The Subcommittee on Monetary Policy and Trade held a hearing on the future of money and how digital currency will feature in it.
Chaired by Congressman Andy Barr, he posed the central question: “Are digital currencies simply a new way to hold and transfer value that will have a limited impact and niche appeal or will it have a far-reaching transformative effect that will change our economy forever.”
Committee members posed a range of questions from the curious to the fearful. They wanted to know what the usefulness of cryptocurrency is, whether it is actually money or not, and whether a foreign digital fiat currency could supplant the US dollar.
It was that issue of the digital fiat currency, which some countries, even industrialized Western ones like Sweden are thinking seriously about, that prompted one of the most notable questions by the subcommittee: whether the US central bank should create its own digital fiat currency.
But that question seemed to come more out of fear of the US dollar being supplanted as the world’s reserve currency than in support of digital currencies in general.
In this hearing, cryptocurrency was likened to wildcat banking in the early 1800s when private companies were issuing their own currencies. That wild west image of cryptocurrency endured through the hearing, as most answers focused on how it has little value as a currency and doesn’t do anything good that fiat currencies can’t do.
There was some outright negativity on cryptocurrency. “There is nothing that can be done with cryptocurrency that cannot be done with sovereign currency that is meritorious and helpful to society,” said Rep. Brad Sherman. “We should prohibit US persons from buying or mining cryptocurrencies. Mining alone uses electricity which takes away from other needs and/or adds to the carbon footprint. As a store as a medium of exchange cryptocurrency accomplishes nothing except facilitating narcotics trafficking, terrorism, and tax evasion.”
Though the subcommittee tended to have an unfavourable outlook on crypto, most didn’t share Sherman’s extreme view on banning it, pointing out that criminals use cars and cash yet we don’t ban those.
In all, the subcommittee didn’t come to any real conclusions on anything, but it didn’t close any doors either. Something the chairman acknowledged in his closing remarks.
“Given the fact that digital currencies and cryptocurrencies will continue to have a greater and greater impact on our financial system and the broader economy I’m sure we’ll be revisiting this topic further in the future.”
Watch the Subcommittee’s Hearing on the Future of Money: Digital Currencies: