The important things that have happened recently have been then I'm both saying it's a
commodity and you know, doubling down that several times, but also saying when
it came to prometheum that he didn't see how permethium was able to say that
ethereum was a security because I would up end what the CFTC has on the
future side to regulate for eve. And so there's a lot of confusion up
Like, hey, Litten, whatever the SEC and the CFTC are talking when
especially comes to prometheum and ethereum, there's a lot of implications here because which
direction they go it does up end, you know, potentially a lot of
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the description. Welcome to the Thinking Crypto podcast. You're home for cryptocurrency news
and interviews with me. Today's Ron Hammond, who's no stranger to the show.
Ron is the director of government relations at the Blockchain Association. Welcome back,
Ron, always great being on Tony. Thanks for having me again.
Ron. I thought of you as yesterday the news broke of the SEC potentially
targeting a theorem trying to classify it as a security investigations going on or the
Ethereum Foundation. And in addition, two days ago the judge sanctioned the SEC
and the debt Box case. Maybe we could start with debt Box. What
are you hearing in DC about what took place here? So the Deathaoux case
was sudden that I think are Republicans more than the Democrats, but especially on
the Republican side of the aisle. We've seen them jump at before and after
the SC got sanctioned again this week depth Box sanctioned the SEC having a pretty
aggressive strategy and comes to you know what they did both to the plaintiff in
that case, but also going after a pretty aggressive UH form and action here.
And that's what we saw. The judge rebuke all the actions of the
SEC and entered up in this current situation where Republicans are saying, see,
we've been saying this for years that the SEC has been going so aggressive on
the courts UH, and they've been many times proven wrong. In some cases,
they're even going above the bounds that they're supposed to be going and that's
really concerning here. And this sanctioning definitely is a SoundBite that the Republicans like
to use. Again will move the needle one terms of policy, not as
much, I would say, but it also kind of adds to the beat
of the cap and also builds the narrative that hey, look, not only
losing in the courts, but they're also breaking the bounds sometimes of what they're
legally allowed to do and they're being called out for by the courts. Whether
it be a Republican judge or a Democrat judge, it doesn't matter. It
seems to be pretty unanimous in these cases. So I think it's another feather
in the cap of terms of Republicans oversight, but also again more support going
away from Gunsler and the regime that they've had with regulation by enforcement for crypto
Now. I saw the SEC also put out their budget requests for twenty twenty
five. I saw Tom Emmer tweet out no, so could this situation where
the SEC's acting unlawful be used to cut their budget or limit the amount of
funds they would have? Yeah? So for those are how DC works sometimes,
So every March or so, the presidential budget comes out. Now for
those who understand how, you know, we're kind of always going through a
shutdown here in Congress. We are just or hopefully Congress will be finalizing the
appropriations process for last year. Those would be done in September tomorrow. So
that we've been kicking the can down the road, kicking the can down the
road, and usually what ends up happening is we kind of go with what
the status quo was or what was happening last year for funding levels. You
know, usually the opposite party jumps on these things to attack the administration.
You know, when Trump was president, the Democrats had the House, they
attacked it, and now we have the Republicans in the House, Democrat administration,
they attack it. At the end of the day, I don't think
it's really gonna change much. Congress came barely keep the current functioning. Just
unfortunately that's how it is. We'll probably have the same levels here. But
it does call out, you know, more about where the SEC's priorities are
in terms of their funding levels. You know, we've recalled a couple of
years ago that against it was really advocating for more SEC crypto attorneys, especially
in the Enforcement Division, and it looks like we're seeing a lot of that
play out in the past couple of years, these enforcement actions and again they
haven't been going too well for the SEC most recently, so you know,
it gives more ripe to the more biparz at scrutiny. But at the same
time, I don't think we're going to see, you know, the SEC
budget go to zero or to be diminished, especially with the Democrat administration and
Democrats Senate to count any Republican decreases in funding. Yeah, and that's the
thing that's frustrating Ron. I know a lot of people are going to watch
and listen to this, and they're going to say, so nothing can be
done, you know. And my hope is that the optics it's so bad
for the sec the breaking the law, lying to the courts, that maybe
more Democrats flip on Gary Gainser, Right, Maybe that's the hope, and
then they can vote to say, you know what, yeah, we're not
increasing this budget because this is a mess exactly. And I think it's really
the important thing to highlight here. So it's not about you know, Republicans
versus Democrats, and I think that's you know, it always happens in the
election year. Everyone kind of retreats back to the basis and says, my
team versus your team. But we want to make sure, at least here
in DC, it's not about you know, one party, it's about one
man, one individual that has led an agency. That's how a crusade against
crypto. You know, we've had great democrats in crypto in the Bid administration.
