BitOoda Global & Regulatory Analysis, 12/9/2019: The Push for the Digital Dollar
Amid the global debate over the digitization of national currencies, where do we stand on the potential for a digital dollar? As you probably guessed, the trend is not in a progressive direction, with continued conservative statements from U.S. government players even as former senior government leaders increasingly call for a new U.S. approach.
How does this impact BitOoda and our clients? Given the response by many policymakers to the launch of Libra, we believe the evolution of the stablecoin/CBDC debate will shape the future of U.S. policy on digital assets and fintech in general. In addition, decisions by the U.S. and other countries on how they will move ahead with implementing the new FATF standards for KYC/AML will help determine the approach that SEC, CFTC, and others will take on governing day-to-day market activity and new product proposals.
In the past week, we observed:
· Former head of the National Economic Council Gary Cohn warned that the U.S. is at risk of losing its global economic leadership because it is falling behind in technology. Cohn was on a panel with SEC Chair Clayton when he made these statements, casting an ironic scene given his criticism of the country’s current approach to fintech regulation.
· Former CFTC Chair Christopher Giancarlo (a.k.a. Crypto Dad”) said he plans to advocate for the development of a digital dollar, and the advancement of digital commerce in general.
On the flip side:
· Treasury Secretary Mnuchin — along with Fed Reserve Chair Powell — stated that there is “no need for the Fed to issue a digital currency” for at least the next five years. In addition, the Mnuchin-led Financial Stability Oversight Council (FSOC) in its annual report encouraged regulatory agencies to “continue to examine risks to the financial system posed by new and emerging uses of digital assets and distributed ledger technologies.” In our frank view, it is hard to imagine a more short-sighted view on the digitization of the global economy or a less helpful policy posture than encouraging the continued exploration of the risks of digital assets.
· The SEC appointed a new chief for its cyber unit — responsible for its digital asset enforcement program — who previously advised SEC Chair Clayton on crypto-related issues.
· Anti-crypto Congressman Brad Sherman was appointed as the new chair of the House Financial Services Committee’s Subcommittee on Investor Protection, which — among other roles — oversees the SEC and FINRA.
· On the Senate side, a bill was introduced that would classify Libra and other stablecoins as securities, which could further escalate government scrutiny and oversight.
With the European Central Bank stating its willingness to develop a digital euro if the private sector doesn’t effectively address the need for improved retail and cross-border payments and China moving ahead with its digital national currency, we continue to stand by for U.S. economic leadership to recognize the inevitability of global economic digitization, and start responding accordingly.