The state of cryptocurrency looks a lot different than it did just one year ago. While last year’s Super Bowl featured numerous crypto-focused commercials, this past Sunday’s Super Bowl did not feature one.
The Senate Committee on Banking, Housing, and Urban Affairs held a hearing on Feb. 14 to figure out just what has changed over the past year and what regulations are needed going forward to protect the crypto and digital asset industry.
The Valentine’s Day hearing, entitled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets,” focused on where the committee can begin with work on a bipartisan regulatory framework for cryptocurrency.
“We have to ask ourselves, where do we go from here?” Ranking Member Tim Scott, R-S.C., said in his opening statement. “Moving forward, we must take a thoughtful, bipartisan, and balanced approach that protects consumers and promotes innovation and opportunity.”
Professor Linda Jeng, an adjunct professor of law at the Georgetown Institute of International Economic Law, stressed to the members of Congress that right now is “a pivotal moment in history” in which regulatory decisions will affect the future growth of the U.S. economy.
“The kind of guardrails that you put in place now will affect generations to come,” Jeng said. “Many of the issues that you need to think about will include, certainly consumer protection, but also consumer rights and consumer empowerment.”
“Currently, there are countries around the world who are also looking at how to take advantage of crypto technologies, China being a good example. But in that situation, it’s the government that wants to actually control the personal data,” she continued. “Here is an opportunity for you all to create the framework for consumer empowerment, for consumer data rights that serves as a foundation for the digital economy.”
Jeng also emphasized the importance of having a clear regulatory framework that utilizes public feedback. She noted that, to date, rulemakings through the public process have been missing. And, she explained that Congress must gather all of the best ideas on how to oversee the industry.
While the senators are still working to gather ideas and decide what exactly to include in a crypto regulatory framework, Sen. Robert Menendez, D-N.J., said he has one main priority.
“The key element I’ll be looking for in digital asset legislation is a clear prioritization of transparency and investor protection, while also providing for stability and safe innovation,” Sen. Menendez said. “These are values that make our current financial system strong and effective, and should equally apply to, I believe, to the digital assets.”
Similarly, committee Chairman Sherrod Brown, D-Ohio, said the committee can start with “common-sense principles” as it looks to a regulatory framework. These principles include clear disclosures and transparency, prohibitions on conflicts of interest and self-dealing by insiders, internal governance and risk management, strong consumer and investor rights and protections, fraud prevention, and oversight and supervision to hold companies accountable.
“Crypto isn’t special. We can start with these common-sense principles as we consider a regulatory framework for digital assets that puts consumers first and above all keeps our financial system safe,” the chairman said. “I trust this committee, as the ranking member often says, can find common ground and work together to protect investors from crypto risks.”
