The US Joint Economic Committee Report was released on March 13, 2018. In this 334 page report, the US Congress included a 27-page chapter entitled, “Building a Secure Future, One Blockchain at a Time.” The title alone shows Congress’s positive outlook on blockchain, with each section of the chapter going into further detail.
The blockchain section of the report begins with an overview of “The Year of Cryptocurrencies.” In this section, it describes overall changes in the economy and laws, including tax reform, regulatory reform and drops in unemployment. It puts cryptocurrencies in the context of these changes, and goes on to describe how Google searches for Bitcoin, Ethereum and blockchain have skyrocketed in parallel with increased market capitalization across the board. Of note, the report also mentions Ripple and Litecoin.
The report seeks to educate people on cryptocurrency, blockchain, smart contracts and other subjects related to the technology. The report goes on to define digital currencies differently than actual currencies. According to the report, currencies serve three functions: “medium of exchange, unit of account, and store of value.” By this definition, the Congress does not see cryptocurrencies as actual currencies.
In describing Blockchain Innovations, the report reminds people that there is much more to blockchain than the financial applications. They even go so far as to suggest that people are too fearful of blockchain, and incorrectly associate it with negative headlines. The document acknowledges that there are many blockchain products, particularly in the medical space, that actually attempt to comply with the current system.
The paper does have a section on “Growing Pains and Misuses.” It states that theft is a problem, but not because of the actual blockchain technology. This discussion includes vulnerabilities in exchanges, including the Mt. Gox exchange in Japan. Other growing pains described include the rapid appreciation in value of cryptocurrencies and ICOs, and how this growth led to questionable headlines. However, where the paper could have gone in a negative direction, it rationalized these problems, and rightfully so, as “the pattern of a new, not fully understood technology.” This is where the internet was when it hit the mainstream, and now it is an integral part of life for virtually all people in modern societies. The same may be said for blockchain and cryptocurrencies in the next 5-10 years.
Finally, the report gets into the regulatory questions surrounding cryptocurrencies. It acknowledges the many challenges, most likely due in part to the lack of consensus among the regulatory bodies. Amazingly, the document states that “certain regulatory environments are simply out of touch with the internet age.” ICOs came about very quickly, and it took a while for the SEC to come to a decision on whether they were securities. According to the definition, a security that would be regulated by the Securities Act is a contract, transaction or scheme that someone invests money into where they would expect profits, with a few other qualifiers. The SEC decided that the DAO, for example, was a security under this test. As a result, they have been pursuing enforcement according to securities law.
Overall, Congress appears to have a very positive outlook on blockchain, and cryptocurrencies. This will bode well for new companies getting into this space, as well as investors.