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Day: November 14, 2022

Our Well-Timed Warning on FTX, Bankman-Fried and Future Cryptocurrency Regulations

This letter was sent to Senators, Congressmen of relevant committees, and regulators in the Consumer Financial Protection Bureau, Securities and Exchange Commission, and Commodity Futures Trading Commission in the aftermath of the FTX collapse. The previous letter can be viewed here.

Referring to the previous letter we sent to lawmakers and regulators on October 26, 2022, warning of the influence and inherent financial risks posed by then FTX CEO Sam Bankman-Fried and his related companies, here we offer our thoughts on what you should consider for future regulation on digital assets, cryptocurrencies, and the platforms that use them.

As you will have read by now, the alleged criminal actions of Mr. Bankman-Fried and his affiliated companies (FTX International, FTX Europe, Alameda Research, etc.), have led to several bankruptcy filings, will likely lead to expensive lawsuits, and, without a doubt, will invite investigations and questions from your colleagues and committees in Congress. All of these are necessary and prudent.

The halting of withdrawals for billions of dollars of customer funds, the intermingling of company and customer assets, the collateralization of new crypto tokens backed by nothing, and the unsustainable leverage conspired to create one of the most calamitous events in recent financial history. It is a stain on the reputation of creative entrepreneurs and builders providing value in the cryptocurrency space. This is made all the more troubling by the influence of this company and its leaders in our nation’s capital.

The significant influence of Mr. Bankman-Fried and his companies among Congressional members and staff, donations to political campaigns, and the close relationship with regulators present a damning case of what happens when politically connected firms aim to control and shape legislation without input from consumers and citizens.

While decision-makers were eager to meet with Mr. Bankman-Fried and mirror his biased suggestions on cryptocurrency policy in legislation and enforcement actions, consumer groups like ours sounded the alarm about the conflicts of interest detrimental to sound and principled policy for the millions of Americans who use and invest in cryptocurrencies like Bitcoin.

The Consumer Choice Center began writing publicly about the conflicts of interest and risky financial dealings of these companies and Mr. Bankman-Fried in September 2022, and how they would pose a considerable risk both to the legitimate cryptocurrency industry and to the savings and investments of millions of consumers. We remain steadfast in our conviction.

That said, as consumer advocates, we remain optimistic about the promises of Bitcoin, its cryptocurrency offspring, and the innovative blockchains, decentralized technologies, and crypto services that have evolved around them.

Users of decentralized technologies, however, do not need an industry approach to regulation. Regulations exist to set the rules of the game, not to chart the leaders of the game. This previous approach gave cover to FTX and its affiliated companies and has led to the disaster we see today.

The main caution we invoke, therefore, is that many proposed regulations aim to cement existing industry players and lockout innovative upstarts, while at the same time requiring the same restrictive rules that caused many people to explore cryptocurrencies in the first place.

As we have stated, if rules on crypto and its customers help solidify the financial portfolios, positions, and stock prices of only a select few companies, this will drive innovation away from our shores.

The bad actions of this particular company, while shocking and injurious to many, reflect the mistakes and alleged crimes of those involved. They do not, in any certain terms, condemn the wonderful possibilities of a crypto future nor the millions of consumers who responsibly use these technologies.

The frauds allegedly perpetrated are not too far removed from those of regulated financial firms that have deservedly reaped the consequences of misbehavior, either by the market or law enforcement. That the end product was cryptocurrencies instead of credit default swaps or mortgages makes no difference.

Fraud is fraud and remains illegal no matter what product a company is selling.

This is a stark contrast to the system of fractional-reserve banking that now underlies much of the American financial system and creates the incentives of malfeasance aided by loose monetary policy.

We should not mistake the ills of the current system for those of cryptographically secure digital assets.

With that in mind, rather than the approaches of several self-interested industry leaders, consumers deserve regulation on cryptocurrencies and digital firms that enforce existing rules on fraud (known as “rug pulls”), remain technologically neutral, offer reasonable and minimal taxation, and provide legal transparency. Punishing fraud and abuse, insider trading, and self-dealing should remain the focus.

As consumer advocates, we promote the principle of “self-custody” for crypto consumers, holding private keys to digital assets. This is a cryptographically secure method of controlling cryptocurrencies as originally intended, and one that should be an industry standard. This is the strongest method by which exchanges, brokerages, and those who regulate them can protect consumers. 

The aim of cryptographic digital assets and decentralized digital cash, since the founding of Bitcoin in 2008 by Satoshi Nakamoto, has centered on creating permissionless, peer-to-peer transactions offering a final settlement in a decentralized manner. That should be the guiding principle rather than temporary self-interest.

