United States: Views From Congress, The Executive Branch And International Regulators On The Use Of Blockchain Technology

Scott D Mason is senior policy advisor in Holland & Knight's Washington D.C. office

Norma M Krayem is senior policy advisor in Holland & Knight's Washington D.C. office

On June 26, Holland & Knight Senior Policy Advisors Scott Mason and Norma Krayem participated on a panel "Blockchain: Do We Need to Regulate to Innovate" in the firm's New York office. Given their knowledge on the subject and extensive engagement with federal legislators and regulators, they provided insight on how Congress and the Trump Administration's policy initiatives are evolving the use of blockchain in key sectors.   

The first portion of their presentation focused on the Congressional Blockchain Caucus. Mr. Mason discussed the goals and objectives of the caucus, a bipartisan group of 18 members of Congress who believe in the future of blockchain technology and believe Congress has a role to play in its development and support. Currently, the caucus is focused on using blockchain technology to significantly improve three major areas: government applications, data ownership and healthcare. He explained that the caucus was founded just last year and has been active in working with government agencies in order to make sure blockchain technology has the ability to develop. He discussed the various events that the caucus has held featuring industry representatives, as well as representatives from various government agencies, on digital identity, payment processing, supply chain, and the intersection of blockchain between business and government. Additionally, given the increasing attention on the integrity of America's voting systems, they also held a seminar with VOATZ, a company using blockchain to record American's votes in elections.  He also discussed the various Congressional hearings that have focused on the use of blockchain as well as the growing role of the states in this area as well.

Ms. Krayem, who chairs the firm's Global Cybersecurity and Privacy Policy and Regulation Team, discussed the evolution and changes in how the regulators have viewed the use of blockchain and the creation of varying blockchain working groups across agencies. This included the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC), as well as the U.S. Department of Treasury and the Office of the Comptroller of the Currency's (OCC) creation of "sandboxes" to work with the private sector. She also discussed the intersection of cybersecurity and privacy risks that come with the use of the blockchain technology and how the regulators as well as the U.S. Department of Homeland Security are seeking to address these issues within their overall processes. She explained the work that the Federal Trade Commission (FTC) has focused on related to consumer protections in the FinTech space, as well as their series of events since 2015 addressing these issues. She also discussed the difference in how the Administration views national security concerns that come with the use of cryptocurrencies versus the use of blockchain technology.

Ms. Krayem also discussed the evolving global regulatory regimes around the use of blockchain, including cybersecurity and privacy issues. The European Union (EU) and the Digital Single Market focus have embraced the use of blockchain technology, but companies need to be careful to ensure that its use complies with the General Data Protection Regulation (GDPR) which includes mandatory privacy and cybersecurity requirements as well as fines up to €20 million or 4 percent of your organization's global revenue. She also discussed the activist approach that other countries were taking on technology and the "race to innovate." Ms. Krayem examined the growth in the other influential regimes on digital economies, juxtaposed with growing cybersecurity and privacy issues within the G7, G20, Asia Pacific Economic Council (APEC), India and China to name a few.

Ms. Krayem and Mr. Mason talked about the views of both Congress and the Executive Branch in dealing with new and emerging technology and explained the importance of the private sector engaging collaboratively with them. Leveraging a wealth of experience working with the government, they encouraged the private sector to understand that both the use of blockchain and cryptocurrencies are being used in a heavily regulated space in the financial services sector and that the normal rules of consumer protections, cyber, privacy and other existing requirements will still apply. They also discussed the need to work with Congress and the Executive Branch to help educate them on the technology itself and its uses, or as with any other similar situation, the regulators will work within their legal structures to implement new regulations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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