Why the US Should Not Fall Behind in the Crypto Race
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Cryptocurrencies offer new possibilities for finance, enabling new forms of value creation, storage and transfer. They also pose a challenge to the conventional role of governments and central banks in money regulation and issuance. As more countries and companies embrace crypto innovation. The US faces a crucial question can it afford to lose the crypto race?
The crypto race is not just about who has the most or the best cryptocurrencies. It also involves who establishes the rules and standards for this nascent industry, who gains from its development and growth and who safeguards its users and stakeholders from its pitfalls and risks. The US could lose its edge as a global leader in financial innovation and regulation if it fails to adapt crypto revolution. The current regulatory framework for crypto in the US is fragmented, inconsistent and outdated.
Different agencies have different definitions and approaches to crypto, creating confusion and uncertainty for both businesses and consumers. The lack of clear and comprehensive rules also leaves room for fraud, abuse and illicit activity in the crypto space. The US needs to act fast to catch up with its competitors and allies in the crypto race. "China" as an example, has been creating its own central bank digital currency (CBDC).
Which could undermine the US dollar’s position as a global reserve currency. Other countries, such as Switzerland, Singapore and Japan have been more proactive and supportive of crypto innovation creating favorable environments for crypto businesses and investors. The Biden administration has done some things to deal with this challenge. In March 2022 President Biden signed an executive order directing federal agencies to study the risks and opportunities of crypto and to coordinate their efforts to regulate it.
In September 2022 the White House released its first-ever framework on crypto regulation outlining its priorities and principles for this industry. The framework aims to promote financial stability, consumer and investor protection, national security, financial inclusion, responsible innovation and US leadership in the global financial system. It also calls for exploring the potential of a digital dollar enhancing cross-border payments cracking down on illicit finance, fostering public-private partnerships and engaging with international partners. To achieve these commendable goals, concrete actions and policies are needed.
The US needs to develop a clear and consistent definition of crypto across all agencies and jurisdictions. It needs to update its existing laws and regulations to reflect the realities and challenges of crypto. It needs to balance innovation and regulation, ensuring that crypto businesses can operate freely and fairly while protecting consumers and investors from harm. It also needs to collaborate with other countries and stakeholders to create common standards and norms for crypto governance.
The US can shape the future of crypto in a way that matches its values and interests, which is a unique opportunity.
It should not let this opportunity slip away by falling behind in the crypto race.
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