Crypto in Congress: Rep. Ted Budd
Promoting innovation in the United States, Libra, and the rapidly changing financial services landscape.
Hello!
The third episode of HODLpac’s Crypto in Congress interview is available now.
This week, Rep. Ted Budd talks about promoting innovation in the United States, the Libra drama in DC, and the rapidly changing financial services landscape.
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 third episode of HODLpac’s interview series with candidates for and members of the United States Congress.
HODLpac is a community governed political action committee with the mission of supporting current and future members of Congress whose policies would promote the development of cryptocurrencies and the decentralized economy in the United States. Much like the cryptonetworks we want to see thrive, HODLpac relies on the participation of our 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.
I am your host Tyler Whirty.
Our guest today is Representative Ted Budd from North Carolina’s 13th district. He is a member of the House Financial Services Committee as well as the Task Force on Artificial Intelligence. Representative Budd has introduced or co-sponsored several pieces of legislation relevant to crypto, including: the Virtual Value Tax Fix Act, the Financial Technology Protection Act, and the Token Taxonomy Act.
Representative Budd, welcome to the show!
Rep. Budd:
Thanks Tyler for having me. I appreciate it.
HODLpac:
Absolutely. Thank you for joining us. So to start off our conversation, it’d be great if you could tell our audience a little bit about yourself. How did you decide to get involved in politics and represent North Carolina’s 13th district in Congress?
Rep. Budd:
Yeah. And, again, thanks for having me – I appreciate all your guests and what all you do. This really goes back to North Carolina having a real history in the courts of redrawing its districts. You could go back on Wikipedia and look that up if you want, but they redrew in 2016. Normally they have a census every 10 years and they redraw the following two years after the census. So, we'll have a 2020 census and, in 2022, we'll have new districts, they'll reset the 435 districts. But because of the courts they redid them in 2016 and they drew a brand new district, right on top of where I lived, with nobody that was an office. And so seventeen of us signed up to run that were Republicans and five Democrats, with 22 total.
I signed up to run but around that time I was asking my family and said, look, this is what it looks like to run and this is what it would look like if I won. And my kids were four or five years younger at the time. And I said, “are you are you guys okay with this?” And my then 16 year old (now 21 year old) said “Look Dad, I think it should be cool. You should do it.”
So, and everybody was in agreement because you got to have your family behind you and your friends behind you and you don't want to create resentment at home. And so that's really it, it stems from the redraw, but I had in mind my family’s support and that was really motivating.
I also thought that I can make a difference, the farm background combined with business experience and being entrepreneurially minded – I think that was a great combination.
And it ended up working, it helped with navigating through the 22 opponents, and it seemed to be what the country was looking for and my district was looking for at the time.
HODLpac:
That's awesome. You got the permission from your most important constituents first, I guess.
Rep. Budd:
Absolutely. My wife and kids. You don't want to run without them.
HODLpac:
Yeah, so to kick things off, I wanted to ask kind of a general question: I know that promoting innovation in the US is very important to you, so as a member of Congress, what is your view on the role Congress plays in promoting innovation as well as the role agencies play in promoting innovation, especially as it relates to cryptocurrency?
Rep. Budd:
So, one of the things we do in Congress is actually about a role of pushing back. I want to make sure people understand law in general: law is negative. Now that doesn't mean that I don't have a positive personality in the way I approach life, but law is about saying, “alright, this as a society are the things we've together agreed that you can't do.” We don't want to be in the business of permitting people to do certain things. So, I want to make sure we are aren't out there saying, “alright, you guys can create blockchain or cryptocurrencies.” We want you guys to invent things and we want to be able to understand it so that we can have smart policies around that. And that's really what we do. So all law, in essence, if it's proper law is negative.
But with the agencies, they're essentially the enforcement mechanisms. We're [Congress] not enforcement. We don't carry badges. We don't want to do that.
But we want to be representatives, because we are a republic or a representative democracy. And so from the 435 congressional districts around the country and everyone on the Senate side – two from each state, regardless of population – if it navigates through us and navigates through them and gets on the president's desk and gets signed, well that's law. So, it's a slow process by design. It was meant to be inefficient, but once that law becomes in effect, now you have to apply it. And that's where the regulatory bodies come into place or the agencies. And so you know, the SEC and other agencies – whatever would be relevant to this call – those are the ones that apply what we decided, in Congress, into, you know, the life, as we know it.
