Today’s congressional hearing with CEOs of the most prominent cryptocurrency companies that issue stablecoins and provide an exchange to buy and sell digital assets is part of the House Committee on Financial Services’ ongoing review of digital assets.
Earlier this year, Congresswoman Maxine Waters (D-CA), created a Digital Assets Working Group of Democratic Members to better understand the crypto ecosystem. The group’s purpose was to focus on making sure there is responsible innovation in the cryptocurrency and digital asset space and to “meet with leading regulators, advocates, and other experts on how these novel products and services are reshaping our financial system.”
Over the course of the year 2021, several subcommittees and task force hearings took place around rapidly growing digital assets industry. The crypto industry has grown tremendously in only one year—worth $500 billion in 2020 to nearly $3 trillion as of last month.
“Americans are increasingly making financial decisions using digital assets every day,” said Congresswoman Waters. “Even some pension funds are beginning to invest in cryptocurrencies on behalf of retirees, despite the track record of volatility of cryptocurrencies as investments,” she added. She emphasized the pandemic as a contributing factor to “working families looking for alternatives to rebuild their nest egg by investing in cryptocurrency.”
Waters acknowledged at the hearing that “the rapid growth of this industry has also become more visible with celebrity endorsements and ATMs that exchange cash for cryptocurrency.” However, she warned against unresolved questions about the application of traditional rules and whether regulators have sufficient authority to protect investors and consumers while maintaining market integrity and encouraging innovation.
“Currently, cryptocurrency markets have no overarching or centralized regulatory framework, leaving investments in the digital assets space vulnerable to fraud, manipulation, and abuse,” said Waters.
“Some cryptocurrency market exchanges and stablecoin issuers have obtained state money transmitter and sale of checks licenses from multiple states, and at least three cryptocurrency companies have obtained conditional approval for national trust bank charters from the Office of the Comptroller of the Currency,” she explained.
According to Congresswoman Waters, the Federal Reserve is conducting research on Central Bank Digital Currencies. Federal Agencies like the FDIC and NCUA have announced requests for information from the digital assets industry. The SEC is also actively utilizing its existing authorities to conduct enforcement actions against market participants.
“As the prevalence of cryptocurrency grows, it has also raised environmental concerns tied to the computing power needed to mine some of the coins, which can rival the energy needs of entire countries like Sweden or Argentina,” said Waters. “At the same time, the promise of digital assets in providing faster payments, instantaneous settlements, and lower transaction fees for remittances are areas that our Committee is exploring,” she affirmed.