The U.S. Congress held two pivotal hearings on July 18, addressing the evolving landscape of virtual currency under the themes "The Future of Virtual Currency" and "Cryptocurrency: Regulating a New Asset Class in the Digital Age." These sessions brought together leading economists, legal experts, technologists, and policymakers to explore how digital assets are reshaping finance, what regulatory challenges they pose, and whether they can be integrated into the nation’s monetary system.
As blockchain technology advances and adoption grows, lawmakers are grappling with fundamental questions: Should virtual currencies be treated as money? How should they be regulated—like securities, commodities, or something entirely new? And what role might a central bank digital currency (CBDC) play in America’s financial future?
This article breaks down the key insights from both hearings, offering a clear, structured analysis of expert testimonies, regulatory considerations, and forward-looking implications for investors, innovators, and the broader economy.
The Future of Virtual Currency: Can Digital Money Replace Cash?
Purpose of the Hearing
This session focused on evaluating the extent to which virtual currencies should be recognized as legitimate forms of money and their potential impact on domestic and global economies. Lawmakers also examined the pros and cons of central banks adopting digital currencies, aiming to understand how these innovations could coexist with—or eventually replace—physical cash.
Key Experts and Their Insights
Dr. Rodney J. Garratt – Professor of Economics, UC Santa Barbara
Dr. Garratt emphasized a long-term trend: the decline of physical cash. He noted that electronic transfers are making traditional cash deposits increasingly obsolete. While paper money won’t vanish overnight, the Federal Reserve will eventually have to confront the reality of a cashless society.
“The ease of transferring digital money is reducing reliance on physical currency, and this shift is irreversible.”
However, he cautioned that before virtual currencies can fully replace cash, critical issues around security, scalability, and monetary policy stability must be resolved.
Dr. Norbert J. Michel – Director of Data Analysis, The Heritage Foundation
Michel argued that while virtual currencies are gaining traction as mediums of exchange and stores of value, the U.S. dollar remains unchallenged as the world’s reserve currency. He stressed that Congress should not rush to ban or over-regulate digital assets simply because they’re unfamiliar.
“People should have the freedom to choose their preferred transaction method—governments shouldn’t stand in the way of innovation.”
He warned against premature regulation that could stifle competition and limit consumer choice.
Dr. Eswar S. Prasad – Senior Professor of Trade Policy, Cornell University
Prasad acknowledged that blockchain improvements may enhance virtual currencies’ functionality as payment mechanisms, but highlighted their extreme price volatility as a major barrier to widespread adoption.
“Speculative interest currently outweighs practical use—but that could change as technology matures.”
Still, he affirmed that the dollar’s role as a global reserve asset is secure, thanks to institutional trust, liquidity, and macroeconomic stability—qualities no decentralized currency has yet matched.
Alex J. Pollock – Senior Fellow, RStreet Institute
Pollock reminded the committee that while financial systems are becoming fully digital, money itself hasn’t changed in essence. Governments need legal tender, backed by law and convertible into real assets.
Yet he raised concerns about central banks accumulating excessive power through monetary control. A balanced approach is needed—one that embraces innovation without expanding state dominance over finance.
Cryptocurrency: Regulating a New Asset Class in the Digital Age
Hearing Objectives
This second hearing tackled the classification and regulation of virtual assets. With cryptocurrencies blurring the lines between securities, commodities, and utility tokens, regulators face a complex challenge: how to protect investors without stifling technological progress.
Key Participants and Perspectives
K. Michael Conaway – Chairman, House Committee on Agriculture
Chairman Conaway opened by acknowledging that virtual currencies don’t fit neatly into existing legal categories. Are they securities? Commodities? Or an entirely new class?
“We may need a new regulatory framework altogether—one that reflects the unique economic relationships within virtual asset ecosystems.”
He noted the agricultural committee’s involvement stems from its jurisdiction over commodity markets, including futures and derivatives—areas where crypto increasingly plays a role.
On crime, Conaway made a surprising observation: despite fears of Bitcoin enabling illicit activity, its public ledger makes transactions more traceable than cash.
“As long as foolish criminals keep using Bitcoin, law enforcement wins.”
Joshua Fairfield – Law Professor, Washington and Lee University
Fairfield advocated for use-case-based regulation. Since people hold crypto for different reasons—spending, saving, investing—the rules should reflect actual behavior, not just technical design.
He proposed applying the “duck test”: if it walks like a security and quacks like one (e.g., promises returns based on others’ efforts), then it should be regulated as such.
