When Joe Biden won the presidential election, he pledged immediately to begin working on behalf of the voiceless and the underserved: by rebuilding the middle class, heeding science to end the global pandemic and creating lasting recovery that delivers racial and social justice.
Now, with Biden in office and key appointments filled, Democrats have a chance to fulfill those promises. Cryptocurrencies and the revolutionary technology powering them present an unprecedented opportunity to help do so.
Visionaries across the political spectrum have long decried entrenched financial establishments that have served the wealthy too often at the expense of the poor. They have fought efforts to put big banks and their profits ahead of the working class. The Biden administration now has an opportunity to galvanize that legacy by paving the way for cryptocurrencies.
Ask a person on the street in countries around the world about cryptocurrencies, and you will likely get an array of differing opinions. Ask in Washington, D.C., and you are likely to be met with a blank stare or parroted sound bites — not unlike asking someone about the internet in the early 1990s. But even if the technology is complex, the potential is not.
Blockchain technology and cryptocurrencies are more than just Bitcoin and trading exchanges. Crypto is about fundamentally disrupting the often-antiquated financial technology that, by design, is expensive, slow and opaque and benefits the rich and the powerful at the expense of those struggling to create wealth at the bottom end of the economy.
Blockchain and digital tokens allow everyday transactions in any currency to be frictionless, transparent and inexpensive. That represents a massive departure from the traditional banking system, with intermediaries that take trillions of dollars out of these same transactions every year. If innovators are encouraged to develop consumer crypto products that disrupt this status quo, they could help ignite economic empowerment for those who have been edged out by long-standing and deep-rooted systemic economic injustice.
The Trump administration’s response to cryptocurrencies was pulled from a playbook of crony capitalism. Its approach drove a set of hostile enforcement actions against dozens of innovators, much to the delight of those who see this technology as a threat to the status quo. In the waning days of the administration, Trump appointees sought to push through rules designed to hamstring U.S. coin exchanges and filed a lawsuit against Ripple, a big player in the U.S. crypto industry.
The Biden administration must not fall into the same trap, whether it’s by failing to understand the technology and its potential or simply from a knee-jerk fear of something new.
It is true that most social and economic benefits from crypto technology are yet to be unlocked. The danger is that ill-conceived, overly reactive legislation will close them off permanently to segments of the public that need those benefits the most. The tremendous upside for the U.S. economy, should breakthroughs come to market here first, is obvious. But it doesn’t stop at our borders.
Technology is global in the same way that commerce is global. Cryptocurrency has the potential to affect structural change for working people, the unbanked and the underbanked across the world — rather than continuing to throw money at a broken system that was never designed to serve these groups.
Retail e-commerce platforms are expanding to every continent. The cost of moving money often kills the entrepreneurship that the U.S. invests billions in development aid to nurture. Cross-border payments, particularly between developing countries, are highly expensive in the existing financial system. If technology can reduce, or even remove, these costs, small- and medium-size merchants could be poised to do business with consumers almost everywhere. If we leave those barriers in place, increasing economic hardships could fuel ever more violent conflicts and mass migration.
The Biden administration can position the U.S. at the forefront of this technology and ensure it remains an open protocol system. But it will require putting aside preconceived notions about cryptocurrencies, much like previous administrations ultimately did for the internet. Then, as now, those seeking to protect their vested interests trotted out a “parade of horribles,” seeking to demonize new technology as a passing fad. Fortunately for the world, U.S. leaders saw through that, to the significant social and economic potential of the internet, and their regulatory framework paved the way to realizing it.
The Biden administration and today’s congressional leadership should do the same on cryptocurrencies, without fear and without delay. It’s time policymakers stop ducking responsibility and get up to speed. Otherwise the U.S. risks being so late to the game that it can’t catch up.
Sheila Warren is the deputy head of the World Economic Forum’s Centre for the Fourth Industrial Revolution and a member of the forum’s Executive Committee.
Michael J. Casey is the chief content officer for CoinDesk, a cryptocurrency news site, and a former columnist for The Wall Street Journal.
Warren and Casey co-host CoinDesk’s Money Reimagined podcast.