HFSC considers impact of increased use of digital assets on U.S. financial system – Technology

At a hearing titled “America on FIRE: Will the Crypto Frenzy Lead to Financial Independence and Early Retirement or Financial Ruin?” The US House Financial Services Committee (the “Committee”) reviewed the increased exposure of institutional investors and individuals to the digital asset markets.

The committee addressed regulatory and financial concerns, including reporting requirements, illegal activity, market manipulation and the inability to deliver promised products and services. The committee also discussed regulatory jurisdiction issues over the diverse range of digital assets, including concerns raised by the SEC, FDIC, CFTC, FinCEN, FTC, OCC and other federal regulators.

The Committee heard testimony from the following people:

• Alexis Goldstein, Director of Financial Policy, Open Markets Institute. Ms. Goldstein asked Congress to determine which regulatory loopholes require new legislation to protect the protection of consumers and investors in the cryptocurrency space. Ms Goldstein recommended that regulators monitor the digital asset space, against existing compliance standards and regulations, while new legislation is implemented to ensure mechanisms are in place to assess the systematic risks posed by digital assets.
• Sarah Hammer, Executive Director, Stevens Center for Innovation in Finance at the Wharton School, University of Pennsylvania. Ms. Hammer stressed the importance of balancing the benefits of blockchain technology and cryptocurrencies with their potential systematic risks in order to foster innovation, security and financial stability. Ms. Hammer recommended that Congress use the authority of the Financial Stability Supervisory Board to align federal interagency efforts, collaborate with state regulators, and engage with international standards bodies. She also stressed that Congress should establish a “clear, sufficient and appropriate” regulatory framework for cryptocurrencies.
• Christine Parker, Partner, Reed Smith LLP. Ms. Parker pointed to Congress’ lack of support for the digital asset market under existing financial regulatory regimes. Ms. Parker stressed the need for Congress (i) to adopt “comprehensive and meaningful” legislation regarding the cryptocurrency spot markets, and (ii) to establish a “logical framework” for the regulatory characterization of assets. digital. Ms. Parker also highlighted two “growth areas” in the digital asset space: (i) the development of non-fungible tokens, as it relates to games, and (ii) decentralized finance more broadly.
• Eva Su, Financial Economics Analyst, Congressional Research Service. Ms. Su recapitulated the current debates on digital assets and reaffirmed the consensus of policymakers that the underlying goal of regulatory oversight of the digital asset space should be to ensure market stability and protection. investors while maintaining an innovative financial market.
• Peter Van Valkenburgh, Research Director, Coin Center. Mr. Valkenburgh argued that federal and state governments have tightly regulated cryptocurrencies. Mr Valkenburgh said there was no need to put in place new regulations and that the CFPB, FTC, SEC, CFTC and state attorneys general had sufficient authority to address the concerns presented. through cryptocurrencies and digital assets.

Primary sources

1. S. House Financial Services Committee Event: Hybrid Hearing – America on “FIRE”: Will the Crypto Frenzy Lead to Financial Independence and Early Retirement or Financial Ruin?

1. United States House Financial Services Committee Memorandum: Hybrid Hearing – America on “FIRE”: Will the Crypto Frenzy Lead to Financial Independence and Early Retirement or Financial Ruin?
2. Alexis Goldstein, Director of Financial Policy, Open Markets Institute Testimonial: America on “FIRE” – Will the crypto frenzy lead to financial independence and early retirement or financial ruin?
3. Sarah Hammer, Executive Director, Stevens Center for Innovation in Finance at the Wharton School, University of Pennsylvania Testimonial: America on “FIRE” – Will the crypto frenzy lead to financial independence and early retirement or financial ruin?
4. Christine Parker, Partner, Reed Smith LLP Testimonial: America on “FIRE” – Will the crypto frenzy lead to financial independence and early retirement or financial ruin?
5. Eva Su, Financial Economics Analyst, Congressional Research Service Testimony: America on “FIRE” – Will Crypto Frenzy Lead to Financial Independence and Early Retirement or Financial Ruin?

7. Peter Van Valkenburgh, Research Director, Coin Center Testimonial: America on “FIRE” – Will the crypto frenzy lead to financial independence and early retirement or financial ruin?

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