Cryptocurrency is the future and the US needs to lead: Former CFTC chair

bitcoin's trillion dollar boom the cryptocurrency hitting a new milestone topping 57 000 before uh sliding overnight as you can see it is at 55 000 this morning joining me right now is the uh chairman the former chairman of the u.s commodities futures trading commission he is now digital dollar project co-founder and uh counselor at wiki afar and gallagher senior council christopher giancarlo christopher it's great to have you this morning thanks very much for being here i want to tap into your expertise in terms of what's going on with bitcoin and the digital dollar how do you see things changing in terms of digital assets in the coming years and how soon will a transition take place yeah we're really seeing some interesting action going on maria you know we're seeing the traditional role of retail investors in this new asset class especially in bitcoin with their comfort level with technology and their comfort level with the decentralization aspects of this and they're actually antipathy toward the traditional financial system but what's really changing is the growing role of institutional investors uh in this new asset class with the likes of mass mutual and the united states oldest bank bank of new york mellon moving in in a big way and they really see this as both on one hand a hedge against inflation but also almost like a new risk category of assets in a risk-on environment and all this is made possible by innovations we've brought to bear over the last four years especially uh in with the launch of bitcoin futures back in 2017.

So what does this mean in terms of the regulatory framework lawmakers this week proposed legislation for a cryptocurrency task force that would look at the current regulations and reco recommend ways to improve markets to prevent fraud you founded an early version of this task force while serving at the cftc so what do you expect regulators to find and and what will be the barriers in place for the digital dollar if you will going forward yeah but this is a really important innovation uh or an announcement yesterday day before yesterday by uh ranking member patrick mchenry and then on the majority side stephen lynch of massachusetts introduced a bill that really builds on work that i and chairman clayton at the sec started back in 2017 we launched a cryptocurrency test course between our two agencies to take a look at some of the early steps in this it was on an ad hoc basis before i left the agency at the end of my term in 2019 i spoke to representative mchenry and folks on the other side of the aisle about making that task force putting it on a firmer foundation perhaps providing some funding for it and charging it with coming back to congress with recommendations for a more comprehensive regulatory framework for crypto and i'm delighted to see that some of those ideas have germinated and resulted in a bill that was announced this week that would do just that would take the task force that we started put it on a more regular footing but then charge it with coming back to congress in in 12 months with some ideas around a more comprehensive framework for crypto regulation to focus on some of the issues of investor protection but also what should be the right regulatory structure and just lastly you know regulation can be a competitive advantage if you put if you put markets onto a firm footing and certainly on a global basis the united states competes every day for regulated exchanges against our economic competitors and it's very important that we have the primary and the premier markets here in the united states yeah i think this is a really important point this is where i was going to go next china is also trying to beat the united states in this effort assess that where the u.s is in that regard and how important will it be for the u.s to have a strategy in place as far as digital assets to compete with what's happening in china absolutely maria you know coming out of the last financial crisis society outside of the official sector society has been experimenting with digital money they've been doing that quite successfully bitcoin is part of that there's over three or four thousand different crypto currencies out in operation governments have actually arrived relatively late on the scene but the leading one has been china china has launched now a digital yuan there's millions of people in china now using this there's hundreds of companies involved in this effort and china has big plans for this they intend to seed their digital yuan into the global environment by giving it away to visitors at next winter's olympics when they arrive at the airport they're going to get you want digital wallets they're going to receive digital u1 they're going to use it throughout their visits to beijing and then they're going to take it back to their home countries they've seen this as a huge advantage why because who controls the underlying protocols who controls the underlying standards of the future of money will control the future of money who controls the digital standards of digital money and by the way digital money is the future and they see an opportunity to control the standards and that's why we formed the digital dollar project over a year ago to to advance exploration of this for the united states you know the united states was the leader in the internet the united states was the leader in the space program and as a result of that we had a leading role in setting the standards for those innovations we need to lead in this innovation as well so that the standards for the future of money the digital future money are standards that we've long believed in the rule of law yeah free and fair open markets and economic privacy this is a really important conversation um the digital dollar you say is the future what does that mean on a practical basis for people spending money for institutions moving money well if you're absolutely right because it's both important at the retail level and it's it's important at the wholesale level you know with murray when you and i grew up you know we took a photograph with a camera we'd have to go to kodak to get it developed and then we'd have to put in an envelope if we wanted to send it to our grandparents put a stamp on it drop it in the mailbox you know our kids take a photo a snap on on a on a mobile phone and they can send it anywhere in the world instantaneously they're not going to get it developed and they're not going to the post office and they don't understand why they cannot do the same thing with money why can't money be sent as simply as you said the text message anywhere in the world and that expectation is driving a lot of what's going on with cryptocurrency and striving a lot of what's going on with with digital money and we need to think more ahead where money is going and that's where it's going it's going to be a tremendous challenge at the wholesale level it's going to be a tremendous challenge at the retail level but it can be done it can be done yeah and what we need to do is are the u.s banks and the investment managers in this country prepared for this do they have strategies well so look people are still going to need banks to make loans if you've got 100 000 bitcoin or a hundred thousand digital dollars but you need four hundred thousand to buy a house you still need to go to banks uh to to use that as collateral for what's called french fractional banking so that banks can lend and there's still a very important role in that now the the role of correspondent banking that is the role that banks do to verify identities verify accounts efficiency to move money around the world that part of banking is going to be challenged by this new innovation in the same way that kodak's business model was challenged uh by the innovation of digital photography and that's why banks need to get out in front of this and not fall behind it because as you know technology knocks everything down in its in its wake you either you either harness it and write it or you get knocked over and taken over by it yeah this is really uh really important we'll keep focused on this and and uh make sure to communicate uh the changes impacting our audience christopher it's great to get your insights this morning on this thanks so much we'll keep talking about it breaking with

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