The US Senate Hearing Record: "The blockchain technology has incredible potential and risks"

On July 30th, the US Senate Banking Committee held a hearing to discuss blockchain and cryptocurrency regulation.

Experts involved in the hearing included representatives of the Blockchain Association, CEO of Circle CEO Jeremy Allaire, Rebecca Nelson of the International Trade and Finance Research Service Center, and Mehrsa Baradaran, Professor of Law at the University of California, Irvine. The hearing will be a fact-finding hearing, and the senator will raise questions about blockchain and cryptocurrency from industry experts.

In the opening remarks, Banking Committee Chairman and Idaho Senator Michael Crapo said that blockchain and encryption technologies are unavoidable, and they may be beneficial. The United States should be a leader in this field. The vice chairman of the committee, Ohio Senator Sherrod Brown, revisited Facebook's question, saying that Facebook has repeatedly proved that they are not trustworthy. But they didn't care and acted quickly, they wanted to destroy our currency and payment system with the guise of "innovation."

Jeremey Allaire talked about the current financial system in his opening remarks. He said that "the financial system based on digital assets and blockchain will definitely have a better future." Allaire believes that the current regulatory lag has led to more companies registering overseas, and Congress should define digital assets as new asset classes.

Rebecca Nelson believes that Facebook may become a game changer for cryptocurrencies, and their cryptocurrency Libra raises many regulatory and system issues before implementation.

Professor Mehrst Baradaran said it is natural for people to want to accept bitcoin after the 2008 financial crisis. But the current problem in our economy is a policy issue, not a technical one, so the blockchain is not necessarily a solution. Baradaran said that we already have a public ledger, and that is the Fed.

She believes that “there is no innovation that can eliminate the risks, fraud and crime that regulators aim to combat.” So moving to the blockchain does not avoid these risks.

In the subsequent questioning session, Allaire once again emphasized the need to standardize digital assets. He said that the definition of digital assets in our current financial system is very problematic, we should regulate digital assets, but before that we need to define them as new asset classes.

Baradaran cites the way people try to provide banking for non-bank accounts and past failure attempts, and links these failures to certain established goals of cryptocurrency. She acknowledged that although the blockchain is “amazing”, the problem of no bank account is a policy issue, not a technical one.

Allaire responded to Virginia Senator Mark Warner's question about Libra Stabilizing Coins. He said that while the first digital currencies are focused on building global digital currencies, key mainstream applications in the financial services industry require stable currencies such as Libra. Allaire will also use Circle's US dollar stable currency as another example.

Hawaiian Senator Brian Schatz said, “It sounds like a technician can avoid a lot of political trouble by waving a wand.” Schatz stressed that not everyone has a smartphone, so it’s hard to think that this technology will solve all The problem. However, Allaire retorted that technological innovation may be slow, just like the development of the Internet. Schatz said, "I don't doubt the possibility of this technology. I just don't think it will actually provide banking services for low-income people."

Catherine Masto, a US senator from Nevada, expressed his belief in the potential of the blockchain and emphasized the importance of surpassing China in this technology area.

Nelson said that some countries and regions are using the transparency and certainty of regulation as a way to attract crypto businesses into their jurisdictions. She said that money laundering is a major concern in the global cryptocurrency field, but some licensing, reporting and transparency requirements can help solve these problems. Allaire also said that in some countries outside the United States, digital assets and blockchains have greater opportunities.

Then Commission Chairman Crapo asked how Libra would be recognized globally if it faced a different regulatory environment in each country.

Allaire said that some of the cryptocurrencies are just open source software that exists on the Internet and can run anywhere in the Internet, "even in outer space." He believes that "digital assets will move around the world at the speed of the Internet without friction, requiring high security and data protection."

Brown, the vice chairman of the committee, asked, "If there are no real new products, why do we need rules and regulations?" He believes that the concept of cryptocurrency is the same as financial instruments, but there is a new technology behind it. He also asked about the lessons that could be learned from technology companies after the 2008 financial crisis, and Barabadan said that if the United States does not allow these companies to grow unfettered, then the United States will lose its technological edge. Barabadan also believes that the resistance of technology companies to regulation is similar to the way large banks resist regulation.

At the end of the hearing, Commission Chairman Crapo said that

“I hope that the United States will always be at the forefront of this technology, with incredible potential and incredible risks.”

By Liang CHE

This article comes from pushing , reprinted to indicate the source.