The whims of a select few industry players, however successful they may be, cannot be the guiding light for the future of decentralized digital money, as the saga of FTX has proven.

The Consumer Choice Center created a policy primer on Principles for Smart Cryptocurrency Regulations in September 2021 to highlight these concerns and we hope you will apply them.

We remain at your disposal for any further exploration of how best to craft rules, guidance, and regulation on the future of cryptocurrencies in our country, so that all society may benefit.

Sincerely yours,

Yaël Ossowski

Deputy Director

Consumer Choice Center

Aleksandar Kokotovic

Crypto Fellow

Consumer Choice Center

The Real Consequences the Proposed Vaping Flavor Ban in Columbus

Columbus is considering putting an end to the sales of menthol cigarettes and flavored vapes. Although official legislation hasn’t been formally introduced, tobacco-control advocates who are drafting the proposal are claiming a ban would help decrease smoking rates amongst Black people, other groups of color, women, and LGBTQ populations.

Sadly, over 20,000 Ohioans lose their lives to cigarette smoking-related illnesses every year. Considering that studies have shown vaping to be 95% less harmful than smoking and that adults who used flavored vaping products were 2.3 times more likely to quit smoking cigarettes, ensuring that adult consumers in Columbus have access to the vaping products they prefer will ultimately lead to fewer cigarette smoking-related deaths in Ohio. 

It’s estimated that more than 5% of Ohio’s adult population uses vaping products, accounting for over 634,000 Ohioans who have switched to a healthier alternative to combustible tobacco. Banning flavored vaping products will encourage these former smokers to switch back to smoking cigarettes, and will ultimately lead to increases in smoking-related healthcare costs, which are already costing Ohioan taxpayers $1.85 billion annually.

Advocates for the ban claim that it wouldn’t outlaw flavored vaping products or menthol cigarettes within Columbus, just the sale of said products and that consumers wouldn’t be punished for buying products elsewhere and bringing them into the city. Not only would this plan greatly harm small businesses who sell vaping products, but it would also effectively set up a dangerous illicit market within Columbus where bad actors could easily take advantage of consumers by selling them unregulated faulty products which could cause serious health concerns. 

Additionally, although the flavor ban intends to help minority groups of color, the reality of setting up an illicit market is that it will further exacerbate interactions between law enforcement and consumers of these products. One of the most infamous examples of this is the tragic death of Eric Garner, who was killed by police in New York after being approached on suspicion of selling untaxed individual cigarettes. 

Implementing a ban on flavored vaping products and menthol cigarettes within Columbus will have serious unintended consequences. Instead of a ban, more tobacco harm reduction efforts must first be explored such as increasing educational outreach to specific communities as well as encouraging vapes and smoke-free tobacco products as a tool for cessation. 

Elizabeth Hicks is the U.S. Affairs Analyst and David Clement is the North American Affairs Manager with the Consumer Choice Center. 

Improving America’s Teeth

When was the last time you went to the dentist? If you’re now opening your calendar to check your last appointment, chances are it has been too long. There is no general rule on the regularity that will apply to all patients, not least because we all have different lifestyles. That said, if you are someone who consumes tobacco, drinks alcohol regularly, or if you are in doubt about whether your daily oral hygiene is up to standards, a good rule of thumb is to make a dentist appointment every six months.

For many Americans, the rudimentary costs of seeing a dentist for a routine checkup are manageable. Despite the fact that most dental plans cover 100% of the costs for preventive visits, many Americans appear to lack awareness of their benefits. Even though 80% Americans have access to dental benefits, nearly 35% of adults didn’t visit a dentist in 2019, according to the National Association of Dental Plans. For both the 20% of Americans who are either not employed or whose employer’s chosen insurance plan doesn’t cover dental care, and the existing insured patients, it would be important to increase competition through subscription models. My colleague Yaël Ossowski has explained the advantages of such subscriptions in the Boston Herald.

Improving America’s oral hygiene doesn’t just happen through the policy level of increasing competition or, as some argue, through getting the government more involved in the field of healthcare. First and foremost, oral hygiene happens at home through brushing and flossing. Unfortunately, that is where some Americans’ habits are falling short.

A 2021 study commissioned by the American Association of Endodontists showed that 21% of respondents failed to brush their teeth in the morning, 23% never floss, and 28% didn’t schedule a dental appointment the entire year. A 2016 analysis of 5,000 men and women had found that 32 percent of Americans never floss. This is all paired with headlines of less representative surveys showing that Americans mostly only brush once a day, if at all.

