HOUSE AGRICULTURE COMMITTEE SUBCOMMITTEE ON COMMODITY MARKETS & DIGITAL ASSETS
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On April 9, the House Agriculture Committee Subcommittee on Commodity Markets, Digital Assets, and Rural Development held a hearing entitled, “American Innovation and the Future of Digital Assets: On-Chain Tools for an Off-Chain World.”
Witnesses in the hearing were:
- Bill Hughes, Senior Counsel and Director of Global Regulatory Matters, Consensys Software Inc.
- Mark Tague, Founder and Chief Revenue Officer, CattleProof Verified, LLC
- Mike Horton, Project Creator, GEODNET Foundation; Dr. Chris Brummer, Sesquicentennial Professor of Financial Technology, Georgetown University Law Center; Chief Executive Officer, Bluprynt
- Coy Garrison, Partner, Steptoe LLP.
Key Takeaways
The following is a summary of the main topics explored in the hearing, with further details in the Discussion section below.
- Subcommittee Chairman Johnson (R-SD) emphasized the strong bipartisan support behind the Financial Innovation and Technology for the 21st Century Act (FIT21) passed by the House and noted continued collaboration with the House Financial Services Committee (HFSC) to craft and pass comprehensive digital asset market structure legislation. Committee Chairman Thompson (R-PA) underscored the need for clear rules for developers and institutions using blockchain, warning that inaction risks forfeiting American leadership.
- Representatives supported a comprehensive regulatory structure, with Committee Ranking Member Craig (D-MN) stressing that legislation must differentiate between crypto as a financial product and blockchain as an enabling technology. Brummer stated that FIT21 makes progress by clarifying the roles of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), modernizing trading platforms, and initiating registration for digital commodity exchanges. He emphasized that any regulatory approach must be flexible and adaptable to emerging technologies, with key protections like asset segregation and clarity on customer fund treatment.
- Witnesses agreed that blockchain enables broad cross-sector innovation and that regulatory ambiguity is impeding progress and discouraging domestic investment, with unclear jurisdictional boundaries between the SEC and CFTC pushing innovation offshore. Hughes criticized the SEC’s enforcement-first approach, explaining the issues created by the agency not offering a viable registration pathway or clear guidance. Brummer emphasized that innovation requires disclosure to be embedded in the creation process, calling for updated rulebooks to reflect programmable compliance.
- Horton raised that many jurisdictions have provided clear definitions distinguishing digital commodities from utility tokens, prompting some projects to base operations offshore for regulatory certainty. Garrison pointed to regulatory sandboxes in other jurisdictions as a successful model by allowing experimentation while maintaining essential consumer protections.
- Subcommittee Chairman Johnson highlighted the benefits blockchain technology for precision agriculture, improved legal disclosure systems, and market access for producers to demonstrate. Horton explained how blockchain supports advanced technologies like precision mapping for producers, offering greater accuracy and lower costs than traditional systems, as well as broader applications. Committee Chairman Thompson questioned whether precision mapping would be possible without blockchain technology and how blockchain contributes to solving problems outside of decentralized finance (DeFi) use cases.
Opening Statements and Testimony
Subcommittee Chairman Dusty Johnson (R-SD)
We worked with HFSC to craft and pass a bipartisan, comprehensive digital asset market structure bill. FIT21 passed the House with great bipartisan support by a 279-136 vote, and we are picking up right where we left off last Congress. It was not a coincidence that Chairman Steil’s Digital Asset Subcommittee of the HFSC held their first hearing on market structure today. We are united and committed to advancing comprehensive, bipartisan market structure legislation to the President’s desk to bring legal certainty to issuers and users of digital assets, clear customer protections to buyers of digital assets, and new innovations to Americans. People are creating less expensive, more robust, and more precise GPS networks for precision agriculture and other location-based systems. Others are building automated systems to help developers comply with legal disclosure requirements in a way that consumers can actually understand. These are new ways to solve old problems using public blockchains. We must ensure that producers and consumers innovate with and benefit from blockchain. There is work to be done to develop new projects and address the legal landmines that can disturb that effort and slow innovation.
