Casey Wagner

During a House Financial Services Committee hearing Wednesday, several lawmakers chose to shine a light on cryptocurrencies and how they are — or are not — being used to fund illicit activities.&nbsp;



The Committee gathered Wednesday for its Financial Crimes Enforcement Network (FinCEN) and the Office of Terrorism and Financial Intelligence (TFI) oversight hearing. Witnesses were FinCEN director Andrea Gacki and TFI undersecretary Brian Nelson.&nbsp;



Cryptocurrency’s role in financing illicit actors and terrorism has become a hot topic for lawmakers and federal agencies in recent months as officials clash over just how often digital assets are used.&nbsp;



Read more: <a href="https://blockworks.co/news/lawmakers-clash-over-crypto-terrorism">Lawmakers butt heads on role of crypto in terrorist financing</a>



In an October letter to the National Security Advisor, Democratic lawmakers cited an article from the Wall Street Journal which claimed Hamas had raised “millions” in crypto. Many in the crypto space found the Journal’s statistic troubling, with crypto analytics firm <a href="https://blockworks.co/news/wsj-elliptic-crypto-fundraising">Elliptic saying there was “no evidence” to suggest it was true</a>.&nbsp;



Nelson noted that the <a href="https://blockworks.co/tag/treasury">Treasury</a> believes this figure is inflated.&nbsp;



“We also assess that terrorists still prefer, frankly, to use traditional products and services, but this is something that we&#8217;re obviously monitoring very closely,” Nelson added.&nbsp;



In its 2024 National Risks Assessments, Treasury officials said cryptocurrencies are becoming a greater threat, but fiat still remains the primary tool for money laundering.&nbsp;



Rep. Tom Emmer, R-Minn., asked why, if the Treasury knows many of these figures are incorrect, have officials not set the record straight.&nbsp;



“Treasury has the data to paint the correct narrative of crypto and how it&#8217;s used, and instead we have senators who are legislating on these false figures,” <a href="https://blockworks.co/tag/tom-emmer">Emmer</a> said. “Sure, we can go to <a href="https://blockworks.co/tag/chainalysis">Chainalysis</a> and use their third party reporting, but Treasury already has the data so doesn&#8217;t Treasury have a responsibility to correct the record here?”&nbsp;



Read more: <a href="https://blockworks.co/news/new-crypto-friendly-politicians-are-headed-to-washington">New crypto-friendly politicians are headed to Washington</a>



Nelson responded that his agency releases “a number of reports” regarding illicit finance and he believes has been clear about their concerns with cryptocurrency.&nbsp;



Rep. Brad Sherman, D-Cali., asked witnesses “what is being done” about cryptocurrency, a financial instrument he says threatens US authority.



“I have opposed cryptocurrencies whose promoters have made it plain that they regard the United States as an illegitimate player on the world stage,” Sherman said. “They regard our sanctions policies [and] efforts to affect world policy as illegitimate…they are promoting crypto in part to defang the United States federal government.”&nbsp;



Gacki said her agency recognizes a “critical need” to regulate and examine all money services businesses.&nbsp;



Ranking member Maxine Waters, D-Cali., called for additional funding for the bureau, saying a larger budget is especially necessary as officials are forced to tackle new threats like digital assets.&nbsp;



To deny the department funds would be “misguided,” Waters said, pointing to recent success of <a href="https://blockworks.co/tag/fincen">FinCEN</a> with “the record-breaking Binance settlement that will garner 4.3 billion in penalties for the American taxpayer.”&nbsp;



Wednesday’s <a href="https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=409139">hearing</a> comes months after FinCEN <a href="https://blockworks.co/news/fincen-crypto-mixing-controls">released proposed rules for cryptocurrency mixing services</a>, which would require regulated financial institutions to report transactions when there is reason to suspect a mixer has been used. The suggestion has many industry members <a href="https://blockworks.co/news/coinbase-blockchain-association-fincen-mixers">concerned that the agency is overstepping</a>.&nbsp;



Marisa Coppel, head of legal at Blockchain Association, said in a statement last month that FinCEN’s <a href="https://fincen.gov/news/news-releases/fincen-proposes-new-regulation-enhance-transparency-convertible-virtual-currency">proposal</a> is “far too broad in scope and application.”



In a Jan. 22 letter responding to the proposal, the Blockchain Association argued that FinCEN’s failure to consider the <a href="https://blockworks.co/news/fincen-rules-destroy-defi">many legitimate uses of crypto mixing</a> makes it “makes it impossible for the agency to rationally conclude that the class is of primary money laundering concern.”



“We received a lot of comments on this proposed rule and we are looking through them all,” Gacki said Wednesday.



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House hearing on FinCEN oversight turns into crypto debate 

Republicans are typically the ones advocating for maintaining US financial dominance through the passage of crypto-friendly regulations, but today the tables turned.&nbsp;



Rep. Maxine Waters, D-CA., expressed a rare change of tune Wednesday, suggesting that Republicans are preventing the US dollar from maintaining its global reserve currency status and hindering innovation with their new anti-central bank digital currency legislation.&nbsp;



During a House Financial Services Committee markup Wednesday, representatives considered several pieces of pending legislation, including Rep. Tom Emmer’s, R-Minn., <a href="https://docs.house.gov/meetings/BA/BA00/20230920/116343/BILLS-118-HR5403-E000294-Amdt-12.pdf">Central Bank Digital Currency Anti-Surveillance State Act.</a>&nbsp;



“We&#8217;re allowing 130 other countries that are all researching this CBDC idea, we&#8217;re allowing them to take the initiative away from the United States, plain and simple,” Rep. Stephen Lynch, D-Mass., said Wednesday.&nbsp;



The proposed bill would block the Federal Reserve from directly offering a CBDC to individuals and using it to implement monetary policy. <a href="https://blockworks.co/tag/tom-emmer">Emmer</a> first brought the bill to the House floor in February before <a href="https://blockworks.co/news/emmer-reintroduces-anti-cbdc-bill">reintroducing it this month</a>.&nbsp;



“Unfortunately, this bill, which I will call the CBDC anti-innovation act…would commonly shut down important work the Fed is doing to research a potential US CBDC,” <a href="https://blockworks.co/news/maxine-waters-paypal-concern">Waters</a> said Wednesday. “Instead of taking steps to ensure the United States wins the digital currency space race against emerging powers like China, Republicans are making baseless attacks against the <a href="https://blockworks.co/tag/cbdc">CBDC</a> that does not even exist.”&nbsp;



Emmer defended his legislation, which currently has the backing of 60 members of Congress, he said, arguing that the bill protects Americans from invasive and dangerous technology.&nbsp;



“This bill is simple,” Emmer said. “It halts the efforts of this administrative state under President Biden from issuing a financial surveillance tool that will undermine the American way of life.”&nbsp;



Other Democrats were also quick to point out perceived contradictions in Republicans’ stance toward crypto.&nbsp;



“I&#8217;m struck by the hypocrisy of the advocates of cryptocurrency,” Rep. Brad Sherman, D-Cali., said. “They come in and they say ‘cryptocurrency is wonderful because it&#8217;s digital and it&#8217;s high-tech and it&#8217;s innovative,’ and then they propose a bill which, in the words of the ranking member, is an anti-innovation bill.”



