Hope, caution greet burgeoning industry’s arrival
This week marked a joyful occasion for Connecticut’s fastest-growing city, and by extension the state as a whole. Stamford welcomed the arrival of a company called Digital Currency Group from Manhattan, with promises to employ some 300 people over the next few years. For a governor embarking on a reelection campaign, it was the kind of sight he no doubt longs to see.
Digital Currency’s arrival, along with that of several other financial services firms, helps make up for the downsizing of other multinational companies that previously had a large local footprint, including RBS and UBS. It was enough to prompt one Connecticut official to declare, “This is like the moment when Connecticut takes off.”
That’s all good to hear. Connecticut’s economy remains in need of a boost. The only outstanding question many in the public might have, however, is what exactly this new company is going to do here.
DGC says it focuses on cryptocurrencies and blockchain technology. Its CEO says its goal is “to remove any and all barriers for people looking for their big idea” and to “create an even playing field for everybody, everywhere.” Newly elected Stamford Mayor Caroline Simmons talked of making her city the “crypto capital of the world.”
We’ve long passed the point where average citizens understand the inner workings of the financial industry. Any notion of that disappeared when the world collectively learned about the likes of creditdefault swaps and other incomprehensible financial instruments in the aftermath of the Great Recession that started in 2008.
But it’s still concerning that an industry we plan to rely on so extensively into the future is so little understood. Simmons and, for example, U.S. Rep Jim Himes, who serves on the House Committee on Financial Services and also spoke at DGC’s welcome ceremony, are smart people who could maybe explain what blockchain and crypto mean in the real world. Most everyone else? It’s doubtful.
That’s why, as we welcome new businesses to the state, a wary eye is also warranted. U.S. Sen. Richard Blumenthal got it right at the same press conference when he said, “As with the internet, (crypto) can be a tremendous boon, but it also potentially raises issues and challenges in terms of stopping excesses and making sure the good guys prevail.”
Deciding who the “good guys” are is always going to be a challenge. It is even harder when there’s a lack of basic understanding of what they’re supposed to be “prevailing” at. There are plenty of smart people who question the entire concept of cryptocurrency as a solution in search of a problem, one ripe for potential trouble.
Regardless, it’s too late to jump off the train now. The financial services industry is evolving, and we need companies that will evolve with it. That makes this week’s news welcome.
Himes predicted legislation establishing a regulatory framework for the emerging industry could come from the House in the next year. That’s something the state, as well as local companies, should welcome. It’s vital to encourage job growth, and getting in on the ground floor to the next wave of internet technology is about the best Connecticut could hope for. But we shouldn’t pretend there aren’t potential pitfalls, as well.