Blockchain Testimony on LB987 at the Nebraska Legislature
Recently, Kyle Tut, of BlockEra testified in front of the Nebraska Legislature's Banking and Finance Committee. Below, we provide the testimony as it was presented to Nebraska's Senators.
Chairman Lindstrom, members of the Banking Committee, for the record my name is Kyle Tautenhan (K-Y-L-E T-A-U-T-E-N-H-A-N). I am the founder of BlockEra, a company that provides blockchain consultation services and builds blockchain applications in the financial and agricultural sectors. I am here today in opposition to LB 987.
I have traveled nationally and internationally to compete in blockchain hackathon competitions and attend blockchain conferences to understand this technology at a deeper level.
My experiences around blockchain technology include consulting for large financial companies in Omaha, co-organizing a 250 member blockchain development group, and meeting with farmers, lawyers, and ag lenders at the Cozy Inn in Holdrege, Nebraska to educate on blockchain. We have even partnered with a farmer in Gothenburg, Nebraska to build an ag token and smart contract system to facilitate crop production contracts between farmer and buyer using this technology.
A question frequently asked of me is why I'm willing to meet with anyone, anywhere to talk blockchain.
The answer is that I believe we are in a race to educate, not legislate, about the technology to have an advantage over other states and communities.
At this point, it's a level playing field. Every person I can build a relationship with strengthens our ability as a state to capitalize on blockchain technology.
However, without education, our business, community, and political leaders won't have the ability to make the correct decisions about blockchain when they need to, such as now.
That is why I stand here today. To help educate as much as possible on what blockchain is and where it is going.
I oppose this bill because we are too early in blockchain technology’s lifecycle to be creating laws and defining technical terms.
We are currently in 1994 of the internet for blockchain technology. We don’t know where blockchain will go and proposing any bill today would be similar to proposing bills back in 1994 defining that all internet communications would only be in the form of email.
As it pertains to LB 987, this is A Uniform Law Commission bill heavily influenced by the non-profit blockchain and virtual currency lobbyist group, Coin Center, who I trust has my interest in mind. Additionally, it is endorsed by a number of “Big Crypto” companies like Coinbase.
This is the only distributed ledger technology, smart contract, or virtual currency bill being proposed in the Nebraska Legislature that was written by experts in the field. This is also the only bill that wouldn’t significantly hurt us if passed.
This bill clearly defines who is and who isn't regulated, what control means, and narrowly defines the regulated parties as hosted wallet providers and custodial exchanges.
As for why I oppose LB 987, this bill is about unilateral control of private keys. We do not know the extent with which consumers will want businesses to control their private keys in the future. This bill takes a strong stance that unilateral control of private keys should be licensed.
This is a strong stance and we do not know the potential implications of this definition moving forward. Given the fast-moving nature of virtual currencies and blockchain technologies, bills like LB 987 have shown a propensity to quickly become dated.
Finally, this bill doesn’t provide any significant advantages to Nebraskan entrepreneurs or startups. It was written by “Big Crypto” for “Big Crypto”.
Nebraska would be smart to consider including startup “on-ramp” provisions where businesses engaged in Digital Currency Transmission shall be exempt from regulation and licensing if their outstanding obligations are under $5 million, while limiting consumer risk with disclosures and protections.
This provision would allow our entrepreneurs and startups to freely innovate with blockchain technology without significant licensing and reporting barriers. Such a provision would give Nebraska’s innovators a low barrier way to innovate while providing significant advantages over other states.
Thank you for allowing me to testify today. I would be happy to answer any questions you might have.