WEBVTT 1 00:00:00.280 --> 00:00:04.360 We can do things technologically if we set our mind to it. There's no 2 00:00:04.440 --> 00:00:12.119 reason why we couldn't design a digital currency that would be protective of privacy rights 3 00:00:13.119 --> 00:00:16.679 and one that would be an open architecture, so you don't need to rely 4 00:00:16.800 --> 00:00:20.760 on the government to say, trust us, we're not surveiling you. You 5 00:00:20.760 --> 00:00:26.399 could technologically discern that for yourself. That's what should be an American approach to 6 00:00:26.440 --> 00:00:36.960 this. This content is brought to you by v chain, which is a 7 00:00:37.079 --> 00:00:43.320 leading enterprise grade Layer one public blockchain spearheading a digital revolution from a sustainable, 8 00:00:43.600 --> 00:00:48.759 highly scalable smart contract platform. 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You're home for cryptocurrency news and interviews with me. Today's Chris 18 00:01:33.159 --> 00:01:37.439 John Carlow, who is a former CFTC chairman, the author of the book 19 00:01:37.760 --> 00:01:41.079 Crypto Dad, The Fight for the Future of Money, and also the co 20 00:01:41.120 --> 00:01:44.400 founder of the Digital Dollar Project. Chris, great to have you back on 21 00:01:45.079 --> 00:01:49.079 and Tony's great to be back with you. Chris. I'm always excited to 22 00:01:49.120 --> 00:01:53.200 speak with you because you know, there's a lot happening around the world with 23 00:01:53.359 --> 00:01:57.799 cbdc's and digital currencies, and you know, the landscape is changing. We're 24 00:01:57.840 --> 00:02:02.519 heading into into a more digital world and these are exciting times and there's a 25 00:02:02.519 --> 00:02:06.959 lot happening. So I would love to start with what's the latest with the 26 00:02:07.000 --> 00:02:14.120 Digital Dollar Project. Well, we continue our work as probably, if not 27 00:02:14.319 --> 00:02:19.840 the leading, perhaps the only voice asking a very simple question, and that 28 00:02:20.080 --> 00:02:23.400 is, how do we future proof the dollar? How do we preserve its 29 00:02:23.439 --> 00:02:30.400 reserve currency status, and how do we most importantly preserve the values in which 30 00:02:30.439 --> 00:02:36.520 the dollar has historically been perceived valuers of free enterprise, of free trade, 31 00:02:37.199 --> 00:02:44.639 of economic independence, and individual economic liberty for American for users of the dollar, 32 00:02:45.400 --> 00:02:53.439 in a world that is quickly moving away from the analogue dollar dominating world 33 00:02:53.479 --> 00:02:59.680 of the twentieth century and the architecture of recording value on balance sheets of commercial 34 00:02:59.680 --> 00:03:06.879 institutions, to a future that's going to be a kaleidoscope of both decentralized systems 35 00:03:06.879 --> 00:03:12.039 of value like Bitcoin and ethereum, and highly centralized systems of value, some 36 00:03:12.159 --> 00:03:17.080 run by big tech companies and others run by big banks, and some run 37 00:03:17.159 --> 00:03:23.560 by governments such as China's Digital Yuwan. It will be used for not only 38 00:03:23.560 --> 00:03:27.719 their own domestic use, but will be made available for export purposes in the 39 00:03:27.719 --> 00:03:32.479 form of white label versions of digital currency. In this coming I call it 40 00:03:32.479 --> 00:03:38.639 a kaleidoscope. It's going to be much more of a kaleidoscope of different digital 41 00:03:38.680 --> 00:03:45.360 networks of value. And in that world, we need to think about how 42 00:03:45.360 --> 00:03:51.199 does the dollar in its current state survive that? And does it survive that? 43 00:03:51.840 --> 00:03:53.479 Or do we need to think about how do we best modernize it? 44 00:03:53.719 --> 00:04:00.840 And are we going to outsource that to private sector actors and if we do 45 00:04:00.879 --> 00:04:03.520 so, what are the privacy concerns there? Or are we going to do 46 00:04:03.599 --> 00:04:12.240 some combination of a central bank issued and a private sector issued one, similar 47 00:04:12.280 --> 00:04:15.360 to the way that money has done today, ninety percent of it as bank 48 00:04:15.400 --> 00:04:19.680 created, ten percent as government created. And in that future state, how 49 00:04:19.680 --> 00:04:24.959 do we best protect the values of economic liberty? And those are the questions 50 00:04:25.000 --> 00:04:29.120 we ask at the Digital Dollar Project. Importantly, Tony, we do not 51 00:04:29.759 --> 00:04:33.680 advocate for the US to deploy a central bank digital currency, because we don't 52 00:04:33.680 --> 00:04:39.399 know what that means right now, but we do strongly advocate for the United 53 00:04:39.399 --> 00:04:45.319 States not the seed leadership in this Internet of value, to the United States's 54 00:04:45.360 --> 00:04:49.680 economic competitors and economic adversaries. We at the Digital Dollar Project have been fortunate 55 00:04:49.720 --> 00:04:56.199 to find ourselves at a number of the international global conclaves that are taking place 56 00:04:56.240 --> 00:05:02.399 today to work on what are the of the protocols, what are the standards 57 00:05:02.439 --> 00:05:09.720 for digital systems of value, issues like interoperability, issues like resiliency, cyber 58 00:05:10.959 --> 00:05:15.279 resistance, and privacy rights. And sadly, the United States is not there 59 00:05:15.560 --> 00:05:20.920 at any of these meetings in any consistent official way, but many of our 60 00:05:20.959 --> 00:05:26.839 economic competitors, including our economic adversaries like China, are there, and they 61 00:05:26.879 --> 00:05:31.920 want to ensure a future state that is safe for systems of value that provide 62 00:05:32.040 --> 00:05:39.439 for surveillance, that provide for censorship, and provide for control. It's almost 63 00:05:39.480 --> 00:05:43.319 as if the United States has forgotten the lessons of thirty years ago, when 64 00:05:43.360 --> 00:05:49.439 we made sure that the Internet of Information was one that closed societies couldn't co 65 00:05:49.519 --> 00:05:54.720 opt for their own purposes. We made sure that the Internet of Information was 66 00:05:54.759 --> 00:06:00.920 one that it was an open architecture, and that was appropriate for democrats countries 67 00:06:00.959 --> 00:06:04.519 and citizens of democracies. Right now, thirty years later, in the United 68 00:06:04.519 --> 00:06:10.199 States is not fighting that same fight. But we at the Digital Dollar Project 69 00:06:10.199 --> 00:06:13.240 hope to be a standard for that, at least until we can convince the 70 00:06:13.319 --> 00:06:16.759 United States officialdom that it needs to take up that fight as it did so 71 00:06:16.879 --> 00:06:21.839 honorably thirty years ago. Yeah. Absolutely, Now, just this past week 72 00:06:21.920 --> 00:06:27.639 or last week, I should say, Fetcher Jerome Powell mentioned like there's nowhere 73 00:06:28.120 --> 00:06:32.279 near any intepid development for a CBDC, And then you have across the globe 74 00:06:32.399 --> 00:06:36.480 you have Russia and putin passing bills and so forth saying they're looking to move 75 00:06:36.560 --> 00:06:41.600 to a digital currency, use it for trade between different countries. There's talks 76 00:06:41.639 --> 00:06:46.680 about the bricks countries and the things they want to do. So at some 77 00:06:46.800 --> 00:06:50.199 point, I'm like, is this just geopolitical grand standing or optics, you 78 00:06:50.240 --> 00:06:55.160 know, a little bit of playing around here and there's things happening behind the 79 00:06:55.199 --> 00:06:59.720 scenes, or is the US really resting on its laurels here. Well, 80 00:07:00.160 --> 00:07:02.399 you know, we are in an election year here in the United States, 81 00:07:02.480 --> 00:07:10.439 and unfortunately the issue of CBDC seems to have fallen into a traditional Washington black 82 00:07:10.480 --> 00:07:18.600 and white narrative. And I heard that testimony and I noted not just the 83 00:07:18.600 --> 00:07:27.360 the response given to the questions, but the relief that the questionners of Chairman 84 00:07:27.439 --> 00:07:34.720 Powell expressed when they heard him say the United States is not advancing its work 85 00:07:34.800 --> 00:07:40.759 on looking at CBDC. Now, I'm, you know, as someone who 86 00:07:40.839 --> 00:07:49.079 considers myself fairly uh uh liberal in my views of individual rights, meaning that 87 00:07:49.879 --> 00:07:57.079 I'm a champion of economic liberty, I can both understand the relief that was 88 00:07:57.160 --> 00:08:01.639 sounded because the assumption was the the only type of CBDC that could be developed 89 00:08:03.240 --> 00:08:09.160 would be one that uh gave government uh the ability to limit our economic liberty 90 00:08:09.199 --> 00:08:13.560 and to surveil our activity. It's almost as if the Chinese model is taking 91 00:08:13.639 --> 00:08:20.800 up space in the heads of many people in Washington and they can't envision a 92 00:08:20.879 --> 00:08:26.480 different kind of c DC, one that was architected to be anti surveillance, 93 00:08:26.079 --> 00:08:31.200 anti anti censorship, and anti control. But yet we we have done that 94 00:08:33.320 --> 00:08:39.480 in the development of certain decentralized systems, and there's no reason why technologically. 