Emmer disagreed that being pro-crypto inherently means being pro-CBDC, noting that the technologies are vastly different.



“Unlike decentralized cryptocurrencies, a central bank digital currency is a digital form of sovereign currency that is designed and issued by a government and transacts on a digital ledger that is controlled by that government,” Emmer said.&nbsp;



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Democrats call out Republican for ‘hypocritical’ anti-CBDC bill

Katherine Ross

House Democrat Maxine Waters, D-Cali., is “deeply concerned” about PayPal’s new stablecoin.&nbsp;



In a statement on Wednesday, Waters said that her concern stems from the lack of a federal “framework for regulation, oversight and enforcement of these assets.”



“I and Democrats on the Committee have been working diligently for 15 months on legislation to help to address this issue, and create an environment where consumers and the economy would be protected in the event a corporation like <a href="https://blockworks.co/news/paypal-pyusd-stablecoin-centralization">PayPal</a> decided to launch its own stablecoin,” Waters <a href="https://democrats-financialservices.house.gov/news/documentsingle.aspx?DocumentID=410725">said</a>.



Waters <a href="https://blockworks.co/news/house-stablecoin-markup">previously pushed back against the stablecoin bill</a>, saying that the “extreme…wing of the Republican party” forced the House Financial Services Committee to address “a trove of anti-ESG, anti-investor, and wholly anti-capitalist bills” in late July.&nbsp;



Waters echoed that dissent on Wednesday, contending that there’s “no chance” that Republicans’ current version is signed into law. She urged Republicans and Chair Patrick McHenry R-N.C. to return to the negotiating table.



“Specifically, the Republican bill gives <a href="https://blockworks.co/tag/stablecoins">stablecoins</a> like PayPal USD that are issued under state regimes a seal of approval, but blocks the Federal Reserve from overseeing or enforcing any Federal standards,” she continued.



On Tuesday, the <a href="https://blockworks.co/news/federal-reserve-crypto-oversight">Federal Reserve</a> detailed its plans for expanded oversight of crypto-related activities at banks. These measures include requiring state member banks to obtain written approval from the Fed before using distributed ledgers or other technologies to “conduct payments activities as principal, including by issuing, holding or transacting in dollar tokens.”



Waters enforced the need for “Federal guardrails” on any “issuance of a new form of money,” including stablecoins.



The stablecoin draft bill currently making the rounds around Capitol Hill was released by Republicans earlier this year. In April, Waters said that the <a href="https://blockworks.co/news/republicans-democrats-stablecoins-policy">stablecoin draft would force Democrats</a> to “start from scratch.”



PayPal <a href="https://blockworks.co/news/paypal-launches-stablecoin">announced its stablecoin</a>, an Ethereum-based token issued by <a href="https://blockworks.co/tag/paxos">Paxos</a>, on Monday. The stablecoin, called PayPal USD, can be transferred between external wallets compatible with PayPal. Customers will also be able to buy, send, convert and fund purchases “in the coming weeks.”



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Maxine Waters calls for stablecoin ‘guardrails’ after PayPal debut

A markup hearing in the House Financial Services Committee escalated to a full-blown clash over proposed stablecoin legislation between representatives Thursday morning.&nbsp;



After concluding a markup hearing Wednesday, committee members <a href="https://www.youtube.com/watch?v=FGjvuDjXiq0">gathered</a> again Thursday to consider six newly introduced bills. Legislators agreed that the main focus of the markup would be on the Clarity for Payment Stablecoins Act of 2023, introduced last week by Committee Chair Patrick McHenry, R-N.C., but party lines prevented any cooperation across the aisle.&nbsp;



Tensions were high to begin with, as Democrats made their dissatisfaction with the agenda clear.&nbsp;



“Today this committee is being forced by the extreme [“make America great again”] wing of the Republican party to address a trove of anti-ESG, anti-investor and wholly anti-capitalist bills,” ranking member Rep. Maxine Waters, D-Cali., said in her opening statement.&nbsp;



The committee room immediately reacted, with many people present shouting and expressing their outrage at Waters’ comments.&nbsp;



The chaos seems to stem from a bipartisan agreement that fell apart at the eleventh hour thanks to interference from the White House, according to McHenry.&nbsp;



​​“Today I had hoped to announce an agreement with the ranking member on stablecoins legislation,” McHenry said. “This will not be the case…It was the White House’s unwillingness to compromise that has once again brought that negotiation to a halt.”



White House director of the National Economic Council Lael Brainard raised concerns at the last minute about the bill and <a href="https://blockworks.co/news/house-stablecoin-crypto-offshore">the lack of oversight the Federal Reserve has over state-regulated non-bank issuers</a>, according to a person familiar with the matter. The White House then asked Rep. Waters to attempt to delay negotiations, the source alleged.&nbsp;



<a href="https://blockworks.co/news/waters-floats-stablecoin-bill">Waters</a> proposed a vote to the committee asking the stablecoin bill not be considered, but she was overruled by Republicans. Committee Democrats then accused Republican members of trying to push the legislation through too quickly, not allowing Democrats the time to draft and propose amendments.&nbsp;



“We have had no meaningful opportunity to amend this bill and now we are being asked to do it on the fly,” Rep. Stephen Lynch, D-Mass., said in a raised voice. “The problem is this: Going forward now, we are being denied, in the minority, we don’t expect to win our amendments… but we do want to be heard.”&nbsp;



McHenry countered: He said the process is being appropriately followed, resulting in an extended debate over the procedure of the committee. McHenry requested his colleagues “lower the decibels” in the committee room. 



“There are a number of [Democrats] who support [this] bill and a full bipartisan agreement fell through at the 23rd hour due to White House concerns with lack of [Federal Reserve] oversight over state and non-bank issuers,” Cody Carbone, vice president of policy at the Digital Chamber of Commerce, said on <a href="https://twitter.com/CodyCarboneDC/status/1684574445900558336?s=20">Twitter</a> Thursday. “We’re confident this bipartisan bill still moves forward.”



