill to strengthen minority depository institutions efforts alongside other community financial institutions so that they can continue to support small businesses and help underserved communities thrive.
▶ 0:34:29Passing this bill today is affirming this committee's commitment to MDIs and other small lenders. With that, I yield back the balance of my time. The gentleoman yields back. Pursuant to notice, I call up HR 2808, the Home Buyer Privacy Protection Act, which was introduced by the gentleman from Tennessee, Mr. Rose. The clerk will report the bill, which was distributed in advance.
▶ 0:34:55HR2808 to amend the Fair Credit Reporting Act to prevent consumer reporting agencies from furnishing consumer reports under certain circumstances and for other purposes. Without objection, the bill is considered read and open to amendment at any point. The gentleman from Tennessee has an amendment in the nature of a substitute, copies of which have been distributed in advance. The clerk will report the amendment. An amendment in the nature of a substitute to HR2808, offered by Mr. Rose of Tennessee, designated as Rose TN014.
▶ 0:35:26Without objection, the amendment is considered read and will serve as base text for the purposes of amendment. The gentleman from Tennessee, Mr. Rose, is now recognized for five minutes. Thank you very much, Chairman Hill and Ranking Member Waters for holding this important markup today. And I would also like to thank the committee for including my bill HR2808, the Bipartisan Home Buyers Privacy Protection Act, which currently has over 80 co-sponsors in today's markup.
▶ 0:35:52Before I discuss the specifics of my bill, I want to extend my heartfelt gratitude to Congressman Richie Torres, who has been an outstanding co-lead um and steadfast advocate for the Home Buyers Privacy Protection Act. This has been a long journey to get HR2808 into today's markup, and I applaud Congressman Torres's unyielding advocacy to put a stop to the scourge of abusive mortgage trigger leads.
▶ 0:36:19The Home Buyer's Privacy Protection Act is designed to eliminate abusive marketing via trigger leads. My bill would target trigger lead abuses while allowing mortgage servicesers and originators to maintain relationships with their existing customers. Trigger leads occur when a consumer applies for a mortgage, whether a primary home purchase loan or a refinance loan.
▶ 0:36:44An inquiry to a credit reporting agency by the lender is a quote unquote trigger that notifies the credit bureau that the consumer is interested in applying for financing. The trigger lead is then sold by the credit bureaus to data brokers, including other lenders without the consumer's knowledge or approval.
▶ 0:37:05The Home Buyer's Privacy Protection Act would allow trigger leads to be permissible under the Fair Credit Reporting Act only in limited circumstances during a real estate transaction. Under our bill, a consumer reporting agency may not furnish a trigger lead to a third party unless the consumer has opted in and the third party is a federally insured depository institution, a federally insured credit union, or is the originator or serviceer services serer of an existing mortgage
▶ 0:37:36of the borrower. If a consumer has a pre-existing relationship with a covered entity, then they can also furnish a trigger lead. In response to stakeholders feedback, including from my colleague from California, Congresswoman Young Kim, the ANS we are considering today includes a GAO study on the value of trigger leads received by text message.
▶ 0:37:58Over the years, I have heard from individuals from all walks of life about their deepseated frustrations when it comes to being inundated by abusive mortgage trigger leads. Being contacted dozens or even hundreds of times a day after applying for a mortgage is simply Many abusive trigger leads occur in nearly all hours of the day and night.
▶ 0:38:24This is especially true if the trigger lead user resides in a different time zone than the individual they are uh contacting. It is also important to note that many of these merciless trigger leads come from unscrupulous companies that misrepresent the important fact that they are not affiliated with the mortgage company the individual initially applied with.
▶ 0:38:47Another important factor to consider is that when consumers get flooded with trigger leads, they often blame their mortgage originator despite mortgage originators having no role in selling their information. This can easily sour an otherwise positive relationship between a borrower and their mortgage originator. Lastly, I want to emphasize just how much support there is for this legislation.
▶ 0:39:10I have a letter here dated June 9th uh 2025 from 43 attorneys general and members of the National Association of Attorneys General supporting this bill. I also have a coalition support letter dated today that has been signed by six diff 16 different supporting organizations including the American Bankers Association, uh, America's Credit Union unions, the Broker Action Coalition, the Center for Responsible Lending, the Consumer Federation of America, the Housing Policy
▶ 0:39:40Council, Independent Community Bankers of America, Leading Builders of America, the Mortgage Bankers Association, and the National Association of Mortgage Brokers. Additionally, I also have a support letter from the Mortgage Bankers Association. Mr. Chairman, I ask unanimous consent to insert the text of all three of these letters into the record. Without objection.
▶ 0:40:02In closing, I urge my I urge each of my colleagues to vote yes on my ANS to HR2808, the Home Buyers Privacy Protection Act. And I yield back the balance of my time. The gentleman yields back yields back. The chair recognizes the ranking member of our full committee, Mrs. Waters, for five minutes. I move to strike the last word. Gentleoman's recognized.
▶ 0:40:25I want to thank Representative Rose and Representative Torres for the work on this bill and appreciate that our committee is taking action to improve data privacy in the mortgage market. No one likes being blessed with unwanted calls or text messages for credit product options that you did not ask for. However, we are not debating this bill in a vacuum.
▶ 0:40:47As I said last week, I find it rich that any Republican would claim to support data privacy when they have done nothing about Trump letting Elon Musk and his Doge minions steal the sensitive data from hundreds of millions of Americans. Musk has taken everything from our personal health records, consumer data, and business records to social security numbers and tax data, and we still don't know what they've done with our data.
▶ 0:41:16Now that Trump has turned against Elon, perhaps committee Republicans will start doing their job and find out what Elon has done with our data by investigating the data Elon and Doge obtained from the Consumer Financial Protection Bureau and the Treasury Department.
▶ 0:41:34With respect to I want to acknowledge the work of our former colleague, Representative uh Lacy Clay, who helped pave the path for first introducing a bill to curb abrasive trigger leads back in 2020. Let's discuss what a trigger lead is. When consumers apply for a mortgage loan or seek to refinance their mortgage with a bank or credit union, their credit is pulled from one of the credit bureaus like Equifax.
▶ 0:42:04The credit bureaus then sells your information to other financial institutions without your permission with a so-called trigger lead notifying them that you are seeking a mortgage. Those firms then quickly bombard you with phone calls, text messages, and other communications with mortgage loan offers, many of which may be misleading, deceptive, or predatory.
▶ 0:42:27Importantly, Representative Clay's bill to curb this harmful practice had no exceptions and simply required a consumer to opt in before their information is shared with other companies when they apply for a mortgage loan. I still think this is a better approach and one that committee Democrats argued for when the committee considered former chair Mckenry's private data seat bill. We should put consumers in the driver's seat to fully control the use, sharing and selling of their own data.
▶ 0:42:58That said, this bill is still a positive step forward. That goal of strengthening data privacy protections and is supported by a number of groups including Consumer Federation of America, National Consumer Law Center, National Association of Homebuilders, Independent Community Bankers of America, and America's Credit Union. So, I urge members to support the bill, and I yield back. Gentlewoman yields back.
▶ 0:43:27The gentleman from South Carolina, Mr. Timmons, is recognized. Hey, Mr. Chairman. I move to strike the last word. The gentleman's recognized for five minutes. Thank you, Mr. Chairman. It's refreshing to see uh this committee engage in policym. Um this really is a great bill. I strongly support HR282, the Home Buyers Privacy Protection Act, legislation I've proudly championed alongside my friend Mr. Rose since early last Congress. This bill gives home buyers greater control over their personal information while preserving their ability to shop for competitive mortgage rates.
▶ 0:43:56Specifically, it prohibits the use of mortgage credit inquiry data for marketing purposes unless the consumer has ex has given explicit consent, thereby curbing the sale of so-called trigger leads. As someone who recently went through the mortgage application process, I experienced firsthand the overwhelming volume of unsolicited calls and text messages triggered by the sale of my personal data. So, I refinanced a house. I got a home equity line of credit four four or five months ago and then I just closed on a house I don't know uh a couple weeks ago.
▶ 0:44:25I've probably gotten no less than a thousand calls and texts in the last four or five months. And as somebody that gives their cell phone number out to their 800,000 constituents, um my phone already rings a lot. So to get hundreds and hundreds of phone calls a day, um promising me uh better interest rates or whatever it is, it really is just outrageous. And we need to act. And I am so happy that we are.
▶ 0:44:52Um, I know I may sound like a broken record, but my personal experience underscores why this legislation is so urgently needed. We must protect consumers from this flood of unwanted and in some cases predatory communications. I look forward to advancing this bill out of committee today and ultimately sending it to the president's desk to ensure future home buyers do not face the same barrage of intrusions when applying for a mortgage. And with that, Mr. Chairman, I yield back. Thank you. The gentleman yields back. Who seeks recognition?
▶ 0:45:20Uh the gentle gentleman from uh C Missouri is recognized to strike the last word. Mr. Chairman, move to strike the last word. Gentleman's recognized for five minutes. Mr. Chairman, uh trigger leads often occur when a customer applies for a mortgage uh and a credit bureau without the consent or knowledge of the patron sells that information to other lenders.
▶ 0:45:45Consumers have experienced a sharp increase in the volume of unwanted calls, texts, mails, emails, uh, solicitations from lenders that consumers uh, have with whom, uh, consumers have no relationship. Uh, I have constituents who've applied for mortgages and are receiving dozens or hundreds of trigger lead solicitations.
▶ 0:46:13Some are confusing or even designed to deceive the con the consumer into believing they came from uh the lender to whom the customer originally applied. Additionally, trigger leads can damage the original lender's relationship with their customers who often mistakenly believe it was their lender who sold their information. I support the Home Buyers Privacy Protection Act and applaud the work of Congressman Torres and Congressman Rose for advancing this legislation. Thank you, Mr.
▶ 0:46:43Chairman. Gentleman yields back. Uh the gentleman from South Carolina is recognized. Thank you, Mr. Chairman. Move to strike the last word. The gentleman's recognized for five minutes. Just want to thank John Rose for putting this forward. Folks, those of you who have never maybe bought a house, have rented all the time, I don't care whether it's commercial or residential, this is the a just an example of paperwork we sign.
▶ 0:47:08There is no other industry that gives away your private files like uh the credit bureaus and to get money on it is just wrong. You will not, and this is my line of work, you will not find a home builder. You will not find a uh really a lender. you won't find anybody that would oppose Mr. Rose's bill at all.
▶ 0:47:29So, um I just and I hope it's in bold print that they never really pick out the fine language about not wanting to be in. So, I'm hoping that uh by passing this they don't have to worry about that. This is a good bill. Thank you for all the work you've done, Congressman Rose. And uh I yield back. Gentleman yields back. Gentleman from Illinois is recognized. Thank you. Move to strike the last word. The gentleman's recognized for five minutes. Uh thank you, Mr. Chairman.
▶ 0:47:58I I support HR 2808, the Home Buyers Privacy Protection Act, which will protect the privacy of mortgage applicants and prevent them from being bombarded by unwanted solicitations and scams. Legislation will curtail what are referred to as trigger leads in the mortgage industry.
▶ 0:48:14Uh this practice while meant to provide consumers with competing offers of mortgage products often results in consumers being inundated with spam trigger leads often also result in the widespread sharing of consumer data with an unknown number of legitimate and illegitimate lenders. So that's why I along with a bipartisan group of more than 80 co-sponsors support this legislation which will protect consumers privacy and curb the abuses that come with the sale of trigger leads. I'd also like to note that, you know, this is sort of the tip of the iceberg.
▶ 0:48:44There's a lot of oversharing of personal data and we have to get our arms around this. This does not happen, frankly, in in countries that have a comprehensive financial privacy regime, which we do not. And so, we're left with these little band-aid after band-aid after band-aid to the worst abuses. Um, but this legislation has wide support from consumer advocates as well as from mortgage, banking, and real estate industries. I support the bill and yield back. Gentleman yields back.
▶ 0:49:14Gentleman from North Carolina move to strike the last word. The gentleman, Mr. Moore, is recognized for five minutes. Thank you, Mr. Chairman. I'm proud to also support this important legislation to end the abusive use of trigger leads in the mortgage market. Trigger leads occur when a consumer applies for a mortgage and a credit bureau sells that information to competing lenders, often without the consumer's knowledge or consent. This practice undermines consumer trust and exposes families to misleading solicitations, bait and switch offers, and even outright scams.
▶ 0:49:45Borrowers are flooded with unwanted calls and emails from lenders they don't know, driving confusion and encouraging poor decisionmaking, eroding confidence in the home buying process. It's time we stand up for consumer privacy and promote integrity in our lending system. Honest lenders who cultivate long-term relationships should not be undercut by bad actors exploiting trigger leads. By ending this predatory practice, we can restore fairness to consumers and create a level playing field uh for responsible mortgage providers.
▶ 0:50:16I want to thank Congressman Rose and Mr. Chairman, you as well for your leadership in this important legislation. With that, I yield back. Gentleman yields back. The chair recognizes the gentleoman from Ohio, Miss Batty. Move to strike the last word. The gentleoman's recognized for five minutes. Thank you, Mr. Chairman. And I would also like to voice my support for my colleagues uh bill and the Home Buyers Privacy Protection Act, which I am proud to say I am also a sponsor of.
▶ 0:50:44Let me also say that I associate myself with the words of ranking member Waters. You have heard a lot about this bill this morning. It's putting consumers back in control of their personal information. And right now when someone applies for a mortgage, their data can be sold without their knowledge leading to all of those unwanted calls that we've heard my colleagues talk about and certainly some confusion.
▶ 0:51:12This bipartisan bill is also a means to end that abusive practice while preserving the legitimate offers of credit and it ensures that the home buyers can focus on what they should be focusing on with their new home ownership and that's enjoying that home ownership with the confidence and privacy that they deserve. So, I'm a proud supporter of it and I do urge my colleagues all to vote in favor of this bill.
▶ 0:51:42Thank you, Mr. Chairman and Ranking Waters. And I yield back. Gentlemen yields back. Is there further I now recognize myself for five minutes. I support HR2808, the Home Buyers Privacy Protection Act. This bill updates how personal data is handled during the mortgage process. When a prospective home buyer applies for a mortgage, it can trigger the sale of their personal information to other lenders, often without their express knowledge or consent.
▶ 0:52:12And as we've heard today, this is known as a trigger lead. While there's technically an option to opt out of this practice, very few individuals are aware of this happening, let alone how to stop it, as indicated by our the gentleman from South Carolina, Mr. Timonss.
▶ 0:52:30As a result, individuals all individuals already navigating one of the most time-consuming and complex financial decisions of their lives may face an onslaught of hundreds, sometimes thousands of unsolicited phone calls or text messages. These calls often come from an unknown lender and in some troubling cases from callers posing as the individual's original lender or misrepresenting the terms of an offer.
▶ 0:52:56And that's not if that's not just confusing, it also creates the opening for deceptive actors to exploit individuals during an incredible an important stressful financial moment in their lives. HR2808 modernizes the system by putting clear common sense guard rails around the sale of trigger leads.
▶ 0:53:16Under the bill, credit reporting agencies would only be allowed to furnish a trigger lead to a lender which the individual already has a relationship such as the originator of their current mortgage, the serer of their mortgage, or a financial institution where they have an existing account. Additionally, a third party company may receive an individual's trigger lead only if they can document the individual's consented to share their information.
▶ 0:53:40This ensures Americans have better control over their privacy and financial data and not o unknowingly get caught up in a sales race. This bill strikes the right balance. It protects individuals from abuse and confusion while still allowing legitimate competition and choice in the mortgage market.
▶ 0:54:00As the committee continues broader efforts to update federal standards for financial data protection, we should apply these same principles across the board, giving Americans more control over who can access their personal financial information. I want to thank Mr. Rose, Mr. Torres for their tireless work on this issue over the past two congresses. I'm pleased to see this bill advance to a markup and I urge my colleagues to support it and I yield back. Does anyone else seek recognition? Mr. Chairman, I have an amendment at the desk.
▶ 0:54:31Just a just a moment, Miss Kim. Hearing none, we'll now move to amendments. Does anyone wish to offer an amendment to the substitute? Yes, ma'am. Miss Kim. Yes, I have an amendment at the desk. We'll pause while Miss Kim's amendment is
▶ 0:55:02Mr. Sessions. Mr. Chairman, thank you very much. I I I would reserve a point of order. The gentleman from Texas has reserved a point of order.
▶ 0:56:15The clerk will report the amendment. An amendment to the amendment in the nature of a substitute to HR2808 offered by Mrs. Kim of California designated as Kimca035. Without objection, the amendment's considered read and the gentleoman from California is recognized to discuss her amendment. Thank you, Chairman Hill. We have all her stories. Consumers apply for a home loan and within hours their phones are ringing non-stop.
▶ 0:56:46I know that buying a home can be an extremely stressful and frustrating process and the last thing you want is something that adds more stress and That is why I've always said that we need to stop the phone calls but still preserve tools that allow consumers to shop around. Unfortunately, this legislation before us today does not actually put the consumer first.
▶ 0:57:14Instead, we're cutting corners in ways that will make housing more ex expensive for consumers rather than less. The data shows that when consumers shop around for mortgages, 45% of them receive a lower offer. However, more than 50% of home buyers only get one loan offer.
▶ 0:57:37When properly utilized, pre-screened mortgage offers serve as a valuable tool to put offers in front of consumers that are lower than the rates that they are In Orange County, the average home that a working family owns costs close to $1.5 million.
▶ 0:57:59Just half a percentage point difference in an interest rate could save you over Unfortunately, if today's bill were to be passed into law, it would be our constituents who would suffer the most as they lose a key tool to compare We should be stopping phone calls, going after bad actors who are illegally using trigger leads to blow up your phones with more calls,
▶ 0:58:30not taking away pre-screen mortgage offers from locallyowned institutions that want to compete and give home buyers the leverage that could save them thousands of dollars. So, Mr. Chairman, I intend to withdraw my amendment today and in doing so hope that you and my friend from Tennessee, Mr. Rose, will continue to work together with me to improve this legislation.
▶ 0:58:54I truly believe that we can find a solution that puts the consumers first and that both protects and empowers them through throughout this process. But before I yield back, I would like to ask for unanimous consent to submit this comment letter from the Consumer Data Industry Association. Without objection. Thank you. Does they talk about the problematic um you know problematic pre uh the provisions in the home buyers uh privacy protection act in the record.
▶ 0:59:24So thank you for allowing me to do that. And uh with that I would the gentleoman yield. Would the gentleoman yield? Yes. I just want to thank the gentleoman for working and uh her advocacy from her point of view and her working with Mr. Rose and Mr. Torres on the bill and uh appreciate her offering and withdrawing her amendment and I yield back to the Does the gentleoman yield back? Yes, I do. The gentleoman yields back.
▶ 0:59:55Is there further debate on Mr. Rose's amendment in the nature of substitute? Let me first let me ask the gentleman from Texas. Do you still insist on your point of order? Mr. Chair, I will remove my point of order. The gentleman removes his point of order. Mh. Excuse me, Miss Kim. Just a point. You do withdraw your you you do confirm that. Yes, I the gentle gentle lady has withdrawn her amendment. Mr.
▶ 1:00:25Bar move to strike the last word. Gentleman's recognized for five minutes. I want to thank both of my colleagues for their collaboration, their work, both the author of this bill, Mr. Rose, and also for the collaboration and input from uh uh my friend from California, Miss Kim. Uh let me just thank Mr. Rose for his steadfast dedication to protecting Americans financial privacy. Um the home buying process is is complicated. It's stressful.
▶ 1:00:56And in commun communities across Kentucky, I hear from constituents who feel overwhelmed not just by the process, but by the flood of unwanted calls and messages that often follow a mortgage credit check. Under the current system, it is too easy for third parties to exploit consumer data without permission by using trigger leads to aggressively market financial products, sometimes in deceptive or misleading ways.
▶ 1:01:19Uh this hits our veterans especially hard as they often move more frequently and may not have time to sift through dozens of unsolicited offers. Uh this bill HR2808 will allow the use of trigger leads only in narrow circumstances such as when the consumer has expressly consented to share to the sharing of their data or has an existing relationship with the lender such as through a a current mortgage or account.
▶ 1:01:44It's a targeted bipartisan uh measure and it respects a consumer's right to control how his or her personal data is shared. Uh I want to thank uh my friend from California, Miss Kim, for her support of competition and choice. I I also support competition and choice in mortgage lending, but that competition must be accommodated consistent with consumers control over and rights to their own personal financial information. So, I support Mr.
▶ 1:02:15Rose's uh common sense privacy measure and urge my colleagues to use the same to do the same. I yield back. Gentleman yields back. Is there anyone seeking recognition? Seeing none, there be no further discussion or amendments to the bill. The question now occurs on the adoption of the amendment in the nature of a substitute. All those in favor shall signify by saying I. I. I. All those opposed shall signify by saying nay. In the opinion chair, the eyes have it and the amendment is adopted.
▶ 1:02:41The question now occurs on ordering the bill as amended to be reported to the House with a favorable recommendation. Those in favor shall signify by saying I. I. All those opposed shall signify by saying nay. In the opinion of chair, the eyes have it. For what uh purposes, gentleman from Tennessee seek recognition. I'd like to request a recorded vote. A recorded vote has been requested. All those in favor recorded vote, raise your hands. A sufficient number having raised their hands. A recorded vote is ordered pursuant to subsection C5 of rule three of the committee rules.
▶ 1:03:11The vote on this question is postponed. We'll now move to the next bill for consideration. Pursuant to notice, I call up HR 2835, the Small Bank holding company relief act introduced by the gentleman from Florida, Mr. Donald's.
▶ 1:03:32The clerk will report the bill which was distributed in HR 2835 to raise the consolidated assets threshold under the small bank holding company policy statement and for other purposes. Without objection, the bill is considered read and open to amendment at any point. The gentleman from Florida has an amendment in the nature of a substitute, copies of which have been distributed in advance. The court will report the amendment.
▶ 1:03:59An amendment in the nature of a substitute to HR 2835 offered by Mr. Donald's of Florida designated as Donald 061. Without objection, the amendment is considered read and will serve as the base text for the purposes of the amendment of the amendment. The gentleman from Florida, Mr. Donald's is recognized for five minutes to explain his amendment. Uh thank you, Mr. Chairman.
▶ 1:04:22Uh this the small bank holding company relief act raises the consolidated asset threshold of bank holding companies uh to qualify as small bank holding companies from 3 billion to 25 billion and does not change capital rules and regulations for subsidiary banks. Raising the asset threshold for small bank holding companies frees up bankolding companies to make equity investments in subsidiary banks thereby raising capital levels and enabling lending in support of local economies.
▶ 1:04:50Small, midsize, and community banks are vital economic engines for businesses of all size throughout the country and play an important role in restoring Main Street America. Community banks make up about 99% of all banks and employ nearly 700,000 Americans. 60% of all small business loans are made by community banks and 80% of banking industry agriculture loans come from community banks.
▶ 1:05:14A healthy, diverse, small, midsize community banking sector sector drives competition that ultimately benefits consumers. Small banks and their holding companies need regulatory relief to grow and compete with their larger peers, allowing them to operate with slightly elevated debt levels to pursue progrowth mergers will allow them to compete more meaningfully.
▶ 1:05:38Codifying the regulatory asset threshold in law like the $3 billion mark means that when economic conditions change, those thresholds may be updated like this legislation seeks to do. Economic conditions have significantly changed since consolidated asset threshold was last increased back in 2018.
▶ 1:05:58And this legislation would bring much needed regulatory relief and long overdue flexibility to hundreds of smaller financial institutions across the entire nation. Adjusting for inflation is one way to potentially revise the threshold. But when you consider that the value of assets held by US commercial banks has risen around 42 and a.5% since the last time this threshold was raised, it is clear that we need to go further. So, let's face it, I think this is a great piece of legislation.
▶ 1:06:28Uh, I hope that we have full support for it uh today. Um, I want to thank Chairman Hill. I want to thank committee staff um who've had an open door on this legislation and we've had a great conversation. I look very forward to the rest of this debate and I yield back the balance of my time. The gentleman from Florida yields back back. The ranking member of the full committee, Mrs. Waters, is recognized. Thank you. I move to strike the last word. Gentleman's recognized. General woman's recognized four or five minutes.
▶ 1:06:56I I strongly support our community banks including our rural blanks, our banks rather our minority depository institutions or MDIs and our community development financial institutions or CDFIs. To that end, I'm pleased that the chairman Hill agreed to consider one of our Democratic bills to do so at this markup.
▶ 1:07:22Representative Bad's bill will codify and enhance Treasury's mentor protege program to ensure community banks of all stripes, including rural banks and MDI can be partnered uh with the larger banks to receive the advice and support they need to grow and thrive. Unfortunately, Representative Donald's bill is a different story.
▶ 1:07:48It will significantly increase the asset threshold for the Federal Reserve's small bank holding company and savings and loan holding company policy statement without any rationale or evidence to justify the increase.
▶ 1:08:05The Fed's statement was first that is the Fed's policy statement was first implemented in 1980 to have the smallest banks with less than 150 million in assets acquire other small banks. It allows these small holding companies to take on much more debt than they typically would do could rather to finance the acquisition as it has evolved with time.
▶ 1:08:35The policy statement also exempts these small bank holding companies from certain capital requirements and reduces their reporting requirements. Congress has raised this threshold several times, ultimately to $3 billion in 2018, where it stands today.
▶ 1:08:55Now, I could be open to a much more modest increase to account for inflation or consider more in-house ways to improve the scope of a policy like this instead of resorting to an asset threshold.
▶ 1:09:10But no justification has been provided to the committee thus far to support dramatically increasing this threshold from 3 billion to 25 billion, which represents a staggering 833% increase. A 25 billion threshold would not only cover small community banks, but it would cover many midside banks also.
▶ 1:09:40In fact, it would cover roughly of all bank holding companies and savings and loan holding companies. Republicans posted an earlier version of the bill at the committee's first hearing on community banks in February that proposed the threshold to 10 billion. Just 10 billion, not 25 billion.
▶ 1:10:04However, I found it increasing that none of the witnesses, including several bankers that were on the panel, said a single word in support of this bill. There were no questions asked and no discussion of it in the testimony we received, including no mentions of any studies or other evidence to justify increasing the threshold to 10 billion, let alone 25 billion.
▶ 1:10:32Republicans often say regulators should do all kinds of impact studies and costbenefit analysis before issuing a new rule. Well, where's their studies and analysis that members can point to here? Without further due diligence, I urge members to reject this deregulatory bill disguised as a community bank bill. And I yield back. The gentleoman yields back. who seeks recognition.
▶ 1:11:02The gentleman from Kentucky, Mr. Bar, the chair of our financial institutions subcommittee is recognized. Thank you. I move to strike the last word. Gentleman's recognized four or five minutes. Thank you, Mr. Chairman. Thank you for bringing this uh important piece of tailoring legislation to uh the markup. Uh and and I thank my friend from Florida, Mr. Donald's, for his leadership on this. And I'm proud to support HR 2835, the Small Bank Holding Company Relief Act offered by Mr. Donald's.
