House Republicans decide to regulate crypto with new subcommittee

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

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Republican lawmakers announced late Thursday the launch of a new subcommittee that will oversee the crypto and fintech industries, the first of its kind in the United States, 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 expanded committee, said in a statement that a bipartisan effort is needed for “FinTech innovation to flourish safely and effectively in the United States.”

The unregulated nature of the crypto industry emerged as a pressing concern late last year following the November collapse of crypto exchange FTX. Sam Bankman-Fried, the founder of FTX, was arrested last month for fraud and has been released on $250 million bail pending trial.

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

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

“Ambiguity prevents proper tax compliance,” the letter read.

Other Republican crypto advocates in Congress include Representative Tom Emmer of Minnesota and Senator Cynthia Lummis of Wyoming.

Although Bankman-Fried operated from the Bahamas, he was a skilled agent in Washington, forging relationships with heavy hitters like Rep. Maxine Waters, (D-California) and Rostin Benham, chairman of the Commodity Futures Trading Commission. In the 2022 midterm races, Bankman-Fried gave nearly $40 million in publicly disclosed contributions, mostly to Democrats. He and his associates donated to politicians on both sides of the aisle.

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

The collapse of FTX and the subsequent indictment of Bankman-Fried provided Republicans like Emmer with enough material to criticize the work of regulators. Emmer described the actions taken by Securities and Exchange Commission Chairman Gary Gensler as “random and untargeted.”

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

The SEC has stepped up 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 same day Hill announced the subcommittee.

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

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