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Ep 61: Congerssman Downing
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Ep 61: Congerssman Downing
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Transcript
Introduction to Owl Explains
00:00:06
Speaker
Hello and welcome to this Owl Explains Hootenanny, our podcast series where you can wise up on blockchain and Web3 as we talk to the people seeking to build a better internet.
00:00:17
Speaker
Owl Explains is powered by Avalabs, a blockchain software company and participant in the Avalanche ecosystem.
Meet the Hosts: Silvia Sanchez and Norma Cram
00:00:24
Speaker
My name is Silvia Sanchez, project manager of Owl Explains, and with that, I'll hand it over to today's amazing speakers.
00:00:34
Speaker
Welcome everyone. My name is Norma Cram, Chair of the Cyber or Privacy and Digital Innovation Practice at Vanscoic Associates. and this is the Policy Layer podcast by Avalanche Policy Coalition.
00:00:45
Speaker
Today, we're focusing on the nexus of how policy and legislation are shaping the future of critical technology issues, including blockchain, digital assets,
Spotlight on Congressman Troy Downing
00:00:55
Speaker
and more. We are thrilled to be here today with Congressman Troy Downing, who is on the House Financial Services Committee and serves on the Digital Asset Subcommittee. But before we start, I really would like our listeners to know just a little bit more about the Congressman.
00:01:10
Speaker
He is currently serving his first term in Montana's 2nd Congressional District. A proud Montanan, Downing began his career as an educator, spending time at and NYU's Institute of Mathematical Sciences as a research scientist and teacher in NYU's IT department before leaving higher education and founding a successful tech startup that would later merge with a nascent Yahoo!
00:01:35
Speaker
But when America faced its darkest hour following the terror attacks of 9-11, Congressman Downey rushed to enlist to serve his country. He joined the U.S. s Air Force and Air National Guard, ultimately serving eight years in combat search and rescue squadron, including two tours to Afghanistan. Before coming to Congress, he was a public servant. He served as Montana's state auditor, where he was tasked with oversight of Montana's insurance and securities industries, giving him an amazing background for all the work that he's doing here today. And he is one of the newest members of the House Financial Services Committee and House Committee on Small Business. So Congressman, welcome.
00:02:18
Speaker
Before we jump in with any thoughts you'd like to start us off with?
Digital Assets and AI: Opportunities and Challenges
00:02:22
Speaker
Well, I just want to say thank you for having me on this. I mean, this is ah obviously a really important topic. I think, ah you know really talking about digital assets, you know, artificial intelligence ah and all the issues combined there are probably one of the most, you know consequential conversations we can have right now. And I think this is something that we're going to be charged with ah navigating right now. But, I mean, that's going to continue into the foreseeable future because,
00:02:50
Speaker
You know on one hand, this is some of the most exciting technology that we've seen. And and I started out my career in technology. and I started out at NYU in the Kuran Institute of Mathematical Sciences. And I I taught there as in the computer science department and left there to do a startup company. Obviously, you mentioned that in the opening statement. So I've been part of this world.
00:03:10
Speaker
you know, pretty much my whole life. And I've never been so excited and so concerned at the same time because we have so much opportunity in front of us. We have an absolute need to stay ahead of this, make sure that the United States of America continues to be where innovators want to innovate. And we've had some, you know, fits and spurts with that. with ah you know previous regulators. you know like i You had mentioned earlier that I was the securities regulator regulator for the state of Montana and the ambiguities in digital assets that we were getting from Gary Gensler's SEC really you know kind of stifled you know, the desire for some folks to want to innovate here because they had that, you know, lack of formality or lack of understanding where those sideboards were, where the regulators want to see that. And I think that that really disadvantaged
The Role of Regulation in Innovation
00:03:59
Speaker
us. But, you know, there's a a new sheriff in town and we are really looking at how we can put in reasonable sideboards to make sure that the public interest is is protected, the public is is protected from bad actors, but also have it broad enough that folks still want to innovate in the United States of America. And so I'm excited you know coming out of that as an innovator myself you know on the technology side and then having been a regulator and having to you know think about how this impacts people's lives and industries and businesses and now being the lawmaker and putting things on paper that affect this, that you know achieve the goals that I mentioned. of you know reasonable protection, but broad enough that folks want to continue innovating in the United States so that we continue to lead the charge and lead the rest of the world in what we're doing. So I'm really excited about being on this and digging into these topics a little bit deeper.
