During the last century, the United States has reigned as the world’s economic superpower. The key to this sustained economic power is a regulatory environment that encourages and allows technological innovation. From semiconductors to personal computers, Internet 1.0 and 2.0, US companies have led the development of avant -garde technologies because our country enables their builders and creators. Unfortunately, when it comes to web3, the next generation of blockchain -based internet, digital assets and cryptocurrencies, we are following and we run the risk of staying behind.
In 2023, the European Union approved a comprehensive cryptocurrency regulation [americanbar.org]and numerous significant provisions entered into force last summer. The Central Bank of China has been promoting its Yuan Digital [forbes.com]that threatens the role of the US dollar as the global reserve currency. The United States is just looking, while our opponents move pieces on the chess board.
It is absolutely essential for the future of our country that the United States promulgate clear and sensible cryptocurrency regulations that foster innovation and maintain web3 work within our borders, protect consumers and maintain the domain of the US dollar.
We should start with Stablecoins.
For newcomers, stables are cryptocurrencies whose values are linked to national coins or high quality financial assets. This gives them stability and allows them to play a crucial role in the digital economy, where they combine the transaction speed and the low cost of digital assets with the stability of traditional reserve currencies prices. The United States is already playing an important role in this space. According to a report, more than 95% of Stablecoins are “linked to the US dollar.”
The many cases of use of the stables have won the support of the policy formulators throughout the ideological spectrum. Conservatives value their low -cost payment skills, without friction and snapshots, which can reduce costs for merchants and consumers and stimulate new companies and economic activity. Progressives appreciate their use to reduce the cost of remittances and reach little banking and unattended, and their ability to increase access to basic financial services.
It should be recognized that, as with any new technology, Stablecoins has challenges. Some stable, backed by complex algorithms instead of a stable reserve coin, have collapsed due to design failures. In addition, unlike bank deposits, the stables are not secured by the FDIC, creating risks if the issuer declares bankruptcy. Although concerns have been raised on money laundering, stables are not misused for this purpose other than traditional cash. But for the public to have confidence in Stablecoins, and for companies to adopt them, we need clear regulations to provide consumer protection, govern the emitters and protect against money laundering.
The National Innovation Guide and Establishment Law for the United States (genius), that I presented on February 4 along with senators Bill Hagerty, Cynthia Lummis and Tim Scott, You will address these challenges and create a clear regulatory environment that allows the cryptocurrency environment to prosper.
It protects consumers by keeping Stablecoin emitters for strict reserve requirements, which requires them to maintain individual cash reserves and cash equivalents. The bill prohibits the issuance of non -supporting algorithmic stables, whose collapse has led to substantial losses. To address its use for illegal purposes, it requires that the approved Stablecoin emitters comply with the rules of sanctions against money laundering in the United States. Finally, the bill clarifies the rules around conservation and procedure in the event that a Stablecoin issuer experience insolvency.
While this bill will undoubtedly be modified as progress in Congress has already received contributions from a wide strip of interested parties, including industry participants, federal academic experts and regulators. It is a real bipartisan effort that will train innovators and builders while simultaneously triggering the bad actors.
Establishing the basis for the next century of American exceptionalism is a mission that should unite all, and position the United States at the forefront of the next Internet iteration is key to that goal. Stablecoins is already playing an important role, and it is essential that we now act to maintain our position as a leader in global economic competitiveness.
