there's a collection of c-span products browse to see what's new your purchase will support our nonprofit operations and you still have time to order the congressional directory with contact information for members of congress and the biden administration go to c-spanshop.org. the house financial services committee held the hearing on cryptocurrency and the effect on the us financial system the committee looked at how the cryptocurrency boom may affect retirees and whether regulations are needed to protect consumers and financial markets. good morning one. i'm al green. it is my honor to call the oversight and investigation subcommittee to order. the title of today's hearing is america.

on fire fire being an acronym for financial independence retire early will the crypto frenzy lead to financial independence and early retirement or financial ruin? without objection the chair is authorized to declare a recess of the subcommittee at any time. without objection members of the full committee, not on this subcommittee are authorized to participate in today's hearing. and i'd like to note that it mr. brad sherman who is a part of the full committee without objection will be accepted as a participant. with the hybrid format of this hearing we continue to have some members and witnesses participating in person and others on the webex platform. i remind all members participating remotely to keep themselves muted when they are not being recognized. the staff have been instructed

not to mute members accept. where a member is not being recognized and there is inadvertent background noise. members are also reminded. that they may participate in only one remote proceeding at a time. if you are participating remotely today, please keep your camera on. and if you choose to attend a different remote proceeding. please turn your camera off. i now recognize myself for two minutes to give an opening statement. it is my pleasure to open the second in a series of financial services committee hearings. on issues related to cryptocurrency and digital assets most of us in this room are old enough to remember these financial calamities that cost so many so much.

the 2008 mortgage crisis the allen stanford ponzi scheme the bernard madoff ponzi scheme in each of these cases and in others that i have enumerated investors and financial institutions suffered severe losses then sought and/or received bailouts from the federal treasury. they're refrain refrain seems to have been. keep the government out of my life. until i lose money. so today we ask will there be a bailout of digital asset investors if they're investments market value drops to zero. if we believe that such is not the role of the federal government. should there be an amount or form of reserves required to backstop digital securities? should they fail? or instead or today's investors

in digital assets entirely reasonable and expecting the federal government to provide a backstop in certain cryptocurrency should these digital assets become large enough to have a systemic impact on our economy. if so. should there be greater federal oversight and raiding agencies to evaluate the risk and performance of these digital assets? today's hearing will consider the answers to these questions and assess the systemic risks to the economy as well as the risk of loss to individual investors posed by recent periods of extreme voluntary volatility and christo crypto assets that are not back by any form of tangible collateral. it is now my pleasure. to yield to the ranking member whom i must congratulate mr.

emmer. congratulations on your news station in life. and we yield to you for five minutes for an opening statement. i do look forward to working with you. thank you, mr. chair. i too. look forward to working with you. i appreciate you holding this hearing today, and i thank you and i give a big. thank you to our witnesses for appearing before the committee. i look forward to all of your testimony. financial technology and cryptocurrency are the future of the global financial system. in general fintech lowers the barriers to entry to the traditional financial system and offers all consumers. no matter where they are. the ability to access convenient financial services at low competitive costs cryptocurrency is no exception as we have seen from the huge consumer demand for these innovative assets backed by technology that is permissionless open and private. cryptocurrency allows people to transact with each other in real time across borders for very

little costs in a way. that is so transparent and verifiable that it maintains more trust actually more trust than traditional financial transactions with a third party intermediary. most importantly cryptocurrency and blockchain technology unlock access to opportunity. open source nature of these technologies offer millions of americans the opportunity to study study the underlying code develop blockchain projects and launch their own businesses all without having to ask anyone for permission. that's an incredible opportunity. over the last few years. i've been fortunate to meet with many great crypto and blockchain innovators the common refrain during our discussions is that they so badly want to develop their new crypto and blockchain ideas right here in the united states, but they don't because of continuing uncertainty with federal regulation and perhaps more importantly the lack of enforcement of existing laws and regulation.

they're afraid to launch new projects that for example might classify them to be a quote money transmitter, even though their work has nothing to do with money transmission. still the thought of having to comply with an overburdensome state-based money transmission licensing system in the united states is too much of a challenge for these entrepreneurs to be worth their time and their investment so they head overseas where the regulatory compliance is more streamlined. i've also been told by two co-founders of a company who are in the midst of developing a new blockchain network that they wanted to hire american developers, but because there isn't a streamlined process at the sec to determine what is a security they couldn't pay american developers with their token. so they actually went out and hired a team of developers in europe instead where they can confidently comply with existing regulation as i mentioned.

fintech and cryptocurrency are the future of finance, but we're missing out as a country because american entrepreneurs are still unsure of how to navigate our existing regulatory system. this means high-tech jobs are going overseas and capital formation opportunities for every every day. americans are being missed. all part of the chilling effect that comes when we do not answer the questions that industry leaders and consumers are begging for questions. like what digital assets are a security what digital assets are a commodity what digital assets are currency. answering these questions will keep innovation here in america and unlock new opportunities for every american to access to conclude. let's be clear that these things are already regulated. but we need to clear we need clarity in application and enforcement of the existing laws and regulation. there are also areas where we can and should streamline our regulatory framework to ensure

that we realize and benefit from crypto investment and innovation right here in the united states. i look forward to learning from the witnesses how we can address these challenges and i yield back the remainder of my time. the general yields back the chair now recognizes for one minute the chairman of the subcommittee on investor protection entrepreneurship and capital markets, mr. sherman of california for an opening statement. thank you so much for this time. those in the cryptocurrency space are naturally pro crypto. they're fortunes. they're relevance their fame depends upon the success of cryptocurrency. cryptocurrency something you can bid on. but if people want to have the animal spirits to take risks, i'd prefer them invest in equity markets to support the building of american companies or the california lottery to support the schools in my state. cryptocurrency are highly volatile.

so if one person makes a million dollars and retires at age 45 and nine lose a hundred thousand dollars coinbase makes money the 1 millionaire goes on tv and says how wonderful it is and nine others. do not retire and dignity but instead become eligible for medicaid. cryptocurrency can ultimately be successful only if they're successful currencies and evading the know your customer rule is the one thing that cryptocurrency have as an advantage to the us dollar. cryptocurrency have the political support of the patriotic anarchists who are rooting for tax evasion. i hope we shut it down. gentlemen's time has expired. the chair now recognizes the care of the full committee miss waters for an opening statement the general woman from california thank you very much.

chair, green congress and regulators face many challenges as we grapple with how to best regulate cryptocurrency including cryptocurrency issuers exchanges and investments. this committee is committed to providing not only more transparency in this minimally regulated industry, but ensuring appropriate safeguards are in place. and so we have begun a thorough examination of this marketplace today. i look forward to hearing from our panel about the risk of fraud and market manipulation. they can hurt retail investors and regular consumers furthermore. i look forward to learning about the systemic risk presented by hedge funds rushing to invest in highly volatile cryptocurrency in cryptocurrency derivatives. so, thank you mr. green for convening this hearing today and i yield back the balance of my time. thank you.

and share the chair now recognizes for one minute the vice chair of the subcommittee. representative williams of georgia for her opening statement thank you, mr. chairman, and thank you to all of our witnesses for joining us today for this critical conversation often in congress is up to us to write the rules of the road while the road is being built. this rings especially true when we talk about the rapid development of digital assets. we have to be sure that the legislative and regulatory frameworks governing digital assets. keep up with the pace of innovation. what's that stake ensuring financial innovation is appropriately serving all the people the people of georgia's 5th district won't financial services that are responsible and help them improve their lives and it's our responsibility to make sure that any financial innovations including in digital assets meet that bar. i look forward to our discussion today, mr. chairman. i yield back the balance of my time. channel later yields and thank you miss williams.

i'm it is now my honor to welcome each of our witnesses. and i'm pleased to introduce our panel. we have miss iverson. who is the financial economics analyst for congressional research service? alexis goldstein is the director of financial policy at the open markets institute. christine fred parker, who is a partner at reed smith llp sarah hammer who is the managing director of? stevens center for innovation in finance at the wharton school of the university of pennsylvania. peter van falkenburg the director of research at coin center welcome to each of you and thank you for being here

today. the witnesses will be recognized for five minutes each. given opening presentation of their testimony without objection the witnesses written statements will be made a part of the record. once the witness has finished their testimony each member will have five minutes within which to ask questions. for the witnesses in the hearing room on the table in front of you is a time that you that will indicate how much time you have left. when you have one minute remaining a yellow light will appear. i will ask you to be mindful of the timer and when the red light appears to quickly wrap up your testimony so that we can be respectful of both the other witnesses and the committee members time. without objection your written statements will be made part of the record. once the witness is finished

their testimony each member will have five minutes to ask questions. is sue you are now recognized for five minutes to give an oral presentation of your testimony. thank you. chairman green ranking member amber members of the committee. thank you for the opportunity to testify today. my name is eva su and i'm analyst in financial economics at a congressional research service focusing on capital markets and securities regul. miss sue i will allow you to start again. would you kindly depress there's a button there to turn on your microphone? oh, yes, if a song, would you bring it closer to you, please? is this better? a little bit. could you bring it a little bit closer, please? let's try that. how about this way? i think that's better. but if you could bring it a little bit closer. as close as you thank you.

yeah, how about here? okay, we'll try that. let's see if that works. great. thank you. chairman green ranking member amber members of the committee. thank you for the opportunity to testify today. my name is eva su and i'm analyst in financial economics at the congressional research service focusing on capital markets and securities regulation. crs provides congress with analysis that is authoritative confidential objective and nonpartisan. any arguments referenced in my written or oral testimony for the purposes of informing congress not to advocate for a particular policy outcome. in recent years financial innovation in capital markets has fostered a new asset class digital assets and introduced new forms of fundraising and trading.

