House Republicans move to regulate crypto with new subcommittee

Bitcoin Hits $19,000 and SEC Claims Gemini Genesis Sold Unregistered Securities: CNBC Crypto World

Representative French Hill, a Republican from Arkansas, left, speaks during a press conference on Capitol Hill in Washington, DC, July 24, 2018.

Zach Gibson | Bloomberg | Getty Images

Republican lawmakers late Thursday announced the creation of a new subcommittee that will oversee the crypto and fintech industries, the first of its kind in the U.S., after a tumultuous period for digital currencies.

French Hill of Arkansas will chair the Subcommittee on Digital Assets, FinTech and Inclusion, which will be part of the House Financial Services Committee.

Hill, who was also named vice chair of the broader committee, said in a statement that a bipartisan effort is needed for “FinTech innovation to thrive safely and effectively in the United States.”

The unregulated nature of the crypto industry became a pressing concern late last year after crypto exchange FTX collapsed in November. FTX founder Sam Bankman-Fried was arrested last month on fraud charges and released on $250 million bail while awaiting trial.

Hill is an avid supporter of the crypto industry. In 2021, he co-sponsored the Central Bank Digital Currency (CBDC) Study Act and said at the time it was “important for the Federal Reserve not to delay its important work” on a potential CBDC.

In 2019, long before FTX became a household name, Hill signed a letter asking the IRS to refine its tax guidelines for cryptocurrency users.

“Obscurity impedes proper tax compliance,” the letter said.

Other Republican crypto advocates in Congress included Rep. Tom Emmer of Minnesota and Sen. Cynthia Lummis of Wyoming.

Although operating out of the Bahamas, Bankman-Fried was a veteran agent in Washington, forging relationships with heavyweights like Rep. Maxine Waters (D-Calif.) and Rostin Benham, chairman of the Commodity Futures Trading Commission. At the 2022 halftime races, Bankman-Fried made nearly $40 million in publicly announced contributions, mostly to Democrats. He and his staff made donations to politicians on both sides of the aisle.

Federal regulators have alleged Bankman-Fried committed criminal campaign finance violations while committing an $8 billion fraud.

The collapse of FTX and the subsequent indictment of Bankman-Fried have given Republicans like Emmer plenty to criticize the work of regulators. Emmer described the actions of Securities and Exchange Commission Chairman Gary Gensler as “random and unfocused.”

Senate Democrats, meanwhile, have already begun preparing their own efforts to oversee the crypto industry and dictate enforcement actions.

The SEC has increased its level of activity since FTX went bankrupt. The commission charged crypto lender Genesis and crypto exchange Gemini with the unregistered sale and offering of securities on Thursday, the day Hill announced the subcommittee.

LOOK AT: Bitcoin hits $19,000, SEC charges Gemini and Genesis