Crypto in Congress: Rep. Darren Soto
Check out our first podcast episode with Representative Darren Soto from Florida's 9th District.
Hello!
We’re excited to present the first installment of HODLpac’s interview series with members of and candidates for Congress.
This week we sit down with Rep. Darren Soto of Florida's 9th district to discuss his role in Congress, his work with cryptocurrency legislation, and the future of blockchain in government.
You can also listen to it on Spotify or SoundCloud or read the transcript below.
Enjoy! And be sure to visit www.hodlpac.org to learn more about how to get involved with HODLpac - a community-governed political action committee dedicating to supporting champions of crypto-friendly policy in the United States Congress.
HODLpac: Hello, and welcome to the first installment of HODLpac’s interview series with candidates for and members of the United State Congress.
For those of you who are unfamiliar, HODLpac is a community-governed political action committee with the mission of supporting candidates whose policies would promote the development of cryptocurrencies in the decentralized economy in the United States.
Much like the crypto networks we want to see thrive, HODLpac relies on the participation of the community.
Those who donate, decide which politicians we support.
If you'd like to learn more and get involved, feel free to visit us at www.hodlpac.org and follow us on Twitter @HODLpac.
I am your host, Tyler Whirty.
Our guest today is representative Darren Soto from Florida's 9th District. He's a member of the House Committee on Energy and Commerce as well as the Committee on Natural Resources. Since being elected in 2016, Representative Soto has been one of the most active supporters of crypto in Congress.
He's a co-chair of the Blockchain Caucus and has sponsored or co-sponsored several relevant pieces of legislation, including the Digital Taxonomy Act, the Token Taxonomy Act, and the Virtual Currency Consumer Protection Act.
Representative Soto, welcome to the show!
Rep. Soto: Tyler, thanks for having me. This is obviously a really critical topic for America’s future.
HODLpac: To get us started, I was hoping you could tell the HODLpac community a little bit about your background. What drew you into politics and how did you end up as Florida's ninth district Congressman?
Rep. Soto: Sure, so I ended up moving to Florida along with my family around 2000 from New Jersey and was going to law school around that time at George Washington University, and started interning for a distant relative of mine in central Florida. And so as I finally graduated, I ended up joining the Young Democrats to meet people. Now I had no idea that would lead into a political career. I thought I’d go to Florida to work, to have fun, and to play some music. And I still get to do a lot of those things, but along the way joining the Young Democrats meet folks and to build connections for my law firm. I ended up volunteering for races, then I was managing races. From there I became a candidate myself, and won, and found myself in the state legislature at 29 years of age. Served a few terms in the House, a few terms in the Senate, and then when the opportunity came about for an open seat for representing central Florida in Congress, I jumped at the opportunity. It was a big battle, and I am honored to be in my second term serving Florida’s 9th congressional district, including parts of Orange, all of Osceola County and parts of Polk County as well.
HODLpac: Well, great. And if I'm not mistaken, that makes you Disneyworld's congressman?
Rep. Soto: I have part of Disney World. So, a lot of the environmental land they have, then a place called Wide World of Sports, which happens to be in the queue to host the entire rest of the NBA season soon. So we’ll go from having no professional sports teams in Florida’s 9th to having all of them from the NBA. We may even get the Major League Baseball opportunity as well. Obviously we are all struggling from COVID-19 and the response, but that is one thing I know the constituents are proud of, being able to host them. But most of the parks are in Congresswoman Val Demings’s district - an amazing member- along with Stephanie Murphy – we represent central Florida together.
HODLpac: I know I'm excited for the NBA to return. So thanks to your district for that.
You're a co-chair of the Congressional Blockchain Caucus. I was hoping that you could explain what that is, what you do with the other members of the caucus, and what it all means for promoting crypto’s interests in Congress.
