The Chamber of Digital Commerce is “gravely concerned” about how the U.S. government is addressing technological challenges and opportunities posed by blockchain, according to founder and president Perianne Boring. The U.S. could be ceding technological leadership as well as the dollar’s reserve currency status to other nations including China if it does not revamp policies toward emerging blockchain innovation.
“About central bank digital currencies — I would argue if we don’t figure out from a financial perspective how to lead in this technology, we could be ceding the world reserve currency to something else,” said Boring. “I strongly believe that being a technical leader is going to be an imperative part of being a financial leader. I really do wish more people understood that. There are some really amazing people all throughout the government that do get that, but the lack of action is certainly concerning in the U.S.”
- “I truly believe if the US does not get its act together and figure out how we are going to coordinate a strategy and be technical leaders, we will be ceding our technological leadership to other nations.”
- “[Regulators are] trying to do their jobs to provide oversight and update the laws and the regulations. We don’t always get the best recipe for smart policy out of those conversations when their focus is on fear and anxiety and skepticism of the technology itself.”
- “When we have an environment that’s really focused on enforcement and we’re not looking at what blockchain technology can provide from a positive benefit perspective, that’s when we have real threats to businesses innovating in this space.”
- “If we don’t figure out from a financial perspective how to lead in this technology, we could be ceding the world reserve currency to something else. I strongly believe that being a technical leader is going to be an imperative part of being a financial leader. I really do wish more people understood that.”
- “If you look at monetary policy globally … the entire world is really calling for a replacement of the existing monetary system. And if you really think about what our monetary system is today with all these global fiat currencies, it was really a failure of the Bretton Woods system.”
- “There’s going to be huge shifts in the global financial monetary system. I strongly believe blockchain and digital assets are going to be a huge piece in what that shift and what the future of money looks like.”
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The Chamber of Digital Commerce is a not for profit trade association formed in 2014 and headquartered in Washington, D.C. Their aim is to promote the acceptance and use of digital assets and blockchain-based technologies.
The Chamber’s National Action Plan for Blockchain calls on the highest level of government leaders in the U.S. to make clear public statements about the importance of blockchain technology. “Don’t just talk about the bad actors: Also talk about how this is going to benefit our economy, our national security, the markets, and other areas in the government, and also encourage the private sector to innovate and develop on this technology within the United States.”
China’s central bank has been developing its own digital currency for the past five years, and in January released a statement that it was “progressing smoothly.” If released, it would be the first sovereign digital currency created, and could disrupt traditional finance models including cross-border transactions, payments systems and more.
According to Chinese financial news outlet Caijing, the currency would be piloted in Shenzhen by the end of 2019, though no new reports on its progress have been released since the time of this article’s publication.
“The central bank’s legal digital currency pilot will step out of the central bank system and enter real service scenarios such as transportation, education, and medical treatment, reaching C-end users and generating frequent applications,” Caijin reported.
Global race for digital currency
“There’s many developed nations that understand the importance of [blockchain] and are taking proactive steps to be a leader on the global stage on this technology. And I truly believe if the US does not get its act together and figure out how we are going to coordinate a strategy and be technical leaders, we will be ceding our technological leadership to other nations,” Boring said.
In 2019, Bank of England Gov. Mark Carney called for a global replacement to the U.S. dollar. Moreover, in January the Bank of Canada, Bank of England, Bank of Japan, European Central Bank, Sweden’s Riksbank, Swiss National Bank and Bank for International Settlements formed a group to assess use cases for central bank digital currencies in their respective jurisdictions.
“There’s going to be huge shifts in the global financial monetary system. I strongly believe blockchain and digital assets are going to be a huge piece in what that shift and what the future of money looks like,” said Boring.
Dollar under threat?
In November last year, Federal Reserve Governor Lael Brainard said the Fed “will continue to analyze the potential benefits and costs of central bank digital currencies … that could be held directly by households and businesses without the involvement of a commercial bank intermediary.”
While the Fed explores these options, digital assets innovators are revealing projects of their own. Former chairman of the Commodity Futures Trading Commission Christopher Giancarlo, who is on the Chamber of Digital Commerce’s board of advisers, recently announced a Digital Dollar Project to work with the U.S. Government and the Fed on creating a digital dollar.
“The digital 21st century is underserved by an analog reserve currency,” reads the press release. “A digital dollar would help future-proof the greenback and allow individuals and global enterprises to make payments in dollars irrespective of space and time. We are launching the Digital Dollar Project to catalyze a digital, tokenized U.S. currency that would coexist with other Federal Reserve liabilities and serve as a settlement medium to meet the demands of the new digital world and a cheaper, faster and more inclusive global financial system.”
