After a bill aimed at establishing a definition for blockchain technology was introduced in Congress, a few in the crypto community raised concerns. Drew Hinkes, lawyer and co-founder of startup investment bank Athena Blockchain, was one of them.
Representatives Doris Matsui (D-CA) and Brett Guthrie (R-KY) submitted a bill to the US House of Representatives this week titled the “Blockchain Promotion Act of 2018.” One of its primary purposes is gaining a clear definition of blockchain technology by creating a “blockchain working group.” This task force could spend one year studying and defining blockchain before recommending said definition to the House.
Not everyone thinks this is a great idea.
One of the naysayers is co-founder of startup investment bank Athena Blockchain, Drew Hinkes. Hinkes is a lawyer, author, and speaker on matters relating to cryptocurrencies and blockchain technology. He also co-teaches a course called “Digital Currencies, Blockchains, and the Future of the Financial Services Industry” at the NYU Stern Business School and the NYU School of Law.
In a recent Twitter post, Hinkes didn’t hold back on his opinion:
ETHNews reached out to Hinkes to learn more about his perspective. Hinkes made clear that he’s a critic of the bill, not the sentiment behind it: “I applaud the intention of these Representatives who clearly are trying to help and encourage technology development and innovation in the US.”
The problem with the bill, he says, is rooted in the contrast between the slowness of legislation and the speed of technological evolution. In an exchange with ETHNews, Hinkes clarified his position:
“I expect that, upon establishing a ‘blockchain’ definition, more laws will be created to provide privileges or special treatment for ‘blockchains’ as defined (i.e., subsidies, tax breaks, different licensing requirements, etc.) that would then exclude systems that don’t fall within the statute. This may constructively direct product development and limit innovation.”
Another key issue, other than the rapid rate of development, is that innovations in blockchain technology are being created in silos. Tribalism in blockchain communities is undeniable (which is not to say universal). Bitcoin Cash developers tend to hold a differing ethos than Ethereum developers, and there is a notable level of contention about the importance of decentralization and trustlessness. Beyond ideological differences, blockchains serve a wide array of purposes that necessitate varying technological specifications. Given the variability among blockchains, some doubt the ability of the technology to be adequately defined.
“Given the fast development of these systems, legislation is more likely to ‘get it right’ if it attempts to guide the behavior of the users of the technology rather than the tech itself. These laws should focus on incentivizing compliance with existing laws, preventing harm, and facilitating innovation.”
So, what would he like to see as an alternative to this bill? What would help, rather than hinder, blockchain innovation? He suggests a more useful bill would be one that increases funding for tech research and education as well as gives “financial incentives” to companies in the blockchain sphere.
One of Hinkes’ most profound worries is that blockchain innovators will develop technology to operate inside of the definition, rather than working with the design freedom to truly explore the technology. From that perspective, the biggest risk is that we legislate before we innovate.
Melanie Kramer is a freelance FinTech, blockchain, and cryptocurrency writer based between France and Canada. Melanie has studied, and retains an avid interest in, global politics, business, and economics.
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