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‘Lower the decibels’: House committee stablecoin markup devolves into shouting match

John Rizzo

When Maxine Waters sent a letter to the SEC and the Treasury Department requesting feedback on the leading crypto market structure bill, some assumed she was laying the groundwork to oppose the measure.&nbsp;



As the ranking member of the House Financial Services Committee, it’s possible that her <a href="https://blockworks.co/news/waters-seeks-input-crypto-bill">feedback request</a> on this bill —&nbsp;which is <a href="https://twitter.com/RonwHammond/status/1673373301152858113">slated</a> for committee mark-up next month — could be an <a href="https://blockworks.co/news/waters-seeks-input-crypto-bill" target="_blank" rel="noreferrer noopener">excuse</a> to give the SEC a place to unleash its criticisms.



That may be so, but accepting that theory without consideration of an alternate <a href="https://twitter.com/johnrizzo1986/status/1673503482798649344">possibility</a> may miss the forest for the trees — and deprive market participants of fully seeing an end-game in which Chairs Patrick McHenry and Glenn Thompson’s crypto market legislation passes through the House with significant bipartisan support.&nbsp;



To understand why there’s still hope for a bipartisan crypto market structure bill, one has to go back to the summer of 2022 when a comprehensive regulatory framework for crypto market structure and stablecoins was at hand, only to come short after paying the <a href="https://www.nytimes.com/2012/09/08/books/the-price-of-politics-by-bob-woodward.html">price</a> of politics.&nbsp;



As a then-senior spokesperson at the US Department of the Treasury, I saw that period of time in crypto policy personally. From a distance, I observed one of the most skillful legislators of her generation, then-chair of the House Financial Services Committee, Maxine Waters.&nbsp;



Through a dozen years in Congress and nearly two more in the Biden Administration, I gained a unique perspective on an array of public officials: And it’s true, believing in politicians will break your heart more than not.&nbsp;



Over those 14 years, I learned the opposite of the operating assumption when I walked into Congress as a 22-year-old staff member.&nbsp;



The best politicians are not the ones that stay strident and steadfast in their views and never move. No, the most skillful and impactful legislators are willing to absorb new information and look at issues in a different context over time. It’s what has made the back half of Congresswoman Waters’ storied congressional career her most consequential.&nbsp;



Waters was initially a no-compromise <a href="https://democrats-financialservices.house.gov/news/documentsingle.aspx?DocumentID=410424">opponent</a> of the financial services community, <a href="https://clerk.house.gov/Votes/1999570">opposing</a> the Gramm-Leach-Bliley Act that ended Great Depression-era restrictions on the banking industry — but she kept an open mind. She ascended to the top of the House Financial Services Committee more as a <a href="https://democrats-financialservices.house.gov/news/documentsingle.aspx?DocumentID=410424">compromiser</a> and conciliator than a partisan warrior.&nbsp;



Fast forward to 2021 and 2022, and Waters was the driving force behind the effort to create a comprehensive regulatory framework for crypto assets (including stablecoins) out of deep concern over certain crypto asset risks and an abiding belief that the next generation of financial innovation should occur here in America, not overseas. At times, it felt like she may drag the effort across the finish line through force of will alone.&nbsp;



Ultimately, FTX’s collapse and an oncoming election scuttled any chance of a crypto regulatory framework agreement. However, something that happened along the way should cause observers to see Congresswoman Waters’ <a href="https://blockworks.co/news/anti-crypto-memo-democrats" target="_blank" rel="noreferrer noopener">more strident anti-crypto rhetoric</a> of late and her recent letter to the SEC and Treasury in a new light.&nbsp;



During that two-year sprint in which she sought to put a comprehensive crypto-regulatory framework in place, Waters was <a href="https://www.politico.com/newsletters/morning-money/2021/11/02/for-progressives-stablecoin-report-falls-short-798609">burned</a> <a href="https://www.warren.senate.gov/newsroom/press-releases/at-hearing-warren-calls-on-regulators-to-clamp-down-on-stablecoins-and-defi-platforms-before-it-is-too-late">badly</a> by the progressive left, which sought to <a href="https://fortune.com/2022/12/18/sherrod-brown-crypto-ban-ftx-senate-banking-regulation-coinbase/">crush crypto</a> instead of containing its risks and fostering its initiative potential through a regulatory framework.



The array of forces was led in part by Senator Elizabeth Warren. It is represented best at the executive level by the current actions of the SEC Chair Gary Gensler. These political actors clearly communicated that they do not see the <a href="https://finance.yahoo.com/news/sec-chair-gary-gensler-us-184347676.html?guccounter=1&amp;guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&amp;guce_referrer_sig=AQAAAHqradxZYHJ7208q0EpQVOsNBYkfQsE-2ZMtbwHRAx0DLDZzH4lewgu8SOrh6RH5p-MyuVOhEdoP4c-pmVtgYxI9R-anJtTSBn92abeHtn0517qLerZbKOTotnBY7MKnESCWlX9raGu7vZYhZAKPCXGa9ozbFheGCK5g70_HVWT4#:~:text=Shortly%20after%20the%20U.S.%20Securities,built%20on%20non%2Dcompliance.%E2%80%9D">need</a> for a crypto regulatory framework and that current rules will do just fine.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/elizabeth-warren-crypto-web3" target="_blank" rel="noreferrer noopener">Elizabeth Warren has a lot to say about crypto — try listening for once</a>



Near the end of that two-year sprint for a crypto regulatory framework, Waters was left out on a ledge. She had an agreement within reach, but a left flank willing to go nuclear to kill any agreement.&nbsp;



But Waters’ inability to incorporate the views of Warren, Gensler and those who agree with them into a bill was not for lack of trying.&nbsp;



On the contrary, specific feedback is hard to solicit from a party that believes no action is necessary. Ever the savvy legislator, Waters, once a <a href="https://waters.house.gov/media-center/floor-statemements/iraq-war-1">political tormentor</a> of President George W. Bush, appears to be adopting his famous <a href="https://www.youtube.com/watch?v=KjmjqlOPd6A">“you can’t fool me twice”</a> approach.&nbsp;



Instead of allowing Gensler and his allies to kill the bill by offering general concerns but not concrete feedback, Waters may have decided to draw them out and pin them down.&nbsp;



It’s a good legislator’s classic move.&nbsp;



“You don’t like the bill? Fine, tell me what you would change. We’ll work to accommodate your concerns and force you to engage with these ideas seriously.”



