Two members of the Congressional Blockchain Caucus today warned against any broad federal action that would disrupt the workings of volatile cryptocurrency markets, expressing a slow approach on any move by the government to set up a 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 the past few months of volatility in crypto markets “does not warrant action” by the government. “The last thing we need,” he said, is “bureaucrats galloping to our rescue … that’s the mistake we’ve made in this country for too long.”
“It’s important that elected officials pump the brakes a little bit instead of jumping 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 the market is supposed to work.” Instead, said Rep. Emmer, is the crypto industry looking for self-regulation.
Rep. Rep. Trey Hollingsworth, R-Ind., agreed with that assessment. “The bar for government intrusion should be very high,” he said, adding that the volatility of the crypto market “doesn’t hit that bar.”
“I don’t see this volatility as a reason to be pessimistic,” said Rep. Hollingsworth, who agreed with Rep. Embraces that it is part of the process of “creative destruction.”
Perianne Boring, founder and CEO of the Chamber of Digital Commerce, said during a panel discussion with members of Congress that traditional financial sectors also regularly see inflation and contraction across markets — much like what crypto markets have been going through in recent months.
“We should try to grow the economy,” she stressed. Boring added that the crypto and blockchain sectors are among the most promising ways to generate growth, but that one of the biggest obstacles remains the current regulatory framework that hinders these markets.
The members of Congress also talked about legislation soon to be introduced in the House regarding the class of cryptocurrency known as “stablecoins,” whose value is tied 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 upcoming legislation would need to be narrow in scope, ensure “light touch” regulation for stablecoins, and have the effect of encouraging investment in that arena.
When talking about fiat-backed stablecoins, “we want to make sure that consumers are confident about that,” the congressman said.
Rep. Emmer said that Rep. Maxine Waters, D-Calif., and Patrick McHenry, RN.C. are key players in upcoming legislation affecting crypto. He predicted the House legislation won’t have much of a chance of advancing to the Senate, but on a more hopeful note, he said he believed parts of the upcoming House bills could help generate broader agreement among lawmakers on any legislation that could have a better chance of becoming law.
Finally, the congressman indicated that they could support the federal government’s creation of a digital US central bank currency (CBDC), but only if the resulting asset still functioned as cash today with a reasonable measure of anonymity.
The White House’s executive order on digital assets issued earlier this year calls on the Federal Reserve to “continue its research, development and assessment efforts” on a US CBDC “including the development of a plan for broader US government action in support of their work.”
Rep. Emmer said he would be “willing to look at” the possibility of a US CBDC, but only if it could “emulate cash.” He emphasized that the digital currency “must be private, just like cash,” and not act as a “surveillance tool” for the government.
Rep. Hollingsworth agreed that the potential for surveillance is a problem and that he favors a slow approach.
“I want to see steps that are well thought out … I don’t want to rush to failure,” he said. Getting the process right with the world’s reserve currency, he said, “should be done slowly and methodically.”