The George Mason University Antonin Scalia Law School National Security Institute hosted a webinar on Wednesday, March 30, titled “Crypto and National Security: How to Validate American Innovation and Verify US National Security.” Journalist Laura Shin moderated the discussion. CEO of the Crypto Council for Innovation Sheila Warren, executive director of Coin Center Jerry Brito, and global managing partner and chief strategy officer of risk compliance and monitoring firm K2 Integrity Juan Zarate were participants.
After opening the comments, the panel’s first of three questions centered on American innovation. Brito expressed hope that crypto would be allowed to develop with open access like the internet did. He spoke of the process as ‘making a thousand flowers bloom’. Zarate spoke of using blockchain technologies “to challenge US adversaries”. It will be possible, Zarate said, to strengthen US capital markets and the role of the dollar “if we have a say and a hand in how” the technology is developed. He specifically mentioned the use of dollar-denominated stablecoin to the benefit of the nation.
The second question related to regulation. Zarate complained about the “sneaker” approach to crypto regulation, which is based more on the powers of agencies than on the nature of crypto, while Brito was in favor of principle-based regulation. Brito criticized the IRS for being a regulatory “laggard”. Warren spoke of incentives and risk, and Zarate rejoined the discussion to say that absolutism – the unwillingness to accept any risk of bad action – “isn’t how the financial world handles risk”.
The discussion on the digital yuan turned out to be the most lively, with Brito and Warren sharing their very different perspectives. Brito argued that
“A digital yuan is still a yuan, and no one wants to hold onto a yuan.”
The Belt and Road Initiative, he said, would not change attitudes toward the Chinese currency. But a digital dollar bearer could dollarize the internet overnight and bolster the dollar’s dominance in the world, Brito said. Warren saw a greater threat from China’s debt trap for developing countries, which could lead to the forced adoption of the digital yuan.
The webinar had an audience of about 100, according to host Jamil Jaffer. It is available for to look at on Youtube.