Guest post by Arry Yu from WTIA Cascadia Blockchain Council
Arry is the Chair of WTIA Cascadia Blockchain Council.
Our collective voice working together is the only way we will ensure this Cascadia region (from Portland to Seattle to Vancouver B.C.) demonstrates continued leadership for decades to come.
The impact of Caitlin Long’s visit and keynote at the Seattle University School of Law’s 2nd Annual Innovation and Technology Law Conference focused on RegTech: The Transformation of Regulation and Compliance is prolific.
Just like the approach of the WTIA Cascadia Blockchain Council, Long sought the expertise of legal experts (like Perkins Coie), of technologists (CTOs of blockchain companies), of government (the Wyoming Governor, the bank regulators, and other experienced policymakers), and other crypto and blockchain experts.
The network of policies and regulations to date at the state, federal, and global levels, (as highlighted by Facebook’s Liba project) are all in flux.
Wyoming’s recent blockchain bills and laws speak to the state’s ethos and mantra: privacy, clear property rights, and no income/franchise taxes. This is done by:
- Directly recognizing property rights for owners of digital assets
- Exemption of digital assets from property taxes in an already business-friendly tax code
- Providing a special utility for blockchain/crypto miners
- And most recently, Long recommended we pay special attention to the most recent bill, Uniform Commercial Code (UCC), which provides clarification of how existing commercial laws apply to digital assets in a way that understands how blockchain works
In her speech, Long talked about “fungible bulk,” a term that allows a consumer shareholder to actually be three-degrees away from owning the stock, and instead, being in more of a creditor/debtor relationship like an IOU. This means having an entitlement as an entity, not ownership.
General consumers are not aware of the significant additional risk they are undertaking. Long articulated the challenges of being able to search or know if a certain digital asset has a lien against it and the solution provided by Wyoming’s new laws.
What became obvious is that humans, no matter what industry or background, are inherently lazy. When it comes to understanding what’s going on in Wyoming and the fast-tracked 13 bills that were passed (thanks to the leadership and vision of Caitlin Long from 2018 to 2019), what is realized is that humans are lazy and crave convenience. When it comes to ensuring that as emerging technologies arrive and society evolves—that our policies and laws are “backward compatible”—humans are lazy.
When it comes to educating policymakers, and vice versa, policymakers truly understanding the purpose and potential of new technology, but humans seek convenience. Complacency is not good enough anymore. Laziness is no longer an excuse. All of us have to step up to the plate, engage, work in partnership with policymakers and technologists to thoughtfully craft legislation that 1) keeps consumers, the “main street moms, and pops,” safe, 2) keeps the nefarious “bad guys” at bay, and 3) enables innovation and collaboration to thrive. Simply “band-aiding” policies will not work—as we’ve seen time and time again.
What is driving Long to donate countless hours and energy to have fast-tracked the state of Wyoming to have a chance at achieving her vision of leading a mecca for digital assets nationally and a leader of what standards look like for digital assets? She thinks other states/nations will look to Wyoming as the roadmap for blockchain policies. Long wants to block nefarious actors that take advantage of ambiguity and loopholes for their own benefit.
Wall Street is where Long witnessed bad actors taking advantage of legal loopholes—where the capital markets are not stable. It is where human laziness has led to the retail investors being taken advantage of. In her keynote, she referred to the Dole case that made the case for blockchain because in this case, more shares were claimed than actually existed.
Property rights were violated because there are no clear property rights, and titles are not clear. Long also strongly recommended everyone who is interested in proper policy creation for Washington to read about the “blockchain plunger.”
The final food for thought that was left for the audience is a statistic—the conviction rate is 0.0027% of all claims and litigation in financial fraud related to the Bank Secrecy Act.
What’s the point then of all this very costly compliance, regulation, and activity? The government wants to track all activities to prevent events of mass destruction. There is a balance and getting it wrong will be scary and costly for everyone.
Long fears for the United States because “Asia is so far ahead.” The regulations need to make sense and need to be backward compatible—that’s what we need to be mindful of.
In Washington state, we have a responsibility to thoughtfully leverage the work that Wyoming has already done in pioneering regulation for a digital native future and showcasing all of the leadership we already have at our fingertips. The Cascadia region is a global leader in aviation, cloud technology, software platforms, startup innovation, consumer services, and especially, quality engineering talent.
Our collective voice working with the technology juggernauts like Microsoft and T-Mobile, alongside the smaller companies like ArcBlock, Tenta, and Dragonchain, shoulder-to-shoulder with investors and government is the only way we will ensure this Cascadia region demonstrates continued leadership for decades to come.Posted In: Seattle, Wyoming, Guest Post, Regulation