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February 28, 2017

What the New Congressional Caucus Could Mean for Bitcoin

Michael Scott | Nasdaq

In an official statement, Polis expressed his optimism about this next step for the caucus:

“Blockchain [technology] has the potential to transform the 21st century economy,” Polis said. “Lawmakers need to understand that as the world rapidly changes, it’s our responsibility to ensure that we craft policies and adapt laws that match our ingenuity. Blockchain [technology]’s potential to reshape everything from the financial industry, to supply chains, to cybersecurity, to healthcare is something we should embrace. I look forward to the caucus’s upcoming policy briefings and meetings that will educate members of Congress on these innovative technologies.”

Rep. Schweikert furthered those sentiments.

“Open blockchain networks and distributed ledger technologies are still new, but it’s critical for members of Congress to begin comprehending both their current applications and future use cases. It is critically important the United States remain competitive regarding emerging technologies, and distributed ledger technology is the open, secure, efficient technology backbone we’ve been looking for.”

The primary aim of the Congressional Blockchain Caucus is to educate, engage and offer research to assist policymakers in pursuing thoughtful regulatory approaches to the issues facing the rapidly growing blockchain network landscape.

Polis’s cohort Schweikert replaced former Co-Chair of the Blockchain Caucus, Rep. Mick Mulvaney (R-South Carolina), who was successfully confirmed as U.S. President Donald Trump’s budget director after a tight, heated vote.

Rep. Mulvaney is widely seen as pro-Bitcoin and a major blockchain advocate . There is growing belief that his appointment will fuel the integration of blockchain technology into the U.S. government, even allowing Bitcoin to find a safe legal haven against onerous federal regulations.

An Outside-the-Beltway Perspective

Steven J. Ehrlich, associate at the New York-based Spitzberg Partners LLC , offered his insights to Bitcoin Magazine on the new caucus and the future of blockchain technology in government. Spitzberg Partners is a consultancy that assists clients in development, market entry and M&A strategies for Europe, North America and beyond.

“I applaud the launch of the Congressional Blockchain Caucus and am happy to see that the issue will continue moving forward following the ascension of former Co-Chair Mick Mulvaney, with Rep. David Schweikert taking his place,” said Ehrlich.

Ehrlich believes that having a formal mechanism to discuss the potential use cases and public policy implications of this technology is critical to achieving more mainstream diffusion of this information.

He says that it will become harder to argue that this technology is strictly a law-enforcement issue or is exclusively useful for illicit activities if there is a dedicated group in Washington centered on promoting its use.

“I think that the U.S. continues to face challenges regulating the industry and the outlook is uncertain. Moreover I believe it’s too early to make any broad assessments on what the impact of President Trump will be, but my initial outlook – although Mulvaney could temper it – is somewhat negative. Given his strong focus on security I see it as unlikely that he would give the benefit of the doubt to any technology, including virtual currencies, which has a whiff of impropriety.”

From a policy and regulatory point of view, Ehrlich believes the initial focus will likely center around security and consumer protection. Above all else, he says, it is the responsibility of the government to protect its citizens from all threats, be it a terrorist attack, criminal activity or negligence. So that is the initial threshold that any blockchain application will have to cross.

Back in September, Rep. Mulvaney said, “Blockchain technology has the potential to revolutionize the financial services industry, the U.S. economy and the delivery of government services.”

Ehrlich agreed but with a few qualifiers:

“First, the end state being described here is a long ways out and will necessitate a series of trials and errors combined with a piecemeal approach across different industries.

“Second, it is important to remember that we are not building these technology stacks from scratch. There are legacy systems across every industry that must be integrated, updated or replaced, which creates additional complications.

“Third, we often use the terms blockchain or distributed ledger technologies as if they are monoliths, but they are not.”

Ehrlich contends that there are many different platforms and ecosystems in development and at some point either one will win out or there will have to be a way for multiple blockchains to communicate with one another. “A siloed approach will not work at scale,” he said.

According to Ehrlich, assuming that these hurdles are cleared, blockchain technology offers the potential to add transparency, speed and efficiency to virtually any industry that requires shared records or knowledge.

“From a cybersecurity point of view, being able to have absolute certainty that your systems and records are maintaining their integrity and confidentiality is invaluable. Additionally, through the use of smart contracts and the transparency of blockchains, state and federal governments can more efficiently collect taxes, disburse benefits, track spending, etc.”

Ehrlich cites what’s currently taking place in state governments as just one example, saying that it will be very interesting to follow developments in Delaware over the course of 2017, as they are already working on a live project involving smart contracts and their public archives.

He says that the state has even loftier plans, including legally enforceable smart UCC filings, and expects the takeaways from these projects to reverberate throughout Washington and around the country.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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