Field Hearing Entitled: Building the Future of Finance: How the CLARITY Act Unlocks Innovation

[18:03] The Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence will come to order. [18:09] Without objection, the chair is authorized to declare a recess of the committee at any time. [18:14] Today's hearing is titled, Building the Future of Finance, How the Clarity Act Unlocks Innovation. [18:21] Without objection, all members will have five legislative days within which to submit additional material for the chair to include in the record. [18:28] I now recognize myself for four minutes for an opening statement. [18:31] In America's 250th year, on the site of the building of the first Congress, and one year to the day after the House of Representatives passed the Clarity Act, we gather amongst the pillars of history. [18:45] For 250 years, American markets have powered innovation and economic growth. [18:52] In each time technology and financial innovation leapt forward, Congress met the moment. [19:00] We did not stop the engines of growth. We gave them clear, consistent rules so they could run. [19:07] Right here in this building, the very first Congress debated Alexander Hamilton's revolutionary vision for a national financial system, [19:18] including a plan to turn state war debts into the first federal government bonds, backed by the full faith and credit of our new nation. [19:28] A hundred years later, as a patchwork of paper notes and counterfeit flooded the states, Congress stepped in again. [19:38] The National Bank Act swept away the chaos of wildcat banking and created the first American dollar bills we carry in our pockets to this day. [19:47] In the next century, when opaque and disorderly markets ruined millions, Congress passed the Securities and Exchange Act to restore transparency and increase the public trust. [20:01] Consistency and clarity conquered chaos. [20:06] Today, we're here on Wall Street again. [20:09] We gather at the threshold of the next generation of innovation. [20:14] As the Senate prepares to consider the Clarity Act, we can complete nearly a decade of work. [20:21] Since 2017, the House Committee on Financial Services, alongside our colleagues at the Committee on Agriculture, [20:28] have worked to craft a durable framework for digital assets that fosters innovation while protecting consumers and investors. [20:36] Our goal is clear. [20:38] Replace regulation by enforcement with clear rules of the road for digital assets. [20:44] For 250 years, America has led the world in financial innovation. [20:51] For 15 years, blockchain technology has redefined what's possible. [20:57] For 10 years, Congress has worked to write the rules of this new financial frontier. [21:03] And for one year, we have had a statutory framework for payment stable coins. [21:07] Now, it's our turn to meet the moment. [21:10] Today, we'll hear from experts who are building the next generation of financial innovation. [21:15] And we'll hear from them on why they believe the Clarity Act is essential. [21:20] I thank all of our witnesses for being here today. [21:22] And I thank my colleagues for making the trip up to New York for this important discussion. [21:29] I think it's our opportunity to unlock the next 250 years of innovation here in the United States of America. [21:35] Now, it's time to pass clarity. [21:37] I yield back, and I now recognize the chairman of the full committee, Chairman French Hill, for one minute for his opening statement. [21:44] Well, Chairman Stile, thank you for convening this hearing in historic Federal Hall. [21:48] Such an incredible place to be in our semi-quincentennial. [21:52] And as you say, echo the success that Congress has had in spurring innovation and economic growth here for 250 years. [22:00] Our leadership in finance and technology depends on clear, predictable rules. [22:04] That's been at the heart of financial oversight throughout our nation's history. [22:08] One year ago today, we passed the Clarity Act and also saw genius enacted into law. [22:14] If we want to have the ultimate success in our economy and see the transition of a traditional finance on an analog basis to a distributed ledger or blockchain basis, [22:25] the country has to have the rules to make the U.S. the center of that digital ecosystem in the world. [22:33] This is President Trump's goal. [22:34] This was the work behind genius and clarity last year. [22:38] So we stand ready to help our Senate colleagues complete the work and get it to the president's desk. [22:44] And I thank you for convening the hearing, and I yield back. [22:47] Chairman Yields back. [22:48] Today, we welcome the testimony of four distinguished witnesses. [22:52] We have Ms. Sarah Aberg, Chief Legal Officer at Nova Labs. [22:57] We have Ms. Randy Abernathy, Head of Clearing and Group Risk at Bullish. [23:03] Ryan Lovar, Chief Legal Officer at Wisdom Tree. [23:08] And Jason Somen Sato, the Director of Policy at Coin Center. [23:15] We thank each of you for taking the time to be here. [23:18] Each of you will be recognized for five minutes to give an oral presentation. [23:20] Without objection, your written statements will be made part of the record. [23:24] Ms. Abernathy, you're recognized for five minutes. [23:28] Thank you, Chairman Steele, Chairman Hill, and members of the subcommittee. [23:33] Thanks for the opportunity to testify. [23:36] My name is Sarah Abernathy. [23:37] I am the Chief Legal Officer of Nova Labs, the company that created and supports the Helium Network, [23:44] the world's largest decentralized wireless network. [23:47] Helium is a physical telecommunications infrastructure, wireless access points deployed in communities [23:55] across the country that provide real coverage to real people every day. [24:00] Blockchain is the technology that makes the network run, and cryptocurrency is the incentive [24:06] that built it. [24:08] Today, that network is more than 140,000 hotspots. [24:12] It provides carrier-grade Wi-Fi offload to major carriers, including T-Mobile and AT&T, [24:19] and serves millions of American users every day. [24:23] Nova Labs provides telecommunications services in all 50 states and holds an FCC Section 214 authorization. [24:31] The Helium Network has been operational since 2021, and it was not built in the usual way. [24:37] Instead of spending billions on towers, the Helium Network was built by tens of thousands of individuals [24:44] and businesses who deployed hotspots because a token reward made it worthwhile. [24:52] Compensation for verified wireless service measured and paid automatically by the protocol. [24:59] That model has proven itself under pressure. [25:02] When Hurricane Helene knocked out cellular service across western North Carolina, Helium and the [25:09] veteran-led nonprofit Team Rubicon deployed portable beacons on satellite backhaul and reconnected [25:15] tens of thousands of devices within days. [25:19] In Redondo Beach, California, a waterfront district had near zero cell coverage for years because [25:26] high-rise buildings blocked the signal before it reached the pier. [25:29] The city closed that gap simply by enabling Helium offload on Wi-Fi it already had. [25:37] No new hardware, no capital expense, and now it connects more than 2,000 people a day. [25:44] The Helium Network has also absorbed cellular surges during major events like Mardi Gras and Super Bowl weekend. [25:51] It is being used to improve indoor 911 location accuracy, where the FCC's own data shows that today, fewer than 1% of wireless 911 calls deliver a usable, dispatchable location, [26:07] and to bring affordable broadband into public housing. [26:11] These are public benefits, built by communities investing in themselves. [26:16] I want to be direct about why I am here. [26:20] In January of last year, on the last business day before the new administration took office, [26:27] the SEC sued Nova Labs. [26:30] Its theory was that selling hotspots that rewarded deployers and tokens for delivering verified wireless coverage [26:38] was an unregistered securities offering. [26:41] It went further, alleging that our mobile phone plan, a phone plan, was also an unregistered offering [26:50] because subscribers could opt in to earn rewards for helping map coverage. [26:55] Each of these digital asset claims was later dismissed with prejudice. [26:59] We were glad to be vindicated, but we spent years and significant resources defending claims that were ultimately abandoned. [27:09] Those were years not spent deploying hotspots, not building emergency communications capabilities, [27:15] and not connecting underserved communities. [27:18] That is the real cost of regulatory ambiguity. [27:23] It does not protect investors. [27:25] It deters the companies that want to follow the rules, [27:28] and it doesn't stop bad actors from breaking them. [27:31] The Clarity Act fixes this, and that is why Nova Labs supports its passage. [27:38] Clarity is not a call for deregulation. [27:41] It is a call for the right regulation, from the right regulator under rules that market participants can understand and follow. [27:50] It distinguishes between digital assets that function as securities and digital commodities that power operational networks, [27:58] and it assigns oversight accordingly between the SEC and CFTC. [28:02] For a network like Helium, that clarity is not abstract. [28:06] It determines whether the incentive that built the network up to 140,000 hotspots can continue to drive deployment, [28:14] and whether the public benefits that flow from the network, emergency communications, broadband access, [28:21] and resilience during disasters and network congestion can reach more communities. [28:25] The community has already done the hard work, the House passed clarity a year ago, [28:30] and I respectfully urge the committee to see it through to enactment. [28:34] Thank you. [28:35] Thank you very much. [28:36] Ms. Abernethy, you're now recognized for five minutes. [28:41] Thank you. [28:42] Chairman Hill, Chairman Stile, Ranking Member, and members of the subcommittee, [28:46] thank you for the invitation to testify and for bringing this hearing to New York, the financial capital of the world. [28:51] My name is Randy Abernethy. [28:53] I'm Head of Clearing and Group Risk at Bullish, a publicly traded digital asset firm listed on the New York Stock Exchange just a short walk from here. [29:01] I've spent my career in clearing and risk management for regulated market infrastructure at LCH, at Barclays, and at Nodal Exchange before joining Bullish. [29:10] Let me tell you briefly who we are. [29:13] Bullish is an institutionally focused digital asset platform. [29:18] Our chief executive, Tom Farley, ran the New York Stock Exchange, and we built Bullish deliberately to look and operate like the regulated exchanges and clearinghouses that made American markets the envy of the world. [29:30] Because the United States had no federal framework, we built under regulators abroad in Germany, Hong Kong, and Gibraltar. [29:38] But when American regulators opened a door, we walked through it. [29:42] Last September, New York's Department of Financial Services licensed us to serve U.S. customers, and we are now working with the CFTC and NFA on the registrations needed to operate a federally regulated exchange, clearinghouse, and intermediary. [29:56] We are not asking to operate in the shadows. We are asking for a rule book, and we intend to build under it. [30:04] That is why the Clarity Act matters. One year ago today, the House passed it, 294 to 134, with strong bipartisan support. [30:12] By drawing a clear line between the SEC and the CFTC, it gives responsible firms what they have asked for over a decade of uncertainty while capital and innovation moved offshore. [30:22] And I want to be direct. Regulatory clarity is not a favor to industry. It is how Congress brings this activity onshore under American regulators with American investor protections. [30:36] From where I sit, running clearing and risk, that's the heart of it. The failures that hurt investors, most notably FTX, happened offshore beyond the reach of any American regulator. [30:48] Under this framework, registered exchanges would live under the disciplines that have protected investors for generations, segregated customer assets, capital requirements, surveillance, and federal examination. [31:02] Bullish follows these principles voluntarily today. We are eager for oversight that makes them mandatory for everyone. [31:09] As the Senate takes up its bill, I want to focus on one detail that matters enormously in practice. The treatment of exchange affiliates. While early drafts would have flatly banned affiliates of an exchange from trading on it, [31:22] we have appreciated that Senate leaders have shown a willingness to align itself with the House version of the bill, which instead permitted affiliate activity subject to guardrails. [31:31] That's the right answer, and for three