95 00:08:39.000 --> 00:08:43.879 Remember we're we're Americans, right. We can we put a man on the 96 00:08:43.919 --> 00:08:48.480 moon. We can do things technologically if we set our mind to it. 97 00:08:48.519 --> 00:08:54.600 There's no reason why we couldn't design a digital currency that would be protective of 98 00:08:54.639 --> 00:09:00.519 privacy rights and one that would be an open architecture, so you don't need 99 00:09:00.559 --> 00:09:05.120 to rely on the government to say, trust us, we're not surveiling you. 100 00:09:05.120 --> 00:09:09.360 You could technologically discern that for yourself. That's what should be an American 101 00:09:09.360 --> 00:09:16.799 approach to this. But the other part that is so I think simplistic in 102 00:09:16.879 --> 00:09:22.399 the thinking about this is the assumption that a CBDC would surveil you, but 103 00:09:22.519 --> 00:09:30.639 somehow a private sector digital currency would not. I have not seen any stable 104 00:09:30.679 --> 00:09:35.039 coin operator, and I'm a big believer in stable coins, and I support 105 00:09:35.120 --> 00:09:39.440 their rollout and development, and I agree that they're a great way to extend 106 00:09:39.559 --> 00:09:46.080 the US monetary values around the globe and extend the dollar but I have not 107 00:09:46.159 --> 00:09:52.080 seen any stable coiner disclaim the ability to suck out all of that data. 108 00:09:52.519 --> 00:09:58.720 I mean, and when they do, government will be knocking on their door 109 00:09:58.759 --> 00:10:01.840 in the same way they're knocking on the door of banks and saying, share 110 00:10:01.879 --> 00:10:03.879 some of that data with us. Oh, and by the way, we 111 00:10:03.879 --> 00:10:09.240 don't want people buying ammunition, or we don't want people supporting right to life, 112 00:10:09.320 --> 00:10:11.720 or we don't want people supporting abortion, and so don't let them do 113 00:10:11.799 --> 00:10:15.840 that with your stable coin, in the same way that government has done that 114 00:10:15.960 --> 00:10:20.039 with social media. So we need to get beyond a very simplistic notion that 115 00:10:20.200 --> 00:10:26.639 seems to be prevalent in Washington right now that CBDC is unsafe for democracy, 116 00:10:26.679 --> 00:10:31.480 but stable coins are safe for democracy. That just doesn't hold water. And 117 00:10:31.559 --> 00:10:35.639 I'm not accusing anybody of anything. I'm just simply saying intellectually, it doesn't 118 00:10:35.639 --> 00:10:41.159 hold water. We've seen how government can say, okay, well, we're 119 00:10:41.159 --> 00:10:46.000 barred by the by the constitution from limiting your speech, but we have no 120 00:10:46.159 --> 00:10:54.120 problem telling the public sector and social media companies to limit your free speech. 121 00:10:54.600 --> 00:11:00.360 And I could see them doing the same thing with digital currency. So I 122 00:11:00.440 --> 00:11:03.440 think there's no difference between sovereign and no sovereign. What I do think we 123 00:11:03.559 --> 00:11:07.480 need to do, and I hope your listeners hear me clear and simple, 124 00:11:07.039 --> 00:11:13.559 because I'm a proponent of a digital architecture and an Internet of value as strong 125 00:11:13.600 --> 00:11:16.679 as anybody and my bona FID he's proven themselves during my time at the CFTC 126 00:11:16.879 --> 00:11:22.960 on this subject. We need to have a national consensus that says, anything 127 00:11:24.039 --> 00:11:30.720 that's based on the dollar in the digital future of money must reflect American values, 128 00:11:31.200 --> 00:11:35.799 whether it's whether it's whether it's references the dollar, whether it's stabilized by 129 00:11:35.799 --> 00:11:39.200 the dollar, whether it's rolled out by the Central Bank, and whether it's 130 00:11:39.320 --> 00:11:43.200 rolled out by a private sector big tech company, whether it's rolled out by 131 00:11:43.240 --> 00:11:48.679 a stable coin operator, whether it's rolled out by a consortium of banks. 132 00:11:50.320 --> 00:11:54.039 If you call it the dollar, almost as if the American public have a 133 00:11:54.120 --> 00:12:00.440 right to license the reference to the dollar, we demand in return that that 134 00:12:00.519 --> 00:12:07.000 instrument preserves our bill of rights freedoms, our freedom of speech, our freedom 135 00:12:07.039 --> 00:12:09.919 of expression, our freedom of assembly, and our rights to privacy. That 136 00:12:11.200 --> 00:12:15.799 must be the condition on any instrument that reflects the dollar. And it doesn't 137 00:12:15.840 --> 00:12:18.840 matter whether it's a CBDC or a stable coin or a bank issued instrument. 138 00:12:20.480 --> 00:12:24.720 It must enhance our rights. And so that, I think is the issue 139 00:12:24.799 --> 00:12:28.600 that we should all be focusing on. The Internet of value is coming. 140 00:12:28.559 --> 00:12:33.039 Money is going to exist on digital networks in the future, and the issue 141 00:12:33.120 --> 00:12:37.559 is going to be less the matter of the value and more the matter of 142 00:12:37.759 --> 00:12:43.679 values. And if we can get the values right, if people around the 143 00:12:43.720 --> 00:12:48.559 globe knew that anything that uses the dollar as a reference point will respect their 144 00:12:50.120 --> 00:12:56.320 legitimate rights to privacy, then the United States is going to win this game. 145 00:12:56.440 --> 00:13:00.519 We're going to come from kind of being absent at the table to leading 146 00:13:00.559 --> 00:13:05.200 the table. Why Because people that aspire the freedom worldwide will aspire to own 147 00:13:05.360 --> 00:13:09.960 dollar referenced instruments. And that's what I think. That's where I call my 148 00:13:09.960 --> 00:13:13.360 book the Fight for the Future Money. That's the fight right now. The 149 00:13:13.399 --> 00:13:20.519 fight is about the values of dollar based digital systems of value. That's where 150 00:13:20.879 --> 00:13:26.200 that's what we need to be fight for is free, free citizens. Yeah. 151 00:13:26.279 --> 00:13:30.799 Absolutely, And because you brought up a great point that this double standard, 152 00:13:30.879 --> 00:13:33.600 right, because the stable coins are out in the market, people are 153 00:13:33.679 --> 00:13:37.159 using them, different companies are launching them, but like you said, those 154 00:13:37.159 --> 00:13:39.759 guardrails are not there. Just as you know some of these people who are 155 00:13:39.799 --> 00:13:46.120 being a bit hyperbolic about the CBDCs and so forth. But the same concerns 156 00:13:46.120 --> 00:13:48.720 apply there, and we don't have the regulations or the guard wills in place. 157 00:13:50.039 --> 00:13:52.559 And I see companies like PayPal launching a stable coin. We have USDC 158 00:13:52.799 --> 00:13:58.240 issued by Circle here in the US, and there are certain banks like JP 159 00:13:58.360 --> 00:14:03.600 Morgan have their own bank coin, such as jpm coin. So you know, 160 00:14:03.759 --> 00:14:07.120 when do you think there might be the wake up call? Is it 161 00:14:07.159 --> 00:14:11.320 maybe after election, after all these political talking points get put to the side 162 00:14:11.360 --> 00:14:13.879 and people settle down, that we can get back to the table and say, 163 00:14:13.919 --> 00:14:18.240 okay, we got a problem here. You know, people are coming 164 00:14:18.279 --> 00:14:22.080 after the king on the hill of the US dollar reserve currency. So how 165 00:14:22.080 --> 00:14:26.559 do we how do we preserve that? I don't know, Honestly, I've 166 00:14:26.600 --> 00:14:31.399 been perplexed, and I've been in many of the debates. I've been perplexed 167 00:14:31.120 --> 00:14:37.480 with how simplistic this has gotten. CBDC bad. You know, stable coins 168 00:14:37.480 --> 00:14:43.440 good. Okay, I'm a supporter again to my dying breadth of the need 169 00:14:43.519 --> 00:14:48.879 for private sector innovation in the digital systems of value. In every one of 170 00:14:48.919 --> 00:14:52.759 the stable coins, I think has a value of proposition that is very very 171 00:14:52.759 --> 00:14:58.240 strong and very very positive, and so I do not want anything to impede 172 00:14:58.279 --> 00:15:03.559 their further deve but I do think we need to recognize our own lived experience 173 00:15:03.600 --> 00:15:09.879 of the last thirty years. We hoped and thought that the Internet of Information 174 00:15:11.080 --> 00:15:18.480 would be one that would in a sense liberate us as as as private free 175 00:15:18.519 --> 00:15:28.960 citizens from control of you know of of publishing giants and information repositories, where 176 00:15:28.000 --> 00:15:33.480 we could interact with each other directly and share information, and the Internet was 177 00:15:33.519 --> 00:15:39.799 going to be this great liberating force. Only to discover Web two was this 178 00:15:39.919 --> 00:15:46.360 huge centralization effort where we were no longer the free citizens we thought we were. 179 00:15:46.360 --> 00:15:50.600 We were suddenly the providers of data upon which a couple of big companies 180 00:15:52.799 --> 00:15:58.879 became behemals and then use that data to control how we think, how we 181 00:15:58.960 --> 00:16:03.360 acted, what transactions we did, and most importantly, what information we could 182 00:16:03.360 --> 00:16:08.519 have access to, and what information we suddenly decided they cited for themselves we 183 00:16:08.519 --> 00:16:14.000 were not allowed to have party to. And we've learned more and more about 184 00:16:14.039 --> 00:16:18.480 that in a couple of key court cases where we've discovered that our federal government 185 00:16:18.519 --> 00:16:25.759 has been leaning on social media companies to restrict information on certain taphood subjects. 