Nonetheless, chief economist at the International Monetary Fund Gita Gopinath wrote in an opinion piece for the Financial Times in January that cryptocurrencies such as Facebook’s Libra do not address fundamental issues of what it takes to be a global reserve currency. “The dollar’s status is bolstered by the institutions, rule of law and credible investor protection that the U.S. is seen as providing.” wrote Gopinath.
The Chamber of Digital Commerce will be hosting the Blockchain Summit in Washington D.C. in partnership with Georgetown University on March 11-12, 2019. Visit dcblockchainsummit.com for more information.
Angie Lau: Welcome to Word on the Block, the series that takes a deeper dive into the topics we cover right here on Forkast.News. I’m Editor-in-Chief Angie Lau.
Innovation is one thing, but without regulatory or policy support or even understanding from lawmakers, development can be stopped right in its tracks, and that’s something that the Chamber of Digital Commerce is more than aware of for its members and indeed the whole industry.
So what are the efforts for greater understanding, more honest conversations? That’s why we’re having a conversation right now with Perianne Boring. She’s president and founder of the Chamber of Digital Commerce, the world’s first and largest blockchain trade association. From Washington, D.C., Perianne welcome.
Perianne Boring: Thanks, Angie, it’s great to be here.
Lau: Tell us a little bit more about the Chamber of Digital Commerce. A lot of people are aware of it, but perhaps not everyone is aware of just the scope and the size of the organization. Tell us a little bit more.
Boring: So the Chamber of Digital Commerce, we’re a not-for-profit trade association, we were formed in 2014, we’re headquartered in Washington, D.C. Our mission is to promote the acceptance and use of digital assets and blockchain-based technologies. Today, we represent more than 200 companies that are investing in and innovating with blockchain-based technologies. That includes global financial institutions, emerging technology companies, software developers, consultancies, investment firms, law firms and our leadership.
Our board of advisers includes a range of policy, legal experts, industry pioneers, former regulators, including two former chairs and a commissioner of the U.S. Commodity Futures Trading Commission and a former commissioner of the U.S. Securities and Exchange Commission. A big part of what we’re focusing on is education advocacy and working closely with policymakers, regulatory agencies in the industry to create an environment that fosters responsible innovation, job creation and investment. We do believe there are a lot of regulatory challenges to the adoption of this technology. So we serve as a dedicated group of professionals to work with the industry and the policymakers to address what I think are some of the biggest challenges to the future of this technology.
Lau: Well, case in point, you just saw what happened to Facebook’s Libra announcement in 2019. It was like somebody dropped an anvil on Capitol Hill and everyone seemed to react so negatively almost immediately. What’s happened since then? Is this the type of reaction that you’re constantly battling?
Boring: Yeah, that’s funny, I’ll tell you a quick story. So Facebook announced Libra, the whole world freaked out, Capitol Hill freaked out, a lot of conversations, a lot of people really didn’t understand what was going on. A lot of misinformation and a lot of fear and skepticism not only about Facebook, but cryptocurrencies and blockchain technology in general. Facebook is a U.S. company and the House Financial Services Committee decided that the rollout of Facebook’s Libra project would be one of their biggest priorities for the year. They published a document saying that’s going be one of their priorities, they brought in David Marcus and Mark Zuckerberg, I’m sure you guys all saw the hearings which were informative and entertaining all at the same time.
But what came out of those hearings, all of them, you can really see just what we’re up against for companies that are innovating in the cryptocurrency space and the greater blockchain space, where policymakers have legitimate concerns about this technology and applications surrounding it. They’re trying to do their jobs to provide oversight and update the laws and the regulations. We don’t always get the best recipe for smart policy out of those conversations when their focus is on fear and anxiety and skepticism of the technology itself.
What came out of those hearings with Mark Zuckerberg and where we are today, members of the House Financial Services Committee introduced three bills in response to Facebook. One was called Keep Big Tech Out of Finance — I know it doesn’t pass the laugh test as we call it, that one we’re not really worried about becoming law, but it gives you a little bit of idea into their insights.
The second one was this managed stablecoin bill that would ban new types of stablecoins or consider them securities, so effectively it would be a ban. Then there was an associated prohibition listing bill with that. I used to work on Capitol Hill — about 2% of legislation that’s ever introduced will ever become law. So there’s a lot of interesting things out, there’s a lot of things not to be concerned about. This managed stablecoin bill, we were kind of concerned about because it started making its way through the legislative process and we got what I call the Facebook Christmas present, because one of those bills actually was making its way to a markup.