reasons. First, affiliate trading is not some novel feature of crypto. It's common and often necessary in the very markets this legislation uses as its model. [31:45] Futures exchanges clear through affiliated clearinghouses. Clearinghouses trade for their own account to manage defaults and correct errors. [31:52] Exchanges rely on affiliates to provide liquidity in new markets until independent market makers arrive. And the SEC expressly permits a broker, a broker dealer running an alternative trading system to trade on its own platform. [32:06] If a ban were necessary to protect investors, our securities and futures markets wouldn't be built the way they are. Second, these structures are safe because they come with guardrails that work. [32:18] Strict segregation of customer assets, conflict of interest management, disclosure and anti manipulation enforcement. The Clarity Act applies that same proven architecture to digital assets. [32:31] Third, FTX is invoked in this debate and invoked incorrectly. FTX did not fail because affiliates traded on it. FTX was an unregulated offshore exchange whose affiliate misappropriated customer assets, deploying them largely on other unaffiliated venues. [32:51] A trading ban would not have stopped that. Every element of that conduct was already illegal for registered firms. In fact, the one piece of FTX that survived was Ledger X, its CFTC regulated exchange and clearinghouse, precisely because it was under federal supervision. [33:07] Not a dollar of customer assets were lost there. The lesson of FTX is not to ban practices regulated markets have used safely for decades. The lesson is to bring these markets inside the federal perimeter, which is exactly what this bill does. [33:22] Bullish is the kind of company this legislation is designed to reach, and we want to build the future of finance here in America under American rules. I encourage Congress to finish the job and get the details right. Thank you. And I look forward to your questions. [33:38] Thank you, Ms. Abernethy. Mr. Lovar, you're now recognized for five minutes. [33:41] Thank you, Chairman Hill, Chairman Stile and distinguished members of the subcommittee. Thank you for the opportunity to testify today. My name is Ryan Lovar. [33:50] I serve as the chief legal officer and head of business and legal affairs, digital assets for Wisdom Tree, $160 billion asset manager listed on the New York Stock Exchange and headquartered here in New York City. [34:03] I've spent more than 25 years working at the intersection of asset management, ETFs, digital assets and tokenization focused on legal compliance, risk management and policy. [34:16] The Clarity Act matters because it can provide the market structure certainty around asset classification and SEC and CFTC jurisdiction with broader modernist modernization provisions needed for responsible tokenization and blockchain based infrastructure to scale in the United States. [34:37] Section 505 is particularly important because it preserves the principle that a tokenized security should remain the security it represents. [34:46] At the same time, it fosters the proposition that regulators should be able to modernize how operational requirements apply to blockchain based infrastructure. [34:56] That is the right balance. Same regulatory substance, modernized operational mechanics. Tokenization is often described as a new asset class, but it is better understood as a new set of rails for owning, transferring and settling financial products. [35:14] What changes is the infrastructure through which the asset can be held and moved. [35:20] An analogy to ETFs is helpful. [35:22] ETFs did not invent stocks or bonds. [35:25] They gave investors greater transparency and access to those asset classes at lower cost. [35:31] Tokenization can do something similar and potentially more compelling by modernizing the speed and flexibility of financial infrastructure while preserving investor protections. [35:42] That is especially important in markets that increasingly operate around the clock. [35:48] For most Americans, the focus is not really about blockchain, but realizing the benefits that may come from it. [35:55] Wisdom tree is proof that this can be done responsibly earlier this year. [36:00] Wisdom tree became the first and to date only firm to receive SEC exemptive relief, allowing SEC registered broker dealers to trade an SEC registered money market fund. [36:11] The wisdom tree tokenized money market fund 24 seven 365 enabling instant settlement for tokenized fund shares for the first time under US law. [36:24] We also offer the largest lineup of SEC registered funds that are tokenized in the market 15 funds spanning equity, fixed income, alternative and asset allocation through our wisdom tree prime and connect platforms. [36:38] While also making available tokenized gold Bitcoin ether and a dollar stable coin available through our wisdom tree prime platform. [36:47] Importantly, wisdom tree has chosen the more regulated path rather than the easier one. [36:53] Our tokenized fund business includes a variety of SEC registered entities SEC registered investment advisor transfer agent investment company and broker dealer. [37:04] And the tokenized gold Bitcoin ether and stable coin side of the business is operated under a New York limited purpose trust company under seen by the New York State Department of Financial Services and a money services money transmission license business. [37:19] This structure reflects our belief that responsible innovation requires identifiable regulated entities accountable to investors and regulators. [37:28] The genius act has already shown that clear congressional rules can bring serious institutions off the sidelines. [37:36] Clarity can do the same at far greater scale for the broader digital asset market. [37:42] And that makes Matt that matters for us leadership. [37:46] The question is no longer whether finance will become more digital. [37:49] It will. [37:50] The question is whether the United States will continue to lead in developing the next generation of financial infrastructure while preserving the strengths that have made its capital benchmarks. [38:01] Global the capital markets, excuse me, a global benchmark for innovation and investor protection. [38:07] Wisdom trees experience shows that responsible tokenization is possible today. [38:13] The clarity act can help make it repeatable, scalable and available to more investors. [38:20] Thank you. [38:21] And I look forward to your questions. [38:22] Thank you, Mr. Lovar. [38:23] Mr. Soman Sato, you're recognized for five minutes. [38:26] And chairman Hill, chairman style members of the subcommittee. [38:29] I was first asked to comment on a draft crypto market structure bill back in 2018. [38:34] At the time, one Bitcoin had fallen to roughly $3,000. [38:38] The term DeFi had only recently been coined to describe a small and experimental corner of the ecosystem. [38:44] And beyond a relatively small group of developers, users and entrepreneurs, many people viewed crypto as a technology whose moment might have already passed. [38:53] But even then, the core policy challenge was clear. [38:57] Congress needed to find a way to empower regulators to protect customers and ensure market integrity while preserving the open peer to peer architecture that makes blockchain networks unique. [39:09] Nearly a decade later, much has changed. [39:11] Many are worried because Bitcoin is only up 2,000% since the lows of 2018. [39:17] DeFi has grown from an obscure idea into a term that is used in legislation, regulation and enforcement actions. [39:24] And the industry built around crypto networks now includes not only startups, but some of the largest companies in technology and traditional finance. [39:32] For me personally, I've spent the past eight years engaging in the development of market structure legislation from several different perspectives. [39:40] At the CFTC, including my roles running Lab CFTC and working for Chairman Benham, I provided detailed technical analysis to Congress on what authority the CFTC would need to oversee these markets. [39:51] At Chainalysis, I engage policymakers on illicit finance issues involving crypto networks. [39:56] And now at Coin Center, the place that I got my first opportunity in this ecosystem back in 2014, I focus on the public interest and civil liberties issues raised by open blockchain networks. [40:07] From all of those perspectives, I believe clarity answers the call. [40:11] The work is largely done. The provisions have been negotiated. The stakeholders have been engaged. [40:18] And most importantly, the House passed a bipartisan bill one year ago that would create a robust framework for regulating crypto markets while protecting the underlying networks and those who develop them from inappropriate regulation. [40:30] That latter point is essential. Blockchain networks are not merely a new way to trade assets. [40:36] At their best, they are open computing networks that allow individuals to hold and transfer value without depending on a bank exchange payment processor or other centralized intermediary. [40:48] They give individuals the freedom to transact in a peer to peer fashion without being censored or unnecessarily surveilled. [40:56] That is why developer protections are key to market structure legislation. [41:00] If Congress creates clear rules for centralized cryptocurrency businesses, believes developers exposed to open ended liability for building non custodial software, then the legislation will have protected part of the market while undermining the technology that makes that market possible. [41:17] The Clarity Act recognizes this in several ways. [41:20] First, it includes protections designed to ensure that software developers and infrastructure providers do not are not required to register with the SEC or CFTC [41:29] simply because they write code, publish software, validate transactions or otherwise support the functioning of a blockchain network without taking control of customer assets or acting in a trusted capacity as a traditional intermediary. [41:44] Second, Clarity protects developers through the Blockchain Regulatory Certainty Act, a long term priority for Coin Center. [41:52] The BRCA addresses the most serious risk facing non-custodial software developers of being treated as an unlicensed money transmitter and clarifies that developers and service providers that never take control of customer funds shall not face such a threat in the future. [42:08] These provisions effectively protect developers without weakening the regulatory protections core to Clarity. [42:15] Securities laws still apply to securities intermediaries. [42:19] Clarity even creates new categories for businesses operating in the digital commodity markets and imposes stringent regulations on those newly defined intermediaries. [42:28] And where a business is properly regulated as a financial intermediary, the Bank Secrecy Act still applies to prevent money laundering and terrorist financing. [42:38] Clarity keeps regulation focused on the people who actually perform intermediary functions. [42:43] And for these reasons, Coin Center applauds the House for its work in passing clarity and encourages the Senate to pass equivalent legislation as part of its market structure efforts. [42:53] This has been a long process, but the pieces are now in place. [42:56] Congress can meaningfully improve market integrity and customer protection while also preserving the open networks, non-custodial tools, and peer-to-peer architecture that makes this technology worth protecting. [43:07] Thank you, and I look forward to your questions. [43:09] Thank you very much, Mr. Somonsato. [43:11] We'll now turn to member questions. [43:13] I'll recognize myself for five minutes. [43:15] History teaches us when transformative technologies come online, they often face skepticism before becoming foundational to our economy. [43:24] A century ago, that was electricity. [43:27] 50 years ago, personal computer. [43:29] 30 years ago, commercial internet. [43:33] Each of these technologies matured, though, and policymakers developed legal and regulatory frameworks that gave businesses, investors, and consumers confidence to innovate, invest, and drive widespread adoption. [43:45] Blockchain technology has now existed for more than 15 years. [43:49] It's no longer a theoretical concept. [43:51] It's a practical technology powering real businesses, real networks, and real economic activity. [43:58] Yet, despite its maturity, entrepreneurs and developers are still facing significant uncertainty about how the digital assets are classified and regulated. [44:07] Which brings me to you, Ms. Aberg. [44:09] Is it fair to say that without blockchain technology, helium would not exist? [44:15] In other words, are blockchain and digital assets fundamental to helium's business model rather than simply being an added feature? [44:23] Absolutely. [44:25] Absolutely. [44:26] The