By Marshall Hayner, CEO of Metal
It is no secret that government entities are struggling to both define and regulate blockchain technology — particularly in the United States. Despite holding Congressional hearings on the matter, U.S. federal governing bodies cannot come to a consensus on, let alone fix, the discrepancies between state definitions and regulations.
Education in the blockchain space is severely lacking, and as U.S. legislators struggle to understand the technology, other countries have surpassed us — moving onto both proposing meaningful regulation and presenting blockchain use-cases for more transparent government practices. Among the various blockchain technologies, cryptocurrencies are the highest regulatory target across the world. This raises the question: when will the U.S. follow the lead of other countries and form cohesive regulation for cryptocurrencies?
Other countries, particularly in Asia, are strides ahead of the U.S. when it comes to regulation of cryptocurrencies. For example, we can look to Chile helping to establishing a Bitcoin-to-peso exchange in 2015, or China implementing a ban on initial coin offerings (ICOs) earlier this year.
Whether harsh or not, having regulatory guidance not only assists in defining the use-case of the technology for various sectors, but also helps form a roadmap to clear regulation - one that can be built upon as the technology evolves. In fact, Chinese regulators are moving to improve upon their own legislation by looking to the public for feedback. This effort was most recently demonstrated by the draft policy released by the country's top internet censorship agency on how to regulate blockchain service providers. The news followed the Hong Kong Stock Exchange ’s proposal classify fintech startups as subject to existing financial regulations.
China is not the only instance of other countries leading the charge for blockchain legislation — Japan is also at the forefront with their being one of the first to draft regulation recognizing bitcoin as a legal form of payment, issue cryptocurrency exchange licenses, and then taking that a step further by exploring best practices for simplifying tax return filings for cryptocurrencies.
Even countries in Europe and South America have gotten involved, with an EU Securities Group recommending regulating crypto assets under existing financial laws, and Fernando Haddad, the presidential candidate for the Brazil Workers’ Party, recently publishing his plan for the government on the blockchain — helping to heed citizens’ calls for more government transparency.
As other countries are looking for ways to ensure cryptocurrencies can be utilized by the general public, in the U.S., we have a dearth of policy makers and decision makers who are champions of innovation. There is an immediate need for blockchain education among political leaders in the U.S.
The U.S. Securities and Exchange Commission (SEC) should absolutely be applauded for the recent formation of a division to talk to ICO startups , but the only way to create loophole-free regulation is to open the conversation and include blockchain leaders from various companies, both developing and utilizing the technology. Regulation on blockchain should be treated very similarly to the process used when revamping the tax code or updating the Telecommunications Act — by holding hearings and having roundtables with experts representing all stances on the technology.
The U.S. has a reputation for being a tech industry leader and economic giant; however, we are at risk of being surpassed entirely if legislators do not get up to speed on both the technology and how to best regulate it. We are no longer in a position to be debating the use-cases of the technology, but instead have to figure out best practices for ensuring blockchain is widely available and safe for mainstream use.
In fact, it was released that blockchain technology could actually save the federal government billions of dollars — but the lack of education on the matter within Congress is slowing movement on regulation, and will cause the U.S. to quickly fall further behind in the global technical economy.
It is evident that U.S. consumers and legislators alike are feeling the pressure to enact regulation as quickly as possible. This is no longer a question of when, but a more complicated question of how. While the creation of the Congressional Blockchain Congress was a step, there are still several back roads to the highway of mainstream adoption; we need to agree, as a nation, which one to take.