digital assets which include cryptocurrency crypto assets or crypto tokens among others are digital representations of value. the current regulatory landscape for digital assets is perceived by certain industry observers to be fragmented. multiple agencies apply different regulatory approaches to digital assets at the federal and state levels regardless of the terms used to describe digital assets. depending on their characteristics some digital assets are subject to security's laws and the regulations that are designed to protect investors maintain fair orderly and efficient markets and facilitate capital formation. others such as bitcoin and ethering are not considered securities and generally not directly subject to those requirements. securities and exchange commission is the primary regulator overseeing digital

asset securities offerings sales and investment activities. my testimony focuses on issues related to digital assets securities regulation digital assets increasing presence in capital markets racist policy questions regarding whether changes to existing laws and regulations are warranted. if so, when such changes should happen would form they should take and which agencies should take the lead. current innovative environment is not the regulatory regimes first encounter with changing technology. in the past some technological advancements have led to regulatory revamps whereas others were dealt with through the existing regime. regulatory oversight generally strives to balance the need to foster financial innovation with objectives to ensure marketing

integrity and investor protection as well. in general policymakers contending with major financial innovations have historically focused on addressing risk concerns while tailoring a regulatory framework that was flexible enough to accommodate evolving technology. current developments that raise policy issues include first digital asset exchanges some industry observers perceive digital asset trading platforms is functional equivalents to secure this exchanges in buying in the selling digital assets, but these platforms are not subject to sec regulation potentially making them less transparent and the more susceptible to manipulation in the fraud. second digital asset custody custodians provide safekeeping of financial assets digital assets present custody related

compliance challenges because custodians face difficulties in recording ownership recovering loss assets and providing audits among other considerations. third digital asset etfs etfs are pulled investment vehicles that gather an invest money from a variety of investors etf shares can trade on security exchanges like a stock. the sec has not yet approved any digital asset etfs because of marketing manipulation and the fraud concerns. fourth stablecoins stable coin is a digital asset designed to maintain a stable value by linking its value to another asset or a basket of reserve assets as seen in dm formerly known as libera and the tether. in policy discussions some suggest applying etf regulatory

frameworks to certain stable coins others argue for more disclosure of the underlying reserve assets to expose potential deceptive activities. that concludes my testimony. i look forward to your questions. thank you. thank you, miss sue. the chair now recognizes ms. goldstein you are recognized for five minutes to give an oral presentation of your testimony. chairman green ranking member emma and distinguished members of the subcommittee. thank you for inviting me to testify today. i'm the director of financial policy at the open markets institute where my work focuses on financial regulation and consumer protection. previously, i worked as a computer programmer at morgan stanley in electronic trading and at merrill lynch and deutsche bank as a business analyst serving the equity derivatives trading desks. earlier this year the blow-up of a single family fund are cagos capital led to 10 billion

dollars in bank losses after the firm's bets on about a dozen total return swaps imploded. because these sorts of derivatives aren't currently reported to the securities and exchange commission on form 13f banks and regulators alike were entirely in the dark about archaicos's positions into excuse me until it blew up. the extent of hedge fund and family involvement in cryptocurrency lives in a similar regulatory blind spot. chairwoman waters to her credit has introduced discussion draft legislation to try and address some of these concerns with form 13f. and i believe that congress and regulators should also consider a requiring that hedge funds report their critic cryptocurrency positions on this form. if a majority of hedge funds with billions of dollars and assets under management begin to hold significant positions in crypto as certain surveys indicate, they are interested in doing it may produce dire risks for systemic. for financial systemic risk and

induced future crises as volatile swings in the cryptocurrency markets could lead to things like forced liquidations on their assets. in addition to hedge funds large too big to fill banks and silicon valley venture capital firms are also a growing presence in crypto vc firms have already invested 17 billion dollars in crypto firm so far this year, which is more than three times what they invested in all of 2020. if you combine this with the fact that some cryptocurrency have a majority of their supply held by a very small number of people it raises concerns around concentration to take one example, as of february the top 20 largest dogecoin addresses held half of the cryptocurrency's entire supply. there are also broad investor and consumer protection concerns in cryptocurrency that i have personally observed as a user of crypto exchanges and defy platforms. in traditional financial markets barring a serious liquidity crisis if you buy something you can generally assume you can sell it back especially with a stock.

but on defy protocols like uniswap and sushi swap anyone can upload a new cryptocurrency token. anyone can add a liquidity pool for it including malicious actors who designed tokens that can be bought but never sold. these so-called honeypot tokens are so prevalent that some defy protocols include an explicit warning about them on their website. some crypto investors try to read the smart contracts or code of new coins to look for common pitfalls and avoid scams, but this is an extremely high bar for non-programmers. some of the more concerning areas. i've seen in d fire on platforms that offer derivatives frankly. it reminds me of the over-the-counter derivatives marketplace before dodd-frank, which i worked in as a banker in the early in the late 2000s things like the us-based duydx open which offers options on cryptocurrency and ribbon finance which offers structured products based on crypto. recently cftc commissioner dan

berkovitz said in a speech that unregistered defy exchanges may not be legal under the commodity exchange act. i've also used a defy protocol called pancake swap which often advertises very eye-popping annual percentage rates in exchange for locking a pair of cryptocurrency into the platform's liquidity pools aprs are probably not the right metric to attempt to use for what the crypto community called yield farming as the rates can vary wildly even on a single day, but just to give you one example in early may pancake swap posted a tweet saying you could get over 100,000% apr if you stake or locked in your dogecoin on pancakes swap, they later stated that that special rate was only there for 13 days, which is questionable to use for an apr users complain that the rate offered was nowhere near what they were advertising on twitter yet. they tweeted again the same day that quote the longer you wait the less free money you get and quote. i believe that congress should

continue to examine if there are regulatory gaps that require new legislation in order to ensure consumer and investor protection and crypto and avoid systemic risk. regulators should continue to monitor the space and ensure compliance with existing laws. thank you, and i look forward to your questions. thank you, mrs. goldstein. and the chair now recognizes miss parker four or five minutes to give an oral presentation of your testimony. thank you. thank you. chairman. green madam chair waters ranking member emmer and members of the subcommittee for the opportunity to appear before you today. and thank you to the subcommunity staff for their hard work and putting together this hearing my name is christine parker and i'm a partner in the new york office of reed smith. i'm actually joined today by my colleague trevor levine who was kind enough to breathe the heat to come to dc with me. my practice focuses on regulatory enforcement and transactional matters related to commodities derivatives and

digital assets. i routinely advise both regulated and unregulated digital asset market participants in connection with the number of different federal and state regulatory and prudential regimes. at the outset i want to note that there are a lot of use cases for blockchain and digital digital ledger technology for which cryptocurrency serves as the fuel i urge this subcommittee to engage with organizations that are working at the grassroots level to establish industry sponsored voluntary self-regulatory associations for digital asset and crypto markets on both a global basis and at the national level because i think there is a lot of a lot to be learned from them. i also want to point out that if we are going to innovate how we regulate these new markets. it really calls for a new kind of financial regulator and a minimum. we need financial regulators that reflect the diversity of retail investors who are active or want to become active in the crypto markets as advocates for responsible innovation. i don't think the crypto industry has been very good at pushing forward diverse diverse

voices, but we can and we should and we will better on that front. however, we are here today to talk about the retail investors who are training in the crypto markets, and i know there's been a lot of focus on the research volatility in these markets. and what does that mean for congress for the regulators and for retail investors? just a quick point, you know the volatility in the crypto markets i think is not solely attributed to their lack of regulation. i will point out that crypto exchanges such as gemini and coinbase are not regulated like the chicago mercantile exchange and the new york stock exchange, but they are regulated by the new york department of financial services as limited purpose. trust banks. they're subject to aml kyc requirements as any other federal or state regulated bank and they're subject the commodity features training commission. the cdcc has anti fraud and anti-manipulation authority over the purchase and sale of bitcoin and ethereum on these trading markets and has actively used that authority in this space.

separately volatility is not unique to the crypto markets last april the crude oil market went negative and in february natural gas markets were incredibly volatile due to winter storm yuri, and there are products that are offered on cetc regulated exchanges that are available to retail customers that are based on market the volatility. so some investors are actually seeking out assets that are based on volatility on these very highly regulated exchanges. that being said the question that we're really grappling with today is how do we best protect retail customers who are actively trading in the crypto markets? i think it's somewhat. a problematic to just sort of simply equate the crypto markets with terrorism tax evators and bad actors realistically every member of the subcommittee has a law-abiding constituent who enjoys training crypto. so what is in the best interest of this constituent of yours who's training crypto right now?

access to crypto markets that operate under a clear regulatory framework with both both customer protection mandates and opportunities for risk that are commensurate with the suitability of their of the investor. right now we have an absurd patchwork of regulatory regimes at both the state and federal level we have regulation by enforcement interpretation guidance interpretive guidance and public statements from regulators. one regular says that a crypto asset is a currency another set is a security and the outcome of that is incredibly harmful to retail customers this lack of clarity stifles innovation in the us and frankly drives retail customers to foreign exchanges. so, how do we better regulate crypto? the cftc and the sec should be empowered by congress to move quickly to provide retail investors with a broader array of regulated crypto products that are attractive to market to participants, but come with the robust market oversight of these

regulatory regimes this should happen now congress should also direct the sec to immediately create clear workable criteria as to which digital assets are security is and therefore subject to us security laws and regulations. second while regulators in new york and wyoming in particular have been very crypto forward regulators and will continue to be leaders in the space congress needs to pass legislation to provide for the product federal preemption of the current state by state licensing requirements for the direct purchase and sale of cryptocurrency. this will ensure that these transactions are subject to the level of market oversight that we currently have in the futures and securities markets. a logical regulator here is the cftc, but you must ensure that you fully fund them so they can take on this mandate. thank you for the opportunity to speak today, and i look forward to your questions. thank you. miss. parker, ms. hammer. you are now recognized for five minutes to give an oral presentation of your testimony. chair green ranking member emmer and members of the subcommittee.