Take the CFTC for example, who've already done a really good job of
pushing back against YESC advances. And take a theoreum for example, most recently,
where they've doubled down said actually no, like that's our jurisdiction. This
is our line here. We believe and definitively say it is a commodity.
And they set it back in the Trump administration for the SEC, and we
are still holding firm in the Biding administration at the CFTC. So, you
know, I think it's just really important to highlight everyone does tend to get
into these really pars and tendencies, especially when it's a residential election year.
But this is about one individual, one man here, and that's why,
you know, we've been seeing a lot of bipars and push back and been
encouraging that. And every time we've seen scrity in Congress, it's like,
hey, look, let's make sure we bring others along, whether you be
Democrats giving scrutiny or Republicans student scrutiny. There's combined forces here because there's a
lot more now. Yeah, And yesterday, Ron, we got news that
the SEC is looking to target Etherorem and classify as as security and there's been
subpoenas issued investigations into the Theorem Foundation and to your point, the CFDC just
recently Roston Benham was talking about Etherorem and working with the SEC, and they
viewed as a commodity. This thing seems to be getting very messy. I
know it's still early, but what are you hearing? Yeah, so I
want to stress I just actually ran back with Capitol Hill just now after this,
running back over there because they got meetings on this exact same topic.
You know, we've been seeing this reversal of the Ethereum, you know,
from the him Men speech years ago on the Garry Genzel for quite some time.
So by no means is this shocking, and this has kind of been
happening for quite some time. And again also I want to stress, at
least at this current moment on Thursday, at least, we still don't really
have official confirmation if this is the SEC or something else is happening at play.
So that's kind of you know what I'm doing back over there by the
end of the day. You know, I think the important things that have
happened recently have been ben both saying it's a commodity and you know, doubling
down that several times, but also saying when it came to Prometheum that he
didn't see how Prometheum was able to say that Ethereum was a security because that
would upend what the CFTC has on the future side Toulate for eth and so
there's a lot of confusion of like, hey, listen, whatever the SEC
and the CFTC are talking. When especially comes to prometheum and ethereum, there's
a lot of implications here because which direction they go it does up end you
know, potentially a lot of present or law here and so a that's why
we need market structural legislation, so we can now have to have this turf
ward to go and play out in real time in front of us. But
also at the same time, I think Congress, you know, we talked
about how them don't do too much. I think they're going to actually more
facilitate either more scrutiny or oversight. You know, we have rumors of potential
sub poena from you know, to Genzler, from mckenry h. And I
will say also, it has been a couple of months since Chered Gensler has
come in front of the House Binds Service Committee, and sent being Committee would
not be shocked to be coming in the next two or three months, to
be honest, it's usually around that time anyway. But the timing is right
you also think about the ETF application in May, that deadline is coming up.
I think there's a lot of you know, kind of swirling about right
now that make for a perfect time to have a hearing. And then let's
not forget or did the last hearing start off with mckenry and share a Guensler
Is he the security or not? And I think it would be a you
know, a beautiful and almost poetic scene to have the e ETF right living
on and then Shared Gunsler comes in front of the House Find Service Committee again
at is in my experiences, the staffer the timing would be right around now,
but not just because of this, just because usually this is when charaguns
in the SEC chairs would come in front of Congress and Ron. We also
saw two senators I believe they're both Democrat, sent a letter to the SEC
saying no more ETFs. So it seems there's some political play here, maybe
you know, the Elizabeth Warren pull into strings a bit to block these ETFs
and maybe this whole a security thing is a smoke screen once again just to
the delay, confuse and cause more problems. Yeah, I did think that
was kind of odd to see this coming from you know, pretty senior Democrat
senators I read, for example, is one of the most highly ranking members
on the Senate Bank committees, and he's been no fan of crypto for quite
some time, so this was on shocking to see from him. Lafonda Butler
attack difference, but she's also new in the Senate. But the push was
a on a couple of fronts. It was it was kind of odd to
see them recognize that bitcoin has at least a heavily scrutinized markets in their form
or in their words, and they believe the market's mature enough at this point.
