If you’re a politician, this isn’t an easy time to come out supporting crypto. Especially in the wake of the FTX collapse, it might seem more expedient -- and safer -- to make crypto a punching bag than endorse it as a promising industry.
Senator Elizabeth Warren, in the most famous example of this, declared on twitter that she’s recruiting an “anti-crypto army.” And as the 2024 election approaches, the nation somehow grows even more polarized. Is the moment of blockchain bipartisanship dead? Is there no chance for sensible policy and regulation?
This interview is part of CoinDesk's "State of Crypto Week" sponsored by Chainalysis.
Not if former Congressmen Tim Ryan, a Democrat, and David McIntosh, a Republican, have anything to say about it. “The technology itself has tremendous potential for economic growth and innovation,” says former Rep. McIntosh. “But what’s happened in the United States is that we have a regulatory system led by Gensler that is very anti-blockchain technology, so it’s pushing the innovation and the capital for this new technology overseas.”
So McIntosh and Ryan are spearheading the Blockchain Innovation Project, which has a goal of advancing bipartisanship, educating their colleagues, and ultimately enacting sensible crypto policy. They know it’s an uphill battle. Ryan acknowledges that Senator Warren “chalked the field” with her forceful anti-crypto message, and says that unfortunately the “extremes define the entire party.” This is why he thinks it’s so important to get more of the Left to appreciate the merits of blockchain technology, and thinks that “we seeing more and more Democrats come online.”
In a recent Zoom call, McIntosh and Ryan share what their “magic wand” crypto legislation looks like, how they think the 2024 election will impact their efforts, why Ryan thinks the Biden administration has been “hostile” towards crypto, and they ultimately share their predictions as to whether we’ll soon see any actual hard policy.
(Spoiler: One is optimistic, one is not.)
Interview has been condensed and lightly edited for clarity.
Let’s start with the current state of play in Congress. How does the lack of a Speaker impact the push for sensible crypto regulation?
Former Congressman David McIntosh (R): From the Republican side, [Interim Speaker Rep Patrick] McHenry is very a strong proponent of having reasonable regulations, and setting up a structure where blockchain technologies and digital finance can thrive in the United States. He and his committee have several bills; we've supported a couple of them.
You have several of the Democrats and committees support what McHenry has done, whereas in the Senate, and forgive me, Tim, if I get a little partisan on this, but you've got Elizabeth Warren acting as somebody who is dead-set against any legislation that would open up the private markets. And so in the Senate, you're not going to see any headway. You need the House to act first.
Former Democratic Congressman Tim Ryan (D): The sooner we could get things stabilized in the House, the better, because we are seeing progress. You know, we had Congressman Torres up in New York (Rep. Richie Torres), and Steve Horsford, who's the head of the Congressional Black Caucus, all vote with McHenry in committee.
So, I think the educational process of what we're trying to do publicly is starting to work. Some of our op-eds have me, for example, take a stand against the Democratic administration, because we believe so strongly that this is an important technology. I think more and more Democrats are focusing on that. We just need some stability in the House, so we can create an environment where you can get a bipartisan win on an emerging technology that is good for the country.
How would you characterize the White House’s approach to blockchain and crypto? Friendly? Not friendly?
Tim Ryan: Well, I would say it's been hostile. I've been in government for 20 years in the House. I recognize that what we saw with Sam Bankman-Fried and all of that is absolutely wrong. There's nobody defending what he did. But then they use that as an excuse to go after what could be a blockbuster technology for America.
We're supposed to be adults who should understand that the opportunities far outweigh the costs. We're looking for a regulatory environment, that's what the industry's asking for.
David McIntosh: I agree completely with Tim on all counts. Actually, when the administration first started, there were some fairly balanced things that were being produced out of the White House. But I think they've allowed the anti-crypto forces to emerge. You've seen a very sloppy environmental research paper that went after Bitcoin mining. I don’t know that they actually retracted it, but the peer review indicated the studies they cited were fabricated. It became political rather than data-driven. They lost track of the fact that this industry could be a tremendous job creator.
How do you think that the upcoming presidential election will impact possible crypto regulation?
David McIntosh: On Republican side, I don't think the candidates have really thoroughly thought this through. I've heard conversations about being against the Central Bank digital coin. That's a sort of emerging consensus, but it hasn't risen to the level where a lot of them are talking about it.
Honestly, I think the best chance for blockchain to have a promoter running for president -- and that would be helpful -- is if either party moves a generation down.
That’d be helpful for a lot of reasons!
David McIntosh: Yeah. And you can pick who you want, right? But I think if that happens in either party, you're more likely to get somebody who appreciates and understands it.
