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Instead, we advocate for a reg approach that it focuses more on stablecoin reserves by requiring stablecoin arrangements be fully reserved by appropriate assets, requiring reserves to be held as insured depository institutions, creating clear standards for regular audit and public disclosure of stablecoin reserves and key contractual terms regarding redemption, and by making it clear that payment stablecoins are not securities.

Denelle Dixon : Of course, regulators must be empowered to oversee these requirements. The framework should allow oversight through state banking supervision, or a narrowly tailored charter of the OCC. In our view, this would promote the safety and soundness of stablecoin arrangements. In Nigeria, stablecoins and blockchain technology were eliminating costly foreign exchange and transaction fees and slow processing times until the Central Bank of Nigeria abruptly ended that business model.

And many innovators had consequently been stopped in their tracks. As we walk away from this hearing, I urge you to look at the industry and technology beyond the narrow lens of applications that often dominate the news.

Thank you for having me here today. Chairman Waters: Thank you, Ms. Haas, you are now recognized for five minutes to present your oral testimony. Alicia Haas: Chairwoman Waters, Ranking Member McHenry, and members of this committee, good morning, and thank you so much for this opportunity to testify on digital assets in the future of finance.

My name is Alicia Haas, and I serve as the chief financial officer of Coinbase global. I also serve as the chief executive officer of Coinbase Inc, our US subsidiary.

I joined Coinbase in Formerly was chief financial officer of Sculptor Capital and OneWest Bank and spent 20 years in the financial services industry. We were founded in with the idea that anyone, anywhere should be able to easily and securely send and receive Bitcoin. We have customers in every state, except the state of Hawaii.

And as a remote-first company, we have employees in 45 states and in the district of Columbia, including 24 of the 25 states represented by this committee. This is across over asset types, and we offer customers the opportunity to learn, to sell, to resend, to receive and buy more than assets on our platform.

Additionally, we offer customers the opportunity to spend, to borrow, to earn, to stake and transact on select assets. Alicia Haas: We serve more than 73 million customers globally, including 10, institutions and , application developers. Since our founding, Coinbase has strived to be the most secure, trusted, and legally compliant bridge to the crypto economy. Coinbase is federally registered as a money services business with FinCEN, licensed as a money transmitter in 42 states, holds a BitLicense and trust charter from the New York Department of Financial Services.

And we are authorized to engage in consumer lending in 15 states. Alicia Haas: Much like the adoption curve of the internet in the s, we are seeing dramatic advancements in crypto participation. There are more than million crypto holders globally. Technologies like non-fungible tokens, which we call NFTs, and decentralized application platforms will lead the away to web 3. We believe sound regulation is central to fueling crypto innovation and adoption. The dApp Assessed the challenges of the existing regulatory framework and proposed a four pillar solution.

First, we believe the government should recognize digital assets under a new comprehensive framework that recognizes the unique technological innovations underpinning digital assets. Second, the responsibility for this new framework should be assigned to a single federal regulator.

This regulator would be charged with establishing a registration process for intermediaries, which we refer to as marketplaces for digital assets. Third, this new framework should have three goals to ensure holders of digital assets are empowered and protected. A, we believe in enhanced transparency through robust and appropriate disclosure requirements. B, we want to protect against fraud and market manipulation. And C, we want to promote efficiency and strengthen our market resiliency. Our fourth and final pillar is to ensure that regulatory solutions promote interoperability and fair competition.

Alicia Haas: In conclusion, Coinbase placed crypto will drive transformational change across society in positive ways. This is why our mission is to promote economic freedom around the world. Disruption always challenges the status quo, but we believe sound policies can improve the system for everyone. We applaud Chairwoman Waters, Ranking Member McHenry, and the members of this committee for holding this important hearing.

Thank you for the opportunity to discuss these important issues, and I look forward to answering your questions. Chairman Waters: Thank you very much.

I now recognize myself for five minutes for questions. As you know, Facebook has attempted several times to enter the cryptocurrency market starting in , they founded the Libra Association, based in Switzerland, with the goal of creating a stablecoin, but suspended its activities after this committee held hearings.

And I, along with other members, and US regulators, raised significant concerns leading to a number of Libra association members pulling out. Now in partnership with Paxos and Coinbase, Facebook has launched a pilot project with this digital wallet, Novi, for a limited number of individuals in the United States and Guatemala to send and receive money using your stablecoin known as USDP, or Pax Dollar. Chairman Waters: The report among other things recommends legislation that stablecoin users must comply with activity restrictions that limit affiliation with commercial entities, similar to restrictions most banks face to promote the separation of banking and commerce.

While your partnership with Facebook is reportedly a pilot, limited to a number of users in Guatemala and the United States, what is stopping Facebook from the future allowing its nearly 3 billion, monthly active users to make payments and save funds with the Pax Dollar, or other previously issued stablecoin through a Novi wallet? Cascarilla, are you still muted? Can you hear me? Charles Cascarilla: There we go. Sorry about that.

Thank you for the question, Chairwoman. We have an open product, they could use that product in the open market, they decided to come to Paxos. And I think they did that because we have the most regulated stablecoin product. And I think that was an important decision for them, that they wanted to use a well regulated product. But Novi itself is a regulated money services business.

Charles Cascarilla: They are regulated to operate in almost all states in the United States and we have done extensive due diligence on their controls and the regulatory oversight that they have. What is stopping Facebook, again, from in the future, allowing its nearly 3 billion monthly active users to make payments and save funds with the Pax Dollar or other privately issued stablecoin through a Novi wallet?

