Taming the Wild West: Achieving Public Policy Goals through Crypto Standards

20 Pages Posted: 5 May 2022

See all articles by Sarah Hammer

Sarah Hammer

The Wharton School of the University of Pennsylvania

Brett Hemenway Falk

University of Pennsylvania - Department of Computer and Information Science

Date Written: April 29, 2022

Abstract

A continued challenge in policymaking related to cryptocurrency is the potential lack of central entity or traditional intermediary that would be the subject of regulatory authority. In the crypto space, activities are often originated by individual developers, decentralized organizations, or even algorithms — a set of instructions left in place by programmers. A key example of this dynamic is stablecoins, where the cryptocurrency is pegged to a reference asset considered to be stable (such as the U.S. dollar). With stablecoins, certain provisions such as reserves, lockups, clawbacks, blacklisting, fees, and wrapping have given rise to considerations about their behavior and user accessibility. Examination of the relevant limited terms of service/use, auditors’ reports, and business models have implications for credit, liquidity, and operations, as well as consumer protection and financial stability.

Because there may not be a central entity or traditional intermediary to regulate for many stablecoins, we propose establishing new “Crypto Standards” that could be applied to the smart contracts of not only stablecoins, but across the burgeoning web3 landscape. Crypto Standards offer many benefits, including progress towards public policy goals of consumer protection and financial stability, as well as tools to promote interoperability, security, and responsible technological innovation.

Keywords: cryptocurrency, stablecoin, blockchain, central bank digital currency, digital asset, standards, financial regulation

Suggested Citation

Hammer, Sarah and Hemenway Falk, Brett, Taming the Wild West: Achieving Public Policy Goals through Crypto Standards (April 29, 2022). Available at SSRN: https://ssrn.com/abstract=4096816 or http://dx.doi.org/10.2139/ssrn.4096816

Sarah Hammer (Contact Author)

The Wharton School of the University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

Brett Hemenway Falk

University of Pennsylvania - Department of Computer and Information Science ( email )

3330 Walnut Street
Philadelphia, PA 19104
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
203
Abstract Views
707
Rank
225,470
PlumX Metrics