Six crypto-CEOs testified before US-lawmakers on digital assets

The House Financial Services Committee held a hearing on 12 December, 2021 with several CEOs representing the decentralised finance (DeFi) and crypto industry, including Jeremy Allaire, Circle; Samuel Bankman-Fried, FTX; Brian Brooks, Bitfury Group; Charles Cascarilla, Paxos Trust Company; Denelle Dixon, Stellar Development Foundation, and Alesia Jeanne Haas, Coinbase

The hearing was part of the process aimed at overhauling digital assets regulations, partly motivated by rapid market changes. Benchmarked against other regions, the United States (US) received about 18% of cryptocurrency volumes between July 2020 and June 2021, worth about $750 billion, and the US is the highest ranked country according to the global adoption ranking index for DeFi. The US is host to unicorns such as Coinbase, FalconX, OpeaSea, Ripple and more. Americans are also highly ranked for their internet-usage and purchasing power allocated to cryptocurrency.

US-lawmakers intend to frame legislation to facilitate ‘responsible innovation’, a concept initially developed in the United Kingdom, European Union and US around 2006 to 2008 to tackle potential problems with nanotechnologies. Since 2014/15, it has expanded and now covers research institutions, businesses as well as all innovations and particularly technology innovation. The goal of responsible innovation is to make new technologies work for the society, without causing more problems than they solve.

Moreover, responsible innovation recognises the importance of wide consultation to effectively reach new policy objectives, therefore the hearing with the six crypto-CEOs. The choice of responsible innovation is motivated by the lawmakers´ need to incorporate a multitude of concerns including consumer protection, financial stability, antitrust, money laundering, cyber security, and more recently climate change considerations.

Potentially, responsible innovation comes with at least a couple of problems. The time required for getting the different concerns settled and agreed upon may exceed the time at hand. Digital assets markets move literally at the speed of light in comparison to other asset markets, for instance, bitcoins can be traded 24/7. Moreover, responsible innovation as a method may fit other areas in the economy where transactions and industry dynamics are slower, such as the transportation sector. The notion of fit underscores the importance of speedy and efficient decision-making processes.