The long-awaited crypto regulatory framework released by President Joe Biden’s Treasury Department this month attempted to outline a blueprint for managing the burgeoning crypto industry. Unfortunately, the department’s evaluation has failed to capture more substance than a mere statement of intent.
While the Biden administration appears to be taking a “whole of government approach” toward oversight of the decentralized finance (DeFi) sector and its effects on the traditional economy, they are predominantly focused on defending against negative events – such as the financial crime — and they don’t facilitate positive developments, like the wealth-building opportunities that crypto offers Americans excluded from the traditional banking system.
The new framework was a follow-up to Biden’s executive order in March, titled “Ensuring Responsible Development of Digital Assets.” Officials predominantly focused on going after money launderers and Ponzi schemes across jurisdictions. This is no surprise, considering that it was developed while cryptocurrencies were falling in the summer months. These included the collapse of Terraform Labs, which led to an Interpol arrest warrant against its founder, Do Kwon; the bankruptcy of Celsius Network; and the collapse of cryptocurrency prices.
However, these events served to shake up the bad actors who were in the world of cryptocurrencies for criminal or self-interest purposes. An effective set of cryptocurrency-related laws that deter illicit activities and promote peer-to-peer financial transactions would do wonders for the public image of cryptocurrencies. Biden’s framework, which is more reactive than proactive, fails to do that.
As a nation, we disagree on many things today. Mainly we want the United States to remain a global economic superpower, but we differ on how to do it. Stablecoins and other cryptocurrencies dismantle the power of federal currencies and allow individuals to independently accumulate wealth, which is exactly why the federal government doesn’t like them.
The Biden framework literature suggests that digital currency is key to securing America’s future as an economic leader. But if you give power over crypto to the same authorities that wield power over traditional finance, the status quo is not going to change. Instead of establishing the “digital twin” of the US dollar, the government would do better to find a way to co-exist with alternative currencies.
The White House’s proposed framework is a fucking disgrace.
– Clear attack on proof-of-work by implying they will set environmental standards for mining.
– Pushing FedNow over crypto
– Framing everything as a potential scam or threat
– Harping on volatility and consumer risk
— The Wolf Of All Streets (@scottmelker) September 16, 2022
It is time to move beyond enforcement of existing regulations and institute new programs that embed blockchain technology in areas most in need of disruption, such as healthcare and big business, even if we disagree on how to approach currencies.
For example, keeping medical records on a blockchain – as Estonia’s advanced e-health system already does – would streamline and secure each person’s health data from birth to death, with every doctor or pharmacist having access to accurate history to make the best decision. The collection of anonymized and uncorrupted medical data is going to lead to better research, better treatments, and more cost-effective healthcare.
Similarly, putting property and business records on a blockchain would lead to greater liability for large, opaque corporations making bold claims of charity and sustainability. This transparency would allow consumers to make more informed decisions about who they buy from and who they do business with.
The federal government should also encourage blockchain technology by investing in large-scale blockchain projects and incentivizing companies that use it to better serve the public.
In the future, let’s hope that both the federal and state governments cooperate to write real legislation on the cryptocurrency industry, not only to mitigate its harms, but to further its potential. Cryptocurrencies and other digital assets have the potential to offer wealth-building opportunities to huge swaths of unbanked Americans, break down monopolies, and hold wealthy Goliaths accountable for their businesses to a degree never seen before. Biden’s framework is a tepid start, but we have a long way to go.
Guy Gotslack is the president and founder of the CryptoIRA My Digital Money (MDM) platform. He has a bachelor’s degree in computer science and engineering from UCLA and an MBA from Northwestern University.
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