“City of Washington (D.C.) from Beyond the Navy Yard” | George Cooke (1833)
“Whenever a man has cast a longing eye on offices,
a rottenness begins in his conduct.”
Thomas Jefferson
The digital assets market—and related products and services—has grown at a rapid rate in recent years. Digital assets include (but are not limited to) convertible virtual currency and cryptocurrency, Stablecoins, central bank digital currency (CBDC), and non-fungible tokens (NFTs). A substitute for real currency—cryptocurrency, for example—can be used as payment for goods and services, digitally traded between users, and exchanged for or into real currencies or digital assets.
While digital assets could help facilitate faster payments and make financial services more accessible, the government recognizes that more work is necessary to ensure that digital assets benefit underserved consumers and do not lead to predatory financial practices. The White House reported that unique and varied features of digital assets can pose significant financial risks to consumers, investors, and businesses if suitable protections are not in place: “In the absence of sufficient oversight and standards, firms providing digital asset services may provide inadequate protections for sensitive financial data, custodial and other arrangements relating to customer assets and funds, or disclosures of risks associated with investment.”
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Although this issue is not directly in our wheelhouse, the meaning and value of US currencies in the largest non-residential building construction market in the United States is in our wheelhouse. We report our findings and understanding during our periodic Finance colloquia. See our CALENDAR for the next online meeting; open to everyone.
Nearly every college and university has a business school. Additionally, most states have a requirement for all secondary school students to receive instruction in basic economics. For this reason, we step slightly outside our wheelhouse to forward this proposed regulation’ although we have tracked digital ledger technology applications to the construction industry.
Digital currency regulation by the US federal government has both potential benefits and drawbacks
Pros:
- Consumer Protection: Digital currency regulation by the government can help protect consumers from fraudulent activities, data breaches, and other risks associated with digital currency transactions.
- Enhanced Oversight: Digital currency regulation can provide greater oversight and transparency in the digital currency market, helping to prevent criminal activities such as money laundering and terrorist financing.
- Economic Growth: Regulation can promote economic growth by providing a stable and predictable regulatory environment that encourages investment and innovation in the digital currency sector.
- Greater Adoption: Regulation can also help promote greater adoption of digital currencies by consumers, businesses, and other entities by providing a level of legitimacy and trust that can encourage wider acceptance and use.
Cons:
- Restriction of Innovation: Overly burdensome or restrictive regulations can stifle innovation and growth in the digital currency sector, as businesses and entrepreneurs may be deterred by high compliance costs or legal uncertainty.
- Costly Compliance: Digital currency regulation can be costly for businesses and individuals to comply with, particularly for smaller firms that may lack the resources or expertise to navigate complex regulatory requirements.
- Privacy Concerns: Some argue that digital currency regulation could threaten individual privacy by requiring companies to collect and share more data on their customers than they might otherwise choose to do.
- Fragmented Regulation: Digital currencies operate across national borders, which can make it challenging to develop a cohesive regulatory framework. A fragmented regulatory environment could create uncertainty and potentially harm the growth and adoption of digital currencies.
