Capitol Hill: ‘Crypto Innovation Should Be Fostered, Not Smothered’

Until U.S. lawmakers have a clear handle on the mechanics of cryptocurrencies and the decentralized ledger, it appears that regulation has to wait. The good news is that Congress is earmarking the time for these discussions, most recently at a hearing on Capitol Hill where lawmakers and cryptocurrency authorities alike convened to delve into the topic. The hearing, which was entitled: “The Future of Money: Digital Currency,” delivered a surprisingly accepting and curious response to cryptocurrencies, the theme of volatility and investor protection notwithstanding.

One of the rock stars of the hearing was Norbert J. Michel, director at The Heritage Foundation’s Center for Data Analysis. He said that cryptocurrencies and the underlying technology “hold the potential to transform the financial industry,” adding: “This innovation should be fostered, not smothered.” Dr. Michel identified four themes that are paramount to the regulatory response to cryptocurrencies.

  1. Despite the rise of electronic payments, many consumers still prefer to transact in cash, for items such as micro-transactions, for instance. Retailers that don’t accept cash could be shooting themselves in the foot. “This danger, this threat of consumers using an alternative form of payment possibly at an alternative place of business is exactly as it should be. The competitive process should take place so businesses and consumers can discover the best means of payment. … Though it is in its infant stages, [cryptocurrencies] should be embraced,” Michel said.
  2. The government should not come in and “tilt the playing field” to favor one currency over another. Instead, they should treat all money including digital currencies “neutrally.” Any capital gains tax associated with using cryptocurrencies as a form of payment should be removed “to level the playing field.” Michel went on to suggest that the U.S. Post Office add cryptocurrencies to their accepted payment methods.