▶ 1:11:28This bill simply updates the asset threshold in the Federal Reserve small bank holding company policy statement from 3 billion to 25 billion. It's a long overdue adjustment that better reflects the scale and scope of today's banking land landscape since the last bipartisan threshold increase in 2018. The total assets held by US commercial banks have grown over 40% from 16.7 trillion to more than $24 trillion. Yet, the definition of a small bank holding company hasn't kept pace.
▶ 1:11:57In Kentucky, particularly in the rural communities I represent, community banks play an outsized role in supporting small businesses, family farms, and local economic development. Unfortunately, these same institutions face disproportionately high regulatory costs. Raising the threshold under the Fed's policy statement helps level the playing field and gives these banks flexibility to grow responsibly. This bill doesn't remove oversight.
▶ 1:12:23It only applies to well-c capitalized institutions and excludes those with significant non-bank or off uh balance sheet activities. The policy already has strong guard rails in place and the Fed continues to monitor leverage capital and dividend practices. This is not uh as the ranking member would suggest a deregulatory free-for-all.
▶ 1:12:44It's about modernizing an outdated framework so that small, well-managed banks can access capital and expand services without being held back by rules written for a different era. When we let outdated thresholds drive regulatory policy, we end up hurting the very institutions that are most connected to their communities and least responsible for systemic risk. This bill also reflects the simple economic reality.
▶ 1:13:12Rising asset values, inflation, and industry consolidation have all outpaced the current $3 billion threshold. If we don't adjust it, we risk stifling small bank growth and discouraging new entrance into the market. Bottom line is we need a diversified banking sector and if we don't uh enhance tailoring then we risk uh greater consolidation which actually creates systemic risk.
▶ 1:13:42uh providing this uh targeted regulatory relief in a bipartisan way in a bipartisan way is a common sense fix. It will strengthen community banking, strengthen uh financial stability, strengthen the American banking uh system, and it will not weaken oversight. I urge my colleagues to support it. Let's make sure small banks have the tools they need to thrive. I yield back. Gentleman yields back.
▶ 1:14:07Is there further I recognize myself for five minutes. I support HR 2835, the small bank holding company relief act introduced by Mr. Donalds of Florida. This bill fits squarely within the committee's goal of trying to update regulations so they better reflect today's banking system. Small bank holding companies face real challenges with accessing funding, especially when they're trying to grow through uh acquisitions.
▶ 1:14:39While the Federal Reserve traditionally expects bank holding companies to be strong enough to support their subsidiaries without relying heavily on debt, it also recognizes that smaller banks often need to use debt financing out of necessity. Back in 1980, the Fed set a policy of allowing small bank holding companies to use up to 75% debt for acquisitions. But since 2018, that threshold has not been updated, even as the value of the assets held by commercial banks has increased 43%.
▶ 1:15:11If adjusted for this growth, the threshold would now be nearly 4 This bill simply updates the threshold to reflect today's banking landscape. It helps smaller, less complex institutions stay competitive and continue to serve their communities. When regulations don't evolve and fail to account for risk properly, it's smaller banks and their customers who frequently suffer most.
▶ 1:15:35We need rules that support a healthy growth and competition across all sizes of our banking system and not be blocked by unnecessary uh government red tape. I thank Byron Donald's for introducing this and important bill and I encourage our members to support it. And I want to echo a comment that Chairman Bar made about the Federal Reserve's leadership and discretion here.
▶ 1:16:00This is not greenlighting the use of of debt in every instance because this is for well- capitalized, well-managed, highly rated financial institutions subject to the approval obviously of their primary regulator both for the structure of the of an acquisition. for example, and the use of debt and equity in that matter.
▶ 1:16:22This simply just gives the freedom for those growing small, community, and midsize institutions to have the flexibility of using this rule effectively subject to their primary regulators oversight. So, I do encourage a yes vote and I yield back. Yield back. Does anybody seek recognition? Hearing none, we'll now move to amendments. Does anyone wish to offer an amendment to the nature of substitute? For what purposes the gentleman from Illinois seek recognition?
▶ 1:16:51I have an amendment at the desk. Dr. Foster has amendment at the desk. We will pause while that amendment is distributed. Gentleman from Kentucky reserve a point of order. Gentleman from KY's reserved a point of order.
▶ 1:17:35clerk will report the amendment. An amendment to the amendment in the nature of a substitute to HR 2835 offered by Mr. Foster of Illinois designated as amend HR 28353. Without objection, the amendment's considered read. The gentleman is recognized to discuss his amendment for five minutes. Uh thank you, Mr. Chairman.
▶ 1:17:58Well, I oppose the underlying bill as written because it arbitrarily increases the asset threshold for bankolding companies and savings and loan companies uh to be exempt from important credential safeguards. It does th so without any costbenefit analysis and without any real knowledge or understanding of the past history of of banking crisis.
▶ 1:18:18This legislation increases the existing threshold for banks to qualify for the small bank holding company policy statement from three billion to 25 billion, a more than 800% increase. This 800% increase is justified neither by inflation, which might argue for an increase from 3 to4 billion, which is what my amendment does, or by total assets, which would argue perhaps for a 42% uh increase in um in this number, not 800%
▶ 1:18:48increase. As a result, this would allow roughly 98% of bank holding companies to take on additional debt to finance acquisitions, seek exemptions from riskbased leverage capital rules, and have less frequent regulatory reporting requirements. Uh what could possibly go wrong?
▶ 1:19:04These uh requirements were implemented to ensure that banks and their holding companies remain financially stable and able to serve their customers in times of stress such as and and such an arbitrary adjustment of $25 billion is worthy of a lot more examination than we're trying we're giving today especially when past congressional as a action has simply followed roughly followed inflation and resulted in significantly smaller Congress last year increased
▶ 1:19:35the threshold and I guess last increased in 2018 from 1 billion to three billion. Uh and if adjusted for inflation as I said that three billion would should be in increase to roughly four billion today which is what my amendment does. Um, and it also directs the GAO to conduct a study to better inform the effectiveness of the threshold that's set under the small bank holding company policy statement, including its effects on community banks, on competition, and on the safety and soundness of these institutions.
▶ 1:20:06GAO would be asked to explore how the consolidated asset threshold under this policy statement interacts with other regulatory obligations of comm community banks and savings and loan holding companies. Finally, my amendment would ask the GAO to recommend alternatives to the existing thresholds and ways to ensure that its requirements evolve um perhaps more automatically as market tren with market trends to support small banks and savings and loan and holding companies uh for the communities
▶ 1:20:36they serve. I believe that it's important to gather additional information before making such an enormous change to this threshold and to consider alternatives that can more thoughtfully address the challenges of small holding companies that they're facing today. Finally, we should not assume that just because these firms are quote unquote small, if $2 billion can be considered small, and therefore that they cannot collectively threaten the safety and soundness of the financial system.
▶ 1:21:04We've been down this road before during the savings and loan crisis triggered by, I should say, by a previous wave of Republican deregulation. More than 10,000 banks failed, holding more than 519 billion in assets, which is a lot of money back then, and nearly half of the existing thrifts failed. The cost to the taxpayer of this SNL bailout was 1.7% of GDP, which would correspond to over half a trillion dollars debt lost to the federal taxpayer today.
▶ 1:21:34And so while I support efforts to help community banks, I do not believe this legislation hits the mark. I encourage my colleagues to support my amendment that will provide valuable insight to the effectiveness of the existing policy statement um and provide alternative solutions that may better support safety and soundness of the community banks that serve our constituents. Thank you, Mr. Chairman. Yield back. The gentleman yields back who seeks recognition. Gentleman from Florida. Uh thank you, Mr. Chairman. I move to strike the last word.
▶ 1:22:03Would the gentleman suspend just a minute? Uh, Mr. Bar, your do you still insist on your point of order? The gentleman from Kentucky withdraws his point of order now. I recognize the gentleman from Florida, Mr. Donald. Uh, thank you, Chairman. Look, and in short, I think we have to be careful not to just be focus focusing on the size of the increase, but on the impact this actually means to community banking and small banking throughout the United States. Um, I'm glad that the gentleman raised what happened during the SNL crisis.
▶ 1:22:33We can also raise what happened um in this body roughly 15 years ago where small banks across the country were were hit with the regulatory burden that the large systemically uh risky banks were hit with after the financial collapse of08. And so you had small banks across the country who had to deal with the same regulatory impacts even though they did not cause the issues that occurred during the great recession of08. They simply did not.
▶ 1:23:03What this does, it gives those banks more flexibility to be able to operate to grow in size and to actually serve communities all across the United States. Small businesses are growing in this country at a rapid pace. They need access to capital and they are find finding fewer and fewer doors because of the regulatory environment in banking um brought to us by Washington DC.
▶ 1:23:28So moving the threshold from 3 billion to 25 billion not only takes into account asset growth that we've seen since 2018, it also prepares small banks for the future of America's economy which is state which is slated to grow because of the tax policies that the House of Representatives is now in negotiation with the Senate over extending President Trump's tax policies actually bringing in more reform policies some dere deregulation policies changing energy regulations
▶ 1:23:58to allow more development here in the United States. There's other pieces of legislation dealing with new forms of our economy that will be growing over time. The community banking system needs to be prepared for that and not have to come back to Washington year after year after year, not looking for relief, but looking for common sense.
▶ 1:24:17And so we have to prepare the banking system in the United States to actually be prepared for the future of America's economy, not be stuck in the past simply because we are afraid to look at things like uh what the threshold is for small banks. The Federal Reserve policy statement already includes meaningful guard rail guard rails.
▶ 1:24:37It applies only to bank holding companies that are not involved in substantial non-bank activities, do not engage in significant offbalance sheet activities, and do not hold material debt or equity securities other than trust preferred securities. So, as Chairman Hill said and chairman bar said, this applies to banks who are already operating soundly and they continue those sound practices to continue to do further work.
▶ 1:25:06So I would argue that this is the right legislation at the right time. We have to have a robust community banking environment in the United States. The truth of the matter is we do not have a robust community banking industry in the United States. We have one under stranglehole by the federal government. It's time to change that. And I will and my the biggest reason I argue for this is because not only it doesn't it's not just for the banks. This impacts small businesses.
▶ 1:25:35No matter what city of America you're in, this impacts family farmers. No matter what county in America you are in, this impacts the little guy. This impacts people trying to grow their businesses. They typically are doing work with small banks. They are not doing it with uh Bank of America. They are not doing it with Wells Fargo. They are not doing it with City. And they have a different regulatory structure that continues to apply.
▶ 1:26:00What this legislation does, it gives room to small banks, to community banks, so that they can meet the needs that the American people are asking for. You go to any city in America, and I've been to a lot of them. You go to any state in America, and I've been to a lot of them. When you talk to small business owners, the number one thing they're asking for is access to capital. This legislation gives them an opportunity to have that access.
▶ 1:26:26We should be forwardlooking into this and not be thinking about uh what was what has already occurred in the past. Especially like I said at the top of my comments, small community banks, small banks, they were not the problem. They were not the problem. They are the solution. This committee should give them the relief that they deserve. I yield back. Gentleman yields back. Ranking member of the full committee. I move to strike the last word.
▶ 1:26:55The gentleoman's recognized for five minutes. I thank Representative Foster, uh, our ranking member of our financial institution subcommittee for offering this amendment. Again, we've seen no evidence justifying a massive increase of 833% to 25 billion for a policy statement that is designed to help the smallest banks.
▶ 1:27:19In fact, Jones Day provided a legal analysis back in 2017 when Congress was considered raising the threshold when it was 1 billion, somewhere between two billion and 5 billion.
▶ 1:27:34And the law firm wrote, and I quote, "Size increases are meaningful, but many institutions at these levels may not meet the qualitative factors set by law, quote unquote." The law firm explained various other activities may disqualify them given how larger banks tend to engage in more securities activities.
▶ 1:27:59Ultimately, Congress decided to raise the threshold three billion, but this analysis raises questions about who really would benefit with a massive increase to 25 billion. If we adjusted the current threshold for inflation, it would be about 3.8 billion today. This amendment will account for that by increasing the current threshold to 4 billion.
▶ 1:28:26The amendment also requires the government accountability office to do the kind of impact study the supporters of this bill should have done in the first place to justify further increases.
▶ 1:28:40In particular, this GAO study will give Congress more data and analysis to help us explore legislative options to make the eligibility criteria more dynamic and the policy statement more effective in a way that promotes the safety and soundness of banks.
▶ 1:29:00This could mean permanently allowing for the asset threshold to increase based on inflation or considering different thresholds or criteria like allowing larger entities to qualify if they are well rated by their examiners. Since holding companies covered by the policy statement are also exempt from certain capital leverage and reporting requirements.
▶ 1:29:26We should also be mindful that in considering additional changes to the policy statement, I urge members to support this amendment. I yield back. Gentleman yields back. Is there further uh debate on Dr. Foster's If there's no further debate, the question now occurs on the amendment. All those in favor of the amendment shall signify by saying I. I. All those opposed shall sign signify by saying nay. Nay.
▶ 1:29:56In the opinion of the chair, the naysay have it. The nays have it. Amendment is not adopted. We will now move on to the next amendment. Chair request recorded vote. The gentleman from Illinois has requested a recorded vote. All those in favor record vote raise your hands. A sufficient number having raised their hands. A recorded vote is so ordered. Pursuant to subjection C5 of rule three of the committee rules, further proceedings on the amendment are postponed.
▶ 1:30:22We'll now move to the next There being no further discussion. There being no further amendments, without objection, the previous question on the substitute is ordered and recorded votes on the pending amendments have been postponed. Once those votes are taken, committee will immediately vote on the adoption amendment in the nature of a substitute and then consider the question to report the measure.
▶ 1:30:49We'll now move to our next bill for Pursuant to notice, I call up HR 3672, the Securities Research Modernization Act, introduced by the gentleman from Texas, Mr. Williams. The clerk will report the bill, which was distributed in advance.
▶ 1:31:08HR 3672 to amend the Securities Act of 1933 to expand the research report exception to include reports about any issuer that undertakes a proposed offering of public securities. Without objection, the bill is considered read and open to amendment at any point. The gentleman from Texas has an amendment in the nature of a substitute, copies of which have been distributed in advance. The clerk will report the amendment.
▶ 1:31:35An amendment in the nature of a substitute to HR 3672 offered by Mr. Williams of Texas, designated as will Without objection, the amendment's considered read and will serve as base text for the purposes of the amendment. The gentleman from Texas, the one and only Mr. Roger Williams is recognized for five minutes. Thank you for that introduction, Mr. Chairman. Um, the coach. Access to capital is one of the biggest challenges facing businesses across America.
▶ 1:32:05The ability to attract investment is essential to growing hiring and ultimately contributing to the economy. And one of the most valuable tools in that process is research. When companies go public, research reports help inform investors, improve transparency, and increase the chances of a successful public offering. Under current law, emerging growth companies can benefit from research reports during the IPO process without these reports being deemed an offer. That policy has worked.
▶ 1:32:32It has improved visibility to encourage investor interest and help the EGC's compete in capital markets. So, my bill builds on that success. It simply says or simply applies that effective approach to all companies pursuing a public offering not just a narrow group. Companies of all sizes and sectors should have the same opportunity to benefit from effective research.
▶ 1:32:55Expand the safe harbor strengthens investor choice promotes market transparency and reports business across the country as they grow and seek public capital. So, I want to thank uh Representative Cleo Fields for leading this bipartisan effort with me and I urge all of my colleagues support this comments and solution. With that, I say thank you and I yield back the balance of my time. Gentleman yields back. Who seeks recognition on Mr. Williams bill? I move to Thank you, member.
▶ 1:33:25I move to strike the last one. The gentleman is recognized for five minutes. Thank you, Mr. Chairman. Mr. Chair, the Securities Research Modernization Act would allow broker dealers, the entities that trade securities for customers and for themselves, to draft their own research reports on any security without their reports qualifying as a general solicitation.
▶ 1:33:50Currently, the law only provides for this in relation to emerging growth companies or EGC's. We permitted this exception because EGC's are new companies that may not have a lot of analysis available in the market. But this bill extends the privilege to all issuers, no matter how large or well-known they may be. This is concerning on several levels. Let's first break down what we're talking about.
▶ 1:34:20A research report is simply a document usually written by an independent financial an analyst that discusses the merits of purchasing a particular stock. A general solicitation is a fancy way of saying that an investment product is being advertised and offered to the public.
▶ 1:34:42When something qualifies as a general solicitation, a broker is obligated to provide investors with disclosures about the issuer of the stocks underlying business risk factors and financial condition.
▶ 1:34:58By exempting broker drafted research reports from counting as a general solicitation across the board as this book bill does, investors will be left with far less information about the stocks they are considering buying.
▶ 1:35:14Not to mention, investors will have fewer options to sue a broker when they make investment decision if the product is not covered by regulation best interest, which requires brokers to only offer investment advice in the interest of their customers. Furthermore, when these research reports are produced in-house by a broker, there can be a conflict of interest in terms of what information they choose to include in these reports.
▶ 1:35:44This is because brokers often earn a commission when they clients buy a stock. So, there may be a strong incentive to include misleading or overly positive analysis to boost sales of stock. A prior version of this bill, which was included in a large Republican package in the 118th Congress, did not receive a single Democratic vote in both markup and the House floor.
▶ 1:36:14It was also opposed by multiple investor advocate groups including AARP, the North American Securities Administration Association or NASA, the Consumer Federation of America, Americans for Furniture Reform and Public Citizens. For these reasons, I cannot support this bill and urge all members to vote no. Thank you and I yield back. Gentleoman yields back. seeks recognition.
▶ 1:36:44The gentleoman from Missouri, the chair of our capital market subcommittee, Miss Wagner. You're recognized. I thank you, Mr. Chairman, and I'm proud to support Congressman Roger Williams bill HR 3672, the Securities Research Modernization Act, one of our many very strong capital markets bills.
▶ 1:37:06This is a smart and targeted update to our securities laws, one that reflects the growing challenges that public companies face in securing independent research coverage after going public. For investors to make informed decisions, they need access to independent research.
▶ 1:37:27And for companies, especially smaller public companies, research coverage is often the difference between vibrant secondary market activity and a stock that effectively that's effectively invisible to investors. Over a decade ago, the Jobs Act recognized this reality by creating a limited safe harbor for research reports about emerging growth companies. What HR 3672 does, Mr.
▶ 1:37:57Chairman, is simple, but it is powerful. It expands that same common sense protection to cover any any issuer pursuing a public offering, not just The this change will improve research availability. It'll increase transparency for investors and it will help small and midsize companies attract capital with fewer artificial barriers.
▶ 1:38:26It doesn't impact analyst regulations, investor safeguards, or the substance of disclosures. It simply clarifies that that publishing research in the context of a public offering is not by itself an offer under the Securities Act. That is a modest legal clarification, but one with real consequences for market participation and efficiency.
▶ 1:38:55I commend Congressman Williams for his leadership, and I urge my colleagues to support this bill. And I yield back, Mr. Chairman, is there further debate on Mr. Williams bill? I recognize myself for five minutes. I'm proud to support HR 3672, the Securities Research Modernization Act, introduced by my good friend Roger Williams of Texas.
▶ 1:39:19You know, many years ago, I chaired a small cap, publicly traded company, and one of the biggest challenges to both small cap companies that uh have been referenced, but also as as chairwoman Wagner points out, all companies is trying to have adequate robust coverage for investor research. A big company, a famous company might have, I don't know, I'm going to round a number, you know, 15 analysts covering it.
▶ 1:39:48But a smaller cap stock or or a new company or a company that doesn't have a high profile has a hard time attracting research coverage. But we want informed investors and we want a vigorous market that has a narrow bit ass spread for every stock. And you do that through investment research. And I just remember how challenging it was to even attract the attention of investment analysts across the investment community.
▶ 1:40:18And just like we want to have a vigorous competitive banking system with a lot of banks of all sizes, we want a vigorous broker dealer community, broker dealers of all sizes that are attracted to small cap, midcap, large cap, and of course unicornsiz companies. So this is a great step in that direction. And the Jobs Act of 2012 recognized that importance of abundant research, particularly for small public companies like I referenced.
▶ 1:40:47But as as Chairwoman Wagner pointed out, we need to expand that. So with over a decade of marketplace experience, this provision of protecting EGC research reports has been proven a success. If we didn't have the emerging growth companies as a part of our IPOs, our initial public offerings over the last decade, we would really have anemic numbers of initial public offerings.
▶ 1:41:11And this is just one of those barriers to recruiting more public companies for our American citizens to have choice in investing. So based on that success of the emerging growth company use of research, it's time to expand it. And that's exactly what Mr. Williams bill does. It expands that safe harbor protection for research reports to cover all securities from all issuers.
▶ 1:41:37To be clear, research analysts remain subject to robust regulation, including the SEC regulation analyst certification and the conflict disclosure requirements that FINRA promagates. And Fender rules also uh review that and protect any anti- fraud violations as well. So these protections remain untouched by this bill. This bill will promote an increase access to investment research.
▶ 1:42:05I think that's important to a robust capital market. It's important for more choices for American citizens to have as investment potentials in their individual retirement accounts or in their uh company retirement accounts. All this is important and the more market participants we have, the lower the cost of capital for companies that want to go public. So, I commend Roger Williams for his common sense bill. I thank uh Chairwoman Wagner for shephering this through her subcommittee.
▶ 1:42:36I urge all my colleagues to support the legislation and I yield back. Does anyone else seek recognition on Mr. Williams bill? Hearing none, we'll move to amendments. Does anyone wish to offer an amendment to the nature an amendment in the nature of a substitute? There being no further discussion or amendments to the bill, the question now occurs on the adoption of the amendment in the nature of a substitute. All those in favor shall signify by saying I. I. All those opposed shall signify by saying nay. Nay.
▶ 1:43:05In the opinion of the chair, the eyes have it and the amendment is adopted. The question now occurs on ordering the bill as amended to be reported to the house with a favorable recommendation. Those in favor shall signify by saying I. I. All those opposed shall signify by saying nay. Request a recorded vote. Mr. Chair. In the opinion of the chair, the eyes have it. For what purposes the gentleman seek recognition? We cast recorded vote. Mr. Williams requests a recorded vote. All those in favor of recorded vote raise your hands. A sufficient number having raised their hand.
▶ 1:43:34A recorded vote is ordered. Pursuant to subsections C5 of rule three of the committee rules, a vote on this question is postponed. We'll now move to our next bill. Pursuant to notice, I call up HR 3645, amendment for crowdfunding capital enhancement and small business support act introduced by the gentleman from Pennsylvania, Mr. Muer, the chair of our oversight subcommittee.
▶ 1:44:06The clerk will report the bill which has been distributed in advance. HR 3645 to amend the Securities Act of 1933 to raise the offering amount threshold from when issuers using the crowdfunding exemption are required to file financial statements reviewed by a public accountant who is independent of the issuer and for other purposes. Without objection, the bill is considered read and open to amendment at any point.
▶ 1:44:30The gentleman from Pennsylvania has an amendment in the nature of a substitute, copies of which have been distributed in advance. The clerk will report the amendment. An amendment in the nature of a substitute to HR 3645 offered by Mr. Muer of Pennsylvania designated as HR 3645 ANS. Without objection, the amendment's considered read and will serve as the base text for the purposes of amendment. The gentleman from Pennsylvania, Mr. Muser, is now recognized to explain his amendment for five minutes.
▶ 1:45:01Thank you, Mr. Chairman. I move to strike the last word. Gentleman's recognized. I urge my colleagues to support my bill, the access act of 2025 HR 3645 regulation crowdfunding reggg CF has been one of the great bipartisan success stories to come out of the jobs act. It gives the smallest of businesses a shot at raising that critical first $25,000 to $250,000.
▶ 1:45:28This is capital too small for venture funds and too risky for traditional loans, yet absolutely essential for hiring those first employees and opening the doors. Since REGG CF launched, more than 5,000 companies have raised over $2 billion while maintaining one of the lowest fraud rates of any SEC exemption. But there's a catch. The moment a founder tries to raise more than they must shell out in the neighborhood of $15,000 for an audited financial review.
▶ 1:45:57significant portion of the very money they're trying to raise. This threshold is outdated and should be modernized. This higher threshold works. We saw the proof during COVID when the SEC temporary temporarily lifted the audit threshold to $250,000 offering spike capital move faster and investor safeguard stayed strong.
▶ 1:46:17The Accex Act simply locks in that proven $250,000 threshold and importantly lets the SEC elevate it up to $400,000 when inflation or market data warranted without waiting on another act of Congress. I want to thank Chairman Hill, Ranking Member Waters, and my colleagues across the aisle for their collaboration. We kept rigorous investor protections in place while still giving small business the flexibility they need.
▶ 1:46:43We have shown that promoting entrepreneurship and protecting investors are not mutually exclusive. In fact, they go hand in hand. Bottom line, the access act keeps capital and future wealth in our local communities, reduces the red tape for the smallest of entrepreneurs, and future proofs regulation crowdfunding all without sacrificing a single investor safeguard. Urge my colleagues to vote yes, and I yield back. The gentleman from Pennsylvania yields back. Uh, who seeks recognition.
▶ 1:47:11The gentleoman, the ranking member of our full committee, Miss Waters, is recognized. I move to strike the last word. You're recognized for five minutes. Thank you, Mr. Chair. I support this bill as it builds on the work former chair McHenry and I did to create a functioning crowdfunding security in our marketplace.
▶ 1:47:27Regulation crowdfunding or RED C-F, which was first created by the Jobs Act of 2012, allows qualifying businesses to raise up to $5 million in a 12-month period from potentially thousands of investors, including from retail investors. As the rules currently stand, if a business wants to raise $124,000 or more using crowdfunding, their financial statements must be reviewed by an independent public accountant.
▶ 1:47:58While I'm a strong proponent of having publicly disclosed financials that are reviewed or audited, hiring an accountant can be expensive and we do not want to make it prohibitively costly for small businesses to have access to capital during the CO 19 pandemic.
▶ 1:48:16The Securities and Exchange Commission or SEC temporarily raised the limit to and I support making this permanent by raising the current limit to $250,000 and giving the SEC the discretion to raise it up to 400,000 at the recommendation of the investor and small business advocates. This bill balances the needs of small businesses with the needs of investors.
▶ 1:48:44And I'll note that the CEO must still attest to the accuracy of the financial statements, but doesn't need to go through the expensive formal auditing process until the company has the financial wherewithal to do so. So, I want to thank Miss Muser and chairman's staff for working with my staff to ensure this bill mirrors the temporary actions of the SEC and urge all members to support it. I thank you and I yield back. The gentleoman yields back.
▶ 1:49:13The chair recognizes the chair of our capital market, subsequently Miss Wagner of Missouri. I uh thank you again, Mr. Chairman, and I am indeed pleased to support HR 3645, the Access Act, authored by Congressman Muer, yet again, another strong capital markets uh subcommittee bill. And I'm so pleased we're able to come to a bipartisan uh agreement on this piece of legislation.
