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House Financial Services subcommittee hears competing calls for a federal digital‑assets framework
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Summary
The House Financial Services subcommittee on digital assets, fintech and artificial intelligence held a hearing titled “A Golden Age of Digital Assets, Charting a Path Forward,” where lawmakers and industry witnesses urged Congress to write federal market‑structure and stablecoin rules to provide clarity for exchanges, issuers and investors.
The House Financial Services subcommittee on digital assets, financial technology and artificial intelligence held a hearing titled “A Golden Age of Digital Assets, Charting a Path Forward,” where lawmakers and industry witnesses pressed for clearer federal rules governing stablecoins, exchanges and decentralized finance.
Chairman Stile opened the hearing and said the technology “presents a clear opportunity for the advancement of financial services in the United States,” while urging Congress and regulators to provide legal certainty so U.S. firms can compete globally. Representative Stephen Lynch, the subcommittee’s ranking member, warned that cryptocurrencies remain “highly volatile and speculative” and urged stronger consumer‑protection and anti‑money‑laundering safeguards.
The hearing brought five witnesses: Jonathan Yajem of Kraken, Ji Kim of the Crypto Council for Innovation (CCI), Coy Garrison (attorney), Jose Fernandez de Ponte of PayPal, and Timothy Masid (research fellow at Harvard Kennedy School). Witnesses largely agreed on the need for a statutory framework but differed on how to allocate regulatory responsibility and on the strength of consumer protections.
Kraken’s witness described the business case for federal clarity, saying the company serves “over 15,000,000 customers around the world” and “custodies over 42,000,000,000 in assets on our platform,” and argued that clear rules would encourage investment and keep operations and jobs in the United States. CCI emphasized the economic scale of the market, noting a global digital asset market cap cited in testimony of more than $3,000,000,000,000 and a stablecoin market exceeding $200,000,000,000.
Several witnesses and members urged Congress to act on two priorities: (1) a market‑structure regime for spot trading of crypto assets and centralized intermediaries, and (2) a federal framework for dollar‑denominated payment stablecoins. Witnesses recommended statutory clarifications that would assign spot market authority and supervisory responsibilities (some urged CFTC spot authority for commodities; others urged coordinated or joint frameworks) and create tailored disclosure, custody segregation, reserve and governance standards for stablecoin issuers.
Concerns raised during the hearing included consumer protection, anti‑money‑laundering enforcement, bankruptcy and resolution for failed stablecoin issuers, and the risk of market migration offshore if the United States fails to deliver clear rules. Research testimony cited a 2023 figure that Americans lost about 5,600,000,000 to crypto scams and that illicit addresses received roughly 40,900,000,000 in cryptocurrency; witnesses called for rules on disclosures, operational risk management, and enhanced AML/CFT perimeter measures.
Timothy Masid urged stronger resolution mechanics for failed issuers and said the STABLE Act discussion draft has useful provisions but “does not address the bankruptcy of a stablecoin issuer” sufficiently, recommending a dedicated resolution process. PayPal’s Jose Fernandez de Ponte described PayPal USD (PUSD), a Paxos‑issued, U.S. dollar‑backed stablecoin used for commerce and remittances, and said properly regulated stablecoins can lower cross‑border costs and increase payment speed.
Members from both parties pressed witnesses on jurisdictional lines between the SEC and CFTC, the proper scope of federal versus state charters for stablecoins, the role of the Federal Reserve in digital payments infrastructure and the Consumer Financial Protection Bureau’s consumer‑protection remit. Representatives repeatedly cited prior regulatory uncertainty and “regulation by enforcement” as drivers that pushed companies and innovators offshore.
No formal committee votes or markups occurred during the hearing. Members referenced multiple bills and discussion drafts — including the STABLE Act (discussion draft), FIT 21 Act, Token Taxonomy Act, the New Frontier in Technology Act, the Bridge Act, and proposals described as the CBDC Anti‑Surveillance State Act and the Securities Clarity Act — but the hearing was a policy‑and‑information session rather than a markup. Several members said they intend to advance legislative text in this Congress that would set jurisdictional lines, require reserves and disclosures for payment stablecoins, and create market‑structure rules for centralized exchanges.
The hearing record and witness testimony emphasize five near‑term legislative priorities reported by witnesses and members: clarify jurisdiction between SEC and CFTC for spot markets; establish a federal supervisory framework for dollar‑backed payment stablecoins with minimum reserves and governance standards; require custody segregation and anti‑commingling rules for customer assets; create a dedicated resolution regime for failed stablecoin issuers; and strengthen AML/CFT application across on‑ and off‑chain activity. Several witnesses recommended cooperative supervision between federal and state authorities where state charters persist.
The subcommittee left the record open for five legislative days for additional materials and questions. Members and witnesses said they expect ongoing hearings and negotiations on competing drafts that seek to balance innovation, consumer safety and national security.
