Crypto in Congress: Rep. Stacey Plaskett
Financial inclusion, economic development, and the role of the House Agriculture Committee in crypto-related policy.
The fourth episode of HODLpac’s Crypto in Congress interview is available now.
This week, Rep. Stacey Plaskett talks about financial inclusion, economic development, and the role of the House Agriculture Committee in crypto-related policy.
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I am your host Tyler Whirty.
Our guest today is Representative Stacey Plaskett from the United States Virgin Islands' at-large congressional district. She is in her third term in Congress, having first been elected in 2014. Representative Plaskett is a member of the House Agriculture Committee, as well as the Subcommittee on Commodity Exchanges, Energy and Credit - which contrary to what some may think, is quite relevant to crypto-related policy.
Representative Plaskett, welcome to the show.
Thank you. Thanks for having me.
So I think a great place to start would be with a bit of your background. You have a unique position in Congress as the, at large representative for the United States Virgin islands. so, please tell us: how did you get involved in politics and make your way to Congress?
This was not a position that I had spent a lot of my adult life thinking about. I really enjoy politics from a policy side, but had not really seen myself as an elected official. I have spent all of my professional career primarily in the public sector as a public servant. And so running for Congress seemed to be an evolution of my public service, taking it up a notch in a way that I felt that I could help my community, utilizing the skills that I gained over time to advance them in the best way. And that happened to be in an elected position.
I started out after law school as a prosecutor in New York and then spent a bit of time working for an offshoot of McKinsey and Co., doing financial and corporate investigations, and then went to back to Washington DC, where I had gone to college and law school to work on the Hill and then work in an administration at the Justice Department.
I then went home, after working for a short stint in the private sector, to the Virgin islands which had always been a goal of mine – and of my family – to give back to our roots, to come back to our ancestral home and work for the Virgin Islands Economic Development Authority.
And while there, I worked on a lot of public private partnerships. I drafted the language for tax increment financing and utilization of new market tax credits in the territory. But I realized that a lot of the issues that we faced were federal and there were impediments to us really growing economically. And that led me to deciding to run for Congress. So this is my third term and I have really placed myself on two committees that I think are very important for economic development. One is the Transportation and Infrastructure Committee and the other is Agriculture. Most people don't really think of those two committees as committees that are supportive of economic development. But, to me, in the Caribbean, those are the really the two pillars for economic growth.
Great, and another thing people don’t necessarily think of when they think of the House Agriculture Committee is cryptocurrency. But, indeed, House Ag, as its called, does play a large role in the regulation of cryptocurrency through its oversight of the CFTC. So can you explain to us what the Agriculture committee does generally and how its activities are relevant to crypto?
Sure. Interestingly, when people think of House Agriculture, they think of animals, they think of nutrition, some may think of food, food stamps, food programs such as school lunch programs – which are also part of the Agriculture Committee – livestock, also forestry. And then, of course, wheat and corn and other things that we grow.
But some of the areas that people do not think of a lot are the two committees where I spend most of my time. I am the chair of the Biotechnology, Horticulture, and Research committee, which does a lot of Agri-tech discussion. We do a lot of oversight in the Agri-tech area, which is genetic modifications, the future of agriculture, how technology is being utilized.
But also I'm in the Commodities Exchange, Energy, and Credit Committee. That's a really interesting committee to me. Most people forget that many of the components of agriculture are actually commodities. And that includes, you know, the things that we think of – wheat, sorghum, soy, and corn.
And so the commodities exchange is a market where various commodities are traded and the Agriculture Committee has oversight over that. When it comes to the CFTC committee or the commodities exchange, of course people think of finance and the Financial Services Committee, but agriculture is really the base of that – where we are looking at agricultural products and raw materials, wheat, barley, and others. But interestingly, the definition of commodities has grown to also include things that we would not normally think of such as Bitcoin and cryptocurrency.
That’s very interesting, can you speak a bit more about how that came to be? And, related, are there special considerations made toward these new kinds of digital commodities as compared to the more traditional ones that you mentioned?