00:04:54
Speaker
Well, this is exciting. um It is a rarity that we have someone with such an amazing background like you, again, having been both a regulator, been a technologist, someone who's taught these issues, And as you said, these are not these issues are not going to go away.
00:05:09
Speaker
What we do want to do as we work together through this process in Congress right now, and we focus on really the digital revolution. We're talking about Web 3.0. But as you said, that one other thing that's really important. We do want clear rules of the road. We do want regulatory certainty. And we do need to make sure that we have those consumer protections in place. And certainly the work you're doing goes a long way towards that.
00:05:37
Speaker
One of the things we do spend a lot of time on, and and you do as well in your role on the House Financial Services Committee, is trying to explain to people the difference between the technology and the use cases And particularly for the Avalanche Policy Coalition, we really like to talk about blockchain is that tech layer, right? And it's the wide variety of uses for digital assets. So tell us a little bit more about your work on the House Financial Services Committee on these
Blockchain's Industry Transformations
00:06:03
Speaker
issues. You mentioned AI, right? These are all things that we need to work on. And while we know you passed an important bill, there's still more to do. So tell us a little bit about your priorities.
00:06:12
Speaker
Yeah, well, first of all, just in general, um you know a lot of just you know people who aren't involved in technology don't really understand you know what a distributed ledger is, don't understand what blockchain is, and they don't understand what the opportunity is there. Because we have you know incredible opportunities that we've never had before in just you know simple things. like you know I was also an insurance regulator.
00:06:36
Speaker
And you think about you know buying a home and having you know title insurance and the work that goes into making sure that you have a chain of ownership. When you have a distributed ledger that can, you know be beyond the shadow of a doubt, you know prove ownership in something, i mean that's a powerful tool. And how we lever some of that stuff is is going to be really interesting as we see these you know these industries and these use cases start to develop. In terms of you know digital assets assets in general, in terms of you know cryptocurrencies, you we've done a lot of work in this Congress, you know really building on what um Fitzpat, Fitzhenry did in the previous um ah Congress with FIT21. And then we you know we kind of tweaked that as as things move forward in making sure that folks that are trying to build you know solutions, trying to build industries, trying to build products and businesses around this, that they have some some clarity. And I think that's incredibly important because what we saw under Gensler is a complete lack of clarity on, you does this solve the Howey test? Is this a security? Does it need to be regulated as a security and what Gensler would do is just come after somebody that tried to bring an innovative new product to market and say well you know this solved the Howie test so this is a security so we're gonna find you a million dollars for basically unlicensed sale of securities and so I obviously it it had a lot of people really nervous about how to move into the space.
00:08:03
Speaker
But I will tell you that, you know, digital currencies, digital assets, they're not going anywhere. And now that, you know, we passed two bills in the House dealing with this.
Legislation Impacting Digital Economy: Genius and Clarity Acts
00:08:15
Speaker
We had the Genius Act, which was ah dealing with... was stable coins. So those are asset backed, you know, digital assets or or tokenized, you know, assets. and And one of the things that was important to me when we did the Genius Act is that we tied it directly to dollars, you know, US dollars or dollar derivatives like treasuries. So that it really, you know, one of the things that I'm concerned about is the, you know, continued ah success of the United States of America and make sure that we are still you know, in charge in terms of, you know, global innovation and trade and everything else and making sure that the dollar is still the reserve currency that everybody's using. So it' was really important that we used um ah the dollar or dollar derivative as, you know, the the tethered, you know, ah um asset behind these stable coins. And, you we got that through, got that through the Senate. So that was that was all, you know, good policy. But it was one piece of the puzzle. And going back to the ambiguity I talked about in terms of you know ah regulating by you know enforcement, which we saw under Gensler, is we also passed the Clarity Act in the House. And the Clarity Act gave clarity to these digital assets. It says this is this is when it falls under the Securities Act, and this is when it's dealt with under you know under the commodities laws. so it's basically traded as a commodity and and and regulated as a commodity and giving clear clarity. I mean, it's not an accident that it was named the Clarity Act is something that innovators need. They need that that understanding of what they can do and how it's going to be regulated because in a lot of businesses,
00:09:57
Speaker
you can build to wherever the bar is, but you need to know where the bar is. And if the bar is being moved while you've already invested you know capital, ah resources, people, you know brain time, everything that you do, putting something together, and that bar is not where you expect it it to be when you go to market, it's really hard to take those risks that you need to do to build something in that industry. So I am really... hoping, and this has been a big topic of topic of conversation, that we get that clarity act back from the Senate, because it still is waiting to get out of a committee in the Senate so that we can get it, you know, either approve their changes or or modify it again. But I think time is of the essence that we get that back so that we can give that clarity, because what's going to happen in the United States of America is folks that you know don't have those constraints and that ambiguity that we have in the United States are going to start you know doing things abroad. And you we've seen how bad that can happen. we see We saw what happened with like FTX you know out in the Bahamas. We've seen you know a lot of issues where you know things have not had the reasonable sideboards to make sure you're protecting consumers, but been broad enough that they actually want to do at the United States of America. so the work that we're doing in financial services and the digital assets i think that you know uh chairman style is doing a great job on the subcommittee i think that chairman hill is doing a great job in the committee on really um bringing some needed and desired ah regulatory clarity on where these you know new industries you know can start to you know build their foundations. So a lot of work to be done, hoping that we get something back from the Senate quickly because you know we're all chomping the bit to actually get this enacted.
