Blog Article

Digital Assets and the Future of Finance: Testifying Before the US House Committee on Financial Services


Stellar Development Foundation

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Digital assets



All eyes were on Washington, D.C. today as one of the first full congressional committee hearings on digital assets and the future of finance took place — featuring six witnesses from across the blockchain and crypto industries called to testify, including SDF CEO and Executive Director, Denelle Dixon. The purpose of this hearing was to help the House Committee on Financial Services better understand the challenges and benefits of financial innovation in the United States, covering topics ranging from digital assets, regulatory frameworks, environmental impact, and more.

The hearing covered a lot of ground, everything from defining stablecoins, sharing the various perspectives on regulatory frameworks, to ensuring blockchain is an inclusive and equitable industry. As the only representative of a blockchain network, Denelle spoke to the meaningful ways in which Stellar is enhancing the world’s financial infrastructure through real-world use cases such as cross-border payments and remittances. Integral to these use cases are digital assets, and stablecoins – digital tokens pegged to a stable reserve asset such as fiat – were an oft-discussed topic.

“Stellar is a pioneer for tokenization, optimized for fiat-backed asset issuance before stablecoin was even a word. Businesses and users have built use cases around Stellar-based stablecoins due to their utility to solve many of the problems we see in today's payment landscape.” – Denelle Dixon

In addition to stablecoins, blockchain offers advantages such as digital asset issuance, real-time settlement, and immutability that the existing financial system can leverage. Denelle discussed how businesses are currently developing new applications on Stellar, highlighting the versatility of the network when it comes to different payments-related use cases. For instance, MoneyGram International facilitates payments via Stellar USDC with near-instant settlement while Leaf Global Fintech offers refugees a Stellar-powered wallet that allows them to make payments with stablecoins and safely transfer their money across borders.

Crypto’s impact on the environment also took the floor. Citing University of Lund’s research conducted on Stellar’s energy consumption, Denelle provided the context that a key factor to sustainability is the consensus mechanism behind blockchains. She made the distinction that there are consensus mechanisms (for example, the Stellar Consensus Protocol) that are available and consume less energy per transaction than those of traditional financial rails. When asked her opinion on how policymakers should approach better understanding blockchain’s environmental impact to mitigate it, she emphasized the importance of continued research and public-private collaboration to advance sustainability standards, and goals should be set in tandem with third party experts.

“You always need to balance the value of what you receive in terms of the harm that’s actually created in the environment – we constantly have to do this kind of analysis. We all need to focus on minimizing energy consumption as much as possible and think of how we can work with governments to consider the best way to achieve that carbon-neutral status that a lot of folks want us to get to.” – Denelle Dixon

Attention soon turned to the struggles that underbanked, unbanked, and minority populations in the US face in terms of accessing financial services, and how blockchain and traditional financial institutions can tackle these challenges together. Elaborating on MoneyGram’s progress to integrate their cash in-and-out capabilities onto Stellar, Denelle noted that this partnership represents an opportunity for the traditional financial institutions and blockchain to leverage each others’ strengths to offer new value to underserved consumers. By integrating its services onto Stellar, MoneyGram will enable its users direct access to blockchain and digital assets via its own established global network of on/off ramps. Consumers will be able to use cash to fund digital wallets, send value in USDC and access new digital financial services if they desire, and easily convert back to local fiat currency for instant pickup at participating MoneyGram locations globally – all without a bank account.

“It demonstrates the true interoperability between blockchain and the traditional financial infrastructure and the value these traditional players bring – because they created this important ecosystem and network of folks all over the world that have feet on the ground who can then deliver value to people with cash.” – Denelle Dixon

Overall, SDF appreciates how the US House Committee on Financial Services approached these topics with open-mindedness, curiosity, and nuance, and is optimistic that ongoing dialogue could lead to a regulatory framework for stablecoins that encourages innovation.

If you want to read the full remarks, you may find them here. You can also catch a recording of the hearing below: