As blockchain technologies have evolved to enable ever-faster digital payments, the need for speed continues to drive both technological innovation and mainstream adoption of new digital assets. The industry is building a lot of momentum for obvious reasons: companies have always wanted the ability to move money faster, and individual consumers have become annoyed with the wait for refunds. For many consumers and businesses experimenting with new digital assets, quick access to money has never been more within reach.
This interest is not expected to cool as younger generations become digital currency natives who only know a world of digital wallets. But even for them, that future may remain out of reach because innovation in digital payments is slow. And that’s not because we don’t have the technology. According to many leading experts who discussed fintech innovation at the Las Vegas Money 20/20 conference last month, the problem is that regulators have not yet set clear standards about what is and is not allowed.
In the United States, the lack of regulatory clarity threatens to slow down not only the mainstream adoption of new technologies, but also innovation in digital payment options, potentially cutting consumers and businesses across the country from sought-after conveniences simply because regulators allow it. unable to keep up with how digital assets are used today.
“There needs to be some clarity, some standards, some ideas about the dos and don’ts and a structure around it,” said May Zabaneh, PayPal’s vice president of product in blockchain, crypto and digital currencies at a Money 20/20 conference. session focused on how people use crypto to make digital payments. “Otherwise that mainstream adoption is really inhibited.”
According to Zabaneh, digital payment processors need government agencies to provide much more stability before the companies can confidently “explore the potential” of using digital assets such as stablecoins or central bank digital currencies to provide alternative payment options in e-commerce. She said that while PayPal has a responsibility to continue to innovate in digital payments, efforts could stall as “regulatory clarity is needed,” particularly consumer protection regulations and the tax implications of using digital assets. These are areas where US agencies are just getting started, and that’s holding back innovation. “For things to go mainstream, they need to be easily accessible and easy to adopt,” she said.
Zabaneh was not alone in arguing for regulatory clarity to stimulate innovation. Executives from other payment processors like Checkout.com, cryptocurrency exchange platforms like Coinbase, and banks like JPMorgan Chase all echoed the same call in their sessions, warning that U.S. fears of digital assets involved in financial crimes are creating difficult-to-navigate compliance risks for those who have invested the most in driving innovation. The executives said the US is so slow in passing laws and enacting regulations that industry leaders are going to do business elsewhere. Money 20/20 experts said this is already happening.
The US wants to lead the way in digital currencies, but tension remains between what President Joe Biden wrote in an executive order this year about the economic “nation’s interest in responsible financial innovation” and the broad security risks, including those for consumers and businesses, but also for national security.
To ensure that fintech leaders continue to do business in the US and participate in what has become a trillion-dollar market, Tufts University cybercrime expert Josephine Wolff told Ars she thinks the country must first prove that it is illegal. activities and other security risks associated with digital assets.
But not everyone believes that risk management should come first. On Money 20/20, Vice Chair of the National Credit Union Administration, Kyle Hauptman, suggested that government agencies like his should not allow concerns about the risks associated with digital assets to deter the country from approving financial partnerships, so that bold new fintech operations are sustained. the country and that the US gets the maximum financial benefit from dominating this booming market.
“The worst-case scenario is to get all the downsides of a disruptive technology and not the benefits,” Hauptman told Ars during an interview after his session.
In order for the US to avoid this mishap, Hauptman told congressmen that the US should focus not only on preventing illegal activity, but also on supporting innovation by providing clear guidelines upfront so that industry leaders are clear on how to proceed. engage with new digital asset initiatives. “For me, clarity is the most important thing,” Hauptman said.
