Cryptocurrency appeared in high-art circles, on NBA jerseys, and in an increasing number of investment portfolios in 2021. As a result, it should come as no surprise that the industry made an appearance in the halls of Congress for the first time ever.
In a hearing before the House Financial Services Committee yesterday, six executives from key cryptocurrency companies, including FTX and Coinbase, testified. A “fact-finding mission” by Congress to determine how to control a business that has received less monitoring than the lads in Lord of the Flies is underway.
As a result of the approximately 13-year period from the introduction of bitcoin, the cryptocurrency market has grown to become a $2.6 trillion asset class.
Despite this, rather than a unified regulatory framework, the industry is governed by a patchwork of laws and regulations.
So, what kind of oversight should be provided?
As could be expected, business executives and policymakers do not always see eye to eye on issues.
Cryptocurrency executives, on the whole, prefer low-touch, tailored policies that encourage competition and innovation in the blockchain technology space. Alesia Haas, the chief financial officer of cryptocurrency exchange Coinbase, claimed Monday that strict regulations would “essentially push crypto activity underground” or beyond the United States.
Haas asserted that cryptocurrency markets are fundamentally different from regular financial markets and that regulators should handle them as if they were.
Lawmakers, particularly Democrats, are concerned about a number of aspects of the way the cryptocurrency sector is currently operating, including the amount of energy needed during the mining process and the possibility of fraud in the industry.
They are particularly alarmed by “stablecoins,” which are cryptocurrencies that are often tethered to government-backed currencies, according to the report. Stablecoins have grown in popularity to become a $140 billion market, but regulators believe they are not quite as “stable” as they claim and may actually be destabilising financial systems if they are not properly regulated.
Taking the big picture into consideration, both crypto leaders and government regulators agree that some rules of the road are required for the business to be long-lived. “There have been few technologies in history, since antiquity, that have been able to exist for lengthy periods of time free of public policy frameworks,” SEC Chair Gary Gensler recently noted.