Today, the U.S. Senate Banking Subcommittee on Digital Assets held a hearing entitled “Exploring Bipartisan Legislative Framework for Digital Assets Market Structure,” in which panelists implored Congress to pass digital asset legislation soon. Notably, the word “Bitcoin” was not mentioned once during the hearing, but Bitcoin would still be subject to some of the crypto regulation discussed, making it important for Bitcoin enthusiasts to understand the proceedings.
The hearing took place in the wake of Senators Cynthia Lummis (R-WY), Thom Tillis (R-NC), Bill Hagerty (R-TN), and Senate Banking Chairman Tim Scott (R-SC) issuing principles for digital asset market structure. Senator Lummis presided and touched on these principles, while also noting that the Senate had just voted on the GENIUS Act, moving the U.S. closer to financial modernization.
Senator Lummis was joined by Senators Bill Hagerty, Bernie Moreno (R-OH), Angela Alsobrooks (D-MD), Dave McCormack (R-PA), and a panel of witnesses including:
- Sarah Hammer, Executive Director at the Wharton School, University of Pennsylvania
- Greg Xethalis, General Counsel at Multicoin Capital and Board Member of the Blockchain Association and the DeFi Education Fund
- Ryan VanGrack, Vice President of Legal at Coinbase
- The Honorable Rostin Behnam, Distinguished Fellow at Georgetown University’s Psaros Center and former Chairman of the CFTC
Combatting Illicit Activity in the Crypto Space
During the first round of questions, both Behnam and Hammer stressed the importance of clear anti-money laundering and anti-terrorist financing rules to combat illicit digital asset activity. When asked which country the U.S. should emulate regarding crypto anti-terrorist financing, Hammer cited Singapore. Behnam warned that the longer Congress waits to pass comprehensive market structure legislation, the more space unsavory actors have to operate: “Bad actors will gravitate toward areas that are unregulated,” he said.
Consumer Protection for Crypto Investors
Senator Hagerty, primary sponsor of the GENIUS Act, praised bipartisan efforts and encouraged continued momentum. The sole Democratic senator present, Alsobrooks, expressed optimism about crypto's potential but emphasized the need for guardrails. She asked Behnam about essential consumer protection elements. Behnam highlighted “bankruptcy protection” as the most critical: “Customer assets must be fully segregated so that in the event of a bankruptcy, there is no question assets will be returned to customers.”
The Price of Failing to Legislate on Crypto in the U.S.
Senator Moreno asked panelists how much time the U.S. has to pass crypto regulation and the cost of inaction. Xethalis responded that “we have to act now,” citing two major costs: first, other jurisdictions may enact more onerous rules (citing Europe’s strict internet commerce rules decades ago); second, economic cost – the U.S. already lags in 5G and semiconductor manufacturing, and he doesn’t want crypto to follow the same path.
A Call for Bipartisanship
Senator Lummis closed the hearing by urging bipartisan discussions, as she has done with Senator Gillibrand. She noted that some Democrats seem reluctant to engage in crypto legislation because President Trump’s family is involved in the industry, but added that crypto is bigger than any single family’s involvement and Democrats should acknowledge this.