On July 30, 2019, Circle CEO Jeremy Allaire testified on behalf of the Blockchain Association before the Senate Committee on Banking, Housing, and Urban Affairs. Mr. Allaire discussed the need for clear regulations in the crypto industry as well as the potential benefits and different applications of blockchain technology. We are grateful that the Committee asked the Blockchain Association to represent the industry in this important hearing and look forward to continuing our dialogue with policymakers in order to ensure that the United States remains a leader in this growing field.
Mr. Allaire’s oral testimony can be found below and his written testimony can be found here.
Oral Testimony of Jeremy Allaire
Thank you Chairman Crapo, Ranking Member Brown, and the members of the committee. It is my pleasure to appear before you today to testify about the promise of digital assets and blockchain technology.
I have spent the past twenty-five years building internet technology platforms and companies in the United States, serving millions of businesses and hundreds of millions of consumers.
In 2013, I co-founded Circle, a global digital currency company seeking to make it much easier for people and businesses everywhere to create and exchange value with the same ease that we create and share information and content on the internet.
I’d like to start today by touching on some of the challenges I see in the global financial system.
Billions of people lack basic access to financial services. Those who do have access face a system with exorbitant fees and excessive risk.
Our banking system is riddled with crime and money laundering, with annual illicit proceeds laundered through our financial system exceeding $2 trillion, and with 99% of laundering going undetected.
Our financial system is also overwhelmed with privacy violations and data breaches. Cyber criminals and hostile nation states continue to take aim at our financial infrastructure. The costs of this are spiralling, and the situation seems to be getting worse.
Access to capital for small businesses is extremely limited, with capital markets reserved for only the largest companies and those with access to venture capital, and very few people have a chance to even invest in these startup businesses.
This existing system is in desperate need of transformation.
There absolutely can be a better future ahead, one built on digital assets and blockchains. These technologies represent one of the most significant innovations in modern history, on par with the invention of the commercial internet. In terms of economic impact, I believe that blockchains and digital assets will be viewed as more impactful than the rise of joint-stock corporations, double-entry bookkeeping and modern banking.
In the coming decade we will see a series of profound changes:
As a new and fundamental layer of internet infrastructure, blockchains will transform the global economic system. They will also increase our privacy and data security, and reduce the risks society faces from centralized internet platforms.
With respect to the policy and regulatory issues facing the world with the growth in digital assets, there are significant issues at stake.
In the United States, regulatory uncertainty and the application of laws that do not contemplate digital assets has led to the loss of significant opportunity. The Securities and Exchange Commission, for example, is forced to apply federal laws written in the 20th century to technologies created in the 21st.
This has had a material impact on the competitiveness of US crypto companies, with Asian-based companies beginning to dominate the market, and is a backward- rather than forward-looking approach. Congress should consider new laws that protect consumers while not causing companies to fixate on nearly century-old definitions rather than innovation.
The result of the uncertain and restrictive regulatory environment has led many digital asset projects and companies to domicile outside of the United States and to block US persons and businesses from accessing products and technologies. In Circle’s case, we have received a license under Bermuda’s forward-looking Digital Asset Business Act, which provides a comprehensive regulatory framework for companies in this industry, and we are in the process of moving our international-facing products and services out of the United States.
It is vital that we allow innovators room to grow here in the United States. Congress should adopt national policies that define and establish digital assets as a new asset class, including appropriate rules and exemptions.
Without a national policy framework for digital assets, I am concerned that the United States will not be the world’s leader in this critical new technology, that it will continue to fall behind, and that it will not fully reap the benefits of the economic transformation that digital assets will bring.
Thank you for your increased interest and attention to this area of significant opportunity. I look forward to hearing your questions and opinions.