WEBVTT

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<v Speaker 1>The point of regulation is to protect investors, make sure

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<v Speaker 1>that people get the right disclosure. If you spend all

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<v Speaker 1>of this time and energy trying to figure out which

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<v Speaker 1>regulator to go to, what the requirements are, that is

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<v Speaker 1>not actually helping the bottom line and helping investors. So

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<v Speaker 1>I agree regulations should be easy. Regulation is burdensome, like

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<v Speaker 1>when you're regulated. It's not supposed to be easy, but

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<v Speaker 1>the process of getting registered and regulated and understanding which

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<v Speaker 1>agency need to be regulated with that should be easy

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<v Speaker 1>so that you can get to the bottom line and

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<v Speaker 1>protect investors.

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<v Speaker 2>This episode is brought to you by bitgo, the trusted

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<v Speaker 2>infrastructure behind the digital asset economy. If you're serious about crypto,

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<v Speaker 2>US regulatory framework. That is the genius at want to

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<v Speaker 2>and the ability to trade directly from custody. No pre

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<v Speaker 2>funding required for approved clients. And if you need capital,

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<v Speaker 2>without selling your assets.

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<v Speaker 3>So here's the bottom line. Bitco is one of the.

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<v Speaker 2>First federally chartered digital asset infrastructure companies, offering regulated, insured

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<v Speaker 2>custody and a platform built for institutions but accessible to

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<v Speaker 2>for thinking players across the space. So whether you're scaling

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<v Speaker 2>a fintech, managing a fund, or building the future of finance,

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<v Speaker 2>bitco gives you all the tools that you need to

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<v Speaker 2>do this securely, compliantly, and at scale. So learn more

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<v Speaker 2>at bitgo dot com and see why the biggest players

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<v Speaker 2>in crypto trust Bitgo. Hey everyone, welcome into the Thinking

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<v Speaker 2>Crypto podcast. I'm your host Tony Edward and we're recording

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<v Speaker 2>at Station three in New York's Financial District. And joining

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<v Speaker 2>me today is Tiffany Smith, who is a partner and

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<v Speaker 2>co chair of the Blockchain and Cryptocurrency Working Group at

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<v Speaker 2>Wilmer Hale. She has over fifteen years of experience advising

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<v Speaker 2>the largest financial institutions on complying with securities laws. Last year,

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<v Speaker 2>Tiffany testified before the House Financial Services Subcommittee on Digital

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<v Speaker 2>Assets to discuss crypto market structure legislation. And she's also

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<v Speaker 2>a member of the Wall Street Blockchain Alliance and Women

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<v Speaker 2>in Crypto.

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<v Speaker 4>Tiffany welcome, Thank you for having me.

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<v Speaker 2>Yeah, Tiffany, it's a great day for us to be

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<v Speaker 2>talking because we got the draft of the CLARITIAC today.

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<v Speaker 2>The industry everybody's heads down reading through. But you bring

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<v Speaker 2>a lot of experience at the table, and I want

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<v Speaker 2>to pick your brain on securities laws and where you

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<v Speaker 2>see the future of crypto going and much more. But

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<v Speaker 2>before we get to all that, tell us about yourself.

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<v Speaker 2>Where'd you grow up, how'd you get into the legal field,

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<v Speaker 2>and much more.

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<v Speaker 1>Oh well, first of all, thanks for having me. I'm

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<v Speaker 1>very excited to be here. I've been listening to this

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<v Speaker 1>podcast for the last couple of years. So I'm from

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<v Speaker 1>New Jersey. Originally, I grew up near the Shore area

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<v Speaker 1>in a town called Neptune, which is by Asbury Park.

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<v Speaker 1>Went to d C for undergrad at George Washington, stayed

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<v Speaker 1>in DC there for law school, and then I went

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<v Speaker 1>to my firm, Wilmore Hail right after law school, and

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<v Speaker 1>I've been there ever since. Been in New York for

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<v Speaker 1>since twenty eleven, so i've been here back in the

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<v Speaker 1>Tristate area for a while now.

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<v Speaker 2>And where along the line at Wilmer Hill did you

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<v Speaker 2>discover blockchain and crypto and how did you become the

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<v Speaker 2>co chair of that group?

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<v Speaker 4>Yeah, it's been a journey.

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<v Speaker 1>So I started off in the firm and the securities

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<v Speaker 1>broker dealer regulation group when I started back in two

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<v Speaker 1>thousand and eight, no one knew what a broker dealer was.

