Crypto, Blockchain Hearing at US Senate

Will the States Embrace Crypto and Blockchain?

The heated up discussion of existing policies and regulations governing the U.S. crypto industry continuous and the whole world is watching. In a Tuesday hearing titled “Examining Regulatory Frameworks for Digital Currencies and Blockchain,” the United States Senate Banking Committee heard from industry participants and analysts, with a common refrain that potential and risk are in the offing, and new regulations are needed. Hearing at 30th of July follows the previous ones in mid-July that focused on Facebook’s proposed digital cash in progress — Libra, and a large group of different organizations through a consortium model.

The Chairman of the Committee, Senator Michael Crapo of Idaho started the hearing with a positive statement saying that “These technologies are inevitable, they could be beneficial, and the United States should lead in this sector.”

At the very beginning of the hearing Senator Sherrod Brown of Ohio said that “Facebook has proved over and over […] that they can not be trusted. But they don’t care. They move fast, they break things. Minor things, like our political discourse and journalisms and relationships and privacy. Now they want to break our currency and payment systems, hiding behind the phrase ‘innovation’.”

Testifying on behalf of the CENTRE Consortium Jeremy Allaire, co-founder, and CEO of payments company Circle, shared during the hearing, that the current banking system is vulnerable to money laundering, where according to his testimony as much as 99 percent of money laundering is undetected. Allaire pointed out that “There absolutely can be a better future ahead, one built on digital assets and blockchains.”.

From the left: Circle CEO Jeremy Allaire, Rebecca M. Nelson, a specialist in international trade and finance; and Mehrsa Baradaran, a professor of law at the University of California Irvine School of Law.

Allaire said that the current restrictive atmosphere is leading companies to move and settle overseas, rather than to stay in the U.S and that Congress should define digital assets as a new asset class. “We are in the process of moving our international facing services and products out of the United States.” he continued. (The Libra Association is based in Switzerland, making it a perfect example).

Next on, Specialist in International Trade and Finance and Congressional Research Service, Rebecca M. Nelson said that “large-scale adoption of digital currencies could have a range of policy implications for the United States, including financial stability, consumer protections, AML/CFT, privacy considerations, and sanctions policy, among others.”

In Mehrsa Baradaran, a professor of law at the University of California, Irvine School of Law opinion, “There are inequalities and problems in the U.S. banking system and they must be fixed, but they must be fixed through democratic means. Cryptocurrencies want to take over where our public institutions have failed.”

“We have all of these banking deserts, especially in rural places, and all we need to do is some access for that point of contact, cash-digital,” she said. “None of these cryptocurrencies can do that until there is wide-scale adoption.”

The meeting tended to all the cryptocurrencies (approx. 2,3k) as one. They raised worries around the error between their inherent worth and showcased worth, and their impact on the economy. Libra was mentioned several times in this discussion with a focus on exploring the aspects economic connected to it and the privacy issues. The hearing lasted 90 minutes and we can all agree — there is much more coming up.

Fernando Liu, Founder, and CEO of Dimension

Dimension CEO Fernando commented that: “The US’s cautiousness to Libra brought greater opportunities to other countries. The risks that regulators worried about can happen to any financial instrument, such as securities, commodities, and currencies. Even commercial banks do have to face the risk of bankruptcy. I believe that the US government will eventually participate in Libra’s experimental issuance, with super strict regulatory requirements. So they can observe how the financial system is going to be in which the cryptos and fiats coexisting, and control any impact and risk brought to the US dollars.”

Some time ago President Trump commented on Twitter that he is “not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.” is that kind of a mindset stopping the US to give a green light to crypto? Centralized cryptocurrency systems like Facebook’s Libra project (actually a cryptocurrency in name by now) would be much easier for governments to control. Senator Catherine Marie Cortez Masto of Nevada stated that she believes in the blockchain and it’s potential, and that “we as a country do not lead in this technology, China or some other country is going to do so”. Considering US pursuit to be number 1 in the world, even though the current opinions seem to be negative maybe we will be able to see a sudden turn.

What are your thoughts on the US and other governments regulating cryptocurrencies? Share your thoughts!