Today, the Senate Banking Subcommittee on Digital Assets held its first hearing entitled “Exploring a Bipartisan Legislative Framework for Digital Assets.”
Sen. Cynthia Lumith (R-WY), a longtime supporter of the Bitcoin and digital assets industry, moderated the hearing with support from ranking members of the subcommittee ranking member Sen. Reuben Gallego (D-AZ).
Witnesses included Tim Massad, former CFTC chair and researcher at Harvard's Kennedy School of Government. Jai Massari, Chief Legal Officer of Lightspark. Jonathan Jachim, world head of policy and government relations at Kraken. Lewis Cohen, partner of Cahill Gordon & Reindel LLP.
Setting the tone for the meeting, Senator Ramis said he intends to do his part in passing bipartisan Bitcoin and Stubcoin laws. (This was one of the few times the word “bitcoin” was mentioned during the meeting. One of the only other times mentioned at the hearing was when Massad announced his opposition to the creation of a strategic Bitcoin reserve.)
Throughout the hearing, Massad emphasized the importance of monitoring Stablecoin transactions. He proposed extending the “regulatory boundaries” to address the challenges of AML (money laundering anti-money laundering) associated with Stablecoins, and even suggested that smart contracts be designed in a way that reduces the risk of bad actors using them.
“[We might] We program smart contracts to prevent transactions from passing unless someone properly reviews them,” Massad said.
Massad also suggested that Stablecoin issuers “actively monitor stubcoin activity” as a way to keep them eye on AML violations.
Massari pointed out that since these assets are implemented on public blockchains, authorities could also investigate Stablecoin transactions. She also called for wise regulations on technology.
“We have a tendency [when regulating] “It's a financial service that brings in new things and stuffs them into the old things,” she said.
Additionally, she also advocated a “common standard set” that manages stubcoin issuers, allowing users to gain confidence in all stubcoins that are properly backed.
Jachym has made an effort to shift the focus of the hearing from Stablecoins to the Digital Asset Market Structure Bill. This argues that it is “important” for regulators to establish clear guidelines for digital assets being securities and not.
However, he didn't take much. Massad said he argued that Stablecoins' debate is more important than discussing the market structure bill, as regulators can work with existing securities laws to regulate crypto markets, and that the market structure bill is not a pressing issue.
Jachym said, “The Line of Jurisdiction [around] Digital assets should be easy,” he said, “The lack of regulatory certainty in the US has hampered growth [in the crypto industry.]”
Cohen made a similar argument, saying that US crypto entrepreneurs “feel the constant threat of litigation,” hinting at former SEC chairman Gary Gensler's “enforcement-based regulation” approach.
He also shared that “an uncertain regulatory environment left both consumers and users of digital assets at risk.”
The only participant in the hearing was Sen. Bernie Moreno (R-OH) who directly pushed back the US government's desire to (over) regulate digital assets.
“The government has this complete and complete desire to control things,” Senator Moreno said.
“When you arrived at digital currency, why did you think you'd determine the pace of innovation in Washington, DC?” he concluded.
Throughout the meeting, subcommittee members asked witnesses what clues should be taken by jurisdictions around the world as the US modelled its digital asset regulatory framework.
Massad argued for the market for Europe and Crypto Asset Regulation (MICA) framework, which was just enacted by the European Union, but Jachim suggested that they look to states like Wyoming, which are the basis for Kraken, to learn from the cryptography that the state legislature has passed.
The presentation of the subcommittee senators and witnesses provided a variety of perspectives on the topic discussed, but certain feelings permeated the hearing. That was to bring together politicians on both sides of the aisle to create clear rules for the crypto industry roads.
“Bipartisan support for crypto policy is no longer a distant horizon goal,” says Jachym, with some sense of relief.
