Your Humble Correspondent wanted to write something about the groundbreaking work of Carlotta Perez, the Venezuelan economist whose findings suggest a coming surge of activity as blockchain moves productivity forward.
But then Christian Catalini, the MIT professor who laid the groundwork for valuing ICOs, inserted himself in the news.
While deciding what to write about, though, history intervened.
“Time passed, which, after all, is its job.” -Sir Terry Pratchett
This turned out to be the week that blockchain economics went mainstream. The article in this space about the Bank for International Settlements throwing up all over crypto was just the beginning.
First, the U.S. Congress released its annual report that, for the first time, spent a whole chapter on blockchain, viewing it as a risky but promising new technology with huge economic implications. Which it is. Whoever wrote this bothered to do their homework.
That was followed almost immediately by The G20’s Financial Stability Board giving cryptocurrency a clean bill of health. It’s a baby step, and there’s a lot that got kicked down the road, but still.
Then, as expected, the governor of the People’s Bank of China retired, paving the way for longshot Yi Gang to be appointed. So almost a quarter of the world’s population now has a central banker who has reportedly expressed a favorable view of cryptocurrency.
Any one of these would’ve made a great think piece, and they will. For now, here’s a brief survey of this rapid-fire cluster of big tokenomic news.
“Anonymous, untraceable cash? Hmmm, I have a primary next month …”
The biggest thing about Congress’s economic committee report is what was not said. These papers are generally written by the majority party’s staff with the minority’s response tacked on at the end. And you better believe that, for the first eight chapters, the Democrats pushed back on everything the Republicans thought about the U.S. economy. But then came Chapter 9, “Building a Secure Future, One Blockchain at a Time”. The end of that chapter was the last time in the document that the strings “blockchain” or “cryptocurrenc” could be found in the document. The loyal opposition had nothing to say against it.
There could be two explanations. First, this could be a rare sign of bipartisanship in the public square as policymakers agree on the both the risks and benefits of cryptocurrency. Or, the Democrats might be so completely clueless on the subject that they just couldn’t find anything to say.
Neither of these is likely. Bipartisanship left town with the end of the 20th century (it had been packing its bags since 1988). And ignorance has never gotten between any member of Congress and their opinion. Let’s choose to be optimistic enough to favor the first.
“What happens now?” “Don’t ask anymore.”
The takeaway from the G20 no-threat is that it’s anticlimactic. For weeks, many of us were cogitating on whether the topic of blockchain would even be on the Buenos Aires summit — and we braced ourselves for what kind of bad news would emerge. Those of us with a more positive mindframe — again, optimism — wondered if the stewards of the world’s 20 largest economies were going to actually come together and propose a common regulatory scheme. But none of that happened, for ill or good.
The non-messenger was an interesting choice. Apparently, when Mark Carney wears his FSB chairman’s hat, he has a nuanced view of crypto-assets, stating “ that crypto-assets do not pose risks to global financial stability at this time.” He says he wants to “identify metrics for enhanced monitoring of the financial stability risks posed by crypto-assets and update the G20 as appropriate.”
But when he’s wearing his Bank of England governor’s green eyeshade, he calls “failing” cryptocurrencies are “proving poor short-term stores of value.” He’s like Trump tweeting about Andrew McCabe with that.
No more foot-dragon?
And then there’s the turnover at PBoC. There’s not a lot of information out there about Governor Yi, but his appointment seems to be a watershed.
Whether it’s a causal relationship or just part of larger theme, Providence only knows, but a lot of sovereign bankers and regulators have suddenly started swinging back toward supporting cryptocurrency.
On the same day Trump took action banning the Venezuelan petro — which represents everything wrong with crypto, so good for him — the U.S. Treasury enabled reasonable regulation of wallets so that anti-money laundering and anti-terrorist financing laws can be enforced in the cryptosphere. This means that the initial FUD is fading into reasoned concern about specific issues, so sensible policies can be established and enforced. If your wallet is software, then it’s not a brokerage account, thus the SEC has no reason to go near it.
And while Carney was off in Buenos Aires, the BoE launched its own task force to take a closer look at the benefits and risks of digital assets. It stands to reason that cognitive dissonance causes stress, and nobody wants a stressed-out boss.
Anyway, Your Humble Correspondent shall endeavor to give each of these emerging stories their fully merited attention in turn.