At the Senate Banking Committee hearing on Wednesday, Senators from both parties, including Trump's ally John Kennedy (R-LA), expressed concerns about the bill structuring the cryptocurrency market, particularly allowing the industry to write its own rules.
Concerns about lack of oversight and legal loopholes
Senator Kennedy compared allowing the crypto industry to self-regulate to letting the current internet generation do the same, resulting in outcomes "as if someone spilled a sample of urine." Many Democratic Senators also warned that the House bill #CLARITYAct could have serious consequences.
Senator Tina Smith (D-NM) questioned the loopholes that could exempt SEC regulations for digital assets considered collectibles or having other utility. Senator Elizabeth Warren (D-MA) expressed concern that the bill could allow traditional financial institutions to evade SEC oversight by tokenizing financial products. Former CFTC Chairman Timothy Massad agreed that if the law creates exceptions for DeFi, assets like stocks could be tokenized and traded on DeFi protocols to avoid SEC oversight.
Requirements for transparency and anti-corruption
Warren conditioned her support for the bill on it protecting fundamental securities law, implementing anti-money laundering programs, and enforcing sanctions. She also called for a ban on the President and Vice President from engaging in cryptocurrency activities while in office, a priority for Democrats due to the President's lucrative activities in the sector.
Senator Raphael Warnock (D-GA), while having voted for the GENIUS Act, was more assertive this time, stating that "Trump's crypto corruption distorts the digital asset market" and "writing a bill with provisions favoring corruption sends a clear message: Congress is not serious about addressing corruption."