Lesley Chavkin, Adam Minehardt
Last year, crypto suffered notable setbacks at the hands of bad actors who deceived consumers, casting a shadow on the industry. It also undermined the work of many of us in blockchain who work tirelessly to demonstrate the real-world utility of this technology. Yet beyond the provocative headlines, 2022 also marked a year of momentum and progress for blockchain policy.
In the European Union, authorities agreed to landmark legislation, the Markets in Crypto-Assets (MiCA) regulation, which sets out a comprehensive framework for the blockchain industry. And in the United States, the Biden Administration issued the first-ever crypto-focused executive order, outlining the federal government’s approach to the future of digital assets. These policy and regulatory developments represented a meaningful acknowledgment from governments that innovation cannot thrive without clear, effective guidelines and proactive engagement with industry.
With all of this at play, 2023 is shaping up to be a busy year for SDF’s policy and government relations team. We have hit the ground running, engaging with regulators and policymakers on both sides of the Atlantic. Here are a few things we’re taking on this year:
We want to make clear what blockchain is – a technology that’s transforming how we think about and use money, and expanding access to fast, affordable, and transparent financial services for all.
In 2022, we announced two exciting projects in the Stellar ecosystem that proved the value of blockchain technology to further SDF’s mission of creating equitable access to the global financial system: MoneyGram Access and Stellar Aid Assist. MoneyGram Access demonstrates that blockchain can be interoperable with traditional financial infrastructure. And Stellar Aid Assist opened the door to a new future for humanitarian assistance, allowing aid organizations to deliver aid faster and more transparently than ever before to internally displaced people in Ukraine, even if they do not have a bank account. As these projects continue to grow, we look forward to showing the world that blockchain isn’t a solution in search of a problem – it’s already solving the problems of today.
SDF will continue to advocate for clearer government oversight and regulation to not only safeguard consumer interests, but also to help strengthen our industry. SDF believes that appropriate regulatory clarity can spur innovation and accelerate the growth of blockchain. The need to educate regulators and lawmakers in the United States and elsewhere about the technology is therefore as important as ever.
We’re encouraged by the steps the European Union took last year and by the announcements from the United Kingdom just last month about its proposals for regulating crypto. We will continue to advocate for the United States to take an active leadership role in the digital assets space as well.
Stablecoins are particularly well-suited for remittances because they leverage the speed, affordability, security, and borderless nature of blockchain technology while removing the volatility of other cryptocurrencies. And businesses and individuals throughout the Stellar ecosystem rely on the network for payments. This is why we continue to be laser-focused on the need for sound stablecoin regulation in the United States and elsewhere.
A stablecoin’s value should be fully backed by cash or a combination of cash and short-term, highly liquid government bonds in the currency of denomination, and those reserves should be audited and held in regulated banks and financial institutions. Retail consumers should also have immediate access to their funds and strong consumer protections. With these elements in place, consumers using stablecoins for payments will be able to transact with confidence. In the United States, we are optimistic that we will pick up where we left off in 2022 and that bipartisan stablecoin legislation can get over the finish line.
Open blockchain networks – also known as public, open, or trustless networks – like Stellar are at the heart of today’s technology revolution. Open networks are characterized by their resiliency and their transparency, and we want to help policymakers and regulators understand the tremendous value of public blockchain infrastructure. SDF also firmly believes in the need for interoperable systems, both across blockchain networks and between blockchains and the traditional financial system. We see 2023 as a critical year for laying out what common standards and technical solutions are needed to get to a place where all financial systems – both novel and legacy – interact seamlessly with one another.
Following suit with SDF’s 2023 strategic roadmap, our policy team is charging full steam ahead to create equitable access to the global financial system, and we’re thrilled for what’s in store.