At Hearing, Ranking Member Warren Probes Impacts of Potential Dissolution of SEC Authority and President Trump's Monetization of Crypto
Washington, D.C. – Today, U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, gave opening remarks and questioned Timothy Massad, former chairman of the U.S. Commodity Futures Trading Commission and current fellow at the Kennedy School of Government, and Richard W. Painter, professor at the University of Minnesota School of Law and former chief White House ethics lawyer in President George W. Bush’s administration on crypto market structure proposals and risks any legislation should address.
Below is the transcript of Ranking Member Warren’s questioning:
Ranking Member Warren: Thank you, Mr. Chairman. We need to make sure that any new legislation to regulate the crypto market doesn’t do more harm than good. There are a couple of areas where we need to be really careful not to make things worse. First, we can’t pass any legislation that eats away at the SEC’s current jurisdiction to regulate traditional securities.
Mr. Massad, you were the Chair of the CFTC and the Assistant Secretary of the Treasury for Financial Stability. Could market structure legislation make it possible to structure a non-crypto product so it dodges our securities laws? Let’s use Tesla’s stock as an example.
Timothy Massad: Yes, it certainly could. If you, for example, provided an exemption for activity on these decentralized trading protocols. And, that's a very broad exemption, you can tokenize Tesla stock and have it traded on that protocol and it could be exempt then from 34 act trading requirements.
Warren: So in effect we start to repeal the SEC.
Timothy Massad: It can certainly undermine their authority substantially.
Warren: It is critical that any crypto regulation bill we pass does not have massive unintended consequences. I think those are unintended consequences for everyone, but consequences that would reach far beyond the crypto market and take a tie iron to the $240 million golden egg that is America’s capital markets. There’s another problem we should address: corruption. President Trump has made it impossible to have a conversation about crypto legislation that doesn’t address his most successful grift yet. According to a recent New York Times analysis of the President’s financial disclosure: crypto is now the biggest source of President Trump’s wealth. In the past seven months, he has become the most successful president in history at making money off his time in the Oval Office. And he’s done it using crypto.
Mr. Painter, if Congress passes a bill creating a new federal regulatory framework for the crypto market, what will happen to the crypto market—is it likely to grow?
Richard W. Painter: It will grow substantially.
Warren: And what will that do to the value of President Trump’s memecoin?
Painter: It will make him very rich. Richer than he already is.
Warren: And what about the values of his stablecoin, and his sons’ Bitcoin mining company, and his family’s crypto holdings, and … you get it.
Painter: The Trump family will become very wealthy as the prices go up and the bubble rises.
Warren: So, if we create a new federal regulatory framework for the crypto market, the President and his family stand to make even more money.
Mr. Painter, the President and his family own billions of dollars in crypto. If Congress passes a crypto bill,who will claim the power to appoint and the power to fire the regulators that will implement these new rules governing crypto holdings?
Painter: The President of the United States. And he is now claiming the power to fire members of the independent commissions, including the Commodity Future Trading Commission and the SEC.
Warren: You were President Bush’s chief ethics counsel. Can you think of another time in U.S. history when a President of the United States held such power over regulators who would determine the value of the President’s own net worth?
Painter: ever. We have never had since the Civil War a President of the United States with substantial financial holdings that are conflicted with any official duties. And, this is unheard of. And, now it's not just real estate. Now, Donald Trump is recently into crypto even though he said it was a scam a few years ago. Now he's into crypto and social media industries he did not have in his first administration.
Warren: We need clear and strong rules for the crypto market, but the proposals I’ve seen so far undercut the investor protections in our traditional capital markets, harm our national security, and supercharge the value of President Trump’s crypto grift. We need crypto regulations that actually regulate the industry—not another giveaway to a handful of billionaire insiders.
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