The US and Crypto Mass Adoption: Insights from Circle's Chief Strategy Officer, Dante Disparte

Does the US still hold the key to mass adoption? That’s the trillion-dollar question today!

In this interview with Circle's Chief Strategy Officer and Head of Global Policy, Dante A. Disparte, we examine the role and influence of the United States in the nascent crypto industry. According to Dante, one could argue that a giant stablecoin company such as Circle would not have been founded anywhere in the world but in the United States.

During our conversation, I asked Dante if he saw in the demise of Libra, the defunct Facebook-backed cryptocurrency project, a squandered opportunity for the United States to reclaim its global financial leadership and fortify the US dollar.

In response, he pointed out that de-dollarisation is a long-range issue bordering on how the rest of the world views the United States dollar as America’s soft power instrument that goes back to the Brenton Woods era, and on the desire for countries to have monetary sovereignty and control of their domestic, economic and monetary environments.

In Dante’s view, blockchain technology, notwithstanding its vast potential, is excessively intricate. In 2018 in a Forbes article, he argued vehemently that we can change the world with blockchain technology when we stop talking about it. Read on for more details!

Mr. Dante, how would you describe your journey to blockchain technology and web3 coming from a 20-year career in entrepreneurship and business?

First of all, it is great to have a chat with you. The way I found blockchain is in many ways the way people find most new industries. The industry or the technology finds you; you don’t find it.

So, I was originally looking at this industry from the lens of insurance and risks.

A lot of the early companies in the crypto space like Bitfury and others that were doing Bitcoin mining activities came to me looking for help with insurance bordering on things like cyber risk, technology risks, fiduciary and financial crimes, and other risks. So, that’s my original foray into the industry.

Does it bother you that the US  losing its global lead in Web 3 as a result of its harsh crypto policies?

I wouldn’t like to say anti-crypto policies because right now it looks like the regulatory landscape is not favorable. And then did you see it coming?

For one, I wouldn’t say the United States is losing. As a matter of fact, I would recommend to you and your readers an article that I wrote, a couple of years ago, taking the counter-narrative position that is the US losing the digital currency space race. And, as you know very well, a lot of people suggest that unless the United States or the Federal Reserve Board issues a digital dollar of its own and tries to directly compete with the model that is being followed in China somehow the United States will be less relevant in the global economy and in the 21st century and in the digital assets markets.

My view is despite some of the regulatory headwinds and despite some of the enforcement actions the crypto industry will be very well advised to remember that no single actor, government, country or enforcement agency caused the crypto industry more harm than the industry caused to itself.

The Terra Luna collapse was not the SEC or the CFTC or the Treasury Department or the US government; it was the industry and it was excess risks, greed, and financial alchemy. All the way fast forward to the end of last year the FTX Collapse equally had nothing to do with regulatory actions. It was a blend of fraud and other risks of opportunities. But it was not something the US government did.

If anything, you could argue, with the benefit of hindsight many regulators and policymakers probably would look vindicated in warning about the potential for excess risks in the sector. So it is a little bit more nuanced, and I don’t think this is a zero-sum proposition where the United States is necessarily losing ground or where any country or company has to win at another company or country’s expense.

In 2019 you described the uproar that followed the launch of Facebook’s cryptocurrency, Libra, as ‘oversimplification”. I would like you to buttress on this. What does that mean?

I have had a front-row seat in the public policy discussion about money, the future of money, and the current state of affairs. I would do it all over again including the many awkward hours and often complex hours in public testimony either as a witness or sitting next to the witness in Congressional, Senate, and other hearings around the world.

Frankly, my motivation for joining the Libra project even in failure was that it was a platform big enough to have a conversation about issues that I don’t think the world would be discussing if it wasn’t for Libra. For example, is it really your money if you have to pay someone to spend it and if you have to pay someone to hold it for you? For example, if you care about financial inclusion as,  such a global systemic problem, what better pathway to include more people in the formal economy than a large-scale digital transformation of the global financial system?

And I think without the Libra project, things like the Central Bank Digital Currency would have remained in abstraction; and without the Libra project, I do think a lot of the developments that we now take for granted in fintech, in digital assets and in banking probably would not have happened without Libra. So I would have done it all over again.

There is one crucial question I would like to ask now: do you see in the demise of Libra a missed opportunity for the United States to reclaim its financial leadership and strengthen the dollar or was Mark Zuckerberg merely amping up the worries over China's rise in recent times?

Well as you can imagine, former Treasury Secretary Hank Paulson wrote an article on foreign policy basically saying that a currency and a trusted currency is the sum of the part. For example, if you are going to create a Digital Zimbabwean Dollar then you would have the sum of the part but in digital form, and that perhaps would not be a great innovation either in ones and zeros or in paper.

This is partly because of the hyperinflationary nature of the currency, and so many of the world’s currencies–the publicly issued world’s currencies--are not worth the paper they are printed on. And so, I think this notion of de-dollarisation and the economic competitiveness of the US Dollar is a real issue.

But the issue is not about the dollar itself as much as it is an issue about the payment rails on which the dollar rides. So much of the war taking place between central bank digital currencies and alternative payment networks is about creating sanction resistant network of payments so that from a geopolitical and geoeconomic vantage point the US soft power is blunted but that is a multi-decade slow-boiled change of the global economy.

It is not something that just happened overnight because a digital currency is issued by a rival central bank or a rival country. It is something I think is a long-range issue. The reason the dollar is the global reserve currency is in no small measure because of the ability to transmit the dollar across multiple different channels on a global scale.

