The world’s largest democracy hasn’t rolled out the welcome mat for crypto. Does that mean it’s missing its crypto moment, or avoiding the technology’s growing pains?
So far, India has held back on introducing crypto-specific legislation domestically, taking more of a wait-and-see approach.
With China closing itself off to crypto, the sector’s hopes turned to India as the next big thing. The world’s largest democracy outgrew China in 2021, and a population that embraced smartphones and new payment technologies made it seem like a natural market.
But Coinbase suffered an embarrassing reversal when it tried to enter India with a splash. CEO Brian Armstrong traveled to the country in April to talk about Web3 as his exchange began offering services there. Banking regulators shut it down by abruptly cutting off access to India’s payments infrastructure.
The co-founders of WazirX, India’s largest crypto exchange by volume, relocated to Dubai. While they maintain that they still have a headquarters in Bengaluru, the company now says that it is a “remote-first organization,” with employees who are free to work from wherever.
A recent hike in crypto taxes and mixed signals on how India might regulate digital assets have left the industry in limbo, despite burgeoning venture investment. Balaji Srinivasan, a former partner at a16z and Coinbase CTO, called India’s approach a “trillion-dollar mistake” in an interview last year.

India doesn’t seem to view the stakes the same way, and its go-slow approach may be vindicated by the recent crash in crypto prices and disasters like the implosion of Terra’s UST stablecoin and the ongoing hacks draining funds from DeFi projects. Officials have also signaled that they don’t think India can rein in crypto on its own, given the global nature of the technology.
So far, India has held back on introducing crypto-specific legislation domestically, taking more of a wait-and-see approach. Richard Lyons, a professor and chief innovation and entrepreneurship officer at UC Berkeley, told Protocol that Indian regulators seem to be letting other jurisdictions experiment with regulation first. “The idea is [they] don’t have to be on the vanguard of creating it,” he said. “[They] just need to be flexible enough in the future to adopt it.”
Indian Prime Minister Narendra Modi noted at the World Economic Forum in Davos that crypto is “an example of the kind of challenges we are facing as a global family with a changing global order,” and that governments around the world would need to take “collective and synchronized action.”
Indian Finance Minister Nirmala Sitharaman also emphasized that the Indian government is going to take a more cautious approach to crypto regulation, saying that “it can’t be rushed” and that more information is needed.
“Our intention is in no way to hurt this [innovation around crypto] … but [we need to] define for ourselves,” Sitharaman said in April at Stanford University. She stressed that the government is open to blockchain innovation and has called the technology “absolutely imperative.”
In the meantime, India seems content to tax crypto, even if that means scaring away some traders and companies. A 30% income tax on crypto came into effect April 1.
On top of the income tax, a 1% tax on all transactions above 10,000 rupees, or roughly $130, comes into effect July 1. Smaller transactions that add up to 50,000 rupees in a year are also taxed. WazirX executives strongly criticized the tax, saying it would drive liquidity out of the market.

A 28% goods and services tax on crypto payments is also reportedly being considered, and several members of parliament have called for crypto to be taxed like casino and lottery earnings.
Many Indian users have reportedly moved to decentralized exchanges that don’t collect know-your-customer data in an attempt to avoid taxes, according to the Times of India. Those users may face a challenge converting their crypto to fiat, at which point taxes might also be imposed.
The government isn’t completely opposed to digital currencies. The central bank’s annual report published last month outlined a three-step phased approach to introducing a digital rupee, set within the Union Budget for fiscal year 2022-23. India joins dozens of other countries, including the U.S., in seriously exploring a central bank digital currency and its pros and cons.
India could be moving closer to a formal crypto policy. Ajay Seth, secretary of the Finance Ministry’s Department of Economic Affairs, said that consultation papers are “fairly ready,” after discussions with both the International Monetary Fund and the World Bank. And signs point to some accommodation with cryptocurrency — not a China-style prohibition.
“Whatever we do, even if we go to the extreme form, the countries that have chosen to prohibit, they can’t succeed unless there is a global consensus,” Seth said.
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In 2019, the gap between male and female early-stage startup CEO pay was $5,000. Today, it’s $20,000.
The pay gap is getting wider.
Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.
The early-stage startup CEO salary gap is worse today than it was in 2019, even after a record-breaking funding year in venture capital.
At the beginning of the pandemic, early-stage female startup CEOs took a disproportionately higher pay cut than men, according to data from startup accounting firm Kruze Consulting. While female startup CEOs’ salaries have since crept up since the initial plunge, the boom times of 2021 didn’t close the pay gap created by the pandemic. In fact, the pay gap is four times wider in 2022 than it was in late 2019 for early-stage startup CEOs.
“Women have raised their salaries back up, but we still have this tremendous gap, which is kind of weirdly really persistent and weirdly large in my mind,” said Healy Jones, Kruze’s VP of Financial Planning and Analysis.
The pay gap between early-stage male and female CEOs was only $5,000 in 2019. Now, it’s $20,000, according to Kruze’s analysis of over 250 startups’ pay data. More than 40 of them are female-led companies.

