Why U.S. policymakers should embrace Web 3

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In 1997, the Clinton administration published the revolutionary “Framework for Global Electronic Commerce, which sets out five key principles:

  • Governments should recognize the unique qualities of the Internet.

  • The private sector should take the lead.

  • Governments should avoid undue restrictions on electronic commerce.

  • Where government involvement is required, its aim should be to support and enforce a predictable, minimalist, consistent and straightforward legal environment for commerce.

  • Internet e-commerce should be facilitated globally.

In the decades that followed, the internet transformed our economic and social interactions in ways that profoundly changed society – for better and for worse. Today we find ourselves at a similar time for the next generation of the Internet, and it is time for a new set of principles that incorporate the lessons learned over the past 25 years.

Tomicah Tillemann is Global Head of Crypto Policy and James Rathmell under him at a16z. This editorial is part of CoinDesk “Politics week” a forum to discuss how regulators view crypto (and vice versa).

Policymakers have finally been interested in Web3 for a long time. But the conversation is essentially about what policymakers don’t want from technology: fraud, illicit use, unsustainable energy consumption, systemic risk. We believe it is time to establish an affirmative vision of what we expect from technology. Public companies need a pole star to guide our efforts and innovation.

Web 3 is the most credible alternative for reshaping and redeeming institutions that have failed in recent decades. The list includes Big Tech, Wall Street banks, and failing public assistance platforms that have failed to quickly and effectively deliver the help Americans need in times of crisis.

Big tech has been embroiled in a never-ending series of controversies over the past decade, ranging from mismanagement of consumer data and privacy breaches to disinformation and algorithmic bias. But these platforms are now disrupted and disintermediated by Web 3. For example, decentralization has opened up the possibility of a world in which people can own their data and allow applications to use it in limited ways, rather than see this data littered. on hundreds of centralized databases.

See also: Crypto is Too Big for Partisan Politics | Kristin smith

Another area with great potential is decentralized finance (DeFi). If fintech platforms such as mobile payments have revolutionized the front-end of finance, we can think of DeFi as a revolution of the back-end – laying new pipes and rails that are easier and more efficient to access, audit and upgrade.

This new generation of digital infrastructure could help achieve goals that have long eluded policymakers, such as expanding access to consumer credit products, lowering the cost of capital, enabling capital formation for small businesses. around the world and improve compliance with easy and instant auditability. Policymakers will still need to develop thoughtful regulatory frameworks in this space that protect consumers from bad actors and ensure the stability and integrity of our financial system. However, if we are judicious in how we incubate these tools, we can usher in a new renaissance of economic opportunity.

Web 3 also holds great promise for the government itself. The onset of the COVID-19 pandemic led the federal government to invest heavily in Americans who were struggling to make ends meet. The proposals currently under consideration in Congress would bring even more help to working families across the country. Yet our outdated financial systems leave far too many people waiting weeks or months for help to arrive in times of desperation, and even longer for checks to clear.

At the same time, existing systems have proven to be extremely vulnerable to exploitation by foreign organized crime networks, which have stolen tens of billions of dollars from taxpayers by exploiting weaknesses in our increasingly decrepit financial architecture. Tools like stablecoins and digital identity – if adopted by Washington – can enable more efficient distribution of aid to working families and protect our systems from exploitation by foreign criminals.

Decentralization is more than a buzzword. It puts power and control back into the hands of consumers and individuals. Web 3 systems can be more inclusive, fairer and more resilient. Simply put, they’re a much better alternative to a broken digital status quo.

Technological innovation is often necessary to unlock social change and economic growth, but it is certainly not enough. Without a well-designed public policy framework that recognizes the great diversity of the Web 3 ecosystem, we may never realize the benefits of decentralized digital transformation.

Failure to do so would mean two things:

First, other countries – potentially countries with values ​​contrary to our own – would set the standards that would define the next generation of global technology.

Second, we will miss what may be our only opportunity to apply lessons learned from the failures of Big Tech, Wall Street, and broken institutions, to implement a new vision of the role we want our technology and institutions to play. play in people’s lives.

See also: DeFi is unlike anything regulators have seen before. How should they tackle it?

The growth of Web 3 has been driven by entrepreneurs who grew up in the aftermath of the 2008 financial crisis and want to improve the systems of the past. And consumers are also actively participating: we are already seeing nearly one in six Americans under 35 invest in crypto, with a strong commitment, particularly among Black and Hispanic Americans. These technologies respond to a strong demand for solutions in communities that have not always been well served by traditional finance.

Since its founding, the United States has been the hotbed of innovation, imagination and independent thought. The country’s success was rooted in the philosophy and practice of decentralization – a belief that many independent actors could create a whole that was more than the sum of its parts, and produce results better than what could be achieved by concentrating power in the hands of a few. Web 3 can bring us back to these core values ​​and rekindle their legacy of progress, opportunity and inclusion.

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