Members of Congress love to drag the CEOs of large companies into hearings to show off in front of their constituents. The best recent example is the grilling of Facebook’s Mark Zuckerberg over the company’s Libra cryptocurrency project.
While he was tied to the playground tetherball pole being publicly pilloried, the majority of the crypto-market has been impatiently waiting for Congress to provide regulatory clarity for the future of the cryptocurrency industry.
Now that over-the-top political production is threatening to to spoil a good opportunity to address a policy area impacting everyday Americans before the 2020 elections dominate Congress’s attention.
Unfortunately, it seems that some members of Congress would rather put on a performance than get things done.
As I’ve written previously, cryptocurrencies are a new and exciting innovation, but in order to foster their growth here at home they need approval from the powers that be. Until the Administration, Congress, and federal regulators clarify which cryptocurrencies are commodities, which are securities, which tokens have utility, and everything in between, American startups in the crypto space will continue to look elsewhere to grow their businesses.
The lack of regulatory certainty surrounding crypto should be central to the broader debate taking place. Unfortunately, the House Financial Services committee would rather use its limited time to drag Mark Zuckerberg over the coals for privacy issues that have nothing to do with cryptocurrencies and the underlying merits of the technology.
Even without this Facebook aside, as we have seen happen with most industries, the federal government is moving too slowly and many technology sectors are running laps around it—crypto included. Several states are already filling the void left by the federal government. Some, like Wyoming, are carving out little pockets of crypto-innovation. Congress should look to these states for examples of how they can expand policies for the industry across the country. That is, if Congressmembers can stop bullying the tech industry for a moment and do their homework.
A point of contention in the crypto space today is between commodities and securities. But, the business model of a company working with commodities is a lot different than one offering up securities. As I have written, many crypto-coins should not be treated as securities, as they are currently. The Chairman of the Commodity Futures Trading Commission (CFTC), Heath Tarbert, finally did weigh in on this debate. Tarbert recently said, “We’ve been very clear on bitcoin: bitcoin is a commodity. We haven’t said anything about ether—until now [. . .] It is my view as chairman of the CFTC that ether is a commodity.”
Ether is somewhat unique among its crypto-peers in that it supports Ethereum, a network of decentralized apps that rely on blockchain technology to operate. Ether is the network’s native currency and is used to pay for the computational power needed to run a program—”process a transaction”—on the network.
However, ether is just one example of where innovations are going in the cryptocurrency space—real applications for the real economy that benefit real everyday consumers. Not just people holding cryptocurrencies as an investment, but people putting them to work. They represent a way to bypass some of the outdated business models and payment systems of the past. But unless Congress and the Administration make it clear how they will be treated, these ideas will remain ideas, not the tools that can propel us to the future.
The CFTC providing clear direction is a good start. Codifying these principles into law is going to be an uphill battle. That challenge should not deter lawmakers from providing guidance for such a promising sector of our nation’s economy. With the right rules of the road, cryptocurrencies can flourish and thrive in the United States.
Hopefully, Congress can get serious for at least a few months before the silly season of the 2020 elections takes full control of their schedules, talking points, and egos.