Subcommittee Ranking Member Don Davis (D-NC)
Digital asset policy remains vital for American innovation. My priorities as we move forward on market structure includes getting digital market structure legislation across the finish line to provide our markets with the certainty necessary so that we can continue to operate and ensure that the U.S. remains a leader. We must reauthorize the CFTC, with increased responsibilities for the CFTC concerning future market structure and other related legislation necessitating that the CFTC is reauthorized and provided with the adequate ability and staffing to carry out its job. Rural America relies on rural development, broadband deployment, community facility support, and all the USDA rural development programs. As HFSC advances legislation, it is vital that our Subcommittee remains engaged as the process moves forward.
Committee Chairman G.T. Thompson (R-PA)
Digital assets have the potential to provide significant value for the public and agriculture, not just in monetary terms but as tools to solve real-world problems. Digital asset developers, users, and institutions need clear, thoughtful rules of the road to create these solutions. We are working closely with the HFSC to craft legislation that will do just that, requiring cooperation among Committees and regulators to build a workable framework to oversee digital assets. The result of this approach last Congress was the passage of our digital asset market structure bill, FIT21, in the House with a strong bipartisan vote.
Committee Ranking Member Angie Craig (D-MN)
We need to establish a clear and comprehensive regulatory structure to govern crypto, looking beyond crypto at the potential uses of blockchain technology, which makes crypto possible. Blockchain is not crypto; it is the operating system upon which it is built. People can build applications on the blockchain operating system that serve real-world, non-crypto purposes, with witness exemplifying the non-crypto use cases of distributed ledger technology. We must learn about these uses as we develop legislation to establish a regulatory structure for financial products using blockchain. We do not want to stifle innovation in non-financial uses of the technology. I hope the Committee’s work in this space will lead to legislation with broad bipartisan support. If successful, it will not be due to the meme coins issued by the President and his family or the cryptocurrency companies they buy, as these efforts undermine the credibility of the entire industry. We must focus on the power of American innovation.
Bill Hughes, Senior Counsel and Director of Global Regulatory Matters, Consensys Software
Web3 primarily uses the Ethereum blockchain as the first and most established programmable blockchain, safeguarding assets without a bank or custodian and sending funds without a payment intermediary. Unlike Bitcoin, it additionally supports software programs, called smart contracts. The financial applications of DeFi and payment stablecoins are powerful innovations that will mature as technology evolves. Economic and investment activity from traditional finance slowly moves to blockchain. Blockchain applications are much more diverse than finance. On most blockchains, there is a native digital asset that serves as the foundation of the incentive structure, which is how users pay for moving value or accessing software applications on the network, as well as payment for maintaining the network infrastructure. The market must have the freedom and clarity to innovate with blockchain. This is an opportunity to move on from outdated thinking. While the rest of the world has updated policies to embrace innovation, the U.S. has fallen behind, threatening its leadership role on this issue.
Mark Tague, Founder and Chief Revenue Officer, CattleProof Verified, LLC
We operate at the intersection of agricultural providence, blockchain infrastructure, and rural economic development, bringing integrity, transparency, and innovation to often overlooked livestock and commodity markets. At the core of our solution is verifiable data, addressing inefficiencies in agriculture caused by fragmented systems, paper trails, and lack of transparency. We build on-chain tools for off-chain assets requiring providence, auditability, and programmable trust. Users upload verified documents, creating a USDA-certified digital identity for each animal, enabling downstream partners to verify claims instantly without relying on centralized authorities. We are not asking ranchers to replace markets but to use tools that operate in the background, adding security, efficiency, and access. Tokenizing livestock enables fractional ownership, collateralization, and liquidity, promoting financial inclusion. We integrate on-chain payments using Wyoming’s stable token (WYST) for near-instant, cost-effective transactions, along with transparency in land stewardship practices through the USDA Process Verified Permit. Regulatory clarity and infrastructure are essential. Agriculture is the ideal test bed for digital assets, creating verifiable records of assets’ lifecycles. With commodities representing trillions in value, bringing them on-chain could position the U.S. as a leader in programmable real-world markets. Digital asset tools need low-cost, transparent settlement and clear legal frameworks for stablecoins, like the STABLE Act passed by the HFSC. Other countries are ahead of the U.S. in creating regulatory frameworks, and with the right tools and policies, we can lead in unlocking the value of real-world assets on-chain.
