The Financial Services Committee hearing on digital currencies earlier this week didn’t go along the lines the proponents of a free and fair crypto economy were hoping for. While there’s no need for the alarm bell to go off just yet, the hearing on March 14, Wed, saw some Congress members openly expressing their skepticism about bitcoin and other digital currencies.
The hearing lasted for more than a couple of hours, during which it bounced from one topic to another.
Perhaps one of the biggest takeaways from the hearing was the stark realization that lawmakers are themselves divided along two diametrically opposite viewpoints. As the hearing started revolving around the theme of government regulation and enforcement, the floor echoed two principle stand which, roughly put, give policymakers two options: New laws and more teeth for regulators, or a clear and well-defined policy rooted in existing laws and regulations.
While there was no consensus on which of these two options would be better suited to protect the interest of investors, it was clear as day that lawmakers are not taking kindly to the concept of initial coin offering (ICO).
Congressman Brad Sherman’s take on the issue reflected the fairly common disdain for ICOs among lawmakers. In fact, Sherman pulled no punches when he said that the mere purchase of digital tokens would not contribute anything to the real-world economy. He then went a step further by adding that ICOs were basically “fixed, fraudulent gambling scheme with no social benefit.”
On a side note, Sherman didn’t seem too fond of crypto either. He said that digital currencies are “popular with guys who want to sit in their pajamas and tell their wives they’re going to be millionaires.”
However, the committee couldn’t reach a definitive conclusion regarding how the government should go about regulating ICOs. Simply put, the members were stuck in the same old question of which agency should take the onus — the CFTC or the SEC — and which laws should govern the regulations.
The closest the committee came to finding an answer was when Peter Van Valkenburgh from Coin Center made the following statement:
“A sensible way in dividing these markets is between things that are security-like, and commodity-like” and suggested that the SEC should clarify it’s test for deciding if a token sale is a security. The result of bad or incomplete legislation, he warned, would be that these “truly innovative capital formation opportunities.”
Meanwhile, Rep. Tom Emmer suggested a hands-off approach to handle this rather delicate dilemma.
Emmer, who is a member of the Congressional Blockchain Caucus, underlined the importance of policy-makers across the political spectrum avoiding a knee-jerk reaction. He also suggested that the Congress should refrain from looking for a“new policemen”, and neither should it allocate more power to the “policemen we already have.”
He hinted that giving more teeth to existing regulations without due consideration could amount to an unwarranted invasion of the crypto economy with potentially adverse consequences.
“I realize there has to be some regulation but there needs to be a balance,” Emmer said.
Video link: https://youtu.be/-CCqCsmCDdw