How will the issuance of US government-sponsored digital coins affect issues such as monetary policy, cryptographic regulations, and civil liberties?
New York — Focusing on a “complete explosion” in the field of digital currencies, this week’s Digital Currency Forum opening panel will discuss the advantages and pitfalls of cryptocurrencies and what governments and regulators may face. Deep into a wide range of discussions about its popularity.
The panel, which is part of the Thomson Reuters Institute’s two-day forum, Manifest Destiny: Risks, Opportunities and Rewards Around Digital CurrenciesComes in the height of investor excitement about all cryptocurrencies. Last year, investors invested a record $ 9.3 billion in financial products featuring crypto assets, with funds buying either Bitcoin or Ethereum accounting for almost 80% of total investment, according to CoinShares data. I did.
“This is an exciting place,” said David Cass, senior partner at Law & Forensics and co-chair of the conference. This turned out to be an understatement.
U.S. digital coin
Bradford Newman, a partner at Baker & McKenzie and co-chair of the conference, proposes that the U.S. government will eventually create its own digital coin, which will have a significant impact on the government’s monetary policy, risk and regulation. I suggested that. Citizen freedom.
Newman suggested that if the US government issued its own fiat digital coin, it could dramatically change the way US regulators and policy makers look at digital currencies. “There may be a move to regulate the existence of private coins and move everyone to public coins,” he added.
Jeff Lewis, another panelist and director of capital formation at Panthera, said the creation of US digital coins could be a positive development for the industry as it facilitates the large-scale adoption and use of digital currencies. I pointed out. Current environment. “Most people don’t use digital currencies, but if the United States celebrates this with its own digital coins, I think it’s a catalyst for people to adopt them.”
What can happen then is some sort of global turf war between the government that creates these flat digital coins and hundreds of privately created coins, some panelists have claimed. Not all of them have Bitcoin cash. (Yes, see Dogecoin.) Indeed, a large government advance into the digital currency space ends up in the DNA of such currencies themselves. That is, the fact that we use blockchain to maintain decentralized anonymity.
Which one left behind multiple panels pondering what the multi-billion dollar problem with cryptocurrencies is? Are regulations coming? If so, what does it look like?
Newman said he was concerned that the industry could fall into the general innovation / recruitment / regulation cycle of the past, which could hurt the future of the industry. “We have seen how the sovereign currency collapses during a crisis,” he added, referring to Russia’s invasion of Ukraine. “Nevertheless, we have seen the benefits of digital currencies with the help that people could offer to Ukraine through donations sent by digital currencies.”
Panelist Rayhaneh Sharif-Askary, managing director of investor relations at Grayscale Investments, the world’s largest crypto asset manager, needs to promote digital currencies as a way to increase the financial inclusion of citizens left behind in the traditional banking system. I added that there is. “Not everyone has access to banks. Using digital currencies allows people to jump over existing banking systems that may not have helped them well.”
Future wave of regulation
John D’Agostino, Senior Advisor at Coinbase Institutional, said the clear message the industry should send to the US Congress would highlight the capabilities and usefulness of digital currencies as a positive force. “Investor-class, especially large institutional investors, want to be clear about how these investments are viewed, so they are seeking regulation,” explained Dagostino. Coinbase operates a cryptocurrency exchange platform.
Indeed, in the United States, where a clear federal regulatory plan has been delayed, individual states are considering their own rules and patchwork of regulatory schemes is being developed. “It shouldn’t take this long,” agreed Lewis of Panthera. “Bitcoin has been around for years. This uncertainty doesn’t help.”
The second panel, which focused only on the angle of regulation, suggested that there is some distance to a consistent global approach to digital currencies. “World wide, Cryptographic restrictions are on the entire map“Thomson Reuters Senior Regulatory Intelligence Expert Todd Ellett said. “Future regulations need to consider all jurisdictions and players, including exchanges, but in inches, we’re there.”
Britt Biles, a panelist who is a partner of Womble Bond Dickinson, explained how digital currencies create a dilemma that almost exists in the US Securities and Exchange Commission. “In the SEC’s view, cryptocurrencies are a major issue for agencies because they feel that their overall regulatory system should be able to adapt to any new technology.”
In short, the SEC feels that if anti-fraud and anti-operation laws are already in the book, it can regulate this area in the way it does today. Of course, this is at the heart of the regulatory issue — cryptocurrencies are securities like stocks and bonds, and should they be regulated by the SEC? SEC requirements register Is it anonymity that crypto issuers and asset managers fly around the digital world, and is the lack of central control now influential?
And what about the famous Howey Test, a shorthand quoted by the Supreme Court to determine if a product is security or something else? Would a digital currency without an issuer, promoter, or general enterprise pooled by all investors be considered a security?
“I think many ciphers will fail the Howey test,” Ehret said. “But does that mean we need a new test for this technology?” As in many cases in the world of digital currencies, we know the time, but things are moving fast.