US Officials Praise Blockchain Amid ICO Concerns

Crypto regulation and government applications of blockchain were hot topics at day two of the D.C. Blockchain Summit.

AccessTimeIconMar 8, 2018 at 12:00 p.m. UTC
Updated Sep 13, 2021 at 7:39 a.m. UTC

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 business community, public and private sector cooperation is key.

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

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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.

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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.

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“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. 

Correction: This article has been amended to clarify remarks made by deputy assistant secretary Sullivan. 

Images by Annaliese Milano for CoinDesk

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