Two committees of the American Congress held a public hearing in July 2018 to discuss matters related to cryptocurrencies. They discussed the use of bitcoin as means of payment, general applications of blockchain technology and the necessity of a sound legal framework.
There have been several debates and discussions for creating a regulatory framework for cryptocurrencies. Digital currencies such as bitcoin and ethereum have gained immense popularity over the last two years. Cryptocurrencies are an application of distributed ledger technology, and this technology can be used for creation, exchange, and trade of digital assets.
House Agriculture Committee Hearing on Cryptocurrencies
The U.S. House Committee on Agriculture held a public hearing on matters relating to cryptocurrencies and blockchain technology on July 18, 2018. Republican senator Mike Conaway chaired the conference. He with a statement that introduced the theme and agenda for discussion. Mr. Conaway accepted that blockchain technology has come a long way since its introduction several years ago and could be revolutionary. He then began venturing into cryptocurrency discussion, referencing Bitcoin and Ethereum.
He stated that digital currencies began as a means of payment and facilitated exchange but were now also being used for a wide variety of diverse applications. Senator Conaway pointed out that tokens built and developed on the Ethereum blockchain could be traded in a way similar to securities.
However, the senator pointed out that there is apparent confusion over whether these tokens should be governed under securities laws or fall under the purview of commodities-related laws.
Mr. Conaway said that one of the key aims of this hearing was to analyze which jurisdiction the asset class would come under. There is a widespread belief that cryptocurrencies must be governed under securities laws as they are traded on exchanges similar to equity stocks.
Regulatory Framework for Cryptocurrencies
Mr. Conaway said that if it is ascertained that cryptocurrencies come under neither securities or commodities laws, then the Congress may consider bringing in a new regulatory framework for digital assets. Developing a regulatory framework is essential for helping developers to build tokens according to those standards while also protecting investors.
“The committee has a strong interest in promoting safe, efficient, transparent markets for those who use these tokens in the markets. Properly regulated markets promote innovation and foster economic growth, and I don’t believe it will be any different concerning digital assets.”
However, other council members did share their concerns. “97 percent of Bitcoin is held by just 4 percent of the participants in cryptocurrency,” said committee member Collin Peterson. He acknowledged that these digital currencies could have a future, but remained skeptical nevertheless.
Amber Baldet, CEO of Clovyr, was also one of the speakers in the house. Clovyr is a service which makes it easier for blockchain developers to build decentralized applications. In her testimony, she highlighted the need for a cautious regulatory approach with regards to cryptocurrencies. She argued that it is crucial to not stall innovation in an industry which is still in its nascent stages.
Scott Kupor of Andreessen Horowitz made a case for why cryptocurrencies were a compelling investment option for investors. He said that there had been too much talk about the volatility of cryptocurrency prices and highlighted that it had been brought up by ranking member Collin Peterson as well.
Committee on Financial Services Discusses “Future of Money”
Committee chairman Mr. Barr began made the opening remarks at the “Future of Money: Digital Currency” hearing. The house committee discussed whether cryptocurrencies such as bitcoin and Ethereum could potentially replace fiat currencies shortly.
At one point, it was highlighted that countries such as Tunisia and Ecuador have already adopted cryptocurrencies, with some even issuing state-backed digital currencies. On the other hand, the technology has garnered its fair share of criticism as analysts frequently draw parallels between it and the Tulipmania.
At his testimonial, Mr. Sherman talked about protecting investor capital in cryptocurrencies because they could also be used by drug dealers and potential tax evaders. He also drew highlighted other unlikely successes, pointing out that Las Vegas was virtually a desert before it was transformed into a tourist hotspot.
There has been a significant rise in the number of hearings held by Congress committees on the topics of cryptocurrency and blockchain technology. The SEC, in a previous statement, had said that it does not potentially classify digital currencies as securities.