Executives of six cryptocurrency companies, including Coinbase and Circle, have asked Congress to provide clearer rules for the cryptocurrency industry, which is under threat of regulation by the Securities and Exchange Commission and other federal agencies.
On Wednesday, the U.S. House of Representatives Financial Services Committee held a hearing with top members of the cryptocurrency industry, who explained their businesses to lawmakers amid growing concerns that cryptocurrencies pose systemic risks, Reuters reported.
The executives, who hailed from companies like Coinbase, FTX Trading, BitFury and others called for what Reuters refers to as “careful, bespoke rules rather than forcing the industry to comply with existing regulations.”
The remarks made by the cryptocurrency executives come amid some calls from members of the U.S. Senate, including Sen. Elizabeth Warren, who pressed Treasury Secretary Janet Yellen to address the “growing threats” posed by the cryptocurrency market, CNBC reported in late July.
“Without tailored legislative solutions that are openly debated with public participation, the United States risks unnecessarily onerous and chilling laws and regulations,” said Alesia Haas, chief executive of Coinbase Inc.
According to Reuters, Congress is unlikely to pass any new regulations on cryptocurrency, according to analyst predictions. The hearing on Wednesday is described primarily as a “fact-finding exercise.”
During the hearing, Democrat Rep. Maxine Waters, who chairs the panel, singled out Facebook’s stablecoin plans, as a major concern due to the company’s global reach of over two billion users.
A stablecoin is a type of cryptocurrency that derives its value from an underlying external asset such as the U.S. dollar.
The rapid growth of cryptocurrencies and in particular stablecoins — digital assets pegged to traditional currencies — has caught the attention of regulators, who fear they could put the financial system at risk if not properly monitored.
Some policymakers, such as Senator Elizabeth Warren and Securities and Exchange Commission Chair Gary Gensler, are also concerned the products could be used for illicit purposes, or to take advantage of unsuspecting consumers.
In November, a U.S. Treasury-led working group recommended Congress pass a law specifying stablecoins should only be issued by companies that have insured deposits, like banks.
While Democrats exercise caution over cryptocurrency, a number of Republican lawmakers praised the cryptocurrency executives for leading the way on the vital technology.
“I am tremendously impressed. I see a lot of ingenuity, a lot of entrepreneurial spirit,” said Rep. Pete Sessions. “We need to be supportive of you.”
The executives told the members of Congress that they would welcome regulatory clarity, which would enable the industry to continue expanding. They warned that restrictions and regulations could prove counterproductive for the cryptocurrency industry in the United States, especially as other nations are lenient on regulation and encourage its growth.
The rapid growth of cryptocurrency underscores its appeal with investors and should be supported with clear rules rather than held back, the cryptocurrency executives said.