Crypto’s fintech upheaval starts in New York
Hello, and welcome to Protocol Policy! Today, we bring you an inside look at how crypto lobbyists are approaching New York, where they hope to set a precedent for legislation across the nation. Also: the SCOTUS confirmation hearing touched on Section 230 and antitrust, and the SEC’s new climate plan leaves a lot of room for interpretation.
Crypto comes to New York
Last month, I wrote about how New York is becoming a key battleground for crypto legislation. Lobbying groups upped their resources in Albany in an attempt to shape the 20-plus crypto-related bills introduced since the start of the year.
Key issues in New York include BitLicense requirements — which grant crypto companies permission to operate and sell certain products — and a potential moratorium on all crypto-mining activities in the state.
Last week, the Blockchain Association announced its first dedicated lobbyist in Albany. The crypto advocacy group, which represents more than 80 companies, hadn’t previously worked at the state level. I interviewed John Olsen (New York State lead) and Graham Newhall (communications adviser) from the Blockchain Association to understand what’s at stake here and how it could impact the national regulatory landscape.
New York is an emerging hub for crypto and could serve as a legislative blueprint for other states.
- In some regards, New York makes for an obvious home for crypto: It’s the financial capital of the world, and attracts top tech talent. Mayor Eric Adams wants New York City to become “the center of the cryptocurrency industry.” And the state superintendent of the Department of Financial Services sat on the board of the Digital Dollar Foundation.
- But New York is also a deep blue state, and it’s competing to lure crypto companies away from states such as Texas and Florida that aren’t as keen on regulating business interests.
- While crypto has become a partisan issue at the national level, it hasn’t yet in state legislatures. That presents an opportunity to shape policy early.
- “I don’t think there’s been an opportunity for partisan divide, simply because there’s not enough people who are really understanding of the underlying technology,” Olsen told Protocol. “We are here to start that education process in terms of demonstrating the potential benefits of blockchain applications.”
- Dozens of other U.S. states are beginning to form their stances on crypto, and New York could set the tone. “Once you have a precedent, it’s very easy to say, ‘Well, we can do that here,’” said Olsen. “State legislators talk all the time. They’re constantly meeting at conferences and sharing ideas … The socialization of certain policy is very easy, especially with states that neighbor each other or have economic packs or things like that.”
And the crypto battle has increasingly become a state — not federal — issue.
- “The speed at which state legislation or regulation can move is really why the Blockchain Association has decided to venture into state-level engagement,” said Olsen.
- And that aforementioned partisan divide at the federal level is slowing down the legislative process. Sen. Elizabeth Warren introduced a tough-on-crypto bill in the Digital Asset Sanctions Compliance Enhancement Act, but it hasn’t yet attracted Republican co-sponsors.
But as the crypto industry promotes a political message, it risks alienating its core support base. I always thought that crypto utopianists — like all other utopianists — were a bit naive. This cohort thought that crypto alone would be able to usher in a post-national era of global politics, freeing the masses from an oppressive and centralized financial system. But when the crypto lobby courts politicians, it often contradicts this foundational promise. For instance, industry executives assured senators earlier this week that they could stamp out the use of crypto in Venezuela, Iran and North Korea. So which is it? Is crypto a docile system that presents no threat to the current world order, meaning it isn’t as revolutionary as it once claimed? Or is it a wolf in sheep’s clothing, waiting to strip off the wool once the farmer is old and feeble? U.S. politicians only have one chance to figure it out.
Tech issues are trickling in as part of the ongoing confirmation Senate hearing of Judge Ketanji Brown Jackson to the Supreme Court.
- Jackson suggested that conditioning Section 230 immunity on presenting all political viewpoints, as many Republicans would like, would be “generally impermissible” under the First Amendment.
- Jackson seemed to offer a nod to advocates of expanded antitrust enforcement, saying competition laws “protect consumers and competitors and the economy as a whole” — an answer with a broader scope than the usual focus on consumers alone. She added that she follows the texts of the laws on the books, which are far wider-ranging than judges’ rulings in recent decades, and suggested her colleagues “should not be importing their own policy preferences.”
