“I’ve seen people take very aggressive positions on Crypto Twitter, and it’s something that I do not support at all,” Boring told Protocol.
Don’t think that means Boring holds back when she sees a problem. At this week’s D.C. Blockchain Summit, Boring blasted the SEC as “the [No. 1] blocker to this industry having economic progress and springing an economic boom in this country that we haven’t seen in decades.”
As crypto reels from another steep downturn, punctuated by the UST crash, Boring has emerged as one of crypto’s staunchest defenders in the face of heightened criticism and scrutiny of the industry.
Crypto lobbying has boomed in recent years, which means Boring, who’s been defending crypto for nearly a decade, is now surrounded by newcomers to the field.
She was working as a legislative analyst in Washington when a friend introduced her to bitcoin. Fascinated by the technology, she ended up founding the first national trade association for the industry.
Launched in 2014, the Digital Chamber, as it is known, includes major companies in crypto and traditional finance, including BlockFi, Ripple, Chainalysis, Citi and Goldman Sachs.
In an interview with Protocol, Boring discussed the current crypto downturn, the heightened focus on stablecoins and why she wants Crypto Twitter to keep it clean.
This interview was edited for clarity and brevity.
How are you navigating the two major shifts in crypto recently: the sharp market decline and the heightened scrutiny of stablecoin in the wake of the UST crash?
These crypto market fluctuations are something we’ve seen many times before at the Chamber of Digital Commerce. We’re eight years old. Because this is a young space, it’s expected that you’re going to have ups and downs in the market.
What’s really interesting and different is this is the first time bitcoin and crypto have experienced the Fed tightening, the first time we’ve ever seen bitcoin and crypto markets have an opportunity to react to a Fed that’s this aggressive where they’re unwinding the balance sheet and increasing interest rates at the same time.
What we’re seeing is bitcoin and this market react very similarly to the traditional stock market. However, though bitcoin is showing some degree of correlation in the short run, we expect that to change in the long run, and we think the true value of these networks will emerge in the long term.
How about the kind of scrutiny that stablecoins have received? Janet Yellen called the Terra-UST implosion a “bank run.”
That’s really no different than the conversations we’ve been having with our policymakers for well over a year on stablecoins. It was about this time last year that Secretary Yellen announced that she was going to convene the President’s Working Group on Financial Markets to study and put forward recommendations related to stablecoins.
We have been working on stablecoins. The first time was when Facebook announced the Libra project. We’ve had a number of different congressional offices that introduced legislation specific to stablecoins.
It’s always been the same. It’s just always kind of a new thing that captures headlines and Washington’s attention. Of course, this past couple of weeks has been [about] Terra. A couple years ago, it was Facebook.
All of this is very predictable from my perspective. Our strategy and the way we’re approaching it is not changing based on one project. Our message has always been the same: that this is an incredibly dynamic ecosystem.
The crypto space is very dynamic. Stablecoins are an ecosystem in itself. When we think of stablecoins, people don’t really understand that there’s a huge variation in the types of projects and companies that are building and issuing and operating stablecoins.
When we look at this from a public-policy perspective, the first thing we need to do is to understand the differences between how these projects are built, because you can’t apply regulation at a broad base because it won’t be effective. The majority of regulatory efforts today specific to stablecoins are focused on stablecoins that are backed one-to-one to the dollar, that are fully collateralized.
Of course, Terra does not meet that definition. The vast majority of efforts that our policymakers have spent studying and learning and understanding and drafting policies would have not been applied to Terra to begin with. The work that’s been underway specific to stablecoins would not have prevented Terra from happening.
What are your views on algorithmic stablecoins like Terra, then?
At this point, the President’s Working Group has not issued any recommendations related to algorithmic stablecoins, so we don’t have a body of work there. There are also no legislative proposals today that are related to algorithmic stablecoins that could have prevented the Terra collapse.
From a policy perspective, if policymakers want to see stablecoins that are fully collateralized and backed one-to-one to the dollar, and they want to incentivize those types of networks over others, then they need to build a regulatory platform for projects that are building those fully collateralized stablecoins to get regulated so they can grow and thrive and be integrated into our financial system.
Let’s talk about the regulatory climate. You’ve been doing this for nearly a decade. What has been the biggest change in the conversation in Washington?
I think the biggest difference is that you just have more people who are interested and are paying attention. I used to work on Capitol Hill, so I understand that policymakers [and] members of Congress have many different things in front of them at any given time. Crypto and blockchain technology is just one of many things they have to understand and manage.
This has definitely taken much more of a front seat from a prioritization perspective. We have a lot more people serving in government today who are educated on this.
You were recently quoted as saying the SEC is “the [No. 1] blocker to this industry.”
I stand by my comments.
SEC Chair Gary Gensler has faced harsh criticisms from the crypto industry, and has been portrayed as the enemy of crypto.