My analogy is the 1990s, when you saw tremendous innovation happening out in Silicon Valley. And traditionally that was a more Republican area. Bill Clinton, when he ran for president, understood this innovation could be enormously powerful and on the political side, could create a bunch of supporters in California that could help him win the state. I was posted then with the Bush administration. We were seeing traditional companies that made chips decide they were going to support Democrats, because they were more in favor of the tech industry. So I’d like to see people in each of our parties competing to be activist proponents for this technology.
If you could wave a magic wand, what would you want to see with crypto regulation?
David McIntosh: Oh, great question. I'd like to see a very, very clear set of rules on the financial side of what you need to take a new product, or a new coin to market. Very clear ways that companies like Coinbase can set up an exchange and abide by the rules.
Right now, there are no clear structures to do that, and so they are being regulated by enforcement actions, which means they don't have any clarity. There are so many good actors in this area who want to produce a good product, want to sell it to people in good faith. But in the absence of the rules, they don't know what's allowed and what's not allowed. By the way, that allows the fraudsters to get away with a lot more, right? Because they just go and pocket the money and leave the market.
So, the current way that Gensler's going at it makes the consumer and the investor much more vulnerable. Because now someone can enter the market, commit the fraud and leave. And it's a terrible strategy. So, clear rules is one of them. I'd like them to be lightly regulated so that innovation could occur so you don't have to pre-clear things to get them into the marketplace. But they're enough to protect the investor and the consumer.
Tim Ryan: I agree with David, and I think that's the magic of what we're doing here with the institute. He's with Club for Growth and I'm a Democrat from the other side, but we both are agreeing on enough regulation to allow protections, but not too much that you're going to stifle innovation. That should be the common sense American position.
And I think where we're getting in trouble here is when regulators fail to sit down with some of these businesses. Ideally you try to sit down and have some kind of relationship with the industry that you're regulating. Not to be in bed together, but to understand each other. And that's what's so difficult with the hostility, is there’s no real attitude of trying to understand the business. If that’s a political play, fine, but then you’re putting politics ahead of what's in the best interest of the country.
We want to make sure that this continues to be an American technology. And if we continue down this path, it won't be, and it'll be the Americans who suffer, American businesses who suffer, and ultimately American workers who suffer, because we won't be driving the investments or creating the efficiencies that we can with this kind of technology.
The American DNA is innovation, and that's how our capital markets work. And now there's money in blockchain and there's money in bitcoin and there's money that people can have to invest in the next generation of technologies, and all the venture funds that are popping up. Why would we stifle that when we’re only scratching the surface, and we don’t even know how far this thing can go?
David McIntosh: The regulators are monitoring everything the banks do. The pressure they put to de-bank digital finance is bad policy, but it's also wrong in the sense that you don't want the banking system picking winners and losers, and you shouldn't have the government regulators pressuring them to do that.
We've seen it done for various political things, such as banking and the gun manufacturers. If that trend continues, then you’re going to see every political fight get turned into a finance regulation fight. And that's a disaster for the free market and the banking system.
One of the most outrageous things I heard about, and this came from New York regulators, is that banks in New York have been de-banking people because they have a Coinbase account. To me that’s wrong. They shouldn't do it. And they certainly shouldn't be pressured by regulators in New York or Washington to engage in that kind of activity.
How confident are each of you, on a scale from 1 to 10, that we’ll have crypto policy legislation before the election next year? With 10 being rock solid confidence, and 1 as no chance in hell.
David McIntosh: Before I give you a number, let me just say it gets harder as you get closer to the election, right? So, I'd say I'm an optimist. I'd say a seven that something can pass.
Before the election?
David McIntosh: Before the election.
Tim Ryan: I’m at 4.5.
Whoa! Why no optimism?
I just think there's a lot of uncertainty and it's an educational process, and that's part of why we're trying to hit the gas pedal with this [Blockchain Innovation Project] and showing this coalition that we have.
I think we can move the needle a little bit on it, and hopefully before the election, but then also there may be something in a lame duck session, depending on how the politics play out. So I wouldn’t necessarily say we can't do it next year. And I think there may be a chance after the election, too, so we just want to set the table and do the best we can at this point.
One last question. It feels like crypto used to be a truly non-partisan issue that didn’t fall along the normal party lines. But has that shifted? You guys are doing bipartisan work, and I personally love that, but it does feel like there has been a shift towards Republicans being more crypto-friendly, and Senator Warren leading the anti-crypto pact on the Left. Would you agree with that? And Congressman Ryan, thoughts on what the Left should be doing, in terms of not ceding the turf of crypto to the Right?
Tim Ryan: Well, I think it's a sign of the times where the extremes define the entire party in one sense or another. And I think that's what happened. Elizabeth [Warren] came out early and kind of chalked the field, I guess you could say, around the issue. So that’s why we've got some work to do. But as we make our case, we are seeing more and more Democrats come online. We just need to reverse what she did coming out of the chute, and that's very doable. That's very doable.
Thanks again, and good luck to you both.
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