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Chair Sean Patrick Maloney Opening Statement at Hearing on the Future of Digital Asset Regulation

WASHINGTON House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit Chair Sean Patrick Maloney delivered the following statement at today's hearing “The Future of Digital Asset Regulation.”

[As prepared for delivery]

Again – Thank you all for joining me today in my inaugural hearing as Chair of the Commodity Exchanges, Energy, and Credit Subcommittee, and welcome to today’s hearing, The Future of Digital Asset Regulation.

Today’s hearing is an excellent and timely opportunity to engage market experts at the CFTC, digital asset stakeholders, and academics in discussion on the effectiveness of current regulation of a continuously evolving digital asset markets and how to address regulatory concerns in any future regulatory framework.

Since the launch of Bitcoin in 2009 and the creation of the Ethereum blockchain in 2013, there’s been rapid and expansive growth and innovation in both the diversity and volume of digital asset products available.

A digital asset can be a virtual currency, an investment opportunity, or traded on an exchange – and how investors and consumers use these products will say a lot about how they should be regulated.

As the Committee of jurisdiction over the CFTC, of primary importance to today’s hearing is digital commodity products available for trade in the derivatives and underlying spot markets – a primary access point for investors to the digital asset market.

Digital assets are popular, but volatile. We see this reflected in the substantial decrease in combined digital asset market capitalization from its peak of approximately $3 trillion in November 2021, to current levels of approximately $1 trillion.

Polling also reveals that approximately 20% of American adults have invested in, traded, or used cryptocurrencies.

Providing Congressional direction to establish the rules of the road to ensure American retail investors are informed and protected is as important as ever.

While the CFTC has dutifully exercised its role as a regulator and enforcement authority in digital asset markets, its authority is limited. When you couple the recent volatility with high retail participation in digital asset spot markets, it is concerning that there is a gap in oversight and regulation of these markets.

The growth of the digital asset industry has centered on innovation, transparency, and security – and I believe in fostering that innovation here in the United States. In contrast to a traditional bank or financial institution, the most popular cryptocurrencies, Bitcoin and Ether, have entirely public ledgers. Anyone can view them and participate in recording and authenticating transactions on them. 

As we will hear from our witnesses today, the digital asset economy presents opportunities to support financial inclusion, but, without strong customer protections and regulatory certainty, participants in the industry may be at increased risk of financial loss and exposure to fraud.

Digital assets are complicated, and retail participants may be tempted by the promise of quick returns without knowing how the digital asset functions, or without knowing who received early access to information.

Regulation regarding disclosure to market participants may help retail investors understand the volatility of the assets and facilitate smart digital entrepreneurship.

Today’s hearing will help this Committee understand how Congressional action can give the CFTC the tools they need to protect investors while fostering innovation here in the United States.

Thank you again to the Members and witnesses joining us today as well as those who are following along online. I look forward to a productive conversation about the future of digital asset regulation.

With that, I’d now like to welcome the distinguished Ranking Member, Mrs. Fischbach from Minnesota, for any opening remarks she would like to give.

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