Skip to main content

House Call: Two Hearings. One Day. No Clue.

Last week, two House committees held hearings on cryptocurrency on Capitol Hill. I would bet a single bitcoin that you couldn't guess both committees. If you guessed the Committee on Financial Services (well, the Subcommittee on Monetary Policy and Trade (MPT)), you're right. If you guessed the Committee on Agriculture (Ag Committee), you might be a policy wonk and you probably know all that follows already.

The hearings were as illuminating as one would expect. The Ag Committee's hearing was entitled, "Cryptocurrencies: Oversight of New Assets in the Digital Age." The purpose of the hearing was to "shed light on the promise of digital assets and the regulatory challenges facing this new asset class." Their difficulty in conceptualizing when digital assets are securities or commodities or neither was pretty apparent. We can't really fault them for that because no one seems to have a comprehensive legal framework. However, there was an apparent interest in knowing more, closing the regulatory gaps, and promoting strong and well-regulated markets for digital assets. I think I most appreciated that one Congressmember raised the question as to whether the current laws are appropriate for these new digital assets. And in case you're wondering why the Ag Committee cares at all about cryptocurrency, it's because it has an interest in all commodity markets--including those trading digital assets (Ag Committee: not just for farmers anymore!).

On the (almost) flip side, the MPT subcommittee set out to "consider cryptocurrencies as money...evaluate the merits of any uses by central banks of cryptocurrencies, and discuss the future of both cryptocurrencies and physical cash." Some of the more notable comments came from subcommittee members with a more pessimistic (or uninformed) approach to their evaluation. One Congressmember offered that cryptocurrency should be illegal because mining uses electricity (huh?). One Congressmember suggested that cryptocurrency is only used in "facilitating narcotics trafficking, terrorism, and tax evasion," while another pondered how cryptocurrency will affect the almighty dollar.

The takeaways: they still don't know what's going on. If you don't believe me, check out the coverage below.

MPT Subcommittee Hearing
The Future of Money: Digital Currency



Ag Committee Hearing
Cryptocurrencies: Oversight of New Assets in the Digital Age

Comments

Popular posts from this blog

The Rundown on CBDCs

Everyday there is a news report about a country that is "exploring" or "studying" the possibility of developing a central bank digital currency (CBDC). In the past few days, I've read articles about Rwanda, Israel and France looking to pilot programs with CBDCs. And yesterday, the Bank of International Settlements announced its backing of the development of CBDCs. With approximately 80% of central banks around the world taking a closer look at CBDCs, now is as good a time as any to learn more about them. What Are They? A central bank digital currency is exactly what it sounds like--a digital currency issued by a central bank. In the same way our central bank, the Federal Reserve, issues the U.S. dollar, it would similarly issue some official U.S. digital currency ('digital dollar'). This is pretty much where the simplicity of it all ends. Things get really hairy (really fast) when central banks have to figure out how CBDCs fit into a traditional financ

ABCs of DeF(i)

The summer of 2020 is notable for a host of reasons. A pandemic. #BLM protests. USPS shenanigans. But within the blockchain/crypto space, the summer of 2020 will be remembered as "DeFi Summer." Short for "decentralized finance," DeFi refers to a system of automated financial arrangements stored and executed on a distributed ledger such as blockchain. One of my business faves, Mark Cuban, recently touted the potential for DeFi to explode in the next 10 years. I may be biased but I agree; DeFi has the potential to revolutionize finance. Automation is Key We know that blockchain can facilitate peer-to-peer transactions in a trustless environment, that transactions happen without the need for a third party intermediary, and that an immutable record of the transaction is stored on the ledger. In other words, transactions happen automatically and records of transactions are incapable of being changed. This is why bitcoin was created. This is blockchain 1.0. We also know

Happy New Year! + OCC OKs Stablecoins

Happy New Year from the most consistently inconsistent blogger to ever have blogged! I've finally accepted myself for who and what I am in hope that I'll surprise myself by becoming inconsistently consistent. I'm trying to make 2021 "The year of execution" so *fingers crossed* we shall see. On to the Office of the Comptroller of the Currency (OCC)... Yesterday, the OCC announced (well, clarified) that banks are able to use distributed ledger technology (e.g., blockchain) to verify and store transactions and they are also able to transact stablecoins. Banks must continue to comply with the applicable laws and other sound banking practices, such as "Know Your Customer," anti-money laundering controls, and Office of Foreign Assets Control sanctions. However, the OCC recognizes the efficiency and security benefits associated with blockchain technology in banking. The regulator also recognizes the banking industry's track record of competently (mostly) de