If there was ever a time when the crypto community believed it would operate unfettered by state rules it’s over. Regulation is coming, and time is running out for DeFi to influence and shape this looming regime.
That was the message Andrew Yang delivered in an exclusive interview with The Defiant’s Robin Schmidt in a video posted Tuesday. Yang, an entrepreneur and Democratic Party candidate for president in 2020 who made a splash in the campaign with his unvarnished opinions and humor, has now jumped into web3 with a DAO called Lobby3. Formed in February, the organization is designed to rally the DeFi community and push for favorable regulations in Washington.
“Lobby3 is an initiative to take the voices of web3 to Washington DC, where we can hopefully expand people’s understanding of what these tools can do to improve the public interest [and] improve people’s lives,” Yang said.
“My goal is to make it so that the rules are intelligent, understand the space, and properly prioritize the [innovation] side of the equation,” he continued. “Right now, if you’re a regulator, unfortunately, they are very focused on risk.”
Lobby3 is swinging into action at a pivotal moment. The Biden Administration is expected to unveil an executive order today that will direct the U.S. Treasury Department to work with other regulators and produce a report “on the future of money and payment systems,” according to CoinDesk. Last year, Gary Gensler, the chair of the U.S. Securities and Exchange Commission, said virtually all cryptocurrency offerings fell under the purview of existing laws, which means they must comply with the same registration and disclosure requirements that govern the equities and bond markets.
Yang believes that many U.S. lawmakers “are a little bit in the dark or confused about the myriad range of uses for the blockchain and Web3 technologies.” Lobby3 plans to make contact with “the folks who have not yet made up their minds” regarding cryptocurrency in Washington D.C. Yang added that “the majority of legislators” are still undecided on how crypto should be regulated.
Observing that the average age of U.S. senators is 63, Yang said it may be productive to connect with staffers in their late-30s or early-40s. “You might have a shot there,” he said.
Lobby3 has been raising money and growing its membership via an NFT sale that will end on March 11. Yang asserted that the window in which “work that can be done to push things in a positive direction” regarding digital asset policy will close within the next 12 to 24 months. “There are a number [of lawmakers] whose attitudes are hardening in part because of recent events,” Yang said.
“We’re making the case as quick as possible to avoid some ill-conceived… rules from coming out in the not-so-distant future… and we just want them to be as reasonable and balanced as they can be.”
Yang believes the DAO must clearly communicate how web3 technologies will benefit lawmakers’ constituent communities to ensure that incoming regulations balance fostering innovation against managing risk.
“You don’t need to worry about people necessarily understanding the whole space,” he said. “I need [lawmakers] to understand that the people [they] care about, care about this… there are very powerful virtues and applications, and you don’t want to go too far and throw the baby out with the bathwater.”
Yang said that the relationship between crypto and regulation has matured and evolved over time. “Most people in web3 probably enjoyed not having the attention of regulators, but we have to know that ship has sailed,” he stated.
“The question is, how are the rules going to be written? Are they going to balance the management of the risks within the space… with the positive potential around innovation, value creation, and job growth? I think we all sense instinctively that regulators are leaning much more towards the risk management side than the value creation side, so that’s the balance we have to strike.”
Yang subscribes to the idea that cryptocurrencies warrant their own regulatory agency. “In my ideal world, you don’t have this stuff operating out of the SEC, which is going to take its relatively antiquated framework and just try and apply it to other things,” he said. “You want a new agency around digital assets and new currencies. History is being written “right now, and you don’t necessarily want history to be written in a government agency office in D.C., you want history to be written by builders, creators, innovators, and community builders.”