A factor that is underestimated by many is the effectiveness of chewing sugar-free gum. The American Dental Association says that while chewing sugar-free gum is no substitute for brushing your teeth, those gums sweetened by non-cavity-causing sweeteners such as aspartame, xylitol, sorbitol or mannitol can help prevent tooth decay. The saliva produced through chewing washes away food debris and neutralizes acids, and also carries with it more calcium and phosphate to help strengthen tooth enamel.

The European Food Safety Authority (EFSA), known for its cautious assessments of product claims, seconded the assessment that sugar-free gum improved tooth mineralization and thus has overall oral health benefits. It remains important to reiterate that sugar-free gum is in no way a substitute for regular oral hygiene; however, it is an adjunct to oral hygiene that makes it more than just a lifestyle but in fact, a wellness product.

Oral hygiene is an important factor in our daily lives. Tooth decay and lasting problems with teeth plague many Americans, burdening them with high dental costs. Both on a policy level and on an individual level, a lot remains to be done to improve the oral health of all citizens.

Originally published here

Apa yang Bisa Kita Pelajari dari Kebijakan Vape di Filipina?

Vape atau rokok elektrik saat ini merupakan salah satu produk konsumen yang digunakan oleh jutaan orang di seluruh dunia, termasuk juga di Indonesia. Saat ini, dengan sangat mudah kita bisa menemukan berbagai orang yang menggunakan rokok elektrik di berbagai tempat, terlebih lagi bila kita tinggal di wilayah urban dan kota-kota besar.

DI negara kita sendiri, konsumsi vape atau rokok kelektrik oleh para konsumen merupakan fenomena yang kian meningkat dari tahun ke tahun. Pada tahun 2018 misalnya, diperkirakan ada sekitar 2,1 juta penduduk Indonesia yang menjadi pengguna vape. Angka tersebut meningkat di tahun 2020 menjadi 2,2 juta orang yang menjadi konsumen rokok elektrik (vapemagz.co.id, 24/1/2021).

Semakin meningkatnya pengguna vape di Indonesia tentunya memberikan dampak yang signifikan terhadap industri di sektor tersebut. Industri rokok eleektrik, atau produk-produk tembakau alternatif secara keseluruhan, yang meningkat, tentu akan memberikan lapangan kerja yang besar bagi banyak tenaga kerja di Indonesia. Saat ini, industri rokok elektrik di Indonesia setidaknya sudah berhasil menyerap 100.000 tenaga kerja di Indonesia (liputan6.com, 13/6/2022).

Akan tetapi, tidak semua pihak mengapresiasi adanya fenomena tersebut. Tidak sedikit yang berpandangan bahwa fenomena semakin meningkatnya industri vape di Indonesia merupakan hal yang sangat negatif, dan berbahaya bagi kesehatan publik. Hal ini dikarenakan, mereka menyandingkan rokok elektrik dengan rokok konvensional yang dibakar, dan memiliki dampak yang sama atau bahkan lebih berbahaya dari rokok konvensional yang dibakar.

Hal ini tentu merupakan pandangan yang kurang tepat. Berbagai lembaga kesehatan dunia telah mengeluarkan laporan yang menyatakan bahwa vape atau rokok elektrik merupakan produk yang jauh lebih tidak berbahaya bila dibandingkan dengan rokok konvensional yang dibakar. Lembaga kesehatan asal Britania Raya, Public Health England (PHE) misalnya, beberapa waktu lalu mengeluarkan laporan yang menyatakan bahwa rokok elektrik 95% lebih tidak berbahaya bila dibandingkan dengan rokok konvensional yang dibakar (theguardian.com, 28/12/2018).

Sangat penting ditekankan bahwa, menyatakan bahwa vape atau rokok elektrik 95% lebih aman bila dibandingkan dengan rokok konvensional bukan berarti bahwa vape merupakan produk yang 100% aman tanpa resiko. Hal ini berarti, tetap ada resiko kesehatan bagi konsumsi vape atau rokok elektrik, namun resiko tersebut jauh lebih kecil bila dibandingkan dengan rokok konvensional yang dibakar.

Oleh karena itu, beberapa negara di dunia telah secara resmi mengeluarkan kebijakan yang ditujukan untuk memberi insentif bagi para perokok untuk berpindah ke rokok elektrik, atau yang dikenal dengan kebijakan harm reduction. Inggris misalnya, melalui lembaga kesehatan nasional National Health Service (NHS), mendorong warga Inggris yang perokok aktif untuk berpindah ke produk rokok elektrik yang jauh lebih tidak berbahaya (nhs.uk, 29/3/2019).