But then they started using the old reasons to deny the bitcoin et arguments
to the ethereum side of things, and again they I'm believing them mentioned ethereum
explicitly, and they also referred him as ETPs not et apps. They're really
pushing on that, But it was more by pushing on the A. I
don't think the market's mature, but B I don't like the idea that Wall
Street is getting more involved into this very volatile ecosystem. And usually we kind
of see these reactions from Congress, especially more on the progressive side, when
there's a dip in the markets. You know, it's usually when there's a
bear market or things are crashing a little bit that we have the a lot
of the I told you sos or you know, people are losing their money
or more other folks are hurt than others. But we haven't seen that yet.
We're actually kind of in the ball run right now, and we're seeing
criticism right now of the ETP. But if I were Genstler, this is
kind of the political cover you could probably utilize to say, I believe Congress
wanting to deny these future ETPs, I can now point to it and that
among other reasons or why I'm not going to approve it E ETF. So
we'll see how this plays out, but I three that more of a playle
cover situation now. With this situation though, in how messy you could get?
You know, could this be the catalysts where Patrick McHenry can rally to
troops to at least get the bills out of the house. Like this thing
looks it's going to be really messy. Given the history of the theorem build
him and all these things. Do you think that's possible that he can say
this once again? This could be the catalyst, you know, I think
it can be for a market structure or the fit twenty one acts. You
got to thinking, uh, you have Secretary of Yellen at the beginning part
of February testifying front the Senate Banking and House Bundal Services, both of the
committees that will be important and the one deciding that bill moves or dies.
She doubled down and said, we need spot market regulation for non you know,
for non uh securities tokens. She wouldn't say which ones at all,
but she would say for non security tokens plural, not just bitcoin, because
at least before Chair Gensler, it just seems to be just one token is
non security. So we have Chair Secretary Yellen, Chair Venom from the CFTC,
We have decent amount Democrats Unan support on the Republican side in the House
at least, and that's a pretty strong, you know, groundswell of support.
And then you have the ethereum situation with all the news and the hype.
You have the Wall Street forces, crypto forces, and just the general
mainstream watching what's gonna playing out. And I think it's going to be a
pert whirlwind to at least get momentum moving, because in Congress that's how we've
seen kind of things move. It's just you need momentum. You need either
a crisis, which will be see in folks who've been post to crypto use
crisis like whether be you know, October seventh or the Russian vasia Ukraine to
move their more negative legislation for the industry. Maybe you know, a positive
groundswell or at least scrutiny of of the current situation can get you the grounds
well for mckenry and those other Republicans and Democrats to move that bill. So
we'll see. But you know, if you look at the chess board,
it's really starting to form and it's pretty starting to heavily stack on one side.
But time is going to be the issue. It's an election year.
It's already hard enough to get the government to do anything, especially Congress to
fund their own governments. So there's those political realities you have to operate in.
Man, I tell you, there's never a dull day in crypto.
I love my job because it's never boring, but man, yeah it is.
It's never a dull day in crypto. Now, we got the elections
coming up, obviously, and we saw on Super Tuesday a good amount of
pro crypto candidates one and some who are aligned to Elizabeth Warren, the anti
crypto army lass and you got, for example, John Deeton running against Elizabeth
Warren as well. What is your take on what's happening in the elections.
