Senior executives from leading digital asset companies traveled to Washington on Wednesday to highlight the industry’s contribution to the economy and to call for clearer regulations from the U.S. Congress and federal regulatory agencies.
For more than five hours, CEOs have testified about the positive impact of cryptocurrency and blockchain technology and to dispel the image of a Wild West attitude towards regulations and guidelines.
The leaders of digital asset giants – including Circle, FTX, Paxos Trust Company, Stellar Development Foundation and Coinbase – have called on Congress to pass legislation giving the power to regulate cryptocurrency to a federal agency, instead of the many who currently oversee the industry.
Currently, the Securities and Exchange Commission regulates the spot securities markets and the Commodity Futures Trading Commission oversees the derivatives markets. However, no agency has oversight power over the commodity spot market, for cryptocurrencies such as Bitcoin and Ethereum.
The administrative formalities of several American states
In addition, some cryptocurrency market exchanges and stablecoin issuers must obtain licenses for state issuance of money and sale of checks from multiple states.
At least three cryptocurrency companies have obtained conditional approval of National Trustee Bank Charters from the Office of the Comptroller of the Currency, according to to a panel hearing note.
“An effective policy framework would allow crypto platforms to offer both spot transactions and derivatives on crypto assets under a unified system, with a rulebook and a technology platform to manage the risks associated with all activities.” accounts receivable trading, âSam Bankman-Fried, CEO of FTX, said during testimony before the House financial services committee.
The executives touched on two major themes during their testimony: Digital assets are here to stay, and it’s not the Wild West, as many believe in Washington.
âStablecoins and Internet-natural capital markets aren’t too big to fail, but they’re now too big to ignore,â said Jeremy Allaire, CEO of Circle.
According to the audience note, the capitalization of stable coins reached nearly $ 147 billion in November, up more than 500% since November 2020.
Never the Wild West
The SEC and the Biden administration fear that digital banking is vulnerable to fraud, manipulation and abuse. In November, federal regulators have asked Congress to “Act quickly to pass a law” that addresses these risks. There are bills pending in Congress and the US House of Representatives, but stalled in committees.
The panel admitted that early in the history of digital assets there had been cases of bad action on the part of a few. However, the industry has a new self-imposed security to avoid duplication.
âThere (were) irresponsible players in the digital asset industry and these players have drawn the headlines,â Bankman-Fried said, adding that the industry is now âcompletely transparentâ.
He added that the government should ensure that digital assets have the reserves they claim to have and should be audited regularly. âThis is the most important thing the US government can do. If a company says it has a billion reserves but only has a million, then there is a problem.
Leaders are calling on the federal government to treat cryptocurrency the same as other assets and to have a senior regulator who can perform regular audits.
Coinbase CEO Alesia Haas said the industry is emphasizing technology as a way to keep investors safe, adding that the industry has 24/7 compliance monitoring. , cybersecurity experts and worked closely with law enforcement when ransomware attacks occur.
The assurance of Haas’ security measures did not appease committee chair Maxine Waters (D-Calif.), Who pointed out that Americans are making more and more financial decisions using digital assets on a daily basis.
âSome pension funds are starting to invest in cryptocurrencies on behalf of retirees, despite cryptocurrency’s history of volatility as an investment. The pandemic has also helped working families seek alternatives to rebuild their nest egg by investing in cryptocurrency, âshe said.
Denelle Dixon, managing director of blockchain payment network Stellar, said stablecoins are already being used beyond trade and speculation. âIt’s up to the industry to make people comfortable with technology,â she said.
Help the unbanked
Crypto proponents often argue that blockchain technology allows people to bypass traditional middlemen and move value across the internet. without guards like banks. It could help bring the 1.7 billion people around the world who are excluded from the existing financial system into a new one, they say.. The panel said digital assets don’t come with fees, such as overdrafts or money transfers.
âBig banks make a lot of money on these fees,â said Brian Brooks, CEO of Bitfury.
However, Democratic representatives have posted contracts for digital asset services, where a service fee is charged, up to 2-3%. Panel members countered that their fees are “much lower” than those of financial institutions.
Members of the Democratic Committee asked why contracts are only written in English. The panel said most users of digital assets are English speakers, but an industry-sponsored survey found that 18% of African Americans, 17% of Latinos, 21% of Asians and 43% of whites have used digital assets.
âWe have a diverse customer base,â said Brooks, who was the acting chief comptroller of the currency under former President Donald Trump.
One talking point for proponents of digital assets is that onerous regulations will, and have, sent technology and jobs overseas. This point was made by Republicans and CEOs during the hearing.
Brooks said excessive regulation would send American tech talent out for jobs in foreign countries.
âA surprising number of talented traders have left for Portugal, Dubai, Abu Dhabi, Singapore and other jurisdictions which are not at all deregulated but which are growing,â he said.
Part of the innovation created by digital assets is known as Web 3.0, a new paradigm in web interaction supposed to mark a fundamental change in the way developers create websites, but more importantly, in the way people interact with those websites.
Bankman-Fried and Brooks said the next generation of the internet is spearheading blockchain technology.
However, MIT physics graduate Bankman-Fried said the United States can reverse the exodus. “I am optimistic the trend will be reversed in the next few years” with smart and sane industry regulations.
Read more: Tom Brady backed company offering inaugural NFTs
Read more: Crypto prices make a comeback after taking hits
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