WEBVTT 1 00:00:00.200 --> 00:00:04.759 People who are already criminals and they're engaged with so like a good example of 2 00:00:04.759 --> 00:00:09.400 that is the SEC had a lot of meetings with SBF and yeah, he 3 00:00:09.480 --> 00:00:14.599 does belong in jail. So if that's your reference frame for CEOs, then 4 00:00:15.080 --> 00:00:18.440 of course, if the only people you're talking to are criminals, you think 5 00:00:18.480 --> 00:00:22.519 everybody is a criminal. The other group of people is trad fi skeptics who 6 00:00:22.640 --> 00:00:26.600 quite frankly hate blockchain right because they don't have a problem talking to the SEC. 7 00:00:26.640 --> 00:00:30.000 They do want to destroy the space, And so where you end up 8 00:00:30.039 --> 00:00:35.000 there is an SEC that can't get good information, can't talk to constructive actors, 9 00:00:35.039 --> 00:00:39.359 and can't really find a way to operate because they themselves poisoned. Well. 10 00:00:39.960 --> 00:00:43.920 So when I saw those comments from Gary to me, that is just 11 00:00:43.960 --> 00:00:48.880 a statement of how the pathway chosen by the SEC and their policies has been 12 00:00:48.920 --> 00:00:59.359 incredibly destructive. This content is brought to you by Bitco, which is one 13 00:00:59.399 --> 00:01:03.400 of the top crypto custodians in the crypto industry. Bitco works with many big 14 00:01:03.400 --> 00:01:08.959 companies and brands such as Pantera Capital, Bitstamp, and bitcoin Ira. Nike 15 00:01:10.159 --> 00:01:15.959 also selected Bitco to power its wallets for its NFTs and bitco has many great 16 00:01:15.000 --> 00:01:19.640 services such as hot wallets, custodial wallets, self managed cold wallets, and 17 00:01:19.920 --> 00:01:26.799 NFT wallets. Many institutions trust bitgo with its top level security and incredible services 18 00:01:26.840 --> 00:01:32.159 such as being able to deploy your capital wallets in custody, which includes lending, 19 00:01:32.319 --> 00:01:34.760 borrowing, trading, staking, DeFi access and more. If you'd like 20 00:01:34.799 --> 00:01:38.879 to learn more about bitco, please visit bitgo dot com link in the description. 21 00:01:40.159 --> 00:01:42.400 Welcome to the Thinking Crypto Podcast. I'm your host Tony Edward and with 22 00:01:42.439 --> 00:01:47.840 me today is Austin Campbell, who's the founder and managing partner at Zero Knowledge 23 00:01:47.840 --> 00:01:53.640 Consulting and an adjunct professor at Columbia Business School. Austin. Great to have 24 00:01:53.680 --> 00:01:57.719 you on, Thank you, Tony. Happy to be here again, Austin. 25 00:01:57.920 --> 00:02:01.319 Lots of talk about whatever at Dell Day. In crypto and of course 26 00:02:01.400 --> 00:02:07.520 on the legislation regulation law side, there's a ton of things happening. Let's 27 00:02:07.520 --> 00:02:13.159 start with the SEC's partial approval of the etheromyts. This looks like it's going 28 00:02:13.199 --> 00:02:15.039 all the way. A lot of people are expecting an approval maybe in early 29 00:02:15.120 --> 00:02:20.599 July, but part of leading up to that was the SEC dropping their investigation 30 00:02:20.680 --> 00:02:24.759 against Etheroreum and consensus. It's a mess. Genser refuses to even say before 31 00:02:25.000 --> 00:02:30.199 the Senate or Congress that if etherrem is a commodity or not, what are 32 00:02:30.199 --> 00:02:34.560 your thoughts on all these things? Yeah, So I wouldn't read too much 33 00:02:34.960 --> 00:02:39.240 into the closing of that investigation because at the closure they basically said that the 34 00:02:39.319 --> 00:02:45.400 staff recommended not proceeding with any sort of enforcement actions at the current point in 35 00:02:45.479 --> 00:02:49.960 time. So one of the things to remember is that investigation being closed does 36 00:02:50.000 --> 00:02:53.919 not mean permanently eth is off the hook for all reasons forever, like if 37 00:02:53.960 --> 00:02:58.479 other actions are taken, if things change, if they change their mind on 38 00:02:58.599 --> 00:03:02.479 theories, it could be reopened. I would say the bigger point on that 39 00:03:02.520 --> 00:03:07.639 one that makes it harder to backtrack, or at least backtrack significantly, is 40 00:03:07.759 --> 00:03:15.800 the ETF approvals. Right if you have live ETFs on ethereum trading with investors 41 00:03:15.800 --> 00:03:20.319 in those Given that part of the SEC's mission is investor protection, they're going 42 00:03:20.360 --> 00:03:24.120 to need to proceed a little bit more carefully because spiking the football on current 43 00:03:24.159 --> 00:03:29.919 investors and their own decision making process is a lot more egg on their face 44 00:03:30.439 --> 00:03:34.840 than just closing an investigation and then opening it again a year later. Do 45 00:03:34.879 --> 00:03:40.240 you think the approval of the ethfs was maybe fifty percent political pressure Donald Trump 46 00:03:40.280 --> 00:03:46.280 and even the Democrats turning on Gainser and Elizabeth Warren, and also the threat 47 00:03:46.400 --> 00:03:51.719 of lawsuits. Grayscale was able to defeat the SEC over the big twin ETF. 48 00:03:51.759 --> 00:03:55.960 I can't imagine what Blackrocket Fidelity would have done to the SEC. Yeah, 49 00:03:57.039 --> 00:04:00.680 I mean to be honest, like, when you're looking these sorts of 50 00:04:00.680 --> 00:04:03.439 things from the outside, the usual answer is it's likely a mix of all 51 00:04:03.520 --> 00:04:09.479 of these things, and in kind of nonlinear ways, certainly political pressure plays 52 00:04:09.520 --> 00:04:13.919 at least some part in what's going on, Because the SEC's actions towards crypto 53 00:04:14.000 --> 00:04:17.399 have been pretty nakedly political. If we're being honest, there are other things 54 00:04:17.439 --> 00:04:21.120 they could have and probably should have been focused on, even within the crypto 55 00:04:21.279 --> 00:04:26.519 space, as opposed to what they were much less in other spaces. So 56 00:04:26.720 --> 00:04:30.079 I come from the position that some of their work is clearly political in the 57 00:04:30.120 --> 00:04:33.360 first place. The second part, though, on the lawsuit part, and 58 00:04:33.360 --> 00:04:39.600 this is important, you already lost on the bitcoin ETFs, and some federal 59 00:04:39.720 --> 00:04:44.920 judges said some pretty harsh things with regard to the SEC, calling them arbitrary 60 00:04:45.000 --> 00:04:49.759 and capricious and questioning their exercise of authority. If after that happens, you 61 00:04:50.279 --> 00:04:56.360 essentially give the double middle finger to some federal judges and do the exact same 62 00:04:56.480 --> 00:05:00.600 thing on the exact same fact pattern again that when you're starting to sail into 63 00:05:00.839 --> 00:05:05.120 very dangerous territory as a regulator, that's how you end up getting sagtioned, 64 00:05:05.319 --> 00:05:09.959 as they did in the debt box case. That's how you end up having 65 00:05:10.000 --> 00:05:13.000 Scotus take a look at you and be like, ah, maybe we shouldn't 66 00:05:13.000 --> 00:05:17.959 be giving these guys deference, like litigate everything they don't get essentially even one 67 00:05:18.000 --> 00:05:21.160 degree of deference from the courts and so on and so forth. That could 68 00:05:21.160 --> 00:05:26.120 make the SEC's life really hard. And I'm sure there are staff who looked 69 00:05:26.120 --> 00:05:30.800 at that. We're probably recommending we should probably just approve these because if we 70 00:05:30.959 --> 00:05:33.920 don't and we get sued and we lose spectacularly, there's a huge amount of 71 00:05:34.000 --> 00:05:39.199 doubts. Oh yeah, And there's so many eyeballs on this now because of 72 00:05:39.240 --> 00:05:43.600 that political aspect. You know, they've