thank you for the opportunity to testify today. my name is sarah hammer. i am managing director of the stephen center for innovation and finance and senior director of the alternative investments program at the wharton school of the university of pennsylvania. i also oversee the blockchain laboratory within the stephen center at wharton. additionally, i am adjunct professor of law at the university of pennsylvania law school where i teach an upper-level level jurisdoctor course on financial regulation. before i proceed i'd like to note that the views i express here today are my own and not the views of the wharton school or the university of pennsylvania. blockchain is a shared immutable ledger that facilitates the recording of transactions in a network. today blockchain technology infiltrates and powers a myriad of institutions functions and assets in the united states, and globally. the use cases for blockchain are two numerous to cover in detail here, but they include

decentralized finance enterprise blockchain cybersecurity enhancements and even addressing climate change. the subject of today's hearing is cryptocurrency. at the outside it is worth noting that there's no official public data source for cryptocurrency prices market size or volatility. this lack of data is a significant problem. however, unofficial data sources have estimated that the total value of the cryptocurrency markets may exceed two trillion dollars. investors in cryptocurrency include retail high net worth and institutional investors such as private funds corporations and endowments. retail investment in cryptocurrency, may give rise to particular concerns about investor protection given the possibility of fraud or business failure the lack of discosure and the high level of price volatility.

the securities exchange commission is charged with a tripartite mission a protecting investors maintaining fair orderly and efficient markets and facilitating capital formation. at the same time the sec faces challenges in applying capital markets and securities regulation to cryptocurrency. chief among these is whether the sec has the authority to regulate a particular instrument. currently the sec evaluates crypto sales through the lens of a test known as the howie test which evaluates whether an instrument qualifies as an investment contract for the purposes of the securities act. while the sec has applied securities regulation to dozens of initial coin offerings based on the howie test. there is still a lack of clarity as to whether it applies to a number of crypto transactions that currently do not comply with sec registration and disclosure obligations. in addition a number of exchanges that offer trading in

crypto including those that meet the definition of a security do not register with the sec. given this there is a strong need to establish a clear sufficient and appropriate regulatory framework for cryptocurrency. i turn now to the issue of systemic risk. as discussed the value of the cryptocurrency market is estimated to possibly exceed two trillion dollars and it is characterized by very high levels of price volatility. additionally estimates are that more than 2,000 different cryptocurrency currently circulate globally. for context estimates of subprime debt prior to the great financial crisis are less than one trillion dollars. moreover since no official data source exists for crypto markets financial regulators are at a distinct disadvantage in evaluating their regulatory options. because of the infiltration of crypto into so many institutions functions and assets the

potential risks must be carefully evaluated in a coordinated fashion. in light of the risks and considerations of crypto a myriad of agencies states and international standard setting bodies are implicated. thus a key question for regulation is how should we proceed and in what forum? importantly a government authority already exists that could support the development of a clear sufficient and appropriate framework for regulation of crypto. established in 2010 by the dodd-frank act. the financial stability oversight council is the appropriate forum to engage in evaluating and addressing potential systemic risks. convening and coordinating federal rulemaking on issues that touch multiple agency jurisdictions and consulting with state and foreign regulatory authorities. i believe that by leveraging the authorities of the epsoc to support the development of a clear sufficient and appropriate

framework for crypto. we can address concerns about fostering innovation. providing consistency establishing global rage and balancing our regulatory objectives. thank you. thank you, ms. hammer. mr. van valkenburg you're now recognized for five minutes to give an oral presentation of your testimony. chairman green ranking member emer members of the subcommittee thank you for the invitation to speak with you today. my name is peter van valkenburg. i'm the director of research at coin center, which is an independent nonprofit that's focused on cryptocurrency public policy. the bitcoin network has been processing transactions for longer than uber has been offering rides. bitcoin and other cryptocurrency have enabled 3.1 billion transactions in the last 10 years securing over two trillion dollars in value. if cryptocurrency is were unregulated to this day. would that not be an incredible

failure of our regulatory system? as i'll outline it's not a failure because over the last 10 years cryptocurrency have been regulated. some of that regulation of course does come from the technology itself the scarcity of bitcoin a total supply of only 21 million is not preserved by the goodwill and honesty of the participants on the network. it's secured by a transparent peer-to-peer accounting technology a public blockchain that makes fraud trivially cheap to detect and absurdly expensive to commit but much regulation has also come from the federal and state governments. the on-ramps and off-ramps where people buy and sell bitcoins for dollars and safe keep them. are heavily regulated? they are state licensed money transmitters, or else they are chartered banks and trust companies before offering any services to americans. they must prove minimum capital

requirements post bonds and open their doors to yearly examinations. they are also classified as financial institutions under the bank's secrecy act. they must register with fincen know their customers and share the details of suspicious activities with law enforcement. cryptocurrency like bitcoin and ethereum are commodities, but many crypto assets meet the flexible definition of an investment contract and are therefore securities which means they're issuance and their trading are regulated by the sec. cryptocurrency derivatives are regulated by the cftc. finally anyone who markets a cryptocurrency service or tool that is deceptive or fraudulent is liable under various laws enforced by the cfpb ftc fcc cftc and state attorneys general. and the results of all of this regulation speak for themselves in 2020.

only 0.34% of all cryptocurrency transaction volume involved a criminal sender or recipient. despite several high-profile hacks of overseas exchanges. no american exchange has suffered a substantial hack or loss of consumer funds. operators of money laundering exchanges overseas have been arrested sales of unregistered tokenized securities have been targeted by sec enforcement and criminal ransomware rings have had their servers seized and their ransoms recovered all of this has happened by sensibly applying existing laws to the cryptocurrency space. we don't need new regulations. and all of this has also happened while preserving the fundamental value of cryptocurrency as open access platforms for financial services and innovation. unlike any other transactions technology that works online an open blockchain network is accessible to people that banks

and tech companies would rather ignore than serve. with the rise of central bank digital currencies from authoritarian nations happening in tandem with the rise of bitcoin. we are at a decision point as an advanced technological society. are we willing to accept some risks if it means we can eliminate the choke points to economic participation that further inequality and stifle innovation, or would we prefer to strengthen those choke points and outlaw alternatives in the hopes that a powerful elite will smartly choose who should and should not have access to powerful tools and volatile markets. for every transaction that we want blocked there is another transaction. we should celebrate for being unstoppable. yes, there are some criminals making payments on the bitcoin network because banks won't bank them. there are also pro-democracy activists in belarus and anti-police violence protesters in nigeria taking donations on

the bitcoin network because local banks won't bank them. nonprofits bisol and feminist coalition in nigeria raised millions of dollars in bitcoin donations last year donations. they were forbidden from accepting by a corrupt or otherwise uncaring banking sector in their respective countries. in america, we don't always agree. but no matter what we are tolerant and expect everyone to have the opportunity to stand up and fight for their own vision of the good. crypto innovation embodies that aspiration it's rough around the edges but holds some values above. all every node is an equal. no one's voice should be censored and work rather than privilege is what counts in consensus? thank you. thank you mr. paul van valkenburg. the chair will now recognize these gentle woman from california the chair of the full committee for five minutes for questions. thank you very much, mr. green. miss goldston earlier this year.

pricewaterhousecooper released a third annual survey of hedge funds in the cryptocurrency market according to the survey cryptocurrency currently accounts for 10 to 20 percent of all assets under management for one in seven hedge funds over 60% of the hedge fund survey expressed a desire to start investing in cryptocurrency are to accelerate their existing investments in cryptocurrency by the end of 2021. hedge funds often manage funds on behalf of mutual funds pension plans and other institutional investors which affect millions of regular consumers and investors ms. goldstein. do you see any systemic risks associated with heads funds investing heavily in cryptocurrency, and i'm more interested in this just having

listened to the last presenter who talked about the choke point that we should not be so concerned about. do you think? thank you chairwoman waters for the question. i'm very concerned about the presence of hedge funds in cryptocurrency. i think we've seen with the archaicos meltdown this year that when banks have prime broker relationships with hedge funds who are conducting or family funds as our cagos was we're doing risky things. it can redown to the taxpayer-backed financial system credit suisse lost billions of dollars all the banks lost some 10 billion dollars if hedge funds get farther into crypto. they don't care about direction. they'll go long. they'll go short they can use leverage. there are lots of cryptocurrency exchanges like ftx and binance and many others that allow people to use insane amounts of leverage a hundred times to one and hedge funds are the perfect client to use those sorts of leverage. so what happens if a huge number of hedge funds who have prime broker relationships with two big to fail banks all happen to be in similar crypto positions

whether it's longer short and there's massive volatility in the market. they may have to sell some of their other assets it. lead to margin calls in their non-crypto assets, which could lead to force liquidations and sort of redound to the banks themselves in the form of counterparty risks. so i ask you are there any reporting requirements hitch funds must comply with that would provide regulators and the general public more transparency regarding which hedge funds are most heavily invested in cryptocurrency. and which of these institutional investors counterparties may also be exposed to potential risk. i'd share women there. there are not to my knowledge because cryptocurrency is not currently reported on on the form 13f. it's not seen as an ownership interest and so regulators are essentially totally in the dark about what hedge funds cryptocurrency positions are and i suppose have to rely on the financial press or trying to figure out based on the

transactions on the blockchain and d anonymize certain addresses and figure out who are the hedge funds, but there's no formalized way for regulators to know how much hedge funds are in crypto. miss hammer you spoke to this issue someone would you give me your knowledge about what kind of oversight do we have now what agencies have what responsibility and what should we have? chair waters. thank you for your question. i too have concerns about crypto trading by private funds and one of the key issues as i discussed in my opening statement is transparency and the availability of data in the crypto markets. we have no official public source for data investors are operating based on online websites. there are sometimes disparities over prices and interpretations

of what volatility may be and in some ways it harkens back to credit default swaps prior to the great financial crisis. that was a market that was traded almost exclusively over the counter and highly unregulated when the great financial crisis hit we saw that credit default swabs exacerbated the risks, but once we regulated them and instituted central clearing counter parties, we had an official data and an oversight regulator. that we could identify where the risks lay. i think the same is true for crypto. and as ms. goldstein said the issues related to leverage and whether it's appropriate or not for some of these assets are extremely important. i do believe that at a high level the authority of the f-stoc to convene to coordinate the regulators is crucial because we're talking not just about markets issues or private fund issues. we're talking about crypto within banks.

