Opposition to Market Structure Bill
Two prominent Democratic senators, Elizabeth Warren and Elissa Slotkin, who serve on the Senate Banking and Agriculture Committees respectively, have expressed their opposition to an upcoming market structure bill unless there is a thorough investigation into two high-profile White House officials regarding potential conflicts of interest.
Concerns Raised
In correspondence sent earlier this week to the State Department, Commerce Department, and Department of Ethics, the lawmakers raised concerns about David Sacks, the designated AI and cryptocurrency advisor for President Donald Trump, and his Special Envoy to the Middle East, Steve Witkoff. They argued that without clarity on the influence of politically-connected cryptocurrencies on national security, they cannot lend their support to the digital asset framework being considered by the Senate.
Background of the Issue
The senators’ concerns arose from a New York Times article published on September 15, which revealed a controversial $2 billion transaction involving the Abu Dhabi-based MGX investment firm and Binance, a cryptocurrency exchange. This deal was reportedly facilitated by Sacks and Witkoff, who provided the UAE with access to advanced AI technology, utilizing stablecoin assets linked to Trump’s own crypto venture, World Liberty Financial.
“It is unprecedented in our nation’s history to have senior officials involved in decisions of national security who have such apparent conflicts of interest,” Warren and Slotkin asserted in their letter.
They urged an immediate and comprehensive investigation into these matters, stating that the findings are essential for Congress as it deliberates on legislation aimed at establishing a regulatory framework for digital assets that safeguards against corruption affecting national security.
Impact on Legislation
As critical votes in the Senate, Warren and Slotkin’s positions could significantly influence other Democrats’ support for the proposed bill, especially since a contingent of twelve Democrats previously indicated willingness to collaborate with Republicans on ensuring anti-corruption measures in the legislation. Warren has previously stated her backing for crypto regulations, though she firmly opposes any legislation heavily influenced or drafted by the cryptocurrency industry itself.
Current Legislative Status
After initially encountering obstacles due to Republican skepticism towards central bank digital currencies (CBDCs), a market structure bill moved through the House of Representatives in July, passing with bipartisan support in a measure referred to as the CLARITY Act. The act saw diverse backing, including from 78 Democrats. Transitioning to the Senate, however, the bill is facing similar hurdles. Senator Cynthia Lummis, a crucial supporter on the Banking Committee, had expected movement on the legislation by the end of August, but as of the latest updates, no vote was scheduled.
Discussions are ongoing between Republican members and Democrats regarding the Responsible Financial Innovation Act in hopes of reaching a consensus and getting the legislation enacted by 2026. At the time of reporting, inquiries made to the White House for comments remained unanswered, adding to the uncertainty surrounding the progression of these pivotal discussions on digital asset regulation.