made this political. It's not just 73 00:05:43.639 --> 00:05:46.959 the industry looking at it, it's members of Congress and other folks in other 74 00:05:47.040 --> 00:05:50.600 industries looking at this like what is the SEC doing here? So they've kind 75 00:05:50.600 --> 00:05:56.720 of put the spotlight on themselves, and I'm kind of curious, why do 76 00:05:56.759 --> 00:06:00.439 you think they launched some sort of investigation in the first place. They approved 77 00:06:00.480 --> 00:06:09.240 the Etheroreum futures last year and they engaged with the filers, but then all 78 00:06:09.279 --> 00:06:13.959 of a sudden, we're launching an investigation into who what's the point of that? 79 00:06:14.439 --> 00:06:17.160 So that's the hard part about federal investigations. A lot of the times 80 00:06:17.319 --> 00:06:20.120 when they start them, they're not going to tell you why, and to 81 00:06:20.160 --> 00:06:25.199 be fair, nor should that, because if somebody had done something actually criminal, 82 00:06:25.720 --> 00:06:28.639 you don't want to tip them off as to what you're looking for to 83 00:06:28.639 --> 00:06:31.759 give them avenues to try to do things like destroy evidence or high facts, 84 00:06:31.800 --> 00:06:34.680 you know, all of those sorts of things. But the fact that they 85 00:06:34.759 --> 00:06:39.680 closed it and haven't really given a complete accounting means, to be honest, 86 00:06:40.000 --> 00:06:44.519 we'll just never know, and it could be anywhere from this was nakedly political. 87 00:06:44.560 --> 00:06:46.959 They were looking for ways state or fear with things if they could have 88 00:06:46.040 --> 00:06:49.399 gotten away with it, to something much more specific and granular, like we 89 00:06:49.480 --> 00:06:56.439 think this one person made false statements and manipulated the market or something like that. 90 00:06:56.600 --> 00:07:00.079 So there are many layers to that, and from the outside, I 91 00:07:00.079 --> 00:07:02.639 would say, we really don't know right now, and I would caution people 92 00:07:02.720 --> 00:07:08.920 like on that front, I would be patient, do you think and this 93 00:07:08.959 --> 00:07:13.439 could be or this may change as a result of against her being gone, 94 00:07:13.519 --> 00:07:18.439 a new president potentially in place that the SEC may come back years later and 95 00:07:18.439 --> 00:07:23.920 say, you know what, we got it wrong with regards to the theorem. 96 00:07:23.920 --> 00:07:28.560 We're going to follow another law suit to your point earlier. It kind 97 00:07:28.560 --> 00:07:30.800 of leaves a door open date they could do that. I mean, this 98 00:07:30.920 --> 00:07:35.319 is one of the problems of federal regulatory authorities and agency deference in general. 99 00:07:35.519 --> 00:07:40.680 Right, Like anybody who thinks that this is a problem unique to crypto has 100 00:07:40.839 --> 00:07:46.480 not been paying attention to administrative law written large right Like this happens with the 101 00:07:46.519 --> 00:07:49.879 banking regulators, this happens with the FTC, this happens with some of the 102 00:07:50.040 --> 00:07:56.720 environmental agencies. Like these sorts of issues that we have where an agency will 103 00:07:56.759 --> 00:08:00.639 have one political party in charge and make one opinion, and then another political 104 00:08:00.639 --> 00:08:05.120 party in charge and change its mind produces a lot of inconsistency for American companies 105 00:08:05.160 --> 00:08:11.279 and consumers in general, and I would say that problem, essentially, what 106 00:08:11.319 --> 00:08:15.839 you've raised here is much larger than just the SEC. Now. This week, 107 00:08:16.199 --> 00:08:20.680 sure Gencer was interviewed by Bloomberg and made some pretty scathing remarks about crypto 108 00:08:20.800 --> 00:08:24.680 CEOs. They're all going to jail and all kinds of things. I mean, 109 00:08:24.720 --> 00:08:28.120 it's pathetic. What are your thoughts on what do you have to say? 110 00:08:28.800 --> 00:08:31.080 I would say in many ways, that to me is more revealing of 111 00:08:31.200 --> 00:08:37.960 Gensler and how bad the SEC's relationship with the industry is than the industry itself, 112 00:08:37.120 --> 00:08:41.559 because if you look at the history of the SEC, they had told 113 00:08:41.639 --> 00:08:46.639 people earlier on, come in and talk to us, and as a result 114 00:08:46.679 --> 00:08:50.200 of that, we'll listen to you and try to make rules. And what 115 00:08:50.240 --> 00:08:52.240 they actually did was come in and talk to us and will immediately start an 116 00:08:52.240 --> 00:08:56.080 investigation into you with the facts you gave us to try to fight with you. 117 00:08:56.960 --> 00:09:01.240 Almost every single competent lawyer that I know who works with crypto companies, 118 00:09:01.279 --> 00:09:07.000 advises their clients, no matter how clean they are, never ever ever talk 119 00:09:07.039 --> 00:09:11.960 to the SEC. Voluntarily, make them show up with speanut, meet them 120 00:09:11.960 --> 00:09:15.519 in court. Do not disclose anything you do not have to. They are 121 00:09:15.679 --> 00:09:20.080 bad people trying to build a case against you. There is no productive pathway. 122 00:09:20.480 --> 00:09:24.480 That is the pretty generic legal advice people are getting. And what this 123 00:09:24.720 --> 00:09:28.559 means is that the SEC can only talk to two kinds of people now. 124 00:09:28.120 --> 00:09:33.039 One people who are already criminals and they're engaged with so like a good example 125 00:09:33.039 --> 00:09:37.279 of that is the SEC had a lot of meetings with SBF and yeah, 126 00:09:37.440 --> 00:09:43.200 he does belong in jail. So if that's your reference frame for CEOs, 127 00:09:43.320 --> 00:09:46.000 then of course, if the only people you're talking to are criminals, you 128 00:09:46.080 --> 00:09:50.000 think everybody is a criminal. The other group of people is trad fise skeptics 129 00:09:50.039 --> 00:09:54.679 who quite frankly hate blockchain right because they don't have a problem talking to the 130 00:09:54.720 --> 00:09:58.159 SEC. They do want to destroy the space. And so where you end 131 00:09:58.240 --> 00:10:03.159 up there is an SEC can't get good information, can't talk to constructive actors, 132 00:10:03.159 --> 00:10:07.279 and can't really find a way to operate because they themselves poisoned the well. 133 00:10:07.879 --> 00:10:11.480 So when I saw those comments from Gary, to me, that is 134 00:10:11.600 --> 00:10:16.279 just a statement of how the pathway chosen by the SEC and their policies has 135 00:10:16.320 --> 00:10:22.200 been incredibly destructive really to everybody. The SEC. Yeah, and you know, 136 00:10:22.279 --> 00:10:26.360 it's kind of ironic that the SEC reports that we heard was trying to 137 00:10:26.440 --> 00:10:31.399 work some special broker deal license deal with SBF and FTX where they would have 138 00:10:31.399 --> 00:10:37.120 had I think some sort of monopoly monopoly, excuse me, And yet they 139 00:10:37.120 --> 00:10:41.000 didn't do their due diligence. SBF was scamming people and doing all kinds of 140 00:10:41.039 --> 00:10:46.120 fraud, right, And then I saw, you know, Chair Patrick McHenry 141 00:10:46.120 --> 00:10:52.200 had threatened Gary against and the SEC for not handing over the communications, and 142 00:10:52.200 --> 00:10:56.559 so I don't think they have yet, but he threatened a subpoena subpoenas I 143 00:10:56.559 --> 00:11:03.000 think it is to get that information that has seemed to fall on the wayside. 