Inter-agency coordination is essential to avoid contradictory rulings from the SEC, CFTC, and other bodies.
Amber Baldet – Co-Founder & CEO, Clovyr
Baldet compared blockchain to early internet infrastructure—open, decentralized, and ripe for innovation. She urged Congress to adopt a “do no harm” approach, creating safe harbors for developers.
“The longer we wait to clarify regulations, the more we risk losing America’s first-mover advantage.”
She warned that regulatory delay could push innovation overseas, just as unclear rules once threatened early web development.
Scott Kupor – Managing Partner, Andreessen Horowitz
From a venture capital perspective, Kupor stressed that clear rules enable risk-taking and investment. The U.S. became a tech leader because its regulatory environment supported experimentation.
He explained that token classification depends on context:
- In early stages, when a central team raises funds via token sales, it may constitute a security under the Howey Test.
- In mature, decentralized networks, tokens often function more like commodities, reflecting access to services rather than investment contracts.
“One-size-fits-all regulation doesn’t work here—we need nuance.”
Daniel Gorfine – Chief Innovation Officer, CFTC
Gorfine highlighted the importance of regulatory literacy in fintech. Over 80% of ICOs have failed or turned out to be scams—proof that bad actors thrive in uncertain environments.
But rushing into regulation is dangerous too.
“Not everything called a ‘commodity’ deserves federal oversight. Hasty rules can misfire and harm innovation.”
His call: build expertise first, regulate wisely later.
Lowell Ness – Executive Partner, Boies Schiller Flexner LLP
Ness proposed a tiered regulatory model:
- Tokens representing specific goods or services should follow existing rules for those assets.
- Other digital assets require deeper analysis based on structure and function.
His framework preserves investor protection while allowing space for growth. It grants:
- SEC authority over securities,
- CFTC oversight of derivatives and spot market fraud,
- FinCEN responsibility for AML/KYC compliance,
- FTC power over misleading advertising claims.
Core Consensus from the Hearings
Despite differing viewpoints, several key agreements emerged:
- Regulatory clarity accelerates innovation—delays put U.S. competitiveness at risk.
- Virtual assets are here to stay and represent a major technological shift.
- Regulation must be adaptive, considering use cases, decentralization levels, and project maturity.
- Inter-agency collaboration is crucial to avoid conflicting mandates.
- A balanced approach protects consumers while fostering entrepreneurship.
Chairman Conaway concluded:
“Our goal is to promote innovation while ensuring public protection. We’ll continue working with experts to build a safe, efficient, transparent digital asset market.”
Frequently Asked Questions (FAQ)
Q: Can virtual currencies replace the U.S. dollar?
A: Not in the foreseeable future. While digital assets offer innovation, the dollar’s stability, global trust, and institutional backing make it irreplaceable as a reserve currency.
Q: Are cryptocurrencies considered securities or commodities?
A: It depends on context. The SEC regulates tokens sold as investments (via the Howey Test), while the CFTC treats many as commodities—especially in decentralized networks.
Q: Is Bitcoin used mostly for illegal activities?
A: No. While some criminals use crypto, Bitcoin’s transparent ledger makes it less anonymous than cash. Most transactions are legitimate.
Q: Could the U.S. launch its own digital currency?
A: Yes. A central bank digital currency (CBDC) is under active discussion, though concerns about privacy and financial control remain.
Q: How does regulation affect crypto innovation?
A: Unclear rules discourage investment. Well-designed regulation provides certainty, encourages responsible development, and protects users.
Q: Why is blockchain compared to early internet technology?
A: Like the 1990s web, blockchain is foundational but immature. Open protocols today could power future financial infrastructure—if nurtured properly.
Final Thoughts: Shaping the Future of Finance
These congressional hearings mark a turning point in U.S. policy toward digital assets. Rather than reacting with fear or prohibition, lawmakers are engaging thoughtfully with technologists and economists to craft intelligent regulation.
The core keywords guiding this transformation are:
- Virtual currency
- Blockchain technology
- Cryptocurrency regulation
- Digital asset classification
- Central bank digital currency (CBDC)
- Financial innovation
- Decentralized finance
- Monetary policy
America stands at a crossroads: embrace measured innovation or risk falling behind global competitors already advancing digital finance initiatives.
With thoughtful oversight, public-private collaboration, and adaptive frameworks, the U.S. can lead the next era of financial evolution—securely, inclusively, and innovatively.