The Case for Technological Neutrality in Web3 - Transcripts

June 17, 2022

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On today’s show, Thomas Mack, head of legal at Dibbs and Bradley Tusk, co-founder of Tusk Venture Partners, dig into technological neutrality, and why it might be pretty useful to make laws that understand it.


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It's friday, june 17th 2022. And this is Markets Daily from coindesk. I'm an A B. Levine here with Adrian Blust on today's show, we're digging into technological neutrality and why it might be pretty useful to make laws that understand it. And just a reminder that coindesk is a news source and does not provide investment advice. Mhm. Today's featured story is an opinion piece from Bradley tusk, the managing partner and co founder of tusk Venture partners. Today's story is entitled the case for technological neutrality in Web three. The cliche is that the only thing is unavoidable in life are death and taxes. We can probably add new technology to that list to artificial intelligence. The metaverse, autonomous vehicles, flying cars, they're all coming lawmakers if they want to be on top of a paradigm shift, should approach tech regulation in a way that's thoughtful, perceptive and comprehensive. But reaching consensus in our state houses is challenging and finding any sort of common ground in Washington D.

C. Is virtually impossible. Making matters worse, a comprehensive approach to tech policy typically occurs only after some crisis forces legislators hands and the media is all over them only increasing the risk that the law is hasty or ill conceived. While new regulatory frameworks will be needed in some areas of Web three. The version of the Internet driven by Blockchain. There are other areas where innovators and investors can move the ball forward on the basis of existing laws and regulations all the while simplifying the task for policy makers. So let's talk about technological neutrality by technological neutrality in the context of Web three and tech innovation. We mean this if new technology enables activities that are mostly the same as existing activities, let's start with an assumption that the law treats the two activities similarly said differently wherever possible. The law should be neutral to the technology and any variation and legal treatment should come from and be tailored to material variations in the business or risks associated with the technology. Us president joe biden's recent executive order on crypto while leaving a whole lot unsettled, gives an implicit nod to this approach when declaring quote same business, same risk same rules. End quote the crypto community will likely hate the approach the securities and Exchange Commission or the sec takes. But at least it's now in a context we can all understand in Web three and crypto regulators and innovators alike have at times gotten this backwards.

For instance in the midst of the initial coin offering or I. C. O. Boom. Every I. C. O token he had seen was a security that suggested. Although digital tokens on distributed ledgers are infinitely variable and could represent anything from book club points to a corporation legal risks and web three stem from the technology rather than what lawyers call a substantive activity. Under this paradigm tokens are distributed ledgers were and are high risk. However that hardly makes sense. This type of thinking is no doubt part of the U. S.

Inability to effectively regulate crypto currently And if we don't learn from it. Web three in the future seeking a unified regulatory scheme to oversee distributed ledgers. A general purpose technology with highly variable uses is like seeking a unified regulatory scheme for uses for spreadsheets. Stay with us after the break away back to talk about appropriate oversight and what a better system would look like. We'll be right back

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Welcome back. So rather than starting with the technologies, the bucket ng function or the way that we group these things together. Let's start about how people actually use the technology or their substantive activities and the presumption that Blockchain tech is irrelevant. What is the business? What rights are being created between parties? How are those rights communicated from sellers to buyers and what risks are associated with the business? If we start with these questions, we usually find that there is relevant precedent in the existing laws, regulations or legal history. And more importantly, if innovators, investors and regulators can use this as a shared starting point, we could take a couple of significant steps First, tech innovators and investors should have a common framework to assess risk associated with leading edge businesses of egg sense that Web three businesses are risky can be replaced by targeted questions and answers what existing businesses does this most resemble? How are those businesses regulated? How is this business different from those businesses? Which of those differences are legally significant and what are you doing to address risks stemming from that? What here actually impacts regular people and how second the task for policy makers can be simplified with the technology has brought as Web three in crypto asking a regulator for clarity is understandably daunting the internet is a broad technology and regulation would of course change depending on whether you're discussing e commerce or social networking, consumer protection or data privacy or whatever.

If our starting point of technological neutrality can get us good answers on most issues associated with particular Web three activity, we can then rely on policymakers for a smaller subset of truly novel issues. There will inevitably be areas where comprehensive role making and legislation are needed and the industry should not be shy about advocating for that. But there will also be vast swaths of Web three in crypto that are simply new ways to do the same old things, not everything is revolutionary and where that's the case. Let's lean in on what clarity does exist under the law. In other words, if the government's failure to properly understand and regulate Web two has taught us anything, it's that we need to make it a lot easier for them. But even if we do, they still may drop the ball or their politics may cause them to favor entrenched interests regardless of the impact of any particular web. Three business protecting consumers and protecting businesses from fraud is what matters not passing value judgments on the merits of one technology over another. And that's our show for today. Thanks very much for listening. This episode was edited by Adrian blushed and we'll be back tomorrow with your weekend story and just a reminder that coindesk is a new source and does not provide investment advice.