Every Friday, Law Decoded provides an analysis of the week’s critical political, regulatory and legal stories.
Editor’s note
Armed National Guardsmen are erecting concentric outlines of black barricades around the U.S. Capitol and its entire neighborhood of federal buildings in preparation for the inauguration of Biden and protesting against it on Wednesday. That inspires a déjà vu, whether last week or last summer.
As much as history is supposed to repeat itself, the present seems to be stuck in its own loop. Remember how last week’s law was mostly about handing over presidential power in the US? That’s what it’s about too. Sorry; I also hope this no longer dominates the news.
In the same way, today’s main stories will feature a number of characters eerily similar to last week’s. If there is help, their main role in today’s plot is that they will all change.
Watch the platform
One consequence of last week’s violence in the U.S. Capitol was the suspension of President Trump’s Facebook and Twitter accounts. Twitter and Square CEO Jack Dorsey posted an in-depth thread on the decision last night, highlighting what many see as the crux of the current technical dilemma. Platforms make their own decisions in a free market, but consumers have little choice between providers when a small group of large companies act together.
Facebook and Twitter deleted a number of right-wing extremist accounts – a decision they are certainly allowed to make by law. Many of these accounts were migrated to encrypted channels like Telegram and Signal, where an increase in the bad press attacked them for promoting extremism. A combined blockade by Apple, Google and Amazon Web Services appears to have completely strangled Parler, which was a well-known online hangout for white nationalists. And it’s not just social media. Stripe, PayPal and Square announced that they would end payments to organizations related to last week’s rallies. Ahead of Wednesday’s inauguration, AirBNB has stopped rentals in the DC area after talks with the mayor’s office and a number of local hotels have joined them.
Let me be clear: I have no patience for “stopping the theft”, QAnon, nor the Proud Boys and the entire constellation of white supremacist groups that surround them. As a resident of DC, I don’t particularly want these protesters here either. However, these are some problematic methods. Even Reporters Without Borders, certainly not fans of Trump, have called for more democratic controls in the face of this mass platforming.
While these companies have the ability to monitor police content on their platforms, politicians don’t always have to legislate to apply pressure, and even require private companies to bid, which is more of a first-change concern. Republicans and Democrats in the federal office have threatened social media giants in the past few years in an attempt to get them to align. With Democrats narrowly winning the Senate since last week, the recent excision of Trumpism may be due more to self-preservation than moral awakening. All of this makes me deeply uncomfortable.
Last week’s attempt at insurrection was undoubtedly outside the limits of freedom of expression. Authorities should arrest those who stormed the Capitol, especially those who attempted to use violence against elected officials. Twitter and Facebook rightly cut off Trump’s megaphone. But the US faces dangerous trade-offs between freedom and security. Dorsey’s final conclusion is especially intriguing: if these platforms are to function as city squares, they should be decentralized so that no one else makes those calls. However, don’t expect lawmakers to wait for it to act.
A parting present from Brian Brooks
Brian Brooks left the building, but not before an encore.
On Brooks’ last day as head of the office of currency auditor, the OCC announced that it had issued a national charter to Anchorage.
Compliance-oriented crypto-based financial services in the US have historically been dependent on the licensing of government money services. The OCC, the regulator for national banks, has long flirted with a means to expand access to more niche fintech companies that may not hold traditional deposits – and free them from the FDIC requirements of typical banks, but otherwise to authorize nationwide business operations.
The concept is a fundamental rethink of what exactly banking is, and Anchorage is the first recipient. While the idea dates back well before Brooks’ time, he’s the fintech and crypto-forward figure who leads the OCC. In just seven months as assistant controller, Brooks was instrumental in a number of efforts to integrate crypto into the financial system.
Brooks’ position is an appointed one, however, with Trump not being formally nominated until after the November election. The Senate, busy with the president’s gimmicks and seeing a marked change on the horizon, never scheduled the Brooks confirmation hearing.
FinCEN winces
The Treasury Department’s Financial Crimes Enforcement Network has extended the timeframe for its controversial proposal that the crypto exchanges must contain more data about self-hosted wallets with which they transact.
This does not mean that the rule has been lifted. Far from it. However, one of the central concerns of the proposal was the fact that there were only 15 days to answer, days that fell on Christmas and New Years and came just before a new government came to power.
The slowdown was thanks to an overwhelming response from the crypto industry, which averaged 500 comments per day. The expanded window places any final decision on the proposal in the hands of the next administration. The rulemaking was part of a general suspicion of crypto by Treasury Secretary Steven Mnuchin, who, along with many of Trump’s cabinet members, was obsessed with uncontrolled capital flows from the US and consequently viewed crypto primarily as a threat. While the next government is likely to make a rule based on some of these regulations, Yellen doesn’t quite have the same tradition of international falsehood.
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The Electronic Frontier Foundation speaks out against companies that, like Amazon, offer a technological infrastructure that acts as a choke point for content.
Brookings’ TechStream is evaluating two new draft laws aimed at reshaping competition and data management between digital platforms in the EU.
The Economist gives a (weirdly disapproving) explanation for Bitcoin’s recent bull run.