we're talking about crypto within insurance companies and other non-banks and that can implicate taxpayer dollars in a number of different ways. so in our system the f salt can convene to coordinate those authorities to work together. thank you very much. i yield back the balance. montana lady yields the chair now recognizes the gentleman from minnesota who has served on the fin. gen task force for five minutes thank you, mr. chair, and this is interesting following on the testimony the questions we just heard mr. van falkenburg. let's start with you know, this idea that there's a need for regulation when people promise investors wild profits from proposed new digital tokens in an initial offering. is that regulated? a promise of future profits reliance on the issuers' efforts is basically the howie test.

it's how we classify things as investment contracts. and so the sec would probably treat those offerings in all cases as securities, they regulate issuance and trading. the well, let me keep going. i want to come back to that one because i want to talk about what the sec would probably do and why that's it. that's a problem. when people make bets again mr. van balkenburg on the future price of cryptocurrency or trade with leverage as we've heard reference. is that regulated? so that's on the future price of an underlying commodity are swaps or futures. these are commodities derivatives and the cftc has jurisdiction over that kind of trade and those markets. so yes, it's regulated. yes. can companies sell and transmit in this probably goes to the first bit of testimony. and companies sell and transmit cryptocurrency without identifying their customers. is that regulated that's heavily regulated and while

representative sherman said that the one advantage of this is avoiding kyc. i have to argue that every us exchange is bsa regulated. they have to know their customers file suspicious activity reports, and this has been the case since at least 2013. so let me do the prices of cryptocurrency like dogecoin have been quite volatile and seemingly susceptible to influence by statements from persons and groups. maybe even manipulated as was suggested by one of the opening statements here today. is that regulated mr. van valkenburg? so as an open source open network cryptocurrency dogecoin likely does not qualify as a security. the extent that that line is unclear yourself congressman emmer have introduced excellent legislation last congress that was bipartisan and co-sponsored by soto and kana. that would help.

clearly delineate that line between securities and commodities, but if we assume today that dogecoin is a commodity it is still a regulated commodity for various purposes. specifically in the manipulation context that you raise the cftc has the duty to investigate and prosecute manipulation including at commodity spot markets under their cea authority section 6 c1 which dodd-frank added to the commodities exchange act. as sec chairman gensler recently testified there is in some ways a gap here because unlike traditional commodities spot markets which are like cattle auctions, you know, i'm buying a commodity from you. you're selling it to me these markets have much higher volumes and a lot more retail participation. so accordingly, it may be appropriate to extend market supervision to these entities another reasonable approach that i think would follow chairman gensler's recommendations is another piece of legislation

that you introduced last congress the digital commodities exchange act. i'm sorry representative conway former representative conway introduced the legislation, but you co-sponsored it and for that we're grateful because it would create a reasonable guardrail based approach to market supervision for places where people are trading these commodities even at the spot market level. well, my dad i'd also introduce the securities clarity act which provides clarity for the sec and token issues to be to swiftly determine when and if the token is a security in the short time we have left. i i believe that we do have the regulatory framework the laws in place people don't get to run in this country under the radar if they're complying with kyc and all the other regulations that are out there. would you agree mr. van valkenburg that the real issue here is while we can do some work perhaps as congress on the margins to clean up some of this real issue is the application of

existing regulation and laws has not been consistent and there has been little enforcement in terms of court decisions or things that can give us precedence so people in this area know what's right and what's wrong? i think that's right. there's a certain wisdom to our flexible and open standards for investor protection in this country like our securities laws that have these broad and flexible standards. however, they only work if controversies end up in court and judges make clear rules about new application of those laws and one thing we've seen is a replacement of a lot of decisions made by judges acknowledging the interests of the parties with administrative guidance. that is not always as clear as it could be, but the underlying laws are sound and should be applied. thank you. the gentleman's time has expired. chair recognizes the gentle woman from north carolina, ms. adams for five minutes for your questions. thank you. thank you chair green ranking member emma and chairwoman

waters for holding the hearing today to our witnesses. thank you as well ms. parker. there's a great deal of interest from both the public and from members of congress with respect to the current regulatory framework overseeing cryptocurrency. so as a vice chair of the ad committee, i've heard plenty of discussion from my colleagues about not only who should regulate cryptocurrency, but how they should regulate these entities. so as you alluded to in your statement many of these discussions have sent it around the world of the sec and the cfc. so, how are cryptocurrency markets currently regulated in the us and is this level of oversight and regulations sufficient protection from the attendant risk pose? thank you. that's awesome. thank you. that's an that's an excellent question and and sort of like you i come from the the

commodity side when i'm looking at these markets and and bitcoin and eth are the two tokens that we have a very clear regulatory framework. they're they're commodities and so at the spot level the cash level, you know, the ctc is generally not been active in that space in terms of of the robust market oversight that they provide to their futures exchanges and that's just because of function of the commodity markets they sort of arose from commercial entities coming together to buy and sell their you know pork bellies and you know, orange juice concentrate and we in corn and soy so, you know those markets, you know, we don't really have established treating spot markets for physical commodities or any form of commodities. so so bitcoin is sort of a novel application as an intangible physical. commodity it's sort of a novel application of these laws and these these systems that have existed for almost a hundred years. so what i would recommend but i

think makes sense is that the cftc is a very sort of robust and experienced market regulator. i think it makes sense to draw digital assets spot products, so i'm not talking about other physical commodities not talking about physical financial commodities just digital assets spot commodities. i think it makes sense to pull that into the ctc's market oversight framework and and apply those sort of market conduct and markets surveillance requirements that are imposed on the cme and ice to these spot markets good. thank you. i want to move on if i can get another question. thank you so much. so miss who let me pay the focusing on protections and my opin time over the past few years focusing on what happens on twitter, but when it comes to

cryptocurrency volatility twitter has been front and center in january. we we watched a bitcoins fight with with each elon musk tweet with what we watched it fluctuate in the months thereafter. so let me ask you what are the most concerning risk to investors in cryptocurrency market in the marketplace and and how can those risk be mitigated most effectively by regulators? so, yeah, thank you i think from our investor protection perspective if you look at capital markets related concern there are three groups of primary risks, we consider market volatility as you highlight is it's definitely front and the center but the traditional way to handle it is through disclosure and investor restrictions by that. we mean you provide material

information about the risk, so investors would go in into risk-taking in the informed way so they would price the risk accurately. similarly with investor protection regarding restriction it would be if you deem the instrument to be highly volatile and highly risk relative to the risk tolerance and the financial cushion certain individual investors. have you may exclude those investors from such investments? um, okay risk. i'm sorry other risk is related. fraud and the scam so on obviously you handle it through rule making enforcement reporting and then the third category which people usually over unlike not paying particular attention. that is safe keeping functions like the loss password. i think you're probably generally aware like 20% of

certain digital asset was lost due to the lost key. so safe keeping. yeah custodian service may be that thank you man. thank you very much. i'm out of time and i'm chairman. i'm gonna go back. the general ladies time has expired. the gentleman from georgia mr. laro milk is now recognized for five minutes. thank you, mr. chairman, and thanks to the panel for being here. it's a very important hearing we're having here today and i think is something we need to be looking at but one of the aspects of being here is a lot of times people draw a line in the sand very early on and they take in early position on something especially when it's dealing with technology because it's something either don't understand or there's this fear factor and i've seen that with cryptocurrency because a lot of times we don't see the force for the trees. and in this case, i think there's something that we miss

out on because we have either decided we're for against cryptocurrency in that part. we're missing out on is the blockchain technology that's underlining which i think is very valuable for us in this nation, especially in the federal government. and i have been advocating for a long time that we utilize or at least we look very strongly at using blockchain technology as a solution to our crypto our crypto, but our cybersecurity issues here in this nation when you consider the federal government. and we know that we've had cyber attacks. there's been loss of data and people's personal data has been inadvertently disclosed caused a lot of issues that isn't that hard to do when you consider how many points my personal information and other personal information reside within the federal government. i mean there's duplication of data and every place that my

social security number my date of birth my address phone number all of this resides is another system the susceptible to attack and all it takes is one week. and then you've exposed it. i mean if you look at as a veteran my information to the va from years of working in business, it's been with various departments social security administration. you name it irs you look at all the different database. i did account one time. there could be 47 different data points that just my information would reside and all it takes is the breach of one of those. because of the decentralization of blockchain it seems to me that that may be the solution to the cybersecurity problems that we have in this nation. so miss hammer. is this something that that you would agree with and can you describe how the blockchain technology could be used to enhance cybersecurity? congressman thank you for that. excellent question. i appreciate the chance to talk