Rep. Soto: Certainly. You know, when I was in my first year in Congress I was not on any of the technology committees yet. I witnessed Mark Zuckerberg get interviewed in committee meetings, and it became reallyclear to both my wife and I – we had a conversation that night after the hearing in the House and the Senate – that Congress really didn’t – a lot of folks didn’t particularly understand technology. And it became really evident in the questions. So we decided that focusing on technology would be an important part, along with my work in a lot of environmental issues, issues related to space, and a whole host of issues across the nation. And so as I looked to get more involved in technology, there were a few areas that I focused on. Artificial intelligence and blockchain technology, when used together could solve some of the world’s most difficult problems because AI goes beyond our comprehension to be able to use quantum computing, and then blockchain is what makes the data safe. It’s a fixed ledger that you can’t change afterwards. And of course one of the great applications of that is in cryptocurrency. So I jumped at the chance to be one of the Co-Chairs of the Blockchain Caucus, which is a bi-partisan caucus. And over the course of the end of my last term, I co-introduced the Token Taxonomy Act, establishing some of the jurisdiction definitions for cryptocurrency. We finished the job by re-filing that and adding the Digital Taxonomy Act so that we could establish the definitions between the CFTC, the FTC, and the SEC, and establish the unique jurisdiction and a new financial asset. That would be the first time in decades that the United States actually defined a new financial asset. That came about through the input of the blockchain and cryptocurrency community – that really cryptocurrency can be a commodity, it can be a currency, it can even sometimes be a future or a security. So we defined all those in those two bills. I serve on one of the committees that has jurisdiction over the FTC, the Consumer Protection Committee. Then Warren Davidson, who is my co-introducer serves on the Financial Services Committee and FinTech, which has jurisdiction over the remainder of it. So that’s our main goal right now as we clock little victories here and there to advance the cause to establish certainty and make the United States a competitive jurisdiction for cryptocurrency.
HODLpac: Yeah, you touched on a few things in that answer that I would love to follow up on. In my introduction, I mentioned that you are the co-sponsor of the Digital Taxonomy Act as well as the Token Taxonomy Act. I was wondering if you could describe the goals of both pieces of legislation, how they're related, and where they stand currently.
Rep. Soto: They together make up the creation of an entire regime to establish jurisdiction across those agencies and definitions. There’s two bills because we wanted to strategically make it easier so that one would be referred to one committee and one would be referred to another, rather than have one bill referred to both committees – that makes it much more difficult. The one bill addresses the FTC and CFTC side - that is the Digital Taxonomy Act, and that goes through the Energy and Commerce Committee that I serve on. The other bill finishes up the rest of that spectrum that we need to define and establish jurisdiction over, and that deals primarily with the SEC. That would go through the Financial Services Committee. So, it’s by strategy – legislative strategy – that we split the bills up into two. But together, they could be viewed as one larger effort to establish the whole spectrum of what cryptocurrency could be, since it can be more than one thing as we just discussed. So our main goal is to create certainty. You have half the cryptocurrency startups in the United States or more spending more than half their money on lawyers and on compliance – that’s a problem right now. And I say that as a commercial lawyer. But we want you to spend it on research, on development, on making you systems more efficient. And the real reason there is so much money to be spent on compliance is because there isn’t a fixed set of rules right now. Right now, the agencies are trying to fit cryptocurrency into 1920’s and 30’s style definitions that simply don’t really capture this very dynamic, new financial asset. So the proposed laws recognize that.
HODLpac: I think it's safe to say a lot of people in the crypto community would agree with you on the need to bring regulatory compliance costs down. So thank you for your leadership on these issues.
You spoke about a little bit about the legislative process and legislative strategy. I know one area that you've been really active in is the appropriations process. I was wondering if you could help us understand: first, what is the appropriations process and, second, how can it be used to advance the goals you were just describing? In other words, how can the goals of the blockchain caucus be accomplished through the appropriations process?
Rep. Soto: Sure. So Appropriations is basically the process where we appropriate funds. It’s one of the main powers that Congress has, along with writing laws and oversight. And it’s one of the ways we exert our checks and balances on the Executive Branch and on the Judiciary. This is basically where we spend the money that the taxpayers put together – all of us put together – to help fund the many efforts of the nation. And of course the President and the Executive Branch run the day-to-day government. Through this though, lots of law is put into the appropriation bill, which itself is a law. So we have used the appropriations process to advance certain smaller victories in the meantime that continue to move the ball forward as we are fighting for the bigger effort of passing the Digital Taxonomy Act and the Token Taxonomy Act. Some of those efforts include getting the IRS to provide further clarification on the de minimis rule, which I know is important for a lot of the small trades and transactions for cryptocurrency. I know there is still further definition and certainty that people want, but we’ve at least gotten them to report on some of that already. We in addition got included language from the CFTC and FTC on combating fraud and promoting competitiveness. Right now we are working on the potential of a Blockchain Center of Excellence that would be in the Department of Commerce, or potentially in other departments if our peers in the Senate or the White House urge us to. But we figure if we can get a specific agency to look at blockchain – including cryptocurrency – among many other informational and research applications. But that would also help advance our competitiveness. Then in the larger blockchain space we’ve worked on quantum computing language that we’ve gotten into the budget to help the Department of Defense utilize quantum computing, and also for them to do presentations to the Armed Services Committee on the uses of blockchain in the military. And this is a big – this is a huge part of it because when we look at some of our competitors – our rivals – they’re certainly not our enemies, but places like Russia and China which are our economic rivals, we work with them on some things but we have different interests than them on others, and we have different values. We’re a liberal democracy that has profound civil rights. We need to make sure that our military technology is being developed here, and that we don’t have foreign nations spying on us. And the future of the military defense is going to be more than planes and aircraft carriers. It’s cybersecurity, it’s space, it’s supercomputers, it’s so many different ways to protect our nation beyond the traditional wars we’ve seen in the past. So a lot of this is really important to protect our nation as well as to keep us economically competitive.
