Posted on

Regulators Could 'Take Away' Blockchain's Efficiencies, Congressman Warns

“What would happen if our Department of Motor Vehicles held all bills of sale on the blockchain?”

This was the first of several possible use cases mentioned by Rep. David Schweikert (R.-AZ) during his keynote address on day two of the D.C. Blockchain Summit, where he outlined some of the challenges he sees in mainstream blockchain adoption.

One of his chief concerns surrounded regulation, the Congressional Blockchain Caucus co-chair told the audience. While wider adoption of blockchain technology will require some guardrails, too many requirements could inhibit innovation. During his speech, he warned:

“The regulators are all going to want to step in and say ‘I want to be the arbitrator so I can reverse a transaction.’ That’s where I’m most worried about the regulatory world, because they’re going to want to slow this down and say ‘I need 24 hours to vet this,’ and they’re going to take away all the efficiency.”

Schweikert, who has co-sponsored a bill in Congress to exempt small bitcoin payments from taxation, explained his strategy for persuading fellow lawmakers of the blockchain’s benefits.

“How do I take 435 of us in Congress? I don’t need them to understand what a node network is, from my view I’m trying to sell the societal good that can come from a bulletproof ID,” he said.

Moreover, existing precedents can help define how blockchain legislation should work. For example, he said, “we actually have 100 years of history of ‘how do you tax people that do foreign exchanges?'”

Using existing tax code to determine how to tax cryptocurrencies would simplify that process, he said. “We don’t have to reinvent the wheel from top to bottom. We actually do have case laws and IRS rules that are out there to think about these things.”

Ultimately, blockchains can be useful when applied correctly, Schweikert said. He suggested that small communities can use private networks for shared services, such as a babysitting cooperative, or larger networks can store medical data.

“There’s so many applications here that if you start to unify the mechanisms, it solves a lot of my societal problems,” he said.

Photo via Annaliese Milano for CoinDesk.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Posted on

US Officials Endorse Blockchain at DC Summit, But ICO Concerns Linger

Come together and collaborate…

This was, perhaps, the message broadcast by representatives of the U.S. government to audience members at the first day of panels at the DC Blockchain Summit in Washington, DC on Wednesday – even as securities regulators warned exchanges who offer trading of ICO tokens.

Indeed, it was James Sullivan, the deputy assistant secretary of services at the Commerce Department’s International Trade Administration who remarked during his address that “we cannot make policy in the abstract” and that, when it comes to the potential use of blockchain within the public sector, cooperation is key.

“I would welcome all of you in the audience to reach out … and to hear your recommendations,” Sullivan concluded.

While the sessions didn’t result in any major reveals of a U.S. government blockchain project, they did reveal that the tech could find its way into some of the services it offers.

Indeed, Sullivan expressed support for the use of blockchain within the trade finance chain, particularly for smaller companies with fewer resources.

“The companies that are usually hit hardest by that gap of trade finance are small- and medium-sized businesses,” he said. “We think this is where the blockchain could come in.”

Yet, attendees who spoke to CoinDesk proved to be more conflicted on the question of blockchain’s use in government – as well as the topic of cryptocurrency regulation, which was top-of-mind at the event as well. One employee of a major blockchain startup expressed skepticism that the U.S. government would seriously commit to using the tech, arguing that agencies might be better served looking at the benefits of tokenization.

Other officials at the event expressed the view that, should blockchain find its way into public-sector use, it may come as part of a wider technology suit.

Marcel Jemio, chief data architect at the Office of Personnel Management (OPM), spoke alongside IBM Public Service Blockchain partner Mark Fisk, stating that blockchain could be used to aggregate government employee data in a more accessible and efficient way.

“I think blockchain in a lot of cases is going to be an enabler of solving the problem, but not necessarily with solving the problem only with blockchain,” Fisk stated.

‘Everyone’s talking about it’

As might be expected, the topic of regulation was a major one, both on and off the stage.

Earlier in the day on Wednesday, the U.S. Securities and Exchange Commission publicly warned about “potentially unlawful online platforms for trading digital assets,” arguing that exchanges which offer services for ICO-derived tokens may be required to register with the agency.

The topic of regulation came up during an appearance by Bitmain co-founder Jihan Wu, who revealed that the bitcoin mining hardware giant wants to invest in startups seeking to create “private central banks” that use cryptocurrencies.

In Wu’s view, most tokens on the market today will ultimately come to be viewed as securities under traditional definitions.

“Most tokens will very likely fall into the definition of a security and will be subject to the regulation of a security,” he commented, going on to argue:

“But I believe regulators need to prepare a good answer on how to deal with such business innovations.”

Some conference attendees told CoinDesk that they would welcome regulation, particularly pertaining to ICOs, while others claimed that developing regulation at this moment would “lock’ businesses into rigid models ill-suited for a fast-moving environment.

Attendees also expressed concern about the inconsistent treatment of cryptocurrencies by the U.S. government, given that the IRS considers bitcoin as property and the CFTC views it as a commodity (the latter of which having been reinforced by a court ruling earlier this week).

However, two participants from a cryptocurrency services firm said they thought such discord could eventually benefit the industry, with the lack of agreement by the IRS, the CFTC and the SEC ultimately forcing more discussion on the best way forward.

The event also saw Brian Quintenz, a commissioner for the CFTC, strongly advocate for more self regulation in the cryptocurrency space.

Quintenz told the audience that cryptocurrency platforms should “step up” and self regulate while the government deliberates, a position he has also expressed in the past.

“I believe that a private cryptocurrency oversight body could bridge the gap between the status quo and future government regulatory action,” he argued, adding that he believes such a group could have a global influence. 

Images by Annaliese Milano for CoinDesk

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Posted on

Jihan Wu to Talk Central Bank Crypto at DC Blockchain Summit

Sparks, meet lighter fluid.

Jihan Wu, the controversial co-CEO of bitcoin mining hardware maker Bitmain, will discuss the idea of central bank digital currency in a speech Wednesday, a source told CoinDesk.

Wu is perhaps the most highly-anticipated speaker at the three-day D.C. Blockchain Summit, which kicked off on Tuesday with a developer event.

Named as one of CoinDesk’s Most Influential in Blockchain for 2017, Wu is at the head of the world’s largest provider of bitcoin mining hardware, which analysts have estimated made as much as $4 billion in profits last year, according to Fortune. Depending on who you ask, Wu is either Enemy Number One or, in the words of Roger Ver, someone who has “poured his life and soul into this for years.”

Wu’s chosen topic – central bank-issued digital currencies – is perhaps just as controversial. A number of institutions worldwide have looked at the question of a central bank using the tech that underlies bitcoin to further digitize their money. Yet despite support from quarters of the finance community, observers say that 2018 is unlikely to be the year that such a launch takes place.

DC set for summit

Wu’s appearance forms part of a wider event in D.C., which will see regulators, government officials, startups and business leaders converge to talk blockchain and cryptocurrency.

The conference is being organized by Digital Chamber of Commerce and Georgetown University’s Center for Financial Markets and Policy. In anticipation of the three-day event, the Chamber also released a white paper regarding intellectual property issues and blockchain.

Government officials are also among the notable attendees, including James Sullivan, the deputy assistant secretary for services at the International Trade Administration, which falls within the purview of the U.S. Department of Commerce.

Other officials scheduled to speak will be familiar faces to the crypto industry by now, including CFTC Commissioner Brian Quintenz and Representatives Emmer and Schweikert of the Congressional Blockchain Caucus, all of whom have previously weighed in on crypto regulation.

Washington, DC image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.