▶ 1:49:38For many small businesses, regulation crowdfunding or reg CF is the only realistic path for raising early stage capital outside of friends and family. Unfortunately, the structure of the current rules often treat these microissuers like they're conducting multi-million dollar offerings. And that is simply a mismatch. The Access Act makes a simple but important change.
▶ 1:50:07It updates the financial statement review threshold to better reflect the modest size and risk profile uh of most REG CF offerings. This is not about rolling back investor protections. It's about right sizing compliance to fit the scale of capital being raised.
▶ 1:50:30When regulatory costs exceed 10% of the funds an entrepreneur is trying to raise, the rules aren't serving anyone, not not investors who want to access early stage deals. We've already seen this policy tested in the real world.
▶ 1:50:50The SEC temporaril uh SEC's temporary relief during the pandemic proved that higher thresholds can work without compromising integrity. This bill puts the common sense into law. I commend Mr. Muser for his work and I urge my colleagues to support the access act and I yield back. Mr. Chairman, gentlewoman yields back. Who seeks recognition on Mr. users ANS.
▶ 1:51:21I recognize myself for five minutes. I'm proud to support HR 3645, the amendment for crowdfunding capital enhancement small business act, the access act as introduced by our oversight subcommittee chair Dan Muser. Regulation crowdfunding reg CF was created by the jobs act of 2012.
▶ 1:51:40And as the ranking member noted, this has been a strong uh place for bipartisan cooperation over the past decade to try to find helpful options for startups and small businesses seeking to raise small amounts of money while avoiding the most costly aspects of Securities and Exchange Commission registration requirements. In fact, since 2016, Rex CF has supported over 6,500 startups.
▶ 1:52:08Additionally, nearly 2.4 4 billion in capital has been raised through 8,400 investment rounds using that crowdfunding exemption since 2016. That's a big statement. This has been a big help to angel investors all around the country. It's been absolutely validated the good work that uh former chair Mckenry and former chair also waters worked on around the jobs act.
▶ 1:52:36It's demonstrated that crowdfunding is a viable raise way to raise capital without producing significant regulatory or oversight challenges. Currently, issuers using exemption under REC CF must file financial statements reviewed by an independent public accountant for any offering over a h 100,000. But the average cost to file those statements is around 10,000, which is a significant expense.
▶ 1:53:04You're trying to raise capital to move your business forward and it's eaten up by legal fees and accounting fees just trying to move ahead. And this is the secret to what we're doing in this committee in this Congress on access to capital. Whether it's access to capital like Mr. Donald's amendment to the bank holding company act to be able to to borrow more money in small bank holding companies or Mr.
▶ 1:53:30Williams bill that we just talked about that lowers the cost for capital by raising the ability to have more people doing investment research reports on small business. Here we go to crowdfunding, angel investing, the very startups that the jobs act was meant to improve and we want to recognize that uh we want to give them a better shot at doing that and lower their upfront cost in their capital raise.
▶ 1:53:59The SEC experimented with this by amending REGG CF during the CO 19 and during that temporary relaxation of REGG CF's requirements, the crowdfunding exemption continue to work as intended and the SNC did not report any increased abuse or exploitation of crowdfunding exemptions as a result of this temporary relief.
▶ 1:54:21So, it makes complete sense with the leadership from our friend, the sponsor of this bill, that we try to take the success from that temporary relief and make it permanent. Under Mr. Muer's bill, issuers using crowdfunding exemption will only be required to file financial statements to be reviewed by an independent accountant for offerings over $250,000 as opposed to that current threshold of 100,000. I commend Mr.
▶ 1:54:47Muser for drafting a bill that surgically rights sizes our security laws to lessen the burdens on those small businesses raising small amounts of capital. I urge my colleagues to support this legislation to help small companies grow, hire, and innovate. And I yield back the balance of my time. Does anybody seek recognition? Hearing none, we'll move to amendments. Does anyone seek to offer an amendment to Mr. Muer's amendment in the nature of a substitute?
▶ 1:55:15There being no further discussion or amendments to the bill, the question now occurs on the adoption of the amendment in the nature of a substitute. All those in favor shall signify by saying I. I. All those opposed shall be signified by saying nay. In the opinion of the chair, the eyes have it and the amendment is adopted. The question now occurs on ordering the bill as amended to be reported to the house with a favorable recommendation. Those in favor shall signify by saying I. I. All those opposed shall signify by saying nay.
▶ 1:55:44In the opinion of the chair, the eyes have it. For what purposes, the gentleman from Pennsylvania seek recognition. Mr. Chairman, I ask for a recorded vote. A recorded votes been requested. All those in favor of recorded vote, raise your hands. A sufficient number having raised their hand. A recorded vote is ordered. Pursuant to subject C5 of rule three of the committee rules, a vote on this question is postponed. We'll now move to our next bill.
▶ 1:56:11Pursuant to notice, I call up HR 225, the HUD Transparency Act, introduced by the gentleoman from Texas, Miss Dela Cruz. The clerk will report the bill, which was distributed in advance.
▶ 1:56:26HR 225 to require the Inspector General of the Department of Housing and Urban Develop Development to testify before Congress annually and for other Without objection, the bill is considered read and open to amendment at any point. The gentleman gentleoman from Texas has an amendment in the nature of a substitute, copies of which have been distributed in advance. The clerk will report the amendment.
▶ 1:56:50An amendment in the nature of a substitute to HR225 offered by Miss Dea Cruz of Texas designated as H225 ANS. Without objection, amendments considered read and will serve as the base text for purposes of amendment. The gentleoman from Texas, Miss Dela Cruz, is now recognized for five minutes to explain her amendment. Thank you, Mr. Chair, for bringing this important piece of legislation up.
▶ 1:57:18the HUD Transparency Act of 2025, is a good governance bill to require the Inspector General of HUD to testify before Congress annually. Given the amount of federal dollars sent to HUD, the housing affordability discussion cannot be the had cannot have effectively without HUD's commitment to be good stewards of our tax dollars.
▶ 1:57:46Unlike several other federal agencies under this committee's purview, the HUD secretary currently has no requirement. Again, that is no requirement to testify.
▶ 1:58:00This bill will ensure members on both sides of the aisle have a formal oversight mechanism for HUD, which is transparency we are currently lacking and have previously agreed that we need with the unanimous passage of this bill out of committee and on the House floor last Congress.
▶ 1:58:23Prior to 2023, it had been five years since the committee received testimony from the HUD IG with thousands of full-time employees and an annual enacted gross discretionary budget authority of over 77 billion in 2024. It is Congress's responsibility to conduct meaningful oversight of HUD and its programs.
▶ 1:58:51Our committee relies heavily on the work the HUD Inspector General does and the role it serves as an independent third-party voice when they testify about issues key to their mission, which is to safeguard HUD's program from fraud, waste, and abuse, and identify opportunities for HUD programs to progress and succeed.
▶ 1:59:19A key point I would like to make is that this legislation is not about questioning the importance of HUD programs. In fact, my majority Hispanic and largely workingclass district relies on the critical programs HUD provides. This bill is working to increase transparency and ensure these programs are running well.
▶ 1:59:44I look forward to working with my colleagues on both sides of the aisle to continue ensuring American taxpayer dollars are used for impactful and well-run programs and that those programs like the ones provided by HUD are sustainable for when our constituents need them. Thank you. I yield back. Gentleoman yields back. Who seeks recognition? Ranking member of the full committee, Miss Waters, you're recognized. I move to strike the last word.
▶ 2:00:14General woman's recognized for five minutes. Uh Mr. Chairman, um oversight is a core function of this committee. Inspectors general play a critical role in providing transparency about the functions of government as well as holding government officials accountable. They're able to do this because they're independent of the officials they oversee and until recently were only removed for cause.
▶ 2:00:41However, earlier this year, President Trump fired 17 IGs across the government, including the Department of Housing and Urban Development. That vacancy has remained unfilled. The bill before us would require the testimony of the HUD IG annually.
▶ 2:01:00And while I'm supportive of that, is the chairman going to invite the acting IG to I've repeatedly asked that the acting CFPB director testify, but the chair rebuffed my request, stating that he plans to wait for a confirmed director. Based on the chair's track record and the president's aversion to I think we'll be waiting a while for this testimony.
▶ 2:01:30In addition, this bill ignores the real and urgent challenges facing HUD and our housing market. Where are the pieces of legislation that seek to end the affordable housing crisis? Where are the bills that address our homelessness crisis? Where's the legislation pushing back on the president's budget that would cut 27 billion from the HUD budget and end section eight?
▶ 2:01:58There is also no mention of the president's plan to use cryptocurrency to make HUD payments or an investigation into DOA's access to confidential information. This bill also doesn't address the recent roll backs of critical civil rights protection, including the repeal of the affirmatively furthering fair housing rule and the equal access rule.
▶ 2:02:24These are issues the committee should prioritize and direct the IG to examine. So, while I support the intent of the bill, we must finally take up legislation that addresses the housing crisis and pushes back on Trump's dangerous actions to undermine HUD. With that, I yield back. The gentleoman yields back who seeks recognition. Mr. Flood, the chair of our housing insurance subcommittee. You're recognized for five minutes.
▶ 2:02:54Thank you, Mr. Chairman. First, I want to express my support for Congresswoman Dea Cruz's legislation, the HUD Transparency Act of 2025. This bill will aid our committee's oversight of the Department of Housing and Urban Development by requiring the HUD Inspector General to testify in front of our committee annually. I will note the HUD IG has testified in each of the last three years, including this year.
▶ 2:03:16Those hearings have all been constructive and they provide a forum for this committee to track challenges within the agency that reinforce our role in this committee both in oversight and policym. When the HUD OIG testified this year, they raised very important issues like number one, the health and safety challenges in HUD assisted housing, number two, increasing access to affordable housing, number three, mitigating counterparty risk for the FHA, and finally, number four, oversight of disaster recovery
▶ 2:03:47dollars. A number of these issues present opportunities for our committee to legislate this Congress and they will be items that we can check on when the Secretary Turner uh testifies before the committee. I want to thank my colleague Miss Dea Cruz for her work on this legislation and I urge my colleagues to support the bill. I yield back the balance of my time. Gentleman yields back who seeks Mr. Chairman, the gentleman from North Carolina, Mr. Moore, are you recognized? Thank you, Mr. Chairman.
▶ 2:04:16I just want to speak in support of this uh this bill as well. Uh one of the questions that we had a few months ago had to do with the disaster relief in North Carolina and how HUD funds were being used uh particularly last year. And so I think more transparency in this process is warranted and as we as western North Carolina rebuilds from the hurricane from hurricane Helen uh and we know HUD's going to be a critical part of that rebuilding. I think this legislation uh Mr.
▶ 2:04:43State L Cruz is a great step in that uh in that direction. So I would urge the body to support it. Thank you. Yel back. Gentleman yields back. Who seeks recognition on Miss Dela Cruz's bill. I recognize myself for five minutes to strike the last word. I want to thank uh the gentleoman from Texas for offering this common sense accountability measure. I wholeheartedly support it.
▶ 2:05:10We hear a lot of talk from both sides about how when the other side occupies the White House, it's Congress's job to hold them hold them accountable through greater oversight hearings. Well, in our case, what could be a better tool for both sides, regardless of who's in charge, than to have the independent inspector general of HUD testify before the committees of jurisdiction every year.
▶ 2:05:36We rely on the invaluable work of the Inspector General to bring our attention major issues requiring this committee's The HUD Office of Inspector General is one of 12 original OIGs enacted into law, reporting not only to the HUD Secretary, but also to Congress. It serves as our eyes and ears in bringing forth audits, evaluations, investigations, and other reviews of programs and operations of the federal agencies.
▶ 2:06:05The task of the HUD Inspector General is no small one. The OIG has uncovered multiple instances of waste, fraud, and abuse. Much of it involves substandard conditions and even life-threatening issues with public and HUD assisted housing impacting thousands of households annually.
▶ 2:06:27This hits close to home in my own district where just last week I sent a letter to the HUD inspector general asking for an investigation into the decadel long problems with the Little Rock Housing Authority that has resulted in the impending foreclosure of 240 units of public housing and millions in unaccounted for public housing dollars.
▶ 2:06:51We rely on the OIG to report to us on whether taxpayer funds are spent appropriately and where the money could be put to better use and that is something that on which we should all rely. By requiring annual testimony by the HUD IG, this committee can ensure that these issues continue to receive attention that they deserve and take the necessary timely actions to address them. I urge my colleagues to support HR 225 and I yield back the balance of my time.
▶ 2:07:20Does anyone seek recognition on Miss Dela Cruz's amendment in the nature as a substitute? Mr. Chairman, amendment. Just gentleoman would suspend a moment hearing none. We'll move to amendments. Does anyone wish to offer an amendment? Gentlewoman from Texas. Mr. Chairman, I have an amendment at the desk. For what? Uh the gentleman has an amendment at the desk. will pause while that amendment is distributed. Gentleman from Texas. Mr.
▶ 2:07:50Chairman, I reserve a point of order. The gentleman from Texas reserves a point of order. I'm sorry, Mr. Chairman. Do I keep hearing the gentleman from Texas? I just called on the gentleman from Texas because he reserved a point of order. Oh, I thought you were referring to me. I would never refer to the gentleoman as a gentleman. Well, I wanted to correct you if that's what you were saying. God bless. Right.
▶ 2:08:10Take it A point of order has been reserved. The clerk will report the amendment.
▶ 2:08:37An amendment to the amendment in the nature of a substitute to HR225 offered by Miss Garcia of Texas designated as Without objection, the amendment is considered read. The gentleoman from Texas is now recognized to discuss her amendment. Thank you, Mr. Chairman. And uh first I want to agree that this is a good government bill and and I'm glad to see uh the other side of the aisle be very concerned about transparency.
▶ 2:09:04I hope that concern stays through this whole uh markup especially when we start discussing the Calamity Act. Um, but I see this amendment as making uh this good government bill even better. Uh, the bill would require the HUD inspector general to testify on annual basis.
▶ 2:09:23Uh, and that we should also make sure that not only do they discuss the items that were discussed in the bill, but that we also ensure that we make the best of the committee time with the AG to address pressing housing affordability issues that families across the nation are facing. My amendment will require the HUD IG to study and report to Congress the impact of DEOs, otherwise known as Department of Government Efficiency on the Department of Housing and Urban Development.
▶ 2:09:52Deutsch has called for and carried out the termination of staff and field offices, including offices that administer public housing vouchers, projectbased rental assistance programs, and homelessness assistance. Deutsche also called for the termination of staff and offices and enforced fair housing laws. Just as Secretary Turner repealed the affirmative further furthering fair housing rule in the equal access rule.
▶ 2:10:18As a reminder, the affirmative affirmatively furthering fair housing rule is designed to help identify and address barriers barriers to housing. The equal access rule required housing facilities and services funded through HUD's program to ensure equal access to individuals regardless of their gender identity.
▶ 2:10:40These were two sensible rules that help historically underserved communities access housing because everyone everyone in this country deserves a roof over their heads. The study detailed in my amendment would investigate the impacts of Deutsch and these repeals. At a time when our nation faces the worst affordable housing and homeless crisis, we cannot let Deutsch and Secretary Turner take away housing programs that serve communities.
▶ 2:11:08This is contrary to the HUD's mission which which um there's no mention in in this uh bill. Uh we should look at HUD's roles efforts of our progress towards his mission to create strong sustainable inclusive communities in quality quality affordable homes for all. Access to safe, dignified and affordable housing is not a privilege. It is a basic fundamental right. It is a right that everyone deserves.
▶ 2:11:38We cannot continue to stand by without understanding the impact that Deutsch's actions will have on our constituents. The bill is currently written requires the inspector general general to focus on face waste and abuse and is tending before the committee. I agree but let's make sure that it also studies at all.
▶ 2:11:59Let's require the IG to study the abuse of power by Deuts and the waste of meaningful policies like the FFHR rule and the equal access rule that were meant to protect Americans across the nation. Otherwise, we will just keep perpetuating fraud that everything is fine in housing in America. There's no homelessness. All we have to do is cut fraud, waste, and abuse. I say, let's study it all.
▶ 2:12:26Let's include a review of what the impact of Deutsch has had on all these housing policies. I urge my colleagues on both sides of the aisle to support this amendment, and I yield back the balance of my time. The gentle lady yields back. Uh, does the gentleman from Texas insist upon his point of order? He withdraws his order.
▶ 2:12:48Is there further debate on the amendment for the gentleoman from uh Texas, Miss Dea Cruz is recognized for Mr. Chairman, if I can interject, it's nice to see an all Texas uh debate here this this morning. I think this is a historic day and I would personally love to see an all Texas Kumbaya. So, let's let's see what we can do. Let's see what we can do. Texas Jamberee Time. Miss Dale Lruz, your five minutes.
▶ 2:13:13Oh, well, on that note, I can say that all of us here in Texas, um, Miss Garcia and myself agree the importance of having the inspector general, uh, come before us and testify. I don't think that the amendment is necessary because when the inspector general is here, we are free to ask him any questions that we would like. Uh I don't think that we need a specific amendment to ask about this specific service or concern.
▶ 2:13:41We can ask a multitude of questions during the time that the inspector general is here. It is important that we agree on both sides of the aisle, including Texans. um that the inspector general come here to talk about the importance of housing, make sure that there is no fraud, waste, and abuse, and that the funds that there that are allocated to HUD are being used properly. Thank you. I yield back. Gentle lady yields back.
▶ 2:14:10And for what purposes, the ranking member seek to be Uh ranking member is now recognized for five minutes. I strongly support Representative Garcia's amendment directing the HUD Inspector General to exam examine the harmful actions by the Trump administration at HUD.
▶ 2:14:29Since the start of the new administration, Republicans Trump and Elon Musk and his Doge minions have launched a fullscale assault on HUD at a time when the US is facing one of the worst housing and homelessness crisis.
▶ 2:14:45They have repealed fair housing regulations, halted civil rights enforcements, closed field offices, and access sensitive personally identifiable data on housing discrimination, including on sexual assault victims. We must understand the consequences of these actions and ensure her submission is not compromised. So I thank Miss Garcia and I urge my colleagues to support this amendment.
▶ 2:15:15Thank you and I yield back the balance of my time. Gentle lady yields back. Is there further debate on the amendment? Uh seeing no seeing no further debate. Question now occurs on the amendment. All those in favor of the amendment shall signify by saying I. I. All those opposed shall signify by saying nay. Nay. And in the opinion of the chair the nays have it. The nays have it. The amendment is not I ask for a recorded vote.
▶ 2:15:45For what purposes a gentle woman from Texas seek I ask for a recorded vote. A recorded vote is requested and all those in favor of a recorded vote raise your hand. A sufficient number having raised their hand. A recorded vote is ordered. Pursuant to subsection C5 of the rule three of the committee rules, further proceedings on this amendment are postponed. We'll now move on to the next Mr. Chairman, for what purpose does a gentle lady from New York seek recognition?
▶ 2:16:15I have an amendment after this. We'll pause while the amendment is Mr. Chair, I reserve a point of order. The gentleman reserves a point of order.
▶ 2:17:10Point of order has been reserved. The clerk will report the amendment. An amendment to the amendment in the nature of a substitute to HR225 offered by Miss Velasquez of New York designated as Valaz Q043. Without objection, the amendment is considered red. Uh the gentleoman is recognized on her amendment. Thank you. Uh Mr. Chairman, my amendment is simple and straightforward. It takes a strong bill and makes it even stronger.
▶ 2:17:40This bill is all about transparency and accountability. In addition to requiring the hot inspector general to testify before this committee, my amendment requires any federal receiver or monitor overseeing a public housing authority res over the previous calendar year to also appear and present testimony before Congress.
▶ 2:18:07As many of you already know, my home city of New York is home to the nation's largest public housing authority. The New York City Housing Authority, or NICHA, provides affordable housing to more than 528,000 residents. It is home to 1 in 17 New Yorkers.
▶ 2:18:28NICHA has more than 177,000 apartments in 2,411 buildings across 30 33 35 conventional public housing and pack developments. It also operates the nation largest section 8 program.
▶ 2:18:49Yet unfortunately many NICHA's many of NICHA's unit are in a very diff um difficult state of disrepair due to a lack of capital investment. Republicans and Democrats are to blame.
▶ 2:19:04Nitra residents suffer from a consistent lack of hot water, insufficient heat during the winter months, rotten and insect infestations, broken elevators, and widespread and recurring lead and mold problems. But NICHA's problems are about more than just the conditions of the units. Is about the operational challenges of NICHA as well.
▶ 2:19:32Residents can wait days or even weeks for basic repairs. Tenant association presidents often have to call the Nichas headquarters in Manhattan to receive basic services and consistently call my office for intervention. While my team and I are always ready and able to assist, the situation remains unacceptable. NICHA has been under the imposition of a federal monitor since 2018.
▶ 2:20:01While NICHA has made improvements to the conditions of its unit as well as its operation, it has also suffered setbacks. Last year, 70 current and former NICHA employees were arrested and charged with bribery and extortion offenses. It was the largest single day bribery takedown in the history of the Justice Department.
▶ 2:20:28I have heard my colleagues on the other side of the aisle say for years that tax taxpayers aren't getting their money's worth from this agency. I agree. Taxpayers deserve better, but so do residents. Residents deserve better. I have always understood that turning NICHA around will take years, not months.
▶ 2:20:51I am committed to NICHA's future and I will do everything in my power to retain return NICHA to the agency it once was. New Yorkers like to say that I am NICHA's biggest champion, but I'm also its biggest critic. It is a title I wear proudly.
▶ 2:21:12If we here in Congress are going to ensure that taxpayers and residents get their services they deserve and ensure e efficient use of funds, we must hear from the monitor directly and hear how he's working to achieve this result. While the monitor meets regularly with Nitro officials, city council members and hot staff to provide updates, he has not appeared once before either our committee or the Senate Banking Committee.
▶ 2:21:42My amendment will change that by requiring annual appearances before our committee. The cost of the monitor are high and transparent performance and reporting will facilitate accountability. While the monitor publishes qu quarterly reports that consist of observation by by its team and outside contractors.
▶ 2:22:07This report lack clear consistent metrics for evaluating success and it is not clear how the monitor judges success. Public reporting and appearances before Congress of the data is essential for transparency and accountability. Again, while I'm committed to NICHA for the long term, there are key question we must ask the monitor in order to achieve that result.
▶ 2:22:33I want to thank Representative Da Cruz and Chairman Hill for working with me on this amendment. I also want to thank Ranking Member Waters for her tireless effort to improve our nation's affordable housing system. Thank you. I yield back. Gentle ladies yield his time. Sorry, gentle ladies time has expired. Does a gentleman from Texas insist upon his point of order? Gentleman withdraws. Are there is there further debate on the amendment? Congresswoman from Texas, Miss Dea Cruz. Yes.
▶ 2:23:04Thank you, Mr. Chairman. Um, and thank you, Miss Velasquez, for your amendment. I think that we both agree that what has happened in New York um is simply unacceptable and that the residents do deserve better. I do agree with you on that.
▶ 2:23:20And what I would like to do is work together to find some solutions where we can um bring justice for the residents that deserve safe safe housing in New York. And so if um if you would agree to remove your amendment, I would like to work together on something that would help the residents of New York live in a safe environment and hold the housing authority in New York accountable.
▶ 2:23:51I much appreciate your commitment to work with me and uh at this point I will withdraw my amendment with the asurances that you are going to work uh going forward with me. Yes ma'am. Thank you. Does the gentle gentle lady yield back? I yield. The gentle lady yields back with that. Does the gentleoman from New York withdraw? With throw my amendment. Thank you. Gentle lady withdraws. Are there additional the ranking member.
▶ 2:24:21I have an amendment at the desk. Uh we will pause while the amendment is distributed.
▶ 2:25:15Gentleman from Texas. Gentleman reserves a point of order. Point of order. A point of order has been reserved and the clerk will report the amendment.
▶ 2:25:40An amendment to the amendment in the nature of a substitute to HR225 offered by Miss Waters of California designated as HR22503. Without objection, the amendment is considered read and the gentle lady is recognized on her amendment. Mr. Chairman, I don't believe all of us have a copy.
▶ 2:25:56I don't I don't know whether the front row we will suspend until the gentle lady gets a copy of the Thank you, Mr. Chairman. I have one now. With that, the ranking member is Thank you very much. HUD plays a vital role in providing safe and affordable housing to families across the United States.
▶ 2:26:24Unfortunately, Trump and his administration are trying to force crypto down the throats of people living in HUD assisted housing. ProPublica reported in March that Trump's team at HUD were planning to treat HUD assisted households as guinea pigs in their plans to launch a untested initiative to make payments to households using stable coins, a type of cryptocurrency.
▶ 2:26:53My amendment would direct the HUD inspector general to investigate HUD's plans to require that HUD payments be made in stable coins, a type of cryptocurrency. If HUD does move forward with this, I for one would want to know if HUD is using Trump's own stable coin, how they choose the stable coin, and what fees are being paid into the president's pocket.
▶ 2:27:20This is this idea is preposterous, but requiring an investigation into it is just basic oversight. Back in April, I sent a formal letter to HUD demanding answers about the use of crypto and blockchains in agency operation. To this day, we have received no response. HUD has ignored a direct inquiry from Congress. That kind of silence is unacceptable.
▶ 2:27:47And unfortunately, the chair has not invited the HUD secretary to testify about this or anything else. Families depend on HUD programs to keep a roof over their heads. We cannot allow speculative financial tools to put that stability in jeopardy. This is not about stifling innovation. It is about protecting the millions of families and ensuring that HUD continues to provide safe and affordable housing for all.
▶ 2:28:16Until Congress sets a framework for responsible use of cryptocurrency, HUD should not proceed. Housing is not a test case. to ensure accountability and pre prevent another kickback to Trump and his family. My amendment directs the HUD IG to investigate the use of crypto in any of HUD's programs and operations. I urge my members to support my amendment and I yel back. The gentle lady yields back.
▶ 2:28:47Does the gentleman insist upon his port of point of order? Gentleman withdraws his point of order. Uh, for what purposes the gentle lady from Texas seek recognition? Um, yes. Uh, thank you, Mr. Chair. I will assume the gentle lady is uh moving to strike the last word. Moving to strike the last word. Yeah. I'm recognized for five minutes. Thank you. Uh, yes. Thank you for uh this amendment that you have um have given Miss Waters.
▶ 2:29:15I I do believe that um we are able to ask the inspector general to have and conduct any kind of investigation on cryptocurrency or on the housing authority in New York. And so while I think this is valuable um as an amendment, I don't think it is necessary to add it to this bill that we know is good governance.
▶ 2:29:41This is something that we can ask the inspector general to do by simply writing a letter. And once we've written the letter and given the inspector general a deadline to respond to that letter, then once the inspector general is in front of us, we can ask more questions concerning this specific subject. While I do think that it is um important information, I do not believe that we need to add it as an amendment to the bill. Will the gentle woman yield?