Waters is known as a direct communicator. When she’s going to be against something, it’s apparent. Take, for instance, the way <a href="https://www.msnbc.com/am-joy/watch/rep-maxine-waters-and-joy-reid-talk-the-gop-tax-plan-1108387907779">she discussed </a>the 2017 GOP tax law with how she <a href="https://democrats-financialservices.house.gov/news/documentsingle.aspx?DocumentID=410424">has discussed</a> work on a crypto regulatory framework. When she’s ready to torpedo a proposal, there’s no ambiguity.&nbsp;



But even if all that may be true, my alternate view about the import of her recent letter to the SEC and Treasury may still be wrong. However, when I saw Waters’ latest missive on the crypto market structure bill, I couldn’t help but think of the force of nature I observed from afar driving to put a regulatory framework for crypto assets in place.&nbsp;



That deep inside this legislative forest that is crypto policy, there stood Maxine Waters by the apple tree, five steps ahead and forcing the pack to come her way.&nbsp;



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<div class="wp-block-post-author-biography">John Rizzo is Senior Vice President for Public Affairs at Clyde Group where he provides strategic counsel and communications guidance to a broad range of financial services clients, including market participants in traditional finance along with emerging and innovative spaces such as digital assets and fintech. Rizzo most recently served as the Senior Spokesperson at the U.S. Department of the Treasury where he led public affairs strategy on digital assets, fintech, climate finance, financial stability, domestic finance, and economic policy. Prior to his service at the Treasury Department, Rizzo was a top communications adviser to Sen. Chuck Schumer (New York) and Sen. Bob Casey Jr. (Pennsylvania).</div>


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Don’t villainize Maxine Waters just yet

Rep. Maxine Waters, D-Cali., has given US regulators one week to weigh in on the potential impact and reach of the latest crypto bill advanced by Republicans.&nbsp;



In letters sent to the US Treasury Department and the <a href="https://blockworks.co/tag/sec">SEC</a> on June 23, Waters asked the agencies to review the Market Structure Bill, a discussion <a href="https://financialservices.house.gov/uploadedfiles/digital_002_xml.pdf">draft</a> sponsored by Republican Committee heads Patrick McHenry, R-N.C., and Glenn Thompson, R-Penn.&nbsp;&nbsp;



Waters wants to know how the bill would change the role of the SEC and Treasury and the effectiveness of the legislation in terms of protecting investors, as well as if its contents pose a threat to the stability of financial markets.&nbsp;



“If there are recommendations or changes to existing law outside the scope of the bill that you believe would protect investors within the digital assets space, I would welcome those views as well,” Waters said in her <a href="https://democrats-financialservices.house.gov/uploadedfiles/06.23_ltr_sec_re_mchenry_crypto_bill.pdf">letter</a> to SEC Chair Gary Gensler.



Waters asked both agencies to respond to her office by Friday, and she requested both Gensler and Treasury Secretary Janet Yellen be prepared to brief lawmakers about their findings.&nbsp;



The letters come after Waters and other House Democrats have expressed concern about the current Republican agenda and their approach to crypto regulation.&nbsp;



“I have some initial concerns I’d like to discuss today,” Waters said during a <a href="https://blockworks.co/news/crypto-bill-clears-up-sec-allegations">hearing earlier this month to discuss the legislation</a>. “For starters, I am particularly worried that the Republican bill would allow crypto firms that are currently being sued for violating our securities laws to continue doing business through provisional registration.”&nbsp;



The Republican draft seeks to give more authority to the <a href="https://blockworks.co/tag/cftc">CFTC</a> to oversee crypto commodity spot markets, which is outside of its current oversight. The CFTC regulates bitcoin and ether derivatives.&nbsp;



Waters has maintained that the SEC is equipped to issue crypto guidance.&nbsp;



“The door is always open for crypto companies to register with the SEC,” Waters said during the hearing, quoting Gensler.



Plus, the “securities laws — which have worked for every other industry for 90 years — can also work for crypto firms,” she said.



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Rep. Waters wants Treasury, SEC input on Republican crypto bill

The House Financial Services Committee gathered Tuesday afternoon to discuss the future of crypto market regulation. The <a href="https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=408851">hearing</a>, titled “The Future of Digital Assets: Providing Clarity for the Digital Asset Ecosystem,” featured witnesses from the crypto industry and legal experts.&nbsp;



Lawmakers focused questions on token classification and two crypto bill proposals that have yet to make it to the House floor.&nbsp;



In terms of how to classify crypto tokens and fit them into the existing landscape, Republican committee members continued to largely push for more involvement from the CFTC.&nbsp;



“I did not anticipate that we would have such strong advocacy for the CFTC,” Rep. Maxine Waters, D-Cali., noted, referring to her Republican colleagues.&nbsp;



Witness Coy Garrison, a partner at Steptoe &amp; Johnson LLP and former counsel to SEC Commissioner Hester M. Peirce, pointed out that both the CFTC and the SEC have roles in the future of crypto regulation, and further congressional clarity is needed.&nbsp;



“Sweeping statements that nearly all digital assets are securities, or are not securities, ignore the complexity of the analysis and distract from finding a workable solution to the numerous legal and regulatory issues involved in this context,” Garrison said during his <a href="https://docs.house.gov/meetings/BA/BA00/20230613/116085/HHRG-118-BA00-Wstate-GarrisonC-20230613.pdf">prepared testimony</a> Tuesday.&nbsp;



“The application of the Howey test to digital assets is not always a straightforward exercise,” Garrison added, but the process for determining which crypto assets are securities should be clear.&nbsp;



Rep. David Scott, D-Ga., advocated for existing securities laws, arguing that crypto companies and token issuers already have enough guidance from previously passed legislation and SEC policies. Scott criticized a current <a href="https://docs.house.gov/meetings/BA/BA00/20230613/116085/BILLS-118pih-HR____Toprovideforthe.pdf">discussion draft</a> the committee has reviewed, arguing it places power in the wrong hands.&nbsp;&nbsp;



“I believe that under this misguided digital asset market structure bill we&#8217;re dealing with now, the fundamental approach to security laws is effectively undermined to the detriment of the American investor,” Scott said during the hearing. “And I&#8217;m particularly referencing sections of the bill which gives much of the authority over digital assets previously with the SEC, and instead placing it at the CFTC.”&nbsp;



The hearing comes one day after Reps. Warren Davidson, R-Ohio, and House Majority Whip Tom Emmer, R-Minn., both members of the Financial Services Committee, <a href="https://blockworks.co/news/republicans-oust-gensler-bill">introduced the SEC Stabilization Act</a>.&nbsp;



The bill suggests that the SEC remove the chair position, which Gary Gensler currently holds, and instead appoint an “executive director” to oversee operations. Reps. Davidson and Emmer also propose adding a sixth SEC commissioner. There are currently five, including Gensler, which are nominated by the president and approved by the Senate.



