FULL COMMITTEE HEARING
The Digitization of Money and Payments
DATE: Tuesday, June 30, 2020 TIME: 10:00 AM
THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS will meet REMOTELY to conduct a hearing entitled "The Digitization of Money and Payments."
The witnesses will be:
The Honorable J. Christopher Giancarlo, Senior Counsel, Willkie Farr & Gallagher LLP and former Chairman, U.S. Commodity Futures Trading Commission;
Mr. Charles Cascarilla, Chief Executive Officer and Co-Founder, Paxos; and
Professor Nakita Q. Cuttino, Visiting Assistant Professor of Law, Duke University School of Law.
Pursuant to guidance from the CDC and OAP, Senate office buildings are not open to the public other than official business visitors and credentialed press at this time. Accordingly, in-person visitors cannot be accommodated at this hearing. We encourage the public to utilize the Committee's livestream of the hearing, available on the website at http://www.banking.senate.gov.
Crapo Statement at Digital Currency Hearing
June 30, 2020
WASHINGTON - U.S. Senator Mike Crapo (R-Idaho), Chairman of the U.S. Senate
Committee on Banking, Housing and Urban Affairs, delivered the following remarks at a
virtual hearing entitled, ""The Digitization of Money and Payments."
The text of Chairman Crapo's remarks, as prepared, is below.
"Today, the Committee will hear testimony on the digital transformation of money and
"We will discuss how it has enabled more efficient technologies, ushered in new players
and business models, and raised important questions about what the rules of the road
should be and the federal government's appropriate role.
"Testifying will be The Honorable Chris Giancarlo, Senior Counsel, Willkie Farr &
Gallagher and former Chairman of the U.S. Commodity Futures Trading Commission;
Mr. Charles Cascarilla, Chief Executive Officer & Co-Founder, Paxos; and Professor
Nakita Q. Cuttino, Visiting Professor of Law, Duke University School of Law.
"Welcome to our witnesses, and thank you for joining us today.
"The COVID-19 pandemic has forced us all to 'go digital' at rapid pace, turning to our
phones or computers to work, shop, communicate, and provide or receive services.
"This has highlighted the incredible innovation of banks, fintech and payment
companies to facilitate commerce at speed and scale.
"It has also challenged us to reexamine issues of financial inclusion, and consider
different ways to think about money and payments.
"New technologies, like digital wallets and mobile money transfers, have greatly
increased the availability and ease of electronic transactions.
"Often, these services are layered on top of traditional payment rails and rely on core
nonbank payment systems as means of settlement.
"Because many of these services require consumers to hold a preexisting bank account
or card, some believe they may be limited in their ability to expand the population of
financial services consumers.
"Financial innovation has attempted to fill that need by creating entirely separate
payment systems based on their own digital currency and distributed ledger technology.
"Cryptocurrencies have long claimed the ability to provide faster, less-expensive
payments on a global scale, with some degree of anonymity.
"More recently, a new type of cryptocurrency has emerged aimed at achieving these
benefits while marginalizing the volatility of some of its predecessors.
"Stablecoins, which may be issued by a central entity, deliver price stability by having
their value pegged to another asset, like commercial bank deposits or governmentissued
"Still, there are legitimate questions about certain stabelcoins and digital currencies
more broadly, such as the degree of oversight, impact on the transmission of monetary
policy and disruption of banks' traditional financial intermediation.
"The Financial Stability Board (FSB) recently reported that stablecoins could pose
financial stability risks if offered and used by a large, existing customer base.
"Nothing amplified these concerns more than Facebook's announcement of the Libra
project last year.
"To be sure, the cryptocurrency ecosystem is as diverse in its products and functions as
the rest of financial services.
"And as I said in our last digital currency hearing, it seems to me that these and similar
innovations are inevitable, beneficial, and the U.S. should lead in their development.
"The U.S. currently regulates digital assets based on their activity and employs a 'same
risks, same rules' principle. Some states have taken further steps in designing their
own oversight regimes.
"The U.S. must have clear rules of the road in place that protect businesses and
consumers without stifling future innovation.
"Acting OCC Comptroller Brian Brooks has recently raised the idea of a federal
payments or digital currency charter.
"The OCC is also seeking input on a variety of areas important to fintech and digital
currency, aimed at supporting "the evolution of the federal banking system" and its
ability to meet needs of customers and communities.
"This includes: barriers to further adoption of crypto-related activities and distributed
ledger technologies in the banking industry; new payments technologies and processes
the OCC be aware of; and innovative tools for complying with regulations and
supervisory expectations, also known as 'regtech.'
"I am interested in learning more about these and other strategies towards a consistent
"In the meantime, adoption of electronic payments and the growing scale of digital
currencies has led to calls for digital fiat, a so-called 'central bank digital currency,' or
CBDC. This is being explored by many major central banks.
"A CBDC could take many forms. For example, former Chairman Giancarlo has
discussed a tokenized U.S. dollar that could be issued by the Fed and function next to
cash, central bank reserves and commercial bank money, which we will discuss more
"No matter its form, a U.S. CBDC requires methodical consideration and U.S. regulators
have begun this work already.
"Fed Chair Jay Powell has raised several potential legal hurdles, like whether the Fed
has the underlying authority to issue a tokenized dollar; how the rights and obligations
of system participants would be determined; and potential effects on the U.S. dollar as
the world's reserve currency.
"Another critical consideration is the role traditionally filled by banks and other financial
"As trusted intermediaries, these firms perform several services critical to the safety and
stability of the U.S. economy.
"As the federal government explores CBDC, it must consider the innovation and
competition already demonstrated in the U.S. payments sector.
"During this hearing, I look forward to hearing more about efforts being undertaken by
different groups in the development of digital money and payments; design, operational,
and risk considerations in their development; what specific problems a CBDC should
resolve that are not currently being or cannot be addressed by the litany of payments
innovation already completed or underway; and what the rules of the road should be."