Fireside Chat: Colorado Attorney General Phil Weiser | Yev Muchnik & Phil Weiser

Hi, good morning everyone. I'm here to introduce our first talk of the day. It is a fireside with Colorado Attorney General Phil Weiser, moderated by Yev Mutchnik, the legal council for ETH Denver since its inception and founding partner of Launch Legal. Thank you, Elizabeth. [applause] Good morning, everyone.

I know we had some wild events last night at Meow Wolf, so I think uh some people are still coming to this morning. Um, but I'm incredibly honored to be here on stage with my good friend, um, colleague Phil Weiser, who's attorney general for Colorado, um, and running for governor for Colorado. Phil is an attorney, um, but not just a regular attorney. He is one of the good guys. He's he thinks out of the box.

He's pro- innovation and he's come out as pro crypto. And that's exactly what we need in here in Colorado and and nationally as well. Um, Phil was the founder of Silicon Flat Irons 20 years ago. Um, and that is a combination of law and technology out of Boulder. Um, Phil was a professor of law at the University of Colorado Law School.

um and also took some time out to advise President Obama on um innovation and technology. So, Phil has an incredibly impressive background and resume. I believe you were a clerk for RBG as well.

I was,

which is in just amazing. So, Phil is exactly the kind of person that fits in in Colorado at East Denver and and really has our best interests in mind. Um, Phil, you know, you've been in the uh the technology ecosystem for over 25 years and um long before crypto was around. So, as you walk into ETH Denver, what's new? What's what's different?

And and

let me offer reflection.

Yeah, a few reflections because I've been thinking a lot about this. So I was just at a conference where we were looking at artificial intelligence and I've thought back my career starts in the mid '9s when the internet's getting started and I spend my whole career at the intersection of law technology entrepreneurship when the internet started the optimism was off the charts. blockchain comes along and I start hearing about it and a friend of mine Brad Burnham is a venture capitalist and Brad's theory of the case which I still think is underappreciated is that blockchain is open architecture in a hardwired way and what will what happened with the internet where you get these major companies think Google for example that ends up being a gatekeeper Brad's point is that's not going to happen with blockchain blockchain you can build your products and services and you're not going to have these gatekeepers building monopolies that in effect move the internet from what it once had this promise of this open democratizing creative engine to now we have these major companies Google Meta to name a couple who have dominant positions and who have been able to do things that we look back and we're like huh there were some dark sides there too and So as we look at this moment, we have now both the still critical excitement about innovation and this nation being a leader. We have some challenges with our federal government um not welcoming scientific research making it inhospitable for immigrants to come here which has always been part of our innovation story. And we have a challenge with respect to people have now seen the dark side of the internet as they look at blockchain and crypto as they look at artificial intelligence.

I think there's now an understandable concern, hey, how's this going to work out? So from your perspective, what are early signs um from a regulator's perspective, what are early signs that a disruptive technology needs guardrails and and more speaking to consumer protection versus protectionism?

Well, I wanted to get to both sides. So, let me talk about that. There are two risks and I worry about both of them. One risk is you don't have any responsible regulatory protections and consumers get taken advantage of and see a technology as harmful or untrustworthy. Another risk is the incumbents are acting in a protectionistic way and they push regulations with the goal of preventing disruptive entrance.

Let me talk for a minute about one of the applications that I know you've been talking about this week and we'll continue talking about. You know, the credit card industry. There are firms with market power who charge these, you know, settlement fees. And if you talk to merchants about how much they're paying for these fees, search charges, it's one of their pain points. If they've got the chance to move to an alternative payment system where there's much less friction, much less cost, there's more competition, they're excited.

What we don't want to have happen is we don't want those promising entrance to be thwarted because incumbents make it impossible to enter. That's the protectionistic side. At the same time, if shady companies are operating in ways where their business model is to mistreat people, then that's going to give the whole sector a bad look. We need to figure out how when you have whatever rules of the road, um, they can be complied with in a sensible way. They can make sure that companies are being responsible and they can build trust in the marketplace.

You talk about Colorado needing to signal its commitment to innovation through policy choices, things like proportional regulation, payment experimentation, openness to new ownership structures, uh, which we've done here with Sporkdow and and using the Colorado cooperative structure to to house our DAO.

You should give a little bit of a commercial announcement here.

We've done we've done is not giving you enough credit.

