Cryptocurrency experts gathered on Capitol Hill on Wednesday as the Senate’s Select Committee on Intelligence kicked off a public hearing on the technology that has grabbed the attention of financial regulators.
“Like the Internet before it, cryptocurrencies have emerged from the arcane and fringe corners of the industry to become the most prominent technological innovation in the financial world for more than a decade,” committee chairman Sen. Richard Burr, R-N.C., said in a statement. “This hearing will explore the potential effects of such technological innovation on the integrity of financial markets and our national security.”
The hearing comes less than a month after the Securities and Exchange Commission accused digital currency exchange Coinbase, of San Francisco, of failing to adequately monitor the transactions that could lead to illegal conduct in financial markets.
In its lawsuit, the SEC accused Coinbase of failing to require it customers to disclose all of their connections to a money transmitter, and of not properly identifying customers and their money transfers.
“Coinbase provides investors a variety of protections but lacks a strong plan in place to enforce them against themselves,” the SEC said in a statement at the time. “Coinbase fails to adequately protect its users and the funds entrusted to Coinbase.”
The SEC brought the lawsuit with the help of the U.S. attorney’s office in San Francisco. On Wednesday, the Senate panel’s chairman pointed to the SEC suit as an example of the risks involved in digital currencies.
“There have been multiple serious breaches of the regulations on the conduct of virtual currencies, and the regulatory framework is still evolving,” Burr said in a statement. “This places additional pressure on the SEC to protect investors and ensure the integrity of our financial markets.”
The debate about regulations surrounding the technology comes amid a multi-year rise in the cryptocurrency market. Today, at least $213 billion is invested into virtual currencies, a significant portion of the overall $3.5 trillion in virtual currency assets under management, according to a September 2017 study by research firm TABB Group. Bitcoin accounts for about 78 percent of all virtual currency assets, according to the report.
Among the panelists at Wednesday’s hearing: