Crypto in Congress: Rep. Tom Emmer

Bitcoin and monetary freedom, Congress's role in crypto policy, the importance of self-governance, and why he's optimistic for the future.

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Now, for the main attraction…

The next installment of HODLpac’s interview series with members of, and candidates for, Congress is available now.

This week, Rep. Tom Emmer talks about bitcoin and monetary freedom, Congress's role in crypto policy, and the importance of "self-governance." 

You can also listen to it on Apple Podcasts or Spotify or read the transcript below.

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HODLpac:

Hello, and welcome to the latest 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 candidates whose policies would promote the development of cryptocurrencies and 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.

I am your host Tyler Whirty.

Our guest today is Representative Tom Emmer from Minnesota’s 6th District. 

After the election in November, Rep. Emmer will be entering his 4th term in the House, where he serves on the House Financial Services Committee and the Republican Study Committee. 

Since arriving in D.C., Rep. Emmer has emerged as one of bitcoin and crypto’s staunchest allies in Congress. He is co-chair of the Congressional Blockchain Caucus and ranking member on the Fintech Task Force, and has introduced many pieces of legislation that have to do with crypto, including the Blockchain Regulatory Certainty Act, the Safe Harbor for Taxpayers with Forked Assets Act of 2019, and, most recently, the Securities Clarity Act - which would provide a path to regulatory certainty for digital assets and other emerging technologies under securities law. 

So without further ado, Rep. Emmer, welcome to the show!

Rep. Emmer:

Thank you, Tyler. Glad to be on

HODLpac:

You have been one of the premier champions of crypto-related policy on Capitol Hill. You were one of its early champions and you continue to be one today. So, for our first question for you, what has it been like watching – and, at times, leading – the evolution of crypto policy in DC?

Rep. Emmer:

It really is about monetary policy and freedom. And I'm going at this a little different than I have in the past Tyler cause as I was telling Landon [Zinda, Emmer's Legislative Director], I've been reading this book by George Gilder. He wrote it back in 2016, called the "Scandal of Money". It is about fiat currency and how the government manipulates the time value of money. And it's a problem. Once we went off the gold standard we didn't peg the currency to anything. Now you can float it right against other things. And what it allows the government to do is print a whole bunch of money and grow the balance sheet.

And the beauty of Bitcoin and cryptocurrencies is that they don't. As I was sharing with Landon here a little bit ago – because I was just reading it again on the plane for the second time –  crypto currency, in this case they were talking about Bitcoin, is a lot like gold. It's about the concept of scarcity. It gets more difficult, there's less of it to get. It holds its value.

So, it's really interesting. I came to Congress to work on financial issues. Specifically, on those related to capital formation and main street businesses – you know, people from just any walk of life, having a great idea and trying to get access to capital, to create that idea and grow it, you know, and start in a garage and grow it into tomorrow’s big success story in this country. 

And, funny thing on my way, Tyler, Landon gave me a book when I got here about five years ago called The Age of Cryptocurrency. Quite frankly, I'd never, I mean, I'd heard of it, but I've never really done any in depth research. I read that book and it was like, “Landon, this thing is great.” I mean, this is exactly what we should be talking about. 

And the more that I've gotten into it, a couple of things, one, the people that fear it have not done their homework. They're not studying it. I'm more of the decentralized version. I think it's a great way to empower people by taking this control of our financial system away from the government, if you would, the elites, and giving it to back to the people - where I think it belongs. And that's what got me so excited about cryptocurrency in the whole area. And it was about raising people's awareness, trying to get them to look beyond the end of their nose at a paper dollar and start to think outside of the box. And I think we've come a long way in five years - a long way. And that's, that's just a general picture, we can get into more details, but as you can tell, I think about it a lot. It's really an important advance, I think just in the history of our Republic and the freedoms that we enjoy.

HODLpac:

That's awesome. And I very much agree with you on those points. Just to follow up on that question though, you spent the last five years in Congress thinking about these issues, and you also mentioned how some of the opponents in Congress just haven't done their homework. Specifically, how do you assess the role that Congress has played in this conversation that's gaining more and more steam in recent years in D.C.? Has Congress kind of played its role well? How do you see Congress fitting into the greater conversation with regulators and the executive branch as well. 

