Since the creation of bitcoin in 2008. Facebooks project has generated renewed interest in Digital Currencies, including how they react with u. S. And International Regulatory frameworks, the potential benefits and challenges they pose, and concerns around issues like antiMoney Laundering and counterterrorism efforts, including data privacy, Consumer Protections, commerce, and Monetary Policy. A few weeks ago, the head of the program joined the committee to provide an update on facebooks proposed Digital Currency. Somearcus emphasized important points and commitments. There are a number of regulators globally engaged on the facebook project. They will have the highest standards when it comes to data privacy and no Financial Data or account data that is collected will be shared with facebook. It will be headquartered in geneva switzerland, but will and haveistered oversight from u. S. Regulators. Though it may have begun this conversation, the block chain and cryptocurrency system is diverse. It seems to me that these technologies and other Digital Innovations are inevitable. They could be beneficial, and i believe the u. S. Should lead in their development. Happen without clear rules of the road. Develops regulatory may need to bere a look at gaps that could develop in the framework. Treasuries secretary mnuchin said the u. S. Welcomes new innovation that could include the Financial System stability and expand access to Financial Services. That said, our overriding goal is to maintain the integrity of our Financial System and protect it from abuse. He also noted that treasury had serious concerns regarding the growing misuse of Digital Currencies by money launderers, terrorist financiers, and other bad players. As Digital Currency efforts move forward, im particularly interested in better understanding how these technologies may impact individuals ability to control their data, including the right to receive information about and access their data, correct inaccuracies, and delete their data. During this hearing, i look forward to hearing more about how the market for Digital Currencies has grown and evolved over the last decade, different types of Digital Currencies in the marketplace, including their differences with facebooks proposed Digital Currency, how other countries are approaching the regulation of Digital Currencies and Block Chain Technology and what we might learn from their successes and failures, potential gaps in existing Regulatory Frameworks, whether distributive technology can help to facilitate meaningful privacy for individuals data, and approaches congress should consider in developing a comprehensive Regulatory Regime for Digital Currencies, including ensuring individuals have real control over their data. With the appropriate balance of regulation, Digital Currencies and their innovations and their innovative Underlying Technology could provide meaningful benefits. I look forward to learning more about the ecosystem during this hearing. Senator brown . Sen. Brown thank you, chairman. Welcome to our three witnesses. Thank you for joining us, some of you more than once. This Community Committee hearing earlier this month, many of us from both parties, voiced concerns about facebooks plan to run its own currency out of a swiss bank account. By and large, we mostly her deflections and dodging, exactly what we mean when we say facebook does not understand accountability. Facebook has proven over and over, through scandal after scandal, that it cannot be trusted. But they just dont care. They move fast, they break things. Minor things like our political discourse and journalism and relationships and privacy. Now they want to break our currency and Payment Systems hiding behind the phrase innovation. They want to innovate americans right out of their paychecks. Look around at what happens when big corporations say they want to innovate. Before they blew up the economy in 2008, bankers were pitching an Innovative New product called subprime mortgages. Which claimsebook, its new currency will help the underbanked these mortgages are supposed to help people who never had access to credit achieve the American Dream of homeownership. In reality, these mortgages ripped off millions of families who ended up losing their homes. They wrecked the economy, they made the staggering inequality in this country even worse. The only innovative thing about the financial crisis was how the banks managed to stick everyone else with the bill. Not exactly the kind of innovation most of us were hoping for. So im all for innovation, especially if it delivers on its promises of improving peoples lives, but big Tech Companies, wall street banks are hiding behind innovation as an excuse to take over important Public Services we all benefit from, and should all have a say in. There are some things, currency, Payment System, the protection of our savings accounts, that everyone in the country has a stake in. We should not be handing those kinds of Public Resources over to wealthy special interests, so they can squeeze more profits out of ordinary americans. Think how hard it is to get Quality Service from comcast. To know how your privacy wasnt basted by facebook or to know how much of your personal data was leaked by equifax, and we just learned in the last 24 hours capital one and who is next . We dont know. We should be suspicious when someone tells us that only big corporations can be trusted to provide critical Public Services. I recently moved into a new office. It was john glenns office. When he served he served ohio annie senate he and are longtime friends john glenn spoke at my eagle scout dinner in mansfield ohio, 50 years ago. I moved into that office because he was an innovator. He was the First American to orbit the earth as we know. That will be followed by the gemini and Apollo Missions that would eventually put american on the moons. Many of us joined in the celebrations of the 50th anniversary, some of us on this podium were old enough joined in the 50th anniversary but remember the day 50 years ago just this month. None of the astronauts did it alone. It took the hard work of thousands of innovative scientists and engineers, most of them unknown. People like Catherine Johnson or immigrants like miguel fernandez, these immigrants did not do it for profit, they did it to serve their country and their successes were served enjoyed by every american. It is a reminder that some infrastructure works better as a public good and we should not let big banks or big tech get their hands on those public goods. The Federal Reserve and other watchdogs need to continue to be leaders in banking innovation. If we dont move quickly to improve important infrastructure, not just roads, bridges, highways, sewer systems, but our Payment System, too, if we dont move quickly to improve it, we will end up with big corporations who have broken our trust again and again and that does not make any sense. I look forward to hearing from our witnesses about which of these technologies might actually help