Thread by @nikhileshde

Good morning folks. At 10am ET today the @FSCDems @FinancialCmte will be hosting six crypto execs to discuss digital asset trading and stablecoins
coindesk.com/policy/2021/12…

We will hear from @jerallaire, @SBF_FTX, @BrianBrooksUS, @PaxosGlobal CEO Charles Cascrilla, @DenelleDixon and @Coinbase Inc CEO/Global CFO Alesia Haas

.@CoinDesk will livestream this hearing on our website at CoinDesk.com and @FSCDems are streaming this on YouTube.

Ya'll know the drill - thread starts here. I'm also live-blogging this hearing for @CoinDesk at the link below. Have thoughts? DMs open or email [e-mail]. I won't post everything so send me your most insightful analysis and commentary. coindesk.com/policy/2021/12…

.@RepMaxineWaters calls the hearing a part of @FSCDems @FinancialCmte's ongoing efforts to understand cryptocurrency, briefly summarizes the hearing memo in her opening remarks coindesk.com/policy/2021/12…

Rep @PatrickMcHenry says much of crypto is already regulated in the U.S., though these regulations might be "clunky," warns against overregulation of the sector coindesk.com/policy/2021/12…

@PatrickMcHenry Did I mention I'm liveblogging this thing coindesk.com/policy/2021/12…

@PatrickMcHenry .@jerallaire is our first witness, outlining a brief history of stablecoins and @circlepay, as well as the role he sees stablecoins playing in financial services at large.

@PatrickMcHenry @jerallaire @circlepay There are nearly 11,000 people watching this hearing right now

.@SBF_FTX is up now, talking about the role cryptocurrencies could play in providing financial services to underbanked/unbanked individuals

@SBF_FTX .@BrianBrooksUS, who's relatively new to @BitfuryGroup, is outlining Bitfury's mining business before pivoting to what he views as the issues in the regulatory conversation -- ie a focus on enforcement over registration, etc (read full remarks here financialservices.house.gov/uploadedfiles/…)

@SBF_FTX @BrianBrooksUS @BitfuryGroup "Can anyone explain ... why Fidelity Investments, one of America's best-known investment advisors, had to go to Canada to offer a bitcoin ETF," @BrianBrooksUS asks to argue his statement that current regs drive legitimate activity offshore

@SBF_FTX @BrianBrooksUS @BitfuryGroup .@PaxosGlobal CEO Charles Cascarilla also pointing to financial inclusion as a key goal for stablecoins/crypto at large
coindesk.com/policy/2021/12…

@SBF_FTX @BrianBrooksUS @BitfuryGroup @PaxosGlobal .@DenelleDixon pointed to other use cases, such as Moneygram's work with the Stellar Development Foundation, as examples of what crypto can do (though she later also mentioned financial inclusion) coindesk.com/policy/2021/12…

.@coinbase exec Alesia Haas says the company stores 12% of the world's crypto on its platform coindesk.com/policy/2021/12…

Haas brought up @coinbase's policy proposal (which she called "D-app"?) which reminds me that both Coinbase and FTX have published policy proposals directed at the lawmakers they're now speaking to

@coinbase .@RepMaxineWaters opens her questions with @PaxosGlobal's Cascarilla: "I'm a little concerned about your company" because of the Novi pilot launched in partnership with Facebook, she says

@coinbase @RepMaxineWaters @PaxosGlobal "Novi is Paxos' customer," Cascarilla says, adding it's just like any other customer that Paxos conducted due diligence on. Says Novi would be best placed to answer questions about how it might expand this coindesk.com/policy/2021/12…

@coinbase @RepMaxineWaters @PaxosGlobal First guest comment: @TomicahTD says "the tone so far ... has been reasonable and constructive. So far, so good" coindesk.com/policy/2021/12…

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD While the YouTube stream appears to be down, C-Span's stream is still working c-span.org/video/?516464-…

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD Rep. @NydiaVelazquez is asking about stablecoin backing, noting a @NewYorkStateAG investigation "called into question" the backing of the industry and asking whether Allaire and Cascarilla would support a federal mandatory reporting requirement coindesk.com/policy/2021/12…

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD @NydiaVelazquez @NewYorkStateAG From @matt_homer: "Testimony is making it clear that crypto is already regulated. Focus should be on gaps and creating level playing field." coindesk.com/policy/2021/12…

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD @NydiaVelazquez @NewYorkStateAG @matt_homer Rep. @PeteSessions says he's concerned about fraud: "What do you do to try and look at what might be fraud? ... Is there an investigation or understanding about what might be risky even though you accept it?"
coindesk.com/policy/2021/12…

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD @NydiaVelazquez @NewYorkStateAG @matt_homer @PeteSessions .@coinbase's Haas says the exchange conducts KYC for customers but also assesses assets from tech, etc perspectives before listing them coindesk.com/policy/2021/12…

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD @NydiaVelazquez @NewYorkStateAG @matt_homer @PeteSessions .@RepGregoryMeeks asks about global coordination of regulation, which is I think one of, if not the first time a U.S. lawmaker specifically is asking about this to crypto execs?