“I appreciate that so much innovation is happening in our country. I hope we can keep some of it here,” Davidson said during his allotted questioning time Tuesday.&nbsp;



“If the existing framework and existing laws are fully adequate, why can&#8217;t the chairman of the SEC answer that? It&#8217;ll tell you it&#8217;s not clear enough,” Davidson added, referring to Gensler’s inability to answer whether ether is a security.



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Rep. Waters surprised by ‘strong advocacy’ for CFTC crypto oversight

Weeks after insisting Democrats would be “starting from scratch,” Rep. Maxine Waters, D-Cali., is circulating her own stablecoin bill ahead of this week’s House hearing.&nbsp;



The new draft includes the same key points as the bill circulated last session, which representatives were unable to push through.



Its purported areas of concern include how issuers are licensed, how reserves are evaluated and how stablecoins tied to other cryptocurrencies are regulated.&nbsp;



On Thursday, the House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology and Inclusion will meet to discuss stablecoin legislation for the second time this session.&nbsp;



The Subcommittee’s last stablecoin hearing was about three weeks ago, which Financial Services Committee Chair Patrick McHenry, R-N.C., kicked off by unveiling his party’s <a href="https://docs.house.gov/meetings/BA/BA21/20230419/115753/BILLS-118pih-Toproviderequirementsforpaymentstablecoinissuersresearchonadigitaldollarandforotherpurposes.pdf">new stablecoin bill draft</a>. McHenry’s bill has <a href="https://blockworks.co/news/republican-stablecoin-bill-wont-survive">not yet been introduced on the House floor</a>.&nbsp;



Rep. Waters’ discussion draft makes no changes to the current responsibilities or authorities of the Treasury, the Bureau of Consumer Financial Protection, the <a href="https://blockworks.co/tag/sec">SEC</a> or the <a href="https://blockworks.co/tag/cftc">CFTC</a>.&nbsp;



Institutions looking to issue stablecoins must apply through “the appropriate federal payment stablecoin regulator,” Rep. Waters’ draft states. The appropriate regulators include the <a href="https://blockworks.co/tag/federal-reserve">Federal Reserve</a> Board of Governors, the Comptroller of the Currency, the National Credit Union Administration and the Federal Deposit Insurance Corporation (<a href="https://blockworks.co/tag/fdic">FDIC</a>).&nbsp;&nbsp;



Both <a href="https://blockworks.co/news/republicans-democrats-stablecoins-policy">bills state that the regulator must approve or deny the application</a> within 90 days.



Factors taken into consideration for approval include the issuers’ ability to maintain reserves, the benefit provided to the public and the issuers’ promotion of financial inclusion.&nbsp;



Issuers could apply through state regulators, Waters’ bill states, but the Fed Board can still “issue rules” for these parties — the same language found in McHenry’s draft, released in April.&nbsp;



Waters’ version additionally specifies that the Fed can decline state-qualified payment stablecoins from registering on a federal level.&nbsp;



McHenry’s draft declares that state-qualified issuers who submit all required registration materials will be officially registered within 60 days of submission.&nbsp;



Thursday’s <a href="https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=408790">hearing</a> will feature testimony from four witnesses, including crypto industry members, legal experts and a former leader at the New York Department of Financial Services, which has been a trailblazer for state-level stablecoin policy.



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Waters Floats Stablecoin Bill Draft Ahead of Thursday House Hearing

House Republicans have some work to do if they want their stablecoin bill to pass, Hill insiders say, but both parties seem inclined to leave the SEC out.&nbsp;



The current draft, which was revamped earlier this week, doesn’t have much chance of making it to the floor, people familiar with the matter said.&nbsp;



Democrats and Republicans appear to agree somewhat on keeping the SEC out of stablecoin regulation. Both the new draft bill and <a href="https://blockworks.co/news/republicans-democrats-stablecoins-policy">former draft based on bipartisan negotiations</a> have the Federal Reserve listed as the applicable regulator, according to Congressional documents obtained by Blockworks.&nbsp;



But, insiders added, House Financial Services Committee Chair Patrick McHenry, the current draft’s main champion, will be giving up his seat as chair at the end of next session, so he may prioritize pushing this legislation through the House. 



An additionally amended version, ideally with some bipartisan support, is more likely to get introduced this session. A bill only endorsed by Republicans has next to no chance of making it through the Senate, sources added.



House Republicans unveiled the first iteration of their stablecoin bill ahead of <a href="https://www.youtube.com/watch?v=ti0CDUxTAWI">last week’s subcommittee hearing</a>. The newest version, released Monday, gives state legislators more control over the asset class, presumably in response to comments made at the hearing.&nbsp;



Rep. Ritchie Torres, D-N.Y., said last week that he was unlikely to support any legislation that undermines the current stablecoin regulatory framework in New York. Hearing witness Adrienne A. Harris, superintendent of the New York State Department of Financial Services, highlighted advantages in allowing states to be more proactive in their approach.&nbsp;



“Federal regulators are able to comprehensively address macroprudential considerations and establish foundational consumer and market protections,” Harris said. “[States can] act more nimbly to respond to industry developments and support responsible innovation given their ability to modernize regulations more quickly and leverage their more immediate understanding of consumer needs.”



Industry members and House Republicans are expecting a Democratic bill to drop soon, based on comments from Rep. Maxine Waters, D-Cali., at <a href="https://blockworks.co/news/house-grapples-with-stablecoins">last week’s hearing</a>.



The Republicans’ draft “in no way recommends the final work on stablecoins by negotiations between the two of us,” Waters said, referring to unresolved conversations with Hill. Democrats will have to “start from scratch,” she added.&nbsp;&nbsp;



Neither Waters nor other committee Democrats have provided clarity on when an opposing bill may be introduced, or if one is even in the works. The party has also not yet publicly commented on the Republican’s new version of the bill.&nbsp;



If a Democratic stablecoin bill does make it to the floor, it is likely to focus on issuer requirements; Democrats have largely maintained a view that issuers should be federally insured depository institutions. Clauses requiring stablecoin issuers and/or distributors to maintain some sort of know-your-customer and anti-money laundering standards can also be expected.&nbsp;



Representatives from Waters’ office did not respond to Blockworks’ repeated requests for comment.



