By Jeff Hinkle, Polyient Content Director
Last year, Rep. Darren Soto (D-FL) was named Co-chair of the Congressional Blockchain Caucus.
A longtime proponent of decentralized technology, Soto added to his blockchain credentials in 2019 when he helped spearhead (as the co-lead) of the Token Taxonomy Act - which put a regulatory framework around the token economy. He also introduced the Digital Taxonomy Act of 2019 - which allocated money to the FTC to mitigate “unfair or deceptive acts or practices in transactions relating to digital tokens.”
According to one of his staffers, Soto’s goal is to highlight blockchain implementation solutions to convert policymakers and build momentum over time.
Most recently, he fired off a letter to Treasury Secretary Steve Mnuchin asking him to consider using blockchain to distribute future COVID-relief money. A bipartisan group of 11 members of Congress co-signed the letter.
We recently caught up with Rep Soto to discuss the practicality of using blockchain to speed up COVID-19 relief payments and to share his thoughts on what a federally-approved blockchain ecosystem might look like.
A: Our office was called daily from people asking about their stimulus checks.
The IRS tried. They put up a website with FAQs, but it crashed twice. It was an extremely burdensome task and it got to the point where they were able to answer fewer and fewer questions. This was a real eye-opener.
Blockchain would have made the distribution of CARES money more efficient. Blockchain - coupled with AI - would have sped up the factors used to identify who needs money and make sure it is delivered on time.
The IRS is dealing with a computer system that dates back to the Kennedy Administration. A new system is needed now - whether it is blockchain-based or not. But, by using blockchain it would put the Treasury Department moving in the same direction where the financial services industry is moving, so Congress should move in that same direction.
A: Financial institutions have an overwhelming amount of resources available to them, so it makes all the sense in the world that they would play a key role in administering a federal blockchain payment system.
But - should larger institutions not want to fill that role - new financial service startups could fill the role.
That’s the natural progression of a free market. Financial institutions need to adapt and be part of this progression. If not, they will leave openings for innovative, smaller companies to step in.
A: Those of us who signed the letter are open to using a digital dollar. But, we also don’t want to exclude any other cryptocurrencies already in use.
When you look at cryptocurrencies in general, you can see real potential in using them to ensure people who might not have access to a full suite of banking services could benefit by using cryptocurrencies to meet their banking needs.
A: We’re making more progress in the House than we’re seeing in the Senate. Generally, the House takes a more open-minded approach to fintech. And Republicans are generally more open to it than Democrats.
Some lawmakers still have concerns about the core “black market” issues [surrounding cryptocurrencies], but others see cryptocurrencies as having the potential to serve small businesses that want to do international business.
If you have a small vacation apparel company in Orlando that wants to do business internationally, cryptocurrencies can facilitate that. It allows the business owner to do business overseas without getting hit with currency exchange fees, transaction costs, etc.
A: You’ve got to start somewhere. Which is why we’ve been working on getting the necessary regulatory framework in place [for blockchain].
I think to meet the immediate needs of Americans, we would need to start with a pilot program of some kind. People would have to request their government payments be sent to them via cryptocurrency. Bitcoin could be one option.
But this would require input from the Treasury Department - unless there are laws that superseded this approach.
A: Well, the private financial sector is already moving towards blockchain adoption. And Mnuchin’s ties to the Wall Street community is an important factor to consider.
That, coupled with a bipartisan letter, makes a good start. We’re working in a bipartisan fashion with the Small Business Committee and the Financial Services Committee.
As of yet, we have not heard back from the Secretary’s office, but they are slow to respond.