After the US Senate Execs and Cons on Digital Cash — What Do We Do With It?

clicks | 11 days ago | Google AI sentiment -0.30 | comments: discuss | tags: cryptocurrency bitcoin

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The crypto industry has the best historical moment to change the discourse about cryptocurrency and its reputation into a successful innovative tech sector. The COVID-19 pandemic has certainly accelerated the digitalization of economies across the globe, opening up discussions on the future of digital financial services and whether our economy should advocate for the financial inclusion of Bitcoin ( BTC ) and other digital assets. Yet, despite the horror we have been seeing as our industries continue to suffer, the digital payments industry is expected to thrive, based upon recently reported data from the Consumer Confidence Index. Reaching a three-month high last month, consumer confidence data revealed a 12.1 jump from 85.9 in May to 98.1 in June. Last month when the United States Senate Committee on Banking, Housing, and Urban Affairs held its virtual meeting, dubbed “The Digitization of Money and Payments,” the conversation primarily revolved around stablecoins and whether our economy is ready for a U.S. central bank digital currency. In case you missed it, it all came down to these two points, with committee chairman Senator Mike Crapo, a Republican from Idaho, explaining that our financial sector needs “rules of the road,” while Senator Sherrod Brown, a Democrat from Ohio, presented the question of: “Why on earth we would trust big tech with our banking system?” The “rules of the road” When it comes down to whether we need a digital dollar or not, I examined some of the discussion points throughout the hearing while diving into my continued belief that decentralized finance only emphasizes a need for a CBDC. Digital dollar, for the uninitiated, is an electronic credit that would only exist on computers, but like a traditional, physical fiat dollar, consumers and businesses could use it to pay one another. The opening statements of June’s hearing kicked off with Senator Crapo inviting witnesses to discuss why a CBDC is necessary now more than ever. In short, he wanted answers to: Efforts being undertaken by different groups in the development of digital money and payments. Design, operational and risk considerations in their development. What specific problems a CBDC should resolve that are not currently being or cannot be addressed by the litany of payments innovation already completed or underway. What the rules of the road should be. However, Senator Brown followed up with skepticism on entrusting big technology companies with managing our financial system, even in a digital world. Recognizing digital advancement, Senator Brown identified his concerns surrounding consumer protection and providing equal access to financial services, bolstering support for his own proposed legislation alternative: Banking for All Act . This alternative, according to Senator Brown, would allow all Americans to open zero-fee bank accounts at U.S. post offices, banks or online and connected directly to the Federal Reserve’s system. He said: “Banking for All means no more check-cashing fees, no more paying to use the money you already earned, [and] no more waiting until Wednesday to use money you were paid on Friday.” Brown added that friendlier technologies like a digital dollar would be a valuable tool as well. What we can learn from international markets While the country’s economy has one of the highest penetrations of digital payment systems when compared to other economies, China , for example, seems to be taking the lead in legitimizing digital money and cryptocurrency in its economy. You can’t question its latest law after the Thirteenth National People’s Congress and Chinese People’s Political Consultative Conference passed a new civil code designed to protect the civil rights of inheritance, marriage, property, personality, contract and infringement. Going into effect on Jan. 1, 2021, the new inheritance law not only identifies Bitcoin as one asset that could be inherited but it also allows China’s citizens to pass on their cryptocurrency and other digital assets to their heirs. The government has also rolled out a digital coin that looks to challenge the digital offerings of Alibaba Group and Tencent Holdings. The reason is that it would enable better control of financial systems that are currently not possible with the yuan. Large-scale implementation of the coin would go live in 2022. If to compare, the complexity of the European Union’s economy and its legislation process tend to hamper the rolling-out of any common law, putting China ahead of the game. Attempting to address and minimize the chances of missing out on potential opportunities, many member states have already started to develop CBDCs separately. Back in June, the Italian Banking Association revealed, or ABI, it would be willing to support and pilot the implementation of a digital currency from the European Central Bank. On June 18, the ABI website shared that it had approved guidelines governing its position on digital currency and CBDCs. As fo...