The U.S. Senate Banking Subcommittee on Digital Assets held a hearing. They zeroed in on a bipartisan legislative framework through which to achieve such a market structure for digital assets. Presided over by Senator Lummis, the hearing featured a panel of experts who emphasized the urgent need for Congress to pass comprehensive digital asset legislation. By engaging with those basic principles, our panelists—Rostin Behnam, Sarah Hammer, Greg Xethalis, and Ryan VanGrack—provoked a very spirited discussion. Their testimonies underscored the importance of establishing clear regulatory guidelines to foster innovation, protect consumers, and combat illicit activities within the crypto market.
The hearing follows the recent issuance of digital asset market structure principles by Senators Cynthia Lummis, Thom Tillis, Bill Hagerty, and Senate Banking Chairman Tim Scott. Those conversations highlighted both the economic and national security peril of further delaying regulatory movement. Looking to international examples and calling for bipartisan collaboration, panelists discussed the elements of a successful transportation policy.
Expert Panelists Advocate for Regulatory Clarity
Rostin Behnam, a Distinguished Fellow at Georgetown University and Former Chairman of the CFTC, stressed the necessity of addressing illicit activities in the digital asset space. He pushed for strong anti-money laundering and anti-terrorist financing regulations to stop cryptocurrencies from being exploited by criminals.
"Bad actors will gravitate toward areas that are unregulated" - Rostin Behnam
Behnam similarly even discussed the need to protect customer assets through adequate segregation,
"Customer assets must be fully segregated so that there’s no question in the event of a bankruptcy that assets will be returned to customers" - Rostin Behnam
As far as Sarah Hammer, Executive Director at the University of Pennsylvania Wharton School, sees it, the U.S. needs to learn the right lessons from other countries. In particular, she cites Singapore’s successful anti-terrorist financing regulations for cryptocurrency as a beneficial model. She emphasized the need for international cooperation and learning from best practices around the globe to create regulatory frameworks that really work.
Greg Xethalis, General Counsel at Multicoin Capital, warned that “He argues that the U.S.’s inability to lead in the crypto regulatory space would come at great economic cost. He further acknowledged that other jurisdictions could adopt stricter regulations for crypto. Xethalis underscored the need for the U.S. to lead the way. Time is of the essence – for SEC to maintain its competitive advantage in ever evolving digital asset space.
Legislative Developments and Bipartisan Efforts
The hearing underscored positive recent legislative advances. One standout success is the GENIUS Act, sponsored by Senator Hagerty, which recently passed in the Senate. This act marks an important milestone and growing awareness among lawmakers that action is needed to regulate the burgeoning digital asset space.
Senator Lummis concluded the hearing with a passionate exhortation. She identified the need for the same from her fellow senators and called on the panelists to initiate bipartisan dialogue and collaboration. She emphasized the importance of working together to develop strong, thoughtful legislation that achieves the right balance. This strategy fosters an environment of innovation while simultaneously protecting consumers and furthering our national security interests.
Concerns and Optimism
In her remarks on the bill to the D.C. Council, Senator Alsobrooks sounded an optimistic note on the potential of crypto while stressing the need for investor guardrails. She highlighted the need to balance innovation with consumer protection to ensure that the digital asset market can thrive responsibly.