144 00:11:03.279 --> 00:11:05.679 But I wish someone would fallow up on that, you know, we 145 00:11:05.720 --> 00:11:11.679 would see what was taking place between SBF and Gensler. So one thing I 146 00:11:11.679 --> 00:11:15.000 would say is I'm always a little bit skeptical of any idea of like, 147 00:11:15.039 --> 00:11:18.200 oh they're going to hand him a monopoly to a specific company or things like 148 00:11:18.240 --> 00:11:22.279 that. A lot of that probably leaves the realm of there was a kernel 149 00:11:22.320 --> 00:11:26.039 of truth, and you know, gets into sort of crypto Twitter's favorite thing 150 00:11:26.080 --> 00:11:30.960 to do, which is conspiracy theories. With that said, clearly they were 151 00:11:31.039 --> 00:11:35.679 talking to SBF, and they were taking him seriously. Now that does represent 152 00:11:35.799 --> 00:11:39.679 probably at least some degree of poor judgment if you were primarily talking to him 153 00:11:39.240 --> 00:11:43.559 the other part, I would say, I'm like Congress and the House and 154 00:11:43.639 --> 00:11:48.840 activities around that is, I would wait until after the election. I would 155 00:11:48.840 --> 00:11:52.559 expect if the Republicans win, there may be significantly more investigations with way more 156 00:11:52.639 --> 00:11:56.399 muscle behind them into the sec. People always ask the House, why haven't 157 00:11:56.440 --> 00:12:00.440 you done more? And the answer is, well, the entity that should 158 00:12:00.480 --> 00:12:03.879 really be investigating this is the DJAG and that is currently controlled by the Biden 159 00:12:03.879 --> 00:12:07.840 administration. So let's wait and see what happens this year and come back to 160 00:12:07.879 --> 00:12:11.679 that point. That's a great point. I didn't think of that that they 161 00:12:11.679 --> 00:12:16.200 would have, like you said, more political muscles to go after Againstter and 162 00:12:16.240 --> 00:12:20.840 do more investigations because right now it's probably gonna get blocked by Gainster's Democrat friends 163 00:12:22.320 --> 00:12:26.759 pretty much. Now, speaking of Democrats and Republicans, Crypto has become this 164 00:12:26.879 --> 00:12:31.039 political force. I mean, it's amazing. There's like there's complete one to 165 00:12:31.080 --> 00:12:37.039 eighty. A few months back, many Democrats joining their Republican colleagues across the 166 00:12:37.080 --> 00:12:39.559 al to pass the FIT twenty one bill. Out of the House repeal SAB 167 00:12:39.600 --> 00:12:43.600 one to one in the House and the Senate. What are your thoughts on 168 00:12:43.639 --> 00:12:48.000 this? And is it because of Donald Trump's stance? All right, so 169 00:12:48.799 --> 00:12:52.360 this is a complicated topic, so I'm going to try to answerain pieces so 170 00:12:52.440 --> 00:12:56.559 we can discuss each one. Let's start with SAB one twenty So that's staff 171 00:12:56.559 --> 00:13:00.960 accounting bulletin one twenty one that came from the SEC. And it is a 172 00:13:01.080 --> 00:13:05.559 ruling, to simplify this for the audience, that basically bans regulated American companies 173 00:13:05.559 --> 00:13:09.559 from doing crypto customing. It's not an explicit ban, but what it does 174 00:13:09.679 --> 00:13:13.720 is makes it both uneconomic and likely damaging to the consumer to do it the 175 00:13:13.759 --> 00:13:16.320 way they've said to do it, so you can think of it as a 176 00:13:16.320 --> 00:13:20.159 de facto ban on the thing. Right. As a result, a lot 177 00:13:20.200 --> 00:13:24.399 of people do not like and do not think that rule is like well founded, 178 00:13:24.600 --> 00:13:30.879 and both the House and the Senate voted to repeal it. The important 179 00:13:30.879 --> 00:13:35.440 thing to remember is that the House vote went through with twenty ish Democrats involved, 180 00:13:35.440 --> 00:13:39.759 and they were largely the people who have been skeptics of the Biden administration 181 00:13:39.960 --> 00:13:43.320 stance on crypto to begin with. So it's people like the Richie torres Is, 182 00:13:43.919 --> 00:13:46.519 the Wiley Nichols of the world, who have been some of the most 183 00:13:46.559 --> 00:13:50.840 informed people of in Congress on this issue, have thus been willing to buff 184 00:13:50.919 --> 00:13:56.840 the administration because they understand the implications of what is happening. However, I 185 00:13:56.879 --> 00:14:00.799 would not take a lot of information from the Democrats who it in favor of 186 00:14:00.840 --> 00:14:05.080 the repeal from the Senate, and the reason for that is that they already 187 00:14:05.159 --> 00:14:09.240 knew it was going to be vetoed and that there were not enough votes to 188 00:14:09.360 --> 00:14:13.720 override the veto when that vote happened. That makes it very easy for somebody 189 00:14:13.759 --> 00:14:20.080 like John Tester and Montana who's been an arch cryptoskeptic for a long time to 190 00:14:20.200 --> 00:14:24.559 pander to the industry by voting to repeal. And I put voting in air 191 00:14:24.679 --> 00:14:28.879 quotes there because he knows there's no way it's actually getting refuted. So in 192 00:14:28.919 --> 00:14:31.399 many ways, I would advise people, if you're trying to understand the stance 193 00:14:31.440 --> 00:14:37.360 of people on crypto, just completely ignore the SAB one twenty one vote in 194 00:14:37.399 --> 00:14:41.759 the Senate. It had no informational value because the outcome was predetermined. Now 195 00:14:43.559 --> 00:14:46.919 fit twenty one is a little bit different of an animal lobbing something over with 196 00:14:48.039 --> 00:14:52.559 seventy plus Democratic votes to the Senate is more of a statement that seems to 197 00:14:52.600 --> 00:14:56.799 me like the younger members of the House, because again, if you look 198 00:14:56.799 --> 00:15:00.159 at who voted for it, like, it's not one to one, but 199 00:15:00.240 --> 00:15:05.879 there's strong correlation between Democrats not struggling with email and understanding technology and voting for 200 00:15:05.960 --> 00:15:09.960 Fit twenty one right, Whereas if you look at the people who are against 201 00:15:11.039 --> 00:15:16.720 it, they are largely geriatric, and so that many people defecting and voting 202 00:15:16.759 --> 00:15:20.559 for that and sending it to the Senate is a clear signal that Democrats are 203 00:15:20.639 --> 00:15:24.480 starting to break with the administration on this topic. What that means to me 204 00:15:24.679 --> 00:15:30.600 is exactly what you said, which is that crypto entering into the political sphere 205 00:15:30.919 --> 00:15:33.480 is starting to have an impact on how it is treated. And I'm going 206 00:15:33.559 --> 00:15:39.279 to go two different directions on that and response to your question, so we'll 207 00:15:39.320 --> 00:15:41.720 get to Trump last, because that's where everybody wants to talk and what we 208 00:15:41.799 --> 00:15:48.360 generate headlines. So let's do the crypto like stance. First. Two things 209 00:15:48.360 --> 00:15:50.440 that I would tell people to keep an eye on are fair Shake, who 210 00:15:50.480 --> 00:15:56.159 has been spending a lot of money in races, especially primaries right now in 211 00:15:56.320 --> 00:16:00.600 order to help pro crypto candidates win. So example of their influence was they 212 00:16:00.639 --> 00:16:04.159 put a couple million dollars into the race where Jamal Bowman, who was one 213 00:16:04.200 --> 00:16:11.320 of the loudest but least informed Crypto skeptics, was just bounced and Latimer beat 214 00:16:11.399 --> 00:16:14.840 him in the primary. Now, Bowman was a bad candidate to begin with, 215 00:16:14.919 --> 00:16:18.159 there were other problems with him, but getting piled on by Crypto really 216 00:16:18.200 --> 00:16:22.440 doesn't help, and people are taking note, well, if I oppose this, 217 00:16:22.600 --> 00:16:26.360 especially in an uninformed way, I'm going to have a lot of problems. 