Well, this is an emerging market. And so, providing oversight over something that's emerging is something that members of Congress are still having discussions about, how much oversight is appropriate, how much should be allowed who has entire jurisdiction over that, whether it is the Agriculture Committee or the Financial Services Committee with the SEC
The CFTC – the US Commodities Futures Trading Commission – was first established in 1974 to provide oversight of markets that were previously under the jurisdiction of the US Department of Agriculture. And that was usually the hard market materials that we discussed. But in 2015, the CFTC determined that Bitcoin and other virtual currencies are properly defined as commodities. And that the individuals who create the platforms for the purchasing sale of Bitcoins were in fact, operating a facility for trading or processing swaps and that then allowed CFTC and the Agriculture Committee to have some jurisdiction over it.
So having found the Bitcoin and virtual commodities belong with CFTC, their enforcement of it is usually, at this time, still with classic fraud cases. So in terms of what, how much further we're going to go, we're still looking at it. Many of us, like myself, are concerned that we do not create so much regulations that the industry cannot evolve, cannot grow to maturity. And so I'm interested, like some of my colleagues, in creating a sandbox regulatory framework, the same that's in London, which allows those who were involved in it to have some leeway, have some flexibility, in being engaged in developing the area, while at the same time, having some regulatory oversight to ensure that bad actors or great fraud, or even unsuspecting injuries that others would not even necessarily be consciously trying to do, don't take place. There's still a lot of debate going on as to what exactly that's going to look like. And the discussion is going on in Congress right now.
Got it, thank you - so, you mentioned the idea of a regulatory sandbox. Correct me if I’m wrong but any such effort would need to coordinate among the different financial regulators out there, such as the SEC and CFTC, as you mentioned, but also, maybe even the CFPB – the Consumer Financial Protection Bureau – or other agencies. How do you think about the relationship between those regulators when crafting solutions like you were talking about, who gets jurisdiction and who doesn’t, and stuff like that?
Well, I think it takes a while for it to sort itself out. You know, I think we've done it in the past in other areas. And so it's not as if it's going not going to happen. I think that, you know, part of it will be Congress's responsibility to determine who has jurisdiction. The other of course, will be to the judicial branch: should enforcement become conflicts of interests. You know, that's what we have our judicial branch for. And we're hopeful that they will as well, when Congress is unable to provide some framework and guidance for us in developing who should or should not have proper oversight. And, you know, whether there should be a larger clearing house or some greater oversight over the entire industry, because it's constantly evolving with the advent of blockchain as a process that adds another level of complexity in determining what will be under which committee in Congress's jurisdiction. And of course the environment that we're in, Tyler, with the coronavirus pandemic, a lot of that has been put on hold, but these are some of the questions that we were having prior to the shutdown, a lot of members of Congress were involved in discussions.
Absolutely, that makes sense - but related to coronavirus relief, you - along with past guests of ours on this show - were part of an effort to urge the Treasury Dept to think about using blockchain in order to improve the processes of dispersing funds or tracking other kinds information associated with the pandemic relief efforts. Can you talk a little bit about your involvement with that letter and what your motivation was there?
Sure! So in April – I believe you're talking about the letter to Secretary Mnuchin – members of Congress, most of us are members of the Blockchain Caucus, made a request of Secretary Mnuchin that in his efforts to implement the CARES Act, that he utilizes tools that are already in place for us. And one of those of course, is blockchain and distributed ledger technologies. [We sent the letter] to encourage the Treasury Department to utilize private sector innovations to support the functions of government, to not only distribute, but to track relief programs and efforts. Whether it's for food that is going out, you know, we have supply chain issues for food distribution, for those that are food insecure during this time coming from the Department of Agriculture, to Treasuries, utilization of small business funds, and even to stimulus checks that are going to individuals. Utilizing these mechanisms that are already in place in the private sector can really provide liquidity quickly, securely, and transparently to Americans who need it most during this difficult time.
And related to that is the conversation happening around the Digital Dollar – I know you're not on the House Financial Services Committee, but I was wondering if you had any thoughts on that - especially as it relates to how it might help financial inclusion and economic development.
Sure. I know that last week Steve Lynch and his [fintech] subcommittee on the Financial Services committee – member from Massachusetts – held a hearing on the Digital Dollar. And I know that the chair of the committee, Maxine Waters, along with other members, have introduced legislation particularly regarding the use of digital dollar with the CARES Act and the importance, during this time, to utilize the Federal Reserve Bank to create a digital banking account for the unbanked. You know, the unbanked is something that has been with us for a long period of time, and there have been projects going on to see how we can make sure the unbanked are able, not only to have credit too, but to make purchases that they're unable to, without a bank account. There was a lot of discussion about this in the 90s, you know, when we moved from having checks to going to a checkless society.