regular americans. Sen. Crapo thank you, senator brown. Theys witnesses are cofounder, chairman, ceo of circle on on behalf of the block chain association. Specialist nelson, in International Trade and finance at the Congressional Research service. And a professor of law at the university of california, irvine, school of law. I would like to assure each of you your written testimony has been entered into the record. We assure you to follow our fiveminute rule by watching the clock in front of you so we have time to sql questions. With that, lets begin in the order that i introduced you. Crapo,k you, chairman Ranking Member brown, members of the committee. It is my pleasure to a p a before you today to testify about the promise of digital Block Chain Technology. Ive spent the past 25 years building Internet Technology servings in the country hundreds of millions of consumers. I cofounded circle, a global Digital Currency company, seeking to make it much easier for businesses and people everywhere to create an Exchange Value with the same ease as we create and share content on the internet. I would like to touch on some of the challenges i see in the global Financial System today. 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 Money Laundering and crime, with annual illicit proceeds laundered through the Financial System exceeding true 2 trillion. 99 of laundering goes undetected. Our Financial System is overwhelmed with privacy violations and data breaches. Several criminals and hostile nations continue to take aim at our financial infrastructure. The costs of this are spiraling 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. Very few people have a chance to even invest in startup companies. Theyresolutely absolutely can be a Better Future ahead built on Digital Assets and block chains. These technologies represent one of the most significant innovations in modern history. I believe block chains will be viewed as the more as more impactful then double entry bookkeeping and modern banking. In the coming decade, we will see a series of profound changes. Digital currencies will proliferate and become usable by billions of people on mobile devices, payments will become a commodity free service on the internet. Of currencies will open up opening up Capital Markets for businesses and investors everywhere, scaling from thousands of companies to a world where every business and person can Access GlobalCapital Markets with the global ease that they access ecommerce marketplaces. Commerce relationships will increasingly be running on blockchain, providing a commerce environment with greater security, efficiency, transparency, and enforceability. New decentralized forms of Digital Identity will become available, allowing for much safer use of Digital Services and which will radically improve our privacy, will more effectively thwarting financial crime. As a new fundamental layer of the internet, blockchains will transform the global system. 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 is forced to apply federal laws written in the 20th century to technologies created in the 21st century. This has had a Material Impact on the competitiveness of u. S. Companies. Asianbased companies are beginning to dominate the market. It is backward, rather than forwardlooking. Congress should consider new laws that protect consumers, while not causing companies to fixate on centuriesold definitions. The result of the uncertain and restrictive Regulatory Environment has led many Digital Asset projects and companies to domicile outside the united u. S. Persons block and businesses from accessing products and technologies. Circle has received a license under bermudas forwardlooking act, which provides a comprehensive Regulatory Framework for countries in the industry, and we are in the process of moving our internationalfacing products and services out of the United States. It is vital that we allow innovators room to grow 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, im concerned the United States will not be the world leader in this crippling technology, that it will continue to fall behind, and it will not fully reap the benefits of economic transformation. Thank you for your increased interest and attention to this significant area of opportunity. I look forward to hearing your questions and opinions. Sen. Crapo thank you. Nelson dr. Nelson . Good morning. Thank you for inviting the Congressional Research service to testify. My testimony focuses on the International Landscape of Digital Currencies. I will summarize my statement with these brief remarks. In 2009, bitcoin was launched as the first cryptocurrency. Cryptocurrencys art cryptocurrency has no status as legal tender. Cryptocurrency strives to make payments cheaper and faster. In terms of market size, cryptocurrency is a small market. Some Central Banks and large multinational corporations are looking to take cryptocurrency into the mainstream. If these initiatives move forward, there could be numerous policy implications for the United States, including gross financial stability, the role of the u. S. Dollar, Consumer Protections, moneylaundering, privacy considerations. I will make three points today. First, the patchwork of cryptocurrency regulations around the world. Second, the growing interest of Central Banks. Third, facebook as a potential game changer for the market. The first point is the patchwork of cryptocurrency regulations around the world. Cryptocurrency is international in nature, but it is regulated by governments at the national level. There are more than 190 countries in the world and they are taking different approaches to the regulatory issues presented. For example, cryptocurrency regulations have focused on permitted uses, Consumer Protections, security regulations, licensing requirements, moneylaundering, and tax treatment. Broadly speaking, government approaches fall across the spectrum. At one end, some countries are striving to become cryptocurrency hubs. They view cryptocurrency as a source of growth and they attract cryptocurrency with favorable regulations and tax regimes. At the other end of the spectrum, some countries have banned were strongly restricted cryptocurrency. The concerns focus on government control of the Financial Sector, financial stability, and consumer protection. In the middle of the spectrum, some governments are allowing the development of cryptocurrency, what developing regulations to minimize risk. Most major developed economies, including the United States and united kingdom, have developed this approach. Differences in financial regulations across countries can lead to instability, especially if cryptocurrency is developed on a larger scale. Some Central Banks are exploring the creation of their own cryptocurrency. Some countries claim to develop cryptocurrency as a second legal tender. For example, the Marshall Islands is planning to create one called the sovereign to raise government revenue. Venezuela launched one backed by funding way to raise and avoid sanctio