network would not exist without blockchain. [44:28] The network operates across 140,000 unique access points deployed by thousands of individuals and small businesses. [44:37] That's a distributed, decentralized network infrastructure. [44:41] That infrastructure needs to be coordinated between all these discrete points. [44:49] Blockchain is the technology that allows us to do that. [44:52] So, knowing that, what's the real-world consequences of the lack of clarity in this space from a regulatory standpoint for your business trying to deploy internet and access to consumers across the country? [45:03] So, the status quo is that there's not a distinction between tokens that operate a functional network like helium and tokens that are sold as part of an investment contract and for raising capital. [45:15] We suffer the consequences of that directly on January 17, 2025. [45:20] Thankfully, those claims were dismissed. [45:22] But right now, without codification of that into law, we could face those exact same claims again under a new administration, a new chairman of the SEC. [45:32] Thank you very much. [45:33] I want to jump to you, Mr. Somatsato, and talk DeFi a little bit. [45:37] Building on a similar theme here, financial markets have grown along technological innovation. [45:43] 200 years ago, finance relied on handwritten ledgers, horse-drawn or horse-delivered communications. [45:49] 100 years ago, telegraph and then telephone connected markets. [45:53] 50 years ago, we got closer to the internet. [45:56] Today, blockchain technology is giving us an ability to decentralize networks that can coordinate financial activity without a centralized or without a central intermediary. [46:09] Blockchain's enabled that growth and decentralization. [46:12] So, the question comes to you. [46:13] Why is it important that a regulatory framework recognize the unique characteristics of decentralized networks rather than treating them as if they were traditional centralized networks? [46:25] Yeah, so I think the fundamental innovation of what we're talking about here is this ability to transact in a peer-to-peer fashion, as you mentioned. [46:33] And part of that recognition from the regulatory perspective is identifying what are the technology tools here that are being used versus those individuals who are participating in activities that would traditionally trigger registration and regulation. [46:49] And I think, you know, the technology is fairly novel and new in the way that it interacts with financial infrastructure, but it is important to understand that, like, the key innovation here is equivalent to having a tool in place. [47:04] Just like when, you know, the markets went from open floors to electronic trading, right? [47:09] It wasn't the computers and the network wiring that we started regulating. [47:12] It was the institutions that used those for regulated purposes. [47:16] And the same is true in this transition. [47:18] Thank you. [47:19] Thank you very much. [47:20] I want to jump to you, Mr. Lovar, if I can. [47:23] Digital assets represents the next chapter. [47:25] You talked a little bit in your testimony about how you use ETF and EFTPs to navigate around some of the roadblocks that are standing in the way. [47:35] What are those roadblocks? [47:37] How do we unlock them? [47:38] And what happens when we do? [47:40] Yeah, I look at it from a couple of different angles. [47:43] First off, you know, digital assets under the umbrella of sort of crypto assets and then tokenization. [47:48] So let me start off with crypto assets. [47:50] And so we develop products, exchange traded products that invest in those assets. [47:55] So that was our first foray nearly eight years ago. [47:58] One of the roadblocks at the time and then fast forwarding was that, you know, there wasn't clear delineation of how those assets were categorized. [48:07] And ultimately, we had an SEC at the time that was really looking at these in terms of a, you know, not a way under the traditional securities laws and types of disclosure, [48:18] but more market based regulation. [48:21] And so our goal was to launch products investing in those assets at the same time through our U.S. business and through our Europe business. [48:28] But ultimately what happened is we were able to launch due to the regulatory environment in the U.S. going back a few years. [48:35] We were able to launch in Europe many products investing in many digital assets that have now garnered a couple billion in assets where we were way behind in the U.S. [48:45] This is our this is our big opportunity is to put forward a clarity and a regulatory framework so that folks are investing and developing and deploying here in the United States, not in Europe, not in locations around the globe. [48:57] Cognizant of the time I yield back. I'll now recognize the chairman of the full committee, Mr. French Hill of Arkansas, for five minutes. [49:03] Thank you, Mr. Chairman in to commemorate the fact that we're in this historic location in our semi quincentennial. [49:09] I'd like to ask that a talk I gave about Hamilton's restructuring of the debts negotiated in this building be inserted in the record without objection. [49:20] And I encourage folks to read it. Yeah. Well, that won't happen, but we'll insert it in the record. [49:25] Well, I think we've heard a clarion call today for clarity, and that's really helpful because we've worked in the House. [49:37] And many of you have been involved in that really since 2018 under Maxine, even Maxine Waters chairmanship. [49:44] We dealt with Libra. We dealt with David Marcus going from PayPal to try to explore that. [49:50] We dealt with FTX's collapse and Maxine gave important leadership there. [49:56] And then certainly under Kevin McCarthy as speaker and Patrick McHenry as chairman of the committee, [50:00] you've seen us systematically try to educate members on both sides of the aisle of the importance of making this transition [50:07] and having fit for purpose rules that do not confuse a functional blockchain token for a security contract, investment contract. [50:19] And that's been at the heart of Fit 21, which we passed two Congresses ago. [50:24] And then, of course, the Clarity Act last summer that we commemorate today with 78 Democratic votes. [50:30] So this has been a bipartisan priority. And your clarion call today really, I think, helps us focus why it's important. [50:38] And I want to start out, I'm going to start out with Mr. Luvar. [50:44] And there's a lot of conversation, particularly on, I'd say, blockchain ecosystem chatter on X and elsewhere about, [50:55] well, if the Senate can't pass clarity, don't worry, we can just do all this through exemptive relief. [51:02] You're a beneficiary of exemptive relief. [51:05] Could you tell us how much more important it is to have something put in law for the regulatory and legal certainty of that? [51:12] Yeah. I mean, you know, we're very grateful, you know, the positioning that the SEC staff has taken under the current leadership [51:19] in being innovative and forward-thinking and granting exemptive relief. [51:23] But the exact opposite of the last SEC. [51:25] Yep. [51:27] Would you agree with that? Is this different from Gary Gensler's SEC? [51:30] It is different. Certainly we're seeing the winds of innovation behind our back, you know, very much a different atmosphere, if you will, very pro-innovation. [51:39] But, you know, we really need durable rules that are embedded within what Congress has approved. [51:46] That's what's important, you know. So understanding that those asset classifications, the distinction between the SEC and CFTC jurisdiction, [51:55] the ability to modernize is not just up to the agency, which should embolden and empower the agency and provide the agency with the resources it needs, [52:04] but really needs to be embedded in law so it can carry administration to administration. [52:09] I agree. I agree completely that we've, as the chairman outlined in his opening statement, [52:14] we've seen the migration of our legal and regulatory structure to meet the need for advancing American economic performance, [52:22] no matter what generation. And we're at another one of those turning points, as we were in the 90s, [52:27] with the decisions taken by Congress to not regulate the Internet, to let it be an open-source network, [52:33] but to regulate activity on the Internet. And once again, we're at that fit-for-purpose moment. [52:39] Ms. Iberg, such a great, compelling testimony about the success of the Helium Network. [52:46] And I think it's very educational for members and the public to see distributed ledger technology used in a practical way [52:53] that's not tangled up in Wall Street jargon. And so you're not the only company with a big success story there. [53:00] But I think it is a way to illustrate what it is that we're talking about in a way that a lot of people can understand. [53:05] But you are a victim of regulatory and legal uncertainty. And again, you echo, I'm sure, this comment, [53:14] that the statute is the only way to achieve that for innovators in the country and to make America a safe and sound leader in this. [53:22] Do you agree with that? [53:23] Ms. Absolutely. Absent clear rules, which we intend and want to comply with, compliance becomes impossible. [53:32] It is, at best, guesswork. The regulatory environment that changes with an election cycle is not sustainable, [53:40] it's not durable, and it does not support long-term infrastructure projects like ours. [53:46] So the only way to do that is through legislation, and that precludes the next SEC chair from simply, you know, [53:54] changing his mind and reversing the guidance that we're under now. [53:57] Right. Thank you for that. And I yield back, Mr. Chairman. [54:01] The gentleman yields back. The gentleman from South Carolina, Mr. Timmons, is recognized for five minutes. [54:05] Thank you, Mr. Chairman. It is wonderful to be here as we mark the one-year anniversary of the Genius Act being signed into law. [54:11] We are also getting closer to bringing the Clarity Act across the finish line with the goal of ensuring America leads the world in digital asset innovation and emerging technology. [54:19] As we discuss what a fully implemented Clarity Act would mean for the future of digital assets in the United States, I want to begin with you, Mr. Samansato. [54:26] One of the Act's central goals is to establish a clear regulatory framework that promotes innovation while strengthening market integrity and consumer confidence. [54:34] How will the Clarity Act encourage responsible innovation while also safeguarding its illicit finance, market manipulation, and operational risks? [54:41] I mean, I think the key is in defining those entities that will fall within the regulatory perimeter and then empowering regulators to actually oversee them. [54:51] I mean, truthfully, the discussions around the regulation of this industry for the past decade have been, you know, one of excitement and newsworthiness. [54:58] And as a former regulator, it should be a fairly boring job, right? [55:01] You should know the entities that are under your jurisdiction and be able to implement that. [55:05] At the same time, we're talking about a novel technology that has the potential to be very innovative and come, you know, be used in a bunch of different ways, as you've heard from some of the witnesses today. [55:14] And what that requires is an understanding of where that line is, right? [55:17] So many have been acting in an environment in which, you know, there's kind of unclear, unwritten rules out there. [55:23] There's evolving interpretations between various regulators. [55:26] And that's just not an environment in which, if you're a software developer or somebody who wants to see some of the future innovations be built, that you can really operate easily in. [55:33] And so the fact that Clarity kind of draws those very clear lines, gives guidance both to the regulators and to the individuals participating in these networks is really powerful. [55:42] Thank you for that. [55:43] Regulation by enforcement during the previous administration drove much of America's digital asset innovation overseas. [55:48] How will the Clarity Act help reverse that trend? [55:51] And what impact do you expect it to have on bringing companies investment, talent, and technological innovation back to the United States? [55:57] I think one of the, like, unique aspects, I'm not an expert on kind of, like, which jurisdiction is ahead and which one is behind. [56:04] But, like, at least from my perspective, seeing a lot of the individuals who are in the U.S. are probably some of the people at the cutting edge of thinking about this innovation. [56:12] And then there's a lot of, like, structuring to get out of the country to avoid potential regulatory hiccups over the last few years. [56:18] And, like, that is an environment that is just not conducive to seeing