Hearings to examine bipartisan legislative frameworks for digital assets.

Subcommittee on Digital Assets

2025-02-26

Source: Congress.gov

Summary

The Senate Banking Committee's Digital Assets Subcommittee held its inaugural hearing to examine the regulatory framework for digital assets, focusing on stablecoins and market structure. Panelists including legal experts, exchange executives, and former CFTC chair discussed critical policy issues such as the Howey Test for securities classification, consumer protections, and the need for clear, bipartisan legislation. The hearing emphasized the importance of creating a predictable regulatory environment that promotes innovation while preventing fraud, protecting consumers, and maintaining financial system integrity. Key bills under discussion include the Lummis-Gillibrand Responsible Financial Innovation Act and the Genius Act, which propose prudential standards for stablecoins, issuer vetting, and clear rules for digital asset exchanges. Witnesses called for a balanced approach that avoids overregulation while ensuring robust oversight, especially in areas like bankruptcy resolution, anti-money laundering compliance, and protecting against illicit financial activities. The hearing concluded with a strong bipartisan consensus on the need for legislative clarity to strengthen U.S. competitiveness and ensure responsible innovation in the digital economy.

Participants

Transcript

I would like to call this first meeting of the Digital Assets Subcommittee to order.  And Mr. Gallego, welcome.  As the ranking member, I'm looking forward to working with you and the other members of the subcommittee.  This has been a long time coming, so I'm delighted to get started.   I'll make an opening statement and then the floor will be yours to make an opening statement and then we'll introduce our witnesses.  So the hearing now being in order, thank you everyone for being here at the inaugural subcommittee on digital assets hearing.  I'm really grateful to Senator Scott for creating this subcommittee.   And as I said, Senator Gallego, looking forward to working with you to pass bipartisan legislation on Bitcoin, on stablecoin, and digital assets.  We want to promote responsible innovation and protect consumers.  We sure have come a long way since I first arrived in the Senate.  Many members of the Senate were still trying to wrap their heads around   What is a Bitcoin?  What is a digital asset?  What is a stable coin?  What is a Howey test?  And so now we've arrived at the point where we can move forward.  We're on the precipice of finally creating a bipartisan legislative framework for both stable coins and market structure.  I hope we can get both pieces of legislation to President Trump for his signature this year.   including the Lummis-Gillibrand Responsible Financial Innovation Act, which is the more market structure-oriented bill that would sort of dovetail with what the House passed last year, which was VET 21.
But we're gonna start with stablecoins.  And on stablecoins, I'm optimistic the Senate Banking Committee will soon mark up Senator Hagerty's legislation,   It is called the Genius Act.  Chairman Scott and Senators Gillibrand and I are all co-sponsors.  The act makes the U.S. dollar fit for the digital age, creates additional demand for U.S. debt, and makes payments both faster and cheaper.  I'm also pleased that the legislation fully protects the dual banking system and creates parity between both states and federal stablecoin charters.   Turning to market structure, I'm excited to work with Chairman Scott, our subcommittee members, Chairman Bozeman, Chairman French Hill over in the House, and Chairman G.T.  Thompson, who are respectively chairs of Financial Services and Agriculture, to clearly draw the line between a security and a non-investment contract commodity, and to create a path for digital asset exchanges to register   with the Commodity Futures Trading Commission.  This industry needs clear rules of the road that it can follow while simultaneously promoting both responsible innovation and protecting consumers.   So each of our witnesses today are committed to these goals, and I'm really grateful to all four of you to be here and share your expertise on these topics.  First, we have Lewis Cohen, partner at Cahill Gordon and Reindell.  Did I get that right?  Thank you.  Mr. Cohen is a learned lawyer and an expert with respect to differentiating between a security and a commodity.   Can't wait to hear from you about that.  We have been wrestling with that for months.  Second is Jonathan Yackem, Global Head of Policy at Kraken.   I am proud that Kraken calls Wyoming home today.

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