Six cryptocurrency executives told the U.S. House Financial Services Committee Wednesday (Dec. 8) that it could send cryptocurrency activity underground or outside the U.S. if the new rules it imposes on the industry are too strict, according to a Reuters report.
“Without tailored legislative solutions that are openly debated with public participation, the United States risks unnecessarily onerous and chilling laws and regulations,” said Alesia Haas, chief executive of Coinbase Inc, in her testimony released Tuesday (Dec. 7).
“This could effectively push crypto activity underground or to offshore exchanges that have little or no compliance programs,” she said.
Congress is expected to push crypto execs to defend the industry and help them with ideas to regulate the space during the hearing.
“To us, it would be productive if executives present a pro-active agenda for what Congress can do to ensure consumer and investors are protected, the government gets its taxes and criminals and terrorists are blocked from using crypto,” said Jaret Seiberg, an analyst at Cowen Washington Research Group, in a note to clients.
Several executives who are expected to testify will push Congress to tread lightly on its oversight and regulation of the digital currency world.
“There are a number of examples of U.S. regulatory decisions that have driven legitimate activity offshore, in ways that harm U.S. investors, innovators, and workers,” said Bitfury CEO Brian Brooks in the Reuters report. “There is a reason why crypto talent is no longer concentrated in Silicon Valley, the birthplace of the original commercial internet.”
Related: Regulators Focus on Crypto, Hoping to Avoid Another Post-Crisis Reckoning
The Office of the Comptroller of the Currency (OCC)’s Semiannual Risk Perspective report named digital assets in the banking sector as one of four key operational risks facing the banks it oversees.
Acting Comptroller of the Currency Michael Hsu is hoping that being proactive in regulating digital currency will keep another financial crisis from crippling the sector. The EU has been aggressive in enacting preemptive regulation, while India is discussing it after China’s lead in banning crypto outright.
The agencies are working to craft rules related to crypto custody, helping customers buy and sell digital assets, crypto asset-backed loans, issuing and using stablecoins and banks holding crypto assets on their balance sheets.
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