Chicago has built a global reputation as a leader in financial innovation, with three of the world’s most important exchanges: the Chicago Mercantile Exchange (CME), the Chicago Board Options Exchange (CBOE), and the Chicago Trade Commission (CBOT).
But today, its reputation is at risk of slipping as the next generation of financial technology (digital assets) evolves (mainly) outside our state.
Certainly, Chicago has formed solid roots for digital assets such as blockchain, cryptocurrency, and Web 3.0, but it is not a world-leading way to lead the world with past innovations such as financial futures, options trading and the provision of high-frequency liquidity.
In this next era, there is talent, technology, experience, capital – all the materials. We know how to build and run the world’s best, most advanced financial markets. Already, more than 300 blockchain and crypto startups have called their homes in Illinois, and digital assets startups have attracted more than $1.5 billion in venture capital investment. Chicago is where codes can flourish.
But there are obstacles – the big ones – blocking Chicago’s progress and putting our leadership at risk in the global financial stage. Congress has yet to provide clear and consistent regulatory guidance to the digital asset industry.
As a fintech professor and a longtime observer of financial markets, I believe in the potential that digital finance will drive the global economy. Cryptocurrency, stubcoin, and blockchain-based tokens represent a fundamentally new kind of finance. Unlike traditional banking systems that rely on centralized intermediaries, these technologies enable peer-to-peer transactions, smart contracts, and distributed record management.
Blockchain technology is already beginning to make global financial systems more transparent, more efficient and more accessible, with the potential to better serve the communities left behind by traditional banks.
However, innovation cannot thrive without regulations, and the sustained lack of clarity in regulations is suppressing innovation. Entrepreneurs speculate which rules apply and which regulatory bodies could possibly appear at the door, but consumers are more vulnerable to fraud by bad actors overseas. The US (and Chicago) is not appealing to leading financial institutions, startups and trading companies innovating in digital finance.
Appropriate name Clear actions Moving through the US House of Representatives is an opportunity to change that. This is the single most important law seen by the digital asset industry, providing a comprehensive framework for the industry and protecting consumers without overly compromising innovation.
One of the bill’s key strengths is that it helps define how digital assets are regulated. Not all cryptocurrencies work the same way. Some resemble traditional securities, while others act as commodities. Clarity introduces much-needed coordination between the Securities and Exchange Commission, which traditionally oversees equities and investment products, and the Commodity Futures Trading Commission (CFTC), which regulates goods and derivatives.
Importantly, clarity also allows federal enforcement of illegal use of codes, such as money laundering and terrorist financing.
Edit: Do you have friends at Crypto? Or is it crazy? – Donald Trump
Without clarity in regulations, crypto companies are increasingly choosing more accessible jurisdictions, such as Dubai, Switzerland, Toronto and London. Companies that may prefer to bring operations back to the US are waiting for bystanders, fearing they will be punished for not knowing the rules of US roads that end with clear actions.
Passing the Clarity Act will send you a powerful message. That means the US intends to lead blockchain and cryptocurrency. We support entrepreneurs who are willing to embrace the risks they deserve and consumers. Being ready to write the next chapter of American financial leadership.
With proper policy in Washington, DC, many of that chapters can be written here in Chicago. I urge members of the Illinois Legislature delegation to act decisively by supporting the act of clarity and building a solid framework for the next generation of finances to thrive in Illinois.
Dr. Benjamin E. Van Vriette is an associate professor of finance at the Stuart School of Business at Illinois Institute of Technology and director of the Center for Strategic Finance, where he teaches fintech and quantitative finance.
