Providing for Congressional Disapproval of the Rule Submitted By the Securities and Exchange Commission Relating to ``Staff Accounting Bulletin No.

Floor Speech

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Mr. SHERMAN. Mr. Speaker, the crypto industry comes before our committee almost every week saying: We want clarity. Then the SEC provides the clarity. Now, the friends of crypto are here to abolish the clarity, to not only take away release 121, which requires that the custodians of crypto indicate that on the balance sheet, but to prevent the SEC from issuing a revised version of 121 that could call for that same disclosure to be made in footnotes.

It is very clear to me, as co-chair of the bipartisan CPA Caucus, that the financial statements must reflect the incredible risk that banks take when they become custodians of billions and hundreds of billions of dollars, supposedly, worth of crypto.

Now, why the uniqueness of crypto? We have seen Sam Bankman-Fried. He was the face of crypto. He is now facing only a quarter century in jail, which seems rather light. The crypto industry would tell us that Sam Bankman-Fried was just a single snake in the crypto Garden of Eden. The fact is, we have learned since Sam Bankman-Fried's indictments that crypto is a garden of snakes. It is uniquely problematic. Why is that? Because crypto's whole purpose is to facilitate evading American law and to help criminals. Who does it attract? It attracts criminals.

What is the comparative advantage that crypto has as it attempts to become a currency and partially displace the dollar and the euro? Is it more stable? Certainly not. Is it more useful to buy something? You can go to Rayburn and buy a sandwich for $1--well, okay, $8, but you can't buy a sandwich anywhere in this complex for a bitcoin. It is not a better medium of exchange. It is not a better measure of value. What advantage does it have? It is secret.

Now, the best way to have their secrecy is to have the iceberg above the water be available and visible and then to have under the water seven-eighths of the crypto subject to being hidden from the know-your- customer and anti-money-laundering laws.

So how can the crypto compete with the dollar, aspire to become a currency, and compete with the best currency in the world? By tapping into the markets that don't want to be surveilled by the U.S. Government. What are those? Obviously, the sanctions evaders, the drug dealers, and the human traffickers, but that is not a big enough market for crypto. They want the tax evasion market.

The IRS Commissioner under Donald Trump testified that we are losing a trillion dollars in revenue. That means that those who are cheating on taxes, almost all at the high end of the spectrum, have to hide $3 trillion of income each and every year. That is $30 trillion of hidden income every decade. They can't do it with U.S. dollars, so crypto is designed to fill that need.

Now, if you think it will be successful in doing that and you want to bet against America and facilitate the undermining of American laws while perhaps making a profit, you can buy crypto, but it is an asset whose very nature creates an additional risk. That risk needs to be shown in the financial statements of the custodian. This resolution would prevent the SEC from causing that to be disclosed either on the balance sheet or in the footnotes.

If you doubt what the purpose is of crypto, then look at their latest invention: the mixer.

What is the mixer?

It is designed to mix up law enforcement. It is a facility available to every crypto owner to disguise their transactions and to hide from American law enforcement.

Not only that, of course, crypto aspires and claims that they will partially displace the dollar as the reserve currency. If it does that, that will be a tremendous decline in America's power in the world and the American economy.

So I see no reason for us to have rules that hide this risk from the shareholders of the custodian.

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Mr. SHERMAN. I see no reason for us to hide from those who are looking at bank balance sheets the unique risk that they take in order to facilitate a crypto ecosystem whose sole purpose and whose strategy is to defeat the American Government whether it tries to collect taxes or enforce our sanctions.

Mr. Speaker, if you have any doubt, look at what the proponents, the visionaries, behind crypto say. They say that they are innovative. They are trying to innovate a way to make sure that America cannot enforce its sanctions, cannot deal with drug dealers, cannot enforce its taxes, and, oh, by the way, particularly useful to Sam Bankman-Fried, cannot enforce its bankruptcy laws.

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