We wanted to make sure we weren’t seeing businesses, Facebook and others’ applications being banned. We had to get highly involved in that process. Long story short, when we have an environment that’s really focused on enforcement and we’re not looking at what blockchain technology can provide from a positive benefit perspective, that’s when we have real threats to businesses innovating in this space. So a big part of what we do at the chamber is just to explain the risk, but let’s also make sure we understand the benefits and not cancel out the opportunity to benefit from this technology while we’re mitigating against the challenges.
Lau: Well, the concern is just how reactionary and not collaborative or cooperative … There’s one thing about being cooperative, you can take that as it or leave it, but it’s the collaboration. You don’t always have to agree, but you should always collaborate. At least that’s how innovation arises. One thing from our perch here in Asia — and we cover this story globally — a very distinct characteristic from the West side when it comes to innovation and policy is that it feels adversarial. It feels, as you’ve said, reactionary and fearful.
Certainly when we were in Switzerland, in Crypto Valley, in Zug, the political process, the collaboration is so much more integrated. I mean, obviously, it’s a different political system, but also it’s a recognition that as a smaller sovereign, that there needs to be collaboration in this new technology for its national economy and finance. So there’s a very different collaborative relationship when it comes to innovators and entrepreneurs and policymakers.
Even in China — we just wrapped up our our China Blockchain Report — because policy is top down and embracing blockchain and crypto technology, not necessarily cryptocurrency, but even the People’s Bank of China is talking about a digital asset, a central bank-backed digital asset, it’s a very different dynamic. As you see the landscape, where does that leave this kind of innovation environment in the U.S.? How would you characterize that, and is that a good or bad thing in the face of competition elsewhere?
Boring: I think your analysis is pretty spot on [regarding] the attitude and approach to blockchain in the United States of America, at least on the federal level, the states are a little bit different. But on the federal level, the majority of the conversations, whether it’s hearings on Capitol Hill, conversations happening at the regulatory agencies. You may have seen in response to Facebook, our treasury secretary Steve Mnuchin gave a press conference from the White House talking about crypto, blockchain and Libra, or whether it’s tweets coming from President Trump, the majority of the messages coming from Washington about blockchain and digital assets are very much focused on enforcement, focusing on bad actors, identifying them and enforcing the laws against them.
I’m not saying we shouldn’t do that. As a pro-business person, we need to have a rule of law, we need to have healthy, functioning markets, and enforcement is absolutely a part of that. But where we see problems is the other half of the conversation is completely absent. Not only do we need to mitigate against the risk and address the bad actors, we also need to understand the benefits and make sure we are taking advantage of those benefits.
So this is something we have been gravely concerned about at the chamber. We launched a national program, an initiative called the National Action Plan for Blockchain, and it calls on our highest level of government leaders to, one, make clear public statements about the importance of this technology. Don’t just talk about the bad actors, also talk about how this is going to benefit our economy, our national security, the markets, and other areas in the government, and also encourage the private sector to innovate and develop on this technology within the United States.
If you look around the world, and I’ve had the opportunity to travel to some really cool places over the past several years, and you highlighted many of them, there’s many developed nations that understand the importance of this technology and are taking proactive steps to be a leader on the global stage on this technology. And I truly believe if the U.S. does not get its act together and figure out how we are going to coordinate a strategy and be technical leaders, we will be ceding our technological leadership to other nations.
Lau: Not only are you ceding the innovation, you’re ceding talent. That’s what we’re seeing right now is all of this blockchain talent and this innovation talent are all seeking friendlier shores, and much of it is his here in Asia.
Boring: Yeah, and you talked about central bank digital currencies — I would argue if we don’t figure out from a financial perspective how to lead in this technology, we could be ceding the world reserve currency to something else. I strongly believe that being a technical leader is going to be an imperative part of being a financial leader. I really do wish more people understood that. There are some really amazing people all throughout the government that do get that, but the lack of action is certainly concerning in the U.S.
Lau: As Donald Rumsfeld very famously said, it’s the known unknowns and the unknown unknowns that will really be the critical part of the outcome. But look, what are you expecting to see in 2020? 2019 helped a lot of people recognize that there is something to this technology and in fact the impact could be massive. You did a lot of work, you’ve deepened a lot of relationships, you’ve furthered a lot of conversations. What are you expecting to see out of the U.S., Capitol Hill, D.C. in 2020 for blockchain and digital assets?
