U.S. risks ‘chilling’ regulations on crypto, industry warns Congress

Coinbase CFO Alesia Haas observes during the 2021 Milken Institute Global Conference in Beverly Hills, California, USA on October 18, 2021. REUTERS / David Swanson

WASHINGTON, Dec 7 (Reuters) - Top executives of six cryptocurrency firms will tell Congress on Wednesday to be soft on imposing new rules on digital assets, or risk sending the activity underground or out of the United States.

In front of a audience In the U.S. House of Representatives Committee on Financial Services starting at 10:00 EST, executives leading some of the world's largest crypto companies indicated in prepared testimony that they will generally support more rules. clear. But they will emphasize that overly restrictive ones would not stifle activity, but simply push it out of reach of the United States.

"Without tailored legislative solutions that are openly debated with public participation, the United States risks unnecessarily burdensome and chilling laws and regulations." warned Alesia Haas, CEO of Coinbase Inc, in testimony posted Tuesday. "This could effectively drive crypto activity underground or to overseas exchanges that have little to no compliance programs."

The testimony, released by the panel before the hearing, sets the stage for what is expected to be a highly watched and high-risk event as US lawmakers publicly pressure crypto executives to defend their businesses and develop ideas. to keep an eye on them.

Several executives, however, advocated a lighter touch.

"There are a number of examples of US regulatory decisions that have fueled legitimate activity abroad in ways that hurt US investors, innovators and workers." said Bitfury CEO Brian Brooks. "There's a reason crypto talent is no longer concentrated in Silicon Valley, the birthplace of the original commercial internet."

The rapid growth of cryptocurrencies, and in particular "stablecoins," which are digital assets whose value is tied to traditional currencies, has drawn the attention of regulators, who fear that they could put the financial system at risk if they do not. are adequately monitored. Some lawmakers, such as Senator Elizabeth Warren and Securities and Exchange Commission Chairman Gary Gensler, are also concerned that the products could be used for illicit purposes or to take advantage of unsuspecting consumers.

In November, a task force led by the US Treasury recommended that Congress pass a law specifying that stablecoins should only be issued by companies that have their deposits insured, such as banks. Wednesday's hearing could serve as a good indication of how likely Congress is to adopt any such digital currency legislation, according to analysts. read more

Executives said they would welcome regulatory clarity, but overly restrictive rules could backfire.

"The stablecoins and native Internet capital markets are not too big to fail, but now they are too big to ignore." said Jeremy Allaire, CEO of Circle Internet Financial. "Policy frameworks must support an open and competitive playing field, and allow new technologies to flourish."

Proponents say stablecoins could revolutionize payments by offering an instant, reliable, and low-cost way to transfer funds around the world. Executives say the United States should play a leadership role in fostering such technology, just as American rules allowed the Internet to flourish in its early growth in the 1990s.

"Let's work together to ensure that American policymakers are the ones setting the stage for a smart, productive regulatory roadmap for this technology around the world." said Denelle Dixon, Director of the Stellar Development Foundation, in her prepared testimony. "I hope we can all agree that cryptocurrencies and stablecoins should not be buzzwords, used to incite fear of the unknown."

Reporting by Katanga Johnson and Pete Schroeder in Washington; Editing by Megan Davies and Dan Grebler

Our Standards: The Thomson Reuters Trust Principles.