Is the United States Lagging in Blockchain Technology?

US leads with the internet, but is it lagging behind the world in blockchain?

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The United States may have been the driver of the internet but are they lagging behind other countries when it comes to creating, and benefiting from Blockchain technology? Regulation may be the reason, said a panel at Money 20/20 in Las Vegas recently in October 2016.

Blockchain Regulation Panel at Money 20/20

Perianne Boring, Founder and President of the Chamber of Digital Commerce recognizes that the Blockchain can have a major impact on businesses and the United States.

However, she also knows that finding the right mixture of regulation and innovation is the only way to make it happen. That’s a big reason why she’s headquartered in Washington, DC where she notes that addressing Blockchain regulation is a “constant conversation” she’s having each day with government and legal authorities. 

Boring headed up an eye-opening panel at Money 20/20 this year that included business leaders involved with Blockchain innovation including Jerry Cuomo of IBM and John Beccia of Circle along with legal authorities including Alan Cohn, who works with Boring on the Blockchain Alliance. All panelists made it clear that progressing the Blockchain will require not only continued innovation in the space but the involvement of legal and regulatory authorities as well.

However, a takeaway from the session is the reality that the United States is lagging behind other countries like the United Kingdom, Australia and Korea when it comes to providing a path for Blockchain innovation.

 The panel pointed out that the US may have been the driver of the internet, but when it comes to Blockchain innovation, they are clearly not driving the ship.

Too Many US Government Agencies Involved?

The culprit seems to be the fact that the obsession or need, of US government officials to implement appropriate regulations is impeding their ability to create a path for further Blockchain innovation as is being seen in the other countries.

 The reality is that other countries are not avoiding the need for regulations, but rather, that they have implemented a more streamlined regulatory process than is currently possible in the US, where multiple legal, law enforcement and regulatory agencies have to be onboard before progress can be made.

Beccia of Circle notes that in the United Kingdom there’s a single regulatory entity that has been helping to implement Blockchain innovation. “There’s a lot more progress going on in the UK,” he says, which he also says can lead to “lots more jobs.” He recognizes that the reality is that the US is focused on “regulation by enforcement” that requires educating and working with multiple law enforcement agencies in the US, which is impeding its ability to innovate as quickly as he’s seeing it happen in other countries.

The panel made it clear that any innovation, particularly on the technology and finance front, must go through a myriad of agencies, most of which are unequipped and uneducated to understand the technology. The concerns about disrupting financial status quo, cybersecurity and terrorism funding force any progress on the technology to move at a snail’s pace due to the many agencies required to approve regulation.

Although there have been a wealth of blockchain related startups in the country, Boring recognizes that the United States doesn’t have a monopoly on talent when it comes to Blockchain innovation and that’s why she’s working hard with people like Cohn on the Blockchain Alliance which is forging relationships between US companies and law enforcement agencies to educate, inform and provide a level of comfort about the technology that can lead to innovation. It’s an uphill battle, but if the US has the talent those on the panel who can stay focused on making it happen, then the US may be able to regain a leadership role. If not, the US will be following the lead of other countries when it comes to what may be the most important technology since the internet.

Creating a Partnership Between Private and Public Entities

Members of the panel and the Digital Chamber of Commerce are part of the Blockchain Alliance, which provides a forum for public regulatory and law enforcement agencies and private companies that recognizes that criminal activity can occur with this technology and they seek to jointly address how to combat this potential to make it work for all.

 

Blockchain Alliance member Cohn, who had served as Assistant Secretary with the Department of Homeland Security, feels that the Alliance is a way to gain a more collaborative relationship between private and public entities. He noted that the Alliance has the involvement of over thirty companies and twenty-four government agencies with the intent to recognize the need to protect consumers and the public from the criminal potential of the technology while also creating a platform for the technology to grow effectively in the country.

Cohn also noted that he was happy with the support with the many "knowledgeable people within the Bitcoin community" who are playing a role in this partnership. It was the belief of the panel and many at the conference that those involved within the blockchain and bitcoin communities can be major drivers for better education of government officials and recognition of the value of regulation in order to provide a health platform for innovation in these areas to continue in the country.

What Does a Trump Presidency Mean for Blockchain?

It’s unclear what impact the recent election will have on this, but many see that a Trump administration is going to strengthen law enforcement methods where there are technology concerns. Additionally, the rally in banking stocks after the election may signal that the incoming administration may be more open to changing banking regulations while still supporting the financial status quo that exists. Others see a Trump presidency being more open to technological innovation and think that his business-friendly approach may be good for bitcoin and blockchain companies. 

The recent exits of Goldman Sachs and Santander from the R3 Consortium can also be a disconcerting signal as these banks have decided to leave the group of banks jointly exploring blockchain technology for changes in the current financial system. Whether this signals their feeling that the technology will not have a future in a Trump presidency or if they believe that there’s too much lengthy work needed to effectively integrate the technology into the system, is unclear at this point.

Boring and the Digital Chamber of Commerce will have their work cut out for them in gaining government support and acceptance of the technology, and that's the reason that their office is in Washington. As Boring stated at Money 20/20, "my job is to create more jobs in the US." She believes that more acceptance and a healthy discussion with government entities can provide a way for blockchain technology to do that. It may take some time to see how the new administration will view the technology and potentially provide a clearer regulatory and less cumbersome path to wider acceptance in the country.

What is clear is that the technology can be revolutionary in providing efficiencies and innovations in the way the world handles money and other processes. Whether the revolution will be driven by American companies or elsewhere in the world remains to be seen.