▶ 2:30:11Will the gentle woman yield? Will you uh join with me? Just m Just a moment. The gentle lady, do you do you yield to the ranking? Yes, I yield back. Do you yield? Will you yield time to the ring? Thank you. Thank you for yielding. Uh I would like to respectfully ask you to join with me in sending the letter uh to the inspector general uh to uh uh to get the inspector general uh basically uh to respond uh to the letter that I have sent.
▶ 2:30:41I I would hap I I'd be happy to connect our teams together so that we could see what a good solution for both of us would be. Thank you. Does the gentle yield gentle lady yield back? I yield back. The gentle lady yields back. Is there further debate on the amendment? Seeing none, if there's no further de debate, uh the question now occurs on the amendment. All those in favor of the amendment shall signify by saying I. All opposed signify by saying nay. Nay.
▶ 2:31:12In the opinion of the chair, the nays have it. The nays have it. And the amendment is not adopted. Recorded vote is requested. The gentle lady has requested a recorded vote. Uh, a recorded vote is requested. All those in favor of the recorded vote raise your hand. Seeing a sufficient number having raised their hand, a recorded vote is ordered. Pursuant to subsection C5 of rule three of the committee on rules for the proceedings on this amendment are postponed. We will now move on to the next amendment.
▶ 2:31:43Seeing no further amendments, without objection. Oh no, I know. Okay. No. Seeing no further amendments, without objection, the previous question on the substitute is ordered and recorded votes on the pending amendments have been postponed. Once those votes are taken, the committee will immediately vote on adoption of the uh amendment in the nature of a substitute and then we'll consider the question to report the measure.
▶ 2:32:05We will now move on to the next Pursuant to notice, I call up HR 3709, the Advancing the Mentor Protegé Program for Small Financial Institutions Act, introduced by the gentleoman from Ohio, Miss Batty. The clerk will report the bill, which is distributed in advance.
▶ 2:32:30HR 3709 to amend the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to establish a financial agent mentor protege program within the Department of Treasury and for other purposes. All right, without objection, the bill is considered read and open to amendment at any point. The gentleoman from uh California has an amend well on behalf of the gentleoman from Ohio.
▶ 2:32:56Uh the ranking member has an amendment in the nature of a substitute, copies of which have been distributed in advance. The clerk will report the amendment. An amendment in the nature of a substitute to HR 3709 offered by Mrs. Batty of Ohio, designated as Batty013. Without objection, the amendment is considered read and will serve as the base text for the purpose of the amendment. The ranking member is recognized for five minutes on behalf of Representative Batt. I move to strike the last word.
▶ 2:33:26You are recognized for five minutes. Uh, let me thank our colleague and our former chair of the diversity and inclusion subcommittee, Representative Joyce Batty, for her strong leadership on this bill to support our community banks and credit unions across the country, including our minority depository institutions or MDIs.
▶ 2:33:48HR 3709 will codify and enhance the Treasury Department's mentor protege program, which pairs larger banks with smaller ones so they can have a mentor they can get advice and support from to grow and thrive. The House previously passed a similar version of Representative Batty's bill by voice vote in 2020 during the Trump's first term and the House subsequently passed it several more times during the pandemic.
▶ 2:34:19However, we are debating this at a time when President Trump has attacked anything that relates to diversity, equity, and inclusion. Trump has even attacked our community financial institutions in seeking to wipe out the CDFI fund.
▶ 2:34:34I'm so pleased that Chairman Hill agreed to take up Representative Bad's bill to continue our long-standing bipartisan tradition to support MDI's alongside other community financial institutions like rural banks.
▶ 2:34:50Let me remind members that during Trump's first term, I worked with ranking member Velasquez and when Treasury Secretary Minutuchin uh we worked with him to secure a $60 billion set aside for MDIs and CDFIs and other community financial institutions to provide paycheck protection program that is the PPP loans to small businesses in the second round of the program.
▶ 2:35:16We knew that the MDIs and other small banks and credit unions really helped to get those critically needed funds to smallest the smallest of businesses which enable them to keep their lights on during the pandemic. We then worked together to pass a historic 12 billion package of capital investments and grants that the Treasury Department deployed to CDFI and MDI.
▶ 2:35:43I and other committee Democrats have a number of other bills that we believe will support all of our communities, financial institutions, including rural banks and MDIs. These include reforms on deposit insurance, the formation of denovo banks, and programs to support our young entrepreneurs, and help community financial institutions with their technology challenges.
▶ 2:36:08We stand ready to work closely with committee Republicans to advance them for the benefit of these institutions and the committees they serve. Let's start by passing HR 3709. Uh I urge members to vote yes as many of you have done before and I yield back my time. And does anybody else seek recognition on the Mr. Chairman? I move to strike the last word. The gentle lady from Texas is recognized. Thank you, Mr. Chairman.
▶ 2:36:37HR2709, the advancing the mentor protege program for small financial institutions act supports small banks and credit unions by codifying the financial agent mentor protege program at the US Department of Treasury.
▶ 2:36:54This program pairs up small and rural financial institutions with large banks and credit unions, providing resources, training, and technical assistance to help them better serve their communities and become financial agents to Treasury themselves. Small financial institutions, including minority depository institutions that are at the front lines of serving low and moderate income, underserved, and minority communities.
▶ 2:37:21These institutions know the financial needs of their communities best and provide essential financial services like mortgage credit, small business and auto loans, investment banking and more. Despite the v vital nature of these anchor institutions, they are struggling and we need to help them. There are only 151 MDI banks left in the United States, a figure that has dropped more than 30% since its peak in 2008.
▶ 2:37:52MDIs, small banks, and credit unions. And rural financial institutions generally have much higher expenses and are often for forced to merge with other institutions to survive. Codifying the mentor protege program at Treasury will go a long way toward preserving and strengthening these institutions and ensuring that they continue to provide critical banking services to communities in need.
▶ 2:38:20I'm proud to support this bill which has passed on suspension twice before has the support of the Independent Community Bankers Association, the American Bankers Association, America's Credit Unions Association, and the National Bankers Association. Of this, we can all agree sporting supporting small missiondriven credit unions and community banks directly benefits American consumers and the and the economy. as well.
▶ 2:38:49I urge my colleagues to support this bill and I yield back. Gentle lady yields back. Does anybody else seek recognition? I will recognize my uh self to strike the last word and um in in I think there's been a general concern on the steady decline in the number of small throughout the country and uh and I know that I've seen that in Michigan as well.
▶ 2:39:16In in 2018, the Treasury Department launched the bank mentor protege program to foster relationships between nation's largest banks and its smallest banks. Uh and as but yet, as we have seen, those uh those smaller institutions, especially those in rural areas, are vital to the growth and development of the communities that they serve. Yet, they are often lacking in the uh access to critical resources needed to compete with those larger banks.
▶ 2:39:43So throughout this Congress, we've heard from community bankers who say that postcrisis financial reforms have made it harder for them to survive and continue offering lowcost services uh to their customers. This voluntary mentorship program allows large banks to share expertise and resources with small banks, helping them raise capital, build skills, and grow, not just survive. And with that, I yield back.
▶ 2:40:07Does anybody else seek uh anyone else seek none, we'll move to the amendments. Is are there any amendments at the desk? Being no further discussion or amendments to the bill, the question now occurs on adoption of the amendment in the nature of a substitute. All those in favor shall signify by saying I. I.
▶ 2:40:36And all those opposed shall signify by saying nay. In the opinion of the chair, the eyes have it and the amendment is Uh the question now occurs in ordering of the bill as amendment as amended to be reported to the house with a favorable recommendation. Those in favor shall signify by saying I. I.
▶ 2:41:06Those opposed shall signify by saying nay. In the opinion of the chair, the eyes have And now And now a recorded vote is A recorded vote is requested. All those in favor of a recorded vote, please raise your hands. A sufficient number having raised their hand, a recorded vote is ordered. Pursuant to subsection C5 of rule three of the committee on rules, the vote on this question is We'll now move on to our next bill.
▶ 2:41:39Pursuant to notice, I call up HR 3633, the Clarity Act, uh, which uh, the chair has introduced. Uh, the clerk will report the bill, which was distributed in advance. HR 3633 to provide for a system of regulation of the offer and sale of digital commodities by the Securities and Exchange Commission and the Commodity Futures Trading Commission and for other purposes.
▶ 2:42:07Without objection, the bill is considered read and open to amendment at any point. Uh there is an amendment in the nature of a substitute, copies of which have been distributed in advance. The clerk will report the amendment. Amendment in the nature of a substitute to HR 3633 offered by Mr. Hill of Arkansas designated as Clarity ANS FSC.
▶ 2:42:38Thank you. We're going to pause here momentarily for the chair's return.
▶ 2:43:26Without objection, the amendments considered read and will serve as base text for the purposes of amendment. I now recognize myself for five minutes. I rise in strong support of the Clarity Act, a landmark bill that creates muchneeded regulatory framework for digital assets. This legislation is a critical step towards providing legal certainty, protecting consumers, and ensuring that the United States remains a leader in digital innovation.
▶ 2:43:57Digital asset technology is evolving rapidly and holds enormous potential. However, its growth in the United States is being constrained by a fundamental problem. A problem that this committee has grappled with for the better part of four years. The absence of clear and consistent rules and regulations governing its use and development.
▶ 2:44:23This uncertainty not only slows innovation, but it also puts consumers and investors at greater risk. At the heart of the issue is the lack of a clear definition of when is a digital asset considered a security under the oversight of the Securities and Exchange Commission or a nonsecurity or digital commodity under the authority of the Commodities Future Trading Commission, the CFTC.
▶ 2:44:49Neither agency currently has full jurisdiction over the spot market transactions, which represent the majority of activity in this space. The spot market gap has created a regulatory void where intermediaries operate without clear rules or Rather than offering clarity through formal guidance or rulemaking, the Biden administration through the SEC and then chairman Gary Gensler pursued instead a
▶ 2:45:19strategy of regulation by enforcement, asserting that you just had to come in and register as someone trying to innovate in this space. This reactive approach left developers and investors uncertain about compliance, pushed innovation offshore, and failed to provide meaningful protection to the public.
▶ 2:45:42In contrast, other countries have moved swiftly to create clear regulatory structures for digital assets and are quickly becoming global centers for this financial technology. Without decisive action, the United States risks falling behind.
▶ 2:45:59In the 118th Congress, we laid the foundation by advancing bipartisan digital asset legislation through the House with a vote of 279 to 136 with the support of 71 Democrats. Today, we continue that important work through the Clarity Act. The Clarity Act improves transparency by requiring developers to disclose essential information about their projects.
▶ 2:46:28It holds customer-f facing digital asset firms like brokers or dealers to high standards by requiring them to safeguard customer funds, provide adequate and accurate disclosures among many other It supports innovation by establishing clear processes for projects to raise capital under the SEC and for digital commodities to be traded through intermediaries regulated by the CFTC.
▶ 2:46:58More importantly, the Clarity Act brings much needed certainty by clearly defining the roles of the SEC and CFTC and creating a comprehensive registration structure. This gives digital asset firms the rules they need to operate legally and responsibly within the United States.
▶ 2:47:19I want to thank chairman GT Thompson of the House Agriculture Committee, Whip Tom Emmer, subcommittee chairs Brian Style and Dusty Johnson, and Representative Warren Davidson for all their work for years in crafting this legislation.
▶ 2:47:35Building on the success we had in FIT 21 in the 118th Congress, listening to the SEC, the CFTC, market participants on how to craft the bill that we have before us today. I also want to thank our Democratic partners and the many members of this committee who worked to move this legislation forward.
▶ 2:47:57It's time to close these regulatory gaps, provide clear rules of the road, and secure America's position as a leader in the digital asset innovation. I urge all my colleagues to support the Clarity Act so we can bring much needed protections to the digital asset markets. I yield back. Does anyone seek recognition? The ranking member of our full committee, Miss Waters, is recognized for five minutes. I move to strike the last word. The gentleoman is recognized.
▶ 2:48:26As I mentioned before, I am deeply concerned at the various abuses of power we have seen in this administration. President Trump has illegally deployed the military against my state. Our democracy is under attack and our constituents are facing a very serious economic crisis.
▶ 2:48:50Ignoring all of this, committee Republicans are trying to jam through a dangerous crypto market structure bill. The Calamity Act exposes investors to fraud, enables more FTX style fraud, creates national security risk, and hands over even more power to the mega bank mega banks and crypto giants.
▶ 2:49:16And to make matters worse, this bill creates vague new definitions that will result in endless litigation. Now, that set of issues doesn't even begin to address the Republicansized elephant in the room that my colleagues pretend not to see.
▶ 2:49:39Trump and his family have built a crypto empire and this bill does nothing to address blatant conflicts of interest and avenues for corruption and bribery. Mr. Hill, as the sponsor, I'd like to ask you a few questions about the bill. Days before taking office, President Trump issued his meme coin.
▶ 2:50:06As you know, he has used this meme coin to grant access to the White House to the highest bidder, foreign and domestic, through his meme dinner co memeco dinner. A few months ago, the SEC exempted meme coins from securities describing them as akin to collectibles.
▶ 2:50:32Although securities experts told us that meme coins can change over time, Mr. in section 103 on page 28, there is an exclusion for collectibles from the definition of digital commodity. Would this exclude meme coins like Trump's meme coin from important regulations under the bill?
▶ 2:51:02I yield to you, Mr. Hill. I appreciate the ranking member. Let's be clear that memecoins are essentially a symptom of the regulatory failure in my view from Gary Gensler's SEC and rather providing clear functional guidance on what makes a transaction of digital assets subject to security laws. He and that commission pursued a strategy regulation by enforcement that opened the door for this kind of project that doesn't have real world utility.
▶ 2:51:33And in our bill, we actually would give structure and strict standards for listing any kind of digital assets on an exchange which includes a memecoin. And I think you'd find this bill will very limit any uh use of meme coins by virtue of them not meeting listing requirements on the regulations that are strictly outlined in this bill to govern exchanges like Coinbase or other crypto exchanges.
▶ 2:52:09I yield back to the gentleman. Thank you very much. Um, are meme coins excluded from the definition of digital commodity in the bill? Well, as I said, I described that it's not a a memecoin is not a digital commodity, but a memecoin that could potentially be traded as a token would be covered under the strict listing standards in this legislation.
▶ 2:52:35And therefore these non-utility quote meme coins that would be seeking listing on an exchange regulated by this bill would not do very well in my personal judgment. Well, you know, I continue to bring up these very, very serious issues and unfortunately, um, Trump has so much power and influence, uh, with your caucus, uh, that he proceeds with ownership of crypto in the most outrageous way.
▶ 2:53:04It is an obvious uh, attempt by which to use the presidency of the United States to enrich itself. So, I will be proposing an amendment today to stop Trump's crypto corruption once and for all. Thank you, and I yield back. The gentleman does yield back. Who seeks recognition? The chairman of our financial technology, artificial intelligence, and digital assets subcommittee, Mr. Brian Style of Wisconsin. You're recognized for five minutes. I move to strike the last word. Gentleman's recognized for five minutes. I want to start, Mr.
▶ 2:53:33chairman by thanking you by thanking former chair Mckenry uh chairman of the agriculture committee uh GT Thompson uh subcommittee chair Dusty Johnson for their work on the digital assets market structure over the last few years. I think it should be really important to note that moments ago our colleagues on the egg committee passed the clarity act 47-6 in an overwhelming bipartisan manner.
▶ 2:53:59Moments ago, the egg committee passed the Clarity Act, which we are discussing right now 47-6 in an overwhelming bipartisan vote. Mr. Chairman, I feel optimistic that we can move forward on this legislation in a bipartisan manner also because at the end of the day, market structure clarity is not about Democrats or Republicans. It's about moving our country forward. In my opinion, Mr.
▶ 2:54:24Chairman, today we have a really unique opportunity, a responsibility in fact, to build on the progress that we have made in the previous congresses on this critical legislation. The Clarity Act incorporates ideas and feedback from stakeholders, experts, members across from across the ideological spectrum. Crucially, this bill is going to cement the US as the center of innovation in the digital asset space for the next generation of the internet.
▶ 2:54:51The web 3 revolution is truly here. Innovators are coming up with new ways to build decentralized systems that support creators, reduce costs, and improve transparency. But our laws in the United States have not kept up with the pace of innovation and development. So, what's occurred in the meantime? Legal ambiguity has pushed innovation and jobs offshore. It's stifled investment. It's put American consumers at risk of fraud.
▶ 2:55:23This bill will put in place a common sense framework that supports responsible development here in the United States. The Clarity Act provides straightforward answers to key questions. One, what are digital assets and when do they when do transactions implicate securities laws? What role should the SEC and CFTC play in regulating issuance or trading through centralized intermediaries?
▶ 2:55:48How can we reduce how can we reduce regulatory fragmentation between these two agencies? How can we encourage innovation and competition not just by tech firms but also by traditional financial firms? And finally, how can we best prevent fraud and manipulation by bad actors? These are the questions that we should be asking ourselves. And these are the questions that the clarity act provides clarity to.
▶ 2:56:15By answering the questions, you'll also see it provides market participation, market participants. It provides them the confidence to build and invest. We will truly unleash the promise of in the web 3 economy. It will ensure that innovation can occur in garages and dormatives, not just in law firms, in boardrooms. So, I encourage my colleagues to support this bill. The web 3, the web 3 revolution is here.
▶ 2:56:41We can either cement US leadership or seed the playing field to foreign competitors. I congratulate my our colleagues on the agriculture committee from moments ago overwhelmingly passing the Clarity Act. Let's bring innovation jobs back to back to America. Let's support the Clarity Act here in the financial cons in the financial services committee room in the same way our friends in the agriculture committee room did just moments ago. Chairman Hill, I thank you for your leadership and I yield back.
▶ 2:57:12I thank the gentleman from Wisconsin who seeks Vice chairman of the committee, Mr. Heisinger of Michigan. Thank you, Mr. Chairman. And I was just reflecting on this and I'm hearing my friend from Wisconsin talk about the 476 vote coming out and I'm truly encouraged. You know, I've I've been sitting at the uh leadership table of this committee for a full 10 years now.
▶ 2:57:41Um and uh the if I could just transport the entire committee back to what what those discussions were a decade ago. uh knowing that there was something looming on the horizon like this that we needed to tackle, that we needed to go after this and then over those years seeing this sort of erode away and escape from the United States.
▶ 2:58:07Um it was uh it was frustrating uh for many and to see the leadership of uh of uh former chair Mckenry and all the team that worked on FIT 21. Um and moving forward, it's just this is a good good day for digital assets and those that use it, but more importantly for the future of the United States and our preeminence on this.
▶ 2:58:31You know, obviously the digital asset ecosystem operates in fragmented regulatory environment that lends itself to significant challenges for both businesses and investors. The ambiguity is uh classifying a digital asset either as a security or as a commodity. I've often talked about that. Uh here in Washington, we like to declare things fish or fowl and this has characteristics of both and it's kind of a platypus as you uh as we look forward to it.
▶ 2:59:00And it obviously leads to confusion, legal uncertainty, and ultimately consumer harm because of that lack of clarity. And digital assets such as cryptocurrencies hold immense potential and long-term benefits. They can enhance liquidity, improve transparency, security using blockchain technology. Uh pro they provide new revenue streams and encourage innovation and investments in emerging technologies.
▶ 2:59:28American innovation is a critical element of job creation and economic opportunity here in the United States just much like our uh much like our ecosystem of funding is unique to the United States. But that's why we are preeminent and we have to look to preserve this competitive advantage and not let it leave our shores. And on that point, Mr. Chairman, and I know uh Chairman Style as well had mentioned this, I'd like to thank you for including Mr. Emmer's blockchain regulatory certainty act in the bill.
▶ 2:59:58uh that that legislation is crucial to making sure that those jobs and the innovation that comes along with them remains here in the United States and legal clarity is essential for these developers to develop their products in America without overregulating them out of business or offshore. By passing a comprehensive market structure framework, responsible actors will now have greater certainty and for greater protection from bad actors.
▶ 3:00:26For my friends on the other side who are uh concerned with conflicts of interest by elected officials, status quo is not the answer. Doing nothing does not solve that uh that that concern that they may have. The digital asset market clarity act establishes a regulatory framework for digital assets that aligns with our external uh our existing financial markets while accounting for the unique characteristics of digital assets.
▶ 3:00:52provides clear functional rules that allow market participants the ability to gain that clarity that they need. Clarity that has not existed in nearly two decades. And thankfully after years of regulation by enforcement, we have a securities and exchange commission that is willing to partner with Congress in making sure that the market certainty is realized.
▶ 3:01:14Under Commissioner Pur, acting director Aayu Au ua and chairman Atkins, the SEC has signaled a more welcoming approach to digital assets. Instead of creating arbitrary barriers and unachievable unachievable rec registration guidelines, the SEC and Trump administration have embraced digital assets and blockchain technology. Just yesterday in public remarks, SEC Chairman Atkins noted, quote, "We should not automatically fear the future." close quote.
▶ 3:01:44And I wholeheartedly agree. Americans American innovation is a critical element of job creation and economic opportunity here in the United States. And Mr. Chairman, our markets are the envy of the world. Congress must not seed its responsibility or that standing. We must pass the Clarity Act. And I urge my colleagues to support this legislation. And I congratulate obviously the authors and and others who have been involved in this.
▶ 3:02:10I am very proud of the uh the the the parts that I've been able to play over the last decade and I just want to say congratulations to our colleagues on the agriculture committee for seeing with clarity uh the future and with a 47 to6 vote and I hope that we can follow suit with that I yield back. Gentleman yields back who seeks recognition of the gentleman from Illinois Dr. Foster you're recognized. Yeah, thank you Mr. Chair.
▶ 3:02:36I I just there's a large number of questions I have about some fun foundational issues on this. You know, there's the whole business of why we're not doing anything to regulate the spot market uh that underlies a lot of this. Um there is the foundational issue of the definition of blockchain in your system.
▶ 3:02:55I don't it's unclear to me whether that even allows for season freeze that is important to to um for many of the of the stabled coins simply to be a product that can't be abused because if you if you can't just look at the blockchain and see what the situation is because you don't know what seizing and freezing might be pending on these maybe that doesn't qualify it for being a blockchain but you know there dozens of questions I have like that another one uh that I'd like to see if I can get an answer to is the business of
▶ 3:03:25self-certification of quote unquote mature blockchain systems and um that so there's an exemption put in here uh for investment contracts in involving units of digital commodity if the related blockchain system is certified as a quote mature blockchain system intended or intended to become one within four years so this question of intention I don't know who calls and strikes on that uh section 205 in in this furtherly further details the certification
▶ 3:03:56process for quote unquote mature blockchain systems allowing issuers to Okay. The SEC would have only 60 days to review and challenge such Okay. So that you can it seems like you can do pretty much anything and just say but I intend for it to be um you know decentralized and and that would be enough.
▶ 3:04:17So I I just wondering have you received feedback from the SEC on what sort of resources the SEC would require to adequately review the potentially large volume of these self-certifications? you know there are a bazillion uh uh you know crypto assets being spun up you know every day in this country and around the world and so who is going to call balls and strikes on self-certification and and particularly in a in a situation where the SEC is uh you know being gutted of key personnel how are we going to actually be
▶ 3:04:47able to handle the volume of self-certifications um and and just how does the bill even contemplate uh that you know there may be no way for the SEC to confirm whether the details included in the self-certification are true or not, you're going to need to investigate whether they're they're correct in a good faith. So, it seems like there ought to be a lot of manpower if you don't want this to be a a real problem. And I was just wondering if you can provide a little clarity on that. Is the gentleman yielding to me?
▶ 3:05:17Is the gentleman yielding? I say yield. Well, thank you for your question. Well, first of all, the bill outlines statutory requirements on being a mature uh blockchain that are outlined in the section and then gives the SEC discretion on additional qualifications on it. And as it relates to the funding, uh we call for all the funding that's necessary in this authorization bill for both the SEC to do their their job.
▶ 3:05:42And so yes, the SEC has given us extensive technical assistance on writing the draft and therefore they've analyzed the staff uh aspects of it. Yeah. Yeah. Would Yeah. Would it be possible for us to see the the technical information that you've received back from them and also including their estimates of the manpower uh that they might need to actually be able to do a due diligence on all these self-certifications?
▶ 3:06:09Well, again there yes to answer your questions we're happy to work with you and your staff and talk walk through the technical assistance that we receive to from the commission and any estimates that they have on the manpower issues but again there are core definitions of how to be a mature blockchain in the statute and then we offer the SEC's discretion to have additional additional ones as well.
▶ 3:06:30You're you're uh in your question you seem to imply there's no definition of a mature blockchain visa v this statement about you know the self no it's based on the definition if please yield back to you yeah no it's a question there seems to be an end around all those end run around all those by just saying oh I know I don't it's not that way now but it's my intention to be decentralized and and so on and it seems like that's you know a potential huge loophole in this thing and
▶ 3:07:00particularly when the SEC is undermanned and has a default yes default acceptance of a self-certification if they're under manned and can't respond to would the gentleman yield just yes just for a moment well of course the joint rulemakings that are contemplated by this bill that they'll be done and done within 365 days of the bill being passed so it's not imminent when this bill is signed into law that kind of rule making and that kind of planning would take place over that the next few months to to do that So I don't I don't
▶ 3:07:30want you to think that if we pass this bill suddenly that all those requirements are being met immediately. They're being met according with that rule making. Yield back to you. Yeah. Um so I guess my time's expired but gentleman's time is expired. I appreciate that dialogue. Uh who seeks recognition. Uh Mr. Downing from Montana, you're recogn. The gentleman's recognized for five minutes. Thank you. Uh these are exciting times.
▶ 3:07:57In November 2024, the American people said loud and clear that they want the United States to remain the center of innovation and delivered a House, Senate, and White House to do so. You know, the United States cannot seed leadership in the digital asset space. The lack of regulatory clarity has stifled innovation, pushed digital asset businesses out of the United States, and left consumers unprotected.
▶ 3:08:25This legislation before us today, HR 3633, the Clarity Act, will ensure the United States continues to lead in innovation and Americans have the protections they would expect in robust financial markets. The Clarity Act creates clear jurisdictional boundaries between the SEC and the CFTC, guaranteeing clear pathways for digital asset innovators to come into compliance with US laws and regulations.
▶ 3:08:51The bill also creates a new pathway for digital commodity issuers to raise capital, giving developers a workable avenue to raise funds and further innovate without being subject to the SEC's jurisdiction in perpetuity.
▶ 3:09:05Finally, the Clarity Act preserves one of the most exciting value propositions of blockchain technology by enshrining individuals right to self-custody of their digital assets into law by allowing individuals to conduct financial transactions by themselves without the need to go through an intermediary. You know, the Clarity Act appropriately accounts for the nuance of technology and ensures that its most transformative aspects are not lost to one-sizefits-all regulation.