186 00:16:26.799 --> 00:16:29.879 So web To, you know, didn't quite work out the way we hoped 187 00:16:29.879 --> 00:16:33.279 it would. Now we're hoping that a new wave of the Internet, an 188 00:16:33.279 --> 00:16:40.320 Internet a value, would have that democratizing force. But we need to kind 189 00:16:40.360 --> 00:16:45.480 of be aware the same centralization process could take place, but this time in 190 00:16:45.519 --> 00:16:51.519 some ways almost worse. If you think about are constant here in the United 191 00:16:51.559 --> 00:16:55.840 States and a very constitutional and a very US framework, And I apologize to 192 00:16:55.919 --> 00:17:00.600 listeners around the world for referring to American forms. But if you think about 193 00:17:00.759 --> 00:17:07.599 our very vaunted and laudable constitutional rights First Amendment freedoms right freedom of assembly, 194 00:17:07.680 --> 00:17:14.119 freedom of speech, freedom of religion, Fourth Amendment, right to privacy in 195 00:17:14.200 --> 00:17:22.920 a free market economy, all of those rights are expressed financially. Our freedom 196 00:17:22.960 --> 00:17:26.559 of assembly, you know, concerns the dues we pay to organizations to which 197 00:17:26.599 --> 00:17:33.480 we belong. Our freedom of speech is subscriptions we pay the magazines and publications 198 00:17:33.519 --> 00:17:38.759 we wish to read. Freedom of religion is tithes we pay to churches and 199 00:17:38.799 --> 00:17:45.319 synagogues and mosques to which we we wish to belong. Privacy is our right 200 00:17:45.400 --> 00:17:51.119 to not pay certain things that we don't want to pay, whether they be 201 00:17:51.319 --> 00:18:00.279 union dues or other things. If centralized authorities, whether they be sovereign or 202 00:18:00.359 --> 00:18:07.839 non sovereign, can surveil, can censor, can control that economic activity, 203 00:18:08.440 --> 00:18:14.200 then we no longer have those First and Fourth Amendment freedoms anymore. We suddenly 204 00:18:14.279 --> 00:18:21.079 find that those freedoms are curtailed by the very people that are the transmittal media 205 00:18:21.599 --> 00:18:26.519 medium for how we pay in a free market economy, how we transact in 206 00:18:26.519 --> 00:18:30.960 a free market economy. So I you know, I hope to be someone 207 00:18:30.079 --> 00:18:37.039 sounding the alarm, someone who, if you are a crypto maximalist, hopefully 208 00:18:37.119 --> 00:18:42.000 you accept what I'm saying as someone who's not hostile this innovation, but who 209 00:18:42.079 --> 00:18:48.559 actually took steps to further this innovation during my time, you know, as 210 00:18:48.599 --> 00:18:52.519 an official sector leader, and so you know, I'm very much an advocate, 211 00:18:52.559 --> 00:18:57.880 but I'm sounding the alarm that you know, hidden within our desire for 212 00:18:57.920 --> 00:19:03.119 this new Internet of value, it could be some danger points and we must 213 00:19:03.200 --> 00:19:07.400 not leave our values by the side of the road as we get on with 214 00:19:07.599 --> 00:19:11.359 furthering this innovation. We need to be values first, and we need to 215 00:19:11.440 --> 00:19:19.400 insist that all these digital systems and money are ones that are preservative of our 216 00:19:21.000 --> 00:19:30.000 of our civil rights or our individual autonomy as free citizens and as people of 217 00:19:30.079 --> 00:19:34.519 democratic republics. Now, Chris, something, as you were saying that, 218 00:19:34.720 --> 00:19:38.400 I thought about going back years, maybe twenty eighteen. I think it was 219 00:19:38.839 --> 00:19:44.200 when Mark Zuckerberg and the folks at Facebook wanted to create I think it was 220 00:19:44.279 --> 00:19:48.160 called DM some sort of digital currency, and all of a sudden we saw 221 00:19:48.200 --> 00:19:52.319 a knee jerk reaction and everybody was like, no, no, no, 222 00:19:52.319 --> 00:19:55.200 no, We're putting a stop to this. And I thought at that point 223 00:19:55.680 --> 00:19:59.440 they were going to start taking these things seriously. But then to your point, 224 00:19:59.599 --> 00:20:03.839 they've kind of just the urgency has ramped down. What do you think 225 00:20:03.920 --> 00:20:07.480 happened there? You know, I don't know if you have any sight on 226 00:20:07.559 --> 00:20:11.880 that's Facebook or any details there, but what do you think happened there? 227 00:20:11.400 --> 00:20:22.720 Well, look, I was very very actively an observer and a commentator, 228 00:20:22.799 --> 00:20:27.799 and I saw that in real time. I think that scared the Big Jesus 229 00:20:29.759 --> 00:20:42.240 out of the governing class of country of of reserve currency status countries around the 230 00:20:42.240 --> 00:20:48.039 world. I mean, you know, in China, the reaction was to 231 00:20:48.160 --> 00:20:52.720 further its work on its digital YU one with the Chinese called it's ec and 232 00:20:52.880 --> 00:20:57.599 why in Europe it was to further its work on a digital euro. You 233 00:20:57.640 --> 00:21:03.480 know, these are reserve currency countries that saw d M and the potential network 234 00:21:03.519 --> 00:21:08.400 effect that its own digital currency network with its you know, a global user 235 00:21:08.480 --> 00:21:15.799 base of Facebook could challenge their reserve currency status. In the United States, 236 00:21:15.480 --> 00:21:22.279 it had a combination effect of furthering some work by the Federal Reserve a number 237 00:21:22.359 --> 00:21:27.240 of pilot projects, but it also I think created this current political divide. 238 00:21:29.000 --> 00:21:40.839 I think some of the current political divide is is somewhat naive. I think 239 00:21:41.000 --> 00:21:45.680 some of it is understandable. Why do I say it's understandable. Well, 240 00:21:47.240 --> 00:21:52.640 since the end of World War Two, the economic system that emerged after that 241 00:21:53.480 --> 00:22:02.000 is one that has been highly dominated by the United States, and that domination 242 00:22:02.160 --> 00:22:07.319 has brought a lot of advantages to the United States. I would argue it's 243 00:22:07.359 --> 00:22:14.839 also brought advantages to the world. And maybe let me take a moment and 244 00:22:14.960 --> 00:22:18.680 just say what that is, because then I want to explain why. I 245 00:22:18.680 --> 00:22:22.960 think that explains where we are today. So in the post war period, 246 00:22:22.000 --> 00:22:26.480 the United States emerged as having the dominant reserve currency, but not only that, 247 00:22:27.000 --> 00:22:33.920 the dominant institutions that supported the United States as reserve currency, the dominant 248 00:22:33.400 --> 00:22:41.759 capital markets, the dominant global banks, the dominant central bank, and the 249 00:22:41.799 --> 00:22:48.920 dominant system of market regulation as amplified by the Federal Reserve and its regulatory efforts 250 00:22:48.920 --> 00:22:55.000 of banks, and of course market regulators like the CFTC and the SEC. 251 00:22:55.839 --> 00:23:00.559 The benefit of that is then that the world needs to hold dollars, whether 252 00:23:00.640 --> 00:23:06.960 it's to hold them to as a stable store of value, whether it's to 253 00:23:07.000 --> 00:23:11.480 hold them to pay a debt service on international lending, whether it's to buy 254 00:23:11.599 --> 00:23:15.279 the world's commodities, most of which are priced in dollars, mostly important once 255 00:23:15.319 --> 00:23:22.039 priced in dollars, And so the dollar is an important component of that post 256 00:23:22.400 --> 00:23:29.359 World War two financial system the United States. It's called the exorbitant privilege by 257 00:23:29.440 --> 00:23:33.519 our friends in Europe, referring to the dollar's ability to issue debt in the 258 00:23:33.519 --> 00:23:37.640 world needing to hold that debt, which allows the United States to support its 259 00:23:37.839 --> 00:23:41.160 way of life very successfully. But I would argue that yes, the United 260 00:23:41.200 --> 00:23:45.200 States has benefit, but so is the world because I think the last thirty 261 00:23:45.279 --> 00:23:52.000 years of what we call globalization, during which time more people have risen out 262 00:23:52.079 --> 00:23:56.799 of poverty around the world than ever before in human history would not