the development that you would want to see in a country, right? [56:25] Again, going back to that point of if you have the clear established rules plus the clarity of who is outside of that, right, and we think it's very important from Coin Center's perspective on, like, the BRCA and some of those developer protections to create the environment in which, you know, individual ingenuity, like, absorbing some of the American values of, like, liberty and freedom of speech that are, like, inherent in this technology, allowing people to kind of build off of those is really important. [56:53] I'm going to expand on what you just said. [56:55] It's just very fitting that we're here at Federal Hall 250 years ago. [56:59] The American experiment literally created the most freedom in the history of human civilization. [57:04] And I actually think that emerging technologies, digital assets, blockchain technology is going to help freedom flourish in a way that few other things have in human history because of the decentralized nature of it. [57:18] So we had a hearing on my subcommittee on the Oversight Committee, Military and Foreign Affairs, about the challenge that emerging technology will pose to authoritarianism. [57:27] And if you think about the tools of authoritarianism, of autocracy, is information control and capital control. [57:36] If you can control what your citizenry believes to be true and if you can control their resources, you can control them. [57:43] And this is going to have a huge impact on authoritarian government's ability to control their population's wealth. [57:51] Do you agree with that? [57:52] Yes. [57:54] And, I mean, I think, honestly, blockchain technology is even just one aspect of that, right? [57:58] We're in a time now where technology is changing so quickly and how governments choose to interact with that and with the people is an extreme new risk, right? [58:08] And it's really important to kind of ensure that the values that protect the individuals from participating in these and developing these and, you know, [58:16] allowing the development of that digital space to look like the development of our, like, physical space in this country 200 years ago is extremely important. [58:23] The Clarity Act is incredibly important in maintaining the U.S. economy as the center of the global economy. [58:31] Do you agree with that? [58:32] Yeah, I mean, to the extent that this is going to be a technology that is infused into the businesses of all these other witnesses here, [58:40] like, it is imperative that that be within the structures just like our securities markets are, just like our derivatives markets are, right? [58:47] I think part of the reason of their success over the years has been the regulatory environment in which they get to operate. [58:52] Thank you for that. [58:53] Thank you for that. [58:54] We're on the one-yard line. [58:55] We just got to score the touchdown. [58:56] With that, I yield back. [58:57] Thank you. [58:58] The gentleman yields back. [58:59] The gentleman from Indiana, Mr. Stutzman, is recognized for five minutes. [59:03] Thank you, Mr. Chairman. [59:06] And it's great to be here. [59:07] Thank you to the committee for hosting us here at Federal Hall. [59:11] It's neat to be sitting here discussing future technology in these hallowed halls here. [59:18] Last night we were at Francis Tavern, and I was thinking, I was like, you know, that used to be one of those central points of information. [59:26] But, you know, it was fun just to be there and thinking about the history of our great country and the founding of our country and what we've done in the last 250 years. [59:36] But our conversation today really is going to affect what the next 250 years is going to be like in our country. [59:43] As we discussed earlier, one year ago today this House passed the Clarity Act with one of the strongest bipartisan votes in Congress. [59:51] It cleared Senate banking two months ago, yet it is still sitting on the Senate calendar. [59:56] Every witness here today has a story about what delay costs faster payments, markets open around the clock, and American innovation that flees overseas. [1:00:05] In business, we have a saying that I can handle a yes or a no, but I can't handle suspense. [1:00:10] And that's what it feels like we're dealing with today. [1:00:13] I want those costs on the record today and to send one clear message that it's time to pass the Clarity Act. [1:00:20] Ms. Iberg, I'd like to ask you, because I represent Northeast Indiana and a lot of rural communities, [1:00:26] we have a lot of underserved areas that are underserved by major internet providers. [1:00:33] And we've spent billions of taxpayer dollars subsidizing broadband in this country, unfortunately with not so much to show for it. [1:00:40] Can you tell us how rural America, especially Hoosiers watching at home, how your network can benefit them? [1:00:47] Absolutely. [1:00:48] So one of the problems with the effort, the initiative to roll out broad Vantable communities under the BEAD program is that the fiber and cable came out to those communities, [1:01:00] but the last mile was not met. [1:01:02] And so you have pretty much useless unlit cable and fiber in the ground. [1:01:07] What Helium can do is connect to that backhaul and then create a shareable signal for that community in central spaces where they're used by the people in that community. [1:01:20] The advantage of doing that is that, one, you're using not bespoke equipment, but typically any Wi-Fi hardware can be converted to connect to the Helium network. [1:01:32] You don't have to buy special equipment. [1:01:34] The deployer of that hardware then is able to earn token rewards that are programmatically and automatically distributed via the Helium protocol, which is a blockchain protocol, to that deployer. [1:01:46] So that deployer is incentivized to create a signal that then benefits the community that deployer is in. [1:01:52] So it empowers the people in those communities to serve themselves and help their neighbors. [1:01:58] You mentioned the lawsuit by the Biden administration in your testimony. [1:02:02] If the Clarity Act had been law, do you think that frivolous enforcement action would have happened at all? [1:02:07] Absolutely not. [1:02:08] As written, the Clarity Act clearly sends transactions like those that are that pay HNT to Helium deployers under the programmatic and automatic distributions within the gratuitous distribution carve out. [1:02:22] That recognition explicitly identifies tokens that power functional networks like ours versus tokens that are used to raise capital. [1:02:32] They're two completely different things, two completely different risk profiles, and we should not have been categories in the other. [1:02:38] What a huge setback. [1:02:40] Ms. Abernathy, I'd like to ask you, your exchange is already regulated in Germany, Hong Kong and Gibraltar, but has only just gotten a foothold here in the U.S. [1:02:49] And I think that sequence speaks volumes. [1:02:52] Why did a company like Bullish have to go abroad first before setting up shop here in the United States where you think that this would be a no brainer for us? [1:03:01] Your microphone, please. [1:03:07] Thank you. [1:03:08] That's better. [1:03:11] So when when we launched the exchange, that was back in 2021. [1:03:16] At that point, there was very limited regulatory jurisdictions that actually had proper investor protections as part of any regulatory framework. [1:03:27] And to us that was and always has been still is very important. [1:03:31] And that that was why we needed to find that that regulatory structure. [1:03:36] So again, in 2021, when we launched the exchange, we went to Gibraltar because it was actually one of the few that had a regulatory framework with proper investor protections. [1:03:48] Wow. Fascinating. [1:03:49] My time is almost set to expire. [1:03:51] So I'll just yield back, Mr. Chairman. [1:03:52] But thank you both for your answers. [1:03:54] Chairman yields back the gentleman from Florida. [1:03:56] Mr. Herodopoulos is recognized for five minutes. [1:03:58] Thank you, Mr. Chairman. [1:04:01] And as a history teacher, I love being here. [1:04:03] This is fantastic. [1:04:04] And I could not be more appreciative of the fact that the opportunities that will afford so many Americans with this new legislation will will clearly be enhanced. [1:04:12] And and one of the fundamentals I've always worked from is the idea that the key with government is offering certainty and stability. [1:04:19] And Saber, I'm really saddened to hear your story today and the unfortunate nature of what has happened. [1:04:26] And I'm so glad to see we're finally moving forward to some clarity so that you can operate here in America and grow these opportunities. [1:04:33] And this this financial framework we're talking about is is really what makes America the unique place. [1:04:39] Everybody wants to do business here. [1:04:41] Unfortunately, the previous administration did not provide that certainty and stability. [1:04:45] And that's the dollars are going elsewhere. [1:04:49] Jobs are going elsewhere. [1:04:50] And it's so important that we do it this right way. [1:04:52] And again, I would applaud the chairman, Mr. Stile from Wisconsin, where walking us through the historic nature when America acts with with that certainty and stability, starting with Hamilton and others providing the haven where people can invest with confidence, knowing that the rules will be there in part. [1:05:11] And that means our kids and grandkids will actually have the jobs of the future that are in places around the world we never thought they would be. [1:05:17] Mr. Lovar, if I could ask you, traditional crypto and traditional companies will now compete under these equal rules or same rules. [1:05:27] How does this bill in your mind create that level playing field we've all been looking for? [1:05:31] Yeah, so I think, you know, look, we're, you know, proponents and we have been, you know, operating under a regulated infrastructure. [1:05:38] I think, you know, bringing that, you know, recognition that requires, you know, governance, risk management, you know, an understanding of clear rules, whether the asset you're operating under or the regulatory jurisdiction, you're operating under SEC or CFTC. [1:05:54] Whether you're an established financial services firm like Wisdom Tree or a FinTech, just having those knowable rules will allow you to continue to build your business and more particularly build it here in the U.S. under those knowable rules. [1:06:11] And Mr. Somancento, if I could, on the, on the DeFi issue, in the, in the bill, they, it's, it specifically excludes that certain rules with DeFi. [1:06:20] And what would happen if we did not have that same clarity? [1:06:23] What would happen to you, DeFi, if we did not provide the, the structure that's in this bill? [1:06:28] Yeah, I mean, I think it would continue the environment that we've been in for a while now, which is, uh, listen, the developers are, are creating pretty novel technologies, right, [1:06:38] that do test the questions around what should and shouldn't fall into, to a regulatory environment. [1:06:43] And, uh, it's really incumbent on Congress to kind of come forward and say, this is where we draw the line. [1:06:49] And from us, for a perspective, like there are important protections to be had, right? [1:06:52] First Amendment protections to be able to write code, uh, protections to participate in these networks [1:06:57] and to put your peer management without having, you know, surveillance from the government that might be unnecessary. [1:07:01] And so, uh, clarity is really important at just, again, making that line clear so that, that development activity can continue, right? [1:07:10] And that people can understand when the development activity and the business activity flows into something that's, uh, regulated, [1:07:15] that they know where that falls as well. [1:07:17] And clarity is very specific on that, that line. [1:07:19] Thank you. [1:07:20] And, and I'll just close by saying this. [1:07:21] I really appreciate the chairman and also our full term, Chairman Hill. [1:07:24] I mean, we, a lot of people look at Congress as very chaotic place. [1:07:28] And, and the way that you've been able to navigate this with the ranking member really makes a difference. [1:07:33] And when we go back home, we say we actually made this a bipartisan bill. [1:07:37] Everybody had kind of not only a stake in this, but more importantly, a say in how we changed the rules on how we, we modify this emerging technology. [1:07:45] And I couldn't be more pleased to be on a committee that focuses on solutions, not playing politics. [1:07:49] And so, uh, with that, Mr. Chairman, I yield back. [1:07:51] And again, thanks for taking this time here at, at a special place in a special time in our history. [1:07:55] Thank you very much. [1:07:56] The gentleman yields