Hearing Preview: Circle CEO calls on Congress to treat cryptocurrency as a new asset class

At 10:00 pm Beijing time on July 30, cryptocurrency will once again become the focus of Capitol Hill, and the US Senate Banking Committee will hold a hearing to discuss current and potential regulation of the cryptocurrency and blockchain industries.

It is reported that Circle CEO Jeremy Allaire will represent the Blockchain Association Trade Group to attend the hearing. In addition, Mehrsa Baradaran, a professor at the University of California, Irvine Law School, and Rebecca Nelson, a Congressional research services expert, will also attend as hearings.

Circle CEO Allaire

(Photo: Circle CEO Jeremy Allaire)

Accordingly, the purpose of the hearing was to investigate regulatory issues across the cryptocurrency and blockchain industries, which is different from the hearing of the Facebook Libra project earlier this month.

Kristin Smith, head of the Blockchain Association, said:

“This will be a discussion about the broader industry, regulatory challenges and how the US can do better, so I am very optimistic.”

Circle CEO calls on Congress to treat cryptocurrencies as a new asset class

In his testimony, Jeremy Allaire called on Congress to treat digital assets as a new asset class because the current regulatory burden could make it difficult for US companies to do business.

He said:

“As a law-abiding US citizen, American companies or the US industry should not be disadvantaged in developing this global technology. Congress should adopt national policies to define digital assets as new asset classes and develop appropriate digital assets. Rules and exemptions. This will require changes to our existing commodities, securities and banking laws."

Smith said that Allaire represents the blockchain association because his Circle is well aware of these issues. It is reported that Circle has obtained a number of regulatory licenses in the United States and restricted US investors from trading certain assets. However, due to the current regulatory structure, the company had to lay off employees and transfer some of its operations overseas.

Allaire also explained in the testimony that blockchain technology will help regulators better track money-laundering attempts.

Cryptographic currency vs Libra

At the previous Libra hearing, legislators differentiated between cryptocurrency and Facebook's Libra project.

In Tuesday's testimony, Allaire also compared Libra with the USDC stable currency jointly issued by the company and Coinbase.

He says:

“Unlike Libra, which is trying to establish a new global currency and account unit, the CENTRE agreement provides a path for the main reserve currency to operate as a digital currency.”

He said that CENTRE is also moving away from any single blockchain model (currently, USDC is built on Ethereum).

In the prepared testimony, Congressional research services expert Nelson also compared Libra with cryptocurrencies and focused on privacy. she says:

“Previously, concerns about the privacy of the cryptocurrency market focused on whether users had too much privacy: by partially blocking user identities, cryptocurrencies allowed bad actors to engage in evil and illegal activities.

In contrast, Libra's focus is on how to protect user data in financial transactions, rather than merging it with user data from other Facebook platforms. Although the head of Calibra has promised to ensure privacy is a top priority, many analysts remain skeptical given the scandals of Facebook's use of user data and the dependence of Facebook's business model on collecting and monetizing user data. It's unclear whether Facebook will appear on Tuesday's hearing, but Smith said it could involve questions about consumer privacy and how different systems can solve this problem.

“I think this should be a fairly comprehensive discussion,” Smith said. “I don’t think we’re going to hear any new news that we’ve never heard before. I just think it’s going to be a Facebook hearing. A more thoughtful and more cautious conversation."

Propose Congress to take action to promote inclusive finance

Although Allaire called on legislators to take specific legislative action, his expert witnesses were more based on discussion positions, and Nelson specifically pointed out that her testimony “required” examined the international regulatory structure.

she says:

“As central banks and large (multinational companies) seek to establish their own digital currency, digital currencies may be more widely adopted.”

“The large-scale adoption of digital currencies may have a range of policy implications for the United States, including financial stability, consumer protection, AML/CFT, privacy considerations and sanctions policies.” The testimony of Law Professor Baradaran focuses more on the financial system and its impact on people without bank accounts. Her remarks indicate that she is skeptical about the development of cryptocurrencies by private citizens or companies to address these issues.

Mehrsa Baradaran

(Photo: Professor Mehrsa Baradaran)

"There is an inequality in the US banking system, which must be addressed, but it must be solved through democratic means. The cryptocurrency is expected to take over where our public institutions fail," Baradaran said.

Baradaran concluded that Congress should take action to promote inclusive finance.