have happened 263 00:23:57.359 --> 00:24:02.799 if there was not a state currency as a store of value and a means 264 00:24:02.839 --> 00:24:07.960 of transacting around the globe at a time where a lot of movie money has 265 00:24:07.000 --> 00:24:12.319 moved from the wealthy North to the underdeveloped South and therefore helped a lot of 266 00:24:12.319 --> 00:24:17.720 countries move themselves from the lowest ranks of poverty. So I would argue that 267 00:24:17.799 --> 00:24:22.559 the dollar has been net good. Now there's been as many critics of sanctions 268 00:24:22.680 --> 00:24:26.720 policy and a lot of other elements of the dollar. We could spend hours 269 00:24:26.720 --> 00:24:30.680 getting into that, and I don't deny those concerns. That's why I say 270 00:24:30.759 --> 00:24:33.519 net positive, all right. The reason I went through all of this, 271 00:24:33.640 --> 00:24:41.000 Tony, is because if you put yourself in the shoes of the current generation 272 00:24:41.160 --> 00:24:45.759 of leadership of the United States financial system, including its regulators in Washington, 273 00:24:47.799 --> 00:24:53.720 you can understand why they're reluctant to part with a system that has served so 274 00:24:53.880 --> 00:24:59.559 well. It has served the country well, but has also served themselves well. 275 00:25:00.079 --> 00:25:04.519 Any of our leaders are somewhat septagenarian, and I say that impartially across 276 00:25:04.559 --> 00:25:08.400 the you know, across the political divide. They grew up in a world 277 00:25:08.400 --> 00:25:14.960 of past book savings, accounts and branch banking and check writing to pay bills, 278 00:25:15.440 --> 00:25:19.400 and for them, a new architecture of money can only be a threat 279 00:25:19.720 --> 00:25:23.640 to what they know. And so I've been a critic of some of the 280 00:25:23.720 --> 00:25:32.039 recent work of the Financial Stability of Sorry of the FSOC, the Financial Stability 281 00:25:32.079 --> 00:25:38.079 Oversight Counts on which I served during my time in Washington, for conflating financial 282 00:25:38.160 --> 00:25:45.240 stability with preserving the status quo. And what I see a lot in Washington 283 00:25:45.359 --> 00:25:51.079 right now is in order to preserve in their minds financial stability, it means 284 00:25:51.119 --> 00:25:56.440 protecting everything that they know and love and everything that they've learned. And it 285 00:25:56.519 --> 00:26:03.839 reminds me of that old quote by the author of The Hitchhiker's Guide to the 286 00:26:03.880 --> 00:26:11.680 Galaxy who said, in life, whatever comes about before you turn thirty five 287 00:26:11.559 --> 00:26:15.880 is new, and it's cool, and it could very well be the source 288 00:26:15.920 --> 00:26:21.039 of a lifetime's career. But anything that comes about after you turn thirty five 289 00:26:21.960 --> 00:26:26.319 is dangerous. It's suspect, and it needs to be suppressed. And I 290 00:26:26.319 --> 00:26:30.599 think you've got some of that going on right now in American leadership, both 291 00:26:32.079 --> 00:26:34.279 in the public sector, in the private sector, in the financial community, 292 00:26:34.920 --> 00:26:41.640 of seeing a new architecture of finances can only be a threat to the old 293 00:26:41.680 --> 00:26:48.240 system, and it truly is. Crypto is much more than just bitcoin at 294 00:26:48.319 --> 00:26:56.160 seventy three thousand dollars. It's much more than just some new, funky tradable 295 00:26:56.240 --> 00:27:00.519 new asset class. It really is a new architecture of value. It's a 296 00:27:00.599 --> 00:27:08.759 digital network based architecture of value as opposed to what we've known in human history 297 00:27:08.799 --> 00:27:14.200 for the last four hundred years and what America has dominated for the last seventy 298 00:27:14.279 --> 00:27:19.079 years, and that is a balance sheet based system of value. Right my 299 00:27:19.839 --> 00:27:25.559 retirement, whenever I've amassed in this world, and my net worth is actually 300 00:27:25.559 --> 00:27:30.480 not stacks of one hundred dollars bills in Fidelities vaults or JP Morgan's vault or 301 00:27:30.519 --> 00:27:37.720 Bank of America's vault. It's actually ioused from those financial institutions. And that's 302 00:27:37.759 --> 00:27:41.960 the current architecture of money. Ninety percent of all money is basically bank balance 303 00:27:41.960 --> 00:27:48.160 sheet ioused, with only about ten percent being cash. We're moving to a 304 00:27:48.200 --> 00:27:52.599 new architecture, an architecture of recording values on digital networks, whether it be 305 00:27:52.680 --> 00:28:02.319 distributed ledger systems or different blockchains. And I think that for many in leadership 306 00:28:02.400 --> 00:28:06.599 they see that as a threat to everything they know, and therefore it needs 307 00:28:06.640 --> 00:28:11.599 to be at least ignored at first. And now I think some you know, 308 00:28:11.799 --> 00:28:18.039 fairly obvious efforts that outright suppression or if you can't suppress it, let's 309 00:28:18.039 --> 00:28:26.039 tax it to death. And I think the United States is in this somewhat 310 00:28:26.119 --> 00:28:33.759 understandable but disappointing course of conflating financial stability with hanging on for dear life to 311 00:28:33.839 --> 00:28:40.839 the status quo. And I hope that Winston Churchill's adage about Americans is true 312 00:28:41.480 --> 00:28:47.440 that we always do the right thing after trying all the alternatives, and right 313 00:28:47.480 --> 00:28:51.319 now we seem to be trying the alternatives. Eventually, this innovation is not 314 00:28:51.519 --> 00:28:55.720 going away, and I think the United States will come back to being a 315 00:28:55.839 --> 00:28:59.039 leader, not only in the private sector, where we are a leader, 316 00:28:59.240 --> 00:29:03.480 but also in the public sector as well. The biggest disappointment of what we're 317 00:29:03.480 --> 00:29:15.319 doing right now is actually not so much the regulatory indifferent hostility to digital asset 318 00:29:15.359 --> 00:29:21.480 innovation. The biggest disappointment is the lack of leadership, a lack of American 319 00:29:21.559 --> 00:29:26.880 leadership around the globe to set regulatory standards. Proud to do this, you 320 00:29:26.880 --> 00:29:29.920 know, thirty years ago, when the first wave of the Internet came about 321 00:29:29.920 --> 00:29:34.640 the Internet of Information, the United actually set the global standards with our do 322 00:29:34.839 --> 00:29:41.799 no harm approach. A Republican Congress under Nu Gingridge and a Democratic White House 323 00:29:41.880 --> 00:29:47.279 under Bill Clinton came together and basically came up with a system that said, 324 00:29:47.720 --> 00:29:51.400 the official sector is not going to suppress this innovation. We're going to let 325 00:29:51.440 --> 00:29:55.039 it grow and see what happens. And the rest of the world adopted that 326 00:29:55.119 --> 00:30:00.519 same approach, for the most part, the closed societies of the world to 327 00:30:02.319 --> 00:30:07.240 appropriate the appropriate the Internet for their own use, and the democracy stood up 328 00:30:07.279 --> 00:30:11.839 and said, no, this is going to be an open architecture. Sadly, 329 00:30:11.920 --> 00:30:17.440 that same leadership is not present this time around. As we're now embarking 330 00:30:17.440 --> 00:30:22.319 on an Internet of value. The United States is not setting a leadership standard. 331 00:30:22.359 --> 00:30:26.720 In fact, most of the world is rejecting the crypto hostile approach of 332 00:30:26.759 --> 00:30:30.799 the United States. Right now, we're really a global outlier, our official 333 00:30:30.839 --> 00:30:33.920 sector, you know, resistance to this a global outlier. Now. As 334 00:30:33.960 --> 00:30:37.640 I said, I think it's understandable because of our successful history in the old 335 00:30:37.799 --> 00:30:42.039 architecture, but that's not going to see us through in a new architecture. 