The US Senate Committee on banking, housing, and urban affairs conducted a virtual hearing tagged Digitization of Money and Payments. The hearing took place on Tuesday. In attendance were the ranking Senators of the committee and several experts from the cryptospace.
Chris Giancarlo (Cryptodad) the former head of the Commodities and Futures Trading Commission (CFTC), CEO of Paxos Charles Cascarilla and Nakita Cuttino, Professor of Financial inclusion at Duke University.
Stablecoins are Supporting the Current System
Charles gave insight into the functions of stablecoins within the current financial ecosystem. He said that "Stablecoins address the antiquated plumbing of our financial system.”
Stablecoins have been able to function in many cases in place of the fiat dollar. The current financial system has many loopholes that have been exploited for years. New technologies like distributed ledger technologies (DLT) can help close such loopholes.
Concerning solutions, Professor Nakita said that “Any solution should have low transaction costs. In the early days for Bitcoins, the transaction cost was extremely high — and remains extremely high.”
This is the core problem that is currently faced when it comes to the implementation of new technologies.
The Dollar is Challenged
When asked by Senator Mike Crapo (R-ID) about projects by other central banks and if those projects were a threat to the US dollar, Chris Giancarlo said that
“The dollar’s strength internationally as a reserve currency is built on many pillars. And many of those pillars are quite durable and are not going to be undermined any time soon,”
“Nevertheless, the Chinese efforts and some other efforts are directly targeting some of those pillars. The U.S. dollars’ dominance is based on an account-based global banking system. The moved toward a digital yuan by China is meant to bypass the accounts based system and allow for direct payments.”
Chris also hinted that the Chinese affront on several fronts could be a challenge to the Dollar.
Commodity Markets have Gone Digital
Giancarlo also went on to indicate that most of the world's markets have all moved to digital forms. Chris further asserted that since those commodities were priced in dollars, the US dollar should also go digital.
Senator Tom Cotton (R-AR) supported this view. He said that "the dollar has unmatched advantages, but without digitization, I worry that the dollar may end up being like the very best flip phone in 2006.”
The rest of the world has moved forward in the technologies that drive digital currencies. Chris Giancarlo admitted this and alluded to the fact that the world is looking to the US to lead the digital revolution.
The great thing about the virtual hearing is that it is the beginning of a bigger conversation. One where the United States will take her place in leading the digital currency charge.
This is something that the world sorely needs.