Thank you. Well, I mean, so Spark Dow is is one of the most innovative DAO structures. Um, and we're using the Colorado Limited Cooperative Association framework, which lends to um kind of a decentralized governance style. So by attending ETH Denver, by speaking, by sponsoring, by building hacking, um you become a member and you're that is sort of your patronage activity and we tokenize that patronage activity and then when there's a surplus um there's a distribution. So Sporkdow made its first distribution last year, which is you know something that you don't hear about for a free conference.

um to come to a free conference and then to be rewarded for that. So this is what it's about. It's about user ownership and here we have in Colorado the framework, this unique framework to make it so. Um I'm incredibly proud of that.

Let's keep riffing on this. There are different forms of ownership and often people think about corporate ownership in this top down. A few people make all the decisions, get all the wealth, control it. What Colorado and other states can do is say we are open for another model of innovation. We welcome experimentation and we're a really entrepreneurial state.

We're willing to try things. We're one of the first states who has naturalized medicine which is developing um promising therapies for people who are experiencing trauma. Um we have said we want you to be able to pay your taxes in crypto

paid crypto. Um

California got there first, but they've taken actually some of their title records and put them on blockchain.

So my mindset is always how can we be innovators? How can we take advantage of emerging technologies? One thing I want to do when I'm governor is make sure we've got a chief innovation officer who's leveraging these opportunities to engage the public. When open source development was getting going, there was this great saying, with enough eyeballs, all bugs are shallow. And so, you take something and you put it on blockchain and you get people inspecting it, you may have fraud detection that you otherwise wouldn't have had.

And so there's some interesting opportunities for us to explore. Um I welcome the engagement of the community and I believe Colorado can and should be a national leader

and it is already. Um so you're candid about the frustration caused by enforcement first approaches at the federal level. Uh from a state perspective, what lessons should we take from that period about how not to regulate emerging technology? I assume everyone here gets the reference. And it is to me still inexplicable how a regulator, in this case the SEC, can play gotcha with businesses.

What government needs to be able to do is say we want to tell you in advance, this is the rules of the road. here is what we think responsible conduct looks like and have a mindset of how can we help you comply. If government instead says we're not going to tell you what the rules are, we're going to go after you and tell you what the rules are after the fact and play gotcha. Um I think that is a problem from an innovation perspective. It's a problem from what lawyers think about as due process, which is giving treating people fairly.

Um, and it's obviously a way to build distrust in government. Here's how you build trust. And I want to give you a specific example. We had a law that we developed in our office called the Colorado Privacy Act. We told people upfront, "We're thinking about doing this.

What do you think?" Had lots and lots of conversations. It passes unanimously in our state senate. We then have to develop regulations. We put out questions upfront.

What are your concerns? We develop the rules of the road. And part of what we do is develop what I'm going to call a principlebased approach, not a prescriptive. Here's an example. Europe.

And by the way, we say in order for this law to apply, you have to have a 100,000 customer records. We want to leave room for upstarts to build up their businesses not worrying about compliance. And when you get to that, you do something called a data protection assessment. You ask how much data are you collecting? Who has access to it?

How are you storing it? How are you securing it? How long do you keep it? Businesses should all be asking these questions. We say you have to do this.

We don't say how you have to do this. We don't prescribe use specific technologies that can become outdated, for example. And finally, what I've said, our goal is to enable compliance to coach people. We've had a right to cure period for a number of years. Not to play this type of gotcha.

That's the way government should operate so people feel like, okay, you're treating me fairly. Okay, this makes sense and I can be an innovator. That's the model I want us to follow in Colorado. That's the model we should follow nationally.

So would you support some kind of a a sandbox?

We in effect in effect that's what we did by having this threshold. So the the idea I think of a sandbox as it's really important for upstarts to have room to develop not having burdens right away

and how we can make sure that laws are keeping that space like the Kado privacy act does I think is an important principle I want the message to be if you're an innovator whether it's in crypto whether it's in AI whether it's in biotech Colorado is a place to be because we're going to support you both with the right legal environment but also the right cultural environment and you have want to come back more props to you on this. You've worked with this community with the mindset how do we help each other.

Exactly.

That's that's what makes Colorado so special. I want to make sure we're leveraging that.

