The US House Committee on Financial Services has produced a memorandum outlining the topics that will be the subject of discussion in the hybrid hearing on digital assets scheduled for Wednesday at 10:00 a.m. ET.
The document stated that one panel of the hearing will be dedicated to six executives from the crypto community as witnesses, addressed to members of the Financial Services Committee. Jeremy Allaire of Circle, Sam Bankman-Fried of FTX, Brian Brooks of Bitfury Group, Charles Cascarilla of Paxos, Denelle Dixon of Stellar, and Alesia Haas of Coinbase are among the names on the list.
The hearing, titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States”, will focus on four important topics: crypto exchanges, stablecoin offerings, digital asset regulatory issues, and federal regulatory solutions.
“This hearing will investigate some of the innovative goods and services offered by significant digital asset market participants”, according to the brief. The importance of bitcoin market exchanges in enabling cryptocurrency investments and transactions is also discussed. Stablecoins and other digital assets are also gaining popularity. And the regulatory environment that governs these new products and services right now”.
The significance of exchanges as a point of entry for crypto investors
The document emphasises the importance of exchanges as a point of entry for crypto investors. However, there will be a discussion of decentralised financing at the hearing. Because of its potential to “replicate and replace traditional financial services such as loans, asset trading, insurance, and other services,”
The document also discusses how stablecoins differ from fiat currency in terms of operating frameworks and reserve compositions, stating:
“There is no comprehensive and centralised regulatory structure for cryptocurrency marketplaces.” As a result, digital asset investments are subject to fraud, manipulation, and misuse. Money laundering can be facilitated by digital assets and linked service providers. Terrorist funding, sanctions evasion, kleptocracy, and other illicit financial hazards are among the threats.”
Exploring the potential benefits and dangers of CBDCs
Congress intends to develop a clear position on central bank digital currencies in light of the rise of cryptocurrencies (CBDC). This is based on the Federal Reserve’s continuing investigation to “explore the potential benefits and dangers of CBDCs. As well as their influence on the domestic payments system in the United States”.
In advance of the hearing, Circle’s Allaire issued the following statement:
“In a world where money is becoming a basic aspect of the internet, the United States should promote the dollar as the internet’s primary currency. And use it to boost the country’s economic competitiveness. More efficient and inclusive financial services require security and a big overhaul.”
Circle, Allaire’s organisation, is the exclusive issuer of USD Coin, a dollar-backed stablecoin (USDC). He suggested that the US government may employ dollar-denominated reserves to make widespread adoption of the stablecoin. “Policy frameworks must promote an open and competitive playing field, allowing innovative technologies to thrive,” he added.