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Crypto set to dominate US Congressional discussions

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Cryptocurrency looked set to be the main topic on the agenda at a meeting of an important US Congressional committee on Tuesday.

The US Senate Banking Committee will be discussing the most appropriate method of regulation for the crypto industry, which could have a knock-on effect on the amount of crypto fraud which occurs.

One of the speakers at the hearings will be Jeremy Allaire, who is the CEO of peer-to-peer crypto payments platform Circle.

However, he will be testifying in his capacity as a representative of the Blockchain Association, which is a major trade body that has been assembled to fight for the industry’s advancement.

The US Senate publishes some testimonies, plus what are known as “prepared remarks”, in advance, although it is understood that Allaire will be asked questions at the hearing as well.

In the prepared remarks published on the Senate website, Allaire points out that “digital

assets present a new kind of custody and security risk”.

“The appropriate response of governments should be to ensure that there is supervision and compliance around the fundamental protections needed for financial services — enterprise risk, cyber security risk, fraud and financial crime risk, and the risk of theft”, he will say.

He is also expected to argue that firms in this sphere need a “light touch” approach to regulation, rather than too much.

“At the same time, there is a tremendous amount of technical and business model innovation

emerging in this field, with new developments moving at an accelerated pace”, he is expected to say.

“To support this innovation and experimentation, it is crucial that governments approach this new asset class with a relatively light touch.”

In particular, he is expected to cite the performance of the Bermudan government as a model for the US to follow.

He will point out that it has prioritised the types of risk that could occur, including financial crimes risks, and responded appropriately.

He is also expected to claim that regulation ought to be centralised in one particular organisation where possible, rather than distributed over lots of different locations.

“Compared to a patchwork of regulators here in the United States, across the federal government and the states, there is a single regulator to supervise firms [in Bermuda]”, his prepared remarks read.

A number of other speakers will speak at the event too.

Rebecca Nelson, who works for the Congressional Research Service and focuses on international trade and finance, will be asked questions by the panel – which, when fully present, is composed of 25 Senators including presidential candidate Elizabeth Warren.

Mehrsa Baradaran, who teaches law at the University of California Irvine School of Law, will also speak.

This is not the firm time in recent weeks that crypto has been central to the agenda of Congressional testimony.

Last week, for example, the leader of Facebook’s cryptocurrency project Libra was asked about the operation of the project, which is backed by organisations such as Visa and Andreessen Horowitz.

However, the hearing did not break very far into wider discussion of other crypto coins, and instead the Libra brand dominated the conversation.