218 00:16:26.960 --> 00:16:30.600 Two, you have Stand with Crypto, and what Stand with Crypto is 219 00:16:30.639 --> 00:16:34.720 doing is getting people to sign up, give out their phone numbers, give 220 00:16:34.720 --> 00:16:40.279 out their location information, so that as elections come around, they are going 221 00:16:40.320 --> 00:16:45.559 to get prodded to go vote on the basis of the Crypto stances of candidates. 222 00:16:45.639 --> 00:16:49.600 I would tell you in many ways, Stand with Crypto could genuinely impact 223 00:16:49.720 --> 00:16:52.600 the election, both for many of the House seats, for some of the 224 00:16:52.639 --> 00:16:56.720 Senate seats, and for the presidency. Because if you've already got a million 225 00:16:56.759 --> 00:17:00.200 plus people signed up and they are high in ten voters, and you get 226 00:17:00.240 --> 00:17:04.079 them to the polls and they vote on the basis of crypto. There are 227 00:17:04.160 --> 00:17:10.079 states where House elections are like tens to hundreds to thousands of votes, and 228 00:17:10.599 --> 00:17:14.920 you know states in the presidential election that are ten thousand is votes. So 229 00:17:15.079 --> 00:17:18.079 stand with crypto could literally swing the election. I would not want to be 230 00:17:18.319 --> 00:17:22.319 on the wrong side of them right now from a crypto perspective. All right, 231 00:17:22.400 --> 00:17:27.599 So that's the ground game stuff. Last part. Anytime Donald Trump says 232 00:17:27.799 --> 00:17:33.960 anything repeatedly, it becomes a relevant political talking point, and that's just because 233 00:17:33.000 --> 00:17:41.359 of how pressurized the political scene is. So Trump embracing crypto forces the Democrats 234 00:17:41.359 --> 00:17:45.480 to respond. And one of the things Trump has been good at this time 235 00:17:45.519 --> 00:17:49.559 around on a couple of issues is finding a position where sixty plus percent of 236 00:17:49.599 --> 00:17:55.720 Americans agree with him and then embracing it loudly and strongly. And what that 237 00:17:55.920 --> 00:18:00.920 does is it forces the Democrats to either change their position or fight him from 238 00:18:00.000 --> 00:18:07.319 weak ground. Right, So ignoring Trump the person that's strong political tactics. 239 00:18:07.359 --> 00:18:08.880 You want to get on the right side of an issue and put your opponent 240 00:18:08.920 --> 00:18:14.799 on the wrong foot. So I think the Biden administration's antipathy to crypto opened 241 00:18:14.839 --> 00:18:18.559 that door. Had they just been neutral, that wouldn't have really been possible. 242 00:18:18.599 --> 00:18:22.400 But by being arn't skeptics, they kind of handed the momentum to Trumpet 243 00:18:22.480 --> 00:18:26.599 boy as he seized it. Do you think, though, I know it's 244 00:18:26.640 --> 00:18:32.720 not so much Biden, but it's Elizabeth Warren who has power of the financial 245 00:18:32.759 --> 00:18:37.000 markets a bit. She's the one driving a lot of this. I don't 246 00:18:37.000 --> 00:18:41.319 think it's just Elizabeth Warren like that. Again, that's sort of the classic 247 00:18:41.359 --> 00:18:47.000 oversimplification of things. So Warren is definitely a cryptos skeptic. We all know 248 00:18:47.160 --> 00:18:51.839 that there are other crypto skeptics out there, though, like Sharon Brown has 249 00:18:51.880 --> 00:18:56.720 not historically been a friend of crypto. John Tester, all Senate banking people, 250 00:18:56.880 --> 00:19:00.279 like on the d side, they're powerful right now, excuse me. 251 00:19:00.279 --> 00:19:03.720 There are some people in the house, like the Brad Sherman's of the world 252 00:19:03.759 --> 00:19:10.519 have been very anti crypto for a long time, and in the administration you 253 00:19:10.599 --> 00:19:14.119 have some people who are pretty skeptical on the economic side. It's not just 254 00:19:14.200 --> 00:19:18.160 Elizabeth work right, and so many of the people in that orbit who are 255 00:19:18.160 --> 00:19:22.599 call it kind of like pro mercantilism, pro state control. They are naturally 256 00:19:22.599 --> 00:19:27.319 opponents of crypto because crypto quite frankly reduces the power of the government to explicitly 257 00:19:27.359 --> 00:19:33.519 control things at many places, and so I think it's a more complicated coalition 258 00:19:33.640 --> 00:19:36.880 than just Elizabeth Warren. But I think it would be fair to say that 259 00:19:36.920 --> 00:19:42.400 the Biden administration written large has been pretty crypt like cryptoskeptical over time, though 260 00:19:42.920 --> 00:19:47.480 knock on wood. One hopes they're maybe changing that view. Like Carroll House 261 00:19:47.680 --> 00:19:51.920 just rejoined, you know, the government, and I think she's a more 262 00:19:52.039 --> 00:19:56.079 positive influence than many of the people currently there. So I'm hoping that elevates 263 00:19:56.079 --> 00:19:59.480 the level of discourse and that they add more people like her. Yeah, 264 00:19:59.519 --> 00:20:03.599 absolutely saw that note as well as our LinkedIn posts. Now we're recording is 265 00:20:03.640 --> 00:20:07.359 on Thursday, June twenty seventh. We got the presidential debate tonight. The 266 00:20:07.400 --> 00:20:12.920 first we were talking a bit about it before the recording that we potentially expect 267 00:20:12.920 --> 00:20:15.839 crypto to be brought up as a topic. If not, Donald Trump may 268 00:20:15.880 --> 00:20:19.519 try to bring it up. Yeah. I mean, again back to what 269 00:20:19.559 --> 00:20:23.000 I just said, it is good political tactics to get on the right side 270 00:20:23.039 --> 00:20:27.079 of that issue. If you look at support for crypto in the United States, 271 00:20:27.759 --> 00:20:33.960 groups that support crypto disproportionate compared to their call it. Current political affiliation 272 00:20:33.119 --> 00:20:38.519 include young people who are tech savvy or bank skeptical, and minorities who tend 273 00:20:38.519 --> 00:20:42.079 to be very bank skeptical because, to be totally honest, they've been historically 274 00:20:42.119 --> 00:20:47.839 treated pretty poorly by some of the financial industry as a result of that. 275 00:20:47.960 --> 00:20:52.000 If you're a Republican looking to flip marginal voters, BOYD, wouldn't it be 276 00:20:52.079 --> 00:20:56.400 great to have an issue you're on the right side of where people under the 277 00:20:56.440 --> 00:21:00.400 age of forty five and minorities are like, yeah, I like what he's 278 00:21:00.440 --> 00:21:04.440 saying. So I would suspect, you know, as politics goes, either 279 00:21:04.599 --> 00:21:07.720 there will be a question about crypto and the debate, or if there's not, 280 00:21:08.559 --> 00:21:12.160 and you're a savvy politician, you find a way to wedget in there 281 00:21:12.480 --> 00:21:17.200 during one of your answers to another question, just to plant the flag. 282 00:21:17.599 --> 00:21:22.599 So I would say my expectation is if Trump does well in the debate, 283 00:21:22.720 --> 00:21:26.960 one of the things he will have done is found a way to introduce crypto 284 00:21:26.680 --> 00:21:32.359 in one of the answers that he has in the debate. Now, I 285 00:21:32.400 --> 00:21:38.799 want to move ahead to there's been some fud around tether USDT Consumer First campaign. 