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Colorado crypto advocate seeks balance as lawmakers ramp up legislation

October 20, 2023, 8:49 am

Color Taylor Kendal “skeptically optimistic” when it comes to what Forbes Magazine describes as a “storm of crypto legislation” over the summer that’s currently mired in an exceptional level of congressional gridlock but enjoys support among Colorado lawmakers.

Taylor Kendal

Kendal, the Denver-based president of the Learning Economy Foundation and a steward of ETHDenver, is a former economic academic at CU Denver and Metropolitan State University of Denver who now engages in “systems-level hacking of higher education.” His current goal is to “make sense of emerging technologies and translate that into economic and social systems that are ultimately in service of individuals and learners and workers.”

Kendal is leery of Washington’s first-ever stabs at stand-alone crypto legislation, some of which seek to determine if digital assets should be regulated by the Securities and Exchange Commission (SEC) or be treated as commodities by the Commodity Futures Trading Commission (CFTC). Also at stake is whether the Bank Secrecy Act applies to cryptocurrency.

“It has to be measured,” Kendal says of any potential regulatory bills, “and who actually has done the work to understand it? There’s a lot of political posturing that gets dangerous, where it’s like, who are you? Are you just appealing to some base to get reelected or do you actually care about being there to help shape the tech and shape the policy? Colorado, I think, is in a really unique position to lead the way on some of this. So, I’m skeptically optimistic.”

For instance, one bill that made it out of two House committees in late July – the Financial Innovation and Technology for the 21st Century Act  (H.R. 4763) – was dubbed a “victory for the crypto industry” as it faces an onslaught of potential regulation in the wake of the high-profile collapse of companies like FTX, whose founder, Sam Bankman-Fried, is now on trial.

Colorado Democrats Yadira Caraveo and Brittany Pettersen both voted for the so-called “Fit21” bill in their respective committees, with Caraveo – the ranking member on the House Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development – issuing the following statement back in July:

“At least 70 percent of digital assets are currently unregulated. That leaves a huge number of retail investors unprotected in a volatile market class where many people have already lost their life savings. We have to act now to prevent more FTX-like disasters.”

Asked where Colorado U.S. Sen. Michael Bennet stands on crypto-regulatory legislation, his office flagged the Digital Asset Anti-Money Laundering Act, which Bennet joined as a sponsor in September.

“Cryptocurrency can be a boon for cybercriminals, cartels, and terrorist organizations, allowing them to evade sanctions and finance illicit ventures,” Bennet’s office wrote in a statement. “We cannot allow crimes like money laundering to evade scrutiny simply because they take place on the blockchain instead of with dollar bills. It’s time we extend our common-sense safeguards to digital assets.”

And on Thursday, Bennet and Colorado U.S. Sen. John Hickenlooper signed onto a letter with 103 other lawmakers urging National Security Advisor Jake Sullivan and Department of the Treasury Under Secretary for Terrorism and Financial Intelligence Brian Nelson to detail how it plans to prevent crypto-financed terrorism in the wake of the Oct. 7 Hamas terrorists attacks in southern Israel. They cited a Wednesday Wall Street Journal report showing the groups raising $130 million in crypto funding.

“Given the clear and present danger posed by the financing of these and other militant organizations, we ask the administration to provide additional details on its plan to prevent the use of crypto for the financing of terrorism,” Bennet, Hickenlooper and the other lawmakers wrote.

Kendal understands the need for some guardrails in the crypto industry, and he’s extremely tuned into the various factions that want everything from absolutely zero regulation to something more state-controlled. He first became involved at that level during Gov. John Hickenlooper’s administration, and ETHDenver has grown from a small meet-up to a major event with tens of thousands of participants at the National Western complex, with Gov. Jared Polis attending.

“I try to see a nice balance there,” Kendal said. “There are folks that fall on the far side of the libertarians that would ultimately say the state is nothing but a problem when it comes to how this stuff evolves and actually allowing for open networks that are permissionless — that the people do what they will — and that to me becomes a problem. And then obviously you’ve got [SEC Chair] Gary Gensler and folks that are clearly not tapping into the reality of what’s here.”

