Today, the United States Congress held a hearing on crypto assets, hearing testimony from the industry’s most prominent executives.
Stablecoins are defended by cryptocurrency executives.
The House Committee on Financial Services of the United States Congress held the hearing. Maxine Waters, Chairwoman of the House Financial Services Committee, hosted a hearing on “Digital Assets and the Future of Finance.”
Executives from leading crypto firms testified during the congressional hearing, which was live-streamed on YouTube. Circle CEO Jeremy Allaire, Bitfury CEO Brian Brooks, Paxos CEO Charles Cascarilla, Coinbase CFO Alesia Haas, FTX CEO Sam Bankman-Fried, and Stellar CEO Denelle Dixon were among those who testified.
Stablecoins, or tokens whose prices are pegged to traditional currencies such as the US dollar, were a hot topic.
Several executives are interested in the subject: Circle and Coinbase are in charge of the USD Coin stablecoin (USDC), while Paxos is in charge of its own Paxos dollar (USDP).
Allaire and Brooks place a premium on competition.
Stablecoins, according to Circle CEO Jeremy Allaire, may help the US dollar’s global dominance rather than harm it.
Allaire believes that independent US stablecoins will continue to dominate the crypto market even as competing alternatives such as China’s digital yuan, issued by the country’s central bank, enter the market.
Whereas dollar stablecoins have handled “trillions of dollars in transactions,” China’s digital yuan has handled “only $10 billion in transactions so far,” according to Allaire.
He explained that the US crypto industry wants the dollar to play a critical and strategic role, and that as a result, regulators should make supporting US stablecoins a “national security priority.”
In his testimony, Bitfury CEO and former OCC chair Brian Brooks agreed with Allaire. Stablecoins, according to Brooks, can help the US dollar become utility-driven and “not just a monetary system created after World War II” at a time when inflation is rising.
Brooks advocated for US stablecoins, claiming that their online nature will allow the dollar to “compete on features, not just history.”
Others Talk About Stablecoin Security
Allaire continued by claiming that stablecoins provide security. He pointed out that the assets underlying stablecoins are “safer than dollars in bank accounts because [the latter] are fractionally reserved and lent out.” This, he believes, poses a greater risk to the US economy than stablecoins.
Charles Cascarilla, CEO of Paxos, also testified about the security of stablecoins. Concerns about a bank run caused by stablecoins were addressed by Cascarilla, who stated that stablecoins are “backed by money sitting in FDIC-insured bank accounts or money sitting in Treasury bills.”
This means there is “no risk of a run,” he claims. Cascarilla went on to say, “It’s liquid cash, and you’ve tokenized a dollar.” Such assets have a high level of utility.”
In response to concerns that stablecoins could be used for illicit purposes, FTX CEO Sam Bankman-Fried stated that “advanced policies are already in place” and that the “digital asset industry has a pretty strong standard” for KYC/AML procedures.
Other witnesses, including Coinbase CFO Alesia Haas and Stellar CEO Denelle Dixon, spoke about how stablecoins can help the unbanked.
They also suggested that regulators provide more clarity, which is consistent with Coinbase’s recent policy proposal, which suggests the creation of a new regulatory framework.
Hearing Reception Was Positive
The majority of committee members who spoke during the hearing agreed that it was important not to stifle innovation in the crypto sector. While several questions about how regulators can ensure investor protections were raised, the overall outcome of the discussion was positive and encouraging for the cryptocurrency space.
Jake Chervinsky, a well-known crypto lawyer and the CEO of the Blockchain Association, described the hearing as “the most positive, constructive, and bipartisan public event on crypto.”
Patrick McHenry, a ranking member of the Committee, has described the cryptocurrency sector as the “next generation of the internet.” He went on to say that the United States Congress must work together to regulate the burgeoning sector in a bipartisan manner.