With a holiday recess approaching in the U.S. House of Representatives, Majority Whip Tom Emmer (R, MN) is still making the most of the 2023 Congressional calendar while preparing for next year.
He knows the drill.
Emmer, who has been a key advocate for digital assets legislation, first joined Congress in 2015 and served as Chairman of the National Republican Congressional Committee in the 116th Congress and 117th Congress. He currently sits on the House Financial Services Committee.
Digital assets legislation he has sponsored in the current Congress includes Blockchain Regulatory Certainty Act [H.R. 1747], CBDC Anti-Surveillance State Act [H.R. 5403] and Securities Clarity Act [H.R. 3572].
Whip Emmer sat down with blockchain tipsheet at the Capitol on Tuesday to discuss the state of digital assets including:
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- 2023 digital asset highlights
- Member education on digital assets
- Congressional staff and legislation
- Looking ahead
- Crypto, AML and terrorist financing legislation
- CBDCs
- National security
The interview has been lightly edited for clarity.
What are your highlights for 2023 when it comes to digital assets?
Majority Whip Emmer: I had high hopes coming into the 118th Congress because of our new [House Financial Services] Chairman. Patrick McHenry (R, NC) is someone who understands the digital asset space.
Patrick and I have been close since I came to Congress -he was assigned to me as my mentor when I got here… I was excited because I know that this was a passion of his. I was also excited because even though we’ve had a fight it seems with the White House under the last Administration and now under this Administration, and with some certain Senators – and some in the House but not quite as much. Republicans and Democrats in the House are learning very quickly about the space.
So, highlights of this year are watching Republicans and Democrats on the House Financial Services Committee literally collaborate on digital assets issues. We may not see it in the actual committee votes, but it’s happening with French Hill (R, AR), with Patrick McHenry, Richie Torres (D, NY) and Josh Gottheimer (D, NJ), Jim Himes (D, CT) – Himes has been very helpful – and Greg Meeks (D, NY). You could keep going on.
We passed a CBDC bill out of committee to outlaw central bank digital currencies, which is something that I’m adamant about. We’ve gotten a lot of support for it. And then Patrick McHenry managed to set us up for market structure and, potentially, stablecoin legislation. And there could be others on the way, but that’s just this year.
For the first time since I arrived in Congress eight years ago, we have some very consequential things in the space that are moving forward.
On Member education, where is Congress today versus where Congress was when your started your digital assets crusade?
I started almost eight years ago now. And when I started I like to tell the story about the Congressional Blockchain Caucus which was still being run by its two original founders – who were like “The Odd Couple.” It was Jared Polis (D, CO), who is now the governor of Colorado, and Mick Mulvaney (R, SC) – of all people, they were the co-Chairs. But they were forward thinkers and think out of the box as well as David Schweikert (R, AZ) who has always been there… The group was very small and we were trying to do this education through our office early on.
I remember Jeb Hensarling (R, TX), my first Chair in Financial Services, had his first [brush with] what we call digital assets, but it was very narrow back then… it was more just talking about Bitcoin. I listened to Republicans and Democrats sound exactly the same -they were not informed. Everything to them was “Silk Road” and “it’s all the drug dealers.” [They didn’t] understand what this is or how it works.
Fast forward to August of 2021 when the U.S. Treasury works with former Senator Rob Portman’s (R, OH) office on an amendment to an infrastructure bill. Somebody decided that the crypto community – the digital asset space – has monetary value and the government wanted its piece.
So, some bean counter came up with a proposal that if you taxed miners and… it was very poorly written… you could generate X million of revenue to the federal government. And they incorporated that into the infrastructure bill to pay for it.
Now, that wasn’t good. But what was good is it was the first time that the [crypto] community just rained down on Washington DC. I heard that some Senators were getting up to 30,000 contacts a day. It caused a bunch of people who didn’t grow up in a world of anything more than two dimensions – newspapers and punch-button radios – to move into the 21st century quickly.
And several of them picked up on it really fast.
One of the ones that I’ve been most impressed with has been Senator Ted Cruz (R, TX) -and he doesn’t get mentioned a whole lot in this space. Others do – but you got a whole bunch on the Senate side, and on the Republican side, and it’s interesting from where we started today. The education process is now gone well beyond our office or Senator Cynthia Lummis’ (R, WY) office or the handful of people that were there. Now it’s almost feeding itself.