There hasn’t been a time when the need for financial innovation in the United States is a front-burner issue than now. You are going to agree with me that there is a gradual decline in web3 innovation following some of the anti-crypto policies and you have the SEC to blame partly for this. Do you see this decline as a dangerous trend?

I don’t actually. I’m wired personally an all-ships-rising person and you could argue that a company like Circle probably would not have been started anywhere in the world but in the United States.  However, the fact that many more jurisdictions around the world are now starting to enable responsible innovation in financial services and technology, fintech, and in digital assets is encouraging.

Ideally, there would be more Circles developed in more places around the world but the Circles of the world would find more venues and more jurisdiction to stop the very dangerous race to the bottom regulatory arbitrage that has made crypto in its maiden decade scary, opaque and bad for consumers, bad for markets, bad for regulators and bad for people.

If you care about all of those things done well, then we need to race to the top in terms of trust, transparency, and accountability as opposed to the race to the bottom.

I think the race to the bottom cost crypto  2 trillion dollars.

Why is mass adoption a major challenge today and do you see the United States changing the narrative anytime soon?

There is no question. Three things have to happen at once. First, I joined this space and I joined the Libra project and I joined Circle to deliver three things. The first is that financial innovation, financial inclusion, and financial integrity are not tradeoffs. As much as there might be a conflict between those objectives, I don’t think of them as tradeoffs.

I think you can achieve universal global access to universally accessible device-centric payments and money everywhere in the world without degrading the types of consumer protection, financial protection, financial market protection, and financial crime compliance protections that the world cares about.

In fact, I am willing to wager that we can make exponential improvements in those three objectives compared to any other technology stack or any other sector. So what then does it take then to get to the billion-user market or the mass adoption market? It does take legislation and legal and regulatory clarity, and remember that has to become an export product. One person’s well-regulated stablecoin is not another country’s banned digital asset or digital security, right? In order to lead, we need to harmonize regulation and export a harmonized regulatory standard.

We also need the technology to be abstracted away into the background because we oftentimes talk about crypto being trustless, open, frictionless technology. It is heavily complicated, it is fraught with gas fees and technological complexities that need to be abstracted away into the background. So I wrote an article in Forbes titled ‘We can change the world with blockchain if we stop talking about it”. When was the last time we talked about wireless software and routers? We are still making the technology a protagonist and I think that is one of the major pathways to the billion-user market.

So let’s talk about de-dollarisation. Right now, the BRIC countries are pushing for this agenda. I want to really understand how it affects payment stablecoins like the USDC. Does the fate of payment-stable coins hang in the balance?

It’s a very good question. So, to summarise this notion of de-dollarisation. Every other day there is an article in the news, whether it is the mainstream financial media or elsewhere around a transition among many emerging and developing countries away from dollar dependency partly because of the notion that the dollar represents a soft power instrument of the US government and a way of exerting that soft power around the world.

It is also in the context of a war in Europe: Russia’s war of aggression against Ukraine. The dependency on the dollar and more importantly the rails on which the dollar rides, networks like SWIFT and others in which people, companies, and entities can be ‘de-banked’ or removed from having access to the financial system depending on whether those sanctions are imposed or not.

So, de-dollarisation is on the one hand symbolic of the desire among many to have monetary sovereignty and control of their domestic, economic, and monetary environment as much as it is the desire to remove soft power instrument that the United States has and has had since the Brenton Woods era.

 But it is as I said before, a long-range issue: it’s not something that just happened overnight in no small measure because of the liquidity, the network effect, and the ubiquity of the dollar around the world. Those are hard preconditions to recreate irrespective of any innovation or country or central bank desire to have.

What are the regulatory concerns in the United States as far as crypto regulation is concerned?

If you look at the recent hearings; Im forever an optimist. Just like it took the recent dot-com bubble to develop a more durable, usable, value-adding internet, and then all of the tech titans that were burned from that bubble, I do think if you look backward to 2022, and the things that worked in crypto and digital assets and the things that did not work.

I also remain very heavily optimistic about the space, and just like it took the 2008 banking crisis to get comprehensive banking reforms from the US and to get bodies like the Financial Stability Board and others, I do think these rounds of crypto risks that we have suffered will produce positive outcomes from a regulatory vantage point.

We have had hearings for example in the US on stablecoins; I was in one of those hearings. The upcoming hearing, for example, on the role of the dollar, and the strength of de-dollarisation coming up on June 7. And I think that policy conversation will produce ultimately legislation and my hope is that that legislation is not so light-touched that more and more people and consumers are harmed but that it is sufficiently acknowledging a principle base that enables competition, a level-playing field, and the pathway to the billion users that remains very illusive for crypto but very important for the world.

On a final note, how can my readers connect with you? What are your hobbies?

Well so for one, I guess they could follow my work, my writings, and my other hobbies on my personal website which is www.dantedisparte.com. I have written hundreds of articles, a number of book chapters, and a book on global risk. In fact, the things that keep me awake at night probably have less to do with the future of money and payments and more to do with the state of the world. There is a lot of complexities in the world and unless we encourage innovation and the whole of society's approaches to solving big complex issues like the Covid-19 pandemic and other then we should all be concerned.  Those are some of my personal preoccupations but I promise you I’m a fun guy to be with.

Articles Dante referenced in this interview:

https://www.forbes.com/sites/dantedisparte/2019/05/20/why-enterprise-blockchain-projects-fail/?sh=ec4655b4b96b

https://www.project-syndicate.org/onpoint/us-digital-currency-race-private-crypto-sector-secret-weapon-by-dante-alighieri-disparte-2021-07

https://www.forbes.com/sites/dantedisparte/2018/03/28/when-we-stop-talking-about-blockchain-we-can-change-the-world-with-it/?sh=489847c91037