This is the fourth post in a series of eight about the discussions, leadership and community created at the first inaugural Blockchain Law for Social Good Conference held on October 20-21, 2022.
Loni Manhanta, lawyer and litigator, now Vice President of Policy and Government Affairs at OpenSea, spoke with our Center’s Executive Director, Tanya Woods, about her professional journey working on issues related to new technology and diversity. Ms. Manhanta shared her experience working in an ever-evolving blockchain policy space.
Focused mainly on issues at the federal level, Loni shared some of her interactions with government and political staff who are newer to crypto and NFT technologies. She observed that they seem to be currently focusing on first line issues and applications like crypto and stable coins, which are easier to understand and relate to the importance of keeping the U.S. dollar as the reserve currency of the world. The second group of people she has interacted with were more focused on the financial side of crypto, such as exchanges, investment contracts, and even securities and commodities. Though she finds that this group tends to have more knowledge about crypto and blockchain technology, she found that they continue to benefit from more education around the broader applications and innovation potential. Ms. Manhanta spends most of her time at present interacting with officials to promote education and awareness about the emerging opportunities with blockchain technology and practical applications that are being developed.
There has always been some level of pushback when new technology is being questioned by regulators, because as we know, policy rarely keeps up with technology. When asked about her perspective on the “chilling” that occurs with new technologies Ms. Manhanta stated that there are two things to consider: the education of policy makers, and the importance of understanding of the consequences that can occur with a regulatory framework that is incomplete and enforcement focussed. She highlighted that there is a lack of education of these policy makers because not enough members of industry are taking the steps to explain to policy makers what their product actually does or why it matters. She believes that having creators and artists explain to regulators why they are using an NFT, like finding economic support or getting their art into a new market, will help regulators understand the importance of having a solid regulatory framework to ensure NFT innovation can thrive.
Ms. Manhanta points out that regulatory frameworks should differentiate between different kinds of crypto assets. NFTs, for example, can be used in many ways including for things like concert tickets. Obviously a concert ticket is very different from a security or a commodity, so they shouldn’t all be treated the same way. Understanding these nuances should change the way that regulators see crypto assets and perhaps is exactly what is needed to form a solid set of regulatory frameworks and/or supportive innovation policies.
She further stated that not understanding how the Howey Test should apply to an NFT (to determine whether they are securities or not) will also have a chilling effect on the progress and understanding of this technology. Without that clarity, the rest of the ecosystem involved in the blockchain and crypto space doesn’t really know what will happen to their projects or their NFTs. Will they need a slew of securities lawyers? Or will there even be enough information to determine what their crypto assets are classified as? This, she believes, will limit the people who can be involved in this space. Manhanta went on to state that these uncertainties will limit the number of people that will be able to join the crypto space.
If there are only certain kinds of companies or businesses allowed to deal in crypto assets, will that have the same effect that traditional finance has on marginalized communities? As Ms. Woods points out, any kind of limitation on who can participate in this innovation ecosystem is concerning when social good and democratization are so fundamental as first principles of blockchain technology.
Ms. Manhanta’s commentary led me to think of a number of additional questions including:
How will we be able to level the playing field for everyone so that financial and cultural inclusion can be at the forefront of policy making?
If the cost of doing business with this innovation demands that companies have enough funding to take on legal liabilities and costs, how will smaller groups and organizations have the ability to even participate if they never had the wealth to begin with?
Financial inclusion has been at the heart of many crypto asset projects and the likelihood of regulatory frameworks excluding people is still very high based on past experience.
So what can we do in this space to ensure that everyone has the ability to participate? Ms. Manhanta pointed to the need for government education, emphasizing that if the blockchain innovation community helps the government understand the larger applicability of crypto assets, then we may be able to help regulators come up with laws and guidance that are actually helpful to businesses and people. She also mentioned that there is a need for more diverse, experienced, and knowledgeable people in this space. Ms. Manhanta proposed bringing courses and educational information to community colleges or HBCUs, enabling the community to intentionally choose to include and educate people who would normally not have access to learning at this level. She added that if the community actively chooses to educate and train people of various backgrounds, we will be able to help ensure that traditionally disadvantaged communities will have equal access to this thriving innovation ecosystem, as they were always intended to have.