Jake Chervinsky Profile picture
Apr 7, 2020 11 tweets 4 min read Read on X
1/ We talk a lot about governance in crypto: whether it exists, how much we need, & what we can do better than ever.

We can learn a lot from one of the best examples in history: the creation of the executive cabinet.

Disclosure: my wife wrote this! 😃👇
amazon.com/Cabinet-Washin…
2/ The cabinet includes the Vice-President & the heads of all fifteen executive departments. It gathers often to advise the President on critical issues of national concern.

These days we take the cabinet for granted, assuming it's a standard segment of the bureaucracy.

Not so.
3/ Despite its pivotal role in federal governance for centuries, the cabinet is not authorized or even addressed in the Constitution.

This was not mere oversight. The framers of the Constitution considered & *explicitly rejected* proposals to establish an executive cabinet.
4/ Suspicious of the British privy council's influence over the King, the framers were concerned that a cabinet would obscure responsibility for decision-making in the executive branch.

An early draft of the Constitution included a cabinet. It was removed in the 1787 Convention.
5/ So how did we end up with a cabinet anyway?

🚨shill alert🚨

You'll have to buy the book to get the whole story, which is fascinatingly & beautifully written by @lmchervinsky.

But in short, it turned out that the framers' governance model didn't survive contact with reality.
6/ As ratified, the Constitution gave the President only two ways to obtain advice on critical issues:

- written opinions from the department secretaries, or
- in-person advice from the Senate while in session

Both ensured the source of advice would be recorded & known to all.
7/ George Washington -- already an American hero & so certain to become the nation's first president that the position was basically designed for him -- tried his best to use only these two methods to obtain advice.

Neither was sufficient to meet the actual needs of governance.
8/ Within a few years of taking office, Washington decided he *must* create a cabinet, knowing full well that the Constitution didn't authorize it & the framers hadn't wanted it.

It's a remarkable tale of an extraordinary leader who set precedent that survived hundreds of years.
9/ If you want to learn more, pick up a copy of the book. Did I mention it's particularly well-written & engaging? 😜

But really, it's been described as "important and illuminating" by @jmeacham & "a riveting, beautifully written story" by @JohannNeem. I fully agree with both.
10/ And there really are important lessons for us to learn as we use revolutionary technology to design new governance systems for the future.

Among them, the need for optionality & flexibility, & to avoid the hubris of thinking we can achieve perfection without experimentation.
11/ It's not easy to publish a book during a pandemic, but @lmchervinsky is making the best of it.

If you're free tonight, check out her book launch (link below). I'm sure she's happy to take questions here too. Just try not to go full crypto on her! 😉🙏
facebook.com/events/5131542…

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More from @jchervinsky

Sep 30
1/ As U.S. regulators continue their war on crypto, many founders are thinking about geofencing as a compliance strategy.

It can work, but only if it's done right.

That’s why @dbarabander and I wrote this Practical Guide to Geofencing:
variant.fund/articles/pract…
2/ Our guide explains what you (and your counsel) need to know about geofencing.

Geofencing means stopping people in a certain "geography" from accessing a product by creating a virtual “fence” around it.

We start by explaining when it's useful as a compliance strategy.
3/ Geofencing is essentially a “when all else fails” fallback option when a company can’t:

- satisfy applicable compliance obligations, like registration, disclosures, KYC, etc.; or

- design the product in such a way that no compliance obligations apply in the first place.
Read 11 tweets
Aug 29, 2023
1/ Grayscale's victory over the SEC is *massive.*

It's very rare for a federal circuit court to find that an agency has violated the APA by acting arbitrarily and capriciously.

The DC Circuit just delivered a huge embarrassment for the SEC.

But the ETF isn't approved yet 🧵
2/ The DC Circuit soundly rejected the SEC's view that Grayscale's ETF proposal was not "designed to prevent fraudulent and manipulative acts and practices."

The SEC has spent a full decade denying spot bitcoin ETF proposals under this reasoning. That era has now come to an end.
3/ But the court didn't order the SEC to approve Grayscale's ETF proposal. It just said the SEC's analysis on the "fraud and manipulation" issue was wrong.

Now, the SEC has to go back and review Grayscale's proposal again, with the court's ruling in mind.

What will the SEC do?
Read 8 tweets
Jun 29, 2023
1/ SEC Chair Gary Gensler has wrongly prejudged that all digital assets are securities.

As a result, federal law requires that he recuse himself from all enforcement decisions related to digital assets.

@MTCoppel and I wrote a paper explaining why 👇
theblockchainassociation.org/chair-gensler-…
2/ Every SEC enforcement action must follow the “Wells process.”

In that process, the SEC Commissioners are meant to act as neutral arbiters, impartially weighing the evidence and arguments presented by SEC staff (the prosecutors) and the enforcement target (the defendant).
3/ When it comes to digital assets, Chair Gensler is far from a neutral arbiter.

Since his appointment, he has repeatedly stated his view that all digital assets other than bitcoin are securities, end of story.

We list many of these statements in our paper.
Read 10 tweets
Mar 16, 2023
1/ Today, @BlockchainAssn sent FOIA requests to the Fed, FDIC, and OCC, demanding information about the unlawful debanking of crypto companies.

We are also collecting evidence of debanking. Share your story with us:

debanked@theblockchainassociation.org

Here's the situation 🧵
2/ There are troubling reports of crypto companies having their bank accounts closed, often with no notice and no explanation. They've struggled to open new accounts too.

This disturbing trend suggests that regulators are trying to cut crypto entirely out of the banking system.
3/ These reports are especially concerning this month after the failures of Silvergate, Silicon Valley Bank, and Signature Bank.

Those banks had many crypto companies as customers, who are now rushing to open new accounts elsewhere to make payroll and stay in business.
Read 21 tweets
Mar 9, 2023
1/ Today, @KMSmithDC and I sent a letter to Congress from @BlockchainAssn urging prompt action on stablecoin legislation.

There is already bipartisan, bicameral support for new laws on stablecoins. The US is falling behind on crypto. It's time to act.
theblockchainassociation.org/blockchain-ass…
2/ In the letter, we explain what stablecoins are and why they represent such a categorical improvement on legacy payment infrastructure.

We also explain how important stablecoins are for the US dollar's status as global reserve currency, given China's focus on the digital yuan.
3/ We also outline five fundamental principles that are crucial for good stablecoin legislation.

First: Congress should focus on "custodial" stablecoins, meaning those issued and redeemed by firms holding assets backing the stablecoins in a bank or other financial institution.
Read 8 tweets
Feb 15, 2023
Today, the SEC proposed changes to the investment adviser custody rule that seem designed to prohibit US firms from investing in US crypto companies.

This proposal would flagrantly violate the SEC's mission by making investors *less* safe and by *discouraging* capital formation.
Commissioner Uyeda explains:

"This approach to custody appears to mask a policy decision to block access to crypto as an asset class. It deviates from the Commission’s long-standing position of neutrality on the merits of investments."
sec.gov/news/statement…
Commissioner Peirce writes sharply, as always:

"[T]he sweeping 'just about every crypto asset is a security' statements also seem to be part of a broader strategy of wishing complete jurisdiction over crypto into existence."
sec.gov/news/statement…
Read 5 tweets

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