The COVID-19 pandemic was the first shockwave to CEO salaries. In its study, Kruze Consulting found that female CEOs took on average a 30% pay cut in April 2020 in response to the pandemic, and it took months for pay levels to climb higher. Male CEOs, on the other hand, didn’t really see a pay cut during the pandemic. Those who did accept lower pay were washed out by the CEOs who gave themselves raises, Jones said at the time.
Despite a record funding environment in 2021, the pay gap between male and female CEOs has only widened. Women are making on average $5,000 less than they did pre-pandemic: $138,000 in Q4 2019 versus $133,000 in Q1 2022.
Male CEOs, on the other hand, have seen their salaries increase by $10,000, growing from $143,000 in Q4 2019 to $153,000 in Q1 2022, according to Kruze’s data, which covers early-stage venture-funded startups across multiple industries from biotech to SaaS to fintech.

One explanation could be that male-led startups raise more money, and startup CEOs tend to rise in line with the amount of funding the company has raised. But even taking that into account, using Kruze’s startup CEO salary calculator for average amounts raised by men versus women in the data set showed the gap should be roughly $5,000, not the $20,000 it is today. Jones said he was “dumbfounded” by the persistence of the gap.
With a looming downturn already spooking companies to re-evaluate their cash flow and trim costs where they can, there’s rising concern that women could fall further behind. Venture funding to female-founded companies cut in half between the first and second quarters of 2022, according to PitchBook. Many companies are making hard calls to reduce costs, including layoffs and pay reductions.
The challenge for founders is that there’s very little transparency into what founders should be paid, minus surveys from firms like Kruze or Pilot (which analyzed 176 responses). And if they do receive advice from venture capitalists, it can often be conflicting.

This week, Vitalize’s Justin Gordon asked founders and investors what pre-seed startup founders should be paid — a stage at which a founder doesn’t necessarily have a board to consult.
Some investors like Worklife’s Brianne Kimmel argued that pre-seed CEOs and founders should get paid at least $100,000. “Investors who want founders to pay themselves poorly are indirectly saying only rich people should start a company,” she tweeted. “Rent, childcare, gym membership, therapy, and taking time off to recharge all add up.”
Other investors embraced the “ramen-poor” mentality typical of startups and said anything over $100,000 was a red flag for a business, even advocating for $0 in some cases when people can afford it. “Anything under $100K is ok. Above it and will raise eyebrows,” investor Andrew Gluck tweeted.
It’s common to see pay variability in the pre-IPO markets, Renegade Partners’ head of People Susan Alban wrote in an email, so she advises founders to look at companies in similar financing stages to determine what’s fair. While Kruze’s data is focused strictly on cash compensation, equity is another huge part of a potential pay day for founders and another area where they have to be careful to approach it fairly.
“The more bespoke a situation is, the more opportunity for bias, because that’s where the inequity creeps in and you see a lot of inconsistencies in equity,” Alban said.
In today’s market, there’s going to be a lot of conversations around how to cut costs. It’s easy for founders to feel the call to sacrifice when employees are feeling the pinch, so that may be a time for investors to step in and make sure that they’re not unfairly shortchanging themselves.
“I am concerned that women are going to pull their salaries back more than that if history is a guide,” Jones said. Hopefully, with a warning to be on the lookout, history won’t repeat itself.
Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.
Internet for Growth, an initiative of the Interactive Advertising Bureau, supports the transformative role the advertising-supported internet plays in empowering America’s small businesses, helping entrepreneurs bring their ideas to life. Supported by a diverse community of over 700 IAB members including marketers, agencies, publishers, platforms and ad tech providers, as well as hundreds of small businesses and creators, Internet for Growth highlights the benefits the internet delivers to local economies, expanding opportunities for innovators to reach markets far beyond their neighborhoods. Their work ensures people understand the limitless opportunity the internet provides for creativity and commerce, fair competition, and connecting with consumers on mutually shared values and interests, no matter the background or geography.

