A former top American financial regulator dubbed “Crypto Dad” for his embrace of cryptocurrencies is setting up a think tank to promote the idea of digitizing the U.S. dollar.

J. Christopher Giancarlo,

who stepped down as chairman of the Commodity Futures Trading Commission last year, said he was creating the nonprofit Digital Dollar Foundation to study converting the dollar into a fully electronic currency based on blockchain, the technology that underpins bitcoin.

The U.S. risks losing the advantages it enjoys from having the dominant global currency if it falls behind rivals like China, which is working on creating a digital yuan, Mr. Giancarlo wrote in an op-ed published in The Wall Street Journal in October.

“Like with the physical infrastructure of this country, if you don’t modernize and keep up with the times, those strengths will begin to fray,” he said in an interview this week.

Central banks around the world have warmed to the idea of converting traditional paper- and coin-based currencies into digital currencies. These would be like bitcoin, but with the backing of a central bank and greater government oversight.

Digitizing the dollar could speed up the processing of financial transactions, while giving officials better tools to go after money launderers. But such a shift raises thorny policy issues, including the future of financial privacy in a world in which all transactions can be tracked electronically.

In an original WSJ documentary, markets reporter Steven Russolillo ventures to Japan and Hong Kong to explore the universe of cryptocurrencies. His mission: create WSJCoin, a virtual token for the newspaper industry. Image: Crystal Tai. Video: Clément Bürge

Putting the dollar on the blockchain would likely be a yearslong undertaking and a huge transition for anyone accustomed to holding cash. Some skeptics also worry it could allow hackers to steal digital money.

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Global consulting giant

Accenture

PLC is supporting Mr. Giancarlo’s new foundation and its main initiative, called the Digital Dollar Project, company representatives said. The project will encourage research and discussion of the advantages of digitizing the dollar. It is expected to be officially launched later Thursday.

The Digital Dollar Foundation’s other founders are

Daniel Gorfine,

a former CFTC official who led the regulator’s research into financial technology, and Mr. Giancarlo’s brother

Charles Giancarlo,

a longtime Silicon Valley executive who has worked for

Cisco Systems Inc.

and private-equity firm Silver Lake Partners.

The Giancarlos and Mr. Gorfine are providing the initial funding for the foundation. Accenture’s main role will be to provide research and logistical support, company representatives said. The consulting giant has worked with the central banks of Canada, the European Union and Singapore on digital-currency initiatives. Last month, Sweden’s central bank said it would work with Accenture on a pilot project to develop the “e-krona,” a digital version of the Swedish currency.

Mr. Giancarlo, a Republican, led the CFTC from January 2017 to July 2019, a period that overlapped with the inflation and deflation of a huge bitcoin speculative bubble. The CFTC oversees futures and derivatives markets, including new markets for bitcoin futures that were launched during Mr. Giancarlo’s chairmanship. He won fans in the libertarian-leaning community of cryptocurrency users by praising the technology as a form of financial innovation at a time when other regulators were more skeptical.

That earned him the moniker “Crypto Dad” on Twitter and an unlikely rock-star status on his visits to cryptocurrency and blockchain conferences. Mr. Giancarlo is 60 years old.

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In September, he became an adviser to the Chamber of Digital Commerce, a blockchain and digital-asset lobbying group.

Other former regulators who have entered the cryptocurrency world include

Arthur Levitt,

a former chairman of the Securities and Exchange Commission who is now an adviser to several blockchain and crypto startups. Mark Wetjen, a former Democratic commissioner on the CFTC, is on the board of the parent company of LedgerX, a crypto-derivatives trading platform.

In the interview, Mr. Giancarlo said his involvement in the Digital Dollar Foundation wasn’t like other cases of the “revolving door” phenomenon, in which former regulators join the industry they used to oversee. He said his foundation was a nonprofit aimed solely at advancing U.S. national interests.

Write to Alexander Osipovich at alexander.osipovich@dowjones.com

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