First off, I've been really shocked to see just how well the pack size
organized and they mobilize their resources and to support again Republicans and Democrats starting,
you know, folks who more aligned with Warren and supporting those who want to
be pro crypto or at least outly pro crypto. So that's been really exciting
to see. And I will say after Super Tuesday has been really noticeable the
amount of Republicans and Democrats that have reached out to us who are candidates who
want to just learn more about the issue. Again, like at least for
us at the Bough Chain Association, like we don't you know, are getting
money here. You know, there's a pack and stuff like that separately,
but they just want to know more about the issue. And like so I've
been briefing candidates. We had I think five in our office yesterday. The
guys you're going to call one after this. Like the amount of outreach that's
happened from both sides of the aisle has been incredible. We're talking sentence candidates
and House candidates, and that's been really interesting to see. And I think
the most exciting thing is just like hearing how crypto has organically come up on
the campaign trail. And you know, a lot of times they say it's
more folks who are concerned about the central bank digital currency and thinking that's all
crypto, but we've had actually a couple of candidates, actually two Democrats yesterday
said it's actually come up organically when they're talking to constituents about like top issues,
you know, the borders, one at the economy, inflation, abortion
rights, but crypto sometimes comes up, and it's really funny here them like
there's no way it's true. No, but these are actual stories that we're
hearing and like, this is kind of exciting to see. And I think
again coinbas is at a great job mobilizing on the educational side, so many
other groups as well, and then we have the pack side of the money
that really promotes these candidates, and I think that's been a great all round
effort and crypto's really they come to play. So we'll see what happens in
November. Yeah, it's fascinating, right Ron, because it's not the number
one issue obviously, Like you said, there's all these things. But if
I have money invested in crypto and millions of Americans own crypto, I don't
want my investment to go to zero to be roadblock because of politicians and nonsense.
Right, I'm gonna be upset by that and actively looking to talk to
my local representative and so forth. So I could see people being strongly incentivized
because of the money aspect, right, And we could get philosophical about a
Metcalf's law and network effects and it's a very different dynamic. So it's fascinating
to watch that play out. Yeah, and let's also forget like you know,
NFTs, for example, they've come underneath the law screuting with the SEC
recently, but the DNC is running NFTs now as like a bonus there,
Like I never thought that'd be funny. It's like, you know, you
think you're back of your mind, Like, yeah, the SEC is actually
being really aggressive in this industry, especially in NFTs recently, and then the
DNC now promoting it as a thing. So it's it's interesting to see how
this evolves. But I think also just shows like a the anti crypto army,
it's slim to none and if you're in the you know, back camp,
there's not been many left. And also it's just it's steamrolling this the
amount of of you know, great news have been going for the industry recently,
the court cases, the positive reaction in the market, there's a lot
of rounds well of just positivity here and I think it's really good to see
that kind of come to fruition through a very tough bear market. A lot
of folks put their head down and grind it. So again, I don't
want to take credit, you know, for anything by any means, but
we have a long way to go. But it's been really exciting to you
know, be positive here in DC when it comes to crypto. Yeah.
I was pleasantly surprised by that. And then another interesting fact is former President
Donald Trump, who's the Republican candidate for this election. I found it fascinating
that his tone has softened. He's gone more neutral versus back in twenty nineteen
when he tweeted out, I am not a fan of bigcoin in crypto.
This time around, he's has a Bitcoin Ordinals, you know, selling accepting
bitcoin and crypto. That is just a big surprise for me as well.
And like, the one thing that I've always consistently seen is that when a
member of Congress, you know, tweets especially tweets, are engaged on crypto
and they look at their Twitter, it has been like, wow, that's
a lot of reaction there, and the usually don't get that kind of reaction
for anything I post on Twitter unless it's really controversial. And there's that.
I think there's actually a pretty decent amount of folk who are paying attention to
this, and I think that's been been more happening for you know, Trump.
I think I'm on social bike, you know. I'm sure he'll probably
saw a little of that, but we saw a lot of folks, like
a Veck for example, really kind of more engaging on crypto. Even after
they're done being considered a nominee, they're still engaging on it. And from
my sources I heard Veca is really important at least in the Trump campaign to
get you know, get more folks aligned on the pro crypto side. I'm
sure there's several other forces at play. But again that's just you know,
that's we've seen the evolution here. It's still a long way to go for
Trump. You know, I'm still hopeful for the buying side things, especially
when we have good folks like Chair Benham. But you know, we'll see
it's an election year, so things can get really parson and our hope is
that this is not one of those issues. What are your thoughts on that
John Dundeeton running against Elizabeth Warren. I think it's great. I think,
you know, a it puts the pressure on her b you know, it
kind of has to make her defend her position, not only again on crypto.
I've seen John, you know, going after several issues I from more
over his background and you know how he grew up in poverty and welfare and
was to be used as a child, like you know, he has personal
stories to really really back this up. That doesn't speak to just to hate
just crypto, because obviously there's a many other issues that folks gravitate towards.