Tools for the Crypto World: Core Wallet
00:11:51
Speaker
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00:12:02
Speaker
Meet Core, the native crypto wallet for Avalanche. Mobile, desktop, however you work, it works around you. There's no messing around with exchanges. Upload funds directly from your bank account or Venmo just as easily as sending a PayPal transaction.
00:12:19
Speaker
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00:12:37
Speaker
Pretty awesome. Then there's a whole world of crypto apps and tools to explore direct from your wallet. Get the wallet that does more. Download Core today.
00:12:48
Speaker
Well, thank you so much for that. You touched on so many issues. I do want to dig, you know, just a little bit deeper on, and, and really this, this is a testament to your amazing background. For you to be able to also talk to more members of Congress and explain these issues is really important because that's, you know, for us at Avalanche and Avalanche in this podcast, it is about helping to educate other members of Congress and the broader community ah on these issues.
00:13:15
Speaker
You know, one piece you talked about at the at the outset is the different uses for blockchain and digital assets. And that is one thing that we do find that we spend a lot of time explaining. You know, for us at Avalanche Policy Coalition, trying to explain that there are different types of digital assets are really important, right? Not everything is a cryptocurrency. And you mentioned two that are very close to your heart from your time in Montana. You know, title insurance. That is something that the Avalanche is actually working on with the state of New Jersey, putting title insurance on the blockchain. And even insurance in general, we have been working with a company called Lemonade to actually provide crop insurance. And so one of the things that we we do find that are challenging for...
00:14:04
Speaker
yeah for many people to understand is how we use digital assets overall. And then the other issue you jumped into, which is really important, is trying to make sure that we have clarity, pun intended, right, um on what the SEC and what the CFTC should be doing. As you said, Chair Gensler did have regulation by enforcement, and we're trying to be able to work our way through some of these issues between the SEC and the CFTC.
00:14:35
Speaker
do you Do you really have a sense of whether or not, i mean, members have so many other issues to focus on. What is it can we that we can better do to help educate them on the differences between these issues? Well, I think, you know, how you ended that question is exactly the issue, is educating, because there's folks that, you know, have been involved in this, folks that are very technically savvy, excuse me, folks that understand, you know, these these issues and the opportunities.
00:15:04
Speaker
And there's a lot of folks in Congress that just don't know what it means or what it is. And you spend time, know, explaining, you know, well, why do I want this or why is this important? Yeah. And ah so what you mentioned in your question there is is education. And I think that's a big part of it.
00:15:19
Speaker
And having people understand, you know, what's different and what's the same. And you look at you know, the opportunities of like stable coins and the opportunity to streamline transactions and to be able to do that without, you know traditional, you know, ah banking or traditional, um you know, fees involved with, you know, credit card swaps or transactional fees or anything like that. It really kind of, you know, is a huge opportunity for streamlining that. And, ah you know, one of the things that I try to remain cognizant of and make sure that we are, you know, that my members, ah my co-members in Congress are are cognizant of too, is we can't do that at the expense of traditional banking. We need to make sure there's still, you know, ah ah community banks that are still lending to buy houses to, you know, in in my district, making sure that there's
00:16:10
Speaker
you know, banks they're lending on on on farms, on, you know, we need to still have that traditional banking there. And, you know where this goes ultimately remains to be seen, but in the definitely in the short medium term, we need to make sure that these can coexist and that there are opportunities for traditional banks to to participate in in these in these as well. And so, you know, there's just ah so much...