How long is this pilot? Can you describe it? Charles Cascarilla: Yes. Novi would be best a position to talk about their plans to expand it. McHenry: Well, thank you-. Chairman Waters: [crosstalk ] Ranking Member of the committee.

You are now recognized for five minutes. McHenry: Thank you. It became much more interactive. But counterintuitively, much more interactive, but much more centralized, in web 1.

Policy makers need to understand the nature of web 3. This is a hearing about a component of web 3. Now, along those lines, what are the characteristics that defined web 1. Brooks: Mr. McHenry, thank you very much for that question.

So, the characteristic of web 1. The innovation of web 2. This is when the blogosphere became a big thing. The reason for the centralization of the internet of course, was that all of that activity was being monetized by a very small number of companies.

Brooks: Facebook, as the Chairwoman mentions, Google and then two or three other companies. What makes web 3. So, when you hear people talk about, for example, layer-1 tokens, what they mean is, this is your reward for providing the ledger maintenance services, the computing power to the network, that on web 1. McHenry: Okay. So, token holders, for our language here on the hill, those are digital assets, which are the keys to open up the ledger, for you to participate, right?

Brooks: Correct. McHenry: So, describe to us how those digital assets fit into this internet revolution, web 3. Brooks: So, the concept is that you have application layer tokens, and you have protocol layer tokens. The Bitcoin is the reward I receive for doing the work to keep the network operational. And that allows me to own a piece of the Bitcoin blockchain. Or take Ethereum, which is easier to understand, the Ether token represents an ownership stake in the network.

But on top of that network are all kinds of apps that get built on the network, much like the apps on your phone depend on the underlying network existing that lets the phone operate. Brooks: And so, people will make judgements about which network is likely to win, and they will invest in the tokens in that network much the same way you might invest in Google stock because you think Google is going to scale access to the original internet.

The difference being here, you can vote on what happens in the future of a proof-of-stake network, for example, you can get rewarded through a proof-of-work token for maintaining a ledger on something like Bitcoin, but the real message here is that what happens on the decentralized internet is decided by the investors, versus what happens on the main internet is decided by Twitter, Facebook, Google, and a small number of other companies. So, getting this, this layer on digital assets right, for Congress to understand this, everything is built upon that on ramp to this new internet.

So, very important for us to be sensitive to how this develops and any actions we take in terms of laws and updating laws to incorporate these new technologies?

Brooks: Yeah, Mr. And I think when you hear about all of the problems of different big tech companies, the importance of an owner controlled network becomes clearer. Owner controlled network rather than a cooperative, right? Brooks: Yes. McHenry: And thinking in those terms. Brooks: Absolutely. Brooks: Exactly right. This is not simply about you on this panel. It is about trillions of dollars of assets that did not exist before Satoshi wrote his whitepaper 13 years ago.

This is a small panel, important as you may be, a small panel about the discussion about web 3. And so, with that, Madam chair, thank you for having this hearing, and I hope that we can have more understanding by policy makers about these important concepts. Thank you, Mr. Chairman Waters: [crosstalk ] Thank you very much. The gentlewoman from New York, Mrs. Maloney, who is also the chair of the House Committee on Oversight and Reform is now recognized for five minutes.

And consumers and investors more protected when things do go wrong. In , the New York attorney general released a report from its Virtual Markets Integrity Initiative, which detailed a few key findings regarding crypto trading platforms on potential conflicts of risk and interest, lack of serious efforts to stop abusive trading activity and limited protections for customer funds.

In fact, Coinbase was reportedly the subject of a hack earlier this year impacting at least 6, Coinbase customers. Haas, what happens today for a Coinbase customer in the event of a hack of Coinbase or a Coinbase wallet, or in the event of unauthorized withdrawal? What protections does a customer currently have, FDI insurance, commercial in insurance? Could you answer that question, please? Alicia Haas: Yes. Thank you so much for the question.

We bifurcate our assets into two different storage systems. Specifically, the incident you mentioned was not a hack of the Coinbase systems, but in that event where customers did lose funds due to other losses, we did reimburse customers for that event.

We do protect our customers for any hack of the Coinbase hot wallet, and we have third party insurance, plus we use our own balance sheet to protect our customers for the event of loss on our platform. Chairman Waters: Pull the microphone closer to you and speak into it so all members can hear you. Alicia Haas: Thank you so much for the clarification. With regards to what losses we typically see though in press, we typically see these are account takeovers at the endpoint, where a customer has lost their credentials and then has had a hack of their own phone, their own personal device.

And that is unfortunate at this point in time because that loss is not well protected for within the broader crypto economy.

That is something that Coinbase continues to study and would look to over time, do more to support our users for those loses. Carolyn Maloney: Reclaiming my time, reclaiming my time. Is that uniform the protections you talked about for all crypto exchanges and wallets, or just for yours? So, do you think customers could benefit from some uniformity and standardized minimum protections if and when customers lose their funds through no fault of their own? And FinCEN identified several money laundering typologies for these actors.

Carolyn Maloney: Mr. But not everyone in this industry believes that, and many have rejected or avoided compliance standards. Some actively promote themselves on not complying with Know Your Customer requirements. This is an entire financial services ecosystem. And one weak link exposes the entire system to money laundering risk as highlighted by the FinCEN data. And what steps can we take to bolster our anti-money laundering efforts and ensure all crypto marketplaces comply?