Inggris tentunya bukan satu-satunya negara yang mengambil langkah tersebut. Tidak perlu jauh-jauh ke negeri tempat kelahiran Ratu Elizabeth II tersebut, negara kita sesama anggota ASEAN, Filipina, baru-baru ini juga mengeluarkan peraturan yang kurang lebih serupa. Pada bulan Januari tahun ini, lembaga legislasi FIlipina berhasil meloloskan undang-undang yang dikenal dengan nama The Vaporized Nicotine Products Regulation Act.

Salah satu aspek yang paling penting dari undang-undang tersebut adalah regulasi ini memberi jalan untuk menyusun strategi kebijakan harm reduction untuk menawarkan rokok elektrik sebagai pengganti rokok konvensional kepada para perokok. Filipina sendiri saat ini memiliki sekitar 16 juta perokok aktif yang tinggal di negara tersebut (vaping360.com, 27/7/2022).

Selain itu, undang-undang ini juga melakukan beberapa perubahan yang menerapkan regulasi yang tidak jauh berbeda antara rokok konvensional yang dibakar dan rokok elektrik. Misalnya, penyetaraan batas usia konsumsi rokok konvensional dengan rokok elektrik. Dengan demikian, akan semakin banyak orang yang memiliki opsi legal untuk mengkonsumsi produk yang jauh lebih tidak berbahaya. Akan ada pula sanksi yang diberlakukan kepada penjual yang menjual produk-produk hasil olahan tembakau kepada anak-anak di bawah usia.

Peraturan yang diberlakukan di Filipina ini merupakan hal yang cukup berbeda dengan beberapa negara ASEAN lainnya, seperti Thailand dan Singapura misalnya. Di Thailand dan Singapura, vape atau roko elektrik merupakan produk ilegal, di mana mereka yang melanggar dapat dikenakan sanksi pidana baik berupa denda maupun penjara, meskipun rokok elektrik merupakan salah satu produk yang telah digunakan oleh jutaan perokok untuk membantu mereka berhenti merokok.

Sebagai penutup, langkah kebijakan yang dilakukan oleh Filipina yang meloloskan regulasi agar para perokok bisa berpindah ke rokok elektrik yang jauh lebih tidak berbahaya merupakan hal yang bisa dipelajari oleh para pembuat kebijakan di Indonesia. Bila semakin banyak perokok yang bisa berpindah ke produk yang jauh lebih tidak berbahaya, maka dengan demikian diharapkan berbagai penyakit kronis yang melanda masyarakat juga dapat ditekan, dan akan membawa dampak yang positif terhadap kesehatan publik.

Originally published here

Memperkasa hak pengguna syarikat penerbangan

Setiap hari lebih daripada 100,000 penerbangan berlaku di seluruh dunia.

Dalam kesibukan itu, sudah tentu akan ada risiko gangguan seperti penerbangan ditunda atau dibatalkan, kehilangan atau kerosakan bagasi, dinafikan menaiki pesawat kerana lebihan tempahan, kehilangan tempahan atau masalah yang lain.

Semakin kerap penerbangan, semakin tinggi kebarangkalian masalah seperti itu timbul.

Oleh sebab itu, Kod Perlindungan Pengguna Penerbangan Malaysia (MACPC) diwujudkan pada 2016. Ia bertujuan untuk melindungi hak dan kepentingan pengguna dalam usaha untuk mewujudkan industri penerbangan yang berorientasikan pengguna.

Setelah enam tahun dilaksanakan Suruhanjaya Penerbangan Malaysia (Mavcom) menerima lebih daripada 22,000 aduan, dengan separuh pertama 2022 sahaja sebanyak 1,251 aduan direkodkan.

Sebanyak 99.1 peratus daripadanya melibatkan syarikat penerbangan.

Daripada jumlah itu 577 (46.1 peratus) aduan adalah mengenai pembatalan penerbangan, penjadualan semula dan tempahan dalam talian secara kolektif.

Read the full text here

War on Plastics Misguided

Do you feel bad when you see pictures of plastic waste in the world’s oceans? Most certainly, and any decent human being would. In fact, governments fail to do enough to stop the dumping of plastic waste into the environment and are still inefficient at holding companies to account for these ecological disasters.

That said, the solution of many environmental campaigners – banning all plastic items and packaging – is misguided.

A new report by Greenpeace outlines that a large section of plastic waste in the United States is not recycled and pairs this with its advocacy for banning single-use plastic items. In fact, campaigners have argued for the General Services Administration (GSA) to cease all acquisition of single-use plastic items.

This ignores the fact that we need plastic for many things: ranging from medical equipment to cleaning gear, from packaging to extend shelf-life to containers to keep our food intact for delivery. Neither the federal government nor individual consumers can afford to phase out plastic.

