Cryptocurrency Public Policy Analysis
24 Pages Posted: 27 Dec 2015
Date Written: December 4, 2014
Cryptocurrency – including a particular initial denomination known as Bitcoins – has received since 2009 wide and growing publicity in technology, finance, U.S. and international law enforcement, as well as general public journalism and popular press. This recent popular press coverage of cryptocurrency (how and from where do Bitcoins originate?, how much is one worth today or tomorrow?, will it last with all the stumbling implementation and technical intricacies?, purchasing illegal drugs and guns with Bitcoins!) overshadows cryptocurrency’s applicability to financial and currency system theories which have been developed and predicted for decades or more: the fundamental theory of currency; currency denationalization; a return to an international standard monetary unit (before nationalized fiat); the inefficiency of costly 3rd-party-trust currency models; and global concerns about currency hegemonies as well as political influence of monetary policy, and currency hedge/speculation.
As the moral panic of Bitcoin and similar initial implementations of cryptocurrency fade and cryptocurrency systems gain traction underground or aboveground anywhere in the world, U.S. and international public policymakers and regulators will need to surveil, understand, and evolve public policy to accommodate any aspect of cryptocurrency which develops from technical novelty to realization of predicted grand monetary theories. Some of those areas of evolution include: national central bank monetary control; public sector dependence (oversight, taxing, fees) on private sector financial models and structures; and viability of traditional national and international law enforcement techniques
U.S. federal and major subnational public sector policymakers and regulators must remain vigilant for and educated about cryptocurrency usage whether in nationalized or denationalized use cases or they risk missing early opportunities to shape the rapidly changing landscape of digital financial systems in the U.S and abroad. This vigilance and awareness could be in the form of continued congressional hearings and regulatory surveillance. But a more proactive approach including federal grants for research and study of cryptocurrency, promotion of national and international symposia regarding currency technology and implications should be pursued.
The nature of cryptocurrency’s raison d'être and early-adopter motivation foretells a disruptive network-effect adoption despite entrenched interests’ efforts at preclusion similar to numerous recent technical innovations in the private sector like music or other intellectual property downloads, retail shopping, taxis services, hotel lodging, traditional print journalism, and traditional communication systems.
Keywords: cryptocurrency, currency, monetary, policy, regulation, fiat, denationalization, SDR (Special Drawing Rights), bitcoin, bitcoins
Suggested Citation: Suggested Citation