Executives from six cryptocurrency firms told Congress Wednesday to tread lightly in imposing new rules on digital assets or risk sending activity underground or outside the United States, according to a news report.
While the executives who testified before the U.S. House Financial Services Committee indicated that they generally support clearer rules, Reuters reported, they emphasized that overly restrictive ones would not stifle the activity, but push it away from U.S. reach.
"Without tailored legislative solutions that are openly debated with public participation, the United States risks unnecessarily onerous and chilling laws and regulations," Alesia Haas, chief financial officer of Coinbase Global (COIN) said in testimony released on Tuesday.
Jeremy Allaire, CEO of Circle Internet Financial, said "stablecoins and internet-native capital markets are not too big to fail, but they are now too big to ignore."
"Policy frameworks need to support an open and competitive playing field, and allow new technologies to flourish," he said.
Representative Maxine Waters, the Democrat who chairs the panel, said there are "several questions" about the need for new rules for crypto, and also highlighted concerns about significant energy usage to mine and trade cryptocurrency.
"Cryptocurrency markets have no overarching or centralized regulatory framework, leading investments in the digital assets space vulnerable to fraud, manipulation and abuse," she said.
However, Representative Patrick McHenry, the top Republican on the panel, urged lawmakers to seek ways to boost cryptocurrency with sufficient safeguards.
"We should embrace it, we should understand it, and we should be international leaders in this space," he said.
The rapid growth of cryptocurrency, and in particular "stablecoins," which are digital assets whose value is pegged to traditional currencies, has caught the attention of regulators, who fear they could put the financial system at risk if not properly monitored.
In November, a U.S. Treasury-led working group recommended Congress pass a law specifying stablecoins should only be issued by firms that have their deposits insured, like banks.
Securities and Exchange Commission Chairman Gary Gensler said last week that the SEC would “use the enforcement tool,” with crypto exchanges as needed, but that, “I think a better approach for these platforms … is to work to get registered within the law."
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