All Segments
a16z Podcast | The Regulatory Landscape for Crypto
31 segments available
with Katie Haun (@katie_haun), Robin Weisnman (@robinweisman), and Sonal Chokshi (@smc90) What’s going on, regulation-wise, in crypto? How should people who want to join a company or build something new in the space think about the regulatory environment? What to make of all the headlines, or the "alphabet soup" of agencies potentially involved in regulating crypto? This episode of the a16z Podcast shares principles -- as well as key players/acronyms to know -- for sorting the signal from the noise in the regulatory landscape for crypto. The experts in conversation with a16z editorial partner Sonal Chokshi include: Robin Weisman, who helped found and is a lobbyist for Coin Center, a nonprofit policy research and advocacy group for cryptocurrencies; and was formerly a director of government relations at Nasdaq; and Kathryn (Katie) Haun, who teaches crypto at Stanford Business School; is on the boards of Coinbase and HackerOne; is a former federal prosecutor with the U.S. Department of Justice, where she led their first digital currency task force and prosecuted a number of cases in the space; and was recently announced as general partner. The discussion is based on a panel that originally took place at the “Intro to Crypto” event that Andreessen Horowitz and #Angels put on in April 2018. You can see other talks from this event -- including a video on the building blocks of crypto; as well as sessions on the big picture of decentralization to building companies in crypto, from people to code -- here. This panel also presented the below slide, which is referenced in (but is not necessary to follow) this episode: a16z.files.wordpress.com/2018/07/regu…pto_a16z.png photo credit: Erin Brethauer
Segments Timeline
Welcome to the Regulatory Landscape
In this introduction, Sonal Chokshi sets the stage for a discussion on the regulatory landscape for cryptocurrencies, referencing the inaugural 'Intro to Crypto' event co-hosted with #Angels. The episode features insights from experts Robin Weisman and Katie Haun, who bring their extensive backgrounds in crypto policy and law.
"hi everyone welcome to the a 6 & Z podcast I'm sonal today's episode is all about the regulatory landscape in crypto it's based on a conversation recorded at our inaugural intro to crypto event co-hos..."
Meet the Experts
Sonal introduces the panelists: Robin Weisman, a lobbyist and co-founder of Coin Center, and Katie Haun, a Stanford Business School professor and former federal prosecutor. Their expertise in cryptocurrency regulation and advocacy sets the foundation for the discussion on navigating the complex regulatory environment.
"co-hosted with hash tag angels in April 2018 you can also find other sessions from this event as podcasts as well as on our YouTube channel where there's also an intro to crypto basics deck presented ..."
Understanding Regulatory Principles
Robin Weisman outlines key principles for understanding cryptocurrency regulation, emphasizing that while Bitcoin itself is regulated, the underlying technology is not. She explains the importance of distinguishing between different regulatory bodies and their varying objectives, highlighting the broad discretion regulators have in applying existing laws.
"who's a lawyer by training her early work on Bitcoin policy issues helped found quayne Center which is a non-profit policy research and advocacy group for cryptocurrencies she's a lobbyists of the gro..."
The Legality of Technology
The conversation shifts to the legality of cryptocurrency technology. Robin and Katie discuss how decentralized cryptocurrencies are not illegal, despite potential illicit uses. They draw parallels to the internet, emphasizing that the technology itself is not the issue, but rather how it can be misused.
"discussion that follows covers everything from a pulse check on what's coming on regulation lies in crypto to how people who want to join a company or build something new in this space should think ab..."
Early Adopters and Misconceptions
Katie highlights the counterintuitive reality that criminals often adopt new technologies first, including cryptocurrencies. This segment discusses the misconceptions surrounding early adopters and the need for policymakers to focus on illegal uses rather than demonizing the technology itself.
"aspect of it but one context note the story of the internet and we've referenced the Internet as an analogy here a lot has been a story about permissionless innovation government invented it and unive..."