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Republican Stablecoin Bill Draft Likely Won’t Make It to the Floor, Insiders Say

A draft of the long-awaited bipartisan stablecoin legislation Congress members have been promising hit the wire last week, but top Democrats say the bill is nothing like what was discussed.&nbsp;



House Representatives <a href="https://blockworks.co/news/house-grapples-with-stablecoins">met last week to discuss stablecoins</a> and hear from expert witnesses about their role, safety and stability. The current <a href="https://docs.house.gov/meetings/BA/BA21/20230419/115753/BILLS-118pih-Toproviderequirementsforpaymentstablecoinissuersresearchonadigitaldollarandforotherpurposes.pdf" target="_blank" rel="noreferrer noopener">draft bill</a> was released by Republicans on the Subcommittee on Digital Assets ahead of the hearing. 



Subcommittee Chair Rep. French Hill (R-Ark.) hailed the legislation as a bipartisan effort that began last fall.&nbsp;



But Democrats beg to differ. The draft “in no way recommends the final work on stablecoins by negotiations between the two of us,” Rep. Maxine Waters (D-Cali.) said, referring to unresolved conversations with Hill. Democrats will have to “start from scratch,” she added.&nbsp;



Hill responded by saying he welcomes collaboration on the bill and stablecoin framework.



As the hearing progressed, the party lines became more clear. Here is a rundown on where leaders stand when it comes to collaboration on stablecoin policy.&nbsp;



<h2 class="wp-block-heading">Where cross aisle agreement can be found&nbsp;</h2>



Several Subcommittee members brought up the collapse of <a href="https://blockworks.co/tag/terra" target="_blank" rel="noreferrer noopener">TerraUSD</a> and <a href="https://blockworks.co/tag/luna" target="_blank" rel="noreferrer noopener">Luna</a> and highlighted the need to protect investors and enforce strict reserve reporting requirements. 



Customer funds should also not be commingled, Republicans and Democrats agreed unequivocally.&nbsp;



There also seems to be some bipartisan agreement that US Dollar dominance should not be undermined, by a stablecoin or otherwise, although there is some disagreement about how stablecoins may impact USD.&nbsp;



House Republicans and Democrats may not agree on how to get there, but both sides of the aisle are calling for some sort of policy to make it through soon.&nbsp;



<h2 class="wp-block-heading">Where party lines remain strong&nbsp;</h2>



Some Democrats maintain the need for more guidelines around who can issue stablecoins.&nbsp;



&#8220;These programs are typically limited to banks who are heavily regulated and that is for good reason,&#8221; Rep. Stephen Lynch (D-Mass.) said. &#8220;It is the danger of allowing shadow banking products, particularly stablecoins, to issue deposits like products without FDIC insurance. So I strongly believe we need to separate crypto assets from our banking system, and this [draft] bill does just the opposite.&#8221;



Others in the party, like Rep. Ritchie Torres (D-NY), counter that stablecoin issuers are nothing like banks; if there are no lending services provided, there is no need to require issuers to be licensed banks.&nbsp;



Lawmakers also disagreed about privacy and KYC policies around stablecoins. Rep. Bill Foster (D-Illi.) suggested regulators would need access to each wallet owner’s identity in order to effectively oversee the industry.&nbsp;



Rep. Warren Davidson (R-Ohio) on the other hand, said private and permissionless blockchains are essential.&nbsp;



Congress members also had a difficult time getting on the same page about state versus federal policy. Rep. Torres said he would not be inclined to support any legislation that undermined New York’s current stablecoin regulatory policy.



<h2 class="wp-block-heading">What’s next</h2>



Bipartisan talks between current Chairman of the House Financial Services Committee Patrick McHenry (R-NC), and Rep. Waters began last year, but the two were unable to move their efforts out of committee.&nbsp;



Any bill will ultimately have to get through the Senate as well, and if Senate Banking Committee Chair Sherrod Brown (D-Ohio), doesn’t take interest, the legislation will likely die.&nbsp;



Crypto investment vehicles are “speculative products run by reckless companies — we know that’s true,” Sen. Brown said <a href="https://blockworks.co/news/senate-banking-hearing-on-crypto-crash">during a February hearing after the fallout of FTX</a>.&nbsp;&nbsp;



“It would require, certainly, a change in approach for the Banking Committee to move forward with markup,” Sen. Cynthia Lummis (R-Wyo.) said, <a href="https://blockworks.co/news/gillibrand-lummis-revamped-crypto-bill">during an appearance in DC to discuss her bipartisan crypto bill</a>.&nbsp;



Rep. Waters has not yet released her own draft or proposal for a new stablecoin bill to counter what Republicans unveiled last week. The draft bill has also not yet been introduced on the House floor.



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Stablecoin Policy Progress Impeded by Partisan Disagreements

Sebastian Sinclair

Former FTX CEO Sam Bankman-Fried won’t appear before Congress on Tuesday after all, considering his arrest, disappointing the head of the House Financial Services Committee and piquing curiosities across crypto.



Committee chair Maxine Waters said Monday she was “surprised” to hear Bankman-Fried had been apprehended. Bahamian authorities <a href="https://blockworks.co/news/sam-bankman-fried-arrested-in-bahamas" target="_blank" rel="noreferrer noopener">arrested</a> the former crypto billionaire on sealed charges at the request of the US Attorney for the Southern District of New York at 6:00 pm local time on Monday.&nbsp;



Bankman-Fried is to be held in custody in line with the Bahamas Extradition Act.



“It’s about time the process to bring [Bankman-Fried] to justice has begun,” Waters said in a <a href="https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=410026" target="_blank" rel="noreferrer noopener">statement</a>. “However, as the public knows, my staff and I have been working diligently for the past month to secure [Bankman-Fried’s] testimony before our Committee tomorrow morning.”



Bankman-Fried’s absence will only extend the wait for on-the-record, public answers about his involvement in the fall of his own crypto empire. While he must be held accountable for his actions, the American public deserves to hear directly from the former CEO, Waters said.&nbsp;



Lawyers estimate up to one million FTX creditors around the world are impacted by its bankruptcy, although how many are US-based is unclear. 



<h3 class="wp-block-heading">Waters threatened Bankman-Fried with subpoena to front Congress </h3>



Earlier this month, Waters <a href="https://twitter.com/RepMaxineWaters/status/1598693811252875264?s=20&amp;t=XUUyvVwCThzZeidVGXr0Gg" target="_blank" rel="noreferrer noopener">encouraged</a> Bankman-Fried to testify before a Financial Services committee.



“We appreciate that you&#8217;ve been candid in your discussions about what happened at FTX,” Waters tweeted. “Your willingness to talk to the public will help the company&#8217;s customers, investors and others.”



