Crypto is everywhere, and the blockchain is changing the world.
How would the global economy look if there was a shift towards decentralized banking? How have cryptocurrencies impacted regulatory practices, taxation, and international reporting? Why are some countries, like El Salvador, adopting crypto as legal tender while others, like China, ban its use? How are environmental and sustainability challenges impacting the future of crypto?
The World Affairs Council of Philadelphia hosted a discussion about these questions and more on cryptocurrency and its impact on the global economy.
The event began with introductions. Sarah Hammer explained her role in the Wharton School of Business’ blockchain accelerator and her excitement for the potential of using blockchain technology in supply chain contracts. She noted how the rapid private rate of technological development has outpaced the implementation of government regulation. Paul Hondius introduced his role in the OECD and their work in developing a common standard of reporting crypto currency assets for tax purposes. He highlighted the importance of international organizations reporting crypto information to local authorities so they can decide the proper tax procedure. James Haft explained DLTx’s work in expanding Web3, a new framework for the internet based upon blockchain technology and decentralized control.
Mr. Haft elaborated that advocates of blockchain technology want to ensure that governments do not smother the benefits of the new technology by forcing it into the same regulatory box as government-backed currencies. He theorized that the passion for decentralization driving many blockchain advocates is a desire to reclaim control over the use of their assets and personal data. The question of energy consumption in cryptocurrency mining was also addressed. According to Mr. Haft, the energy demands of crypto and ensuing costs have incentivized the more environmentally friendly practice of running computers at non-peak hours and their investments have financed the construction of more green energy infrastructure.
Ms. Hammer continued the conversation by detailing the potential benefits for blockchain technology in managing healthcare data. She commented that the current lack of regulation makes crypto a risky investment, since there is no clarity on how blockchain assets will be treated in a legal sense. For example, there is no clear guidelines for how to treat crypto during bankruptcy proceedings.
Mr. Hondius acknowledged the need for balance in the regulation of cryptocurrencies, that people must have the freedom to innovate while also making regulations to protect people’s savings and secure ways to get funds to those who need it. Mr. Haft expressed his skepticism at the effectiveness of global regulation and proposed that the new framework of cryptocurrencies will force governments to go along with the will of the people.
During the Q&A session, the audience asked about the handling of crypto assets in estate planning, to which Ms. Assar answered that the encrypted nature of crypto currency can lead to the unintentional loss of assets when the owner does not pass along the key to an heir. When asked about the necessity of blockchains for Web3, Mr. Haft explained that only distributed ledger technology can provide the privacy and security that would fit the Web3 definition. Ms. Hammer added that blockchains have the potential to revolutionize finances because they can clear transactions much faster than traditional methods. Audience members also asked about the penalization of influencers for promoting cryptocurrency without disclosing their payment for advertising. Mr. Haft explained that rather than creating specific rules which those dealing in crypto must follow, the government has opted to legislate by example, where people learn that specific actions are impermissible from the example of those who are punished.
