Eight crypto executives have been asked to testify before Congress on December 8, 2021. The eight include executives from leading crypto firms such as Circle, Coinbase, and Bitfury. It will be the first time leading executives from the crypto industry have been questioned in this manner.
Calls for Increased Oversight over Crypto
For a long time now, US lawmakers from both sides of the political divide have been calling for increased scrutiny over the crypto sector. One of the proponents of more stringent regulation over crypto is Senator Elizabeth Warren (D). Even Trump was in favor of more stringent regulation, at one time describing it as a scam.
One of the executives set to testify before Congress is Brian Books, an executive at Bitfury. Brooks previously worked as the top banking regulator during the Trump administration. He had a role in creating policies for the crypto sector.
Why Regulators Want Tougher Rules
Crypto, unlike traditional money, does not need to be stored in a centralized place, such as a bank. Instead, users can store their crypto in a personal crypto wallet. Unlike banking transactions, the owners do not have to worry about carrying huge amounts of cash in their wallets. A crypto wallet can be as small as a thumb drive or even a piece of paper called a paper wallet. Consequently, it is harder, although not impossible, to trace crypto transactions.
Another issue that lawmakers have with crypto is the high volatility of crypto coins. It is common for crypto coins to see their value rise by double-digit percentage points within a few days. Besides that, lawmakers are concerned about scams in the form of pumps and dump coins.
The anonymity offered by crypto coins has also made them a favorite of criminals. Tech-savvy criminals no longer carry large wands of cash during illegal transactions. Instead, they use crypto coins to trade. Additionally, crypto coin ransoms have become common during ransomware attacks. All of these issues have caused regulators to have a negative view of the crypto sector.
How Countries Have Reacted Around the World
As the crypto sector has grown and created new challenges for law enforcement agencies, countries around the world have reacted differently. For instance, China moved to outlaw all crypto transactions in the country. India has also been mulling similar measures in the recent past.
However, some nations have embraced the sector. For instance, El Salvador recently declared the BTC, the largest crypto coin, as legal tender. The country has plans to build a Bitcoin city where crypto will be used within the city’s economy.
In the US, many citizens hold crypto. However, since there is no national legislation on crypto, each Federal agency treats crypto differently. For purposes of taxation, the IRS treats crypto as an asset. This has caused many issues for crypto holders, with the IRS reporting that most of its seizures of breaking tax laws were in the crypto sector.
However, even in the US, crypto regulation is not uniform. At the state level, Wyoming has some of the friendliest laws for the crypto sector. On the other end of the spectrum is New York, which has some of the strictest laws when it comes to crypto regulation.
During the hearing in Congress held by the US House Financial Services Committee, the focus will be on “the challenges and benefits of financial innovation.” While it is a small step, it could play an important role in the creation of national legislation for the US crypto industry.