Supporters of cryptocurrency believe it to be a secure and efficient modern mode of payment, but regulators are concerned about potential risks to financial stability. If nothing else, Congress’ increased focus on cryptocurrency and Big Tech regulation and enforcement is a clear reflection of how entrenched and important these assets have become.
U.S. Rep. Patrick McHenry, Republican Leader of the House Financial Services Committee, told PYMNTS CEO Karen Webster about the challenges involved in navigating the political landscape for digital currencies and his concerns about regulating Big Tech.
On Regulating Cryptocurrency
“With the acknowledgment that the existing regulatory regime has done well so far, but for us to be the leader in the next generation of internet technology, we need a new regime built around the nature of digital assets — the current law and existing regulatory structures does not match the unique nature of those assets,” said McHenry of North Carolina.
As a staunch proponent of the notion of the internet of money, McHenry shared that the regulators in Washington do not have the legal authority to do the things that U.S. Securities and Exchange Commission Chair Gary Gensler claims. He believes that the regulators need to have a better knowledge of the technology defined under the federal law of digital assets and understand its effects and implications on the financial space to set a proper regulatory regime built off of the unique characteristics of digital assets.
“Congress has to define [the framework for digital assets]. It is in the nature in control of law, not in the nature in control of the current regulators,” said McHenry when asked about the authority responsible for developing and classifying the framework.
He shared that the current state involves lesser informed policymakers attempting to legislate in a pretty complicated domain. The infrastructure bill passed by the Senate in July made it evident that the House of Representatives has a poor definition of digital assets. Coupled with the non-commiserative regulatory and tax regime, he fears it to be a problematic situation.
See also: SEC’s Gensler Cautions $2T Crypto Space Needs Oversight for Survival
McHenry believes that the enactment of such a regulatory regime would enormously harm the technology. He wants to make sure that policymakers are smart about the subject matter and reward and encourage innovation, not destroy it.
“If we see regulation coming out of this Congress in the next three months, it will be horrible. A slow and methodical process is needed here so that we can foster innovation and still be a global leader when it comes to technology,” said McHenry.
See also: From Taxes To Trading, Federal Scrutiny of Crypto Regulation Is On The Rise
On Regulating Big Tech
“I would rather have global internet giants be American companies than be Chinese companies,” said McHenry when asked about whether the Chinese government’s crackdown and “hobbling” of Big Tech sounds eerily familiar to the tone and tenor of Congress.
The innovation capabilities that Big Tech giants have established and spawned in the U.S. have a lot to credit to the American capitalist system. However, it is concerning that both parties on Capitol Hill repeatedly bring up poor proposals surrounding big tech that can have detrimental effects in the long term.
See also: Attorneys General Ask Congress to Regulate Big Tech
Expressing his concerns, McHenry said that the political discussions have overlaid the regulatory and legal structure in this matter. Referencing the last presidential campaign, he shared that the debate surrounding what was permitted to be on Facebook or Twitter has overlaid what should have been more focused attention on the rules-based regime for these entities.
“I hope over the long term, cooler heads will prevail and we can do smart things to encourage and foster competition rather than take a sledgehammer to the greatest growth engine we’ve seen over the last generation, which is technology development and innovation,” said McHenry.
Credit Access for SMBs
PYMNTS data has pegged the dollar volume of outstanding receivables to suppliers to be about $3.1 trillion on any given day of the week in the U.S., with 30% of this sum paid late, often more than a month beyond whatever terms had been established between the buyer and the supplier. Because of their size and the large percentage of transactions they represent, small to midsized businesses (SMBs) are especially vulnerable to the financial impacts of this situation.
To curb the consequences of late payments, SMBs tend to offer as much as 4.8% discounts just to get paid on time or earlier in the process, a concession that further complicates the issue as it becomes costly for SMBs to become creditors for larger firms that can pay them sooner.
“Having a report of this magnitude raises awareness and furthers the discussion in public policy,” said McHenry.
The small business committee at the federal level has been focusing on access to capital, specifically for small businesses. McHenry believes that hearings are needed to understand the issue better and determine what can be done to close the gap and help small businesses get the resources they need to survive to thrive.
“It’s been a well-known precept that large businesses will demand extraordinary terms from their [often smaller] suppliers. We know that, but to have the data is the most powerful thing for us to do something about it. And [PYMNTS’] report provides us that capacity to look more deeply at the things that we can do to wrestle with this,” said McHenry.
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