I can recall when I was in management consulting, there were studies done on whether that is possible. I even worked on a project that was for the Federal Reserve, talking about a checkless society, paperless checks and whether that is that even possible. And, you know, in 1998, everybody thought that was impossible. And here we are today where most people do not actually own a physical checkbook. And so Congress is, interestingly along with many in the private sector and others who were working on the digital dollar project, coming up with innovative ideas on how to include those who have been outside of the banking system. The unbanked, those who have been left out of the use of banking.
And that is, in fact, to create a tokenized form of the US dollar that operates alongside existing monies and is primarily distributed using existing architecture of commercial banks and money transmitters to create a transaction for those who have not had a banking opportunity before. And Chairwoman Maxine Waters wants the Federal Reserve to be the person that is holding that for others. You know, this is something that is really new. I think it's exciting that Congress is looking into this first. And so we'll see, we'll see what happens at this time.
That’s very interesting, and I’d love to double click on that topic a bit. So you mentioned the private sector and its role in creating solutions for the unbanked. Those things are happening simultaneously to these conversations within the public sector. How do you think about the relative roles of either party - meaning the public sector versus private sector - and maybe how they can both work together to solve what I think everybody agrees is an issue that needs more attention, which is financial inclusion and banking the unbanked?
Well, I don't think that we've had any super innovation in the Americas – we always bill ourselves as the innovators the leaders of innovation building systems – but I don't think any of that ever happens where there is not a utilization of both, whether it be private sector technology into the public sector, or even public sector technology into the private sector.
When we look at GPS, cell phones, whether it's the internet, you know, going back further to space programs, it's all about the technological advances between the public and private sector working together.
Just as an aside, several weeks ago, I was having a conversation with members of Congress – I'm a member of the New Dems, which are the moderate Democrats focused on business innovation – having a discussion with pharma and the leaders of pharma talking about how they're working in cooperation with National Institute of Health, the Center for Disease Control, their counterparts in London and France, all working together for a vaccine for COVID-19. Without that cooperation between the private sector and the public sector, recognizing that this is one time where we cannot be worried about patents or proprietary information and who's going to be the one to take it to the market, there will not be a vaccine in time to really slow down the economic, as well as the public health, crisis that we're facing right now
In the same way that that was done, that's what dealing with the unbanked is going to take. It's got to take a partnership between the public, the private sector and the public. In this instance, many members of Congress believe that it's the Federal Reserve that has the responsibility, as well as the capacity, to be able to deal with this issue. They've been studying this for a long time. It's part of their tenet. And so the Federal Reserve banks working with the private sector is best suited to create some kind of tokenized system that will allow a digital dollar to be utilized for those who have been unable to, to, to be banked before.
And it's probably also really important to ensure that, you know, when we're looking at what's happening right now, with this talks about the Fed, you know, talking about Fed accounts as a delivery mechanism for benefits that individuals may need, right? So rather than individuals getting checks sent out to them, to banks, there are so many individuals who don't have banks, how do they then receive those monies? Are they going to get these cards that you have to activate? What if, in fact, there was a Fed account, which is the idea that Senator Sherrod Brown from Ohio and Congresswoman Rashida Tlaib and Pramila Jayapal have, to use a digital dollar as a delivery mechanism to speed the stimulus funds and other monetary you know, currencies that the federal government are giving out to Americans getting it straight to them.
So, to talk specifically about your home district - the US virgin islands - you know, economic development there is a big focus of yours as a member of Congress. How do you view these discussions about financial inclusion in the context of your district? Frankly, if our listeners here are anything like me, then they might not know much about the Virgin islands so I think that would be very to interesting to learn more about.
Well, I think that the discussions that we're having about access, about the availability of funds, the ability to be banked, are always magnified in a place where people are outside of the mainstream, or don't have the same access as others do. You know, the Virgin Islands is an unincorporated territory of the United States. We are not treated the same. When you live in the Virgin Islands, you lose your ability to vote for president. Myself, as the representative ,I vote in committee, I engage in all the activities of all the member, except for one very crucial point: I do not have the ability to vote on final passage of legislation. And so that affects us tremendously in terms of funding, in terms of our ability to receive equity.
