Patrick McHenryChairman

Washington, December 9, 2021 -

Today, the top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), joined Yahoo Finance to discuss yesterday’s hearing with CEOs of digital assets organizations, Web3, and the future of crypto regulation in the U.S.

Watch the full interview here or by clicking the image above.

Read excerpts from Republican Leader McHenry’s interview:

On burdensome regulations pushing digital asset innovation overseas:

“I don't think it's a question of tough or lax regulation. We currently have, as members learned yesterday, members of the House learned yesterday, we currently have a regulated space for cryptocurrencies in the United States. They're adhering to existing laws. What we have the risk of is poor regulation, bad regulation, dumb regulation that then drives this innovation somewhere else.

“We have a question of, really, whether or not the United States wants to be competitive and in Web3. And if we want to be the innovators, we want to be the leaders in the space, like we were the leaders in the space in Web 1 and 2, we have to make sure that we embrace this technology and have a fulsome embrace of it at the federal level so that it can grow and flourish here and get all the benefits here at home.

On the next steps for digital asset policy in Congress:

“Well, look, we have a 13-year-old technology. You know, 13 years after Satoshi wrote the Bitcoin whitepaper, Congress is having its first hearing on Bitcoin and blockchain technology. 13 years later, $3 trillion market cap. So, one hearing does not-- should not bring about policy. We should have more hearings about this to understand, to understand more deeply the nature of this technology and Web3.

“So, I think we need more hearings of greater understanding of the nature of digital assets and its potential. And that's before we get into the question of what are the necessary next steps.

“And I don't think we need a full rewrite of laws. I think we need some modest changes to existing laws to make sure that they're tech neutral. And in that way, we can use the benefits of this new technology here in the United States and let them fit into-- let our regulators embrace these things in a proper way.”

On the urgency surrounding digital asset regulation and the risk of Congress moving slowly:

“Well, first of all, everyone on that panel yesterday was adhering to current laws. And so-- and I think members of Congress were surprised to hear that there is serious regulation in this marketplace, money transmission licenses in states. We have the CFTC in one place. You have a method for ICOs with accredited investors through securities regulation.

“We have this layering on of adherence to existing laws. What we don't have, though, is a full embrace of the technology and regulations that are sort of forward with a forward-looking view and an embrace of this technology. We need to work on those things.

“So let me just tell you. For Congress to come in 13 years after this technology developed and have one hearing and then say, we have all the answers, is really bad, even for Congress. We need to make sure that we're deeply informed. And right now, policymakers on the Hill, by and large, are barely modestly informed. So, we need to have a measured approach, rather than a precipitous approach. I think a precipitous approach would harm innovation here in the United States, rather than the measured approach that I think we should seek.”

On stablecoin regulation and the President’s Working Group on Financial Market’s stablecoin report:

“Yeah, I think stablecoins is the soft entry point here by which we can build consensus in a bipartisan way and create law. This is something that regulation alone cannot adapt and embrace. We need to have at the federal level, we need to have changes in law in order for stablecoins to actually be in the marketplace.

“What we heard yesterday, though, is a great deal of skepticism on both sides of the aisle about the president's working group approach, which is to say, only FDIC insured institutions can issue stablecoins. There was skepticism by both parties on that account. I think there is a realization that stablecoins have different attributes. Some are a store of value, whether it's a savings account or money market account. Others are a method of payment. So, they look much more like a payments regulation regime.

“And so, we have to make sure that we have law and regulation coming out of that new law that allows for optionality here at the Federal level, based on the nature of what will be done with that stablecoin. Not all stablecoins are made the same. But we need to make sure that they have appropriate capitalization and appropriate regulation for us to get the full benefit out of the entry point to Web3.”

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