Over the last decade, both Democrats and Republicans have struggled to find common ground on the issues impacting America’s tech sector. From net neutrality to data privacy protections, both consumers and businesses have largely been bewildered about where policy is heading. Cryptocurrencies, in turn, have mostly been ignored by Congress.
But that changes today, when the House Financial Services Committee convenes its hearing to discuss Libra – Facebook’s new digital cryptocurrency founded on blockchain technology. Facebook’s long history of mishandling consumer data is understandably a driving force behind the hearing. But this will be the first meaningful look at cryptocurrencies by this Congress, and they should take care to separate their concerns over Facebook from the broader achievements of blockchain companies that long predate the social media giant’s foray into the space.
The potential for U.S. blockchain and digital asset innovations to revolutionize the global economy goes far beyond billionaires and giant companies. There are over 50 million Americans who are “unbanked” in this country, lacking equal access to financial institutions and are therefore unable to transfer money, cash checks, or build credit without the use of predatory, non-traditional, financial organizations. Crypto innovators of all kinds have been working for a decade on payment systems that can help to significantly diminish this disparity in access by giving the over 90 percent of Americans who own a cellphone access to a low cost, safe and secure digital wallet that is not dependent on what zip code you live in or by how much money you have.
Fintech companies that have developed analog “mobile money” services have already brought millions into the financial system in Africa, and crypto solutions could take the social benefits to a bigger scale across the globe. This is particularly true for cross-border remissions and other consumer payments. With lower costs and speeds not obtainable today in the banking system, remissions and retail payments across borders over crypto solutions are a potential godsend for migrant workers and their families, as well as merchants seeking to expand their markets abroad at lower costs.
Above all else, cryptocurrencies have brought competition to a global financial services industry that has often ignored the little guy. Like every disruptive entrant into our modern economy, the broad ascent of crypto-based payment systems can only frighten big banks into rethinking their business model as it relates to the average person. The huge potential of this technology is what attracted Facebook to it, and Congress needs to keep the big picture in mind no matter what side of the aisle they come from.
Democrats in Congress should become aware of the universe of crypto innovators that are not Facebook, and while consumer protection is undeniably needed with every innovation, they must not lose sight of the positive impact this disruption can have. Republicans, meanwhile, should remember that we have always nurtured American innovation with sensible regulatory frameworks that act more like guardrails rather than obstacles. Members should work across the aisle as they did in the 1990s on internet e-commerce, and cement U.S. leadership on crypto innovation. This way, we can address the immediate questions that have littered Washington since Libra’s announcement: money laundering, consumer protections and the proper role existing regulatory agencies have over these innovations.
Thankfully, despite the sudden interest in Libra, there has been some early leadership in Congress on the crypto issue. The bipartisan Congressional Blockchain Caucus, formed in 2016, exists to chart out a sound regulatory approach. Their members have written legislation in an effort to bring regulatory certainty to the cryptocurrency world and stave off the dramatic uptick in developers fleeing the regulatory uncertainty in the U.S. for countries in Asia and Europe. After this week’s Facebook hearings, Congress should look toward a regulatory framework as the next step and work in concert with a broad range of stakeholders to accomplish this.
As the party that created the Consumer Financial Protection Bureau, Democrats have proven that they can work with their colleagues to create a framework for cryptocurrencies that protects the American people while maintaining our country’s leading role in the industry’s development. Providing tens of millions of Americans with greater access to affordable financial services should be championed by Democrats, and this technology should be embraced for the good it can produce. Facebook may be jumping on the bandwagon of cryptocurrencies, but we’ll all be better served by regulatory certainty for the entire industry.
Harold Ford Jr. is a former Democratic Congressman representing Tennessee’s 9th District in the U.S. House of Representatives.
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