The future of bitcoin, and other cryptocurrency, is being shaped along political lines. Democrats favor more regulation while Republicans are inte
The future of bitcoin, and other cryptocurrency, is being shaped along political lines. Democrats favor more regulation while Republicans are interested in developing a decentralized medium for exchange and ledge technology.
Senator Sherrod Brown (D.OH), Chair of Senate Committee on Banking Housing and Urban Affairs, gave a dim view on the digital currency market and opened the Tuesday hearing titled “Cryptocurrencies – What Are They Good for?”
Since 2009, virtual currencies, cryptocurrencies and stablecoins have been flooding the markets. These currencies all have one thing in common: they aren’t real dollars and they don’t come with the full faith or credit of the United States. He stated that they all risk Americans’ hard-earned dollars in his opening remarks.
Brown described crypto-economy as a “shady, diffuse network” of online amusement money.“
“Smart regulations that protect consumers and investors, and seperate the innovators and the extortionists are the best way to protect Americans’ cash.
Senator Elizabeth Warren (D.MA), who is a strong advocate of regulation, also expressed her concern about cryptocurrencies.
“There’s no doubt that our financial system requires major structural changes. We should be open to considering how new technologies could benefit consumers and our economy. She said that as the cryptocurrency market expands, it is also up to us to examine all claims and promises. “Crypto puts our financial system under the control of large banks. Instead of leaving it at the mercy of big banks, it places the system at risk of being manipulated by a shadowy group of super-coders and miners. This doesn’t seem right to me.
Warren wrote to Janet Yellen in advance of Tuesday’s hearing urging her to take the lead in developing a comprehensive strategy for regulating digital currency.
Republicans on the other side of this debate were more positive about cryptocurrencies, noting that open ledger technology and the market could bring significant benefits to the U.S. banking system.
Pat Toomey, a ranking member of the banking committee (Republican from Pennsylvania), stated that digital currencies play a growing role in investors’ portfolios and as an inflation hedge.
“Some cryptocurrencies could be used as an alternative to fiat currencies like the dollar to store value. He stated that cryptocurrencies could be used as a store value, because unlike fiat currencies, the government cannot print trillions of them. “In this way, cryptocurrency might complement the historical role of gold as a store-of-value and hedge against inflation. We’ve seen in Venezuela, for example, how Bitcoin can be used to store value if a government devalues its currency.
Senator Cynthia Lummis (R-Wy) stated that further development of crypto markets could result in faster global financial transactions.
She said that she had noticed that the St Louis Fed noted that the U.S. financial industry accounted for 8.2% of the U.S. GDP in 2021, and that payments accounted for around 1% of the GDP. Antiquated payment methods that can take days, or even weeks to settle payments are causing billions of dollars worth of capital loss every day. This is costly for a Fortune 500 company that sends international wire transfers regularly.
Senator Steven Daines (R.MO) advised the committee to support innovation and not overregulate crypto markets ‘into obsidian’
“I believe it is a myth that the cryptocurrency industry is not regulated.” He said that existing regulations can be applied in a number of ways to effectively and efficiently apply them.
These comments about the future of cryptocurrency come as the global market value of cryptocurrencies is now at $1.5 trillion, having fallen from $2 trillion just two months ago.