This week, two U.S. committee hearings have taken place focusing on the cryptocurrency market, with both striking different tones as to the impact the industry is having.
Yesterday, the House Committee on Agriculture focused on the emergence of digital assets in a digital age in agriculture. The hearing was entitled “Cryptocurrencies: Oversight of New Assets in the Digital Age.” The Congressional Subcommittee on Monetary Policy and Trade’s hearing, “The Future of Money: Digital Currency,” looked at whether the U.S. “government should consider cryptocurrencies as money and the potential domestic and global uses for cryptocurrencies.”
Lasting around two hours, the House Committee on Agriculture, led by committee chairman, Michael Conaway, had a more positive tone compared to the Subcommittee, headed by chairman Andy Barr. Conaway started by saying that he recognised the cryptocurrency market as an “emerging policy area.”
During the hearing, he said: “Digital assets like bitcoin and ether, but also hundreds of other token-based projects that are being developed, represent a new way for people to interact and exchange in commerce with one another.”
He added that even though digital assets are considered as digital gold, he believes that the “promise” they hold is “more universal and more exciting.”
He went on by adding: “For the first time, we have a tool that enables individuals to reliably exchange value in a digital realm without an intermediary…This technology holds the potential to bring enormous benefits to each of us if we’re willing to give it the space to grow.”
The hearing’s witnesses included academics and entrepreneurs in the cryptocurrency industry:
- Mr. Joshua Fairfield, William Donald Bain Family Professor of Law, Washington and Lee University School of Law, Staunton, VA
- Ms. Amber Baldet, Co-Founder and CEO, Clovyr, New York, NY
- Mr. Scott Kupor, Managing Partner, Andreessen Horowitz, Menlo Park, CA
- Mr. Daniel Gorfine, Director, LabCFTC and Chief Innovation Officer, CFTC, Washington, DC
- The Honorable Gary Gensler, Senior Lecturer, MIT Sloan School of Management, Brooklandville, MD
- Mr. Lowell Ness, Managing Partner, Perkins Coie LLP, Palo Alto, CA
During her speech, Amber Baldet, JPMorgan’s former head of blockchain, said that as the “Federal Reserve and commercial banks take a wait-and-see approach to exploring tokenized representations of the U.S. dollar,” there is the risk of missing the bigger picture of a next-generation Internet of Value for future economic competition and geopolitics.
In response to the hearing, Guy Hirsch, U.S. Managing Director of eToro, the world’s largest social trading platform, said that regulators should hear more from “good actors and companies with an international presence since they would be valuable to this discussion in Congress.”
“Cryptocurrencies are by design global assets and companies with global perspective are uniquely positioned to help regulators better understand the diverse regulatory approaches and best practices,” Hirsch added.
The Subcommittee wasn’t as open about the potential that cryptocurrencies present. It looked at the merits of cryptocurrency uses by central banks, in addition to the future of digital currencies and fiat.
Congressman Brad Sherman set the tone by arguing that U.S. persons should be prohibited from buying or mining cryptocurrencies. He added that they could also be used by rogue states and tax evaders. However, one of the panelists, Norbert Michel, Director for the Center for Data Analysis at the Heritage Foundation, stated:
“Yes it is true that criminals have used bitcoin, but it’s also true that criminals have used airplanes, computers and automobiles. We shouldn’t criminalize any of those instruments simply because criminals used them.”
He noted that it was important for a careful regulatory approach to be taken, and that financial regulators not apply strict laws to the industry simply because they can be used in illegal activities.
“Digital assets present unique challenges for regulators because they have properties that don’t apply to our current understanding of securities or commodities,” noted Hirsch. “While it makes sense to classify some tokens as securities, others are more accurately classified as currency or commodities, or perhaps a new asset class altogether.”
Hirsch added that the “industry should provide education and support for regulators to define a framework that will lead to logical and growth-oriented classification of each crypto.”
In addition to Michael, other panelists to the hearing included:
- Dr. Rodney J. Garratt, Maxwell C. and Mary Pellish Chair, Professor of Economics,
University of California Santa Barbara
- Dr. Eswar S. Prasad, Senior Fellow, The Brookings Institution
- Mr. Alex J. Pollock, Distinguished Senior Fellow, R Street Institute.