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.
Coinbase’s legal chief is calling for private sector leadership in developing America’s digital currency.
“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.
Coinbase Joins Japan’s Self-Regulatory Organization for Crypto Firms
San Francisco-based Coinbase is still preparing behind the scenes for a presence in the Japanese market.
The popular cryptocurrency exchange, which previously applied for an operating license in the country, has now become a second-class member of the Japan Virtual Currency Exchange Association (JVCEA) – the self-regulatory organization given the mandate to oversee the industry by the Financial Services Agency (FSA) in 2018.
Announcing the news on Monday, the JVCEA said local firms Digital Asset Markets Inc. and Tokyo Hash have also joined the group alongside Coinbase as second-class members.
Coinbase has had a Japanese exchange in its sights since as far back as 2016, after it received a $10.5 million investment from a group that included Bank of Tokyo Mitsubishi UFJ and Mitsubishi UFJ Capital.
In mid-2018, the firm named a CEO for its local subsidiary, and later in the year indicated it was confident it would receive an operating license from the FSA before the end of 2019. That hasn’t happened as of early 2020.
In becoming a member of the SRO, Coinbase joins other second-class member firms «applying for or planning to apply for virtual currency exchange registration as prescribed in Article 63-3 of the Payment Services Act,» according to the JVCEA.
The body aims to ensure that its exchange members carry out «sound» business as set out in local law. As an official SRO, it has the power to put in place rules for the nation’s exchanges and take action over any violations.
While Coinbase has a holding page for its planned local service, Japan is not listed on its supported nations page.
