Cryptocurrency industry executives warn U.S. Congress: Over-regulation could drive related activities underground

Sina Technology News Beijing time, December 8 morning news, six cryptocurrency company executives will testify to the U.S. Congress on Wednesday morning local time in the United States, and these executives said in advance that they must be cautious when implementing new rules for digital assets, otherwise it may cause related activities to move to the "underground" or outside the United States.

The U.S. House Financial Services Committee will hold a hearing starting at 10 a.m. ET on Wednesday (11 p.m. Beijing time on Wednesday), and executives from some of the world's largest cryptocurrency companies said in prepared testimony that, in general, they would support clearer rules for the industry. But at the same time, they will emphasize that overly restrictive regulations will not stifle cryptocurrency-related activities, but will only drive them to areas beyond the jurisdiction of the U.S. government.

Alesia Haas, CEO of Coinbase, the largest cryptocurrency exchange in the United States, warned in testimony released on Tuesday: "Without tailored legislative solutions and public participation in open debate, the United States risks introducing overly burdensome and intimidating (cryptocurrency-related) laws and regulations. This could effectively drive cryptocurrency-related activities underground or to offshore exchanges with little or no compliance programs."

The hearing is high-stakes and expected to be closely watched for the cryptocurrency industry, which faces a backdrop of U.S. lawmakers publicly pressuring cryptocurrency executives to defend their businesses and detail their ideas on how they should be regulated.

However, several cryptocurrency executives have argued that governments should take a more relaxed approach in regulating the industry.

Brian Brooks, CEO of blockchain technology services company Bitfury, said: "There are many examples in history where U.S. regulatory decisions have promoted legitimate activities abroad but harmed the interests of American investors, innovators and workers. There is a reason why cryptocurrency talent is no longer concentrated in Silicon Valley, the original birthplace of the commercial Internet."

The rapid growth of cryptocurrencies, especially so-called stablecoins, digital assets whose value is pegged to traditional currencies, has attracted the attention of regulators, who worry that cryptocurrencies could put the financial system at risk if not properly regulated. Policymakers such as Senator Elizabeth Warren and Securities and Exchange Commission Chairman Gary Gensler are also concerned that these products could be used for illegal purposes or lead to unsuspecting consumers being taken advantage of.

Last November, a working group led by the U.S. Treasury recommended that Congress pass a law requiring that “stablecoins” can only be issued by companies with deposit insurance, such as banks. Analysts said Wednesday’s hearing could send a good signal about how likely Congress is to discuss any such digital currency legislation.

The cryptocurrency company executives said they welcome clear regulatory rules, but overly strict rules could backfire.

Jeremy Allaire, CEO of Circle Internet Financial, a blockchain-based payments and consumer finance startup, said: "Stablecoins and the Internet's endogenous capital markets are not 'too big to fail', but they are now too big to ignore. The policy framework needs to support an open and competitive playing field and allow new technologies to flourish."

Supporters of stablecoins argue that the cryptocurrencies could revolutionize payments by providing a reliable, low-cost and instant way to transfer money around the world. Cryptocurrency executives say the United States should take a leading role in promoting the technology, just as U.S. rules allowed the internet to flourish during its early growth phase in the 1990s.

“Let’s work together to ensure that U.S. policymakers lay the groundwork for the regulatory landscape of this technology and develop a productive, sensible roadmap for global regulation,” Denelle Dixon, head of the Stellar Development Foundation, said in prepared testimony. “I hope we can all agree on one thing: cryptocurrencies and stablecoins should not be buzzwords thrown around that incite fear of the unknown.”