The Biden administration can change the world with new crypto regulations
The US government is failing us on fintech and blockchain regulation.
There has been no legal framework for the past four years and we have been working in limbo on the development and advancement of crypto products. Innovators in the fintech and blockchain industries have the ability and vision to create products that solve real problems for everyone, from individuals to big banks to governments. Without a clear path forward, however, these products cannot grow and develop their full potential.
Regulation shouldn't be a guessing game. Since 2019, when the Securities and Exchange Commission declared that neither Bitcoin (BTC) nor Ethereum (ETH) are securities, the industry has stalled. Without clarity, blockchain innovation will be limited to just two coins - the industry is much bigger than this. A lack of regulation suppresses the immense potential that crypto and blockchain offer.
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If we know the rules of the game, we can continue to do what we do best: innovations.
A new administration gives elected officials across the political spectrum a new way to develop clear policies and regulations that will allow banks, fintechs and corporations to hold and use crypto for better efficiency and a better customer experience.
We can learn a lesson from recent history here. In 1991 the High Performance Computing and Communications Act (HPCCA) was passed, a bipartisan initiative led by Senator Al Gore and led by President George H.W. Bush.
This legislation paved the way for companies like Amazon, eBay, Yahoo, Google and others to boom and make the US an early internet leader. Web browsers were introduced in 1993, and shortly thereafter the dot-com era began in 1994, cementing the US as a symbol of innovation.
The browser changed everything. It has created new jobs, new economic opportunities, and new categories in technology that we could not have predicted 30 years ago. When looking at the top 100 Fortune 500 companies in 1991, technology was hardly a slip on the radar as IBM was the only tech company. By 2020 the picture will look drastically different. The list is completely dominated by technology giants like Microsoft, Apple, Alphabet, Facebook, and Salesforce.
Tech companies in the top 100 have created nearly three million jobs, many of which are leaders in market value. Despite an unconventional year, we continued to have successful technology IPOs such as DoorDash, Snowflake, Asana and Palantir.
Products and services that we now take for granted, such as Google, the iPhone, Uber, Salesforce, Spotify, Postmates, and more, have been made possible by the HPCCA. We now have another chance to create a bipartisan effort that is focused on crypto innovations and supported by the public and private sectors to ensure a clear legal framework. Regulation will make it easier for innovators to create new products that will keep the US competitive with other countries and attract more investment.
It is undisputed that the adoption of crypto and blockchain is increasing. Big companies like PayPal, Square, and Robinhood are leaning towards crypto and bringing it into the mainstream. As these brands are validated, interest in the usefulness of cryptocurrencies and the ability of crypto to better serve businesses and their customers grows.
Leading crypto companies like Ripple, Coinbase, Gemini, DCG and Chainalysis are currently based in the US. However, unclear regulation will deter new entrepreneurs from innovating in the US. While other countries are pushing defined regulatory frameworks, it is possible that new entrepreneurs and companies forego starting a business in the US in favor of jurisdictions where the rules are clear.
If we know the rules of the game, we can continue to do what we do best: innovations. We're just getting started - developers can build on open source technologies, entrepreneurs can start new businesses and develop new products, and investors can invest in those businesses.
We want the most innovative crypto and blockchain companies to be built and grown here in the US where they can create value and opportunity for US citizens. Similar to the early days of the Internet, we don't know what the industry will look like in 5-10 years, but with flexible framework conditions the opportunities are huge.
There is a great opportunity for the Biden administration to influence new policies and laws and provide clear guidelines that will accelerate innovation in fintech and crypto for many generations to come. The administration can:
Create a national digital banking licensing charter (similar to the Singapore digital banking charter) to streamline the process for fintechs to apply for crypto, credit and payments licenses. Today, companies in the United States must apply for licenses from state to state that cost millions of dollars in legal costs and years to complete.
Define clear classifications for digital assets, derivatives (created via smart contracts) and stablecoins.
Create a non-partisan public and private sector group led by tech-savvy thought leaders like Andrew Yang to work together on landmark laws that do for fintech what the HPCCA did for internet companies.
Appoint an SEC chairman who knows how to truly drive innovation while protecting consumers and markets. The innovation-friendly lip service we received from this SEC is just that - lip service. Every crypto project that touched this SEC has fled the US, gone bankrupt, or left worthless tokens behind.
Regardless of how policymakers and regulators choose to address our industry's problems, we must continue to work with the government to ensure that the rapidly growing number of people using fintech and blockchain products continue to have the best solutions their class receives with adequate consumer and market protection.
It is clear that this technology is here to stay, and I hope elected executives realize the power it has to make massive strides in the financial industry. Much like the HPCAA, smart regulation can protect both our consumers and our markets, and enable proud US companies to create life-changing innovations.
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