Congressional committees held two separate hearings on Wednesday about cryptocurrency.
One hearing, entitled “The Future of Money: Digital Currency,” examined “the extent to which the United States should consider cryptocurrencies as money.” That hearing was held by the House Financial Services Committee, which makes obvious sense.
The other hearing, “Cryptocurrencies: Oversight of New Assets in the Digital Age,” focused on “the regulatory challenges facing this new asset class.” That hearing was put on by… the House Agriculture Committee.
Huh? You might ask: Why is the agriculture committee doing hearings on crypto?
Cryptocurrencies as commodities
The answer dates back to 1820 and has its roots in farming. The agriculture committee was established in 1820, and as part of its purview it oversees commodities. Most commodities were historically agricultural products like corn, soybeans, and wheat.
Then in 1974, the federal government created the Commodity Futures Trading Commission (CFTC) to regulate commodity futures trading, and as a replacement for the Department of Agriculture’s Commodity Exchange Authority. So it is still the Agriculture Committee that authorized the CFTC and deals with futures trading.
As the Agriculture Committee said in a statement released before the hearing, “Our committee has a deep interest in promoting strong markets for commodities of all types, including those emerging through new technology.” Hence: crypto and crypto futures trading.
The chairman of the House Agriculture Committee is Michael Conaway, a Republican congressman from Texas. You might remember Conaway as the man who led the House Intelligence Committee investigation into Russia election meddling, and concluded last year that the Trump campaign did not collude with Russia, a conclusion that was met with much skepticism.
In his opening statement at the crypto hearing, Conaway further explained why the Agriculture Committee is eyeing crypto policy. “Similar to our work in agricultural commodities, as well as futures and swaps markets, the committee has a strong interest in promoting safe, efficient and transparent markets for those who use these new token markets… Perhaps no question has generated greater uncertainty than how to determine if a particular token is a security.”
Cryptocurrency and citrus farming
An SEC official, William Hinman, also tied cryptocurrency trading to agriculture when he announced last month, at the Yahoo Finance All Markets Summit: Crypto in San Francisco, that the SEC does not view the cryptocurrency ether as a security. In his prepared remarks, Hinman referenced the case of SEC vs Howey, in which, “a hotel operator sold interests in a citrus grove to its guests and claimed it was selling real estate, not securities. While the transaction was recorded as a real estate sale, it also included a service contract to cultivate and harvest the oranges.”
And Conaway, too, referenced the Howey case in his statement, saying it is “often presented as the standard test to determine if the securities laws govern a token, yet they have proved challenging to analyze under the test.”
Without getting further into the weeds of the Howey test, suffice it to say that many government officials see connections between crypto and farming, and use agriculture as their means of understanding these new digital assets. (Large-scale bitcoin mining operations are even called “farms.”)
The other speakers at the hearing on Wednesday were: Joshua Fairfield, a tech law professor at Washington and Lee University; Amber Baldet, a former JPMorgan executive now running a blockchain startup called Clovyr; Scott Kupor, managing partner at the Silicon Valley VC firm Andreessen Horowitz, which recently launched a new crypto investment fund; Daniel Gorfine, CIO of the CFTC; Gary Gensler, former chairman of the CFTC and now a lecturer at MIT; and Lowell Ness, a partner at the California law firm Perkins Coie.
Don’t expect this to be the last crypto hearing held by the House Agriculture Committee.