On Wednesday, top guns in the cryptocurrency industry had a long talk with lawmakers telling them to allow their startups to succeed without harsh regulation clampdown. However, Washington has a lot to think about. First, the left and right wings have different opinions about the cryptocurrency industry. Also, the rampant $3 trillion market capitalization of digital assets, especially as an emerging market, is another cause of concern for lawmakers.
The lawmakers invited industry leaders from six crypto trading organizations to a hearing with the House Financial Services Committee. There seem to be conflicting opinions about handling the crypto industry from the subsequent interaction.
A couple of Democrats feel unsure about the financial risks involved in crypto trading. Republicans, on the other hand, are requesting a systemic approach to enact new laws. The executives also felt that a more precise roadmap should be created, expressing their dissatisfaction with the “shoehorn” process that the SEC had applied to the young industry.
Lawmakers And Regulators Must Rally Support For Crypto Startups
Apart from the comments from financial regulators, Charles Cascarilla, the co-founder of a financial service provider to crypto industries, believes that the government must first support the crypto industry. After that, they can design procedures that foster a secure and competitive financial system for decentralized digital organizations to thrive. He believes that when Congress comes up with an excellent framework implemented suitably, everyone will benefit. If not, there are severe consequences for the wrong implementation.
Adding to the discussion, the big wigs averred that their digital trading platform is of global importance, and the U.S. should ape in now. The innovations in digital assets will reduce transaction fees and increase transaction speed. Most importantly, the crypto leaders mentioned that blockchain technology is a disruptive tool that will drive innovation and assist ordinary people in taking charge of their privacy, which information and technology organizations have controlled for decades. This is what “Web 3.0” is all about.
Redefining Assets For Traditional And Digital Markets
Constant loggerheads between the SEC and Coinbase were a result of asset identification. The regulatory agency believes that digital asset trends and their underlying products are similar to investment contracts in the traditional sense, which is the prerogative of the agency. Also, a spokesperson for the SEC says the crypto market does not offer consumers enough protections because it is still new.
The CFO of Coinbase avers that the SEC would have no regulatory responsibility or oversight in the future because the blockchain can do that well. The official also added that blockchain tokens are digital properties, record ownership, and never securities in the traditional sense. However, both parties agreed that a clear strategy is required to map out duties and oversight. Since there were no counterparties or critics of the crypto industry in the hearing, the industry’s perspective left a lasting imprint on the discussion.
Republicans And Democrats Agree to Disagree On Cryptocurrencies
The discussion soon took a severe divide between the Republicans, who are positioned to take charge of the chamber next year. The Democrats are concerned about environmental factors, price volatility, money laundering, the effects of digital assets on the dollar, and its general benefit for society. It appears that the polarity in views and positions means that designing a regulatory structure for crypto will take years.
On the other hand, bank lobbyists feel that lawmakers should conduct a regulatory investigation, the type that was applied to commercial banks and financial lenders, to crypto businesses. And also use the same measures to the activities of the blockchain industry. This is because the nature of digital assets and their whole operation falls outside of the regulatory framework in the United States. The bankers believe that a weak oversight could result in financial instability and pose risks to the consumers.