HODLpac:
Specifically related to Congress's role in cryptocurrency policy, one of the things that you've been very active in is attempting to clarify our country's tax regime when it comes to the use of cryptocurrencies. A couple of the bills that I mentioned in the intro - including the Cryptocurrency Tax Fairness Act and the Virtual Value Tax Fix Act - both have to do, as one can tell from the names, with taxes. So if you could tell us a little bit about those bills and what their current statuses are, that would be great.
Rep. Budd:
Yeah, thanks Tyler. One of the things I'm really looking for – and this is regarding cryptocurrencies and even beyond and I've never understood this more than now having been in Congress and it really made a lot of things click coming from a business background – is how important clarity is for those that are making decisions.
So, these two bills, the first being the Cryptocurrency Tax Fairness Act was introduced last Congress. Unfortunately, a lot of these things, they get assigned out to different committees – there's about 18 different committees. I'm on the Financial Services committee, which is mostly banking and insurance and FinTech and reg tech, but it also got assigned to the Ways and Means committee, which is an old term for taxation. So it didn't move past Ways and Means and it kind of got stuck there. But what it would have done is exempted cryptocurrency transactions from the IRS’s reporting requirements if those transactions were below $600, and then that number would then be pegged to inflation every year. We just want to treat them like regular transactions.
And then the Virtual Value Tax Fix Act that I introduced in Congress earlier, that's been also referred to Ways and Means committee. And this bill allows for an exclusion of gain or loss for income tax purposes of like kind of exchange of virtual currencies that are completed prior to 2025. So we think those are two good bills. So if you want to look those up on congress.gov, again, they are the Cryptocurrency Tax Fairness Act and then the Virtual Value Tax Fix Act. Just two smart things that I think all of us could probably agree on.
HODLpac:
So to step back for a second, you were a part of the famous 2018 crypto roundtable at the Library of Congress. We previously had Congressman Davidson on the show and he shared his perspective on how that came together. One of the things I wanted to ask you about is what your perspective on that was - What was your involvement, what were your biggest takeaways, and how has that informed your policymaking since then?
Rep. Budd:
Yeah, that was a great panel. It's hard to believe that was back in 2018, but a big shout out goes to a real friend and a real expert on this: Warren Davidson. He hosted the event, he put it together, and it was bipartisan. And this is one of the great things, in a partisan world, that we all see: whether we're in the crypto space or not, we care about our country and this is one of the things that we can come together on. But, you know, he hosted this and it was the people in the room that were either traditional banks or FinTech or crypto related, it was just fantastic to see. It was really informative. I mean, we were on the panel, but I felt like I should be in the audience, just gathering more information and getting a better understanding of this.
But it allowed a really open discussion. It allowed for greater understanding and appreciation of the subject of crypto, and it really increased my understanding and appreciation for something that I think is vital now, but will be even more so in the future when it comes to crypto and blockchain.
It's not a hidden secret that a lot of us in Congress weren't fully aware of the capabilities of these technologies. And some of that's not about if you're pro-tech or not, it's generational. And if you're older, you may not be familiar with it. And if you're younger, it may be more natural, you might have Coinbase on your phone but hearing the concerns of industry leaders about the lack of clarity – made a lot of sense to us.
I think the US government's priority in this space has to really be about bringing clarity while also creating real framework that allows for more significant American innovation. We can't let what you guys are bringing to the table, move off shore. I think we need the United States to lead in this, and at least have the framework where you guys can do the heavy lifting without being impeded.
HODLpac:
Absolutely, and as a follow-up to that, what are some of the ways that you, as a member of Congress, stay informed about the crypto industry. And I guess more broadly, you know, as you're trying to learn about how to update laws in other areas, how do you stay up to date on innovative industries in general?
Rep. Budd:
So, a lot of this revolves around staff. In Congress, it might look like it's just us but we have about 15 to 18 of us on that's in the district back home and up here in DC.
We have one or two that focus on these issues of tech and, for me, financial services. So, I asked them to make sure that you're keeping me informed by, first, making sure we talk to the right people and we say yes to these meetings and we make sure that you're in our offices telling us what is important to you.
