'Disruption always challenges the status quo' -Coinbase CFO

At the hearing, Haas said her company believes "sound regulation is central to fueling crypto innovation," adding that regulatory solutions should promote "fair competition."

In written testimony released Tuesday, Haas was more direct.

"Without tailored legislative solutions that are openly debated with public participation, the United States risks unnecessarily onerous and chilling laws and regulations," warned Haas. "This could effectively push crypto activity underground or to offshore exchanges that have little or no compliance programs."

The rapid growth of cryptocurrency, and in particular "stablecoins," which are digital assets whose value is pegged to traditional currencies, has caught the attention of regulators, who fear they could put the financial system at risk if not properly monitored.

Some policymakers, such as Senator Elizabeth Warren and Securities and Exchange Commission Chairman Gary Gensler, are also concerned the products could be utilized for illicit purposes, or to take advantage of unsuspecting consumers.

In November, a U.S. Treasury-led working group recommended Congress pass a law specifying stablecoins should only be issued by firms that have their deposits insured, like banks. Wednesday's hearing could serve as a good indication for how likely Congress is to take up any such digital currency legislation, according to analysts.

Executives said they would welcome regulatory clarity, but that overly restrictive rules could prove counterproductive.