Crypto chiefs also warned lawmakers that overly strict regulations would push the asset abroad.
Senior executives at six major cryptocurrency companies, including Coinbase and Circle, on Wednesday urged the United States Congress to provide clearer rules for the booming $ 3 trillion industry, but warned that too strict restrictions would push it abroad.
The House Financial Services Committee hearing marked the first time that top industry leaders explained their businesses to US lawmakers amid growing concern that cryptocurrencies may present systemic risks and hurt investors.
Crypto executives repeated calls for careful and personalized rules rather than forcing the industry to comply with existing regulations.
“Without tailored legislative solutions that are openly discussed with public participation, the United States runs the risk of unnecessarily burdensome and chilling laws and regulations,” warned Alesia Haas, CEO of Coinbase Inc.
Congress is unlikely to establish new crypto rules anytime soon, analysts say, and lawmakers treated the hearing primarily as an investigative exercise.
Democratic Rep. Maxine Waters, who chairs the committee, said there are questions about proper oversight and highlighted Facebook Inc’s stablecoin plans as a major concern given the company’s enormous global reach.
Some lawmakers, particularly Republicans, praised the executives for leading the way in what could be critical technology.
“I am tremendously impressed. I see a lot of ingenuity, a lot of entrepreneurship, ”said Rep. Pete Sessions, a Republican from Texas. “We need to support you.”
Circle CEO Jeremy Allaire, FTX Trading CEO Sam Bankman-Fried, Paxos CEO Chad Cascarilla, Stellar Development Foundation CEO Denelle Dixon, and Bitfury CEO Brian Brooks, also testified.
The rapid growth of cryptocurrencies and, in particular, stablecoins, digital assets tied to traditional currencies, has drawn the attention of regulators, who fear they could put the financial system at risk if not properly controlled.
Some lawmakers, such as Senator Elizabeth Warren and Securities and Exchange Commission Chairman Gary Gensler, are also concerned that the products could be used for illicit purposes or to prey on unsuspecting consumers.
In November, a task force led by the US Treasury recommended that Congress pass a law specifying that stablecoins should only be issued by companies that have insured deposits, such as banks.
Executives said they would welcome regulatory clarity, which could help expand the industry, but overly restrictive rules could backfire.
Rapid growth in the sector underscores investors’ strong appetite for digital assets and should be supported by clear rules rather than stifled, they said.
Bitfury’s Brooks, who was CEO of the American company Binance and before that a banking regulator, told lawmakers that cryptocurrencies are similar to traditional assets.
“We are the last country standing that has not realized that,” he said.
But the complexity and volatility of cryptocurrencies, as well as the wildly variable standards around disclosure, reserves, consumer protection and other policies, left some lawmakers concerned.
“Most of the people I know who have invested in cryptocurrencies [have done so] … Because they think they can get rich quickly, ”said Representative Juan Vargas. “We have seen this before, unfortunately, and it led to the financial crisis.”