The hearing will come to order. Last congress this Committee Held two hearings examining the currency ecosystem. Those hearings we heard about some of the developments that have occurred and tha and and tr ijokerin the marketplace since e creation in 2008. The potential benefits of the Digital Currencies and the concerns about the value of stability, quality and illicit uses market manipulation and privacy. Since then facebook announced its intentions to launch the system into Digital Currency that will be governed by the association comprised of up to 100 financial and nonfinancial members including facebook digital wallet service. Facebook project generated renewed interest in Digital Currency and watching generally including how they interact with u. S. And International Regulatory potential benefits and challenges and concerns around issues like antiMoney Laundering in counterterrorism efforts including data privacy, Consumer Protections, commerce and Monetary Policy. David marcus joined the company to provide an update on the proposed Digital Currency. During that hearing, he emphasized the importance plans and commitments including that there are a number that regulators globally that are engaged o on this project including the Federal Reserve cut Financial Conduct Authority and more. The association will have the highest standards and no Financial Data collected will be shared with facebook and will be headquartered in switzerland but will still register and have oversight from u. S. Regulators. While it may have begun the conversation, the crypto currency system is diverse. It seems to me these technologies and other Digital Innovations are inevitable and could be beneficial and i believe the u. S. Should lead under development. That cant happen without the rules of the road as the u. S. Develops a more comprehensive regulatory approach, care must be taken determined the gaps in the framework. The treasury secretary said to be clear the u. S. Welcomes responsible innovation including new technologies that may improve the efficiency of the Financial System and expand access to Financial Services. That being said with respect to the other developments in the currencies the overriding goal is to maintain the integrity of the Financial System and protect it from abuse. He also noted the treasury has concerns regarding the misuse of Digital Currency by money launderers, terrorists and other data players. As Digital Currency efforts moved forward, im interested in better understanding how the technologies may infect individuals ability to exercise control over their data including the right to receive access to the data, correct inaccuracies and deletes the data. During the hearing and look forward to hearing more about how the market for the Digital Currency has grown and evolved over the last decade and a different types of Digital Currencies in the marketplace including the differences with the proposed Digital Currency, how other countries are approaching the regulations of the Digital Currencies at watching technology and what we might learn from the success and failures and potential gaps to the existing frameworks and whether distributed technology can help facilitate the privacy for individual data and approaches congress should continue in their Regulatory Regime for the currencies including ensuring individuals have real control over their data. With the appropriate balance of regulation, Digital Currencies and innovation and underlining technologunderminingtechnology e meaningful benefits and i look forward to hearing more about the ecosystem during this hearing. Senator brown. Many of us in both parties is easier from the chair voiced concerns, serious concerns about the plan to run its own currency out of a Swiss Bank Account by and large we mostly heard deflections and dodging what we mean when we say they dont understand accountability face that has proven over and over to scandal after scandal that cannot be trusted but they just dont care. They move fast and break things. But the political discourse now they want to bring the systems in the innovation and innovate americans out of their hardearned paychecks and the corporations say they want to innovate. Bankers were pitching an innovative project like facebook which claims that it will help the own bank. They ripped off millions of families that lose their homes and wrecked the economy as they become tree even worse. The banks managed to stick everyone else with the bell about the kind of innovation most of us were hoping for. So i offer innovation on the promise of improving peoples lives. But wall street banks are hiding behind innovation as an excuse to take over imported the services we benefit from and should have a say in. There are some things the system everyone in the country has a stake in. We shouldnt be having those kind of Public Resources over and asked him to do with think how hard it is to get Quality Service to know how your privacy was invaded by facebook or how much of your data was leaked and weve learned in the last 24 hours so we should be a little suspicious when someone calls us oonly big corporations can be trusted to provide a critical public service. I recently moved into a new office will. Rarely he was an innovator at the First American to orbit the earth as we know is that part of the mercury project which will be followed by the Apollo Missions and many of us that are old enough joint in the celebrations of the 50th anniversary at least some of us were old enough joined in the 50th anniversary. We all did that but remember the day 50 years ago just this month. None of the astronauts did it alone. It took the hard work of innovating scientists and engineers and most of them unknown people. They didnt do it for profit if they did it to serve their country and successes were shared by every american who is all usa on the side of the apollo 11 and its a reminder that some infrastructure works better as a public good for the big banks to get their hands on their public goods. Federal reserve and other watchdogs need to continue to be leaders in beijing innovation if we dont move quickly to improve the infrastructure not just roads and bridges in the sewer systems but the Payment System if we dont move quickly to improve if we end up with big corporations that have broken our trust again and again and again and that doesnt make any sense. I look forward to which of these technologies might actually help regular americans. Thank you, senator. Todays witnesses are mr. Jeremy, cofounder and ceo of circle on behalf of the Block Chain Association and rebecca nelson, special International Trade finance at the Congressional Research service and professor of law at the university of California Law school. Id like to assure you your testimony has been entered into the record and encourage you to try to follow the fiveminute rule by watching the clock in front of you sweet time to ask you our questions and with that lets begin in the order i introduce to you. It is my pleasure to appear before you today to testify about the promise of Digital Access and watching technology. I spent the past 25 years building Internet Technology in the united gets serving millions of businesses and hundreds