FinTech Law Professor Tells Congress Crypto Should Be Banned from the Banking System

FinTech Law Professor Tells Congress Crypto Should Be Banned from the Banking System

Lee Reiners, policy director at the Duke Financial Economics Center, recommended banking agencies block the crypto industry from entering the banking system while testifying before the Senate Banking Committee on Tuesday.

The professor claimed that crypto has brought nothing of any use in the 14 years since Bitcoin's white paper was published.

What to do about crypto

The hearing entitled “Crypto crash“, examined why crypto needs stricter regulation and protections to protect investors, especially after last year’s contagious market collapse.

Banking Committee Chairman Sherrod Brown opened the hearing with strong criticism. Call on the industry not to advertise at this year's eventSuper Bowl, he mocked Matt Damon's famous ad on behalf of CryptoCom: "It turns out that fortune doesn't favor the bold. It favors the wealthy insiders," he said.

Reiners followed Brown's skeptical tone, claiming that crypto's "killer use case" still hasn't revealed itself after over a decade.

“Most people simply invested in crypto because they thought they could sell it to someone else at a higher price in the future,” he said. Rather, he argued that there is ample evidence of the harm crypto can cause, includingchopsFraud, financing terrorism, evading sanctions and endangering the nation's climate goals.

Given the dangers, Reiners said he “agrees with the opinion” that crypto should be excluded from access to the banking system as much as possible. However, as long as crypto remains legal, banks are obligated not to discriminate against the industry.

The professor recommended that banking agencies release information to the public disclosing all the ways banks are exposed to crypto. He also suggested that authorities impose stricter rules on what crypto-related activities banks cannot engage in - including a rule against holding crypto on their balance sheets.

Accelerating regulation

Linda Jeng – a former member of the SEC CFTC and the Federal Reserve – was also present to testify. Her belief in crypto's innovative power was more optimistic than Reiner's - although even she admitted that there is a severe lack of regulatory clarity in the industry.

“Congress urgently needs to pass thoughtful, comprehensive legislation that creates a federal regulatory framework for digital assets that addresses both securities and non-securities in this complex and nuanced area,” she said.

Senators Cynthia Lummis and Kirsten Gillibrand drafted bipartisan legislation last year to create basic standards for the proper regulation and classification of digital assets. The invoice was checked by bothRegulatorAndBitcoin bullsHow.

.