Flood Slams Yellen Over Agricultural Guidances: You ‘Rejected The Best Available Scientific Data’

  • 2 months ago
On Tuesday, Rep. Mike Flood (R-NE) questioned Treasury Secretary Janet Yellen on agricultural financing during a House Financial Services Committee hearing.

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00:00Gentleman's time has expired, but that would go to the gentleman from Nebraska, Mr. Flood, recognized for five minutes.
00:05Thank you, Mr. Chairman. Thank you, Madam Secretary, for being here today.
00:08Before I begin, I want to make a brief statement on something that is admittedly not within the scope of this particular hearing,
00:15but is very important to my district and agriculture producers across the country.
00:20With the 45Z clean fuel production credit going into effect in less than five months,
00:26Nebraska's agriculture and energy producers need full and accurate guidance promptly.
00:33I was disappointed to see Treasury release guidance in April for the 40B sustainable aviation fuel credit
00:40that rejected the best available scientific data and tied the hands of our nation's ag producers
00:45with an unworkable, one-size-fits-all limitation.
00:49Nebraska's farmers don't need the federal government to come in at the 11th hour
00:53and dictate which practices are acceptable and not acceptable,
00:57and I will continue to advocate for greater flexibility that fully recognizes
01:01the role Nebraska's producers play in the future of transportation fuels
01:05and for an all-of-the-above energy policy that puts our farmers first.
01:09I plan to submit some questions to Madam Secretary for the record on this issue
01:13and would appreciate a quick response.
01:15Switching gears, Secretary Yellen, in response to a letter from Chairman McHenry, among others,
01:20regarding FSOC's calls to fill the spot market gap in digital assets,
01:24it was noted that, quote,
01:26crypto asset platforms engage in practices commonly subjected to greater regulation,
01:31including operating order book style markets and custodying crypto customer assets, end quote.
01:39Those activities sound a lot like activities undertaken by centralized intermediaries,
01:44and centralized intermediaries are undoubtedly an important piece of the regulatory puzzle
01:49for digital asset regulation.
01:52That's why this committee and the Ag Committee collaborated together on FIT for the 21st Century,
01:57which provides a new regulatory framework with sufficient responsibility and resources
02:02for the CFTC to effectively regulate spot markets for digital assets that are not securities.
02:08However, I think it's important that we think about some of the unique characteristics
02:11in decentralized systems as well.
02:14These protocols will allow willing buyers and willing sellers to find one another
02:18and make a trade based on the rules of the protocol to any of the market participants.
02:23Here's my question.
02:24How do you think about decentralized trading protocols that do not create order book style markets
02:29or involve the custody of customers' crypto assets?
02:32Wouldn't these markets, which are unique relative to most of our understanding
02:36of traditional centralized markets, require a different approach to regulation?
02:43You're talking about DeFi type of activities?
02:48We have to recognize there's going to be a decentralized angle to all of this in digital assets,
02:53and so far everything seems very centralized, so yes.
02:59Your question is, what about the regulatory approach to those markets?
03:04How are you thinking?
03:05When you look at this whole regulatory regime, how do you think about decentralized trading protocols,
03:11specifically, that do not create order book style markets
03:16or involve the custody of a customer's crypto assets?
03:19Have you given that a lot of thought?
03:21Well, this is certainly something that the regulators are looking at, the SEC,
03:26and to some extent the CFTC.
03:30Perhaps some of these activities may fall under the regulatory umbrella of the banking agencies as well,
03:40and I would add this, Madam Secretary.
03:43FSOC released a report in late 2023 dedicated an entire section to the risk associated
03:49with digital assets.
03:50One such risk the report mentioned was, quote, unquote, concentrated risk.
03:55I'd like to focus on a couple aspects of concentration risk that I'd like your view on.
03:59If there are only a small number of entities that are able to serve as custodians
04:03of digital assets for registered investment advisors,
04:06would you agree that such an arrangement could constitute a concentration risk?
04:11It could potentially, but I'd need to know more about the details.
04:16I will note that a witness representing the registered investment advisors spoke in front
04:20of the digital assets subcommittee panel early last year and testified that his firm had, quote,
04:25three, maybe four, end quote, options for digital assets custody currently
04:29and indicated the number could reduce with the SEC's custody rulemaking.
04:33I guess, Madam Secretary, in the time I have left, if there are only a small number of entities
04:37that are able to serve as custodians of the now approved spot bitcoins ETFs,
04:43would you view that arrangement as a potential concentration risk?
04:47I'd just have to know more about the details.
04:50I'd need to really look carefully at the case you have in mind.
04:55I will leave with this.
04:56I emphasize there are only a handful of custodians for spot bitcoin ETFs,
05:01and most issuers only have one custodian.
05:03With that, Mr. Chairman, I yield back, and thank you for your time.
05:06The gentleman yields back.
05:07With that, we go to the gentleman from Illinois, Mr. Kasten.

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