Stop Protecting Big Banks: End the War on Cryptocurrencies
On the day President Joe Biden was sworn into office, he ordered a freeze on the blizzard of last-minute rules that the Trump Administration tried to ram through in its final days. They were a grab bag of favors to Republican special interests and big business that Biden immediately put under review before allowing them to take effect. Buried in the provisions to roll back protections for workers, immigrants and the environment were leftover actions by Trump’s appointees aimed at crushing U.S. innovators who are working to offer millions of American citizens and small businesses easier, cheaper and safer ways to transact money, challenging generations of inequality fed by the practices of big banks.
Fintech developers are using blockchain and cryptocurrency technology to bring these services to the general public, and banking lobbyists have been busy trying to stop them. Billions of dollars in monopolistic fees are in danger from these new payment systems that eliminate the bank as the middle man, and Trump’s acolytes were all too eager to wage what has been dubbed “the Crypto Cold War” over the last four years. But that war turned hot in the final days, with two high-profile attacks from Trump’s Treasury Department.
First, a week before Christmas, Treasury Secretary Steve Mnuchin unveiled industry-shaking rule changes for U.S.-based cryptocurrency exchanges that many said would be nearly impossible to comply with and remain in business. They’d either face oppressive operational and administrative burdens or be forced to shut down. Worse yet, the rulemaking set a 15-day comment period, which Coinbase, one of the leading cryptocurrency exchanges, explained was “obviously impossible”.
Days later, the Securities and Exchange Commission (SEC) filed a lawsuit against the San Francisco-based software developer Ripple, one of the biggest companies in the blockchain industry, and two of its senior executives. The company offers cross-border payments solutions that threaten the SWIFT monopoly controlled by the world’s largest banks. The lawsuit claimed that XRP, the world’s third biggest cryptocurrency which Ripple has used for nearly a decade to power its payments software products, was allegedly an unregistered security when they distributed the token seven years ago. Hours after the lawsuit was filed, Trump’s appointed SEC chairman, Jay Clayton, left his post, followed soon after by the lawyer he’d tasked to lead the Ripple case only five months after he’d been hired.
The Biden Administration needs to recognize the motivations behind both actions, carried out by Republican appointees who fought for their rich and powerful friends every day they were in power. The Ripple lawsuit needs to be re-examined and the Treasury rules on coin exchanges should be reversed. We need to keep responsible American cryptocurrency exchanges in this country and encourage them to continue innovating. Coinbase, Ripple and other industry players have been pleading with Washington to develop a comprehensive regulatory framework that will safeguard all the enormous benefits of this technology, particularly for the underbanked, while also protecting consumers and investors from fraud and the nation from money laundering and other criminal uses. We did it in the 1990s with the internet, and we can do it now with financial technology.
Unfortunately, the United States continues to trail other nations in nurturing this technology along, but it can’t continue. Democrats have embraced their progressive roots by embracing green technology and the enormous promise of a green economy. This same vision has to be applied to blockchain technology, which can democratize finance and money. How else can we possibly tackle economic injustice if we aren’t willing to break out of the structural inequalities of our financial system?
Treasury Secretary Janet Yellen and Gary Gensler, Biden’s nominee to head the SEC, have a unique, and potentially historic, opportunity to embrace the benefits of blockchain technology and work in partnership with visionaries racing to unlock its revolutionary benefits. They can start with ending the war on cryptocurrencies and joining hands with American innovators striving to put them to good use for our economy and our people.
Albert Wynn is a former Democratic member of the U.S. House of Representatives for Maryland’s 4th District. He served on the House Financial Services Committee.
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