Five New Year’s Resolutions for cryptocurrency

With a new President, Congressman, and SEC Chairman, the U.S. can reset its approach and win the cryptocurrency race against China. Here are five ambitions to achieve these goals.

1. The Senate should certify the SEC’s openness or at least neutrality to cryptocurrency and financial innovation.

After Securities and Exchange Commission (SEC) Chairman Jay Clayton (who made no secret of his vitality for cryptocurrency with a barrage of lawsuits, enforcement, and assertions to crush upstarts), the Senate can advance policy for cryptocurrency just by confirming a new Chairman who is more friendly to financial innovation. Reports suggest that the incoming Biden Administration has in mind Gary Gensler who, in addition to his previous management experience, runs the MIT financial technology lab and the Currency Initiative They have digital. Gensler has called cryptocurrency “a tool for change in the world of finance and the economy in general.” If confirmed, the SEC would acquire another crypto alliance with GOP commissioner Hester Peirce, known as the “crypto mom” for advocating for policies to ensure U.S. dominance in cryptocurrency. In the process, the Senate Banking Committee should ask Gensler questions of proof as to whether he will continue with Clayton’s hostile approach, or whether he supports dissident fintechs seeking services. democratize finance for Americans.

2. Stop the turf wars between financial regulatory bodies.

Governance is not good governance. The U.S. has amassed more than a century of financial regulation and spawned nearly a dozen federal financial regulators (as well as state-level actors) – in the last decade alone – but no one can say that the policy for the U.S. financial industry is the best. Indeed, the regulatory and labyrinth layers of federal offices and departments may have reduced the financial environment for consumers and innovators. As SEC Commissioner Hester Peirce said in Modernizing financial management: increasing sustainability and protecting consumers, the more important regulation becomes, the more banks serve regulators, not customers. There is a good idea that regulation increases the power of financial institutions based at the expense of small banks and financial innovators. Regulators usually prefer to monitor a handful of giant market giants of advanced, innovative players. It is for some reason that the SEC does not have business as a secure regulator monitoring all cryptocurrencies in all use cases. Digital and cryptocurrencies are already regulated by the Office of the Treasury Regulator of the Treasury, the Futures Trading Commission (CFTC), the Revenue Service, and the Department of Justice on anti-currency requirements.

3. Congress should work in a bipartisan way to adopt a reasonable, sensible approach to cryptocurrency.

It takes courage and luck to resist the urge to solve a problem through management, without examining the biggest issues first. The first step is to determine whether government intervention would create more harm. At the RealClearPolicy U.S. Crypto Policy event at the Biden Administration, spokesman Patrick McHenry explained how it was his job to stop adopting knee-jerk laws that would have killed cryptocurrency in the cradle for the past 15 years. gone.

However, no regulation is a place for a thoughtful policy to help cryptocurrency thrive while respecting the measures that protect consumers and prevent fraud. In addition, if Congress does not clarify the boundaries, regulators will be given new things to govern to keep themselves relevant. McHenry’s approach, which he released in a 2020 podcast with Producer Dan Crenshaw (R-TX), is that blockchain is a new technology that needs its own framework. With Senator Sherrod Brown (D-OH) ready to chair the Senate Banking Committee, it’s time to take a fresh look.

4. The SEC should withdraw its lawsuit against Ripple.

Just hours before he left the building, SEC vice chairman Clayton filed a lawsuit against Ripple Labs, the operator of the global settlement system using XRP, 3 world^rd largest cryptocurrency. The suit alleges that, after 7 years, Ripple has traded with security, not currency, and thus attempts to punish the company for not registering and to preventing its founder and operator from participating in the crypto market. Such a question may be answered with caution and opinion rather than as a trial.

At least, the SEC ‘s case in reliance on the Howey Test from SEC v. HJ Howey Co. in 1946. According to law professor JW Verret of George Mason University in the RealClearPolicy debate, security is an investment contract where the custodian participates in a common venture with the dealer. But Chris Giancarlo, former Chairman of CFTC, argues that XRP is not an investment, and that there is no “common ground” between the owners and Ripple. XRP is a medium of exchange and settlement. However, even if Ripple wins in court, and the company has said they will fight hard, the SEC will have already damaged its open source XRP ledger and all a developer who uses it. The lawsuit has cooled other crypto ventures, not to mention Ripple itself. Most defendants in regulatory enforcement will never go to court because of the cost; instead they settle. Ripple apparently tried to resolve the issue for years, but getting a headline seemed to be more important to Clayton. This abuse reflects what many legal scholars see as the fundamental non-establishment of an administrative body such as the SEC, merging into a single governing body, governor, and judge and thus opposing the separation of powers. .

5. Congress should mitigate the growing risk in China of digital assets.

China has laid the foundation to capture the product of U.S. innovation and use their own digital currency to decouple the dollar as well as their de facto control over Bitcoin and Ether mining. As a key part of China’s joint efforts, their central bank has begun distributing digital yuan for use by thousands of retailers – with nearly a fifth of Shenzhen city’s residents test the technology today. China aims to control the global value of trading coins and is scaling up their large domestic market to accommodate their fintech bids. Again, on technological advances that had nothing to do with innovation, China wants to do it themselves. It is only a matter of time before China’s digital currency is offered to billions worldwide, along with Chinese payment solutions copied from U.S. innovators. The U.S. will not be able to block digital yuan diversification; it can only win by making a better solution and getting to market first. A swift move on a regulatory framework for cryptocurrency is essential to secure U.S. dominance and counter China’s aggressive approach.