Business

Erik Gibbs

US bank CEOs appear before Congress to talk about blockchains

The CEOs from several of the largest banks in the United States were recently pulled in front of Congress to answer some questions. A hearing was organized by the House Financial Services Committee, and cryptocurrency enthusiast Representative Warren Davidson, designed to understand the banks’ position on blockchains and cryptocurrencies. Davidson, who is responsible for attempting to introduce a number of bills to evolve the Bitcoin industry in the U.S., also wanted to know why the CEOs had been trying to game the government and the people.

Davidson is behind the Token Taxonomy Act of 2019, a bill that is designed to amend the Securities Act of 1933 in order to cover digital assets. That bill was introduced on April 9, and Davidson met with the heads of JP Morgan, Goldman Sachs, BNY Mellon, along with others, the following day.

Davidson went on the offensive, looking to the CEOs for an explanation behind their actions. In addressing the head of JPMorgan, Jamie Dimon, Davidson wanted to know how the company could go from calling crypto “not a real thing” to launching the JPM Coin a year and a half later.

Dimon responded, “The blockchain is real, its technology, a lot of people use and attest to it today and we think it will work over time. But the part that is not real is that cryptocurrency is not supported by anything. There’s no value behind it other than what the next person will pay for it… The JPMorgan Coin is a token which is supported by a deposit at JPMorgan. So it can be shipped around the world real-time, it can go with a lot of data on it, you can split it into pieces, and the second someone wants cash, we can move the cash.”

Goldman Sachs, which reportedly was going to introduce a crypto trading desk but decided against it, was asked about that move. The company’s CEO, David Soloman asserted, “…like others, we’re watching and exploring and doing work in terms of trying to understand the cryptocurrency market as it develops. We have some clients that have certain functionality that we’ve engaged with them on clearing physical futures, but other than that, we never had plans to open a cryptocurrency trading desk. We might at some point in time, but there’s no question when you’re dealing with cryptocurrency, it’s a new area, there are a lot of issues, it is unclear from a regulatory perspective, and it’s not clear whether or not, you know in the long run, as a currency, you know those technologies are going to work and be viable.”

All of those involved echoed the same sentiment—the U.S. needs to develop regulations for blockchains and cryptocurrencies. This has been the position of Davidson throughout his fight, asserting that the lack of oversight is causing the U.S. to fall behind in innovation. If something isn’t done to implement corrective action soon, he asserts, the U.S. will be so far behind that it will never be a world leader again.

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