Berns Weiss LLP recently met with Congressman Tony Cárdenas (D-California) to discuss his co-sponsorship of the bi-partisan virtual currency/blockchain technology resolution, House Resolution 835 (H.Res. 835), passed by the U.S. House of Representatives on September 12, 2016. It expresses “the sense of the House of Representatives that the United States should adopt a national policy for technology to promote consumers’ access to financial tools and online commerce to promote economic growth and consumer empowerment.” Congressman Cárdenas supported H.Res. 835 to show that Congress “put a marker down right now and we can’t say two years from now or ten years from now we didn’t see this coming legislatively. We need to be on top of it and hopefully in front of it.” He went on to discuss his motivation for co-sponsoring H.Res. 835 and acknowledged that the blockchain technology on which virtual currency is based is revolutionary and here to stay:
Virtual currency is not going to go away. It might have its fits or hiccups or what have you, but it’s not going away. So if something’s not going to go away and it’s going to be parallel to an existing system that we’ve had for hundreds of years with its modifications over time, why aren’t we willing to recognize that and then say what is the ecosystem and what is its place in this ecosystem from a legal vantage point, from a legislative vantage point.
Congressman Cárdenas was very forthcoming about his concerns regarding this new technology, citing security as chief among them. “My first thought and concern was how are they going to make it secure? What happens if the system locks up? And all of a sudden it is so involved in the community that people are [saying], ‘I literally need to transact at this moment and I can’t. And then the fear what happens to my transactions tomorrow? I’ve now adopted this new currency and I don’t use any old form of currency. That’s pretty scary.” Frequent discussions between lawmakers, experts, and industry participants on this and other topics is absolutely necessary to enable the creation of a comprehensive federal virtual currency regulatory framework.
While Congressman Cárdenas and his co-sponsor did not face any resistance during the voice vote for H.Res. 835, that will likely not be the case once an actual draft of any virtual currency/blockchain technology regulation is promulgated. Perhaps the biggest barrier to comprehensive federal regulation is the apparent lack of knowledge by many legislators regarding virtual currency and blockchain technology. According to Congressman Cárdenas, the conversation on the House floor was fairly general without much emphasis on how exactly virtual currency regulation would be enacted.
Hopefully, once the new Congress is seated, the legislative process will continue with what Congressman Cárdenas perceives to be the best next step towards passing virtual currency and blockchain technology regulations: Congressional hearings. “I think the most productive thing we could do is to have hearings [on virtual currency regulations]. I think that will spawn other actions and reactions. I think that in the hearings we are going to hear opinions and reports on what the rest of the world is or isn’t doing. We’re going to learn more about what it is. And in a nutshell we’ll be more informed as a society, as a country, and as people. We’ll be engaged and to be disengaged is not only a lost opportunity but I think it’s irresponsible.”
These hearings and the process leading up to them will provide an ideal opportunity for those in the virtual currency and blockchain community to educate lawmakers about how virtual currency and blockchain technology work, their generally unlimited potential to revolutionize many aspects of society, and the relevant issues faced by industry participants and consumers. By providing members of Congress with information covering the fundamental concepts of blockchain technology and virtual currency, how they can be productively regulated without stifling innovation, and the various ways in which they can benefit both the public and private sector, lawmakers will hopefully develop the understanding that they need to move forward with comprehensive virtual currency and blockchain technology regulation that both protects consumers and fosters industry growth.
Recognizing the vast potential of blockchain technology, which expands far beyond virtual currency, Congressman Cárdenas expressed his interest in creating a blockchain-based system to more effectively address opioid prescription abuse and addiction and manage the No-Fly List. As Congress looks to create comprehensive virtual currency and blockchain technology regulation, forward thinkers like Representative Cárdenas will be important advocates for the virtual currency/blockchain community and the groundbreaking legislation addressing applications of this technology.