back. [1:07:57] Uh, the gentleman from North Carolina, Mr. Moore is recognized for five minutes. [1:08:01] Thank you, Mr. Chairman. [1:08:02] And good morning to our, to our guests today. [1:08:05] Thank you for the candid testimony. [1:08:06] And, and Ms. Aberg, uh, while you were testifying and some, I actually was doing a little other research, reading some articles about, uh, what all happened. [1:08:15] And I think to, to, you know, Mr. Herodopoulos' comments, unbelievable the way the company was treated. [1:08:21] And I do want to thank you again for the efforts you all made in Western North Carolina after Helene. [1:08:25] That was very helpful to allow commerce to pick back up. [1:08:28] So thank you for those efforts that, uh, that cannot be expressed enough. [1:08:32] Uh, I do, um, it, it always strikes me as odd. [1:08:35] You think about it. [1:08:36] Roughly a third of all Americans either own or use digital assets in some manner. [1:08:41] So this isn't some fleeting thing that's going to go away. [1:08:44] And there are those who look at it and they, they resist technology. [1:08:48] Well, guess what? [1:08:49] If we banned automobiles, we'd have 40,000 less deaths a year, but that's not, uh, we're not going to get rid of cars, I don't think. [1:08:57] So there's inherent risk in certain technologies. [1:09:00] But the guidelines and the proposals and the, the, the law that's being worked on with respect to, of course, the genius and then with clarity are designed to do that. [1:09:08] So it's understandable why companies with the failure, particularly the four years before under the Biden administration, were having to look to go offshore. [1:09:16] So I think it's important that we, we work hard to bring that stability. [1:09:19] And that's why I'm proud of what this committee has done and what the house has done to, to pass this legislation. [1:09:25] But it did bring me to another question. [1:09:27] And that is, it's clear why these, you know, the market structure is important for financial firms. [1:09:34] But tell me about when it comes to companies who are developing blockchain applications outside of traditional finance. [1:09:42] Why is it important to have these guidelines as well for them? [1:09:45] Uh, it's critical, um, for, for pretty much our history embodies why it is so critical. [1:09:51] Uh, the FCC sued Nova Labs over allegations that the hotspots of hardware, uh, uh, could be plugged in and in exchange the, the deployer of that hardware could earn tokens. [1:10:03] It also said that, uh, users of a mobile phone plan, that that was also an unregistered securities offering because the user of that phone plan could potentially earn tokens if they voluntarily opted into a program where they provided useful information for mapping the network. [1:10:19] Um, that we're trying to build infrastructure. [1:10:23] We're not trying to raise capital through selling tokens. [1:10:25] We've never actually sold tokens in the secondary market other than OTC sales that were constructed with regular, regular, to be regulation D compliant. [1:10:34] Clarity defines, uh, uh, and a lot tokens that are used to run functional networks like ours, uh, to the, to the regulation under the CFTC. [1:10:43] The CFTC, uh, still has its full regulatory toolkit, um, and can bring claims for fraud manipulation and abuse, uh, in the sale and purchase of those tokens like it always has been. [1:10:57] I don't think clarity is a call for deregulation. [1:11:00] I think it's a call for the right regulation per the right regulator. [1:11:04] And without that clarity infrastructure projects like ours are not going to be durable in the United States. [1:11:11] We need the certainty of legislation codified into law that cannot be changed at the whim of whoever happens to be sitting at the share of the SEC or the White House. [1:11:20] And so, and so to your point, of course, jurisdictions like the European Union, Singapore, the UK, Hong Kong, and the, uh, the Emirates have aggressively moved to establish clear digital asset frameworks. [1:11:31] Uh, Mr. Solomon Sato would bring me to you. [1:11:34] What lessons can Congress learn from the jurisdictions that have already adopted these, uh, digital asset regulatory frameworks and, uh, and where have those frameworks succeeded or fallen short? [1:11:47] I mean, I think the, the key lesson is, is more the initiative, right? [1:11:51] It is the recognition that there's something novel here and that the markets are developing in a way that requires some kind of regulation and that there are jurisdictions that have kind of leaned into that and said, [1:12:00] okay, we're going to tackle this problem. [1:12:03] And we recognize that kind of existing regulation is being tested in a way that we can't just rely on some of the principles that have been there. [1:12:09] And so one, I think it's that, you know, that lesson of, hey, you need to take the initiative and that comes down to Congress. [1:12:14] And then I think the second part is, you know, naturally markets are global, uh, environments, right? [1:12:20] It's very difficult to put jurisdictional boundaries around markets and that requires, you know, all the regulators to kind of come together and be able to marry where that makes sense. [1:12:28] And that requires, again, that initiative to put some regulatory environment in place. [1:12:32] And in that same thing, just as a follow up on that, why would you say it's important that any market structure legislation preserve the ability of decentralized finance to innovate while ensuring there is the regulatory oversight focused where there are risks? [1:12:47] Yeah, I mean, for us, that is the core innovation here, right? [1:12:50] It is the, uh, development of a network that is permissionless to participate in and to be able to transfer value in a peer to peer fashion, right? [1:12:58] Um, it is the truth that there has been a large development of financial institutions and technology firms building in this environment. [1:13:04] Um, but even without those, the technology is still important and that requires the protection of those people who want to participate at that level. [1:13:12] Thank you. And, uh, my time is expired, Mr. Chairman. [1:13:15] Gentleman yields back. [1:13:16] Uh, the chair now recognizes the chair of the subcommittee on oversight in investigations, the gentleman from Pennsylvania, Mr. Muser for five minutes. [1:13:23] Thank you, Mr. Chairman. [1:13:24] And thank you all very much for being here with us. [1:13:26] This is a really a great hearing. [1:13:28] Uh, it's very, very important. [1:13:31] Uh, and it's certainly fitting that we're here at federal hall, uh, where capital formation, uh, began in our country. [1:13:38] And the clarity act is about extending that same opportunity to more Americans, not fewer. [1:13:44] And I, I'm sure my colleagues as well are certainly hoping that the Senate is watching your testimonies and your comments because they're compelling. [1:13:52] Uh, and they certainly need to be aware of it. [1:13:54] Also a little disappointed. [1:13:55] None of our Democrat, uh, colleagues are here. [1:13:58] They were invited. [1:13:59] Um, and certainly, uh, Republicans and Democrats will all benefit America by passing the clarity act. [1:14:07] Um, we've, um, uh, passed the genius act, as you, as you well know, uh, into law signed by the president. [1:14:15] Uh, so, you know, the, uh, stable coins has got its federal framework. [1:14:20] Um, the house has done its part, uh, in passing clarity and truly it's now where it's up to the Senate to finish the job. [1:14:28] So, uh, Mr. Samansato, let me start with you, please. [1:14:31] Um, with your experience, uh, working, uh, at the CFTC and now the private sector, how does the clarity act make sure we're not creating new gaps for illicit finance and market manipulation while we're trying to give legitimate businesses certainty? [1:14:46] Yeah, so I think, uh, it does a few things. [1:14:49] I've talked already about how it, you know, sets the clear, uh, lines of which entities are going to be regulated. [1:14:55] But then core to that is, uh, building off of that to use the traditional anti-money laundering structures that are in place, right? [1:15:02] To say that these newly regulated entities are still going to be Bank Secrecy Act regulated and that they will have an obligation to surveil for, uh, illicit activity. [1:15:12] Um, I used to work at Chainalysis. It's a company that, you know, recognizes there's something unique in these networks and the ability to process some of the data and be able to identify potential, uh, bad actors. [1:15:23] And what you've seen is even something unique in this market of companies that operate using that kind of technology to do, you know, enhance screening or, or, uh, kind of a different form of risk management on their customers and on illicit activity. [1:15:37] And so I think kind of putting all of those pieces together with, uh, this bill and kind of ensuring that those intermediaries that are rightfully defined as so also have those AML obligations and kind of, uh, you know, the, the, uh, the kind of, I don't want to say motivation, but the, the, the, the call to, to implement that is really important. [1:15:58] Okay. Thank you. Mr. Lover, um, wisdom tree prime mobile app tokenized securities for sales. [1:16:04] Uh, do you think this will expand access to everyday investors to trade on blockchain and how does clarity, uh, what role does clarity act play in that? [1:16:14] Yeah, most certainly. I think, you know, if you look at one of the core benefits and this gets to a point, Mr. Timmons made as well as you look at the investor being able to have greater control. [1:16:23] So we can deliver that tokenized fund share to their own wallet. They control that wallet and then they can move that fund share to anyone else's wallet instantly. [1:16:34] If you think about the power of that, that instant movement, instant settlement right now that is intermediated, believe it or not. [1:16:41] If you tried to move a traditional share of stock, if you just said, Hey, I want to transfer the share of stock to my son or daughter. [1:16:47] That is actually not a simple process. It requires a lot of paperwork, multiple days just to do that simple action. [1:16:54] Now I can hold my token. I share my wallet, move it immediately. So just bringing back the power to the investor is critically important. [1:17:03] The clarity act embodies and notes the power of tokenization that securities that are tokenized or securities themselves also empowers the SEC and CFTC to continue to innovate. [1:17:15] So that's really what's going to continue to allow innovation and growth in this space. [1:17:20] Great. From your perspective, Mr. Lover, where does today's uncertainty over whether digital asset, which of course, the genius act tried to clarify falls under the SEC's or CFTC's jurisdiction. [1:17:32] Does that create a operational or compliance burden? [1:17:36] It has historically. Yes. I mean, from our historical experience, for instance, we tried to under the prior administration just have comfort that our tokenized gold product was in fact a commodity. [1:17:47] If you think about certificate of title to physical gold in a bulk, it seems like pretty clearly a commodity, but it was such a complicated environment that we didn't have complete comfort. [1:18:01] We we then said, OK, help us understand, you know, why this shouldn't be just considered a commodity. [1:18:08] And we just could not get an answer. And this clarity act would provide those noble rules, those durable rules to make clear that answer. [1:18:17] I mean, we ultimately launched because, you know, we knew we were in the right there that that that we had the clear answer. [1:18:24] But but you want the durable rule to allow you to really have the ultimate comfort. [1:18:29] Thank you. I'm glad I believe we have a second round. So I will have more questions after that. [1:18:33] I yield back, Mr. Chairman. The gentleman yields back and indeed we do have a second round. [1:18:37] So we'll go into a second round of questions for our witnesses. [1:18:44] I want to dive in, if I can, with you, Ms. Abernathy again. [1:18:49] A lot of crypto intermediaries and exchanges have been relying on licenses like the state money transmitter license, New York Bit license to operate. [1:19:00] But these requirements differ, require compliance with up to 50 regulatory frameworks. [1:19:07] And so the question then is how will clear definitions of digital asset intermediaries roles impact crypto exchanges such as bullish? [1:19:16] But then in particular, how will providing these types of frameworks at the federal level enable greater consumer protection in the process? [1:19:25] Yeah, thank you. I mean, having clarity over roles and responsibilities is obviously always very, very important. [1:19:34] So, you know, firms know the rules of the road. [1:19:38] They know what they can