- Two hearings have been scheduled in the U.S. Congress this week to address crypto regulation and oversight issues. The full House Committee on Financial Services will hear from SEC Chair Gary Gensler on Tuesday regarding SEC oversight, while the Subcommittee on Digital Assets, Financial Technology, and Inclusion will take up draft legislation relating to stablecoins on Wednesday.
- Gensler has come under fire from within his own agency, with SEC Commissioner Hester Peirce filing a dissent against Gensler’s latest policy move that changes the statutory definition of a securities exchange to include cryptocurrency and digital asset exchanges. Pierce asserts that the change undermines First Amendment protections and “renders innovation kaput.”
- The draft legislation on stablecoins calls for a two-year moratorium on new stablecoins until a study can be completed by the U.S. Treasury, and sets up standards for interoperability, reporting, and enforcement. Industry players have called the bill “a product of bi-partisan efforts” and a “moment for the future of currency on the internet.”
Congress schedules hearings
The U.S. Congress has scheduled two separate hearings to discuss crucial topics in the crypto industry. The SEC Chair, Gary Gensler, is set to appear before the U.S. House Committee on Financial Services on the topic of “Oversight of the Securities and Exchange Commission,” while the Subcommittee on Digital Assets, Financial Technology and Inclusion will address draft legislation related to stablecoins. The legislation includes federal and state-level requirements for stablecoin issuers and a two-year moratorium on new stablecoins until a study can be completed by the U.S. Treasury.
Gensler is facing backlash from within his own agency as SEC Commissioner Hester Peirce filed a robust dissent against Gensler’s latest policy move, which changes the statutory definition of a securities exchange to include cryptocurrency and digital asset exchanges. Peirce stated that Gensler’s plan “undermines fundamental First Amendment protections” and “renders innovation kaput.”
The hearing on the regulation of stablecoins is expected to include testimony from experts in the industry, including Circle CEO Jeremy Allaire, Blockchain Association Chief Policy Officer Jake Chervinsky, and New York State Department of Financial Services Superintendent Adrienne A. Harris. The draft legislation aims to set up standards for interoperability, reporting, and enforcement and also calls for research on a digital dollar.
The first hearing on Tuesday, with SEC Chair Gary Gensler, is expected to focus on the regulatory developments, rulemakings, and activities that the SEC has undertaken since the last hearing in October 2021. The discussion will include the new policy move by Gensler that changes the definition of a securities exchange to include cryptocurrency and digital asset exchanges, which has drawn criticism from SEC Commissioner Hester Peirce, who argues that the change will undermine innovation and free speech.
On the other hand, the second hearing on Wednesday, entitled “Understanding Stablecoins’ Role in Payments and the Need for Legislation,” will examine stablecoins’ role in payments and review a 72-page draft legislation that provides requirements for payment stablecoin issuers, research on a digital dollar, and other purposes. The bill establishes federal and state-level requirements to issue stablecoins, sets up standards for interoperability, reporting, and enforcement, and calls for a two-year moratorium on new stablecoins.
Allaire states “Extraordinary moment”
Jeremy Allaire, Co-founder & CEO of Circle, sees the bill as a product of bipartisan efforts and believes that it’s an extraordinary moment for the future of the dollar and currency on the internet. However, he also acknowledges that there are open and challenging issues with the proposed bill and suggests that it needs more work. The hearing will feature several industry experts, including Dante Disparte, Chief Strategy Officer and Global Policy Head at Circle, Jake Chervinsky, Chief Policy Officer at the Blockchain Association, Columbia Business School Adjunct Assistant Professor Austin Campbell, and Adrienne A. Harris, Superintendent of the New York State Department of Financial Services.
Draft US Digital Dollar / Payment Stablecoin Bill Enters Congress— Jeremy Allaire (@jerallaire) April 15, 2023
1/ A product of bi-partisan efforts, the first comprehensive proposed law for Payment Stablecoins has arrived in Congress. Some thoughts below:
The two hearings this week in the US House show that the government is actively engaging with the cryptocurrency industry and seeking to regulate it. While some believe that regulation is necessary to protect investors and consumers, others fear that overregulation could stifle innovation and harm the industry’s growth. It remains to be seen how the draft legislation will evolve and what impact it will have on the crypto industry as a whole.
Allaire believes that the proposed legislation is the first comprehensive proposed law for Payment stablecoins and is the result of bi-partisan efforts. He also stated that the future of currency on the internet and the dollar in the world are at stake and that it is time for US leadership to ensure clear regulation and empower innovation within the framework of US prudential law.
During the hearing, several experts in the industry testified, including Dante Disparte, Chief Strategy Officer, and global policy head at Circle, Jake Chervinsky, Chief Policy Officer at the Blockchain Association, Columbia Business School adjunct assistant professor Austin Campbell, and Adrienne A. Harris, Superintendent of the New York State Department of Financial Services.
The crypto industry is at a critical juncture, with the SEC and Congress taking on regulatory matters relating to crypto. While some in the industry believe that the proposed legislation is a step in the right direction for stablecoins, others are concerned about the SEC’s attempt to expand its authority over digital asset trading platforms and the potential negative impact it may have on innovation. It remains to be seen how these regulatory developments will shape the future of crypto in the US and the world at large.