Cryptocurrencies could serve as a possible solution to disparities currently faced by the U.S. dollar, an economist with the Federal Reserve Bank of St. Louis said Tuesday.

During an hour-long question-and-answer session, the Federal Reserve Bank of St. Louis – one of 12 regional banks that make up the U.S. central banking system – answered questions on Twitter with economist David Andolfatto, who is a vice president in the bank’s research division.

During the session, one user asked whether cryptocurrencies can be used to solve the 50-year-old Triffin Dilemma, which refers to the conflicting interests between national and global monetary policy for a country whose currency is used as the world’s reserve.

Specifically, it refers to the U.S. dollar, which has been considered a world reserve currency for decades. In order to maintain this role, the U.S. must incur a trade deficit.

When posed the Triffin Dilemma question, Andolfatto responded:

“The Triffin Dilemma refers to the double-edged sword of possessing a currency that serves as the world reserve currency. If a private cryptocurrency were to replace a given world reserve currency, this would eliminate the dilemma for that currency.”

Other questions asked during the session ranged from whether Andolfatto thought a cryptocurrency could replace the U.S. dollar or whether the Federal Reserve is likely to ever consider monetary policy in terms of cryptocurrencies.

The economist demurred on both counts, noting that cryptocurrencies are essentially private monies, and therefore not something that would fall under the central bank’s purview.

Moreover, because there is “no need for decentralized consensus based record keeping” for the dollar, he does not see it being replaced with a cryptocurrency.

Andolfatto also does not see the demand for cryptocurrencies supplanting the demand for existing reserve currencies, he added.

This post credited to coindesk  Federal reserve logo via Shutterstock

In a new letter dated September 28 to Jay Clayton, chairman of the Securities and Exchange Commission (SEC), US Congressmen Warren Davidson, Ted Budd, Tom Emmer, and Darren Soto asked for clarifications on the regulatory status of initial coin offerings (ICOs) and cryptocurrencies.

According to the lawmakers, the current uncertainty regarding digital tokens “is hindering innovation in the United States,” while hinting that businesses may be moving elsewhere to more crypto-friendly jurisdictions if nothing is done.

The pro-crypto Congressmen went on to write that they “believe the SEC could do more to clarify its position,” and added that they are “concerned about the use of enforcement actions alone to clarify policy […]” The Congressmen were particularly interested in getting a clear regulatory framework for when a token sale should be considered an “investment contract,” thus classifying tokens as either securities or non-securities.

As Cryptonews.com reported last week, Congressman Davidson hosted a roundtable discussion on Capitol Hill between lawmakers and representatives for the crypto industry. The forum, dubbed “Legislating Certainty for Cryptocurrencies,” will provide input from the industry to be used in the preparation of a new bill that Davidson plans to put up for a vote in the US House of Representatives this fall.

During the meeting, Davidson was quoted as saying that “I am confident we can move forward and make this a flourishing market in the U.S.,” while adding that “we did it well with the Internet.”

Meanwhile, not only in the U.S. the lack of regulation in the crypto and blockchain space, especially for projects that raised funds through ICOs, is keeping even compliant projects from working.

“If you’re a good citizen complying with accounting, opening bank accounts, doing everything correctly, you can still get hit every single week by institutions, service providers, partners that tell you they’re not working with you anymore just because you’re dealing with cryptocurrencies,” Ada Jonušė, CEO of Lympo, a Lithuania-based sports and health data monetization company, said in September.

Ripple forms lobbying group

In other news from Washington this weekend, a statement from Ripple revealed that the California crypto startup focusing on the banking sector, and other companies associated with it, are forming a lobbying group to influence crypto regulations during a critical time when lawmakers in Washington are trying to figure out how to approach the issue.

The new advocacy group, dubbed Securing America’s Internet of Value Coalition (SAIV), says it will promote “a vision of fair and equitable Internet of Value,” as well as fair tax treatment on crypto-related “capital gains, assets and charitable contributions.”

 

This post credited to cryptonews  Image source: iStock