Catherine Coley is the CEO of Binance.US. Previously she was head of XRP Institutional Liquidity at Ripple after working for Morgan Stanley Foreign Exchange desks in Hong Kong and London.
Amid the fear and uncertainty of the COVID-19 pandemic, the U.S. government is looking for ways to financially support Americans as soon as possible, even discussing the possibility of universal basic income payments. People need help. At the same time, they need to stay home to reduce the risk of contracting the virus. In delivering emergency payments, the government should be aware of the risks of asking people to pick up money at a bank or another physical location. It should distribute any stimulus package in a way that's sterile, efficient and accessible.
The government needs to look for ways to innovate the antiquated process of distributing checks by mail. In the interests of speed and safety, why not consider sending the stimulus in the form of stablecoins as a means to verify the transfer of assets? Because stablecoins can be distributed digitally, Americans would have immediate access to their funds, alleviating the need to spend hours at a bank to cash a check while removing oneself from a self-imposed quarantine.
Because the digital asset space is new and relatively unknown outside the cryptocurrency community, there would, of course, be some pushback to this idea. A lack of understanding often translates into a lack of trust. Education should go hand in hand with distribution. Both government and citizens would need to be informed about how stablecoins work, how users exchange them into fiat money, and why they could potentially make money transfers easier in the future.
The advantages of using stablecoins are numerous. For starters, with digital assets, recipients do not need to own a house or even have a mailbox to receive them.
Digital assets also prevent counterfeiting or lost checks. President Donald Trump has mentioned the idea of paying this stimulus in multiple installments. Digital assets can be put in escrow to be released at a certain time. Once the asset is addressed to its recipient, that person can send the money to themselves or others without any fees or a waiting period, providing a faster solution than traditional checks.
If the stimulus were delivered via digital assets, every American with internet access, a Social Security number and proof of address could have the ability to access their stimulus. These assets can be distributed to all persons and tracked by the government on a blockchain. Digital assets would be sent and received through U.S. regulated entities and monitored by financial institutions that are already subject to federal and state laws and regulations.
By sending digital assets, the government would free up postal workers and resources needed to create and distribute physical checks or prepaid cards. These physical checks mean cashing or depositing at a time when everyone is expected to stay home. It's also difficult to monitor possible COVID-19 contagion if mail and bank services are operating locally to process checks.
Whether Americans are self-quarantining or reducing human interaction, we need to actively look for ways to reduce the spread of COVID-19. Why would we encourage the hand delivery of hundreds of millions of stimulus checks? This might even violate the government’s own shelter-in-place procedures.
Digital assets can connect to existing banking systems without requiring in-person deposits. There are no fees for depositing them into any bank account from a digital marketplace or exchange. Anyone over 18 can access digital funds sent to them online, which would provide a solution for the thousands of college students who cannot go home for fear of spreading the disease unintentionally, and for parents who need to stay put. Through digital distribution, not only would the U.S. preserve the health of recipients and senders, it would provide more inclusive access and show the world we are still leaders in financial innovation.
The cost of sending checks to every citizen is great, even if we consider that the government may be able drive bulk bargains for itself. Consider that mailing checks to 250 million adult citizens, at an estimated cost of 55 cents each, could potentially translate to $138 million. And this does not include labor costs to prepare and deliver that mail, fuel costs for last-mile delivery, and the health and benefits of employees. Nor does it include the fees for return-to-sender services, the costs of correcting any checks incorrectly sent, any staff hired to monitor and confirm the checks are sent appropriately to all persons, or the staff to gather addresses from the IRS. The direct-to-citizen stimulus would already cost about $350 billion. Why should we spend at least $138 million sending it?
If the U.S. were to incorporate digital assets into this stimulus distribution, we would be the first-mover globally to use digital assets in such a way, ahead of other countries building their own digital currencies. We would send a clear signal the U.S. is prioritizing its citizens’ health while educating and adapting to this evolving digital world.
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