-9999

Floor Speech

BREAK IN TRANSCRIPT

Mr. KENNEDY. Mr. President, with me today is one of my colleagues from my office, Mr. Will Pietri, who has helped me immensely on this issue.

I want to talk, just for a few minutes, about digital assets. Some people refer to them as crypto or cryptocurrency.

The Senate Banking Committee is in the process, as we should be, of considering market structure legislation for digital assets, for Bitcoin, for crypto. And it is important because there is an enormous amount of confusion out there.

I remember when blockchain technology started--many of us do. Today, one in five Americans is on cryptocurrency. Its growth has been nothing short of breathtaking.

But as oftentimes happens when you have an innovation, it creates enormous confusion on the way that the subject of that innovation integrates with the Federal Government, and that is the case here. Those who are in the cryptocurrency business and in the blockchain technology business don't know whom to talk to in the Federal Government.

The Securities and Exchange Commission has announced, under President Biden, that it has jurisdiction over digital assets, and so did the Commodity Futures Trading Commission, the CFTC. There has been a lot of litigation, and there have been a lot of court cases, and it has been enormously confusing.

And those in the crypto business, understandably, have the reaction: Look, we don't mind being regulated. We have nothing to hide. But we would like to know whom to talk to. Is it the CFTC? Is it the SEC? What do we do?

And that is why we need legislation. That is why we need market structure legislation, not because the government needs to stick its nose in everything, but because there has to be some certainty here. Clearly, there is a turf war between the CFTC and the SEC, and it is Congress's role to delineate who has jurisdiction over what.

Now, we did pass one piece of what you might call crypto legislation. We passed the GENIUS Act, as the Presiding Officer knows. That was an important piece of legislation, but it was really just a baby step. It regulates stablecoins, which is only one part of the digital assets business.

I am certainly not denigrating the act. I voted for the bill. I sat on the Banking Committee. The Congress passed the bill. It was a good bill. It was necessary. I congratulate everybody who worked so hard on it. But it is only a small portion of the digital assets market.

Now, we need to turn to the rest. The House has already acted. The House has passed a bill called the CLARITY Act, which does just what I have been talking about, providing some market structural legislation for the crypto industry, the digital assets industry.

But the Senate--this is above my pay grade. But the Senate has decided not to take up the CLARITY Act. I don't know that it has been decided definitively, because obviously if enough Senators want to, we can take up anything we want to take up. But the thinking seems to be that the Senate needs to start over and draft our own digital assets market structure bill that complements the CLARITY Act, which is already passed by the House.

The Banking Committee, chaired by a very able chairman, Tim Scott, is going to be taking up this legislation soon. It has got to be written first. It is still being written. We need to hold hearings.

This is a complicated piece of legislation. I have spent a lot of time on it, and it is one of the most complicated pieces of legislation I have ever seen.

This is just one person's opinion. As a member of Banking, I think it is going to take at least two hearings for us to be able to understand the pros and the cons of this legislation and understand the legislation itself.

We have to be sure, in this legislation, given that one in five Americans owns cryptocurrency--we have to make sure, in this legislation, that we are striking the right balance in jurisdiction between the CFTC and the SEC.

We have to make sure, in this legislation, that we are coordinating closely with another Senate committee, the Senate Agriculture Committee, because it has jurisdiction of the CFTC and will play just as important, if not a more important, role in this legislation as the Banking Committee.

We are going to have to address in this legislation some concerns of the banking community. The banking community, after we passed the GENIUS Act--remember the GENIUS Act was just about stablecoins. The Banking Committee is arguing--rather, the banking community, our banks, are arguing, very persuasively, that there were some mistakes made in the GENIUS Act, which, as I just said, regulates stablecoins.

Frankly, I don't know if that is accurate or not. That is what we need a hearing for. But I think the banks--the banking community--need to be heard on this issue. If we did make some mistakes in the GENIUS Act with respect to American banks, I want us to correct it. I am not saying we did or we didn't; I have heard both sides of the argument. But my point is that we are going to have to take up that issue as well in the hearing because the banking community would like us to amend the larger digital asset market structure legislation to accommodate their concerns about the mistakes, if any, that we made in the GENIUS Act.

We are going to have to spend a lot of time in these hearings and in drafting the legislation making sure that we are addressing things like tokenized securities. This is complicated stuff. It is a way, basically, to trade a stock using blockchain technology without owning stock. We have got to make sure that we get that right.

An issue will be raised, I am sure, about deposit insurance. Cryptocurrency is--well, it is currency in the eyes of many people. And I can see the day when the American people will ask us to address the issues: Should deposit insurance cover cryptocurrency and digital assets?

I am not suggesting to you that it should; I am not suggesting to you that it shouldn't. I am suggesting to you that, likely, will be a topic we would want to consider in one of these hearings that we need to have about this topic.

I also think it would be appropriate in a hearing on this topic before we draft or vote on legislation to talk about the Clarity Act. That is the digital market structure and legislation that I just referred to that was passed by the House.

No one is suggesting this, but I certainly would disagree if they suggested we just ignore that legislation. A lot of work went into it. I spent a lot of time reading it, and I am going to have to spend more time reading it--it is very interesting--but there is some good work there. And I want to be able to compare the Clarity Act passed by the House with the Senate's market structure legislation. So perhaps we can pick the best of each, and that would be an appropriate topic of a hearing as well.

And these issues I am addressing are illustrative; they are not exhaustive.

But we also need to address the issue of what, if any, fiduciary responsibility those who participate in the digital assets markets have. I am talking about commodity brokers, digital commodity brokers. I am talking about digital commodity dealers. Should they have a fiduciary obligation to their customers, to their clients? I am talking about the digital commodity exchanges. What should their duty to their clients be? Should it be a fiduciary obligation? Should it be something less?

These are weighty issues. These are important issues. These are not issues that you raise and solve over a weekend.

But I wanted to start talking about this bill because it is one of the most important pieces of legislation that this body will consider. It may not be the sexiest. It may not be the most interesting to some. But when one in five Americans own cryptocurrency, it is certainly important. So I will probably be talking about this issue several more times on the floor as the Senate moves forward with our digital assets market structure legislation.

I hope we will move it quickly, but I hope we will move deliberately. I hope we will take the time to hold the hearings. And, again, I think it is going to take more than one hearing to address these weighty topics and then an additional time, once we get a bill, to mark it up, as we say, to amend it and make sure that we do the job for the American people.

BREAK IN TRANSCRIPT

Source