about the potential benefits of blockchain technology. it's absolutely something that i would agree with and certainly something that we work with on a day-to-day basis at the stephen center at wharton as you mentioned. blockchain is a decentralized technology and that is key because it has no single point of failure. so there are many different uses for the technology in addition to cryptocurrency with each new block in blockchain the previous blogs or stored and this creates a fully traceable history log so it can potentially have manners many cyber security applications blockchain can therefore be used to create security profiles for user data such as you mentioned and it protects the data by decentralizing it in addition blockchain technology incorporates something known as public key and private key. authority so public key infrastructure much like an email address can be used to

authenticate and authorize parties and private keys can be combined with it for end-to-end security and encryption of our data. blocking blockchain can be used for many different means in cybersecurity. it can decentralize security devices such as a home security system to discourage hackers. it can protect websites by decentralizing domain name servers such as separating an ip address from a name and it can be in fact combined with other security protocols like biometrics in order the strength in our cybersecurity options. so i fully agree. there are many applications for blockchain technology and it's important for us to remember this is the technology that powers crypto, but the technology itself also has many applications and we move ourselves to consider those innovative possibilities, and that's the challenge i've had is separating what some will

consider the stigma of cryptocurrency from blockchain in the remaining time. i got one other question that if you could answer do you have concerns with a potential central bank? currency thank you congressman for that excellent question, and i know that central bank digital currency has been the subject of other hearings in this forum. and certainly it's something that's being studied really across the country by many different academics and not for profits. i think it's important to consider that central bank digital currency could take many different forms. it could be blockchain-powered. it could be not blockchain-powered and run along a traditional database system such as we do currently there are concerns about central bank digital currencies some of them relate to issues around privacy and whether it actually achieves the objective of having a central bank digital currency because rather than a decentralized system, which cryptocurrency is or blockchain

is having a central bank digital currency would concentrate our private information and therefore could potentially be a target for hackers at the same time. i recognize your gentleman's time has expired would you kindly give the rest of your answer in writing and submitted. absolutely. thank you very much. and when i have my time, i may give her the opportunity to finish with my time. the gentle woman from georgia miss williams the vice chair of the subcommittee is now recognized for five minutes. chairman my top priority in congress is ensuring that those most marginalized remain at the center of our policy considerations when it comes to digital assets this means making sure that investors of all experience levels have equitable access to information about the the digital assets that investing in ms. hammer. how can regulators best communicate with all consumers? especially those who may be investing for the first time

about any risk associated with investing in digital assets and ways to invite to avoid predatory behavior in the market? congresswoman. thank you for that excellent question and as i mentioned in my oral testimony investor protection is a key concern and priority when we think about cryptocurrency and i returned to what i recommended in terms of coordinating federal agencies because investor protection consumer protection and even irisa and the department of labor implicated when we think about investing in these markets, not every investor is the same investors have different risk profiles. they have different periods of time that they can invest in and not every asset is appropriate for every vehicle today. we're seeing cryptocurrency being introduced into things like retirement funds. we're seeing the rise of cryptocurrency amongst younger investors through different applications. and so i do feel strongly that

number one coordination through the f-stock through the federal financial agencies is extremely important to both from a consumer protection. perspective and investor protection and number two that we have the data and the resources to evaluate what's happening in the market without an official public data source. i think that we're a little bit in the dark about what the proper regulatory framework should look like. thank you. it's important that we ensure consumer protection when it comes to digital assets, but we also have to be sure that we're protecting the health of the broader economy as the use of digital ethics expand. so miss hammer more on this given that digital assets can change rapidly in value. are there legislative considerations that congress should keep in mind to ensure any risk to the broader economy is minimized as investment expands in these assets. thank you congresswoman for that question as well, and i do believe systemic risk is a key concern. i do believe that the financial stability oversight council is

the proper authority to consider systemic risk under section 120 of dodd-frank acted actually has a specific mandate to do so. the fact is that cryptocurrency has really infiltrated many different aspects of our financial system and regardless of what we may think the benefits and costs of that may be it is the reality today. not only do investors hold crypto in their individual portfolios, but we see it in private funds as ms. goldstein mentioned. we see it in banks. we have permitted banks to serve as custodians. we have national trust banks that are operating as crypto companies and we have 50 different states that are looking at a myriad of crypto rules. i think at last count 31 states. we're actually looking at crypto legislation in the current session. so this level of activity can be useful if it's innovative, but i think the key thing is that we have a race to the top and not

erase to the bottom and there are some things that should be regulated on a federal level as far as what is specific legislative. mandate would look like i think that's to be determined after substantive study by the f-soc after we've established some public data sources and there's clear coordination amongst the agencies. so knowing that we need more research and investigation around this. i'm thinking more in the lines of some of my priorities in congress, which are can ensuring consumer protection and the beneficial the benefits to financial inclusion for more people. and so what are are there any considerations that you have in mind for congress that specifically speak to those two areas? so, thank you congresswoman for that point as well. i think the issue of financial inclusion is crucial when we think about crypto as we digitize our economy the reality is that some people may be included more and some people

may be included less and i tend to think globally because that's kind of the research that we do at the wharton school when i think about financial inclusion, globally, there are 1.7 billion people who are unbanked and two thirds of them do have mobile phones. now that may differ from what we have in the us. i think that having legislative priorities around consumer protection related to this asset. these assets would be important, but also think that clarity in that space and international coordination is key because the technology going back again to the uses of the technology has many beneficial functions for others in other areas who may not be so lucky to have stable currencies. they be subject to political and economic instabilities that make using crypto an important method for them to run their businesses and to support their families. thank you. my time has expired. thank you. the gentle ladies time has expired.

the chair recognizes the gentleman from tennessee, mr. gustav for five minutes. thank you, mr. chairman. this hammer if i can continue with you just briefly. i know that you were finishing answering mr. loudermilk. was there anything you wanted to say in conclusion to his questioning? thank you so much congressman. we were discussing central bank digital currency, and i wanted to acknowledge that there may be privacy concerns around central bank digital currency, but emphasize that there are many different iterations. the technology can can take and i think going back to some of our earlier discussion one of the key priorities that we focus on in our work related to fintech and blog chain at the stevens center is financial inclusion. and so when i think generally at a very high level about cbdc, i believe that that is a focus that we should continue with and and it's an important topic of discussion related to crypto as

well. thank you samura if i could along those lines to your quarrels from the fed i believe on i'm going to characterize express some skepticism about central bank digital currency. my question to you is we've talked about. innovation and and not stifling innovation do you personally have concerns if if we if we move slowly and the chinese accelerate? can you can you play that out? what happens over? 12 months 24 months five years thank you congressman for that question. and i know it's an important topic for all of us as we think about cbdc to be honest. i i don't have any particular expertise on china and our policy as it relates to china. i would say that one of the things that i think is valuable about thinking about blockchain

technology generally and cbdc as it may relate is how it can improve our financial infrastructure and our financial system. we live in a world today where it takes days to clear and settle a payment. we live in a world where we have intraday risk between counter parties who are trading we have an antiquated central clearing counterparty system that's in need of a revamp in some ways. and so i believe that we should be doing everything we can to modernize our system and that we should be taking advantage of the available technologies the key thing from my perspective is regulatory clarity. i think that already is required for businesses to innovate. i see it every day in some of the companies that we work with for a company to develop a product or create a go-to-market strategy or raise money. they need clarity in the law. and this is an area where they just don't have it on particular issues. so my my belief is that we

should be working in a coordinated fashion to provide that thank you, ms. hammer. mr. van valkenburger i could with you inflation is a concern for people across the country certainly in my district in west, tennessee. i know in an interview recently. i you talked about her you advocated essentially that a consumer may want to buy bitcoin because it could be a way to balance an investment portfolio against the threat of inflation. could you expound on that, please? sure, so the intuition here is fairly straightforward bitcoin is the world's first digital commodity and it functions rather like gold except it's gold that you can send peer to peer over the internet. now as to the wisdom of any particular investment in a portfolio. i think most people agree that diversity is how we can achieve greater financial stability for ourselves and for our major

institutions, and so my point in that previous interview was simply that as part of a diversified portfolio one might be interested in owning some bitcoin along with some gold along with some stocks american industries overseas industries in order to achieve some balance and a hedge against the risk of inflation. should we see it being pronounced? and you may have answered this but would you would you advocate that strategy for the lack of better better word the average retail investor. so i think we've got guardrails in place now for these bitcoin spot markets, for example that make that a safe bet as long as we have good investor education, which is always a perennial problem. but if you go to the right places the american run companies, they are state licensed money transmitters. they're new york department of financial services chartered banks and trusts and these are safe places where a customer will be given clear information about what they're buying from a person who's posted a bond prove

minimum capital requirements and as a robust regulatory structure around them to ensure investor protection. thank you, sir. thank you. i thank the other witnesses i yield back. general yields back the chair now recognizes the gentlewoman from michigan mr. lee for five minutes to ask her questions. thank you so much, mr. chair. we all know cryptocurrency like bitcoin currently consumes enough energy to power a small nation. and the cambridge bitcoin electricity consumption index is one of the most cited cryptocurrency energy estimates right now at estimates estimates sits actually at analyze consumption of 66 terawatt hours. that's actually around a third of the energy consumption of facebook. google amazon's data centers combined. but due to the decentralized nature of cryptocurrency, even the cambridge model is just a small, you know, not precise estimate and their upper bound