The gentlewoman from Missouri, Ms. Wagner is now recognized for five minutes. Wagner: I thank you, Madam Chairwoman. The lack of clarity is clear through the numerous requests that the SEC receives for these no-action letters. In your view, is additional guidance defining clear rules of the road for investors and market participants needed at this time? Alicia Haas: Thank you for the question. We believe this is a very important area focus for the SEC and this committee. We do agree that the laws are clear, however, existing laws, regulation, and legal precedent, make it clear that blockchain tokens are not securities.

So, we believe that the law clearly shows that blockchain based digital assets are one of two things, either a new form-. Haas: � clearly shows that blockchain based digital assets are one of two things, either a new form of digital property or a new way to record ownership, as Brian Brooks spoke earlier about.

We do believe that clarity is needed because these are new assets. And I think it would benefit all of us in the ecosystem to have agreed upon definitions. We talk a lot about financial inclusion in this committee and digital assets have the potential to provide fair access to financial services to all Americans. And I believe that Mr. Bankman-Fried brought that up. And many of you did in your written testimony.

And then I think Mr. Allaire, how would digital assets and blockchain technology facilitate financial institutions or financial inclusion and benefit the 1. Dixon: Thank you for the question. This is a really important area. And it does so very, very quickly.

So the value of blockchain is the ability to send from the United States, for example, and send to another country without having to reconcile with all the different software and intermediaries that exist today. So it eliminates intermediaries.

Wagner: Thank you very, very much for that input. And Mr. Allaire: Thank you, Congresswoman. I think financial inclusion is a critical design goal for many of us. And certainly as we think about USDC. Today, USDC as a payment technology for dollars on the internet enables users to transfer dollars in a fraction of a second with a transaction cost that can be as low as a 20th of a penny.

Just like anyone can have an email account or a text message or access the internet, this is an open financial system. And when you combine those kinds of access efficiency and that openness, it creates an opportunity for anyone with a mobile device anywhere in the world to seamlessly exchange value with one another.

Wagner: Thank you. Brooks, in your-. Wagner: silence. Allaire: � open financial system. And when you combine those kinds of access efficiency and that openness, it creates an opportunity for anyone with a mobile device anywhere in the world to seamlessly exchange value with another. Wagner: Thank you Mr. Velazquez: Bankman-Fried, digital asset trading platforms like yours play an important role in the current functioning of stable coins.

And therefore also raise broader question about digital market regulation, supervision, and enforcement. Can each of you describe the method, your platforms used to determine the price for exchanging digital currency for Fiat currency? I see that my time has expired. I yield back. Wagner: Time? Velazquez: Okay. Haas: Coinbase is an agency only platform.

We do not engage in proprietary trading on our platform. All prices established on our platform are due to market makers. So we offer a platform for customers to come together, to offer bids and asks on a variety of currencies that we offer on our platform.

So the market price is determined by the market participants. Velazquez: And at what stage of the transaction do you provide an assurance of or lock in of an execution price? Haas: So we have two products. We have a consumer product and we have what we call our pro product for our institutions or more advanced traders. Velazquez: Thank you. Madam Chair Waters: Thank you. The gentleman from Oklahoma, Mr. Lucas is now recognized for five minutes. Lucas: Thank you, Madam Chair. Could you discuss further what trends you currently see and how new asset classes could arise through blockchain technology?

Haas: Thank you. Lucas: Where are we going? Haas: Thank you for the question. Over the protocol layer, we see infrastructure being built and then we see applications being built as the next layer. So Bitcoin, Ethereum, Stellar, Solana. And on top of these, we see applications. Haas: So an interesting article was published yesterday, that gaming platforms.

Every token is different. Think about a shield or a sword or something of value are being most accurately traded. And it was a significant percent of the assets in defi, decentralized finance in November were traded in apps. But this is just the tip. Lucas: Fascinating. Could you discuss what key fundamental differences between banks and stable coin issuers are important for Congress and regulators to understand when looking at regulatory proposals?

Brooks: Sure. Well, Congressman Lucas, thank you so much. One of the historical differences between banks and stable coin issuers is that banks in this country historically have been engaged in multiple different kinds of financial intermediation and risk taking functions. Banks typically engage in three different things, deposit taking, lending, and payments. So banks historically innovated in payments by first having check clearing, then later having travelers checks, then later being prepaid cards and things like that.

Brooks: Stable coin is just the faster, most modern way of transmitting those values. And this is one of the reasons why at the OCC, we look very carefully at the possibility that payment companies like American Express in a different generation, circle today might possibly qualify for bank charters.

Lucas: Ms. Dixon, could you also discuss this for a moment? I think when you mentioned before about tokenized assets, there already are tokenized interest in real estate that exist on Stellar, for example, or in fractionalized interest in US stock.

With respect to what we have with blockchain and what can be accessible, that banks already have available out there, but when they de-risk populations and they de-risk individuals out of the banking infrastructure, they can actually access accounts, hold assets, hold their assets into a digital framework, and then do a lot of the same things that you can do at banking institutions.

And it does show I think with, as Ms. So I think we have a long road ahead of us with respect to this technology. Lucas: Mr. Bankman-Fried, could you respond to the criticism that stable coins would be ripe for illicit financial activity? And could you compare this risk with other payment rails? Samuel Bankman-Fried: Thank you, Congressman. We as do most market participants in the digital asset ecosystem have advanced surveillance techniques to prevent financial crimes for all digital assets, including stable coins, conducting know your customer policies and blockchain surveillance on all users and deposits and withdrawals through our platform.

