Chief executive officers of leading banks testified before the United States House of Representatives Financial Services Committee on April 10 on how the banking industry has transformed since the 2008 financial crisis. Among many topics spanning the breadth of the banking industry, the CEOs and lawmakers discussed blockchain technology and cryptocurrencies.
During his allotted time for questioning, Rep. Warren Davidson (R) argued that the industry is entering into a new era of innovation, wherein blockchain technology is transforming existing financial systems, as well as cybersecurity. Davidson also noted that the U.S. is currently staggering behind due to regulatory certainty issues.
Davidson addressed Jamie Dimon, chairman and CEO of one of the largest financial institutions in the U.S. JPMorgan Chase (JPM), stressing that back in 2017, Dimon called cryptocurrencies “not a real thing,” while this year JPM unveiled “JPM Coin” and stated that “we are supportive of cryptocurrencies as long as they are properly controlled and regulated.”
In response, Dimon said that blockchain will work over time, adding:
“The part that is not real is that cryptocurrency is not supported by anything, there is no value behind it other than what the next personal pay.”
Davidson also addressed the Chairman and CEO of the Bank of New York Mellon, Charles Scharf, noting that the company’s website states lack of regulatory clarity as a barrier to providing custody for digital assets. Scharf said:
“Cryptocurrencies are very early in their existence. They are not significant today to speak of in terms of being used as a real currency to move value, and so we are actively thinking about what we want to do. One of the biggest issues that we have relates to any money laundering and KYC [Know Your Customer].”
Other topics included the banks’ role in the housing market crash, bank financing for private prisons and even their equality and diversity policies. Rep. Alexandria Ocasio-Cortez noted fines the banks paid for disproportionately low salaries for minority and female employees.
Yesterday, representatives in the U.S. House of Representatives, including Rep. Davidson, reintroduced the Token Taxonomy Act (TTA). The bill would exclude cryptocurrency from being classified as a security. The act pursues the introduction of regulatory certainty for businesses and regulators in the U.S. blockchain industry, as well as clarifying conflicting state initiatives and regulatory rulings that have confused the issue.