"To protect consumers, maintain market integrity, and uphold the very essence of Bitcoin, Congress must act boldly and outlaw rehypothecation of Bitcoin for all entities"

Why should rehypothecation be banned for bitcoin, but not all assets?

What makes sense is to ban rehypothecation for assets (any asset) where the service is fully custodial. In these cases, savers should expect to pay a service fee for the custody, as with the etf -- perhaps 2% a year. Savers should also understand they aren't entitled to interest. Of course here, no rehypothecation.

In other cases, where the saver gets paid interest, this is where you have some gray areas and it makes sense to talk about what is not allowed, and rehypothecation and perhaps other things should be carefully spelled out and there should be clarity on the oks and the not oks.