Smaller companies like ours are buckling under the weight of unprecedented price increases, supply chain shortages and rising labor prices. To increase our marketing reach on a slim budget, the internet is our best option. Internet marketing is critical to the survival of our business. It’s one of the most affordable, effective forms of marketing at our disposal.
Limiting our options will only hurt us at a time when we need every opportunity possible to stay in business. Small companies like ours are competing with much larger competitors to reach the same customers in a busy, crowded space.

How many Valpaks, grocery store flyers and random postcards from local businesses have you discarded in the last month? We’re all overloaded with physical junk mail. Even if an offer catches our eye, there’s no instant online access or interactivity. Generational shifts have also impacted marketing. For younger generations, digital media is a part of everyday life. How they shop, date and travel: It’s all digital. For most of our customers, shopping online is the norm, and their payment choices are digital too, including at pop-up and live events. The digital economy is a way of life and here to stay. Congress needs to be careful tampering with digital advertising tools that Pot Pie Factory needs to stay in business.

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Over 100 years in business, Virginia Diner has learned and shifted approaches to advertising through changing times and overcome inevitable hurdles.
The idea that politicians could restrict cost-effective online advertising and marketing is daunting. These laws could potentially cripple the way small companies like ours do business in this ever-evolving digital age.
The recent pandemic was devastating for many brick-and-mortar small businesses relying on in-person transactions, especially those in remote, rural areas like ours in Wakefield, Virginia. E-commerce was a lifeline. As consumers spend more time online, they also demand goods be delivered directly to their doorsteps, quickly. Targeted, tailored advertising has become a critical tool for Virginia Diner to identify and serve customers, maintain growth and stay viable in a rapidly changing marketplace.
Traditionally, our core business had been wholesale, with retailers selling our products in brick-and-mortar stores. But during the pandemic, direct-to-consumer sales (DTC) became our biggest revenue channel, generating enough volume for us to stay at full capacity and keep all our team members employed. Proposed restrictions on data-driven advertising would demolish DTC sales. Our ability to identify and advertise to customers inclined to do business with us is at risk. Speaking as a consumer, I enjoy learning about and purchasing unique brands that meet my tastes, which I might not discover without personalized ads. I hope legislation making it hard to use data responsibly and to personalize ads to serve more customers never gets enacted.
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I founded my small business to help other small businesses grow. Whether they need help amplifying a brand, an artist or selling a product or service, our clients rely on S.S. Creative to connect with more customers, and much of that relies on consumer data.

The last few years have been tremendously difficult for small businesses, especially those I represent. For musicians and artists, live venues where they would typically connect with fans suddenly went dark, halting their ability to grow their brands and promote their work. For many, they could only connect with their audiences using social media and internet advertising.
Consumer data and digital marketing aren’t just nice tools to have: They’ve been essential to my clients’ survival. They range from recording studios and musicians to hair salons and lawyers, and the one thing they all have in common is that during the last two years, every one of them has had to move his or her business online to forge a path to success. The only reason my clients’ businesses are still surviving today is because they can connect with their customers digitally.
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Baby Chick is a digital media company covering everything from pregnancy and birth to postpartum and parenthood, helping parents make the best decisions for their families. My wife Nina and I started the company on Mother’s Day in 2015. Since then, Baby Chick has influenced over 26 million (primarily) women over the past seven years and gained over 81 million pageviews. If we didn’t have internet advertising, it would be challenging for us to continue operating the company.
Internet advertising has enabled us to grow our business to what it is today, but proposed regulations limiting advertisers’ ability to reach target audiences would hurt media publishers like us. With less precise information, advertisers would likely reallocate budgets from programmatic ad-buying or bid less money on digital ads, which would negatively impact Baby Chick’s revenue and our family’s income. The readership experience would suffer if site visitors weren’t seeing ads relevant to their interests and Baby Chick’s unique content. If Congress enacts restrictions on using data for advertising, it would be extremely difficult to deliver the content our customers enjoy and to pay our staff.
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New markets are constantly emerging on the internet. That’s why we see the IBM and AOL of one era replaced by the Google and Spotify of the next. That’s why today direct-to-consumer brands like Madison Reed in hair care are winning market share from giants of the industry, and brands like Allbirds are finding entirely new markets. This pace of innovation is only possible because companies are leveraging data about consumer behavior to create truly customer-centric products, services and media.

