The year 2023 marked an unprecedented surge in regulatory actions targeting cryptocurrencies globally, with the United States emerging as the epicenter of this enforcement wave. Following the initial crackdown in August 2022, when the Treasury Department's OFAC sanctioned the Ethereum mixing service Tornado Cash, 2023 witnessed a relentless series of measures. These included landmark SEC lawsuits against major centralized exchanges, criminal charges leveled against developers, and even a guilty plea from one of the industry's most prominent open-source advocates.
The message is unequivocal: any lingering doubts about the U.S. government's willingness to intervene decisively in the digital asset sector have been dispelled. As we move into the new year, with calls for regulatory clarity growing louder from all sides, 2024 is poised to be a pivotal year for crypto policy in the United States, with potentially profound consequences for the industry's future.
To better understand the current state of play, CryptoSlate spoke with Nilmini Rubin, the Chief Policy Officer at Hedera. Her current role provides her with a distinct vantage point to offer critical insights. With a career spanning from the halls of Congress to the West Wing, Rubin's extensive experience in both policy-making and advanced technology places her at the critical intersection of distributed ledger technology, government regulation, and global market dynamics.
As a participant in numerous discussions on Capitol Hill, Rubin provided a nuanced glimpse into the concerns that preoccupy lawmakers, which are both numerous and diverse. "Some [policymakers] are just interested in learning about the fundamental technology," she notes. "Others want to dive deep into the most complex aspects of the technology and its policy implications," she continues, elaborating that their concerns range from national security and economic opportunities to environmental impact and beyond.
According to Rubin, the global perspective appears more integrated. "They are looking at it from a very holistic standpoint. It's more about, what are the benefits broadly, and how do we effectively mitigate the risks?" This approach, common outside the U.S., reflects a broader, more comprehensive view of blockchain technology. Policymakers in these regions tend to weigh the overall advantages against potential downsides, seeking a balanced perspective that considers both innovation and its societal consequences.
In contrast, Rubin points out that U.S. policymakers often focus on how blockchain fits within the existing framework of American law and regulation. This inward-looking approach is more about integrating new technology into current structures than reevaluating or adapting those structures to accommodate new possibilities. Rubin further explains that when discussing blockchain policy with counterparts in Europe, for instance, the conversation often involves examining how other jurisdictions like the EU or the UK have addressed similar challenges, indicating a more comparative and globally-informed strategy.
Explaining why U.S. policymakers might not adopt a similar global outlook, Rubin suggests it's largely a matter of priority. "They are really thinking about the United States. They're thinking about their constituents," she observes. This domestic-focused approach can sometimes constrain the scope of their policy considerations to homegrown concerns, potentially overlooking broader international perspectives or successful models adopted elsewhere.
While many view the crypto space through the lens of high-risk speculation and volatile price movements, Rubin stresses that Hedera is operating from a position of tangible, real-world utility, with little interest in its native token's secondary market price. The technology has so far found significant use cases in agriculture and carbon offsetting, both of which represent massive markets and stand to benefit immensely from enhanced capabilities for eco-conscious supply chain tracking.
Rubin highlighted Dovu, a platform built on Hedera that enables farmers to issue tokenized carbon credits. This innovation offers a dual benefit: it provides farmers with a novel revenue stream by monetizing the carbon sequestered in their soil, while simultaneously contributing to environmental sustainability. The process involves farmers planting cover crops and receiving credits for the extra carbon captured. What sets this system apart is its granular traceability, as blockchain technology allows for precise tracking of where each carbon offset originates, thus effectively preventing greenwashing.
Rubin emphasized that while the narrative surrounding these technologies often narrows to the fluctuating values of cryptocurrencies as investment assets, the true value lies in what each asset enables and its fundamental purpose. Regarding the market price of a crypto asset, Rubin stated:
"It's not about that at all. The real goal is to empower businesses to operate. The focus isn't on the asset itself. And so we want to showcase how people are using the technology. The cryptocurrency is simply the fuel that powers the network."
She explained that unlike the Web 2.0 model, which relies heavily on advertising for revenue, blockchain technology (or, in Hedera's case, hashgraph technology) operates on a different economic model. It utilizes the tiny fees associated with data exchange as a funding mechanism. This approach is not only global in its reach but also demands rapid processing, for which cryptocurrency proves to be a far more practical tool than traditional currencies, especially when considering the limitations of standard banking hours and settlement times.
Looking toward the future, Rubin expresses a cautious optimism regarding the trajectory of blockchain innovation in the U.S. She states, "I am hopeful that something will get done that helps advance blockchain and cryptocurrency innovation in the U.S." Her optimism is grounded in the growing awareness among policymakers and an elevated level of dialogue surrounding crypto policy in Washington. She acknowledges, however, that progress in the nation's capital is seldom easy or swift, so her hope is tempered with a dose of realism.
Until then, she and others must continue working to steer the conversation in productive directions. The objective, as Rubin outlined, is to illuminate the broader utility and productivity of blockchain technology for policymakers. The goal is to ensure that any regulations developed to govern this space are crafted in a way that recognizes and harnesses the technology's potential to benefit consumers and businesses alike.
"We want policymakers to see the productivity of the technology, so that whatever rules they put in place enable the technology to benefit consumers. If they only think about it from the perspective of addressing fraud that has been conducted by bad actors, they're going to potentially throw the baby out with the bathwater. We definitely don't want that to happen."
There is a critical balance to be struck in regulation—to protect against fraud and exploitation by bad actors without stifling the innovative and beneficial aspects of the technology. In a year that has seen its headlines dominated by bad actors—and there has been no shortage of them—Nilmini Rubin and her colleagues are constantly reminding U.S. lawmakers not to lose sight of the many wonderful applications of the technology as they work to sweep away the bad actors.
