Recommendations for the Biden Administration on Cryptocurrency
As the Biden administration begins to fight on a number of fronts to revive the American economy, we need to make sure we’re protecting an innovative way to allow people to access funds--and make our financial system more inclusive.
The way forward is cryptocurrency. And for it to reach its full potential in the United States, there are a few points I believe President Biden should focus on.
Cryptocurrency isn’t just a digital dollar.
Cryptocurrency is more than a payment system. It’s an innovation.
The Biden administration has already signaled an understanding of that concept, with the announcement that Gary Gensler will take over as head of the Securities and Exchange Commission (SEC). Gensler has taught classes on blockchain and digital assets at MIT and recognizes that these technologies could reshape our financial system for the better.
In testimony to Congress in 2018, Gensler said: “Blockchain technology has real potential to transform the world of finance. Though there are many technical and commercial challenges yet to overcome, I’m an optimist and want to see this new technology succeed.” In his confirmation hearing this week, he also spoke about the need for clearer regulation of digital assets and the potential for blockchain technology to be a “catalyst for change.”
Much like the Internet when it was first created, we don’t yet know all of the benefits these new technologies will bring. Emerging digital currency companies could transform insurance, supply chains, and our entire financial system. They could democratize our financial tools and lower costs for consumers.
Recently, we’ve seen mainstream and institutional investors start to recognize the power of cryptocurrency in the global monetary system, from PayPal to Fidelity to Square. This is only the beginning.
Be smart about regulation.
Just as regulations could have stifled innovation in the early days of the Internet, we shouldn’t rush through restrictions that would put arbitrary or unnecessary burdens on the cryptocurrency industry.
In the final weeks of the Trump administration, the Treasury Department put out proposed rules on cryptocurrencies that would have a chilling effect on innovation and hurt consumers. At a time when we cannot afford to lose American jobs or technology overseas, the rule threatened to impose costly recordkeeping and reporting standards on small businesses, while giving the government unprecedented visibility into Americans’ financial information.
Now, in a clear response to the flood of comments that came in from Americans opposing the proposal, final rulemaking has been delayed.
We need a more sensible approach. As Brian Brooks, the former acting Comptroller of the Currency, described it: “I don't think a trillion-dollar market, which is what crypto is, is a funny side hobby. I think it is the future of finance, and we need to prepare banks for how they're going to survive and win in that environment.”
We’re open to regulation, but it has to be smart regulation that protects consumers while acknowledging the part cryptocurrency will play going forward.
Cryptocurrency has a role in our recovery.
President Biden has committed to making sure all communities are sharing in our economic recovery -- that we “build back better” in 2021.
As we work to make our economy more inclusive, cryptocurrencies will have an important role to play in making innovations in our financial system accessible for all. Digital currencies can drastically reduce fees put on consumers by traditional institutions and eliminate the need for predatory middlemen that have upcharged low-income communities for decades. Square describes cryptocurrency as “an instrument of economic empowerment.”
At CoinFlip, our ATMs remove the barriers to entry that have long perpetuated inequality and denied access to disadvantaged communities. You don’t need a bank account, or even a permanent address, to use our services.
That’s important at a time when 25% percent of American households are unbanked or underbanked. We won’t have an inclusive recovery if a quarter of Americans aren’t able to fully participate in it.
The global economy is shifting dramatically--and as we move to a digitized economy, we have to make sure no one is left out or left behind. Cryptocurrency offers a way forward.
That’s how we can truly build back better.