So the education is still very necessary – and this is a non-partisan area to me. This isn’t Republican or Democrat. Finance should not be. Everybody should have equal access and opportunity. But you do have some people who are like anti-digital assets. They’re more anti-crypto than anything else. And they just make statements that are patently not true.
For instance, “the Russian oligarchs are moving their money out of Russia using crypto.” Well, wait a second. Why don’t you explain to people that: “I got a private wallet, I have my crypto in my private wallet. The government can’t see that. The second I unlock that and I start to move it, it’s on a public blockchain. I can see that it’s being moved. I may not initially be able to connect the movement with an individual or an entity.”
But we know that the government has been able to do that because the Colonial Pipeline – which was shut down in return for Bitcoin ransom – nobody reports that they recovered all of it. So it’s misinformation like that we have to constantly overcome.
Can you discuss the importance of Congressional staff in the creation of digital assets legislation?
Staff are key for a couple of reasons . Not only do they do the bulk of the work around this place, but they’re in the 21st century already. They’ve been raised in it. I like to tell people that I think the reason that [digital assets] attracted me is because it keeps me connected. My wife and I have seven kids. Our oldest is 32, the youngest just turned 22. They think differently than we do. They process information differently than we do.
I told you about my generation in which we used to punch the radio buttons in our car and you got AM in the beginning. And then you got AM and FM and – oh boy, that was big. Well, now kids are plugging in whatever they want to listen to. Everything’s at their call. They don’t think in two dimensions. They think in three dimensions and beyond. Their ability to abstract and go outside of the norms is just stunning. That’s why the staff is so important because they think differently, process differently and have been raised differently.
They’re gonna help push this thing well into the 21st century. Ritchie Torres and Tom Emmer could probably be no more different politically and everything else and yet on this, we’re almost in complete alignment… I know that’ll probably hurt Ritchie’s reputation…
Congressman Torres says there’s a “generational divide” on this issue.
That’s what I’m talking about with the staff being so important. There is a difference.
Remember, you’ve got a generation that’s probably 18 to 45 that has been Internet-all-the-time. They’ve never known life without a cell phone. But, then you’ve got this older group that I come from – I didn’t have a cell phone until I was practicing law. I remember people from my generation who liked to read a book with pages. The younger generations are using today’s version of a Kindle. It’s all different.
Looking ahead to digital assets legislation in 2024, Chair McHenry as well as Digital Assets Subcommittee Chair French Hill have both suggested Q1 2024 is going to be a big moment. Thoughts?
You know when I became Whip, the Speaker told me, “You’re gonna have plenty to do so you can suspend your work on Committee and focus on your leadership position.” And I said, “No,” because I wanted to be part of this. This is something I’ve been working on for years. And I couldn’t be more excited to to see Patrick McHenry – who now has added motivation because this will be his last year in Congress – and see French Hill – who is way up to speed on the issues we’re talking about – see what they, and we, can push through in the next 12 months. It could make a difference.
We also have to somehow bring the SEC back under control and the FDIC and the CFTC. We’ve got to make sure that they go back to the business of working for Americans rather than believing Americans work for them. I’m excited not only on the policy side, but on the oversight side.
On a House floor vote on a digital assets bill, and how you go about “whipping” for it and what do you anticipate happening?
Say the market structured bill came to the Floor, I’d be surprised if we did a formal whipping process. It doesn’t mean I won’t be working members, though. Patrick McHenry will be working members. French Hill will be working members. Warren Davidson will be working members. Barry Loudermilk (R, GA) will… We’ve got too many advocates. Same thing on the Democrat side whether it’s Wiley Nickel, Ritchie Torres, Josh Gottheimer, etal.
As for whether it happens, there’s going to be a Floor vote at some point. I don’t know on what – I think they’re making some tweaks to the market structure bill – but whenever Patrick McHenry says it’s ready to go, at that point, they’ll figure out when there’s Floor time.
Another hot topic in Congress today is terrorist financing via crypto and AML legislation – particularly in the Senate. There have been comments on the House side. What are your thoughts about the specific need for legislation regarding anti-money laundering (AML) and terrorist financing as it relates to crypto?