286 00:21:38.920 --> 00:21:42.880 I believe that is the name of the agency or whatever it is, 287 00:21:44.279 --> 00:21:51.359 launch some sort of campaign here against tether. What are you hearing and seeing 288 00:21:51.400 --> 00:21:55.319 about this? And I'm very curious who might be funding this? Yeah, 289 00:21:55.359 --> 00:22:00.359 So one, unraveling political funding is always a difficult thing. But if you 290 00:22:00.480 --> 00:22:06.119 think about who those kinds of campaigns are funded by, in general, there's 291 00:22:06.240 --> 00:22:10.240 usually a coalition of two types of people, right, which is, one 292 00:22:10.359 --> 00:22:14.160 is moralists with an axe to grind, So a lot of times it's people 293 00:22:14.200 --> 00:22:18.839 who just don't like somebody for personal reasons or have had negative experiences with them, 294 00:22:18.279 --> 00:22:22.640 And two is hedge funds shorting things. Right, So, if you 295 00:22:22.640 --> 00:22:26.319 look at like some of the thud around banks and where some of that apparently 296 00:22:26.359 --> 00:22:30.200 came from during some of the collapses, like research from hedge funds who are 297 00:22:30.240 --> 00:22:33.279 short often drives the start of some of these campaigns. And by the way, 298 00:22:33.599 --> 00:22:37.359 that's not to say it's true, and that's not to say it's false. 299 00:22:37.519 --> 00:22:40.599 That's just to say these are the kinds of people you often uncover when 300 00:22:40.640 --> 00:22:45.000 you could really look under the rock, what is the substance of the claims 301 00:22:45.000 --> 00:22:48.759 here? I would kind of rank it into like three different sort of sets 302 00:22:48.759 --> 00:22:52.000 of things. Claim Number one, which I am just going to say I 303 00:22:52.039 --> 00:22:56.359 am highly skeptical of, is that Tether is somehow a Ponzi scheme and does 304 00:22:56.400 --> 00:23:00.680 not have any of the money. That just seems unlikely. I've seeing fun 305 00:23:00.799 --> 00:23:04.359 flows in and out of Tether right through market makers and things like that, 306 00:23:04.440 --> 00:23:07.640 and the many billions of dollars. The idea that they have like none of 307 00:23:07.680 --> 00:23:11.680 the money and are just paying this out as a literal Ponzi scheme is highly 308 00:23:11.720 --> 00:23:18.160 implausible, especially in a world where just by holding treasuries you make five percent 309 00:23:18.240 --> 00:23:22.359 on your holdings. And reminder, Tether does not pay interest to owners of 310 00:23:22.400 --> 00:23:26.440 tethers, So that means if you've got one hundred billion of tether just by 311 00:23:26.480 --> 00:23:30.440 holding tea bills, you're making five billion dollars a year to do nothing. 312 00:23:30.759 --> 00:23:33.920 Right, that's a pretty good business if you can get it. So I 313 00:23:33.960 --> 00:23:37.960 think the fud around that is unlikely. And if it is true, then 314 00:23:37.079 --> 00:23:42.880 that implies that the CEO of Cantor Fitzgerald is like on TV committing fraud. 315 00:23:44.440 --> 00:23:48.359 Yeah, because he claims to have seen their books and like trades their stuff. 316 00:23:48.200 --> 00:23:52.680 But it's just implausible, Like, is Tether perfect? Are they penny 317 00:23:52.759 --> 00:23:56.079 for penny in all circumstances with no volatility. I have doubts about that. 318 00:23:56.640 --> 00:24:00.839 But do they have the super majority of the money in a way that's at 319 00:24:00.920 --> 00:24:06.400 least somewhat sane. I think that's nothing is ever certain, but I think 320 00:24:06.400 --> 00:24:11.240 it's close to certain. Yeah, my gut instincts were telling me that given 321 00:24:11.279 --> 00:24:15.640 the market pullback, someone was shorting here. And because I've seen stuff like 322 00:24:15.680 --> 00:24:18.160 this over the years. I've been here since twenty sixteen, and these headlines 323 00:24:18.200 --> 00:24:22.799 pop up at the most opportunistic times, right when the market is maybe at 324 00:24:22.839 --> 00:24:26.000 a weak point. You're looking at the charts and it's like, wait a 325 00:24:26.039 --> 00:24:30.720 minute, why weren't you saying this? You know, when it was pumping, 326 00:24:30.839 --> 00:24:33.960 Well, no one would pay attention, it wouldn't have any impact. 327 00:24:33.359 --> 00:24:36.759 And then you know, these guys come out and say these things, but 328 00:24:36.799 --> 00:24:41.559 they don't show any proof. It's usually just a headline, sensationalized and so 329 00:24:41.599 --> 00:24:45.599 forth. I was gonna say so to that end. Also, if you're 330 00:24:45.599 --> 00:24:48.880 a truly serious person, you're not like renting a truck to drive this thing 331 00:24:48.920 --> 00:24:53.119 around in Times Square Like that's ridiculous. What you're doing is taking your private 332 00:24:53.160 --> 00:24:57.559 findings to the Department of Justice or some of the regulators, right and handing 333 00:24:57.559 --> 00:25:00.279 it to the missile with sir of course. So this to me is like, 334 00:25:00.359 --> 00:25:04.799 what do you guys do? Yeah, I was gonna say, but 335 00:25:06.279 --> 00:25:11.440 let's address the other sort of types of their complaints here, I would say 336 00:25:11.559 --> 00:25:17.160 number two, And this one I think is like at least semi plausible or 337 00:25:17.680 --> 00:25:22.799 you know, potentially at least partially true. Is that Teather is like facilitating 338 00:25:22.319 --> 00:25:27.119 for bad actors throughout the world. That is to say, funding like terrorists, 339 00:25:27.240 --> 00:25:33.000 funding like money laundering, you know, like purchases of fechnyl precursors, 340 00:25:33.119 --> 00:25:37.680 you know, things of that sort. Now I would tell you, do 341 00:25:37.759 --> 00:25:41.240 I think tether is like going to these people and soliciting their business. I 342 00:25:41.359 --> 00:25:47.000 find the odds of that, whow not zero? Nothing is ever zero? 343 00:25:47.119 --> 00:25:52.119 But WHOA. Now, do I think they have insufficient controls or maybe turn 344 00:25:52.200 --> 00:25:55.400 a blind eye to some bad activity? That's much more likely, right, 345 00:25:55.480 --> 00:26:00.000 That is the kind of thing that typically happens when you look at large money 346 00:26:00.119 --> 00:26:03.640 flows across the globe. And by the way, that's also been true of 347 00:26:03.720 --> 00:26:08.319 banks like go read about the money laundering issues at like abn Amro or City 348 00:26:08.359 --> 00:26:12.400 Bank, or HSBC like similar story. This would not be unique to tether, 349 00:26:12.920 --> 00:26:15.079 which is why I look at that and go, well, there's at 350 00:26:15.160 --> 00:26:19.680 least some plausibility because there's a pretty good track record from tradfi of this kind 351 00:26:19.720 --> 00:26:25.359 of exact bad behavior. Right, And then I think case number three is 352 00:26:25.400 --> 00:26:30.119 this sort of like market manipulation of bitcoin prices, and I think to be 353 00:26:30.319 --> 00:26:34.160 totally blunt. That rests on a misunderstanding of how money works. Like the 354 00:26:34.240 --> 00:26:40.559 idea that people put money into tether to buy bitcoin and that's somehow illegitimate. 355 00:26:40.680 --> 00:26:44.519 Is like saying people put money into their bank to go buy food and that's 356 00:26:44.519 --> 00:26:48.720 somehow illegitimate. Like the way our system works is you give cash to somebody, 357 00:26:48.759 --> 00:26:53.440 it gets transformed into a deposit, then use that deposit for electronic payments. 