Rep. Emmer:

Congress, and the art of of self-governance - and it is an art - needs to be revived. What has Congress’ role been? Right now Tyler, Congress is naming a bunch of post offices. Boy, we seem to be very functional – not. In this space, there are leaders on both sides of the aisle and they are growing in number, right? I mean, it started out with the Mick Mulvaney’s, The Jared Polis’s, the Dave Schweikert's, and now it's growing to where you've got people on both sides of the aisle. Some are doing this because, like me, they believe that this is the future of finance - this is the new frontier that's going to give us back our personal liberties when it comes to how we transact with one another and try to get the government out of the transaction for others.

For others, it’s just the opposite. They see it as a way for government to be more efficient, and have more control over the bad actors when they talk about how they want to see this thing advance. And yet another group - it's getting them to be selfish self-Interested, right? One of the things that we did recently is we announced that we're going to start accepting cryptocurrency as campaign contributions. Now some would say, ‘that's great, look at what they're doing. They're expanding the new frontier.’ Well, yeah we are, but guess what else we're doing? We're getting self-interested elected persons to look at it and go, ‘wait a second. Is that person getting ahead of me? Do I need to do some more work on cryptocurrency to understand what it's all about? Because maybe they're going to get ahead of me in fundraising and everything else.’

And guess what, Tyler? That will force them, whether they realize they're doing it or not, to start to get up to speed so that we can do some substantive things in this area. And I do think this past five years, it's mostly been about raising awareness, mostly been about educating Congress. And despite my cynicism, I do see a bright future I in this country. I think that we're just going through change right now, like we've done at other times in our history. At times it’s an almost violent experience, but we're going to get through it. And when we come out the other side, we're going to have leaders from all different walks of life that are going to be serving here in Congress. And I do see a day when we when we're going to make some serious advances in this area from this place called Washington D.C. Frankly, it might actually happen in the next Congress, where you're going to see - I would hope - a new subcommittee established dealing with just this. Not a taskforce, but a subcommittee that has jurisdiction over this and can move some very important laws having to do with creating certainty for people who want to innovate and create -just to give them a safe zone from the IRS while they try to figure out what their idea is, and how they're going to put it into action. Things like that.

HODLpac:

Well, that's great news. I hope that comes to fruition. I know I'll be fingers crossed waiting for that, but you mentioned some of the regulatory uncertainty that needs to be cleared up to help this budding industry that we both care so much about. And I would love to get into some of those policy areas, if you don't mind. Bills that you've introduced and co-sponsored include the Blockchain Regulatory Uncertainty Act. You introduced this in January, 2019, and this bill would exempt blockchain developers and providers of blockchain services from certain financial regulatory requirements, including money transmitter licensing and stuff like that. Just quickly what was the motivation behind this legislation, and why do you think it's important?

Rep. Emmer:

Well, it stems from the fact that early on we had a lot of banks and financial companies, as you  know Tyler, that had no clue what this technology is. They were asking people who wanted to start a business in this industry - whether they want to start mining, they wanted to provide wallets, whatever it might be - they were asking them to register as money transmitters when they literally didn't take in someone else's money and transmit it. They literally didn't transmit money. So then you start asking, well, “why do we have money transmission laws?” Typically someone takes the assets of someone else and transfers them with their consent and understanding. It's an important function from a consumer protection standpoint. It's important that we have safeguards and protections for those who are willingly giving their money over to someone else to be transferred.

But if you're just using a Bitcoin mining rig to make money for yourself, or you're providing a technology to provide others the means to secure their crypto currency, and you're never receiving or handling the crypto of another person, why should you have to register as a money transmitter? Protections from unnecessary regulations have to occur if we're going to let cryptocurrency grow and thrive here in the United States. The bill that you're talking about will continue to be a huge priority of ours into the next Congress as well, because while it seems kind of like a simple thing, just getting these people to put their head around it and understand it, you could make such a difference by passing this law - in terms of allowing people the ability to innovate and create the next generation of offerings. And I'm going to just keep pushing, I know Landon's going to keep doing it at the staff level, which let me give you this very quickly:

Tyler, I think at the staff level, there's a little bit more understanding maybe because the age of staff is typically several years younger than the members, and probably more apt to be exposed to these new technologies and cryptocurrencies, and frankly are ready to dive in because some of them are already working in the area. So I, this is a relatively simple bill in my mind to make sure that you protect people who are literally not transmitting money, so they don't have to go to 50 States and get money transmitter licenses to do business.

