On this episode of “Money Reimagined” the discussion comes home for an insider’s look at how new, disruptive technology and government interact. For this discussion, hosts Michael Casey and Sheila Warren of the World Economic Forum are joined by Marvin Ammori, best known for his work on network neutrality and Internet freedom issues. Rounding out the panel is Christopher Giancarlo, former Commodity Futures Trading Commission chairman and founding principal of the Digital Dollar Foundation.
“My background is really 20 years of working on the internet,” said Marvin Ammori. “And I remember in the early days of the internet, you know, one kind of piece of deja vu is what jumped out to everyone. The internet began with all the bad stuff. Congress couldn’t believe there was porn on the internet. We had to protect the children from the number one thing that people noticed on the internet.
“And, in fact, the first major case about the internet, had the [U.S.] Supreme Court upheld Congress’ action, pretty much every website would have needed to get your credit card number and verify you’re 18 to go on. The internet would have been for adults only.”
Marvin continued, “The entire trajectory of the internet would have been different, but luckily the Supreme Court pushed back on congressional action under the First Amendment. But the first impulse of Congress 20 years ago with the internet was ‘let’s cripple this thing.’ […] We’ve seen all the tremendous benefits, things we could have never imagined back then. Now, when it comes to cryptocurrency, we see something similar.”
“The first wave of the Internet was an internet of information. And, interestingly, it emerged into a federal regulatory structure that was really a pretty light zone because of our First Amendment protections of freedom of speech,” said former CFTC Chair Christopher Giancarlo. “So the internet, actually, in the first case, it didn’t face a lot of opposition, I think. Marvin is absolutely right. There were certainly calls in Congress for banning because of pornography, but at the end of the day the Democrat White House of President [Bill] Clinton [and] the Republican Congress under Newt Gingrich came up with the ‘first, do no harm’ approach.
“And the internet flourished and a lot of lessons learned were ‘don’t ask permission, seek forgiveness,’ ‘keep going until you break something.’ And the first internet wave, the wave of information flourished pretty successfully.
“We’re now in a new construct, where in fact what we’re talking about, as an internet of ‘things of value’, whoa… Well, it’s a very different construct. We have at least three federal bank regulators regulating holdings of people’s things of value, market regulators in Washington. And then in every state level.
“And so this new wave of the internet is not running into a regulatory light zone. It’s actually running into a regulatory heavy ‘no go zone.’ And we’ve seen the clash. I mean, just look at the [initial coin offering] challenge a few years ago. That was a statement by one regulator that they were not conceding ground in this new internet of value. [… It’s] a product of our past and our approaches and our constitutional liberties, but also these new technologies, new waves, the internet bring new challenges to old constructs that we haven’t often been successful in working through.”
On Dec. 18, the U.S. Treasury Dept. published a proposal to expand the Financial Crimes Enforcement Network’s requirements for identity monitoring and reporting by crypto exchanges. Under these proposed new rules, that powerful agency, known as FinCEN, would require exchanges to collect names and home addresses from the owners of private, self-custodied digital wallets that receive more than $3,000 in cryptocurrencies daily and to file special currency transaction reports about any wallet that receives more than $10,000 a day.
The announcement prompted an outpouring of criticism from the crypto community and among digital rights activists. Many saw it as an attack on privacy. As of this recording, more than 7,500 comments have been posted to FinCEN’s site. That constitutes more than two thirds of all public comments received by the agency for various rules and proposals dating back to 2008.
Then, on Monday last week, the Office of the Comptroller of the Currency, which sets and coordinates federal banking rules, offered a rule change that was much more favorably received among the crypto community.
The OCC said banks could now use stablecoins to conduct payments and other activities, including stablecoin tokens issued on public blockchains such as Ethereum. It prompted some breathless commentary on how integrating the old world of banking with the new world of decentralized finance paves the way to a new global financial system of programmable money.
To many this seemed like a weird good cop/bad cop routine out of Washington. Is the Trump Administration pro- or anti-crypto?
But to Michael Casey, there’s much more coordination here than meets the eye.
“There’s a common theme with respect to how both rules fit into geopolitical tensions that digital currency technology is stirring up. We’ll go into that in this week’s episode, which is why one of our guests today is Christopher Giancarlo, the former chairman of the Commodities Futures Trading Commission who is now senior counsel at Willkie Farr & Gallagher and, among other roles, founding principal of the Digital Dollar Foundation. As someone who knows the ropes in Washington and is thinking hard about how the U.S. should prepare for a world of digital currencies, his insights will be invaluable.
“The other question this throws up is: how do we forge a more constructive relationship between the crypto community and policymakers, not just in the U.S. but in the global setting in which this technology exists?
“For that we’ve brought in Marvin Ammori, the chief legal officer for the decentralized exchange protocol Uniswap. Not only does that role give Marvin a solid foot in the crypto community’s regulatory concerns, but we think his past influential work for the internet tech industry developing a common framework for net neutrality laws comes with real lessons on how to do these things right. And as an influential activist for digital civil rights, the questions here of privacy and digital autonomy are right in his wheelhouse.”