Coinbase’s legal chief is calling for private sector leadership in developing America’s digital currency.
Brian Brooks, in a Fortune essay published Monday, argued private corporations are best positioned to build a much-debated digital U.S. dollar, and that the government should stand back and let them, doing little, if anything, to regulate their underlying blockchains.
“The best path forward is one that harnesses our country’s remarkable capacity for innovation and also reflects government’s historical practice of setting broad guide rails for private innovation within the financial system,” Brooks said. “… But there is no more need for the government to control the blockchain policy of stablecoin issuers than there is for the government to dictate the technology used by privately-owned commercial and investment banks.”
Essentially, Brooks envisions an informal public-private partnership in which private corporations leave monetary control to the federal government, and the government, in turn, secedes management of the technological infrastructure to them:
“In short: the private sector should build the technology, and the public sector should set monetary policy.”
His approach differs from the Facebook-led Libra project, which the social media giant first announced this past summer.
U.S. lawmakers and regulators alike have balked at the company’s plans to develop a global stablecoin governed by a Switzerland-based council dubbed the Libra Association, claiming the cryptocurrency would be beyond regulators’ jurisdiction. Further, the project’s plans to back the stablecoin with a basket of global currencies could, conceivably, strip America’s federal reserve of monetary control.
In October, Federal Reserve governor Lael Brainard said global digital currency projects like Libra could destabilize the world’s central banks.
Brooks contrasted Libra’s approach with USDC (the stablecoin issued by Coinbase and Circle) and other similar tokens, asserting instead that dollar-backed digital currencies pose no threat whatsoever to central bank control. If the Fed-controlled dollar backs the private sector minted stablecoin, then, he pointed out, the fed still controls the stablecoin’s underlying monetary policy.
As Brooks sees it, the government’s best action would be taking little, if any. Other than ensuring that varied stablecoin projects – Libra and Coinbase’s USDC, among others – hold the fiat reserves they claim to, he called for a hands-off approach to private innovation.
“There is no more need for the government to control the blockchain policy of stablecoin issuers than there is for the government to dictate the technology used by privately-owned commercial and investment banks.”
Brooks did not immediately respond to requests for additional comment.
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