After FTX, How Will Massachusetts Tackle Blockchain and Crypto Politics?

As federal policymakers grapple with how to regulate the crypto industry, similar conversations are taking place here in Massachusetts.

Despite the recent implosion of international crypto exchange FTX, Massachusetts State Representative Kate Lipper-Garabedian said she remains committed to advancing crypto and blockchain policy on Beacon Hill next year. Her goal is to help the state support a thriving crypto and blockchain industry.

But the current unfavorable sentiment toward crypto may dampen efforts to advance blockchain legislation. Caution on Beacon Hill would come just as the state began investing in crypto technology, including a $2 million grant to QUBIC Labs to incubate blockchain startups.

Politicians may be tempted to follow the lead of Senator Elizabeth Warren, a well-known critic of cryptocurrency. She recently wrote a letter to FTX, asking for information and answers to questions related to allegations of fraud. Days later, she wrote a letter to Fidelity Investments, asking it to reconsider its decision to allow some employers who offer their 401(k) plans the option to allow employees to invest in Bitcoin.

Lipper-Garabedian pointed out that she wants state to consider “appropriate” uses of blockchain technology — not to get involved with sketchy crypto firms — but she worries some won’t understand the difference.

“So much of the world is still learning about this space… FTX and its spin-offs have the challenge of making people think blockchain is just crypto,” she said.

The two blockchain bills she filed last year never made it out of session, but Lipper-Garabedian plans to refill them. And she hinted at more sweeping bills to come, though she did not provide specifics.

Last year, Lipper-Garabedian proposed a bill to create a statewide blockchain and cryptocurrency commission, made up of politicians and representatives from the crypto industry. The group’s goal would be to “develop a master plan with recommendations to promote the appropriate expansion of blockchain technology and the cryptocurrency industry.” The second proposed bill would establish a government-funded workforce development program for blockchain talent.

Although the federal government likely plays the biggest role in regulating crypto, Lipper-Garabedian said individual states have the ability to write crypto-friendly legislation and update their laws and technologies.

Massachusetts, she said, could adjust its corporate laws to offer crypto and blockchain companies more guidance. It could allow DAOs, or decentralized autonomous organizations, to register as business entities, or allow the use of blockchain technology for property registries, she said.

Opening up state law to include crypto and blockchain could also enable Massachusetts to have more consumer protection oversight, she said.

“It’s challenging to know for sure how this will play out,” Lipper-Garabedian said.

Anissa Gardizy can be reached at [email protected]. Follow her on Twitter @anissagardizy8 and on Instagram @anissagardizy.journalism.