As Congress returned from summer recess, Sen. Bill Hagerty (R-Tenn.) called for crypto legislation on Thursday, arguing that the lack of regulatory clarity could push the industry beyond the US.
“It’s a horrible environment,” Hagerty told an audience at the libertarian-oriented Cato Institute. “For those companies trying to invest and expand, this forces them to look abroad for a more favorable regulatory environment.”
Until the collapse of the Sam Bankman-Fried-led crypto exchange FTX last November, the need for crypto regulation was largely a two-pronged one. Committees in both the House of Representatives and Senate have introduced bills that span different parts of the industry, from stablecoins to market structures.
Bankman-Fried’s frequent presence in D.C. — and his prodigious habit of donating — complicated the matter, with many lawmakers, especially in the Democratic party, calling for a delay in legislative talks. In the meantime, agencies including the Securities and Exchange Commission have stepped up enforcement action, much to the chagrin of the crypto industry.
Hagerty has emerged as a leading voice in the Senate on crypto. While he has not introduced any bills this year, he has written public letters to key digital asset regulation officials, including a March letter to Federal Reserve Chairman Jay Powell, FDIC Chairman Marty Gruenberg and Acting Currency Controller Michael Hsu, arguing that financial institutions’ pressure on crypto companies “appears disturbingly reminiscent of Operation Choke Point,” a popular chorus within the crypto industry.
Speaking at Thursday’s Cato event, Hagerty called for a step-by-step approach to crypto legislation, citing a stablecoin bill he introduced in 2021 that was two pages long. “I admire my colleagues, but it seems they value the legislation based on the number of pages it contains,” he said.
Hagerty denounced the SEC’s “regulation by enforcement” approach, instead arguing that congressional bodies such as its Senate Banking Committee should conduct more oversight hearings with SEC Chairman Gary Gensler. He expressed confusion over why Gensler had become a leading critic of the crypto industry after teaching a blockchain course at MIT, citing reports that Gensler had even approached crypto exchange Binance to serve as an advisor .
The SEC has reversed criticism from the Republican Party, with Enforcement Director Gurbir Grewal arguing in June that crypto presents a “perfect storm of investor risk.” The SEC filed thirteen charges against Binance in a lawsuit earlier that month.
Following other Republican lawmakers, Hagerty also criticized central bank digital currencies, or CBDCs, which he said could bring the US closer to China when it comes to controlling economic behavior. He pointed to President Joe Biden’s nominee for the Office of the Controller of the Currency, Saule Omarova, who called for a government-led digital currency in the wake of the March banking crisis.
“Looking for a crisis and then advocating for something — that would be very worrying,” Hagerty said.
