Getting crypto regulation right
Consumer protection is key, but so is promoting innovation
BLOCKCHAIN, CRYPTO, and Web3 — these aren’t just hot new buzzwords for the tech industry, they’re becoming the focus of Bay State members of Congress and financial regulators, and for good reason.
US leadership in Web3, a decentralized online ecosystem founded on the blockchain, is giving us first access to technology that is creating opportunity and giving American companies in nearly every sector a competitive advantage. Advances in blockchain technology are making personal data like health records, banking information, and Social Security numbers more secure. Cryptocurrency networks are reducing the cost of cross border payments and remittances, and providing basic financial services to the underbanked. Andthousands of jobs in the Web3 industry have been created here in the United States.
Boston in particular has become a hub for global blockchain innovation. MIT’s Digital Currency Initiative isresearching what a US central bank digital currency might look like. Boston-based crypto company Circle doubled its valuation to $9 billion in the second half of 2021. And Algorand, founded by a former MIT professor, is developing a blockchain network which can handle thousands of transactions a second.
But a lack of clarity from regulators in Washington is creating an opening for foreign competitors to overtake the US as the leader in blockchain tech. While the Securities and Exchange Commission has engaged in misguided litigation and threats against blockchain-based platforms, countries like Singapore and the United Kingdom have moved forward with regulations that protect consumers and foster innovation.
Fortunately, bipartisan groups like the Congressional Blockchain Caucus are building consensus around legislation to clarify existing regulations governing digital assets and Web3. Rep. Jake Auchincloss of Massachusetts voiced this sentiment at a Progressive Policy Institute event last month, stressing that debates around blockchain and Web3 need to remain “pre-partisan” and that it’s counterproductive for them to “become a political football.”
Leaders like Auchincloss are getting it right—swift, bipartisan action to protect consumers and spur innovation is a must to maintain US leadership in Web3.
Many of the top players in the crypto industry have called for a new regulatory framework to meet the needs of a new class of products. Traditional financial products have defined rules and agencies to report to as a means of protecting investors, businesses, and markets. Digital assets need the same assurances in order to thrive in the US.
Boston’s academic and financial ecosystem has a unique opportunity here. The cryptocurrency industry isn’t dealing with the same fear of the unknown as it was five years ago. Over 46 million Americans now own cryptocurrency, and cryptocurrency markets quadrupled in value last year alone.
As we develop what will be the foundation of US crypto regulations, policymakers should prioritize protecting consumers and promoting blockchain innovation within our borders to help the US drive global leadership in the industry.There’s too much at stake – both nationally and in Massachusetts – to allow cryptocurrency and blockchain technology to become another partisan wedge issue. More elected officials need to follow the Bay State’s lead and support a legal framework for crypto that continues to grow jobs and financial access and opportunity here in the United States.
Adam Kovacevich is the founder and CEO of Chamber of Progress, a center-left tech industry policy coalition.