As U.S. lawmakers wrestle with what to do with Facebook's Libra, they are being forced to confront another digital currency that they've been trying to avoid like the plague – bitcoin. Unfortunately, the longer lawmakers wait, the more left behind the U.S. becomes as crypto innovation goes elsewhere. Even Facebook chose Switzerland for its Libra coin.
Many thanks to Chair @RepMaxineWaters, Ranking Member @PatrickMcHenry, and the rest of the House Financial Services Committee for devoting so much time to discuss Libra today. We will take the time to get this right.
— David Marcus (@davidmarcus) July 17, 2019
Crypto fund manager Brian Kelly worries that it might already be too late. He pointed out on CNBC that while traveling the world, he can't help but notice that "other countries are way ahead of the U.S," saying:
"The U.S. may have already lost the race...It's very concerning to me. Asia is eating the U.S.' lunch. The U.S. is the center of finance. We should take the lead in it."*
He may be right. While the Libra hearings have forced Congress to confront crypto, policymakers clearly haven't changed their archaic approach to the market. How do they plan on forming a regulatory framework for the industry? By creating more committees and taskforces, of course.
"It is inevitable that the Bitcoin ecosystem will continue to grow and contribute to the economy. The question is: where?"
— Jameson Lopp (@lopp) July 17, 2019
Crypto Committee Overload
CoinShares Chief Strategy Officer Meltem Demirors testified before the U.S. House Financial Services Committee today, where she took it upon herself to help lawmakers differentiate between Facebook's attempt at a cryptocurrency and bitcoin. She told CNBC:
"Today what you saw today in the House...was lawmakers are trying to understand what is Libra? Nobody really understands. Libra would like to be a cryptocurrency. That is how Facebook is styling this."
Demirors made the point that "cryptocurrencies aren't going away," pointing to the $266 billion combined market cap of the broader crypto market. Given her front-row seat to Congress, Demirors described an environment in which representatives are ready to provide some regulatory clarity to the market. She is quick to draw a distinction between cryptocurrency and Libra, essentially placing them into two separate buckets.
As for regulation, Demirors appears encouraged,
"Lawmakers are very aware that the U.S. needs to remain competitive, that regulatory clarity is tantamount...I think it's too early to say whether new regulation will be applied. I do think we'll see the formation of a committee to focus on the issue of cryptocurrencies and possibly a subcommittee to focus on the issue of Libra."
If that's the case, then why is Washington, D.C. continuing on this path of committee overload? That appears to be their answer to anything they intend to punt on – form a new group and so far it hasn't led to much fruit. But the good news is that the world now knows about bitcoin. What happens next, at least as far as what role the U.S. will play in bitcoin adoption, will set the stage for decades to come.
*Direct quotes are a rough translation of a live TV interview.