Treasury's Bessent Tells Crypto 'Nihilists': Move to El Salvador

"Move to El Salvador." That's Treasury Secretary Scott Bessent's blunt advice for crypto industry players who don't want strong U.S. regulation. In a heated Senate Banking Committee hearing on February 5th, Bessent launched his most direct attack yet on cryptocurrency insiders who've been pushing back against the long-awaited Digital Asset Market Clarity Act.

The Nihilist Problem

"There seems to be a nihilist group in the industry who prefers no regulation over this very good regulation," Bessent testified, drawing an immediate "Amen, brother" from Democratic Senator Mark Warner, one of the bill's key negotiators. When Warner urged Bessent to "weigh in," the Treasury Secretary didn't hesitate: "I do. Early and often."

The frustration stems from high-profile resistance within the crypto community. Coinbase CEO Brian Armstrong notably withdrew support for the Senate Banking Committee's version last month, citing concerns over decentralized finance (DeFi) regulation, stablecoin yield rewards, and how the bill defines tokens as securities. Armstrong's pullback was particularly consequential given Coinbase's influence in the space.

National Security vs. Innovation

Warner, who quipped "I feel like I'm in crypto hell" during the hearing, has been leading discussions on crypto's national security implications. His concerns center on DeFi gaps that could undermine prosecutorial powers. "We need to not create a set of rules that leaves huge exemptions and, candidly, takes away some of the prosecutorial powers that exist today," he said.

The senator expects another meeting within days, with Bessent likely invited to participate. While Warner acknowledged that technical issues like "yields and rewards" can be resolved, he's drawing a hard line on national security concerns around decentralized finance.

The Stablecoin Success Story

Bessent pointed to the earlier GENIUS Act, which regulates U.S. stablecoin issuers, as a model for balanced crypto oversight. He argued this approach could be replicated in the Clarity Act, striking the right balance between innovation and oversight.

"There seem to be people who want to live in the US, but not have rules for this important industry," Bessent said. "We've got to bring safe, sound and smart practices and the oversight of the U.S. government, but also allow for the freedom that is crypto."

The Stakes Get Higher

The Treasury Secretary made clear that passage isn't optional for the industry's future in America. "It's impossible to proceed without it," he declared. "We have to get this Clarity Act across the finish line."

The bill has struggled to maintain momentum as crypto and banking lobbyists clash over stablecoin yield provisions, while lawmakers from both parties remain divided on key details. Yet Bessent expressed optimism that continued bipartisan work could get the legislation "across the line this year."

Warner's upcoming meetings will be crucial, as the Virginia senator has emerged as a pivotal voice balancing innovation concerns with national security imperatives. His focus on DeFi regulation reflects broader Washington anxieties about crypto's potential for illicit finance and regulatory arbitrage.