House Republicans are moving to regulate crypto with a new subcommittee

House Republicans are moving to regulate crypto with a new subcommittee

House Republicans are moving to regulate crypto with a new subcommittee

French Hill, a Republican from Arkansas, speaks during a press conference at the U.S. Capitol in Washington, D.C., July 24, 2018.

Zach Gibson | Bloomberg | Getty Images

Republican lawmakers announced late Thursday the creation of a new subcommittee to oversee the crypto and fintech industry, the first of its kind in the US, after a turbulent period for digital currencies.

French Hill of Arkansas will chair the Subcommittee on Digital Assets, Financial Technology and Inclusion, which will be part of the House Financial Services Committee.

Hill, who was also named vice-chair of the wider committee, said in a statement that a two-way effort is needed for “FinTech innovations to be able to develop safely and effectively in the United States.”

The unregulated nature of the crypto industry emerged as a pressing issue late last year after the collapse of crypto exchange FTX in November. Sam Bankman-Fried, the founder of FTX, was arrested last month on fraud charges and was released on $250 million bail pending trial.

Hill was an enthusiastic supporter of the crypto industry. In 2021, he co-sponsored the Central Bank Digital Currency (CBDC) Research Act and said at the time that it was “important that the Federal Reserve does not delay its important work” on a potential CBDC.

In 2019, long before FTX became a household name, Hill signed a letter urging the IRS to improve tax guidance for cryptocurrency users.

“Ambiguousness makes it difficult to properly comply with tax laws,” the letter reads.

Other Republican crypto advocates in Congress include Congressman Tom Emmer of Minnesota and Senator Cynthia Lummis of Wyoming.

Although operating out of the Bahamas, Bankman-Fried was a skilled agent in Washington, establishing relationships with heavyweights such as Representative Maxine Waters (D-Calif.) and Rostin Benham, chairman of the Commodity Futures Trading Commission. In the 2022 midterm races, Bankman-Fried made nearly $40 million in publicly disclosed donations, mostly to Democrats. He and his associates donated to politicians on both sides of the altar.

Federal regulators alleged that Bankman-Fried committed financial violations of criminal campaigns while committing an $8 billion fraud.

The collapse of FTX and the subsequent Bankman-Fried indictment provided Republicans like Emmer with enough fodder to criticize the work of regulators. Emmer described the actions taken by Securities and Exchange Commission chairman Gary Gensler as “random and untargeted.”

Meanwhile, Senate Democrats have already begun preparing their own efforts to oversee the crypto industry and dictate enforcement actions.

The SEC has stepped up its activity since the FTX bankruptcy. The committee charged cryptocurrency lender Genesis and cryptocurrency exchange Gemini with unregistered securities sales and offerings on Thursday, the same day Hill announced the subcommittee’s appointment.

WATCH: Bitcoin hits $19,000, SEC charges Gemini and Genesis

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