Government's Evolving Understanding
The panelists discuss the evolving relationship between technology developers and policymakers. They note that government agencies, like the SEC and CFTC, are forming working groups to better understand cryptocurrency and its implications, reminiscent of the early days of the internet.
"noise and if you have to summarize some of the key principles or mindsets that people should think about approaching the space what are some of the big picture principles you'd share Robin do you want..."
Coordination Among Agencies
Katie discusses the increasing coordination among regulatory agencies, highlighting recent joint efforts between the SEC and CFTC. This segment emphasizes the importance of collaboration in addressing the complexities of cryptocurrency regulation.
"when those applications cross into an area where there is an existing set of regulations whether it be money transmission or something or a custody of funds there are regulations that do apply and so ..."
Media Sensationalism and Its Impact
Robin expresses frustration over misleading media headlines that sensationalize cryptocurrency issues. She explains how these headlines can influence policymakers and lead to knee-jerk reactions, stressing the need for accurate information to guide regulatory responses.
"in mind is there are very different priorities and objectives between civil enforcement and criminal enforcement and the second kind of principle is that all of the existing laws and regulations are r..."
The Scrutiny of Cryptocurrency
The discussion turns to the heightened scrutiny faced by the cryptocurrency industry compared to traditional financial services. Robin shares her experiences as a prosecutor, illustrating the disparities in media coverage and regulatory focus between cryptocurrencies and established financial institutions.
"would say that decentralized cryptocurrency is the kinds of things we're talking about today not illegal but you can think about ways that they can be used in an illicit way and the same thing I mean ..."
The Impact of Sensational Headlines
Katie Haun discusses the frustration surrounding misleading headlines in the crypto space. She emphasizes how sensational news can skew policymakers' perceptions and lead to knee-jerk regulatory reactions. The segment highlights the importance of accurate media representation in shaping the regulatory landscape for cryptocurrencies.
"Banking Committee the chairman of the Securities and Exchange Commission and the chairman of the commodities future Trading Commission I'm a joint op-ed in The Wall Street Journal about their work so ..."
Misconceptions About Blockchain Security
In this segment, Haun clarifies common misconceptions about blockchain security, particularly the false narratives surrounding hacks. She points out that while cryptocurrency exchanges have been compromised, the blockchain itself has never been hacked, underscoring the need for accurate information in the regulatory discourse.
"people to read oftentimes if you drill down even into the actual body of the story you realize okay that was a sort of a sensational headline but the other thing that's really frustrating about some o..."
The Regulatory Scrutiny of Crypto
Haun explains the heightened scrutiny faced by the cryptocurrency industry compared to traditional financial services. She shares her experiences as a prosecutor and highlights the disparity in media coverage between crypto scandals and those in established financial institutions, emphasizing the need for balanced regulatory perspectives.
"never yet been hacked and so that's just one great example of these headlines I think the other fact of the matter is that cryptocurrency as a community and as an industry is really under a microscope..."
Understanding Legal Actions in Crypto
The discussion shifts to the current state of legal actions in the cryptocurrency space. Haun notes that while there are ongoing investigations, the majority of crypto activities are lawful and innovative. She emphasizes that many cases remain under seal, indicating that the public may not yet be aware of significant regulatory developments.
"still under seal that's kind of first principle so know is you know people would ask well when is the government going to do something about X Y Z there cuz barely breaking the law the government wasn..."
The SEC's Role in Crypto Regulation
This segment delves into the SEC's processes for investigating and prosecuting cases in the cryptocurrency sector. Haun outlines the steps involved in bringing a case to trial, highlighting the thoroughness required before enforcement actions are taken, and the importance of judicial oversight in these matters.
"mean I don't think that you have people in enforcement at the Securities and Exchange Commission out looking to get somebody and be not a gotcha right and you know it takes an incredible amount of mea..."
