The chief executives of some of the largest US banks were called to testify on Wednesday (Apr 10) in front of the House of Representatives Financial Services Committee some 10 years on as part of a follow-up after the 2008 financial crisis. Blockchain technology and cryptocurrencies were two of the topics discussed at the hearing, amongst others such as the role of banks in the housing market crash, financing for private prisons, and equality and diversity policies.
Called “Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 Years After the Financial Crisis”, the session on Capitol Hill saw high profile banking CEOs as witnesses including Citigroup Inc.’s Michael Corbat, JPMorgan Chase & Co.’s Jamie Dimon, Morgan Stanley’s James Gorman, Bank of America Corp.’s Brian Moynihan, State Street Corp.’s Ronald O’Hanley, Bank of New York Mellon Corp.’s Charles Scharf, and Goldman Sachs Group Inc.’s David Solomon.
Of note, Republican Representative Warren Davidson used the opportunity to emphasize that the finance industry is entering a new era with the entrance of blockchain technology, which also changes the face of cybersecurity. He also noted that the US was currently lagging behind in having clarity on related regulatory issues.
Davidson went on to address Scharf about the Bank of New York Mellon’s website stating that the lack of regulation clarity is a barrier to it providing digital asset custody services. Scharf responded, saying, “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].”
In addition, Davidson quizzed Dimon, noting how Dimon had called crypto “not a real thing” back in 2017, yet JP Morgan Chase had gone on to launch a JPM Coin this year. Dimon replied, “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 person will pay.”
Separately around the same time, 21 US lawmakers, including Davidson, collectively re-submitted an updated version of the Token Taxonomy Act (TTA) to try and exempt certain crypto and digital assets from being classified as securities. Davidson said in a statement that if approved by Congress, this law will “send a powerful message” publicly that “the US is the best destination for blockchain technology”.
First introduced in 2018, the new version of the TTA features, amongst other changes, a clearer definition of digital tokens that is more inclusive of changing technology, and stronger consumer protection. Last year’s Congressional session ended before the House managed to vote on the bill.