Bitcoin is on its way up — and the growth of cryptocurrencies is a cause for concern, Congress is told

What makes now an appropriate time to push for legislation making it easier for banks and other financial institutions to issue cryptocurrency, experts on Friday asked members of the U.S. House of Representatives.

Even as law enforcement officials have sought to dissuade people from falling prey to cybercriminals who pose as crypto personalities, the pace of the movement has accelerated, they said. There are now more than 850 cryptocurrencies, with the market capitalization of the most valuable offering, bitcoin, hovering around $500 billion, up from less than $100 billion last year.

At a hearing on Friday, members of the House Financial Services Committee put executives from such businesses, known as digital asset exchanges, and the SEC, the agency that regulates securities, on the hot seat for more than two hours. Lawmakers asked regulators and companies how they would address the different needs of platforms offering financial products such as crypto tokens, and how they would prevent companies from engaging in illegal behavior.

Executives from exchanges such as Coinbase and Kraken told lawmakers that increased awareness, consumer education and the removal of excessive regulations are helping increase demand for crypto tokens.

Rep. Patrick McHenry, a North Carolina Republican who has played a significant role on the committee, offered praise for many institutions participating in the hearing, which was the first to feature representatives from multiple exchanges.

But McHenry said he was concerned that too many companies had “missed important opportunities.”

“We know that crypto is an emerging industry that is changing drastically,” McHenry said. “But we must not simply turn a blind eye to what many see as an increasing threat to the integrity of our financial system.”

There have been reports in recent months that exchange data is being hacked, mostly through the use of phishing emails in which users click on an attachment that contains malicious software.

Rep. Maxine Waters, a California Democrat who serves as the committee’s top Democrat, said she wants to be informed about the concerns of consumers who try to purchase crypto. “I want to know what the customer protections are,” she said.

Kenny Lowey, the chairman of the committee, struck a similarly defiant tone. He noted that Washington had been at the forefront of many financial innovations since the Glass-Steagall Act of 1933 repealed the separation of commercial banks and investment banks, “bringing many new ideas to America,” but lamented that modern crypto instruments had been presented to the public as “magic” and “possibilities,” confusing people.

“The bills before us seek to protect consumers and advance the cryptocurrency industry,” Lowey said. “Make no mistake, these bills are not about digital tokens … nor are they an attempt to establish crypto as a form of legal tender.”

The House also passed a bill on Friday that will make it more difficult for companies to post speculative information on social media. The bill requires Twitter and other social media networks to remove false and misleading posts and require more detail about the security safeguards behind an offer to purchase the same financial instrument.

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