00:16:37
Speaker
educational opportunity in ah having members understand really what this means to you know streamlining and reducing the costs of transactions, which is something that a lot of Americans want.
00:16:52
Speaker
And, you know, there's obviously some that don't understand. so you know, one of the things that was really important to me in my you know previous role was, you know, outreach and education, making sure we are doing, you know, public service announcements so people understood what the opportunities were. And making sure that this is not necessarily you know going to uproot everything, but this is a new rail where you can make a choice on using this for you know your transactional needs rather than something traditional. And it's going to be great for some people. It's not going to be perfect for everybody, but just understanding where it's at. So... so
00:17:26
Speaker
What really helps is like what you're doing is doing podcasts, talking to you know policymakers about what's going on and sharing that with people that may not understand. And what my job is, is I'm trying to push ah forward legislation that solves a lot of these problems is making sure that I'm talking to my colleagues that may not see it as important as I do. or may not understand it as well as I do to make sure that they have the resources to understand and say, hey, yes, this is this is something that we need to get some clarity on so that industry can you know grow and thrive. um
00:18:00
Speaker
And it's not it's not something that we hide because it's not going away. It's here and it's going to continue to be bigger and more important. So we can't just ignore it and making sure that my colleagues understand that.
00:18:12
Speaker
that it That is so critically important and and we are so thankful that that you continue to do that. You know, you mentioned one other issue and that I did want to spend ah another few minutes on and that is, as we talk about changes in the banking industry, I'll say the small b banking industry and that fact the fact that digital assets are not going away.
Evolving Economy: Financial Literacy and AI Awareness
00:18:32
Speaker
The concept of financial literacy, honestly, it' it's it's always important. But the more we talk about this Web 3.0 and evangelizing something like digital assets, we do have a financial literacy gap.
00:18:48
Speaker
And what we what we really would like to do is talk a little bit about how we can get everyone in Congress to talk about these issues, right? These are not, they're not blue or red. We have everyday Americans who who lots have access to the internet, others that don't. So the question is making sure that we're not leaving anyone behind, but we're teaching people, right? That they can still have trust in the old banking system, but in this new one.
00:19:15
Speaker
So what's the best way, do you think, just in Congress for all of us to be able to talk about those issues to help you know your constituents and others? Well, I mean, that's an interesting quandary. ah you know Financial literacy education has been a big priority for mine, you know going back from my regulator days. And that's something that actually fell within my wheelhouse as a regulator. So we did a lot of outreach on financial literacy education in you know, starting out with with high schools. We did, you know, some with junior high schools starting earlier because I think a lot of them are being disadvantaged because they they're not being given the tools to really understand, you know, how how money works. And we did a lot of outreach in Indian country. We've got a lot of tribal communities Montana making sure that they had the resources and their, you know, ah the schools in and around tribal communities, the tribal colleges ah to really be able to participate
00:20:08
Speaker
you know not just in the in the current economy, but in the in the future economy as that starts to come down the road. And i think that we need to continue you know working on tools to do that. And in a very you know small sense, you know I have a bill a bipartisan bill. i have a um a Democrat co-sponsor with me on financial services doing this on the AI Wise Act.
00:20:31
Speaker
And what that does is it's basically an educational ah program under the SBA, the Small Business Administration, on artificial intelligence and making sure that they supply you know educational tools for small businesses trying to understand technology. know, how to leverage artificial intelligence, how to, you know, what they should be worried about, ah what they should be excited about, you know, whether it's right for them or not. But, you know, that's one small piece of the puzzle. But I think we need to, you know, continue to look for opportunities where we can get that education out because what we really don't want
00:21:04
Speaker
is we don't want to further divide between you know the haves and the have-nots or the no's and the no-nots, you know but making sure that everybody can participate in the economy as it you know unfolds you know more and more rapidly in front of us. So um yeah if you if you have suggestions, I'm im you know all ears, but that's something that is high on my priority list and something that you know i've I've put a lot of time and effort to in my previous job and continue to try to you know find opportunities as ah as a lawmaker in how we can get educational tools out there.
00:21:37
Speaker
I think that's incredibly important and in been so wonderful to hear more about your leadership on these issues because the AI component to all of this, when we talk about technology, is mission critical. As you said, we do not want to leave people behind. And and what we do worry about is the more we have complicated technology and we don't have the financial literacy or ah maybe the tech literacy keeping up. right? We have to make sure that, that you know, kids and whether you're you're a kid or you're, you know, ah older, we have to make sure that everybody has those tools and we'd be happy to work with you on that. Outstanding.
