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In the early hours of Wednesday Beijing time, executives from Coinbase, Circle, FTX, PAXOS, Bitfury, and Stellar appeared in front of congressmen — Facebook CEO Mark Zuckerberg has testified in Congress more than once in the past few years, each time inevitably being treated with anger and scolding. But this time, the executives of these crypto companies were treated completely differently, and members of Congress were not only curious about crypto, but even began to encourage them to grow their businesses.
These companies are not the most valued crypto companies, but they are the most active in U.S. politics.
Circle and Paxos were involved in the issuance of the two largest dollar-backed stablecoins, and they were both represented at the hearing: Jeremy Allaire and Charles Cascarilla, both of whom were "old acquaintances" at the congressional hearing. In an exchange, Congresswoman Nydia Velázquez asked the two of them to verify the stablecoin reserves before gaining their support for federal standards, to which Jeremy Allaire and Charles Cascarilla agreed.
One of the most prominent proposals in the recent Biden Presidential Working Group's report on stablecoins is to limit stablecoin issuers to insurance depository institutions, so broadly speaking, stablecoin issuers have no relevant constraints. Brian Brooks, bitfury's current CEO and former director of the U.S. Office of the Comptroller of the Currency, also offered his views and questions, saying: "Is there a consensus that only banks can issue stablecoins, but not the largest stablecoin issuers?" ”
Another issue discussed at this hearing is the overall regulation of the trading platform. Coinbase's global CFO, Alesia Haas, and FTX's Sam Bankman-Fried both support some form of regulatory coordination. However, Alesia Haas said the U.S. Securities and Exchange Commission (SEC) did not provide further explanation for shutting down Coinbase lending products.
This time, the U.S. House of Representatives Financial Services Committee "unexpectedly" expressed some sympathy for Coinbase, but the problem remains in the details. The SEC and its sister regulator, the U.S. Commodity Futures Trading Commission, are themselves debating their respective roles in the crypto ecosystem, and the U.S. Commodity Futures Trading Commission currently regulates only futures trading, but there is growing discussion about expanding the scope of regulation by the U.S. Commodity Futures Trading Commission to the cryptocurrency spot market.
Historically, Congressional Democrats have been more interested than Republicans in regulating cryptocurrencies more aggressively, such as Rep. Alexandria Ocasio-Cortez, who argues that "crypto doesn't look like a new system, but an extension of our existing system." Another Democratic Rep. Sherman even said this time: "In fact, cryptocurrency advocates represent the power of our society." ”
In some ways, the attitude of the US Congress toward cryptocurrencies is changing.
The five-hour hearing was held before the U.S. House Financial Services Committee, where six crypto CEOos, including FTX's Sam Bankman-Fried, testified about the growing importance of the market and the industry's desire for regulation.
While past hearings of this kind have focused almost entirely on bitcoin's criminal uses, at Wednesday's meeting, U.S. Congress asked about everything from the security advantages of blockchain technology to the potential of cryptocurrencies to offer greater financial inclusion.
"Web3 empowers everyone," said Rep. Anthony Gonzalez, who used a relatively new term to describe the emerging stack of applications that don't rely on centralized authorization to run. Not only that, but Anthony Gonzalez and others have repeatedly mentioned that due to cumbersome regulation, they highlighted that the U.S. might not be able to benefit from crypto innovations, and asked whether the industry would benefit from the U.S. government's more cohesive policies.
Unsurprisingly, FTX CEO Sam Bankman-Fried agreed with Anthony Gonzalez and urged Congress to clarify overlapping jurisdictions between agencies like the SEC and CFTC and allow companies like Circle, which has issued more than $30 billion in stablecoins, into the current banking system.
Members of the U.S. House of Representatives Financial Services Committee and cryptocurrency executives have also repeatedly pointed out that other countries, including Canada, have allowed products such as Bitcoin ETFs, but the U.S. is still banning them.
Alesia Haas, Coinbase CFO and CEO of Coinbase US, asked Rep. Bryan Steil, "If a large group of customers want to buy a Bitcoin ETF, why don't we let them buy it?" ”
It is worth mentioning that Coinbase has questioned why the SEC cannot issue tokens that are pegged to stablecoins, fiat currencies such as the US dollar. Alesia Haas told Congress, "We've [asked] about it, but we still don't know why our product can't go ahead." ”
Still, some Democrats in the U.S. House of Representatives' Financial Services Committee remain skeptical about the crypto industry, such as:
1. Rep. Rashida Tlaib asks about the growing carbon footprint of Bitcoin mining.
Rep. Sylvia Garcia and Alma Adams both urged both crypto companies to provide data on their company-level and user base diversity — a request that every CEO agrees to.
But even as a handful of Democratic lawmakers have expressed concerns about the crypto industry, other Democrats have praised the innovations brought about by cryptocurrencies and blockchain wallets, especially as the emerging technology has the potential to provide a low-cost alternative to existing banking systems. Rep. Ritchie Torres from the South Bronx admits that cryptocurrencies offer a cheaper and faster way to send money to many local voters, one of the poorest areas in the United States.
Meanwhile, republicans and Democrats alike have expressed concern about whether quantum computing will pose a threat to blockchain security and whether cryptocurrencies will weaken the dollar's position as the world's reserve currency, but also expressed support for the potential of crypto.
Throughout the hearing, only one member of the U.S. House Financial Services Committee, Brad Sherman, expressed his dissatisfaction with the crypto industry, which he believes has the support of Wall Street and therefore has an interest in both sides. Brad Sherman also slammed Coinbase for sending Alesia Haas instead of CEO Brian Armstrong to the congressional hearing, suggesting that Brian Armstrong still needs to come to congress eventually, like Facebook CEO Mark Zuckerberg. Of course, Brad Sherman has always been skeptical of the crypto industry, but judging by the atmosphere of the entire hearing on Wednesday, Brad Sherman seems to have become an outsider.
There is no doubt that the tone of this U.S. House financial services hearing has won praise from many in the crypto community, and remember, the hostility and lack of knowledge of the crypto industry among members of Congress in the past has disappointed many community members. Jake Chervinsky, General Counsel of Compound, tweeted:
"Today's U.S. House financial services hearing is the most active, constructive, bipartisan crypto public event I've ever seen in Congress. What I want to say is literal. This is a testament to the effectiveness of DC's industry and community engagement in recent months. We have made astonishingly great progress. ”
Although several members of the U.S. House of Representatives Financial Services Committee announced that they would enact bills to simplify crypto regulation and support the industry, it is unclear what the final outcome of this hearing will be.
"Web3's rules of the road can be bipartisan," Rep. Jake Auchincloss concluded. (This article was originally published in ChainDede, authorized by Titanium Media App, author: PANews)