Good afternoon, everyone, and welcome to the next portion. My name is Hilary brill. And we're gonna run right into it because I know we're running a teeny bit late. I currently work at Georgetown Law School where I teach technology policy in the law and IP law. And I'm also there at the institute of technology, policy and law. But I'm also part of the state of the net family, so to speak, and part of the new decentralized Future Council, and every year, stay the net for now, two decades, has brought up the new and exciting issues facing the Internet today and this year, is no exception. We have been talking about decentralized technologies. We had a panel earlier this morning. And we are very fortunate today to have a congressman that is a forward thinker in this area, and has already made his mark in this area. So it is my honor to introduce our next speaker Congressman Jake aucun gloss. He is currently the vice chair of the Financial Services Committee, and member of the Transportation and Infrastructure Committee. His areas of focus include infrastructure, housing, life sciences, Energy policy, and supporting and discussing new technologies that are part of web three. Now, Representative aucun, gloss before serving in Congress was a city councilor in the Boston area of my own childhood hometown, Newton, Massachusetts. And before that, he commanded Marine infantry in Afghanistan, and special ops in Panama. He is now a major in the reserves, comes from Aachen. Closs has also worked for Fortune 100 companies and cybersecurity startups. He has degrees in economics and finance from Harvard College, and MIT Sloan. Congressman Auchincloss while serving his first term in Congress, as I mentioned, has already made a mark in tech policy. He has recently introduced bipartisan legislation to create a research and development center to further bilateral cooperation and artificial intelligence and contribute to the advancement of this critical fields. He realizes and I quote him by investing in technologies of the future. With our allied partners, we can build an economy that prepares us to tackle the challenges of the next generation. Congressman knockin clause has also publicly promoted several times the need to write bipartisan rules to promote innovation, and web three technologies. It is now with pleasure that we get to hear from Congressman aucun Closs, to discuss his thoughts on policy, innovation and regulation.
Good afternoon. Thanks for having me. I want to give a few brief remarks on web three and on metaverse, but then leave some time for a conversation. And I appreciate the flexibility from state of them that with the timing of this, I knew I had to change it up at the last minute. As mentioned in the intro, I took a slightly unusual path to Congress and that I worked for more than five years in technology first as the director of the MIT 100k competition, which is an entrepreneurship accelerator that sees the most frontier technologies coming out of MIT and has them compete in front of judges from across industry. For seed funding, I was a director of that and got to work with cutting edge technologies, both in hardware and software. And then was a product manager for a startup cybersecurity company and then a product manager for a fortune 100 Technology Incubator. And in all those different roles. I wore a hat that required me to look at technology and be agnostic as to how cool it was. And instead think only about what is the applicability for the customer. I don't care if you're using Java or blockchain or Python or or you know, 1980s mainframe coding, as the insurance industry does. What matters is are you solving problems for the consumer? That's what the core the core approaches in this new role that I'm in as vice chair of the Financial Services Committee. I am no longer having to have a view on the commercial viability of these technologies, crypto or metaverse, or anything like that. In fact, what I think distinguishes me from some of my colleagues is I am steadfastly agnostic as to whether web three is going to be a massive commercial success, whether it's going to redefine tech and finance, or whether it's going to be a bubble that bursts. That's actually not my role in Washington DC is to have a strong commercial view in the technology. What I have taken with me, though, from the tech sector, is a focus on the end user The idea that regardless of whether these create tremendous new applications, or whether they end up being a dead end for investors and entrepreneurs, here in Washington, DC, our job is to protect consumers from fraud and abuse, it's to uphold market integrity. And it's to create a regulatory sandbox for innovation. Because it's going to be the markets and the entrepreneurs who create the new use use cases who solve the new problems. It's up to us here in Washington DC to to allow for that innovation in a way that does not create systemic risk, or fraud and abuse. So what does that look like for web three and for cryptocurrency, in particular? I think the clear and present next step for us is stable coin auditing and disclosure. We have heard repeatedly in the Financial Services Committee, from industry and from regulators that we have an issue where people are purporting to have $1. Usually it's dollar denominated, but doesn't have to be to back up one stable coin token that is being issued. And auditing and disclosure regime for those stable coin issuers would solve a huge percentage of the problems being faced right now, in the crypto ecosystem.
