00:00Thank you, Mr. Chairman. I want to start with an apology. I'm going to be bouncing in and out.
00:05This is also the markup of the National Defense Authorization Act, and we are in live rewriting of the bill,
00:14and so I'm going to have to spend a lot of time over there, and I appreciate the chairman's and the rest of the committee's indulgence here.
00:22You know, I want to thank you for having this hearing today. I have been calling for stronger rules and enforcement in the crypto market for many years now.
00:32The crypto market has grown 15-fold in just the last five years. It's now at about $3 trillion, at least in 2024, where we've got the data.
00:44While growth in the market may unlock new opportunities for innovation, risks to investors, our financial system, and our national security have also increased at the same time.
00:59Consider some recent data. According to the FBI, Americans lost more than $9 billion to cryptocurrency fraud last year,
01:08and it's the trend lines that are particularly concerning. It's a 66% increase from the year before.
01:16According to chain analysis, North Korean hackers stole a record $1.3 billion from crypto platforms in 2024
01:27and then turned around and topped it in just a single heist with a $1.5 billion heist earlier this year.
01:38According to TRM Labs, quote, terrorist organizations demonstrated increased sophistication in their use of cryptocurrency,
01:47turning to unhosted wallets, mixers, and privacy coins like Monero.
01:54We need a crypto regulatory framework that reduces these risks, but I am concerned that what my Republican colleagues are aiming for
02:03is another industry handout that gives the crypto lobby exactly its wish list.
02:09The blessing of our government's approval combined with crypto rules that are weaker than the rules that every other financial actor must follow.
02:19The crypto industry may be calling the shots for Republicans, but nobody wants weak crypto rules more than the President of the United States.
02:29A majority of President Trump's wealth, as much as $7 billion worth, is now based in crypto,
02:38from issuing his own stable coin to issuing his own meme coin to owning a Bitcoin mining company
02:45and to controlling a huge portfolio of crypto investments.
02:50Again, according to Chainalysis, the President and his associates pocketed more than $320 million in fees alone from the Trump meme coin,
03:03while the majority of retail investors who bought that same token actually lost money.
03:09Now, if we're going to provide rules of the road for crypto, we need to shut down the superhighway for presidential corruption at the same time.
03:21We need crypto legislation that will strengthen our financial system, not make it worse.
03:26Here are principles that I think should guide our work.
03:29First, new crypto rules shouldn't open a back door to destroy the securities laws that have served as the bedrock of our capital markets for nearly 100 years.
03:41I'm particularly worried here because some recent proposals, including the Clarity Act that the House is voting on this week or next week,
03:51include language that would allow non-crypto companies to tokenize their assets in order to evade SEC regulations.
04:03Think for just a minute about what that means.
04:06Under the House bill, a publicly traded company like Meta or Tesla could simply decide to put its stock on the blockchain
04:17and poof, it would escape all SEC regulation.
04:23That is a serious problem for our country.
04:26Second, crypto investors should have the same protection from getting scammed or getting cheated as investors in any other asset.
04:34Doesn't have to be bigger, but it should be the same.
04:37For example, there is no reason that the rules prohibiting stock exchanges from simultaneously serving as brokers
04:46and giving preferential treatment to their own trades over their customers.
04:51We have rules against that elsewhere.
04:54Those same rules should apply to the crypto market, too.
04:58Third, ensure that turmoil in the crypto market doesn't infect our traditional financial system.
05:05And that means making sure that taxpayers are not on the hook for backstopping risky crypto bets
05:12and that crypto exchanges, crypto dealers, and other intermediaries face strong capital liquidity
05:19and risk management safeguards so they can meet their obligations to consumers and counterparties,
05:26even in times of market stress.
05:28Fourth, counter the threat of illicit finance with common-sense rules to fight crime and protect our national security.
05:38Crypto service providers that act as financial institutions must be required to implement anti-money laundering programs.
05:47Republicans refused to strengthen AML rules and close sanctions loopholes in the Genius Act,
05:54and their claim was that they would deal with this in the crypto market structure bill.
06:00Well, this is it.
06:02No more kicking the can down the road.
06:04Now is the time to solve that problem.
06:07And finally, if Congress is going to ratify a sweeping crypto regulatory regime,
06:13it is critical to shut down the president's crypto corruption.
06:16This means prohibiting public officials, including the president of the United States,
06:22prohibiting public officials from issuing, sponsoring, or profiting from crypto tokens.
06:28I'm looking forward to working with my colleagues to get this done the right way.