First off, it surprises me that the Senate is already working on a solution when they don’t know what the problem is.
We wrote a letter to Treasury asking them to outline [the problem] – and this was a bipartisan letter with more than 50 of us who signed and sent last month – we still don’t have a response. And the letter simply is, “This is a problem – that’s what you’re telling us. What is the extent of the problem? So we understand what we’re dealing with.” Once you understand what you’re dealing with, then you have to figure out what the appropriate solution is.
Some of the stuff that comes from the other side of the building – they seem to be looking for excuses to overreach in this area. And people that are involved in the digital asset space, people who are concerned about America leading and having this innovation happen here, should be very wary when the Senate is telling us that we have to do this today even though we don’t know the extent of problem.
We need to address it. We understand there is terrorist financing that has happened in the crypto space. Tell us what the extent of the problem is so we can understand the problem that we need to deal with.
Regarding CBDCs and your Anti-CBDC Surveillance State Act where you have 70+ co-sponsors right now, a couple questions to explore… first, how do you think about a private stablecoin versus a CBDC?
[On a private stablecoin vs. a CBDC,] I’m not gonna go there. When you talk about what these things are, it’s up to whoever the innovator is to tell us what they’re going to use it for. I am not going to be the one that builds the pyramid and says “Here everybody, this is yours.” My job as a Member of Congress is to make sure that you the innovator, has the ability to innovate and create without the strong arm of government slapping you down and saying, “Oh no, this is too dangerous. This is too disruptive to the existing financial structure.” That’s what we’re here for.
Congress needs to weigh in in this area because we want to protect the existing, two-tier legacy banking system, while at the same time allowing this incredible technology and the disruption and changes that it will lead to – to develop. The existing two-tier banking system is going to have to evolve into the 21st century. But we don’t want one to harm the other before it has the chance to do that.
Is a bank-to-bank “wholesale” CBDC of interest?
I’d have to see the way it works. I would say this because we don’t even oppose a central bank digital currency. This was for some people the sticking point – they never want any CBDC. For me it was, if it can mimic cash – open, permissionless and private – if you can do those three things, alright, then let’s talk about it.
But right now, I don’t believe they can do “private” and that’s their problem – “cash is still king” when it comes to privacy. This is not.
In this country, they say, “That’ll never happen here.” Well, it happened in Canada. Trudeau used “extraordinary measures” to shut down the truckers protest a couple of years back – by the way, even though it’s a bit of a stretch – the FISA ( Foreign Intelligence Surveillance Act) Court was created in the early 70s. And I’m sure that people back then said, “It will never be used to spy on American citizens. This is only being created so that we can do what we need to with foreign nationals.” Oops, I guess it was used for what they said it wouldn’t be used for. I don’t want to make the same mistake with a central bank digital currency.
Again, let’s make sure that it’s open, permissionless and absolutely private. If it is, okay great. Otherwise, let’s let the private sector handle it. And on the bank-to-bank CBDC, again I want to see it. So much of this is semantics because we talk about digital assets – we already have essentially everybody using their cards bank-to-bank. You don’t have cash anymore. They’re doing it digitally already.
We have to put more parameters and definition on it so people understand what we’re talking about. Otherwise, you’re just doing business the same way. Only now it’s electronic instead of paper. And by the way, with electronic transfers comes a lot of data. And somebody’s going to have that data. And how do we make sure that it’s not misused?
How do you think about national security and its intersection with digital assets?
It’s really important. I relate this to the reserve currency. Because I’ve had some of my colleagues over the past few years argue that the problem of this space is that it will take away from our ability to enforce economic sanctions on those that are not being good actors in the world.
I argue just the opposite. I believe that if you allow the digital asset space to thrive – and I don’t care if it’s stablecoins or whatever you’re looking at – if you allow us to thrive… let’s use stablecoins, you back them up with US dollars. You’re not weakening the reserve currency, you’re strengthening it. That is the way you can maintain the ability to impose economic sanctions that actually are meaningful – especially with some of these other countries that have gone all digital.
Follow Majority Whip Tom Emmer on X at @GOPMajorityWhip and @tomemmer.