Rep Sherman Likens Crypto to Cocaine Production Ahead of Joint Congress Hearing

  • Two key Congressional panels are set to hold a meeting on crypto regulations.
  • A senior member of one of these panels does not appear keen on the plan.
  • The lawmaker is not alone in his skepticism.

The lack of a crypto regulatory framework in the United States has long been a concern for industry participants. The situation has worsened as regulators appear to be clamping down on the industry, forcing some firms to look abroad.

The House Committee on Financial Services and the House Committee on Agriculture are set to host an unprecedented joint hearing on Wednesday, May 10, with plans to work together on crypto regulations to address industry concerns. Not all lawmakers are on board with the plan, however, as recently highlighted by statements from Representative Brad Sherman.

Sherman: “We Don’t Need to Keep up on Crypto”

In a recent Bloomberg interview shared on Tuesday, May 9, Sherman argued that the U.S. did not need to lead on cryptocurrency innovation, comparing the industry to cocaine production and organ harvesting.

"Peru is way ahead of us in cocaine production, China's way ahead of us in Oregon harvesting, we don't need to keep up on those things. And we don't need to keep up on crypto," the lawmaker said.

Despite industry calls for clear regulations, the senior House Financial Services Committee member claimed that the crypto market did not want “real regulation.”

"They are here not because they want clarity, but because they want only a patina of regulation," he asserted.

True clarity would allow for Know Your Customer (KYC) and anti-money laundering (AML) rules to apply to the entire crypto ecosystem with cryptocurrencies classified as securities, according to the House Financial Services Subcommittee chairman on Investor Protection, Entrepreneurship, and Capital Markets.

Sherman is a long-time critic of the industry. In a September 2022 interview with the Los Angeles Times, the lawmaker revealed that he would have preferred if the government had banned the industry years ago when less money was involved. He also reiterated this view in January 2023.

Sherman is not alone in his skepticism, as fellow Democrats have also expressed an unwillingness to create new rules for crypto, instead calling for the filling of perceived gaps in existing regulations ahead of the joint hearing between the U.S. Securities and Exchange Commission and Commodities Futures Trading Commission overseers.

The joint hearing will feature testimony from several experts, including Harvard Research Fellow Timothy Massad, Kraken Chief Legal Officer Marco Santori, New York Stock Exchange Chief Operating Officer Michael Blaugrund, and former CFTC Director Michael Kulkin.

On the Flipside

  • Representative French Hill has expressed optimism that Republicans and Democrats would reach a consensus on crypto.

Why You Should Care

Sherman’s views highlight that the crypto industry still has significant hurdles to cross in Congress before it can get regulatory clarity in the U.S.

To learn more about the planned hearing, read this:

U.S. Closes in on Crypto Consensus Amid Plans for SEC & CFTC Collab

The crypto community is puzzled by Biden’s desire to go after crypto tax loopholes; learn more:

Biden Targets Crypto Tax Loopholes. Community Left Confused

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