Chairwoman Stabenow Opening Statement at Hearing on Digital Assets: Risks, Regulation, and Innovation
WASHINGTON – U.S. Senator Debbie Stabenow (D-Mich.), Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, today released the following opening statement at the hearing titled, “Examining Digital Assets: Risks, Regulation, and Innovation”. Live video of the hearing is available here.
Stabenow’s statement, as prepared for delivery, follows:
Good morning and welcome to today’s hearing on digital assets. Thanks to Ranking Member Boozman and his staff for working with us on this bipartisan hearing. And welcome to Chairman Behnam and our witnesses. I am really looking forward to today’s discussion.
Thirteen years ago, Bitcoin was introduced to the world as a new form of digital money that people could exchange online without going through a bank. This novel technology aims to democratize our financial system and offer new tools for those who do not have access to traditional banks or reliable currencies. Since then, thousands of digital assets—sometimes called “cryptocurrencies”—have sprung up. Unlike traditional fiat currencies, however, cryptocurrencies are not backed by the full faith and credit of a central bank.
And wild swings in value can make digital assets a risky form of payment and unreliable store of value. Given its instability, you can’t reliably use Bitcoin or other digital assets to pay your mortgage or for other everyday purchases. This is not to say that digital assets are without promise. Every American, whether or not they have a bank account, should be able to send money to their loved ones quickly and easily. And our financial markets should be accessible to the average investor, not just the wealthy. It is worth pursuing technology that will make the financial system work for everyone. But to truly work for everyone, we need to ensure appropriate protections.
Americans are buying and selling digital assets using online exchanges, many of which are unregulated or not held to the same standards as traditional financial institutions. This poses unacceptable risks to consumers and could lead to instability in our financial markets. Fraudsters have already stolen billions of dollars in assets, leaving customers with no recourse. And some platforms fail to prohibit abusive activities like insider trading.
Last month, we saw the value of digital assets plummet, wiping out more than $1 trillion in wealth. And one-third of Americans who have traded digital assets earn less than $60,000 a year. New technologies are making it easier for Americans to buy crypto with the press of a button—however, this ease of access can backfire when their assets drop in value overnight.
Finally, we cannot overlook the outsized climate impacts of Bitcoin and other digital assets. Astonishing amounts of energy are currently being used to “mine” certain digital assets. When those sources of energy are fossil fuels, digital assets threaten our progress in fighting the climate crisis. The carbon footprint of this technology must be addressed.
Digital assets may have been designed to democratize the transfer of money, but that does not mean they should operate outside of the rules. History has shown us, time and again, that this is a mistake.
The good news? Regulation and innovation are not mutually exclusive. If they were, our financial markets would not be the strongest in the world. But we can’t afford to wait until the next crisis. Congress must work with regulators and the Biden Administration to design a framework that protects consumers and our environment and keeps our markets fair, transparent, and competitive.
The CFTC will play a key role in that effort. It currently regulates digital asset derivatives and polices fraud in the spot market. I look forward to hearing from Chairman Behnam about the work his agency is doing in this space, the challenges it presents, and what we can do to make these markets safer for everyone. With that, I’ll turn to Ranking Member Boozman for his opening remarks.
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