In a bid to reclaim its position as the world’s economic superpower, the United States is introducing a bipartisan cryptocurrency regulation framework, focusing on stablecoin regulations that balance innovation with consumer protection.
The Need for Bipartisan Stablecoin Regulation
For the past century, the United States has been the world’s economic superpower, thanks in large part to a regulatory environment that encourages and enables technological innovation. From semiconductors to personal computers to internet 1.0 and 2.0, ‘American companies have led the way in developing cutting-edge technologies because our country empowers its builders and creators.’
The Challenge of Web3
Unfortunately, when it comes to Web3 – the next generation of the internet built on blockchain, digital assets, and cryptocurrencies – we are trailing behind other countries. In 2023, the ‘European Union passed comprehensive cryptocurrency regulation, and numerous meaningful provisions went into effect this past summer.’ China’s central bank is also promoting its digital yuan, which threatens the U.S. dollar’s role as the global reserve currency.
Web3 is a decentralized internet architecture that aims to provide a more secure, private, and transparent online experience.
Building on the principles of blockchain technology, Web3 enables users to control their own data and interact with applications in a peer-to-peer manner.
This shift away from centralized platforms like Web2 has significant implications for online governance, security, and user autonomy.
As Web3 continues to evolve, it promises to revolutionize the way we experience the internet.
The Importance of Stablecoin Regulation
It is essential to our country’s future that we enact clear and sensible cryptocurrency regulations that foster innovation, keep Web3 jobs within our borders, protect consumers, and maintain the dominance of the U.S. dollar. We should start with stablecoins – cryptocurrencies whose values are pegged to national currencies or high-quality financial assets.
The Benefits of Stablecoins
Stablecoins have earned support from policymakers across the ideological spectrum due to their many use cases. ‘Conservatives value their low-cost, frictionless, and instantaneous payment abilities, which can lower costs on merchants and consumers and spur startups and economic activity.’ Progressives appreciate their use in lowering the cost of remittances and reaching the underbanked and underserved.
A stablecoin is a type of cryptocurrency that maintains a stable value relative to a fiat currency, such as the US dollar.
It uses algorithms and reserves to peg its value, ensuring price stability.
Stablecoins are designed for everyday transactions, reducing volatility associated with traditional cryptocurrencies.
They often serve as a bridge between fiat currencies and digital currencies, facilitating cross-border payments and exchanges.
Challenges and Solutions
While stablecoins have challenges, such as design flaws and lack of FDIC insurance, we need clear regulations to provide consumer protection, govern issuers, and guard against money laundering. The bipartisan Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act will address these challenges and create a clear regulatory environment that enables the cryptocurrency environment to thrive.
The GENIUS Act
This bill protects consumers by holding stablecoin issuers to strict reserve requirements, prohibits the issuing of unbacked algorithmic stablecoins, requires approved stablecoin issuers to comply with U.S. anti-money laundering and sanctions rules, and clarifies rules around conservatorship and procedure should a stablecoin issuer experience insolvency.
A Bipartisan Effort
The GENIUS Act has already received input from a wide swath of stakeholders, including industry participants, academic experts, and federal regulators. It’s a true bipartisan effort that will empower innovators and builders while simultaneously rooting out bad actors.
Bipartisanship refers to cooperation and agreement between two or more parties, often in a legislative context.
It involves finding common ground and working together despite ideological differences.
In the United States, bipartisanship is seen as a key aspect of democratic governance, allowing for the passage of laws that benefit the greater good.
According to a Pew Research Center study, bipartisan legislation has increased in recent years, with 44% of bills passed in 2020 having support from both parties.
Laying the Groundwork for American Exceptionalism
Positioning the United States at the leading edge of the next iteration of the internet is key to maintaining our position as the leader in global economic competitiveness. We must act now to maintain our position as the leader in global economic competitiveness and ensure a bright future for America’s innovators, builders, and creators.
- coindesk.com | Why We Need a Bipartisan Stablecoin Bill – Gillibrand
