Two members of the Congressional Blockchain Caucus warned today against any broad Federal action that would interfere with the workings of volatile cryptocurrency markets, and voiced a go-slow approach about any move by the government to set up dollar-backed digital currency on its own.
Speaking on July 21 at the MerITocracy American Innovation Forum, Rep. Tom Emmer, R-Minn., who chairs the caucus, said that the past few months of volatility in crypto markets “doesn’t warrant action” by the government. “The last thing we need,” he said, is “bureaucrats galloping to our rescue … that’s the mistake we have been making in this country for too long.”
“It’s important that elected officials pump the brakes a little bit rather than jump in,” the congressman said, adding that Federal government interference “can throw a wet blanket on the ability to create” in the tech space.
He referred to the wave of market volatility as an example of “creative destruction” that comes with the territory in innovation. “This is the way that the market is supposed to work.” Instead, Rep. Emmer said, the crypto industry is looking for self-regulation.
Rep. Trey Hollingsworth, R-Ind., agreed with the thrust of that assessment. “The bar to government intrusion should be really high,” he said, adding that crypto market volatility “doesn’t chin that bar.”
“I don’t see this volatility as a reason to be pessimistic,” said Rep. Hollingsworth, who agreed with Rep. Emmer that it’s part of the process of “creative destruction.”
Perianne Boring, founder and chief executive officer of the Chamber of Digital Commerce, said during a panel discussion with the members of Congress that traditional finance sectors also regularly see inflation and contraction across markets – much like what crypto markets have gone through in recent months.
“We should be trying to grow the economy,” she emphasized. Boring added that the crypto and blockchain sectors are among the most promising ways to generate growth, but that one of the biggest impediments remains current regulatory frameworks that hinder those markets.
The members of Congress also talked about legislation due to be introduced in the House soon regarding the class of cryptocurrency known as “stablecoins,” whose value is pegged to another asset class such as cryptocurrency, fiat money, or exchange-traded commodities.
Specific legislative details were scarce today, but Rep. Hollingsworth previewed that the coming legislation needs to feature a narrow scope, ensure “light touch” regulation for stablecoins, and have the effect of encouraging investment in that arena.
Speaking of fiat-backed stablecoins, “we want to make sure that consumers are confident in it,” the congressman said.
Rep. Emmer said that Reps. Maxine Waters, D-Calif., and Patrick McHenry, R-N.C. are key players in coming legislation impacting crypto. He predicted that the House legislation won’t have a great chance of moving along to the Senate, but on a more hopeful note said he thought that portions of the coming House bills could help to generate broader agreement among lawmakers on eventual legislation that might have a better chance of becoming law.
Finally, the congressman indicated they could support the Federal government’s creation of a U.S. Central Bank Digital Currency (CBDC) but only if the resulting asset still functioned as cash does today with a reasonable measure of anonymity.
The White House’s executive order on digital assets issued earlier this year encourages the Federal Reserve to “continue its research, development, and assessment efforts” on a U.S. CBDC “including the development of a plan for broader U.S. Government action in support of their work.”
Rep. Emmer said he would be “willing to look at” the possibility of a U.S. CBDC, but only if it could “emulate cash.” He emphasized that the digital currency, “would have to be private, just like cash,” and not function as a “surveillance tool” for government.
Rep. Hollingsworth agreed that the potential for surveillance is a problem, and that he favors a go-slow approach.
“I want to see steps that are thoughtful … I do not want to rush to failure,” he said. Getting the process done right with the world’s reserve currency, he said, “should be done slowly and methodically.”