HODLpac: So, following on that thread of economic competitiveness, as you know, your colleagues on the House Financial Services Committee recently held a hearing on the digital dollar. So I was wondering if you had any thoughts on that topic specifically as well.
Rep. Soto: So I'm generally supportive of any efforts to expand cryptocurrency, including a digital dollar, it just would have to be done right. I caught some of the headlines from the committee meeting and I’m still kind of digesting some of that, but I do also need to say that the private sector really plays a huge role in this and needs to continue to lead the way. We've had parallel currencies or alternate currencies for generations. Think of gold, for instance. Of course, we have a foreign currencies that that you could exchange at any time, but where cryptocurrency really has a real advantage – particularly private sector generated cryptocurrency – is removing the transactional costs and the economic frictions for small transactions that are international. So, if a small robot producer in Orlando wants to do business with someone in Africa or Australia, they have to exchange funds, they may have to do it through money order, all these different things. But, if they were both utilizing the same cryptocurrency, they'd be able to do that transaction with far less transactional costs associated with it. So the digital dollar, I don't think is going to be doing that kind of work. It would just be another form of a dollar, to give people options. I mean, we really already have digital dollars. I mean, when's the last time you used cash? You know, most of it is debit cards and credit cards already. I think, you know, eventually it could be a positive idea as long as we're not crowding out some of the other major advancements, which is our private sector leading the way with other exchanges of cryptocurrency that can harness the advantages avoiding these transaction costs that make it harder for small businesses to do business abroad and in a more secure fashion, because it's a fixed ledger. So it's impossible, at least under current technology, to go in and conduct fraud later on.
HODLpac: Back to your previous comment about the appropriations process, you were the leader of a recent effort to send the Treasury Department a letter about using blockchain technology to solve some of the problems that we've seen on full display during the COVID-19 pandemic. Namely, some of the shortcomings of government when it comes to, for example, tracking and publicizing information and distributing funds to citizens. Can you talk a little bit about that letter, how that came together and kind of what your goals are with that?
Rep Soto: Sure. And I alluded a little bit to it already but the main goal is to harness artificial intelligence, utilizing blockchain and the important fixed ledger that it brings, to have decentralized research efforts and data points to solve some of the worlds and the nation's most difficult problems. For instance, coordinating between suppliers of personal protective equipment during this pandemic and the hospitals, businesses, and other healthcare centers that need this personal protective equipment. And so right now we're using basically 20th century technology through the Pentagon that the military has used to handle these logistical and procurement issues. We think we can do better and that we should try at least with pilot programs to take on part of this using a new systems. And so we filed a letter. It was one of two letters that the blockchain caucus got really involved in, in our pandemic response.
So in addition to tackling the supply and demand of personal protective equipment, we suggested treasury about utilizing cryptocurrency to help pay stimulus payments. You got to start somewhere, so they obviously didn't do that, but the fact that you had Treasury respond to it in the media and people have started thinking about it, who knows? We may have under the HEROES Act that we're contemplating right now, another round of similar checks, we may not. We'll see. But, at least they’re thinking about it as we look to another round of checks. And this certainly won't be the last time that the government is refunding people money or paying people, a stimulus check, you know, and people get tax refunds each year. So there's going to be opportunities going forward. At least we're getting Treasury to think about what that look like to allow people to get their similar checks or potentially tax refunds in the future through cryptocurrency.