336 00:30:42.079 --> 00:30:45.720 We've got to, you know, put our big boy pants on, get 337 00:30:45.720 --> 00:30:48.319 back in the game, both in the in the in the private sector where 338 00:30:48.319 --> 00:30:52.279 we are in the game, but also in the public sector. And I 339 00:30:52.319 --> 00:30:56.920 think, quite frankly, and I don't mean to sound immodest, but the 340 00:30:56.920 --> 00:31:02.640 work we did at the CFTC five years ago demonstrates that US regulators can engage 341 00:31:02.640 --> 00:31:11.160 with crypto successfully. And I think that I would urge the current regulatory class 342 00:31:11.160 --> 00:31:18.000 in Washington to follow the lead of the CFTC back from twenty seventeen to twenty 343 00:31:18.039 --> 00:31:22.319 twenty. Yeah, and Chris, I remember last time we spoke, we 344 00:31:22.359 --> 00:31:26.160 had to discussed some of the pilots and testing that were being done by private 345 00:31:26.200 --> 00:31:30.480 sector folks along with the FED and so forth. And you guys have been 346 00:31:30.519 --> 00:31:36.160 advising different folks. Any updates on pilots and anything that looks promising, I'm 347 00:31:36.160 --> 00:31:37.880 not sure how much you can share there. Hi, everyone, part of 348 00:31:37.960 --> 00:31:41.039 the interruption. I'm Tony Edward, the founder and host of the Thinking Crypto 349 00:31:41.160 --> 00:31:45.720 podcast. I have a YOUG favor to ask you. If you haven't subscribed 350 00:31:45.720 --> 00:31:48.720 as yet on YouTube or the podcast platforms, Hit the subscribe button, hit 351 00:31:48.759 --> 00:31:52.799 the thumbs up button, hit the notification bell on the YouTube platform and on 352 00:31:52.839 --> 00:31:56.799 Spotify or Apple or wherever you get your podcasts, please leave a five style 353 00:31:56.880 --> 00:32:00.519 rating and review. It supports the podcast. It allows me to bring great 354 00:32:00.640 --> 00:32:04.799 quality content to you. Thank you for your support, and I'll let you 355 00:32:04.839 --> 00:32:07.279 get back to the content. Yeah. So, we at the Digital Dollar 356 00:32:07.279 --> 00:32:15.000 Project tend to keep close to our chest our pilot work until we formally announce 357 00:32:15.000 --> 00:32:20.359 it and publish a white paper. We're not you know, we're a five 358 00:32:20.400 --> 00:32:23.119 o'h one C three. We're a nonprofit. We're non partisan, and unlike 359 00:32:23.119 --> 00:32:28.559 a commercial actor that may want to you know, generate some buzz from work 360 00:32:28.599 --> 00:32:34.680 they're doing before it's announced, our partners, which tend to be some of 361 00:32:34.720 --> 00:32:44.119 the more important US commercial actors preserve, prefer to conduct the pilots and generate 362 00:32:44.160 --> 00:32:47.720 the learnings from the pilots and announce them. And we're not in the business 363 00:32:47.839 --> 00:32:53.799 of saying that every pilot we do is actually going to be a proof of 364 00:32:53.920 --> 00:33:00.559 concept for some use of a digital dollar. Some of our pilots prove limitations 365 00:33:00.640 --> 00:33:04.839 or shortcomings of that. So it's important that we do that. I will, 366 00:33:05.079 --> 00:33:08.960 as probably some of your listeners know, we have done a number of 367 00:33:09.160 --> 00:33:15.200 I think very important pilots, both on the wholesale side and on the retail 368 00:33:15.319 --> 00:33:21.559 side of what a center bak digital currency could do, how it can advance 369 00:33:21.599 --> 00:33:27.480 the dollar. We did a very important experiment for a retail digital dollar last 370 00:33:27.559 --> 00:33:34.200 year showing how it can be used in global remittances. The United States to 371 00:33:34.400 --> 00:33:39.599 the Philippines is one of the most active remittance corridors in the world, and 372 00:33:39.759 --> 00:33:45.240 sadly, many of those Filipinos living and working in the United States that when 373 00:33:45.279 --> 00:33:52.519 they send money home sometimes pay as much as seven to seventeen percent to send 374 00:33:52.519 --> 00:33:58.720 money home, and it takes days and often lands up in small regional banks 375 00:33:58.720 --> 00:34:02.559 in the Philippines that may be there today and may be gone tomorrow. And 376 00:34:04.039 --> 00:34:08.400 we demonstrated working with the Western Union Company, that a digital dollar could speed 377 00:34:08.480 --> 00:34:16.119 that to from days to minutes and could lower costs down to a few percentage 378 00:34:16.159 --> 00:34:22.920 points from where they are. And so that's one very important use. The 379 00:34:22.000 --> 00:34:25.760 dollar is one of the world's most important remittance currency, and taking some of 380 00:34:25.800 --> 00:34:34.239 the friction and time and loss of time, latency and risk out of that 381 00:34:34.320 --> 00:34:38.400 would be a tremendous usage and would further the dollar's use for remittance, therefore 382 00:34:38.440 --> 00:34:44.719 furthering the dollars use in global trade. We do have a very active twenty 383 00:34:45.079 --> 00:34:51.239 twenty four pilot project agenda, and I ask your listeners to follow us at 384 00:34:51.239 --> 00:34:55.679 Digital Dollar project dot org for news of our work. But we do have 385 00:34:55.719 --> 00:35:02.119 a very very active twenty twenty four agenda with upcoming pilots and things that you're 386 00:35:02.199 --> 00:35:07.559 testing. Is there any use of AI being in corporated or is it too 387 00:35:07.559 --> 00:35:12.519 early or you know, not a non starter right now because we're still trying 388 00:35:12.559 --> 00:35:15.559 to figure out the blockchain aspect of it. Yeah, so, so you 389 00:35:15.599 --> 00:35:20.159 know what I'll say. Right now, we have talked to a number of 390 00:35:20.199 --> 00:35:27.880 players about using AI in a pilot, and I invite any of your listeners 391 00:35:28.039 --> 00:35:32.599 who are focused on that issue to approach us. We would very much like 392 00:35:34.360 --> 00:35:42.239 to craft a really well thought out pilot using AI in connection with a US 393 00:35:42.360 --> 00:35:45.639 digital currency and would love to explore that with the right partners. We have 394 00:35:45.679 --> 00:35:51.880 a number of ongoing conversations. I'd love to have more conversations with folks that 395 00:35:51.920 --> 00:35:59.280 have been thoughtful about this. Any thoughts on you know, I guess maybe 396 00:35:59.320 --> 00:36:01.880 it's a it's a really it's a question I asked you earlier that maybe we 397 00:36:01.960 --> 00:36:06.840 will see some action on the US side, when you know, maybe a 398 00:36:06.840 --> 00:36:10.559 handful of countries decide to go live. Let's say Europe or even the UK, 399 00:36:12.199 --> 00:36:15.519 they launched their digital pound or digital euro, and then all of a 400 00:36:15.559 --> 00:36:19.800 sudden, Russia launches their digital ruble, and you know, and they start 401 00:36:19.840 --> 00:36:25.840 to get more market penetration. Do you think that will light a fire here 402 00:36:25.880 --> 00:36:31.519 for some of the folks in DC. Yeah, I think there's there'll be 403 00:36:31.559 --> 00:36:37.079 a number of potential catalysts for that. I think certainly that a successful launch 404 00:36:37.159 --> 00:36:40.480 of the digital euro would do that. I think a successful launch of a 405 00:36:40.480 --> 00:36:45.960 digital pound would do that. But I think there's something that people aren't anticipating 406 00:36:46.639 --> 00:36:52.119 that could actually be even more likely to generate that, and that would be 407 00:36:52.920 --> 00:37:00.760 China's providing a white label digital currency for countries here in the Western hemisphere. 408 00:37:00.440 --> 00:37:09.239 It would not surprise me to see countries like Venezuela announce a digital boulevar and 409 00:37:09.280 --> 00:37:14.679 when in fact, what that is is a white label version of China's digital 410 00:37:14.679 --> 00:37:22.079 currency directly connected to the People's Bank of China, which would make those transactions 411 00:37:22.199 --> 00:37:28.719 relatively sanctioned proof. You know, it's great to have sanctions against your allies, 412 00:37:28.800 --> 00:37:32.000 but it's sanctioned power against your opponents that you really need. And if 413 00:37:32.039 --> 00:37:38.480 those opponents become basically integrated into China's digital U want, that's going to be 414 00:37:39.119 --> 00:37:45.639 a major economic power play on the globe, and I wouldn't be surprised to 415 00:37:45.679 --> 00:37:51.159 see that before the end of the decade. I think there's another element to 416 00:37:51.199 --> 00:37:54.880 this that also people aren't thinking about. If you think about the relationship that 417 00:37:54.960 --> 00:38:02.519 exists today in the analog world between paper dollars and bank deposits. As I 418 00:38:02.559 --> 00:38:09.639 said before, ninety percent of the quote unquote money in circulation is bank credit 419 00:38:09.719 --> 00:38:14.880 is bank IOUs, not credit, but bank iouse right. You know what 420 00:38:15.360 --> 00:38:19.800 I have. The cash in my pocket are obligations of the federal government. 