HFSC Committee: No clarity for crypto grifters
The Honorable French Hill, Chair
The Honorable Maxine Waters, Ranking Member
Honorable Members
House Financial Services Committee
Washington, DC 20515
Re: Committee Markup of Various Bills June 10, 2025
Dear Committee Members,
On behalf of more than 500,000 members and supporters of Public Citizen across the country, we provide the following comment for the House Financial Services Committee markup scheduled for June 10, 2025.
This markup focuses on approval of a sweeping measure named the “CLARITY Act” that will promote expansion of the most pernicious grift in recent financial history: cryptocurrencies. We begin with an assessment of that bill. The markup also includes a grab bag of banking bills, a few with merit, but most without, which we address subsequently in ascending bill number order.
None of the bills squarely address what should command this committee’s efforts, namely the shortage of affordable housing, looming threats to financial stability, and the yawning wealth gap between the richest 1 percent and the majority of Americans. It is revealing that the official personal websites of the members who dictate this committee’s agenda say little about its work. These members’ constituents care little, or perhaps even scorn, cryptocurrency. They don’t favor hucksters who avoid investor protection safeguards. They don’t appreciate a member of congress who coddles big banks. Yet these bills are stated for action on the committee agenda.
H.R. 3633, the Digital Asset Market CLARITY Act of 2025
This measure succeeds the “Fit 21 Act” of the last Congress, approved with strong bipartisan support, a result we believe reflects profligate political spending by the crypto sector in 2024. Now that the crypto political spenders brazenly threaten to recycle even more of their ill-gotten gains into future elections, Congress is speeding through more pro-crypto bills.
Even if this so-called CLARITY Act provided all that its sponsors claim, namely investor protection, iron clad anti-money laundering guardrails, reinforced separation between banking and commerce, and even if this draft emerged solely from the offices of Ranking Member Maxine Waters, and all the intelligent, progressive members of the House, Public Citizen would oppose the bill if it does not force the termination of President Trump’s corrupt misadventures into crypto.
Trump once dismissed bitcoin, the most popular crypto, as “based on thin air.” It is a “scam.” It can facilitate unlawful behavior, including drug trade and other illegal activity.” Now, he’s the self-proclaimed crypto president.
Recently, the Trump family announced an agreement with a fund backed by Abu Dhabi that “would be making a $2 billion business deal using the Trump firm’s digital coins,” according to the New York Times. This deal involves a stablecoin. The U.S. Constitution (Article 1, Section 9) forbids accepting money (specifically a “present” or “emolument”) or anything of value from any “king, prince, or foreign state.”
Before this, Trump promised a presidential dinner to the largest new buyers of his crypto “meme,” called “$Trump.” He restated this “gala” solicitation May 5. He hosted this gala on May 22 at his golf course near Sterling, Va.. Public Citizen led a protest at this live violation of federal conflict-of-interest statutes, which drew a large turnout and considerable media attention, as noted above.
Federal law strictly regulates payments to government officials, including gifts. Although the president may receive gifts, he may not “solicit” gifts. These prohibitions begin with the Constitution’s Emoluments Clause and are reiterated in the anti-bribery statute, 18 U.S.C. § 201, and federal regulations, 5 C.F.R. § 2635. Although section 2635.205 lists several exemptions from the prohibition, none exempts soliciting purchases for personal gain.
As to why the public might be interested in sending money, the Trump meme website explains: “This Trump Meme celebrates a leader who doesn’t back down, no matter the odds.” Under the Trump meme website’s question, “What is a meme?” the website explains: “Merriam-Webster’s meme noun: 1: an idea, behavior, style, or usage that spreads from person to person within a culture.”
The website states that “Trump Memes . . . are not intended to be, or to be the subject of, an investment opportunity, investment contract, or security of any type.” Trump’s Securities and Exchange Commission also stated that meme coins have “no use.” Other cryptocurrency observers deride memes generally as without value. Former aide Anthony Scaramucci said Trump’s effort demeans broader cryptocurrency efforts, calling it “Idi Amin level corruption.” Another commenter said that the Trump meme “is effectively a ‘for sale’ sign on the White House.” Some, including an author in the Washington Post, characterized this token as a “sh—coin.”
