Responding to US lawmakers’ scrutiny of Facebook’s digital currency plans, Ripple executives Brad Garlinghouse and Chris Larsen have written an open letter urging the authorities not to paint all cryptocurrencies with the same regulatory brush.

Democrats on the House Financial Services Committee have demanded an immediate moratorium on the implementation of Facebook’s proposed Libra cryptocurrency and digital wallet, citing the social media giant's recent privacy issues as a threat to the world economy.

President Donald Trump also criticised the social media giant and digital currencies such as Bitcoin for potentially undermining the US dollar.

Ripple, which issues its own digital currency XRP, pleaded with policymakers to reserve judgement before rushing into legislative restrictions on the industry.

"We don’t take for granted the vital role of central banks in issuing currencies and setting monetary policy in concert with the complex dynamics of economies around the world," wrote Ripple chief executive Garlinghouse and executive chairman Larsen. "For centuries, governments have been well suited for the job because paramount to the acceptance of any currency is trust, but in our view, digital currencies have the opportunity to complement existing currencies like the US dollar – not replace them."

They cited prospects for innovation, financial inclusion and economic growth brought by digital assets, measuring the impact as on the same scale as the internet.

"We urge you to support regulation that does not disadvantage US companies using these technologies to innovate responsibly, and classifies digital currencies in a way that recognises their fundamental differences — not painting them with a broad brush," read the statement. "Without regulatory clarity, we risk pushing the innovation, tax revenue and jobs that these new technologies create overseas."

Meanwhile, in advance of Circle chief executive Jeremy Allaire’s testimony before the Senate Banking Committee today, he shared his written testimony to be made before the hearing on ‘Examining Regulatory Frameworks for Digital Currencies and Blockchain’.

He is due to state that the existing financial system is in desperate need of transformation. “We currently have a global system with limited access and exorbitant fees that impose a tax on real economic activity; a system rife with money launderers and financial crime that is failing 99 per cent of the time to stop bad actors and leads to trillions in losses because our existing data and financial infrastructure are not secure enough.”

Allaire is due to argue that with a coordinated effort, in the next 10 years there will be a series of profound changes that will benefit individuals and businesses in the US and around the world:

“Sovereign and non-sovereign global digital currency models will proliferate and become usable by billions of people through their mobile devices... payments and value exchange will be commoditised and become free services on the internet, in the same way that sharing content or data and communicating online are free today... our capital markets will resemble the Amazon and Alibaba commerce marketplaces or the Google advertising marketplace more than the NYSE or NASDAQ,” he is due to state.

“Economic and commercial relationships will increasingly be mediated by smart contracts running on public blockchains, as businesses, labour market participants, and consumers seek to operate in a digital commerce environment with greater security, efficiency, transparency, certainty, and enforceability across borders.”

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