And so hearing that, you start picking up themes about what's really important. You start understanding the vocabulary better and understanding the underlying concepts to it.
I do a lot of reading. You guys might be dropping off books. I try to read what I can, I read articles, Google alerts, etc. And then just being generally interested, it's kind of like having your antennas up to receive the signals of what's going on related to blockchain and cryptocurrency.
I would say as a personal goal, I'm very pro-tech, even before I came to Congress – it's a fascination of mine. So I'm going to be able to, whether I'm in Congress or out, to pick up concepts pretty easily. Even though I might have to stop and research a little thing before I grab it, but I think it's been very eye opening being here for the last three or four years.
HODLpac:
Yeah. That makes sense. And I commend you because, you know, even as somebody in the industry, it's definitely hard to keep up with everything going on. One of the hopes I have for HODLpac actually is to kind of help facilitate that information flow.
So switching gears a bit, one of the biggest stories of last year was Libra, especially as it relates to innovation and financial services - which are two areas you've said you focus on. Can you walk us through kind of how your office first heard about Libra and you what the reactions were like on the Hill? I know it made a big splash in DC.
Rep. Budd:
Yeah, it really did. And I'm trying to think, it's like, when you started asking the Libra question just now, about eight different angles of how to approach this question came to mind, because if you walk back to when it served, we were dealing with so many issues regarding Facebook, regarding privacy, election security - “are they biased or are they not?” I think they are, but, and then there's this kind of like, “alright, we're all in the tech space here, but these guys own maybe too much, and it's not egalitarian, so how do we think about Facebook?” Like, Zuckerberg, when you think about him starting out in 2004, he's an entrepreneur like all of us have been – at least probably on this call – at some point in our lives, so kudos to what he's accomplished.
But when it comes to Libra: is it really a cryptocurrency or is it a representational basket of other currencies?
And that's really what it is. And so everybody thought, “Oh, it's just it's just like Bitcoin, except it's now Facebook's version of it.” And I said “no, let's break this down.” And so I'm able to go across party lines and just say, “look, let's look at this a little bit differently than you would Bitcoin, because it's not the same and though it uses technology, it really just represents other currencies.” And the currencies can be switched in and out over time, we're not really sure of the method.
But I think Facebook was absolutely brilliant when it came to Libra, because essentially they published a white paper, they dropped it on the market and in the press and everybody went nuts over it. Some people, I'm sure, support it: Libra as the currency and Calbra, which is the wallet around that. And then they got to hear all these objections. Mark Zuckerberg got to come in and have a hearing where people asked him questions – whether they knew anything about it or not – and then they got to beat up on it for, I think, a day or two days. Which is brilliant because, you know, it's like back when we were in college and we had one of those professors that lets you turn it in early and they mark it up for you. That's essentially what Facebook did.
And now we've essentially marked up his paper for him, his white paper. Now they get to know where all the hotspots are politically so that they can advance on it if they wish to.
I think there were 28 co-investing companies along with them at the time and a lot of those have pulled out – and then I think because of COVID and other things, it's kind of lost a little bit of love – but it's still on the shelf. It's still there. And they are a lot smarter now thanks to Congress and a lot of other people because they dipped their toes in the water back then.
But you can't conflate Libra as a cryptocurrency. It's very different. And I just think there's a lot of lack of understanding. I think it elevated the understanding, but I think it really showed how far a lot of Congress has to go before they get a grip on things like Libra, into the wallets like Calibra and then other cryptocurrencies.
HODLpac:
Yeah, absolutely. I will say though, I think a lot of people were impressed by members of Congress who were able to make the same distinction that you just outlined there. So I think that was that was a positive. But it definitely does show that there's a lot of financial innovation happening these days and a lot of different areas, you know from traditional FinTech you know, to things like Libra and the things like, you know, of course you know, Bitcoin
Rep. Budd:
I think it's funny when you just said traditional, you just said traditional FinTech, which is awesome because that shows you how fast things are moving. Fintech is new in most spaces, but, you know, when you look at it as traditional that it shows you how fast things are in your world.
HODLpac:
Yeah, absolutely. Very true, there's so many different things going on in financial innovation, generally. And I guess one of the tasks that you have in Congress is to make sure that you know, regulation applied to any one thing within that spectrum of financial innovation doesn't necessarily get in the way of others.
