WASHINGTON—The chief government officers of half a dozen cryptocurrency companies are set to seem earlier than Congress on Wednesday, as lawmakers and regulators wrestle with the best way to deliver the greater than $2 trillion market underneath authorities oversight.
The Home Monetary Providers Committee, led by
Rep. Maxine Waters
(D., Calif.), known as the listening to in hopes of bettering lawmakers’ understanding of crypto belongings and the way the sector suits into present rules.
The CEOs of stablecoin issuer Circle Web Monetary Ltd., crypto exchanges
Coinbase International Inc.
and FTX Buying and selling Ltd., bitcoin-mining agency Bitfury Group Ltd., cryptocurrency-payments system Stellar Improvement Basis and blockchain agency Paxos Belief Co. are testifying.
“At the moment, cryptocurrency markets don’t have any overarching or centralized regulatory framework, leaving investments within the digital-asset house susceptible to fraud, manipulation and abuse,” Ms. Waters stated Wednesday.
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In ready testimony, the executives touted the potential upsides of crypto and blockchain expertise whereas taking part in down the dangers. In addition they argued that cryptocurrencies don’t match neatly throughout the present construction of U.S. monetary rules and that lawmakers ought to take into account writing tailored laws for his or her trade.
“Due to their nascent stage of improvement and distinctive underlying expertise, digital belongings commerce in markets which can be essentially completely different from conventional monetary markets,” Coinbase CEO
Alesia Haas
stated in ready testimony. “In consequence, present regulatory regimes usually don’t accommodate this new expertise.”
Crypto supporters say that the expertise can facilitate sooner and cheaper transactions than conventional fee networks, and that it has the potential to foster innovation and monetary inclusion. Coverage makers fear that the fast progress of crypto markets poses a risk to monetary stability, that the sector is rife with fraud, and that criminals are utilizing cryptocurrencies to evade taxes and circumvent anti-money-laundering legal guidelines.
Oversight of crypto markets is spotty within the U.S., the place monetary regulation is cut up amongst federal and state companies.
The Securities and Trade Fee in recent times has shut down dozens of so-called preliminary coin choices for promoting unregistered securities. Beneath Chairman
Gary Gensler,
who was nominated this yr by President
Biden,
the company has sought to influence buying and selling and lending platforms, comparable to Coinbase, to register as securities exchanges.
However the two largest cryptocurrencies by market cap—bitcoin and ethereum—are thought of by many specialists to be commodities slightly than securities, which means they possible fall outdoors the SEC’s jurisdiction. Whereas the Commodity Futures Buying and selling Fee regulates derivatives markets for commodities, its authority is extra restricted relating to the underlying devices.
“There are gaps in our system,” Mr. Gensler stated Tuesday at The Wall Avenue Journal CEO Council Summit.
—Alexander Osipovich contributed to this text.
Write to Paul Kiernan at paul.kiernan@wsj.com
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