We've heard that from again, the industry side as well as the regulatory side. And so my focus right now is working in a pre partisan way to put together a statute for stable coin auditing and disclosure that ensures that if you're going around saying that you've got $1, to backup one token that you're going to have insurance for that it's you're going to have a transparent and trackable disclosure regime that your customers and that regulators can access. That is the best way right now that we can uphold market integrity and prevent consumer fraud and abuse while welcoming in innovators from around the world who want to build the next great web three businesses here in the United States. And that can be done in a pre partisan way. It can be done in an organic, incremental way. What I don't accept, are what I think of as the vacillations of the extremes, where on one side, you've got people saying, I disagree with everything that crypto or web three stands for. And we've got to block it right off at the root, because it's going to be used for money laundering, or it's going to undermine the US dollar. Or it is going to lead to speculation and fraud and abuse. Or on the other extreme where people say this is definitely where the future is going to be at for all financial technical services. And we need an entire regulatory regime from scratch. Right now we need a new agency, we need a new mandate for all these different agencies, we have to figure it out right now. I don't accept either of those extremes. I think the best policy in Washington DC is going to be made with both parties working together, solving incrementally the problems as they emerge. And by the time we solve this first problem stablecoin adding in disclosure, again, everyone is telling us that's the first problem to solve. But a time we solve that first problem. Seven problems that we think we have right now probably are going to be going go away because the markets moving so fast, and industry is innovating so fast. And 10 new problems that we didn't even know about are going to have emerged. But we'll have the muscle built of how you do good new innovation policy. And we will have the relationships and the learnings from this first tranche of regulation. So that's my approach, incremental and organic. I think it reflects the learnings of web one, where you know, if you'd ask people in 1992, or four or six, to regulate the entire.com industry, in a way they were supposed to be looking forward for 15 or 20 years, they just wouldn't have gotten it right. And that's nothing to say about 1990s regulators or policymakers couldn't possibly know the innovations that were going to come with mobile and social and, and local and the centralizing and decentralizing impulses. It just was not predictable. So be humble and be incremental in your approach. I want to close by talking a little bit about metaverse, and then I want to get comments and questions here. The second big mega trend that you hear investors and entrepreneurs talking about with the next decade of the Internet is is the metaverse, right, you got web three, decentralized finance and trust based trust lists, I should say, transactions, but then you've got the metaverse, this immersive 3d world where people can recreate and transact and create new avatars of identity. And here, I feel pretty differently than I do about web three, web three, as I said, I'm steadfastly agnostic as to the commercial and uses think that's really for the investors and the entrepreneurs to decide. My job is to have basic market integrity and consumer fraud and abuse protections, web through web three, I feel pretty differently. And I'll tell you why. Right now it seems to be bifurcating into two big use cases. One is enterprise one is consumer Got Microsoft making big plays into the enterprise metaverse. You can see use cases coming down the road for for healthcare and maybe even for education for workforce development. And this sounds like it's going to happen in a structured way with strong consent from everybody participating. But then you've got the consumer metaverse, you've got one giant company hiring 10,000 software engineers in Europe to create a, an immersive alternative universe targeted specifically at young people. And the reason they're doing this is because their demography on their social network is aging. And as a social network, if your demography is graying, you're losing, pure and simple.
That is a use case that I have a strong opinion about. If you are having eight to 13 year olds, spend 68 hours in your platform, if you're asking them to yield their attention, and to be to have their cognitive development subject to the universe that you're creating, you are going to answer to Washington DC and to the American people about that. The regulations and the conversations around the metaverse for the consumer use case are nascent. I would even say they're they're pretty nascent, they haven't even really begun yet. They need to, they need to because we could not be caught flat footed in the way we were in 2016. For example, we got to get ahead of this. And it's my intent to to be one of the leading policymakers in that frame.
Apologists in a sense, you're taking your government as it were into a digital phase by being pre literate, what you call it free part of them. Is that a popular thing? On the hill?
Well, I think when I say pre partisan, what I mean to what I'm really getting at, in actual terms is that web three is not a voting issue for either party's base right now. It's it's not a top three issue for constituents and liberal enclaves or conservative enclaves. It's an issue that lends itself to and again, I hesitate to use the word bipartisan because that's that sort of connotes that we are somehow bridging a divide. That doesn't even really exist a divide yet at least it doesn't have to. It's just It hasn't kind of crystallized into tribal camps yet. That's the time to do policy. Right. I mean, that's terrific. And I think it's an underappreciated aspect of Congress right now that there's actually a fair number of issues like that. Infrastructure is probably the one that's most salient in the last year, but we just did a bill in the House, America Competes $300 billion of investments in basic science and manufacturing and research. huge chunks of that bill are bipartisan in nature. There, there are areas where both parties can work together. i My intent is for crypto policy to be one of them. Now, the way to not do that, though, is to try to create an entire regulatory regime from scratch overnight, one that I think is lacking in humility to what we don't know about how the industry is going to evolve. But to it's going to require too many forks in the road that are going to bifurcate people.
I reclaimed co ag ventures, I was on the panel today. Kids cashless apps, and capa who's protecting kids FinTech privacy. And this is really the intersection of social networking, metaverse and financial transactions of children who are now getting digital wallets and digital and debit cards as the Financial Services Committee taking a look at this issue, and if so, what are your thoughts?
