FTX CEO Sam Bankman-Fried said: "I came in expecting some hostility and grandstanding, but instead found the discussion to be by and large productive and helpful."
Six crypto CEOs have urged U.S. politicians to provide greater regulatory clarity on digital assets during a hearing in Congress.
However, the entrepreneurs also warned that overly strict measures could force some of the sector's biggest firms to move overseas.
Brian Brooks — the former acting comptroller of the currency who now serves as Bitfury's CEO — pointed to the ongoing stalemate over BTC exchange-traded funds as an example.
While the U.S. Securities and Exchange Commission has given light to several ETFs that are based on BTC futures, regulators are yet to approve one that's backed by physical Bitcoin.
Pointing to how such products are increasingly becoming commonplace in the likes of Canada and Germany, he added:
"There’s no fuzzy line, it’s super clear: You cannot do that here, so you have to go abroad."
Brooks was also joined by representatives from FTX, Coinbase, Circle, Paxos and the Stellar Development Foundation.
Revealing that the exchange now stores 12% of the world's cryptocurrency supply, Coinbase's chief financial officer continued this theme — and said activity in the sector could effectively be pushed underground without an effective regulatory framework. She warned:
"Without tailored legislative solutions that are openly debated with public participation, the United States risks unnecessarily onerous and chilling laws and regulations."
The panel was chaired by Maxine Waters, the Democratic congresswoman from California who has long been critical of the cryptocurrency sector.
She raised Facebook's controversial plans to roll out a stablecoin during the hearing — and told Paxos CEO Charles Cascarilla she was "a bit concerned" about his company because of its role in the ongoing trial of the social network's digital wallet, Novi.
The digital wallet is currently being trialed across Guatemala and in parts of the U.S. — but Diem, the tech giant's planned stablecoin, is nowhere to be seen. Waters took the opportunity to warn that Facebook, now Meta, can't be trusted to roll out a digital currency because of its past controversies.
Cascarilla stressed that Paxos did perform due diligence into Facebook and its digital currency ambitions — describing them as a customer. He subsequently stressed that any questions about Novi's plans should be directed to the, not him.
Financial inclusion was a dominant theme during the hearing. A particularly interesting remark came from Democratic Congressman Ritchie Torres.
He said he found it "striking" that leading stablecoin issuers have chosen to peg their stablecoins to the U.S. dollar — and said he sees this as a "vote of confidence that reinforces rather than challenges the status of the dollar as the world's reserve currency."
Cascarilla agreed, saying:
"What people want is a U.S. dollar bank account. Everywhere in the world, people want to be able to have U.S. dollars — and actually, that's the hardest thing to get. Crypto is a tool for a lot of different things, including bringing communities together, but what people want for their everyday spending is dollars … That's why tokenized dollars are so valuable. You don't need to have a bank account yet you can have access to the dollar-based system. That's a very, very important tool for inclusion."
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A 'Productive' Meeting
Most of the crypto industry — and indeed, an article we wrote ahead of the hearing yesterday — anticipated a showdown between the CEOs and Congress, expecting U.S. politicians to use their time to attack the executives and their business models.
But FTX CEO Sam Bankman-Fried described the hearing — which ran for over hour hours — as "productive," adding he was "really grateful for the engagement and thoughts from policymakers." On Twitter, he wrote:
"I came in expecting some hostility and grandstanding, but instead found the discussion to be by and large productive and helpful. I'm excited to keep engaging with lawmakers and regulators to refine the regulatory landscape."
This was echoed by the Blockchain Association's head of policy Jake Chervinsky, who tweeted:
"The HFSC hearing was the most positive, constructive and bipartisan public event on crypto I've seen in Congress — ever. I mean that literally. It's a testament to the effectiveness of industry and community engagement in DC in recent months. We've made shockingly big progress."
Indeed, some members of the House Financial Services Committee were full of praise for the crypto sector. Republican Congressman Pete Sessions said:
"I am tremendously impressed. I see a lot of ingenuity, a lot of entrepreneurial spirit, and lots of advice about the future ... We need to be supportive of you."
Sessions added that he was in favor of what these crypto platforms do — and rather surprisingly, told the CEOs:
"I'm not sure I'd want to go as far as you do on the robustness of how much oversight you really want."
Inevitably, there were moments that potentially showed that U.S. politicians weren't fully up to speed on how the crypto sector works… and the dynamics that underpin it.
Here's a quote from Representative Brad Sherman, who said back in 2019 that Facebook's proposed digital currency "may do more to endanger America" than 9/11:
"The number one threat to cryptocurrency is crypto. Bitcoin could be displaced by Ether, which could be displaced by DOGE, which could be displaced by HamsterCoin. And there's CobraCoin, what could MongooseCoin do to CryptoCoin?"
