I told you that.
Believe it or not, as an elected official, I hate to say those four words. Not because I don’t like the right thing, but because when it comes to tell them, it usually means something is grossly wrong. It also means that other elected officials and policymakers have been warned and have chosen to ignore the warning and move forward anyway.
We warned them of the risks of deregulation of regional banks by demolishing barriers between commercial and investment banks. But those warnings were ignored, and those bills became law, and when it all fell apart, everyone immediately pointed their fingers, but not on their own. Now I’m warning about pending cryptography risks.
You are alarming about pending cryptography risks.
This week, the House will consider several cryptography bills, including the so-called Clarity Act and The Genius Act. But the reality is that they pass bills written by the crypto industry. If any building passes Congress, we will one day look back at its enactment as a pivotal moment, as pointing to the Gram Reach Breeley Act. That law will dismantle the Glassstegull firewall between commercial banking and investment banks, allowing banks, brokers and insurance to be combined into Mega Financial’s “supermarkets.”
When the predatory mortgage-fueled housing bubble burst, these “innovators” who gathered wealth on the backs of vulnerable families needed massive taxpayer relief. In other words, they privatized their profits and socialized their losses. A warning from the recent past is the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, which undermined surveillance that exposed regional banks and depositors to potential losses, as seen in the collapse of Silicon Valley Bank in 2023.
Crypto often portrays critics as luddites at best, and at worst anti-Americans. In fact, the bill of clarity and genius is wrapped in the banner of innovation, but what they really do is recreate the same confusion that led to past financial crises.
Additionally, these bills have special intentional wrinkles, making them particularly dangerous. They will legalize and legalize unprecedented code corruption by the US president.
Donald Trump and his family are raking much of it in a pile of cash through the shady Crypto Ventures that enriched Trump $1.2 billion. At the same time, the Trump administration has destroyed the Watchdog, silenced critics, allowing Trump to capitalize on the surveillance gaps created to enrich himself through meme coins, stub coins and deep contracts with foreign governments. What we are witnessing is not unethical. It is the greatest fraud and abuse of power in modern history.
Trump used the power of the presidency to market crypto transactions overseas.
Trump used the power of the presidency to engage with suspicious and dangerous foreign groups to market crypto transactions overseas. The bill will likely not check its actions this week. Certainly, they make it easier for Trump’s personal financial interests to determine US policies.
On the committee, Democrats provided numerous amendments to reduce the president’s abuse of power. Republicans voted for everyone.
But Trump’s corruption should not be our only concern.
The big problem with these bills is that they cannot protect consumers. The Clarity Act handcuffs the Securities and Exchange Commission and prevents people from actively protecting them from fraud. Regulators must wait until investors have been harmed to act. Potentially, after the company collapses and life savings disappear. I’ve seen this before. FTX collapsed as insiders illegally ran exchanges, managed client funds and traded with their own clients. Clarity Bill does nothing to deal with it. In fact, they actually create space for similar schemes. This does not affect consumers in the crypto market. Clarity will undermine traditional securities markets by creating loopholes that traditional companies can use to circumvent existing securities laws.
Genius is not good. Its supporters say it provides urgently needed protections to users of Stablecoins, but there is no funding provided to regulators to enforce the law, and the consumer protection it provides is weak. In contrast to how banks regulate, there is no community reinvestment requirements or surveillance of third-party vendors, and federal surveillance for state or international licensed Stablecoin issuers is weak. This makes users vulnerable to fraud and discrimination.
The second problem is that the bill creates serious national security risks. The Clarity Act refers to the Bank’s Secret Act (BSA), but rarely does it actually implement it. During the markup of the House Committee on Financial Services bill, Republicans immediately rejected a democratic proposal to ensure that crypto companies comply with the BSA, which is commensurate with the financial crime risks they face. The bill also exempts the decentralized financial industry from almost all surveillance, a category Trump claims to be particularly relevant. Meanwhile, the genius opens the floodgates to foreign-controlled codes that pose serious national security risks, and opens everything to appease Trump’s inner circle, where everything is tied to the code.
These bills squeeze out small innovators while only strengthening Wall Street control with small engineers.
The third issue is that the bill will entrench the power of Wall Street. Crypto has long been sold by large banks as a way to democratize finances. But these bills squeeze out small innovators while only strengthening Wall Street’s control with small engineers. They give green light to megabanks and large cryptography and integrate controls.
This should be enough reason for my colleagues to vote no.
In a few weeks, we will celebrate the 15th anniversary of the Dodd Frank Act, a groundbreaking law passed by Congress in response to the 2008 financial crisis. That crisis has been exacerbated by AIG, one of these Wall Street supermarket companies. AIG is an insurance giant that is permitted to guarantee complex, underregulated and dangerous financial products. I will never forget the despair of Americans who lost their home, jobs and lives back then. Many of them never recovered.
Passing clarity and genius will prove that we have learned nothing from the disaster. Congress currently chooses whether to protect the people and support democratic accountability or use his or her own power to hand over the keys to the President for personal gain.
When these bills become law, America will ultimately face the first cryptocurrency crisis. And when it happened, my Republican colleagues would point their fingers at everyone except themselves, like they always did, and say they didn’t think this would happen.
But I don’t. I tell you that. And I will start working on cleaning up their mess.
