Congress might actually get crypto.
That was a key takeaway from last week’s contentious hearings in on Facebook’s Libra project in Washington, D.C.. While giving Facebook executive David Marcus the third degree, lawmakers took pains to distinguish between the social network’s project and the broader cryptocurrency ecosystem.
For example, Sen. Brian Schatz (D.-HI) asked Marcus to explain why Facebook specifically had to build a cryptocurrency, and not just argue what the benefits of a cryptocurrency network could be in general. Rep. Denver Riggleman (R.-VA) hammered Marcus on the security implications of using the RUST programming to implement Libra. And Rep. Warren Davidson (R.-OH) famously asked CoinShares chief strategy officer Meltem Demirors to explain the difference between bitcoin and “shitcoins.”
"Whatever their thoughts on Facebook and Libra, they didn’t paint their thoughts of bitcoin and crypto with the same brush," said Omer Ozden, CEO of Rocktree Capital, a blockchain-focused merchant bank.
And while some elected officials – cough, Brad Sherman (D.-CA) – may have trotted out reliably anti-crypto tropes such as that Libra would be worse than 9/11, for the most part last week’s hearings indicated a sort of maturity about how lawmakers are approaching the space now.
Even among the members of Congress who were "less knowledgeable" about the space, "I was really impressed to see they knew enough to say 'we know the hearings are separate from crypto,'" Ozden said. "They at least knew enough to separate that."
It was a far cry from last year, when lawmakers called for strict regulatory protections in the crypto space, even if those calls ultimately did not result in action.
"We've come a long way in terms of the understanding of blockchain technology and cryptocurrencies in Congress," said Perianne Boring, founder of the Chamber of Digital Commerce, which held a blockchain education event with lawmakers the day after the second hearing.
"It was encouraging to see that there are more members of Congress ... that are able to make that distinction between different types of products and services and applications that are available and also being able to understand they’re different," she said.
The Digital Chamber’s Blockchain Education Day saw representatives from just under 120 companies in the crypto space meet with staffers or elected officials from 70 different offices in both the Senate and House of Representatives.
"It is clear that lawmakers are aware of the great potential of this new industry," said Matthew Trudeau, chief strategy officer at crypto derivatives exchange ErisX. "We were pleased with the depth of discussion and quality of questions we received during the meetings ErisX participated in."
Likewise, Anthony Tu-Sekine, partner at the law firm of Seward & Kissel LLP, told CoinDesk that the staffers he met with had a "genuine interest" in blockchain, as well as some level of understanding.
"I think it is fair to say that most of their perceptions are formed based on bitcoin and other cryptocurrencies," he added. "I think it is important that the community take every opportunity to educate the staff about other blockchain applications, to avoid a situation where all of the discourse (and potential legislation) is driven by concerns associated with cryptocurrencies or their issuers."
In the days before Congress held its hearings, a draft bill began circulating which would prevent companies with more than $25 billion in assets from providing financial services, written by members of the House Financial Services Committee. Rep. Ted Budd (R.-NC) told CoinDesk that in his view, the bill seemed overly broad.
While the bill appeared targeted at Facebook in particular, it could possibly also impact Apple and Google, both of which offer payment services, he said.
Despite Rep. Maxine Waters (D.-CA), chair of the House Financial Services Committee, saying the bill would be discussed during Wednesday’s hearing, the matter did not actually come up for any substantive discussion.
Chen Arad, chief marketing officer of compliance Solidus Labs, said the way the committee appears to be handling the potential legislation was a positive sign.
"I particularly appreciated Chairman Waters repeatedly admitting the committee doesn't understand the issue well enough, and that they're looking to learn before they can take legislative action effectively," he said.
Congress seems interested in taking some action, Boring said. Her hope is that any legislation or other action is informed, with industry stakeholders taking part in the conversation. She concluded:
Warren Davidson image via House Financial Services Committee
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.