Kendal, a 41-year-old originally from Evergreen, does see the need for more transparency and less ambiguity, but he puts his trust in innovators over regulators.

“Yeah, openness and just some clarity so you have a pretty good sense of like where the lines are — do this, but maybe don’t go this far,” he said. “But there’s also part of me that is like, if you give large numbers of people a little more freedom, they collectively can make some pretty good choices. I probably fall a little further towards the sort of crypto-anarchist, libertarian side of the spectrum, just because I do have a deeper underlying belief that technology, if it is not in some ways really driven by the broader collective, that it’s going to be corrupted in some way.”

Finally, Kendal argues the United States needs to catch up to Europe on the regulatory front for the sake of keeping the best people in the industry working in America.

“The clarity isn’t there. So, if done well, obviously, a layer of regulation is super-important,” Kendal said. “The U.S. is woefully behind the EU, and I just spent a couple months in Europe over the summer, and we’ve certainly got work to do with a lot of people that are just like, ‘I don’t know how to even feel about this industry in the U.S.’ So, a lot of them have just picked up and are moving shop, which is sad. There’s like a whole national security layer to this that actually doesn’t get brought up enough — keeping good, smart people here to help build out what is still the greatest experiment when it comes to doing this right, getting democracy right.”

Editor’s note: This story first appeared on the Colorado Times Recorder website.

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David O. Williams

Managing Editor at RealVail
David O. Williams is the editor and co-founder of RealVail.com and has had his awarding-winning work (see About Us) published in more than 75 newspapers and magazines around the world, including 5280 Magazine, American Way Magazine (American Airlines), the Anchorage Daily News (Alaska), the Anchorage Daily Press (Alaska), Aspen Daily News, Aspen Journalism, the Aspen Times, Beaver Creek Magazine, the Boulder Daily Camera, the Casper Star Tribune (Wyoming), the Chicago Tribune, Colorado Central Magazine, the Colorado Independent (formerly Colorado Confidential), Colorado Newsline, Colorado Politics (formerly the Colorado Statesman), Colorado Public News, the Colorado Springs Gazette, the Colorado Springs Independent, the Colorado Statesman (now Colorado Politics), the Colorado Times Recorder, the Cortez Journal, the Craig Daily Press, the Curry Coastal Pilot (Oregon), the Daily Trail (Vail), the Del Norte Triplicate (California), the Denver Daily News, the Denver Gazette, the Denver Post, the Durango Herald, the Eagle Valley Enterprise, the Eastside Journal (Bellevue, Washington), ESPN.com, Explore Big Sky (Mont.), the Fort Morgan Times (Colorado), the Glenwood Springs Post-Independent, the Grand Junction Daily Sentinel, the Greeley Tribune, the Huffington Post, the King County Journal (Seattle, Washington), the Kingman Daily Miner (Arizona), KUNC.org (northern Colorado), LA Weekly, the Las Vegas Sun, the Leadville Herald-Democrat, the London Daily Mirror, the Moab Times Independent (Utah), the Montgomery Journal (Maryland), the Montrose Daily Press, The New York Times, the Parent’s Handbook, Peaks Magazine (now Epic Life), People Magazine, Powder Magazine, the Pueblo Chieftain, PT Magazine, the Rio Blanco Herald Times (Colorado), Rocky Mountain Golf Magazine, the Rocky Mountain News, RouteFifty.com (formerly Government Executive State and Local), the Salt Lake Tribune, SKI Magazine, Ski Area Management, SKIING Magazine, the Sky-Hi News, the Steamboat Pilot & Today, the Sterling Journal Advocate (Colorado), the Summit Daily News, United Hemispheres (United Airlines), Vail/Beaver Creek Magazine, Vail en Español, Vail Health Magazine, Vail Valley Magazine, the Vail Daily, the Vail Trail, Westword (Denver), Writers on the Range and the Wyoming Tribune Eagle. Williams is also the founder, publisher and editor of RealVail.com and RockyMountainPost.com.

