'If We Build It, Crime Will Come': Sean Casten Rails Against Major Crypto Regulation Bill

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During remarks on the House floor last week, Rep Sean Casten (D-IL) spoke about cryptocurrency regulation.

Transcript

00:00Mr. Speaker, this week we will vote on bills to defund the police, sow the seeds for our

00:12next financial crisis, and remove any remaining fig leaf that we might hide behind when we insist

00:17that Congress is a co-equal branch of government. I'm, of course, revering to the highly misnamed

00:23Genius and Clarity Acts. Let's dive in. The way a tool is used, that's the purpose of the tool. If

00:29you watch a carpenter use a screwdriver, you can ignore someone who says that's a tool for hammer

00:34and nails. Crypto has been around since 2009. Watch how people use crypto over the last 16 years,

00:39and you can ignore anyone who says this is a tool for legitimate finance, because the tool is

00:44overwhelmingly used for crime. The Russians use crypto to evade sanctions and fund their war in

00:50Ukraine. The North Koreans use it to fund their nuclear program. Hamas used it to fund their

00:54October 7th attack. Fentanyl traffickers use it to get paid. All 100% of ransomware attacks in the

01:00United States get paid in crypto. That's a really good argument for legislation. And if the crypto

01:06industry did not want to hang out with criminals, they would have welcomed good legislation, but these

01:12bills are not that. The Clarity Act would exempt any platform that is the network for crypto transfers

01:19from any regulation at all. And that might be attractive to my Republican colleagues, because

01:23Donald Trump's World Liberty Financial is one of those platforms. The Clarity Act would defund

01:29white-collar police by shifting most of these coins from the well-staffed, well-funded Securities and

01:34Exchange Commission to the much smaller CFTC. It would exempt whole classes of crypto, so-called

01:40meme coins, from any regulatory supervision. You know that Trump coin? That's a meme coin.

01:46It would allow normal, healthy public companies to evade all SEC regulation by tokenizing their

01:54stock, so they can raise more money from less-informed, less-sophisticated, dumber investors.

02:00And finally, it would allow anyone to create a self-hosted wallet, basically like an online

02:05account, where you can transfer assets between anonymous users with absolutely no regulatory

02:10supervision. If your goal is to make money laundering easier, I have no idea how to make the Clarity Act

02:16better. And yet, somehow, the Genius Act manages to be even worse, because it connects the fraud of

02:22crypto to the real financial system. The Genius Act is for so-called stable coins. I say so-called because

02:30they are neither stable nor are they coins. They are bits of computer code that you can buy and sell at

02:35any time, in theory, for one real U.S. dollar. Now, as of May, there were 247 billion, with a B, dollars of

02:44stable coins in circulation. How's the tool used? Six percent of them are used to buy things.

02:51Nearly 90 percent are used to provide a liquidity bridge between much shadier cryptocurrencies, you

02:56know, the ones contemplated by the Clarity Act. Now, to state the obvious, no one will sell you a gallon

03:01of milk for a Trump coin, but they will take dollars. So criminals need stable coins so they can make

03:08crypto crime pay. And the blockchain, of course, doesn't fix this because smart criminals cover

03:14their tracks. And they've created these digital mixers that commingle lots of crypto together and

03:19spit out a clean, or shall we say, laundered, blockchain. This is why the Treasury Department

03:25has described particularly offshore mixers as, quote, a primary money laundering concern. The United

03:30States Treasury Department. Now, of course, you can't make a profit buying and selling something at the

03:36same price. So the stable coin issuers, like banks, want to earn interest on the dollars they hold,

03:41except that those issuers are not regulated like banks. And we saw this when Silicon Valley Bank

03:46collapsed a couple of years ago, and the price of the USDC stable coin, which was supposedly worth a

03:51dollar, fell to 88 cents as the run on the bank exposed the company's failure to put their deposits

03:57in insured accounts. USDC only looks stable today because all you taxpayers bailed them out with the FDIC.

04:06The Genius Act makes this problem even worse by saying that in the event of a future bank run,

04:12those uninsured crypto deposits, the irresponsible depositors, they get a claim on money before your

04:18deposits. You as a good depositor. That puts every American's deposits at risk. Amendments were

04:25introduced to fix every one of those problems, and every one of them was rejected, which brings me to

04:29a final point. You know who really benefits from crypto? Corrupt politicians. Last week, the United

04:37Arab Emirates sent $2 billion to convicted money launderer Changpeng Zhao using coins issued by

04:45Donald Trump's family. It's $2 billion in their bank account. The Trump family will earn about $30

04:51million off this transaction, and Mr. Zhao is now asking for a pardon. These bills will make all of

04:59those crimes easier, and if we build it, crime will come. So when the crime happens, when the president

05:05gets richer, when your bank fails, when your deposits are wiped out, when the crypto bubble pops,

05:13just don't say you weren't warned. The gentleman's time has expired. I yield back. The gentleman yields

05:18back. The chair recognizes the gentleman from Texas, Mr. Williams, for five minutes.

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