Mike Horton, Project Creator, GEODNET Foundation
Precision agriculture provides substantial economic benefits to producers through efficient crop applications that also benefit the environment. Precision agriculture depends on precise GPS, with blockchain enabling GEODNET to improve the reliability and reduce the cost of precision GPS for farmers. Standard GPS cannot pinpoint where a specific plant is planted or help steer a tractor without running over the plants themselves, measuring in feet not inches. Precision GPS techniques can improve location accuracy from several feet to sub-inch precision. The most precise method of positioning is RTK (real-time kinematics), requiring either a direct or indirect connection to one or more GPS reference stations. To work at scale, a network of these GPS antennas is necessary, but we do not have the billions of capital needed. Blockchain can solve this problem and GEODNET uses it as the largest precise positioning RTK network in the world. This type of blockchain application is known as decentralized physical infrastructure networks (DePIN). GEODNET is one of the leading DePIN networks, but there are more being built globally, including DePIN networks for broadband internet and decentralized energy. We offer reliable, high-accuracy positioning needed for precision agricultural practices, as well as the precision required by many robotics and drone systems in agriculture. GEODNET is loved because of the low cost, accessibility to both small and large farm operators, and compatibility with both new and old equipment. The USDA’s Dale Bumpers Small Farm Research Center has been an active GEODNET node operator for over a year, and USDA research staff has validated quality and accuracy on both new and old machines. For the end farmer who requires a precise position signal, GEODNET subscriptions offer savings from 33 to 90 percent per year compared to centralized corporate competitors. GEODNET provides small farmers with ROI to use precision agriculture, while higher-cost centralized solutions are either out of reach or do not provide RTK coverage in the area. GEODNET’s unprecedented stations spread of stations provide the best immunity to solar weather and we are the solution of choice for two of the leading autonomous farm equipment companies. The GEOD token is the key mechanism that allows the network to operate and grow successfully without capital investment from a centralized entity, whether corporate or government. This innovative digital infrastructure depends on reliable blockchain networks. We must consider ways to enhance clarity on digital asset regulation and ensure high-utility blockchain applications thrive in the U.S.
Dr. Chris Brummer, Professor, Georgetown University Law Center; CEO, Bluprynt
Making things and disclosing things need are not separate endeavors, but two sides of the same coin. Blockchains are programmable, immutable, and transparent; perfect for compliance and identifying friction points. MiCA took a step forward in doing what the SEC could not at that time: tailoring a disclosure regime for crypto assets based on the production of “white papers,” similar to SEC filings for issuers of crypto assets. However, there were still plenty of questions within MiCA, having undefined terms, open to interpretation, such as basic conflicts of interest, certain kinds of digital asset features, and how compliance is defined. Compliance is not cheap and takes weeks to complete. Recognizing the programmable nature of blockchains, we built tools for developers to embed regulatory metadata on-chain. The digital economy is a disclosure economy. We are not just building a business but also building systems applicable beyond financial markets. We put infrastructure in place to facilitate producers hedging against fluctuations and embed that process on-chain. Effectively building high-quality digital infrastructure requires Congress’s help to set clear rules of the road and support compliance technologies. The rulebook itself needs updating. Even if technology evolves and the rules stay the same, problems can arise, especially if weaknesses emerge, creating risks or challenges for innovators who cannot build or navigate both.
Coy Garrison, Partner, Steptoe LLP.
