The House Financial Services Committee gathered yesterday to debate the future of cryptocurrency in the U.S.
Speaking at the meeting, chairman of the Federal Reserve Jerome Powell, said cryptocurrencies aren’t big enough to pose any risk to financial stability at this time.
Despite a market capitalization of USD 287 billion, he believes that cryptocurrencies hold no value because they have nothing backing them – unlike the American dollar which is backed by strong commodities such as ‘the faith of the people.’
Powell goes on to point out that consumers are at risk due to the volatile price and lack of protection, while at the same time assuring us that cryptocurrency is essentially worthless since it can’t be used as a method of payment or store of value.
He added that cryptocurrency is out of the regulatory control of the Federal Reserve and it is not looking to provide oversight to the market.
The future of cryptocurrency and criminal use
Another key speaker and detractor of cryptocurrency, Congressman Brad Sherman, took it a step further and called for an outright ban on buying or mining cryptocurrencies in the U.S.
“..cryptocurrency accomplishes nothing except facilitating narcotics trafficking, terrorism, and tax evasion,” he said.
He claims his entirely impartial feelings on the matter are because cryptocurrency can be used for criminal activities and not at all because one of his largest donors is credit card processing company Allied Wallet.
Surely if criminal activity was a concern, it would make more sense to ban something like semi-automatic weapons before banning a minor form of digital trade that your own Federal Reserve Chairman believes has no value?
In response to the claims of criminal use, level-headed data analyst Norbert Michel pointed out that criminals also use airplanes and computers, which nobody seems intent on banning. He went on to say that Congress “should eliminate barriers that impede people from using their preferred medium of exchange.”
Positive feelings about the future of cryptocurrency
Libertarian and one-time presidential candidate Austin Petersen, who has a large youth following, also spoke in support of cryptocurrency. He is opposed to regulation and believes citizens should be free to trade between themselves as they please.
“Bitcoin’s disruptive influence is just what our financial system needs at this time,” he stated during his speech. “Cryptocurrency represents the future of American creativity and American liberty, and I’m delighted to accept campaign donations in this form.”
During his campaign this year he received a donation of USD 250,000 in bitcoin but had to return it due to Federal Election Committee (FEC) rules which restrict donations to USD 5,400. Earlier in the year, he also received a 0.2 BTC donation which at the time was USD 4,500. Admittedly it doesn’t seem like much, but it’s still the largest ever bitcoin donation made to a US political campaign.
Central Bank Digital Currency
A Central Bank Digital Currency (CBDC) was also a hot topic at the debate. Recently many countries around the world have looked into the idea of creating a digital asset based on their own fiat currency.
Speakers at the Capitol Hill Congress meeting were not so keen though. Alex Pollock of the R Street Institute said it is “one of the worst financial ideas of recent times”, with the majority of committee members agreeing.
Indicating the significant lack of cryptographic understanding present at the meeting, Congressman Bill Foster said that the “unsolved problem in the digital world is how do you authenticate yourself?
Representative Rick W. Allen also couldn’t seem to get his head around the idea of cryptocurrency. “We’re creating another money supply here as I see it. I just don’t know how that works. Our dollar sets the mark for the world. I can’t visualize how this would work.”, he said.
All in all, it seems that the U.S. is still a long way from getting a clear understanding about the future of cryptocurrency in the country.
Mark Hartley is an IT specialist, freelance writer, keen traveler, and blockchain enthusiast. He has worked on the trading floors of the world’s biggest interdealer broker in London and helped integrate crypto-services into IT trading systems. When he’s not searching for the world’s most beautiful beach, he’s nose deep in any crypto and blockchain related news.