And all legitimate stable coin issuers in addition to that conduct sophisticated no your customer policies on all issuances and redemptions of those stable coins. If you compare that to, for instance, physical cash, where no transactions effectively have know your customer or anti-money laundering or anti financial crimes surveillance on them, already I think that the digital asset industry has set a pretty strong standard on that front.

Lucas: Thank you. Madam Chair, I yield back. Green, who is the chair of the subcommittee on oversight and investigations is now recognized for five minutes. Green: Thank you, Madam Chair. And I thank the witnesses for appearing as well. If you can verify, I would greatly appreciate it. Brooks: We can hear you very well, Mr. Green: Thank you very much, Madam Chair. Bitcoin, for example, lost half of this value over two days in March.

And it rebounded of course later on, but there are many problems leading up to the global financial crisis that seem to be manifesting themselves in the market currently.

With the explosive growth in cryptocurrencies, at what point should we become concerned about the possibility of a bubble? At what point should we become concerned about the possibility of a bubble? Brian Brooks. Brooks: Well, thank you, Congressman Green. And I always find your questions extremely perceptive. What I would say about that question is a lot of the price volatility of cryptocurrency has to do with the early stage of the market and the thinly traded nature of the asset compared to, for example, US real estate, global equities, or anything like that.

And what I mean by that is in the US, we have regulated equity mutual funds. And so the result in a relatively new, relatively thinly traded market is that one person unwinding their position can have a massive effect on the price. So I would argue we need more liquidity and more price discovery to a tamp down volatility, not less. Green: Thank you. Dixon, please. So they understand you look at user experience, you look at UX design, all of these things are really, really important.

And as we saw in the early days of the web, it happened, it came together. This information is already leveraged by chain analysis, for example, in Elliptic, to demonstrate the different things that are happening on chain.

Green: Mr. Samuel Bankman, if you would please, like to hear from you. Samuel Bankman-Fried: Thank you for the question. We do not have overnight risk or weekend risk or holiday risk in the same way traditional assets do, which allow risk monitoring and de-risking of positions in real time to help mitigate volatility.

Samuel Bankman-Fried: Even going through periods of large movements in both directions, we store collateral from our users in a way which is not always to on in nutritional financial ecosystem to backstop positions. If you compare that to what happens on FTX or other major cryptocurrency venues today, there is complete transparency about the full open interest. There is complete transparency about the positions that are held.

My time has expired. Thank you, Madam Chair. The gentleman from Texas, Mr. Sessions, is now recognized for five minutes. Sessions: Madam Chair, thank you very much.

And to of the panel, we appreciate this opportunity to hear from you. I am tremendously impressed that from what I see, a lot of the ingenuity, a lot of entrepreneurial spirit, and lots of advice about the future, about where this can grow is I think very important for us to listen to.

Because I think that in your perhaps infancy, perhaps in your modeling, what makes you better is what you are. And I respect that. What is a risk? We get very little into value, but a lot into risk. And so I would ask you that the value of much of this could be compared to stocks.

Sessions: IPOs when they first come out, they might come out and be worth this amount of money. What do you do to try and look at what might be fraud? You do these things, but is there investigation or an understanding about what might be risky even though you accepted or fraud? Sessions: Thank you very much. Haas: So I want to share a little bit, this is specific to the Coinbase platform. So on the Coinbase platform, we have various tools.

So we offer, as I mentioned, over assets for trading on our platform. We have a robust assessment of each of those assets.

Do we think it has the contours of a federal security? We do not list securities on our platform. Is this a scam? Are there real people behind those?

Haas: Can we safely secure and store this on our platform? Or is there underlying technology risk that would be rising to a hack? Bankman-Fried responded to the risk models. We also then monitor the blockchains.

One of the wonderful things about this technology is the transparency. And so we can look for transaction activity, look for patterns on the blockchain. And then we partner with law enforcement.

We file SARs and we have traditional approaches much like you would see in finance, but the transparency really changes what we can do here. And it seems like to me, that that is something that if you have accepted this as part of the duty that you have to make sure for the integrity of your system, it seems like to me, that I have satisfied myself, that what you have not just have ongoing, but where you think you want to go, we need to be supportive of you.

We need to look at you as less of as something that we ought to get in and understand and tackle you and hold you back, and more to what we believe the future should look like for people around the world and people in the United States.

I would simply say to you, I encourage your integrity. I encourage you to avoid the pitfalls that come from there being some fraud that was hidden for a long period of time. And the industry knew it. So Madam Chairman, I want to thank you for doing this today. Thank you very much. The gentleman from New York, Mr. Meeks, who is the chair of the House Committee on Foreign Affairs is now recognized for five minutes. Meeks: Thank you, Madam Chair.

And I want to thank you too for putting together this very, very important hearing. Look, the future is an innovation in financial industries is just unavoidable and to get ahead of it. So your foresight along with the ranking member to do this is really important. Meeks: Let me first ask my question to Mr. As you may be aware, communities of color often rely on minority depository institutions or community development financial institutions to safely do business and get access to crucial banking needs.

So my question really to you is can you provide us a status update on where Circle is in implementing this program and what sorts of systems will be developed to ensure the long term success of the program? Allaire: Thank you, Congressman Meeks. I appreciate the question very much. For those on the committee that are not familiar, we recently announced a new broad based company initiative called Circle Impact.

