When we released our policy agenda and legislative proposals publicly last month, our goal was to catalyze a conversation about the next generation of the internet and the role of technology in open societies. We also hoped to inspire the broader community to generate policy ideas to support responsible web3 innovation. As we said in our agenda’s Executive Summary, “We intend for this paper to be a living document. It will evolve as more stakeholders join the effort to define our digital future.”The initial response has exceeded our most optimistic expectations. We’ve had serious, detailed discussions with leaders across government, civil society, and the private sector, and received constructive feedback from web3 innovators, academics, and policymakers. The dialogue that started with the publication of our agenda is helping refine the proposals we put forward and opening the conversation about the revolutionary potential of web3 technology to a much broader audience.This is just the start. We are looking forward to more suggestions on how to move the ecosystem forward. As part of what we hope will be regular updates, we are sharing some new ideas generated from the last month of constructive feedback.
- We support the appointment of a senior official to serve as a web3 czar, and the allocation of additional resources to facilitate technology analysis by Congress. We understand from recent reports that the White House is considering appointing a “crypto czar” as part of its anticipated executive order on cryptocurrency. We support the designation of a senior official to coordinate policymaking in this space, and hope they can help bring order to what is currently a fragmented regulatory landscape with too many agencies competing for jurisdiction rather than pursuing a common strategy. We also hope that the mandate for this role will be sufficiently broad to encompass the more expansive landscape of web3 and decentralized technology in addition to cryptocurrencies. As the executive branch expands its capacity to engage effectively on web3, Congress also needs additional resources to analyze the impact, risks, and opportunities that come with decentralized technology. We’re particularly intrigued by the recent proposal to revive the Office of Technology Assessment.
- We are doubling down on DAOs while working to ensure that regulation enshrines real decentralization as a gold standard for governance. We have been encouraged by the response from policymakers who understand the potential for decentralized governance through DAOs, including protocol DAOs, social clubs, and art collectives. A more open and inclusive web3 necessitates decentralized governance, so getting this right could usher in a revolution in how economic benefits and control over institutions are equitably distributed across society. We recently published a comprehensive analysis of how policymakers and regulators can provide a pathway for DAOs to establish legal existence in the United States, thereby enabling them to pay taxes and supporting their further decentralized growth and development.
We remain focused on bona fide decentralized governance, and believe decentralized systems naturally have inherent advantages when compared to the centralized platforms of web2. As such, we believe they will come to dominate web3 without the need for regulatory advantages. However, establishing a pathway for legal existence is not sufficient to provide DAOs with the legal certainty that centralized systems already enjoy. In particular, the uncertainty created by the continually evolving application of securities laws to governance tokens should not be allowed to spread to other areas of the law. Ultimately, creating a level playing field for decentralized and centralized systems to compete will benefit us all.
- We believe policymakers should explore multi-stakeholder regulatory frameworks. Our recent conversations have highlighted successful examples of regulatory frameworks, such as the Brazilian Internet Steering Committee, which are structured as multi-stakeholder organizations with participation from representatives of the public sector, private sector, and civil society. In the words of Lawrence Strickling, who served as NTIA Administrator under President Obama, “Decentralized control over the Internet involving innovators, entrepreneurs and experts is far preferable to a top-down government approach that has political dealmakers charting the future of the Internet.” We think this remains true for web3, and hope to explore this option further with policymakers.
- Use web3 to improve tax compliance. Our work on tax compliance is focused on ensuring that the innovative benefits made possible by decentralized systems reach as many people as possible, are not needlessly undercut by expansive regulation, and subjected to smart regulations that manage risks effectively. In the context of tax compliance, that means reporting obligations should rest with actors that possess most pertinent information. In addition, the IRS should take advantage of the fact that use of blockchain technology results in on-chain transactions recorded on a publicly-viewable blockchain ledger that are auditable by anyone at any time. FinCEN and law enforcement have already made great use of this feature. Ultimately, we will continue to push for greater tax compliance because we believe it will help legitimize the industry and incentivize the U.S. government to encourage further innovation in this space. As a result, we hope to work with industry and government to develop proposals that make use of blockchain technology to assist revenue collection agencies and prevent tax evasion.
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