, 19 tweets, 14 min read Read on Twitter
1/ The Senate Banking Comm staff reached out last week regarding @Facebook @Libra pursuant to my @ForbesCrypto article. During a conf call they indicated interest in receiving formal testimony from me. Here it is + summary follows 👇: forbes.com/sites/caitlinl… @DoWithCare
2/ Big takeaway--politicians that weaponize the US banking system (blocking access to disfavored industries/countries) are modern-day Herbert Hoovers bc these barriers block both unlawful & LAWFUL commerce, & these barriers caused the invention of #stablecoins in the first place.
3/ (OK, I didn't actually call them modern-day Herbert Hoovers the testimony, but I digress...) If Congress isn't happy about @facebook @Libra, it can immediately make #stablecoins irrelevant by letting #banks bank the #crypto industry (& I give v specific recommendations here:
4/ a) remove reputation risk as factor in bank examinations (wld alleviate #derisking & #OperationChokePoint), b) ensure USABILITY of dollar to keep reserve currency status (stop threatening to block access, which causes users to search for insurance policy & like it or not...
5/ ...#digitalcurrencies are real alternatives) & c) roll back #BankSecrecyAct & related #compliance obligations on banks--w/ such paltry 0.002% conviction rate for money laundering etc, why on earth is Congress imposing such massive compliance costs + blocking lawful commerce??
6/ There's an easy way to block all money laundering, tax evasion, terrorist financing & criminal use of money--just block all commerce! (modern-day Herbert Hoovers...) But seriously, every barrier to unlawful commerce also blocks some lawful commerce, & there needs to be balance
7/ As I write this, I see @stevenmnuchin1's new comments & really hope he reads my testimony. He's misguided. Moreover, current #BankSecrecyAct #compliance rqmts unlikely to survive constitutional challenge under 2018 Supreme Ct Carpenter decision. #DontBeAModernDayHerbertHoover
8/ Next, a reality check: #cryptocurrencies can't be uninvented. Despite attempts to kill them, they haven't died. @facebook @Libra setting up shop in #Switzerland instead of the US is a shot across the bow to the US--bad regulation sends innovators offshore rather than kills it.
9/ Congress shld, tho, hold @Libra_ to its promise to keep 100% reserves permanently. Next,a regulatory-compliant framework for #digitalcurrencies is possible & #Wyoming shows how it can be done. There appears to be a push in Washington to require @facebook to get a bank license.
10/ Seriously, requiring @facebook #calibra to get a bank license, if true, might've killed the project in the US (bc no federal bank regulator has yet approved banks to get involved with #crypto), but #Wyoming's new #SPDI bank charter can bridge the gap--satisfying demands by...
11/ ...Congress for a regulatory-compliant solution (incl #AML compliance) while giving @facebook what it needs bc it fits #stablecoins v well. I'm almost positive @facebook #calibra would be as welcomed in #Wyoming as it appears to be unwelcomed in DC.🤠 Next, tho, there are...
12/ ...serious policy concerns w/ the project: privacy & interest payments. On privacy, the left fears big business, the right fears big govt, but freedom-loving people should fear when big biz & big govt collude (h/t @tkibbe). I propose Congress prohibit admission of #calibra...
13/ ...data as evidence in US criminal cases UNLESS govt first obtained a valid warrant before @facebook gave it the data (+ similar for non-US govts). That would remove a big #SurveillanceState concern--just make the data inadmissible as evidence unless obtained under a warrant.
14/ Other big concern is interest pymts. @Libra_ Assoc members are keeping the float & not paying interest to Libra holders. In UK, Bank of England just opened its interest-bearing deposit accts to tech cos (incl Libra), in addition to banks. Will the #Fed do the same in the US?
15/ This is a major policy question--shld @Libra_'s Assoc benefit from central bank largesse in this way (directly or indirectly), at the cost of diluting every holder of the dollar, sterling etc? Why do banks benefit in this way too? As that practice becomes better understood...
16/ ...by voters, calls of both "where's my #bailout?" on the one hand, & "end the ?#Fed" on the other, will inevitably become louder. The US must tread carefully tho, as other countries wld prob love to court @facebook if US regulation is too heavy-handed. US should recognize...
17/ ...there's huge demand for much more efficient pymt system relative to status quo + there are huge economic benefits to freeing up trapped "comfort deposits" on company balance sheets by speeding up payment latency. The #Fed should stop coddling the slumbering incumbent...
18/ ...payment system. Congress is already playing catch-up--our bad regulations already caused invention of #stablecoins in the first place & @facebook already went outside the US for the @Libra_ Association (which shld embarrass the US). Rather than fight the first real...
19 ...innovation in payment systems in nearly 50 yrs, the US should embrace it. #Wyoming's suite of innovative laws shows that such an embrace can be done largely w/in existing regulatory regime, in manner that provides legal certainty, protects consumers & promotes innovation 🇺🇸
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