Tag: blockchain

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Congressional Blockchain Caucus Collides With Midterms, Partisan Risk

Congressional Blockchain Caucus

The U.S. House of Representative’s Congressional Blockchain Caucus, a key vehicle for driving blockchain interest in Congress,  may be on the precipice of significant change with midterm elections looming next week.

Among the Caucus’ 39 members, seven are retiring (4 Democrats, 3 Republicans). The remaining 32 members are expected to win their elections. See below.

According to polls for the seven retiring seats, only one is expected to flip to another party: Tennessee’s 5th District where Andy Ogles (R) is expected to win the seat for Republicans replacing retiring Democrat Rep. Jim Cooper. Interest in blockchain tech – let alone the Caucus – by any of these newcomers is unknown at this time.

Caucus before-and-after totals look like this:

    • 117th Congress: 22 Republicans and 17 Democrats
    • 118th Congress: 19 Republicans and 13 Democrats

Next year’s membership seems poised to grow – if its leaders want it to – given Congressional momentum for blockchain legislation. Amidst this backdrop is the original purpose of many caucuses: bringing Members together across party lines on a particular area of interest. The Congressional Blockchain Caucus would appear to be no exception with an aim to both educate and promote to all Members.

Bipartisanship 2023

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Rep. Krishnamoorthi Makes Case for ‘Seat at the Table’ of Crypto Legislation

Rep. Raja Krishnamoorthi (D, IL), who represents Illinois’ 8th Congressional District – a large part of the northwest suburbs of Chicago, asked on August 30 that key financial regulators and digital asset exchanges turn around by Monday, September 12, what they are doing to prevent fraud in the crypto markets.

Another letter from Congress, another deadline unfulfilled?

What it means

Federal agencies may need to prioritize their responses given the expected delivery of reports pertaining to the President’s Executive Order on blockchain technology and cryptocurrency this coming week. For executives at the exchanges, it could be an opportunity to connect with a pro-blockchain industry congressman. Krishnamoorthi is a member of the bipartisan Congressional Blockchain Caucus.

Also, with fall elections ahead and a potential for House committee chairmanships flipping from Democrat to Republican, this may be an effort by Krishnamoorthi to use his perch as Chair of the Subcommittee on Economic and Consumer Policy while he’s got it.

Last but not least, the timing of the release – the week before Labor Day Weekend – helped amplify coverage during a notoriously slow news week and perhaps reinforced the congressman’s goal of having a “seat at the table” in future distributed ledger technology regulation discussions.

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Letters on the Edge of Regulation

Letters from Congress

When it comes to disagreements over crypto and its regulation, DC policymakers have consistently chosen the humble “letter” as an impactful device.

Often signaling a disagreement of some sort between the sender and the receiver, a Congressional letter is like publishing a press release, but with more personalization and a purposeful lack of discretion.

With 4 months still remaining in the calendar year, 2022 has gotten off to a prodigious start among DC letter writers with crypto on their minds. Here is a sample of what we’ve seen thus far in reverse chronological order:

August 23, 2022
From: Rep. Tom Emmer (R, MN)
To: US Treasury
Subject: DeFi application Tornado Cash

Rep. Tom Emmer wrote in an open letter to the U.S. Treasury Department and Secretary Janet Yellen, an appointee of Democratic President Joseph Biden and member of his Cabinet, requesting clarifications about the sanctioning of mixing service Tornado Cash on August 8. A “senior official” summarized Treasury’s case in a quote for The Wall Street Journal: “Mixers are basically an automated money-laundering service.”

Effectively, The Office of Foreign Assets Control (“OFAC”) under the auspices of Treasury had for the first time ever sanctioned code rather than a person or entity. Emmer’s letter identified 7 questions for which he wanted answers including guidance on how OFAC determines that a wallet address might be sanctioned. The congressman’s pithy conclusion offered that the decentralized Tornado Cash mixer may have been used for illicit services, “Nonetheless, technology is neutral and privacy is normal.”

The four-page letter signed by Rep. Emmer was released in a tweet. The Congressman is co-Chair of the Congressional Blockchain Caucus, a U.S. House Financial Services committee member and Ranking Member of its Task Force on Financial Technology,

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Senator Booker May Co-Sponsor RFIA Bill; Stablecoin Bills are “Meld”-ing

Senators Gillibrand and Lumis

This morning at Bloomberg’s Crypto Summit in New York City, Senator Cynthia Lummis (R, WY) and Senator Kirsten Gillibrand, (D, NY) continued their outreach to the blockchain industry with a 15-minute, recently recorded fireside chat on the Responsible Financial Innovation Act (RFIA) with Bloomberg’s Allyson Versprille. The chat featured familiar talking points as well as a deeper discussion on timelines and attainable milestones for their bill and components of it.

The Highlights

Senator Lummis said specifically that the stablecoin part of the bill could “go through” the Senate Banking Committee on which she sits this year led by Senator Pat Toomey (R, PA).

The total RFIA bill will likely take until and through next year said Senator Lummis. Senator Gillibrand emphasized bi-partisan participation on behalf of Democrats noting Senator Wyden’s (D, OR) participation on tax provisions as well as overall participation by Democrats in the Senate Banking and Agriculture Committees.

Continuing to address RFIA’s momentum, NIST‘s cybersecurity piece could move forward on the Intelligence Committee of which Senator Gillibrand is a member. Gillibrand added that she and Senator Lummis are actively educating Congress on their bill. Senator Lummis emphasized bi-partisan education on Senate Banking as well as keeping Republican leadership informed on timelines. She also said, on the House side, that Maxine Waters (D, CA) and Patrick McHenry (R, NC) are “coalescing” on thoughts related to RFIA.

