Document Type

Testimony

Publication Date

Summer 2025

Location or Event Name

Congressional Testimony Before the U.S. House of Representatives Committee on Financial Services

Abstract

When we hear from the crypto industry that existing regulation is incompatible with their technology, that is a misdirection. It is entirely possible for a blockchain-based technology business to comply with existing investor protection and financial stability regulation. However, for many crypto businesses, it may be true that existing regulation is incompatible with the economics of their business model, especially if their business model depends on doing things that we have learned, over the years, tend to harm people. But we have little to lose as a society from limiting the profitability of this kind of business model; unfortunately, the contemplated bill is designed to supplant existing law in order to ensure the profitability of the crypto industry.

The bill offers fewer investor protections than the existing securities laws, and was intentionally designed in this way in order to accommodate the crypto industry’s current market structure. This bill will also give crypto assets a veneer of legitimacy, making it easier for fiduciaries operating pension funds and 401k plans to invest in them. Also, the deregulation facilitated by these kinds of bills can run both ways: by providing the crypto industry with “lighter touch” regulation than traditional finance, they encourage traditional financial institutions to refashion their services as crypto services in order to be able to take advantage of the lighter touch regime.

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