It includes several key initiatives. First and foremost, something I did reference in my testimony as well is an initiative to take what we hope will be billions of dollars of the deposits that are held behind USDC and actually place those with minority deposits institutions and community banks throughout the United States. We expect to have the first wave of that in place by the end of the first quarter.

We are also looking to coordinate with federal banking regulators who have their own initiatives that are focused on supporting MDIs and community banks.

And we view this as a really critical and strategic part of what we can do to foster a more inclusive financial system. Final comment is simply that we believe that the technology of digital currency, the frictionlessness, the way in which individuals with mobile devices can actively participate.

And not just domestically, but interacting with family members around the world and safely exchanging value, that these can also bring significant benefits to these communities.

And we will certainly keep the committee up to date on progress with this initiative. Meeks: Well, thank you very much for that. And let me go to Ms. Haas real quick. For example, I know a lot of communities rely on these new modes of payment systems to send money to their families in their home countries. And this type of activities, of course, extremely useful to our global economy, which is really-.

Gregory Meeks: To our global economy, which is really important, but there are also bad actors out there that could use crypto or digital currencies to hide cash from illicit activity.

Also, people can hide cash not to pay their support payments and other things. So my question is how can we and what is being put in place to keep the bad actors out there? Gregory Meeks: And so in your testimony Ms. And what more can the United States policy makers do to better coordinate with regulators across yours to prevent this arbitrage that you referred to?

Hass: Thank you so much for the question. I know other US regulated exchanges that we speak to have similar controls and everybody on this panel here today, I think shares those views.

And that was part of our policy proposal. The gentleman from Missouri, Mr. Luetkemeyer is now recognized for five minutes. Luetkemeyer: Thank you of Madam Chair. This dominance by the dollar in global marketplace is a key reason why the dollar remains a reserve currency of the world. Brooks: Well, Mr. And this has been going on for more than 10 years at this point. So dollars is a share of the European Central Bank, the Japanese Central Bank, et cetera, has shrunk from 80 plus percent to more like 60 plus percent in a short amount of time.

And we need to start thinking about competing on utility, on features, not just based on a post World War II monetary system that we could take for granted for the last two generations. One of the benefits of the crypto economy is that it creates some counter incentives on the part of the Fed to do that kind of policy because people will flee to other kinds of assets.

Olair: Thank you, Congressman. It seems likely to us that the ability to access and interact with these Blockchain networks will reach billions of users over the next two to three years. I think Ms. Right, would that be correct? Olair: That is exactly correct. And I think in many respects, the assets that back these dollar digital currencies are in many ways far safer than the dollars in a bank account because dollars in a bank account, as we know, are fractionally reserved and lent out.

Luetkemeyer: I got one quick question from Mr. Brooks, with regards to you talked about a minute ago, of owner controls the network. We had Mr. Zuckerberg in here when he was trying to talk about his Libra and the control of the value of it was going to be with a commission.

My concern is who controls the internet? How concerned are you about outside forces, controlling the platform on which the digital dollar is traded? The point of crypto is to have true decentralization and the projects that succeed will be the projects that achieve that. Bitcoins succeeded, because there are literally millions of participants in the node network. Luetkemeyer: Thank you very much. I yield back, Madam Chair.

The gentleman for Colorado, Mr. Perlmutter, who is also the chair of the subcommittee on consumer protection and financial institutions, is now recognized for five minutes. Perlmutter: Thanks Madam Chair.

Brooks, good to see another Coloradan on the panel. But I want to start with a couple questions for you, Mr. Bankman-Fried in Ms. Hass mentioned knowing your customer, they avoid getting into the securities transaction business as to the best of their ability.

All right, so get ready for that one. Perlmutter: Cryptocurrency market exchanges, such as yours are regulated through a patchwork of different state and federal agencies. For instance, some exchanges register as money services business with FinCEN at the Federal level and may also receive money transmitter licenses. And you talked a little bit about that in your opening, how is your company registered in this context?

Samuel Bankman-Fried: Yeah, thanks for the questions. And looking forward to the left field question at the end, in addition to a bunch of international licenses, in the United States we are participating in that system you referenced with the money transmitter and money service businesses licenses.

In addition to that, however, we are also licensed by the CFTC. And we look forward to continuing to work with them, to build out our product suite. We just submitted a page, I believe, proposal to them a few days ago. Perlmutter: All right. You talked a little bit about derivatives and the fact that derivatives were sort of a key component in the failure of the financial markets back in 08 and 09, is FTX registered with the SEC?

With the SEC, we have begun discussions that are excited to continue discussions there. We do not list securities on our platform as of now, although we would be excited to explore listing digital asset securities in the future under the guidance of the SEC. I will also say briefly that I would be excited to see a unified joint regime with both CFTC and SEC involvement to create sort of harmonious markets regulations between spot derivatives contracts and other things.

Perlmutter: All right, now the left field question. So I also sit on the science committee with Mr. And so my question to you is what threats or benefits to a Blockchain system will come from quantum computing?

Samuel Bankman-Fried: Well, thank you for the question. In terms of the threats, some cryptographic algorithms are not� At least theoretically might not be secure under quantum computing. On the same front, I think it has the potential to create basically new cryptographic algorithms that are faster, that are more secure and that are more efficient from a number of different perspectives.

Madam Chair Waters: Thank you very much, Mr. The gentleman from Kentucky, Mr. Barr, is now recognized for five minutes. Barr: Thank you, Madam Chair. And thank you for holding this important hearing. Brooks, good to see you back in front of our committee and to all of our witnesses, thank you for your testimony. Brooks, I will start with you is a bit of a follow up to Ms.

