Congress must pass legislation to regulate cryptocurrencies before their rapid growth and popularity pose dangers to investors and the financial system, the chairman of the Joint Economic Committee said.
Representative Don Beyer, who is holding a hearing Wednesday on “demystifying crypto,” acknowledged that most lawmakers have a steep learning curve when it comes to digital assets but said it’s vital they provide guidelines for regulators. Beyer added that he’d be “thrilled” if a bill could be passed sometime next year.
“We are trying to get ahead of this,” Beyer said in an interview.
Read more: How Bitcoin Is Edging Toward the Financial Mainstream
It’s an issue that the entire government is struggling with, including law enforcement agencies, regulators and the Treasury Department-led Financial Stability Oversight Council. The pressure to set rules has grown as tens of millions of average Americans have rushed to invest in tokens, making it a roughly $2.6 trillion market.
Beyer said the current crypto craze reminds him of the growth of credit default swaps that preceded -- and ultimately fueled -- the 2008 financial crisis. “People didn’t understand them and people were making money, so they just let them go.”
The Virginia Democrat introduced a bill in July that observers say is the most comprehensive attempt yet to lay out a regulatory regime for cryptocurrencies. It seeks to define which tokens are securities and which are commodities, and gives the Treasury the power to approve dollar-backed stablecoins. The legislation also would authorize the Federal Reserve to create its own digital dollar.
Read more: Stablecoin Risk Spurs U.S. Agencies to Seek Power for Crackdown
Still, the bill has not attracted co-sponsors or a companion measure in the Senate, a sign of the difficulties in getting Congress to act on any crypto legislation. Beyer said he is talking to several House Financial Services Committee members about joining his effort.
The joint economic hearing, Beyer noted, is designed to educate the representatives and senators on the panel, as well as the public, on issues like investor protection and fraud. Scheduled witnesses include Timothy Massad, a former chairman of the Commodity Futures Trading Commission, and Kevin Werbach, a professor at University of Pennsylvania’s Wharton School who studies blockchain technology.
“For most people it’s a mystery,” Beyer said. “Just trying to learn about it, so that we can legislate on it, is a challenge.”
