As federal policymakers grapple with how to regulate the crypto industry, similar conversations are playing out here in Massachusetts.
Despite the recent implosion of international crypto exchange FTX, Massachusetts state Representative Kate Lipper-Garabedian said she remains committed to advancing crypto and blockchain policy on Beacon Hill next year. Her goal is to help the state support a thriving crypto and blockchain industry.
But the current unfavorable sentiment toward crypto could dampen efforts to advance blockchain legislation. Wariness on Beacon Hill would come just as the state began investing in crypto technology, including a $2 million grant to QUBIC Labs to incubate blockchain startups.
Politicians could be tempted to follow the lead of Senator Elizabeth Warren, a known critic of cryptocurrency. She recently wrote a letter to FTX, requesting information and answers to questions related to allegations of fraud. Days later, she wrote a letter to Fidelity Investments, asking it to reconsider its decision to allow some employers who offer its 401(k) plan the ability to let employees invest in Bitcoin.
Lipper-Garabedian pointed out that she wants the state to evaluate “appropriate” uses of blockchain tech — not get involved with sketchy crypto firms — but she worries some won’t grasp the distinction.
“So much of the world is still learning about this space... FTX and its ripple effects have the challenge of making people think blockchain is just crypto,” she said.
The two blockchain bills she filed last year never made it out of the session, but Lipper-Garabedian plans to refile them. And she hinted at more comprehensive bills to come, though she didn’t provide specifics.
Last year, Lipper-Garabedian proposed a bill to create a statewide blockchain and cryptocurrency commission, made up of politicians and representatives from the crypto business community. The group’s goal would be to “develop a master plan of recommendations for fostering the appropriate expansion of blockchain technology and the cryptocurrency industry.” The other proposed bill would establish a state-funded workforce development program for blockchain talent.
Though the federal government likely plays the larger role in regulating crypto, Lipper-Garabedian said individual states have the opportunity to write crypto-friendly legislation and update their laws and technologies.
Massachusetts, she said, could tweak corporate law statutes to offer crypto and blockchain companies more guidance. That might allow DAOs, or decentralized autonomous organizations, to register as business entities, or allow the use of blockchain tech for real estate records, she said.
Opening up state law to include crypto and blockchain could also enable Massachusetts to have more oversight of consumer protection, she said.
“It is challenging to know for certain how this will play out,” Lipper-Garabedian said.