Opening Statements

Remarks as prepared for delivery:

Thank you, Chairman Maloney. Congratulations on your appointment. I look forward to working with you. But more immediately, thank you for holding this important hearing.

There is no better time than the present to discuss how and why we regulate financial markets and consider how to best balance the need to protect customers with desire to protect innovation.

According to a recent survey, roughly half of American adults today own or have owned some sort of cryptocurrency. This brings digital assets on par with the number of Americans that own traditional securities. Of those Americans who own cryptocurrency, more than 74 percent bought for the first time within the last two years.

Since the creation of Bitcoin, thousands of cryptocurrency projects have developed. Today, there are nearly 20,000 cryptocurrencies in existence spread across numerous blockchain platforms. Unfortunately, these tokens do not always fall neatly into our current financial regulatory framework.

Traditionally, we protect investors through disclosure requirements and the segregation of their assets, and we promote market integrity through regulatory oversight of intermediaries and enforcement actions. But what rules apply depend on the nature of the asset and the specific types of risks market participants face.

Regulators have struggled to provide guidance to market participants on how and when their activities require registration and compliance. Market participants still do not know what rules to apply and when.

Real risks to market participants exist and we have an obligation to address them.

Over the past several years, members of this Committee have proposed legislation that would lay down clear parameters for the roles of both the SEC and the CFTC in digital asset markets. In April, Republican Leader Thompson and Congressman Khanna introduced the bipartisan Digital Commodity Exchange Act of 2022. The DCEA would give the CFTC expanded oversight of the trading of those digital assets which are commodities. And it would bring certainty to market participants by doing what the regulators cannot—providing legal clarity to market intermediaries and participants.

I appreciate efforts the CFTC and SEC have made to try to fold digital assets into the existing framework, but in some cases—particularly for spot digital commodity transactions—the existing law simply lacks the authorities necessary. As the popularity of digital assets continues to grow, it is incumbent on Congress to speak clearly about how best to regulate.

I’m glad we have the opportunity to explore these issues and the way Congress can better create an environment where digital assets can become not only a valuable financial product, but an important conduit of innovation in our financial system.

Thank you to each of our witnesses for their willingness to share their expertise with us. I am looking forward to hearing your perspectives about how and why we regulate in financial markets, and where and when we might apply those lessons to crypto markets and market participants.

Thank you, Mr. Chairman, and I yield back.