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House committee considers competing regulatory approaches to cryptocurrency – tech

United States: House committee considers competing regulatory approaches to cryptocurrency

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In a House Financial Services Committee hearing, titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States,” witnesses share recommendations on competitiveness, risks and regulatory clarity in the emerging digital asset economy.

In a memorandum, the majority staff of the committee Noted increasing the market value of digital assets from around $ 500 billion in 2020 to nearly $ 3 trillion in the past year. Majority staff claimed that regulators do not know (i) how to control the high levels of volatility occurring in the digital asset market, (ii) the potential for compliance issues, and (iii) the prevalence of criminal activity in due to a lack of regulation. Majority staff also highlighted the danger of criminal cryptocurrency activity and the risks associated with theft, fraud and cyber attacks.

The Committee heard testimony from the following six FinTech CEOs:

Many competing recommendations were made in the testimony. Among them: granting banking charters to major players in the digital asset market and / or issuers of stable coins to allow better oversight by banking regulators (Allaire); stay within current regulatory paradigms “with some careful modifications or productive interpretations by our supervisors” (Bankman-Fried); the need for a broad national policy to integrate crypto activities within the regulated financial system so that they can be supervised and operated with appropriate levels of risk management and not treat crypto as a single unit activity (Brooks) ; the creation of a primary prudential state or federal regulator to regulate both digital asset companies and their products and the development of a clear set of standards for companies (Cascarilla); the creation of a “single federal regulator and established new registration process for digital asset markets” (Haas); and a regulatory framework in which issuers could choose state banking supervision or opt for a narrow stablecoin charter administered by the Office of the Comptroller of the Currency (Dixon).

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