Two Democratic senators are signaling resistance to supporting a digital asset market structure bill currently under consideration in the Senate due to concerns over potential conflicts of interest involving two White House officials and their connections to "foreign crypto deals".
Senators Elizabeth Warren and Elissa Slotkin, both members of key Senate committees, have voiced their opposition to the legislation without further investigation into the roles of David Sacks, President Trump's AI and crypto czar, and Steve Witkoff, Special Envoy to the Middle East. In a letter addressed to officials at the State Department, Commerce Department, and Department of Ethics, the senators called for an inquiry into whether "politically connected crypto interests are undermining our national security".
Their concerns stem from a New York Times report regarding a $2 billion deal between Abu Dhabi-based investment company MGX and cryptocurrency exchange Binance. The investment, which was announced in March, was reportedly settled using the USD1 stablecoin issued by the Trump family's crypto business, World Liberty Financial. The report alleges that Sacks and Witkoff facilitated the deal by providing the UAE access to AI chips.
Warren and Slotkin argue that the involvement of senior officials with significant conflicts of interest in decisions regarding national security is unacceptable. They are urging a swift and thorough evaluation of these allegations. The senators emphasized that information regarding these potential conflicts is crucial as Congress deliberates on digital asset market structure legislation, aiming to ensure that the crypto industry does not compromise national security.
Meanwhile, a group of Democratic senators, including Ruben Gallego, Mark Warner, and Kirsten Gillibrand, are advocating for a bipartisan approach to crypto market structure legislation. They have proposed collaboration with Republican colleagues to address regulatory gaps and provide explicit protections for businesses and investors. Their proposal aims to extend anti-money laundering requirements to all digital asset intermediaries, including foreign entities serving US customers, and subject DeFi protocols to scrutiny for compliance vulnerabilities. It would also grant the Commodity Futures Trading Commission (CFTC) complete jurisdiction over spot markets for digital commodities that do not qualify as securities, resolving regulatory ambiguity between the CFTC and Securities and Exchange Commission (SEC).
The White House is pushing Congress to act quickly on cryptocurrency market structure legislation. However, disagreements persist among lawmakers and industry stakeholders regarding key provisions. For example, the GENIUS Act, which became law in July, stipulates that no stablecoin issuers can offer any yield or interest on holdings. Senate Democrats have proposed extending this prohibition to include indirect payments made through affiliates, a move that is opposed by the crypto industry but supported by big banks.
