Cryptocurrency Executives Appear Before Congress To Determine Future Of Digital Assets

The House Financial Services Committee called a hearing in which several cryptocurrency executives discussed the nascent digital ecosystem.

When President Biden signed the $1.2 trillion Infrastructure Investments and Jobs Act last month, he also approved provisions that tighten federal oversight of cryptocurrency. During debate in August, however, some lawmakers — including Sen. Ted Cruz (R-TX) — noted that the definition of the term “broker” in the text of the bill was highly unclear. 

The Wednesday testimonies from six cryptocurrency executives come one month after Congress approved the new regulations.

The New York Times reported:

The hearing was called by Representative Maxine Waters, the California Democrat who leads the committee, as part of an effort to understand fast-growing digital assets — and how to regulate them. It followed familiar partisan patterns, with Democrats expressing concern about crypto’s risks as Republicans emphasized innovation and said that strict regulation would drive the industry away from the United States.

Ms. Waters expressed concern about how quickly crypto is being adopted, noting that the “rapid growth” has been fueled in part by celebrity endorsements. These digital assets currently have no “overarching regulatory framework” at the federal level, she said.

Her Republican counterpart on the committee, Representative Patrick T. McHenry of North Carolina, said that his colleagues may not be as steeped in the technology as they need to be to write new rules: “I ask my friends on the Hill, do you know enough about this?”

The executives sought to impart a vision regarding the potential innovations arising from cryptocurrency and blockchain technology.

“I really do believe we are building a new global economic infrastructure layer,” explained Circle chief executive Jeremy Allaire to Rep. Alexandria Ocasio-Cortez (D-NY). Meanwhile, Bitfury chief executive Brian Brooks asked lawmakers to consider the decentralization that cryptocurrency can offer — a move that would benefit internet users, yet deal a blow to large technology firms popular with neither major party’s base.

Beyond the regulations created by the infrastructure bill, many other progressive legislators have been pressing for more federal oversight of the sector.

In July, Sen. Elizabeth Warren (D-MA) asked Treasury Secretary Janet Yellen to evaluate “the dangers cryptocurrencies pose to investors, consumers, and the environment in the absence of sufficient regulation in the United States.” She noted that 27% of hedge funds have cryptocurrency holdings, while banks’ holdings of digital assets result in “liquidity, credit, market, and operational risks.” 

“The longer that the United States waits to adapt the proper regulatory regime for these assets, the more likely they will become so intertwined in our financial system that there could be potentially serious consequences if this market comes under stress,” she wrote.

Earlier this year, Rep. Don Beyer (D-VA) unveiled the Digital Asset Market Structure and Investor Protection Act, which would “protect consumers and promote innovation by incorporating digital assets into existing financial regulatory structures.” According to his office, the legislation would “create statutory definitions for digital assets and digital asset securities,” providing the Securities and Exchange Commission with authority to enforce the law.

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