Boring: There’s a couple of big things that I’m watching, not just in D.C., but globally. This is a global technology ecosystem, and I think what happens all around the world impacts what happens in the U.S. and elsewhere. One thing that I’m watching very closely and I’m incredibly interested in is what China is doing. It’s really been amazing just to see how much investment China, as well as the People’s Bank of China have put into blockchain. They’ve made blockchain a part of their 13th five-year plan. They’ve been looking at this technology and investing in it for at least five years, maybe more.
Their most comprehensive project is their central bank digital currency project. You may be interested to learn or maybe you already know this, but they have filed over 80 patent applications on this central bank digital currency project and really just goes to show the amount of thought and how serious they are taking this, not only for their financial system, but it’s a part of their overall national strategy. So that project is piloting now and it’s expected to be made available probably very soon. And I think that is going to cause a lot of implications in the global monetary and financial system.
Lau: It’s going to be a seismic shift, that’s definitely the recognition. But how it actually practically functions, that’s something that no doubt everyone is watching closely. But 1.4 billion people in China, many of whom access the Internet, I think three-quarters of the country access the Internet already and through their mobile phones, already groomed to a digital system. You almost can’t go into China and use [paper] money anymore.
Boring: It’s amazing and a little frightening at the same time as you look at some other projects in China, like their social credit scoring program and you take that and you layer a digital currency on top of that. … It creates a very strong recipe for monitoring everything. I think there’s going to be some real challenges to that. But not only that, if you look at monetary policy globally — you talked about one of the other things that we’re looking at is just the entire world is really calling for a replacement of the existing monetary system. And if you really think about what our monetary system is today with all these global fiat currencies, it was really a failure of the Bretton Woods system.
The current system is not what it was meant to be when the world came together after World War Two, Bretton Woods, 75 years ago, which if you really think about it, it’s not all that long ago. So the world agreed on a gold standard, and that broke down within really just a couple of years. It’s spiraled out into where we are today with these fiat currencies. And it’s great for the United States because we are the world’s reserve currency and we Americans have a lot of benefits from that, but not everybody.
I think one of the most important speeches from 2019 was Mark Carney from the Bank of England, where he called for a global replacement to the U.S. dollar. Now you’re seeing the Bank of England experimenting in this area, the European Union experimenting in this area, Singapore’s project Ubin that’s been out for many years and China. There’s going to be huge shifts in the global financial monetary system. I strongly believe blockchain and digital assets are going to be a huge piece in what that shift and what the future of money looks like.
Lau: Well, these are important conversations and it’s talks that you’re aggregating actually in D.C., you’re hosting the D.C. Blockchain Summit in March. Forkast aims to be there covering some of the top stories that will culminate out of there. Tell us a little bit more about how the audience can find you there, and why this is integral to business thinking, governmental thinking, policy thinking in 2020.
Boring: We’re hosting the D.C. Blockchain Summit in partnership with Georgetown University. It is actually our fifth year holding this event, so we’ve been doing this now for half a decade and we’ve grown this event really to a go to place to discuss blockchain innovation and policy applications for the space. This year, we’ll be celebrating our five-year anniversary. Some of the things that we’ll be discussing include the future of money. You may have seen Christopher Giancarlo, who’s the former chairman of the CFTC who also joined our board of advisers last year, he announced the digital dollar project just last week where he’s putting together a dedicated initiative to work with the U.S. government and the Fed on a digital dollar.
He will be at the summit, he’ll be talking about the digital dollar project. We’ve also invited some other central banks to come and talk about other digital currency projects around the world. We’ll be addressing this issue of U.S. competitiveness on blockchain. We do represent a couple of companies that are actually based in China.
We’re going to come and talk about the dichotomy between when you have a government that’s really embracing this technology in a massive way and one that’s not, and what’s the implications of that? We’ll be talking about AML — a big change in the international money laundering requirements for crypto assets is underway. We have representatives from FinCEN coming to talk about that and we’ll also be talking about what banks are doing with blockchains.
We have many banks that are members of the chamber that are innovating and building tokenized networks and really using this technology to address different areas of friction within the banking system, so we’ll be talking about how digital assets are being integrated within the commercial banking system as well. So this is March 11th and 12th, and if you’re interested in joining, and Angie, I really hope you can join us too, [visit] Dcblockchainsummit.com.
Lau: Perianne, I know this is our first chat, but it won’t be our last. We’re going to touch base with you again. It’s important to understand globally these dynamics and you’ve done an incredible job helping lead those conversations at Capital Hill, sometimes less comfortable than others, but you’re doing it with incredible.
Perianne Boring, president and founder of the Chamber of Digital Commerce, right there. Thank you so much, Perianne and thank you everyone for joining us on this latest episode of Word on the Block. I’m Forkast.News editor-in-chief Angie Lau. Until next time.