And if so, do you have any specific suggestions? Brooks: Well, I really appreciate that question. That is the most important issue in the short term for the industry. And so let me just pick up where Mrs. Wagner left off. People need to know what the speed limit is. Brooks: In my old agency, the OCC, what would happen is a bank would come to us with a new activity proposal and we would give them an answer. We would either give them a nonobjection or we would not give them a nonobjection and it was very clear whether they would be allowed to access that.

Barr: Yeah. And Chairman [Gensler ] has been quoted as saying the test to determine whether crypto asset is a security is clear. Brooks, do you agree that that test is clear? I take it from your previous answer to the answer is no, but could you walk me through the process that exists today to determine if a digital asset is a security?

Brooks: Yeah. Well, thank you for that. The best test that is out there is a test that several of us on this panel actually helped to develop about three years ago, as part of an industry organization called the Crypto Rating Council. But what we can do at least is we can tell you the difference between an R rated asset and a PG rated asset, and people can make their risk tolerance judgements. It gives you a number and that number tells you how close you might be to danger and how far away you-.

Can you give me an example of an over reach that would stifle innovation? Barr: Okay. Olair, for, to you, can you talk about the difference between a Stablecoin versus a central bank digital currency, and what advantages does a Stablecoin offer that a digital dollar say at the Fed would not be able to offer?

Olair: I think so, yes. The United States and the US dollar is winning the digital currency space race today. So the United States is winning. This has potential to grow at a very significant speed around the world and benefit the US dollar and benefit American businesses and households. And we need to get going on it right now. Barr: Thank You. I have many other questions as well, but my time has expired. Madam Chair Waters: Thank You very much. The gentleman from California, Mr.

Vargas is now recognized for five minutes. Juan Vargas: Thank you very much, Madam Chair. I appreciate very much you bringing this to our attention, appreciate the ranking member, everyone participating today, especially the witnesses.

And the appreciation of Bitcoin is something that they want a part of. Most of them say no. I just know that, make a lot of money and I want invest and I want part of it. Juan Vargas: So I do see the risk in this. I do have concerns I want to follow on to what Mr.

Barr said, the issue of the dollar being the reserve currency, this seems it does challenge it. Does someone want to comment on that? I want to respond to a couple things in your comments. Olair: But more importantly, coming back to the comment about the dollar. I think there is this growth in digital assets as a new kind of asset class. In fact, I think the overwhelming majority of the digital assets are commodities that are, have utility that are used to power, some kind of technology network or protocol, more thought of like an oil or gas than a Fiat currency.

And I do believe that with innovations like Stablecoins and dollar digital currencies, we could actually see a dramatic amount of growth in the use of the dollar globally-. Madam Chair Waters: Thank you very much. Williams is now recognized for five minutes. Williams: Thank you, Madam Chair. Now some of you may know this, but modern day baseball can really be attributed to Babe Ruth. He brought in the live ball era of the time and introduced power to the baseball diamond.

And before this teams would play small ball, that was very conservative where teams would literally play for one, run a game. The entire objective was simply to get the ball in play so they could try to steal their way around the bass pass. And there was nothing wrong with this old way of playing.

Williams: But when the White Sox won the world series in , the entire team had a total of six home runs all year. But Babe Ruth came along, Babe Ruth came along and totally changed everything in , he set the American league record of home runs with 54 to put that into perspective how fantastic this feet was at the time the previous mark that had been set was by Socks Seybold in with just 16, this introduced an entire generation of new baseball fans and for the first time ever, the New York Yankees over 1 million fans came to see them in a single season.

Now with that being said, many of you are becoming the Babe Ruth in the financial services space. So my first question to you, Mr. Brooks, can you talk about some of the negative consequences that could happen if we take a heavy handed approach to regulating this developing technology?

And winning and not losing or not the same thing. So I come back to Mr. There are two ways of answering that. One is to prevent as many people as possible from accessing this amazing technology.

For example, the way the current legal regime works is certain kinds of assets can only be purchased by accredited investors, meaning rich people. Brooks: So the only people who can get rich on this are people who are already rich. The way that we made equities safer 40 years ago. We created mutual funds, diversification, sector funds, and other things that make it easier for regular Americans from places like my hometown in Colorado to buy equities, without having to be stock experts.

So I would argue the way to win is to bring more people into the system more safely, not to keep them out at their own peril. Williams: Great. Second question, we often hear that crypto industry is the wild, wild west. Where there is no regulation guiding the industry, but as all of you are aware that simply is not true. The SEC and the CFTC are the primary federal regulators and our states also have strict regulations that all of you must be abiding by. So Mr. Bankman-Fried, can you discuss the different layers of regulation that FTX must abide by as an exchange and also in order to uphold customers deposits in your digital wallets?

Samuel Bankman-Fried: Yeah, thank you for the question Congressman and putting aside the other regulatory jurisdictions that we take part in and the dozens of licenses that we are acquiring each month and all of those. Williams: Thank you. I think my time is up Madam Chairman.

The gentleman from Illinois, Mr. Casten, who is also the vice chair of the subcommittee on investor protection, entrepreneurship and capital markets is now recognized for five minutes. Casten: Thank you, Madam Chair. I really appreciate our witnesses coming here and I also feel terrible for you because we could have an entire hearing on Stablecoin, we could have an entire hearing on Blockchain, we could have an entire hearing on oh, CBDCs, I suppose.

