Don't Let the Crypto Circus in Congress Fool You

Rep. Brad Sherman's laughable suggestion during a House Financial Services Committee hearing in the house that the U.S. ban mining and purchases of bitcoin could suggest we've gone backward since bitcoin was first discussed in Congress in the fall of 2013.

Consider also how dozens of law firms, a community that's constantly interacting with both regulators and legislators, either have crypto practices or are doing research and education into how the law should deal with this issue.

The folks at Coin Center and others in the crypto space who've been engaging with regulators since 2013 remark that non-political staff members from the Securities and Exchange Commission, the Commodity Futures Exchange Commission and various other agencies are now much more comfortable using the language of this industry than back then.

Part of this shifting tide reflects the unavoidable reality of crypto markets, which have grown massively since 2013.

Notwithstanding problems of measurement, the almost $300 billion that CoinMarketCap says is the crypto market's total market capitalization is a historically significant figure.

Even after its correction from a high above $800 billion in early January, the number belies the presence of an emerging, parallel capital market.

There are more than 200 crypto exchanges, where more than $16 billion is changing hands daily in dozens of countries.

The dollar amounts are still small compared with the trillions traded in traditional fiat capital markets, but they are by no means insignificant.

Powell might be currently saying that crypto markets are too small to threaten financial stability, and therefore for the Fed to regulate them, but he will keep being pestered by lawmakers and their staff, as well as those of other government agencies, for his opinion on them.

Various jurisdictions are taking stances that proactively encourage crypto and blockchain development, in part because they're eager to attract some of that capital flow and in part because they want to promote innovation.