Defining Securities in the Crypto Space
Haun discusses the SEC's evolving stance on whether initial coin offerings (ICOs) should be classified as securities. She explains the implications of this classification and how it affects regulatory compliance, emphasizing the ongoing debate about the nature of tokens in decentralized networks.
"talking about criminal cases is a jury of 12 of your peers gets to decide if the government's proved beyond all reasonable doubt that what you've done is clearly illegal and in this space especially a..."
Collaboration Among Regulatory Agencies
The conversation highlights the collaboration between various regulatory agencies, such as the SEC and FinCEN, in addressing issues within the cryptocurrency market. Haun provides examples of recent cases where these agencies have worked together to enforce regulations, showcasing the interconnectedness of regulatory efforts.
"glad you're benching that because you guys have actually mentioned the SEC a few times but we have the slide up here which has a lot of other agencies on you and we don't have time to go into this bec..."
The Evolution of Regulatory Focus
Haun reflects on how the focus of regulatory agencies has shifted over time, particularly regarding cryptocurrencies. She notes that while the SEC has become more prominent in recent years, other agencies like FinCEN and the IRS have also played crucial roles in shaping the regulatory landscape for digital currencies.
"so we see these agencies working together a lot also and we talk all about the SEC today in 2018 and I think one of the reasons is what agency was putting out guidance in 2017 the SEC however if you w..."
The SEC's Perspective on Utility Tokens
In this segment, Haun discusses the SEC's evolving perspective on utility tokens and their classification as securities. She highlights recent discussions within Congress regarding the potential for tokens to be considered non-securities based on their utility, reflecting a significant shift in regulatory thinking.
"we're talking about the sec a lot today is because 2017 saw an explosion in terms of these ICS initial coin offerings and so the SCC's work has been done a lot in the enforcement division in terms of ..."
The Future of Token Regulation
The segment concludes with a discussion on the future of token regulation and the implications of recent SEC statements. Haun emphasizes the importance of understanding the lifecycle of tokens and the need for clear regulatory guidelines as the cryptocurrency market continues to evolve.
"big deal is it an open question it's not a closed question if you have a token that's operating on a fully decentralized network that's probably clearly not a security and just this morning a House Fi..."
The Lifecycle of Cryptocurrency Networks
This segment delves into the lifecycle of cryptocurrency networks, discussing how established cryptocurrencies like Bitcoin and Ethereum have evolved over time. The panelists highlight the government's cautious approach to regulation, emphasizing the need to understand the developmental stages of various tokens and their applications. This understanding is crucial for regulators as they navigate the complexities of the crypto landscape.
"application of rules and regulations because the tricky part comes when you have a decentralized network you might have an existing set of rules and policy makers right and just to pause for a moment ..."
Community Engagement in Regulation
The conversation shifts to the role of the cryptocurrency community in educating regulators about the industry. The panelists stress the importance of collaboration between industry players and government entities to ensure effective regulation. They highlight the challenges regulators face in keeping up with the rapid evolution of cryptocurrency technologies and the need for ongoing dialogue.
"this was actually a utility token yeah not a good vehicle to make an example of for example where as you might have the exact opposite end of the spectrum I do have a question which is the nuances and..."
Bridging the Gap Between DC and Crypto
In this segment, the panelists discuss the disconnect between regulatory bodies in Washington, D.C., and the cryptocurrency industry. They emphasize the importance of mutual understanding and communication to foster better regulatory outcomes. The conversation highlights the global nature of cryptocurrency and the involvement of various regulatory bodies, both domestically and internationally.
"on the government side to come in and say here are all these kinds of laws you know they're not giving legal advice of course but it's a two-way street and so I think that's really important I remembe..."
Understanding Regulatory Agencies
The panelists provide an overview of key regulatory agencies involved in cryptocurrency regulation, including the Treasury, FinCEN, and the IRS. They discuss the roles these agencies play in monitoring financial systems and ensuring compliance with laws. This segment serves as a primer on the various entities that impact the regulatory landscape for cryptocurrencies.
