'All The Money And Power In This Town Is On One Side': Brad Sherman Bemoans Inability To Regulate Crypto

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At a House Financial Services Committee hearing prior to the Congressional recess, Rep. Brad Sherman (D-CA) spoke about the inability to pass meaningful crypto regulations.

Transcript

00:00The gentleman yields back. The gentleman from California, Mr. Sherman, the ranking

00:03member of the subcommittee on capital markets is recognized for five minutes.

00:08Yes, I'll point out normally a hearing on capital markets would be in that capital

00:12markets subcommittee. I'll also point out that meme coins were determined by the

00:19SEC not to be securities only after Gary Gensler left and under that decision was

00:25made under the Trump administration. But I'll agree with a lot of the pro-crypto

00:34folks here who have said it's kind of silly that we're determining how to

00:39regulate crypto based on a 1940s case involving Orange Groves interpreting a

00:48law written in the 1930s. We ought to have, if we could write it, a good crypto

00:55regulation law designed for this century. The problem is that all the money and

01:00power in this town is on one side. There is no lobby for effective enforcement of

01:09our tax laws or enforcing our sanctions laws or dealing with drug dealing. And so I

01:17fear that while determining what our policy should be by having brilliant lawyers look

01:24at magnifying glasses and footnotes from the 1940s, looking at a case and

01:30determining on that basis how to regulate is an absolutely absurd thing for a

01:34society to do. Passing a bad law would be even worse. Mr. Heisinger says that your

01:41industry wouldn't like a patchwork. Many industries would like a patchwork because

01:46then they pick which patch they want to be in. And if we had a system where any crypto entity

01:54could go to Wyoming and then Wyoming would say, well we're going to leave this at the

01:57county. So you just find one county in somewhere in Wyoming that will give you

02:01everything you want and you give them some jobs and some economic activity that's

02:07significant to that county. But I want to focus, I also want to say that there is

02:12really a battle inside crypto that hasn't quite broken out yet between the old coins and

02:17the new coins. And most of our testimony here is in favor of making it easier to create new coins.

02:24I think that what will be the undoing of crypto is more crypto. And I'm on the

02:32side of the new coins versus the old coins, although we really should have people

02:36investing in businesses that employ people and build things in the United States. But

02:40we've got some brilliant lawyers here and I want to focus on a really easy legal questions. Since I

02:48stopped practicing law last century, Mr. Sarah, if, and I realize you're not representing your firm here,

02:57but you are a lawyer. And if a powerful politician in this state or that state came to your firm and said,

03:04we're going to prevent your firm from practicing law in our state unless you give me a million dollars,

03:11would that be legal? Thank you for the question. Like I said in my opening, I'm here in my individual

03:18capacity and I'm- You're individually a lawyer, a pretty good one. Can you give me an answer? Thank

03:23you. I'd like to contribute to the conversation about how we need to come up with a new regulatory

03:28framework for keeping- I know, but you're here in Congress and I'm the- and this is my time and I'm

03:33asking you a question, which is your obligation to answer. Can you answer? Yes, sir. So that would

03:40be illegal? I'm not an ethics expert, but that sounds coercive. Yeah. Okay. And if instead of the

03:48million dollars going to the politician, the million dollars was going to some political organization

03:53the politician was aligned with, would that change the answer? Uh, I'm not clear on the question. I'm

04:00sorry. The question is a powerful politician comes to your firm and says we're going to make it impossible

04:05to practice in our state unless the firm gives a million dollars to a political organization allied with

04:11that politician. So I- I can't comment on the legality of that. I'm not a lawyer. This is- this is- this is

04:181L stuff here. Uh, you- you choose not to. Uh, Ms. Smith, uh, and- and I'll ask you both. You could be

04:27giving us testimony that was adverse to the interests of Donald Trump coin, and then your whole firm could

04:36find that it is, uh, disqualified to do anything and you lose all security and clearances. How can you

04:43assure us that your testimony, uh, is not affected by the knowledge that you could have a billion dollar,

04:50that the- the issues we're discussing here could have a billion dollar effect on a president willing

04:55to disqualify firms that displease him? Ms. Smith. As I mentioned, I'm here today in my personal

05:02capacity. Right. And I- so my testimony- Right. And I- so my testimony-

05:04We need to know that you're representing what you really believe and not fear of Trump. Can you do that?

05:09Ms. Smith. My- my- my testimony is in my personal capacity, so I'm representing my own views today.

05:16The gentleman's time has expired.

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