America must lead on cryptocurrency – Washington Examiner

America must lead on cryptocurrency – Washington Examiner

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Throughout my career at the intersection of National security and ours economy, I have witnessed firsthand several revolutionary technological revolutions. From GPS to the Internet and from smartphones to artificial intelligenceOur nation's unparalleled capacity for innovation has created unprecedented benefits for the economy and security.

Another wave is coming: Blockchain and cryptocurrencies offer the United States the opportunity to lead another generation of critical innovation, but policymakers must do their part, or this opportunity will slip away. If the Biden White House and Congress do not provide the support and regulatory certainty this burgeoning industry requires, there is no doubt it will develop and prosper elsewhere.

Blockchain is a technology that provides a transparent ledger for something of value. Crypto uses blockchain to allow transactions between people online. The benefits of the United States leading in blockchain and cryptocurrencies are clear.

First, these technologies are based on principles like individual liberty, limited government, and privacy, which, as a conservative, I greatly appreciate. Transacting via blockchain eliminates powerful and often costly intermediaries, making the financial system more accessible.

While the ledgers showing the transactions are public, the identity of the account holders is anonymous, providing privacy for accounts conducting legal transactions while exposing illicit transactions to significant scrutiny. This balance between privacy and free flow of data is desperately needed in an age where social media platforms and other technology companies have unparalleled data on every user.

Secondly, blockchain and cryptocurrencies are an economic engine. By 2030, the industry is expected to generate up to 4 million jobs. As CEO of a software company during Pittsburgh's renaissance, I know the economic impact technological innovation can have. With growing blockchain and crypto ecosystems in my home state, places like Allentown and Philadelphia could reap the benefits of this boom. Blockchain also has applications beyond finance that will bring innovation to other industries. For example, secure accounting technology can protect health data and verify supply chains.

Third, American leadership in blockchain and cryptocurrency is critical to our economic and national security. One of the enduring strengths underpinning America's economic power and prosperity is the dollar's status as the world's reserve currency. But we cannot take it for granted. While the vast majority of crypto transactions are denominated in dollars or involve dollar-backed stablecoins, other countries are imposing regulations to encourage alternatives other than the US dollar. Maintaining the link between crypto markets and the US dollar is critical to the future of dollar primacy.

Finally, blockchain provides new national security tools to pursue financial crimes and deter bad actors. Transparent and traceable blockchain ledgers allow law enforcement to track money and identify illicit accounts more easily than private transactions. This is very different from the tools that have traditionally facilitated money laundering. This is why it is important to have US-based crypto exchanges: US exchanges must comply with US laws, including anti-money laundering regulations and sanctions.

Our competition is moving quickly to take advantage of this opportunity. Chinese President Xi Jinping has said that China should lead on blockchain, which would raise significant national security concerns for Americans if China is not kept out of our market. The European Union and places like Japan and Singapore have begun developing their own crypto regulatory frameworks.

Meanwhile, parallel efforts in the United States are stalled in Congress. And to make matters worse, Securities and Exchange Commission Chairman Gary Gensler has aggressively invaded into regulatory gray areas to stifle crypto innovation and prosecute US-based crypto companies. In the absence of congressional action, Gensler's heavy-handed approach will determine and deter the future of cryptocurrencies in the US .

Congressional leaders must act to ensure that the United States captures this next wave of innovation. They should embrace bipartisan efforts like the Financial Innovation and Technology Law for the 21st Centurywhich would create clear rules for the industry to protect consumers while allowing for continued innovation.

Lawmakers must also stick to the facts. Senator Elizabeth Warren (D-MA) and other skeptics allege that cryptocurrencies are a major source of funding for terrorist groups and other illicit activities. The evidence tells a different story: analysts estimate that crypto transaction volume associated with illicit activities is only 0.34%.

In fact, cryptocurrencies and blockchain have proven to be an asset in combating terrorist financing. For example, the US government attorney millions of dollars in cryptocurrency from Hamas, Al Qaeda, and the Islamic State in 2020. Because their transaction books were traceable, federal authorities also seized more than 300 crypto accounts, dismantling an entire money laundering ring, all because they were on blockchain.

Let's not miss the next wave of innovation. Tens of millions of Americans own cryptocurrencies and the benefits to society are becoming clearer.

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As the former CEO of one of the world's largest investment firms, I understand well the tax imposed by regulatory uncertainty. Our regulatory frameworks for these technologies should provide tangible benefits to American businesses, protect individual privacy, and make moving abroad unattractive.

I'm running to be Pennsylvania's next senator to help ensure American innovators receive the regulatory certainty they need to succeed. It's good for Pennsylvania and America that we remain on the cutting edge of technology.

David McCormick is a West Point graduate and combat veteran who has been CEO of two successful companies. He is running for the United States Senate in Pennsylvania.

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