House Financial Services Committee Holds Two Hearings on Digital Assets

At the beginning of February, two House Financial Services Subcommittees held hearings examining the past and future legislative and regulatory efforts around digital assets. The first hearing, convened by the Subcommittee on Oversight and Investigations, covered past regulatory efforts around cryptocurrency offerings and the many issues surrounding the development, marketing, and listing of crypto. Republican members of the Subcommittee noted the difficulty and uncertainty the industry experienced during the Biden Administration while SEC Chair Gary Gensler was at the helm. They noted the United States should be leading the world in innovation and can simultaneously protect investors. Democrats on the Subcommittee focused on the volatile nature of the cryptocurrency market and highlighted several instances of fraud.

In the second hearing, the Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence examined several legislative measures, including at least one bill that has bipartisan support, that touch on Stablecoins, Non-Fungible Tokens (NFTs), and blockchain technology, among other areas of digital assets. Republicans on the Subcommittee noted the importance of working across the various agencies responsible for creating regulatory frameworks to oversee digital assets, as well as understanding where there may be gaps in regulatory authority. Several of the witnesses noted that if the United States fails to act, the industry will move offshore. Democrats emphasized the need to keep investor protection at the forefront and create a framework that works to penalize fraud. Subcommittee Ranking Member Stephen Lynch (D-MA) also voiced concerns of exposing retirement accounts and pension systems to the volatility of cryptocurrency and digital assets.

Both hearings emphasize the intent of congressional Republicans to move forward with a legislative framework to address regulatory gaps for the digital asset industry. If Paul Atkins, President Trump’s nominee to lead the SEC is advanced by the U.S. Senate, he will likely work with congressional Republicans to clarify regulatory requirements around digital assets.

Click here to watch an archived video of the hearing “Operation Choke Point 2.0: The Biden Administration's Efforts to Put Crypto in the Crosshairs.”
Click here to watch an archived video of the hearing “A Golden Age of Digital Assets: Charting a Path Forward.”