And we could probably have an entire hearing on whether or not things that have forced scarcity or inherent stores of value, except that I think we resolved that a hundred years ago, but yet we still sort of need to debate it periodically.

Casten: All that said I wanted start just focusing on Stablecoins if I could. Do they have sufficient reserve assets behind them? What are the redemption rules? Is there transparency around permission Blockchains? I see you nodding, could go on. First question is really simple, do you support the recommendations of that report for Stablecoins? Olair: So I support a number of things, but not uniformly.

I think there are a number of challenges with the report. I think the first maybe to discuss is really this question of what form of federal charter ought to be in place around a large scale dollar Stablecoin issuer? I think the report recommends that it would be an insured depository institution, but I think one of the really critical things to discuss there is an FDIC insured bank, is FDIC insured because the bank is taking risk with deposits?

And so-. And other sufficient [inaudible ]. But setting aside how we get it done, broadly speaking, are you supportive of the idea that if this is going to look and feel and attract investors with the expectations that this has all the risk and liquidity profiles of a dollar that we should make sure that it actually has those features?

Olair: Absolutely. So full reserve, disclosures, transparency, I think definitions around what those reserves are and the liquidity mandate on it, those are all really critical features that need to come in place. So those are some of the things that I think have to be worked through. Casten: So, and I want to get to two more questions, so apologize. I being quick, but in the absence of those protections being in place, it seems to me that somebody who is-. Casten: � of those protections being in place.

It seems to me that somebody who is currently holding a stablecoin perceives that they are holding a currency, but in reality is holding something that is subject to a lot of exogenous risks beyond their control, which feels a lot more like a commodity. The first is, and I can only really speak on behalf of Circle here, USDC for example, operates under the same stored value electronic money and electronic money transmission statutes that govern Square and Stripe and PayPal and the balances there.

Olair: So today there are consumer protections. There are reserve requirements around holding of those assets, one for one redeemability, anti-money laundering requirements, surety bonds that need to be posted to protect consumers, segregation of client funds and for benefit of customer accounts. And we have operated under such statutes really since Olair: So there is a framework today.

The concern I have is that a stablecoin at some level is an ETF. And we could imagine a stablecoin indexed to all sorts of different currencies and some kind of baskets of currencies that are behind there.

And we regulate those in certain ways with expectations of who is bearing the risk to [inaudible ] question. They all want to protect the integrity of their currency. On the other hand, different countries are going to have very different ideas about what kind of data they would like to track when we trade a central bank digital currency. Casten: And so, a question for any of you who feel technically competent to answer this, if you have a stablecoin that includes some portion of central bank digital currencies that are tracking things that we as Americans would not like to track, can we design the stablecoin to insulate the contamination of that system so that somebody who believes that they are buying something that looks like a dollar is not actually being tracked by our adversaries?

Mor is an experienced marketing professional with a Master of Business Administration M. He previously served as the U. Gorfine also served a clerkship with U.

District Court Judge Catherine C. Blake in the District of Maryland. A graduate of Brown University A. She has extensive telecom, consumer software and Blockchain experience and serves as a speaker at industry events both in the US and abroad. She advises and mentors start-ups in Blockchain, mobile apps, and telecom space and is also interested in AI and Healthcare companies.

As a Founder and CEO herself, Suruchi has first-hand experience developing and bringing products to market from scratch. Her key focus areas are idea validation, product vision, product development, and fundraising. Tom heads up partnerships at PowerTrade, helped establish the DeFi ecosystem as co-founder of Defi Nation and Mosendo starting in early and is a partner at Taureon angel group, investing in early stage crypto founders since Bob Kramich is an MIT Sloan-certified blockchain professional with years of experience helping Fortune companies benefit from cloud and emerging technologies.

Liz manages the ETC Labs accelerator program for blockchain and crypto-focused startups and is responsible for the accelerator's overall operations, processes, workshops, networking, investment committee, and introductions. He is a long-time participant in Tezos where he ran one the largest public validators, Tezos Capital. Previously, Jonas was the founder and CEO of Sensai Acquired , a software firm that used deep learning techniques to analyze textual data.

Ken is an early member of the ndau Collective, which conceptualized the ndau protocol and an advusor to Oneiro, the developer of ndau. He is a pioneer in AI and machine learning and invented search-engine methodology and collaborative filtering e.

Ken has successfully developed and commercialized technology throughout his career. As COO of Keane Advisors, he developed new algorithms and technology for trading, asset allocation and private equity. She manages projects related to CBDC, stablecoins, and blockchain for government transparency and anti-corruption. Prior to working in blockchain technology, she worked in fixed income investment management for BNY Mellon and elsewhere.

Cecily Mak is a Venture Partner with ConsenSys Mesh, a global blockchain technology company building the infrastructure, applications, and practices to enable a decentralized world, where she works on investments, strategic partnerships, and targeted start-up strategy and investor relations.

She has taught Digital Media Law at UC Hastings since and serves as an active advisor, board member, and CEO coach to several media and technology start-ups around the world.

He has been working inside the crypto industry as a user, educator and advocate for seven years and currently consultant for multiple Fortune companies to help them figure out their digital asset strategy. Over 35 patents have been issued to Alex, relating to exchanges, VOIP protocols, messaging and communication.

As one of the pioneers of web-based exchanges, Alex authored patents that cover aspects of the Smart Grid, ad exchanges, Twitter, Skype, App Store, Netflix streaming concept and many other popular web companies.