9 Responses to Colorado crypto advocate seeks balance as lawmakers ramp up legislation

  1. Susan Pryce Reply

    December 7, 2023 at 11:33 am

    Regulations on crypto currencies are absolutely neccessary. First all of the reasons outlined by Hickenlooper and Polis. At the very least, until certain rules are made to prevent what their concerns happen to be and I believe they are justified in those concerns.
    There’s just some specific entities that must have some regulations in place.

    • Samantha Cost Reply

      December 7, 2023 at 3:44 pm

      Susan, literally nobody in the entire world cares about what you think. Especially when your supporting evidence is that two crooked politicians told you so. Please get some cats to keep you busy and stay off the internet.

  2. Steve warning Reply

    December 7, 2023 at 1:27 pm

    Nothing will change until get California thinking out of Colorado and a government change

  3. Lora Premo Reply

    December 7, 2023 at 2:19 pm

    I’m sure everyone who’s been successful in manipulating crypto doesn’t want any regulations but as Sam Bankman-Fried has demonstrated, “innovation” doesn’t put up guard rails. In fact, innovation is all about breaking things and knocking down guard rails and that’s all very well and good when you’re dealing with a new technology that presumably won’t harm anybody in its development, but it is not an acceptable response to taking peoples life savings and flushing them down the toilet or outright stealing them because you think innovation is more more important than regulation. Nobody loves regulations but in the financial services world, the people who object the most to regulations are the people who are most successful at scamming everybody else. There’s a reason they don’t want regulations. They’re having too much fun ripping you off without them. In the meantime, when you see something as disastrous as Sam Bankman-Fried, common sense tells you something needs to be done. The Republicans in the US Congress have already stripped us of all all the banking protections /guardrails that were introduced after the crash of 2008, so our economy is every bit as vulnerable to another huge crash once again, where only the bankers make money because then they take all our taxpayer money to bail them out because we can’t afford to have the banks fail – remember too big to fail? well the Republicans have made sure they’re all too big to fail again – and here once again we have people railing against regulation because it prevents them from making billions while other people starve. I have no sympathy.

    • Eliza Warren Reply

      December 7, 2023 at 3:41 pm

      Who had their money stolen when they voluntarily engaged in a risky investment? Regulations don’t make people smarter, and handling everyone with kid gloves only makes them more dependent on the government. The government knows this well and they just love when impressionable people like you act as their mouthpiece. How about you worry about your own money and let other people worry about theirs? You’re just as dogmatic as the religious zealots only you worship the church of big government making all your decisions for you. No doubt the bozo Republicans have done plenty of things damaging to our economy. I can’t believe you put more stock in that than the deleterious effects of what the government/Federal Reserve at large has done to the purchasing power of the dollar. Correct me if I’m wrong, but based on your take here I’d wager you were in support of our response to covid. How do you think shutting down the economy and printing $5.5T helped protect consumers? Do you think increasing the monetary supply by 60% in one year was… protective of consumers? Do you think the standard-of-living-shattering levels of inflation have helped consumers? Do you understand how damaging that was to our economy and the purchasing power of the dollar for generations to come? Not that the Republicans had very agreeable stances on covid, but your cherished Democrats led the charge there.

      I love that you ignored the fact that SBF was chumming it up with lawmakers until his dubious venture collapsed. He had their support when he was in their pockets and now that the gravy train derailed suddenly it was a scam from the beginning.

      Our circus of a government is the problem, stop the tribalistic nonsense. Grow up.

      • Steve Eddy Reply

        December 7, 2023 at 6:25 pm

        You got that right! Big government hinders rather than helps! Greedy and corrupt career politician’s run the country in concert with numerous “deep state” bureaucracy’s manned by unelected officials that make wrong decisions under the guise that they know better than we do about what’s best for us.

  4. Clayton Clabaugh Reply

    December 7, 2023 at 4:42 pm

    If the conversation is about the need for regulation, let’s consider the fine job regulation has achieved for Tradfi. Below is a “partial” list of misdeeds by regulated Wall Street. #failure

    The problem is trying to apply acts written in 1933 and 1940 to technology 80 years later. Exasperated by legislators in the back pocket of Wall Street. SBF met with Gensler multiple times. The biggest ponzi scheme ever was right under his nose and he was chasing small time players. I can buy Pokiman cards with the expectation of profit, but not an NFT. There is a gross double standard at work here.

