The U.S. Senate Committee on Banking, Housing, and Urban Affairs debated the benefits and drawbacks of cryptocurrencies.
In a hearing titled "Cryptocurrencies: What are they good for?," Committee Chair Sherrod Brown (D-OH) argued that cryptocurrencies: (i) are "not backed by the full faith and credit of the United States"; (ii) put at risk "Americans' hard-earned money"; (iii) create a shadow financial system that lacks oversight, regulation and limits; (iv) are not transparent or democratic as claimed by proponents but rather a "shady" and "diffuse network"; and (v) will enable traditional financial institutions to avoid accountability and put the "entire economy at risk."
Committee Ranking Member Pat Toomey (R-PA) countered, arguing that cryptocurrencies are useful as an exchange medium and a secure store of value. Mr. Toomey noted the significance and innovation underlying distributed ledger technology, though he acknowledged the valid concerns surrounding the use of cryptocurrencies.
The Committee heard testimony from the following individuals:
- Angela Walch, Professor of Law, St. Mary's University School of Law, who testified that, on a high level, the crypto financial system fulfills many of the same functions of the traditional financial system, just with different individuals and methodology. She warned that there are significant risk factors that stem from the software developers whose code maintains crypto systems, and miners or validators who wield substantial governance power over these systems. Professor Walch stressed that further research is needed to better understand the infrastructural risks presented by cryptocurrencies.
- Marta Belcher, Chair, Filecoin Foundation, who testified that cryptocurrencies have the potential to create entirely new technological innovations apart from just acting as a medium of exchange or a store of value, and urged the committee not to stifle an industry that is in its infancy.
- Jerry Brito, Executive Director, Coin Center, who testified that cryptocurrency technologies have a range of benefits including (i) serving as a direct digital payment and a secure store of value, (ii) aiding in microtransactions and metering, (iii) being a component of smart contracts and (iv) extra-monetary applications. He urged the Committee to take a balanced approach that would foster innovation and provide a regulatory regime that offers consumer and investor protection, reasonable financial surveillance, and fair taxation.
Primary Sources
- U.S. Senate Banking Committee Hearing: Cryptocurrencies - What are they good for?
- Congressional Testimony, Sherrod Brown: Cryptocurrencies - What are they good for?
- Congressional Testimony, Patrick J. Toomey: Cryptocurrencies - What are they good for?
- Congressional Testimony, Professor Angela Walch, Professor Of Law, St. Mary's University School of Law: Cryptocurrencies - What are they good for?
- Congressional Testimony, Ms. Marta Belcher, Chair, Filecoin Foundation: Cryptocurrencies - What are they good for?
- Congressional Testimony, Mr. Jerry Brito, Executive Director, Coin Center: Cryptocurrencies - What are they good for?
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