The U.S. ambivalent attitude toward cryptocurrencies is a recurring theme. A former Congressman George Nethercutt Jr. believes it is time for American regulators to make up their mind. He contends that America needs to promote innovation, not obstruct it.
George Nethercutt Jr served as a Republican member of the U.S. House of Representatives from 1995 to 2005. Today he is the chairman of The George Nethercutt Civics Foundation.
In his article for The Hill he explains that innovation, particularly crypto-related, divided the American political elite. While diplomats at the State Department are paving the way for it, the Security and Exchange Commission (SEC) is slowing the process down. He admits that due to this many businesses are stuck in limbo, as the regulation is simply not there.
He points out that experts have already concluded that cryptocurrencies are not securities. And he calls on the SEC, which so far has only declassified BTC and ETH as securities, to adopt this view. “It’s time policymakers share that approach, allowing innovation to continue to flourish,” Nethercutt Jr. emphasizes.
China is after the U.S
He believes that hampered innovation is generally detrimental to the economy. Yet it is also dangerous, as malign actors might take advantage of the regulatory gap. He points specifically at China which he believes plays a role in it. Nethercutt Jr. cites Paul Knierim, deputy chief of operations at the U.S. Drug Enforcement Administration, who pointed during a hearing at Congress last year that drug cartels are “employing Chinese money launderers to cover up their financial transactions.”
He also presented a recent Princeton study which highlighted China’s ability to manipulate BTC. He noted:
Due to a rapid buildout in the country’s ability to “mine,” or validate transactions, the Chinese government has accumulated as much as 74 percent of the bitcoin “hash rate” — or processing power of the total network — and thereby has the ability to disrupt the currency through censoring transactions or interfering with other validations.
Because of China’s outsized role, Nethercutt Jr. believes that the U.S. should accelerate the adoption of crypto.
Stop dismiss crypto and blockchain
He reiterates that “cryptocurrencies and the underlying blockchain technology should be neither feared nor dismissed.” One reason why is because criminals who use crypto “represent a tiny fraction of the total users and applications of these technologies.”
He highlights that Facebook, Amazon, J.P. Morgan, Walmart, and IBM are all exploring crypto and blockchain. Thus, the regulators need to protect the nascent industry. More so, since “many of the advances in cryptocurrencies are occurring right here in the U.S.”
He places high hopes on so-called “utility tokens” which “are not susceptible to the same predatory tactics as other cryptocurrencies.” Startups which focus on them are teaming up with some of the largest corporations for multiple uses.
While Nethercutt Jr. admits that there is still a lot to do in the crypto realm, he is content that some congressmen are already taking action. Thus, in late December Warren Davidson and Darren Soto introduced the “Token Taxonomy Act.” The latter will define what a ‘digital token’ is. It will also ensure that “securities laws would not apply to cryptocurrencies once they become a fully functioning network.”
A tenuous hope
Such a powerful pro-crypto stance from a high-profile figure is more than encouraging. It is indeed the case that America compared to other countries is significantly lagging behind. Switzerland, for example, has already incepted a crypto ETF and is attracting crypto business from the U.S.
China, which Nethercutt Jr. is definitely not fond of, also treats cryptocurrencies suspiciously and has made sure to double-ban it. However, it is also home to such mining giants as Bitmain and Canaan which is looking to be listed on NYSE.The U.S., on the other hand, does not have companies of a similar kind.
American political big shots, however, exhibit a very moderate level of enthusiasm when it comes to cryptocurrencies. The SEC is highly indecisive. To date, it has not managed to make up its mind whether XRP is a security. It is also delaying decisions regarding the Vaneck/SolidX ETF proposal. Besides, key figures like Federal Reserve Chairman Jerome Powell have lambasted cryptocurrency to the full.
It remains to be seen whether Nethercut Jr.’s arguments, as well as Davidson and Soto’s initiatives, will finally change regulator’s tune toward crypto in the U.S.