Wednesday’s Senate hearing on digital assets was off course by Sen. John Kennedy to former White House ethics lawyer Richard Painter about Beincrypto’s reporting to major supporters on key campaign contributions.
However, the painter says that the real concern is not a personal attack. It is how laws like clear conduct are at risk being shaped by political influence, financial lobbying, and legal maneuvers that could undermine independent surveillance of the crypto market.
Senate hearing materials
The uproar hit the US Senate floor on Wednesday, but Kennedy shockedly referred to the painter as a “bang” mid-hearing.
Painter was invited to provide expert testimony at a Bank Senate Committee hearing on digital assets, and was questioned by people in Congress who attended the important testimony he provided minutes ago.
When it was Kennedy’s turn to ask, the Louisiana Republican senator referenced an exclusive Beincrypto published in May about Sen. Kirsten Gillibrand, the $217,000-exclusive Senator, received in campaign contributions from major crypto companies for the 2024 Senate reelection race.
This article was published in the context of Congress’s massive promotion of passing the Genius Act. Instead of focusing on the headline itself, Kennedy accused the painter of calling him Gilibrand.
From there, the remaining interaction escalated on its own.
Neither Kennedy nor Gillibrand responded to Beincrypto’s media requests immediately, but the painter spoke about the topic.
“I don’t think anyone answered any questions about the impact of the campaign’s contribution to decisions being made in Congress and decisions that have a major impact on the crypto industry,” Painter told Beincrypto.
This becomes more important than ever as the House moves forward with a market structure bill aimed at regulating the entire crypto industry. For painters, parliament has already begun with the wrong foot.
Legal loopholes in clear law
The main theme of Wednesday’s Senate hearing was to discuss clear actions aimed at defining structures to regulate digital asset-related markets. The full home of representatives has not yet voted for the law.
Tim Massad, Obama-era chairman of the Commodity Futures Trade Commission (CFTC), said in testimony that day the law now presents a legal loophole that can further suppress crypto markets rather than regulate them.
The current version of the Clarity Act presents a centralized platform and tokenization carve-out and exemption authority that allows large corporations to escape surveillance from the Securities and Exchange Commission (SEC).
In this context, tokenized public companies like Meta and Tesla can convert traditional stocks into blockchain-based tokens and list them on CFTC regulatory platforms rather than on SEC exchanges.
This effectively removes it from strict SEC rules regarding disclosure, audited finance and investor protection.
“Of course, Tesla stocks are security, and if I want to trade them, I would trade them on an exchange regulated by the section, but will issuing a stable token linked to the share of Tesla stock exempt from regulations?” the painter explained.
During the Senate hearing, there was a general consensus that the SEC and CFTC should work together to effectively regulate the crypto market. It was also proposed that provisions that allow this collaboration will be included in the final draft of the Clarity Act.
The painter supported this principle. However, he warned that the outcome of the recent Supreme Court decision could undermine the autonomy of these major institutions.
Could Trump’s courts weaken regulatory independence?
In May, the Trump administration won a favorable Supreme Court decision granted to presidential authorities to eliminate members of independent committees, including the SEC and CFTC.
The ruling lifts a lower court injunction, allows the president to freely dismiss certain appointees and restructures control over key regulatory bodies.
“They have already fired members of the National Labor Relations Commission and several other independent committees. Since the 1930s, it has been understood that the president cannot do so,” Painter told Beincrypto.
Such a decision gives the President an unprecedented authority over key appointments.
“He already has the power to nominate those regulators and the chairman of the majority of commissioners. But if he can fire the Democrats, who are commissioners, and have a unanimous committee, to have more control, it is clear that the President has immense power over the regulators, but he can further fire his approach.”
The verdict expands the president’s authority to eliminate certain officials, but does not grant unlimited authority. The Supreme Court shows that certain agencies, such as the Federal Reserve, may retain protection against arbitrary termination due to their own structure and function.
Nevertheless, an increase in executive control over independent committees could overshadow clear law provisions and reduce the effectiveness of the regulatory framework.
Trekking forward with uncertain passes
As the act of clarity progresses, the grey area exacerbated by the increasingly blurry lines between crypto lobbying and politics creates uncertainty in effective digital asset regulation.
The coming months will determine how lawmakers and regulators will navigate these complex legal and political agendas.
Ultimately, however, the future of digital assets does not rely solely on laws like clear conduct. Financial surveillance will also be active in external factors that could change how political influence changes.
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