Flood Slams Yellen Over Agricultural Guidances: You ‘Rejected The Best Available Scientific Data’

4 months ago

On Tuesday, Rep. Mike Flood (R-NE) questioned Treasury Secretary Janet Yellen on agricultural financing during a House Financial Services Committee hearing.

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00:00Gentleman's time has expired, but that would go to the gentleman from Nebraska, Mr. Flood, recognized for five minutes.

00:05Thank you, Mr. Chairman. Thank you, Madam Secretary, for being here today.

00:08Before I begin, I want to make a brief statement on something that is admittedly not within the scope of this particular hearing,

00:15but is very important to my district and agriculture producers across the country.

00:20With the 45Z clean fuel production credit going into effect in less than five months,

00:26Nebraska's agriculture and energy producers need full and accurate guidance promptly.

00:33I was disappointed to see Treasury release guidance in April for the 40B sustainable aviation fuel credit

00:40that rejected the best available scientific data and tied the hands of our nation's ag producers

00:45with an unworkable, one-size-fits-all limitation.

00:49Nebraska's farmers don't need the federal government to come in at the 11th hour

00:53and dictate which practices are acceptable and not acceptable,

00:57and I will continue to advocate for greater flexibility that fully recognizes

01:01the role Nebraska's producers play in the future of transportation fuels

01:05and for an all-of-the-above energy policy that puts our farmers first.

01:09I plan to submit some questions to Madam Secretary for the record on this issue

01:13and would appreciate a quick response.

01:15Switching gears, Secretary Yellen, in response to a letter from Chairman McHenry, among others,

01:20regarding FSOC's calls to fill the spot market gap in digital assets,

01:24it was noted that, quote,

01:26crypto asset platforms engage in practices commonly subjected to greater regulation,

01:31including operating order book style markets and custodying crypto customer assets, end quote.

01:39Those activities sound a lot like activities undertaken by centralized intermediaries,

01:44and centralized intermediaries are undoubtedly an important piece of the regulatory puzzle

01:49for digital asset regulation.

01:52That's why this committee and the Ag Committee collaborated together on FIT for the 21st Century,

01:57which provides a new regulatory framework with sufficient responsibility and resources

02:02for the CFTC to effectively regulate spot markets for digital assets that are not securities.

02:08However, I think it's important that we think about some of the unique characteristics

02:11in decentralized systems as well.

02:14These protocols will allow willing buyers and willing sellers to find one another

02:18and make a trade based on the rules of the protocol to any of the market participants.

02:23Here's my question.

02:24How do you think about decentralized trading protocols that do not create order book style markets

02:29or involve the custody of customers' crypto assets?

02:32Wouldn't these markets, which are unique relative to most of our understanding

02:36of traditional centralized markets, require a different approach to regulation?

02:43You're talking about DeFi type of activities?

02:48We have to recognize there's going to be a decentralized angle to all of this in digital assets,

02:53and so far everything seems very centralized, so yes.

02:59Your question is, what about the regulatory approach to those markets?

03:04How are you thinking?

03:05When you look at this whole regulatory regime, how do you think about decentralized trading protocols,

03:11specifically, that do not create order book style markets

03:16or involve the custody of a customer's crypto assets?

03:19Have you given that a lot of thought?

03:21Well, this is certainly something that the regulators are looking at, the SEC,

03:26and to some extent the CFTC.

03:30Perhaps some of these activities may fall under the regulatory umbrella of the banking agencies as well,

03:40and I would add this, Madam Secretary.

03:43FSOC released a report in late 2023 dedicated an entire section to the risk associated

03:49with digital assets.

03:50One such risk the report mentioned was, quote, unquote, concentrated risk.

03:55I'd like to focus on a couple aspects of concentration risk that I'd like your view on.

03:59If there are only a small number of entities that are able to serve as custodians

04:03of digital assets for registered investment advisors,

04:06would you agree that such an arrangement could constitute a concentration risk?

04:11It could potentially, but I'd need to know more about the details.

04:16I will note that a witness representing the registered investment advisors spoke in front

04:20of the digital assets subcommittee panel early last year and testified that his firm had, quote,

04:25three, maybe four, end quote, options for digital assets custody currently

04:29and indicated the number could reduce with the SEC's custody rulemaking.

04:33I guess, Madam Secretary, in the time I have left, if there are only a small number of entities

04:37that are able to serve as custodians of the now approved spot bitcoins ETFs,

04:43would you view that arrangement as a potential concentration risk?

04:47I'd just have to know more about the details.

04:50I'd need to really look carefully at the case you have in mind.

04:55I will leave with this.

04:56I emphasize there are only a handful of custodians for spot bitcoin ETFs,

05:01and most issuers only have one custodian.

05:03With that, Mr. Chairman, I yield back, and thank you for your time.

05:06The gentleman yields back.

05:07With that, we go to the gentleman from Illinois, Mr. Kasten.

Flood Slams Yellen Over Agricultural Guidances: You ‘Rejected The Best Available Scientific Data’

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