America is Falling Behind the Rest of the World in Blockchain
The last few decades saw tremendous global growth. A great deal of this was due to the innovation of the Internet. This one breakthrough technology radically changed the make up of the world.
One of the countries that benefited the most from that was the United States. Having the Internet invented within its borders put the U.S. at Ground Zero for the massive economic explosion that ensued.
Being the innovator meant that the United States was there right from the beginning.
Blockchain offers the potential impact on a grander scale than most of what we saw 30 years ago. The ledger technology has the ability to streamline most industries. By eliminating the "middlemen", supply chains can be reduced, onerous fees eliminated, and security of the entire digital system increased.
Many countries such as Bermuda and Malta are already jumping onboard to ensure they are not left behind. China is one of the leaders with the commitment President Xi made. In his plan for the next 5 years, blockchain is one of the technologies that is at the forefront of China's proposed advancement.
Not to be outdone, the Russians are also embracing blockchain. This is basically how they view the potential:
One agent of Russia’s FSB (the KGB’s successor) reportedly boasted that “. . . the Internet belongs to the Americans — but blockchain will belong to us.”
There is a notable absentee on the list of countries that are leading in the blockchain race.
The United States is stuck in neutral. Leadership has failed to provide any regulatory framework meaning that companies are setting up shop elsewhere. One of the major benefits of blockchain is that it can take place anywhere. Thus, companies have the option of determining which jurisdictions provide the best regulatory environment for them to operate.
Sadly, for the United States, they are not the favored ones.
Yet as the world adapts to blockchain, U.S. investments flow offshore. American financiers remain skittish about deploying capital to domestic blockchain opportunities due to regulatory uncertainty over what instruments will be considered a security. A recent survey by the Washington-based Blockchain Association showed that 91 percent of industry participants consider “unclear regulations and guidelines” a significant barrier to their success. Furthermore, the report confirmed that 66 percent of the industry’s largest employers are now based outside of the U.S.
Part of the issue stems from the fact that the regulatory agencies refuse to embrace the new model that is being constructed.
The Internal Revenue Service (IRS), the taxing agency in the U.S., treats cryptocurrency transactions as a taxable event. To them, it is no different than day trading stocks. Each transaction has to recorded for profit or loss. This is a nightmare for people who are frequently using cryptocurrency.
Simultaneously, we see the SEC clamping down on ICOs/IEOs. This agency views fundraising of this nature the exclusive right of Wall Street. Anyone who engages in this activity is running afoul of the United States Security Laws. It is a headache that most businesses and entrepreneurs are not willing to deal with.
There were already some big names in the cross hairs of the SEC. Telegram, Kik, and BlockOne (EOS) all were sued by the regulatory agency. BlockOne settled their case with a fine while the other two companies are taking up the fight in court.
As we learned in the 1990s, when it comes to advancing technologies, falling behind is a bad position to be in. Innovation builds upon itself and those who lag have a difficult time catching up.
Blockchain is one of the most powerful technologies to come along yet an advanced country like the United States is already lagging.
Unless leadership in the country steps up, this is a race that is going to be over before it even begins.
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