WASHINGTON, January 19, 2023 — Embracing emerging technologies such as cryptocurrency will have long-term benefits for the general public, but the industry needs much stronger regulation, City of Miami Mayor Francis Suarez said at an event hosted Tuesday by the Wilson Center.

Suarez, who is president of the U.S. Conference of Mayors, spoke in advance of the mayors’ 91st annual meeting from Tuesday until this Friday.

Suarez has long been an advocate for cryptocurrency adoption; after winning reelection in 2021, he announced that his own salary would be paid in bitcoin. He has also been an enthusiastic proponent of MiamiCoin, a privately-owned cryptocurrency meant to benefit the city — even after the currency’s value dropped by more than 95 percent.

However, when discussing the recent collapse of crypto exchange FTX, Suarez acknowledged that the technology “screams for regulation.” U.S. legislation tends to be reactive instead of proactive, but the latter approach might have been able to stop the FTX crash, he added.

“I think there should have been regulation on what some of these custodial entities could do with custody assets,” he said. “They’re like banks — the kind of assets that they had were enormous — and what they were doing when you when you peel back the layers of the onion is frightening… there’s a reason why some level of regulation exists already in the banking industry.”

Suarez said that the first step for lawmakers taking on cryptocurrency regulation should be to recognize the significance of the technology. Issues such as the national debt ceiling and rate of inflation demonstrate the value of having currency “outside of the mainstream fiat system,” he said.

In addition to cryptocurrency, Suarez expressed his opinion on a variety of other timely technology issues.

“I think AI is going to be our generation’s arms race,” he said, noting the growing potential for cyberwarfare as weapons systems come to rely on encrypted technology.

Suarez also discussed the impacts that an increasingly digital world may have on childhood development. “My daughter one shocked me when she was two years old — she’s four now — by taking a pretend selfie with her pacifier of me,” he said. “And I was like, wow, this is really crazy.”

Despite having initial concerns about technology’s impact on children, Suarez said that watching his own children’s online interactions had assuaged his fears.

“I’m actually going to take it a step further — I’m starting to see socialization opportunities… they’re actually virtually online with a friend, and they’re playing and talking and socializing,” he said.

LAS VEGAS, January 5, 2023 – Despite the crypto industry’s recent stumbles, a panel of experts at the Consumer Electronics Show remained bullish on its potential – as well as that of its underlying technology, the blockchain – to protect individuals’ data privacy and civil liberties.

Many blockchains, although residing in the digital world, largely fall into the category of “public goods,” which traditionally includes shared infrastructure such as roads, argued Anna Stone, director of impact at eToro. Stone cited the Ethereum network, which is open source and allows many individuals to build on it. “What makes Ethereum exist is not any one company that’s doing anything, it’s actually that there are thousands of different contributors,” she said. 

Mike Wawszczak, general counsel at Alliance, argued that the traditional funders of public goods – governments – make serious mistakes that stem from being insulated from market forces. “[Crypto] offers an alternative method of managing and governing these protocols – that we’re only now starting to see massive amounts of experimentation in – might not be subject to the same failure[s]…that we see in states,” Wawszczak said.

Later in the panel, Wawszczak argued that decentralized autonomous organizations empower individuals and communities to further and protect their own interests, even in opposition to state authority. “If you can imagine a lot of the more disparate groups that exist around particular social-justice causes or identity groups that are far flung or spread out, but now they have a new means of coordinating their behiavior and of generating economic wealth,” Wawszczak explained. He argued that the ability to coordinate outside of government control could be a massive boon for oppressed or dissident groups.

Panelists further said blockchain technologies can ensure that consumers maintain control over their own data. “Giving [users] that choice…to pick a place that is built and verifiable to be secure, to be private, to be a place that fits with their values, that can really enhance things for the users,” said Kurt Opsahl, general counsel at the Electronic Frontier Foundation.

December 20, 2022 – Academics discussed the potential usefulness of crypto-related technologies and how they should be regulated at a web event hosted Tuesday by The Brookings Institution.

The prices of digital assets have fluctuated wildly in the last year, driving calls for the institution of a crypto-specific regulatory framework. The price of Bitcoin, for instance, plummeted from $64,400 in November 2021 to less than $17,000 early Tuesday afternoon. The downfall of prominent Crypto exchange FTX, allegedly due to massive fraud, has provided further rhetorical fodder to would-be regulators.

Some crypto skeptics say that regulating crypto is a mistake, however, since it would provide legitimacy to the industry. “Legitimizing [crypto] is simply going to drain creative resources from productive activities,” argued Stephen Cecchetti, Rosen Family Chair in International Finance at the Brandeis International Business School. “In economic terms, this would be like subsidizing a dead-weight loss.”

Cecchetti argued that a new regulatory regime would push crypto into the traditional financial world. “Imagine where we would be if leveraged financial intermediaries had been holding crypto in November of 2021, before the plunge in value,” Cecchetti. “So if we need any new rules, they’re rules to prohibit exposure of traditional leveraged intermediaries – prohibit banks, dealers, insurers, pension funds ­– from holding this stuff and from accepting it as collateral.”

Peter Conti-Brown, professor at the Wharton School at the University of Pennsylvania and nonresident fellow at The Brookings Institution, argued that crypto, even without a dedicated regulatory framework, has already been established a significant foothold. Policymakers should clarify how crypto assets fit into existing regulatory structures, Conti-Brown argued. Due to similarities of various types of crypto to elements of traditional finance, he said, the absence of crypto regulation is a “declaration of a prosecutorial non-enforcement of existing laws.”

Regulators should make clear that “if you’re going to act and smell and quack like a bank, you need to charter, and if you’re going to hawk securities, you need to register,” Conti-Brown argued later in the conversation.

Crypto: Useful or useless?

While crypto’s biggest proponents argue that it, along with its underlying technology, blockchain, are revolutionary innovations, many don’t agree. At a recent Senate hearing held Wednesday on the FTX collapse, a law professor from the American University Washington College of Law advocated banning crypto outright. One senator advocated instituting a “pause” on crypto at a hearing held two weeks prior.

Cecchetti voice skepticism as well. “I don’t think crypto is the future of anything” he said, adding that it is, in his opinion, “utterly without redeeming social value.”

Conti-Brown said some crypto-related innovations may prove useful. He further argued that the very possibility of blockchain-driven innovations threatens incumbent industry – e.g., traditional financial technology firms – and will likely drive innovation.

“Every major payments player is…following blockchain developments, and thinking about where this might represent both opportunity and challenge,” Conti-Brown said. Crypto solutions may be “inchoate, (but) are not non sequiturs,” he added.