421 00:38:19.880 --> 00:38:24.920 But what's in my bank account is an obligation of a financial institution. It's 422 00:38:25.400 --> 00:38:30.920 it's not a hard argument to make that the reason why people are willing to 423 00:38:30.960 --> 00:38:36.480 deposit their money in the bank is because they know that if there's a crisis 424 00:38:37.159 --> 00:38:42.039 and there's any concerns about that bank's ability to redeem their money, they can 425 00:38:42.079 --> 00:38:45.719 go to the ATM and take their money out in cash. They can convert 426 00:38:45.719 --> 00:38:52.679 it from a bank liability to a sovereign liability. Well, if we in 427 00:38:52.719 --> 00:39:01.000 a digital future, if there's only non sovereign digital currency, if there's only 428 00:39:01.039 --> 00:39:07.159 say stable coins based on the dollar, and there's some concern about that stabilization 429 00:39:07.360 --> 00:39:12.280 mechanism, there's some concern about that issuer, that is, stable coins break 430 00:39:12.320 --> 00:39:16.280 the peg to the dollar. As this happened not just with algorithmic programmable stable 431 00:39:16.320 --> 00:39:22.920 coins but with others as well. Where do they go because those stable coin 432 00:39:22.960 --> 00:39:29.360 operators have no ATMs if you want to convert from a stable coin to a 433 00:39:29.400 --> 00:39:34.000 sovereign instrument in a crisis, if your only option is to go to a 434 00:39:34.039 --> 00:39:37.800 digital euro, to go to a digital u wan, that's where you're going 435 00:39:37.840 --> 00:39:45.519 to go if you can't go to a sovereign digital dollar from your stable coin 436 00:39:45.599 --> 00:39:50.679 in a crisis. And so I think stable coin operators should be the biggest 437 00:39:50.719 --> 00:39:57.519 supporters of a digital currency because it provides confidence. I'm going to put you 438 00:39:57.559 --> 00:40:01.159 know, ninety percent of my value or you know, I'm gonna put some 439 00:40:01.239 --> 00:40:05.960 percentage of my value in your stable coin, and I'm gonna trust you, 440 00:40:06.000 --> 00:40:07.800 and i'm gonna believe you, and I'm gonna have confidence. But the moment 441 00:40:07.880 --> 00:40:13.280 my confidence runs out, I'm actually gonna feel a lot better knowing I can 442 00:40:13.360 --> 00:40:16.559 go to a CBDC, and I feel even better knowing I go to my 443 00:40:16.719 --> 00:40:21.480 national CBDC, the dollar and not have to go to a digital Europe. 444 00:40:22.440 --> 00:40:27.320 So I think the success of stable coins is actually going to lead to demand 445 00:40:27.360 --> 00:40:30.920 for CBDC. I got to say that's a great point because we've seen just 446 00:40:31.000 --> 00:40:37.760 even this past bear market, like USDC depegged a couple of times, Tether 447 00:40:37.840 --> 00:40:39.920 has deepegged, and I can imagine people, you know, there's gonna be 448 00:40:39.960 --> 00:40:44.079 situations that pop up over time that people are gonna want to get out. 449 00:40:44.239 --> 00:40:46.480 And to your point, in a digital world, I want to go over 450 00:40:46.599 --> 00:40:53.360 to some sort of federal controlled currents digital currency. It will be ideal to 451 00:40:53.400 --> 00:40:59.000 have the US digital dollar to go to, and you know, we could 452 00:40:59.079 --> 00:41:04.639 engineer that rate. Show right, in the same way that the money is 453 00:41:04.639 --> 00:41:08.920 bank money, ten percent is cash that hasn't stopped the development of banking, 454 00:41:09.920 --> 00:41:13.719 right, It hasn't stopped the development. In fact, I would say once 455 00:41:13.760 --> 00:41:16.960 again that the ten percent is made the ninety possible. Yeah, and I 456 00:41:16.960 --> 00:41:22.000 think in a in a in a in a digital future, I think, 457 00:41:22.199 --> 00:41:27.199 you know, a similar logic could very well prevail. If we see success 458 00:41:27.199 --> 00:41:31.840 in stable coins. It may actually drive to the US government wanting to issue 459 00:41:31.920 --> 00:41:42.679 a digital sovereign instrument to support people willing to place value, you know, 460 00:41:42.960 --> 00:41:47.599 in non sovereign digital networks of value. I have a follow up question on 461 00:41:47.639 --> 00:41:53.440 that. China, let's say white labeled digital currency. I don't know how 462 00:41:53.519 --> 00:41:58.079 much you can share there or what the full details are, but would it 463 00:41:58.079 --> 00:42:01.320 be it's their blockchain and their centralized blockchain, if you want to call it 464 00:42:01.360 --> 00:42:07.079 that, and they're allowing you on maybe on a subnet or a private ledger 465 00:42:07.119 --> 00:42:09.719 to build your digital currency. Let's say you're Venezuela. Is that kind of 466 00:42:09.760 --> 00:42:17.559 the model? Well, so it's very hard to know exactly, you know, 467 00:42:17.599 --> 00:42:22.639 in a close society like China have that model. Some of this is 468 00:42:22.679 --> 00:42:29.400 my own conclusion. I had the privilege of serving on a Hoover Institute's study 469 00:42:30.199 --> 00:42:32.480 that took a year to study the digital u on an issue to report to 470 00:42:32.519 --> 00:42:37.840 the Biden administration, which is publicly available on the Hoover Institute's website. But 471 00:42:37.880 --> 00:42:42.519 it was a year's worth of work. Has spent a lot of time studying 472 00:42:42.559 --> 00:42:46.880 the digital UoN and the more and more that I heard Chinese officials who spoke 473 00:42:46.960 --> 00:42:55.400 to our group adamantly disclaim any global intentions for the Digital UoN the more I 474 00:42:55.440 --> 00:43:01.800 was reminded of Shakespeare's quote he does protest too much. The more they said, 475 00:43:01.840 --> 00:43:07.079 oh, no, we have no global ambitions made me realize they absolutely 476 00:43:07.119 --> 00:43:13.119 have global ambitions and it would not be hard for them to use this. 477 00:43:13.280 --> 00:43:19.519 And guess what their biggest selling argument would be for a white label version of 478 00:43:19.519 --> 00:43:23.880 the Digital Uan. The biggest selling argument will be, we provide your regime 479 00:43:23.960 --> 00:43:31.639 with full surveillance and censorship capability over your citizens. And you know, somebody 480 00:43:32.000 --> 00:43:36.960 said to me, a fairly senior person in Washington said to me, oh, 481 00:43:37.000 --> 00:43:40.599 who would want that? And I thought, there's a lot of regimes 482 00:43:40.639 --> 00:43:45.679 around the world that are going to say, ship it in. We want 483 00:43:45.679 --> 00:43:49.480 to surveil our people. I mean, you know, there's many close societies 484 00:43:49.519 --> 00:43:54.960 that you know, fear their people having cash and would love to use that. 485 00:43:55.119 --> 00:44:02.320 And so the Chinese model of CBDC is it's quite sophisticated. Our report 486 00:44:02.400 --> 00:44:08.119 reports on its technical sophistication, but it also is a model for surveillance and 487 00:44:08.119 --> 00:44:12.199 censorship. And that's why I say to my colleagues on the right side of 488 00:44:12.239 --> 00:44:17.039 the aisle. You are not wrong to be concerned about this, but you 489 00:44:17.480 --> 00:44:23.639 are mistaken if you believe that that's the only model possible. We're Americans, 490 00:44:23.679 --> 00:44:30.400 after all. Let's design the other model, the freedom coin model. Let's 491 00:44:30.400 --> 00:44:36.039 design systems, digital systems of value for both the private sector and the public 492 00:44:36.079 --> 00:44:40.639 sector. In fact, let's insist that anything that references the dollar, whether 493 00:44:40.719 --> 00:44:47.800 it's a CBDC or a stable coin, operate on open architectures where people can 494 00:44:47.840 --> 00:44:52.400 assure themselves that they're not being surveilled, they're not being censored, they're not 495 00:44:52.519 --> 00:44:57.280 being controlled. That's the American way. That's what we ought to do. 496 00:44:57.320 --> 00:45:01.800 We ought to see this as a challenge to overcome, not as a not 497 00:45:02.079 --> 00:45:06.159 the Chinese model is the only way to go, and therefore we need to 498 00:45:06.880 --> 00:45:10.480 We need to reject the future digital systems of value and leave and live in 499 00:45:10.480 --> 00:45:15.960 the past. Analog systems of value. An analog world is not an analog 500 00:45:15.039 --> 00:45:19.599 dollar is not going to serve the United States will for very long. We 501 00:45:19.719 --> 00:45:22.519 need to launch into the future in the same way that we you know, 502 00:45:22.559 --> 00:45:27.039 we we were unafraid to go to the moon, even though it hadn't been 503 00:45:27.039 --> 00:45:30.320 done before. Even though we were unafraid to stand up for an open architecture 504 00:45:30.360 --> 00:45:35.639 of an Internet of of information, we need to once again, you know, 505 00:45:35.760 --> 00:45:38.440 take our values out of the closet and and you know, and and 506 00:45:38.480 --> 00:45:43.360 wrap them around our neck and and and and appear in every global standard setting 507 00:45:43.360 --> 00:45:47.440 body and insist that the Internet of value be one reflects those those wonderful privileges 508 00:45:47.440 --> 00:45:52.840 and rights uh under the under the First Amendment and the Bill of Rights. 