FOR IMMEDIATE RELEASE: January 13, 2025
CONTACT: Jarice Thompson, jarice@ourfinancialsecurity.org
More than 260 Groups Oppose Weak Crypto Legislation
Pressure from civil society grows as Senate poised to mark up industry-crafted bills
Washington D.C. – A coalition of 261 national and state civil rights, labor, community, consumer, environmental, faith-based, and other organizations sent a letter urging the Senate to oppose the passage of any crypto market structure legislation that fails to address the systemic failures of the crypto industry that can harm investors, financial stability, and the economic security of workers and families.
This week, the Senate Committee on Banking, Housing, and Urban Affairs is barrelling forward with a markup of a crypto industry crafted bill that would codify industry give-aways, in direct opposition to what the letter demands.
The letter notes that the “legislation should have binding and enforceable provisions, and should not undermine existing safeguards for traditional investors, markets, and communities. Any bill that fails to uphold these foundational priorities would give a congressional stamp of approval to under-regulated cryptocurrencies, amplifying financial risk and loss for millions of workers and families as well as imperiling the stability of the financial system and the entire economy.”
The Senate Banking Committee text fails to robustly address these critical concerns and allows banks to engage in highly-risky crypto investments that can imperil the financial system. Groups signing the letter say the stakes for this legislation aren’t just about crafting niche policy for Silicon Valley donors, but about how bad policy could undermine democratic values and hurt people who never even touch crypto.
“The Senate has a responsibility to safeguard the resiliency of the American economy and financial system to protect everyday people, but this bill is just a giant giveaway for crypto oligarchs,” said Jennifer Tanner with Indivisible Action Coalition. “The more than 130 grassroots Indivisible groups nationwide are demanding that our Senators stand up for us and not the crypto scammers that are perverting our democracy with a gusher of political money. We must prevent America from becoming a kleptocracy.”
The crypto industry’s aggressive lobbying and surging campaign contributions has pushed the Senate to pursue light-touch regulatory legislation that fails to address industry risks or confront the crypto corruption of the First Family and other Trump cronies. In the lead up to the bill introduction, Senators and their staff met regularly with crypto CEOs and White House officials with deep crypto industry ties according to media reports. Meanwhile, consumer advocates, state regulators, labor groups, and other non-industry players were shown mere glimpses of proposed text or relied on leaks in the news to ascertain details of the bill. The legislation released ahead of markup reflects this dynamic, with the industry’s agenda written into the text and the serious concerns and grievances of consumer and investor protection advocates ignored or limited to unenforceable window dressing provisions within the text. Advocates say this isn’t a surprise.
“Widespread fraud, corruption, and conflicts of interest go hand in hand with crypto. Instead of addressing these critical pitfalls that have the potential to wreck the American economy, the Senate will soon vote on a bill that jeopardizes the financial safety of everyday people,” said Mark Hays, associate director of crypto and fintech policy at the Americans for Financial Reform. “Senators must not cave in to this industry wish list that will only make it easier for crypto firms to get richer while exploiting retirees, hardworking families, small-time investors, and the entire financial system.”
The letter delineates five foundational priorities that any crypto market structure legislation must address but that the current legislative texts fail to achieve:
- Legislation must not enable conflicts of interest and crypto corruption
- Legislation must protect consumers and address crypto crime and fraud
- Legislation must address the economic and environmental impacts of cryptomining
- Legislation must address crypto’s threat to financial stability
- Legislation must have prescriptive, binding, and enforceable measures
The text released by Senate Republicans late last night fails to address these priorities and fails to deliver meaningful provisions with robust language that will actually provide needed guardrails for the crypto industry. For example, the bill:
- Contains no provisions addressing crypto corruption and conflicts of interest with respect to public officials, including the President, Vice President, and their families;
- Allows firms to issue “shadow” stocks on blockchains, bypassing traditional investor protection measures and exposing investors to more risk, with paltry limits that do not meaningfully address the risks and harms such shadow stocks pose to financial stability or investor protections;
- Contains no provisions addressing the environmental and energy impacts of crypto-mining;
- Allows banks to engage in a wide range of risky financial activities with a crypto nexus — including ones otherwise prohibited in traditional finance that are known to threaten financial stability;
- Undermines state regulators’ abilities to protect investors and consumers from unfair crypto schemes, including the pre-emption of state laws cracking down on scammy crypto ATMs.
Without key foundational priorities, these pieces of legislation only further the interests of the crypto industry while leaving people and our economy vulnerable to the same kinds of instability that sowed the seeds of the 2008 financial crisis.
The letter concludes: “The crypto industry should play by the same rules as other financial market actors. Congress should seek to make those rules fair and consistent across finance and should be wary of creating carve outs for wealthy special interests — especially when doing so could not only result in less protection for crypto consumers, but could erode protections for everyone else, destabilize the financial system, threaten workers’ retirement savings, enable corruption, and accelerate the climate crisis. We have learned the hard way that pursuing half-measures with financial regulation risks amplifying the very harm Congress and the public seek to address. Instead, Congress should seek to get it right, rather than simply get something done.”
The gaps in the text released by the Senate Banking Committee make it clear that this bill contains deep flaws and fails to meet any of the necessary thresholds to be considered legitimate regulation of the crypto industry. Senators must stand up for the public interest and resolutely reject this text.
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