00:22:17
Speaker
You know, one of the things, um I don't know how we can end this on a higher note, but you, yeah like all your work is so amazing. If you had two recommendations, I'm i'm making this up now, you know, for our listeners, about how to better understand technology or how everyone, all of us should be working to educate Congress together. What would you like to see either industry or stakeholders do to help you?
00:22:44
Speaker
Well, in terms of the stakeholders, you know, I always, we meet with a lot of folks, I'm sure you can imagine. And one of the things i always tell them is I said, well, just keep us in the loop on what your hopes are and what your fears are. You know, what what do you see coming down the pipe or what do you hope is going to happen and what are you afraid is going to happen? And make sure that you keep us in that loop because some of this is going to change, right?
00:23:08
Speaker
so quickly. And, you we, we barely touched on artificial intelligence on this, but artificial intelligence is is going to evolve much faster than any of us can keep up with it. It's good right now. It's going to be better tomorrow and it's going to, you know, be, you know, better than that the day after and figuring out, you know, really how we deal with that as regulators and, and, or as lawmakers, because as a regulator,
00:23:34
Speaker
I had to deal with this on you know the use of artificial intelligence and insurance rating. And folks are worried about it being about the machine being biased and what do we do about you know these particular issues and whether you need to require somebody using artificial intelligence to expose what's in the black box.
00:23:51
Speaker
But you know me coming from the technology side, I say, well, if you have a black box and the axes in that box is a neural network network that is you know approaching infinity, no human can understand it. So what does that really mean to look into that? And where does it go? And what kind of tools do we need to stay on top of that? It's a very exciting time, um a little bit of a scary time too, because, you know, it's going to like I said, it's going to grow faster than we can keep up. So one of the the things that that I've done in the past is if we put down policy regarding how to deal with this, how to think about it, really focused on being concepts-based and not prescriptive, Because this is moving so quickly. The moment you put something prescriptive down on paper, it's going to be irrelevant.
00:24:37
Speaker
um And I know I went down a little bit of a rabbit hole there on your question, but it's just something that I'm thinking about a bunch. But in terms of, ah you know, making sure that.
Stakeholder Engagement in Technological Progress
00:24:47
Speaker
ah the lawmakers are hearing, you know, from stakeholders is just continue to actively engage. And I know a lot of my colleagues, you know, invite these, this type of information from, from stakeholders, from industry on what is going to help them, what is going to hinder them. And, you know, obviously we're not alone there. We want to make sure that we're hearing from everybody because nobody, no one person, no one system is really going to have their finger on where this is going to end up tomorrow because, know,
00:25:17
Speaker
yeah We've gone through a whole period of training AI with our data and asking questions that we want answered. And tomorrow, AI is going to be trained on its data and it's goingnna be it's going to take the anthropomorphism out of it and it's going to start answering questions that it's asking. And you know we need to make sure that we're just eyes wide open as this progresses in front of us. So let's just keep the lines of communication open.
00:25:43
Speaker
Well, i first of all, that was a wonderful rabbit hole. um i you know but We would love to spend more time talking to you about this specific issue and and particularly on the tech side as we focus on the AI issues, whether it's in in digital assets, blockchain, or more broadly. One of the things that is important and and we we do work a lot on is making sure as we're building that these AI models that we are aware of what we're building in, right, into that basis, into the coding itself. Because the issues around bias, you know, whether it's in financial services or health care, right, there are so many things that are really important. So I know that we will have plenty to talk about in the future. i know that our listeners today will be so excited to hear your thoughts and to get to know you more. And and I would really just like to thank you.
00:26:33
Speaker
for your time today. We very much look forward to working more closely with you on these issues. Well, thank you so much for this opportunity. And I, once again, apologize for my rabbit holes. That's just where my brain goes, but these are all exciting, exciting topics. And I really appreciate the opportunity to talk about them Thank you so much.
00:26:50
Speaker
thank you
00:26:53
Speaker
We hope you enjoyed our Hootenanny. Thank you for listening. For more hootful and hype-free resources, visit owlexplains.com. There, you will find articles, quizzes, practical explainers, suggested reading materials, and lots more. Also, follow us on Twitter and LinkedIn to continue wising up on blockchain and Web3. That's all for now on Owl Explains. Until next time.