Crypto’s more than 20% flash crash over the weekend, plus a new $196 million hack attack at crypto exchange BitMart, will give politics plenty of fuel for a fiery discussion.
Timing is everything, and timing couldn’t be worse for the cryptocurrency industry right now. This weekend a centralized cryptocurrency trading exchange — BitMart — confirmed a security breach where the equivalent of $196 million was stolen from investors who were storing programmable money on BitMart’s network.
Bad news bears claw crypto over the weekend
On top of the happenings at BitMart, the entire crypto sector suffered a surprising flash crash of more than 20% on Saturday that experts say was triggered by uncertainty surrounding the omicron COVID-19 variant. The size of that drop could have been prepped and amplified by a stunning 200% spike in the number of short Bitcoin contracts held the week prior, likely in response to omicron.
Crypto execs called to testify before Congress
If that’s not enough, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, has convened a full committee in an in-person and remote session to grill six CEOs of various cryptocurrency companies. The hybrid session titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States” will be held at 10 a.m. ET on Wednesday, Dec. 8.
According to the Congresswoman’s press release, the following witnesses will be in attendance:
- Jeremy Allaire, CEO, Circle
- Sam Bankman-Fried, CEO, FTX
- Brian Brooks, CEO, Bitfury
- Chad Cascarilla, CEO, Paxos
- Denelle Dixon, CEO, Stellar Development Foundation
- Alesia Haas, CEO, Coinbase Inc. and CFO, Coinbase Global Inc.
Perfect political storm brewing against crypto sector
The bad crypto news over the weekend will likely elevate the emotions and discourse of lawmakers during the hearing. Rep. Waters has historically been an ardent critic of blockchain technology and cryptos in general. In December, she told then President-elect Biden to reverse a series of favorable crypto-related guidelines issued by the Office of the Comptroller of the Currency (OCC), including a provision that allowed banks to store stablecoins for clients.
Earlier this year, she formed a Digital Assets Working Group of Democratic Members, comprising a panel of her political peers skeptical of crypto with the intent to “engage with regulators and experts to do a deep dive on this poorly understood and minimally regulated industry.”
Will this hearing help, hype, or hurt crypto?
Her latest press release further noted that since becoming Chairwoman of the House Financial Services Committee, Waters has, “transformed the Committee to focus its agenda on fairness, protecting consumers and investors, which includes accountability of large financial institutions and emerging tech products and services. She has made it a practice to call Committee hearings with CEOs of major financial institutions and companies to hold them accountable.”
Some of the other top tech executives that Waters has brought before the Committee as part of her accountability agenda include Facebook CEO, Mark Zuckerberg and ex-head of Novi digital wallet, David Marcus.
This upcoming political hearing will likely devolve into political theater and become a public bashing of the attending crypto executives. That would cast the entire industry in a negative light, validating the need for dramatic regulations and government oversight. While crypto realists recognize the need for thoughtful regulation, it will be interesting to see if this committee hearing helps, hypes, or hurts the nascent industry.
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