358 00:26:55.119 --> 00:26:59.599 Like if your stance is doing that is somehow blowing a bubble. Then 359 00:27:00.359 --> 00:27:03.880 let me tell you, don't start with teather, go talk about fractional reserve 360 00:27:03.960 --> 00:27:07.400 banking in general, which is why I say I think that to be one 361 00:27:07.519 --> 00:27:14.119 is just kind of a misunderstanding of modern monetary systems. Absolutely well, put, 362 00:27:14.960 --> 00:27:17.200 yeah, I'm going to try to see if you can get these people 363 00:27:17.240 --> 00:27:19.160 from consumer first on. I don't know if they'll be willing to talk to 364 00:27:19.200 --> 00:27:23.240 me, but I'll try to get them, I think. I honestly, 365 00:27:23.400 --> 00:27:27.359 I think it would be a worthwhile endeavor to get people like that on because 366 00:27:27.400 --> 00:27:32.160 when you really put the questions to them, either they're going to have granular 367 00:27:32.279 --> 00:27:36.160 answers about what they think is going on that they can back up, or 368 00:27:36.359 --> 00:27:38.680 they're going to be revealed to kind of be like, you know, the 369 00:27:38.799 --> 00:27:42.400 same sort of hype merchants that quite frankly we see do a lot of pumping 370 00:27:42.440 --> 00:27:45.440 in the crypto space. This is just the opposite of that, trying to 371 00:27:45.440 --> 00:27:49.200 get something to tell. Yeah. Absolutely, And when I saw that billboard 372 00:27:49.200 --> 00:27:52.640 in Times Gray, I'm like, what the hell is this? Ninety percent 373 00:27:52.680 --> 00:27:55.519 of people walking by they don't have a clue what the hell Teather is. 374 00:27:56.000 --> 00:28:00.440 And it's just like to your point, if you had actual evidence, you 375 00:28:00.440 --> 00:28:04.480 would go to the authorities. I would remind people that prior to that Tether 376 00:28:04.599 --> 00:28:11.319 billboard, probably the most famous billboard from crypto was the terrorform Labs billboard for 377 00:28:11.400 --> 00:28:17.920 the Washington Nationals. So hysterical comments on billboards about crypto doesn't usually put you 378 00:28:17.960 --> 00:28:22.079 in very serious company. Maybe that's like like some sort of omen or somebody 379 00:28:22.119 --> 00:28:25.200 like you know, if I want to take somebody down, I'll put them 380 00:28:25.200 --> 00:28:30.640 on a billboard somewhere I know. Okay, So listen. I know of 381 00:28:30.720 --> 00:28:37.240 hedge funds who track giant buildings for corporate headquarters and purchasing stadium naming rights as 382 00:28:37.279 --> 00:28:42.279 indicators they use to consider underweighting or shorting things. Right, there are people 383 00:28:42.279 --> 00:28:47.519 who literally do that. Yeah, all right, final item here, and 384 00:28:47.599 --> 00:28:52.000 this news broke this morning, and that is the coinbase new lawsuit against the 385 00:28:52.039 --> 00:28:57.960 SEC and the FDIC regarding for your requests into details of Operation Choke point two 386 00:28:59.079 --> 00:29:03.119 point zero crypto being debanked and so forth, what are your thoughts on that? 387 00:29:03.200 --> 00:29:07.039 Okay, So this is another one we got to look at a couple 388 00:29:07.039 --> 00:29:15.400 of anglers from one earlier in our conversation. You mentioned Chair McHenry and his 389 00:29:15.519 --> 00:29:19.000 efforts to get information from the SEC and how he had been so far largely 390 00:29:19.119 --> 00:29:26.200 unsuccessful. So the stonewalling by the SEC is part of a pattern of conduct 391 00:29:26.240 --> 00:29:30.880 where they have tried to not show their work in a bunch of different crypto 392 00:29:30.000 --> 00:29:34.200 cases. And I would say, I personally feel this is a matter of 393 00:29:34.240 --> 00:29:40.200 significant like public importance and that I am totally in favor of people pressing this 394 00:29:40.319 --> 00:29:42.759 point from a foyer perspective, which for those who don't know, that's the 395 00:29:42.799 --> 00:29:47.039 Freedom of Information Act that basically tells you, as Americans, you have a 396 00:29:47.119 --> 00:29:49.759 right to certain kinds of deliberation. For government agencies, they can't just like 397 00:29:51.279 --> 00:29:53.119 hide in a broom closet and do everything and come out and be like it's 398 00:29:53.160 --> 00:29:56.880 magic, right, Like, they kind of have to show their work. 399 00:29:56.519 --> 00:30:03.359 And when we've seen the SEC's work, such as with the Big point ETFs 400 00:30:03.440 --> 00:30:06.839 or with what happened in the Debt Box case, where I will remind people 401 00:30:06.880 --> 00:30:11.079 they lied to a federal judge, We're sanctioned for it, attorneys resigned, 402 00:30:11.119 --> 00:30:15.799 and the Salt Lake office for the SEC was closed. It hasn't been pretty. 403 00:30:17.359 --> 00:30:22.000 So I am very much in favor of transparency because that solves a lot 404 00:30:22.039 --> 00:30:25.480 of ills in government when they have to be honest and show their work to 405 00:30:25.519 --> 00:30:30.359 everybody. Two. You referenced Operation Choke point two point oh, and so 406 00:30:30.640 --> 00:30:36.920 one Choke point one point oh was back under the Obama administration, and what 407 00:30:37.400 --> 00:30:41.359 the banking regulators were doing was basically cutting off access for industries to banking, 408 00:30:41.480 --> 00:30:48.119 not by explicitly banning it, but by going to the banks and essentially engaging 409 00:30:48.160 --> 00:30:52.079 in the mafia style behavior of ah, you know, I see you're doing 410 00:30:52.240 --> 00:30:55.960 X y Z. It'd be terrible if something happened to your charter because these 411 00:30:56.000 --> 00:31:02.799 see very high risk sort of jaw boating, which is not always explicit consequences, 412 00:31:02.799 --> 00:31:06.799 but rather it would be like if you banked the firearms industry, or 413 00:31:06.839 --> 00:31:11.240 maybe the cannabis industry, or maybe other high risk industries, in this case, 414 00:31:11.359 --> 00:31:15.880 the crypto industry, they would come in and start turning over every single 415 00:31:15.000 --> 00:31:19.440 rock they could in your bank to find any wrongdoing and then bring the hammer 416 00:31:19.519 --> 00:31:26.240 down on you excessively for that while quite frankly ignoring the same conduct at your 417 00:31:26.359 --> 00:31:30.960 peers. So what it does is creates a massive paperwork burden and legal liability 418 00:31:30.960 --> 00:31:34.799 issue for companies that were banking crypto. So this is what choke point two 419 00:31:34.839 --> 00:31:40.799 point zero was alleged. I would tell you there's pretty good evidence that some 420 00:31:41.240 --> 00:31:45.480 amount of this is going on. Any bank that banks Crypto. Has been 421 00:31:45.480 --> 00:31:51.039 getting excessive scrutiny from the FDIC, the Federal Reserve, the OCC and those 422 00:31:51.119 --> 00:31:56.599 regulators jointly published a letter basically saying we don't think like public blockchains comport with 423 00:31:56.640 --> 00:32:01.599 safe and sound activities in the Federal Register in twenty twenty three. So the 424 00:32:01.680 --> 00:32:06.480 question here is how much of that is going on, why, and what 425 00:32:06.559 --> 00:32:09.039 are the motivations? That is, again, why you need a Foyer request 426 00:32:09.559 --> 00:32:13.680 and you want to see what people have been saying, or you know, 427 00:32:13.759 --> 00:32:16.400 a fact pattern of not writing any of it down and only saying it in 428 00:32:16.480 --> 00:32:22.920 verbal conversations itself would be very very interesting from this front. So again, 429 00:32:22.480 --> 00:32:28.319 in the context of just revealing the information I'm largely on the side of coinbase 430 00:32:28.359 --> 00:32:32.160 here. Now. I think sort of the leading point that you were trying 431 00:32:32.160 --> 00:32:35.880 to get to is what's going to happen with this? Am I right about 432 00:32:35.880 --> 00:32:38.880 that? Yeah? Okay, So in the United States, when you have 433 00:32:39.000 --> 00:32:44.039 this sort of dispute about a Foyer request where the government is trying to say, 434 00:32:44.079 --> 00:32:45.599 no, this isn't valid, we don't have to respond, and private 435 00:32:45.640 --> 00:32:50.200 persons are saying, actually, yeah, you do have to respond, there's 436 00:32:50.240 --> 00:32:52.519 a forum where you go to get these things resolved, and that is court. 