Passing digital asset market structure legislation is essential to promoting American innovation in blockchain technology. The promising use cases and projects built on blockchain technology rely on digital assets being easily transferable. Exchanges lack any federal regulatory oversight to promote market integrity, monitor against fraud and manipulation, or impose requirements to safeguard customer assets. Entrepreneurs face an unnecessary stumbling block of regulatory uncertainty in the U.S. The SEC, under Chair Gensler, initiated litigation against several digital asset trading platforms, alleging that such entities were operating as unregistered securities exchanges, broker-dealers, and clearing agencies. While the SEC has asserted jurisdiction through enforcement actions, the agency declined to provide a pathway to registration. It failed to articulate a cogent and consistent analysis of the fundamental legal issue at hand: whether secondary trading of digital assets involves the sale of investment contracts or securities. Faced with such legal uncertainty, those looking to build a decentralized network in the U.S. often choose not only to build and launch offshore but also to exclude or limit U.S. participation, hurting our competitiveness while encouraging entrepreneurs and capital to flow to other jurisdictions. The SEC’s Crypto Task Force, led by Commissioner Peirce, issued clear statements excluding certain transactions from securities law and is actively soliciting public input. There are limitations to what the SEC and CFTC can achieve absent direction from Congress. A significant regulatory gap exists as neither agency has clear statutory authority to regulate spot market trading of digital assets. This is an opportunity to work together to bring sensible regulation to the digital asset industry by enacting market structure legislation. Chairman Thompson published six principles for this market structure legislation, providing sensible guideposts upon which a framework can be built. Legislation must promote innovation and should focus on regulating the spot market trading of digital assets without regulating their intended use within the respective network. If a digital asset itself is labeled a security under the legislation, then each transaction in that digital asset, even outside of a digital asset exchange, would be subject to securities laws. This would severely restrict the ability and intended use on the assets network and could drive the development of the network and capital flows offshore. Legislation must provide clarity for the classification of assets. In developing any tests to divide jurisdiction between the CFTC and SEC, the Subcommittee must weigh the following factors: whether the test will upend current practices and bifurcate spot digital asset markets, and if so, whether there is a compelling customer protection or market integrity justification for doing so. Market oversight should function independently. The timing is right to implement a much-needed regulatory framework.
Discussion
Representative Thompson (R-PA): How do you see blockchain and digital asset tools contributing to the solution of sustaining U.S. agriculture across generations? Do you believe these tools can help encourage younger generations? Tague: Solutions like ours are key to attracting younger people into the industry, as most expect modern technology. Younger generations need a way to transfer data to the public to create trust and transparency and secure a premium. We provide that solution because the industry has become inefficient and there is an erosion of trust. Relying on paper trails, instead of an immutable ledger, causes these issues.
Representative Thompson (R-PA): Would precision mapping be possible without blockchain technology, and can you explain blockchain’s unique ability to contribute to solving this problem? Horton: It is not possible to build this kind of network without it, as both centralized companies and governments have spent years and money trying without success. GEODNET has built the world’s largest network in just two years, more than doubling the number of stations. At the root of this success is blockchain and the incentives provided by a token.
Representative Johnson (R-SD): Will blockchain technology enable new capabilities in hundreds of industries, and would the U.S. benefit from being the home of that innovation? Is a lack of a clear regulatory regime around digital assets and blockchain risk reducing innovation and investment in the U.S.? All: Yes.
Representative Johnson (R-SD): Why choose blockchain over alternative centralized solutions? Tague: We specifically chose blockchain over a central eBay or PayPal type model because it requires trusting a central authority or person to trust that data, and there is potential for bias. Blockchain is a distributed ledger with no bias, so we chose it for the trust factor over creating just a central eBay or PayPal type system.
Representative Johnson (R-SD): What is the GEODNET protocol, what does the GEOD token represent, and how does it interact with Solana? How do these components fit together? Horton: The Layer 1 blockchain is a distributed operating system that projects like GEODNET build on. GEODNET connects providers of RTK data to users, and the GEOD token helps buyers and sellers transact and record data in a consistent, transparent way. It also rewards stations providing good coverage and performance, incentivizing the growth of that coverage.
Representative Craig (D-MN): Can blockchain help the financial sector meet current or new customer disclosure obligations at much lower cost? If so, does that also enhance customer protection? Brummer: Blockchains allow data to be composable, programmable, and transparent, enabling a wide range of functionality. In working with central banks, regulators, and Layer 1 and Layer 2 solutions worldwide, we see that blockchain’s functionality can enable disclosure solutions and compliance services at much lower costs and faster execution.
