A group of 26 high-level tech experts and academics have joined forces to provide pushback against the massively well-funded crypto lobbyists they say are peddling a false narrative about the virtues of blockchain technology.
The letter, signed by the likes of Harvard lecturer Bruce Schneier, software engineer turned crypto researcher Molly White, and Google Cloud’s Kelsey Hightower appeals to a long list of Republican and Democratic lawmakers asking them to take a skeptical approach to crypto firms’ claims.
Deep-pocketed crypto firms are spending hard to make their voices heard in the Capitol as DC lawmakers grapple with forthcoming regulation.
“We urge you to resist pressure from digital asset industry financiers, lobbyists, and boosters to create a regulatory safe haven for these risky, flawed, and unproven digital financial instruments and to instead take an approach that protects the public interest and ensures technology is deployed in genuine service to the needs of ordinary citizens,” reads the letter.
According to the small group of tech experts, crypto and blockchain offer the potential for more bad than good to the average American — a “disaster for financial privacy” and a “gift to money launderers.”
Spending from the crypto industry to lobby congress has accelerated massively. As the Financial Times notes, dollar spend on lobbying has quadrupled to $9 million since 2018 with lobbyists canvassing Congress on behalf of crypto nearly doubling from 115 to 320.
The biggest spenders include exchanges such as Coinbase, Crypto.com, and FTX but payment provider PayPal and social media giant Meta have both deployed their lobbyists in the capital in the name of influencing crypto regulation.
Signee and one of the key scientists behind the letter, Stephen Diehl, told Protos:
“This letter is important because it aims to address the crypto lobby narrative that regulation will ‘stifle innovation’, which does not match with the lived experience of technology experts in the field.
“Today we told DC that the status quo needs to change and we need sensible regulation and enforcement,” (our emphasis).
In an exchange on Twitter, cybersecurity expert John Reed Stark brought the letter directly to the attention of Securities and Exchange Commissioner Hester Pierce, a noted crypto booster.
Pierce’s crypto sympathetic policy ideas have earned her the nickname “crypto mom.” For example last year, she revamped her proposal for a safe harbor which would give crypto projects a three year grace period to iron out any issues which would get them in trouble with the SEC.
The Capitol is paying attention to crypto
The letter comes as President Joe Biden orders his department heads to interrogate crypto. In an executive order signed on March 9, Biden requested 13 reports which will likely inform the shape of crypto regulation in the US.
However, former Microsoft engineer Miguel de Icaza explained to the FT that blockchain technology in reality has little to offer.
“The computational power is equivalent to what you could do in a centralised way with a $100 computer.”
“We’re essentially wasting millions of dollars worth of equipment because we’ve decided that we don’t trust the banking system,” de Icaza said (via FT).
Elsewhere in the world, crypto firms flashed their finance power at the Davos summit. Global elites in attendance were met by stands from crypto companies hoping to tout the benefits of blockchain to the politically powerful.
However, that didn’t stop high-profile speakers at the event from unleashing a tirade of criticism against crypto. For example, International Monetary Fund Managing Director Kristalina Georgieva likened some cryptocurrencies to a “pyramid scheme in the digital age” (via Fortune).