In short, it appears Trump is not soliciting money in exchange for an investment or tangible product (such as a Bible, sports shoes, or a guitar), but soliciting money in exchange for nothing—that is, asking for a gift that will benefit him personally.
Already, Trump has profited millions of dollars from the meme and other ventures. His initial sale generated nearly $100 million. The latest salvo in April brought in roughly $100 million more. Some new buyers came through the Binance exchange, legally barred for US investors, meaning that Trump may well be violating the emoluments clause with this venture as well.
The dangers inherent in the $Trump meme portend ominously. Should the president be allowed to enrich himself in this way, other politician might follow this path, rendering the prohibition on solicitation in 18 U.S.C. § 201 and the prohibitions on receipt of gifts by officials other than the president meaningless.
Paradoxically, while this Trump meme is worthless (by his own estimation) Trump managed to create an earlier crypto that is worth less. In October, 2024, he became the “chief crypto advocate” for World Liberty Financial, a nascent cryptocurrency firm. The World Liberty Trump crypto is worse because it cannot be resold. This $Trump crypto claims to buys “governance,” but only a minority share. Trump controls the majority of the governance tokens.
Public Citizen views crypto dimly, largely as a Ponzi scheme whose victims disproportionately include vulnerable populations. We view stablecoins as financing vehicles for illicit activity, including human, drugs and arms trafficking.
At the very least, Congress must bar the president along with all elected officials and their families from owning, buying or otherwise trafficking in stablecoins. Americans must be assured that policy won’t be fashioned by those profiting from the shape of the legislation. We support legislation introduced by Ranking Member Maxine Waters and that of other lawmaker to address Trump’s conflict of interest grift.
Further, Congress should approve an amendment that restates conflict laws that already apply to the president. Namely, he may not solicit gifts; he may not accept gifts from a foreign sovereign; he may not sell political favors.
Finally, federal ethics officials must declare that promotion of a meme constitutes a solicitation of a gift, in violation of conflicts and anti-bribery statutes. Public Citizen has appealed to the Department of Justice and the Office of Government Ethics for such a determination. We do not expect these Trump-controlled offices to respond to our letters or take action. However, the Government Accountability Office (GAO) operates independently. We ask responsible lawmakers to request a GAO determination.
Pro-crypto lawmakers apologize that Trump corruption will persist whether or not Congress approves crypto legislation. We reject this defeatist position. Congress must not abdicate any powers to hold Trump accountable. Without conflict-of-interest guardrails, approving these bills effectively endorses Trump’s conflicts. The bills will integrate crypto into mainstream banking, serving to fatten his grift.
As noted above, we will oppose any crypto bill that fails to terminate Trump’s crypto ventures.
But the CLARITY Act introduced last week falls so short of these necessary protections as to invite mockery. Putting a sign on the keg at a frat party that says “Over 21 only” would achieve better results at tamping down harmful behavior. Fundamentally, the CLARITY Act accords the imprimatur of federal government approval for crypto by awarding official SEC-approved status for qualified firms.
To qualify for approved status, a firm might actually register. Exemptions, however, abound. Sections 309 and 409 of the legislation would exempt firms if they relate to “the operation of a blockchain system.” Crypto projects may win exemption for contracts that trade and settle on a blockchain. The bill exempts tokens with “value, utility or significance,” a designation that the sponsor itself can claim. And all existing tokens enjoy a grandfather protection, legal amnesty for any reporting requirements.
In effect, the bill claims to establish a speed limit, and then provides what amount to exceptions for drivers with red cars, fast cars, if they’re in a hurry.
Further, the bill offers a means for non-crypto companies to bypass securities law and use the blockchain to raise funds. This threatens to upend a near century of securities law- and rule-making that established American markets as the envied, disciplined, safe, and largest in the world. Once the crypto craze dissolves and/or crashes, this element of the bill, if it becomes law, will constitute one of the greatest deteriorations of sound securities law ever.
