Decentralization's Moment, a FinCEN Update, and the Regulatory Rotation
HODLpac Newsletter - January 2021, Part 2
Hello HODLpac-ers,
This being our first newsletter since the events of January 6th in Washington DC, we’d be remiss not to start off by saying that our thoughts are with the families of those who lost their lives that terrible day. It is also important that we say thank you to the public servants who work in Congress representing the American people - the legislative staff, the Capitol police, the support staff, and more.
HODLpac’s mission is to build support for cryptocurrencies and the decentralized economy in Congress. As the people’s branch of government, Congress is the venue through which motivated groups of citizens can most directly make their voices heard in the policy making process.
If you’re reading this, you most likely believe - at least to some extent - that public blockchains and related technologies can improve some of society’s most crucial systems, such as finance and the internet.
However, repairing our democracy will take more than a technological fix. It will take engaged groups of citizens peacefully and constructively participating in and improving upon our civic institutions.
With luck, hard work, and the help of all who are reading this, HODLpac can be an example of such civic participation for others to emulate.
Those of us in the crypto community - as natural proponents of self-governance and systems-level thinking - are well-equipped to lead the way.
Now, before we get into what you need to know about crypto-related policy and politics….
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Have an idea about something you want featured in this newsletter? Reply here or tell us on Discord! A goal for this year is to turn this newsletter into a community-curated collection of crypto policy news and commentary.
Alright, here is what is happening…
Decentralization’s Moment
The ripple effects of the events of January 6th will be numerous and varied, but one of the most immediate was the deplatforming of President Trump by the country’s largest technology companies.
For a good overview of what happened, check out this article in TechCrunch.
In addition, the social media app Parler - which has a large “alt-right” user base - was banned from the Apple and Google app stores as well as Amazon’s cloud services.
HODLpac is a nonpartisan organization so we won’t wade too deeply into the more partisan aspects of this topic. However, it is undeniable that this awesome show of force has brought the power of centralized technology companies into the public eye.
Here are some reactions from the crypto community and beyond that put this issue into focus:
See also:
“Welcome to the Government-IT Infrastructure Complex,” Albert Wenger, Continuations Blog
“Decentralization Is A Necessity Now,” Anthony Pompliano’s Substack
“Big Tech bans Trump, ramifications for the First Amendment & the open Internet,” Episode 17 of the All-In podcast with Chamath Palihapitiya, Jason Calacanis, David Sacks & David Friedberg.
The beginning of “Erik Torenberg on Realignments in Technology, Media, and Education,” Episode 90 of The Realignment podcast with Saagar Enjeti and Marshall Kosloff
“Twitter, Trump and the ‘Private Company’ Fallacy,” Nic Carter, CoinDesk
“How Silicon Valley, in a Show of Monopolistic Force, Destroyed Parler,” Glenn Greenwald’s Substack
It is unclear how these events are going to affect the regulation of technology companies in the upcoming Biden administration, but one thing is certain: the case for decentralization is becoming clearer for everyday people (and, possibly, policymakers).
Seriously, could we ask for a better headline?
FinCEN Update
The short lifespan of this newsletter has overlapped almost entirely with the saga that has been FinCEN’s proposed rulemaking on “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets.”
In our last newsletter, the day of the then deadline, we provided you with some resources on how to submit a comment to the Treasury Department. Leaders like HODLpac board member Jake Chervinsky and the amazing team at Coin Center rallied the crypto community to tell Secretary Mnuchin how we felt about the hasty midnight rulemaking.
And it went pretty well:
But, the good news doesn’t stop there.
On January 14th, FinCEN announced that it would reopen and extend the comment period.
Though we’re not totally out of the woods yet, the crypto community should be proud of itself for mobilizing to fight bad regulation.
Thank you to all who commented. And if you haven’t yet, reference this guide on how to do so.
Regulatory Rotation
Former Coinbase Chief Legal Officer Brian Brooks’ stint as the acting Comptroller of the Currency has been a refreshing example of the good a proactive, forward-looking regulator can do.
During Brooks’ tenure, the OCC has published guidance and written intrepretative letters clearing the way for banks to provide custody for crypto assets, operate nodes and particpate in blockchain networks, and use stablecoins for payment activities.
In addition, the Brooks’ OCC has taken steps to make it easier for fintech and crypto firms to obtain national bank charters, which would enable them to operate nationally without having to obtain money transmitter licenses from every state. Crypto custody firm Anchorage was a beneficiary of this OCC’s regulatory reset on the question “what is a bank?” as it was recently approved for a national bank charter.
Another example of this regulatory rethinking is Brooks’ January 12th article in the Financial Times entitled, “Get Ready for Self-Driving Banks.”
But with a new administration comes a new set of regulators. Brian Brooks officially left the OCC on January 14th. The incoming Biden administration has not yet announced who his permanent replacement will be.
The Biden transition has, however, announced who their pick for SEC Chair will be: Gary Gensler, the former head of the CFTC during the Obama administration.
Only time will tell how Gensler interacts with the crypto industry from his new perch, but there is hope for Brooks-esque forward thinking. From Decrypt:
In 2018, Gensler taught a course at MIT about how Bitcoin and blockchain could be used in finance. Later he also authored an op-ed for Coindesk, describing cryptocurrency as a “catalyst for change.”
Let’s hope Gensler and existing commissioner Hester Peirce aka “Crypto Mom” - who was recently reconfirmed to serve through 2025 - will work together to make our country’s securities laws amenable to crypto innovation.
Extra Credit
“DCEP: An inside look at China's digital currency,” Shuyao’s “da bing” Substack
“To Thrive, Our Democracy Needs Digital Public Infrastructure,” Eli Pariser and Danielle Allen, Politico
“Compute North, Foundry Team Up to Target North American Bitcoin Miners,” Zack Voell, CoinDesk
“What Crypto Can Expect From Gary Gensler at the SEC,” Jeff Bandman, CoinDesk
“Crypto, Washington and the Internet Age, With Christopher Giancarlo and Marvin Ammori,” Michael Casey and Sheila Warren, Money Reimagined Podcast
“Social-Media Algorithms Rule How We See the World. Good Luck Trying to Stop Them.,” Joanna Stern, Wall Street Journal
“What Explains Bitcoin’s Resurgence?” Nic Carter, NY Mag Intelligencer
Did we miss anything?
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