The role of stablecoin and congress in tackling future legislation on digital assets took the center of one of the first hearings of the Senate Bank Committee to focus on what a regulatory framework for crypto might look like.
The Wednesday hearing, framed as the jumping point for further congressional measures of the rules of digital asset, was the first to host the Bank Committee’s new subcommittee for digital assets and led by Wyoming Republican Cynthia Lummis, a long-time crypto-spokesman.
“We are at the bottom of finally creating a top species -legislative framework for both stableecoin and market structure,” Lummis said in her opening declaration, referring to draft legislation she introduced with New York Democrat Kirsten Gillibrand as a natural counterpart to the house’s financial innovation and technology for the 21st century.
However, stablecoins will be first on the committee’s agenda, she said to repeat statements from the White House Crypto and Ai Czar David Sacks and South Carolina Republican Tim Scott, chairman of the entire Senate Bank Committee.
Former CFTC chairman Timothy Massad, one of the four witnesses of the consultation, told the legislators to focus on stablecoin legislation at the moment and postpone any market structure efforts “for several years.”
“For four years, the crypto industry has called on SEC and CFTC to develop rules and guidance and to stop regulating by enforcement; it is happening now,” he said. “SEC has dropped enforcement cases and launched a crypto -tag force to tackle these issues. We should let these legislative issues initiatives make progress before we hurry to rewrite the securities law.”
Existing proposals for updating market structural regulations to tackle crypto have the potential to “create more confusion than clarity,” he added, especially about defining how a digitally asset can be a security, item or something else.
These proposals can potentially undermine existing securities legislation, especially if they relate to decentralized financing.
“This term is used to describe a lot of things that are not decentralized,” Massad continued. “There are almost always some vectors for control. And although a process is decentralized or automated, it does not mean that it must be exempt from regulation.”
The Virginia Democrat Mark Warner asked the panelists to discuss the possibility of stablecoin users performing knowledge-your-customers processes, noting that an issuer can complete KYC, but that a stableecoin can be transferred between wallets without these intermediate transfers through a KYC process.
“I want to come to a regulatory framework that works, but I’ve seen – repeating what others have said from the classified side – oh my gosh, a whole lot of bad things,” Warner said. “So help me find out and I recognize [for] Some people, the anonymity and and the disinteresting role Blockchain play, but how do we put some minimum protection from issuers all the way back to conversion to Fiat? “
Lightspark co-founder and head of legal officer Jai Massari noted that although self-defense wallets do not perform KYC, “there is an unchanging record on the transactions that can be monitored not only by the issuer but [by] Third parties, including law enforcement. “
While mixers and other tools may obscure transactions, parenting wallets still perform KYC at the end of a chain of transfers, she noticed.
“I agree that we have to continue, as the industry has done, to develop new tools to tackle these problems,” Massari said.
