Ripple is one of the biggest names in the blockchain and crypto arena which aims at providing the world with a fast and reliable money transfer network, based around the technological innovation of blockchain. Major banks and payment providers such as MUFG Bank, TransferGo, Standard Chartered etc. already fall under the umbrella of its customers.
As U.S. lawmakers move towards regulating this space, the risk of hampering down innovation in the crypto industry now looms around. Besides, strict regulation can also blur the future of various projects already floating around or just springing up. While Facebook’s Libra has brought the attention of the law makers towards regulating this space, the need is not to paint this entire industry with just one broad brush.
In an open letter to the Congress earlier this year, Brad Garlinghouse, CEO of Ripple & Chris Larsen, executive chairman and co-founder of Ripple said:
Please do not paint us with a broad brush.
Many in the blockchain and digital currency industry are responsible actors. We are responsible to U.S. and international law. We are responsible to serving the greater good.
Facebook’s Libra is expected to have a huge impact on the global economy as it will provide the world with a parallel to the already existing monetary framework. Since smartphones and internet access have become almost ubiquitous across the globe, Facebook wants to reach the unbanked with its digital currency.
In order to ensure safety and security in terms of its usage, Congress held some fiery hearings with the company’s rep just a few weeks ago that caught a major chunk of attention of the global media. But Facebook has a very different operating procedure as compared to most of the other cryptocurrencies. If rules specifically designed for Facebook’s Libra alone get implemented on a broader level in the industry, it will be injustice to all the innovation that is being done in this space.
The crypto industry is booming at a very rapid pace with more people getting involved in bitcoin and other cryptos in general at a very fast pace and the global economy of the future is expected to be greatly affected by the revolution that blockchain aims to bring. If the U.S. wants to make sure that it does not lag behind on this opportunity of getting a competitive advantage, the need is to develop a nuanced regulatory outline for the entire industry.
As the letter states:
Without a doubt, blockchain and digital currencies will engender greater financial inclusion and economic growth not unlike the internet’s historic impact. As it did with the internet, the U.S. has the chance to lead the way, nurturing this economic opportunity while continuing to protect privacy and stability.
Libra in itself is not a “pure” cryptocurrency, since it is going to have multiple pegs with various fiat currencies across the globe, all the inherent shortcomings of the traditional financial space will get inherited into it. Pure cryptos such as bitcoin, largely stand against the traditional banking system. Not every crypto needs to be treated as a “stablecoin”.
Moving forward, the Congress will also have to be very cautious of the intensity of regulation that it imposes on the industry. A strict regulatory net will also result in the flight of companies from the U.S. towards more crypto-friendly states. It will also dampen the innovation going on in this space. For Congress, a huge challenge lies ahead. The US needs to be very careful how it incorporates the crypto industry into its official proceedings.