I think the entire realm of the metaverse and of the way that under 18, in particular engages in that is totally under explored in Washington at the federal level. And it is going to have to be at the federal level that it gets. It gets regulated. And probably, frankly, in concert with the European Union regulations as well, because these companies are so big, and because the use cases are going to be so global. So the short answer is no, it hasn't been it needs to be. And I I love the focus on kids, because that to me is such a strong dividing line. It's one thing if you are, you know, if you work at a company that's moving to remote work, and they want to do 3d meetings, fine, you know, great sign up for that software, and people like it, they use it. And that's an enterprise use case. It's another thing when video games and social media kind of have a offspring. This offspring is aiming directly at the 68 hours of disposable time that most kids in America have every day and wants to basically gobble up as much of it as possible. I mean, make no mistake, metaverse is not competing necessarily. Metta, I should say it's not competing just with tick tock and Instagram. They're competing with YMCA, and after school sports and Boy Scouts and anything that kids do with their free time. They want all of that time to be in their artificial universe with those eyeballs to their advertising.
So what's the difference between regular the metaverse and this focus on children as opposed to regulating video games. Because in a lot of ways, they are very similar.
Yeah, I think it's a terrific question. And they have similarities. I think that the difference is the degrees of freedom within the metaverse versus a video game video game does is relatively path dependent and how people are going to be able to consume that content. Whereas the metaverse is asking people to have an open ended experience that they can create for themselves. And it's a question about how much they're building the entire choice architecture of the metaverse and that is really deeply impactful on how kids cognitive development moves along. Allows them but you're right that the the best precursors, the companies that are most likely to do an effective metaverse are probably video game companies currently, right? So discord probably has a pretty good wedge into a metaverse angle, fortnight or Roblox These are companies that could potentially create ever more immersive experiences. And as they do so we do need to be looking at the evolution from video game into immersive addicting content.
Thank you. My name is Kelsey and I work for a tech startup. I really appreciated your kind of distinction between the enterprise and consumer metaverse and kind of the the desire at least for one member of Congress to get to get ahead of that. Seeing kind of following like the trends of regulating around section 230 or amending section 230 Over the past several years. I'm curious, in your mind, is there a current vehicle for Congress to address the question of regulating or of legislating around metaverse? Or will that have to be a total net new piece of legislation?
I doubt it will have to be net new, but I do think it's going to require new angles on it. And this is something that, you know, full transparency. I'm actively like literally exploring with my staff in real time. I think it's probably a couple different angles into it. One is our definition of consumer privacy. Increasingly, we're seeing regulators take less of an antitrust viewpoint and more of a consumer centric viewpoint of regulation, right? And the metaverse is going to be very interesting about privacy law, because it's going to open up a whole range of questions about to what degree your avatar has human privacy expectations, right? Can you can you be assaulted in the metaverse by can your avatar be assaulted? I think the answer is probably yes. But what does that look like in terms of the law? And we're going to have a whole range of those. If you have NF T's in the metaverse, and you pass them on to your kids is that inheritance tax, like we got a lot of these conversations ahead of us in the next generation. So that's one angle will be at the consumer level. One angle, like I said, will be on a tax level. The other that I'm looking at is the hardware and the actual intellectual property behind the art hardware. A big focus right now for at least one of these metaverse, consumer companies is on eye tracking software, to be able to create a really compelling experience in the 3d world, you want to be able to simulate eye contact between people. And you also for advertising purposes want to be able to track where people are looking. So you can tell your advertisers what their their kind of click through rate is. And that eye tracking software that's being invested in in real time. And I think we probably gonna need to have a point of view about the appropriate use of that software.
Hi, my name is Aiden Huff, I go to the George Washington University here in DC. So my question is, you mentioned incremental and organic problem solving. So I'm my question is how do you find a balance in the metaverse between consumer and enterprise and ensuring healthy a healthy and safe growth? You know, form of growth for children in the metaverse? And how do you basically get them to integrate metaverse without giving up on real life society as a whole?
Yeah, to me, it goes back to where do we as a broad society feel like we have the the license to have an assertive point of view about how people spend their time. I don't feel like I have a license to have an assertive point of view about how a company wants to do workforce development with their workers who are there of their own freewill. I mean, obviously, you have to be with an OSHA right. But like, in general, enterprise use cases, those companies should be able to experiment and innovate. I do feel like we as a society have licensed to have a strong point of view about how kids spend their time. And we do at all levels of government, right? school committees are very, very, very rigorous in how we do our curriculum for how they spend those eight hours of the day. We have strong child welfare laws about what we expect parents to be doing with the amount of time in their day. We do a lot of programs through civil society and local government to try to get kids productive use of their time when they're not in school. Like I said, it's you know, Boy Scouts and YMCA and Code Camp In all that stuff, we do have the right to have a very strong point of view for that when people's brains are plastic and when they're and when they're developing. And my concern is that, you know, I talked to these YMCAs in my district, and they've got a budget of $25,000 to do after school programming, and they're going up against a company that has virtually limitless amounts of money to steal those same eight hours of time. And that that is the competitive sandbox here it is those eight hours of time between school and going to sleep. And I worry that if something as strong as the federal government does not intrude here, we're going to wake up in 10 years and find that we've just lost that, that competition for those for those hours because they're coming up with a product that is so immersive and addictive that we just can't fight back. Everybody. I really appreciate your time and your very thoughtful questions. Thanks for having me.