Top executives at six major cryptocurrency companies, including Circle and Coinbase, called Congress on Wednesday to provide more precise rules for the $3 trillion growing industry. There was also a warning that overly strict restrictions would push it out of bounds. The hearing of the U.S. House of Representatives Financial Services Committee was the first time that industry officials have explained their business to U.S. lawmakers. This was amid growing concerns that cryptocurrencies could hurt investors and at the same time lead to systemic risks.
Crypto executives cautiously repeated calls about ordered rules before the industry had to obey existing regulations. Coinbase CEO Alesia Haas says the U.S. threatens to impose overly heavy regulations without tailored legislative decisions openly considered with public participation. Analysts believe that Congress will not impose new rules on cryptocurrency immediately. Lawmakers will likely use the first hearing to establish the facts first.
Maxine Waters, a Democrat, noted questions about proper oversight. According to Maxine, the plans of Stablecoin and Facebook are a significant concern given the company’s massive global scale. Some lawmakers have praised executives for leading the way in what could be an essential technology.
Paxos CEO Chad Cascarilla, Jeremy Allaire, Circle CEO, BitFury CEO Brian Brooks, Sam Bankman-Fried, FTX Trading CEO, Dannelle Dixon, and Stellar The CEO of the Development Foundation also took a stand.
The rapid growth of cryptocurrencies, stablecoins – digital assets tied to traditional currencies – has attracted the attention of regulators. They fear putting the financial system at risk if there is no proper monitoring. Some policymakers, such as Gary Gensler, chairman of the Securities and Exchange Commission, Senator Elizabeth Warren, are also concerned that the products could become a part of illegal purposes.
In November, a U.S. Treasury working group recommended to Congress that a bill be passed stipulating that stablecoins should only come from companies that have insured deposits, such as banks. Executives said they welcome regulatory clarity that will help expand the industry. However, overly restrictive rules can be counterproductive.
The rapid growth of the sector underscores the strong desire of investors for digital assets. Also, this area should receive support for clear rules rather than suppression. BitFury’s Brooks told lawmakers that cryptocurrencies are similar to traditional assets. However, the complexity and variability of cryptocurrencies and dramatically changing standards have caused concern among some legislators.