U.S. Treasury Secretary Scott Bessent issued stern words Thursday to crypto stakeholders who think they can live without a market structure bill, stating it’s “impossible to proceed” with regulating crypto in the United States if the legislation does not pass Congress.
“There seems to be a nihilist group in the industry who would prefer no regulation over this very good regulation,” Bessent said during testimony today before the Senate Banking Committee.
“We have to get this Clarity Act across the finish line,” the Treasury Secretary added a few minutes later. “Any market participants who don’t want it should move to El Salvador.”
Bessent’s comments came weeks after Coinbase, America’s top crypto company, abruptly pulled support for the bill, derailing a key Senate Banking vote on the legislation. Coinbase CEO Brian Armstrong said at the time that the company would “rather have no bill than a bad bill.”
That comment was publicly rebuked by the White House, which warned that if the crypto industry believes it will be able “to operate indefinitely without a comprehensive regulatory framework,” such thinking amounts to “pure fantasy.”
Coinbase has since returned to negotiations on the bill, but continues to insist the legislation must allow for stablecoins—crypto tokens pegged to the value of the dollar—to generate interest for holders. The banking lobby has furiously protested that ask, warning it could destabilize the U.S. banking system and lead to deposit flight, particularly at the community bank level.
Coinbase’s leadership has adamantly argued such fears are unfounded. But on Thursday, Bessent appeared to give some credence to the banking lobby’s worries, in response to a question from Sen. Cynthia Lummis (R-WY), one of the authors of the market structure bill.
“I’ve been a champion of these small banks, and deposit volatility is very undesirable,” the Treasury Secretary said.
“It’s the stability of those deposits that allows them to lend into their communities, ag[riculture], small business, real estate,” he continued. “We will continue to work to make sure there is no deposit volatility associated with this.”
At another point in Thursday’s hearing, Sen. Mark Warner (D-VA), a key pro-crypto Democrat who has been negotiating the bill’s finer points for several months, expressed his exhaustion at the process to the Treasury Secretary.
“I feel like I’m in crypto hell,” Warner said.
Bessent laughed at the comment, and appeared to almost reply before stopping himself.