    We “trust” that regulation is protecting us now, but as demonstrated by the list below, it doesn’t work, and this partial list is just what was caught.

    There were all kinds of terms and conditions agreed to by customers of these firms and they were violated. And it continues to happen. You can put a warning label on a pack of cigarettes, but that doesn’t stop people from smoking. Participants are learning hard lessons about where they put their money. You will let me run over to Cripple Creek and gamble my retirement away, but God forbid you let me gamble it on a new technology that will change the world. If the SEC and State Regulators can figure out how to enable this industry without trying to kill it, fine. Do it. The problem is they are NOT. They are touting false claims that BTC is used for criminal activities, when the fact is, it is traceable on a public, open ledger, based on trustless math, versus the “trusted” and “regulated” Wall Street firms that are as criminal as they come.

    As for the comment that Republicans are at fault, it is juvenile. Both parties are equally guilty. Pelosi is an inside trader and I can give you a list of Dems and Republicans that are guilty. Regulation is intended to protect the people, not profits of politicians and Wall Street.

    Crypto is a nascent technology and the rate of adoption is only surpassed by AI. Trying to stop it, just pushes it offshore and this hurts US Citizens who want to participate in the financial upside of this industry. For the first time ever, the public has front run Wall Street and they are wining and dining politicians to protect their ponzi scheme by preventing us from investing. They want us in their mutual funds with their fees.

    The aforementioned numbers mentioned in the comment by Hicklooper and Bennett are factually false. Fake news by parties seeking to discredit crypto. Why false? Because the transactions can be traced. The level of unintelligence is maddening. The facts are there if anyone actually wanted to find them but it doesn’t fit the narrative, just like the increased mortality of covid vaccinated people is being swept under the rug and Pfizer is still pushing it for kids (as is Colorado). If you are interested in the facts, here you go: https://www.chainalysis.com/blog/cryptocurrency-terrorism-financing-accuracy-check/

    Colorado was forward thinking on marijuana, and a bunch of idiots when it comes to Crypto. Just plain lazy. Stop dragging your feet and put forward a reasonable regulatory framework that allows this industry to flourish.

    Wells Fargo Securities, LLC together with Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC $125 million penalty;
    BNP Paribas Securities Corp. and SG Americas Securities $35 million;
    BMO Capital Markets Corp. and Mizuho Securities USA LLC $25 million;
    Houlihan Lokey Capital, Inc. $15 million penalty;
    Moelis & Company LLC and Wedbush Securities Inc. $10 million;
    MBC Nikko Securities America, Inc. $9 million penalty.
    Interactive Brokers Corp.: $35 million.
    Robert W. Baird & Co.: $15 million.
    William Blair & Company LLC: $10 million.
    Nuveen Securities LLC: $8.5 million penalty.
    Fifth Third Securities Inc.: $8 million.
    Perella Weinberg Partners LP: $2.5 million.
    Commerzbank fined £37.8 million by FCA for AML failings
    OCC issues $85 million penalty to USAA Federal Savings Bank
    SEB fined $107 million by regulator for Baltic AML failures
    Western Union refunds $153 million for scam victims
    Deutsche Bank faces $150 million fine for Jeffrey Epstein ties
    Citi to pay $400 million OCC fine for risk management failures
    JP Morgan charged $920 million for market manipulation
    Westpac agrees to record AUD 1.3 billion fine for AML failures
    Wells Fargo agrees to pay $3bn fine for fraudulent account furore

  5. Travis Green Reply

    December 7, 2023 at 4:47 pm

    There needs to be law to protect assets in the crypto sector. People who do collect the rewards With such legitimacy deserve the wealth that comes along in the crypto currency space. You can go on different.
    Merchant websites that are very popular such as amazon and purchase fake products. Education is key with Blockchain Technology. Yes the vitality in the market, but there is in every marketplace.

  6. Gary Guerriero Reply

    December 8, 2023 at 9:16 am

    Anyone stupid enough to get involved with cryptocurrency deserves whatever losses they incur.No way Am I going to support anything that saves their stupid a****.

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