When television was the main way brands built their businesses, 200 advertisers were responsible for about 88% of network television revenue in the U.S. TV advertising was the only way to reach most households in a visual medium. It was costly, requiring relationships with big ad agencies and minimum campaign spends.
High barriers made it hard for small firms and startups to advertise at all. By contrast, millions of small businesses today are finding customers on Amazon, Facebook, Google and niche platforms like Marriott and Uber Eats with the help of data-driving advertising. There’s also “earned media.” In the open environment of the internet, millions of times a day social media users are promoting their favorite brands on Instagram and TikTok.

Used responsibly and transparently, data does not harm competition and innovation. It fosters it, as my research for the Interactive Advertising Bureau shows. A healthy economic future depends on fair and creative use of data.

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Internet for Growth, an initiative of the Interactive Advertising Bureau, supports the transformative role the advertising-supported internet plays in empowering America’s small businesses, helping entrepreneurs bring their ideas to life. Supported by a diverse community of over 700 IAB members including marketers, agencies, publishers, platforms and ad tech providers, as well as hundreds of small businesses and creators, Internet for Growth highlights the benefits the internet delivers to local economies, expanding opportunities for innovators to reach markets far beyond their neighborhoods. Their work ensures people understand the limitless opportunity the internet provides for creativity and commerce, fair competition, and connecting with consumers on mutually shared values and interests, no matter the background or geography.
Protocol caught up with ServiceNow’s Chief People Officer Jacqui Canney to discuss the company’s talent strategy and compensation philosophy in an ever-tightening job market and a rough year for tech stocks.
Chief People Officer Jacqui Canney spoke with Protocol about how ServiceNow will maintain its culture while doubling its headcount from 18,000 to 35,000 employees.
Aisha Counts (@aishacounts) is a reporter at Protocol covering enterprise software. Formerly, she was a management consultant for EY. She’s based in Los Angeles and can be reached at acounts@protocol.com.
Joe Williams is a writer-at-large at Protocol. He previously covered enterprise software for Protocol, Bloomberg and Business Insider. Joe can be reached at JoeWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.
ServiceNow is at a critical moment in its history. The company is working aggressively to expand outside its core IT department customer and establish itself as a prominent business software vendor akin to the likes of Salesforce, SAP and Oracle.
Part of that ambition entails hiring more employees than the company has ever had – all in the midst of a shaky tech market rife with layoffs and talent shortages. Alongside important sales roles, ServiceNow has also pledged to grow without buying other technology companies, which means increasing the number of developers in its ranks, a position seeing incredible demand right now in basically every major business.
At ServiceNow’s annual conference last week, Chief People Officer Jacqui Canney spoke with Protocol about why talent is key to the company’s growth ambitions, what role compensation plays in retention and how ServiceNow will maintain its culture while doubling its headcount from 18,000 to 35,000 employees.

This interview has been edited and condensed for clarity.
How does your part of the organization fit into where the company’s overall strategy is going and what we can expect from that?
I had the opportunity to meet Bill [McDermott, ServiceNow CEO and former SAP CEO] –– I don’t remember what year it was, 2016 or something like that, when I was at Walmart. And we were between picking SuccessFactors and Workday, and we picked Workday. And Bill and Jen Morgan came down, because we were a big SAP shop anyway, and I remember meeting him and admiring him and thinking about the products that they sold. It just wasn’t the time for us to be buying what they sold.
So then, when the opportunity came that this job opened, Bill was the new CEO, relatively new, 2019 I guess is when he started, he called me to interview for the job. He didn’t have someone that he felt could help with culture, with scaling an HR organization, with DE&I and then on the development of our people. That was kind of the initial conversation, and I was excited to work for him because I had admired him from before, but also that human capital challenge at my point in the career felt like, what an awesome opportunity.
How do you think about injecting enough stability to where employees don’t feel like everything is changing every second, while at the same time trying to beef up these numbers?
In my experience, you need to have a purpose and values and those have to be real, not just words on a wall or on a piece of paper, that people can anchor to. And you need to be living those things in a way that’s palatable; you don’t just talk it, you can feel it and you can see it. I think the other thing that’s important to be successful when you have that much change going on is that you have a CEO whose purpose aligns to the company’s purpose, because that lack of connectivity shows up in the work because the CEO drives so much of how that change is absorbed.