Representative Craig (D-MN): How have foreign governments approached regulating this technology, and if so, what were lessons learned? Hughes: A key lesson is to focus on centralized intermediaries first, as they currently hold the majority of the economic mass. Another lesson is that there hasn’t been a heavy hand in regulating the technology itself, which allows for innovation in real-world applications, as seen in examples today; Horton: Other jurisdictions have clear guidelines for what is a digital commodity and what is a utility token, which is helpful. This is why many projects with tokens have their foundations based offshore; Brummer: Most regulators get caught up in translating terms of art into a legal regime. One of the challenges for global regulators is creating something elastic enough for the future, yet concrete enough for people to work with and build upon. International regulators and policymakers can stumble on this; Garrison: Regulators and jurisdictions that have allowed experimentation through sandboxes have shown a great ability to let the industry try new things while preserving consumer protections.
Representative Rose (R-TN): As agriculture enters the era of digital assets, how can we better integrate innovative technologies like MetaMask into production agriculture transactions and increase adoption of these tools across the sector? Hughes: We need to think about how these assets can migrate online. Putting assets like cattle and all relevant data on-chain allows for streamlined trading. Once that data is on-chain, an interface like MetaMask enables you to control assets, manage permissions, and define transaction types.
Representative Rose (R-TN): How can blockchain technologies improve market access for producers and enhance their ability to receive higher prices, given their potential to increase security, transparency, and strengthen buyer-seller relationships? Tague: The blockchain network is central to what we are creating. The idea behind our product is trust and transparency, aiming to create this from the producer all the way to the consumer. One way we do this is through USDA process verified programs. By putting that data on an immutable ledger, you can trust it from start to finish; it can be changed, but any changes will be recorded. Producers are generally price takers, not price makers. Verifiable data using blockchain can help producers receive a premium for commodities by proving premium products and securing premium prices.
Representative Rose (R-TN): Can you explain how integrating blockchain technologies can help minimize issues with payment methods and delays for producers? How do we speed up the adoption period? Tague: Using blockchain technology and smart contracts, we can make transactions almost instantaneous and avoid the traditional delays and burdens, ensure everyone related to the transaction is instantly paid with full compliance; Brummer: We must have a structure that enables people to engage with the technology for its benefits, not just through a crypto-native interface. This makes it easier for more people to engage with technology and fosters trust in it, helping to mainstream use and application.
Representative Lucas (R-OK): What are your views on how to address the spot market gap in digital asset regulation, particularly regarding proposals that grant the CFTC authority over decentralized exchanges? Why is this issue so important in discussions around digital asset market structure? Garrison: There is no federal market regulator overseeing spot digital assets, meaning all participants are subject to the whims of trading platforms and their own protections. Issues like preserving market integrity, preventing fraud and manipulation, front-running, and safeguarding customer assets currently lack a federal standard. Congress should focus on this as it considers market structure legislation.
Representative Lucas (R-OK): Given the dual regulatory oversight by the SEC and CFTC, which can complicate hedging strategies involving products across both jurisdictions, how should the Committee approach this in market structure legislation? Should we allow digital asset products that are naturally hedged and offset to be margined together within the same portfolio? Garrison: The focus and approach are to maintain clear lines between the CFTC, which analyzes risk hedging functions, and the SEC. The key question is whether the CFTC and SEC should share jurisdiction over spot markets or if jurisdiction should be assigned solely to one. There are pros and cons to either approach, but at the end of the day, the SEC and CFTC have a long tradition of working together. While challenges can arise, as seen in 2020 when the SEC and CFTC held a joint Commission meeting and voted on various rules, regulatory harmonization can be achieved if the leadership of those agencies works closely together.
Representative Lucas (R-OK): What would regulatory certainty and assistance, such as through the Securing Innovation and Financial Regulation Act that codifies the CFTC’s LabCFTC and the SEC’s Strategic Hub for Innovation and Financial Technology, mean for agricultural producers, particularly in terms of accessibility and fostering fintech innovation? Tague: Investors need regulatory certainty to invest, as most will not invest large sums of money into a product without it. With that certainty, we can also provide these tools to ranchers and farmers, ensuring they receive all the benefits of this technology. This technology will support everyone, from consumers and producers to rural communities and infrastructure.
