Regulate us, but don’t apply the old rules to new assets – .

Regulate us, but don’t apply the old rules to new assets – .

The CEOs of six major cryptocurrency companies debuted in Washington on Wednesday, widely embracing regulation amid the explosive growth of digital currencies – even though they opposed the idea that old securities laws movable would work in the emerging space.
Testifying before the House Financial Services Committee for nearly five hours, executives from Coinbase, Circle, FTX, Bitfury, Paxos and Stellar Development Foundation answered questions from lawmakers about understanding the crypto space, ransomware, how to protect investors against loss and fraud; and providing services to the unbanked.

Amid polite but skeptical questions, many executives expressed support for a new regulatory framework, rather than using existing banking laws to regulate the crypto space. Their appearance in Congress comes as regulators and legislators.

“The solution is not to turn digital asset operations into a regulatory system designed for previous generations of financial assets,” Paxos CEO Charles Cascarilla told lawmakers.

Cascarilla also suggested that if policymakers gave nonbank crypto platforms direct access to the Federal Reserve, like the Bank of England does to nonbank payment service providers, it would open up the industry to more consumers and reduce costs by eliminating the middleman.

Brian Brooks, a former currency controller under former President Donald Trump, who is now CEO of mining company Bitcoin Bitfury Group, questioned what he called hypocrisy within the regulatory system.

“Is it consistent to consider that only banks should be allowed to issue stable coins, but not grant bank charters to the largest issuers of stable coins?” Brooks stressed.

“Does it make sense to initiate enforcement action challenging certain crypto assets as unregistered securities, but then not allowing those assets to be registered and traded on a national stock exchange?” ” He asked.

“Too big to be ignored”

The Coinbase logo displayed on a phone screen and the representation of cryptocurrencies can be seen in this illustrative photo taken in Krakow, Poland on September 28, 2021. (Photo illustration by Jakub Porzycki / NurPhoto via Getty Images)

Brooks also said new regulations did not need to be created. He suggested that if there was a crypto loan product, it should fall under the jurisdiction of the Federal Deposit Insurance Corp. (FDIC), while if it were a crypto security product, it would fall under the oversight of the Securities and Exchange Commission (SEC) and the Commodities and Futures Trading Commission (CFTC).

“Crypto is just an improvement of the step function in the system,” he added.

Coinbase CFO Alesia Haas argued that Blockchain technology is not securities, but a new form of digital ownership, or a new way to register ownership. She noted that the industry needs clarity and would benefit from a definition that everyone could agree on.

Meanwhile, Jeremy Allaire, CEO of stablecoin Circle issuer, said there is a lot of work to be done to define the reserve, liquidity and capital requirements for stablecoin issuers in the United States. global scale.

“The internet’s native stablecoins and capital markets aren’t too big to fail, but they’re now too big to ignore,” Allaire said.

For their part, lawmakers have insisted with leaders on the protections enjoyed by customers. Coinbase’s Haas noted that its exchange divides assets into so-called “hot wallets” – crypto stored online – and “cold storage” – crypto stored offline.

She says Coinbaese owns less than 2% of the assets are in hot wallets, which are more vulnerable to hacks. She agreed that clients could benefit from uniformed protections if clients lose funds.

There was also discussion about retaining the dollar as the world’s reserve currency – a growing concern as digital coins gain popularity and use – and how crypto could impact that.

Allaire said the question is whether the United States supporting digital dollars as a form of stablecoins, which he says will help America become the industry’s biggest competitor. Calling it an economic and national security priority, he said that “if this is the Internet’s new economic infrastructure, we want the dollar to play a strategic role.”

He said partnering with private companies is becoming a way to compete with states that nationalize this structure and operate in watch mode. He noted that digital assets are already helping America compete globally, so a central bank digital currency is not required.

“The United States and the US dollar, [are] winning the digital currency space race today. Dollar stablecoins transact billions of dollars, the experimental beta of the Chinese yen only trades ten billion dollars, ”the executive said.

The question remains what lawmakers will do with this new information and how they might craft new rules. Judging from Wednesday’s hearing, there was little immediate resolution on the urgency with which policymakers will act, if at all.

“It’s hard to see how this hearing is creating momentum for the legislation. The hearing did not create pressure on Congress to act immediately, Cowen analyst Jaret Seiberg said.

However, “the SEC remains likely to further enforce and regulate. Nothing at the hearing would pressure the SEC to delay action. “

Still, market participants are eager to gain insight into the intentions of policymakers. CoinDesk chief executive Jodie Gunzberg told Yahoo Finance live that “it would be in the best interest of the United States if they could accelerate the learning curve and start putting regulations in place, [serving] as a guide rail so that the industry can develop further here.

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