Top executives from six major cryptocurrency companies including Coinbase and Circle on Wednesday urged Congress to provide clearer rules for the booming $3 trillion industry, but said that inflexible restrictions would push business overseas.
The US House of Representatives Financial Services Committee marked the first time senior cryptocurrency leaders have explained their businesses to members of Congress amid growing concerns cryptocurrencies may pose systemic risks and hurt investors.
The executives repeated calls for careful, bespoke rules rather than forcing the industry to comply with existing regulations.
“Without tailored legislative solutions that are openly debated with public participation, the United States risks unnecessarily onerous and chilling laws and regulations,” said Alesia Haas, chief executive of Coinbase.
Congress is unlikely to make new crypto rules anytime soon, analysts say, and committee members treated the hearing primarily as a fact-finding exercise.
Democrat Maxine Waters, who heads the panel, said there are questions about proper oversight and singled out Facebook’s stablecoin plans as a major concern given the company’s huge global reach.
Some members of Congress, Republicans in particular, praised the executives for leading the way on what could be a pivotal technology.
“I am tremendously impressed. I see a lot of ingenuity, a lot of entrepreneurial spirit,” said Pete Sessions, a Texas Republican. “We need to be supportive of you.”
The chief executives of FTX Trading, Paxos, Stellar Development Foundation and BitFury also testified.
The rapid growth of cryptocurrencies and in particular stablecoins — digital assets 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 Elizabeth Warren and Securities and Exchange Commission Chairman Gary Gensler, are also concerned the products could be used for illicit purposes or to take advantage of unsuspecting consumers.
In November, a US Treasury-led working group recommended Congress pass a law specifying stablecoins should only be issued by companies that have insured deposits, like banks.
Executives said they would welcome regulatory clarity, which could help the industry expand, but that overly restrictive rules could prove counterproductive.
The rapid growth in the sector underscores there is strong investor appetite for digital assets and should be supported with clear rules rather than stifled, they said.
BitFury’s Brian Brooks, who was formerly chief executive of Binance’s US business and before that a bank regulator, told the committee that cryptocurrencies are similar to traditional assets.
“We are the last country standing that hasn’t figured that out,” he said.
But the complexity and volatility of cryptocurrencies, as well as wildly varying standards about disclosure, reserves, consumer protection and other policies, have left some concerned.
“Most of the people that I know that have invested in cryptocurrencies [have done so] … because they think they can get rich quick,” said Juan Vargas, a representative from California.
“We’ve seen this before, unfortunately, and it led to the financial crisis.”
Updated: December 9th 2021, 2:51 AM