Cointelegraph spoke with the co-founder and COO of Eris Industries, Preston Byrne, on why the company decided to leave the UK and move its operations to the United States.
As reported in May, Eris Industries has ordered its staff to leave the United Kingdom due to the proposed UK’s Investigatory Powers bill, which the company says gives the government “completely unnecessary” surveillance powers on data.
“This is a red line for us, and should be for every blockchain firm. Distributed systems don't work without secure cryptography.”
— Preston Byrne
Cointelegraph: What does Eris Industries do?
Preston Byrne: Eris Industries makes free, open-source developer tools that allow people to create, manage, and administer their own, permissioned blockchains. Anyone, anywhere can use our tools, completely free of charge, and without our express permission, knowledge or consent.
Permissioned chains aren't about money: they're about being useful in managing data on a distributed network, without the need for a central server or dedicated, specialized hardware. What we do shouldn't, therefore, really be thought of in terms of cryptocurrency. MySQL would be a more appropriate analogy.
CT: How will UK’s Investigatory Powers bill affect your operations?
PB: Before I get into this point, we are fully aware that the draft bill has not yet been released. However, it is common practice for British governments to informally float controversial proposals in the press before introducing them as legislation. We made our decision based on the content of a report in the Telegraph which was consistent with the prior statements of both David Cameron and Theresa May, in public forum, to the effect that:
A) the UK would mandate state-mandated backdoors in all cryptography; and
B) the UK would require all telecommunications providers to retain user data for 12 months' duration.
As for the crypto ban, given the Telegraph's reporting, the prime minister's comments in January of 2015 that "we must not allow a means of communication between people ... that we cannot read," and the government's failure to issue even a very simple denial (which would have ended the discussion immediately), we are proceeding on the basis that this proposal, or one like it, is contemplated for the as-yet unreleased draft Investigatory Powers bill.
We could say a lot about the wisdom of such a proposal, but Cory Doctorow's rebuttal in the Guardian will almost certainly put it better: "'Weak crypto' is like 'slightly fatal.'" This is a red line for us, and should be for every blockchain firm. Distributed systems don't work without secure cryptography.
“[I]t is likely that [companies] could, at some point in the future, be classified [as telecommunications providers] if blockchain databases become routinely used.”
As to data retention, the blockchains we make are run by their users (or can be administered by a portion of them) to provide a web interface-type, highly resilient, global service without the use of a central server or ISP. It is thus likely that a blockchain system (and each blockchain system) is a "telecommunication system" within the meaning of s. 4 of the Telecommunications Act 1984.
Companies providing blockchain communications as a service (BSaaS) may therefore fall within the ambit of any definition of "telecommunications provider" within the draft Communications Data bill from January and, therefore, also within the scope of the Investigatory Powers bill. Even if they don't straight out of the gate, it is likely that they could, at some point in the future, be so classified if blockchain databases become routinely used.
Being classified thus would involve an obligation to retain user information for a year. This would be onerous from an administrative perspective, and extremely expensive to implement — one British web hosting provider, UKFast, estimated its up-front compliance costs for this provision alone to be £30 million. Retention obligations would furthermore complicate our data protection obligations, and introduce the security state into the very core of our business.
“[I]t would be easier to do business from Antarctica: we could get just as much done with none of the cost and associated operations risk.”
Assuming we could get a reliable broadband connection, it would be easier to do business from Antarctica: we could get just as much done with none of the cost and associated operations risk. Plus, we could hang out with penguins, and penguins rock.
CT: What other businesses have also left, or are threatening to leave, if this bill passes?
PB: So far we know of only one: Ind.ie, a privacy-oriented social networking service.
I suspect people think Eris was jumping the gun or overreacting when we announced our departure. In truth, we made up our minds six months ago — as reported by the Guardian — and had actually thought the Communications Data bill had gone away for good.
Eris is unique among crypto firms (and tech firms more generally) in that both our CEO, Casey Kuhlman, and I are trained lawyers who were very recently active in private practice. We both geeked out on the draft Communications Data bill when it first was published six months ago, and almost immediately ascertained that its passage was not in our commercial interests.
