In-house cryptocurrencies: Marching Enforcement, US Partisan Politics and Web3
In-house cryptocurrencies: Marching Enforcement, US Partisan Politics and Web3. A widely heralded meeting has generated a positive response and the industry appears ready for a busy New Year on the hill.
On December 8, top executives from six major crypto firms presented themselves to the U.S. House of Representatives Financial Services Committee in a special hearing on digital assets. While the tone of the conversation was mostly a statement, the industry responded with an optimistic buzz – it looks like crypto will be a hot topic on the hill in the years to come.
The meeting at the National Assembly also received a lot of attention in the mainstream media. It’s worth noting that this hearing marks the first time that senior industry leaders (aka “crypto moguls”) have voiced their fears and hopes about the value sector directly to US lawmakers.
Industry representatives called to witness the hearing include Jeremy Allaire, Circle CEO Sam Bankman-Fried, FTX CEO Chad Cascarilla, Paxos CEO Denelle Dixon, Stellar Development Fund CEO Brian Brooks, Bitfury CEO, and Alesia Haas, Chief Financial Officer of Münzbasis.
This is the first positive public crypto hearing I can remember
The congress seems to have done its homework, the industry seems prepared and in sync
still not sure what the star is doing
very optimistic – could be the beginning of a trend
– Vance Spencer (@pythianism) December 8, 2021
Some of the key lawmakers who have actively engaged with the leaders of the crypto industry include Rep. Pete Classes, a Republican from Texas Rep. Maxine Waters, a Democrat from Lower California, Rep. Republican from Missouri, and Senator Sherrod Brown, a Democrat from Ohio .
So it goes on on the big day.
Allaire backs this point with an example from his company’s work: “In the past few weeks alone, Circle has signed contracts with institutional clients that use these services to make small, efficient international money transfers and payments to remote employees for companies.” As he optimistically stated, it will not be long before “the dollar is as effective and ubiquitous on the World Wide Web as SMS and email”.
Brooks brings the message closer to the main political tensions of the day by highlighting the contrast between tech giants like Meta (officially Facebook) and the decentralized advance of cryptocurrencies. :
At the heart of the CEOs’ stories are the humanitarian impact of digital assets and their potential for growth. Cascarilla has viewed cryptocurrency as a “really powerful tool for democratizing access”.
The point of cryptocurrency is that there is real decentralization and the successful projects will be the ones who achieve them. Bitcoin has been successful because literally millions of people participate in the node network and so there is no Twitter CEO to take you down, no JPMorgan CEO to take your credit cards away.
It was Brooks who made the strong promise of the blockchain-based Web3 era.
Aside from the fiery rhetoric, the message from industry leaders is clear and simple: it is time to rethink the rules of the road and put an end to the government’s dubious nepotism. The industry is still overseen by multiple federal agencies, state-to-state regulation is a mess, and the Securities and Exchange Commission is trying to get its grip on it by describing that digital assets are stocks.
– Kristin Smith (@KMSmithDC) December 8, 2021
The last point is clearly highlighted as the main problem: Coinbase’s Haas suggests treating blockchain-based tokens as digital assets or a way of recording ownership, which would throw them out of scope.
Brooks sparingly highlighted the dysfunctional patterns of the current situation: “What is happening in the US is you have a new crypto project and you go into the SEC and describe it. It’s very detailed and you ask for instructions and them say, “We can’t tell you” and “You list it at your own risk.”
I’m surprised we didn’t get a pump after the congressional hearings! Today is a big day for crypto in the US! The hearings were super constructive and the senators super active! Unbelievable
– Ran NeuNer (@cryptomanran) December 8, 2021
The December 8 hearing again brought up a split on crypto-related issues that are present on the sides. Democrats turn their attention to investor protection and volatility as they view the industry as a potential threat to both uninformed investors and the global economy.
“Currently, the crypto market lacks an overarching or centralized regulatory framework that makes investments in the digital asset space vulnerable to fraud, manipulation and abuse,” said Waters, chairman of the Financial Services Committee.
Related: Road in the sand: US Congress brings partisan politics to crypto
Sherman, one of the industry’s staunchest critics, expresses this concern in a vague, if not confusing, form: “The forces of our society sit on Wall Street and in Washington have spent millions trying to make billions or trillions in the crypto world. ”
Republican lawmakers have demonstrated a pragmatic approach to the decade-old model of the US electoral system, which expects a majority in Congress in the next midterm elections.
I hope that Congress will work with the fledgling digital asset market to make Americans prosperous and move us forward as leaders on the world stage. https://t.co/m6iKPql03Q
– Pete Sessions (@PeteSessions) December 11, 2021
In the words of McHenry, who stands ready to chair the financial services committee if the GOP recaptures the house:
This technology is already regulated. Now regulations can be cumbersome, possibly not up to date. I ask my friends, my political friends here on the hill, this question: do you know enough about this technology to have a serious debate?
Periods goes further and cheers the industry and promises to support it: “I am super impressed that from what I have seen, a lot of ingenuity, a lot of entrepreneurship and a lot of advice for the future about where this could develop, I think it is very important for us to listen. ”
Despite some disagreement among lawmakers, the hearing sparked a positive response from the crypto community, with Jake Chervinsky, head of politics at the Blockchain Association, calling it an “event”. Congress ”and other experts predict broadly similar moods.
Today’s HFSC hearing was the most positive, constructive, and non-partisan public event on crypto I have ever seen in Congress. I mean literally.
It is testament to the effectiveness of the industry and community engagement in the DC over the past few months. We have made astonishingly great progress.
– Jake Chervinsky (,) (@jchervinsky) December 8, 2021
Several representatives also made empathic statements following the hearing. Perhaps the most eloquent response went to Meeks, who expressed moderate optimism about the future of the industry:
The future of innovation in financial markets is inevitable.
Leveraging digital assets can help underserved communities access additional financial tools – but we need to ensure that regulation is coordinated globally. pic.twitter.com/2DbvTZKMvp
– Representative Gregory Meeks (@RepGregoryMeeks) December 8, 2021
Also noteworthy is the silence of crypto critic Sherman, who is usually an active Twitter user.
The overall positive sentiment of the hearing contrasts with some of the recent regulatory actions by the US government. First, the SEC denied WisdomTree’s application for a spot bitcoin exchange trade fund after seven months of scrutiny, confirming that it was unable to invest in a regulated financial product that offers direct exposure, followed by the oldest cryptocurrency in the world.
The hearing will certainly not be the last in talks with the crypto government, not even for 2021. There was a hearing on stablecoins before the banking, housing and finance committee.
As representative of McHenry Put it, “Congress needs to work to fully understand and leverage these innovative new technologies like #crypto.” It seems everyone should prepare for a busy 2022 in crypto policy and regulation.