is as probably as high as 159 tarot hours each hour. as bitcoin miners compete against one another for increasingly scarce tokens energy usage increases and so, you know one of the things i want to talk to you about mr. valkenburg, how can we better measure the energy consumption and energy resources of cryptocurrency to the account for its carbon footprint? so i agree that the cambridge sorry, there's a bit of an echo, and i'm just i agree that the cambridge data is is our best shot right now at looking at this at this question. what we have a benefit of is knowing everything that the peer-to-peer ledger tells us. it's shared and open. it's not a proprietary standard from a corporation and the peer-to-peer ledger shows us. how much work these miners are performing to make sure that transactions get in blocks, and they're not censored by some third party or some government that wants to coerce certain transactions or block certain transactions. it's this vibrant competition

between miners that guarantees that the miners cannot form a cartel and choose to systematically exclude certain persons from this financial system when you have them compete and when you have their evidence of their competition in the form of proof of work calculations on a public ledger that any person can audit independently you get that censorship resistance. as far as energy usage, i'm sorry. now go ahead. i need to get to my next question because i really want to talk about the carbon. okay prime. i'll be brief. i'm sorry. so as far as energy usage, it's worth noting that through dish the traditional financial sector uses an estimated five times more energy than bitcoin. now granted the traditional financial sector moves more money, but it is worth noting that bitcoin energy usage does not scale per transaction. so most of the costs are the are the fixed costs of setting up an open peer-to-peer system. that's robust. and we have technologies like the lightning network that can bundle millions of transactions into that existing system without a meaningful increase in

energy. so it's possible we can have an open financial system that censorship resistant using one fifth of the energy of the current financial system if we were to eventually move more transactions, missed calls. thank you. miss golf team is correct procurrency fundamentally with carbon neutral future. congresswoman. thank you for the question. i think it depends. it depends on the cryptocurrency. it depends on which system it uses for validation. so proof of work i would argue is the most carbon intensive of the validation systems and cryptocurrency. this is the one that bitcoin uses. this is the one that ethereum currently uses, but it's trying to move away from and that's because it's effectively a lottery system any minor can try and compete for the 6.25 bitcoin reward that is generated every 10 minutes and everyone is essentially trying to guess the address of the next block some people describe. this is solving complicated math problems, but you have a lot of people competing for a single reward and it generates a lot of

energy i think as more cryptocurrency is embrace different validation methods whether it be proof of stake proof of history is another one perhaps the footprint could be reduced but it seems unlikely that bitcoin will move away from the proof of work method and as you cited the cambridge index when crypto is very high when bitcoin reached its highs in may we saw an element of 143 terawatt hours, which is more than the consumption of argentina and more the consumption of norway. and so i think the answer is it depends, but i think the proof of work validation method is a climate incompatible. yeah. well, no, it's just a recent study out of china suggested that without taking any actions on her to curb. the greenhouse gases produced by electricity generation or bitcoin mining that they can see like 130 million tons of carbon per year. so mr. chair, you know, my point is climate crisis is here. we need to do everything we can in our power and our preview to really truly reduce carbon

carbon footprint and so many other things that we're trying to do and addressing that i saw firsthand what was happening in my community as we saw record rainfall, but i really do appreciate this committee hearing and i yield a generator yields back the chair now recognizes the gentleman from south carolina mr. timmons for five minutes for questions. thank you, mr. chairman, some of my democratic colleagues have painted a broad brush against cryptocurrency as the purview of charlatans and scammers. in fact, mr. sherman has called for an outright ban on cryptocurrency in the us if we could just for a moment. take a deep breath and heed the words of president obama's own ci director mike morrell in a recent report. he said that bitcoins use an illicit finance activity today is extremely limited and it blockchain ledgers are highly effective crime fighting and intelligence gathering tool he urged for a more fat based dialogue between industry and

government to ensure real risks or mitigated in the opportunities for potentially revolutionary technologies. are not squandered mr. van valkenburg. is this the road? we are headed down our cooler heads prevailing or will alarmism went out. so i've been lucky to have the job that i've had for the last six or seven years now where we've gotten to meet with all the regulatory agencies that have some piece of jurisdiction over cryptocurrency both in the obama administration. and now in the trump administration, and i've always been impressed by the level of knowledge of that one person or maybe small group of people within the agency that's focused on this technology and focused on reasonably applying the existing rules to the risks presented by the technology. i think at the regulatory level. we've seen cooler heads prevail for a long time and i'm grateful for that. we've had reasonable regulation from an anti-money laundering standpoint counter what representative sherman suggested we've seen kyc and aml at all of

the us exchanges and robust suspicious activity reporting and i've talked to law enforcement. we've actually said they prefer doing investigations when it's on an open blockchain network because there's a single source of truth, which is a ledger rather than a number of dubiously well held records at international financial institutions. sure. thank you. thank you for that answer. it really frustrates me when i hear members of this committee. imply that americans are not smart enough to know that investing in cryptocurrency carry risk or even the capital markets more broadly. we heard a similar time in the gamestop hearings as well. they won't come right out and say it, but i find it insulting that members of this committee feel that their constituents. don't know what they're doing when they make investments. i'm not going to patronize the folks back at home in my district. do we have a role in making sure they know what they're getting into? absolutely. but let's stop implying that our constituents don't know what they're doing. my next few questions are for

miss hammer. there's a common misperception which we have heard several times today. that cryptocurrency is quote unregulated. however, we have seen the sec and other regulators at the state and federal level be proactive and enforcement actions and providing guidance to how businesses can offer services and relation to cryptocurrency. can you describe the current regulatory state of cryptocurrency in the united states and regulations crypto companies have to comply with in regards to consumer protection. thank you congressman for that excellent question and it definitely covers many of the issues that we've discussed here today in the complexity of the regulatory framework. the reality, is that crypto and crypto companies receive different types of regulatory treatment throughout our regulatory system. this is how our system works the internal revenue service issued a notice in 2014 that crypto

would be treated as property. but if you are paid in crypto for your work, it is treated as income and tax as such the securities exchange commission may regulate cryptocurrency as a security if it meets the criteria of the howie test unless that particular asset is eligible for an exemption in some cases crypto, maybe regulated as a commodity by the cftc and there are many different types of companies that interact in the crypto world now that have different authorities such as national trust charter from the office of the comptroller of the currency and as i mentioned earlier, we have a number of states that are innov their own regulatory frameworks so my key issue is that we need regulatory clarity in our policy making and i believe that we have an authority in place through the f-stoc to lead that at a high level. the f stock has a mandate under

dodd-frank section 120 to coordinate around issues related to potential systemic risk, and in addition to that it has the ability to form a technical or advisory committee, including one that would work with the states. in addition. the f-stock is charged with consultation with international standard setting bodies, and we've talked about a number of issues today that our international in nature. in fact crypto crosses borders, there are places where there are gaps in the regulation and the best way to address that is through international standard setting. so do you think that the federal agencies have the tools necessary to coordinate their efforts around blockchain and crypto regulation or do you think it's going to require congressional action? i believe that we have the authority in place to coordinate through the financial stability over a site council that said i

think we have a lack of clarity in the regulatory framework and i strongly believe that we need to have official public data sources in order to create a framework for cryptocurrency regulation. we need a map and to have a map we need data about where is crypto. where do the risks lie etc and i think we have to say i'm sorry. my time is expired. i appreciate your answer with that. i yield back. thank you. the gentleman from illinois, mr. garcia is now recognized for five minutes. a good morning to everyone and thank you chairman green and the ranking member emma for hosting this important hearing and of course. thank you to the witnesses of today. i think it's easy to fall into a trap of believing that cryptocurrency is too technical for everyday people that trends like gamestop and crypto are

funny weird coincidences. that might make you rich the fact, is that the crypto market represents more than two trillion in assets and two trillion matters to everyone in this committee. it's our responsibility to look out after the financial system. i watch my neighbors lose their homes in the great financial crisis and many neighborhoods in my district never recovered. i'm glad that we face that we have not faced another crisis like this yet, but i'm very worried about the future the fact is we don't know all the risks cryptocurrency create. us and we know that cryptocurrency are extremely volatile. we know that some of our largest banks are figuring out ways to get into them, but we don't know how concentrated ownership is and we don't know how exposed our hedge funds already are so in short we know that crypto is big, but we don't know other threats that it can pose to mr.

to alexis goldstein regarding open markets miss goldstein. it seems like many of the cryptocurrency proponents are at least honest they want to get around regulations. how much of the appeal of cryptocurrency is just regulatory arbitrage instead of real innovation. thank you for the question congressman. i come at this as from the perspective of someone who worked at merrill lynch and deutsche bank. well merrill lynch prior to the 2008 financial crisis. i worked for the over-the-counter equity derivatives trading desk before dodd-frank when there was not regulation and all the trading was essentially opaque and the cryptocurrency markets reminds me of that time and you know, there's been statements in this hearing today that all us basic exchanges have no your client requirements, which is true, but that's not the only place that us users can trade cryptocurrency. there are defy platforms, and i have yet to come across the single defy platform that has know your customer requirements. and so there are a number of ways to sort of evade some of

the so-called safe cards that are already being touted as being in place and i think you know, we need to look at what cftc commissioner dan berkovitz recently said in a speech, which is that some of these d5 platforms are operating as unregulated unregistered exchanges and maybe illegal under the to be exchange act. i also think that we need to be concerned about leverage leverage both by institutions, but also leveraged by retail investors retail investors in the stock market traditionally can't have more than a two to one leverage but in cryptocurrency markets many individual investors can get up to 125 to one leverage and that can wipe you out quite quickly. and so i do think that there are opportunities in the space. unfortunately for regulatory arbitrage and i do think that that is some of the reason that they have been successful to date. i do think that the regulators should take a close look at their existing enforcement abilities though to see what can be done about that. thank you. i think you just got to the

