The U.S. Senate Banking Subcommittee on Digital Assets recently held its inaugural session, aptly titled “Exploring Bipartisan Legislative Frameworks for Digital Assets”. This hearing focused primarily on the regulation of stablecoins, a type of cryptocurrency.
Senator Cynthia Lummis of Wyoming, a well-known advocate of Bitcoin and the wider digital asset sector, chaired this meeting with the aid of Senator Ruben Gallego of Arizona, the subcommittee’s ranking member.
Among the expert witnesses were former CFTC Chair Tim Massad, now a Research Fellow at Harvard University’s Kennedy School of Government, Jai Massari, the Chief Legal Officer at Lightspark, Jonathan Jachym from Kraken, and Lewis Cohen, a Partner at Cahill Gordon & Reindel LLP.
Senator Lummis started the session by expressing her commitment to advancing bipartisan legislation for Bitcoin and stablecoins. The term “Bitcoin” was seldom mentioned during the session, except when Massad expressed his opposition to the formation of a Strategic Bitcoin Reserve.
The importance of monitoring stablecoin transactions was emphasized by Massad throughout the hearing. He proposed extending regulatory boundaries to address Anti-Money Laundering (AML) issues related to stablecoins. He also recommended designing smart contracts in a manner that reduces the risk of misuse.
Massad further proposed that stablecoin issuers should intensively monitor stablecoin activity to detect any AML breaches. Massari noted that authorities can also monitor stablecoin transactions as they occur on public blockchains. She called for balanced regulation that doesn’t stifle innovation.
Jachym, on the other hand, attempted to steer the discussion towards the Digital Asset Market Structure bill, emphasizing the importance of clear regulatory guidelines. However, his focus wasn’t shared by everyone present. Massad argued that the discussion of stablecoins was more pressing than the market structure bill.
Jachym and Cohen both argued that the lack of regulatory clarity in the U.S. has hindered the growth of the crypto industry. They believe that the current uncertain climate poses a risk to consumers and users of digital assets.
Senator Bernie Moreno of Ohio was the only participant who directly opposed the U.S. government’s inclination to regulate digital assets heavily. He questioned why digital currencies should be singled out for regulation when several recent technologies have been misused.
The subcommittee members sought advice from the witnesses on international jurisdictions that the U.S. could emulate in developing its digital asset regulatory framework. Massad suggested Europe’s Markets in Crypto-Assets Regulation (MiCA) framework while Jachym recommended looking at states like Wyoming, renowned for its crypto-friendly laws.
There was a consensus among the senators and witnesses that it’s time for politicians from both parties to establish clear guidelines for the crypto industry. Jachym expressed relief, noting that bipartisan support for crypto policy is no longer a distant dream.
