Summary of the US Senate Digital Monetary Supervision Hearing: Cannot circumvent Libra and cannot bypass China

The US Senate Bank, Housing and Urban Affairs Committee held a hearing on “Reviewing the regulatory framework for digital currency and blockchain” on the evening of July 30th, Beijing time, Jeremy Allaire, CEO of cryptocurrency operator Circle, University of California Mehrsa Baradaran, a professor at Irving Law School, and Rebecca M. Nelson, a Congressional trade and financial expert, attended the ceremony.

In addition to focusing on blockchain technology regulation, this hearing inevitably talks about Facebook's upcoming digital currency, Lira. In addition, members of Congress are largely concerned that cryptocurrencies do not have sufficient capacity to expand global financial services channels, and that Libra does not provide services to those who do not have access to bank accounts. Planetary (WeChat: o-daily) helps you summarize the three main points of this hearing. Let's take a look at it.

Can cryptocurrencies really help those who don’t have a bank account?

Mehrsa Baradaran, a professor at the University of California, Irvine Law School, said at the beginning of the hearing that financial inclusion is a policy issue, not a technical one. He believes that the Fed and other agencies have the right to provide banking services to those who do not have a bank account, because now Technology is no longer a problem, and the nature of the problem is actually in policy.

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Mehrsa Baradaran said:

“Rural areas are like a desert in the banking industry. What we need to do now is to get these touch points and use digital cash to provide financial services to those who don’t have bank accounts. If cryptocurrencies cannot be widely used, no one can do it. To this point."

Mehrsa Baradaran added that every “touchpoint” (where traditional financial services are not available) can drive cryptocurrencies to be widely adopted, but she believes that there is an easier way to do it directly for those who do not have a bank account. People create "touch points."

The encryption company is "escape" from the United States

Just as Libra chose to headquartered in Switzerland, Congress questioned the choice of cryptocurrency companies not to conduct business operations in the United States.

At the last Libra hearing, David Marcus, head of the Facebook blockchain business, answered why he chose Switzerland as the headquarters of the Libra Association without choosing the United States. A similar problem happened to Circle, but this time Jeremy Allaire did not move their company too far, but placed some of its operations in Bermuda, which is very close to the United States.

For the issue of “escape from the United States”, Jeremy Allaire stated that the US regulatory definition of securities products is very narrow and does not include the characteristics of digital currency. Many cryptocurrencies are considered securities under the Howey Test regulatory framework, even though some of the crypto assets have utility components.

At the hearing, Jeremy Allaire said bluntly:

“The guidelines issued by regulators and the nature of encrypted assets have serious mismatches. Outside the United States, many countries offer opportunities for blockchain technology development. If you look at other jurisdictions, you will know them. How good is the regulation, we want real high standards of regulation, whether it is network security, money laundering, regulatory risk, etc."

Congressional trade and finance expert Rebecca M. Nelson also agrees with Jeremy Allaire and states that some overseas cryptocurrency centers (such as Switzerland and Bermuda) have actually begun to use friendly regulatory policies to attract encryption companies.

Facebook Libra digital currency is still a topic that can't be avoided

The regulatory issues raised by lawmakers inevitably return to Facebook's digital currency, Libra, and Mike Crapo, chairman of the Banking, Housing and Urban Affairs Committee, believes that global digital currencies like Libra may not be able to meet many jurisdictions, including the US. Digital privacy and other regulatory requirements.

In this regard, Circle CEO Jeremy Allaire believes that it is a good thing to implement unified encryption supervision on a global scale. He pointed out that the Financial Action Task Force (FATF) guidelines are a good seven. Earlier this year, the Financial Action Task Force (FATF) issued a guide to the regulation of virtual asset service providers. Many sovereign countries and alliances around the world (including the G20) accepted this guideline, which also means most jurisdictions. The district will comply with the FATF guidelines.

Senator Catherine Cortez Masto hopes that legislators should take a long-term view, she said:

"As a country, if we don't lead this technology, China or some other countries will do so."

At the end of the meeting, Mike Crapo, chairman of the Senate Bank, Housing and Urban Affairs Committee, concluded with a strong heart: the blockchain may help, but it may be bad, and the United States has a long way to go.

Original author: Aislinn Keely

Odaily Planet Daily Translator: Moni

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