437 00:32:52.680 --> 00:32:57.160 So that's why a lawsuit has been filed. A judge will look at 438 00:32:57.160 --> 00:33:00.839 these things and start ruling on what do they have to disclos what do they 439 00:33:00.880 --> 00:33:02.680 not have to disclose? And by the way, are you the right parties 440 00:33:02.680 --> 00:33:06.119 to even be important like do you have a standing? Are we in the 441 00:33:06.160 --> 00:33:08.680 right place? And a lot of those, to be honest, will go 442 00:33:08.720 --> 00:33:10.720 in the favor of the government, a lot of them will go in the 443 00:33:10.720 --> 00:33:15.640 favor of the people sort of requesting information. And many of them will also 444 00:33:15.680 --> 00:33:17.279 be split decisions where a judge will say, well, you do have to 445 00:33:17.319 --> 00:33:22.000 say X, y Z, but you don't have to reveal abs. So 446 00:33:22.079 --> 00:33:24.400 this could go any number of ways, but I think it's a very important 447 00:33:24.440 --> 00:33:29.400 effort to press the point to try to learn everything we can about what's been 448 00:33:29.480 --> 00:33:35.200 going Yeah, absolutely, because we do have some breadcrumbs already, given things 449 00:33:35.200 --> 00:33:39.319 that the different agencies have done reporting by different folks, So you can get 450 00:33:39.359 --> 00:33:44.359 a bit more, you know, to add to the puzzle here to another 451 00:33:44.400 --> 00:33:47.480 piece. It could pretty much, you know, help paint a clearer picture 452 00:33:47.599 --> 00:33:52.039 of what's been going on and the agenda by debund and administration led by Elizabeth 453 00:33:52.079 --> 00:33:55.599 Warren and these folks. Yeah, I mean, without you know, revealing 454 00:33:55.680 --> 00:34:04.720 personal sources. I have heard from several people that the FDIC informally communicated things 455 00:34:04.839 --> 00:34:10.400 like percentage limits on deposits or extreme heightened scrutiny on clients with regard to any 456 00:34:10.440 --> 00:34:15.280 crypto banking activities. I think of the three federal banking regulators, they are 457 00:34:15.360 --> 00:34:22.119 probably the most skeptical, and potentially inappropriately so. They were also the nexus 458 00:34:22.119 --> 00:34:24.960 of choke point in one point zero. On the other hand, you know, 459 00:34:25.039 --> 00:34:30.320 to sort of give credit where credit is due. I think the OCC 460 00:34:30.480 --> 00:34:34.840 has been struggling with the issue, but Mike Sue, who's the acting Comptroller, 461 00:34:34.920 --> 00:34:37.719 has come out and started to become positive on tokenization. I think he's 462 00:34:37.760 --> 00:34:44.039 still skeptical on public blockchains, but to be totally honest, I think the 463 00:34:44.079 --> 00:34:49.719 OCC probably has not been presented with some of the best in class compliance programs 464 00:34:49.719 --> 00:34:52.199 and isn't fully up to speed on what's possible in that space. I am 465 00:34:52.280 --> 00:34:57.840 hopeful that as they learn more, they will get significantly more positive, because 466 00:34:57.840 --> 00:35:01.679 I'll make the provocative statement the public block chains are a far better tool for 467 00:35:01.800 --> 00:35:07.039 finding financial crime than traditional banks, where the system is much more opaque and 468 00:35:07.119 --> 00:35:13.119 fragmented. Lastly, nobody should ever accuse the Federal Reserve of having one opinion 469 00:35:13.119 --> 00:35:16.440 about anything. It is many regional banks staffed by very smart economists, and 470 00:35:16.480 --> 00:35:20.840 if you get three economists in a room and ask them a question, you 471 00:35:20.880 --> 00:35:24.480 typically get at least five opinions. So just be aware. The Federal Reserve 472 00:35:24.599 --> 00:35:30.639 is literally the opposite of a monolith. There are very cryptoskeptical people in the 473 00:35:30.639 --> 00:35:34.159 Federal Reserve. They are very pro crypto people in the Federal Reserve, and 474 00:35:34.280 --> 00:35:38.199 they're probably having a big debate about what they really think and buy weall question 475 00:35:38.440 --> 00:35:43.360 on public blockchains. I think it was black Rocks Cio, if I'm not 476 00:35:43.440 --> 00:35:49.840 mistaken. He made a statement that they tested private blockchains, but they found 477 00:35:49.920 --> 00:35:55.119 public blockchains are way better, and they of course tokenized on etherorem recently. 478 00:35:57.599 --> 00:36:01.159 How much weight does that carry in politics, given that you have the world's 479 00:36:01.199 --> 00:36:07.760 wealthiest asset manager doing this and they're very much, I say, waist deep 480 00:36:07.800 --> 00:36:13.880 in crypto now, I mean, it's definitely important, and I think it 481 00:36:14.039 --> 00:36:19.199 speaks again zooming out from crypto to one of the things that we've sort of 482 00:36:19.280 --> 00:36:23.320 been struggling with in a post Dot Frank work, which is this banks like 483 00:36:24.079 --> 00:36:30.920 centralized, closed, looped platforms where they largely have control of things. Asset 484 00:36:30.000 --> 00:36:36.159 managers would prefer that things be significantly more open source, and that banks don't 485 00:36:36.199 --> 00:36:38.679 get to act as middlemen or kind of toll gates on a lot of these 486 00:36:38.719 --> 00:36:44.960 activities because they find often they charge excessive spreads or fees and quite frankly, 487 00:36:45.000 --> 00:36:49.400 don't deliver a lot of value. So I have said elsewhere that I think 488 00:36:49.599 --> 00:36:53.239 private blockchains, especially those narrowly held, are basically a bridge to nowhere, 489 00:36:53.760 --> 00:36:59.239 right because if JP Morgan runs on X or Goldman runs there on internal blockchain, 490 00:36:59.280 --> 00:37:01.760 or city runs their own internal blockchain. As somebody who's been a chief 491 00:37:01.840 --> 00:37:07.760 risk officer at a company, I would say, one, if I'm another 492 00:37:07.840 --> 00:37:10.679 financial company, boy, do I not want to use that thing? Because 493 00:37:10.760 --> 00:37:14.599 they control it. They can change the rules anytime they want, and they'll 494 00:37:14.639 --> 00:37:19.239 screw me if something goes wrong. And two, from a regulatory perspective, 495 00:37:19.400 --> 00:37:23.239 I probably shouldn't like that because now I'm taking these too big to fail banks 496 00:37:23.280 --> 00:37:28.480 and making them too bigger to fail by giving them control of other critical pieces 497 00:37:28.480 --> 00:37:31.880 of infrastructure. On the other hand, as we talk about quote unquote public 498 00:37:31.920 --> 00:37:37.480 blockchains, one of the things I challenge crypto people about is what do you 499 00:37:37.559 --> 00:37:40.519 mean by public? Because let me propose a thought experiment. If we took 500 00:37:40.599 --> 00:37:46.199 the top call it five hundred financial entities in the world, right, so 501 00:37:46.280 --> 00:37:51.800 that will include bank's, asset managers, payments, companies, and they all 502 00:37:52.000 --> 00:37:58.719 jointly maintained a blockchain for financial transactions. Is that decentralized and is that public? 