Ranking Member David Scott Opening Statement at Crypto Currency Legislation Markup

Hearing

"I want to thank the Chairman for taking on such a complex and volatile market and attempting to regulate it.

It is a tough challenge, to create a whole new regulatory regime, especially without input from me or my Democratic colleagues as you were drafting.

I do appreciate the efforts of my colleagues, particularly Ms. Caraveo, our subcommittee Ranking Member, to bridge the gap between what was in the discussion draft and what the CFTC needs to act in this space.

While I am unable to support this bill in its current form, I do believe we need to act in this space. I just cannot accept the bill we look at today without amendment.

However, I commit to working with you, Mr. Thompson, to get this bill to a better place -- "perfecting it" as the Chairman would say.

As it currently stands the bill is inadequate on several levels and as such, I cannot support it.

First, above all, this bill has inadequate consumer protections in what we know is a very chaotic market.

Second, it encourages vertical integration by allowing entities to register as an exchange and as brokers.

Third, it lacks investor protections like third-party audits, and disclosure of financial statements, so investors can make educated decisions about the financial health of the issuers, and if they are indeed a good investment choice.

Beyond those specific problems, I see that there are additional gaping holes in this legislation that will allow hedge funds and pension funds to invest in these markets without their dealers being registered. And by not registering, they won't even have the most basic customer protections like segregation of funds, conduct standards, or conflict of interest standards.

In a new twist, the Amendment in the Nature of a Substitute we are voting on today includes a change that would require the CFTC and SEC jointly decide to delist an entity. This is a clear attempt to slow down or stop removing products from the marketplace.

This is an anti-consumer bill. Any one of these issues is a huge problem for me and should be for all of us, as these consumers are our constituents.

Because bipartisanship is important to me, and several of my Democratic colleagues we will offer amendments to try and improve upon the bill and address our concerns.

The amendments take this bill from an industry giveaway to being closer to something that could work for our retail investors. I hope that we get support for those amendments to make this a better bill.

I yield back my time."

Source