HODLpac:

You mentioned earlier ‘self-governance through Congress’. I think one of the main reasons why we started HODLpac was because self-governance is something that would really resonate with the crypto community. And we want to, you know, provide a venue for people of the crypto community community to engage with Congress and help the self-governance along, but something that's, I guess, kind of outside of self-governance in a way, is the regulatory state, i.e. the ‘administrative state’, for lack of a better word, just the executive branch. Related to the Blockchain Regulatory Certainty Act, some of the guidance out of regulators like the Treasury Department and FinCEN, have frankly been quite opposite from your characterization of the need for money transmitter licensing, in that they've advised that crypto currency companies are money transmitters and thus are subject to the same compliance burden as what you would call the true money transmitters, in your opinion. How do you see this playing out in the long term? Do you think there's a chance that regulators come along by themselves or will we need Congress to act?

Rep. Emmer:

I think it's going to be a little of both, but let me go at it this way Tyler. First, the debate since the forming of this constitutional Republic has always been the size and scope of government versus the right of an individual to self-determine. And where is that line? I think you correctly point out that people who are delving in this space - the cryptocurrency space -they tend to be more on the, in my experience, and this doesn't mean that they're a Republican or a Democrat. I'm not even going there. They just tend to be more on the self-determination side of that ledger. In other words, there's just too much regulation of things that the regulators don't understand. Now, when you bring up FinCEN I guess our experience in the office has been that some of the guidance from FinCEN has affirmatively stated that non-custodial uses and services are not subject to a requirement to receive a money transmission license.

And FinCEN has actually been pretty helpful over the past couple of years in navigating the current laws and their application to crypto. And the Treasury, which is now added Brian Brooks at the OCC, which by the way, is a great addition, because I think there were people in treasury that were inclined to work with on these issues. But then there was also this old school of thought that we were running into – essentially a  “not on our watch - we're not going to let these cryptocurrency people in” - again, equating it with the bad guys, as opposed to the innovation and all the great advances that are right there on the horizon. But it appears now that with the addition of Brian Brooks at the OCC, the treasury is slowly coming around to the innovations and the benefits that these technologies can have for our country.

And that's great news because two years ago, if you would've asked me that question, I would have said that we got a lot of work to do, and we still have work to do with the with the regulatory state. There's no question. I think Congress is going to have to do some things in terms of creating law. And like I said, when it comes to the money transmitter license, I'm hopeful that next Congress we might be at a place where we can get some bipartisan, nonpartisan participation in moving things like that along.

HODLpac:

Great. And I'm glad you mentioned Brian Brooks at the OCC. He's made some big splashes this year since taking the reins. I was wondering how you feel about some of the changes that he's been making, and again, maybe some of the roles that Congress can play in solidifying those changes. The tricky part about making changes via guidance from regulators is that when someone else takes control of the agency, it might switch back. So how do you feel about Congress's role in solidifying some of those changes?

Rep. Emmer:

Well, you know, we were in contact with Mr. Brooks actually right after his appointment was announced - sat down with him, had a great discussion. I think he's been doing some great things about recognizing and giving banks the footing on which to move forward in terms of, you know, you got somebody who's creating a business in the crypto space, and now they can work with local financial institutions, at least it's welcomed. And you’re right, there could be somebody else that comes in that tries to put the brakes on these advances and tries to go backward. But I don't see that happening, Tyler. I mean, especially in the environment we're in.

If you think about what's happened to us in the last five, six months in this country and around the world we have relied heavily on technology for education, for medicine, telehealth has become a thing. In fact, I would argue that we advanced 10 years in, in terms of what our government recognizes for reimbursement of telehealth visits. And we're not going backward. In fact, I think what this is going to do is this is going to be that booster rocket that comes in next Congress. And we're going to have a debate over building out that last mile of broadband across this country - the same type of concept that the Eisenhower administration had when they moved forward with the interstate highway system -we're going to have a debate, and the debate will be, “does government subsidize the last mile, or do we create private incentives?”