I think some members on the other side of the aisle reacted to Facebook's Libra announcement or the Libra announcement generally by floating the idea of restricting companies of certain sizes from getting into financial services. I forget the name of the bill, but that was an effort that sprung up around the time of Libra. I think you spoke out against those efforts and I correct me if I'm wrong, but, what was your reasoning there? How do you think about the changing landscape of financial services generally, and as somebody on the Financial Services committee, how do you make sure that policy directed at one thing doesn't leak into another area?
Rep. Budd:
So, a lot of our role here is just to push back against bad ideas. And there's a lot of things which folks may want to do, you know, with good intentions, and it could be on either side of the aisle, but they really end up with bad consequences. If you lock down and your anti-technology, eventually you're going to force a technology overseas. It's going to end up in Estonia. It's going to end up, well, probably not Hong Kong, you know, maybe last year about Hong Kong, but not now or. If you think about China as a whole, it may end up there. But we don't want this [innovation] to be in Singapore or China or Estonia or somewhere in in Europe. We want this to be right here in the US. So I have to make sure that we, have light touch regulation that makes sense. That encourages people to want to come to the US, we don't want to make this a hard place to do business. So that's really what's behind it.
Yeah, my personal bent is pro-technology, but at the same time, let's not make the US a hard place to do business. I think those two things work very nicely together, and that's the framework out of which much of my approach is.
HODLpac:
Great, so one of our final questions is, I think, related to that previous question. You’re on the Task Force for Artificial Intelligence and that doesn't maybe directly apply to cryptocurrency, but I definitely think it fits into some of the themes that you've been talking about. So can you just explain what the Taskforce does? And then, second, talk about how it may or may not overlap with some of the other areas that, that you've been spending time on.
Rep. Budd:
So the House flipped from Republican control to Democrat control. So my understanding – a little bit of inside baseball – was that there were a lot of promises made to who was going to be the chair of this one subcommittee underneath Financial Services. However, because it was over-promised there wasn't enough to pass around so they actually split it from just technology into FinTech and Artificial Intelligence.
So, now I think it's been somewhat over parsed because of our jurisdiction. But I love AI. I think it has so many applications when it comes to regtech and FinTech. But you know, I just think you shouldn't necessarily separate those two.
Look, I want to make sure that we're not making this a bad place to do business – like I said before.
But I want to look out, we're having very early conversations about what's going on in quantum computing, how can we make sure this is US centric and not China centric. We now know that China is not our friend. We've seen that when it comes to when it comes to COVID and open sharing information and perhaps restricting critical medications to the US. It's a hostile place to do business.
And basically Tyler, everything is about making the US strong. I would love to be the smartest one in the room when it comes to this, but I'm not and I want to make sure that those who are have an easier pathway ahead and that we're not in the way when it comes to the U S government.
HODLpac:
Great, so I like to end with this question, and we've talked about it a little bit already, members of Congress are very busy and they have a million things on their plate besides, crypto-related issues. So, what are some of your other legislative priorities for the rest of 2020 and in your next term?
Rep. Budd:
Yeah, great question. Because again, we'd love to be able to focus and the focus tends to be in Financial Services where my committee is.
But, right now, we're looking at liquidity issues related to COVID-19 pandemic and making sure that we're positioned to come out of this as quickly and as safely as possible in the least amount of economic damage. So everyone is in their specialties related to their Committees, but it's all through the lenses now about the COVID-19 pandemic.
So I've really focused on supporting measures to increase access to liquidity in the economy and make sure that all Americans have access to cash during these slow economic times. And to make sure, not that we remain there because we don't want to over-incentivize people to stay put, but we want to make sure that those who can, have an economy to go back to.
I mean, this was amazing what we had three months ago, and I think we can rebound quickly. We want to do it safely. If we now are a little smarter three months into this, about who needs the most protection. Look, I’m one who leans towards more rapid reopening, but also want to do it intelligently. So those are the things we're focusing on now.
HODLpac:
Great. Representative Budd, thanks so much for joining us today. It's been a pleasure and hopefully we can do this again sometime soon.
Rep. Budd:
Tyler, this was fascinating. They'll always be something new to talk about. I appreciate what you do.