Cryptocurrencies have been around for more than a decade and adoption has steadily increased. As with any popular, emerging technology, questions and misconceptions remain among the media, public, and even policy makers. So here is a quick primer:

Cryptocurrencies are digital assets that enable novel and more efficient ways to send and store value online; they can be another option for payment, similar to credit cards, Apple Pay, PayPal, or Venmo. You can pay for goods and services with cryptocurrency from businesses such as AT&T, Microsoft, and Overstock, or you can trade it just as you would a currency or commodity.

Cryptocurrency transactions are recorded on a blockchain or its equivalent technologies, more broadly defined as distributed ledger technology (DLT). Think of it as a spreadsheet that records debits and credits between accounts, similar to bank statements, except the ledger is viewable publicly to promote transparency and each transaction is encrypted so it is resistant to tampering.  


1. Cryptocurrencies are safe and secure because they are decentralized, distributed, and use cryptography. 

Cryptocurrency transactions are safe and secure through the use of cryptography distributed across multiple computers globally, allowing for enhanced cyber resiliency. As a result, hacking one computer in the network will not prevent the ledger of transactions from being altered. The use of consensus mechanisms to validate transactions also helps prevent cyber actors from manipulating data stored on the cryptocurrency’s blockchain. Even if a breach were to occur, the changes would be publicly viewable. 

To read up on how DLT can help increase cyber resiliency, see our report: Advancing Blockchain Cybersecurity: Technical and Policy Considerations for the Financial Services Industry. See also, the Considerations and Guidelines for Advancing Cybersecurity in the Token Economy Chapter II, Section D (starting at page 107) in our report series Understanding Digital Tokens.


2. Cryptocurrency transactions are auditable. 

Cryptocurrencies enable the movement of digital assets from one person to another and can be traced through tamper-resistant DLT.  These transactions are publicly auditable, which means that law enforcement officials are able to view the information through the use of blockchain analytics software.  A recent example of the Bitcoin blockchain’s use in aiding law enforcement is the 2020 Twitter Hack  where blockchain analytics helped track down the hackers who engaged in a “giveaway scam.”

For more information on how blockchain technology enables transparency and traceability, see Elliptic: Bitcoin Is Not Anonymous. See also Chainalysis: How Our Cryptocurrency Transaction Monitoring Evolved in 2018.


3. Cryptocurrencies transactions are regulated.

How a cryptocurrency transaction is regulated depends on its use. While regulation is typically applied based on the facts and circumstances of the business platform and transaction, generally speaking, cryptocurrencies that are transferred through an intermediary are regulated by the Department of Treasury’s Financial Crimes Enforcement Network and state banking departments. Cryptocurrencies offered through derivatives, swaps, and options are regulated by the Commodity Futures Trading Commission. The Securities and Exchange Commission has jurisdiction over those that are securities. In addition, the Federal Trade Commission has brought actions for unfair and deceptive acts and practices. Companies need to be cognizant that many laws can apply to transactions just as they would for any other business. 

The Chamber and its Members take compliance seriously. Our report series, Understanding Digital Tokens, covers a broad range of digital token regulations in the United States, the United Kingdom, Canada, Australia, Gibraltar, and Japan (starting at page 145).



4. Cryptocurrencies are becoming a well-established financial tool. 

Cryptocurrency use is growing: almost 30% of Millennials and 15% of Americans have adopted digital currencies, which can be used to pay for goods and services from businesses such as Microsoft and Overstock, or to trade just as any othercurrency or commodity. Further, roughly 33% of U.S. businesses large and small accept cryptocurrency for payments. 

To see a more comprehensive breakdown of the demographics that use bitcoin, check out  Blockchain Capital’s report: Bitcoin is a Demographic Mega-Trend: Data Analysis.

You should also check out a recent report regarding bitcoin’s adoption in Forbes: The Coronavirus Cryptocurrency Craze: Who’s Behind The Bitcoin Buying Binge?

Find out more about the businesses that are accepting bitcoin for payments in the HSB Survey: One-Third of Small Businesses Accept Cryptocurrency.



5. The United States must continue to take a leading role in encouraging an innovative cryptocurrency marketplace.   

For the United States to maintain its global leadership in advanced technologies, we must encourage the development of blockchain technology. Given its global implications, blockchain might soon be considered “critical infrastructure” within the new digital economy. China and the European Union understand this and already are well ahead of the curve through initiatives to develop central bank-issued digital currencies. Separately, each has publicly declared they want to be the global leader in blockchain technology and have strategic national initiatives underway. This could enable foreign actors to control the development and standards of systems and governance of technology that will power the digital economy.  Such advances would present a significant challenge to both our national and economic security. 

The Chamber is calling for a National Action Plan for Blockchain, discussing the urgent need for the United States to invest in U.S. blockchain development or risk losing our competitive edge.