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD @NydiaVelazquez @NewYorkStateAG @matt_homer @PeteSessions @RepGregoryMeeks .@RepBlaine is diving into Facebook (now Meta)/Novi (formerly Calibra)/Libra (now Diem) -- comparing to how social media companies control users on their platforms to how FB might control users of Diem.

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD @NydiaVelazquez @NewYorkStateAG @matt_homer @PeteSessions @RepGregoryMeeks @RepBlaine .@BrianBrooksUS notes that there's no CEO/controller in a properly decentralized platform

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD @NydiaVelazquez @NewYorkStateAG @matt_homer @PeteSessions @RepGregoryMeeks @RepBlaine @BrianBrooksUS .@SBF_FTX says he'd be interested in listing digital asset securities on @FTX at some point but the convo w/ the SEC is in early stages

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD @NydiaVelazquez @NewYorkStateAG @matt_homer @PeteSessions @RepGregoryMeeks @RepBlaine @BrianBrooksUS @SBF_FTX @ftx .@EconWithNick says "it's important to recognize that while @RepMaxineWaters called attention to the environmental costs of cryptocurrencies, she also followed this note by acknowledging the benefits that the technology offers."

coindesk.com/policy/2021/12…

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD @NydiaVelazquez @NewYorkStateAG @matt_homer @PeteSessions @RepGregoryMeeks @RepBlaine @BrianBrooksUS @SBF_FTX @ftx @EconWithNick .@RepJuanVargas is asking about CBDCs and a digital dollar, saying "we do have a digital dollar" already, it's just a fiat item. coindesk.com/policy/2021/12…

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD @NydiaVelazquez @NewYorkStateAG @matt_homer @PeteSessions @RepGregoryMeeks @RepBlaine @BrianBrooksUS @SBF_FTX @ftx @EconWithNick @RepJuanVargas .@RepCasten asks @jerallaire if he supports/agrees with the conclusions in the PWG report on stablecoins. Allaire says he supports "a number of" the conclusions but "not uniformly," saying some details need clarification. coindesk.com/policy/2021/12…

@coinbase @RepMaxineWaters @PaxosGlobal @TomicahTD @NydiaVelazquez @NewYorkStateAG @matt_homer @PeteSessions @RepGregoryMeeks @RepBlaine @BrianBrooksUS @SBF_FTX @ftx @EconWithNick @RepJuanVargas @RepCasten @jerallaire "A stablecoin at some level is an ETF," @RepCasten says. "We have this emerging world of central bank digital currencies," he adds, going on to ask about what sort of data might be tracked and whether a stablecoin be designed to not allow tracking from "our adversaries"

Interesting line of questions from @RepRitchie here -- honing in on cybersecurity issues before asking if a crypto can be complementary to the U.S. dollar or no

@RepRitchie "All over the world, people want a U.S. dollar bank account," Cascarilla says

@RepRitchie .@RepHuizenga says he had to step away earlier to manage a LIBOR bill

Quick aside: For those of you wondering how long this hearing may go, my rough count says we've just had a little bit over half the lawmakers ask questions so far

.@DenelleDixon says some entities that could be classified as brokers under the bipartisan infrastructure law might not have the information necessary to comply with the broker reporting provision in response to a question from @RepAlLawsonJr

@DenelleDixon @RepAlLawsonJr .@RepAlLawsonJr got a call in the middle of a @BrianBrooksUS response I think

Also friendly reminder that if you're watching this, and you have thoughts, feel free to send my way for the liveblog

.@RepBillFoster asked if any of the witnesses would have an objection to "controlled anonymity," allowing courts to de-anonymize a digital currency account if it engaged in illicit activity coindesk.com/policy/2021/12…

@RepBillFoster .@RepTomEmmer lead @SBF_FTX down a line of questioning about the guardrails it employs, before pivoting to the launch of several BTC futures ETFs and saying he's "confused" about why the SEC has yet to approve a spot BTC ETF coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX The questions about a spot bitcoin ETF is a bipartisan issue, @RepTomEmmer says

@RepBillFoster @RepTomEmmer @SBF_FTX Rep. @BradSherman, who was on the House floor dealing with the LIBOR bill, is now in the hearing: "The fact is the advocates of crypto represent the powers in our society." coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman "If you wonder about where the power is, Zuckerberg had to come out here and sit there. @brian_armstrong sent his number two. And @Tether_to didn't bother to show up at all," Rep @BradSherman says coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to .@BradSherman listed a bunch of coins that he says are competing with each other, then says he made "MongooseCoin up" and he thought he made HamsterCoin up "but then I learned" it's a real crypto coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to .@BradSherman now asking Haas and Allaire questions about business lines and how they collect fees but gets cut off before he finishes

coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to .@RepCindyAxne is asking about a federal regulatory oversight regime for crypto spot markets similar to the CFTC's oversight of derivatives, as opposed to the current state-level regime

