Blockchain is gaining notice from at least one member of the U.S.Congress, according to TechTarget. U.S. Rep. David Schweikert, R-Ariz., called on attendees at the DC Blockchain Summit in Washington, D.C. to educate lawmakers about the technology’s benefits so that lawmakers can address it in a way that benefits the economy as opposed to excessive regulation.
Schweikert, who serves on the House of Representatives’ Financial Services Committee, noted banks are scrambling to ensure blockchain technology doesn’t disintermediate them. He said he has followed cryptocurrencies for a number of years.
Only six or seven fellow Congress members understand the basic mechanics of the distributed ledger, Schweikert said. When The Economist published a cover story about blockchain technology last October, the Financial Services Committee bought dozens of copies to distribute to members of Congress to help bring them up to speed.
Banks and other financial services companies are scared that blockchain technology will put them out of business, he said. He wondered if the technology poses a disruptive threat to those in the money transfer business, the credit card infrastructure business, and the old processing systems.
Schweikert recognized the benefits blockchain technology can provide. He said it has the potential to enable peer-to-peer value transfer between people — without requiring a government or bank to execute the transaction. He said this is a major threat to regional and community banks. This threat is particularly pronounced considering there are millions worldwide who up until now have been “unbankable” — lacking access to a bank account and therefore can’t participate in a credit-based economy.
With blockchain technology, a mobile phone and cryptocurrency, the unbankable can join the economy without ever doing business with a bank. This market represents a huge lost opportunity to financial services companies.
Banks aren’t the only businesses facing disintermediation, he said. Any company acting as an intermediary in financial transactions is at risk. “Say you want to sell stock,” he said. “Could I buy it directly from you and never have to have it land in another platform?”
While banks’ biggest problems once revolved around regulatory compliance requirements, the biggest threats they now face are cryptocurrencies.
Schweikert called on his audience, which included many blockchain technology advocates, to take action. He implored them that if they have relationships with “those of my kind, those of us who get elected and think we already know everything” to educate them on the benefits before the “control freaks” find a way to destroy the positive things blockchain could do for the economy and for the world.