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US House of Financial Services Committee holds hearing with top blockchain industry CEOs



The US House of Financial Services Committee will hold a hearing on “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States” of the 6 executives from major cryptocurrency and blockchain companies will appear before the congress. Three of the companies participating in this hearing are part of the Blockchain Association.

What the hearing is about

The purpose of the hearing is to provide these leading companies with an industry analysis of the issues that the committee wishes to investigate and which are set out in the memo of the Financial Services Committee of the United States House of Representatives.

The hearing includes a panel with the following experts: 

  • Jeremy Allaire, Co-Founder, Chairman, and CEO, Circle 
  • Samuel Bankman-Fried, Founder and CEO, FTX 
  • Brian P. Brooks, CEO, Bitfury Group, (former banking regulator under the Trump administration) 
  • Charles Cascarilla, CEO and Co-Founder, Paxos Trust Company 
  • Denelle Dixon, CEO and Executive Director, Stellar Development Foundation 
  • Alesia Jeanne Haas, CEO, Coinbase Inc. und CFO, Coinbase Global Inc.

Areas of focus highlighted in the memo include an overview of the cryptocurrency industry and the shift from an overly bitcoin-dominated asset class to a whole host of new digital assets and technologies gaining market share including ETH, stablecoins, non-fungible Tokens (NFTs), Decentralized Financial Platforms (DeFi) and the focus on regulation to ensure investor and consumer protection and maintain market integrity, given the growth and development of the industry in recent years.

SEC sees problems regulating cryptocurrencies

Market players or operators of exchanges were highlighted as a major topic of conversation as the SEC believes that "some exchanges have unilaterally decided not to be subject to the same regulatory regime, leading to political debates over market integrity, investor protection, and innovation". The memo provided by Congress reads: “Cryptocurrency exchanges have attracted the attention of regulators at home and abroad because of their rapid growth and the complex and risky products they offer. Coinbase, one of the largest cryptocurrency exchanges by market capitalization, became a publicly-traded company on April 14, 2021. Coinbase is also affiliated with USD Coin, the second-largest stablecoin issued by Circle. 

Other major cryptocurrency exchanges with millions of users are Binance, FTX, and Kraken. FTX US recently acquired LedgerX, a company registered with the Commodities Futures Trading Commission (CFTC) that operates as a Designated Contract Market (DCM), Derivatives Clearing Organization (DCO) and Swap Execution Facility (SEF), what FTX allows to offer crypto futures, swaps and options. " 

Decentralized finance is also an issue of concern to the authorities as it is seen as a means to “replicate and replace the conventional provision of financial services such as credit, asset dealing, insurance, and other services, but without central financial intermediaries such as brokers, Stock exchanges, transfer agents or banks. "

Stablecoins as the main concern

Stablecoin products and services are seen as a major criticism as the study cites the problems with the reserves that support this asset class and the previous reviews and studies conducted at Tether in May 2021 that indicated, " that the stablecoins issued by Tether, the largest stablecoin issuer, were not fully secured at all times, which raised concerns about investor protection. " 

Criminal and terrorist activity, loose anti-money laundering compliance and the pseudonymity offered by certain cryptocurrencies were also cited as reasons for concern. 

The final topic highlighted was the response of federal regulation to the rise of cryptocurrencies, examining the possibility of central bank digital currencies (CBDCs) in May 2021, mentioning market regulation by the SEC and CFTC, and general concerns about the lack of a regulatory framework for cryptocurrency exchanges were voiced.  

This is the first time that key players in the crypto industry will testify before lawmakers about the regulation of this new asset class.

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