House Republicans to Set up Crypto Committee After Industry Turmoil

U.S. Rep.-elect French Hill (R-Ark.) delivers remarks in the House Chamber during the third day of elections for Speaker of the House at the U.S. Capitol Building in Washington, DC, on Jan. 5, 2023. Win McNamee/Getty Images

House Republicans announced the establishment of a new crypto subcommittee on Thursday that will focus on digital currency following the collapse of crypto exchange firm FTX last year.

Rep. Patrick McHenry (R-N.C.), chairman of the House Financial Services Committee, unveiled the new Subcommittee on Digital Assets, Financial Technology, and Inclusion, along with other subcommittee appointments.

The panel will be led by Rep. French Hill (R-Ark.). It aims to create clear guidelines for federal regulators in the “digital asset ecosystem,” according to a news release.

Establishing clear regulations for the digital asset industry among federal regulators will be among the panel’s main focuses.

Additionally, the panel will work on creating policies that aim to increase access to financial technology in underserved communities. Further, the subcommittee will be tasked with identifying best practices and policies that continue to strengthen diversity and inclusion in the digital asset ecosystem.

U.S. Rep.-elect Patrick McHenry (R-N.C.) delivers remarks in the House Chamber during the fourth day of voting for Speaker of the House at the U.S. Capitol Building in Washington on Jan. 6, 2023. Chip Somodevilla/Getty Images

The new cryptocurrency subcommittee was unveiled the same day McHenry announced other subcommittee appointments recommended by House Republican Steering Committee.

“I’m proud to welcome all of our new and returning members to the House Financial Services Committee under Republican leadership,” McHenry said in a statement. “From oversight of the Biden Administration, to enhancing capital formation opportunities, to developing clear rules of the road for digital assets—we have a lot of work to do.”

“I have no doubt these Members from across the conference and country will provide invaluable insight to accomplish these goals,” he continued. “The talent and real-world expertise of this group is an embarrassment of riches and I look forward to working with them to deliver on House Republicans’ Commitment to America.”

In September, the GOP issued its “Commitment to America” promise. It is intended to be a model for governing in 2023, with four pillars supporting it: “An Economy That Is Strong,” “A Nation That Is Safe,” “A Future Built on Freedom,” and “A Government That Is Accountable.”

FTX

The new cryptocurrency subcommittee is being formed in the wake of the November collapse of prominent cryptocurrency exchange FTX, whose founder and CEO Sam Bankman-Fried was a prominent Democrat donor.

Bahamian authorities arrested Bankman-Fried in the Bahamas in December. He was extradited to the United States in December, facing various criminal charges linked to the company’s collapse, including wire and securities fraud.

Prosecutors have accused Bankman-Fried of misusing client funds to acquire real estate, invest in his hedge fund, and make political contributions. He pled not guilty to the accusations.

According to U.S. prosecutors, Bankman-Fried is alleged to have orchestrated fraudulent activity, which resulted in significant financial losses for investors, customers, and lenders, potentially in the billions of dollars.

Attorneys and advisors for FTX are currently working to recover funds in an effort to reimburse those who were affected by the alleged fraudulent activity and lost significant amounts of money.

Former FTX chief executive Sam Bankman-Fried (C) arrives to enter a plea before U.S. District Judge Lewis Kaplan in the Manhattan federal court, New York, on Jan. 3, 2023. Ed Jones/AFP via Getty Images

An attorney representing Bankman-Fried’s bankrupt company confirmed on Wednesday that the company currently holds more than $5 billion in cash and liquid cryptocurrencies and securities.

“We have located over $5 billion of cash, liquid cryptocurrency, and liquid investment securities measured at petition date value," Andy Dietderich, an attorney for FTX, told a Delaware judge. “Our holdings are so large relative to the total supply that our positions cannot be sold without substantially affecting the market for the token.”

The exact amount of debt FTX owes to its creditors following its collapse and bankruptcy remains uncertain. As per the bankruptcy filings made by the company’s management two months ago, the estimated debt ranges between $1 billion and $10 billion.

U.S. prosecutors charged Bankman-Fried with fraud and illegal political contributions. The company was reported to have favored Democrat candidates and causes over Republicans, leading to calls for some candidates to return donations.

The U.S. Attorney’s Office has formed a task force to recover missing customer funds and investigate the collapse of the exchange.