Bankman-Fried <a href="https://twitter.com/SBF_FTX/status/1599511560384225281?s=20&amp;t=GD5CadogYcSt7WTxWuW-IA" target="_blank" rel="noreferrer noopener">responded to Waters’</a> request two days later, where he said he’d testify once learning exactly what happened with FTX, but was uncertain if he’d be ready in time for the hearing.



Following <a href="https://www.cnbc.com/2022/12/07/ftx-maxine-waters-doesnt-plan-to-subpoena-sam-bankman-fried-to-testify-at-hearing-on-crypto-exchanges-collapse.html" target="_blank" rel="noreferrer noopener">criticism</a> for not outright serving Bankman-Fried a subpoena to testify, the US representative for California&#8217;s 43rd congressional district <a href="https://blockworks.co/news/maxine-waters-subpoena-sam-bankman-fried" target="_blank" rel="noreferrer noopener">shot back</a>, claiming one was “<a href="https://twitter.com/RepMaxineWaters/status/1600643111973261312?s=20&amp;t=XUUyvVwCThzZeidVGXr0Gg" target="_blank" rel="noreferrer noopener">definitely on the table</a>.”&nbsp;



Bankman-Fried <a href="https://twitter.com/SBF_FTX/status/1601186246990401537" target="_blank" rel="noreferrer noopener">later</a> acquiesced, claiming he would appear virtually on Tuesday. &#8220;&#8230; As the committee still thinks it would be useful, I am willing to testify on the 13th,&#8221; he tweeted.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Lies are circulating <a href="https://twitter.com/CNBC?ref_src=twsrc%5Etfw">@CNBC</a> that I am not willing to subpoena <a href="https://twitter.com/SBF_FTX?ref_src=twsrc%5Etfw">@SBF_FTX</a>. He has been requested to testify at the December 13th hearing. A subpoena is definitely on the table. Stay tuned.&mdash; Maxine Waters (@RepMaxineWaters) <a href="https://twitter.com/RepMaxineWaters/status/1600643111973261312?ref_src=twsrc%5Etfw">December 8, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But the timing of his arrest — on the day before his supposed appearance before Congress — has industry watchers (and <a href="https://twitter.com/riggedgov/status/1602454804814434305?s=20&amp;t=1S74M4GmpwBisVpuXzGc_Q" target="_blank" rel="noreferrer noopener">social</a> <a href="https://twitter.com/cvpayne/status/1602449060631396352?s=20&amp;t=1S74M4GmpwBisVpuXzGc_Q" target="_blank" rel="noreferrer noopener">media</a>) wondering whether <a href="https://twitter.com/milesdeutscher/status/1602450896020918272?s=20&amp;t=1S74M4GmpwBisVpuXzGc_Q" target="_blank" rel="noreferrer noopener">coincidence</a> or coordination is to blame. 



“An arrest has always been suspected,” Sheila Warren, CEO of the Crypto Council for Innovation told Blockworks in a statement. “What’s interesting is the timing — right before two Congressional hearings.”&nbsp;&nbsp;



The speed at which authorities filed charges against Bankman-Fried, however, likely indicates regulators had received information from cooperating witnesses, the <a href="https://www.nytimes.com/2022/12/12/business/ftx-sam-bankman-fried-bahamas.html" target="_blank" rel="noreferrer noopener">New York Times</a> reported Monday citing sources familiar with the matter.



The SEC separately <a href="https://blockworks.co/news/sec-charges-sam-bankman-fried-with-defrauding-investors" target="_blank" rel="noreferrer noopener">charged</a> Bankman-Fried with defrauding FTX&#8217;s equity investors on Tuesday, of which around 80 were based in the US. Tuesday on Tuesday. They together contributed more than $1.1 billion to Bankman-Fried ventures, the SEC said, representing about 60% of all funds he&#8217;d raised.



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Bankman-Fried Arrest Day Before Congress Testimony Raises Eyebrows

Bessie Liu

Maxine Waters, chair of the House Financial Services Committee, tweeted on Thursday that plans to subpoena fallen crypto celebrity Sam Bankman-Fried to testify at the FTX hearing on Dec. 13 are still very much on the table.&nbsp;



CNBC first <a href="https://www.cnbc.com/2022/12/07/ftx-maxine-waters-doesnt-plan-to-subpoena-sam-bankman-fried-to-testify-at-hearing-on-crypto-exchanges-collapse.html" target="_blank" rel="noreferrer noopener">reported</a> that Waters had been trying to convince Bankman-Fried to testify voluntarily and did not have plans to subpoena him, claims Waters denied.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Lies are circulating <a href="https://twitter.com/CNBC?ref_src=twsrc%5Etfw">@CNBC</a> that I am not willing to subpoena <a href="https://twitter.com/SBF_FTX?ref_src=twsrc%5Etfw">@SBF_FTX</a>. He has been requested to testify at the December 13th hearing. A subpoena is definitely on the table. Stay tuned.&mdash; Maxine Waters (@RepMaxineWaters) <a href="https://twitter.com/RepMaxineWaters/status/1600643111973261312?ref_src=twsrc%5Etfw">December 8, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The representative of California&#8217;s 43rd District in Congress previously <a href="https://twitter.com/RepMaxineWaters/status/1598693811252875264?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1599511560384225281%7Ctwgr%5Ed5ecf0c111da7a38f395f195ad6cc9fd81c08585%7Ctwcon%5Es3_&amp;ref_url=https%3A%2F%2Fwww.cnbc.com%2F2022%2F12%2F07%2Fftx-maxine-waters-doesnt-plan-to-subpoena-sam-bankman-fried-to-testify-at-hearing-on-crypto-exchanges-collapse.html" target="_blank" rel="noreferrer noopener">tweeted</a> at the fallen crypto celebrity, politely inviting him to participate at the hearing. In response, Bankman-Fried <a href="https://twitter.com/SBF_FTX/status/1599511560384225281?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1599511560384225281%7Ctwgr%5Ed5ecf0c111da7a38f395f195ad6cc9fd81c08585%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fwww.cnbc.com%2F2022%2F12%2F07%2Fftx-maxine-waters-doesnt-plan-to-subpoena-sam-bankman-fried-to-testify-at-hearing-on-crypto-exchanges-collapse.html" target="_blank" rel="noreferrer noopener">said</a>, “Once I have finished learning and reviewing what happened, I would feel like it was my duty to appear before the committee and explain.”



Adding, “I’m not sure that will happen by the 13th. But when it does, I will testify.”



Waters’ gentle approach to Bankman-Fried, was criticized by crypto community members, and many were concerned about his cushy relationship with elected officials through previous <a href="https://blockworks.co/news/ftx-donations-campaign-finance" target="_blank" rel="noreferrer noopener">campaign donations</a>.



