Rep. Mike Flood Readies For The Long Haul With Digital Assets Legislation

Rep. Mike Flood

When the House Financial Services’ (HFS) Committee abbreviated markup concluded last Thursday, Rep. Mike Flood (R, NE) likely felt some well-deserved relief.

With momentum building over the past few months, the Securities and Exchange Commission’s (SEC) controversial Staff Accounting Bulletin (SAB 121) had become an increasing part of Flood’s legislative remit with his sponsorship of a standalone bill [H.R.5741] and co-sponsorship of a joint resolution [H.J.R.109] intended to rescind the controversial rulemaking-but-not-a-rule by the securities regulator.

At its heart, SAB 121 effectively prevents big banks – well-regulated banks – from taking custody of crypto assets which arguably inhibits the growth of digital assets within the U.S. financial system.

By a vote of 31-19, the joint resolution passed out of the HFS committee markup with bipartisan support and now heads to the House floor for a vote. No doubt, the SAB 121 saga is far from over.  In addition to the House vote, the Senate will need to move on the resolution as will the President… and time is ticking on the 118th Congress.

Nevertheless, it’s a positive development in the eyes of Rep. Flood who is relishing his first session of Congress as part of the majority on the HFS Committee and its Subcommittee on Digital Assets, Financial Technology and Inclusion.

Flood had been a strong advocate for the creation of digital assets legislation. Overall in the 118th Congress,  he has also been a robust legislator sponsoring 12 bills and co-sponsoring 175 bills according to

On Friday, spinning out of last week’s HFS markup, Rep. Flood discussed SAB 121, digital assets, the SEC and his experience in Congress with blockchain tipsheet.

Topics included:

    • Perspective and the Banking Crisis
    • Reviewing SAB 121, Next Steps
    • Uniform Treatment of Custodial Assets Act
    • Members Need Education… Now
    • Congressional Staff
    • CFPB’s Wallet Proposal
    • Looking Ahead & 119th Congress

The interview has been lightly edited for clarity. Continue reading “Rep. Mike Flood Readies For The Long Haul With Digital Assets Legislation”

Interview: Rep. Ritchie Torres Making Progressive Case For Digital Assets

Rep. Ritchie Torres

As a member of the House Financial Services (HFS) Committee and proud representative of his district in the Bronx, New York, Rep. Ritchie Torres (D, NY) has been at the front of lines of the evolution of the U.S. financial system in the 118th Congress.

And though he’s a staunch supporter of the Democratic Party, Torres has been unafraid to break with his Caucus’ leadership when he has believed it’s in the best interests of his constituency. Digital assets has been one such beneficiary of his independence.

Congressman Torres voted in support of the stablecoin and digital asset market structure bills at markup hearings last July, co-sponsored the bipartisan Keep Innovation In America Act of 2023 [H.R.1414], signed on to support numerous bipartisan Congressional letters on digital assets and consistently delivered engaged, tough questioning of U.S. government regulators at public hearings.

After the conclusion of an HFS Subcommittee for Digital Assets, Financial Technology and Inclusion hearing on illicit finance earlier today, Rep. Torres discussed his views on digital assets and Congress with blockchain tipsheet.

Topics included:

    • The progressive case for digital assets
    • Where “Big Tech” fits in
    • Stablecoin legislation
    • The SEC and crypto
    • Congressional generational divide
    • On the industry
    • SAB 121

The interview has been lightly edited for clarity. Continue reading “Interview: Rep. Ritchie Torres Making Progressive Case For Digital Assets”

Six Democrats Break From Party Leaders On HFS Digital Asset Bill

Markup Day 1

Nearly eight hours after Day 1 of the House Financial Services markup hearing commenced, it ended with approval of the signature bill of the day – the digital assets market structure bill a.k.a. H.R. 4763, the “Financial Innovation and Technology for the 21st Century Act.”

The final vote was … 35-15 in favor of the digital assets market structure bill as amended.

The vote was along party lines except for six (6) Democrats who broke with their party’s leadership: Rep. Ritchie Torres (D, NY), Rep. Wiley Nickel (D, NC), Rep. Josh Gottheimer (D, NJ), Rep. Steven Horsford (D, NV), Brittany Pettersen (D, CO), and, in particular, Rep. Jim Himes, (D, CT), who seemed exasperated with his party’s positioning.

Keep in mind, tomorrow’s House Agriculture Committee markup will also vote on the same digital assets market structure bill.

Read below for coverage of the day’s House Financial Services markup pertaining to the “Financial Innovation and Technology for the 21st Century Act.”

opening remarks

At the top of the markup hearing, House Financial Services (HFS) Chair Patrick McHenry (R, NC) outlined that any debate of the bills being marked up today would be completed before a final vote on all of the day’s bills by the Committee.