503 00:37:59.360 --> 00:38:04.079 Because I tell you, in some ways that's probably more decentralized than a 504 00:38:04.079 --> 00:38:08.199 lot of blockchain applications because although there are fewer nodes in theory, many of 505 00:38:08.239 --> 00:38:14.159 the nodes have diverging interests in greater individual strength, So your governance in some 506 00:38:14.280 --> 00:38:17.280 ways might even be more stable. And on the other hand, is that 507 00:38:17.360 --> 00:38:22.719 public Well, in a literal sense, probably no. But on the other 508 00:38:22.840 --> 00:38:25.639 hand, if it's the five hundred largest firms of the world, that's probably 509 00:38:25.880 --> 00:38:30.840 most people on the globe who could still access this thing. So I would 510 00:38:30.880 --> 00:38:36.320 tell people decentralization is not binary. There's a continuum. And one of the 511 00:38:36.320 --> 00:38:38.599 things I think we're going to have to grapple with as an industry in crypto 512 00:38:38.760 --> 00:38:43.920 is over time, especially for more regulated financial products, it can't just be 513 00:38:44.599 --> 00:38:49.800 complete DJM permissionless or centrally held bank things as are only two options, because 514 00:38:49.880 --> 00:38:53.400 quite frankly, neither of those work. Austin I want to ask you a 515 00:38:53.519 --> 00:38:57.440 question, but I don't want to sound like a conspiracy theorist. But I 516 00:38:57.480 --> 00:39:00.480 do understand how the world works, and that is if I'm an incumbent and 517 00:39:00.519 --> 00:39:07.360 there's disruptors at my door, and I've had my tentacles in every part of 518 00:39:07.400 --> 00:39:12.199 the government and working with the Federal Reserve to control currency, and I'm the 519 00:39:12.280 --> 00:39:15.920 largest bank in the world. I'm JP Morgan, and these folks are coming 520 00:39:15.960 --> 00:39:19.719 to steal my lunch, right, They're going to take money out of my 521 00:39:19.760 --> 00:39:22.960 pocket, take away control that I've had for a long time. I've had 522 00:39:22.960 --> 00:39:28.880 politicians I donated to for years. I'm friends with people of the Treasury and 523 00:39:28.920 --> 00:39:32.320 so forth. There's a revolving door with Wall Street and the government many times. 524 00:39:34.000 --> 00:39:38.639 And am I making the phone call to have these cryptos startups slow down 525 00:39:38.840 --> 00:39:45.000 or file lawsuits against them to kill them. And then on the inside, 526 00:39:45.079 --> 00:39:50.840 I'm building ONYX. So I think the problem that you run into with that 527 00:39:51.280 --> 00:39:55.039 is some element of that is definitely happening. That's how political lobbying works in 528 00:39:55.079 --> 00:39:58.960 all industries. And by the way, if you think that's unique to crypto, 529 00:39:59.000 --> 00:40:04.320 again, suit out. This is happening everywhere. However, there's two 530 00:40:04.320 --> 00:40:08.679 problems with that theory. One, you cannot really in the United States. 531 00:40:08.800 --> 00:40:14.320 I'm going to call it by power explicitly, which is to say, you 532 00:40:14.440 --> 00:40:17.400 still have to actually win the election and have your stance be popular. And 533 00:40:17.519 --> 00:40:22.199 one of the few things that's about is unpopular. As most politicians, it's 534 00:40:22.239 --> 00:40:27.360 banks, so they do face a demographic problem over time. Of the politicians 535 00:40:27.400 --> 00:40:30.639 who support those stances, like say Jamal Bowman, are likely to be voted 536 00:40:30.679 --> 00:40:36.519 out over time by people who just don't like that. So at some point 537 00:40:36.599 --> 00:40:39.320 you're going to have to win the battle of public opinion in the United States 538 00:40:39.320 --> 00:40:43.880 to carry that stance in the long run. So can you throw some sand 539 00:40:43.920 --> 00:40:46.000 in the gears and slow things down? Sure? But can you stop the 540 00:40:46.079 --> 00:40:51.920 gears from turning? No? Two? Okay, congratulations, you did that 541 00:40:51.960 --> 00:40:55.119 in the United States. JP Morgen. You've jammed public blockchains and you've had 542 00:40:55.119 --> 00:41:00.559 the regulators be hysterical and block all kinds of things. But as it turns 543 00:41:00.599 --> 00:41:02.400 out, if that view is not shared by the rest of the world, 544 00:41:02.440 --> 00:41:07.679 what you may have actually done is killed yourself, because what will happen is 545 00:41:07.400 --> 00:41:12.480 the custodians will be the offshore bags. The people who are serving the crypto 546 00:41:12.559 --> 00:41:17.239 natives will be the offshore payments firms and bags like market makers. And what 547 00:41:17.280 --> 00:41:22.519 you will find is that if this technology continues to advance, that actually, 548 00:41:22.920 --> 00:41:27.360 now you're really behind the eight ball, because five years, ten years forward, 549 00:41:27.400 --> 00:41:30.480 your competitors have a ton of reps, trust, with customer market understanding, 550 00:41:30.880 --> 00:41:35.280 and you have done none of that by essentially trying to stand in the 551 00:41:35.280 --> 00:41:37.519 way of progress. What I would tell you is that if you want a 552 00:41:37.719 --> 00:41:43.119 model of where that happened, that is Europe. With regard to the original 553 00:41:43.159 --> 00:41:47.800 tech boom and social media. They made a bunch of regulations that favored their 554 00:41:47.840 --> 00:41:52.559 incumbents. And so as a result, let me ask this question, how 555 00:41:52.559 --> 00:41:54.519 many of the largest tech companies in the world are based in Europe? And 556 00:41:54.599 --> 00:41:59.280 by the way, who now controls tech in Europe? A bunch of Americans 557 00:41:59.280 --> 00:42:04.480 and Asian company? Right, And so you can stand in front of the 558 00:42:04.639 --> 00:42:07.920 train of progress and shout stop, But history would tell you that just means 559 00:42:07.960 --> 00:42:12.599 you're gonna get run over by a train. So you're absolutely right, But 560 00:42:13.119 --> 00:42:16.280 is it more of slowed them down so that hey, our R and D 561 00:42:16.719 --> 00:42:21.360 can build onyx and jpm coin and try to catch them doesn't mean they're going 562 00:42:21.360 --> 00:42:27.920 to be successful. There's no guarantee. But or for example, sue Coinbase, 563 00:42:28.639 --> 00:42:31.719 uh, Sue Gray's gill whatever block their ETF, but all of a 564 00:42:31.719 --> 00:42:38.360 sudden black Rock comes in and gets it. Well, I would I would 565 00:42:38.440 --> 00:42:44.039 say ironically one of the biggest winners of the ETF fiasco has been coinbase. 566 00:42:44.119 --> 00:42:46.639 So this is kind of the point I'm making, Like, because sab one 567 00:42:47.159 --> 00:42:52.239 one was probagated to block crypto custody by regulated institutions, who does the super 568 00:42:52.280 --> 00:42:58.239 majority of crypto custody huh coin Base? Right, So again, these things 569 00:42:58.239 --> 00:43:01.119 tend to backfire on you because I think in front of progress just doesn't work. 570 00:43:01.159 --> 00:43:05.760 And I'm sure that many people at BAGS would like to slow down the 571 00:43:05.800 --> 00:43:09.000 crypto people to build things themselves. But let me tell you what is the 572 00:43:09.039 --> 00:43:15.480 history of large entrenched incumbents innovating in major ways versus startups. It's pretty bad. 573 00:43:15.559 --> 00:43:19.880 Now. That's not to say it never happens. There have been large 574 00:43:19.880 --> 00:43:23.639 companies that have generated like world changing, you know products, see for instance, 575 00:43:23.679 --> 00:43:29.280 Apple with the iPhone after they were already a major computer manufacturer. But 576 00:43:29.320 --> 00:43:31.719 those are often the exceptions that prove the rule. Right, Like, how 577 00:43:31.800 --> 00:43:37.840 many social media companies that are now giants came out of regular old media companies. 578 00:43:37.360 --> 00:43:39.840 So yeah, I do think, Toty, you're right. They're going 579 00:43:39.880 --> 00:43:43.960 to try, and also I think they're going to fail because they're just not 580 00:43:44.079 --> 00:43:47.440 good at those things. Awesome, great stuff. Man, all is a 581 00:43:47.480 --> 00:43:51.679 pleasure chatting with you. Appreciate your knowledge and insights. Thank you so much. 582 00:43:52.119 --> 00:44:01.639 Yeah, great to see you again. Thank you. Task post to 583 00:44:02.039 --> 00:44:05.679 post the task