The crypto industry is facing headwinds from technology experts

by Joe Light
Barrons
Translation: Thomas Steer

A group of 26 technologists and crypto opponents sent a letter to politicians in the US Congress on Wednesday. In it, they urge MEPs to be wary of statements by proponents of digital assets. They claim that “Web3” will change the world for the better.

It is unclear what impact the letter will have in the short term, especially as Congress has passed few crypto-related laws so far. But if the initiative gains ground, the crypto industry could face a strong new adversary in the fight for new legislation.

Web3 is a collective term for next-generation Internet based on blockchain technology and cryptocurrencies. It has prompted large investments, but has also raised skepticism about whether it is anything other than a marketing gimmick.

Some technologists are now outright crypto-skeptics. “Crypto” is a solution to a problem that does not exist and which has now stuck to concepts such as financial inclusion and data transparency to justify its existence, “the letter reads.

Photo: Shutterstock

The blockchain technology enables “only a few real economic applications, if any,” the letter continues. However, cryptocurrencies are “an instrument of uncertain and highly volatile speculative investment strategies” offered to retail investors who are not aware of the risks.

The letter’s signatories urged MPs not to create a “protective legal framework” for industry. In addition, Congress should “look beyond the hype and fuss surrounding the crypto industry.”

Notable technologists who signed the letter include cybersecurity expert and Harvard lecturer Bruce Schneier and software engineer and IBM Fellow Grady Booch. Other signatories include crypto skeptic and blogger Molly White and Jamie Zawinski, developer of the Netscape browser.

MEPs are already working on bills to regulate cryptocurrencies. Proponents of the crypto industry have increased their political donations and lobbying activities. They call on the legislature to take milder action – also to promote innovation. But with the US Congress divided and with a short time left until the November midterm elections, it is unlikely that the legislation will be passed. And according to most lobbyists, the effort sets the stage for yet another regulatory initiative in 2023.

The letter can still be important. He can push crypto skeptics to become more organized in the technology industry. So far, they have had little influence in Congress.

Opposition to cryptocurrencies has so far come from other industries and interest groups. The banking sector has criticized the crypto industry for offering financial products without following the rules that traditional financial companies are required to follow. Consumer advocates accuse the crypto industry of enabling fraud and not adequately protecting investors.

But the technology industry has so far seemed largely united in supporting Web3 development.

The letter is “an experiment. Want to see if the level of skepticism that these technologists hear and see in their own industry can be translated into something more concrete and collaborative,” said Mark Hays, a senior policy analyst at Americans for Financial Reform (AFR). ), an investor advocate group that helped initiate the letter.AFR has lobbied in Congress for more regulation of the crypto industry.

The technologists put the letter online to collect more signatures. According to Hays, the technologists could contact the politicians directly – depending on how much support they receive. He added, however, that they would generally try to “make the skeptics more heard”.

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