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Ahead of a hearing at the U.S. House Financial Services
Committee starting 10:00 EST, executives leading some of the
world's biggest crypto companies indicated in prepared testimony
they will generally support clearer rules. But they will
emphasize that overly restrctive ones would not stifle the
activity, but merely push it away from U.S. reach.
"Without tailored legislative solutions that are openly debated
with public participation, the United States risks unnecessarily
onerous and chilling laws and regulations," warned Alesia Haas,
chief executive of Coinbase Inc, in testimony released on
Tuesday. "This could effectively push crypto activity
underground or to offshore exchanges that have little or no
compliance programs."
The testimony, published by the panel ahead of the hearing, sets
the stage for what is expected to be a closely watched and
high-stakes event, as U.S. lawmakers publicly press
cryptocurrency executives to defend their business and flesh out
ideas for policing them.
Several executives, however, argued for a lighter touch.
"There are a number of examples of U.S. regulatory decisions
that have driven legitimate activity offshore, in ways that harm
U.S. investors, innovators, and workers," said Bitfury CEO Brian
Brooks "There is a reason why crypto talent is no longer
concentrated in Silicon Valley, the birthplace of the original
commercial Internet."
The rapid growth of cryptocurrency, and in particular "stablecoins,"
which are digital assets whose value is pegged to traditional
currencies, has caught the attention of regulators, who fear
they could put the financial system at risk if not properly
monitored. Some policymakers, such as Senator Elizabeth Warren
and Securities and Exchange Commission Chairman Gary Gensler,
are also concerned the products could be utilized for illicit
purposes, or to take advantage of unsuspecting consumers.
In November, a U.S. Treasury-led working group recommended
Congress pass a law specifying stablecoins should only be issued
by firms that have their deposits insured, like banks.
Wednesday's hearing could serve as a good indication for how
likely Congress is to take up any such digital currency
legislation, according to analysts.
Executives said they would welcome regulatory clarity, but that
overly restrictive rules could prove counterproductive.
"Stablecoins and internet-native capital markets are not too big
to fail, but they are now too big to ignore," said Jeremy
Allaire, CEO of Circle Internet Financial. "Policy frameworks
need to support an open and competitive playing field, and allow
new technologies to flourish."
Proponents say stablecoins could revolutionize payments by
offering a reliable, low-cost, instant way to transfer funds
across the globe. The executives say the United States should
play a leading role in fostering that technology, just as U.S.
rules allowed the Internet to flourish in its early growth in
the 1990s.
"Let's work together to ensure that US policymakers are the ones
that set the stage for a productive, smart, regulatory roadmap
for this technology around the world," said Denelle Dixon, head
of the Stellar Development Foundation, in her prepared
testimony. "I hope that we can all agree that crypto and
stablecoin shouldn’t be buzzwords, thrown around to incite fear
of the unknown."
(Reporting by Katanga Johnson and Pete Schroeder in Washington;
Editing by Megan Davies and Dan Grebler)
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