Coinbase’s legal executive is calling for private sector leaders in creating the U.S digital dollar.
In a Fortune essay published on Monday, Brian Brooks said private institutions are best positioned to develop a much-debated digital American currency, and that the government should stand back and let them regulate their underlying blockchains.
“The best path forward is one that harnesses our country’s remarkable capacity for innovation and also reflects government’s historical practice of setting broad guide rails for private innovation within the financial system,” Brooks said.
“… But there is no more need for the government to control the blockchain policy of stablecoin issuers than there is for the government to dictate the technology used by privately-owned commercial and investment banks.”
Essentially, Brooks foresees an informal public-private collaboration in which private institutions leave monetary control to the federal government. In turn, the government secedes management of the technological infrastructure to them.
“In short: the private sector should build the technology, and the public sector should set monetary policy.”
Brook’s approach is different from Facebook’s Libra project, which the social media company initially announced in June.
U.S legislators and regulators alike have balked at Facebook’s plans to create a global stablecoin governed by the Libra Association, claiming the crypto would be beyond regulator’s jurisdiction.
In addition, the project’s plans to support Libra with a host of international currencies could, conceivably, take away monetary control from the U.S Federal Reserve.
Last month, Federal Reserve governor Lael Brainard stated global digital currency projects such as Libra could destabilize international central banks.
Brooks contrasted Libra’s strategy with USDC (the stablecoin provided by Circle and Coinbase) plus other similar coins, claiming instead that dollar-supported digital currencies pose no threat to central bank control.
If the government-controlled dollar supports the private sector minted stablecoin, then the Federal Reserve still controls the stablecoin’s underlying monetary policy, Brooks said.
From his point of view, the Fed’s best move would be taking little, if any. Apart from ensuring that varied stablecoin projects including Libra and USDC hold the fiat reserves they claim to, Brooks called for little to no involvement in private innovation.