Watch: Congressman Emmer’s remarks during today’s House Financial Services Committee Hearing

A transcript of Congressman Emmer’s remarks can be found below.

Emmer: Thank you, Chairman Hill, for holding this important hearing today, and thank you to this Committee for its consistent, nonpartisan leadership on digital asset policy across multiple Congresses.

The United States has a real opportunity to lead globally in building the next iteration of the internet - a peer-to-peer digital economy - and that is thanks in large part to this Committee’s work. 

The CLARITY Act is a thoughtful bill that creates regulatory guardrails tailored to the unique attributes of blockchain technology while giving users and developers the confidence to engage and innovate in this ecosystem.

I’m proud to be an original cosponsor, and I especially want to thank the Committee for incorporating the Securities Clarity Act - my bill - into this legislation. The Securities Clarity Act establishes the principle that a token is distinct from an investment contract, and it’s gratifying to see that principle serve as a cornerstone of this market structure framework.

The CLARITY Act focuses on legal certainty for custodial entities, but its current draft raises an important question about those who are not.

Ms. Minarik, assuming Congress passes a market structure bill that resolves the legal uncertainties for custodial entities, do noncustodial developers - those who never touch user funds - still face potential questions of liability? And if so, what kind of chilling effect could that have on developers of protocols and wallets who might otherwise want to build in the United States? 

Minarik: Congressman, thank you so much for this question. Companies for decades and decades, but now much more recently, software developers who never take custody or control of user assets have always been outside the regime, the money transmitter regime. And that is for good reason. That regime originally came from the states, decades and decades ago, to address the risks of a customer handing their own money to a third party who may then take days to deliver that money to the recipient. Those risks obviously do not exist if that money owner never is handing off custody or control of their money to someone else.

FINCEN issued guidance in 2019 that confirmed these principles for DeFi specifically. But recently, even though the law has been well established for so long, and despite FINCEN’s 2019 guidance, we have seen some attempts to stretch existing money transmission laws to capture software developers of non-custodial technology. So, there is still a risk, and it is a profound threat, and has a deep chilling effect on software development today. 

Emmer: Thank you. In your written testimony, you highlighted the Blockchain Regulatory Certainty Act, a bill I introduced with Mr. Torres recently. You said that the Blockchain Regulatory Certainty Act is essential to codifying that noncustodial actors should not be treated as financial intermediaries.

For the benefit of my colleagues and the public, can you explain - in plain terms - what kinds of legal and operational risks Uniswap or its users face today without that certainty? And what would change if the Blockchain Regulatory Certainty Act were included in the CLARITY Act?

Minarik: Yes, I think the risk today is the uncertainty that comes from a regulator deciding to advance an enforcement action, an argument that the money transmission regime applies to software developers who are non-custodial. We see that as an act of risk today which means that all software developers are under threat.

Emmer: Thank you again. As you’ve outlined, today’s noncustodial blockchain developers face legal risk for how others might misuse their open-source, permissionless tools. That is a dangerous precedent for innovation and one that I’m thankful Chairman Hill and this Committee is working with us to address. Your testimony makes clear why resolving state-level ambiguity and preventing prosecutorial overreach is critical for American leadership in the digital economy.

Again, I’d like to thank the Chairman and my colleagues for their consistent, unwavering commitment to nonpartisan digital asset policymaking, and I yield back the balance of my time.

Background
Congressman Emmer reintroduced the nonpartisan Blockchain Regulatory Certainty Act (BRCA) in May, along with Congressman Ritchie Torres (NY-15). The BRCA clarifies that digital asset developers and service providers that do not custody customer funds are not money transmitters. More information on the Blockchain Regulatory Certainty Act can be found here.

More information on Congressman Emmer’s Securities Clarity Act can be found here.

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