On the complexity of ballot initiatives
Hey, folks. Welcome to the third issue of The State of Crypto: Election 2020. I'm Nikhilesh De and our countdown clock is now at six days.
Today’s issue: Privacy initiatives, or lack thereof in state ballot initiatives.
An estimated 70 million individuals have now cast their ballots, out of a registered 209 million or so. First thing’s first: About 30 minutes after this goes live the Senate Commerce Committee will be holding a hearing on Section 230 with the CEOs of Facebook, Google and Twitter. We’ll be discussing that on Friday, but tune in here if you’re interested.
According to the International Association of Privacy Professionals, only three states in the U.S. have “comprehensive” privacy laws: California, Nevada and Maine. Another 20 are considering privacy bills but many “will fail to become law.” Generally these laws are passed by state legislatures but this year, two states are letting voters weigh in on digital privacy initiatives through ballot measures.
There are 120 ballot measures in 32 states for voters to decide on this year, covering a range of topics from permitting medical marijuana to managing wolves to taxing oil production. There are two measures of primary interest to the crypto space: California Proposition 24 and Michigan Proposal 2. Both appear to deal with data privacy issues, though California’s initiative focuses on private businesses while Michigan’s looks at police search warrants.
Permits consumers to: prevent businesses from sharing personal information, correct inaccurate personal information, and limit businesses’ use of "sensitive personal information," including precise geolocation, race, ethnicity, and health information. Establishes California Privacy Protection Agency. Fiscal Impact: Increased annual state costs of at least $10 million, but unlikely exceeding low tens of millions of dollars, to enforce expanded consumer privacy laws. Some costs would be offset by penalties for violating these laws.
At first blush this would seem reasonable to those interested in protecting their privacy. End users would be able to limit the amount of personal information a business they use can take advantage of. Proponents say it would protect children and other users by strengthening the California Consumer Privacy Act. Entrepreneurs and former presidential candidates like the blockchain-friendly Andrew Yang have come out in support of the measure.
Opponents, on the other hand, which include the Northern California affiliate of the American Civil Liberties Union (ACLU), argue that the measure will place a greater burden on the end user and say the actual protections described are weaker than those already enshrined in existing law. Specifically, critics of the measure claim that companies might be able to charge customers more to protect their privacy, noting language in the actual text that could allow businesses to charge fees for “excessive” opt-out requests. The proposition would also change a business’s default privacy approach from opt-in to data harvesting to opt-out, the ACLU says.
Michigan’s electronic data privacy proposal would amend the state constitution:
This proposed constitutional amendment would:
• Prohibit unreasonable searches or seizures of a person’s electronic data and electronic communications.
• Require a search warrant to access a person’s electronic data or electronic communications, under the same conditions currently required for the government to obtain a search warrant to search a person’s house or seize a person’s things.
This measure is a lot more straightforward. Proponents say it will formalize certain protections for individuals’ electronic data, such as communications carried out over the internet. According to Michigan Radio, a state affiliate of NPR, it would pretty much just codify cell protections for cell phone data, emails, phone records, etc. by requiring law enforcement officials to secure a warrant before collecting this information. Both the ACLU and Michigan State Police appear to back it, and it seems there’s no formal opposition to the measure.
On the ballot
A number of this year’s candidates for federal office have proposed crypto-related bills or suggested policies. Meet a few of them:
Rep. Stephen Lynch (D-MA)
Crypto stance: Pro-blockchain
Rep. Lynch, a longtime Congressman from Massachusetts, has participated in a number of pro-blockchain initiatives in the House of Representatives over the past few years, including heading up a FinTech Task Force established by the Financial Services Committee. He’s also called on the White House to consider using blockchain tools to support COVID relief efforts.
Rep. David Schweikert (R-AZ)
Crypto stance: Pro-blockchain and crypto
Rep. Schweikert has been an active proponent of cryptocurrencies in the U.S., introducing a number of bills to regulate cryptocurrencies and acting as one of the Congressional Blockchain Caucus’s co-chairs. Just this month, he reintroduced a bill with Rep. Darren Soto that would let smart contracts and other information stored on a blockchain act as legal records. He’s also attempted to create a de minimus exemption for small payments conducted using cryptocurrency, a position many crypto advocates and lobbyists have called for.
Rep. Sylvia Garcia (D-TX)
Crypto stance: Pro-regulation of Libra in particular
Rep. Garcia, a former state senator, has not taken an overly active role in calling for crypto regulation, but introduced a bill that would classify stablecoins as securities after a House Financial Services Committee hearing about Libra last fall. She later modified the proposed text to specify the “securities” designation would only apply to “managed stablecoins,” referring to those backed by a basket of fiat currencies that are actively managed by a governing entity. In her view, Libra’s subsequent revamp was insufficient to address regulatory concerns.
Rep. Anthony Gonzalez (R-OH)
Crypto stance: Pro-studying blockchain, but has questions about certain privacy services
Rep. Gonzalez, a first-year Congressman from Ohio, has participated in a few hearings around blockchain technology, asking an infosec executive whether the U.S. had the ability to shut down anonymity-enhancing tools like Dark Wallet. He has also sponsored a bill empowering the Financial Crimes Enforcement Network (FinCEN) to study whether blockchain and other new technologies might be useful for the agency’s data collection and analysis efforts.
Rep. Maxine Waters (D-CA)
Crypto stance: Not wild about Libra especially
The Chairwoman of the House Financial Services Committee has a number of hearings around crypto and blockchain, including several after Facebook unveiled the Libra initiative. She’s said in public statements that private crypto projects like Libra cannot be allowed to compete with the U.S. dollar, and has called for a complete halt in development until lawmakers and regulators can get a better grasp of the project and how it might be regulated.
Prediction markets are an effort to create better polling by ensuring participants have “skin in the game,” by asking them to actually bet money on the outcome of an event, such as an election. There isn’t a huge market, as my colleagues Benjamin Powers and Brady Dale wrote last month. But people are betting real money, either on centralized prediction markets or on decentralized platforms using tokens.
CoinDesk is monitoring crypto prediction markets to see how they align with traditional polls and the final election results.
Here’s what a random sampling of markets says (as of Oct. 27, 2020):
PredictIt: Joe Biden (D) has the best odds of winning the presidency.
Iowa Electronic Markets: Democrats are likely to receive the majority of the popular votes.
PrediQt: Donald Trump (R) will be re-elected in 2020.
FiveThirtyEight: Biden is favored to win the presidential election.
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