10:06 The hearing begins
Financial Services Chair began the US House hearing with statements touching on a wide range of the SEC’s activities; singling Facebook’s Libra out, saying that itt appears that; “Facebook is looking to establish a new global financial system intending to rival the U.S. Dollar.”
Patrick McHenry encouraged the SEC “to reduce regulatory barriers”, saying; “you will hear a lot of doom and gloom today. It is not all doom and gloom.”
10:17 Opening statements from the Commissioners
Commissioner Robert J. Jackson Jr supported greater transparency for corporate-political spending and the need to provide greater transparency for consumers and investors.
Commissioner Hester M. Peirce expressed concern about “overriding investor preferences,” saying that the job of the SEC is not to make decisions for investors. She also emphasized the importance of “regulatory humility,” the need to “always be asking if what we’re doing is right,” entailing work with investors, corporations and other regulators like the Commodity Futures Trading Commission (CFTC).
Commissioner Elad L. Roisman said that “market integrity is a priority for us.”
The increase in capital raised in private rather than public markets were front and center in Commissioner Allison Herren Lee’s concerns, as were the role of digital assets and cryptocurrencies, as well as financial intermediaries.
10:36 Chairman Jay Clayton’s remarks on US House Hearing
Chairman of the SEC Jay Clayton began his remarks by applauding the commission’s recent progress in IT and cybersecurity, but cautioned: “let there be no doubt: substantial risk remains.”
Clayton also put forward the enduring goal of aligning the interests of “main-street investors” with those of professionals.
10:40 Maxine Waters and Libra
Rep. Waters asked Commissioner Jackson about a 10b5 exception to insider trading law before shifting the conversation to Facebook’s Libra, referring to recent comments from President Trump, as well as the governments of France and Germany.
Waters’ June call for a moratorium on Facebook’s development of Libra set off a summer full of news on potential regulation of the prospective token.
Clayton responded to Rep. Waters: “what we have developed is an ecosystem of financial assets over the years,” saying that he indeed has a problem with the potential of digital assets to evade those existing regulations. He did, however, praise the efficiency of cryptocurrencies at large. Waters, however, pressed on Facebook’s Libra.
10:45 Patrick McHenry and Crypto
Continuing with the theme of cryptocurrencies and Libra, Rep. McHenry noted that Facebook’s planned token “is just an idea at this point; a white paper.” But he asked if an appropriate ecosystem existed for cryptocurrencies, which Commissioner Peirce responded to with skepticism.
10:50 Further questions from representatives on US House Hearing
Rep. Brad Sherman, whose incendiary commentary at the Libra hearings with David Marcus back in July was so memorable, said that:
“The U.S. dollar is extremely good currency […] It fails, however, to meet the needs of tax evaders, sanctions evaders, drug dealers and terrorists.”
Rep. David Scott asked the commissioners about the broad state of regulatory affairs regarding fintech. Peirce responded that much development is happening overseas, and she would consequently “like to bring more regulatory clarity to the United States so that fintech development can happen here.”