US House committees hear similar testimonies in simultaneous hearings on digital assets

The United States House of Representatives was abuzz with speech astir crypto connected April 27, arsenic some the Financial Services Committee and the Agriculture Committee held hearings with astir identical titles and covered astir the aforesaid crushed with galore akin conclusions.

The Financial Services Committee successful its proceeding “The Future of Digital Assets: Identifying the Regulatory Gaps successful Digital Asset Market Structure” heard from Davis Polk spouse Zachary Zweihorn, who argued that “securities marketplace operation laws and regulations bash not align with integer plus securities.” He said:

“We’ve each heard the siren’s telephone to ‘come successful and register.’ It sounds enticingly attractive. But this is an oversimplification that conflates registration, which whitethorn theoretically beryllium possible, with compliance, which is not.”

American University instrumentality prof Hilary Allen, a noted hostile of cryptocurrency, disagreed with Zweihorn. “This is simply a misdirection,” she said of the industry’s assertion of incompatibility with existent regulations. “It is wholly imaginable for a blockchain-based exertion concern to comply with existing capitalist extortion and fiscal stableness regulation.”

Gattaca Horizons laminitis and CEO Daniel Gorfine was a dependable of moderation successful the discussion. He said:

“Some of the problems we person observed successful the crypto abstraction implicit the past twelvemonth are a effect of excessively overmuch absorption connected caller integer assets alternatively than real-world applications that output productive gains and amended lives.”

Similar sentiment was echoed successful the Agriculture Committee’s proceeding “The Future of Digital Assets: Identifying the Regulatory Gaps successful Spot Market Regulation.”

Looking guardant to testifying successful the House Financial Services Committee contiguous astatine 2 ET! Livestream: https://t.co/fWH7etJQH6

— Marta Belcher (@MartaBelcher) April 27, 2023

Katten Muchin Rosenman spouse Daniel Davis said overmuch of the spot marketplace successful integer assets is extracurricular the jurisdiction of some the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Digital assets that are not securities oregon a leveraged retail commodities product, for example, are not regulated, though the CFTC has “backward looking authority” to prosecute fraud.

Of the apical 15 integer assets traded, 2 person been identified by the SEC arsenic securities, and 7 person been identified by the CFTC arsenic commodities, leaving sizeable disorder adjacent successful the astir actively traded assets.

Related: US House Financial Committee Republicans look for records to amusement crypto debanking

Several witnesses gave examples of the shortcomings of the existent SEC regulatory model erstwhile it is applied to crypto. FalconX Holdings lawman wide counsel Purvi Maniar said mandatory SEC disclosures would marque peer-to-peer transactions impossible.

Regulatory gaps made specified marketplace issues arsenic the FTX illness possible, erstwhile CFTC seat Timothy Massad said. He suggested the SEC and CFTC jointly constitute a acceptable of principles for each traders that usage Bitcoin (BTC) oregon Ether (ETH) but are not presently regulated. He referred the assemblage to the op-ed helium and erstwhile SEC seat Jay Clayton wrote for The Wall Street Journal successful December.

Securities integer assets get “regulated retired of beingness oregon astatine slightest retired of the United States,” Davis Polk & Wardwell spouse Joseph Hall said. He besides held that integer assets are “different successful benignant from what preceded them” and not good regulated wrong the existent SEC framework. He said:

“I judge contention betwixt our regulators is simply a feature, not a bug, of our system. So I judge it is clip to determination connected beyond the bushed debate.”

The 2 committee volition clasp a associated proceeding adjacent month.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler person the last say?