US senators are not convinced that cryptocurrencies could be used for positive purposes. During a House Financial Services Committee hearing titled ‘The Future of Money: Digital Currency,’ four witnesses spoke before the house to highlight the state of cryptocurrency. Proponents suggested that cryptos being used for illegal activities is not enough to criminalize their use. However, there was harsh criticism of digital currencies and the demand for an outright ban was discussed.
Statements Favoring Cryptocurrencies
Of these, Dr. Michel presented a striking case in favor of digital assets. He noted that cryptocurrencies and blockchain technology have the potential to change the financial industry, and hence they “should be fostered, not smothered.” He also suggested that cash is still a preferred method of payment, even though its demise has been predicted since the 1970s.
His long and informed testimony to the government included the idea of letting competition surface in financial business so that consumers and businesses could take advantage of the best payment methods. If the federal government enters the market, it will tilt the playing field. Instead, it should embrace the fact that cryptocurrencies are still in their nascent stages and that all forms of money should be looked upon neutrally.
To level the playfield, Dr. Michel suggests that the government must remove capital gains taxes from the purchase of cryptocurrencies and foreign currencies and let government services accept them as payment.
The Argument Against Cryptocurrencies
Rep. Brad Sherman presented the harshest criticism of digital currencies during the hearing. He said:
“We should prohibit U.S. persons from buying or mining cryptocurrencies. Mining alone uses electricity which takes away from other needs and-or adds to the carbon footprint. As a store, as a medium of exchange, cryptocurrency accomplishes nothing except facilitating narcotics trafficking, terrorism, and tax evasion.”
While his arguments stand true, as many crypto enthusiasts will agree, these are not the only aspect of cryptocurrencies. While they can and have been used by criminals, they could also enable faster and cheaper payments globally.
During the hearing, Rep. Rick Allen said that he could not visualize how this system would work. Rep. Collin Peterson said that “there’s a lot of things here that don’t make much sense to me.”
Cryptocurrencies are a complicated subject, and we cannot blame the reps for not understanding everything completely. However, if there must be regulation, it would be worthwhile if the lawmakers know the fundamental value proposition and use cases of digital currencies.
For the full version of the House hearing, check video below.