Title: Op-ed: Keeping the U.S. at the Forefront of Web3 Innovation in the Face of Pending Crypto Legislation
Introduction
As the House prepares to introduce a new crypto bill, the United States stands at a critical juncture in maintaining its position as an innovator in web3 technology. In a recent guest post, Nilmini Rubin, Chief of Staff and Head of Global Policy at Hedera, emphasized the need for regulatory clarity to sustain blockchain industry development in the country. This article explores the importance of public blockchains and digital assets, showcases the impact of web3 innovation on the economy and humanity, and provides recommendations for Congress to ensure the U.S. remains a leader in the web3 revolution.
Unlocking the Power of Public Blockchains
Public blockchains, often referred to as web3, offer a major breakthrough in protocol innovation. Unlike the previous iterations of the internet (web1 and web2), web3 allows for unprecedented personal control over data and assets without relying on centralized intermediaries. Through this new technology, users can securely own, read, and write their data and assets, paving the way for revolutionary applications.
To operate these public blockchains, a network of independent computers, or nodes, is essential. Unlike web2 intermediaries that generate revenue through advertisements or subscriptions, nodes on public blockchains require direct compensation through fees. However, existing financial systems struggle to facilitate fast, efficient, and global microtransactions. This is where digital assets, commonly known as cryptocurrencies, come into play.
The Role of Digital Assets in Web3
Digital assets, such as cryptocurrencies, serve as the fuel that powers public blockchains. They enable the seamless transfer of value between users and operators within the network. For instance, the Hedera network successfully processed over 1.5 billion transactions in the last month, with each transaction costing a mere fraction of a penny in its native cryptocurrency, ‘HBAR.’
Advancing the Economy and Humanity
Web3 technology has enormous potential to advance various sectors and impact the economy and society positively. Several real-world examples showcase the benefits of blockchain-enabled systems:
1. Starling Lab offers a framework to verify and preserve the authenticity of evidence, securing the USC Shoah Foundation’s Holocaust archive.
2. The DOVU marketplace empowers farmers to generate additional income by tokenizing their actions as carbon credits, funding carbon-reducing projects.
3. atma.io by Avery Dennison reduces waste across the supply chain, benefiting both the environment and economy.
4. Everyware monitors vaccine cold-chain storage, ensuring patients receive safe vaccinations.
Recommendations for Congress
To foster innovation while protecting consumers, Congress must enact legislation that reflects the unique characteristics of digital assets. Rubin provides the following recommendations:
1. Clearly define and differentiate between “Digital Commodity” and “Digital Security” to avoid overly broad regulation.
2. Empower the Commodities Futures Trading Commission (CFTC) to regulate certain Digital Commodity activities, ensuring consumer safety.
3. Recognize that not all digital assets should be treated as securities, preventing excessive limitations on blockchain use.
4. Develop an activities-based regulatory framework that considers the international nature of digital asset use, with the CFTC as the relevant regulator.
Conclusion
The United States must act swiftly to establish clear regulations around digital assets and public blockchains to remain at the forefront of web3 innovation. The international landscape is rapidly evolving, with other countries implementing digital asset regulations that may give them an advantage over U.S. companies. By providing regulatory certainty, Congress can enable American innovators to continue shaping the future of the internet while safeguarding national security interests.