509 00:45:52.159 --> 00:45:55.119 Absolutely, Chris, I want to get your thoughts on the big qin's body 510 00:45:55.119 --> 00:46:00.800 taps. Those have been launched a huge Wall Street firm such as black Rock 511 00:46:00.840 --> 00:46:05.119 and Fidelity of issue them. The inflows have been incredible, and it seems 512 00:46:05.199 --> 00:46:08.800 a bitcoin is entering the mainstream into retirement accounts and so forth. What are 513 00:46:08.840 --> 00:46:15.280 your thoughts on how it's been that going. I'm cheering up and down. 514 00:46:15.360 --> 00:46:19.000 I mean, honestly, I take some pride in this because I think it 515 00:46:19.039 --> 00:46:23.760 is it reflects a continuum of work that we started at the CFTC in twenty 516 00:46:23.840 --> 00:46:28.599 seventeen, first with the launch of LAMB CFTC that put out some of the 517 00:46:28.719 --> 00:46:34.800 very put out the first primers on cryptocurrency ever in the United States by the 518 00:46:34.920 --> 00:46:37.719 US government, and that allowed us to be ready at the end of the 519 00:46:37.800 --> 00:46:44.320 year when bitcoin futures came about. And it was really the launch of bitcoin 520 00:46:44.400 --> 00:46:49.480 futures that created the first world's first, not just the United States, the 521 00:46:49.519 --> 00:46:53.639 world's first regulated market for any type of crypto. That gave the CFDC the 522 00:46:53.800 --> 00:47:01.239 regulatory knowledge and experience regulating the market. Now five years later, the market 523 00:47:01.320 --> 00:47:07.000 is deep, it's liquid, it's transparent, and it's well regulated. But 524 00:47:07.320 --> 00:47:10.519 for it, I don't think the SEC would have been able, would have 525 00:47:10.519 --> 00:47:15.480 found its way to green lighting the ETF. So I think that what we're 526 00:47:15.480 --> 00:47:20.559 seeing from the SEC in many ways reflects the early work we did, so 527 00:47:20.599 --> 00:47:24.039 I take a lot of pride in this. I also think that the success 528 00:47:24.079 --> 00:47:30.320 of this reflects what I think all of us knew. There's tremendous demand both 529 00:47:30.360 --> 00:47:34.920 at the wholesale level, at the institutional level, and at the retail level 530 00:47:35.400 --> 00:47:42.760 amongst Americans and people around the world for well regulated markets. Right. It's 531 00:47:42.840 --> 00:47:46.639 what makes this exciting is it's not only an exciting product, but it's now 532 00:47:46.679 --> 00:47:51.559 traded in the world's deepest, liquid and best regulated markets in the world. 533 00:47:51.599 --> 00:47:54.480 So I think this is a tremendous success. I think it's long overdue, 534 00:47:54.519 --> 00:48:00.280 but it's there. It's successful, and as you say, in little over 535 00:48:00.360 --> 00:48:07.400 six weeks, the Bitcoin ETF has surpassed ten billion dollars. It took the 536 00:48:07.320 --> 00:48:13.199 previously most successful ETF Gold two years to get to that level. And I 537 00:48:13.239 --> 00:48:15.679 don't think that we're going to stop anywhere soon. So I think this is 538 00:48:15.800 --> 00:48:22.000 very successful. And look what we said back in twenty seventeen when there were 539 00:48:22.039 --> 00:48:28.559 those here in the United States and many abroad that were critical of the CFTC, 540 00:48:28.679 --> 00:48:32.840 including many in journalism that were critical of us, including many in the 541 00:48:34.119 --> 00:48:38.320 trade fi industry that took up full page ads in the Wall Street Journal challenging 542 00:48:38.360 --> 00:48:46.559 the CFTC not to go forward with bitcoin futures. What we felt then and 543 00:48:46.639 --> 00:48:54.639 I feel today is it's not for regulators to determine the legitimacy of a lawful 544 00:48:54.679 --> 00:49:00.760 product. That's for the people's representatives in Congress to do. Congress is going 545 00:49:00.800 --> 00:49:06.280 to ban UH an instrument like that, going well, you know, God 546 00:49:06.280 --> 00:49:08.760 bless them, that's there. That's their lawful job, and they'll face the 547 00:49:08.840 --> 00:49:13.880 voters and the consequences of doing so. But it's only for them to decide. 548 00:49:13.920 --> 00:49:19.679 It's not for regulators to legitimize or deal legitimy something that is lawful. 549 00:49:20.159 --> 00:49:25.159 The job for regulators is to put a working regulatory structure around it, with 550 00:49:25.320 --> 00:49:30.320 clear rules, in the case of the CFDC, clear principles, and to 551 00:49:31.079 --> 00:49:38.360 bring a degree of thoughtful, intelligent regulation to the marketplace so that that that 552 00:49:38.960 --> 00:49:45.039 good people of goodwill can trade it and trade it relying on that it's on 553 00:49:45.119 --> 00:49:50.199 a built on a solid foundation, that the marketplace is built on a solid 554 00:49:50.199 --> 00:49:54.719 foundation. That's what we did at the CFTC, proving that we can regulators 555 00:49:54.719 --> 00:49:59.480 can engage with this asset class, and the proof is there, and now 556 00:49:59.480 --> 00:50:06.239 it's been reinforced by the Bitcoin etf And as we found when I was at 557 00:50:06.280 --> 00:50:12.000 the CFTC, once we approved bitcoin futures, there was immediate demand for ethereum 558 00:50:12.079 --> 00:50:17.679 futures, and the regulators were able to gain experience with one decentralized acid class 559 00:50:17.840 --> 00:50:22.880 that gave them the ability to eventually green light ethereum futures eighteen months later. 560 00:50:23.199 --> 00:50:28.079 I think the same will take place at the SEC. I don't think it's 561 00:50:28.079 --> 00:50:30.159 going to be eighteen months, but I don't think it's going to be six 562 00:50:30.199 --> 00:50:32.159 months either. I mean, I think it's going to take time, but 563 00:50:32.239 --> 00:50:37.800 the direction has been set. I think the demand is there, and the 564 00:50:37.840 --> 00:50:42.960 world is looking to the US to not only build these markets, but to 565 00:50:42.960 --> 00:50:49.920 build solid regulatory frameworks around the world's biggest pools of capital and the world's biggest 566 00:50:50.199 --> 00:50:53.159 set of retirement investment money, and the biggest set of institutional money. So 567 00:50:53.440 --> 00:50:58.320 I think it's an important development. I think, like our green lighting and 568 00:50:58.360 --> 00:51:04.840 Bitcoin Futures launch, a Bitcoin ETFs is going to be one of those milestones 569 00:51:05.480 --> 00:51:09.280 on the highway to a digital Internet of value. Yeah. Absolutely, And 570 00:51:09.559 --> 00:51:14.000 you guys did great work in setting the foundation for all of these things, 571 00:51:14.960 --> 00:51:17.719 be chause you know there's still the battle between the two agencies. You know, 572 00:51:17.840 --> 00:51:22.239 just recently, Rosson Venam, chair current chair of the CFTC, was 573 00:51:22.280 --> 00:51:24.239 talking about you know, he's unsure what the SEC is doing with e theorem 574 00:51:24.719 --> 00:51:30.679 while the CFDC views as a commodity. So, man, I'm hoping Congress 575 00:51:30.679 --> 00:51:34.280 can act and put all these things to rest. I'm kind of tired of 576 00:51:34.320 --> 00:51:36.880 it, but you know that we have to go to the courts and we 577 00:51:36.960 --> 00:51:40.559 have to battle this out, and it's it's kind of ridiculous at this point. 578 00:51:40.840 --> 00:51:45.639 Well, I agree with you, but let me say this, thank 579 00:51:45.760 --> 00:51:51.480 goodness for the CFTC the past five or six years, because if the CFDC 580 00:51:51.679 --> 00:51:58.280 were not there holding the flame for innovation, we would only have the SEC. 581 00:51:58.920 --> 00:52:02.880 Yeah, and it's and it's and it's relative, you know, indifferent 582 00:52:04.000 --> 00:52:12.679 slash UH antipathy slash hostility to digital asset innovation. You know, our founders 583 00:52:13.480 --> 00:52:17.519 of the United States right a room, they very much believed in divided government. 584 00:52:19.039 --> 00:52:24.519 They felt that if government were arguing with itself, then our liberties were 585 00:52:24.559 --> 00:52:30.760 safe. Uh. In a in a similar kind of way that's played out 586 00:52:30.840 --> 00:52:35.000 between the SEC and the CFTC. I mean, although we're all I agree 587 00:52:35.039 --> 00:52:37.920 with you, many people are sick of it, but but for it, 588 00:52:38.599 --> 00:52:44.199 we might have had a majority of view coming out of the SEC dominating their 589 00:52:44.199 --> 00:52:47.760 approach to this. I think the CFTC has held and I tipped my hat 590 00:52:47.920 --> 00:52:52.920 to Chairman Venom. I think he's been very principled. I think he has 591 00:52:52.920 --> 00:52:58.079 maintained his position from the beginning that Congress needs to act, and it does. 592 00:52:58.639 --> 00:53:01.239 But while it's what we're waiting for it to act, he hasn't backed 593 00:53:01.280 --> 00:53:13.400 off the CFTC's UH determination to build a smart, understandable regulatory regime around digital 594 00:53:13.440 --> 00:53:19.440 commodities uh and and how they trade in derivative markets. So I I I 595 00:53:19.960 --> 00:53:23.320 think that we should all we should all be grateful that c FDC has held 596 00:53:23.360 --> 00:53:28.960 the torch over the past few years. Yeah, and you know, Chris, 597 00:53:29.000 --> 00:53:32.239 it's funny. I'm appreciating the checks and balances much more, right, 598 00:53:32.320 --> 00:53:37.000 And to your point that we have the digital branch, you have these different 599 00:53:37.000 --> 00:53:39.599 agencies and and say no, you know, we disagree, and maybe that's 600 00:53:40.159 --> 00:53:45.400 it's not a bug, but it's a feature, right, that it's there 601 00:53:45.960 --> 00:53:51.559 to avoid the rule the king to just make all the decisions for us. 602 00:53:51.559 --> 00:53:55.000 But we can have a voice. And you're right to tip your head to 603 00:53:55.039 --> 00:53:59.119 the courts as well, because I think they've played a very very important role 604 00:53:59.760 --> 00:54:04.079 to get at us through this period of time. And