Or is it a combination of both? But we're gonna finish building it out. And as that happens, the area that you and I are talking about, when it comes to cryptocurrency, I think it's only going to leap forward right along with the development of the technology and the access for the public. People have been using very crude forms of money transfer with Venmo and all this other stuff. Just imagine what happens once they're comfortable with that. And you have access to a rural broadband all around this country and hopefully the world - you're not going to go backward. I just don't see more Cro-Magnon thinkers being put into these financial positions. I think you're going to see more forward thinkers. Because here's the other thing that's going to happen if they don't get on board, if they don't start looking at how this works for people - the people are going to do it themselves. And I think the worst thing for our government, or any government, would be to become not relevant, which could happen if they don't get moving,

HODLpac:

I think the vision you just painted is one all the listeners of this podcast would love to see come to fruition. So let's hope for that as well. And so another pro crypto regulator - Commissioner Hester Peirce at the SEC, and her recent safe Harbor proposal has gotten some attention for a while, but it hasn't really gone anywhere in the last few months. I think there's been some talks about adapting this proposal, which would create a three year window for the development of a decentralized network to be safe from the purview of securities laws. There's been talks about adapting that as a bill in Congress. If that doesn't happen at the SEC, what are your thoughts on doing something via Congress to move that or something similar along.

Rep. Emmer:

Hester's great. And she's been doing an amazing job with proposing solutions and fighting for innovation at the SEC. Look, this has been my major complaint from day one. You’ve got to give us definitions, you’ve got to define what constitutes money. What constitutes a commodity? What constitutes a security? And there are already some proposals out there that try to deal with the security area. I'm going to be blunt - I don't see Congress fixing that. I think it's going to have to come from the bureaucracy side, from the executive branch. And why do I say that? Because this is a place that we get into, where all of a sudden politics starts playing a role. You know, these people, these do-gooders with election certificates that want to control private enterprise, they want to know who you're hiring.

They want to know if you're spending your money on the right things, however they define those things to be “right”. And I mean, I've just seen it with Maxine Waters and company, and it's been very frustrating. This is an area where it shouldn't be about whether you believe or you don't believe in whatever the current craze is, whether you're for or against whatever society's big rage is today. It should be more about how do we allow human beings to intersect, interact, and transact together in the easiest fashion possible - while at the same time, having some light touch regulatory structure so that we can make sure that there's fairness - that there's justice in the marketplace. And I'm not overly optimistic that with the characters that we have in Congress right now that we're going to be able to get back to just the basics of Finance 101.

It should not be a partisan issue, but all that being said, I do think that the administration, can do a lot of things with people like Hester, Brian Brooks, and some others that are starting to find their way into the bureaucracy in terms of not only changing hearts and minds in the executive branch, but then also moving things forward that maybe Congress has to come a little reluctantly in behind - but it'll get done better that way. Because the other thing, when we talk about the SEC, is all the stakeholders. The stakeholders should have a say in that, working with the SEC and with innovators like Hester and Bryan. So I have a better feeling about how they could advance it from the executive branch side than how individual legislators might. So to switch gears a little bit, even though I think all of these things are related, you, you've had a front row to the ongoing

HODLpac:

So to switch gears a little bit, even though I think all of these things are related, you've had a front row to the ongoing discussion within Congress, and then broadly in D.C. about the quote unquote digital dollar, and this intersection with topics like Libra. The digital dollar has kind of regained a focus in the light of the COVID-19 pandemic and some of the relief efforts therein. How have you seen this unfold so far? Have you been paying attention to the broader conversation? I know you're one of the co-chairs of the FinTech task force. So you've been front and center to it -but also as somebody who's close to the crypto industry and sees the innovation happening in the private sector with crypto dollars and stable coins, I think you have a very interesting point of view on this whole debate. So I'd love to hear your thoughts about it generally.

Rep. Emmer:

The most basic description for anybody who doesn't work in this area - a digital dollar should work the same way as a paper dollar works. In other words, that dollar, I should be able to use it in a transaction with you. I should be able to transfer it to you in return for something of similar value. That's not exactly what the debate is though, because there seems to be another school of thought in Congress. And it is from the other side of the aisle. It's, it's hard enough getting Republicans who are traditional banking folks to look at this area and realize the promise that it has, and as they start to develop more knowledge, it’s so amazing how fast they start coming with you. Maybe not totally, you know, because they want a centralized operation.

I'm more of a decentralized support, but then you've got the folks on the other side of the aisle. There's a couple of proposals out there that they think everybody should have an account at the Fed. I mean, that's the last thing I want. And I'm going to suggest that people that I know in this in this industry, in this area of innovation, it's the last thing they want. They want to be able to deal in a cryptocurrency and create their own ways, because they want to be in charge of their own destiny. They want to be in charge of their own information. The last thing they want is for the government to be in charge of all of that. For goodness sakes – look at Wuhan when everybody had their cards shut off so they couldn't travel out when the when the virus started to appear. That's the last thing we want, I think, in this country and in this area.

