Congressman Darren Soto on Libra, Trump's crypto tweets and getting blockchain into the federal budget

Since the fall of 2016, much of the advocacy around issues related to cryptocurrency and blockchain tech within the United States Congress has been pursued via the Congressional Blockchain Caucus.

Its ranks have changed between successive sessions of Congress – co-founders Jared Polis is now the governor of Colorado and Mick Mulvaney was, until recently, acting chief of staff to President Donald Trump – but the mission has largely remained the same: to advocate and advance policy measures focused on the technology and its use in both the public and private sectors.

Rep. Darren Soto (D-FL-9) was named co-chair of the Congressional Blockchain Caucus in January 2019. Soto took office in January 2017.

In an interview with The Block, Soto touched on some of the major initiatives the Caucus has pursued, including its advancement of the Token Taxonomy Act and Digital Taxonomy Act, as well as a concerted effort to include blockchain-related items in the fiscal year 2020 budget.

As this publication has detailed, the 2021 budget request from U.S. agencies includes a raft of requests that would boost agency resources on cryptocurrency-related oversight and enforcement efforts if approved. More broadly, it would result, over time, in a federal workforce possessing greater expertise in the area of blockchain analytics and the use of the technology that underpins cryptocurrencies.

And of course, the pace of movement on crypto policy issues has perhaps been ponderously slow, though industry groups like Coin Center, the Chamber of Digital Commerce and the Blockchain Association have played a role in advancing that discussion in and around Capitol Hill. Whether 2020 itself will be a pivotal year on that front is an open question, one that faces the obvious complication of a presidential election year. The coronavirus pandemic has rightfully consumed Congress’s attention, and it may be that crypto-related efforts ultimately get punted into the next session.

It’s within that context that the Caucus continues its work, said Soto. During the interview, Soto said that the 2020 budget’s blockchain-related items impacted a range of government activities – including those coming out of the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the Department of Defense (DOD), among others – and those efforts will continue as the budget process unfolds for FY 2021.

“We’ll be looking at some of the president’s proposals to see if we can find some common ground,” he remarked.

Soto stressed the work being done by lawmakers to urge federal agencies to use blockchain, in combination with other technologies like artificial intelligence, “to tackle some of the most complex problems facing the federal government and the nation.” Soto mentioned climate change and healthcare as two such examples. He also contended that the inclusion of elements in the 2020 budget was a sign of interest in the part of agencies on that front, including a mandate for the Department of Defense to brief Congress on the potential uses of distributed ledger tech.

“We face nearly impossible problems we have to address, and this type of technology can help us start addressing complex problems that would have been impossible to get our arms around 20-30 years ago,” he told The Block.

On crypto regulation

On the cryptocurrency front, Soto advocated for solutions like the Token Taxonomy Act, which he argued would be a boon to companies and individuals looking to work with the technology within the country.

“We want rules of the road and certainty in the market so entrepreneurs aren’t spending nearly half their capital on legal just to navigate an uncertain landscape in the United States,” he said.

He also raised that effort in the context of the uphill battle faced by those seeking federal approval for a bitcoin exchange-traded product. As The Block reported late last month, the SEC shot down yet another bitcoin exchange trade fund (ETF) effort, prompting a dissent from commissioner Hester Peirce. As it now stands, there are no active efforts to get a bitcoin ETF approved (though some advocates say there is still hope to be had).

On this point, Soto was unequivocal: “This is exactly the reason why we need to pass the Token Taxonomy Act and the Digital Taxonomy Act. These things need to be defined by laws passed by the Congress that give direction to the agencies.”

“Until we have laws, this uncertainty’s going to continue,” he added.

On Libra and Trump’s tweets

The ever-controversial President Donald Trump, who faces reelection this year, made waves in the crypto space last summer when he sharply criticized cryptocurrencies as well as Libra, the stablecoin effort being led by social media giant Facebook.

“[N]ot a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he wrote at the time.

When asked about these statements, Soto told The Block that “certainly that had the effect of setting us back” and expressed hope that Trump’s advisors might be able to sway him on the issue.

“They may be able to soften the president’s bias toward cryptocurrency that we have seen in his Twitter account,” Soto remarked.

He also highlighted comments issued by Federal Reserve chairman Jerome Powell, who recently discussed Libra before Congress and indicated that the stablecoin effort had added fuel to its own digital currency efforts.

“We certainly encourage the Chairman to pursue these markets and have some involvement in them," Soto said. "They’re happening anyway, so we need to be prepared.”

He added that he had met with representatives from Libra ahead of their launch last summer.

“I would welcome folks entering into the market and new businesses would – there’s this fear, unfounded, that somehow we’re going to have these parallel currencies and shadow nations as a result of these currencies," Soto continued. "Really it comes from a level of ignorance on the subject.” 

He contended that such efforts could provide a boon for consumers in terms of transaction costs by reducing the overhead needed to operate those money flows.

“I think that’s where you’ll see some of these new initiatives disrupt in a positive way for consumers,” Soto said. “So those are the things we’ll be looking at going forward in how it affects the international market.”