of millions of consumers. In 2013 i cofounded a global Digital CurrencyCompanies Seeking to make it much easier for people and businesses everywhere to create and Exchange Value with the same is that we create and share information and content on the internet. Id like to start by touching on some of the challenges i see in the global Financial System today. Billions of people lack basic access to Financial Services and those who do have access to a system of exorbitant fees and excessive risk. The Banking System is riddled with Money Laundering and crying with annual proceeds laundered in the Financial System exceeding 2 trillion is 90 of f laundering going undetected. The Financial System is also overwhelmed with privacy violations and data breaches, cyber criminals in hostile nations can continue to take aim at the financial and restricto restrictorkava causes spiraling into the situation seems to be getting worse. Access to capital for Small Businesses is extremely limited Capital Markets preserved only the Largest Companies and those with access to the Venture Capital and very few people have the chance to even invest in the startup companies. Theyrthey absolutely can be a r future ahead despite billions of people on the mobile devices and payments will become a commodity free service on the internet. A new set of internetbased global Capital Markets built on Digital Assets will emerge opening up Capital Markets for businesses and investors everywhere, scaling from todays thousands of companies to a world where every person in the business can directly Access GlobalCapital Markets to the same ease that the access to ecommerce marketplaces. Commerce relationships will increasingly be running providing ecommerce environment with greater security, efficiency, transparency, and impossibility. A new decentralized form of Digital Identity will become available, allowing for much safer use of Digital Service and which will radically improve the privacy while more effectively sorting through the financial crime. As the new fundamental layer of internet infrastructure they will transform the Global Economic system. The significant issues are at stake and in the United States, regulatory uncertainty into the applicatioand theapplication ofe led to the loss of significant opportunities. This has had an impact on the competitiveness of u. S. Companies with those continuing to dominate the market that is backed word rather than the forwardlooking. Congress should consider new laws that protect consumers while not causing them to fixate on centuryold definition. The result of the uncertain restrictive Regulatory Environment has led many projects and companies to domicile outside of the United States and to block u. S. Persons and businesses from accessing the products and technologies. We have received a license under the forwardlooking Digital Asset business act which provides a comprehensive Regulatory Framework for companies in the industry and we are in the process of moving or International Products and services out of the United States. It is vital if we allow innovators to room to grow in the United States, congress should adopt a National Policy to define it establishes Digital Assets as a new class including appropriate rules and exemptio exemptions. Without a National Policy framework for the Digital Assets im concerned that the United States will not be the world leader in this Critical New Technology that will continue to fall behind and that will not reap the benefits of economic transportation of the Digital Assets will bring. Thank you for your increased interest and attention to this significant area of opportunity and i look forward to hearing the questions and opportunities. Doctor nelson. Good morning, chairman, Ranking Member round and members of the committee thank you for inviting the Congressional Research service to testify on examining the recovery framework for the Digital Currency and chains. Chains. Chains. The testimony focuses on the International Landscape of the currencies. I will summarize my statement with these remarks. In 2009 it was launched as the first crypto currency. They are digital representations of value. Generally administered using distributed to allergy and have no status of legal tender. Crypto currency payments are cheaper and faster. Today more than 2200 are in circulation. In terms of market size for whether they are currently a small market. Some Central Banks and multinational corporations are looking to take the currencies in the mainstream. If they move forward there could be numerous policy implications for the United States including Financial Stability, the u. S. Dollar, Consumer Protection, Money Laundering, privacy considerations and policies. First the patchwork of the currency regulation around the worlworld from and the second tg interest and third the game changer for the market. The first point is that patchwork of regulations around the world. Crypto currency or international regulated by government of the national level. More than 190 countries in the world taking different approaches to the regulatory issues presented. For example, the regulations have at it uses, Consumer Protection, security regulatio regulations, licensing reporting requirementsfor Money Laundering regulations and tax. Broadly speaking they approach across the spectrum. On one end of the spectrum some countries such as singapore and switzerland are striking to become crypto currency. The new crypto currency is a potential source of growth and to be actively attract joker into the favorable regulation and tax regimes. On the other end of the spectrum some countries including china, india, egypt and taiwan have strongly restricted crypto and hes focusing on the government control of the sector, Financial Stability and Consumer Protection. In the middle of the spectrum some of the governments are allowing this while developing regulations to minimize risk. Most economies including the United States and United Kingdom have adopted this approach. Differences in Financial Regulation across the countries can lead to instability especially crypto currency is adopted on a larger scale. The second point is that some Central Banks are exploring the creation of their own crypto currency. Some plan to develop crypto currency as a legal tender for the Marshall Islands a crypto currency code is offering to raise government revenue and venezuela launched the petro backed by oil as a way to earn money and sanctions. Iran and russia are considering the crypto currency at least in part to avoid sanctions. Others are considering making digital versions of the existing currencies directly available to individuals. For example, swedens reliance on private Payment Processing come these. The policy implications of such initiatives would depend on which countries are involved and how the new currencies are structured. The banks with most are refraining from such initiatives at this time. The third point is that facebook has the potential to be a game changer for the currency. In june they announced the proposal for the new Global Crypto currency to be used by billions of people. It would be backed by the assets, nominated in the currencies. The association of nonprof