That’s not my word. I would not use the “e” word in describing him. But the SEC is holding back innovation, and they’re also harming investors. And they’re holding back a significant amount of potential economic growth at a time when we need to grow our economy.
There’s a few very specific examples. One is getting clarity on which digital assets are securities and which ones are not. We’ve been working with the SEC since 2016 to get clarity on that specific question. We still don’t have it. So this issue predates the Biden administration. We did not get this clarity under the Trump administration either.
[The SEC has] said companies can come in and ask for clarity, but they’re not responding to any questions. Companies are not getting clarity. They have led with enforcement. And that has had a chilling impact on the digital asset ecosystem.
If you look at trading volume globally of cryptocurrencies, the vast majority of that activity happens outside of the United States. However, the majority of intellectual property, the people who are developing these blockchain networks and programs, are coming from American innovators. So we have American innovators who are developing in this space and then all that intellectual property benefit goes overseas.
What do you say to critics who point to the other side of that equation? There have been reports of people who lost everything because of the Terra crash and were just devastated by that collapse.
America was founded on entrepreneurship and innovation, and our greatest economic periods of prosperity were at a time when different technologies were just growing and blossoming.
The last one would have been the era of the internet, which brought economic prosperity to this country that we’re still benefiting from today. But you have to have a business environment where companies are allowed to innovate and take risks. Not every project is going to be successful. How many times did Thomas Edison invent the light bulb? Can you imagine if we had regulations in place that did not allow him to fail? Failure is a part of the innovation process. We can’t regulate by taking risk out of the system.
With regards to consumers, it’s incredibly devastating to hear that there were people who put their life savings into a very risky project. But at the end of the day, that’s an education issue. Investors should know that you should only invest what you’re comfortable losing. You shouldn’t invest in things that you don’t understand. So there was clearly a huge lack of education from some people that were involved with that project. But I don’t know if there’s regulation that could have prevented that lack of an informed investor.
Last week, Gensler actually said before a House committee that he thinks bitcoin is a commodity. But he and the SEC have argued that many cryptocurrencies should be regulated as securities.
What is the definition of a digital asset security? There’s no definition. Your article this week mentioned [former director of the SEC’s division of Corporation Finance William] Hinman’s speech. Hinman gave a speech [in 2018, essentially] saying, “Well, OK, it’s possible for something to be issued initially as security, and then it could eventually become a commodity.”
We have companies who, after the Hinman speech, engaged with the SEC and they said, “This is great. There’s a path forward.” They have gone through the SEC process of registering their projects and issuing security tokens. They have been waiting for almost a half a decade for any path forward when their tokens will be commodities.
So they built their projects and they built their platforms. And they built the economics for the tokens to be commodities. They worked with the SEC. They registered them as securities. And they were under the assumption, based on the Hinman speech, that they would eventually be commodities when they either become sufficiently decentralized or reach network maturity.
And now they’re just in limbo.
Can you give examples?
No. I’m not at liberty to give specific company names. But there’s over half a dozen companies that I’m aware of from my conversations with them. That is the process they went through with the SEC.
A lot of the debates have been playing out in social media, specifically Twitter. Some of the attacks on Gensler are deeply personal and harsh. I wonder how this affected your work in lobbying and talking to policymakers about crypto.
To me, it’s always important that we approach public policy with the highest degree of professionalism and we absolutely don’t condone personal attacks on any public servants. I’ve seen people take very aggressive positions on Crypto Twitter, and it’s something that I do not support at all.
If you look at my Twitter handle, I put a verse in there: Ephesians 4:29. It says — I’m paraphrasing — “Don’t let any harmful words come out of your mouth.” I never think there is ever an appropriate opportunity to personally attack a policymaker. As someone who worked on the other side of the public policy process, there’s always going to be people who don’t agree with your policy position. It’s totally OK not to agree.
Do not let unwholesome or vulgar words come out of your mouth. And I believe that personally. People who are acting in an unprofessional manner, ultimately, they’re harming themselves and they’re harming the larger industry.
I’ve seen people get told to leave meetings. I’ve seen people basically get the door shut on them. Policymakers won’t communicate with them anymore because they’re being disrespectful. It’s disturbing to see.
They were shut out because of what they said on Twitter or in an in-person meeting?
Both. This isn’t really a problem for my company or the people that we represent at the chamber, but we do see it in the broader community.
How were you introduced to bitcoin?
I first learned about bitcoin in 2011. A friend of mine just thought I would be interested in it and showed it to me. I became incredibly interested in it. At the time, I was working on Capitol Hill and I was very focused on monetary policy. The idea that there is a new virtual currency on the internet that was operating outside of the role of central banks, or wasn’t run by a company, that to me, as somebody working in monetary policy, was just interesting.
I studied it independently for a number of years, and after having the opportunity to understand it more, I eventually came to the conclusion that this was going to be the most important technology I see in my lifetime, and I really wanted to see it succeed.