do. They know how they can do it. [1:19:40] They know what's, you know, part of the framework, what isn't, and what they need to comply with. [1:19:47] To your point, yes, the state by state is tricky. [1:19:51] And not all states have a regulatory framework either or license. [1:19:56] So, you know, we actually believe, you know, one of the biggest investor protections of a federal framework is the fact that it would be federal, that it would be across all states, that there would be a consistency in the licensing and in the requirements and that everyone would be protected. [1:20:14] That consistency across 50 states, that obviously allows businesses to scale. That's one benefit, right? [1:20:20] You're going to see hopefully capital deployed in the United States. [1:20:23] The other side of this that I'm focused in on not only is making sure that we're investing here in the United States rather than abroad, but also how we're protecting consumers in the process. [1:20:32] How does that having a national framework benefit consumers rather than the patchwork that we just discussed? [1:20:39] Well, again, to the point, having the framework will bring liquidity on shore, to your point. [1:20:50] It will make the markets actually have a structure within which they can grow and develop, which we have not had to date. [1:21:01] And that is why liquidity has certainly left. [1:21:04] And we've seen it in the past when new regulatory structures have come in to even traditional markets. [1:21:10] They have done so with the right protections that have allowed a market to grow, evolve, and effectively protect all consumers involved. [1:21:20] I think there's a real opportunity as this framework builds out. [1:21:23] Not only will you see more innovation development in the United States, I think this is also our opportunity to make sure that there's consumer protection standards in place to help people. [1:21:31] But the good actors want to root out the bad actors in this space. [1:21:34] I think making sure that we have clear lines as to what regulator has, what authority where, as clarity does, provides us huge opportunities in this space. [1:21:43] I'll stay with you just for a minute here since we're in the second round. [1:21:48] The clarity act really shores up the SEC's authority with respect to digital assets commodities sold as part of an investment contract and allows the SEC registered entities to offer digital commodities on their platforms. [1:22:03] Could you just give a little flavor as to why you think that is an important provision inside clarity? [1:22:08] Yeah, so that's really important as it kind of helps towards the development of kind of a dual registration, if you like, between the SEC and the CFTC. [1:22:18] And, you know, as we've seen recently from March 2026, sort of the MOU between the SEC and the CFTC, as well as the interpretation that came out, [1:22:29] that the agencies are trying to harmonize and working towards that, which I think would be an incredible benefit, [1:22:34] because there are overlaps, there are intersections, and they do need to work together. [1:22:39] Some of the important ones, one in particular I've been looking at is the portfolio margining that is recently being discussed, [1:22:46] which can provide not only more effective and efficient risk management, but it can also actually unlock capital, [1:22:54] which then provides more liquidity into the market. [1:22:58] Thank you very much. [1:22:59] I appreciate everybody being here. [1:23:00] I'll yield back and I'll recognize the chairman, Mr. Hill, for five minutes. [1:23:05] Thank you, sir. [1:23:07] Let me stay with you, Ms. Abernathy. [1:23:10] You talked about you've got the base exchange and people are now writing applications on this base layer, [1:23:16] which clarity gives some real benefits to, but can you walk through the migration of certain traditional finance [1:23:24] intermediated settlement activities to a decentralized blockchain approach and talk about how you see that interoperability. [1:23:34] And, for example, in the consolidated audit trail plans of the SEC, not my favorite subject, but nonetheless the law of the land, [1:23:44] you know, blockchain ATSs or blockchain registered exchanges have an obligation to show that lit market. [1:23:51] Tell me how you're going to comply with that. [1:23:54] So we operate a centralized exchange primarily. [1:24:01] So we're not moving into sort of the decentralized space. [1:24:06] And so that is how we are evolving, as noted, starting with sort of, you know, we have applications in right now with the CFTC to have our centralized futures, [1:24:19] futures exchange clearinghouse and intermediary. [1:24:21] We have also had also recently announced acquisition of equinity. [1:24:28] And the purpose of that was to move into the tokenized securities infrastructure. [1:24:35] And we believe combining the platforms does sort of give that full lifecycle from issuance and registry to trading and connecting effectively a trusted sort of reporting and regulated transfer agent. [1:24:50] That was equinity or is and with bullish is sort of blockchain and trading infrastructure. [1:24:59] And that this is this is represents the future of the securities market. [1:25:04] Thank you, Mr. Lovar. [1:25:09] Same sort of question to you since you run a big, well known traditional finance company that's you're using tokenization. [1:25:17] And there are a lot of people that, you know, they don't want to be bombarded with information from you seven days a week, 24 hours a day. [1:25:24] So tell me the value of tokenized settlement with seven day a week settlement for your customers. [1:25:32] Who's using it now that you're offering it? [1:25:34] And what kind of volumes are you seeing? [1:25:36] Yeah, so, you know, one of the things I'd note is that, you know, we've seen increased volumes just since the passage of the Genius Act. [1:25:43] So, you know, one of the important things there is I think just Congress, you know, putting its stamp on actually approving a federal framework for even though that was for stable coins. [1:25:54] I just think it underlies the importance of the passage of clarity. [1:25:57] So we've seen increased activity since then, including increased stable coin issuers. [1:26:02] So those stable coin issuers, for instance, are interacting with our money market fund as a reserve asset. [1:26:09] So they want that instant liquidity, instant availability can move into their reserve. [1:26:15] And then as their users are moving in and out also instantly out of that stable coin, they can similarly move that reserve asset. [1:26:22] We're also seeing stable coin holders that aren't able to obtain yield through holding their stable coin similarly access our assets, our tokenized funds, particularly our tokenized money market fund, but also the other exposures. [1:26:35] You know, I can move my digital assets instantly. [1:26:38] I want also if I'm going to access and interoperate with traditional financial services, I want that similar experience. [1:26:45] So, you know, every user should have that similar experience and have the availability to instantly settle and also work 24 seven around the clock. [1:26:54] I think as well as, you know, as others are, you know, you're entering into different spaces. [1:27:00] It can be difficult to have a financial position that you want to, you know, liquidate, for instance, and not be able to do that on a Saturday when the markets are, you know, maybe volatile otherwise. [1:27:11] So providing that access point 24 seven, we found to be very important. [1:27:16] And Mr. Samasato, similar with your regulatory experience to tokenization of collateral pools, we talked about net margining, but wouldn't that be a big issue? [1:27:29] And couldn't that have been helpful in some catastrophic situation like Silicon Valley? [1:27:33] If the collateral pool of the Federal Home Loan Bank and the Federal Reserve Bank of San Francisco had all been 24-hour accessible with blockchain accounting, [1:27:43] isn't that a way to have more liquidity, more safety in the financial system? [1:27:47] Yeah, I mean, I'll take you in a different example, which is you go back to 2008. [1:27:51] And there was a lot of questions about, you know, to what extent was the crisis a result of the derivatives market? [1:27:56] And a lot of it was just an unknown exposure between counterparties, you know? [1:28:00] And so when you have something with more, you know, uniform infrastructure and information available to a regulator, [1:28:08] it's a lot more information to glean that maybe it wasn't the case that any one business was underwater, [1:28:13] but now we know the credit exposure to each business and can manage that risk better. [1:28:17] Yeah, I think that's an important point, Mr. Chairman, when we think about the benefits and scale of this technology yield back. [1:28:23] The gentleman yields back, the gentleman of South Carolina. [1:28:25] Mr. Timmons is recognized for five minutes. [1:28:28] Thank you, Mr. Chairman. [1:28:29] It's critically important that Congress continue to create the rules of the road to make sure that emerging technology has certainty. [1:28:40] And the Biden administration's regulation by enforcement was the exact opposite approach, and now Congress has acted. [1:28:46] We put a lot of points on the board with genius. [1:28:49] We're about to put more points and more clarity, but we need to continue to build to maintain the certainty for businesses to invest and to give them the rules of the road. [1:29:00] And I think the next step, I hope, is going to be around tokenization. [1:29:05] I have an NFT bill that we've been working on and plan on filing it after clarity passes. [1:29:10] I think that all of this emerging technology changes lives in a way that we can't really fathom. [1:29:16] I mean, think about the iPhone came out just 20 years ago, and the world has changed just immensely. [1:29:23] I still remember the Blackberry. [1:29:24] So, I mean, I can't think of what 20 years from now is going to look like. [1:29:30] And I think that there's some areas that are exciting. [1:29:34] And again, all of this emerging technology has value because it streamlines processes, it removes middlemen, it creates transparency, [1:29:42] and it gives people more freedom to move their assets there. [1:29:48] It makes their lives easier. [1:29:50] So, as it relates to tokenization, there's also a potential for the government to use it. [1:29:57] So, one thing that I've been thinking about is vehicles. [1:30:00] I recently got a new car to register my car. [1:30:02] You got to pay taxes, all this stuff. [1:30:04] So, I mean, Mr. Lovart, could the government tokenize vehicles and then streamline taxation? [1:30:11] I mean, we're having this issue of the gas tax. [1:30:14] We got electric vehicles. [1:30:15] We're going to have hydrogen vehicles soon. [1:30:16] So, I mean, could we use blockchain technology, tokenized vehicles to register and to tax vehicles as they use roads? [1:30:25] Yeah, I think, you know, look, there's many opportunities for tokenization. [1:30:29] You know, we're focused in the financial services space. [1:30:31] But as you note, you know, if you just focus on the underlying fundamentals of it's a, you know, transparent, you know, blockchain database, essentially, that is immutable. [1:30:44] So, having that record-keeping functionality that, as you mentioned, can potentially, you know, provide more seamlessness, greater functionality, quicker functionality, you know, having that, you know, in what may traditionally be very, you know, spaces that aren't typically, you know, functioning as fast as they want them to be in terms of cars, registration, taxes. [1:31:07] I think, you know, it's potentially a very, very significant use case, certainly. [1:31:11] I got another fun one, land. [1:31:14] So, I mean, how many people across this country work at the Recorder of Deeds office? [1:31:19] I mean, ChatGPG said over a million. [1:31:22] So, I mean, if you think about it, we have records that go back hundreds of years to show who owns what and who passed it across, title, all of this stuff. [1:31:33] So, I mean, we theoretically could tokenize land and we could, in 20 years, no longer have these questions of deeds or title insurance. [1:31:43] Is that fair? [1:31:44] Yeah, I think that's fair. [1:31:45] I mean, that's the importance of, you know, you have an immutable, transparent record and that immutability, it can't be changed. [1:31:52] So, that's incredibly important. [1:31:54] You know, you potentially reduce potential for forgery or the like. [1:31:58] Well, you have that transparent record. [1:32:00] You can see where it moved and also you can tell, you know, how it's moved. [1:32:05] Does it move to, you know, different, you know, types of actors? [1:32:09] So, yeah, I think there's a lot of potential there as well. [1:32:12] Well, I think that it's hard to even imagine what the