RANKING MEMBER SCHAKOWSKY'S OPENING REMARKS AT SUBCOMMITTEE HEARING ON BLOCKCHAIN

Hearing

"Today, we are here to discuss blockchain, a new technology.

Blockchains are being used to solve problems like supply chain management or create digital contracts and wills.

Blockchains also have enabled the creation of digital currencies, like the cryptocurrency Bitcoin, as well as other digital "goods".

However, this technology has significant shortcomings.

Some blockchains have large energy and environmental impacts.

What's put on the blockchain is visible to everyone and can't be removed, raising privacy concerns.

But the biggest downside is the use of this technology for scams, fraud, and extortion.

Real people are being harmed. Some have lost their life savings to scams or hacks.

Centralized cryptocurrency exchanges have issued new cryptocurrencies on the promise that they are backed by real assets when they are not.

Just this week, the SEC alleged that two of the largest cryptocurrency exchanges were deceiving consumers or operating illegally.

And cryptocurrencies are often demanded by criminals who use ransomware to take hospitals and other essential infrastructure hostage.

Between 2017 and 2022, Illinois residents allege that they lost more than $45 million to cryptocurrency scams.

The same rules apply to blockchains and crypto as to any other technology.

That includes the FTC's existing rules against unfair and deceptive acts or practices.

The harm consumers are experiencing because of crypto fraud underscores the need to pass the security provisions in a comprehensive data privacy bill.

And the FTC needs sufficient resources to investigate and prosecute scams, fraud, and privacy violations both on and off the blockchain.

I look forward to hearing from our witnesses about how we can protect consumers by stopping crypto scams and fraud on the blockchain."

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