Her <a href="https://twitter.com/RepMaxineWaters/status/1599858166359068676" target="_blank" rel="noreferrer noopener">subsequent</a> pleas, which took a dig at the former FTX CEO’s recent media tour, were initially left unanswered by Bankman-Fried.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">.<a href="https://twitter.com/SBF_FTX?ref_src=twsrc%5Etfw">@SBF_FTX</a>, Based on your role as CEO and your media interviews over the past few weeks, it’s clear to us that the information you have thus far is sufficient for testimony. (1/3) <a href="https://t.co/YUVVjOkC40">https://t.co/YUVVjOkC40</a>&mdash; Maxine Waters (@RepMaxineWaters) <a href="https://twitter.com/RepMaxineWaters/status/1599858166359068676?ref_src=twsrc%5Etfw">December 5, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Under <a href="https://www.govinfo.gov/content/pkg/USCODE-2020-title28/pdf/USCODE-2020-title28-partV-chap117-sec1783.pdf#:~:text=%C2%A7%201783-,%C2%A7%201783,of%20person%20in%20foreign%20country&amp;text=The%20person%20serving%20the%20subpoena,the%20issuance%20of%20the%20subpoena." target="_blank" rel="noreferrer noopener">US law</a>, a court can issue a subpoena to a US resident or national in a foreign country if “the court finds that particular testimony or the production of the document or other thing by him is necessary in the interest of justice.”



A subpoena can also be issued if it is not possible to obtain a testimony without the appearance of the witness. Which means in the case of FTX, whether or not a subpoena of Bankman-Fried — who is currently believed to be in the Bahamas — can be issued will also depend on the other witnesses who will be called upon to testify.



But by Friday morning, Bankman-Fried caved, announcing on Twitter that he would participate in the hearing as requested.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">1) I still do not have access to much of my data &#8212; professional or personal. So there is a limit to what I will be able to say, and I won&#39;t be as helpful as I&#39;d like. But as the committee still thinks it would be useful, I am willing to testify on the 13th. <a href="https://t.co/KR34BsNaG1">https://t.co/KR34BsNaG1</a>&mdash; SBF (@SBF_FTX) <a href="https://twitter.com/SBF_FTX/status/1601186246990401537?ref_src=twsrc%5Etfw">December 9, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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He expressed the intention to limit his testimony to four main areas: FTX US&#8217;s solvency and American customers, pathways that could return value to users internationally, the causes of the crash, and his own failings.



Given that the testimony will be under oath, upon penalty of perjury, it will be interesting to see how the ex-CEO handles questions that touch upon his own <a href="https://blockworks.co/news/sam-bankman-fried-new-attorney" target="_blank" rel="noreferrer noopener">potential legal liability</a>.



 This story was updated on Dec. 9 at 9:08 a.m. ET following Bankman-Fried&#8217;s notice of willingness to testify.



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Maxine Waters Is Prepared To Subpoena, Sam Bankman-Fried Responds

Former FTX CEO and founder Sam Bankman-Fried (SBF) said Sunday he would be willing to testify before congress, but only once he has “finished learning” about the implosion of his crypto empire.



SBF was asked by chairwoman of the House Financial Services Committee, Maxine Waters, to attend a hearing on Dec. 13 to explain his side of events.&nbsp;



Appearing before congress would likely ratchet up pressure against the former FTX CEO and increase the spotlight on exactly what occurred over that past month and <a href="https://blockworks.co/tag/ftx">how the exchange was able to fall apart</a> so quickly.



“We appreciate that you&#8217;ve been candid in your discussions about what happened at FTX,” Waters <a href="https://twitter.com/RepMaxineWaters/status/1598693811252875264?s=20&amp;t=V6XT9iLJgt2XAvUcjPtrrA">tweeted</a> at Bankman-Fried on Friday. Waters added that his willingness to speak up will help affected stakeholders, including customers whose digital assets remain locked on the platform.



The representative for California&#8217;s 43rd congressional district was <a href="https://twitter.com/iamDCinvestor/status/1598700475230175232?s=20&amp;t=V6XT9iLJgt2XAvUcjPtrrA">criticized</a> by some in the crypto community for appearing servile and obsequious. Congressional relationships with Bankman-Fried were often friendly, and his willingness to engage with elected officials has been painted as an attempt to regulate the industry in a manner that would have been friendly to his failed exchange.



Bankman-Fried’s relationships with politicians have been under scrutiny since he made substantial donations to specific members of the Democratic Party. Bankman-Fried claims to have made similar donations to the Republican Party, but to have avoided publicizing them.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">You, as the Chairwoman (or the Committee itself), can just subpoena him to testify. No need to ask nicely on Twitter. It&#39;s House Rule XI clause 2(m). But I&#39;m sure you already knew that.&mdash; Jeremy Hogan (@attorneyjeremy1) <a href="https://twitter.com/attorneyjeremy1/status/1598717704247967748?ref_src=twsrc%5Etfw">December 2, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In a <a href="https://twitter.com/SBF_FTX/status/1599511560384225281?s=20&amp;t=V6XT9iLJgt2XAvUcjPtrrA" target="_blank" rel="noreferrer noopener">tweeted response</a> to Waters’ request, Bankman-Fried said he would head to Washington DC only when he was ready, and following a review of events.



The refusal to testify voluntarily comes despite Bankman-Fried’s multiple mainstream media interviews which he used to deflect some of the heat over his role in FTX’s implosion, including with <a href="https://www.cnbc.com/video/2022/12/01/sbf-says-didnt-commit-fraud-post-ftx-collapse--interview-cnbc-crypto-world.html">CNBC</a> and <a href="https://abcnews.go.com/US/ftx-crypto-collapse-ceo-sam-bankman-fried-denies/story?id=94215046">ABC News</a> last week.



Both interviews have been criticized for their softball approach to questions over Bankman-Fried’s role in the commingling of customer funds with Alameda — estimated to have blown an $8 billion hole in FTX’s balance sheet.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Translation: he doesn&#39;t mind lying to Andrew Ross Sorkin or George Stephanopoulos, but lying to Congress under oath is less appealing. <a href="https://t.co/DZTyzMwn9s">https://t.co/DZTyzMwn9s</a>&mdash; Jake Chervinsky (@jchervinsky) <a href="https://twitter.com/jchervinsky/status/1599521955622707200?ref_src=twsrc%5Etfw">December 4, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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It’s not known whether this postponement is a result of legal advice SBF has received, or if house members will seek to compel his testimony.



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