The face-to-face exchange between US lawmakers and the crypto industry may have finally taken a constructive turn.

The biggest regulatory story of the week was a hearing from the U.S. House of Representatives Financial Services Committee focusing on cryptocurrencies. The title of the event – “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the US” – conveyed a different mood than countless previous congress sessions, primarily about investor protection or security risks or threats Financial stability.

Judging by the response from many participants and industry experts, the exchange was received as consistently positive, with lawmakers asking well-informed questions and acting as if their goal could be to understand this new matter instead of acting on preconceived notions. Of course, there have been tiresome questions about Bitcoin’s environmental footprint and the objections of MP Brad Sherman, but it looked like the constructive dialogue between the digital asset industry and lawmakers that we have been waiting for so long.

Below is a short version of the latest Deciphered Laws newsletter. For full details on political developments over the past week, sign up for the full newsletter below.

Listen to the industry

The hearing convened by the Chair of the Financial Services Committee, Maxine Waters, focused on the role of cryptocurrency exchanges, the development of the stablecoin sector and general issues of general digital asset regulation. Several leading crypto CEOs have been convened to represent the crypto space.

One of the prominent topics discussed in the plenary was the cryptocurrency-based decentralization of the digital ecosystem – a politically beneficial aspect at a time when many US lawmakers are uncomfortable with the takeover of power by the World Wide Web. Feeling Giants – as well as U.S. regulators hesitant to give in to certain crypto investment products can be viewed as symptomatic of a distributed regulatory approach. The connection between the global role of the US dollar and the growing demand for stablecoins is also interesting.

BIS: Afraid of DeFi?

Just don’t get carried away by a victory in Congress, a note in the Bank for International Settlements’ latest report on decentralized finance is in order. “Banking for Central Banks” has delved into the vast DeFi space and developed some alarming slogans like “Decentralization Illusion” to describe it.

BIS analysts are concerned about some structural aspects of the DeFi landscape, such as liquidity mismatch and the lack of shock absorbers like banks. The report’s authors claim that protocols regulating DeFi activities carry a risk of centralization, potentially leading to a concentration of power in these systems in the hands of a few. These claims are sure to surprise many, especially among those close to the DeFi space.

CBDC

The preference of the BIS for more regulated financial innovations is evident in the news that its specialized department, BIS Innovation Hub, is actively involved in testing cross-border payments based on the digital euro together with the central banks of Switzerland and France. . The process was deemed successful but stakeholders have made it clear that it does not guarantee the eventual issuance of a European CBDC.

In other focused news on digital currencies, a biennial research by the Reserve Bank of Australia ended with a report highlighting the potential of a digital banking currency for central wholesaling to improve the efficiency of transactions in financial markets.