second question. i was going to ask you and that is one of the most important things that regulars can do to keep crypto from threatening our financial system. well congress congressman, i'll take a shot at elaborating. i mean, i do think that in some ways the united states is behind. there's been a lot of recent regulatory activity. canada has pursued enforcement actions against bivit and cucoin among others. japan has warned binance. germany has worn binance about their so-called tokenized stocks which are essentially crypto assets that track the performance of stocks and look very similar to me to the kinds of equity swaps or total return swaps that crash the archaicos family fund. we recently saw the uk's fca tell binance that they need to put a warning on their website as of today saying that they are not registered with the fca and i think in some ways the us regulators are behind our international regulators to putting out these sort of

consumer warnings. so that's one thing that they could do. another thing that they could do is look at leverage by retail investors, right? why is there this difference between the access to leverage of retail investors in the stock market and in the crypto markets and i said in my opening statement. i think it's very important whether it's congress or the regulators. we pursue an avenue to ensure that private funds like hedge funds are disclosing what their cryptocurrency positions are so that the regulators can get a handle on any systemic risk concerns. okay. thank you so much and with i yield back manager. the gentleman yields the chair recognizes the general woman from texas miss garcia for five minutes for questions. thank you, mr. chairman, and thank you for calling this very important hearing on the topic. it's been on the minds of many of us the issue of crypto assets is so important to us because we must understand what the financial marketplace of the future will look like digital

assets present an exciting new frontier with a potential to bring the unbanked into our economy. in fact, 12.2% of latinos and 13.8% of black households or unbanked in 2019 compared to only 2.5% of white households. this is not the first time i've discussed that and i'll continue to discuss it. well cryptocurrency is a new frontier. we must be be cautious to make sure that we protect consumers from any affordable risks. we need to bring the different chest america's to the financial freight, but we must also look at the bigger picture to make sure that we do not inadvertently allow a system to grow then grants too much market power to you decision makers it's our job is lawmakers to protect a consumers from financial abuses. this includes protecting the sovereignty of the us dollar. we cannot allow anyone to compete with our us dollar without a sovereign dollar that

represents the primary form of currency in this country. we risk destabilizing our financial markets, and i would i would also suggest it would destabilize global markets. we must protect the value of marriage of the us dollar both in cash and digital form. stable coins such as facebook's dm preventing sovereignty risks to our domestic currency. in other words. there is a risk of these stable coins replacing the us dollar and undermining the federal reserve's ability to perform its critical functions as the central bank the world economic forum has worn its member countries of this risk and the bank for international settlements has urge countries to form your own central bank digital currencies so they can offer access but still protect and so protect the sovereignty of their currencies last congress. i introduced a bill to regulate manage table coins a securities peggy them to a currency without proper regulation like facebook

has done with dm is a step forward, but it does not address all the risk miss goldstein i wanted to start with you. how urgent is this need for regulating stable coins and protecting the us dollar? congresswoman. thank you for the question. i think staplecoins are it's an urgent need for regulators to look into them. thankfully we've already had state attorneys generals looking at the problem, leticia james in new york has has looked at bitfinex, which operates the tether stable coin and has they've recently reached a settlement and so heather you can no longer buy heather in the state of new york, but i think there are a lot of questions about what is tether actually backed by they've recently had to disclose a number of their reserves which included commercial papers and cash like products, but they had very little actual cash. they had some commodities they had some other digital assets and i think you know, there was recent reporting. i believe it was in the financial times where they asked some of the large banks who tend to be one of the major

counterparties for commercial paper, and they said they hadn't done any business with it connects. so, who are they doing business with you know, i think this is an opportunity to make sure that stable coins are actually based on something right and we're not is relying on faith that it's actually pegged to some denomination of the us dollar or another currency and i think one perhaps way to approach that would be to have this our, you know, central bank's issue central bank digital currencies, but that's not the only way perfect. right well and you know we hear from some well you can't do that. it's not about regulation and you know, we can't go in there as a government it always just regulate we got up. we got to allow for innovation. do you see that? it is possible to strike the balance where we protect, you know those innovation and we we allow that to occur but balance the need for the sovereignty of our dollar in balance of

protection that we need for consumers. congressman yes. i think we absolutely can achieve that balance. i don't think it's unreasonable to want to ensure that something that pertends to be pegged to one us dollar actually is and isn't capable of breaking the buck and people losing their funds. you know, that's not to say that the there isn't existing problems in the financial system, right? i think there may be similar problems with you know money market mutual funds right and and they're sort of ability to peg themselves to the dollar and break the buck, but we can always do better and we can strike the right balance to both protect consumers and also encourage innovation. i don't think that they're in conflict. well, thank you, and i did have one more question. i submitted in writing mr. chairman. i see that my time is down to three seconds. so i'll yield back. gentlelady yields back the chair recognizes the gentleman from ohio mr. gonzalez for five minutes for questions. thank you, mr. chairman, and thank you to our our panel in a

way. i'm sort of encouraged by today's hearings. i think there's more broad agreement than is normal in this committee at least amongst the panel the majority of the panel that we do need clarity. we do need clarity with respect to how we are going to regulate in the space because we are pushing a lot of the innovation overseas. i hope we get that clarity mrs. parker. i want to start with with your testimony you suggest to my earlier point that this uncertain regulatory environment does choke innovation and pushes projects overseas, correct? thank you, and it forces americans to do things like use vpns as a workaround and i think you rightly highlight that this is a bad outcome for for americans. that's correct. thank you. you also say that that regulators are hesitant to to get involved when relevant members are your words relevant members are our to to crypto.

subcommittee chairs on this specific committee that they would qualify as relevant, i won't be qualify as relevant but not hostile. relatively, right right. so but some potentially so assuming regulators are listening and i didn't want to put you in that box there, but you did say listening. i'd encourage them to listen to the full committee and and not quote relevant members who say ridiculous things like people should invest in the california lottery instead of cryptocurrency and suggest that if it's possible to lose money that some people are going to make money and others are going to lose money that whatever that thing is, whatever that instrument is. it's a factor should be banned. and also people who suggest that because there are money launderers. and bad people who use cryptocurrency than there are we know that that it should be banned i would.

like the sight of statistic by katie han who? broke up the silk road scheme a while back 99.9% of money laundering with fiat currencies goes on prosecuted 99.9 so, you know the the commentary around whether we should allow cryptocurrency. to exist on aml lines, i would ask compared to what? compared to fiat where 99.9% goes on prosecuted so i want to shift now to mr. van valkenburg. another common is made well, it's highly volatile and and because it's highly volatile there is necessarily systemic risk, and we should ban it because it's highly volatile. here's some. bubbles in the crypto space 2011 went from one dollar to thirty one dollars down to two dollars.

no systemic risk, 2013 13 to 266 down to 65. 2015 65 dollars to 1242 to 200 and then obviously in the last year. we've seen it go from a couple thousand to 60 grand back down to 30 and bounced up at any point mr. van balkenburg. did the federal government have to step in and prop up the cryptocurrency markets or save anybody? no, but by definition cryptocurrency are on backed we've heard some members question whether that's wise but something that's not backed doesn't have promises associated with it. and so there aren't promises to be disappointed and someone to be bailed out in that case. it's like gold. how would you bail out? the price of gold who would you pay? exactly and then with your with your final or my final minute, i'd like to talk to you. there's a there's a comment that you know, people are going to lose money and that's definitely true. can you compare blockchain and

cryptocurrency to the early internet maybe use the pets.com and amazon analogy if you could absolutely so these are brand new systems that do something amazing. they allow people across the world to coordinate to perform and provide a service that previously could have only been performed and provided by a big company. so just like the internet suddenly gave us the ability to all have our own blogs and not necessarily have to rely on the new york times or the wall street journal. the nature of bitcoin is quite radical. it allows us to rely on ourselves in addition to centralized entities and the radicalness of that innovation is something that people will get excited about for the right reasons and sometimes over over excited for the wrong reasons. so, i think it's a good metaphor, right? and so there is risk in the system, but with risk comes great reward and and if you want to ban risk well, guess what you also ban reward and you ban innovation. and so i thank you for all that. and with with that i yield back. gentleman yields back the jonathan from california mr.

sherman who is also the chair of the subcommittee on investor protection entrepreneurship and capital markets is recognized for five minutes for questions. after especially after the last gentleman's comments. i have a lot to say i'll use my five minutes to say them of course as i pointed out in my opening statement and thank you mr. chair for allowing me to make an opening statement those who live in the crypto world. i have their relevance their fortunes caught up in making this successful. we're told that well cryptocurrency are fun and useful and there might be somebody in my district to enjoy trading them. well one thing that would be useful would be a $10,000 bill. it would occasionally be used to buy an automobile, but it would be uniquely valuable for those drug dealers. we'd make their lives so much easier when they have to deal these hundred dollar bills, imagine if they had a $10,000 bill. in our natural tendency is to

try to facilitate and help people do their financial transactions. but i for one am not looking for a more accurate heroin scale to make sure the one drug dealer doesn't get cheated by another. we're told that that you have to be for blockchain because well you rather you have to be for cryptocurrency. otherwise your anti-science i am for the internet. i am for semiconductors. i have four computers. i have four blockchain. that does not mean i have to be for a cryptocurrency or for that matter for that $10,000 bill that would make the lives of some of our constituents easier. we've got to keep pace with china china is close to banning all cryptocurrency. they are going to protect their economy protect their currency and cult protect their tax collection system. if we fail to keep up with

