With help from Derek Robertson
Blockchain isn’t just a shiny new thing for Silicon Valley—the snow the place to be for Washington tech lobbyists, policy buffs and political strategists.
This means that the same characters who shaped the government’s approach to good old Web 2.0 become central to policy-making for ‘Web3’. In the last six months alone:
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Mick Mulvaney, former White House chief of staff, signed with a crypto firm
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Cory Gardnerformer Republican senator from Colorado, joined the Crypto Council for Innovation
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Financial services and crypto firm Block hooked Tom Manatosformerly Spotify’s main lobbyist.
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Coinbase attracted Kara Kalvert far from a partnership with Franklin Square Group, which represents Google, Apple and other big tech companies.
- The Blockchain Association has hired a lobbyist David Grimaldi away from the Interactive Advertising Bureau to direct its government relations.
On one level, it’s just typical Washington careerism — jump from the slowest to the fastest boat. But, in interviews, many lobbyists who have made the leap say they see a chance to forge a new relationship with DC regulators — sidestepping some of the mistakes the tech industry made in its latest growth phase. explosive.
Back when Facebook, Google, and Amazon were learning to navigate Washington, “a lot of people were really taking another view: that they didn’t necessarily want to work in partnership, the space should be left unregulated, the free market should dictate where things go,” said Chris Lehanethe ubiquitous political strategist who was once played by Rob Lowe in a film,
Lehane himself is part of the trend: he spent seven years at Airbnb before joining Haun Ventures, a crypto and Web3 investment firm, late last year.
Lehane said politics is still “soft” in the blockchain space, meaning it’s unclear if it will become a partisan issue, or how the tokens will fall once it does.
Several of the converted politicians told me this week that corporations, at least, have already learned a lesson: get involved early. Many of today’s big tech companies ignored politics until they came under intense scrutiny.
“The rules will be written by the companies that are really involved in Washington, D.C. and you ignore Washington at your peril,” said Niki Christoffa former Google and Uber executive who now runs her own PR firm representing several crypto clients.
Regulators and politicians don’t want to make the same mistakes this time around, either. They failed to regulate big tech companies very early on, leading to massive concentration in the tech industry. Washington turned a blind eye as misinformation spread on social media, Amazon overwhelmed e-commerce competition, and Google emerged as an unrivaled search giant. The new wave of lobbyists will therefore have their work cut out for them.
There are still many unresolved questions surrounding blockchain politics: which agency will regulate digital currencies, whether lawmakers can craft rules that adapt to rapidly changing technologies, and whether progressives will embrace digital currencies or decide that they are more interested in the accumulation of wealth than in the democratization of finance. .
Crypto is the biggest attraction.
The Tech Transparency Project, an advocacy group focused on tech accountability, in February identified 235 examples of officials who have moved from the public sector to crypto companies. Larry Summers, the former Obama Treasury Secretary whose signature is literally on US currency, is now an advisor to no less than three crypto companies.
It remains unclear where lawmakers will ultimately fall on the crypto issue. Progressives like the Democratic senator from Massachusetts. Elizabeth Warren embarked on an anti-crypto crusade, but the left is divided whether crypto enables financial crimes or offers new avenues for financial inclusion. Right now, crypto lobbyists are still in the “educating policymakers” phase, learning to tell their own story, much like Google, Facebook, and Amazon did in the early 2000s.
Of course, there is also the lure of higher salaries. Venture capitalists invested over $33 billion in crypto and blockchain startups in 2021, according to a recent report.
“The potential financial benefit is really high,” Christoff said. “In the larger “Web2” companies, this is going to be capped. In crypto, it’s high risk, high reward.
What is the “digital dollar”?
In the simplest possible terms, a central bank digital currency – the technical name for the concept – is just a digital representation of a country’s fiat currency. More than 20 countries, including China, have already launched a CBDC or are piloting one according to a Atlantic Council report.
If you’re not a financier, or just crypto-apathetic, the concept might seem intriguing but almost pointless: doesn’t ordinary money spend just as well online?
Well yes. Researchers investigating CBDCs do not yet know exactly what its main distinguishing characteristics would be. The Federal Reserve has argued that a CBDC could reduce transaction costsreduce credit risk and, most importantly, protect the dollar’s status as the dominant global currency, which Bitcoin evangelists hope to challenge.
How soon could we get a digital dollar? Last week, Treasury Secretary Janet Yellen said a U.S. CBDC would likely take years to developbut it’s a possibility the Fed has repeatedly said actively explore.
And there’s a lot of concrete activity around it on the ground in Washington (and elsewhere). POLITICO’s Daniel Lippman noted that the Digital Dollar Project, a finance research group that promotes the concept, briefed members of Congress from both parties.
In February, the Federal Reserve Bank of Boston and MIT released a prototype CBDC platform dubbed “Hamilton Project.” And Rep. Stephen Lynch (D-Mass.) introduced a bill at the end of March, this would launch a US pilot program of “e-cash”, a kind of parallel currency to a potential CBDC intended to familiarize users with the concept.
But worries, of course, abound. The Fed has warned that CBDCs could potentially destabilize mainstream banks, if enough users adopt them to seriously diminish traditional deposits. Digital money is also more vulnerable to hackers and the same type of financial crime endemic to cryptocurrency around the world. — Derek Robertson
Expertise is cheap, analysis is risky, and successful predictions are nearly impossible. But delving into decades-old issues rolling stone this week – you know, as one does in his spare time – I came across a piece of journalism that predicted the digital future as it had been seen since the early 1990s with disturbing accuracy.
“Bulletin Boards: News From Cyberspace” is a relatively brief report by Jon Katz, then editor of RS, on the Internet’s early bulletin board systems, a kind of precursor to Internet forums and social media. (For a more detailed look, check out this excellent multi-part documentary on YouTube.)
Long before our current debates about digital media, misinformation, and a decentralized future, Katz sort of hit the nail on the head:
“…Deprived of its historic role as filter and gatekeeper, what will become of the central role of journalism? … The wellhead begins to crumble, threatening an anarchic vacuum. The challenge is determining who is credible and who is not, who to rely on for quick information. The information we receive will no longer come in the form of evening news bulletins or daily newspapers dropped on our lawns each morning. What seems more likely is that what we now call news media will either merge with new communication technologies or eventually be forced into sweeping editorial changes.
Reminder: This was written not just before Twitter existed, but when Jack Dorsey was still in high school. (You can also read the full article, archived in a reprint by Span Magazine.) When new and disruptive technology emerges, its implications are sometimes before our eyes, even in their nascent forms. It would be the height of hubris to promise the level of oracular insight Katz provided here, but stay tuned while we try. — Derek Robertson
Keep in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Constantin Kakaes ([email protected]); and Heidi Vogt ([email protected]).
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