And I think it's really good to a just kind of show that that's one
side of his message, and he's really shown that there's other sides of him
as a person, but also what he stands for. So I'm really excited
to see that. I'm also always excited to see LIZEB. Warren having to
defend her anti crypto position, and we're even seeing her media reporters being a
lot more faarable recently, at least in the line of questioning about the industry
as a whole. And I think it's a FTX has kind of gone to
the back burner in terms of everyone's mindset. I'll probably restart pretty soon the
sentencing begins, as well as for CZ, but overall, I think that's
kind of the FTX is kind of now fade to the back mind here,
and now folks are saying they're still here, They're still kicking, and actually
not just kicking, they're thriving. And so what do you have to say
in center Warren and other skeptics for you know, landbassing this industry, do
you still hold that view? And I think it's really encouraging to see,
and that's thanks to John Deton and several other are getting pro crypto candidates from
all sorts of you know, walks of life and ployal spectrum. Yeah,
and what We've also seen is that the crypto industry. I don't know where
what was the tipping point, but I see a lot of them countersuing the
SEC. We got like random crypto exchanges like leg Alex out of Texas all
of a sudden popping up, tell us what is a security what's not?
And I really appreciate that. And the cracking, like cracking the exchange and
coin base. They have lawsuits going against the SEC. What are your thoughts
on the industry going on the offensive. I think it's this is the one
area we can go in the offensive right now. I mean Congress again,
we have a lot of good pro crypto champions, but we don't into politics
issues, and you know, the courts do take time. But it has
been going to the grounds well and a lot of folks realizing, hey,
our arguments are winning here. And now we also have you know the back
or other you know, engaged players like black Rock or Fidelity who have a
lot more big stake in the game. And there's several others like bn y
Melon who want to get even more in the game, but the SEC and
others are preventing them, like SAP one twenty one. So I think it's
just there's a there's a lot of uh, you know, excitement, and
folks want to get into the space those who have usually done pretty well,
uh, at least especially recently, And so there's still a lot of barriers
though, and a lot of those barriers are again put up artificially, sometimes
by one man, and folks who feel a lot more bold and saying those
court cases they're getting, they're losing, not only in crypto, they're losing
stop buybacks, a few others recently. So there's other issues where like he
keeps folding and losing, and the courts have now been kind of the hot
spots to really engage or going the offensive. I'm really hoping that changeses soon
because I'd rather have it also come from the policymakers with the bolts to represent
us too, at least right now, that's where we have to go on
the offensive. Yeah, and to your point, like Congress needs to act,
but it's also pretty sweet to see someone like Gary Gainster get embarrassed in
the courts and the headlines that follow that. So you know, this is
this is the part of the cycle. So but that's politics for you too,
sure, Okay, So final item here. You mentioned that potentially we
could see Gary Gainster go before Congress the House Financial Services Committee soon. Is
there any other hearings that might be related to crypto coming up? So,
Carress is in two week recess, after they fund the government hopefully tomorrow,
and then after they come back from the recess again recess being campaigning or trying
to talk to voters and constituents. Then we're going to probably have a hearing
in the Senate Bank Committee center. Sharon Brown called for a hearing with Wallyadamo.
He's the Deputy Secretary over at Treasury who announced that our Blockchain Association summit
back in November, a variety of extensions to sanctions for crypto as well as
things like nodes and wallets, also trying to expand their secondary sanction authorities.
They're going after foreign issuers of stable coins that have US dollars, so on
and so forth. So it was a laundry list of things. It's pretty
aggressive, but Sharon Brown did call to have Waladamo in front of his committee.
Most likely looks like April, it could be May, but we could
be seeing some more conversation, especially around the anti money laundering angle. It
seems like that's not going away by any means, even though again we pushed
back on Center Warren, Treasury didn't do send a letter last week to certain
members of Congress saying we're still looking at to this figure and we do think
it's not one hundred and sixty five million that went to AMAS, but we
want to let you know, Congress, this is still an ongoing investigative matter.
So we'll see probably then what Treasury finds, and they'll be probably pretty
important hearing, so I would stay tuned, especially in the Senate, for
that hearing. M Ron always great information. Thank you so much, my
friend, Hey Tom, thanks again