Ransomware Hearing Highlights Challenges For Businesses; Dems Take Heat On Crypto

ransomware hearing

Vice Chair Elaine Kim (R, CA) took over for an ailing Chair Blaine Leutkemeyer (R, MO) yesterday at the “Held for Ransom: How Ransomware Endangers Our Financial System” hearing under the auspices of House Financial Services National Security, Illicit Finance, and International Financial Institutions Subcommittee.

See the hearing page including video.

With testimony that included phrases such as “payment killchain” and “big game hunting,” Members received a 2-hour barrage on the latest in cybersecurity and its intersection with ransomware.

See witness’ opening, prepared testimony (click name for PDF):

Though not discussed in detail, the looming centerpiece of the hearing was the “Ransomware and Financial Stability Act” co-sponsored by Chair Patrick McHenry (R, NC) and Rep. Brittany Pettersen (D, CO). See it (PDF).

Concerns about the risk to national security due to ransomware were voiced by multiple Members on both sides of the aisle.  In general, digital assets and crypto were not the main focus of the hearing, nor were they seen as the root cause of ransomware.

During the Q&A, Vice Chair Kim began Member questioning by asking about “the level of coordination [among law enforcement] required to respond to the ransomware attacks?”

Chainalysis’ Jacqueline Koven answer was hopeful -due to crypto’s traceability:

Yes. From reported incidents involving cryptocurrency addresses, law enforcement is able to understand the entire ransomware supply chain. We can understand the malware used,  the access and even where they launder their funds. It’s an incredible lead to understanding these networks better and being able to disrupt not only where they cash out, but the other entities involved in the supply chain.

More observations:

    • Rep. Andy Barr (R, KY) noted the need to grown a cybersecurity workforce.
    • Rep. Bill Foster (D, IL) raised his “license plate” idea again -an idea which he tried to insert into last July’s markup for digital wallets as part of the digital asset market structure bill. This time, Foster advocated for a nationwide, secure digital identity.
    • With one of his questions, Rep. Zach Nunn (R, IA) brought to light the “ransomware-as-a-service” business that allows “people with a very minimal skill set to perpetrate something that’s very dangerous to all of us.”
    • Rep. Monica De La Cruz (R, TX), like other Members, emphasized the concerning, negative, impact ransomware has on small business.

bipartisan blockchain support

“Promoting Resilient Supply Chains Act” [H.R.6571] sponsored by Rep. Larry Buschon (R, IN) and co-sponsored by Rep. Lisa Blunt-Rochester (D, DE) has continued to add more co-sponsors since the blockchain legislation was unanimously approved in a House Energy & Commerce markup in December.

Notably, the bill’s new supporters are evenly split between Republicans and Democrats perhaps in an effort to make the blockchain bill as palatable as possible for a divided Congress which includes upcoming milestones such as a potential House Floor vote and whatever happens in the Senate.

New co-sponsors include: Rep. Tim Walberg (R, MI), Rep. Robin Kelly (D, IL), Rep. Greg Pence (R, IN), Rep. Debbie Dingell (D, MI), Rep. Buddy Carter (R, GA) , Rep. Susan Wild (D, PA), Rep. August Pfluger (R, TX) and Rep. Lizie Fletcher (D, TX)

The other blockchain bill sponsored by Reps. Buschon and Blunt Rochester which was unanimously approved in the December E&C markup was “Deploying American Blockchains Act” [H.R. 6572].

This bill has added two new co-sponsors – a Democrat and a Republican: Rep. Darren Soto (D, FL) and Rep. Kat Cammack (R, FL).

Both bills seek to urge government – the Commerce Department, in particular – to seek American leadership in the deployment and use of blockchain technology including as it relates to supply chains. The bills are noticeably distanced from the financial world of digital assets which are overseen by House Agriculture and House Financial Services.

what you should know: Learn more about the bills’ future from Rep. Buschon in an interview with blockchain tipsheet in February. Read it here.

today’s markup

Reminder: today’s House Financial Services Markup begins at 10 a.m. ET in Rayburn House Office Building and features a mixture of 13 bills and joint resolutions. See bills and hearing page – live video, too.

Bills to be voted on include Chair Patrick McHenry’s (R, NC) “Financial Services Innovation Act of 2024” [H.R. 7440] and the FUTURE Act – or “Fostering the Use of Technology to Uphold Regulatory Effectiveness in Supervision Act”- led by Rep. Erin Houchin (R, IN) [H.R. 7437].

op-ed: Schumer and crypto

In an op-ed in the progressive publication, The American Prospect, AP’s co-founder Robert Kuttner takes Senate Majority Leader Chuck Schumer (D, NY) to task for what he says is supporting crypto in Congress.

Due to recent reports of stablecoin legislation potentially riding on top of the FAA Reauthorization must-pass in the Senate, Kuttner sees underhanded tactics by the Majority Leader and his party. He writes, “Collusion by Democrats in weak regulation of hazardous financial products is bad enough. It is even worse when it is done by stealth.”

Read “Schumer Carries Water for Crypto.”

op-ed: Congress and crypto

Bloomberg columnist Aaron Brown, a former head of investment research and current investor -including crypto-, says in an op-ed that crypto can go “pro” if only Congress comes through with needed legislation.

Brown identifies the Clarity for Payment Stablecoins Act [H.R.4766] and The Financial Innovation and Technology for the 21 Century Act [H.R.4763] and writes: “Currently, various institutions are making their own determinations including the IRS, the SEC, the CFTC, the Federal Reserve and the courts. Some of those conflict, and others make life difficult for people working in crypto. Many would welcome clear guidelines from Congress, with specific assignments to various agencies to refine and interpret the different individual issues.” Read more.

still more tips

Tenure alone won’t decide who gets to lead Republican oversight of Wall Street and the Federal Reserve – Politico

Regarding Senators Warren/Grassley’s letter, it’s not the first request of CFTC Chair Behnam’s FTX comms records – CoinDesk

PayPal removes buyer and seller protections for NFTs – The Block