The legislators objected to a chapter of the president’s annual report that they believe diminished the role of Congress and could damage the economy with its hostility to digital assets.
United States Congressmen Warren Davidson and Mike Flood have written a letter to the chair of the Council of Economic Advisers (CEA) demanding an explanation for a chapter the agency prepared for the “Economic Report of the President” that expressed “a hostile view towards the digital asset ecosystem.”
The report, presented to Congress in March, contained a chapter titled “The Reality of Crypto Assets” that claimed such assets “have brought none of the promised benefits.” The agency’s opinion marked a reversal of the position taken in the president’s “Executive Order on Ensuring Responsible Development of Digital Assets,” the lawmakers claimed. They wrote:
“We are working to do our part in Congress to put forth a regulatory regime for digital assets that will allow this innovative ecosystem to thrive in the U.S. while enacting critical protections.”
“By taking such a hostile view towards the digital asset ecosystem, the Administration is only pushing digital asset innovation offshore,” they wrote. This posture, they added, will start “drawing capital and economic growth away from the U.S. to the benefit of other countries.”
The letter raised questions, many of which immediately sprang to the minds of crypto supporters who objected to the claims made in the report. The writers asked how firms can comply with the law “when the laws that allegedly apply are conflicting, for example when a product is considered both a security and a commodity.”
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They further asked why the agency dismissed the role of Congress by saying much of the activity in the crypto space is covered by existing regulations. They wrote, “Is it the CEA’s view that legislation from Congress will not mitigate potential risks and provide consumers with more protections than exist today?”
Finally, the lawmakers demanded to know why the agency, which is part of the Executive Office of the President, claimed that the soon-to-launch FedNow instant payment system and central bank digital currency would be simpler and more effective than digital assets in upgrading the financial system.
There is simply no way the digital assets ecosystem within the United States will survive without some kind of action from Congress to combat the regulatory deluge we’ve seen in the past few months.
Watch my full comments pic.twitter.com/CscbpkorcO
— Rep. Mike Flood (@USRepMikeFlood) April 27, 2023
The letter did not explain what purpose the requested information would serve. The authors set a May 26 deadline for the answers.
Davidson is a longtime crypto advocate who in April introduced legislation to remove Gary Gensler from the chairmanship of the Securities and Exchange Commission.
Flood introduced a bill as a Nebraska state legislator in 2021 that would allow financial institutions in the state to operate digital asset depository businesses. That bill was signed into law. On the federal level, Flood supported Rep. Tom Emmer’s “CBDC Anti-Surveillance State Act” when it was unveiled in February.
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