Yeah. And even our current regulators. So, in speaking with Governor Polus and, um, the securities commi commissioner here, uh, Tong Chan, you know, we've had numerous conversations on how not to be overprescriptive with it with an emerging technology, right? boxing it up and not making it kind of a living breathing instrument that allows people to to kind of blur the lines, but at the same time, you know, having guidance as to to what's possible and what's not. I think that that's sort of the ethos that we'd like to see continued here, and I'm confident that that's exactly what you would do as governor.

Well, and Yev, you have been such a leader and a translator. I know for entrepreneurs sometimes thinking about public policy talking to people like a securities commissioner is not what they want to do but it's really important to have that dialogue ahead of time so that a government official who does securities can say here are my concerns what do you think and then the community can say okay I can understand that how about you do it this way bad public policy is when you don't have that dialogue when you don't have people like you

forging those conversations and then people adopt these rules having no idea what their effect is. Those people who are affected are like, "Man, these people in government suck. It feels like they're trying to put me out of business."

Exactly.

There's a right way to do this. You've done that. We've done that in Colorado. We got to keep building on that.

So, I mean, there's there's a lot of activity at the federal level at the moment, and we are hoping for clarity to come through at some point. um the the market structure bill to give us a little bit more guidance on what is a security, what is a commodity. You know, a lot of us heard um Paul Atkins and and Commissioner Pur speak. So there's there seems to be a positive future, right? We a number of us have gone through these epochs, through these bare and bull and current bare market, you know, and do have a a little bit of PTSD.

So we really want to be able to trust our regulators. We really want to um understand that that there's some, you know, kind of positivity coming out from the federal level, but also that it trickles down to the state level, right? And and some of these specifics that you've spoken about, I think affect Colorado residents, but not just Colorado residents. Like for example, you know, again, going back to this LCA, non-col residents can take benefit of this structure. So, I think that we have sort of more broader reach even at the state level um to to non-resident participants

and I want Colorado to be a leader nationally in how we forge these frameworks. I also really don't want crypto to become a partisan issue. This has to be an American innovation policy issue. This has to be a how can we take this opportunity which as I mentioned earlier is incredibly promising and enable entrepreneurs to thrive enable consumers to benefit and build a stable environment. The challenge of the world we're in right now is there's so much everything gets labeled blue or red.

And in Colorado, we've got a wonderful spirit of can we all just be purple and not view the world in that way, learn from one another, respect one another. And that spirit of collaboration and problem solving is something that I get a lot of strength from and lean into.

Yeah. So, some parting words. Um, if you could give advice to builders in the room, we have a lot of builders at this ETH Denver and how to engage with regulators early on. Um, what would that be? The

you you actually answered the question and I know for many of you building your business, it's like I don't have time for this. So, find the Yev in your world who can help be a guide. And what Yev said is so important. Take the time you can to get to know the regulator, the person who might oversee your business before you're facing whatever situation might later emerge. When you can get to know someone and build a relationship before you're in the middle of a situation, you're setting yourself up for better conversations down the road because someone's getting to know you, getting to know your business, and then they're going off of a place of knowledge and trust as opposed to ignorance and perhaps distrust.

Thank you, Phil, so much. I'm I'm truly honored to to be sitting next to you. you know, I know I've supported you through your AG campaigns and and re-elections. Um, one thing I can say without reservation and, you know, on video forever is Phil is a person of his word. U, whatever he says, he does.

Um, and he is he's got such incredible foresight and and commitment to this great state of Colorado, to entrepreneurs, to innovators. Um, I'm really lucky to be sitting here next to him, to have him, you know, as our AG and and really hoping that that he becomes our next governor. So,

yeah, it means a lot. I want to say final piece of advice. Some people may be so smart they can figure out how they can tell different people different things and keep track of it. My advice is tell the truth, you don't have to remember what to say. So, that's one.

The second point is um build these relationships and and yeah, you've been great bringing together entrepreneurs, people into my world, which is enriching. You're a gem for Colorado. For those of you who aren't from Colorado and are thinking about future places you might want to build your businesses, keep us in mind. This is a special entrepreneurial community. The culture here is one that has continued to be celebrated.

In fact, I'm going to post some remarks from um this conversation that I want to be able to share more broadly. In there will be a link to a recent study saying Colorado is the top place for entrepreneurs to build companies in the United States. So, please check it out. Consider Colorado. Thank you all for your time.

Thank you so much.

Thank you so much. Thank you. [music] [applause]

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