As markets around the world become increasingly interconnected and technology dependent, lawmakers across the planet are racing to keep pace with the ensuing financial innovation.
And, the first nation to perfect a regulatory framework, wins.
And wins big.
Hence, the reason why Facebook’s announcement to launch a new global digital currency in Switzerland sparked a flurry of congressional hearings aimed at exploring potential U.S. regulatory constructs for digital assets and blockchain.
I forewent Netflix to binge-watch CSPAN in hopes of gaining an understanding of how the U.S. intends to maintain its leadership role in a global economy which is rapidly being transformed by technological and regulatory progression.
After watching hours upon hours of tech and crypto entrepreneurs, academics, regulators and finance specialists provide testimony and field questions from legislators, it became clear to me that America’s standing in a modern-day digital economy may be determined by the answer to one single question:
Is an entirely new regulatory regime even necessary or is the existing U.S. framework sufficient to govern the proliferating universe of digital assets?
In July, crypto entrepreneur and Circle CEO Jeremy Allaire testified before the Senate Banking Committee citing the necessity for a new regulatory regime for digital assets. Allaire recommended that Congress “consider new laws that protect consumers while not causing companies to fixate on nearly century-old definitions.”
According to Allaire, this country's uncertain and restrictive regulatory environment has meant that U.S. blockchain companies have already lost considerable market share, mostly to Asian-based crypto companies. In fact, regulatory uncertainty in the U.S. has caused many digital asset projects and companies—including his own—to domicile outside of the U.S. where cryptocurrency laws are far more favorable.
Congressman Patrick McHenry, ranking member of the House Financial Services Committee, recently voiced similar fears during a hearing with the chairman and all four commissioners of the SEC by acknowledging there is a larger ecosystem to raise capital outside of the U.S. jurisdiction, driving innovation away from the U.S.