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On Wednesday, two committees in the US House of Representatives conducted their inaugural joint hearing focused on cryptocurrency, aiming to establish a legislative framework for digital assets.
The initial phases of the hearing were contentious, with some Democrats questioning the necessity of enacting crypto-specific legislation.
A Focus On Making Law
The hearing, organized by the House Financial Services Committee (HFSC) and the House Agriculture Committee, was titled “The Future of Digital Assets: Measuring the Regulatory Gaps in the Digital Assets Market.”
HFSC chairman Patrick McHenry announced that the hearing would occur this month at Consensus 2023 in April, confirming its relevance to the market structure surrounding digital assets. In his opening remarks, McHenry emphasized to his fellow committee members that “the purpose here is to make law.”
“We need to get this right, for a couple of reasons,” he stated. “One is to harness innovation and enable consumer protection. The other is to ensure that the CFTC and the Securities and Exchange Commission will collaborate to guarantee consumer protection, unlike the current situation.”
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Maxine Waters, the ranking Democrat on the committee, concurred that it was time to resume drafting legislation, pointing out the limitations of the Securities and Exchange Commission (SEC) in pursuing fraudulent crypto companies. “These should be bipartisan concerns, and legislation to address them should have a path to the President’s desk.”
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However, Stephen Lynch, the senior Democrat on the digital assets subcommittee, expressed a differing view. He argued that developing new legislation for digital assets appears “redundant and unnecessary” since the existing securities laws have “sustained massive innovation in our financial system for decades.”
His remarks aligned closely with those of SEC chairman Gary Gensler, who has consistently asserted that the current laws provide his agency with sufficient authority to regulate cryptocurrency. Nonetheless, the Commodities and Futures Trading Commission (CFTC) has been in disagreement with the SEC for years, contending that the CFTC possesses greater authority over crypto than Gensler acknowledges.
Crypto’s Future in the United States
As the hearing drew to a close, Brad Sherman – the Californian Democrat and noted crypto critic – questioned whether digital assets should even have a future in the United States. He described cryptocurrencies as a “hidden money system” that diverts capital investment from productive industries, and whose “announced purpose” is to undermine sanctions and tax regulations.
“Crypto bros make money literally by making money, and they’ve made over a trillion dollars,” Sherman remarked during a separate hearing later on Wednesday. “They’ll accuse the U.S. government of making money out of thin air. Maybe we do, but we’re the U.S. government.”
HFSC Chair McHenry concluded the hearing by asserting that the SEC’s current methods for disclosure statements and registrations “don’t work for digital assets,” and that the CFTC requires additional authority over the market.
“The CFTC and SEC alone can’t do this. Congress must act,” he stated.
Last month, McHenry expressed his expectation that the President will sign some form of crypto legislation into law within the next 12 months.
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