Watch: The Crypto Policy Landscape And Educating Policymakers About Web 3.0 | The Future Rules Podcast Ep.5 (youtube.com)
Powered by the Filecoin Foundation, The Future Rules is hosted by Forkast. News Editor-in-Chief Angie Lau, alongside top legal mind in blockchain and Filecoin Foundation Board Chair, Marta Belcher. Together with some of the most renowned names in the industry as their special guests, they dive into the future and the ethical issues that technology will raise, and how to address them today before they determine our tomorrow.

In this episode, Kristin Smith, who is the Executive Director of the Blockchain Association takes a look at the need for policymakers to really understand what cryptocurrencies can do and why professional advocates are essential in providing that education. She also considers the role the U.S. infrastructure bill has played in that process and why hitting the pause button on the legislation could be of benefit for everyone.

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HIGHLIGHTS

The challenge of crypto policy:
“The challenging thing is that most policy that we have to date has not actually come from Congress, it's come from the federal regulatory agencies, and that has some advantages… But the problem is, they're a little bit less directly accountable. A lot of these people are career people, or maybe they're political appointees. But there's a little bit of a less direct connection with users of cryptocurrency and so they often are only looking at a specific policy issue through the very narrow lens of whatever mission their regulatory agency has.”

How bad headlines and misinformation are influencing policymakers:
“Every once in a while, the bad headline is actually true, but a lot of times it's just a misunderstanding about how crypto networks work. So we have issues not just with policymakers, but with the journalists and the different publications that they work for... But, sometimes you can't change somebody's mind once they've sort of set out to do a story. But it is problematic because I think if you're a senior official at the Treasury Department or other agency, you just see the bad headlines and you don't necessarily get access to the good stories. So one of the things that we try to do is actually push out the good narratives through the press as well.”

The crypto provision in the infrastructure bill:
“We've known since the late spring that the White House and the Treasury Department were very interested in putting a provision in that bill that would direct centralized cryptocurrency exchanges, so these are companies like Kraken and Coinbase, to do information reporting, just like your stockbroker would at Charles Schwab. So that means that at the end of the year, these companies would send something that looks like a form 1099 to both the IRS and to their customers with information that shows how much tax they owe, because every time you trade cryptocurrency, there potentially is a capital gains implication there. So this is actually a good thing… But what they decided is, well, we need to help pay for this infrastructure bill, so out of the trillion-dollar bill, this throws in about 28 billion dollars.”

The problem with the infrastructure bill:
“The problem is what they did in this bill is, at the very last minute, without having any hearings or going through any sort of legislative vetting or even asking the stakeholders, like the Blockchain Association and others who've been working with the committee for a long time… what they did is they expanded the definition of a broker, so basically, the people who have the kind of organization that would have to do this kind of reporting, to include things like software developers, miners, stakers, other types of network validators - basically people that don't have customer relationships, that don't have access to the information required for information reporting, and so in some ways, it's almost like a de facto ban on these activities because there's no way for these types of organizations to comply.”

The good news about the crypto provision:
“The good news is that through this process, the authors of the amendment and even the Treasury Department themselves have said, oh, no, that's not what we meant this language should do. So we have a couple of things. One, there's a bunch of pressure right now that if this passes and they move to enact it, that they're not going to immediately try to make this apply to miners or software developers, or others. And so there will be political pressure for them to do this in a tailored way that really just captures centralized exchanges. So what we're working on right now is to try to figure out how to undo this legislation. And at this point that we're recording this, the infrastructure bill has not actually become law yet. So we do actually need that to happen before we can undo it.”
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