Biggest crypto hearing takeaway was 'the need for clearer regulatory guidance’: CoinDesk director

Jodie Gunzberg, Managing Director at CoinDesk Indexes, joins Yahoo Finance Live to discuss the main focus of the Crypto hearing, which was regulating safety guidelines.

Video transcript

EMILY MCCORMICK: But for more on the hearing and what all of this means for the cryptocurrency space as a whole, we're welcoming in our next guest, Jodie Gunzberg, CoinDesk Indexes managing director. And Jodie, thank you so much for joining us this afternoon. This was a nearly five-hour long hearing. It really covered a broad range of topics, from stablecoins to regulation, of course, in the cryptocurrency space. What were some of your biggest takeaways?

JODIE GUNZBERG: I think that the biggest takeaway for me is the need for clearer regulatory guidance and standards across the board so that we can understand better what will be the rules of the game so that we can play. And as the market moves from a bigger retail base to an institutional base, these rules are really important for the industry to stay compliant. So I think that that, for me, was the biggest takeaway.

ADAM SHAPIRO: Hey, Jodie. When Brian Brooks talked about banking and the new technology with blockchain, it's all he said about payment technology. And of course, the cryptos are far more efficient at that. But then in the discussions about stablecoins and banking, he made a very good argument about why would you allow banks to do stablecoin, but you wouldn't allow the biggest enterprises that have stablecoin register and get licensed as bank holding companies. But he used the analogy of the dollar being replaced at some point as the world's Reserve currency. And how would I, as an investor holding stablecoin tied to the dollar, be protected if the dollar loses that status at some point?

JODIE GUNZBERG: Understanding the technology that's behind the cryptocurrency and the blockchain is really important. And then understanding exactly what is the underpinning structure of the stablecoin that you're looking at specifically matters. But in this technology, it's just enabling what I think we've always done in traditional finance. But it enables us to do it in a different way. And I think the technology allows it to be faster, clearer, cheaper. And again, it's very easy to be transparent and keep records of it. So I think that the crypto space is just bringing an innovation to the market that it really needs in order to bring banking to everybody.

EMILY MCCORMICK: And Jodie, one of the things that Alesia Haas of Coinbase mentioned as well, and Coinbase executives have reiterated the stance a couple of times now, they're proposing establishing a single point of federal regulators for crypto issues in the US, but have noted that Congress doesn't necessarily need to create an entirely new agency for crypto, and that an existing one, such as the SEC or the CFTC, could potentially work. What is your opinion on that? And which agency or agencies should this fall under the purview of?

JODIE GUNZBERG: If it's not a separate crypto agency, I think the distinction between the different assets needs to be made in order to figure out which regulators should be supervising it because not all cryptos are the same. And for example, something like Ether that falls into all of the major asset classes, a capital asset, a consumable, transformable asset that's like a commodity or like a store of value like a currency, the question becomes, which regulatory body monitors an innovative asset like that that fills all asset classes? Is it one or is it more than one of them?

So I think, again, understanding the underlying of the digital asset is important. And again, like, even something like an NFT or an artwork, gaming, these are all different businesses that are using the cryptography and blockchain technology to present what we know in a different way.

ADAM SHAPIRO: But that-- it was what Alesia has said. Quote, "We don't know what the future is, and there is so much future ahead of us." How can Congress, which doesn't perhaps possess the understanding of these technological advances, regulate? I mean, it was pointed out, for instance, with banking, we have three different regulators for the banking system in the United States.

JODIE GUNZBERG: I think the regulators need to learn more about the technology that we have. It's not asking them for a crystal ball into what will be the future. But I think taking their time to really understand the underpinning of the encryption and the decryption, so that's the cryptography that is the security, and then the blockchain that is ordering the transactions so that it's more transparent, is key for them to understand better how to regulate it. And then classifying the assets into different sectors and industry groups and industries will be important for them to decipher which regulators or rules or appropriate rules should be put around the guidelines to help us determine how to monitor this from the government's perspective.

EMILY MCCORMICK: Oh, and Jodie, can you also put into perspective what is at stake here in terms of the US potentially falling behind on regulation and letting some of these cryptocurrency exchanges and technologies move to other countries because of a lack of clarity and uncertainty here? I think that was something that at least one lawmaker had brought up during the course of today's hearing. So what is at stake, based on the timeline for implementing some of these changes?

JODIE GUNZBERG: Yeah, given the fluidity and mobility of the way that the technology enables us to be pretty global, I believe that the industry will go where there is more clarity and understanding in how to execute what they want to execute. So it would be in the best interest of the United States if they could accelerate the learning curve and start to put in place some regulations that would serve as the guide rail so that industry could develop more here.

ADAM SHAPIRO: We appreciate your helping us understand the several hours of testimony that we've just watched. Jodie Gunzberg, CoinDesk Indexes managing director, all the best to you.