▶ 3:09:36I want to thank Chairman Hill and Chairman Thompson for their leadership on this issue, as well as President Trump and Vice President Vance for ensuring Congress doesn't take its foot off the gas. I urge my colleagues to support this legislation and I want to point out that the ad committee just passed this uh 47 to6 and on that I yield back. Will the gentleman yield? Would the gentleman yield to the gentleman from Wisconsin? Yeah, gentleman from Wisconsin. I I thank the gentleman. I I I know.
▶ 3:10:03Oh uh our our colleague in that in the the previous dialogue, Mr. Foster, I believe you referred to uh self-certification. um in self-certificate just to make sure we I I fully understand the approach here is not a defined term uh in the bill.
▶ 3:10:20And so what I think we mean by by self-certification is I listen to you is that an issuer could declare themselves uh mature through their own statements is is and I'm happy to although it's not my time I'd be happy to engage in a little bit of a colloquy here if my colleague from Montana be so gracious. Yes. Yeah. Yeah. Certainly. Yeah.
▶ 3:10:43My my issue I think there was a a statement I don't know the exact language but if it is your intention to be decentralized that passes as being in that that was the thing that caught my attention. No understand that that's what I thought you were you were getting at. So maybe I can provide some clarity as to the intent of the drafting. I think as the language presents itself um the SEC would still have an opportunity to rebut or reject a certification. The SEC would have eyes on it um the entire time.
▶ 3:11:11And then in addition uh the intention to mature would be subject to a disclosure and an offering statement uh which in turn is subject to SEC enforcement under section 17 of the securities act. So if there was uh a misleading statement that issue would face liability under section 17. Um this requirement adds more rig more rigor uh to that approach rather than uh a loophole.
▶ 3:11:36And so if I went back to the overall intent uh is to m mature is only about uh qualifying for the codifi the codified exempt offering. Uh it's not about being certified uh as mature. Okay. Yeah.
▶ 3:11:50My my I guess part of my question was just about enforcement capacity on this because you I don't know how many digital assets are being spun up every day and if all of a sudden threearters of these things come you know come out claiming they intend to be decentralized uh then how do you possibly have the um capacity at the SEC to find out what fraction of those may actually be you know legitimate.
▶ 3:12:13I I understand the concern, but hopefully the the clarity there that you're still under section 17 of the Securities Act, and so therefore you'd have liability for false or misleading statements uh is helpful. We'll continue the dialogue. I'll yield back to my colleague from Montana. On that, I yield, Mr. Chair. The gentleman from Montana yields back. Chair recognizes the gentleman from South Carolina, Mr. Norman. Thank you, Mr. Chairman. I move to strike the last word. The gentleman's recognized for five minutes.
▶ 3:12:39I'm speaking in support of the clarity act which establishes a much needed functional framework to provide certainty for the digital assets industry. I want to highlight a specific provision of the bill that deals with national security uh which is section 313 of the underlying bill.
▶ 3:12:58Section 314 of the ANS requires the Treasury Secretary in consultation with the CFTC and the SEC to complete a study and submit a report to Congress that identifies any digital commodity registrants that are owned by go governments of foreign adversaries. GAO is also required to complete a study and submit a report to Congress on the same issues. Why does this provision matter?
▶ 3:13:24In a June 2023 financial services hearing that focused on the need for digital as asset legislation, Aaron Kaplan, who was the CEO of Prometheium, testified, "P Prometheium is the first approved specialurpose broker dealer for digital assets.
▶ 3:13:43That means Prometheium can trans transact in as well as custody digital assets." In that hearing, Kaplan stated that Prometheium and its CCP partners entered into a joint agreement in December of 2018 to develop a blockchain trading system where the Chinese partner took a 20% stake in The circumstances surrounded Per Prometheium raises serious national security and data
▶ 3:14:13privacy concerns. In case anyone has any doubt about its CCP ties, Prometheium's Chinese partner company was founded in 1969 by a former senior CCP official. In 2021, the party's central committee named him a na a national excellent communist party member, which is very disturbing.
▶ 3:14:37The fact of the matter is that because Chinese companies are generally required by Chinese law to share data with the Chinese government, these companies present substantial risk to United States individual privacy and national security. Not to mention that they they share no information from them.
▶ 3:14:56I look forward to supporting the Clarity Act and I'm grateful for the inclusion of this provision that would promote transparent transparency regarding how our nation's strategic enemies may be exploiting the digital asset marketplace to invade the privacy of Americans and steal valuable intellectual property. I yield back, Mr. Chairman. Gentleman yields back. The gentleman who seeks recognition of the gentleoman from California. Mr.
▶ 3:15:25Chairman, I move to strike the last word. Gentleman is recognized for five minutes. Thank you, Chairman Hill. Californians have made it clear that they want access to digital assets and 84% of Californians believe that crypto and blockchain are important tools of the future. In my home state, there are over 8 million people who own digital assets.
▶ 3:15:49And at my alma mater USC, there is a blockchain minor that students can pursue and classes on decentralized finance regulations and NFTTS. That is why I was so proud to support FIT 21 under chairman Mchamry last Congress and I'm speaking today in favor of clarity that uh that is led by our chairman French Hill. I know that some of my colleagues are concerned about illicit finance and money laundering.
▶ 3:16:17However, by not passing this bill, we will not be implementing the muchneeded anti-moneyaundering and counterterrorist financing protections. Just last week, the Department of Justice exposed North Korean employees who are funneling cryptocurrency through a global money laundering operation.
▶ 3:16:39We must tighten the leash on North Korea and safeguard our digital asset ecosystem to prohibit bad actors that starts right here by voting for the Clarity Act. Additionally, I'm also happy to see the inclusion of a joint study between CFTC and SEC regarding the financial literacy of digital commodity You know, when I was working on financial literacy in Orange County, we used to hand out pamphlets about how to use a
▶ 3:17:09checkbook or open a bank account. I could have never imagined today that I would need to learn about digital currency or how to use a digital wallet. So, the inclusion of this study in the Clarity Act will make sure that our federal financial literacy resources keep up with the latest technology that impacts financial security. Californians want to own digital assets and engage in this exciting technology.
▶ 3:17:40So by voting for today's bill, we deliver a clear roadmap to bring blockchain companies back to America and protect consumers as they participate in the digital asset ecosystem. And I go, my colleagues, you know that I hope that the vote that we take tonight will be just as extremely bipartisan as the ACT committee's vote was, which was at 47-6. Thank you, and I yel back.
▶ 3:18:09The gentleman from California yields back. The gentleman from California, Mr. Licardo, is recognized. Thank you. Uh move to strike the last word. Gentleman's recognized for five minutes. Thank you, Mr. Chair. Uh appreciate you putting up with the deluge of comments from uh folks from my state. I wanted to ask if the chair or perhaps uh Mr. Style might be willing to engage in dialogue over a couple questions.
▶ 3:18:36Of course, we'll be happy, either one of us would be happy to be yielded to by you for an answer to a question. Wonderful. I know that Mr. Hines and others have raised concerns about section 202. U and as you know, it allows for sales at least of the current text up to $75 million in 12-month period under the exemption. Uh and further limits the purchaser owning no more at 10% outstanding units.
▶ 3:19:00My understanding at least in discussion public discussion was that the intention was that this would not vary uh from the central requirements of reggga a that there's going to be no significant alteration of uh the fundamental uh structures by which we expect uh issuances and capital raising to occur.
▶ 3:19:25Um, but my understanding is also that reggae requires audit financial statements, requires the SEC to qualify the offering before the first sale and other requirements that are not in this. Is there a reason why we would not incorporate reggga a requirements as part of this provision 202? Does the gentleman from Wisconsin want to respond first or Sure. Maybe I I can start on that. Uh, Mr.
▶ 3:19:54Chairman, I appreciate my colleagues uh question. I appreciate his input uh on the drafting and creation of this bill. You've been a a good partner in providing good feedback. Um I think as we look at reggga a and the securities filings uh what we see is really more of an uh for what we are drafting but recognizing that digital assets are truly novel instruments.
▶ 3:20:19And so although uh there are certain parallels um in the construction of the clarity act uh to current existing securities laws, what we're looking for is providing additional clarity for the digital asset space. So the parallel is not uh exactly the same. We do have a cap on offering issuance and also restrictions on insider sales. So you do see some of those parallels. Uh maturity is a key concept here.
▶ 3:20:45uh and we have to account for that in our framework which we do in both eligibility uh for the exempt offering as well as insider sales uh restrictions. Uh so in a sense the eligibility is narrower maybe because these projects intend uh to be mature or are mature. Uh but you're you're right, it's not a direct parallel off of reggga.
▶ 3:21:06Uh but I think in many ways in the construction of the the legislation, the clarity act, we were looking for inspiration off of current securities laws, but recognizing that digital assets truly are novel and needed a a new unique and specific approach in the digital asset space. Thank you, Mr. Style. One other question. I know that we've had some conversations about DeFi specifically.
▶ 3:21:28Uh, and my concerns about what we know is the largest share of the emerging um market in terms of transactions is really increasingly going to be around DeFi. And I'm concerned about the extent to which and whether the bill really mitigates uh the risk that by excluding entities that label themselves as DeFi but are still performing core financial functions uh lending, exchange, intermediation.
▶ 3:21:58Um that we're excluding them from regulatory oversight even though uh it walks like a duck, quacks like a duck, but we're calling it DeFi. Will will the gentleman yield? Sure. um appreciate the comment here and it's something that that we took and thought about in the drafting uh of this text in the the structure of the legislation. It's really not about labels uh but rather uh about the activities of the technology.
▶ 3:22:24Uh so if it is non-custodial and not subject to discretionary control, it is DeFi. Uh but if it were custodial and discretionary, then it is. And so we're not looking u at autonomy is our north star. really looking at what the underlying function is uh rather than the label uh that it gives. And maybe this goes a little bit back to the comment Mr.
▶ 3:22:46Foster had when we were talking um uh about the the structure of the bill um in the the reggga a cont or in the um the self certification context that it is the the nature of the activity rather than the self-defined uh terminology. Right. I I see I'm out of time, so um I'm happy to take this offline. Thank you, Mr. Yeah, thank you.
▶ 3:23:10We look forward to working with you on section 202 on the amount as well as the disclosures required which financial statements are included uh in section 202 paragraph 3 semiannual reports. So, but we'll get with you on that detail and I thank the gentleman gentleman yields back. Gentleman from California, Mr. Sherman.
▶ 3:23:32Well, here we are again to talk about crypto as if the country has no other But obviously crypto has an opportunity to add to the problems of this country. We are told by this industry they want clarity. They don't want clarity. They want a patina of regulation and a super highway to corruption.
▶ 3:23:57last time we were here, we dealt with the issue of whether there would be And I'm sure everybody wants to go back to their district and say they're against allowing federal bailouts of the crypto industry. So, I put forward an amendment as I will again today. And I got the expan response I expected. Everybody says that they're against bailouts, but they're opposed to any amendment that would prohibit bailouts.
▶ 3:24:25Maybe it's not an italic font. Maybe it's not punctuated correctly. Whatever it is, then they say, you know, the chairman has said he wants to work with me on it. So, I I presented at that meeting a very good amendment and I have no suggested changes except please go away and don't let our constituents know that we're in favor of a federal legal structure that allows for bailouts.
▶ 3:24:52Now, the bailouts won't come before the 2026 election, but this industry will go to its investors and say, "Hey, we're as strong as the dollar. We're as good at a as a money market fund. And don't worry, if there's a problem, you'll just get bailed out.
▶ 3:25:11Second, the American people, at least the ones I've pulled at my own town halls, are in very much against the idea of spending crypto uh spending US tax dollars to quote buy, invest, bet on crypto. This bill will do nothing to prevent the federal government from buying not only Bitcoin but Trumpcoin or Skippidity toiletcoin or hamstercoin.
▶ 3:25:40Now they won't do it before the 2026 election but they'll do it and they'll fight to make sure that they have the legal capacity to do it and that nothing in the law stops them from doing it all while telling us they're not going to do Then we've got campaign contributions. This is a superhighway to the anonymous campaign contributions from foreign entities. And I'll explain that when I present my amendment on this issue.
▶ 3:26:08Uh it used to be that people would try to get give they'd give cash to people, straw men, who would then write a check. And in order to uh uh give a politician 50 grand, they'd have to find 25 to 50 co-conspirators and they'd often get caught. Now we've got a system that will allow every foreign interest to uh contribute without anybody ever knowing.
▶ 3:26:38And finally, we've got the Trump corruption where you sponsor a coin uh from a low tech perspective. Imagine if 50 years ago Richard Nixon had just taken some monopoly money and put his own face on it and then sold it for cash and made hundreds of millions of dollars, people would have said that was corrupt. Now you do the exact same thing electronically and you're called innovative. And so I know the ranking member will have an amendment that will prohibit that.
▶ 3:27:09And all these amendments will fail because the purpose of today's effort is to give this industry everything at once while not letting our constituents know that they will we will have an open door to giant Trump administration and Trump family corruption. We will have the campaign finance laws will basically become a nully.
▶ 3:27:31uh we will have an open door toward bailing out the Sam Bankman freeds of the future at the expense of the American taxpayer and we will take your tax dollars and we will buy crypto of every sort and we'll all be told it can't happen and we'll all be told it won't happen and we'll all be told but we have to vote against any amendment that would prevent it from happening. So, uh, I don't know if the American people are watching.
▶ 3:28:02I realize there are other distractions, including the effort of, uh, this administration that calls my city a city of criminals and now seeks to, uh, tear that city apart.
▶ 3:28:16Imagine an American secretary of homeland of of of homeland security turning to the greatest city of the West and saying, "That's a city of criminals." So there are other things happening but what we're doing today is to try to give a a patina uh to to tell the American people this is time is expired and uh it will not be I yield back. Gentleman yields back. The gentleman from South Carolina, Mr. Timmons is recognized. Thank you, Mr. Chairman. I move to strike the last word. Recognized for five minutes.
▶ 3:28:47You know, I got kind of confused over the last five minutes. I'm not sure if we were talking about ACT blue or Hunter Biden's selling influence in the Biden administration, but I guess just to clarify things, just to clarify things, there's nothing clearer than the A vote that just came out, 47 to6, that's 88% of the overall members on the committee, even better is that 72% of my colleagues across the aisle. This is not a BIP, this is not a partisan issue. This is a bipartisan issue.
▶ 3:29:14Over the past six months, we've done the hard work holding hearings, building bipartisan coalitions, and engaging with both innovators and regulators to craft a serious functional framework for digital assets. The Clarity Act is the product of that effort. I am proud of the strong bipartisan legislation that my friend from Wisconsin, Mr. Style, and Mr. Torres, and our dedicated committee staff have worked hard to craft.
▶ 3:29:36This bill provides long overdue regulatory certainty by clearly defining the roles of the SEC and the CFTC, closing the spot market gap and applying proven market safeguards to the digital asset space. It puts consumer protection and innovation on equal footing. For too long, regulatory confusion has driven talent, capital, and entire companies overseas. The Clarity Act replaces that confusion with a clear and forceful set of rules. rules that protect co customers and support responsible innovation here in the United States.
▶ 3:30:06And the timing could not be better. With President Trump in the White House, we now have a real opportunity to restore leadership in digital finance. The message is clear. America is open for blockchain innovation again. I urge my colleagues to support this legislation to help bring the digital asset sector back to American soil where innovation belongs. And most importantly, I think that we should beat the A committee and go better than 88%. Uh, with that, I I yield to my friend for Would the gentleman yield for a minute? Yes, I'll yield to chairman.
▶ 3:30:33I appreciate the the gentleman's strong support and his his outstanding comments. And I I've heard referenced today several times the words FTX was committed fraud from a right under the nose of our former SEC chairman Gary Gensler. And he did nothing about it. In fact, he was prosecuting people trying to come in and register. Uh but and guess what?
▶ 3:31:01The part that was affected in the US administered by the CFTC, overseen by the CFTC, there was absolutely no problem. Nothing happened to FTXUSA is overseen by the CFTC. And yet somehow Chairman Gensler let that happen.
▶ 3:31:17That's what this bill is all about is to create the rules of the road to protect consumers, promote innovation, create the next level of development, technological development on distributed ledgers on the internet and resolve this and give uh strict rules of the roads that we can protect consumers, enhance investment and bring that business to the US under strict standards that we've developed not only in this legislation but also in our previously marked up stable coin
▶ 3:31:48legislation. I yield back to the gentleman from South Will the gentleman yield. I'll yield to the ranking member. Yes, ma'am. Thank you very much. As U. Chairman Hill described what this bill is all about. He left out one thing. He left out it is about supporting the president of the United States of America and his family including Melania and the boys. Reclaiming my time, Madam Chair, on their ownership of crypto. reclaiming my time.
▶ 3:32:16Madam Chair, um I I anyone that has the beliefs that you have regarding this would want this bill to pass because it creates rules of the road. We got to make sure that we are the best place in the world to start a business, to grow a business. And that is particularly true in in in emerging technology. This is the future and we cannot uh afford to to to follow. We must lead. And with that, I'll Will the gentleman yield?
▶ 3:32:42I I I I'm gonna yield the remainder of my time to my simply say I want this the the the time has been yielded yield it to Mr. Style myself I'm I'm just going to add one thing as we got one minute let's go back and build on what Chairman Hill just said as it relates to FTX I think it's actually a real good learning lesson I think you can look uh at Mr. Miller, former general counsel of FTX.
▶ 3:33:03What he said, he said, quote, "Had the regulatory structure provided for in the bill currently being considered by financial services, uh, and ultimately by Congress applied to FTX, the story I just told would almost certainly have a much different ending. examinations, government governance requirements, audits, reporting, recordkeeper, recordkeeping, and customer asset segregation requirements directly address the shortfalls that have allowed this vicious digital asset industry failures and thefts to occur. End quote.
▶ 3:33:34And so, as I go back to the comments that we were previously listening to about how do you prevent the collapse, how do you prevent uh fraud and abuse of consumers, you pass the Clarity Act. And so those of us that are concerned about making sure that we're protecting consumers are going to be voting yes for the Clarity Act. I yield back to my colleague from South Carolina. Yields back. The gentleman from Iowa, Mr. Nun's Well, thank you, Mr. Chairman.
▶ 3:34:00And I want to say a particular thanks in the AD committee and the financial services committee. We've been able to work together. It's possibly even more impressive than Democrats and Republicans working together. We were able to get this done today in a bipartisan way and voted on and out of the ad committee supporting the Clarity Act. Chairman, you highlighted the impact of why this is necessary.
▶ 3:34:20FTX, an offshore company in an unregulated environment where Gary Gensler did nothing to provide certainty, clarity, and latence and rules of the road here nearly bankrupted Silicon Valley Bank. That's where the contagion spread in the United States. And that was going to impact every one of my hometown banks in Iowa who would have had to have helped bail out FTX if the FDIC, most of which they weren't covered.
▶ 3:34:46But then we had the font of wisdom from Washington DC in my very first act as a member of Congress, Senator Chuck Schumer, rally us all together on a Zoom call and try and explain how he was going to solve this. And that man couldn't even find the unmute button on his Zoom call, let alone unravel this untenable situation where there is no clarity. So this bill moves forward something that, you know, folks in Iowa who represent a large reflection of the entire country know very well.
▶ 3:35:17When it comes to things like commodities, the CFTC helps lead. We've been doing this in pork, beans, and hogs for nearly 200 years. This is the kind of thing that helps us have clarity and move forward. But when it comes to my hometown banks, many of in Iowa which have been there for over 150 years themselves, they look to the SEC for guidance and that provides certainty for them. But when it comes to digital assets, these lines are blurred and there's not a good pathway forward.
▶ 3:35:45The current system creates a regulatory gray zone for us where we can't get straight answers from government officials or private industries and investors face confusion. Innovation flees the country and Americans are slowly losing our onshore capability to compete in this area. Quite simply put, Mr. Chairman, this uncertainty has cost us and not just in billions of dollars, but in real jobs and real loss of innovation.
▶ 3:36:10I recently spoke to a US tech company that spent more than $15 million trying to comply with these unclear and often conflicting guidelines between the SEC and the FTC. They spent money they could have otherwise spent hiring engineers, expanding operations, and creating good paying jobs in places like Iowa. Instead, they paid legal fees and got caught up in lots of red tape. Mr. Chair, we can't allow this to continue to happen.
▶ 3:36:36And that's why I'm so proud to support the clarity bill that both Chairman Style has been leading here and Chairman Johnson in the ad committee have already passed. This bill provides one thing our digital asset ecosystem clearly needs. clear rules of the road. They've asked for it. It does not create more bureaucracy. It provides definition. It clearly defines lines and coordinates the work of the CFTC and the SEC so companies know what to expect.
▶ 3:37:05Investors know how they're protected. Regulators can perform their duties effectively. And importantly, from a national security perspective, the US remains the leader in Americanbacked digital assets so that those countries who may be competing with us on fair ground, like Singapore and the UK, can do well. Countries that overregulate, like the European Union, can learn from their mistakes.
▶ 3:37:27But most importantly, countries like Russia, China, Iran do not own this space before the US backed digital assets have the opportunity to take off. This bill acknowledges that we are in a global race. American can be in the driver's seat or we can be offshored and a recipient of bad behavior. I don't believe any of us on either side of the aisle wants to see that.
▶ 3:37:51And if a and financial services can work together, more importantly, if the House and the Senate can work together, then I'm highly confident that Democrats and Republicans can work together in the interest of the American people. Now is the time for clarity. Now is the time to lead. Mr. Chairman, thank you for helping lead this bill. Will the gentleman yield clarity? The gentleman will yield. Let's pass the bill. Agreed. Thank you. We only need four amendments.
▶ 3:38:18Reclaiming my time, gentlemen, that we should pass this bill. Bailouts. Do not do not confuse this. Do not put us down more years of confusion. Don't put me back on a Zoom call with Schumer where there's no guidance provided. We have clear lanes of the road. I would work with my colleague on the other side of the aisle for further refinement, but don't put the brakes on a good bill that this country desperately needs. We seed the high ground to foreign countries when we don't act in the right way. With that, Mr. Chairman, I yield my time.
▶ 3:38:47The gentleman yields back who seeks recognition. The gentleoman from Michigan, our conference chair, Miss McClan's recognized. Thank you, Mr. Chairman. I move to strike the last word. The gentleoman's recognized for five minutes. Yeah, I I come at this from a a little bit of a different approach as being a business owner um prior to coming to Congress and knowing firsthand the importance of having clarity in the decisions that we make.
▶ 3:39:12It just helps us do business for the client, for the consumer. Um clarity is critical. Clarity is important. And I'm going to come at it from a perspective of I think we all want to do the right thing, but at the end of the day, we have to have clarity, right? Imagine driving down the road not knowing what the speed limit would be only then to have some arbitrary person come and give you a ticket for going over the speed limit when you never knew what the speed limit was.
▶ 3:39:43So, this bill is about clarity. You can make it political all you want, but at the end of the day, let's put policies over politics. Um, I want to voice my strong support for the Digital Asset uh Market Clarity Act of 2025.
▶ 3:39:59This bill is a thoughtful, may I say, bipartisan effort to bring long overdue clarity to the regulation of digital assets and the centralized platform where they're traded.
▶ 3:40:14For years, innovators and investors alike have operated in a fog of regulatory unsure of whether their products fall under the SEC jurisdiction or CFTC oversight or another regulatory and uh reg uh regulatory agency entirely. This is not how capital markets are supposed to work.
▶ 3:40:40It's time we modernize our laws to reflect the reality that digital assets are here to stay. Let's embrace it. In short, this bill does what Congress should always aim to do when dealing with emerging technologies. Give innovators the clarity they need to build right here in the good old US of A.
▶ 3:41:06and give the regulators the tools they need to actually protect the public. See, it works on both sides. It advances American leadership, reduces regulatory framework, and reflects an innovation forward view of finance. I commend my colleagues on both sides of the aisle today who have worked here today to get this done.
▶ 3:41:31I urge all members to support this bill so we can deliver the clear consistent rules of the road that our digital asset asset markets desperately needs. And with that, Mr. Chairman, I yield back. I thank the gentleoman from Michigan and for her service to the conference. Does anyone else seek recognition? I would ask hearing none, we'll move to amendments. Okay. Does anyone wish to offer an amendment to the amendment in the nature of a substitute?
▶ 3:42:05we have Mrs. Waters has an amendment at the desk. We'll pause while it is distributed. Mr. Style, Mr. Chairman, I seek a point of order. The gentleman from Wisconsin has reserved a point of It doesn't make a difference. So, am I saying this correctly?
▶ 3:43:22That's right.
▶ 3:43:53A point of order has been reserved and the clerk will report Mrs. Waters amendment. An amendment to the amendment in the nature of a substitute to HR 3633 offered by Mrs. Waters of California designated as HR 3633 Without objection, the amendment is considered read and the gentleoman of the ranking member of the full committee, Mrs. Waters, is now recognized for five minutes on her amendment. Thank you, Mr. Chair. And I have this amendment at the desk.
▶ 3:44:20This amendment would add in HR 35 uh 73 the stop Trump encrypto act to ensure that we limit conflicts of interest that could arise from our position as elected officials throughout this Congress. I have repeatedly gone through all of the President Trump's crypto ventures. Every week it seems like news comes out of what he's starting a new project.
▶ 3:44:52You got to hold it down. One day it's a meme coin, the next it's a stable coin and now a wallet. That is why I and committee Democrats introduced the Stop Trump in crypto act.
▶ 3:45:10This legislation would block the president the vice president, members of Congress, and their immediate families from engaging in cryptocorruption and blatant conflicts of interest. Importantly, it would stop all of President Trump's crypto conflicts to date.
▶ 3:45:30Over the last nine months, since before he was even elected president, reports have shown that President Trump has made up to $2.9 billion from his crypto ventures, lifting his net worth to an estimated billion. So, according to Forbes, crypto has done more than just make President Trump richer.
▶ 3:45:58It's also provided liquidity that the president needed. In an article, Forbes pointed out that, and I quote, "A year ago, he was short on cash with about 400 million on his balance sheet and more than 500 million in legal judgments against him.
▶ 3:46:18The vast majority from a fraud case he lost and is currently appealing." Now, however, Trump holds roughly 900 million of liquid assets, about half of which come from crypto ventures, quote unquote. This isn't all. The 2.9 billion will continue to increase. He has hundreds of millions, maybe even billions on his way thanks to his company, World Liberty Financial.
▶ 3:46:47And not just that, but Trump is receiving money directly from foreign nationals as he did with his meme coin. Reports show that in his private VIP reception for the top holders of his meme coin, most were non US citizens. The cor the corruption won't stop there. Insiders are now speculating about what President Trump might offer his investors next.
▶ 3:47:15They might open up a new exclusive club in DC. The price buying President Trump's meme coin. Maybe he'll offer his investors exclusive access to Marago, his hotels, resorts, or golf courses. Chairman Hill, you said yourself that quote, "The Trump family activity in the meme coin space makes my work in Congress more complicated." Quote end quote. I agree with you, Mr. bill.
