Another Congressional Hearing, December 6-13

The biggest regulatory story this week is the hearing of the US House of Representatives Financial Services Committee, which focuses on encryption. Even the title of the event-“The Future of Digital Assets and Finance: Understanding the Challenges and Benefits of American Financial Innovation”-conveyed a different atmosphere from countless previous congressional meetings, which were primarily about investor protection or safety Risks or threats to financial stability.

Judging from the reactions of many industry participants and experts, this exchange was considered to be overwhelmingly net positive, with legislators asking wise questions, otherwise their goal is to understand this new thing, not to act on preconceived notions. Of course, the question about Bitcoin’s environmental footprint and the anti-crypto rant on behalf of Brad Sherman is boring, but the whole thing ultimately looks a lot like a constructive dialogue between the digital asset industry and lawmakers, this is us Always eager to see.

Below is a condensed version of the latest “Law Decode” newsletter. For a complete breakdown of policy developments last week, please sign up for the full newsletter below.

Heard industry

The hearing was convened by Maxine Waters, Chairman of the Financial Services Commission, Centered Regarding the role of cryptocurrency exchanges, the growth of the stablecoin industry, and general issues surrounding the regulation of digital assets in general.Several top cryptocurrency CEOs Be summoned Represents the encrypted space.

Some prominent topics discussed in the House of Representatives include encryption-driven Decentralization of the digital ecosystem — At a time when many U.S. lawmakers are upset about the power-grabbing of tech giants in the Web 2.0 era, this is a politically favorable angle — and U.S. regulators are reluctant Give way to certain crypto investment products, which may be seen as a symptom of a fragmented regulatory approach. The relationship between the global role of the U.S. dollar and the growing demand for stablecoins has also received much attention.

BIS: Afraid of DeFi?

Just don’t get too excited by the victory in the Congress meeting, a note from the Bank for International Settlements The latest report on decentralized finance all the best. “Central Bank’s Bank” has thoroughly studied the huge DeFi space and put forward some alarmist slogans, such as “decentralization illusion” to describe it.

BIS analysts are concerned about some structural aspects of the DeFi landscape, such as liquidity mismatch and lack of shock absorbers such as banks. The author of the report believes that there is a risk of centralization in the protocols governing DeFi activities, which may result in the concentration of power in these systems in the hands of a few people. These assertions will certainly attract the attention of many people, especially those who are very familiar with the DeFi field.

CBDC watches

From the news about the active participation of its professional department BIS Innovation Center, it can be seen that BIS’s preference for more controllable financial innovation Digital Euro experiment-Based on cross-border settlement, and the central banks of Switzerland and France. The experiment is considered a success, but the parties concerned have made it clear that it does not guarantee the final issuance of a European CBDC.

In other centralized digital currency news, the Reserve Bank of Australia conducted a two-year investigation End with report This highlights the potential of wholesale central bank digital currencies to improve the efficiency of financial market transactions.