House Fintech Task Force holds hearing to discuss future of CBDC and crypto regulation

On Tuesday, Eastern Time, the House Fintech Working Group held a hearing on the future of central bank digital currency.

Congressman Anthony Gonzalez said, “We don’t want the Fed to take over the banking system.” Rep. French Hill agreed, saying, “The Fed should not have direct accounts with individuals, and I find that concerning.”

“The concern that a contemplated CBDC would actually transform the Federal Reserve into a consumer bank is not what we want,” said Rep. Tom Emmer (R-Calif.). Instead, he cited the Bitcoin network as an example, saying such a system “can only be achieved if it is open, permissionless, and private.”

The proliferation of pilot projects and functional CBDCs around the world over the past two years has increased pressure on Congress. Last month, the Financial Services Committee heard from the Federal Reserve that the central bank needs congressional authorization to launch a CBDC.

Camilla Cadet, founder and CEO of Emtech, said: “We believe that blockchain technology is the key to any other type of technology and approach to creating digital currencies, especially when we are talking about cash.”

Rep. Brad Sherman, R-Calif., an advocate of stronger know-your-customer controls, warned of competition in the tax evasion market and asked, “How can the Fed ensure that a digital dollar is not a vehicle for tax evasion?”

At the hearing, Congresswoman Maxine Waters said she had organized a group of Democratic lawmakers to delve into cryptocurrencies and central bank digital currencies.

Waters believes that cryptocurrencies and other digital assets are an important issue for the House Financial Services Committee.

“As cryptocurrency continues to grow exponentially, I have organized a task force of Democratic members to work with regulators and experts to take a deep dive into this poorly understood and minimally regulated industry,” she said.

Waters has previously spoken about her concerns about digital currencies at other hearings. In 2019, she tried to stop Facebook's Diem token project.

Many lawmakers have spoken harshly about encryption following a series of ransomware attacks on major U.S. infrastructure. Last month, Colonial Pipeline was forced to pay hackers $4.4 million in cryptocurrency after its systems were hit by a ransomware attack.

The role of cryptocurrencies in ransomware attacks appears to be worrying enough that U.S. President Biden may discuss the issue when he meets with Russian President Vladimir Putin tomorrow.