Statement of the Hon. Nydia M. Velazquez Building Blocks of Change: The Benefits of Blockchain Technology for Small Businesses
Washington, March 4, 2020
The key to long term growth in our economy is to make sure we are creating an environment that encourages innovation. That is why since last January we have held hearings on how the digital ecosystem promotes entrepreneurship, how small firms are leading the way in the clean energy economy, and solutions to decrease barriers for women and minorities seeking patents and trademarks. Today’s hearing is another topic I’m excited to explore, on how blockchain technology is being used to support entrepreneurship and small business growth.
I know that when most people hear about blockchain they automatically think of cryptocurrency and Bitcoin. While blockchain is the technology that enables the existence of cryptocurrency, by no means is that its only use. As a member of the Financial Services Committee, I have heard firsthand how blockchain technology is being utilized in payment processing by large banks and insurance companies.
Today, we have an opportunity to hear from small businesses that are using blockchain technology to reduce costs, increase efficiencies, disrupt industries, and grow their businesses. As we all know, the Internet, once the realm of hobbyists and cutting-edge tech experts, has grown into a mainstream driver of economic growth and efficiency.
Yet much of the power of the internet is concentrated in a few multibillion-dollar companies such as Facebook, Google, and Amazon who gather large amounts of data on consumers, dominate marketplaces, and are susceptible to hacking. In fact, many small businesses rely on these large corporations for advertising, E-commerce, distributing their products, cybersecurity, and cloud computing. Much like when a Walmart comes to town, it is challenging for small businesses and entrepreneurs to compete against these massive corporations.
Blockchain technology can help small businesses compete on a more level playing field with larger corporations, by streamlining operations, reducing reliance on costly third-party intermediaries, and boosting cybersecurity networks. By deploying blockchain effectively, the technology can have a positive financial impact on small businesses.
Over the last decade, there has been a frenzy of investment and entrepreneurship around blockchains. Entrepreneurs, innovators, and small businesses are at the forefront of a wide variety of blockchain-based technological applications in nearly every sector of our economy, including healthcare, the clean energy sector, financial services, transportation and logistics.
However, to ensure that the U.S. retains its leadership in advancing and creating cutting edge technologies, public policy should encourage entrepreneurs and small firms by establishing clear rules of the road that allows blockchain to develop in the private sector. The reality is if we don’t take the lead, other countries will.
China, Japan, the United Arab Emirates, and members of the European Union have taken blockchain technology quite seriously. Many of these countries have invested in blockchain research and initiated coordinated frameworks to provide guide rails for the development of blockchain technology. The international competition has begun, and Congress must do our part to make sure that the United States remains the center of blockchain development and engagement.
As a nation, we want to encourage innovation and broad-based applications of blockchain technology. Yet, at the same time, we want to ensure that blockchain technologies are used appropriately. Because blockchain technology has a wide variety of applications, both in government and the private sector, there are a number of federal agencies that have been looking at the uses of blockchain technology including the SEC, CFTC, and even the IRS.
However, many of these efforts are not coordinated between agencies, leaving uncertainty for businesses and entrepreneurs. We must make sure that the federal government adopts policies that support blockchain technology as it becomes a driver of wider economic growth and efficiency. There is a need for a coordinated framework to balance the need for regulation, while still supporting innovation, and providing clarity and predictability for businesses and entrepreneurs.
Today’s hearing is a chance for us to go beyond the hype to understand the benefits and challenges of blockchain technology. Our panel today represents a diverse set of expertise and viewpoints that will provide insight into some of the areas where blockchain is having an impact on small businesses. I look forward to the testimony and discussion.