"these rules and we're saying you see obviously this is a global technology writing global regulators and global governments are involved and in some cases working together with each other these are ju..."
The Role of the SEC and CFTC
This segment focuses on the specific roles of the SEC and CFTC in regulating cryptocurrencies. The panelists explain how the SEC oversees equity markets and investor protection, while the CFTC regulates futures markets. They discuss the implications of these regulatory frameworks for cryptocurrencies and the ongoing developments in this space.
"very minimum share with us the taxonomy for what we're looking at here because I hear this list of names and I just like looks like alphabet soup you know it's I don't know what's going on how would y..."
Criminal Enforcement in Cryptocurrency
The discussion shifts to the enforcement actions taken by various agencies, including the FBI and the Department of Justice, against criminal activities involving cryptocurrencies. The panelists highlight the serious nature of these cases and the importance of prosecuting illicit uses of cryptocurrency. This segment underscores the need for effective law enforcement in the evolving crypto landscape.
"with a federal FinTech Charter so that only one license would be needed so far that hasn't gone anywhere do you want to cover any others I don't do you want to talk about justice and then I'll go to t..."
Consumer Protection and Financial Regulation
In this segment, the panelists discuss the role of consumer protection agencies, such as the CFPB, in the cryptocurrency space. They emphasize the importance of safeguarding consumers in financial transactions involving cryptocurrencies and the regulatory challenges that arise. This conversation highlights the need for comprehensive consumer protection measures as the industry continues to grow.
"you're gonna take ten so this is not the government trying to do gotcha these are cases where you know one of the ones I prosecuted were the corrupt agents who were looking into the Silk Road they wer..."
Self-Regulation in the Crypto Industry
The panelists conclude by discussing the role of self-regulatory organizations like FINRA in the cryptocurrency market. They explain how these organizations help ensure compliance among broker-dealers and the importance of self-regulation in maintaining industry standards. This segment wraps up the conversation on the regulatory landscape for cryptocurrencies and the various mechanisms in place to oversee the industry.
"markets and it's been in one of their rulings said that bitcoin is a commodity so it falls under their jurisdiction they've also done a lot of work they have something called the technical advisory co..."
The Patchwork of Crypto Regulation
Haun emphasizes the fragmented nature of cryptocurrency regulation, noting that it involves multiple federal agencies and is not limited to the SEC. She discusses the importance of understanding both federal and state regulations, as well as the global implications of crypto compliance.
"the FTC we're seeing getting really involved in the cryptocurrency they actually also have had a couple of working groups and some meetings why is the FTC in particularly well for example they also co..."
Advice for Entrepreneurs in Crypto
Haun provides guidance for entrepreneurs looking to enter the crypto space, advising them to use common sense and good judgment. She stresses the importance of being informed about applicable laws and demonstrating best efforts to comply, even in gray areas of regulation.
"entrepreneur and I hear that I think it's great because I'm like great they're thinking about it they're really exploring it but I'm kind of impatient to build something what would your advice be for ..."
Evaluating Companies in the Crypto Space
Haun discusses how individuals can assess the regulatory profile of companies they consider joining. She encourages potential employees to ensure that the companies are committed to responsible practices and compliance with regulations, highlighting Coinbase as a positive example.
"to want to choose they're not gonna go after those what would you say for people looking to join a company or you know a start-up figure out where they are if they want to sort of vet the regulatory p..."
Personal Journeys in Crypto Law
Haun and Weisman share their personal experiences in the crypto space, reflecting on their motivations and the excitement of being involved in a rapidly evolving field. They discuss the challenges and opportunities presented by cryptocurrency and the potential for innovation in regulation.
"for that's great so last question you're both two lawyers and in this face why are you guys in the space what excites you well I got into this face in 2013 and sort of like a lot of people in this roo..."