- Privacy group EPIC urged senators to ask Jackson about consumer protection lawsuits and the role of tech in government searches.
President Biden warned of "evolving intelligence that the Russian Government is exploring options for potential cyberattacks" against the U.S. He also urged companies: “Harden your cyber defenses immediately.”
The Justice Department accused Google of telling employees to hide evidence by CC-ing lawyers and creating “false requests for legal advice” that the company can keep under wraps by citing attorney–client privilege. The government is seeking sanctions for the practice — which apparently went all the way up to Sundar Pichai — from the judge overseeing the U.S. antitrust case against Google. The company says it’s producing documents at a high clip, including some marked as privileged, and that it works hard to respond to document demands.
The FTC is officially requesting more information from Microsoft and Activision Blizzard as it reviews the proposed acquisition of the video game developer. While expected, the move suggests deeper scrutiny of the deal than the FTC might have brought to bear in the past.
A bipartisan group of lawmakers wants more people to get notified if law enforcement is seizing their electronic data — similar to the disclosures for wiretaps. Such government demands for emails, texts and location data from tech giants are common, but law enforcement routinely forces companies to keep them secret.
Sen. Elizabeth Warren confronted Secretary of Commerce Gina Raimondo yesterday behind closed doors over Raimondo’s criticism of Europe’s competition proposals to rein in Big Tech, according to the Washington Post. Raimondo has repeatedly suggested the EU is unfairly targeting U.S. companies. Warren, who has said Raimondo’s comments undermine the Biden administration’s push for revamped antitrust, told the Post that the Commerce Department is “lobbying on behalf of Big Tech.”
A MESSAGE FROM 4-H
Gen Z is poised to impact everyone - from a rural small business to a tech giant - rethink how their business operations can help alleviate the digital divide. It’s time to give Gen Z a seat at the table for the generation that sees how tech can be a benefit but often is the barrier for advancement.
The SEC released its proposed climate rules this week. The rules would require legislatures to disclose Scope 3 emissions — those that don’t directly come from the company — if they can be considered “material” to investors, which leaves a lot of room for interpretation.
The U.S. is pursuing broad, secretive national security reviews of Chinese tech companies, and they appear to have swept in DiDi.
Google settled with the “Thanksgiving Four,” a group of engineers who were dismissed in 2019 for allegedly violating company security rules while they were working to organize in the workplace. Had Google not settled, it may have been forced to reveal documents that showed an alleged plan to prevent workers from organizing.
Cornell Tech researchers say YouTube should partner with alternative platforms to enforce demonetization. The study found that around 61% of channels used some other form of alternative monetization, relative to 20% in 2018 and 2.7% in 2008.
Around the world
Twitter, Vimeo and three other online companies started the Open Internet Alliance, which is focused on European policy (despite the New York photo on its website). Under the slogan “#MoreThanFour,” the group is arguing that its companies want the ability to compete — but not crushing obligations, particularly relating to content. It comes as Europe readies competition regulations under the Digital Markets Act and online safety rules under the Digital Services Act.
$100,000 per ton: That was the record cost of nickel on March 8, though it has since swung back down to $31,380 per ton as of Monday (for comparison, the price hovered around $10,000 per ton as recently as 2020). Sanctions against Russian contributed to the spike in price, which could significantly impact the availability of electric vehicles.
A MESSAGE FROM 4-H
People often think of the digital divide as being just about broadband access, but it is also about understanding the needs and tech literacy levels across roughly six generations. Gen Z could help companies develop products and apps that better serve the needs of our communities, our country and our world.
Don't tell Fitch
El Salvador had to delay its plan to take its bitcoin experiment a step further. The nation postponed the issue of an unprecedented $1 billion bitcoin-backed bond in an effort to wait for more favorable market conditions, according to Finance Minister Alejandro Zelaya.
Thanks for reading — see you Friday!