Every Friday, Law Decoded delivers analysis on the week’s critical stories in the realms of policy, regulation and law.
Editor’s note
Armed National Guardsmen are building up concentric perimeters of black barricades around the U.S. Capitol and its whole neighborhood of federal buildings in preparation for the Biden inauguration and protests against it on Wednesday. Which inspires some déjà vu, whether to last week or last summer.
As much as history is said to repeat itself, the present day seems to be stuck on its own loop. Remember how last week’s Law Decoded was mostly about the handover of presidential power in the U.S.? This is also going to be about that. Apologies; I too hope that this stops dominating news.
In the same vein, today’s leading stories are going to feature a cast of characters eerily similar to last week’s. If it’s any help, their primary role in today's plot is that they are all about to change.
Watch the platform
One consequence of last week’s violence at the U.S. Capitol was the lockdown on President Trump’s Facebook and Twitter accounts. CEO of Twitter and Square Jack Dorsey wrote an extended thread on the decision last night, pointing to what many see as the grand crux of the current tech dilemma. Platforms make their own decisions in a free market, but consumers have little free choice between providers when a small group of major companies act collectively.
Facebook and Twitter went on to purge a number of far-right accounts — a decision they are certainly allowed to make, by law. Many of those accounts migrated to encrypted channels like Telegram and Signal, which saw a surge in bad press attacking them for fostering extremism. A combined blockade from Apple, Google and Amazon Web Services seems to have completely strangled Parler, which was a known online hangout for white nationalists. And it’s not just social media. Stripe, PayPal and Square announced that they would cut off payments to organizations connected to last week’s rallies. In advance of Wednesday’s inauguration, AirBNB has shut down rentals in the D.C. area after conversations with the mayor’s office, with a number of local hotels joining them.
Allow me to be clear: I have no patience for “stop the steal,” QAnon, nor the Proud Boys and the whole constellation of white supremacist groups surrounding them. As a D.C. resident, I don’t particularly want these protestors here either. But these are some problematic methods. Even Reporters Without Borders, certainly no fans of Trump, called for more democratic controls in the face of this mass deplatforming.
While these companies have free rein to police content on their platforms, politicians don’t always have to pass laws to pressure and even deputize private companies into doing their bidding, which is more of a First Amendment concern. Republicans and Democrats in federal office have spent recent years threatening social media giants to get them to fall in line. With Democrats narrowly winning the Senate as of last week, the recent excision of Trumpism may owe more to self-preservation than moral awakening. All of which makes me deeply uncomfortable.
Last week's attempted insurrection was undoubtedly outside boundaries of freedom of speech. Authorities should arrest those who stormed the Capitol, especially those who did so looking to commit violence upon elected officials. Twitter and Facebook were right to cut off Trump’s megaphone. But the U.S. is facing some dangerous trade-offs between freedom and security. Dorsey’s ultimate conclusion is especially intriguing: If these platforms are going to function as town squares, they should be decentralized so there is no individual making these calls. But don’t expect legislators to wait around for that to happen before they act.
A parting gift from Brian Brooks
Brian Brooks has left the building, but not before an encore.
On Brooks’ last day as the head of the Office of the Comptroller of the Currency, the OCC announced that it had granted a national charter to Anchorage.
Compliance-minded crypto-based financial services in the U.S. have historically depended on state money services business licensing. The OCC, the regulator for national banks, has long flirted with a means of expanding that access to more niche fintech firms that may not hold traditional deposits — freeing them from the FDIC requirements that typical banks have, but otherwise authorizing them to operate nationwide.
The concept is a major rethinking of what exactly banking is, and Anchorage is the first recipient. While the idea goes back well before Brooks’ time, he is the most fintech and crypto-forward figure to lead the OCC. In only seven months as acting comptroller, Brooks has been instrumental to a flurry of actions to integrate crypto into the financial system.
Brooks’ position is, however, an appointed one, with a formal nomination from Trump coming only after the November election. The Senate, occupied with presidential shenanigans and seeing a sea change clear on the horizon, never scheduled Brooks’ confirmation hearing.
FinCEN flinches
The Treasury’s Financial Crimes Enforcement Network has extended the timeframe on its controversial proposal to require crypto exchanges to hold more data on self-hosted wallets they transact with.
This is not to say that the rule has been cancelled. Far from it. But one of the central concerns over the proposal was the fact that it gave only 15 days for response, days which fell on Christmas and New Year’s Day and came immediately before a new administration comes to power.
The slowdown was thanks to an overwhelming response from the crypto industry, which on average submitted some 500 comments a day. The extended window will put any final decision on the proposal in the hands of the next administration. The rulemaking was part of an overall suspicion of crypto from Secretary Treasury Steven Mnuchin, who, alongside many of Trump’s cabinet picks, was obsessed with uncontrolled capital flows out of the U.S. and consequently saw crypto primarily as a threat. While the next administration is likely to put out a rule based on some of these provisions, Yellen doesn’t have quite the same tradition of international hawkishness.
Further reads
The Electronic Frontier Foundation argues against firms that, like Amazon, offer technological infrastructure acting as chokepoints for content.
Brookings’ TechStream assesses two new draft laws that aim to reconfigure competition and data management among digital platforms in the EU.
The Economist gives a (comically begrudging) explainer of Bitcoin’s recent bull run.