Representative Figures (D-AL): How is cybersecurity prioritized in this technology, and how can we ensure that farmers feel secure in the investments they are making in these technologies? Horton: The hardware itself contains a cryptographic chip certified by the Foundation, which supports the decentralized deployment of these stations. This chip is programmed to sign the data, ensuring it is authentic and originated from a real GEODNET station. We see the data first and can use it as a code to verify that people are not faking the data.
Representative Cammack (R-KS): With farming becoming increasingly expensive and margins continuing to shrink, how does your technology help producers become more efficient? Horton: Farming is hard enough, and precise positioning helps farmers by reducing overlap when driving tractors. Without it, farmers could overlap ten to twenty percent of the field, driving over the same area multiple times. With centimeter-accurate GPS, machines can steer themselves, avoiding overlap and reducing input costs, like fuel and chemicals, which directly impact the bottom line. Traditionally, centralized solutions have either lacked coverage in certain areas or been too expensive, making it difficult for smaller operators to see an ROI. We have been able to bring costs down and introduce precision agriculture technology to many new farmers. DePIN networks offer an attractive way to extend coverage out to rural areas very cost effectively.
Representative Cammack (R-KS): Does a farmer’s combine, tractor, or sprayer need to be equipped with specific software and hardware in order to utilize your technology? Horton: Yes, with two solutions and options. One is to use the technology already on modern equipment, such as those from John Deere, as well as AGCO, which is built to connect to networks like GEODNET. The other solution is retrofitting older machines with a kit that adds a motor to the steering wheel, allowing it to steer automatically. These retrofit kits are extremely popular and help bring value to older assets.
Representative Vindman (D-VA): What did FIT21 do well and where could it be improved? Brummer: FIT21 accomplished several key things, including defining roles for the CFTC and SEC, modernizing digital asset trading platforms, and starting registration requirements for digital commodity exchanges. When creating rules for emerging technologies, the approach must be flexible and future-proof. Key aspects like segregating customer assets and defining the status of customer funds in bankruptcy are essential. FIT21 also identifies necessary disclosures for the SEC, which will likely elaborate further on, especially regarding tokenomics. Disclosure issues for decentralized assets are an interesting challenge but not new for the CFTC, as they relate to commodities, and more work is needed. Regulatory clarity is needed to define both SEC and CFTC oversight that is workable in theory and practice.
Representative Vindman (D-VA): What are the potential national security benefits to blockchain technology? Horton: A decentralized network of nodes helps detect issues and localize them. The GPS signal, which comes from 12,000 miles away, is weak when it reaches Earth. Having sensitive receivers in these nodes helps identify such issues. We are also working with new low Earth orbit satellites to provide ground infrastructure for them. Doing this in a decentralized way will provide additional reliability and resilience to our positioning networks over time.
Representative Nunn (R-IA): Is regulatory whiplash in digital assets hurting American innovators? Hughes: It absolutely is, pushing innovators to migrate overseas. We are starting to see a change, but when we talk about a chilling element to entire chains of open-source software networks being served with SEC subpoenas out of the blue. This does not create a conducive environment for evolving the next era of innovation. People want to work with U.S. companies and found U.S. companies because this is where the talent and capital are. If we have a coherent regulatory structure that people can comply with, doors will open that benefit the industry and the country.
Representative Nunn (R-IA): Between the SEC and the CFTC, has anyone offered a roadmap that we should consider replicating in Congress? Hughes: Unfortunately, no. We are strongly encouraging both agencies to engage with Congress to develop a coherent regulatory regime, and the CFTC has done a much more admirable job. We are seeing full engagement and the SEC’s efforts, especially the Task Force, should be applauded. There is a cart-and-horse problem because we need a new legislative regime first, then the SEC and CFTC can fill in the gaps. They are doing a great job narrowing the gap, but ultimately, they are setting the stage for Congress to take action.
Representative Jackson (D-IL): Do you see an advantage or disadvantage in a public versus a private distributed ledger platform? Brummer: Time has shown that open, permissionless ledgers are more attractive than private ledgers because private ledgers require multiple servers. Wall Street has examined private blockchains to improve internal services and offer new products, but these efforts have largely wound down. On an open, permissionless ledger like Ethereum, you are plugging into an existing system, which lowers infrastructure costs and provides security and open architecture advantages. We should support open, permissionless ledgers in future legislation.