He has considerable financial services and Fintech experience, ranging from asset management and insurance to payments and blockchain. Previously, Mr. McClurg was a Managing Director at Guggenheim Partners, where he was a portfolio manager and responsible for portfolio construction and strategy for fixed income and private equity.

Most recently, Mr. McClurg founded Theseus Capital, a blockchain-powered asset management platform which was acquired by a merchant bank, Galaxy Digital, where he continued as Managing Director, building their asset management and public funds businesses. He also has experience in leadership roles in technology companies such as Electronic Arts and Crowdfunder.

Spencer first joined the blockchain industry in , starting Bitcoin on-ramp company BTCity. Previously, he worked in investment banking for Bank of America Merrill Lynch covering a range of financial services companies.

Will serves on the Board of Directors of Securrency, Inc. He graduated cum laude from Harvard University. It was founded on the belief that we are amidst a secular change and at an inflection point where the macro landscape, shifting consumer preferences, and technological innovation that have the potential to accelerate the adoption of digital assets and the underpinning technology.

Will is also an active venture investor, with investments spanning geospatial analytics, real time data discovery, coliving, as well as digital asset infrastructure and investment platforms. He currently sits on the Dean's Advisory Council for the college of business. John Piotrowski has been working at the intersection of finance, politics, and technology for over a decade. He began his career in economic policy and management consulting before leading strategy and technology projects at Goldman Sachs.

It was there he became a blockchain enthusiast. A mathematician and developer by training, John believes in the power of decentralized applications to make markets safer, faster, and cheaper for everyone. Sushil has over 25 years of FinTech experience both as an executive managing business and as an architect of innovative platforms. In his previous role as CTO of Scient now razorFish , a leading e-business solutions firm, his focus was primarily retail banks, where he architected and built a P2P payment system for Chase and several online banking systems for some of the top global banks.

Raj leads overall ecosystem development, growth strategy, business design and execution for the project. Prior to joining Diem, Mr. Raj worked as a senior executive in a financial technology company that operates in the blockchain space. Before entering the blockchain industry, Mr. In this role, he focused on helping companies with cybersecurity, national security, and privacy issues.

Before private practice, Mr. Raj served as Deputy General Counsel at the Department of Homeland Security, working directly with leaders of corporate America on the intersection of cybersecurity and privacy with law, policy, and technology.

He held a similar role at the U. Prior to entering the legal profession, Mr. Raj was a lead program manager at Microsoft Corporation where he had responsibility for developing and deploying software tools and technologies that improved the security, compatibility, and overall application experience of the Windows operating system. He also worked at a Venture Capital Firm in New York where he focused on identifying undervalued technology companies and helping them achieve their potential.

Raj holds degrees from the University of California at Berkeley B. He is director emeritus of cybersecurity programs at the Scalia Law School at George Mason and an adjunct faculty at American University. Eric Sibbitt structures and executes initial public offerings and other complex capital-raising transactions for companies and underwriters, including NYSE and NASDAQ listings, registered follow-on offerings, global offerings, PIPEs and other private offerings, and liability management transactions.

Clients turn to Eric for boardroom counsel on SEC and corporate governance matters as well as for his pragmatic approach to navigating the tension between legacy regulations and innovative business models.

Eric also frequently advises on cross-border public and private company mergers, acquisitions, tender offers, and going private transactions. Eric has particular expertise advising on transactions for financial services, life science and technology companies ranging from venture companies to multibillion-dollar businesses.

Michelle Tang is co-founder at Basquet. Her background is in venture investing, public equities, and fund of funds investment research. She has consulted and invested in the blockchain space since Mark is a seasoned entrepreneur with experience founding tech startups and other businesses. Darshan Vaidya spent 12 years trading interest rate derivatives for proprietary trading firms in London before starting a hedge fund focusing on cryptocurrency derivatives trading.

The hedge fund - Magpie Trading - was one of the first market makers on Deribit Exchange and advised on the construction of the risk engine that is in use today.

Magpie directly experienced the capital inefficiencies associated with the fragmented digital asset ecosystem. The problem set drove an exploration of technology solutions for credit risk management and clearing, leading to the founding of X-Margin.

Before PoolParty, Bill developed Peeps DAO, a cause-based, decentralized organization platform for nonprofits, political organizations, and social movements. Prior to jumping full-time into the crypto world, Bill spent a few years practicing corporate law with a focus on startups, fintech, and complex partnership projects.

Between college and law school, Bill worked with political campaigns and PACs on campaign finance compliance and operations. He currently lives in Hillsborough, NC with his wife, young son, and two dogs. Darren Wolfberg is a seasoned technology and finance professional having managed multiple institutional business lines a large multinational banks.

Darren combines this finance experience with a product development and corporate venture capital background at Sony. Suji Yan is founder of Dimension. Previously, Dr.

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Crypto expert brooks mr btc syllabus 2022 pdf download

'Something like 80% of bitcoin holders have never sold bitcoin,' BitfuryGroup CEO testimony

WebAug 6, �� Brian Brooks, a former top U.S. banking regulator, resigned as chief executive of cryptocurrency exchange, just three months after taking the job. . WebJan 18, �� Another entry on the witness list is Brian Brooks, former U.S. Comptroller of the Currency and CEO who in Nov. joined BitFury, a major player in . WebDec 8, �� At a congressional hearing on crytpocurrency, Bitfury CEO Brian Brooks explains the blockchain and how it plays an integral role in Web Show more Show .