▶ 3:47:45I think this makes Congress's job more complicated. But that doesn't mean we should turn a blind eye. We must address these conflicts head on. We must not rush to create a regulatory regime through complexity act that completely ignores President Trump's crypto actions. Frankly, it doesn't matter whether President Trump is a Republican or a Democrat.
▶ 3:48:11The conflicts of interest presented by the president's various crypto ventures put our national security, investors, consumers, and most importantly, Democrats at risk. We must work to end Trump's crypto corruption in any crypto bills we consider. And I urge members to support this amendment.
▶ 3:48:34And I just want to say to everyone, if the members of Congress, Republicans or Democrats, knowingly support this bill, knowingly support the corruption of the president of the United States, there won't be any excuses when investors and consumers all find that they have been ripped off. How can we sit here knowing what the president is doing? I know he's departed with Elon. He doesn't need him anymore.
▶ 3:49:04He got Leon's money and now he can go to the Middle East and every place else and get more money. Democrats better watch out because he is going to fuel his pockets with money uh that he's getting out of crypto to run against all of us. And so this is corruption in its highest form. And gentleoman time is expired. I yield back. Pursuant to the previous order, the chair declares the committee in recess subject to the call of the chair. We will reconvene immediately following votes.
▶ 3:49:34Thank you. The committee stands in recess.
▶ 5:03:37Does the gentleman insist on his point of order? I was drawn my point of order. The gentleman from Wisconsin withdraws his point of order. Is there further debate on the waters amendment? Let me recognize myself for five Let me be clear. This bill is not about the personal finances of any American citizen, any one individual.
▶ 5:04:02It's about creating a fair, functional, forward-looking regulatory framework for digital asset markets that applies to all individuals regardless of who they are, in regardless of the application connected to digital assets. The Clarity Act is a market structure bill. It sets clear definitions, assigns agency jurisdiction, establishes rules of the road for exchanges, brokers, dealers, and other intermediaries.
▶ 5:04:33It's not an ethics bill, nor was it intended to revise how we govern the conduct of federal officials here in the House or elsewhere. This bill includes strong marketwide protection. It requires the registration of digital commodity exchanges and intermediaries with the CFTC.
▶ 5:04:52It requires comprehensive disclosures, sales obligations for insiders, the use of qualified custodians, and compliance with all anti-fraud or manipulation provisions. Everyone, regardless of status, is subject to the same oversight and enforcement. This bill is about protecting consumers, ensuring market integrity, and keeping the United States at the forefront of innovation.
▶ 5:05:22A yes vote helps craft that regulatory system that provides all those protections and enforcement related to those protections for all Americans engaging in these markets. So, in my judgment, uh there's not necessary to support the waters amendment. I urge a no vote and I yield back the balance of my time. Who seeks recognition? The gentleman from California, the ranking member of our capital market subcommittee.
▶ 5:05:51Again, I want to make it clear. You can go back to your constituents and say, "I voted for this bill because I wanted a fair, logical system. You're going to be given an opportunity to get a bill on the president's desk by the end of the week. All you have to do is to agree to some amendments that will prevent this bill from being a superhighway to corruption.
▶ 5:06:16You'll also have a chance in this room to vote again and again to cause this bill to serve as a superhighway to corruption. And you will record those individual votes. First, I asked uh FTX has been mentioned here and they try to blame Gary Gensler.
▶ 5:06:35I ask unanimous consent to put in a record uh a letter dated March 16th, 2022, right after FTX got some subpoenas telling the SEC to lay off and that it may not have authority to uh seek information from FTX. So I ask unanimous consent to put in the record this letter led by Tom Emmer of the Republican caucus. Without objection. Thank you.
▶ 5:07:04So now we have uh this chance to pass the ranking members amendment to make sure that this bill doesn't become a powerful device to enrich the president and his family. Now we have to have some sympathy for pre President Trump.
▶ 5:07:25He just lost the patronage of the richest man to walk the face of the earth since Musa traveled from Mali to Mecca. Man worth well over a hundred billion dollars.
▶ 5:07:42So how does this bill and the crypto industry at large enrich Donald It says that he's free to create monopoly money, electronic monopoly money, which he's already done. He calls it Trumpcoin, but it's literally, if you want to think about things in a non electronic way, it's like he just printed up some uh monopoly money with his face on it.
▶ 5:08:07And then he's free to sell that as he has to the Chinese interest to control Tik Tok for $300 million of US money for $300 million worth uh uh face value of Trump coin, Trump money, monopoly money.
▶ 5:08:26Uh so how so he also is allowed to create Trump stable coin and get $2 billion from Abu Dhabi part of the United Arab Emirates uh for that which is either a transfer of $2 billion to him in his net worth or at minimum an interestf free loan that Abu Dhabi can pull away from him perhaps anytime he doesn't do what Abu Dhabi wants him to do.
▶ 5:08:55So, we have a bill that could become law and on the president's desk so long as it's not a super highway to enriching the president and his family and to allow foreign interests to um to corrupt our system. So what will uh and and uh the most obvious of that is $300 million in return for monopoly money or in this case Trumpcoin.
▶ 5:09:25There are no reserves behind Trumpcoin. It's just pure profit. He doesn't have to buy any treasury bills with this money. He just puts it in his pocket. So what can he do with it? Well, he can enrich himself or he can finance the 2026 campaigns if he chooses to do that since it looks like Elon Musk may not. So, um, if you want this bill to become law quickly, you vote for this amendment.
▶ 5:09:52I'd also point out that Elon Musk has participated in this process because Elon Musk or nobody reveals whom, but we know that somebody made 47, it was 37 billion I believe it is, might be u I'll get you the exact figure later.
▶ 5:10:12any 37 billion or more because they knew that Dogecoin would one week later get this huge boost because they'd name a government agency after the coin. It sounded weird at the time. Wonder why they did it. They did it to enrich the people who knew a week in advance, who knew between the election day and a week later that that would be the name.
▶ 5:10:37So whether it's Elon benefiting or whether it's Trump benefiting from foreign money, this amendment would stop it and would prevent both the enrichment of Elon and Don and and and uh Donald Trump and prevent the perversion of our political system by allowing either of those men to use their illotten gains for political purposes. I yield back. Gentleman's time is expired. Gentleman the uh gentleman.
▶ 5:11:06Gentleman from Wisconsin, Mr. Style, the chair of our digital assets, financial technology, and AI subcommittee. Thank you very much, Chairman Hill. I think it's worth noting to go back to your opening remarks that everyone under this bill is subject to the same oversight uh and enforcement. Uh I hear some of my colleagues are interested in altering and amending uh federal ethics laws. Uh this bill uh does not do that in either direction.
▶ 5:11:30uh it simply provides clarity in market structure uh and rules of the road and digital assets uh that apply equally uh to everyone engaged in the space. And so, uh, this amendment and I suspect amendments to to come further from some of my colleagues on the committee, um, are not relevant to the underlying text of the bill in the context of what we're working on, which is providing market structure to digital assets, clarity in the space and an opportunity to make sure that the next
▶ 5:12:00wave of innovation and development uh, is occurring in the United States of America. So, I would recommend my colleagues to vote no and I will yield Gentleman yields back. Who seeks If there's no further debate, the question now occurs on the amendment. All those in favor of the amendment shall signify by saying I. I. All those opposed shall signify by saying nay. Nay. In the opinion chair, the naysay have it. The nays have it. The amendment is not adopted.
▶ 5:12:33Gentlewoman requests a recorded vote. All those in favor record vote, raise your hands. a sufficient number having raised their hand or recorded vote is ordered. Pursuant to subsection C5 of rule three of the committee rules, further proceedings on the amendment are postponed. We'll now move to the next If the ranking member doesn't have an amendment, then I have an amendment at the desk. The gentleman from California has an a an amendment and we'll wait uh and uh have it distributed.
▶ 5:13:03And the one we should be distributing is Sherman 047 dealing with 47 and Mr. Downing I mean Mr. Moore sorry reserve a point of order. The gentleman from North Carolina reserves a point of order.
▶ 5:14:03She carried that whole.
▶ 5:14:41This is A point of order has been reserved and
▶ 5:15:11the clerk will report the amendment. An amendment to the amendment in the nature of a substitute to HR 3633 offered by Mr. Sherman of California designated as Sherman047. Without objection, the amendment's considered read and the gentleman from California is recognized for 5 minutes to discuss his amendment.
▶ 5:15:32The idea that taxpayer money would be used to bail out a cryptocurrency, a stable coin, or a crypto broker is such an anathema to the American people that every member of this committee must pretend that they're against it.
▶ 5:15:49The question is, can they pretend they're against bailouts with taxpayer money while at the same time building a superighway for crypto is a super highway to bailouts? Can they pretend that they're building a superighway for crypto, but they don't know where that highway is going?
▶ 5:16:13That is the effort that we saw on the stable coin bill where I came before into this room just uh last month or month and a half ago and said here's my amendment to prevent stablecoin which is a subset of the crypto world from getting government bailouts. And every single Republican in this room says oh we're against bailouts. We'll work with you to make sure that doesn't happen.
▶ 5:16:41I presented text of an amendment to that bill that would effectively prevent And no Republican in this room, even though many who said they'd work with me on it, has responded. Why? Because they don't want to offend the crypto world by preventing them from getting the bailouts they really want. Now, they don't want the bailouts now.
▶ 5:17:05They want to be able to turn to their investors uh and the other people they're trying to hoodwink into the crypto world and say, "Hey, we're just as good as the banks. We're just as good as gold. We're going to get bailed out should there be any trouble." So they crypto world wants to turn to the people in the world that might invest and say they're eligible for bailouts. At the same time, no bailouts before the 2026 election because that could be a problem.
▶ 5:17:36So, how could crypto get bailed out? Well, first pass this bill, build the superighway, and then read it in conjunction with section 133 of the Federal Reserve Act, which is available for non-blank banks in unusual and exigent circumstances. Now, the purpose of this bill is to facilitate a crypto world that is clearly going to be systemically important to the United States and to the world economy. No one in the crypto world says, "We want to be small.
▶ 5:18:05God knows why are we at three trillion. We're just we're just like playing cards to invest in. This is like comic books. Don't pay any attention." No. The purpose of this bill is to build a superighway to crypto becoming so significant that it poses a systemic risk and then make sure that every Republican member of this committee can say they're against bailouts but find an excuse not to prohibit bailouts but to leave in force
▶ 5:18:37section 133 and other provisions that will allow for the bailout. Then when the systemic problem problem happens after the election, they can say, "Well, we were against bailouts. We told Sherman we were against bailouts. We just couldn't vote for anything that would prohibit the bailouts. We didn't need to vote for it. Would we didn't know it was going to happen. Nobody told us." So, put up or shut up.
▶ 5:19:02vote to prohibit bailouts or vote to find an excuse why you didn't want to prohibit ba uh uh uh So, um I look forward to uh people figuring out a reason why they can impress the crypto billionaire bros by giving them what they want, which is a highway toward systemic importance and a highway toward bailout eligibility.
▶ 5:19:34Now, nobody actually wants the bailouts. They hope that everything goes fine, but they want to be able to tell their investors that they're bailout eligible. They won't, they promise they won't tell them that until 2027 after the election. But the key thing that they need now from you if you want to be a complete sellout to the billionaire crypto bros is to vote against this amendment and to make sure that they are eligible for bailouts.
▶ 5:20:02So, if you want to stay on good terms with the cryptobillionaire bros, figure out your excuse to vote for this amendment and see if your constituents are stupid enough to believe you. And I'll yield back unless the ranking member has a comment. No, I I yield back. Gentleman yields back. Who seeks Oh, does the gentleman from North Carolina insist on his point of order? I'm glad to withdraw it. Gentleman withdraws his point of order. Who seeks recognition? Ranking member of the full committee, Miss Waters.
▶ 5:20:31I move to strike the last word. Gentleoman is recognized. I thank Mr. Sherman for offering this amendment. Between 2022 and 2023, we witnessed one crypto house of coins collapse after another. FTX defrauded customers of 8 billion Celsius. Failure to freeze 1.2 2 billion of customer funds and Voyer's failure locked up more than a billion dollars.
▶ 5:21:03Terra Luna's fraudulent stable coin erased roughly 40 billion in market value when it collapsed. Painful as it was, these losses stay mostly inside the crypto industry and did not reach the wider financial system. The chairman's mark would change this by pulling crypto loop closer to the core of our financial system.
▶ 5:21:30We have already heard that the big banks are looking to work together to offer their own stable coin and it isn't hard to see how existing crypto firms will grow significantly when we put the federal government seal of approval. Mr. Sherman's amendment foresees this possibility that a politically well-connected industry may run back to Congress when they get in trouble and ask for a bailout.
▶ 5:21:56Taxpayers shouldn't be called on to bail out crypto's failures. I support the amendment and I urge the members to do the same. Um Mr. Chairman and members, this is but one effort that's being put forth by Mr.
▶ 5:22:17Sherman and he has reiterated over and over again uh that this country is not in a position uh the people of this country to bail out uh the failures of crypto when it occurs.
▶ 5:22:31If in fact this market structure bill is allowed to pass, those of us who have been around for some time, who witnessed what happened back in 2000, know what it means when the failure hits uh our individuals, both the investors and consumers.
▶ 5:22:53And so while it may be ignored uh at this moment and at this time, I am not surprised that for those who have been criticizing the SEC, that is the Biden SEC, uh that some of them have been involved in basically trying to intimidate the Biden SEC uh by sending them uh the kinds of questions questions
▶ 5:23:23and demanding all kind of information about why they were doing what they were doing in order to try and create um you know some protection against what could have happened.
▶ 5:23:36And so for those who were trying to intimidate uh the SEC and Gensler and trying to create um situations to make them look as if they were using their power uh in an extreme way uh to undermine uh should be aware that this is all record. This is all recorded in the history uh of cryptocurrency.
▶ 5:24:05And I want you to know without the kind of handrails that we are trying to advocate for, without the president of the United States using his power for ownership and controlling SEC and all of the independent agencies that we are headed for even worse than we experienced in the meltdown that occurred in this country where uh basically uh almost put us into a real recession.
▶ 5:24:33And so I would like uh you to give some thought uh to what is going on here today. And all that we're asking is uh that you have the opportunity to remove the possibility for corruption that is so obvious uh that is right before our very eyes. Corruption by the president of the United States. The president who and his family are increasing their ownership.
▶ 5:25:02the president of the United States that's opening the door to foreign countries to get involved. The president of the United States who's creating the opportunity to get money for campaign purposes that does not have to be under the scrutiny of the Fair Elections Commission. On and on and on. I think that those of you who have been around long enough can understand what it is we're talking about and what we're trying to do.
▶ 5:25:32And I think that many of you agree with us. But the intimidation of a Trump who like he is sending troops into Los Angeles like he's got the National Guard now he's got the Marines going in to intimidate whenever and however he can. You are intimidated by him. You're afraid of him. You don't want to cross him.
▶ 5:25:56But what you're doing is undermining your own possibilities to do the kind of protection for your constituents that most of you want to do or would like to do. Don't allow Trump to do this to you. Don't allow him to own your ability to make the kind of decision that you came to Congress to make to protect consumers and investors.
▶ 5:26:19Don't allow him to literally use the power of the presidents owning the SEC and the FTC, all of them, and using that power to intimidate there uh to basically undermine all that we're doing to eliminate corruption because that's what this is all about. Crypto is moving with the possibility of big-time corruption. I yield back. Gentlewoman yields back. Who seeks recognition? Mr.
▶ 5:26:46Chairman, the gentleman from North Carolina just strikes me that uh yes, one recognized for five minutes. Thank you. It did strike me that one president did open this country up to attacks from outside and that was the previous president who did so and the and the murder and the mayhem that we're seeing happening right now in Los Angeles is a direct result of that. I yield back. Gentleman yields back.
▶ 5:27:14Who seeks Not seeing anyone else seeking a recognition on Sherman amendment. I recognize myself for five minutes. Uh in my view, this amendment is a red herring. Let's be clear, there's no provision in this bill that authorize or contemplates a taxpayer funded bailout of a digital asset company. The underlying legislation is about providing regulatory framework to protect consumers and promote responsible innovation. This isn't about bailouts.
▶ 5:27:43It's about during times of market stress. Whether it was in March 2020 at the onset of CO 19 or in March of 2023 when regional banks faced acute liquidity stress, regulators took coordinated steps to stabilize the financial system.
▶ 5:28:02In those cases, many of the same voices pushing this amendment before the committee today supported actions that protected depositors, ensured market functioning, and prevented contagion. We should apply the same level-headed approach to digital assets. We should be focused on consumer protection, not political messaging. The digital asset space has suffered from a lack of clear rules, not a lack of consequences.
▶ 5:28:31Retail investors have lost money not because the government did or didn't bail someone out, but because of fraud that could have been prevented with a real regulatory framework. And that, my friends, on both sides of the aisle is precisely what the Clarity Act does. There are already safeguards in place. Any extraordinary action by regulators is subject to legal constraints, congressional oversight, and often repayment requirements.
▶ 5:29:00So, let's not pretend that passing this amendment is the only way to prevent a bailout. This amendment is unnecessary and misdirected. And I yield back the balance of my time. Seeks recognition. Excuse me. Is there further debate on this If there's no further debate, the question now occurs on the Sherman amendment. All those in favor of the amendment shall signify by saying I. I.
▶ 5:29:30All those opposed shall signify by saying nay. Nay. In the opinion of the chair, the naysay have it. The nays have it. The amendment recorded vote adopted. Uh gentleman from uh California seeks a recorded vote. All those in favor of recorded vote, raise your hands. a sufficient number having raised their hand. A recorded vote is ordered. Pursuant to subsection C5 of rule three of the committee rules, further proceedings on this amendment are postponed. We'll now move to the next amendment.
▶ 5:30:01I have an amendment at the desk. I'll bring the gentleman from California has amendment at the desk. If we could have it distributed and uh the gentleman from Florida, may I call on you? Mr. Chairman, I'd like to reserve a point of order. The gentleman from Florida reserves a point of order.
▶ 5:31:40A point of order, as I say, has been reserved. The clerk will report the amendment. An amendment to the amendment in the nature of a substitute to HR 3633 offered by Mr. Sherman of California, designated as Sherman 050. Without objection, the amendment's considered read, and the gentleman from California is recognized on his amendment. Mr. Mr. Chairman, I'll use some of my time for a preliminary comment or two. Uh, after this amendment is considered, I will need to leave the room.
▶ 5:32:10Uh, people will look here for a bald head. They won't see one. Uh, but rest assured, my ghost will continue to inhabit this place until I return. Would the gentleman yield? Yes. I'm just sad that we don't have the ability today of a hologram that you could be seated there and continue, but maybe in the future with a yield back. Second, in looking at the no bailout amendment, you said the bill is for protecting consumers.
▶ 5:32:36Well, the number one consumer risk if you invest in hamster coin is that it'll tank and be worth less than mongoosecoin. Uh Trumpcoin could be worth less than Skibbiditycoin. How do you protect consumers? You bail them out with taxpayer money.
▶ 5:32:52So go you've got to go back to your constituents and said say I left the door open there's a giant to bailouts of those who choose to invest in Trumpcoin skippitycoin bitcoin whatever coin and your tax dollars could be used but we didn't want to put it in this bill further the chairman says well we could deal with that some other day I've had a bill to prevent uh bailouts there's no way you're going to bring
▶ 5:33:23it up and there's certainly no way that the Republican Congress is I maybe you'd bring it up but it would certainly uh not pass the Congress. The only chance to prohibit bailouts is to put this amendment or that amendment on this bill. Now let's look at this bill. Uh the president has already established by executive order a strategic Bitcoin uh he has already said that uh that that we should buy Bitcoin.
▶ 5:33:52Um and furthermore, the federal the the the crypto bros say they're creating a currency. Cryptocurren crypto uh currency literally means hidden money. It's supposed to be a currency. People abbreviate it crypto. The full word is cryptocurrency.
▶ 5:34:12So the federal government and the Fed often buy foreign currencies and in fact the US Treasury's exchange stabilization fund purchase gold and foreign currencies and other instruments as they consider appropriate. So what's going to happen when Trump wants more money put into We just asked the secretary of treasury, buy hundred billion dollars worth of Trumpcoin.
▶ 5:34:41buy a hundred billion dollars worth of uh uh Skibbiditycoin, dry a hundred billion dollars worth of Mongoose coin. Uh dry, you know, uh prevent a uh a pro, you know, and who is to say that this is a bad investment. There are people today buying Bitcoin, they think it's going to go up. There are people today buying Trumpcoin, they think it's going to go up.
▶ 5:35:05So all the president has to do is say he agrees with the people that um think that this or that coin is going to go up in value. So if you want a giant highway uh allow the president to take billions, even trillions of your tax dollars and put it into the coin or coins of his then vote against this amendment.
▶ 5:35:34And do not say that we've got to solve that problem some other day. You're building the superighway with this bill and there's no way this amen that this amendment would pass the Congress controlled by the crypto bros uh as an independent bill. If they want these clear rules of the road, say okay, but at least you're not going to get our tax dollars not as a bailout, not as a quote purchase.
▶ 5:36:02Um I don't think people are willing to stand up to the crypto bros and tell them that. So uh further I would say why do the crypto folks want US dollar invest in uh US government purchase because they want to claim to be the reserve currency for the world's reserve currency. Our reserves include the gold and foreign exchange held by the Fed.
▶ 5:36:29And if they can say that this coin or that coin is what stands behind the dollar along with our Fort Knox gold, then they can claim to be as good as gold. They can claim that the US government has slit its own throat, a throat absolutely dependent upon the US dollar being the reserve currency and has declared that their coin is the reserve currency for the reserve currency and therefore that's what other countries should have and their reserves.
▶ 5:36:57So if you want to destroy the value of the dollar worldwide and if you want to make it easy for the president to use your tax dollars for Bitcoin or Trumpcoin or Skippy toilettoin then uh I can see why you wouldn't like my amendment. I yield back. Gentleman yields back. Who seeks recognition? Gentleman from Florida. I'd like to withdraw my point of order. Gentleman withdraws his point of order. Who seeks recognition? The ranking member of the full committee waters is recognized. Thank you very much.
▶ 5:37:27I move to strike the last word. Gentleoman's recognized for five minutes. I want to again thank Mr. Sherman for offering this amendment prohibiting Trump from setting up a crypto strategic reserve. Trump has made it abundantly clear when he sold his meme coin that he views crypto as a profit arm for himself and his family.
▶ 5:37:48His plans to establish a crypto strategic reserve would be to use taxpayer dollars to boost his and his family's holdings of crypto. Such a reserve serves absolutely no purpose other than to enrich Trump and artificially inflate the value of crypto.
▶ 5:38:09We shouldn't be surprised by Trump's goal since his big beautiful bill would similarly cut Medicare, Medicaid, and food stamps by hundreds of billions of dollars to pay for a5 trillion dollar tax cut for billionaires. And so there's so much uh to be learned about what is going on and what not only is Trump doing, but what the members of this committee are doing.
▶ 5:38:38I have you know uh discovered uh that there was a huge uh letter uh sent by Tom Emmer of this committee along with several other committees couple of them from this side of the aisle to the SEC.
▶ 5:38:58It is obvious that in this letter, what they were trying to do was intimidate Gensler and the SEC and discourage them from being able to do the investigations uh that they were involved with.
▶ 5:39:15Uh, as a matter of fact, um, I guess since the SEC chair Gensler was sworn in as chair on April 17, 2021, the SEC has filed more than 100 cryptoreated enforcement actions, more than a third of which were fully settled at the time of filing.
▶ 5:39:37Through these enforcement actions, the SEC has obtained orders for more than 5.5 billion in monetary relief, including more than 800 million in civil penitent penalties and more than 4.8 billion in disgorgement. The terraform case alone involved 4.5 billion in penalties and discordment.
▶ 5:40:02So the efforts that I heard here today trying to blame the SEC under Gensler who allowed uh things to happen that was opposed to what maybe Mr. Emmer and others are going to claim are claiming in this letter that they were doing in order to make sure uh that the SEC was doing its job etc etc.
▶ 5:40:30It's very clear that the SEC was doing its job in the way that I have alluded to. It's very clear that Mr. Emmer and others had put in a lot of time and effort with a whole range of questions questioning everything about the investigation.
▶ 5:40:51And you know, we learned a long time ago when the opposite side of the aisle started to um use costbenefit analysis uh to stop some of the work that we were doing years ago. When we see it pop up again as in the EMR letter, we know what that's all about. Here he asks of the many of questions, has the SEC conducted a costbenefit analysis to determine the fairness and efficacy of its request?
▶ 5:41:21Here you have again from Mr. Emmer and others. On average, yearbyear for the last five years, what are the expected compliance costs imposed on relevant entities to respond to your commission's volunteer document request? implying that what they're doing is they're creating extraordinary costs that should not be created by those who are raising serious questions. Oh, I have a lot more of this that I will be sharing with you throughout the night.
▶ 5:41:49Uh, as we look at the Emmer letter and what they were trying to do, I have every question that was asked in this document. It is extensive in the way that they was trying to intimidate the SEC. And so perhaps this should give us an idea about what they are doing now in order to protect Trump and his family uh from the corruption that is so obvious. With that, uh I yield back the balance of my time.
▶ 5:42:19I got plenty more time tonight to keep on uh what I'm learning about this letter that was sent. I yield back the balance of my time. Gentleoman yields back. Who seeks recognition? Seeing no one seek recognition, I'll claim five minutes. Let's start with the letter that the ranking member is so enthusiastic about. And I've read this letter dated March 16, 2022, entered into the record by Mr. Sherman, and she is right.
▶ 5:42:45It seems to be initiated by Tom Emmer, but it's signed by Darren Sto, Democrat member of Congress, Jake Aenclaus, Democrat member of Congress, Josh Godhammer, Democrat member of Congress, Richard Richie Torres, Democratic member of Congress, along with now Senator Ted Bud, Byron Donald's, Warren Davidson, and Tom Emmer. The purpose of the letter is quite simple. Dated March 2016, 2022.
▶ 5:43:11Dear Gary Gendler, you are asking for information from unregulated entities that you don't have jurisdiction over. We'd like to ask you why are you asking that on what basis? And tell us about it's a p it's it's a very straightforward letter. I see nothing mischievous about it. Uh so it's in the record. I thank Mr. Sherman for placing in the record and for the ranking member for calling attention, but I too would like to enter a letter into the record dated February 10th, 2023 to Mr.
▶ 5:43:41Gendler regarding uh and a letter that he never answered signed by chairman Patrick Mckenry and Bill Heisinger, chairman of our oversight committee asking for all the records related to the charges brought about to Sam Bankman Freed uh by the department of enforcement and the US attorney's office. I'd like that entered into the record February 10th, 2023. Without objection, it will be. Um, let me now turn to the subject of Mr.
