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Crypto executives urge light touch as Congress mulls new regulation

Stock MarketsDec 08, 2021 03:14PM ET
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2/2 © Reuters. FILE PHOTO: Coinbase Chief Financial Officer Alesia Haas looks on during the 2021 Milken Institute Global Conference in Beverly Hills, California, U.S., October 18, 2021. REUTERS/David Swanson 2/2

By Pete Schroeder and Katanga Johnson

WASHINGTON (Reuters) - Top executives from six major cryptocurrency companies including Coinbase (NASDAQ:COIN) and Circle on Wednesday urged Congress to provide clearer rules for the booming $3 trillion industry, but warned that overly tough restrictions would push it overseas.

The U.S. House of Representatives Financial Services Committee hearing marked the first time the industry's senior leaders have explained their businesses to U.S. lawmakers amid growing concerns cryptocurrencies may pose systemic risks and hurt investors.

Crypto executives repeated calls for careful, bespoke rules rather than forcing the industry to comply with existing regulations.

"Without tailored legislative solutions that are openly debated with public participation, the United States risks unnecessarily onerous and chilling laws and regulations," warned Alesia Haas, chief executive of Coinbase Inc.

Congress is unlikely to make new crypto rules anytime soon, according to analysts, and lawmakers treated the hearing primarily as a fact-finding exercise.

Democratic Representative Maxine Waters (NYSE:WAT), who chairs the panel, said there are questions about proper oversight and singled out Facebook Inc (NASDAQ:FB)'s stablecoin plans as a major concern given the company's huge global reach.

Some lawmakers, in particular Republicans, praised the executives for leading the way on what could be a pivotal technology.

"I am tremendously impressed. I see a lot of ingenuity, a lot of entrepreneurial spirit," said Representative Pete Sessions, a Texas Republican. "We need to be supportive of you."

Circle CEO Jeremy Allaire, FTX Trading CEO Sam Bankman-Fried, Paxos CEO Chad Cascarilla, Stellar Development Foundation CEO Dennelle Dixon and BitFury head Brian Brooks also testified.

DIGITAL ASSETS

The rapid growth of cryptocurrencies and in particular stablecoins -- digital assets pegged to traditional currencies -- has caught the attention of regulators, who fear they could put the financial system at risk if not properly monitored.

Some policymakers, such as Senator Elizabeth Warren and Securities and Exchange Commission Chair Gary Gensler, are also concerned the products could be used for illicit purposes, or to take advantage of unsuspecting consumers.

In November, a U.S. Treasury-led working group recommended Congress pass a law specifying stablecoins should only be issued by companies that have insured deposits, like banks.

Executives said they would welcome regulatory clarity, which could help the industry expand, but that overly restrictive rules could prove counterproductive.

The rapid growth in the sector underscores there is strong investor appetite for digital assets and should be supported with clear rules rather than stifled, they said.

BitFury's Brooks, who was formerly CEO of Binance's U.S. business and before that a bank regulator, told lawmakers cryptocurrencies are similar to traditional assets.

"We are the last country standing that hasn't figured that out," he said.

But the complexity and volatility of cryptocurrencies, as well as wildly varying standards around disclosure, reserves, consumer protection and other policies left some lawmakers concerned.

"Most of the people that I know that have invested in cryptocurrencies (have done so)...because they think they can get rich quick," said Representative Juan Vargas. "We've seen this before, unfortunately, and it led to the financial crisis."

Crypto executives urge light touch as Congress mulls new regulation
 

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Comments (13)
The Note
TheNote Dec 08, 2021 6:49PM ET
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Choose from 8746 different crypto currencies.. Utterly madness.
Thomas DeVito
Thomas DeVito Dec 08, 2021 3:24PM ET
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not like they don't print money outside the banking system or anything.
Connecticut Yankee
A_Jaundiced_Eye Dec 08, 2021 11:12AM ET
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If the Crypto industry was smart, they have an easy avenue to get EVERYTHING they want from Congress.  Just tell the senators that from now on, ALL BRIBES to politicians will be made only in Bitcoin.
SureWin Sam
SureWin Sam Dec 08, 2021 11:01AM ET
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All they want is tax income.
jason xx
jason xx Dec 08, 2021 11:01AM ET
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Duh that's why they exist
Jo Pa
Jo Pa Dec 08, 2021 9:56AM ET
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Cryptos we're invented to bypass stifling government control. Government: how can we stifle cryptos?
Matt Brackley
Matt Brackley Dec 08, 2021 9:56AM ET
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lol Cryptos were invited to stifel investing in sound money and as a tool to support the dollar without threatening the precious stonk market. Stay tuned.
Matt Brackley
Matt Brackley Dec 08, 2021 9:56AM ET
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*invented
Jeff Gordon
Jeff Gordon Dec 08, 2021 9:30AM ET
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just ban useless crypto like China
Connecticut Yankee
A_Jaundiced_Eye Dec 08, 2021 8:37AM ET
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In other words, the Crypto industry is hoping Congress will pass on the chance to take control over yet another industry.  Yeah, that happens a lot....too funny.
Damian Wahner
Damian Wahner Dec 08, 2021 8:27AM ET
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Like Elon Musk said about Government they are the Biggest Monopoly ever and can kill you. Watch out I have a fear for the worst Crypto Crash ever.
Ravi Kiran
Ravi Kiran Dec 08, 2021 8:26AM ET
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The basic concept of crypto.. 2+2+2=6 here I solved a math problem. Buy the answer for $xxx
Steve Bucher
Steve Bucher Dec 08, 2021 8:03AM ET
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So in other words .... Top executives from six crypto currency firms are trying to extort the US government and US people. It's time to burst that bubble once and for all.
Edward Chong
Edward Chong Dec 08, 2021 8:03AM ET
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haha u are so right. cheers!
taylor jason
taylor jason Dec 08, 2021 8:03AM ET
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imagine having no idea how blockchain technology works while talking trash about the technology... I guess you like the internet being completely controlled by 5 companies that have prove time and time again they can't be trusted with personal/private data. but ya keep bashing stuff you don't understand,
The Note
TheNote Dec 07, 2021 9:04PM ET
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8747 crypto currencies. Total madness.
Benjamin McIntire
Benjamin McIntire Dec 07, 2021 5:52PM ET
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Heaven forbid they crash the biggest ponzi scheme in existence
Connecticut Yankee
A_Jaundiced_Eye Dec 07, 2021 5:52PM ET
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They're crashing Social Security?
David CA
ILoveQE Dec 07, 2021 5:26PM ET
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All good points. Hopefully, this WH listens.
 
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