world's going to look like in 20 years. [1:32:18] But in order for us to continue to be the center of the global economy and to continue to provide the American dream that people have enjoyed for 250 years, we've got to get this right. [1:32:29] And that's the importance of passing clarity. [1:32:31] And we've got to then build on it. [1:32:33] And there's other pieces of legislation that will continue to give the rules of the road to the free market to continue to innovate. [1:32:42] And it's exciting times. [1:32:44] And I appreciate that. [1:32:45] Mr. Chairman, I yield back. [1:32:46] The gentleman yields back. [1:32:47] Mr. Stutzman is recognized for five. [1:32:49] Thank you, Mr. Chairman. [1:32:50] After Mr. Timmons' comment, it reminded me of a picture that I sent to my boys a couple of weeks ago. [1:32:56] And it's, I don't know if you've seen this, but it's a guy holding a camera, you know, one of the old video cameras. [1:33:03] VHS cameras on his shoulder. [1:33:05] He's got a, I can't even remember the names of these things. [1:33:10] VHS, CDs, these big phones, all these different devices that we used to use back in the 80s and 90s. [1:33:18] And now it all fits in our hand. [1:33:20] I mean, in one hand. [1:33:21] And we can stick it in our pocket. [1:33:22] And that's how far technology has come. [1:33:24] And I think one of the things that is important, especially as we discuss this particular issue, [1:33:30] is how do we explain to our constituents and to the American people what this actually does for them in their everyday lives? [1:33:39] I mean, I'm trying to schedule a closing here in the next couple of weeks. [1:33:42] And, you know, we're having to get everybody there all at the same time and, you know, land at the same spot and signatures. [1:33:48] And, you know, obviously there's some ways to get around some of that. [1:33:51] But, Ms. Abernathy, we were talking a little bit about, you know, companies that are going overseas. [1:33:56] Can you talk a little bit about, you know, enacting clarity? [1:34:00] It would encourage more firms to to be here in America. [1:34:04] We know the race that we have with China. [1:34:06] We know the race that we have with other countries. [1:34:09] You know, if we don't get this right, you know, what happens? [1:34:13] What do Americans miss out on? [1:34:14] I mean, because, you know, I know like even, you know, some of the of the blockchain technology, [1:34:19] how does it apply to a restaurant owner? [1:34:21] How does it apply to, you know, people in small businesses and health care, things like that? [1:34:27] And then I'd like to open up to the rest of the panel, too. [1:34:29] But Ms. Abernathy, if you could comment on that. [1:34:31] So, I mean, absolutely. [1:34:35] If we don't get this right, then there would be a lot of things that are missed out on. [1:34:41] You know, again, from from my perspective, you know, from from an exchange, getting this right means liquidity comes into the US. [1:34:49] But what that also means is obviously more capital to do more with to develop the technology more to innovate and to figure those kinds of things out. [1:34:59] I'm probably less than that, you know, very technical exactly how how it might help a restaurant or or or another thing of that nature. [1:35:08] But I do, you know, from the exchange perspective, getting this right will absolutely bring liquidity on shore. [1:35:16] And bringing liquidity on shore means more capital, means more innovation. [1:35:20] And through that innovation, I mean, we've we've seen it. [1:35:25] It's already been mentioned. [1:35:26] What's it going to look like in 20 years? [1:35:27] Yeah. [1:35:28] You know, we don't know, but it all is moving in a digital direction and a direction that benefits customers. [1:35:37] It's you know, otherwise there'd be no point. [1:35:39] But it's all benefiting consumers. [1:35:41] It's it's all benefiting all of us. [1:35:43] Yeah. I mean, it reminds me a lot of what the chairman said earlier about the Internet. [1:35:46] You know, we're building the the interstate highway and, you know, we really built the interstate highway for commerce, but also for military purposes. [1:35:54] And then all of a sudden you have businesses that are just sprouting up and doing all these different new innovative services and building products for the American people. [1:36:04] And that's what we're where we're at today and what what can be done. [1:36:09] But, you know, whether it's, you know, blockchain technology is, you know, it's still so new. [1:36:13] We probably use it in some ways that we don't even realize. [1:36:16] Mr. Somensata, you're shaking your head there. [1:36:19] I'm kind of curious what some of your thoughts are. [1:36:21] How what should the American people? [1:36:23] Why should they support the Clarity Act? [1:36:25] Because it's going to help them in their daily lives. [1:36:28] Yeah, I think it kind of comes in layers, right? [1:36:30] I think going back to what Mr. Timmons said, it's very difficult to, like, project ahead. [1:36:34] What the future of technology looks like other than we know it's going to, like, drastically change things over time. [1:36:39] And like the we've seen development encouraged in this area and a lot of new technologies coming on board. [1:36:47] And then I think as you've seen early adoption, it becomes incumbent on Congress to say here are the rules of the road so that the companies who do want to build that infrastructure that might be more usable to the end individual can create something right. [1:37:00] The goal of technology should be to make things easier to make them safer. [1:37:05] And I'm not some techno utopian who thinks all of it is going that way right again. [1:37:09] It requires each step in the in the path to kind of focus on that. [1:37:13] I mean, one practical example I'll give you, which is, like, I run my kids swim team, right? [1:37:18] I'm like the parent volunteer. [1:37:19] And this is the first year that we've, like, required credit cards because everything is through online, you know? [1:37:24] And it's like I'm just looking at our small nonprofit swim team and looking at, like, how much you're paying on credit card fees and how many different accounts I have to set that up. [1:37:31] And I'm not saying, like, I don't think crypto is necessarily at a point where it's going to, like, replace all of that, right? [1:37:37] But the concept of, hey, a new technology that makes payments easier and that allows them to be in peer-to-peer. [1:37:42] Coming back to the users and to, like, the individuals in this country, hopefully the development is down a path where at some point you go, hey, this feels more like when I just used to pay for something in cash, right? [1:37:52] And it's easy and it's online. [1:37:53] And, like, I think that is the hope of building the regulatory structure, allowing the companies to build as you kind of get that incremental approach towards that. [1:37:59] Thank you. [1:38:03] Yields back. [1:38:04] Gentleman from Florida. [1:38:05] Mr. Herodopoulos is recognized. [1:38:06] Thank you, Mr. Chairman. [1:38:07] Let me get into the DeFi issue as well again. [1:38:09] One of the defining features of DeFi is that many applications operate through open-source software rather than traditional financial intermediaries. [1:38:17] As innovation continues in this space, it's important that developers who write and publish software are not treated the same as entities that take custody of consumer assets or controlled transactions. [1:38:28] So the question to you is, how does Clarity help distinguish between software developers and regulated financial intermediaries? [1:38:37] And why is protecting developers who build decentralized technologies important for fostering innovation while maintaining appropriate consumer protections? [1:38:47] Yeah. [1:38:49] So, I mean, I go back to the fundamental innovation here being that ability to write up code, offer it up for anybody to use, and that allows you to participate in a network where you do a transaction in a peer-to-peer way. [1:39:02] And a DeFi at its best is intended to do something along those lines. [1:39:06] And so when you look at Clarity, there's a few ways that it addresses this issue. [1:39:10] Let's start with, like, what is our key priority, which is the BRCA, which is right now money transmission, right? [1:39:17] There's different concepts of that at a state level, at a federal level. [1:39:20] But at a baseline interpretation, it involves somebody taking your money and transmitting it to another person, right? [1:39:27] And you play that trusted role because you're taking, you know, hold of their money, you're offering up something to the customer that, like, you know, that they should put their trust in you. [1:39:36] And what crypto networks and DeFi at its best will look like is actually it is your ability to take an open source tool and send those transactions direct in a peer-to-peer fashion. [1:39:48] In that case, the developers who created that network are not the same thing as money transmitters. [1:39:53] But we live in a world where the interpretations around those provisions are flexible, right? [1:39:58] And you've seen aggressive prosecutions go after developers, you know, basically on the premise of you develop something and you're going to be allowed for the illicit use. [1:40:07] What Clarity does is it says, no, you know, there are still money laundering laws in place, [1:40:11] there are still important criminal provisions that apply to a developer who might intentionally try to, you know, assist in some money laundering scheme. [1:40:19] But if you are developing a neutral platform that's open source that other people can inspect and allow them to do a peer-to-peer transaction, [1:40:24] that is not the type of activity that is going to suck you into a regulatory environment. [1:40:28] So that's, like, really key in Clarity. [1:40:30] And then it also does something similar from the SEC and CFTC registration perspectives. [1:40:34] Thank you. [1:40:35] Mr. Lovar, you brought up a great example before we talk about transferring stock. [1:40:39] And the old way and hopefully the new way, right? [1:40:42] And I'm sure we all do wire transfers. [1:40:45] It's a pain, you get 30 bucks, you got to go in and do all these different steps. [1:40:49] Walk us through what a traditional situation that you described, if you want to transfer some shares to your daughter in the old way versus what the future might be, [1:40:57] just so that we could educate folks who are watching why this is so important. [1:41:00] Yeah, I think, you know, it really boils down to just you're having a number of steps and a number of intermediaries, you know, involved in the process. [1:41:08] So, you know, first off, it's that I have my account at a financial institution. [1:41:13] So they're going to require a certain level of paperwork just to be able to say, hey, I would now want to transfer to this account. [1:41:21] Whereas so I've lost the control of the ability to be able to move my asset because I'm dependent on that financial intermediary to do so. [1:41:28] So it's part of that being able to, you know, instruct, if you will. [1:41:32] So but I have a reliance there. [1:41:34] And so and from there, once that instruction is made, then you have the plumbing to be able to do that, to have to move it, which typically that plumbing, you know, takes a good day or two to go through the system of intermediaries to move from, you know, one account through, say, the DTCC to another account. [1:41:54] So it's that plumbing that is is, you know, not needed within the wallet to wallet, direct peer to peer example. [1:42:02] None of that is needed, actually. [1:42:03] So that's really the power of it. [1:42:05] And that and that instantaneous settlement essentially seamlessly. [1:42:08] Great. [1:42:09] And Ms. Abernathy, if I could, you guys are the experts at this. [1:42:12] We're playing catch up with y'all and we're trying to create the best legislation possible. [1:42:16] But when you're talking to your friends who aren't in the finance world, kind of is the answer Mr. Lovar just gave. [1:42:22] How do you describe what digital assets are to the layperson who's who's that isn't in this field? [1:42:29] I do get asked that often. [1:42:34] And it's one that you have to stop and think about, you know, do you do you want to sentence a chapter or a book? [1:42:40] I mean, you know, digital assets, there's so many things from my perspective, from an exchange perspective. [1:42:48] They're another asset class or another. [1:42:50] They're another asset that can be traded, but they could be traded in in ways that are similar yet different. [1:42:59] The difference is more down to the technology and some of the enhancements that can be done, again, from a from a risk management perspective, given that that's one of my key focuses. [1:43:08] You know, we can run margining calls so