By announcing our intent to depart, we sought to alert other IT businesses to the scale of the commercial threat, and spur them to pay very close attention to the bill once it's introduced and to undertake a full impact assessment. We figured it was important to get out in front of this and set the narrative before the government could.
“It doesn't take a political radical to see that this kind of architecture is ripe for abuse, and that this bill will put the surveillance state at the very heart of British daily life.”
CT: Besides cryptocurrency-related companies, what other businesses will be affected, and how?
PB: Virtually any technology where a communications service is provided to a user. See Ind.ie's announcement of its departure. If the reporting is accurate, virtually everything (text messages, emails, browsing histories, instant messaging services), everywhere, relating to everyone would be covered.
It doesn't take a political radical to see that this kind of architecture is ripe for abuse, and that this bill will put the surveillance state at the very heart of British daily life. As I said, I'd rather do business from Antarctica than live like that.
CT: When will it be decided if the bill passes, and is there a concerted effort (lobbyists, petitions, etc.) to kill the bill?
PB: We don't know. It shouldn't take much: 10 courageous and principled Tory rebels, plus a three-line whip from all the parties in opposition, will do the trick.
If the rebels organize themselves quickly enough, this bill may yet be stillborn. If, however, the government does introduce it, we know that the Scottish National Party and the Lib Dems (at minimum) plan to oppose it. We'd hope that Labour, though presently in disarray, would do the same. Multiple civil liberties organizations, including the Open Rights Group and Big Brother Watch, have made public statements against it, as have a number of peers in the House of Lords.
“[N]obody really wants [this bill] — but they're just being British and 'hanging on in quiet desperation,' even though they're really extremely unhappy.”
To be honest with you, I can't find a single intelligent person outside of the security or military apparatus who supports this legislation. There are no thought pieces in the press exhorting the UK public to accept more intrusive surveillance. That leads me to believe that nobody really wants it — but they're just being British and "hanging on in quiet desperation," even though they're really extremely unhappy. To this, I'd say only that there are times when it's OK to be a little impolite to authority, and this is clearly one of them.
CT: Who in particular is pushing this within the UK government? Who is against it?
PB: We don't know. In favor? The Prime Minister and the Home Secretary and whoever is advising them, I suppose. Against? We've heard other government departments are skeptical, but that nobody's been paying attention to it and the bill came as a surprise, so nobody has yet built a cogent business case against it.
CT: Why the U.S.? Why not other cryptocurrency-friendly jurisdictions, for example?
PB: Our tech doesn't involve cryptocurrency or decentralized value transfer, so "crypto-friendliness," as most people understand it, is really a moot point.
Admittedly, Germany is the best destination from a crypto-regulatory perspective. However, on balance, commercial considerations make the U.S. our preferred alternative to the UK for now.
“[M]ore than half of [Britons] say they would use the Internet less if they knew they were being watched.”
CT: What will it take for you to return to the UK?
PB: Although we're UK-incorporated and have our offices there, we run the company on a distributed basis and move around — a lot. This question really means, "Where do you want to make your next hires, grow, and set down roots?"
London is a great city — I've lived in Britain for 13 years (first Scotland, then England), and consider it home. However, this proposal has really put me off — sort of like that one friend of yours who gets too drunk one evening and behaves really inappropriately, such that you never look at them in the same way again. I confess that it's kind of nice being back in America where CCTV isn't absolutely everywhere.
We'd have to discuss it as a company, but in my personal view, this illiberal bill would need to be cast back into the void whence it came. It doesn't deserve to become law. Polls show Britons don't think the government has justified additional surveillance powers by a margin of 20 to 1, with more than half of them saying they would use the Internet less if they knew they were being watched.
I've yet to see favorable press coverage of the bill, if it exists. And practically every security professional I have seen quoted — anywhere — states that this legislation is not only a bad idea, but one which is completely daft.
This legislation is clearly incompatible with a free society. It's my hope my friends and colleagues in Britain will see it the same way.