[Digital Bill of Rights②] The Success of Digital Dollar Comes from Competition

[Block Media Reporter James Jung] Michael Saylor, Chairman of Strategy, published a lengthy article titled 'Prescriptions for Prosperity in the Digital Economy' on X on the 26th (local time).

This article contains specific institutionalization measures on how digital assets like Bitcoin should be utilized for economic prosperity in the age of artificial intelligence (AI). It is divided into three parts, and the full text is published here.

Some subheadings have been added by the editor. Continued from Part 1.

Let Digital Dollar Compete

Digital currency can put dollars in the hands of people around the world and allow those dollars to move at the speed of light.

If we want the dollar to succeed, we should hope that the best companies compete to make the dollar useful. Banks, fintech companies, and technology platforms must have clear pathways to offer digital dollars. Imagine how vast the reach would be if dollar products were embedded in devices and applications already used by billions.

Issuers should also be allowed to compete on yields. Customers should be able to choose from products with different yields, services, and clearly disclosed risks. Policies that suppress yields to protect institutions that pay little or no interest prioritize the interests of those institutions over customers.

My proposal is to allow such competition. If the law prevents this, it should be changed.

The U.S. has the opportunity to expand the utility and reach of the dollar by allowing its companies to create better products based on the dollar.

Introduce Bitcoin to Banks and Insurance

Bitcoin is digital capital. Its utility increases when individuals and businesses can safely hold Bitcoin, use it to efficiently raise funds, and integrate it with other areas of the economy.

Banks should be able to hold Bitcoin under clear and commercially viable rules and provide credit against it. Insurance companies should have practical pathways to reflect digital capital in their balance sheets and product designs. Competition should drive them to improve customer benefits and lower costs.

To achieve this, we need to review accounting rules, capital rules, and supervisory rules that unnecessarily complicate these activities. The 1250% risk weight applied to Group 2b crypto asset exposures under the Basel framework shows how strict current capital regulations can be. I believe policymakers should review this treatment and assess it according to the actual risks of digital assets and related activities.

Holding assets for customers, lending against collateral, and banks holding positions on their own balance sheets are different activities. Regulations should distinguish between them.

As more institutions compete to serve Bitcoin holders, owners will gain more ways to leverage their capital without selling their Bitcoin. Companies will gain funding opportunities, financial institutions will secure customers, and digital capital will achieve higher productivity within the economy.

I expect that the adoption by banks will be a key driver of growth in this industry. As banks compete for custody and credit provision, more capital can flow into the limited market of Bitcoin, a core asset.

Let Tokenization Expand Owners' Rights

Tokenized securities can provide access to equity and credit around the clock, transcending market boundaries. Their greatest potential lies in what they enable owners to do.

Investors should be able to hold tokenized securities directly, transfer them to preferred service providers, and utilize them in a competitive market surrounding custody and credit. Companies should have such rights as well.

Consider an investor with $1 million worth of stocks. Some service providers may offer better funding conditions, others may provide opportunities for returns, and yet others may offer better services. Investors should be able to compare these options and move their assets accordingly.

Self-custody is ultimately important for those choosing custodians. The ability to leave gives customers negotiating power. If assets can be moved, service providers must compete to retain those assets. Such competition can improve services, lower borrowing costs, and return a larger share of the economic value generated by the assets to the owners.

Simply placing securities on the blockchain while locking them within existing closed groups of intermediaries will prevent much of this opportunity from being realized. The goal of policy should be to expand owners' choices.

Protect Financial Privacy

Financial privacy is part of economic freedom. Individuals should be able to live their daily lives without unnecessarily disclosing their financial circumstances, and businesses should be able to conduct their usual business activities in the same way. Protecting this privacy safeguards individuals' safety, corporate business strategies, and the freedom to choose whom to transact with.

My preferred policy is clear. Routine and legitimate transactions below a practically meaningful threshold amount, such as $10,000, should not trigger normal government reporting obligations simply because money or digital assets have moved. Reporting should contribute to clearly defined public interest purposes and impose burdens proportional to risks. Privacy in everyday transactions can coexist with selective reporting and investigation of suspicious activities.

The widely known federal cash transaction reporting rules apply to cash transactions exceeding $10,000, including aggregated transactions under the regulations. This threshold was set in 1972. The U.S. Government Accountability Office (GAO) estimated in its 2024 report that if inflation were taken into account, the threshold for 2023 would have been approximately $72,880. Keeping the threshold unchanged for decades means that increasingly routine economic activities are included in the scope of a system designed for much larger transactions.

Policymakers should raise the outdated reporting threshold and link it to inflation. The digital economy also needs clear protections for routine transfers between individuals and businesses, as well as for routine transfers between individuals and their accounts or wallets. The ability to move assets efficiently while maintaining privacy is one of the factors that make those assets useful.

To be continued in Part 3 of the Digital Bill of Rights

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