As a cryptocurrency CEO, I know that our industry is often misunderstood and criticized. Criticism is sometimes deserved because we haven’t always done our part to illuminate the usefulness and use cases that drive positive change. But other times, they are based on the assumption that all players in this industry are the same, which is not true.
Skepticism recently reached new heights with the epic crash of FTX, one of the world’s largest cryptocurrency exchanges, and perhaps the greatest example of the need for regulatory oversight. Given FTX’s positioning, it was an incredible leap to see them face insolvency. When the news broke, we were witnessing a massive market crash for digital assets. Consumers had to decide if FTX – or any entity in our space – is a safe manager of their funds.
Many may wonder if there is a future for cryptocurrency, and I understand the frustration with the hole the industry has created. But there is a future for blockchain technology and cryptocurrency, and we cannot lose sight of the utility and value of this technology in doing meaningful things, from optimizing supply chains around the world to creating equitable access to the global financial system. . The real question is how to build the future we want and what inspired the development of this technology in the first place. And that answer is highly dependent on standards (both technical and industry) and rules, some of which must come from our public officials.
The US federal government is in a position to lead. To do this, it has to give the industry clarity and direction through the application of thoughtful and principled regulation. This is the kind of leadership that will help shape the “right” future, and with a newly elected Congress, it’s a charge I urge you to take. The future of blockchain and all the benefits it offers depend on it.
The industry must do its part to act transparently and in the best interest of consumers, despite the absence of regulation. But without oversight, we will continue to see examples of companies that do not put the interests of consumers first. That’s why I’m calling on Congress to pass three key measures in 2023 to give consumers the protections they need.
First, clarify the definition of the legal status of digital assets: When are digital assets classified as securities, commodities, or something in between? And how is that defined? The government’s role is to make this clear to both large and small players—and not just pretend there is clarity—because consumers are the losers.
Second, require that stablecoins be stable: The collapse of Terra saw $60 billion worth of value disappear overnight. Consumers should be assured that stablecoins must be backed by high-quality liquid assets on a one-to-one basis. Stablecoins are essential to the actual utility that the blockchain offers. The rules of the game in this case are useful to consumers and will lead to further innovation.
Third, digital asset exchanges. As we have seen with FTX, consumers are exposed to risk when trading and holding their assets with exchanges. Although some of these risks are well known, Congress must ensure that consumers have the necessary safeguards to participate on these platforms.
My experience on the content side of the web taught me the importance of early collaboration with policy makers to help craft regulation of emerging technologies. But I learned this lesson the hard way: We didn’t compromise. Instead, we asked the government to trust that we would do well on our own. We thought we had all the answers. There were already some regulations for data collection activities on the Internet, but none took into account the data collection that technology companies did every day. The balance between the bottom line and the interests of consumers created a huge gap that we thought we could handle. It is now clear that this led to a data privacy crisis in which people became the product, and our collective and individual privacy vanished before our eyes.
I see certain parallels with blockchain, the new emerging technology. It is essential that the ecosystems that develop products and services based on this technology continue to work together with the public sector to develop regulations that provide clarity and guarantees. I know the unlimited potential of the blockchain and am looking forward to helping forge the public-private partnerships necessary to ensure greater stability in this industry. And I hope the new Congress meets us halfway.
Denelle Dixon is the CEO and Executive Director of the Stellar Development Foundation. She was previously the legal director of companies such as Terra Firma and Yahoo! her after graduating from the University of California Hastings School of Law. She completed her college education at the University of California, Davis.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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