Dive Brief:
- Executives from six cryptocurrency companies are set to testify Dec. 8 before the House Financial Services Committee, the panel's chair, Maxine Waters, D-CA, announced Wednesday.
- Witnesses will include Circle CEO Jeremy Allaire, Bitfury CEO Brian Brooks, Coinbase CFO Alesia Haas, FTX CEO Sam Bankman-Fried, Paxos CEO Chad Cascarilla and Denelle Dixon, CEO of Stellar Development Foundation, Waters said.
- The hearing comes as lawmakers, regulators and companies forge how to best regulate the crypto space.
Dive Insight:
Next week's hearing is meant to focus on "the challenges and benefits of financial innovation," the committee's announcement said.
The appearance of several crypto execs on Capitol Hill comes as companies debate a model for regulation in the digital asset space.
Coinbase in October outlined its preference that the U.S. create a new regulator to oversee the crypto market.
"We started where a lot of people start, which is taking the existing multiplicity of regulators and trying to figure out what minimal surgery you could do to make things work," Faryar Shirzad, the company’s chief policy officer told CNBC at the time. "And then there was a point at which … we just kind of looked at each other [and] we said it takes more effort to try to adapt the current system which is predicated on an old market structure — more intellectual effort, I would say — than it does starting from scratch."
Coinbase has taken issue with an alleged threat the Securities and Exchange Commission (SEC) leveled against the company regarding Lend, an interest-bearing account product it intended to launch this fall but then scrapped. The SEC said it classified Lend as a security, a designation Coinbase refutes. Coinbase has said the SEC has not offered an explanation as to why it would be a security.
Ripple last month offered its own regulation take — a framework that would de-emphasize the SEC's role in regulating crypto in favor of the Commodity Futures Trading Commission (CFTC). Ripple, too, has butted heads with the SEC over its token, XRP.
Wednesday's announcement came on a day when SEC Chairman Gary Gensler reiterated a desire for more oversight of crypto trading platforms while speaking at the Digital Asset Compliance and Market Integrity Summit.
"Work with us," Gensler told crypto representatives in attendance, in response to questions from former SEC Chairman Jay Clayton, according to Bloomberg. "These platforms need to come in get registered, come within the investor protection remit."
Three of next week's witnesses come from companies — Circle, Coinbase and Paxos — that Sen. Sherrod Brown, D-OH, wrote last month requesting more data about the firms' operations.
"I look forward to responding and working with you to ensure consumers are appropriately protected," Allaire responded on Twitter.
Bankman-Fried, in a September interview with Bloomberg, said more stringent regulation of cryptocurrency exchanges could potentially pose an upside to investors. "If done properly, these programs can be great for consumers," he said. "If done properly, they can give consumers way higher returns on their assets."
Another witness, Brooks, served as acting comptroller of the currency during the Trump administration. On his watch, the agency issued guidance for banks to use stablecoins and blockchain technology, and published an interpretive letter clarifying that national banks can provide cryptocurrency custody services and hold cryptographic keys.
Waters, in a December 2020 letter, criticized that guidance and called on the incoming Biden administration to rescind policies allowing banks to hold stablecoin reserves and provide cryptocurrency custody services.
Brooks stepped down as OCC chief in January, and then briefly served as CEO of Binance.US before moving to Bitfury.
Waters in June announced the formation of a group of House Democrats "to engage with regulators and experts to do a deep dive" into crypto, which she described as a "poorly understood and minimally regulated industry."