And then, of course, harnessing blockchain in general on to solve these complex problems like personal protective equipment during a pandemic. But we could equally see making our healthcare system more efficient, even combating climate change, by having a decentralized system with the integrity of blockchain that researchers around the nation could put input into and use artificial intelligence to try to analyze that data, to make us be more efficient and more effective in some of the world's most difficult problems that in certain instances really are beyond even human comprehension. So, there's a lot of exciting things that slowly but surely we're getting the federal government to do. And a lot of that, as I mentioned, has been through the appropriations process of getting somebody some of these smaller victories done. And of course we have some more ambitious plans with the Digital Taxonomy Act and Token Taxonomy Act.
HODLpac: So, that letter was a bipartisan letter. At HODLpac, we are nonpartisan. We plan to support both Democrats and Republicans. One of the things I am curious to ask you about as a member of both the Congressional Blockchain Caucus, as well as the Congressional Progressive Caucus, is how do you think about how crypto aligns with progressive goals?
One of the most exciting things about crypto – and one of the things that we're experimenting with at HODLpac – is how it can enable new forms of social organization. I think a lot of people are excited about thinking about crypto networks as the new kind of cooperatives and as an evolution of, for example, corporations, in a digitally native format. I was hoping you could speak a little bit about that. And whether you've had a chance to talk with any of your colleagues that maybe not aren't as interested in crypto as you about the prospects of crypto in general.
Rep. Soto: Sure. So you'll see some progressives and even some libertarians on the right side of the spectrum have a keen interest in cryptocurrency. I can tell you from a progressive perspective, economic disparities in our nation represent some of the biggest challenges that we face. And so anything that can help the smallest of businesses, to help folks be able to do business and to have access to even small amounts of capital so that they can support their small businesses and be able to do business internationally, can help with closing this economic gap. I mean, we see literally the top 1% of the nation has more than 50-60% of the wealth. And when we add it to the top 10%, now we're talking 80% of the wealth. So we have challenges and we're a democracy and we believe in capitalism. So we don't just mandate to fix that, but we do have responsibility to enact policies, to help give more economic opportunities to Americans across the nation.
And I believe that this is a great way for small businesses to be able to excel and expand their business both nationally and internationally, and also giving more creative ways to be able to build capital. It's no secret in this country that for so many Americans, their biggest obstacle to starting their small business is access to capital. And so allowing this and imagine just adding in crowdfunding as well, and you could have multiple people across the nation invest in a small business, small dollar amounts, but it could be enough for that business to get off the ground when a traditional bank or credit union may not approve them for any lending. So I view this as a key part of closing the wealth gaps that we have in this nation.
HODLpac: And for our last question, we know members of Congress like yourself are very busy. You have many other things on your plate besides crypto related issues. So, what are some of your other legislative priorities for 2020 and beyond?
Rep. Soto: Right now, my legislative priorities are really to meet the moment we are in such a unique and challenging time. 2020 has shocked us all. I think we all, as we're riding through and understand that, so my priorities are to meet the nation's priorities right now. We have to a cure and a vaccine to COVID-19, we need to bring an economic recovery back to central Florida and to the nation, and really lead the world back to economic prosperity. After the murder of George Floyd, we need serious reforms to justice and policing. And so we filed the Justice and Policing Act of 2020 that we’ll have the privilege of voting on next week. As we all proclaim as Americans that Black Lives Matter.
And locally, a lot of it will be continuing to develop the high tech economy and diversify the economy in central Florida. We are a tourism area obviously, and that is our biggest industry, with Disney and Universal and Sea World, and so many others. But we also have the busiest spaceport on earth at Cape Canaveral, right in the area. And we also have virtual reality and simulation and training on jobs that we do. We do most of the simulation training programs for the military in central Florida. We have a huge aerospace industry that goes hand in hand with the space industry and then emerging biotech. So a lot of my priorities locally are to be able to increase higher paying jobs for the region by boosting those tech sectors.
Which is also why this issue is important. We certainly encourage any new entrepreneurs in the crypto space or people looking to live in a beautiful area. You're going to find few areas that have a decent cost of living and beautiful weather and great tech background, like the University of Central Florida University of Florida, in other areas of the nation. So we welcome you all to come to central Florida and to make it your home as well. But those are really the things that occupied my, my efforts right now, as we meet these tremendous challenges that our district in central Florida, our state, and our nation face.
HODLpac: Great, thanks so much for your time today, Congressman. Hopefully we can speak again soon.
Rep Soto: Thanks for having me, Tyler.