The co-founder and CEO of crypto company, Circle, says over the next decade “almost everyone on the planet” will adopt cryptocurrencies. While Facebook’s (FB) cryptocurrency project could help in that effort, Jeremy Allaire told Yahoo Finance it also brings about heightened scrutiny for the industry.
“Ultimately if the Libra Association and its members successfully launch and the Libra cryptocurrencies in use with platforms — not just Facebook's, but Visa’s and Uber's and others — it has tremendous potential to reach billions of people,” said Allaire. “I think it also does bring more attention to the policy issues, and that's a double-edged sword.”
Allaire testified before the Senate Banking Committee in Washington on Tuesday morning. The hearing aimed to examine the regulations for digital currencies and blockchain.
Since Facebook announced its cryptocurrency project, many lawmakers have been quick to criticize it — some even calling for it to be stopped. The intense interest around Libra has reignited concerns about how to regulate digital currencies.
“As Facebook’s and other digital currency efforts move forward, I am particularly interested in better understanding how these technologies may impact individuals’ ability to exercise control over their data, including the right to receive information about and access their data, correct inaccuracies, and delete their data,” said Sen. Mike Crapo (R-ID) in the hearing on Tuesday.
While Facebook wasn’t the focus the hearing, it came up repeatedly.
“There was very clearly a focus around privacy and on how can blockchains actually enhance consumer privacy? I think that sparked, in part, by concerns over privacy issues with Facebook entering into the space,” said Allaire in an interview with Yahoo Finance.
‘Lack of clarity’ is hurting the U.S.
Allaire told lawmakers the United States should put a national policy framework in place and define cryptocurrencies as a new asset class.
“This will require legislation that likely changes our existing commodities, securities, and banking laws, among others. Such policies should have the effect of enabling rapid technological progress within the context of sound risk management,” said Allaire in his prepared remarks.
Allaire argues regulatory uncertainty is making the United States less competitive and unless lawmakers and regulators act, the U.S. will continue to fall behind.
“That lack of clarity, or in some cases guidelines that are far too narrow in terms of what digital assets can be utilized by end users — we believe that's hurting the U.S. right now,” said Allaire.
While he said American companies have lost “considerable” market share, Allaire told Yahoo Finance he believes the U.S. can still catch up.
“I think this can be a catalyzing issue and this is very much like the early commercialization of the internet. And I think if people start to see the impact that can have and policy can move, then I think it can [catch up],” said Allaire.
In his testimony, Allaire stressed the potential upsides of cryptocurrency: from improving access to financial services to fighting financial crimes. Allaire urged lawmakers to adopt regulations that would not stifle innovation.
“It is crucial that governments approach this new asset class with a relatively light touch,” Allaire said in his prepared remarks.
While lawmakers were open to the idea that cryptocurrencies could offer benefits to consumers, they were also skeptical.
“I am all for innovation – especially if that innovation delivers on its promises of improving people’s lives. But big tech companies and Wall Street banks are hiding behind innovation as an excuse to take over important public services that we all benefit from, and should all have a say in,” said Sen. Sherrod Brown (D-OH). “Think about how hard it is to get quality service from Comcast, or about how much of your personal data was leaked by Equifax, or how your privacy was invaded by Facebook. And, we just learned in the last 24 hours, Capital One. Who’s next? We don’t know.”
Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.