▶ 5:44:10Sherman's amendment. This amendment, in my view, uh, would unwisely tie the hands of the federal government without any particular policy justification. We're in the early innings of a new generation of financial instruments and private payment rails. To blanket ban the federal government from purchasing a digital asset would prevent the federal government from using tools at its disposal to address an unforeseen need to engage in the future of finance.
▶ 5:44:37In addition, it would prohibit the federal government from using digital assets for a variety of lawful purposes like sending aid seamlessly to Americans suffering from a natural disaster or securing data. for that. I do not support the uh Sherman amendment and urge a no vote. Mr. Chair, is there I yield back. Is I I won't I want to keep moving because of your uh opportunity to spend time together all night.
▶ 5:45:06Uh is there further debate on the Sherman amendment? If there's no further debate, the question now occurs on debate. I just can't get to it. I know. We'll be back. We'll be back live here in a minute. All those in favor of the amendment shall signify by saying I. I. All those opposed shall signify by saying nay. And then chair the nays have it. The nays have vote not adopt it. Mr. Chair, I request a recorded vote. The gentleman from California requests a recorded vote. All those in favor of record vote raise your hand.
▶ 5:45:34A sufficient number having raised their hand a recorded vote is ordered. Pursuant to subsection C5 of rule three of the committee rules, further proceedings on amendment are postponed. We'll now move to the next amendment of the gentleoman from California. I have an amendment at the desk. She has an amendment at the debt. We'll pause for it to be distributed.
▶ 5:46:14You want me to give it to him? Mr. Chairman, gentleman from Florida. Uh, Mr. Chair, I'd like to reserve my right to call for a point of order.
▶ 5:46:32Uh, point of order has been reserved by the gentleman from One key issue here from Wisconsin stylist from Wisconsin the chair visual assets committee subcommittee his own securities regulator wrote to you about him at the very beginning. Yeah.
▶ 5:47:39Yeah, they they preempt state law in many respects throughout the bill. The state regulators are asking to at least hold on to anti- fraud authority and which is what your amendment does.
▶ 5:47:58Let me just say the does somehow Trump in any way all of the power that he has over the independent agency.
▶ 5:48:16because his his edicts wouldn't he couldn't control what does reasons why they want to create okay it interferes with his power to control the under his executive order would have to submit their rules to White House for for
▶ 5:48:46review whereas states regulators are not under the executive order. Yeah, he's got an executive order that requires independent regulators to submit their own proposals before they are final for a review by the White House. To submit the what? A point of order has been reserved by the gentleman from Florida and the clerk will report the amendment.
▶ 5:49:15An amendment to the amendment in the nature of a substitute to HR 3633 offered by Miss Waters of California designated as HR 3633 Without objection, the M amendment will be considered as read and the gentleoman from California is recognized to discuss her amendments. Thank you, Mr. Chairman. Uh, of course, I have an amendment at the desk.
▶ 5:49:44As you North American Securities Administrators Association opposes this bill. Yesterday I received the following note from Wisconsin securities regulator and I quote, "I urge Congress to amend the Eclarity Act to ensure that my agency can can continue to fight fraud in Wisconsin's.
▶ 5:50:10We need this authority to prevent and mitigate fraud and support innovation. My staff frequently receives complaints from victims of fraud involving crypto assets, and they have successfully obtained a total of 169 fraudulent website disruptions or takedowns since March 2025. Quote unquote.
▶ 5:50:35This was from Leslie Van administrator of the division of securities at the Wisconsin's Department of Financial Institutions. I also received a statement from Ms. Leticia James, the attorney general of the state of New York, who as you know regulates both commodities and securities in the state.
▶ 5:50:59Without missing words, she wrote that, and I quote, "The Clarity Act does not do enough to protect America's interests, investors, and national security." Quote unquote. She continued to warn us that quote, "Clarity does not contain the regulator guard rails to to protect America's investors from bad actors seeking to exploit and defraud them." that clarity
▶ 5:51:29allows bad actors to hide be behind the facade of that Congress must ensure that this legislation does not reduce the number of cops on the beat. State anti-fraud and registration laws are intended to prevent and remedy fraud and must be preserved quote unquote.
▶ 5:51:51I respect our state securities regulators and appreciate their role particularly when the f federal regulators are getting defunded, defanged and defamed by this administration and Republicans in Congress. As a result of these strong concerns with your bill, Mr. Chairman, I'm offering an amendment to ensure our frontline regulators can continue to do their job.
▶ 5:52:20My amendment would expressly preserve the basic essential tools that state securities regulators use to foster innovation and fight fraud. First, we must make clear that the states retain the authority to regulate the brokerage and investment advisory industries in this new crypto market structure. I'm proud of the work that the California Department of Financial Protection and Innovation provides to industry members throughout my state.
▶ 5:52:48We also heard in March from the director of the Alabama Securities Commission about the work she does to support industry in her state. We should be empowering state regulators to help innovators not complicating their jobs. Second, we must make evident in this bill that state securities regulators retain their authority to bring investigations and enforcement actions against fraudsters.
▶ 5:53:12Presently, the federal government almost never take cases when harmed investors losses are small. State securities regulators regularly take on cases under $1 million to help victims recover an amount that may be their entire life savings. Meanwhile, the states are also fighting back against schemes like so-called pig butchering and other investment scams. We should be empowering the states to fight fraud, not preempting them. So, Mr.
▶ 5:53:42Chairman and members, I know why uh Trump does not want the states to have this authority. Now, I understand that if states have this authority uh that he won't be able to control uh the independent agencies and prevent the states from doing the kind of protection that they're alluding to. And so, what we have learned about the president of the United States, you know what he's done?
▶ 5:54:09He told all the independent agencies including SEC, you cannot do anything uh under his executive order, he would require independent regulators to submit any rules for approval to him for review before they do anything. He's taken over the independent agencies. He owns SEC. He don't give a darn about the states and what they're trying to do.
▶ 5:54:34So that's why you are protecting uh the president and his uh authority that he would like to have. I yield back. Gentleman yields back. Uh who seeks? Well, first the gentleman from Florida. Mr. Chairman, I withdraw my point of order. Gentleman withdraws his point of order. Who seeks recognition? Uh I'll recognize myself on this amendment. the waters amendment.
▶ 5:55:06The core objective of the clarity act is to to establish a consistent and level playing field across the digital asset and by treating digital commodities as covered securities for purposes of preeemption. The Clarity Act is simply following the existing practice for financial instruments with a national market under federal regulation.
▶ 5:55:27While state regimes can serve as a valuable incubator for innovation, it's clear that targeted preeemption is necessary to ensure regulatory clarity. With that said, I understand the ranking members uh key points and I would urge uh that my friend Mr. Style uh and I can work with the ranking member to look through the text to see if it needs any additional clarity uh no pun intended on this topic.
▶ 5:55:55uh and I thank her for raising it. I yield to my friend from Wisconsin if he has any comments he wants to make on this or the gentleman from Montana who is a distinguished former securities commissioner right there and then come back up. Gentleman from Montana you I'm yielding time to you sir. Uh thank you Mr. Chair. Uh just wanted to uh point something out. Uh the ranking member mentioned a letter from the North American Securities Administrator Association.
▶ 5:56:20Uh I'm a former member of that organization and just so you know it's uh the 51 states, it's the territories, it's Canada, all of the provinces in Canada, it's also Mexico. And uh my experience with them is when their letters came out, it was not uh usually a consensus opinion.
▶ 5:56:36And in my personal experience, when uh NASA was uh submitting a letter to the SEC in response to um Gary Gendler's uh rule promuggation on um climate uh disclosures, NASA was writing a letter and me as one of the state security commissioners asked for the content of that letter in which case they said I could see the content after they sent it to which I raised, you know, some red flags and they got their chief chief legal
▶ 5:57:06counsel involved who said uh that um I couldn't see it but he was checking with the board on whether I could until they rescended and never actually showed me the letter that they were going to send on behalf of every one of the members of NASA. So my point being is NASA in my opinion uh is not sending consensus letters that represents um the opinions of the state regulators and uh is also not just an American institution. It's also Mexico, Canada and and the territories. and I I uh yield back.
▶ 5:57:36I thank I thank my friend from Montana and as I say, Chairman Style, and I'll certainly work to review this language carefully if it needs any additional uh clarity to it. While I still have time, I'd like to read a letter from the Institute of Internal Auditors and insert it in the record. Without objection, this letter will be included in the record. The Institute of Internal Auditors, it comes out firmly today in favor of the committee voting the Clarity Act.
▶ 5:58:05It says, "As professional association representing internal auditors, we support the legislation's emphasis on establishing sound governance and risk management practices at digital commodity exchanges. In particular, sections 404 and 406 of the Clarity Act contain essential investor protections that will strengthen American confidence in the emerging digital asset marketplace. With that, I yield back the balance of my time. Who seeks recognition? The gentleoman from Texas. Mr.
▶ 5:58:35Chairman, I would like to strike the last word. The gentleman's recognized for five minutes. Mr. Chairman, I wanted to just rise in support of this amendment. Um it's just uh interesting to me that probably two hours ago on a separate bill um HR 3633 my colleagues across the aisle were talking about transparency, the need to eliminate fraud, waste and abuse and the need for an OIG.
▶ 5:58:59And now here we have an amendment that that deals directly with fraud uh and and assists the states and others to be able to um be able to help us in this arena. So, I just want to say that I totally support this bill. And with that, I give the rest of my time to our ranking member. The lady from Texas, the gentleoman from Texas yields to the ranking member. Oh, thank you very much.
▶ 5:59:22Um, on this issue uh and this amendment uh that I am trying to um tell you about the North American Securities Administration Association and why they oppose this bill. Now, I mentioned to you Wisconsin, New York, and certainly California, where I'm from, are supporting what is being asked of you by the North American Securities Administrator's Association that opposes this bill.
▶ 5:59:52Now, we can't just ignore these states. Uh we can't just say uh that uh you will get with me and private Mr. Styles, we will talk about this later. No, I want to talk about it now. We have an amendment before us that you can support if you care about the complaints that are coming from your states. But I get it.
▶ 6:00:12The states don't have to go to the president of the United States and Trump the way that the independent so-called independent agencies have to do because by executive order he is requiring all of these independent agencies to submit any rules that they're proposing for review. Oh, the states don't have to do that. So that's why you cut out the states. That's why you don't allow them to use their authority.
▶ 6:00:40But I think those of you who really care about your states, and I think most of us do. Most of you care about what goes on in the states, you will pay attention. You will not ignore them. I want you to know that there's a big case that's pending right now from Oregon against Coinbase from the states. The states are serious about this. They don't have to go to President Trump on hands and knees and say, "Please uh can we excuse your executive order?
▶ 6:01:07Uh uh do we have to review have you review whatever we do before it can be?" No. What the states are doing is saying respect us. Give us the opportunity to let you know what is happening in our states and how we're getting complaints and what we want to do about them. Not just for the biggest and the richest guys, but for those little people. for $1 million and less who are getting ripped off.
▶ 6:01:33And so I am continuing in every way that I can, not only to point out the ownership of Trump and his family and how they're enriching themselves. you should be worried that the independent agencies are no more independent that they have to in an executive order.
▶ 6:01:55He's he's very blatant in all of this and the public knows and he has stated for everybody to know that he said to the independent agencies to they must submit any rules that they're proposing for review.
▶ 6:02:12Now the states are saying that they need the authority not eliminated by what we do but supported by what we do uh so that they can control the fraud in their states. Are we going to ignore them? Are we going to go I'm not going back to California and tell California well I'm sorry. Uh we just don't think that we should be pro protecting the states in dealing with fraud and abuse. I'm not going to do that.
▶ 6:02:42For those of you who are willing to go back to your states and tell them, I don't know what you're going to tell them. I don't know how you're going to say uh that uh you don't approve of them having the authority in their states to protect their citizens from fraud and abuse. This is an opportunity. Thank you, Mr. Chairman, for offering to have a talk with me. Uh and Mr. Style perhaps later on. I'm sorry. I can't wait for that. I can't wait for the talk. I want it done today.
▶ 6:03:12We have the power. We have it before us to make sure that we allow the states to do what they must do to protect their citizens, to protect those from fraud and abuse. We can do it now. I'm willing to do whatever it takes to keep you focused on this.
▶ 6:03:28And I'm willing to have you change your minds so you can go home and face your states and let them know that you stood up for them and they don't have to go hand in knees uh to Trump uh to ask can they have a rule before they can move on. Thank you and I yield back the balance of my time. Gentlewoman yields back who seeks recognition. There's no further debate. The I'm sorry the gentleman from Wisconsin. Thank you uh Mr. Chairman.
▶ 6:03:57little rich uh for uh someone from California to talk about protecting citizens of their states uh at this moment where there could be a lot of work to protect the citizens of the states of maybe that state. Uh but let's dive in um in particular as it relates to the letter nice of the ranking member to read the letter written by the Democratic appointee of the state of Wisconsin uh for the North American Securities Administrating Administrators Association.
▶ 6:04:24uh they often work with Mexico, uh Canada, uh states around the country. Uh as noted by Mr. Downing, uh they're often not consensus uh opinions. I don't know if this was uh or was not a consensus opinion.
▶ 6:04:37Uh but I don't think it would be because I think if people look at the substance and text of the bill that we're working on, um the the the bill that we have only preempts uh up to the amount or to the extent that existing securities laws or commodity laws preempt state laws. So, if you look, the Oregon Attorney General lawsuit under Oregon State Securities Law is a copy and paste of a fundamentally flawed Gensler lawsuit uh that the SEC has since dropped.
▶ 6:05:06So, what what would occur is this amendment would really reinforce a patchwork of state-by-state regulation that's not worked well uh for American consumers. So, as we know, digital commodities are sold through securities transactions uh and they're treated the same as securities under state securities laws. So this is where the conflict arises.
▶ 6:05:27The states retain their authority of course under the commodities exchange act which allows them to enforce uh the commis exchange act to the extent activity isn't happening on CFTC registered entities. It's not really actually um a novel approach uh Mr. Chairman is rather just consistent with current laws. So the clarity act uh we have not one but really two federal regulators on the beat policing fraud uh and misconduct.
▶ 6:05:55And I know Chairman Hill and I are happy to review the language and see if there's ways uh we can improve or uh look at the preeemption provisions. Uh but the amendment that you brought forward uh doesn't strike um the right balance. And so I would encourage my colleagues uh to vote no on the amendment. And Mr. Chairman, happy to yield back. Gentleman yields back. Who seeks recognition? If there's no other uh Mr. Gentleman from Texas, Mr. Yeah, Mr. Mr. Chairman, I have an amendment at the desk.
▶ 6:06:25We're not we're not dispensed with this amendment yet. I'm sorry. Is there anyone else seeks comment here? Well, uh yes, yield me the time. Cast, are you yielding to the ranking member? I Yes. Just I yielding time. Gentleman from Illinois is recognized to strike the last word. Recognized. Strike the last word. Thank you. Um and I yield my time to the ranking member. Gentleoman, you're right. Thank you very much.
▶ 6:06:48I think what the gentleman from Wisconsin have implied is that in no way uh in this bill are we preempting the states because if that's what he's implying, I think it better take another look at what we're doing. This is preeemption of SEC. Don't tell me about what is happening with commodities.
▶ 6:07:11tell me about what's happening with SEC because this is pure preeemption and I want to reiterate uh that Wisconsin's leading the pack with the association uh with the other states uh that are also agreeing with him. My state of California has made it clear uh that we don't want to be preempted that California wants to have the ability to deal with the complaints that we are getting.
▶ 6:07:42We also know that the states need the authority. They don't need to have to answer to the president of the United States who will tell them they must bring to him for review any rules that they would be proposing. This is very very clear. And I know that it makes us uncomfortable when we talk about preeemption, but this is what it is. This is preeemption. And so yield for question.
▶ 6:08:13Yes, I'll be happy to yield for a question. I I understand your your point. That's why I'm I'm willing to to work with you on the clarity. But yes, we like securities under the SEC. We have state blue sky laws where we are this exemption is covered by the blue sky laws. So yes, the SEC is preempting the states for that purpose. But fraud, any manipulation, those consumer complaints, we're not preempting that part.
▶ 6:08:39Uh and that's why I say if there's some language that we need to work on, I'm happy to work with Chairman Style and and and your team. You'll yield back to you. Fraud, this is the biggest issue that NASA they are. They are. All right. Um, as we look at it, it looks as if you are absolutely preempting on fraud and that's serious and that is what must be corrected. We can do it right here. We can correct that.
▶ 6:09:06If that's not what's intended, let's do it right now. Let's make sure the preeemption doesn't take place. And um, thank you. And uh, if you yield back the time, I take the time back. Uh, and so would you like, Mr. chairman uh to correct that right now uh because I don't think that our members maybe even on that your side of the aisle intended to preempt fraud and if we can amend that right now. Let's would the gentle woman yield? Yes, I yield.
▶ 6:09:34Uh I'd like to be more reflective than that and look at the letter and actually study it and consult with you on what needs to be changed uh if anything in the bill and work with Chairman Style, too. So, I'm I'm just I'm just not going to deal with it today and I'm going to urge a no vote on the amendment. But reclaiming my time. Reclaiming my time. Are you saying that you want to continue with this legislation? You want to pass this legislation with the preeemption in it if that's what's in it.
▶ 6:10:05Uh rather than fix it now. Is that what you're I'm saying I'd like to reflect on this letter, which I've never seen until it was mentioned to me. uh with your discussion and see if there's some change in the legislative text I think's appropriate and work with the committee to do that and I don't think it's appropriate to do it. Now I yield back the gentleoman.
▶ 6:10:27Uh I would propose that we have a recess so that you could read it and that you could take a look so that we can fix it if it needs fixing. If you understand what we're saying that we must cover fraud, let the states do that. If we want to take a recess, you want to read it, you want to get with Mr. Styles so that he can, you know, tell you uh what he thinks about the reading of it, then I would propose that we do that. Let's not put it off. This is a big bill.
▶ 6:10:56We're going to go on for a long period of time. Once it gets passed, nothing is going to get changed. I respect your your offer. Uh but I know that it's going to be difficult uh to do. And so understanding the difficulty of getting it done once the bill is passed out of here. You got the votes. You got the votes to pass the bill. And so no uh I don't want to wait past uh the passing of the bill.
▶ 6:11:22So I would propose that we recess and allow you to read it to understand it and hopefully come back with a fix. I yield the balance of my time. Mr. Cassen's time. I yield back. Gentleman yields back. Is there any further debate on the amendment? Question now occurs on the amendment. All those in favor of the amendment shall signify by saying I. I. All those opposed shall signify by saying nay. Nay. In the opinion of the chair, the naysay have it. The naysay have it. Amendment is not adopted.
▶ 6:11:52Recorded vote is requested. The gentleoman from California requests a recorded vote. All those in favor of recorded vote, raise your hand. A sufficient number having raised their hand. A recorded vote is ordered. Pursuant to subject section C5 of rule three of the committee rules, further proceedings on amendment are postponed. We'll now move to the next amendment. I have an amendment at the desk. The ranking member has an amendment debts. We'll pause for it to be distributed.
▶ 6:12:21The gentleman from Wisconsin reserves a point order.
▶ 6:14:53Clerk will report. I'm sorry. There's a point of order that's been reserved and the clerk will report. An amendment to the amendment in the nature of a substitute to HR 3633 offered by Miss Waters of California designated as HR Without objection, the amendment is considered read.
▶ 6:15:12The gentleoman from California is recognized to discuss her Gentleoman's recognized.
▶ 6:15:46Thank you very much. Um, so I have this amendment at the desk. Mr. Chairman and members, I have long said that crypto is here to stay and have worked in prior Congresses to pass legislation to create a federal framework for crypto in order to ensure that crypto investors receive the same protections that investors in securities would receive.
▶ 6:16:12I'm offering an amendment that adds a new title that is called Crypto Investors Bill of Rights. Very Crypto Investors Bill of Rights.
▶ 6:16:27My amendment would require the SEC and CFTC to jointly issue rules that would protect crypto investors and restore their confidence in crypto from the scams, whether they are perpetrated by the president or by offshore fraudsters.
▶ 6:16:44The Crypto Investor Bill of Rights requires every exchange, broker, or wallet provider to show a one-page plain English fee sheet before anyone hits by. Ending the surprise charges related to paying gas, withdrawal, or exit fees.
▶ 6:17:07platforms would owe users a fiduciary duty whenever recommending a crypto product, and they will owe crypto investors a duty of loyalty by fully disclosing any markups, their conflicts, and revenue streams.
▶ 6:17:23Whenever hackers strike, payment stable coin issuers or crypto service providers would, under my amendment, be required to freeze the account within an hour and alert customers exactly the quick response your bank gives when a debit card is So, so a bad situation doesn't become worse.
▶ 6:17:47Platforms would also be barred from cutting in line or trading against their own customers or given preferential access to their VIP customers. Like their traditional securities counterparts, crypto platforms would also have to prove they got you the best price available. No more secret house advantage, just the same fair dealing rule stock brokers follow.
▶ 6:18:15Once a month, exchanges must post a live independently attested dashboard that shows exactly how many coins they hold. So anyone can check their solveny in two clicks instead of waiting for a crisis to reveal a hole in the balance sheet. Platforms would have to would have to have to be insured by the securities investor protection corporation.
▶ 6:18:38So if a trading firm or brokerist fails, crypto investors would receive the value of their tokens. The crypto investor bill of rights would also demand any platform that offers 247 trading to also offer 247 human customer support line so an investor would not have to wait when some glitches at midnight or their account be hacked. The crypto industry says their technology is the way of the future.
▶ 6:19:09If that is true, then there's no reason why they can't comply with existing investor protections. And so the bill of rights and you know, since I've been in Congress, people have created a bill of rights on everything that you can imagine. I mean, that's a favorite, a bill of rights for something or somebody. And we usually confirm uh because conform uh because it kind of works you know to do a bill of rights so that people will understand now this is very important. We're talking about crypto.
▶ 6:19:40We're talking about changing the cash and money systems in this country the payment systems the investment everything. Now I know that we will support a crypto investor bill of rights. And so that's what this bill does. is very simple and it's good for our young people. Our young people are interested in crypto, but I want you to know they don't know all of the tricks to the game.
▶ 6:20:04They don't know all of what's not in the bill to protect them from being just ripped off. And so, come on, give me a vote on the Bill of Rights, crypto investor Bill of Rights. That's not too much to ask. And I know that most of you have voted a hundred times for the Bill of Rights for something for somebody, some city, some state, for firemen, for for police officers, you name it. Bill of Rights is very familiar to us.
▶ 6:20:33So having the familiarity of Bill of Rights and what it is meant to do, come on, let's give it to young people. Let's give it to firsttime investors. Let's give it to those who are using some of the money that could maybe end up going for their savings uh because they have learned what to do and what not to do and what to look for. I yield back the balance of my time. Gentlewoman yields back. Who seeks recognition? Mr. Chairman, does the uh chairman insist on his point of order. Gentleman withdraw from Wisconsin withdraws his point of order.
▶ 6:21:03The gentleoman from Texas. Mr. Chairman, I did not see a quorum. I asked for a quorum and a and a roll call vote on the The joint gentlewoman uh requests a quorum a quorum not being present. We will suspend. Will the gentleman yield?
▶ 6:21:34Committee is suspended while we're going to call for a war. Uh I'd just like to ask to use this time for you to consider uh what you want to consider about the states and uh whether or not we can talk about how to protect the states and not uh put them in a position. gentleoman. We could have conversation. Mr. Chairman, I call the question for a roll call, please.
▶ 6:34:06A quorum being present, we will Is is there any further debate on the waters amendment? There's no further debate. The question now occurs on the amendment. All those all those in favor of the amendment shall signify by saying I. All those in opposed shall signify by saying nay. Chair the nays have it. Nays have it. Amendment is not adopted.
▶ 6:34:41The gentleoman from California asks requests a recorded vote. All those in favor record vote raise your hand. A sufficient number having raised their hand. A recorded vote is ordered. Pursuant to subsection C5 of rule three of the committee rules. Further proceedings on the amendment are postponed. We'll now move to our next amendment. Gentleman from Texas. Mr. Chairman, I have an amendment at the desk. The gentleman from Texas has an amendment at the desk. We'll pause while it's distributed.
▶ 6:35:11That was Mr. Style. The gentleman from Wisconsin reserves a point of order.
▶ 6:35:52Thank you.
▶ 6:37:53Did it get distributed?
▶ 6:38:44Clerk will report the amendment. An amendment to the amendment in the nature of a substitute to HR 3633 offered by Mr. Gonzalez of Texas designated as Gans Without objection, the amendment is considered read and the gentleman from Texas is recognized on his amendment. Mr.
▶ 6:39:11Chairman, I'm offering a common sense amendment today which would bolster our nation's security and combat the actions of illicit a actors such as drug cartels and terrorist organizations. This amendment would in fact uh direct the Treasury Secretary in conjunction with the Securities and Exchange Commission and Commodities Futures Trading Commission to examine and report to Congress how foreign terrorist organizations and transnational criminal syndicates like drug cartels,
▶ 6:39:42Hamas, the Houthis use digital assets to circumvent current regulations and finance their operations. Following this review, Tre Treasury must issue updated guidance to ensure the Securities Exchange Commission and Commodities Future Trading Commission have the tools they need to detect, disrupt, and deter elicit financing through digital assets.
▶ 6:40:05As you know, the Treasury Department has reported that Mexican drug cartels have increased their use of cryptocurrency, especially Bitcoin, to launder elicit drug proceeds. A 2023 DEA report noted that cartels are leveraging digital wallets to move millions of dollars across the border with speed and Hamas received over 40 million in crypto between 2021 and 2023.
▶ 6:40:34According to Routers, the over 20 billion dollars in crypto transactions in 2022 were linked to illicit activity, including sanctions, evasive dark darknet markets, and terrorist financing. These aren't theoretical threats. They're happening right now, and our regulators need the proper tools to respond. This isn't about stiffling innovation.
▶ 6:41:00It's about ensuring our regulators can keep up with bad actors exploiting the digital space. I am also uh happy to be joined by my friend, Congressman Jim Costa, who introduced a similar amendment before the House Agriculture Committee uh for HR 3633, Digital Assets Market Clarity Act of uh which passed out of the House Agriculture Committee this afternoon. and I'm hoping my colleagues on this committee will do the same.
▶ 6:41:30So, Mr. Chairman, I urge your support for this amendment and I appreciate your time, the time. Thank you. Would the gentleman yield? Yes, I yield. I thank the my friend from Texas for this amendment and uh he's put his finger on an important topic. uh foreign adversaries are addressed in the bill, but this issue around foreign terrorist organizations uh was not until this morning when this amendment was adopted in full by the house a committee in title five.
▶ 6:41:59So your text is now included in the bill that will be reported to the house as it was amended in the House Agriculture Committee which is a joint title. We both committees can make a amendment to title five in the bill. So with uh your success uh I'd like to invite you to consider withdrawing it because you've your your amendment has already been admitted to the bill. Good. I withdraw. I thank the gentleman.
