The US Senate House Committee on Banking, Housing, and Urban Affairs began its meeting specifically about cryptocurrencies at 10 AM EST on 30th July 2019. The title of the hearing was – Examining Regulatory Frameworks for Digital Currencies and Blockchain.
The Chairman of the Committee, Mr. Crapo, conducted the meeting. The three panelists were split mainly 2:1 in favor of cryptocurrencies with Professor Mehrsa Baradaran primarily being a skeptic. Nevertheless, they jointly agreed on more specific regulations.
Chairman Crapo began the ceremony with a very positive note. He said,
It seems to me that these technologies and other innovations are inevetaible.. Tt seems to me that the U.S. should lead.
The panelist made a brief introduction, and they talked about essential points from their testimonies. It mostly included the need for lawmakers to regulate cryptocurrencies soon.
Senator Jon Tester raised concerns around the intrinsic value of cryptocurrencies. He also mentioned that it is enabling the movement for value outside of the US. He said,
It appears to me that they’re trying to take the dollar… and make a transaction across country lines.
However, he was also receptive of blockchain technology.
Security or Not?
The meeting addressed all the cryptocurrencies (around 2300) as one. They raised concerns around the discrepancy between their intrinsic value and marketed value, and their effect on the economy. Senator Sherrod Brown made an interesting analogy with the 2008 financial crisis. He said,
“Before they blew up the economy bankers were marketing this new innovative product called subprime mortgages,”
Professor Baradaran was mostly concerned about the value that cryptocurrencies currently seem to project. On whether or not they should be put under existing financial laws, she said,
“The technology is new, but the essence of the product is something we’ve seen before.”
Nevertheless, Jeremy Allaire, who mostly digressed on directly answering questions about how to regulate them, was suggestive of a new paradigm. According to him, “payments will become a commodity free service on the internet.”.
Moreover, cryptocurrency is an innovative way of incentivizing things. In his conclusion, he noted,
“Self-sovereignty over who can access your digital identity and how they can access it… The data breaches that we have today. The massive privacy violations that happen continually on centralized internet services. Those are the core issues that blockchain infrastructure is being designed to address.”
He primarily called for a new way to define these assets.
Libra Vs. other Cryptocurrencies
Facebook’s Libra echoed several times in this discussion as well. While they were exploring the economic aspect of it, privacy-related issues remained to be in question.
According to Professor Nelson, Facebook has changed the debate about privacy and cryptocurrencies. She said,
“We used to focus with cryptocurrencies on whether they gave users too much privacy. And it allowed bad actors to engage in nefarious activities. Now with Facebook’s Libra, it’s whether the users will have enough privacy.”
Last but not least, the Committee broadly addressed the projection of the new financial system with blockchain. The Committee was receptive of the suggestions from the panel. Nevertheless, the Senators largely digressed on Bitcoin, while the panelist on them being recognized as securities completely.
The meeting was concluded within 90 minutes, and it seemed like a lot of education, and deliberation is still warranted before they can formulate laws. The panel also implored the Senate to perceive Switzerland, Singapore, Bermuda, and France as forerunners of the industry; rather than a hub for money laundering. Blockchain and cryptocurrencies were seen as an imminent force, that must be directed to comply with regulatory principles.
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