The House Financial Services Committee (HFSC) held a hearing on Tuesday, September 24, 2019 titled Oversight of the Securities And Exchange Commission: Wall Streets Cop On The Beat. For the SEC, this was a chance for all five Commissioners to publicly meet together and sit as witnesses before the Committee in the House of Representatives. For Democrats, this was an opportunity to discuss Facebooks Libra and how the SEC might also be Big Techs Cop On The Beat with respect to Libra and cryptocurrencies.

Chairwoman Maxine Waters (D-CA) has been unrelenting in her concern of Facebooks new Libra project and todays hearing was no exception. The following timeline indicate her rigor and focus on Big Techs move into cryptocurrency:

In the hearing on Tuesday focusing on the SEC as Wall Streets cop on the beat, the Chairwoman wasted no time turning her attention to how the SEC also needed to be Big Techs cop on the beat as well.

Im very concerned about Facebooks plan to create a digital currency Libra and digital wallet Calibra. It appears that Facebook is working to create a global financial system that is intended to rival the U.S. dollar...I hope to hear what steps the SEC has taken is doing to ensure that Libra is appropriately and rigorously regulated.

Chairwoman Rep. Maxine Waters, D-Calif. speaks to a colleague as David Marcus, CEO of Facebook's ... [+] Calibra digital wallet service, testifies before a House Financial Services Committee hearing on Facebook's proposed cryptocurrency on Capitol Hill in Washington, Wednesday, July 17, 2019. (AP Photo/Andrew Harnik)

During the question period, Chairwoman Waters asked whether Chairman Jay Clayton of the SEC had a specific committee, commission or advisory group to focus on Libra. Clayton responded that the SEC does have a group focused on digital assets examining both the potential they have to add efficiency as well as the risks they create. He noted, To the extent that crypto assets would be used to evade ... regulations, I have a real problem with it.

Representative Al Green (D-TX) followed up on the Chairwomans concerns on Libra and provided an overview of how the Libra Reserve will be funded by the Libra Association. Members pay $10 million to join the Libra Association and receive a Libra Investment token, which entitles them to receive dividends. The fact that the Libra Coin is funded from the Libra Investment token potentially means both tokens would be classified as securities by the SEC. Chairman Jay Clayton welcomed Representative Greens offer to write a letter to the SEC with what he feels the proper disposition of Libra should be.

The comments from Representative Green were very similar to the Committee Memorandum provided prior to the hearing by the House Financial Services Committee, where it states, On the matter of whether both Libra tokens are securities, the Committee Memorandum states,However, the offer of Libra could be integrated into the offering of the Libra Investment Token, thereby deeming both securities. The Footnote referenced the SECs complaint against Kik on June 4, 2019 in regards to how the SEC could rule both Libra tokens as securities.

What about the entire blockchain phenomenon? What do you know about that? What work has been done on that? Is there an opportunity to perhaps brief the legislators on the work you are doing on Libra and the work you are doing or all of blockchain.

Republicans Ask For Regulatory Clarity On Digital Assets To Avoid Innovation Flight From America

For the House Financial Services Committee, this was a chance for many Republicans, particularly Congressman Warren Davidson (R-OH), Congressman Ted Budd (R-NC), and Congressman Anthony Gonzalez (R-OH), to ask for regulatory clarity for digital assets so that innovation and entrepreneurship in this new industry will thrive in the U.S. and not be driven to Singapore and the United Kingdom that have provided regulatory clarity for this new asset class.

Congressman Davidson stated that Bill Hinman, Director of the Division of Corporate Finance at the SEC, described an approach to digital assets through facts and circumstances rather than a bright line test, was not sufficient to providing the regulatory clarity needed in the United States for the digital currency space.

UNITED STATES - SEPTEMBER 24: Jay Clayton, center, chairman of the Securities and Exchange ... [+] Commission, testifies with commissioners during the House Financial Services Committee hearing on oversight of the SEC in Rayburn Building on Tuesday, September 24, 2019. SEC commissioners from left are, Allison Herren Lee, Robert J. Jackson, Clayton, Hester M. Peirce, and Elad L. Roisman. (Photo By Tom William/CQ-Roll Call, Inc via Getty Images)

This company by company approach prevents regulatory clarity and it suffers from the charm and inefficiencies of third world power structures.

Representative Davidson argued that this regulator clarity exists in Singapore, United Kingdom, and Switzerland while hundreds of countries in the U.S. await no-action letters. The Congressman went on to applaud Commissioner Hester Peirce in her comment that enforcement is a poor way to announce policy and asked Commissioner Peirce if a law passed by Congress would be a better way to announce policy. Commissioner Peirce responded it is always better to have a clear way as to what is or is not permissible.

Under questioning from Congressman Gonzalez (R-OH), Commissioner Peirce did note the recent SEC framework provided on digital currencies was guidance did muddy the waters.

Commissioner Peirce Suggests A Safe Harbor For Utility Tokens

Commissioner Peirce noted that, in terms of what the SEC needed to do for the digital assets space, that there is work to do to make sure people can develop in compliance with our rules. Chairman Clayton commented to the extent this technology facilitates more access in a protected way, he would not completely shut the door on token technology; however, in his opinion, the ICOs in 2017 were a very poor example of this.

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Congress Questions The SEC On Libra, Cryptocurrency And The Whole Blockchain Phenomenon - Forbes