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<v Speaker 1>And I would go to cotail party any place and

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<v Speaker 1>I would say broker dealer and people would fall asleep.

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<v Speaker 1>And now I feel like everyone talks about broker dealers, exchanges,

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<v Speaker 1>transferagious exchanges, transfer agents, and all of those types of

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<v Speaker 1>entities which are very critical to crypto. And so for me,

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<v Speaker 1>I first started thinking about crypto from the tokenization lens.

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<v Speaker 1>So back in twenty seventeen, I was at Wilmer always

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<v Speaker 1>focused on the intersection between technology and securities laws. So

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<v Speaker 1>back then it was really fintech before they called it fintech,

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<v Speaker 1>so really electronics trading instead of trading on the floor,

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<v Speaker 1>trading using technology. And so in twenty seventeen, the Dow

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<v Speaker 1>Report came out and it talked about how in certain

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<v Speaker 1>instances crypto assets could be securities, and it sort of

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<v Speaker 1>like had crypto and security as loss sort of front

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<v Speaker 1>and center, and so I looked at it as just

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<v Speaker 1>being another version of new technology being used to trade

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<v Speaker 1>securities at that point, and so my first FORTE was

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<v Speaker 1>actually tokenization. So it's sort of funny because back in

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<v Speaker 1>twenty seventeen, everyone.

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<v Speaker 4>Talks about RWA today, but back in.

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<v Speaker 1>Twenty seventeen, it was tokenizing real estate, art, wine, collectible

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<v Speaker 1>and those are the first types of matters I worked

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<v Speaker 1>on initially, and over the years I started working on

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<v Speaker 1>crypto matterage more broadly. But my first forte was a

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<v Speaker 1>tokenization of real world assets, which is like, come full circle,

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<v Speaker 1>because everyone's talking about that today.

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<v Speaker 2>You were so early twenty seventeen. I don't think I

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<v Speaker 2>heard the word tokenization. I heard ico, I heard about

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<v Speaker 2>this coin and that coin, but the concept of tokenization

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<v Speaker 2>was not as prominent as it is now.

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<v Speaker 1>Yeah, So it's interesting because everyone has a different touch

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<v Speaker 1>depending where they sit. So because I work at a

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<v Speaker 1>large law firm, the clients that were coming to us

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<v Speaker 1>were the clients that were institutional backed, and they were

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<v Speaker 1>thinking of tokeniza chain as a way to fractionalize real

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<v Speaker 1>world assets, and so I thought that was super interesting.

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<v Speaker 1>Or people were saying, Okay, if I have a private placement,

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<v Speaker 1>and usually if a private placement it's really illiquid, but

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<v Speaker 1>I can tokenize it and I can have a secondary

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<v Speaker 1>market immediately, And so thinking about giving people access and

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<v Speaker 1>being able to have more people get like, you know,

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<v Speaker 1>being able to trade in art or wine or other

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<v Speaker 1>types of assets and normally or only reserve for certain

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<v Speaker 1>types of people who have certain types of money. And

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<v Speaker 1>so I thought that was super fascinating.

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<v Speaker 2>So fast forward to twenty twenty six, Tiffany, what a

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<v Speaker 2>journey that tradfy. The major bangs and institutions are here,

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<v Speaker 2>and to your point, they're looking to put all these

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<v Speaker 2>assets on chain. They're now starting with stocks and other

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<v Speaker 2>equities like money market funds and then commodities, gold as well.

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<v Speaker 2>Are you blown away by the you know, growth that

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<v Speaker 2>we've seen.

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<v Speaker 1>Absolutely, it's super exciting to see. It's super exciting to

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<v Speaker 1>see it. Sort of it's interesting it was sort of

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<v Speaker 1>small mentor backed companies that were experimenting back in twenty seventeen.

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<v Speaker 1>You know, I was early, really too early, and a

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<v Speaker 1>lot of the companies that are around that time didn't

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<v Speaker 1>make it. And so now it's sort of you have

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<v Speaker 1>both the institutional clients, institutional traditional entities thinking about tokenization

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<v Speaker 1>as well as the traditional crypto protocols and clients. So

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<v Speaker 1>everything is sort of coming together and it's kind of

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<v Speaker 1>all leading into this term called a super app and really,

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<v Speaker 1>instead of having segmented markets where you have crypto, you know,

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<v Speaker 1>with one intermedia or one company and then securities with

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<v Speaker 1>another company. It's really going to this place where we

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<v Speaker 1>have everything all together. And so you have both traditional

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<v Speaker 1>companies and crypto companies offering these products, and I think

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<v Speaker 1>that is super exciting.