much more frequently than what is currently under the regulations today. [1:43:16] And we can use collateral in a way that, again, the existing regulations haven't thought about. [1:43:23] Sorry. [1:43:24] And I yield back, Mr. Chairman. [1:43:26] Yeah, sorry. [1:43:27] But thank you. [1:43:28] It's a complex issue, and that's why it's always helpful to get the folks to understand how, as Mr. Lovar described, it's just trying to make our life simpler, [1:43:36] but also have that transparency, see if you have the confidence to make that transaction. [1:43:40] So thank you, Mr. Chairman. [1:43:41] I yield back. [1:43:42] Mr. Morris recognized. [1:43:44] Thank you, sir. [1:43:45] You know, digital assets really should not exist or are in isolation from the traditional financial markets that we have in the United States. [1:43:53] I would submit that one of the reasons that we are that we have been as great and prosperous a nation as we have been really falls down to a safe, [1:44:02] reliable financial system that underpins all that, that allows that creative, that entrepreneurship, that growth, that balances the forward thinking to advance and to grow, [1:44:15] but also those protections that need to be in place. [1:44:18] And so my question, and I would first ask this over to Mr. Lovar is, first of all, what benefits do you think there are by allowing the traditional financial institutions to participate in the digital asset markets? [1:44:30] I think it goes back to some of those hallmarks that we we've touched on earlier in terms of, you know, what is the investor experience potentially benefiting from in terms of, you know, leveraging this technology. [1:44:44] And I think ultimately for us, the reference to tokenization or blockchain will in time, you know, fall behind the scenes. [1:44:51] You know, the investor will not really be focusing on is it blockchain, is it tokenization, but what are those benefits that I'm getting? [1:44:58] Can I seamlessly move my asset? Do I have transparency in seeing, you know, where it's potentially moving to? [1:45:04] Is it quicker than what I'm historically experiencing? And most importantly, you know, can I control my own experience to a greater extent? [1:45:13] I think the other important aspect, we touched a little bit on interoperability earlier, but if you think about it, you know, [1:45:19] there's multiple rails that the asset can move on multiple different blockchains. [1:45:23] And so as an issuer, we support asset movement on eight different blockchains, Ethereum, Arbitrum, Avalanche, Stellar. [1:45:32] And so that allows the investors even greater control to say, okay, here's a financial rail, here are the benefits of that one, [1:45:40] attributes that I want to take advantage of. And I want my asset to move within my wallet through that financial rail direct to my counterpart. [1:45:50] So really, it's that holistic, I think, set of benefits that are really investors are looking for. [1:45:55] So let me ask you, and this is going to be open to any of the four that want to comment on it. [1:45:59] Assuming that we get clarity passed out of the Senate, signed into law, and done, where do you see things five years, ten years, [1:46:08] and even, we're going to do the 20-year on that one, like, I don't think VHS is going to be back, though, Mr. Stutzman. [1:46:15] I think that's gone. But where do you think we are, and how does that apply to the consumer out there across the country? [1:46:23] If I may respond, Mr. Morse. So I think that – I think helium represents a non-financial application of blockchain, [1:46:35] and it is already serving millions of Americans on a daily basis and millions of people in Mexico and soon in Brazil and potentially the United Kingdom. [1:46:45] I think what we are showing is that blockchain can be utilized and integrated into incredibly interesting infrastructure projects and other projects [1:46:54] to enhance the cost efficiency of the delivery of those services and make and empower people on a local level to create those services for themselves and their community. [1:47:06] It's not limited to wireless. It can happen with sharing. It could help update the energy grid. There are projects using distributed energy models. [1:47:15] It can happen on the compute level. There are people sharing gigabytes for running AI programs, for running graphics programs. [1:47:23] This enriches communities that are deploying that technology, and it is a way to enhance the delivery of those services already. [1:47:34] And blockchain makes that feasible by being the connective tissue between all those discrete contributors. [1:47:40] Anyone else want to comment on that? Mr. LeBar? [1:47:43] Yeah, I think, you know, we – I think naturally as a large ETF sponsor, we looked at some analogies there. [1:47:49] I think we've seen the growth – and it took the ETF industry – it's only 30 approximately years old, but time to grow from its infancy and now eclipsing mutual funds. [1:47:59] So, you know, $10 trillion. And that goes back to the benefits that those investors are experiencing. [1:48:04] As we look at this industry, we're actually seeing a greater growth trajectory. [1:48:08] And I think that really goes back to the benefits I talked about earlier. [1:48:12] So we're excited for the growth trajectory and really leading and innovating in the space there. [1:48:18] And I think clarity will really be the catalyst, you know, to really put those durable laws in place just so we're not guessing, we're not uncertain about kind of – especially the future, you know, make an administration proof. [1:48:30] With that, I yield back, Mr. Chairman. Thank you. [1:48:33] Chairman yields back. Mr. Muser is recognized. [1:48:35] Very nice. Thank you, Mr. Chairman. [1:48:38] Ms. Ebert, the status quo is clearly not protecting consumers or investors or providing an environment that fosters innovation. [1:48:48] How would the Clarity Act better protect consumers from crypto-related scams? [1:48:53] Ms. I think by creating rules for – clear rules for companies who want to comply to be able to comply with those rules. [1:48:59] Right now, under the status quo, there are so many resources being spent by projects like mine on defensive structure, [1:49:06] on outside counsel, on trying to guess at what the regulations require, how they will be applied by a very mercurial SEC. [1:49:19] With codified legislation, we have certainty about what the rules are and how to comply with them. [1:49:25] I think that that is unquestionably objectively a better environment for business and a better environment for innovation, [1:49:36] a better environment for builders and for consumers because consumers know what they're getting into. [1:49:41] Investors know how to scope the risk if they want to contribute capital. [1:49:46] Counterparties that we deal with can understand what regulations may apply to the activities they're coming into. [1:49:53] Right now, all of that is a gray area, and that's just not a sustainable, workable framework for us to exist in. [1:50:00] Right, thank you. And we hope our current SEC isn't so mercurial in your view. [1:50:05] Ms. Abernethy, how do traditional IPOs compare to digital asset capital raises when it comes to investor protection [1:50:15] and how companies can use the money they raise? [1:50:17] Sorry, I'm not getting this microphone thing correct. [1:50:24] So, you know, with regards to capital raising, you know, we, you know, investors should get transparent, sufficient, and accurate information. [1:50:39] They need to have, you know, enough information to make informed decisions and to ensure there's no fraud or manipulation. [1:50:46] That should be no different, whether it's a traditional security or a tokenized asset or a digital asset. [1:50:55] The, the investor protections that are involved and that have been, the same principle applies. [1:51:03] There, there should be absolutely no difference between the two. [1:51:06] Okay, thank you. And Mr. Lover, I see you're sort of biting at the bit to maybe answer that question, but I got another question for you first. [1:51:11] If you were speaking to the Senate, what would you say to them about the importance of passing the Clarity Act? [1:51:17] Yeah, I think that, you know, what we've seen so far is certainly, you know, while, while Wisdom Tree is sort of focused on the U.S., [1:51:26] we've seen a lot of innovation go offshore. [1:51:28] We've seen a lot of players offshore. [1:51:31] And so, you know, really the Clarity Act and, and providing that durable framework that, that it's proposed to provide, I think will really ensure that America continue to be the powerhouse of innovation in capital markets. [1:51:44] And, and we want to build here and, and continue to do so to have that durability. [1:51:48] So I would say, you know, if you're going to keep America at the forefront of innovation, you know, past the Clarity Act. [1:51:53] Great. Mr. Sumon Sato, same question. [1:51:55] You know, there's like a lot of divergent views on crypto, right? [1:52:00] And I think that even from my perspective, right, there's some really fascinating and interesting developments and innovations in this area. [1:52:08] And at the same time, there's a lot of fluff, right? [1:52:10] And I don't think that changes the way that I think Congress should approach this, which is you have constituents who are interested, excited, want to participate in these networks, [1:52:22] see different value through different products and through different platforms. [1:52:26] And the job of Congress is to understand that need of their constituents and create an environment in which, you know, the regulatory requirements that we can put in place [1:52:35] and the other laws that need to be there to ensure that that's as safe as possible while still giving them the freedom to do that is extremely important. [1:52:41] And so it's like, put aside that viewpoint of like, do you like this technology? Is this the cool development or not? [1:52:47] And understand that like, people are engaged in this, right, regardless of what number you use, right? [1:52:52] If it's 12 million people, 25 million people, right? [1:52:55] There's a lot of Americans who are engaging in this technology in good faith. [1:52:58] And it's incumbent on Congress and on the Senate to recognize that and put into place the regulations that are necessary for that to. [1:53:04] Very well said. [1:53:05] Ms. Heyberg, if you were speaking to the Senate, what would you say to them about the importance of passing the Clarity Act? [1:53:11] It's critically important for innovative projects to thrive and flourish in America. [1:53:20] I think that America has always been the standard setter in the financial markets and in technology. [1:53:27] Failing to pass clarity risks losing that leadership position. [1:53:31] And it puts us in the country in a reactive posture where we are responding to regulations that are imported by other countries rather than exporting the standards that we want to set and have the world follow. [1:53:45] Excellent. [1:53:46] Thank you. [1:53:47] I yield back, Mr. Chairman. [1:53:48] The gentleman yields back. [1:53:49] Appreciate everybody's testimony today. [1:53:51] Thank all of our witnesses. [1:53:52] I also thank everybody from the House of Representatives. [1:53:55] There's a lot of staff here from the Recording Institute and others who helped put this on. [1:54:01] In 250 years of American history, this is the building where Congress first met in 1789 on Wall Street. [1:54:09] And the United States has been the leader in financial innovation. [1:54:14] And that has given the United States such amazing opportunities. [1:54:17] We dominate the globe in the capital market space. [1:54:21] This is our opportunity to seize the moment. [1:54:24] A year to the day since the House of Representatives passed the Genius Act, which was signed into law a year ago tomorrow. [1:54:32] This is our opportunity to finish the job and have clarity, which passed the House under the leadership of Chairman Hill a while ago. [1:54:40] Get all the way across the line to unleash further capital development here in the United States. [1:54:46] So I thank all of our witnesses for being here today. [1:54:49] Formally, I say without objection, all members have five legislative days to submit additional materials to the witnesses and questions to the witnesses. [1:54:57] Questions will be forwarded to you. [1:54:59] And we ask you to respond no later than August 21st. [1:55:02] The hearing on the Subcommittee on Digital Assets on the Financial Services Committee is adjourned. [1:55:07] Said to me and visit my website for our participants. [1:55:08] Here on the Subcommittee on the Subcommittee on the Subcommittee on the Up lieu Crystal [1:55:11] on the Natural Ass bees Canada. [1:55:12] Thank you for taking care of the participants. [1:55:13] Only to be exact as a símbol. [1:55:15] The [1:55:18] Assets on the Subcommittee on the