The House Financial Committee and the SEC are Set to Meet Over Cryptocurrencies

The United States Securities and Exchange Commission (SEC) and the House of Representatives Committee on Financial Services will be meeting this week to discuss several topics, with cryptocurrencies on the board.

According to a memorandum published on September 19, the Committee on Financial Services confirmed that it would hold the hearing on Tuesday, in a session tagged “Oversight of the Securities and Exchange Commission: Wall Street’s Cop on the Beat.” The hearing will reportedly be attended by Jay Clayton, the Commissioner of other SEC, Hester M. Pierce (also known as Crypto mom), as well as four other top agency officials.  

Topics of discussion

On its list of topics for discussion, the Committee included cryptocurrencies, further adding that it plans to enforce securities laws to all securities- including stocks, bonds, and investment contracts- regardless of whether they are based on cryptocurrencies or not. 

The hearing will also cover exchange-traded funds (ETFs), as well as the age-old argument of whether digital assets are to be considered securities or if they should be given exemption from federal securities laws. 

Ever heard of that Libra?

The hearing is also expected to touch on Libra, the stablecoin project developed by social media giant Facebook. Libra has been confirmed to be planning a rollout of two coins; an asset-backed coin to be used for transfers within WhatsApp and Facebook Messenger, as well as a separate coin to provide rewards to Libra investors. 

However, the Committee seems to be unclear as to whether Libra could be a security or not. On Libra, the memorandum states, The Libra Investment Token could amount to security since it is intended to be sold to investors to fund startup costs and would provide them with dividends. The Libra token itself may also be a security, but Facebook does not intend to pay dividends, and it is unclear if investors would have a “reasonable expectation of profits.” 

While we would have to wait until the hearing is over to know what regulators think about Libra, Facebook chief executive Mark Zuckerberg has been doing his bit to ensure that the asset doesn’t get shelved by lawmakers. 

Facebook isn’t giving up yet

So far, it’s safe to say that Libra is standing on shaky legs at best, with lawmakers both at home and abroad expressing skepticism over whether to allow the asset to operate at all. 

In a bid to save this massive investment, Facebook has pulled some strings behind the scenes. It hired multiple lobbyist firms since the release of the Libra whitepaper to help convince Capitol Hill of the’ asset’s viability, while Zuckerberg himself reportedly had meetings with some American lawmakers as well. 

The most recent of such meetings was one with Josh Hawley, a Republican Senator from Missouri. According to a Twitter post on September 19, Hawley tried to reason with the chief executive to help show that the company was serious about privacy issues, including counseling that he sells both WhatsApp and Instagram. 

Just finished meeting w @facebook CEO Mark Zuckerberg. Had a frank conversation. Challenged him to do two things to show FB is serious about bias, privacy & competition. 1) Sell WhatsApp & Instagram 2) Submit to independent, third-party audit on censorship. He said no to both

— Josh Hawley (@HawleyMO) September 19, 2019

However, Zuck was resolute in his stance, saying he wasn’t willing to sell both services. So, we’ll just have to wait to see how the meeting between the House Financial Services Committee and the SEC goes.