▶ 6:42:26I thank him for his idea and I'm glad that it received favorable consideration in House A. I thank him for working on it because I do think it's an important area and I'm glad it's now included in the text of title five. The gentleman from Texas withdraws his amendment. Uh, are there any other further amendments on the bill? The gentleman from Illinois. I have an amendment at the desk. Mr. Castton has amend at the desk. We'll wait for it to be distributed. Uh, Mr. Style.
▶ 6:42:56The gentleman from Wisconsin does reserve a point of order on the castle So this is no joint.
▶ 6:44:03Clerk will report the amendment. An amendment to the amendment in the nature of a substitute to HR 3633 offered by Mr. Casten of Illinois designated as Casten 050. Without objection, the amendment's considered read and the gentleman from Illinois is recognized for five minutes to describe his amendment. Thank you, Mr. Chair.
▶ 6:44:24So my amendment would simply ensure that the SEC and CFTC are adequately staffed and have representation from both political parties before initiating the the various rulemakings required into this bill. This bill defines a lot of terms which are not widely understood. What is a mature blockchain system? What is a decentralized governance system? How do we address mixed digital asset transactions that are subject to the jurisdiction of CFTC and SEC and others perhaps?
▶ 6:44:51um what are the processes for delisting digital assets from trading? All of those are going to require administrative rulemakings by the committee. And right now we do have some some real structural concerns that all of us ought to be concerned about at the SEC. Right now there are three Republican commissioners, one Democratic commissioner, but that Democratic commissioner, Carolyn Krenshaw's term expires at the end of the year, which could result in a 300 commission. Now, in the normal course, uh, Donald Trump per protocol would nominate a Democrat.
▶ 6:45:21Although, as Elon Musk, Rudy Giuliani, Anthony Scaramucci will all tell you, you're a fool to trust Donald Trump to follow protocol. Um, so the there's a there is a risk that there will be no Democratic voice on the SEC to issue those rule. It's we also know that Trump is actively firing people from commissions. The Supreme Court is pushing the undoing the Humphre's executive rulemaking and there's a real concern about making sure that those commissions represent the diversity of of views in America.
▶ 6:45:51It's even worse at the CFTC. Um there we have acting chair Carolyn Fom who will step down once her successor is confirmed. Democratic Commissioner Johnson plans to leave the agency a lot later this year and that potentially would leave only Brian Quinten's who currently leads crypto policy at Anderson and Horowitz and is President Trump's picked to lead the He's going to have his confirmation in the Senate later this week.
▶ 6:46:16Um assuming that he is approved, there's a scenario where he could be the only commissioner at the CFTC and at the CFTC unlike the SEC there is no regulatory minimum for a quorum. So we could end up with Mr. Quinten's being the only authority to make a decision and someone who is massively conflicted by his economic interests um given his connections to the crypto industry. There's been a lot of talk in this hearing about how bipartisan this bill is or could be.
▶ 6:46:46Um let's hope it is, but that bipartisanship shouldn't stop the minute it has to actually be worked out within the committee of how these rules are going to go forward. And you know, I' I' I'd just point out that unless you are of the opinion that that Donald Trump is going to be the last president ever in the history of our republic, um it's in all of our interests for us to make sure that these committees are fully staffed, have quorums, and are diverse because look, some rulemakings take time.
▶ 6:47:15and four years from now when it's President Lena Khan or President Gary Gendler or whoever else uh whoever else you are afraid of this would also protect in that scenario. Um so I you know I think it's a simple rule just says let's make sure that these these commissions are are are staffed that they have a quorum and that there's a diversity of views as they go through to make these rules. Um so thank you and encourage every bit of support and yield back. Gentleman from Illinois yields back. Who seeks recognition?
▶ 6:47:46The ranking member full committee. Thank you, Mr. Castton, for offering this necessary amendment. This amendment would ensure that basic democratic governance structures are in place prior to carrying out joint rulemaking at the Securities and Exchange Commission and the Commodity Futures Trading Commission.
▶ 6:48:07For starters, we're all seeing the headlines earlier this morning about the turmoil at the CFTC as commissioners plan to leave the agency, potentially leaving the incoming chair as a sole member of the fiveperson commission. We know the kind of chaos that would ensue as a new regime is air dropped into an understaffed, underfunded agency.
▶ 6:48:32Additionally, it is critical that independent agencies remain independent rather than filled with party loyalties. Loyal are those looking to serve one individual. Of course, I urge members to support this amendment. Of course, I don't think uh that the opposite aisle is going to uh support this amendment. This is one of the simplest, plainest amendments uh to be offered yet.
▶ 6:49:00uh and yet uh we cannot expect that there will be any real support for it. You know, if we have members here who are coming from states where the states are begging uh for uh the Congress of the United States not preempt their ability to deal with fraud uh that we can't expect anything from the opposite side of the aisle. And so uh yes, we're asking for support.
▶ 6:49:29We have a lot of other amendments that we're going to go through here. But I tell you, uh, when some of us go back, uh, to our states, for example, Wisconsin's where Mr. Styles, uh, has a responsibility, uh, for, uh, relating to the needs of his states, or me going back to California, uh, where, of course, we don't want preeemption or, uh, what is going on in Oregon, uh, where there's an attempt now, uh, to do something about fraud.
▶ 6:49:59Um we're just in a position here where we are literally um doing this work almost for not. Uh we know uh that the opposite side of the aisle they have the majority uh they have the support but this is a simple one. This is a very clear one. Let's see what you're going to do with this.
▶ 6:50:20Let's see if in fact you're going to support an amendment that would just incure just ensure that basic democratic governance structures are in place prior to carrying out joint rule making at the securities and exchange commission and the commodity futures commodity futures trading commission. So with that let's see if my prediction comes true.
▶ 6:50:44I yield Gentleoman yields back seeks Does uh Mr. Style insist on his point of order? The gentleman withdraws his point of order, seeks recognition. Seeing none, I'll recognize myself for five minutes. Uh let me thank the gentleman from Illinois for his uh amendment. I certainly have urged the president to make appointments in both Democratic and Republican slots across all the financial services supervisors. I think that's important.
▶ 6:51:14I hope the Senate moves quickly uh to confirm his choices. I hope this is like newfound evidence that perhaps people are interested in a bipartisan commission to oversee the CFPB. I'll be checking back uh with members in case that's a future possibility here. But I don't believe uh this amendment is necessary and I yield back the balance of my time. Who seeks Is there any further debate? If there's no further debate, the question now occurs on the cast amendment.
▶ 6:51:43All those in favor of the amendment shall signify by saying I. I. All those opposed shall signify by saying nay. Nay. Independent chair. The naysay have it. Nays have it. Amendment is not adopted. Mr. Chair, request a recorded vote. The gentleman from Illinois requests a recorded vote. All those in favor of recorded vote raise your hand. A sufficient number having raised their hand. A recorded vote is ordered. Pursuant to sub section C5 of rule three of the committee rules, further proceedings on the amendment are postponed. We'll now move to the next Mr.
▶ 6:52:13Castton, I have an amendment at the desk. Mr. Castton has an amendment at the desk. We'll pause for it to be Mr. Style reserves a point of order. Thank you.
▶ 6:53:56Mr. Castston, could you identify your which amendment you're working on, which my number up there in the top left corner? The uh I was anticipating it was going to be a different one, but the one that's shown here is number 56. So, we can that's the one we have. 56 is the one that's distributed. I'll do first. Is that the clerk has number 56? Yes. All right. So, uh let me uh ask the clerk to report the amendment. An amendment to the amendment in the nature of a substitute to HR 3633 offered by Mr.
▶ 6:54:23Castton of Illinois designated as Without objection, this amendment is considered read and the gentleman from Illinois is recognized for five minutes on his amendment. Uh thank you, Mr. Chair. Uh this amendment is to address some concerns that were raised in the in the the debate that led to this bill specifically around the fact that the clar clarity act is currently drafted creates broad exemptions for decentralized DeFi services.
▶ 6:54:50Um and as long as that language remains without this patch uh it creates some significant problems with addressing illicit activity cyber security vulnerabilities in the D5 space. We know that North Korean hackers have and will continue to target DeFi systems to steal cryptocurrency to fund their nuclear weapons program. Uh we also know as we heard in a minority day hearing that the term decentralization is not well defined.
▶ 6:55:15I think in theory it means no one person or group has outsized control or influence over the blockchain network or protocol. Business decisions are made collectively by the people who maintain the system. In practice there is no exact clearly defined definition. It gets used as an umbrella term to define a whole lot of protocols.
▶ 6:55:32We had our witness who testified as we were sitting here that her DeFi system actually has a governing board who was issuing tokens on that system without going through those processes and yet still qualified as DeFi. Um the I also know that DeFi services contain features that may grant certain users, founders or insiders some degree of influence or discretion.
▶ 6:55:57And it could just take the form of like the website that you access the system through could be hacked into could be a vulnerability within the system. Now I think there's a there's a counterargument which is which is worth hearing out that I think the estimates I've seen is that maybe 5% of crypto trading right now happens on decentralized exchanges and 95% on more centralized exchanges. I think we ought to ask the question though about maybe that means this is too small to matter.
▶ 6:56:25On the other hand, maybe it means that until the Clarity Act is passed with these big holes, it's not going to be as attractive as a way to arbitrage risk. And I I just I I'd put every a thought experiment in everybody's head. Suppose we all went home tonight and we're all super great coders and we write a piece of computer code that is designed to break the law. I don't think anybody would question that if that code is then released, we would all be guilty of violating the law because we built the tool to do it.
▶ 6:56:52If on the other hand we said I wrote a piece of computer code that I would like to be held I would like to be permanently indemnified against any any criminal activity being committed with this. We might reasonally as legislators as our regulatory counterparts we might say well you need to prove then that your code doesn't break the law. And we're not going to do that within legislative text. But what we've tried to do in this amendment is to strike a balance by saying let's create a working group.
▶ 6:57:19Let's let's get people who are involved, the coders, the investors, the regulators, get them together to say what is the technological solution we're going to do that make sure that if you are going to have a D5 protocol that is indemnified from any investigation of illicit finance etc etc that that has some tool that is set up to make sure that you can't hack into that system. Um, we can discuss what it means. Maybe it's maybe it's real-time transaction monitoring.
▶ 6:57:49Maybe it's screening for sanction list. Maybe it's verifying customer identities and IP addresses. We don't need to get into all that right now. But this simply is a tool that says, let's put that committee together. Let's make sure it's in place so that we shut down the huge barn door to potentially illegal action that exists in the Clarity Act as it sits right now because of the exemption for DeFi. So, you know, the last thing I think any of us want to do is to pass a bill and then find out that we've triggered a massive financial scandal, a massive hack, um massive amounts of illegal activity.
▶ 6:58:21The barn door's there. Let's get it closed. Let's not kick the amendment. Let's not kick this can down the road. And uh with that, I yield back and would ask my colleagues to support. Thank you, Mr. Cast. M yields back. Who seeks recognition? The gentleman from Wisconsin. Mr. Chair, I removed my point of order. Oh, gentleman removes this point of order and I and I you seek recognition. Strike the last word. Yeah, gentleman's recognized for five minutes. Thank you uh Mr. Chairman. Appreciate uh the intention of my colleague uh for offering this amendment.
▶ 6:58:49Uh but I think it's important that we don't lose sight of a few a few key facts uh which the amendment does not take uh sufficient stock of it appears. Uh transactions one, so let's let's frame this. transactions conducted via the blockchain network are recorded on a public ledger. So in many respects, this provides greater transparency uh than what exists with traditional cash transactions. That should be out of the gates.
▶ 6:59:14Two, under the bill, intermediaries remain subject to SEC and CFTC regulations as well as bank secrecy act and anti-money laundering requirements. Three, if we're start thinking down the road, if we create the conditions that'll enable regulators to make it prohibitively difficult or impossible for consumers to transfer their own digital assets to self-hosted wallets and engage uh in DeFi activity without installing surveillance tools.
▶ 6:59:41We effectively force them into thirdparty custody arrangements, exposing them to additional risk with really out without without offering a choice. So this would undermine the fund fundamental promise of blockchain technology uh and would threaten Americans property rights. So under the Clarity Act and existing law, it should be noted money laundering is illegal. Uh and the Clarity Act will introduce a more robust compliance uh with BSA requirements.
▶ 7:00:07And so while I respect the intention and spirit uh in which this amendment was offered, uh I have concerns regarding the imple the imple implications of the study and the insufficient EF emp emphasis placed on minimizing uh intrusions on the privacy of law-abiding citizens. And so I would encourage my colleagues to vote no and I'll yield. Would the gentleman yield? I I'd be happy to yield.
▶ 7:00:30So I want to just yes it's true that if everything is on the blockchain then you've got the record but you can't simultaneously say that the blockchain provides a record of everything that happens and it provides anonymity. There's a reason why anonymous wallets exist. There's a reason why mixers exist. It's to get away from that anonymity.
▶ 7:00:50if we're going to have that anonymity and if we're going to have that running through these D5 protocols, which by the way, you know, you've got this D5 protocol, you've got a blockchain that's set up, but now the the people who manage that blockchain can issue a token that all of a sudden lives there. That token can come into existence, go out of existence, it could be subject to the juris and it's a way to launder money.
▶ 7:01:10So you can't we have to accept the fact and I wish that in all our hearings we could be honest about the fact that either this is either the blockchain provides robust accounting that we know who everybody is legit or we allow all the anonymity. I'm going to reclaim it. I I I I hear what you're saying uh to my colleagueuh from Illinois. Um I think a lot of this is what is the baseline with which we're analyzing money laundering, BSA, etc.
▶ 7:01:33I think all of us in this entire room uh would oppose uh moneyaundering for a whole host of different reasons including illicit financing to terrorism, drug trades, etc. Then I think the question is what is the baseline with which we're this? So we could think about cash transactions uh that already exist, right? That'd be outside this uh realm. That's a that's a challenge. You could you could transfer gold bars, you could you could trade with elicit cigarettes. So it's what is the baseline?
▶ 7:02:01Is it perfection or is it a better system than what we have? And so if we go back uh it should be noted hopefully that privacy in and of itself is not illegal, right? Americans have a right to that in their financial transactions. And so there's totally legitimate uses of privacy preserving technologies and the courts have already vacated the president's authority under uh EA uh in the Biden administration.
▶ 7:02:28I think what we're what we're looking at here is making sure that we maintain um privacy for American citizens. We maintain um the the SEC and CFTC regulations as well as bankrupse secrecy act and anti-moneyaundering requirements. Uh and so I'd still view this amendment uh is adding complexity um into the system uh and an insufficient emphasis placed on minimizing intrusions uh on the privacy of law. I would just note that it's a lot harder to move gold bars.
▶ 7:02:58I'm going to yield back. Um I I'll was It was a cross talk from my colleague. You said you you want to just offer that. It's a lot harder to move gold bars or illicit cigarettes. Yeah. I'll I'll I'll reclaim my time, but it would be happy to reclaim my time, but also noted uh that President Biden literally shipped pallets of cash to Iran uh the leading state sponsor of terrorism. So, we could get into illicit finance and how how that all plays out.
▶ 7:03:24All I'm noting is that yeah, it was difficult, but the the government under Obama literally moved pallets of cash to Iran. Um, and so the the standard which we should be viewing this is how do we make improvements uh making sure that we're protecting privacy and that we're putting things in place not lost on the challenges of apparently moving metal objects. I'll yield back to the chairman. Gentleman yields back. Who seeks recognition? Mr. Lynch, you're recognized to strike the last word. Request to strike the last word. Thank you.
▶ 7:03:52Uh I I do want to point out that uh you know moving cash around and I was on this committee when there's President George W. Bush that was moving pallets of cash and and duffel bags full of cash across Iraq u and and Afghanistan. So uh but but there is a point that Mr.
▶ 7:04:13Casten is making and and that is that uh if you're moving $10,000 in cash, if you're making a a a cash transaction over $10,000, there are a whole lot of uh you know requirements that you that you need to comply with under the bank secrecy act um that you don't have to uh if you're you're doing this on on the blockchain. There's that uh you know limit that invites a lot more scrutiny.
▶ 7:04:42Um and and I think I think the gentleman's amendment is uh you know properly stated and uh uh he he does uh adeptly recognize a a gap in in the legislation and I think it would be entirely reasonable uh to adopt this amendment. I think it will protect everyone involved. Uh with that I could yield additional time to Mr. Casten, the gentleman from Illinois if he if he desires it. Uh thank you Mr. Lynch.
▶ 7:05:10I' I'd just point out that it much like the is it is it anonymous or is it fully traceable because of the blockchain, is it frictionless or are we going to have the checks in place? If if you're going to make it impossible to track where this money is, if you're going to give everybody anonymous wallets, if you're going to allow people to move not less than $10,000, not a pallet of gold bars, but millions of dollars at the click of a switch that immediately disappears into another network because it washes through a mixer and gets anonymized, which is exactly
▶ 7:05:41how these transactions have been done, then we've got to close that barn door. And I also just want to add, not the jurisdiction of this committee, but let's not accuse Joe Biden of being a moneyaunderer. When Donald Trump tanked the JCPOA, all of a sudden there were sanctions against Iran that were lifted. It's going to be interesting to see what happens with the current debates with Iran and the Trump White House and whether those sanctions are lifted.
▶ 7:06:02But allowing a country to access money that there was previously sanctioned because of a bill that was passed under Obama that Donald Trump blew up and now all of a sudden that deal is gone. Let's not equate that to North Korean nuclear funding. Let's not equate that to Islamic jihad. Let's not equate that to some really bad actors. I think we're all better than that. Yield back. Will the gentleman yield? Uh I'm gonna use some of my time. If I have some left, I'll give it to you.
▶ 7:06:28Uh but Biden was giving Iran back their money. We had frozen their assets, right? Biden was was giving them back their money that we had frozen in US banks. George W. Bush was giving them our money, US money, and you know, I think I think there's a there's a there's a clear difference there.
▶ 7:06:57Um, I would yield to the gentleman. I I I I won't further the foreign policy debate. I I would note that I firmly disagree, but we'll we'll leave that for now and debate that at another committee meeting. Fair enough. Uh but but I I I think it's worth noting on the merits of the the substance here that all intermediaries under the bill uh will be filing uh CTRs and SARS uh and they currently do under the money transmission regime. And so I'd much rather have a c you don't want anything playing out.
▶ 7:07:26But if a criminal were to use uh crypto uh it's actually more traceable in many ways uh than cash. And so law enforcement has advanced tools to track down funds and analyze criminal networks all in the open. Uh there's a reason why crypto is still by far uh the most u there's a reason why crypto is um not a preferred uh method in that regard. I'll I'll yield back to my All right, I'm going to claim my last minute.
▶ 7:07:52Every single ransomware attack uh every single one of these scams is using you know is using crypto on on blockchain. every single one 100 according to Fininsen 100% of the successful uh uh ransomware attacks against US companies is using the the payout is from crypto on blockchain.
▶ 7:08:21So, so all this talk about the security and the and and it's because it's anonymous. we c we can't catch them because there isn't there isn't sufficient uh regulations in place to get these folks. So, uh this idea that this is entirely safe and and and and uh accountable is is a complete fantasy.
▶ 7:08:44Otherwise, this wouldn't be the the favorite manner of of transaction for these hackers, scammers, and uh you know, international criminals. And I'll yield back. Gentleman yields back. who seeks recognition. Ranking member of the full committee, Mrs. Waters. Thank you very much, Mr. Thank you very much, Mr. Chairman. I'd like to um uh create a colloquy uh with Mr. Casten about DeFi entities.
▶ 7:09:14What is it the DeFi entities are claiming that they're unable to collect uh the requirement information uh that would would deal with the anti-money laundering and countering financing of terrorism etc etc. What's the argument? Uh so thank you ranking member Waters.
▶ 7:09:35My understanding of the argument, if you know, as our colleagues across the aisle make it, and I'm sure they'll correct me if I've got this wrong, is that these decentralized protocols are essentially bits of computer code that they are stipulating how the system works. There is no there is no individual who is responsible for executing that and therefore there is no need for liability or investigation. the the gap that happens is the exact definition of who created that code. What can they do?
▶ 7:10:03What is the board of directors is pretty vague. Um and and I think I think you recall our witness here who acknowledged that their board which was this exemption while it's a separate entity but it was people under the same collective control were actually issuing tokens on the DeFi blockchain but was saying that that's still DeFi. And so therefore other people using that chain are now saying well I didn't know that those tokens were going to be issued on this chain and yet there they are. So Mr. Castton would you agree with me?
▶ 7:10:30What I am concluding uh that the amendment that you are offering is a very reasonable uh amendment that would create a public private partnership with Treasury to explore the integration of anti-moneyaundering and countering the financing of terrorism requirements including know your customer and sanction screening. Is that all this amendment does? Yeah. It doesn't specify how to do it.
▶ 7:10:54that says let's get the right experts in the room and let's make sure that if we're going to say that this code has a is not going to do any harm and we've coded it in a way to do no harm. So again the complete exempting uh DeFi entities at all um is what is being asked of u this this committee the the Republicans they're saying don't mess with DeFi entities at all leave them alone is that right that is my understanding I'll leave them to not put words in my own
▶ 7:11:24mouth but that sounds good and so Mr. Casten, you know, on this idea of a public private partnership with Treasury, don't we hear a lot from time to time from the Republicans about public private partnerships uh in different ways, all kind of ways believing that uh there should be opportunities for the public and the private to have partnerships particularly in various aspects of business in order to achieve uh what would be commendable goals
▶ 7:11:55etc etc. Why is this so out of line of what you're requiring? I I would not speculate on that. I think we just crafted the amendment to make sure that the experts are in the room. And so would you um basically um indicate to this committee how again you believe this is important based on uh exploring the integration of anti- money money laundering and countering the the finance of terrorism
▶ 7:12:25etc etc. I think the key question for us as legislators doing our job is under what condition would we allow someone to write a piece of computer code that could wreak havoc on our financial system and give them complete indemnification? And I think we're not going to answer that on this committee.
▶ 7:12:45The hope is that we can put together this partnership of people who have that expertise, force them to be at the table, people from the crypto industry, computer coders, people who understand the law, and say, how do we write this in a way so that good actors are rewarded and bad actors can still be held to account? And I'm not sure why that's controversial. Uh, thank you, Mr. Casten. I appreciate that.
▶ 7:13:09And uh I will just conclude by saying uh that as we move this very complicated this huge piece of legislation and we're finding uh that there are too many instances where um uh actions are being proposed that would be harmful to investors, harmful to um consumers etc.
▶ 7:13:39appear to be in this legislation. And it is not understandable why u anyone would be willing to move this legislation with all of these problems uh that would be created um uh for this country. If you understand it any better, you don't have enough seconds, but the next time you have an opportunity, you explain it to me. Uh because I don't understand it. I yield back. Gentleman yields back. Who seeks recognition?
▶ 7:14:08Uh Dr. Foster thank you Mr. Chair. I'd just like to well first reiterate this thing this comparison with cash. You know I think that the the fundamental point has been made that 100% of ransomware and things like that take place with crypto 0% with cash. And this is uh you know that's a fundamental difference that we have to understand and that is why they have to be treated differently under the law.
▶ 7:14:36Um it's, you know, you don't see people, you know, doing ransomware and then demanding a, you know, a big bag of cash in a trash can in um in New York in Central Park or something like this. It it just, you know, this is a fundamental difference. It has to be done differently. Um we have rules on how much cash you can carry across borders for very good reasons. You know, you don't have absolute privacy to carry as much cash as you want across the border.
▶ 7:15:04And that is something that should also be applied to uh to crypto assets and and the technology exists to do this. I'll be introducing a a memo to an in um an amendment to actually um look at another approach to this than what um Mr. Castton's amendment is.
▶ 7:15:25But I think this is this is a thing we've been struggling with for the whole long time on this is that we have there are two fundamental problems that are not addressed in this which is the finality of transactions and the anonymity of transactions. And if you're absolutely an absolutist on both of those, then you're you're living in a world where people will be kidnapped and tortured uh to get their crypto code so that you can um get so that you can obtain their assets.
▶ 7:15:55And and I think most people um don't actually want to live in that world. They don't want to live in a world where um you know if you have let's say you tokenize gold bars somewhere and then they and then you're sitting on your tokens and the North Koreans hack your tokens and they they have your codes. Are they allowed to march in and grab those gold bars out of the vault that's been stored or is there in fact a need for a trusted third party and a set of law that can say no are the rules for accessing that vault.
▶ 7:16:25Here's the company that has control over it. here's the um oversight agency that that you know has legal authority over that company that controls where the gold bars are. You need this whole infrastructure uh to make a trustable system and and that's something that we have to have frankly a more mature attitude on this if we're going to make this a system that will not be like the status quo where we're seeing just massive amounts of of um of abuse in all directions here.
▶ 7:16:56Um so I I often make the the comparison with automobile license plates that you um if you think of the automobile industry in its infancy coming to us and saying you know we've got this great product it's going to be transformative but you can't but you'll wreck the industry if you demand people to use license plates because I want to be able to drive my car um with full anonymity you know through your neighborhood across international borders and don't let us
▶ 7:17:26uh don't let us um do anything that will ruin our inner um our industry or drive that industry offshore. Well, we had we mandated license plates in the United States for automobiles and it did not drive the automobile industry offshore. That ultimately most of the people that want to use crypto products, they come in through platforms. They don't mind being KYC. They don't expect that under all circumstances they will they will have absolute anonymity.
▶ 7:17:53And we have to reflect that expectation, reasonable expectation of the people in the laws that we pass. And and that's why I support this amendment and uh we just have to step back and and rethink this whole thing for from zero. Yield back. Gentleman yields back. Who seeks Seeing no other uh proposed speakers, I recognize myself for five minutes. Let me uh thank my friend, Mr.
▶ 7:18:20Cast for calling attention to the importance of how decentralized finance is overseen and how people think about it in in the future of our financial system. We have section 505 of the Clarity Act which calls for a very similar detailed study by the Secretary of the Treasury, the CFTC and the SEC on how to conduct exactly the right balance of regulations, what risks decentralized finance proposes.
▶ 7:18:49And in the first part of his bill, the this initial concept of the public private partnership with decentralized finance services, that that's something he wants to pursue, not in the form of this amendment, but as a as a consideration in in thinking about the bill or section 505 as drafted in the Clarity Act. I'd be happy to to work with him. Other than that, on the total of the amendment, I recommend a a no vote.
▶ 7:19:17Is there anyone seeking I yield back the balance of my time and there being no additional debate the question occurs on the cast and amendment. All those in favor of the amendment shall signify by saying I. All those opposed signify by saying nay. Nay. The nays have it. The amendment is not adopted. Request a recorded vote. The gentleman from Illinois requests a recorded vote. All those in favor of recorded vote raise your hand. Sufficient number having raised their hand. A recorded vote is ordered pursuant to subsection C5 of rule three of the committee rules.
▶ 7:19:47Further proceeding on the amendment are Pursuant to the previous order, the chair declares a committee in recess. Subject to the call of the chair will reconvene immediately following votes. We are in recess.