What could the emergence of cryptocurrency and blockchain technology provide to underserved communities?
Increasing access to financial services.
Achieving “The American Dream.”
Closing the wealth gap.
These were the hopeful themes from the Commodity Futures Trading Commission (CFTC) recent roundtable on “Digital Assets and Financial Inclusion.” CFTC Commissioner Kristin Johnson led a wide-ranging discussion that included key Democratic staffers from the offices of Senator Debbie Stabenow (D, MI), Senator Cory Booker (D, NJ) and Rep. David Scott (D, GA), each of whom is involved in current blockchain legislation.
The 1-hour, 10-minute video of the event became publicly available late last week on YouTube along with a statement by Commissioner Johnson.
The roundtable itself was produced the Commission’s Office of Minority and Women Inclusion (OMWI), a requirement of Dodd-Frank legislation signed into law by President Obama after the 2008 financial crisis which crushed many investors including those in minority communities. Beginning in 2010, OMWI offices were established across federal agencies including the US Treasury, SEC and CFTC in order to promote voices which may now be critical to the evolution of blockchain technology and cryptocurrency in the U.S. economy and government.
protecting the consumer
In most crypto regulatory discussions, consumer protections are a paramount concern and the roundtable was no different.
Joshua Lobert, who is Majority Counsel to the House Ag Committee’s Chairman David Scott, said protection for underserved customers begins with education and outreach. But, he noted the government has had a “hard time speaking to underserved communities in the past” making a public disclosure regime regarding digital assets and market participants all the more important (quotes lightly edited for clarity):
“Lots of consumers in historically underserved groups aren’t fully aware of the level of regulation and how – in certain cases – crypto markets can be under-regulated or unregulated. One interesting suggestion that has been made [is that] disclosure should take the form of simple and clear labels -that’s something we’re definitely thinking about. Such labels could inform customers about whether regulatory requirements are met, and also provide critical information to customers and empowering them to make the most of this asset class and its products especially as it relates to communities of color.”
Mr. Lobert’s knowledge is informed in part by The Digital Commodity Exchange Act (DCEA) issued by Rep. Scott’s House Ag Committee and its Ranking Member GT Thompson (R, PA) in May -bipartisan legislation which assigns oversight to the CFTC for cryptocurrencies such as Bitcoin and Ethereum.
a seat at the table
Beyond protections, next steps coming out of the CFTC roundtable illustrate that not only do historically underserved communities see opportunity in cryptocurrency and blockchain technology, they want to participate in the creation of today’s emerging blockchain-related legislation.
Both the bipartisan Stabenow-Boozman “Digital Commodities Consumer Protection Act” (DCCPA) and bipartisan Lummis-Gillibrand “Responsible Financial Innovation Act” (RFIA) were hailed as positive steps forward for the use of and investment in crypto by minority communities.
In particular, Senator Cory Booker’s co-sponsorship of DCCPA and its provisions for capturing the views of minority communities piqued the interests of panelists. From the DCCPA’s section-by-section summary in early August, Senator Booker’s influence is clear:
“Section 7. Report on Historically Underserved Customers Participating in Digital Commodity Markets – Directs the [CFTC] to examine the racial, ethnic, and gender demographics of customers participating in digital commodity markets and complete a report regarding how these demographics will impact the Commission’s rule-making, education and outreach efforts, and other related activities.”
Rashan Colbert, who joined the roundtable and is Legislative Assistant for Senator Booker, provided context on why DCCPA is important:
“We have this chance now at this foundational period to avoid a lot of the inequities that we see probably throughout society, and particularly in the economy and the financial ecosystem. We already know that black and brown people ‘over-index’ as participants in the digital asset space. There are a lot of reasons behind that. I think some inherent characteristics of [blockchain] tech are really attractive: the permissionless nature and so on. There’s also a general lack of trust, based on history of institutions and the government.”
It will be interesting to see if these views collide with progressives who have historically supported under-represented community interests and yet are also among crypto’s staunchest critics – for example, in regards to energy consumption. In fact, consumption reporting requirements for the mining of Bitcoin and Ethereum in DCCPA make an attempt to address these environmental concerns.
Could progressives turn pro-crypto? Some are already. Regardless of political persuasion, enablement rather than unwanted paternalism is an important outcome judging from the tone of the roundtable.
Later in the roundtable, Lucy Hynes, Senior Counsel to Senate Ag Committee Chair Debbie Stabenow provided a broad overview of the DCCPA bill including how the definition of “commodity” is changing to include digital commodities and how consumer protections will be addressed by the CFTC – similar in scope to the Securities and Exchange Commission (SEC) beginning with disclosure requirements. Ms. Hynes explained:
“Disclosures are one of those things that the CFTC in working with the National Futures Association (NFA) do require risk disclosures today. But, there will also be disclosures about conflicts of interest, understanding what these tokens are, how do they work and who’s behind them, and then requiring duties of fair and balanced communication and advertising and marketing standards, which we see that the SEC has rules for today.”
Joi Chaney, Executive Director at the National Urban League called the current opportunity represented by blockchain technology a “frontier moment” to inspire people to achieve the American dream while protecting them from the abuses of others.
She added that empowering underserved populations to achieve self-reliance is the ultimate goal. Regarding protection, like others, she stressed outreach must come from trusted partners rather than paternalistic voices and organizations.
Ms. Chaney emphasized the ability for underserved communities to be in on the “ground level” of the transformational opportunity represented by blockchain technology and cryptocurrency.
Or, as Mr. Colbert said, this may be the “beginning of a new era to do the right thing.”