With help from Mohar Chatterjee

LAS VEGAS — The annual CES in Las Vegas kicked off with a media preview Tuesday night, featuring its famously hyped-up cavalcade of new gizmos sprawling across the floor of the Mandalay Bay Resort’s convention center. Worker-assisting robotic exoskeletons! Emotion-detecting VR headsets!

But if you look past the eye-popping tech demos, you can detect a new and very strong current running through the tech industry’s flagship annual trade show: The future is no longer just a matter of building cool stuff. The tech world is, maybe more than ever, very interested in the policy world.

The official CES lineup this year is laden with appearances from policymakers and wonks, including Secretary of Energy Jennifer Granholm, Sens. Mark Warner (D-Va.) and Jacky Rosen (D-Nev.), and a slew of policy assistants and members of the House.

The industry spent a few years going through the Washington wringer, yes. But over the past year it’s also been re-embraced by Congress as a font of American competitiveness, and you can see a fairly strong, bipartisan effort to make common cause between politics and technology.

Granholm and DoE official Vanessa Chan are here to discuss how the government and the tech industry can work together to build sustainability. An advisor to Bitcoin-loving Rep. Tom Emmer (R-Minn.) is making the case for “Making America #1 in Blockchain and Financial Innovation,” and a group including Reps. Yvette Clarke (D-N.Y.) and Darrell Issa (R-Calif.) are here to lay out tech priorities in the newly formed Congress. Overall, nearly every issue this newsletter covers will be discussed this week with a specific mind to how Washington and private industry might sync up.

There’s no question the tech world’s endless expansion is brushing up more and more against the regulatory state — in part because regulators and politicians are getting savvier about the implications of new technologies and new uses of data. (As my colleagues wrote yesterday, that will have huge impact on Elon Musk’s grandiose plans for an “everything app.”)

That much was apparent during a preview speech by the Consumer Technology Association’s VP for research, Steve Koenig, last night. In running reporters through the industry group’s chosen “Tech Trends to Watch” for the year, he touched on how automation is transforming logistics and labor, how global competition overlaps with green tech and how virtual reality is insinuating itself into everything from heavy industry to telehealth.

The inevitability of a rapprochement between government and tech after the past several years of “techlash” was on display particularly during a panel this morning titled “The New Digital Utilities: Cybersecurity, Cloud and AI & Robotics.” The short version: These technologies are actually freaking private industry out — and companies know they need help.

“We’re going to be playing defense against things like ChatGPT for quite a while… It's inconceivable to me that the bad guys won't start using generative AI to generate very high yielding [phishing] lures at scale,” said Dr. Robert Blumofe, EVP & Chief Technology Officer at the cloud computing company Akamai, adding that “The federal government can actually play a positive role” in setting standards to fight them.

“It’s not often that you hear us say that,” quipped Veronica Lancaster, the CTA’s Vice President of standards programs.

Specific threats aside, even the name of the panel itself was revealing. A “utility” has a specific meaning in the world of computing, of course, but it’s also a word used to describe something so essential to the functioning of society that it’s held in public trust. When everything from hospital records to the nuclear command and control system becomes vulnerable to hackers, cybersecurity itself becomes a utility. When AI could transform law and education, or statecraft itself, it enters into the realm of utility; the list of comparisons stretches from finance and blockchain to the aforementioned automation and labor.

Where that public trust enters into the equation, policymakers are going to have their say — and there are plenty of them on the ground in Las Vegas this week. Stay tuned through this Saturday for our coverage of Washington’s different approaches to tech policy, tech’s role in global competitiveness, and what’s in store on the Hill this year.

Of all the topics we cover here, one of the biggest 2023 wild cards is crypto — a landscape that was exploding with possibility a year ago, and now seems to be coming up with dramatic new ways to collapse every month.

Over the holiday, POLITICO’s Mohar Chatteree emailed one of Washington’s most tech-savvy leaders, Sen. Cynthia Lummis (R-Wyo.) — the Senate’s “crypto queen” — to ask a few burning questions about the future of crypto and Washington’s role. Lummis, alongside Sen. Kirsten Gillibrand (D-NY), is pushing a sweeping, bipartisan piece of legislation called the Responsible Financial Innovation Act, which aims to bring digital assets under clearer regulatory oversight (namely the CFTC’s).

What does she see happening in 2023 — and is she still as excited about Bitcoin? (Replies have been edited for length.)

You’ve said you want your home state of Wyoming to become the crypto capital of the U.S. Has the FTX collapse changed that?

We have to remember there are bad actors in every industry. The digital asset industry is no different. Wyoming has strong rules surrounding regulating digital asset businesses that choose to operate in our state, and it is exceptionally unlikely FTX would have gotten away with this in Wyoming. We need similar rules at the federal level…. The industry needs guardrails that will protect consumers while still allowing this comparatively new industry to continue to innovate.

What do you see happening with Congress' willingness to pass your crypto-focused legislation in 2023?

There is an appetite for digital asset legislation, but there is still a great deal of skepticism toward digital assets. I will keep having thoughtful discussions with my colleagues about digital assets and will keep pushing Congress to pass legislation that regulates this industry in a workable way.

To get specific — what are your thoughts on the SEC calling FTX's FTT exchange token a security in December?

I agree. FTX made undertakings in the FTT whitepaper to use part of its corporate revenue to repurchase the FTT token. This is different than many other digital assets in the marketplace. Additionally, it is likely that accounting rules would require FTT to be recorded as a liability of FTX. An important part of the Lummis-Gillibrand Responsible Financial Innovation Act is the Howey Test, which determines which tokens are securities, while the remainder would be regulated as commodities by the CFTC.

How would you convince your colleagues in the 118th Congress that Bitcoin is still a solid store of value?

Bitcoin is “digital gold” because it has a limited supply and is easier to transfer. Only 21 million Bitcoin will ever be mined, which creates scarcity and scarcity creates value. People are looking at the price fluctuations of the last year and assuming that is the norm for Bitcoin. I encourage my colleagues to look at the historical value of Bitcoin. As more Bitcoins are mined, the algorithm gets harder to solve, adding more value to existing Bitcoin. Additionally, unlike gold, Bitcoin is very easy to transfer peer-to-peer.

Could the decidedly old-school world of audiobooks be the next one ripe for disruption by AI?

That’s what tech journalist Mark Piesing predicted recently for The Bookseller, writing that “despite the caution of publishers, the arguments for using AI to produce audiobooks are indisputable and will only become stronger.” Piesing makes the case that the technology is already so sophisticated — and, crucially, the costs of recording regular audiobooks are already so relatively high in an industry on the lookout for thrift — that the bots’ takeover of audio literature is inevitable.

“The use of artificial voice can cut the cost of production down from roughly $2,500 for a standard-length piece of fiction to $400, and reduce the time required to a matter of days,” Piesing writes, something DeepZen co-founder and CEO Taylan Kamis tells him makes it a “no-brainer.” (It remains to be seen whether in our AI-powered future the human brain will still be necessary to actually process a linear narrative.)

• Look back at some of the strangest moments from the tech boom of the past decade-plus.
• Readers of The Atlantic predict the next big seismic shifts in AI.
• …And Microsoft is hoping it can help perennial runner-up search engine Bing compete.
• An Audi-backed startup is bringing VR to the world of in-vehicle entertainment.
• Learn about optical computing, a technology that could power future AI advancements.

Stay in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Steve Heuser ([email protected]); and Benton Ives ([email protected]). Follow us @DigitalFuture on Twitter.

If you’ve had this newsletter forwarded to you, you can sign up and read our mission statement at the links provided.