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne "I'm not concerned about more regulation. I think having more consumer protections than currently can be helpful," as long as they fit the product and regulators, @SBF_FTX says coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne

https://twitter.com/MarcHochstein/status/1468646767138951170

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne .@RepDonBeyer, who isn't on @FSCDems but has introduced a fairly comprehensive bill addressing crypto regs, sent out a statement commending the FSC for holding today's hearing coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems .@RepJoshG says he's working on a bill to implement some of the PWG's recommendations coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG .@RepTedBudd asks about SEC Chair Gensler and how the US might approach crypto regulation. coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS says the US is unique in having a fragmented regulatory framework for banks but recommends using this same approach for crypto, rather than designate a single overarching reg coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS .@RepTedBudd also asks Haas about the bipartisan infrastructure law and the issues the crypto industry has with it. Haas points to the broker definition, as well as the 6050i tax provision

coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS .@RepStephenLynch is asking about the unhosted wallet rule from the tail end of the Trump administration -- he wants to know how Western Union or MoneyGram transactions are different from unhosted wallet transactions

coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch .@jerallaire points to the self-custody aspect of unhosted wallets coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire "The SEC has not yet provided a clear definition" of what a security looks like, Haas tells @RepDavidKustoff, adding the regulator has instead pointed to Howey and Reves analyses coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff .@RepTrey is drilling down to the specific definitions of terms like 'stablecoins' -- asking @jerallaire to specify what they are stable in reference to (a reference asset) but that the underlying asset might still be volatile relative to something else coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey .@RepAOC asks Haas to clarify comments about proprietary trading -- Haas told @NydiaVelazquez that CB does not engage in proprietary trading, but CB's T&C indicates it might

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez CB has a portfolio of crypto that it buys from its own exchange, but it doesn't trade or sell these, Haas says

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez .@RepAOC now drilling down into stablecoins' role in the digital asset ecosystem and how they're designed. @jerallaire says USDC is designed to be a payment tool mainly

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez “If the cryptocurrency industry hypothetically lost its ability to use stablecoins as a bridge to trade in and out of $$ tomorrow, would that cause a significant shift? It seems it wouldn’t be able to work the way it works currently correct?” @RepAOC asks coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez .@RepAGonzalez criticizes Sherman's characterization that Big Tech and banks control crypto before asking @BrianBrooksUS how Web 3 might solve current issues. coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez @RepAGonzalez "Basically, if someone raises money to write a DeFi app or something similar by issuing governance tokens, it’s a security and subject to SEC regulation," @tphillips said. "The [Howey] test is clear." coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez @RepAGonzalez @tphillips .@RepRashida asks about the energy costs involved in crypto, saying the Bitcoin network uses more energy than Google, Apple, Facebook and Microsoft combined coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez @RepAGonzalez @tphillips @RepRashida .@RepRashida also pointed to the repurposing of once-shuttered coal powerplants for crypto mining as a cause for concern, naming @Greenidge_GREE's New York plant and @MarathonDigital's Montana plant as examples coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez @RepAGonzalez @tphillips @RepRashida @Greenidge_GREE @MarathonDigital Rep. @BryanSteil asked about the claim crypto can aid underbanked individuals. Brooks pointed to current bank requirements such as minimum balances and monthly account maintenance fees as things stablecoin issuers don't require coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez @RepAGonzalez @tphillips @RepRashida @Greenidge_GREE @MarathonDigital @BryanSteil Rep. @JakeAuch says "regulation by enforcement" is unfair to crypto cos coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez @RepAGonzalez @tphillips @RepRashida @Greenidge_GREE @MarathonDigital @BryanSteil @JakeAuch .@JakeAuch says the U.S. needs a primary market regulator that can work with a self-regulatory org in the private sector on issues like custody requirements, asset issuance, stablecoin standards, etc

coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez @RepAGonzalez @tphillips @RepRashida @Greenidge_GREE @MarathonDigital @BryanSteil @JakeAuch After a mere 4 hours 49 minutes, today's hearing ends coindesk.com/policy/2021/12…

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez @RepAGonzalez @tphillips @RepRashida @Greenidge_GREE @MarathonDigital @BryanSteil @JakeAuch We'll be back next Tuesday when @SenateBanking @BankingGOP takes up stablecoins

@RepBillFoster @RepTomEmmer @SBF_FTX @BradSherman @brian_armstrong @Tether_to @RepCindyAxne @RepDonBeyer @FSCDems @RepJoshG @RepTedBudd @BrianBrooksUS @RepStephenLynch @jerallaire @RepDavidKustoff @RepTrey @RepAOC @NydiaVelazquez @RepAGonzalez @tphillips @RepRashida @Greenidge_GREE @MarathonDigital @BryanSteil @JakeAuch @SenateBanking @BankingGOP @threadreaderapp unroll