The tide of regulation of cryptocurrency and blockchain might be handing over america. Following feedback by newly-confirmed Treasury Secretary (and former Federal Reserve Chair) Janet Yellen describing Bitcoin as “inefficient” and “extraordinarily risky,” the value of the coin dropped 10% in 24 hours. Throughout her affirmation hearings, Yellen described cryptocurrencies as a “particular concern” and signaled that the Treasury would start analyzing blockchain-based monetary networks. On the heels of Secretary Yellen’s feedback, Congressman Patrick McHenry (R-NC), head of the Home Monetary Providers Committee, and Congressman Stephen F. Lynch (D-MA), Chair of the Monetary Applied sciences Process Pressure, launched H.R. 1602, bipartisan laws which directs the CFTC and the SEC to “collectively set up a digital asset working group” to “present regulatory readability” and to “create a crucial collaboration [between the two agencies to] create truthful and clear markets.” Notably absent from this proposed collaboration is any point out of antitrust enforcement or involvement of the DOJ antitrust division or the FTC. Nevertheless, latest feedback by outgoing DOJ chair Makan Delrahim present clues as to how antitrust might play a component within the regulatory framework for blockchain and cryptocurrency.
Talking on the 13th Annual Convention of Innovation Economics at Northwestern College’s Kellogg Faculty, Delrahim spoke broadly concerning the significance of innovation and guaranteeing competitors in digital markets. Referencing Nassim Taleb’s seminal ebook, “Antifragile,” which posits that embracing randomness and volatility can strengthen financial programs, Delrahim commented that, to ensure that the Antitrust Division to turn out to be “antifragile” it have to be ready to confront and deal with how blockchain know-how will impression competitors in a number of markets. Delrahim defined that he, together with different senior enforcers on the Division, had been enrolled in a course in blockchain know-how supplied by the MIT Sloan Faculty of Enterprise. This course, Delrahim claimed, imposed upon him and his colleagues the “transformational impact” that blockchain can have on sure markets – however warned that whereas blockchain “carried the promise of toppling current monopoly constructions,” it additionally offered the “prospect of recent monopolies rising and searching for to entrench themselves.” He then declared that the Antitrust Division “will play a crucial function in guaranteeing market situations are conducive to unleashing blockchain’s revolutionary potential.”
Delrahim defined that the Antitrust Division shares in a number of the objectives supplied by the promise of blockchain know-how – particularly attaining community price reductions that may provide shoppers “decrease price or larger worth choices.” On the identical time, in keeping with Delrahim, DOJ should stop “aggressive abuses” in those self same markets. However the examples of such aggressive abuses Delrahim recognized didn’t include the “new monopolies” he warned of moments earlier than. As a substitute, he cautioned in opposition to rivals both conditioning entry to trade blockchains as a part of a tacit settlement to collectively repair costs or output, or to make use of the anonymity of blockchain as a cloak to share competitively delicate info with impunity.
Delrahim’s feedback relating to monopolies counsel an activist focus that might draw parallels to the businesses’ present enforcement actions in opposition to digital platforms. Certainly, most of the practices that the FTC, DOJ, and state enforcers are investigating regarding Huge Tech – problems with lockup/lock-in, bundling, refusals to deal, and purchases of competing applied sciences to stifle competitors – all might conceivably emerge as personal blockchain positive aspects prominence. However the particular examples of “aggressive abuses” Delrahim targeted on weren’t of dominant applied sciences, however as an alternative targeted on the backyard selection horizontal collusion that has been the topic of presidency enforcement for the reason that daybreak of antitrust enforcement. Nor did Delrahim’s feedback, made simply weeks earlier than he left the Division, lay out a particular plan of motion for enforcement in cryptocurrencies or blockchain. As a substitute, his feedback might be seen as an acknowledgement that enforcers’ efforts have been higher spent making an attempt to know blockchain and its implications, or in any other case threat “fall[ing] behind and study[ing], solely too late, that entrenched monopolists have taken anticompetitive actions to get rid of the menace from blockchain know-how to their enterprise fashions.” As enforcers get additional steeped within the points, trade observers anticipate additional steerage from regulators, notably new DOJ management, on threshold points together with potential refusals to deal, and the impression of community results inside and all through blockchain ecosystems.