At a House Financial Services Committee hearing, entitled "Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States," witnesses shared recommendations on competitiveness, risk and regulatory clarity in the emerging digital assets economy.
In a Memorandum, Committee Majority Staff noted the increase in the market value of digital assets from approximately $500 billion in 2020 to almost $3 trillion over the last year. Majority Staff asserted that regulators are unsure of (i) how to control the high levels of volatility that occur in the digital asset market, (ii) the potential for compliance issues and (iii) the prevalence of criminal activity due to a lack of comprehensive regulation. Majority Staff also emphasized the danger of criminal cryptocurrency activity and the risks associated with theft, fraud and cyberattacks.
The Committee heard testimony from the following six financial technology CEOs:
- Jeremy Allaire (CEO and Chair, Circle)
- Samuel Bankman-Fried (CEO and Co-Founder, FTX)
- Brian P. Brooks (CEO, Bitfury Group)
- Charles Cascarilla (CEO and Co-Founder, Paxos Trust Company)
- Denelle Dixon (CEO and Executive Director, Stellar Development Foundation)
- Alesia Jeanna Haas (CEO and CFO, Coinbase Global, Inc.)
Many competing recommendations were raised in the testimony. Among them: granting bank charters to prominent digital asset market participants and/or the issuers of stablecoins to allow for better oversight by banking regulators (Allaire); keeping within the current regulatory paradigms "with some careful modifications or productive interpretations by our supervisors" (Bankman-Fried); the need for a broad national policy to bring crypto activities inside the regulated financial system so they can be supervised and operated with appropriate levels of risk management and not to treat crypto as a single unitary activity (Brooks); the creation of one primary prudential state or federal regulator to regulate both digital asset companies and their products and the development of clear set of standards for companies (Cascarilla); the creation of a "single federal regulator and a new registration process established for marketplaces for digital assets"(Haas); and a regulatory framework where issuers could choose state banking supervision or opt into a narrow stablecoin charter administered by the Office of the Comptroller of the Currency (Dixon).
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