I think that when it comes to the digital dollar, that's pretty much it. I will give you this, I'm not a fan of Facebook's Libra idea with their group because somebody is going to control that. It's going to be a closed group. If the government's doing it, then it's going to be the government that's controlling it. And my goodness, look at how they've manipulated our financial system since they took the dollar off gold in 1971 or 72. I don't know that you'd trust them not to do stuff like that with this area. I really would hope if we're going to talk about this at all, it's decentralizing it again in making sure that it maintains its value-based, almost gold-like features in that you can't manipulate the cryptocurrency the way they manipulate our FIAT currency today.

HODLpac:

Well, I think I speak for everybody in saying that I'm glad we have somebody representing that view in Congress, such as yourself. So thank you. You're currently serving as the chairman of the NRCC, which is the National Republican Congressional Committee. It's basically the political arm of the House Republican Caucus. I think that gives you a good perspective on maybe how to get these issues in front of more members of Congress. I guess you could speak better to the Republicans, but maybe you can kind of speak about it to get in front of members of Congress in general as well. Like I said, HODLpac is focused on engaging both the crypto community and Congress and kind of facilitating the grassroots support for some of the policy changes we've been talking about today. Do you have any advice for us as we attempt to get in front of more members?

Rep. Emmer:

Listen, it's not just as chair of the NRCC, although it gives me a position in our leadership, I think it puts me as the number four person on the Republican House Leadership team, which does make a difference. It gives us a voice that we didn't have previously. But in addition to that, I'm the co-chair of the Blockchain Caucus. I'm the Republican ranking member on the FinTech task force. I think what it does is, first within the Republicans on the committee, they've seen how aggressive I personally have been on these issues under our past chairman Jim Hensarling, who God bless him - he still hasn't given me back my book. I lent The Age of Cryptocurrency to Jeb because I told him this is a place that we need to be leaning in.

And he asked me a bunch of questions and then said, “can I borrow your book?”  Well, he's been out of Congress now for a couple of years. I saw him he's working for RBC or somebody who was in town. I said, “Hey, where's my book, man?” These guys got to give me back my book. Sorry, I'm having a little fun at Jeb’s expense, but I'm telling you that because the ranking member on the Republican side, good friend of mine, Patrick McHenry is uber into this topic, which you wouldn’t know. And I found out this is why he put me in as the ranking member on the FinTech task force, because I was having conversations with him on this before he was ever the ranking member. And that's why I have hope for the next Congress, because I think the leadership position gives you a bigger platform.

But then you also start to identify some other influencers within the Republican conference like Patrick, and it's not a fringe issue anymore, right? Because we're not viewed as extreme this or extreme that - we're viewed as mainstream Republicans. And it causes a lot of our colleagues to go, “Huh, okay. Maybe that isn't all about Silk Road. Why are these guys, who don't seem to be crazy, so interested in this area?” And like I say, once you do that, you get a move. And the other thing I told you early on in this interview was, we started taking campaign contributions in crypto, and that really is trying to appeal to the selfish, self-centered nature of political people. You’ve got to get them to look at it and go, “Hey, I wonder if that's working for him, I got to find out about this.” And we'll just keep doing stuff like that. 

But we're willing to work with you and every other group out there who understands how important this is to the future of not just our country, but the future of this planet. I just think that this is the way we're going to empower more people to be in charge of their own lives and to create opportunities for themselves and those around them. So I think it's really important. And I love the fact that Hodlpac is is going at this from almost a nonpartisan approach. And I prefer that rather than bipartisan, because whenever you say bipartisan, already we’ve picked sides. This one really shouldn't have people picking sides,

HODLpac:

Great place to end Representative Emmer. I appreciate you so much. If you have any parting words to say, feel free to share it. But other than that, thank you so much for joining us today

Rep. Emmer:

I just have a positive view of where we're headed. These are rocky times, but out of much disturbance comes a lot of peace. And I think we're going to get some good things down the road, especially in this area.

HODLpac:

Thank you for listening to Crypto in Congress presented by HODLpac. If you'd like to learn more about HODLpac and our mission, check us out at www.hodlpac.org or follow us on Twitter @HODLpac. Also, be sure to subscribe to our newsletter to get exclusive updates and access to transcripts from each episode.