Opinion | US Senator: Blockchain may be widely adopted, but it still does not address financial inclusion issues

Blockchains are good, but they are not enough to bring financial services to those who don't have access to banking services or get restricted banking services. This is the main thrust of the US Senate’s hearing on cryptocurrency regulation on Tuesday.

At the hearing, parliamentarians and witnesses scrutinized statements about cryptocurrency technology that would promote financial inclusion.


At the Senate Banking Committee hearing, Senator Brian Schatz (Day Hawaiian) asked Jeremy Allaire, CEO of the cryptocurrency exchange Circle, about the matter.

Schatz tells Allaire:

“In my opinion, the technicians want to wave the 'woke', skip some steps, avoid some difficult politics, and these politics are good for the people. The technician said, 'We have a new technology that can solve All of these questions. 'Do you really think that in a society where only 81% of the public currently own smart phones, are we close to democratizing the use of these products?"

Schatz told Allaire that the blockchain is likely to become a widely used tool, but that doesn't mean it will solve the banking problems faced by people who are excluded by finance.

"I don't doubt the potential of this technology. I just don't think it will become a bank for low-income communities. I don't think you have convinced anyone here to make people believe that it will become like this."

Allaire agrees and believes that the issue of financial inclusion is complex. He says,

“These are human problems, real policy issues, risks that we must guard against in the financial system… These problems exist. This technology does provide a way to improve these problems, but it is not a panacea. ”

Not a technical issue

Mehrsa Baradaran, another of the committee's witnesses and a professor of law at the University of California, points out that about a quarter of Americans do not have access to the US financial system. They spend billions of dollars to pay other service providers as soon as possible. Get cash. She believes that this is not a technical issue but a public policy issue.

Baradaran believes that individuals who do not have a bank account need a point of acquisition. Although blockchain is a technology that can help, there are "many simpler ways to provide this access." She said that

“The problem for low-income and unreachable customers is not that they are dissatisfied with the existing technology, but that they live in a banking desert… there is no place (using credit cards) because banks are no longer interested in serving these customers. ""

Schatz clarified that he did not consider blockchains to be a useless technique, but in his view, the use of blockchains required some intermediate steps that were not resolved.

Schatz said:

"I don't doubt the importance of this technology, nor do we suspect that we might use it in 20 years, but I think it's a different matter from 'Oh, by the way, it will solve all these social ills'."

His conclusion is:

"It's important to understand this technology, because if we want to establish a regulatory framework, we need all the problems that need to be solved, but we also need to see what problems it may have, or maybe it."

After the hearing, Coinbase Chief Legal Officer Brian Brooks pointed out on Twitter that

“Even those who are skeptical about the prospects of cryptocurrencies often recognize the shortcomings of the current financial system and the consequences of excluding most people from traditional banking services.”

However, he pointed out that blockchain as the "newest breakthrough in peer-to-peer technology" may be necessary to improve the current financial system.

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