The bill fails to provide adequate compliance requirements to deter money laundering. Drug, arms and human traffickers use crypto to avoid detection. If crypto promoters simply required every participant to register–r just as a driver secures a driver’s license– much of this problem would abate. That the bill sponsors resist this simple policy speaks grimly about whom they are serving with this legislation.
Finally, bill sponsors claim they promote this bill to keep crypto innovation American and provide long-needed regulation. But not all “innovation” advances an economy. Crafty cyberthieves deserve no trophy, nor do romance scammers, but both varieties of scammers frequently use crypto to bilk their marks. Moreover, current securities law provides a rubric for crypto. The Biden administration asked crypto to register and comply; some did. Most, however, prefer to grift outside any barriers. This committee must not plant the US flag on this rogue industry through this bill.
H.R. 225, the HUD Transparency Act
This bill requires annual testimony from the Department of Housing and Urban Development (HUD) Inspector General (IG). We support accountability and welcome such routine hearings. We support this bill.
H.R. 2808, the Homebuyers Privacy Protection Act
This bill amends the Fair Credit Reporting Act (FCRA) to limit the ability of credit reporting agencies (CRAs) to sell “trigger leads” to mortgage brokers and lenders when a consumer’s credit report is pulled in relation to a mortgage loan application. Trigger leads alert rival lenders to a customer’s interest in credit. This bill requires the prospective borrower to consent to a trigger lead. We support this requirement for obtaining borrowers’ consent and support the bill.
H.R. 2835, the Small Bank Holding Company Relief Act
This bill would allow banks as large as $25 billion in assets to operate with more debt and less relative equity. Over-leverage leads to failure. Banks overly reliant on debt risk insolvency. If the value of their assets declines by as little as 10 percent, they become insolvent, as what they owe becomes larger than what they own. The overriding reason that bankers fund their operations with as much debt and as little equity capital as possible: executive compensation. Banker bonuses largely come in the form of stock grants. The higher the stock price, the richer the compensation. Less equity capital means the profits of the bank are greater for each share. Banker bonuses stem from return on equity, or ROE. The smaller the equity, the greater the return, and the greater the compensation. (The simplest way to boost pay based on ROE, is to reduce E.) Public Citizen explored the many dangers of that idea in the book titled Too Big. We oppose this bill.
H.R. 3645, the Amendment for Crowdfunding Capital Enhancement and Small-Business Support (ACCESS) Act
This bill exempts a greater number of companies from basic disclosure requirements when they use crowdfunding rules. Investors deserve more, not less, information, from small companies. We oppose this bill.
H.R. 3672, the Securities Research Modernization Act
This bill removes safeguards against so-called analyst reports that promote a new offering where the author may be part of the sales team. We oppose this bill.
H.R. 3709, the Advancing the Mentor-Protégé Program for Small Financial Institutions Act
This bill directs the Department of the Treasury to establish a mentor-protégé program pairing large financial institutions with small, rural, and minority depository institutions, with the goal of enhancing their capacity to serve customers and potentially act as financial agents. We support this effort to promote greater diversity in banking and support this bill.
H.R. 3716, the Systemic Risk Authority Transparency Act
This bill requires the GAO and federal bank regulators to report after the FDIC invokes the systemic risk exception, detailing causes of bank failures, regulatory actions, and any management or supervisory shortcomings. The systemic risk exception allows the FDIC special powers, such as covering the funds of depositors with more than the $250,000 limit for guaranteed return after a bank failure. These limits should serve to deter moral hazard, where bankers take greater risks because they believe in government bailouts. Investigators must rigorously examine such episodes after the invocation of the exception so that Congress can approve appropriate policy reforms. We support this bill.
In conclusion, we believe this committee should be focusing its attention on the critical financial challenges facing Americans, rather than rolling out the red carpet for cryptocurrencies. This committee should not approve a bill that fattens the profits of Trump’s corruption. Instead, it should meet those challenges and surmount them by significantly increasing financial protections for consumers.
For questions, please contact Bartlett Naylor at bnaylor@citizen.org.
Sincerely,
Public Citizen