People always try to use the argument, “Well, you guys, you know, don't pay taxes, you keep your taxes.” Well, when you have a poverty rate of about 20%, being able to keep your taxes doesn't really help people, doesn’t help our general fund. It was utilized from the very beginning as a means to keep us in a lesser role. But all that being said, part of the reason that the United States purchased the Virgin Islands is not because we are a great vacation spot, but because of our geographic location. We had geopolitical strategic importance to the United States during World War I. And so we were purchased from Denmark to ensure the German U-boats were unable to come into the mouth of the Caribbean. We are the most Southern and the most Eastern point in the United States. And it's also the reason that seven nations have owned us, because of that same purpose. We, you know, had an amazing land and so we grew an abundance of sugar cane, but we also had a geographic importance to all of the seven nations that owned us. And that has been utilized by others as well.
We have, Tyler, sitting off of the coast of St. Croix, buried on our shore the hub South America and North America. Global Crossing, put there, buried the hub between South America and North America off of the Island of St. Croix because of its geographic location.
So on St. Croix is the greatest broadband capacity outside of New York City, more than Silicon Valley, more than anywhere in the United States. But we're unable to utilize it because of other inequities. We have inefficient energy costs here in the Virgin islands. We have an inability to retain our best and our brightest. And so data service, broadband usage, and others who could utilize this here on the Island, such as Bitcoin operators and others are not as attracted to a location like the Virgin islands. We have a research and technology park, which is trying to advertise that. So the growth of, you know, Bitcoin and the growth of blockchain is something that's really important to the Virgin islands to utilize our raw ability right now, having this broadband capacity to utilize it, to diversify and grow our own economy.
So if any of your members want to come and live in the Virgin Islands, we're a great place to operate any of these kinds of businesses from a US flag jurisdiction and still stay in a climate that's, you know, on average 82 degrees all year round
Awesome, that sounds very nice, sounds like a good trade with DC’s weather. So for our customary last question, obviously we know that members of Congress like yourself are super busy and have many other things going on than just crypto-related issues. So, what are some of your other legislative priorities for the rest of 2020 and beyond?
Wow, great question. So I think one of the things that the pandemic has really brought to light is concerns about food supply and food security. And so my subcommittee on biotech, horticulture and research, which is the largest subcommittee on agriculture, we're really working on how do we ensure that (1) our farmers and those who are in the horticulture space, which is everything that's grown, that is not a commodity are able to continue growing. And (2) how are we able to continue to feed Americans during this time and make sure that no American is hungry.
So that's a subject that I'm working very hard team is spending a lot of time on the other is we have just passed the Invest Act, which is an infrastructure bill that was passed, authored, and put together by democratic leadership. That talks about how do we invest in America.
And it entails some components that are very important to me. One is how to bring broadband to rural and to distressed urban areas. There are so many locations that I think Covid has shown where children have to work virtually, live in a city, and still have no access to internet, don't have access in their homes or in their neighborhoods. And the same for rural children. That it's my belief that the internet is in fact, the railroad for the 21st century and in the same way that the United States invested in supported rail for goods and services, jobs, and the growth of this country, we must make the investment in broadband and make sure that it reaches every home. We will not be continuing to be the innovators and the inventors that we have been in this country in the past. So our team has been working on that, along with how we pay for this tremendous infrastructure, whether it's through an infrastructure bank or utilization of and creating a deferred maintenance fund that continues to update and take care of the investment that we've made in our infrastructure over time.
So those are two of the things that we're working on right now. And of course, for our home, we're always, you know, we were hit in 2017 by two Category Five hurricanes. We still are facing a lot of hurdles in terms of getting approval on the rebuilding of our islands. And so we're looking to still rebuild our schools that we've lost, our hospitals, which are critically important now. So that's some of the work that my staff has been diligently working on outside of that
Great! Representative Plaskett, thanks so much for joining us today. I really enjoyed this conversation and hopefully we can do it again soon.
Thanks so much. And you take care and stay safe.