And specifically this year, to make that even easier, we created something called our “People Pact,” which is our employee value proposition. So if you come to ServiceNow, you can live your best life, do your best work and fulfill our purpose together. And we talk about it in every town hall, we talk about it in every one of my meetings, we talk about it enough, and it’s hopefully simple enough that it seems to be catching on and it should stand the test of time. It’s not like we have to iterate on that every time to keep changing where we’re going. And I think that creates stability and we are bringing that to life.
Why was it important to double headcount? Obviously, you’re trying to push towards more revenue, but why is headcount important to hitting some of those metrics?
If you look at our footprint now and where we want to grow to, it’s not just in the United States. We have a strong headcount presence here in the United States, [but] our opportunity is quite global, even more so than it is today. So if you want to cover the rest of the globe, as well as build out to the revenue number, that’s how we’re interpreting to get to the double. Is it going to be exact? I don’t know, but we’re sort of on that road, and it seems to be the math is working.
Have you found it a challenge to hire globally?
Yeah, for sure. ServiceNow is a net importer of talent, which is really a good position to be in; our brand, while growing, has a good brand out there to come work here. Our products are very well regarded if you have experienced the products and a lot of our people who we hire have, and we provide a good early in-career experience for people who are just getting started, so the momentum in hiring is real and there.
What I would say is challenging is we need to keep everybody that we have here too, and recruit like that. So you can’t take your eye off of, what’s the retention opportunity as well as what’s the hiring opportunity.

When you say keep, did you see attrition numbers go up last year?
We did slightly. Not as material as others, but definitely they went up.
When do you expect those to stabilize and go back to normal levels?
They’ve started to level off right now and I think the market may be causing some of that as much as we’re proactively trying to mitigate it. We also go through a cyclical time around bonuses and that was just in the last quarter. So I think that that’s also contributed to the tick up but now the tick down.
You did hiring at times when your stock price was very high [and now] it’s dropped. Have you made any changes to level the playing field between those who joined when the stock price was lower and those who joined when it was higher?
We have not made any changes to anybody at any level. I know that is something that other companies are starting to talk about.
The CFO and I actually just [talked about] this: Is there something in this that we need to do? Do you focus on high potentials? Do you focus on hotspots? You’ve got to make choices because there’s a lot of implications to doing something like that. I also believe our company’s very strong, and that this is a cycle: It’s gonna go back the other way as quickly as it went the other. And I don’t have a crystal ball, but I do think that we don’t want to over-rotate either.
You see at other companies, Google and Amazon, there’s a lot of employee-led activism in terms of salary increases and discussions around increasing base pay and things like that. I’m curious whether you’ve seen that within your own workforce [at] ServiceNow?
We’ve been moving up our bases pretty systematically. We haven’t made a big announcement about that, because it’s not the headline we’ve been trying to go for, it’s just who we are. We’re constantly evaluating the market, constantly reevaluating the pay bands and things like that, and it seems that we have been tracking well.

This cycle is definitely one that with the war, with inflation, with everything, this is a time that I’ve never seen I don’t think in my career.
This cycle is definitely one that with the war, with inflation, with everything, this is a time that I’ve never seen I don’t think in my career. But I think that our practices have kept us in line and at pace, so much so that I don’t have the same situation as some of those other companies.
And what happens in this situation, because there are so many corresponding factors — you mentioned inflation and what’s going on in the market — what happens if those do begin to level out? Does there then have to be a readjustment? Are you raising pay now to match higher inflation? And then do those have to be reassessed if inflation goes down?
I mentioned we have advisers, which I rely on quite a bit, from external [companies], not just internally in the company. We also have a great philosophy of how we are moving pay, including what is performance, what’s base, what’s bonus. I think you have to be careful about how you use your comp philosophy and [wavering] too much from it. You have to walk a very fine line.
You don’t want to miss out on something because you lagged, but also this is people’s pay and rewards and they rely on things to be at a certain place. So you have to be careful not to go one to the right, one to the left, and then confuse people about what’s the value of their rewards package. And so we’re trying to keep a level head, be informed, keep evaluating the market and make the moves that we need to make when we need to make them.
In terms of salary when you switch to flexible work, are you adjusting pay based on region?