china, we will fall behind. um, the biggest threat the bitcoin is the theorem the biggest threat to ethereum is dodge going the biggest threat to dodge coin is cat coin dog coin and hamster coin. there is an unlimited number of potentially popular cryptocurrency compare that to sovereign currencies. there are limited number of nations, but even then there are four or five big economies. the uruguayan peso will never displace the us dollar. but well ethereum this place bitcoin will hamster coin. it place ethereum. and oh, by the way, if people are going to take the time and effort and the intelligence to create new cryptocurrency, will they have a back door so that they can have a few trillion dollars of their own. we're told that's impossible from the same people who say it's impossible that between 2017 and 2020 more than 19

million dollars worth of bitcoin and ethereum. we're successfully double spent effectively counterfeiting those supposedly hamper free currencies. we are going to have one cryptocurrency after another and those cryptocurrency will will have less and less protection. we're um, i want to commend rashida to leave for talking about the effect on our planet and i ask unanimous consent to put in the record this article for the wall street journal detailing. how whole new or rather how whole coal plants that have been mothball that we're no longer being used are putting back online just to create electricity to mine bitcoin without these document will be entered into the record. one of our witnesses says that traditional financial systems use five times as much energy. yeah, that's to do 500,000 times

more transactions to everything that purchased on this planet at the retail level is purchased with a sovereign currency. um, but so it's the five times is is a tiny percentage. um, we're told that big that the currencies can be a hedge against inflation. we know that a currencies are supposed to be a store of value. well, the dollar does array erode in value, perhaps a quarter of a percent a month. you can buy treasury inflation protected securities and be fully protected from inflation. or you can say that you're trying to get a good store of value. so you're going to invest in cryptocurrency that could lose a quarter of its value if there's a joke on snl as there was recently and as we saw a nearly one quarter drop, um, we're told that we're going to have know your customer know your customer at the level where you're

trading and investing but ultimately these bitcoin is supposed to be a currency and so you transfer to your individual wallet. and there it's totally anonymous. yes, the records are maintained forever anonymously. and with that you have the perfect tool for those who are underpaying their us taxes by a trillion dollars a year concealing three trillion dollars a year in income and that means perhaps 30 trillion dollars that has to be hidden every day. only with cryptocurrency. can we evade the effort to enforce our tax laws? that's why cryptocurrency the general hospital time has that expired accessibility here will request that the gentleman place his question in writing for the record the chair will thank you move to the gentleman from ohio mr. davidson for five minutes for questions. i think the chairman and really

appreciate this hearing we've come a long way in congress and just by having this hearing. so thank you. thank you for the colleagues that have taken time to prepare for it. some know the topic very well and some are just getting acquainted with it and some no matter how well acquainted will remain hostile to the idea. look. i won't spend long on mr. sherman's remarks, but china is building the creepiest surveillance tool in history. we should absolutely not emulate them. the whole fact that china is doing that is why we should be embracing decentralized distributed ledger technology. that is more secure and does protect privacy. we could actually go further to defending freedom and restoring our fifth fourth amendment constitutional protections in the financial sector by embracing the potential this technology not by being hostile to it the third party doctrine has annihilated the whole concept of privacy. and yes, we absolutely should keep the country safe.

i could spend a lot longer, but i'm reminded of proverbs 24's 26 for so i won't spend longer on his comments, but miss sue your testimony is the only one that i saw that discussed tether at length. i'd like to delve into that for a moment and miss goldstein you spoke around the same topic, you know last month. revealed the breakdown of its reserves in their disclosure. we learned that nearly 50% of its reserves are held in unspecified commercial paper of unknown quality. i looked at a few constant net asset value funds or liquidity funds held by larger banks to see how their composition compares to tethers while these funds are not a part of the crypto market they are targeted for investors with surplus cash deposits who seek liquidity from their investments. thus they serve as similar function to to tether or other stable coins what i found when i looked into these liquidity funds was that commercial paper

accounted for around 25 to 30% of their underlying reserves in the net asset value funds. additionally. we know the quality of those commercial paper holdings in its disclosed miss sue based on tether's disclosure. do you think there should be further disclosure regarding? it's underlying concerns? composition yeah, i think that one was the first disclosure ever and new york attorney general's office took actions in investigating the case prior to its mandated disclosures part of the settlement agreement and the some of the argument focused around the earlier promise of fall backing and the weather the disclosure come out to match that early promise. yeah, and definitely relevant piece. it's easy to break the buck particularly when you hold structured credit with none disclosed quality for the

structured credit. so where they're at in the positions really important. it may not actually be a stable coin ms. parker in your written testimony. you said that the sec is not comfortable approving traditional regulated products based in crypto such as a bitcoin etf, even though it would quote provide more transparency into crypto markets you go on to say quote because of this hesitancy, they art, there are a lack of regulated products that are commercially attractive to market participants. ms. parker, can you expand on how regulated commercial products like a bitcoin etf in other traditional regulated products would bring additional consumer protection elements to the cryptocurrency system. thank you congressman. that's a great question. my point really is that there are not the sort of the bitcoin ets the leverage products the margin products that are available on foreign exchanges that us customers are routinely accessing through the internet with a vpn that provides frankly

too much leverage and and you know, they're likely inappropriate for most retail customers. so my point is to to sort of stop that phenomenon. let's counter with you know, having us regulated exchanges securities exchanges futures exchanges a list regulated products that have some form of margin that have some form of leverage that's available to retail customers. that's appropriate for their sort of credit and suitability for their their training experience. so, so let's have this as a us alternative to the foreign exchanges that you as customers can access because it's just a website. so let's have, you know, the bitcoin futures the the margin products the leverage spot products that us customers are desperately retail customers are desperately seeking at the overseas exchange. let's have them in the us. thank you for that. i really appreciate it. it's a great point. some regulation would be good. i'd love to talk more but this is the point of the token taxonomy act that's been

bipartisan from its origins and it would provide some regulatory clarity for what is a security and is not wouldn't do anything with the etfs, but it would provide a basis for it and if we can get to that we really can do a better job of protecting consumers. generally when we were protect consumers, we do provide some regulatory clarity, and we've talked that we've had a great hearing on spacks. you can have an etf inspects, but currently nothing with with bitcoin. so thanks a lot my times expired and i yield the gentleman's time has expired the chair now recognizes himself for five minutes. dear friends. i do have some consternation. and my consternation emanates from 2008 when i as a member of this very committee. down on a lower part of the desk. and i was here when then secretary hank paulson appeared. he said right out in front. i remember cleaver was to my

left. i believe and scott was to my right. the secretary wanted 700 billion dollars he had approxima$700 billion. he had approximately, i thought, five pages asking for $700 billion. i've since read that it was three pages. be that as it may, $700 billion to bail out what were called exotic products at the time. $700 billion. well, as you can well imagine, my constituents were up in arms. they were calling me by the hundreds, demanding that i vote against a $700 billion bailout. being the good steward that i am, i voted against it. as i stood in the courtroom, and i could see the calculation of

votes, there also was a monitor, television monitor, and i could see the monitor indicated that the vote was failing. the stock market was directly proportional to what was happening with the vote. as the bill failed, the stock market was going down. the next day, my constituents were calling by the hundreds, what is wrong with you? you voted against the bailout. my 401(k) is now at risk. i learned an important lesson. do what you think is in the best interest of your constituents, even when they may disagree. this hearing is taking place because i think it's in the best interest of my constituents that we get a better understanding of what we're dealing with.

i remember secretary banacky, i have a statement from him i'd like to read, and i'll do it quickly. here's what he said, he said, this is chairman, the former federal reserve chairman, that the $182 billion bailout of american international group made him angrier than anything in the recession. they took risks with products like hedge funds -- i'm paraphrasing -- while using cash from people's insurance policies. he said the government had no choice but to bail it out. we know aig was the glue holding the world together. the global order together. this is of concern to me, and, ms. hammer and ms. goldstein, if i can get to both of you, i'd like your comments on my

concern. you mentioned fsoc. i don't know how that will help us with a living will, for example. this is of concern to me. who do we manage a thing that, if it fails, it'll bring a sizable portion of the economy with it? you can be so big that if you fail, you'll hurt the economy. ms. hammer, let's start with you. >> mr. chairman, thank you so much for your question, and i fully agree with your statements about the importance of evaluating potential systemic risk where taxpayer dollars are concerned. i often speak in my law class about the difference between an emergency response and a proactive policymaking framework. and the problem with an emergency response is that it's

inherently backwards looking. you create what's known as an emergency state relationship between the actors. we have the opportunity through the fsoc and dodd/frank section 220 to create a proactive policy framework for cryptocurrency. that means gathering and evaluating data, coordinating the agencies, creating a committee that could consult with the many states that are legislating in this area as we speak, and consulting with international standard-setting bodies. and you mentioned living wills, mr. chairman. that is an important point because there are many aspects of our regulatory framework that still need to be ferreted out and relate to cryptocurrency. i strongly believe that's the place to start, and we have resources to do it. by putting together our collective minds, we can tackle this problem. >> thank you. my time has expired. apologies, ms. goldstein. if you would submit comments for the record, i would greatly

appreciate it. dear friends, i thank the witnesses for their testimony and for devoting the time and resources to share their considerable expertise with the subcommittee. your testimony today will help to advance the important work of this subcommittee and of the u.s. congress in understanding and addressing the risk and opportunities inherent in widespread investment in digital cryptocurrencies. the chair notes some members may have additional questions for the potential which they may wish to submit in writing. five days members have to submit written questions to the witnesses and to place their responses in the record. members have five legislative days to submit extraneous materials to the chair for inclusion in the record. i remind members to submit questions to the email address

provided to your staff. dear friends, the hearing is now adjourned. witnesses, i'd like to come down and thank you personally.

chair plaskett: this hearing of the subcommittee on horticulture and research entitled supply chain recovery and resiliency,

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