A change of government in Washington is coming at the precise moment that some of the biggest innovations in financial technology — fintech — are about to arrive, and it will either be a breakthrough for the American economy or a needless train wreck. It all depends on who Joe BidenJoe Biden46 percent of voters say Trump should concede immediately: poll Michigan county reverses course, votes unanimously to certify election results GOP senator: Trump shouldn’t fire top cybersecurity official MORE names and who the Senate confirms in key regulatory posts.
Blockchain technology — the innovation in question — has jumped from a speculative novelty to a financial instrument providing real economic solutions that could revolutionize how we handle money. American tech innovators have been steadily building a vibrant industry that uses digital assets and open ledgers to develop products for consumers and businesses alike that cut costs, bolster efficiency and bring greater transparency. Without a doubt, cryptocurrencies have proven to be practical tools with enormous utility in our economy for American consumers.
Yet, while all the innovation, investment and risk has been assumed by the American tech sector, the U.S. government has ignored and neglected the need for a regulatory framework that will keep it here in America. This outdated regulatory approach to fintech is embarrassing when you compare the most advanced technological economy to the rest of the world.
While countries like China and Singapore are taking serious steps to integrate digital currencies into their regulatory space, the U.S. is struggling with a coin shortage, stimulus check complications, and an obvious dearth of understanding on Capitol Hill about what a cryptocurrency even is.
As a result, we are unfortunately letting countries like Malta and the United Arab Emirates lure our own innovators away because they were smart enough to develop frameworks while our government stared off into space.
The more time we waste on advancing digital currency development, the further we fall down the pyramid of the global economy. Some of the biggest homegrown industry players like the payments settlement company Ripple are already heading out the door. Yet while Joe Biden has given little insight as to what his views on cryptocurrencies are, the fear is that Democrats will install a new chair of the Securities and Exchange Commission (SEC) devoted only to swinging an enforcement sledgehammer rather than understanding the need to nurture innovation simultaneously.
Reports have surfaced that the crypto-savvy former chairman of the Commodity Futures Trading Commission (CFTC) Gary Gensler will lead the Biden financial policy transition team. Gensler has recognized blockchain technology as a “change catalyst” for U.S. financial services policy, while current Federal Reserve chairman Jerome Powell has been slow to make an effort to issue a digital currency. But while Washington dithered for the last decade — preferring to use laws from the 1930s to regulate this new technology — the Chinese government is moving forward with its pilot Central Bank Digital Currency program.
With the COVID-19 pandemic continuing to disrupt the economy, the need for another round of stimulus checks could be necessary. But will we learn our lesson from the issues with the first round of stimulus checks that some citizens have yet to receive? America does not have another four years to lag behind other countries — the new administration must take immediate action come 2021.
SEC Chairman Jay Clayton has unfortunately taken a notoriously guarded approach to cryptocurrencies, significantly constraining American innovators while showing no understanding for the need for a new regulatory framework. But there is one key figure in the SEC who is actually keen on speeding up our outdated view of crypto — SEC Commissioner Hester Peirce — whose term has luckily been extended through 2025. When asked about her opinion on the pace the U.S. has taken in the crypto space, Peirce said there are “circumstances where we have a framework at the SEC that was built in the 1930s and 1940s” and that “we are going to have to make adjustments and I do think we should move faster. I’m impatient there.” Biden’s staff would be wise to listen to her.
Imagine if we’d spent the 1990s ignoring the rise of e-commerce and forced that burgeoning industry to face regulatory and tax standards written for the economy of the 1890s? We’d have already long fallen from our economic perch in the global economy.
Instead of letting fintech success slip through our fingers, we must demand that Joe Biden live up to his promise of governing down the middle and defending our national economic interests.
Our nation must do better for its enterprises and consumers. It is time for the land of opportunity to live up to its promise.
George Nethercutt Jr. is the former Republican Congressman from the 5th District of Washington, and founder and chairman of The George Nethercutt Civics Foundation. He served on the House Appropriations Committee and House Committee on Science, Subcommittee on Space and Aeronautics.