That said, we shouldn’t preserve plastic for plastics’ sake (even if it is associated with countless jobs). In fact, all too often, plastics outperform their substitute products in efficiency and environmental impact — as anyone who has tried to use a single-use paper bag in the rain can attest to.

As I’ve outlined for Newsmax before, single-use plastic shopping bags outperform all its alternatives when it comes to the environment, not least because cotton or paper bags are not reused as often as they should be, but also because consumers reuse plastic bags as an alternative to bin liners.

If we were to abandon plastic packaging, we would reduce the shelf-life of groceries and eliminate ready-made meals that consumers want. This would increase food waste. Since food production has a carbon footprint far higher than plastic packaging, this move would be counterproductive.

Let’s also not forget that about 11% of ocean plastic pollution results from microplastics, and 75%-86% of plastic in the Pacific Ocean garbage patch comes directly from offshore fishing, not consumer products. Not all waste is littered, and the same applies to plastic waste; it is thus misleading for activists to unfairly amalgamate both aspects of plastic waste disposal.

Of Americans living in cities with a population of over 125,000, 90% already have access to recycling facilities for single-use plastic items. What the United States needs is even more access to these facilities and the boosting of advanced recycling, which not just washes and compounds polymers, but dissolves plastics into their original compounds.

This aspect of the circular economy will make plastics a more sustainable consumer good. On top of the existing recycling rate, the Environmental Protection Agency (EPA) has the specific goal of increasing the recycling rate to 50% by 2030.

Any rule or regulation that restricts the choices of consumers is bad. However, it somehow is even worse when the suggested rule does not even achieve the results it intended. Banning plastics would not just deprive us of products we need but also increase our carbon footprint in many sectors.

Originally published here

Economía colaborativa y tres ciudades de la región

El Consumer Choice Center ha presentado su tercer índice anual de economía colaborativa, en el que clasifica algunas de las ciudades más dinámicas del mundo en función de su apertura a la economía colaborativa.

Este índice único en el mundo es la herramienta para que los consumidores tomen decisiones informadas sobre su próximo destino urbano.

El índice clasifica 60 ciudades de todo el mundo, 6 de ellas de América Latina. Las dos ciudades con mejor puntuación en el Índice de Economía Colaborativa de América Latina de 2021 (otro índice del Consumer Choice Center) fueron Bogotá y Santiago de Chile. Sin embargo, en la escena internacional, las dos ciudades tienen problemas para competir con destinos mundiales más abiertos (y por tanto más atractivos), por lo que han terminado en la mitad inferior del índice.

Por otra parte, tres ciudades latinoamericanas -São Paulo, Buenos Aires y Ciudad de México- figuran en el TOP 10 mundial de las ciudades más favorables a la economía colaborativa. Estas ciudades demuestran una extraordinaria apertura a todos los servicios de economía colaborativa considerados en el estudio. En particular, todas ellas ofrecen aplicaciones de entrega ultrarrápida, una categoría totalmente nueva añadida al índice de este año.

“Para sacar el máximo partido al índice, puedes utilizarlo como un menú de opciones que te ayude a elegir la ciudad que mejor se adapte a tu estilo de vida. Si te gusta el transporte compacto y respetuoso con el medio ambiente, en nuestro índice puedes ver que los patinetes eléctricos ya no se pueden alquilar en la capital de Colombia, pero que sí puedes disfrutar de ellos en las concurridas calles de Ciudad de México”, señala Anna Arunashvili, Knowledge Management Associate del Consumer Choice Center.

Read the full article here

Democrats’ ‘newest megadonor’ plummets on Election Day, forced to sell crypto company to biggest rival

Sam Bankman-Fried, the CEO of crypto exchange FTX and considered the Democrats’ “newest megadonor” ahead of the 2022 midterm elections, reportedly saw around $6 billion of withdrawals within 72 hours before Tuesday morning, forcing him to sell the company to its biggest rival on Election Day. 

Reuters reported that Changpeng Zhao, the leader of competitor Binance, said the company signed a nonbinding agreement on Tuesday to buy FTX’s non-U.S. unit to help cover a “liquidity crunch” at the rival exchange. The stunning bailout came about as American voters simultaneously went to the polls. 

“This is a truly crazy event in startup world. Dot-com bust level event,” tech reporter Eric Newcomer tweeted of the sale. 

Bankman-Fried, 30, was the second-biggest individual Democratic donor this election cycle behind top-ranking liberal billionaire contributor George Soros. He ranked sixth on the overall list of individual donors for the 2022 midterms regarding federal contributions. 

Read the full article here

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