US Congress Holds Hearing on Crypto: Witness Profiles

Today, on July 30, United States lawmakers will once again gather to debate cryptocurrency and blockchain policy in a hearing dubbed “Examining Regulatory Frameworks for Digital Currencies and Blockchain.” The hearing is scheduled for 10 a.m. EST and will be broadcast live.

This time, the U.S. Senate Banking Committee is planning to hold a broader discussion on crypto following the intense, Libra-focused testimony earlier this month. The witness panel will be represented by Jeremy Allaire, co-founder and CEO of payments company Circle, who will speak on behalf of the Blockchain Association; Rebecca M. Nelson, a specialist in international trade and finance at congressional think tank the Congressional Research Service; and law professor Mehrsa Baradaran from the Irvine School of Law at the University of California.

Here are the brief profiles of all three witnesses, along with their stance on regulation, based on their prepublished testimonies.

Jeremy Allaire

Occupation: Entrepreneur, investor

Stance toward crypto: Positive 

Allaire was born in 1971, in Philadelphia, Pennsylvania. In his early career, he had mostly been dealing with internet technologies, eventually becoming a major investor in the space. In 1995, two years after graduating from Macalester College in Minnesota with a major in political science, Jeremy and his brother J.J. founded Allaire Corp., a company focused on creating web development tools. Their company successfully went public in 1999 and was then merged with its rival Macromedia in 2001. Two years later, Jeremy Allaire left Macromedia to work for venture capital firm General Catalyst Partners. In 2004, Allaire founded Brightcove, an online video platform. After a prosperous initial public offering in 2012, Allaire stepped down as Brightcove’s CEO in 2013 but continued to serve as chairman of the board.

In October 2013, Allaire and Sean Neville founded Circle, a startup for facilitating money transfers with digital currencies like Bitcoin (BTC). The company’s core product, Circle Pay, is essentially a wallet for storing and sending cryptocurrencies. Its main feature is that BTC kept in the wallet is insured, so in the case of funds being stolen from the user’s account, all the money will allegedly be compensated. It has been backed by a number of mainstream, blue-chip investors, including Goldman Sachs

In 2015, Circle became the first company to ever receive a BitLicense, a business permit for conducting digital currency activities in the state of New York. In February 2018, Allaire’s company announced that it purchased Poloniex, a major U.S.-based cryptocurrency exchange for $400 million. In September the same year, Circle launched a USD-backed stablecoin dubbed USD Coin (USDC).

When, at the start of July, U.S. President Donald Trump tweeted regarding cryptocurrencies, blasting Bitcoin and Libra, Allaire responded on Twitter. His statement echoed that of many blockchain industry leaders in stating that the acknowledgment, albeit being a negative one, still goes a long way to promote the cause. Allaire wrote:

“Possibly the largest bull signal for BTC ever. Crypto now a Presidential / Global policy issue. People everywhere will embrace a mix of sovereign and non-sovereign digital currency.”

Allaire is strongly pro-regulation, as he has stressed numerous times that the crypto space needs more regulatory certainty. For instance, in May this year, the entrepreneur argued in a blog post that digital assets represent a fundamental new class of financial instrument and should not be considered as a security, commodity or a currency, while also arguing that the U.S. Securities and Exchange Commission is being forced to develop guidance regarding cryptocurrencies, deeming them to be securities. Allaire also declared in the same blog post that existing laws cannot address the cryptocurrency issue:

“We urge lawmakers to recognize the unparalleled economic power that permissionless innovation has unleashed and to act to let crypto and blockchain technologies flourish. We know lawmakers want to support economic growth and want them to seize the opportunity to lead the charge.”

On the following day, Allaire announced that Circle had to eliminate 30 job positions — roughly one in 10 of Circle’s employees — due to the “increasingly restrictive regulatory climate in the United States.”

According to his testimony, the Circle CEO will stress the existing banking system’s problem with money laundering issues, in which “99% of money laundering goes undetected.” Allaire then envisions a better future, “one that is built on a technological transformation ushered in by digital assets and blockchains,” with decentralized public ledger technology ensuring compliance with Know Your Customer and Anti-Money Laundering (AML) rules, helping to “radically improve privacy and reduce data leakage.”

Moreover, Allaire is going to urge U.S. lawmakers to understand the differences between USD Coin and Libra, given that “the recent announcement of the Libra cryptocurrency was the first time many people heard about the concept of a stablecoin.” Specifically, he argues that USDC has more use cases than Libra because it is built on Ethereum, the most popular smart contracts platform, and that his company’s stablecoin will eventually become “blockchain-agnostic.” Moreover, Allaire reiterated