We have not done that.
And do you anticipate maintaining that policy?
I think that there’s going to be times when we might slow down raises, like if somebody moves to a lower band or a lower salary zone, I could see that. But we haven’t officially put in any kind of like, take a pay cut.
Aisha Counts (@aishacounts) is a reporter at Protocol covering enterprise software. Formerly, she was a management consultant for EY. She’s based in Los Angeles and can be reached at acounts@protocol.com.
“It scares the living daylights out of a lot of us.”
Axon’s decision to ignore its own handpicked panel of experts’ explicit guidance is an object lesson on the shortcomings of tech companies’ own ethical AI efforts.
Issie Lapowsky ( @issielapowsky) is Protocol’s chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol’s fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing.
Late Tuesday night, NYU law professor Barry Friedman called an emergency Zoom meeting with members of the AI ethics board for Taser-maker Axon.
Just a few weeks before, the board — which includes academics, civil liberties advocates and two former chiefs of police — had voted against a proposal by Axon to develop Taser-equipped drones and run a limited pilot program with law enforcement. The board had been mulling the possibility of such a pilot for about a year, according to Friedman; ultimately, a majority of the board decided the risks outweighed the benefits.
But on Tuesday, an email landed in Friedman’s inbox from an Axon employee, alerting him that the company was forging ahead with the plan anyway. Not only was Axon going to develop Taser drones, it planned to pitch them as an answer to school shootings, in the wake of the Uvalde tragedy.
The board had about 48 hours to respond. “This came out of the blue,” Friedman said.

“We were told and given two days to react to something very different than something that we had reacted to. And we already said no to it,” said Danielle Citron, a law professor at University of Virginia who is also a member of the board. “It scares the living daylights out of a lot of us.”
Friedman scrambled to organize the board’s response and “repeatedly” pushed the company not to go forward, he said.
On Thursday morning, Axon CEO Rick Smith announced his company’s intention to develop Taser drones anyway, sharing a press release in which the board’s earlier opposition was buried about 1,200 words deep. Hours later, after receiving a wave of negative responses, Axon tweeted the board’s full response roundly condemning the decision, which the board submitted after Axon’s public announcement.
In a statement to Protocol, Smith said, “I understand and agree with the board’s concerns that there are many questions we will need to answer to ensure these systems are designed for maximum safety and with equity in mind. That’s the exact reason why I decided to go public: to broaden the discussion with many stakeholders.”
Smith encouraged concerned citizens and lawmakers to engage with the company through the development process, including during a Reddit ask me anything session on Friday. “I want to hear from legislators, public safety leaders, school administrators, and parents and members of the concerned public,” Smith wrote.
But whether the board’s members will stay on to have those discussions remains an open question. Some members are now actively considering whether working with the company is still worth their time. “In the past, we were helpful and listened to and [our] feedback was relevant, and maybe not so much anymore,” Citron said. “Maybe this was a period of time, and it’s not meant to be forever.”
“We’re all having conversations about that,” Friedman said.
Axon’s decision to ignore its own handpicked panel of experts’ explicit guidance is an object lesson on the shortcomings of tech companies’ own ethical AI efforts. Short of regulation or laws governing the use of AI and other forms of surveillance, even the most accomplished advisers ultimately only have so much power to push back against companies’ competing priorities.

In a video explaining the company’s decision, Smith attributed it to the horrors of the Uvalde, Texas, shooting, which left 19 children and two teachers dead and 17 others wounded. “When I heard about the latest shooting in an elementary school, I held my kids and my wife, and we cried. That could have been us. It’s so frustrating this just keeps happening,” he said. “So, I’m done waiting for politicians to solve this problem, and we’re going to solve it.”
He described Taser-equipped drones as part of a “three-point plan” to address the scourge of school shootings. That plan also includes sharing footage from cameras in schools with first responders and building VR active shooter training for law enforcement. (In Uvalde, police took part in active shooter training just months before the rampage.)
During his AMA, Smith rejected the idea that Axon is pitching this product as a way to profit from tragedy. “Frankly, there are much easier ways to make money than solving intractable problems like this,” he wrote. “We are engaged out of a passionate belief that we can make technology that is safer, more ethical, and more controlled than today’s solution of adding more people with more guns.”
Citron said she and others had joined Axon’s ethics board because they believed Smith’s ultimate goal is to cut down on shootings with less lethal technology than guns. “I really actually believe him. His end goal is less death by bullets,” Citron said.
And members of the board felt they were making headway in guiding the company’s stance on AI issues, she said, including its commitment not to use facial recognition in body cameras. “That they were interested in hearing our opinions about the kinds of legal imprimatur they should support was gratifying,” Citron said.
It’s been clear to Citron and others, however, that the board’s authorities were limited. That’s by design, Smith said in his AMA. “The purpose of this board is to bring in police-skeptical view points, and our company makes tools for police,” he wrote. “If the board has governing rights over the company, then we would have to make sure the board had a stronger balance of pro-public safety views … which would undermine the very reason for having this advisory board.”