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The Bi-Partisan Slay, SEC and CFTC Need Help, DC Versus Davos

DC Blockchain Summit

It was a remarkable week for the blockchain technology community last week: there were conferences where blockchain was top of mind, congressional and regulatory superstars were involved and engaged, and even some humble pie was served.

Let’s review.

The Bi-Partisan Slay

In a country starved for something-we-can-all-agree-upon, along comes blockchain technology guided by its community and successful in its appeal across gender, race and both sides of the U.S. Congressional aisle. In the process, and appearing in one conference, Congressmen Soto (D, FL) and Emmer (R, MN), Senators Lummis (R, WY) and Gillibrand (D, NY), and Senators Daines (R, MT) and Booker (D, NJ) have dashed to the blockchain rooftop like Santa’s strongest reindeer.

Slay…

Can you imagine this in 2017? How about 2020? Me neither. And yet it’s happening in 2022. The bi-partisan/non-partisan rhetoric achieved new heights at the DC Blockchain Summit with Senator Cory Booker saying emphatically that he sees an opportunity to close the wealth gap in minority communities with the growing blockchain technology industry.

This bipartisan, non-partisan thing is the secret sauce for the blockchain community.

DC vs Davos

Blockchain dollars flowed into Davos, Switzerland, and the World Economic Forum for its delayed annual gathering last week. Given the event’s unspoken positioning as a watering hole for global elites – Davos gives attending companies and organizations a branding element that says they’re global players, too.

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In Spite of Terra, No Stablecoin Regulation Before End of Year

Permissionless 2022

Up-to-the-minute regulatory prognostications attracted strong attendance to a Permissionless 2022 panel discussion in Palm Beach, Florida last Wednesday.

Coming only a week after the TerraUSD and LUNA stablecoin debacle, everyone agreed that decentralized finance (DeFi) is receiving a brighter spotlight than ever. And in the wide-ranging discussion titled, “Regulatory Clouds on the Horizon,” industry advocates addressed the clouds which could rain potential regulation as well as who or what should ultimately be in charge of jurisdiction for the wider crypto ecosystem: the SEC, CFTC or a self-regulatory body.

Panelists included:

Quotes are lightly edited for clarity.

Moderator Jordan Nof of Tusk Venture Partners immediately began with the Terra elephant-in-the-room as Chamber of Digital Commerce’s Perianne Boring revealed that her association’s members are wondering how Terra will affect regulatory momentum, but noted the unique properties of Terra’s product saying:

“What’s interesting about Terra in particular is that it’s an algorithmic stablecoin. For those who have been following stablecoin policy closely, the President’s Working Group (PWG) on financial markets put out a set of recommendations for stablecoins last November – and that [group] included the chair of the SEC, the chair of the CFTC, the Fed, and Treasury. Treasury Secretary Yellen led this effort. The group had a number of recommendations for new regulations for stablecoins -essentially, Congress is going to need to implement these recommendations. The scope of that report and the recommendations was limited to stablecoins that are backed one-to-one to the dollar reserves in a bank account.  Algorithmic stablecoins were outside of that scope. So when Secretary Yellen pointed to Terra recently and said, ‘Look, this is why we need to push stablecoin recommendations forward.’ -to me, I didn’t think that was productive because the recommendations didn’t include algorithmic stablecoins. And I think it gives a lot of fuel to the SEC.

For those who remember SEC Chairman Gensler’s remarks, he started using a different vernacular. He started calling them ‘stable value funds’ (instead of stablecoins), essentially trying to put forward the argument that these are securities and they should be under the SEC’s jurisdiction. So, I think that the SEC could pretty easily say, ‘Look, this is why it should be within our jurisdiction.’

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The National Treasure: Our Data

Eye of Providence

What if there was privacy, but there was still identification -of everything?

SafeGraph CEO Auren Hoffman’s new treatise entitled, “It’s Our Moral Obligation to Make Data More Accessible,” sees a world of opportunity ahead if access to data troves can be unleashed to the innovators of today. Read it here.

As Hoffman begins to make his case, the Silicon Valley entrepreneur twists the knife of “morality” into the reader’s gut:

“We have a MORAL OBLIGATION to get this data into the hands of millions of innovators. Not doing so is a true failing of society. This data can save hundreds of millions of lives and help all of humanity … which means not using it hastens the death of hundreds of millions of people.”

No doubt privacy advocates and related special interests will initially convulse at the thought of opening data stores to hoodied entrepreneurs, well-meaning or not. But after being at the front lines of the digital data revolution, Hoffman has put his reputation on the line and seems ready to fight.

It should also be noted that the treatise fits well within his current company’s mission “towards making our vision (to democratize access to data) a reality.”

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Financial Surveillance and a Crypto Society Meet at SXSW

Filecoin at SXSW

Blockchain technology and cryptocurrency were on full display at the recent SXSW festival in Austin, Texas. For the Filecoin Foundation-sponsored track last Tuesday, privacy was a key topic and included a panel discussion titled, “Financial Surveillance in a Cashless Society.”

AML (Anti-Money Laundering) and KYC (Know Your Customer) requirements are ever-growing in the cryptocurrency space especially as the new distributed ledger technology and traditional finance worlds continue to merge. So, where does privacy fit in? A standing-room only audience wanted to know.

Marta Belcher, general counsel of Protocol Labs and chair of Filecoin Foundation, offered some initial thoughts in a crypto context: “There is this myth that privacy is bad and that tools that enable privacy and anonymity are illegal or enable illegal activity. And I think that is fundamentally a very important misunderstanding. Privacy is absolutely critical to civil liberties, as is the ability to transact anonymously.” She pointed to the importance of anonymity as it related to participants in the the Hong Kong protests of 2019-2020 and their anonymous purchase of subway tickets to get to the gatherings.

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