At a recent hearing of the U.S. Senate Banking, Housing, and Urban Affairs Committee, the stark differences between the two sides of the debate over regulating cryptocurrency were on full display.
Committee Chair U.S. Sen. Tim Scott (R-S.C.) told the July 9 meeting that America needs to embrace – not evade—its blockchain future.
“Because make no mistake: blockchain technology and digital assets are not going away – they are here to stay,” Scott said. “The question we should ask ourselves is whether the United States will lead in shaping the future of digital finance, or whether we’ll let other countries like Singapore and the UAE set the standards.”
Scott said it is important to set a light-touch regulatory system to let the free market determine which cryptocurrencies succeed or fail. Those rules, he argued, should focus on protecting investors, stopping fraud, and letting responsible innovation grow.
That approach marked a sharp contrast with the Biden-Harris administration’s more aggressive regulatory stance, promoted by U.S. Sen. Elizabeth Warren (D-Mass.)
At the hearing, she acknowledged the crypto market “may unlock new opportunities for innovation” but raised concerns about increased risks to investors, national security, and the financial system.
Industry experts who testified before the committee, like Ripple CEO Brad Garlinghouse, endorsed the light-touch regulatory framework, which he said can help the U.S. become the leader in digital assets and blockchain.
“Over 55 million Americans participate in the crypto economy, which equates to a $3.4 trillion market cap today,” he said.
Warren accused Republicans of wanting to give the industry a handout through a light-touch regulatory approach. Portraying the crypto market as the Wild West, she said North Korean hackers stole almost $3 billion from crypto platforms in 2024 and 2025. Warren suggested that terrorists use crypto to finance operations to avoid capture.
Cryptocurrency industry executives disagreed.
“The power of our technology, combined with the authorities of law enforcement, have proven to be a more effective disrupter of illicit activity than anything seen before in traditional finance,” retorted Chainalysis CEO Jonathan Levin. The blockchain data platform works with crypto networks and law enforcement to track illicit activity.
Levin pointed out that less than one percent of the crypto market is used for illegal activities, far less than what Warren suggested. “[It’s] equivalent to what we see in traditional markets,” he said.
Critics of Warren’s regulation-intensive approach reminded the committee that it has already been tried.
Under the leadership of Chairman Gary Gensler, the Securities and Exchange Commission (SEC) targeted cryptocurrency companies and entrepreneurs through a series of regulatory and court actions. That included what Gensler critics called “Operation Choke Point 2.0” – a series of lawsuits and fines meant to tie up the crypto industry in court.
Courts routinely rejected Gensler’s strategy. Multiple suits were thrown out by judges, including one in which the SEC sought to classify Ripple’s XRP token as a security. In one case, a judge threatened to sanction SEC lawyers for “materially false and misleading representations” in a suit against Wyoming-based crypto firm Digital Licensing Inc. The SEC later dropped the suit.
The SEC’s targeting of Ripple is one reason Garlinghouse participated in the hearing. Garlinghouse and Ripple took the government to court after being accused of offering unregistered securities. When the fight became public, Garlinghouse told Coindesk.com he wanted to “(drive) a freight train through Gary Gensler’s core argument.” A federal judge dismissed the case and denied the SEC’s appeal.
For Garlinghouse, any legislation passed by Congress should involve protecting consumers from fraud and scams, providing proper oversight, keeping bad actors in check, and protecting innovation. It must also set clear jurisdictional boundaries for regulators.
Scott emphasized that, if Warren believes the blockchain space is the Wild West, there’s a new sheriff in town.
“The Trump administration understands the importance of innovation, opportunity, and keeping American talent on American soil. It’s time to get back to that pro-growth, pro-America First mindset,” Scott said.
“Here’s the reality: The market, not Washington, should decide what works. Our job is to set clear, light-touch guardrails to protect investors, stop fraud, and allow responsible innovation to flourish.”