Smith noted that the former police chiefs on the board did support the drone proposal, and he emphasized that the concept is still in the idea phase, not the product phase. “The ethics board will have a say in this decision,” Smith wrote.
But Axon’s dismissal of the majority’s recommendations regarding drones has shaken members’ faith in the board’s overall purpose. Despite their objections, Axon decided to develop this technology not for law enforcement, but for an entirely different and unvetted context: schools. “It’s going to fall on the shoulders of marginalized kids, without question, and couple that with a drone with Taser in a classroom that a kid could hack?” Citron said. “It boggles the mind.”
Issie Lapowsky ( @issielapowsky) is Protocol’s chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol’s fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing.
An early version of the bipartisan crypto regulation bill revealed that the senators appear to be listening to the industry’s main tax complaints.
A draft version of a crypto tax bill has been circulating.
A highly anticipated crypto regulation bill is generating buzz and gathering support from lobbying groups for its reforms to a topic that’s long been a sore spot for investors in digital assets: taxes.
A draft version of the bill, set to be introduced by Sens. Cynthia Lummis and Kirsten Gillibrand next Tuesday, has been circulating. Though Lummis has warned that the draft, dated March 1, is “outdated,” the language is giving some hope that the bill will give them the clarity they’ve been asking Congress and the Internal Revenue Service for.
The passage of the Infrastructure Investment and Jobs Act last year has created more urgency for crypto tax reform. Industry lobbyists tried and failed to prevent broad language requiring “brokers” to report crypto transactions for tax purposes starting in January 2023.
Kristin Smith, executive director of the Blockchain Association, highlighted this issue in April, and said she hoped Congress would clarify that “brokers” meant centralized exchanges for reporting.

Though the IRS has said it wouldn’t go after software developers, miners or others technically involved in crypto transfers based on that language, the Lummis-Gillibrand bill draft offers the specific exemptions the industry asked for. While it doesn’t narrow the definition to centralized exchanges, it excludes developers of hardware and software wallets, transaction validators and people developing digital assets for use by others, provided that they’re not customers of the developer.
Another clause in the bill, the “de minimis exception,” would bring taxation of smaller personal transactions on par with the treatment of gains from exchanging foreign currencies. That could be a boon for everyone from NFT gamers, who currently face complex accounting on small transactions, to retailers that want to accept cryptocurrency at the point of sale.
Vera Tzoneva, chief operating officer of crypto tax service CoinTracker, said it’s been working with the Lummis-Gillibrand teams to help with that tax clause. The exemption could mark a major step toward more mainstream crypto adoption as “the natural next progression for cryptocurrency is its use for payments,” and the inclusion of the clause is “a great step in the right direction for the industry.”
In other words, it could help you buy Chipotle with bitcoin.
Another clause assures that crypto lending agreements would be taxed along the lines of existing rules for security-based loans, where no gain or loss would be realized in the exchange. The bill also delegated authority to the Treasury Department to classify “forks, airdrops, and similar subsidiary value as taxable.” Within a year, the Treasury Secretary would have to rule on when receiving crypto rewards is a taxable event.
The final version of the bill introduced on June 7 might well differ from the March draft, though many of the provisions match statements Lummis has made about her plans for the bill in recent months. The more important question may be whether the slow-churning wheels of Congress can match the fast pace of Web3 innovations, which might require more clarification or new rules by the time any bill nears final passage.

Gillibrand has said that she is “optimistic” about the passing of the bill, and expects to get a Senate vote by next year at the latest. She stressed the importance of “[getting] it right the first time,” and that “the best thing [they] can do for all these businesses is to bring clarity.”
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