Proof of State is the Wednesday edition of Fortune Crypto where Leo Schwartz delivers insider insights on policy and regulation.
DC Fintech Week is not your average crypto conference. There are no yachts, which would likely have trouble navigating the Potomac, nor edible delights shaped after the organizers' favorite tokens. Instead, the annual event—now in its seventh year—draws bureaucrats and policy wonks ready to discuss the merits of digital assets.
Well, that's not entirely accurate. This year's agenda reflected the precipitous decline in crypto, both in prices and attention, with the first day of the conference mostly devoted to—what else—artificial intelligence.
An all-star list of speakers, ranging from Federal Reserve Vice Chair for Supervision Michael Barr to New York Department of Financial Services Superintendent Adrienne Harris, were asked to opine about A.I. before crypto could be broached. Even the White House's Elizabeth Kelly, once tasked with digital asset policy for the National Economic Council, arrived at the event to tout the Biden Administration's new executive order on artificial intelligence.
Lest you fear that D.C. has fully pivoted to A.I., attendees cared about crypto, especially with the ghost of Sam Bankman-Fried still roaming the halls of Fannie Mae, which hosted Tuesday's sessions.
Still, much of the discussion surrounding crypto seemed like deja vu. Barr called for "strong regulation" on stablecoins—a plea that some attendees found disingenuous, as former Fed Vice Chair Lael Brainard was reportedly one of the forces who blocked the last push for stablecoin legislation because of stalled debates over federal versus state supervision.
Hope springs eternal, with murmurs among the crowd that discussions would pick back up now that the House of Representatives has a speaker again, at least nominally. In the last panel of the day, freshman Democrat Wiley Nickel (D-N.C.)—one of the few from his party on the House Financial Services Committee to vote in favor of stablecoin and market structure legislation—admitted that the chaos in the House had prevented any progress.
"Washington is really good at doing nothing," he joked.
As if to reflect the Groundhog Day proceedings, news broke right afterward that USDC issuer Circle is considering an IPO in 2024—a pronouncement repeated often enough that it may as well be an annual event alongside DC Fintech Week.
The only surprising conversation of the day came from Michael Hsu, the acting comptroller of the currency. While the OCC may not be the country's premier financial regulator, it has taken an active role in crypto, including the office's fast-tracking of digital asset bank charters under former acting head Brian Brooks (who also happened to be in attendance on Tuesday)—a move that Hsu reversed.
Interviewed onstage by event organizer and Georgetown Law professor Chris Brummer, Hsu said that crypto is replete with frauds, hacks, and scams, largely driven by speculation. The exception, he added, was the tokenization of real-world assets, which can include anything from dollars to DMV car titles. "Boring, back-office stuff," as Hsu put it.
This could be a repeat of the infamous "Blockchain, not Bitcoin" refrain, but bullish sentiment around RWA—as crypto folks call it—does seem to be catching on. To hear the optimism uttered by one of the nation's top regulators still seemed like a sea change, no matter how hedged.
"Tokenization, if done right, that holds a lot of promise," Hsu said. T+0 settlement, here we come.
Leo Schwartz
leo.schwartz@fortune.com
@leomschwartz
