The House Financial Services hearing on “The Future of Digital Assets” contained a wealth of information on the potential future of the digital asset space in the United States.
Following the recent SEC lawsuits against Binance and Coinbase, the industry has feared for the future of web3 within the U.S. due to the listing of several top crypto projects, including Cardano, Solana, and Polygon, in the cases against the crypto exchanges.
The recent release of the Hinman emails suggests that such clarification would be impactful for Ethereum, which has been previously assessed to be ‘sufficiently decentralized.’
“Nearly 15 years since the Bitcoin whitepaper, an idea has become the new internet architecture, with ownership, digital identity, and value storage native to technology.
Digital assets are now no longer a new technology, they are used all over the world, and America has always led technology invention and, if not invention, implementation, and today we’re at risk of falling behind competitors around the globe… “
This was the opening statement of the hearing, chaired by Representative Mr. McHenry. He further stated the intention for a version of the 160-page draft bill by July this year and highlighted the proposed directive on the registration of digital assets as securities.
Notably, “sufficient decentralization” appears to be being retained as a key factor in whether to define a digital asset as a security or not.
The hearing also contained testimony talking about the potential for a digital asset to have the security label removed if it were to become sufficiently decentralized.
Hearing testimony
Other testimony compared the SEC lawsuits against Coinbase and Binance to the collapse of FTX, a company that has yet to be served any formal action by the SEC. There were also fears aired of digital assets undermining the current financial system through carve-outs.
Mr. Scott argued that the current draft of the proposed bill could “potentially result in less protection for our investors than is currently provided.”
The CEO of Circle, Jeremy Allaire, argued strongly for the need for digital asset regulation to stop the U.S. from falling behind China and devaluing of the Dollar. Allaire also stated that crypto reserves should be safer than banks by limiting fractional reserve practices by limiting of rights to FED services.
Additionally, he called for stronger protections in the realm of digital custody suggesting all stablecoin…
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