Cory Booker Warns Congress Has ‘Failed To Make Progress’ On Cryptocurrency Oversight And Legislation

2 months ago

Before the Congressional recess, Sen. Cory Booker (D-NJ) questioned experts on cryptocurrency and digital currency oversight during a Senate Agriculture Committee hearing.

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Transcript

00:00Thank you very much. Senator, let me look here on my, I think, I think Senator Booker

00:10just came in the room. Just to talk about just in time, the supply chain.

00:15I appreciate that. I'm a little upset that the microphone did not capture Senator Tuberville's

00:19kind words about my tie today. So I just want to enter that for the record if I can. It's

00:24really good to see everybody here. And this is an exciting moment. I'm really grateful

00:27for a lot of the bipartisan work, especially that of our chairwoman and her wingman, Senator

00:34Bozeman. Thank you very much for your leadership in this issue, in this hearing.

00:40When I joined a bipartisan group of senators about two years ago, working on this to really

00:44find thoughtful, impactful legislation to strengthen regulatory oversight, we saw the

00:50urgency in this space. And since we didn't get something done yet, we really not only

00:56failed to make progress on the legislation, but we have seen a host of crypto issues,

01:00as we've seen in the newspapers and heard from our constituents, that's really left

01:04consumers' businesses and our financial system at risk. Instead of acting, we've left it

01:10up to the SEC and the CFTC to try to do our job for us, resulting in a marketplace that

01:15continues to be rife with fraud, manipulation, and abuse. Although the SEC, CFTC, and DOJ

01:22continue to be our first responders in going after bad actors, of which we're appreciative.

01:27They've done actions like a $4 billion settlement with Binance last year. We've heard again

01:31and again that the CFTC and the SEC lack the resources and tools they need to conduct oversight

01:40in this huge market. I appreciate that the CFTC takes its role in combating fraud and

01:45manipulation in this space seriously. I've been grateful to meet with our witness today.

01:49Just taking a look at the CFTC's enforcement docket, with nearly half of the cases are

01:55related really to crypto enforcement. It's extraordinary. But there are things that Congress

02:00has to do today to build the capacity for regulators, particularly for the CFTC, within

02:07the narrow scope of the spot market to create a system that works better for customers,

02:12entrepreneurs, and the industry as like, as well as holding the United States as an important

02:17center for this activity. But despite the enforcement actions that are taking, the

02:22known risks of this emerging space and the crypto winter, if we can call that, of 2022,

02:28millions of retail customers continue to engage with our financial sector through digital

02:32assets, exposing a lot of ordinary folks to a lot of risk. And I know that you see people

02:40of African-American descent, people who are working class, overrepresented in this space

02:45and often victim to this fraud. We've got to prioritize the needs of these retail consumers

02:51through robust customer protections. We've got to strengthen the CFTC's oversight authorities

02:57by funding agencies at appropriate levels. And so I am grateful that their energy and

03:02the work doing this, and I again want to thank the chairman and Senator Bozeman for their

03:06extraordinary leadership in trying to drive this forward. And so, chairman, again, I've

03:12said this before, but love your haircut. The CFTC is already conducting some oversight

03:18of digital assets alongside other financial regulators. But I just want to point it to

03:23you and hopefully you can speak to the gaps that the CFTC still faces and why legislation

03:29along the principles of the DCCPA is so important, if not urgent.

03:35Thanks, Senator, for your comment and your compliment. I would say you pointed it out

03:40exactly. We have brought 135 enforcement cases over the better part of 10 years. In

03:45our last fiscal year, as you pointed out, half of our enforcement docket was crypto-related,

03:50which I did not use this word in my statement, but it is a staggering statistic for an agency

03:55that oversees trillion-dollar markets to have to allocate half of its resources to a market

04:00it does not regulate or does not get appropriated funds for. It puts both markets at risk and

04:06really exposes the fact that there is so much fraud in the crypto space.

04:11And therefore, there is a stunning urgency by...

04:13Yes.

04:15The other point that really, I think, dovetails to your comment is, yes, we have had success in

04:21the enforcement space, but ultimately it is using a very powerful but limited authority. I used this

04:28phrase with the chairwoman earlier, and that authority allows us to bring enforcement cases,

04:34but only in the context of being reactionary and responsive to customer complaints and tips,

04:40as opposed to having a comprehensive regulatory regime where we can register exchanges,

04:45register individuals, and have typical, very fundamental compliance programs, which would,

04:51if not eliminate, significantly reduce the fraud that we see every day in the marketplace

04:56and allow us to be proactive as opposed to reactive.

05:00And so, can you be a little specific for me and lay out some of the tools that you think

05:05that you could use to better enable and oversee the industry?

05:10So, very similar to the tools we have in our traditional regulated markets,

05:16registration authority to register exchanges, to register custodians, to register broker-dealers.

05:22Within that registration scheme are a whole number of core principles around compliance

05:27with governance, compliance with the board of directors, financial resources, eliminating

05:32conflicts of interest, all of these very typical things that have been built and evolved over

05:36decades in the financial regulatory space that have really enabled U.S. markets to be the most

05:42robust, the strongest, and most desirable in the world. It is really not rocket science,

05:46and a lot of it is built off the DCCPA with some modifications, certainly, but ultimately

05:51we are not trying to recreate anything. We want to model what is needed based on what

05:57has been successful in the past. And just give me one, my time's up, one realistic

06:01consequence for us not getting this done in the coming months. What's something that you are

06:06concerned about? Senator, put aside the resources and the challenges that we have in allocating

06:12half of our resources to enforcement. Our number one priority and responsibility is to protect

06:17customers. If we don't have this authority, we will continue to see fraud and manipulation

06:22and individuals in New Jersey and across the country lose money.

06:26Chairwoman and Ranking Member, there is an urgency here. I am grateful for both of your

06:31leadership. I just ask us to move with some haste, because if we do not move and get something done

06:36in this Congress, more and more people will be taken advantage of, more and more people will

06:39lose their money. There is a bipartisan unity, I think, in this on both sides of the Capitol.

06:44The only real division I see at this table is the Senators with hair versus the Senators with not.

06:50Otherwise, we are together in this. We will debate that separately.

06:56We also have a nice tie.

06:57Yes, exactly. We are debating ties today.

07:05On a serious note, Senator Booker, thank you for that sense of urgency. Thank you for being part

07:09of the bipartisan group in the last couple of years. We have been working so hard to move

07:13something forward. Thank you so much for doing that. Now we will turn to Senator Tuberville.

07:22For the hair rebuttal.

07:24We are not opposed.

Cory Booker Warns Congress Has ‘Failed To Make Progress’ On Cryptocurrency Oversight And Legislation

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