Six senior executives of companies that deal with cryptocurrencies appeared before a panel of legislators in the United States Congress to express their opinions on the industry and the thorny issue of regulations.
CEOs warned legislators to exercise caution when enacting new rules to regulate the digital asset market. Otherwise, the industry could go underground or permanently move out of the country, they said.
During the hearing held on Wednesday by the Committee of the House of Representatives Financial Services, representatives of several of the world’s largest crypto exchanges gave their testimonies while expressing their support for a clear regulatory framework.
However, they drew the legislators’ attention to the risks of passing overly restrictive measures. They emphasized that excessive regulations will not only stifle activity but will cause a stampede of companies.
“Without personalized legislative solutions that are openly debated With public participation, the United States runs the risk of unnecessarily burdensome and chilling laws and regulations, “said Coinbase Inc CEO Alesia Haas.
He added that “this could effectively drive crypto activity underground or to overseas exchanges that have few or no compliance programs.”
Concerns of legislators
Hass’s testimony was released by the panel the Tuesday prior to the hearing. The executives were invited by the legislators to present their points of view before making any decision.
Pressure on company managers who trade cryptocurrencies, it is a challenge for them to defend their businesses and provide ideas on how to monitor companies in the sector.
During the session the chair of the panel, Democratic Rep. Maxine Waters said there were “several questions” related to the need to implement new rules for the crypto industry.
He highlighted that one of the current concerns is the excessive use of energy used by mining and cryptocurrency trading in general.
“Cryptocurrency markets do not have a generalized or centralized regulatory framework, which makes investments in the digital asset space vulnerable to fraud , manipulation and abuse, “said the Missouri legislator.
Although at the beginning of the hearing, the legislators stated that skepticism about the cryptocurrency market was not general. In fact, Republican Representative Patrick McHenry expressed his support for the industry.
McHenry urged the members of the panel and the US Congress to look for formulas that allow to boost the cryptocurrency market with sufficient guarantees. “We must accept it, we must understand it and we must be international leaders in this space,” he said.
Market growth has put regulators on alert
US regulators have been on alert this year in the face of the growing advance of the cryptocurrency market. Especially trading stablecoins like Tether whose price is tied to fiat money (dollar, euro, yen).
Government institutions (Federal Reserve, the SEC ) and even the private banks themselves consider that the financial system is at risk. They fear losing their control and that private digital money will prevail if it is not properly monitored.
There are several legislators opposed to the Bitcoin trade and other cryptocurrencies. Republican Sen. Elizabeth Warren is one of the harshest critics of digital assets. Also the president of the Securities and Exchange Commission (SEC), Gary Gensler, has expressed his concern about the risks for users.
According to Gensler, there are financial products that could be used for illegal purposes or to mislead unsuspecting investors.
A task force led by the Department from the US Treasury, delivered a report to Congress in November with several recommendations. One of them is the approval of a law to regulate the issuance of stable currencies.
In this sense, the group proposed that these digital assets they are only issued by companies whose deposits are insured. As is the case with banks.
Imminent approval of legislation on stable currencies
For analysts, the legislative hearing could mean the beginning of a process that will lead Congress to pass legislation on stable coins at any time .
The CEOs of the companies invited to the audience pointed out that the clearer the rules, the better. However, they clarified that creating an excessively restrictive regulatory framework could be counterproductive.
In this regard, the executive director of Circle Internet Financial, Jeremy Allaire, commented that “the stablecoins and native capital markets of the Internet are not too big to fail, but now they are too big to ignore.”
He explained that “policy frameworks must support an open and competitive playing field, and allow new technologies to flourish.”
Those who support the approval of clear rules for trading stablecoins claim that they are a revolutionary payment instrument. They argue that they will improve the financial system by offering an instant, reliable and low-cost global payment system.
“A productive regulatory roadmap”
The executives of exchange companies who participated in the hearing believe that the US should play a leading role in promoting blockchain technology.
They gave as an example the development of the internet. They said it was the rules approved by the United States that allowed the network to grow successfully since the 1990s.
“Let’s work together to ensure that US lawmakers are the ones to set the stage for a smart, productive regulatory roadmap for this technology around the world, ”said Stellar Development Foundation Director Denelle Dixon.
In his prepared testimony, Dixon added: “I hope we can all agree that cryptocurrencies and stablecoins should not be buzzwords, used to incite the fear of the unknown. ”