Reason Roundup

Meet the New Federal Crypto Czar: Reason Roundup

Plus: the upside of Trump blocking Twitter critics and why Paul Manafort could be headed back to prison



Potentially bad news for fans of Bitcoin and other digital currencies: The U.S. Securities and Exchange Commission just appointed its first crypto czar. Valerie Szczepanik's official title at the federal agency will be senior adviser for digital assets and innovation and associate director of corporation finance.

In the newly created role, Szczepanik will "coordinate efforts across all SEC Divisions and Offices regarding the application of U.S. securities laws to emerging digital asset technologies and innovations, including Initial Coin Offerings and cryptocurrencies," according to an SEC press release.

"Valerie recognized early on the securities law implications of developments like blockchain and distributed ledger technologies, and of cryptocurrencies, Initial Coin Offerings, tokenized securities, and other digital instruments," said SEC Division of Corporation Finance Director Bill Hinman.

So can we now expect increased SEC scrutiny of cryptocurrencies in a way that impedes their dynamism and usefulness? That seems inevitable. But some are suggesting the up front attention from the SEC could be a good thing, providing clear rules that cut down on the number of confused crypto scofflaws the agency will have to investigate.

The SEC's enforcement unit "has been increasingly going after initial coin offering fraudsters," Axios reports. Yet "SEC commissioner Hester Peirce recently said she hopes further guidance will come from the commission's corporation finance division rather than its enforcement unit."

In May, Pierce said she was not "willing to make a blanket statement that everything other than Bitcoin is a security"—going against pressure from SEC chairman Jay Clayton and fellow commissioner Mike Piowar, who have said no initial coin offerings other than Bitcoin should be counted non-securities. The distinction makes a big difference, as classifying them as securities leaves blockchain token developers, sellers, and exchange facilitators subject to strict securities laws.

"There's incredible diversity in what's out there," she said, mentioning that some crypto coins operate like securities, some like money, and some as other functions.

Pierce's May talk to the Medici conference in Los Angeles highlighted many nuanced considerations the SEC should take note of when determining digital currency status. For instance, what happens when a coin's creator "is not involved anymore"? For the SEC enforcement division "to pursue that promoter doesn't make sense," she said. Pierce also pointed out that a cryptocurrency could start as something and then shift in usage or categorization, and expressed a hope that SEC regulators wouldn't micromanage new technologies.

So right now, the regulatory approach to digital currencies is still being debated, and it's unclear whether light-touch advocates like Pierce or the typical technophobic and heavy-handed approach will prevail.

The appointment of Szczepanik as SEC crypto czar "comes during what is perhaps a pivotal point on the crypto front for the SEC," notes Coindesk. "Many of the agency's public-facing actions have focused on alleged scams and fraudulent behavior, while officials have also come out in support of a more balanced approach to regulation."


Think twice before bellyaching about social media blocks by Trump. Constitutional law professor Noah Feldman suggests that we should be wary of courts "beginning to experiment with expanding the First Amendment, proposing that its protection of political speech applies even in privately controlled virtual spaces" like Twitter. His New York Times editorial comes in the wake of a May federal court decision holding that President Trump can't block people on Twitter.

"This is the first time, to my knowledge, that the First Amendment has ever been applied to a private platform," writes Feldman, who does not think this is a desirable development. More:

At present, free speech law ensures the platforms' own freedom of expression and association. That gives them the constitutional right to set their own terms of service and community standards, which they can use to address everything from spreading deliberate falsehoods to harassing people based on their sex, race or religion.

But if courts determine that the Constitution trumps the private decisions of the platforms with respect to regulating speech, the platforms will not longer set their own standards. […] There is thus a fundamental trade-off at stake. If, on the one hand, courts treat social media platforms as private actors with the constitutional right to regulate what is said on their platforms and who can say it, then we must accept that only a combination of moral, public and market pressure can help ensure that the platforms take appropriate measures to protect truth and civility. This is a system of private, voluntary regulation.

If, on the other hand, courts take over regulating social media, that essentially guarantees the same free-for-all on social media that exists on the internet as a whole—not to mention in real life. In that scenario, we should be prepared to accept the inevitability of fake news, online harassment, expressions of bigotry and all the rest. This would be a system of total free speech.

Read the whole thing here.


Paul Manafort could be headed back to prison after alleged witness tampering. Manafort is currently on house arrest while awaiting trial on conspiracy and money-laundering charges. But lawyers with Special Counsel Robert Mueller's team are asking a federal judge for pre-trial detention for Manafort, saying they have probable cause to think the former Trump campaign manager and business associate to Russian oligarchs "repeatedly" contacted two witnesses "in an effort to secure materially false testimony."

The witnesses were both "principals in a public relations firm that worked with Manafort in organizing a group of former European officials, known as the Hapsburg group, who promoted Ukrainian interests in Europe as well as the U.S.," the Associated Press reported.