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Along with sweeping regulatory action this year, including what some are calling a systematic de-banking of the sector, observers fear the crypto winter will become an ice age.
Every new technology, from the rise of electricity to the introduction of cars and planes, has paired the promise of a better life for billions with potential dangers. It's in our national DNA to innovate responsibly. We identify key risks and create sensible regulations to protect the public. We link private-sector innovation with public-sector guardrails. We don't kill emerging tech; we elevate it, bending the arc of progress toward public purpose and utility.
Rejecting this proven approach risks letting an entire strategic technology arena slip from U.S. leadership — the very call to action in
What the public needs now from Washington is not smothering but sifting.
The good news is that Congress can uplevel the crypto industry and shore up U.S. strategic interests by advancing legislation on payment stablecoins, the U.S. answer to competitive electronic money and digital-asset frameworks emerging around the world. Over the weekend, the House Financial Services Committee did just that, publishing a draft stablecoin bill and scheduling hearings this Wednesday at which I'm honored to appear as a witness.
This legislation would support responsible efforts to modernize America's legacy financial plumbing, including ensuring that the dollar becomes the native currency on the internet. On top of cumbersome payment rails that haven't kept pace with the 21st-century economy, the ongoing banking crisis underscores the need to separate payment activity from banking. Had the federal government not intervened to stave off bank risk contagion, America's small to midsize banks could have faced an extinction-level event.
At its core, cryptography is a way to automate a "trust but verify" approach to transactions. What it enables is moving money with the same speed, security and scale as text messages, all at near-zero cost. It also unlocks a whole new ecosystem. Just as an iPhone's OS fostered a flourishing ecosystem of apps, the rise of programmable money, smart contracts and blockchain-based finance can enable a vast range of applications that can level up capital markets and commerce with greater transparency, auditability and global reach.
Much like the proverbial chaff and wheat, however, a different sector has also sprouted from this technological breakthrough. Its cause is not financial inclusion or economic freedom but hyping assets and creating unregulated, offshore financial markets. The result? Questionable ads that hark back to the dot-com bubble, collapsed companies, angry regulators and harmed consumers. I share the White House report's opposition to this counterfeit form of crypto, but categorically reject the notion that novel technologies have no intrinsic value.
Our industry needs to make a decisive break from speculation to utility. Now more than ever, we are seeing the power of new, global, transparent, secure and always on blockchain-native financial infrastructure.
In December, the UNHCR joined with Stellar, MoneyGram and Circle to deliver universally portable digital cash assistance to war-displaced refugees from Ukraine. This is scalable humanitarian assistance that's near-instant, mobile, traceable and corruption-resistant. Where inflation runs rampant, people are turning to fully backed digital dollars like USDC as a store of value. Workers are sending paychecks home without exorbitant remittance fees. And Fortune 500 firms are beginning to realize the benefits of moving money and settling payments in digital form.
Open networks attract regulatory fear as surely as light attracts moths. The early web was good, bad and ugly for users. E-commerce was risky and loading a photo could take 10 minutes. Thanks to the dot-com crash that followed, web development shifted to steadier hands. Online shopping got safer, search got better and developers shifted from flying toaster screensavers to helping people do things faster, cheaper and more securely. The U.S. economy, consumers and markets were the great beneficiaries of this wave of innovation.
But this almost didn't happen. Potential policy paths at the time included major constraints on who could use the internet. Podcasting was almost killed in its infancy: Some officials considered requiring would-be hosts to first obtain FCC licenses. Wiser heads fortunately prevailed, enabling U.S. innovation to lead the global migration online.
We're at a similar point today. Just as the original internet democratized access to information, the internet of money can democratize access to dollars. Indeed, promoting rules-based competition is the key to winning the digital currency space race and ensuring global trends of de-dollarization are managed.
When was the last time you sent a cross-border email? Did you wait three days and pay $12? It's a crazy concept, yet that kind of friction in time and cost is embedded in our decades-old payment rails today. Even the White House report notes this need.
The form factor of money is always changing, from clay tablets and seashells to metal coins and paper dollars. Most of the innovation in how you transact today, from credit and debit cards in your wallet to payment apps on your phone, has come from rules-based, private-sector competition. But all of it must be rooted in trust. As financial historian Niall Ferguson has written, "Money is not metal. It is trust inscribed."
The White House report should indeed signal an ice age for mere crypto speculation, noting that "protecting consumers" after the crypto market crash is like an airline pilot turning on the seat belt sign after a crash. But with an industry course correction toward utility and effective congressional legislation, the ice age can become a Cambrian explosion of new payment forms that enshrine trust, democratic values and U.S. strategic leadership.
