Blockchain could spark renaissance economy

America is the world’s land of opportunity. We attract people and capital from all over the world for a variety of reasons. America’s GDP growth, low unemployment, and favorable markets are the envy of the world, but how did we get here and—perhaps most important for us today—how do we stay in this coveted position? Vibrant capital markets that foster innovation and disruption of entrenched incumbents in a free society are key.

America became the best destination for goods, service, capital, intellectual property, and people because we are proven innovators, and quite often, our laws have adapted with technology. Perhaps The Telecommunications Act of 1996 is the best example of a law that put America in the driver’s seat to the digital age. At that time, engineers were able to keep pace with innovation while legislators had enough foresight to see the limitless opportunity offered by the Internet. The resulting landmark legislation made clear, “It is the policy of the United States to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation.”

{mosads}In contrast, today America is losing market share to strategic competitors on several fronts, but one of the most critical is blockchain innovation. President Xi Jinping has said (perhaps with some hyperbole), “Blockchain will be ten times more important than the internet.” Meanwhile, the lack of regulatory certainty in the U.S., combined with confusing, spasmodic guidance from the SEC, and an inconsistent patchwork of court decisions, has capital fleeing the U.S. market for the welcoming certainty of other jurisdictions.

The consequences of this capital flight are more than financial. When innovation happens in America, not only do startups make money and pay taxes, but they also create great jobs. Moreover, American innovation sets the parameters that can help to foster peace and prosperity for much of the world. To remain the land of opportunity and envy of the world, our engagement in trade and development of transparent protocols is critical to fostering innovation at home and healthy competition around the world.

Key to opening blockchain for the American market is the bipartisan Token Taxonomy Act, which I recently introduced with my colleagues Darren Soto (D-Fla.), Ted Budd (R-N.C.), Tulsi Gabbard (D-Hawaii), Josh Gottheimer (D-N.J.), and Scott Perry (R-Pa.). The proposed law would help to create regulatory certainty by clarifying the roles of regulators, protecting consumers, addressing national security concerns, and facilitating a pro-growth environment for companies to raise capital. Without regulatory certainty, the capital is flowing toward Asia and Europe where they have already provided legal frameworks. Without capital formation, the innovation is likely to flourish elsewhere—even when the innovative origins are American.

We must ensure that we avoid over-complicating, overregulating, and frustrating the spirit of enterprise that built our free market economy into what it is today. In an era of partisanship, the Token Taxonomy Act offers a nonpartisan solution to a nonpartisan issue—American leadership in blockchain technology. We welcome dialogue as we work to pass this important piece of legislation to help keep American leadership preeminent in technology and innovation.

Congressman Warren Davidson represents Ohio’s 8th District and is a member of the House Financial Services Committee. He spent 15 years starting, acquiring and growing manufacturing companies before replacing former Speaker John Boehner in the U.S. House. Davidson is a former Army Ranger, graduated from the U.S. Military Academy at West Point and received an MBA from the University of Notre Dame.