US Courts Gain Increasing Authority in Shaping American Crypto Policy

In a recent article, legal scholar Michele Neitz highlights the decentralizing effect that congressional inaction, the decline of the Chevron doctrine, and regulation by enforcement are having on policy-making power regarding emerging technologies like blockchain and artificial intelligence (AI).

Neitz argues that the lack of action by Congress in establishing clear guidelines for these technologies has contributed to a power shift away from centralized authorities towards a more distributed decision-making process. Without legislative action, regulatory agencies are left to interpret existing laws and regulations on their own, resulting in varying interpretations and inconsistent enforcement.

Furthermore, Neitz emphasizes the decline of the Chevron doctrine, which previously granted deference to agency interpretations of ambiguous statutes. The doctrine’s erosion has led to a more skeptical judiciary that is less willing to defer to agency decisions, adding another layer of complexity to the regulatory landscape. As a result, regulatory agencies are more cautious in their decision-making, knowing that their interpretations may face judicial scrutiny.

Regulation by enforcement also plays a significant role in the decentralization of policy-making power. Neitz explains that when agencies rely on enforcement actions instead of clear regulations, they effectively shape policy through their selective enforcement decisions. This approach often results in a fragmented and unpredictable regulatory environment, as companies and innovators are left guessing what actions may be deemed non-compliant.

The consequences of this decentralization are particularly evident in the emerging fields of blockchain and AI. Neitz points out that these technologies have the potential to revolutionize various industries, from finance to healthcare, but their transformative power is hindered by the lack of coherent and forward-thinking regulations. The absence of clear guidelines not only creates uncertainty for businesses but also hampers innovation and investment in these promising areas.

To address this issue, Neitz suggests several potential solutions. Firstly, she advocates for increased congressional engagement and action in shaping policies related to emerging technologies. By providing clear statutory frameworks, Congress can provide much-needed clarity and certainty to regulatory agencies and industry stakeholders.

Additionally, Neitz proposes that regulatory agencies adopt a more collaborative approach, engaging in robust stakeholder consultation and dialogue. Involving industry experts, innovators, and other relevant parties in the decision-making process can lead to more informed and effective regulatory outcomes.

Lastly, Neitz highlights the importance of ensuring that regulations keep pace with technological advancements. She argues for the establishment of regulatory sandboxes, which provide a controlled environment for testing new technologies and regulatory approaches. This allows regulators to understand the potential impact and challenges of emerging technologies firsthand, facilitating the development of appropriate regulations.

In conclusion, the decentralizing effects of congressional inaction, the decline of the Chevron doctrine, and regulation by enforcement are reshaping policy-making power over emerging technologies like blockchain and AI. The lack of clear legislative guidance, coupled with a more skeptical judiciary and selective enforcement decisions, has resulted in a fragmented and uncertain regulatory landscape. To overcome these challenges, Neitz suggests increased congressional engagement, collaborative decision-making processes, and the establishment of regulatory sandboxes. By addressing these issues, policymakers can support the development and adoption of emerging technologies, unlocking their transformative potential in various sectors.

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