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NEW YORK (AP) — Cryptocurrency executives took to Capitol Hill on Wednesday to understand their rapidly growing industry understands that more regulation is coming, but they don’t want the internet to suppress the next wave or send it to other countries.
Leaders from major crypto exchanges, mining, and other related businesses testified four and a half hours before the House of Representatives financial services committee, who wanted to learn more about how it works as the industry grapples with how to regulate it. . Much of the discussion has focused on protecting investors in an emerging ecosystem that critics have dubbed the “Wild West.”
Questions from members of Congress ranged from 101-level rhetoric about what “stable coins” are – digital coins pegged to the US dollar or something similar that would have a stable value – to technical and enigmatic issues. Many questions centered on how stablecoins could help the US dollar retain its status as the world’s most important currency, and how digital assets could help the millions of Americans who do not have a bank account or are on the fringes of the financial system.
How to regulate digital assets has been a challenging issue with companies operating as part of state and federal oversight. There is still disagreement over whether the Securities and Exchange Commission or other regulators should monitor certain areas of the market, or whether an entirely new regulator is needed.
“Currently, crypto markets do not have an overarching or centralized regulatory framework, making investments in the digital asset space vulnerable to fraud, manipulation and abuse,” said Maxine Waters, California Democratic Representative, chair of the House financial services committee.
Meanwhile, many Republicans on the committee pressed for a light touch on the regulation. For example, Tennessee Rep. John Rose asked industry executives how Congress could prevent innovation from leaving the United States and taking place offshore.
“I’m optimistic that we’re not too far from that point from a regulatory perspective,” said Sam Bankman-Fried, CEO of the FTX commodity exchange. “I think there are a few explanations here that could go a very long way.”
He noted that in addition to having a single, unified regulatory framework for the trading of real cryptocurrencies and their associated futures contracts, it has regulatory requirements for stable currency reserves, among other things.
Alesia Haas, chief financial officer at Coinbase Global, said the US government needs to create a new regulatory framework for digital assets. “Our current regulatory system does not work effectively for the open, decentralized networks that crypto creates,” he said in his written statement.
Tensions are mounting as the size of the industry balloons and more investors pour into the market, either because they believe in crypto’s future or because they want to make quick money. Cryptocurrencies are collectively worth about $2.4 trillion, roughly the same size as Apple, Microsoft or one of the world’s largest stocks.
“There is something about crypto that scares people,” Brian Brooks, CEO of Bitfury Group, one of the first Bitcoin miners, said, adding that the country does not need to add another regulator to monitor crypto. “I don’t know what it is, maybe because it’s new.”
Brooks was previously acting head of the Office of the Currency Supervisor, which regulated the banking industry during Donald Trump’s presidency.
One of the big criticisms of cryptocurrencies is how much electricity they consume. According to the Cambridge Bitcoin Electricity Consumption index, Bitcoin mining alone uses as much energy per year as all gold mining in the world, or roughly as much as Norway or Ukraine. Yet only a small part of Wednesday’s discussion focused on this.
The executives who testified at the hearing were Jeremy Allaire, CEO of stablecoin issuer Circle; Bankman-Fried of FTX; Brooks of the Bitfury Group; Charles Cascarilla, CEO of blockchain infrastructure firm Paxos Trust Company; Denelle Dixon, CEO of the Stellar Development Foundation, of Payments and Haas of Coinbase.
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