Great potential, great obstacles for blockchain

December 23, 2021 12:14 p.m. ET

SEC Chairman Jay Clayton in 2019.


Photo:

erin scott / Reuters

The editorial by former Securities and Exchange Commission Chairman Jay Clayton (“America’s Future Depends on Blockchain,” December 17) is incredibly ironic, given the dismal failure of the SEC under its leadership. direction to embrace the innovation and potential of blockchain and cryptocurrency technologies. . Mr. Clayton stifled the crypto industry during his tenure, but now he is calling on the government to facilitate the adoption of the technology.

The director of national intelligence wrote to Mr Clayton at the time, saying regulatory certainty would allow US companies to compete with their Chinese rivals. A bipartisan group of members of Congress wrote to Mr. Clayton on the same topic, noting that the SEC’s crypto stance was “unsustainable.” Former SEC commissioner Joseph Grundfest has warned against any enforcement action against my company, Ripple, calling it “very problematic.”

In the United States, we lack regulatory clarity for the cryptocurrency market, which reached $ 3 trillion in market capitalization last month. The SEC continues to practice selective enforcement by picking winners and losers rather than stating clear regulatory guidelines. Innovation suffers. While I’m happy that Mr. Clayton now sees the important relationship between crypto, innovation and national security, his last ruling move was to take a misguided legal action against Ripple. He packed his bags and tried to turn off the lights on crypto at the SEC.

Brad garlinghouse

CEO, Ripple

San Francisco

Mr. Clayton is right about the leap forward in financial efficiency that blockchains offer: Decentralized finance, or DeFi for short, is a suite of financial products that are essentially self-executing blocks of code built on top of each other. ‘a global ledger. Instant payments, 24/7 availability and universal interoperability are part of this new infrastructure.

But financial efficiency won’t do much to satisfy DeFi’s harshest critics. Take Senator Elizabeth Warren, who recently called DeFi “the most dangerous part of the crypto world.” Mr Clayton does not emphasize the core DeFi qualities that a progressive crusader like Ms Warren should embrace: built-in transparency and financial inclusion.

Ms. Warren has made a career out of documenting the moral hazard that persists among America’s largest financial institutions. But if Wall Street is a black box, the blockchain is an open book. Every part of financial activity – every transfer, loan and derivative – is verifiable because it is documented “onchain”. The leverage can still accumulate, but not behind closed doors.

Most importantly, DeFi offers a viable path to broad financial inclusion. What the internet and smartphones have done to access information, DeFi does for financial technology. It enables underserved people to use and develop open, cheap and secure financial services.

The crypto slogan has become WAGMI: “We’re all going to get there. Despite the fear, DeFi will make this promise a reality.

Benjamin Simon

Partner, Capital Mechanism

San Juan, Puerto Rico

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