U.S. Congress Hearing: Bashing of Crypto and A Little of Regulatory Talk

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by Bhushan Akolkar · 4 min read
U.S. Congress Hearing: Bashing of Crypto and A Little of Regulatory Talk
Photo: vgm8383 / Flickr

The Securities and Investment Subcommittee met to discuss possible ways to tackle ICO-connected issues, while some just snatched an opportunity to castigate digital currency as a phenomenon.

Yesterday on Wednesday, March 14, House Capital Markets, Securities and Investment Subcommittee met in order to have an overview of the cryptocurrency market and the measures that need to be taken further. The hearing that went on for two hours saw most of the Congress members being extremely critical about digital currencies, while some also talked of the regulatory measures to be taken to protect investors interests.

The opening statement by Rep. Brad Sherman (D-Calif.) was quite harsh:

“Cryptocurrencies are a crock. They allow a few dozen men in my district to sit in their pajamas all day and tell their wives they’re going to be millionaires.”

Besides this Sherman expressed a series of concerns about the increasing use of cryptocurrencies in illicit activities and as a means adopted by startup companies to commit fraud.

The committee had basically gathered to discuss the scenarios around Initial Coin Offering (ICO), which is a decentralized way of fundraising used by many startups and companies to raise capital for their businesses and products. Bashing the crypto community, Sherman said that they have been falsely using the term ICOs to “lie to the public and convey the image that is like an IPO.”

He further added:

“They stole the intellectual property and trademark of legitimate investing and applied it to a fixed, fraudulent gambling scheme of no social benefit.”

Despite some strong words from Sherman, many of the committee members expressed their desire to rather have a balanced approach to accommodating the new technological revolution. Rep. Tom Emmer, said that digital currencies constitute “a huge topic that cannot possibly be scratched even in five minutes,” while U.S. Rep. Randy Hultgren of Illinois stated that it is Congress, who has a responsibility to ensure that investors are protected without unduly preventing growth.

Rep. Bill Huizenga (R-Mich.), chairman of the subcommittee, also addressed the committee members saying that the hearing was more about “hello and not goodbye” while dealing with the “crypto craze”. Huizenga said:

“We know that this has moved very quickly. This panel, this Congress is not going to sit by idly with a lack of protection for investors.”

Huizenga was quick to point the latest study on ICOs by MIT professor Christian Catalin, which says that nearly $300 million raised through ICOs has been lost in frauds and scams.

Many of the committee members also talked about the regulatory measures to be worked upon. Some questions were directly targeted at Mike Lempres, chief legal and risk officer of Coinbase, who was the sole representative from one of the companies in the crypto space. Lempres testified his position before the subcommittee saying that Coinbase’s workforce is committed to compliance and is “waiting for the dust to settle” before engaging in taking any further action for ICOs.

The U.S. Securities and Exchange Commission is said to be actively working on the matter of ICO regulation. Back in January this year, the SEC Chairman Jay Clayton said:

“The SEC is devoting a significant portion of its resources to the ICO market.”

Committee member Rep. Carolyn Maloney (D-N.Y.) also stressed on the matter of having serious attention towards protecting investors money. Maloney stated:

“They’re pouring their life savings into virtual currencies and they stand to lose a lot of money when this bubble eventually bursts.” She further said that she is currently working on a bill with “robust” investor protection and “would regulate virtual currencies but not the technology.”

Rep. Tom Emmer – who is also a member of the Congressional Blockchain Caucus, expressed some contrarian view to that of Huizenga and Maloney. During the hearing, he said:

“I find myself maybe not with my colleagues on some of this. Yet I hear elected officials who don’t have any concept of what we’re doing here … talking about ‘we have to go in and regulate.”

He further added:

“This is something that Democrats and Republicans should be celebrating here in Congress not going ‘oh my gosh, this is terrible, we don’t understand it.”

Emmer also advised the Congress to not install a “new policeman to invade this space and perhaps frustrate the development,” while also stating that there has to be some regulation, but, according to him, there also should be the balance and clarity.

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