See all the bills on the HFS hearing page. And, see the video recording.

Clearly, the digital assets market structure bill was the featured bill today – the “Financial Innovation and Technology for the 21st Century Act.”

At a high level, the bill aligns certain crypto regulatory oversight with the Commodity Futures and Trading Commission (CFTC) versus the Securities and Exchange Commission (SEC). Continue reading “Six Democrats Break From Party Leaders On HFS Digital Asset Bill”

Dual Committee Hearing Yields Historic Theater And Another Dose Of Reality

Yadira Caraveo

In an historic joint hearing in the U.S. House of Representatives, digital assets and its market structure impressively took center stage.

Titled “Joint Financial Services-Agriculture Subcommittee Hearing Entitled: The Future of Digital Assets: Measuring the Regulatory Gaps in the Digital Asset Markets,” the two digital assets subcommittees convened at the Longworth House Office Building. More here.

When all was said and done, the fact two House Congressional subcommittees met for over 3 hours on digital assets was the victory for pro-crypto forces as bipartisan interest in crypto is – at best – shared behind closed doors.

Beginning with a sanguine opening statement by House Agriculture Digital Assets Subcommittee Chair Rep. Dusty Johnson (R, SD), a skeptical Democratic point-of-view was expressed by Ranking Member Rep. Yadira Caraveo (D, CO). on digital assets. It was a familiar political cadence for much of the day and since the FTX implosion…

interest in legislation

Chair Rep. French Hill (R, AR) of House Financial Services (HFS) Subcommittee on Digital Assets, Financial Technology and Inclusion made clear in his opening statement that he thinks Democrats are interested in creating a digital assets framework.

Continue reading “Dual Committee Hearing Yields Historic Theater And Another Dose Of Reality”

Partisan Questioning of SEC Chair Gensler Leads To Few Surprises In HFS Oversight Hearing

HFS and the SEC

Today’s hearing of the House Financial Services (HFS) Committee hearing on Oversight of the Securities and Exchange Commission (SEC) started before it began as the Committee’s Republicans led by Chair Patrick McHenry (R, NC) fired off a condemnation of SEC Chair Gary Gensler’s handling of digital assets in advance of the hearing’s start.

See the letter (PDF). And, see the accompanying press release.

In the letter, HFS Republicans called out Chair Gensler for misrepresenting his agency’s willingness to perform registration of digital asset companies. “You have been outspoken in your push for digital asset trading platforms to ‘come in and register’ under the national securities exchange (NSE) framework. Yet, at the same time, you have failed to provide a path that allows digital asset trading platforms to register.” With HFS Committee member Rep. Warren Davidson (R, OH) already threatening Gensler on Twitter with the loss of his job through a new, yet-unseen bill that would restructure the SEC, the stage was set for a combative meeting between HFS Republicans and Chair Gensler.

opening statements

As the hearing began, Chair McHenry called the meeting to order and began with his opening statement (read it) criticizing the SEC Chair on his digital assets “regulation by enforcement” agenda. He also noted that rule-making by the SEC had doubled under Gensler’s leadership. And he concluded with a condemnation of Gensler’s lack of response to Congressional Republicans requests of the SEC for information related to FTX and other issues. .

In her opening statement, Ranking Member Rep. Maxine Waters (D, CA) wasted no time in her opening statement (read it) in defense of Chair Gensler and called the investigations by Republicans as a “sham.” She blamed Republicans for alignment with Wall Street interests and the rejection of climate change rules for investing, hedge fund reforms and what she called deregulation. She applauded Chair Gensler for his strong enforcement of securities laws as it related to crypto.

Next up were Rep. Ann Wagner (R, MO) and Rep. Brad Sherman (D, CA) took brief turns on the far ends of criticism and compliments of Chair Gensler, respectively.

In his opening remarks, Chair Gary Gensler pivoted off a tweet he had carefully made before the hearing with the statue of lawmaker Sam Rayburn in the Rayburn House Office Building. He argued that artificial intelligence (AI) and not crypto was a more important topic as he looked ahead at his purview at the SEC, suggesting roboadvisors will be transformed to name a few of the impacts. The markets should serve investors not the other way around, he said.

See Chair Gary Gensler’s prepared testimony on the SEC website.


HFS Chair McHenry began the question and answer of Gensler around whether Ether was a commodity or a security. Gensler never answered directly as much as Chair McHenry tried even if he did not seem very surprised.

