A letter Signed by 26 computer scientists, tech bloggers and academics, including many former employees of FAANG firms and notable crypto skeptics, the lobbying against crypto has been presented to US lawmakers, according to the FinancialTimes.
The letter urges regulators to “take a critical and skeptical approach to industry claims that crypto-assets are innovative technology that is unqualifiedly good” and to “resist pressure from financiers, digital asset lobbyists and industry boosters to create a regulatory haven for these risky, flawed and unproven digital financial instruments.”
He then challenges the idea that blockchain offers advantages over the current financial system.
“Blockchain technology cannot and will not have transaction reversal mechanisms because they are contrary to its core design. Likewise, most public blockchain-based financial products are a disaster for financial privacy; the exceptions are a handful of emerging privacy-focused financial alternatives, and these are a boon for money launderers,” the letter read.
He calls blockchain “a solution in search of a problem” and concludes that the technology “has serious limitations and design flaws that prevent almost all applications that deal with public customer data and regulated financial transactions and do not are not an improvement over existing non-blockchain solutions.”
Harvard cryptographer and computer security expert Bruce Schneier, one of the signatories of the letter, told the FinancialTimes: “The claims of blockchain proponents are not true. … It’s not secure, it’s not decentralized. Any system where you forget your password and lose all your savings is not a secure system.
Former Microsoft engineer Miguel de Icaza and senior Google Cloud engineer Kelsey Hightower also signed the letter, which is addressed to Senate Majority and Minority Leaders Charles Schumer and Mitch McConnell.
Pro-crypto Sen. Patrick Toomey (R-PA) is also addressed, as is Ron Wyden (D-OR), who worked with crypto-friendly Republican Wyoming Sen. Cynthia Lummis to oppose the provisions in a 2021 infrastructure bill that many perceived as detrimental to the crypto industry.
Other signatories to the letter include famed Canadian coder and activist Tim Bray, Canadian/British tech blogger Cory Doctorow, and famed non-coinmaker David Gerard. There was a noticeable lack of representation from people who have worked or researched blockchain.
Decrypt contacted several signatories of the letter for additional comments.
The crypto community pushes back
The letter was quick to fan the critical flames of several blockchain experts, including Preston Byrne, a blockchain lawyer at Anderson Kill, a firm that has its own Blockchain and Virtual Currency group. Byrne took umbrage that so few of the letter’s signers had credentials in the blockchain industry. In a now-deleted tweet, he also argued that blockchain transactions are reversible.
Matthew Green, who teaches cryptography at Johns Hopkins University, argued along the same lines as Bryne. He took issue with the language of the letter, which arguably makes misleading claims about the capabilities of blockchain technology.
The problem I have with this letter is not that it identifies certain limitations of current systems. It’s that he claims these limitations are *fundamental* rather than enforcement choices. It is simply wrong. pic.twitter.com/r01pusSlVF
Crypto has evolved to the point of attracting a lot of attention from US lawmakers.
In March, President Joe Biden signed a Executive Decree which has defined a national crypto regulatory strategy. He called on federal agencies — the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) among them — to coordinate crypto regulatory efforts.
While there have not yet been any substantial fruits of this order, in terms of legislation or guidelines, Washington is clearly watching the blockchain sector closely.
Last month, Treasury Secretary Janet Yellen pointed to Terra’s historic collapse to make the case for stablecoin regulation.
According Bloombergcrypto companies spent about $9 million on lobbying last year, more than triple the $2.8 million spent last year.
Coinbase is by far the biggest supporter of crypto in Washington, accounting for $1.5 million of last year’s total. Ripple was second at $1.1 million.
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