you know, life 605 00:54:04.159 --> 00:54:09.400 is like a conveyor belt. With great respect to the septagenarians that are running 606 00:54:09.440 --> 00:54:15.199 things and their way of thinking, you know, the eventually the conveyor belt, 607 00:54:15.519 --> 00:54:19.119 they will fall off of it. And a newer generation, a generation 608 00:54:19.239 --> 00:54:24.960 that grew up in a networked world, to whom network effects and the value 609 00:54:25.039 --> 00:54:30.920 of global networks is intuitively understandable, and they are going to be much less 610 00:54:30.960 --> 00:54:38.679 resistant to digital networks and money. So I'm very optimistic about the next generation 611 00:54:38.760 --> 00:54:45.079 of leadership. However, I want them I you know, as someone of 612 00:54:45.159 --> 00:54:50.400 that older cohort, but who's less resistant to this innovation, who's actually much 613 00:54:50.440 --> 00:54:53.159 more positive on this innovation. I say to younger people, but don't leave 614 00:54:53.199 --> 00:55:00.000 your values at the door. Don't simply say the value of lower friction, 615 00:55:01.119 --> 00:55:07.440 of of of faster times of greater access are enough. We also need to 616 00:55:07.440 --> 00:55:15.000 think about the values of economic independence, of economic liberty, of of of 617 00:55:15.360 --> 00:55:21.639 free markets and free market capitalism are played out in the values of these systems 618 00:55:21.639 --> 00:55:25.360 as well. Yeah, well said now crypto to your point, uh, 619 00:55:25.639 --> 00:55:30.719 free markets, And and we got elections coming up. We're seeing pro crypto 620 00:55:30.760 --> 00:55:35.719 candidates are taking some victories, and crypto is a ballid issue. While it 621 00:55:35.800 --> 00:55:38.119 may not be number one, two, three, or even four, it's 622 00:55:38.199 --> 00:55:42.599 up there. And some some of these crypto voters a single issue voters. 623 00:55:43.239 --> 00:55:45.280 And then you have like John Deaton running against Elizabeth Warren, who has put 624 00:55:45.320 --> 00:55:49.679 up the banner that she's anti crypto. So I would love to get your 625 00:55:49.719 --> 00:55:52.039 thoughts on that. And and you know, you got political candidates as well 626 00:55:52.039 --> 00:55:55.599 coming out with their support for crypto. What do you think about all these 627 00:55:55.639 --> 00:55:59.719 things? Well, a couple of things. First of all, I don't 628 00:55:59.719 --> 00:56:02.400 think the anti crypto banner is going to work at all with young people. 629 00:56:04.559 --> 00:56:07.920 I don't think it's going to work with minorities. I don't think it's going 630 00:56:07.960 --> 00:56:15.159 to work with a lot of people that that. I think the anti crypto 631 00:56:15.239 --> 00:56:20.800 people think it might. I think it might work with with seniors, but 632 00:56:21.880 --> 00:56:27.719 that's not a long term value proposition. That's That's one thing. The second 633 00:56:27.719 --> 00:56:30.800 thing is I think, you know, the one thing I learned five years 634 00:56:30.800 --> 00:56:37.800 in Washington is that money talks and everything else walks. And I think the 635 00:56:37.840 --> 00:56:43.800 political class has been shocked to see how quickly ninety million dollars has been assembled 636 00:56:44.320 --> 00:56:51.960 and deployed and deployed with real targeting, you know, and it's all. 637 00:56:52.000 --> 00:56:55.320 You know, We've got every member of the lower House of Congress running for 638 00:56:55.519 --> 00:57:01.079 reelection this November, a third of the Senate, and both presidential candidates. 639 00:57:01.199 --> 00:57:05.880 It you know, it's this is going to be a several billion dollar election 640 00:57:06.039 --> 00:57:09.599 cycle, and they're going to be looking for every dollar they can. I 641 00:57:09.639 --> 00:57:15.719 don't know who's spending the anti crypto dollars, but a lot of people are 642 00:57:15.760 --> 00:57:19.440 spending the pro crypto dollars. So I think it's going to be I think 643 00:57:19.519 --> 00:57:22.960 it is an issue. I think it's it's it's a bit of a sleeper 644 00:57:22.000 --> 00:57:25.199 issue, but I think it's it's it's coming out of hibernation. People are 645 00:57:25.239 --> 00:57:29.920 seeing its impact, and I think it's going to be a big issue. 646 00:57:29.920 --> 00:57:36.480 And and and and as proof of that, you see candidate Trump now moving 647 00:57:37.079 --> 00:57:42.880 from a uh, sort of indifferent to I don't understand it role, to 648 00:57:42.920 --> 00:57:45.800 where he's now openly talking about it. I don't think he's quite found his 649 00:57:45.920 --> 00:57:52.519 voice on the subject yet, but I think that, uh what and what 650 00:57:52.559 --> 00:57:54.719 that means. What that says to me is there is a recognition that there's 651 00:57:54.840 --> 00:58:00.639 voters up for grabs, there's there's financial resources to be gained, and you 652 00:58:00.679 --> 00:58:04.880 know, we're up and running for the twenty twenty four elections right now. 653 00:58:05.199 --> 00:58:08.239 Both candidates are now established. The primaries are over, we're in the general 654 00:58:08.280 --> 00:58:13.280 election. As of last night, the primaries are over, or they're not 655 00:58:13.360 --> 00:58:17.639 over. But the Republicans and Democrats have achieved the number of delegates to be 656 00:58:17.719 --> 00:58:22.360 their party's nominees. So effectively, we're beyond the prime, We're past primary 657 00:58:22.360 --> 00:58:25.880 season, we're now in the general election season. And I think crypto is 658 00:58:25.920 --> 00:58:30.559 going to be a major issue at the congressional level at some key Senate races. 659 00:58:30.840 --> 00:58:37.639 Two key senators Elizabeth Warren and Shared Brown, they'll both express antagonists to 660 00:58:37.679 --> 00:58:42.920 crypto, are both in tight races, especially the Ohio race, And that 661 00:58:43.000 --> 00:58:46.519 money is being deployed like a scalpel, not like a bazukah. And so 662 00:58:46.559 --> 00:58:51.000 I think this it's going to play a major issue, and time is on 663 00:58:51.519 --> 00:58:55.719 that side, because this is a technology that young people, intuitively understand, 664 00:58:55.719 --> 00:59:00.599 are not afraid of. If they don't, you know, have bought into 665 00:59:00.599 --> 00:59:06.079 the crypto craze, they're not afraid of it because it's just a new system 666 00:59:06.119 --> 00:59:08.719 of network and you know what, they don't like the traditional banking system anyway. 667 00:59:09.760 --> 00:59:13.280 I mean, take a young you know, take a young twenty year 668 00:59:13.280 --> 00:59:16.039 old into a branch bank and they kind of look around and say, what 669 00:59:16.239 --> 00:59:22.119 is this place? You know? And and of course they should because they 670 00:59:22.199 --> 00:59:28.599 expect to be able to have the same ability to transfer funds that they do 671 00:59:28.760 --> 00:59:34.679 with text messages. And the technology is there, It's got a long way 672 00:59:34.719 --> 00:59:37.960 to go. We're still in the early early innings, but it makes intuitive 673 00:59:37.039 --> 00:59:42.360 sense to young people. Do you think John Deaton can unsee Elizabeth Warren? 674 00:59:43.400 --> 00:59:45.920 I think John Deaton's going to make this a very very interesting race. I 675 00:59:46.000 --> 00:59:50.480 just finished this book, and if you haven't read it, and if your 676 00:59:50.480 --> 00:59:53.840 listeners haven't read it, I highly recommend it. It's actually a fantastic It's 677 00:59:53.840 --> 00:59:58.960 an amazing story. It's an amazing story of human resilience and courage. I 678 00:59:59.000 --> 01:00:05.440 mean, he really he had had a hard childhood and he rose above it. 679 01:00:06.119 --> 01:00:07.239 He used to be commended, you know, and he did it, 680 01:00:07.320 --> 01:00:14.960 I think, in many ways, facing both extraordinary challenges and in some ways 681 01:00:14.960 --> 01:00:17.320 the same life challenges that all of us face. So it's a good read. 682 01:00:17.840 --> 01:00:22.119 I recommend it. I come away from reading that book with a great 683 01:00:22.119 --> 01:00:29.400 deal of admiration for John Deaton. I'll be actually attending up program with him 684 01:00:29.559 --> 01:00:31.400 in a couple of weeks. I'm looking forward to sharing with him some of 685 01:00:31.440 --> 01:00:36.880 my thoughts on his books and getting a signed copy from him, for sure. 686 01:00:37.440 --> 01:00:40.719 Chris, always a pleasure, always insightful information, and looking forward to 687 01:00:40.719 --> 01:00:44.800 your future updates around the Digital Dollar Project. I'll link to that in the 688 01:00:44.840 --> 01:00:49.199 description, But thank you for joining me and Tony, thank you for your 689 01:00:49.239 --> 01:00:53.320 great work and for being just a voice of thoughtfulness and intelligence on this subject 690 01:00:53.360 --> 01:00:58.800 from the very beginning. You're you're one of the siren voices out there that 691 01:00:58.840 --> 01:01:15.480 we all listen to. So thank you, Tony. Book Book Bank bo