There is a precedent for the upcoming White House-led heavy hand in technology direction and influence. In 1997, President Clinton recognized the importance of Internet commerce as an emerging arena and appointed Ira Magaziner as the e-commerce czar. Magaziner drafted the famous manifesto, The Framework for Global Electronic Commerce which set the wheels in motion for a swift adoption of e-commerce and the ensuing US global leadership in the era of Internet Commerce. The notable tenets of this manifesto included a “do no harm” mindset, i.e. no new regulation to impede e-commerce’s progress. The other noteworthy part was the passage of the Internet Tax Freedom Act, enacting a three-year moratorium on new or discriminatory taxes on electronic commerce, in addition to US-led coordination with 28 countries also to promise not to tax e-commerce. Finally, letting the private sector lead was another important tenet of this framework.
As an aside, I met Ira Magaziner once, as he hobnobbed with the industry in the ‘97-’98 period. At that time, I was the chairman of CommerceNet Canada, and he was attending our annual global event in Palm Springs.
Today, the US needs a similar manifesto or blueprint to re-spark the role of cryptocurrency and blockchain technologies.
What would be my advice to David Sacks as he embarks on a job position that will have consequential repercussions on the US and global crypto industry?
First, we must go back to rekindle and re-assert the original vision of the blockchain because we were distracted in the last 3 years by regulatory headwinds and scams that hijacked the blockchain’s first principles of decentralized empowerment, peer-to-peer transactions, self-custody, programmable money, frictionless digital asset movements, decentralized applications, digital identity, and token-based business models, just to name a few.
Specifically, as a starting point (and via this manifesto), we need the antidote version of the White House Executive Order on Ensuring Responsible Development of Digital Assets that set the wheels in motion 3 years ago and gave carte blanche to several governmental agencies to bash, slow down, or kill crypto, each in their own way. It was clear then, that US Policy on Cryptocurrency Is Lopsided: It is Solely Focused on Mitigating Risks while Suffocating Innovation, Leadership and Growth.
I anticipate David’s visible work to be more prescriptive, more detailed and more strategic, leading to less room for misinterpretation by the various governmental agencies.
It should encourage and emphasize mandatory education about the first principles of blockchain technology and its many potential applications, beyond just enabling efficient digital money transfers or trading cryptocurrencies.
The priorities of the new crypto direction could be organized into three parts:
Clarification of Regulation
Support for US Industry Leadership
Encouraging Government Adoption
Clarification of Regulation
Paul Atkins, the incoming SEC Chairman is already known to be pro-crypto and is not expected to follow the foolish paths of his predecessor. However, his direction should be ascertained and communicated from the top down because it affects the variety of agencies and departments that also play a role by being either enablers, or detractors.
The two remaining pro-crypto commissioners (Hester Peirce and Mark Uyeda) will have a lot to say because they also have had the experience of surviving the Gensler regime, dissented on many related issues while suggesting several new ideas.
We need this Manifesto for Crypto Technology to emphasize opportunity, without undue excess of caution to the point of choking it. It will be good to prescribe guardrails, as long as they are visible and well articulated.
For example, enforcing standards for disclosures is expected. Currently, token-based projects have been lackadaisical in this area, but we must raise the bar.
In general, the Manifesto should emphasize innovation, exploration, and experimentation to be prioritized over extreme caution and avoidance of risks.
Digital Assets should be positioned as the next frontier for the Financial Services Industry. Just as the US capital markets are strongest around the world, we should let them embrace digital assets to continue their leadership in this new asset class.
If all goes well including the SEC and CFTC do their part, Congress will only need to pass new regulations in just a few areas where regulatory agencies don’t have the authority to make those changes. There is no need for 81+ Bills. A handful will suffice, especially to fill gaps.
Finally, encouraging standards is another area that could be within the scope of this new direction because technical or procedural standards are one of the best lubricants for adoption.
US Industry Leadership
First, crypto-related companies that were founded in the US and fled in the past 3 years must be allowed to return, flourish, and grow without fear of regulatory backlash. The SEC should drop the lawsuits that were distracting to many of these companies, including the ones that decided to remain in the United States and fight the SEC at great costs.
The new direction should encourage firms to get established and grow in the US, without fears.
Efforts by other jurisdictions such as Dubai, Singapore, Zug or Hong Kong who exploited the US weakness by encouraging cryptohubs to flourish will pale in comparison to what the US can do, given its much larger footprint and economic power.
Blueprint for Adoption
Just as the Internet was adopted by a variety of government services, and now you can file taxes and renew licenses, there will be a new class of governmental applications for blockchain technology.
The other antidote to the famous Operation Choke Point 2.0 could be a mandate to encourage the implementation of bridges between crypto exchanges and US Banks. Users who hold cryptocurrency in exchanges should be able to easily convert those assets to US dollars (or stablecoins) and deposit them in their financial institution of choice. US financial institutions should be allowed to take deposits in US stablecoins. The counter to Operation Choke Point could be called “Operation Open Floodgates”.
Subsequently, crypto should be accepted as legal tender for large purchases such as a car or a house. That would allow millions of holders to use their gains without friction, and it would spur the economy.
The Crypto Manifesto should encourage all government institutions and agencies to investigate the best blockchain applications for their specific need. They should be able to start pilots and proofs of concepts while sharing and coordinating best practices around ideas and implementation to maximize adoption efficiency.
In closing, I leave you with this borrowed thought from The Framework for Global Electronic Commerce (suggested reading):
The success of blockchain and crypto-technology “will require an effective partnership between the private and public sectors, with the private sector in the lead. Government participation must be coherent and cautious, avoiding the contradictions and confusions that can sometimes arise when different governmental agencies individually assert authority too vigorously and operate without coordination.”