Ranking Member Rep. Waters asked Gensler to explain to Chair McHenry how a security is defined. He indicated it’s a four-part test and provided some detail. Rep. Waters asked if Gensler had the framework he needed to bring crypto into compliance. Unsurprisingly, Gensler said he has what he needs. “I’ve never seen a field (crypto) that is so non-compliant,” said Gensler. Continue reading “Partisan Questioning of SEC Chair Gensler Leads To Few Surprises In HFS Oversight Hearing”

FTX Had No Controls Says CEO John Ray At House Financial Services Hearing

House Financial Services Committee

With the arrest yesterday of FTX CEO Sam Bankman-Fried now in the rear-view mirror, House Financial Service Committee members undertook a review of the cryptocurrency exchange’s implosion with its current CEO John J. Ray who is overseeing the company’s bankruptcy proceedings.

The hearing titled, “Investigating the Collapse of FTX, Part I,” was led by Chairwoman Rep. Maxine Waters (D, CA) and Ranking Member Rep. Patrick McHenry (R, NC).  With Bankman-Fried’s appearance no longer possible due to his incarceration, there was  some measure of disappointment identified by both Waters and McHenry in the hearing’s opening statements. See the hearing video below.

McHenry made clear that he expects to hear from SEC Chair Gary Gensler “early and often” as the Ranking Member becomes Chair of the Committee in the next Congress. McHenry’s criticism of Gensler’s regulation by enforcement policy toward crypto is well-known.

Read all of McHenry’s opening statement.

Enter the new CEO

John J. Ray jumped right in with his criticism of the poor management, corporate malfeasance and inadequate security controls typical of his predecessors at FTX and its trading group, Alameda Research.

Read his complete opening testimony here.

As he concluded, Ray said:

“I would like to especially say to regulators – in the U.S. and abroad – that I completely understand the depth of outrage and frustration with what happened. I have instructed my team to cooperate as comprehensively and completely as possible, and much of our time so far has been spent on the truly herculean task of gathering and organizing information responsive to the many requests we have received.”

The Q&A

Reiterating themes from his testimony in the Q&A with Chairwoman Waters, Ray stated, “The operations of the FTX Group were not separated” – this is one reason U.S. regulators are even more interested. was not carved out of the international company. They were operated as one unit which violated the regulatory requirements for a U.S.-based cryptocurrency exchange. Mr Ray added, “There were no internal controls. There was no separateness.”

Continue reading “FTX Had No Controls Says CEO John Ray At House Financial Services Hearing”

Centralization Villain Gets More Hearings While Decentralization Watches

Hearings on FTX

With FTX continuing to burn like a sun that never sets, Congress is undertaking its review of the cryptocurrency exchange’s implosion with two hearings this week – one quotable,  the other that checks a box.

Hearing #1 – likely very quotable

On Tuesday, December 13 at 10:00a, Chairwoman Maxine Waters (D, CA), Ranking Member Patrick McHenry (R, NC) and the House Financial Services Committee convene a hearing titled  “Investigating the Collapse of FTX, Part I.” (Live stream)

The scheduled witness list for the House Financial Services hearing is exactly who you’d want, at a minimum, for a one-day hearing: the current CEO and the former one:

      • John J. Ray III, current Chief Executive Officer, FTX Group
      • Sam Bankman-Fried (SBF), Founder and Former CEO, FTX Group

Read the HFS Committee’s hearing memorandum here.

Mr. Ray is well-known for his work in corporate disasters such as Enron and Nortel where Mr. Ray led teams of lawyers to find the best way out possible for shareholders, creditors and customers alike. Read this profile from Ray’s hometown paper for more.

The ignominious FTX founder, SBF, created still more drama around “will he” or “won’t he” appear for the Committee in recent Twitter banter (1, 2, 3, 4) with Chairwoman Waters. As of this writing, he says he’ll appear -likely by video. Rumors had swirled whether Chairwoman Waters would use her subpoena powers to compel SBF to testify. Complicating matters was SBF’s Bahamian location.

It was only one year ago – almost to the day – that  SBF was throwing bouquets to House Financial Services after a Committee appearance and tweeting, “A huge thanks to @MaxineWaters, @PatrickMcHenry, and the whole House Financial Services Committee for having us today to talk about the future of digital assets. The meeting was productive and I’m really grateful for the engagement and thoughts from policymakers.”

With Chairwoman Waters and Ranking Member Rep. Patrick McHenry’s work on stablecoin legislation waiting in the wings, it would seem tough questions will be prepared for Mr. Bankman-Fried.

Top 10 questioners to watch on HFS:
Continue reading “Centralization Villain Gets More Hearings While Decentralization Watches”