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<v Speaker 2>So speaking of traditional companies, you and I were speaking

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<v Speaker 2>before we started recording. You were just a consensus Miami.

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<v Speaker 2>You mentioned some of the biggest institutions had setups there.

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<v Speaker 2>Tell us about who you saw there.

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<v Speaker 1>I saw everyone there. There's a lot of suits. So

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<v Speaker 1>first off, it was very crowded, right, you know, I've

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<v Speaker 1>been going to consensus. I know, maybe this is my

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<v Speaker 1>sixth or so consensus and sort of like depending on

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<v Speaker 1>the price of crypto assets kind of depends on like

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<v Speaker 1>the vibe at the conference. So there were you know,

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<v Speaker 1>super crowded. There were both like institutional participants there as

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<v Speaker 1>well as the crypto native companies there. The sides of

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<v Speaker 1>the boost kind of show the investment, right, So like

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<v Speaker 1>we talked about like one of the large banks having

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<v Speaker 1>a huge installation, there's other you know crypto protocols that

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<v Speaker 1>had their own stages.

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<v Speaker 4>So it's a really good mix.

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<v Speaker 1>And I saw like other clients that I know who

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<v Speaker 1>have been in crypto for years and don't really have

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<v Speaker 1>like a low profile, but because their major institutions, who

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<v Speaker 1>are who had people or they didn't have signage because

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<v Speaker 1>they kind of move sort of under the radar, but

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<v Speaker 1>they were there.

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<v Speaker 4>So the first time I've seen.

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<v Speaker 1>Them ever at consensus, So I thought that was pretty fascinating.

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<v Speaker 2>That's pretty significant because at one point, Tiffany, this was

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<v Speaker 2>all taboo, like, don't talk about it, it's a scam.

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<v Speaker 3>I will fire anyone who.

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<v Speaker 2>Touches this many we may recalled that famous code from

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<v Speaker 2>Jamie Diamond. But now they've got employees there, they've got

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<v Speaker 2>people out, they're talking about crypto, blockchain tech, how can

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<v Speaker 2>we use it in different ways, how can we innovate it.

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<v Speaker 3>It's fascinating.

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<v Speaker 4>Yeah, so it's it's fascinating.

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<v Speaker 1>I think it's also as a result of all of

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<v Speaker 1>the regulatory clarity that we have, you know clarity. The

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<v Speaker 1>bill is still pending before Congress, but the SEC and

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<v Speaker 1>other agencies have done a great job providing clarity with

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<v Speaker 1>their existing authorities. And so now I sort of think

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<v Speaker 1>we think of crypto, I kind of think of four

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<v Speaker 1>different buckets, and so you have you know, assets, like Bitcoin.

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<v Speaker 1>Then you have like other types of crypto assets like

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<v Speaker 1>solana ethereum. We can like build on them and actually

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<v Speaker 1>like you know, have tokenization other types of unlocks that

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<v Speaker 1>you have stable coin, and then you have token is

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<v Speaker 1>securities and sometimes you know, particularly when we had regulatory uncertainty,

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<v Speaker 1>we sort of thought.

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<v Speaker 4>About all of those assets all together.

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<v Speaker 1>And now that we have clarity, you have different institutions

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<v Speaker 1>who were interested in different parts of that taxonomy I

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<v Speaker 1>laid out right, And so it could be that some

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<v Speaker 1>of the large institutions still don't think, still don't want

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<v Speaker 1>to touch a bit Kanye still don't want to touch crypto assets,

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<v Speaker 1>but they really believe in tokenization, right. And so because

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<v Speaker 1>we have this clarity, we have this unlock in different

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<v Speaker 1>aspects of the industry. And I think that's why you

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<v Speaker 1>can have a major conference and have so many different

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<v Speaker 1>types of participants because people are all going there the

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<v Speaker 1>different interests and different segments of the economy or the

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<v Speaker 1>you know, the different aspects of crypto.

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<v Speaker 2>I should say, pardon the interruption. Hi, I'm Tony. I'm

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<v Speaker 2>the host of the Thinking Crypto podcast. I wanted to

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<v Speaker 2>ask you if you can please support the podcast by

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<v Speaker 2>hitting the like button subscribing. If you haven't as yet,

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<v Speaker 2>you can leave a comment below as well well. And

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<v Speaker 2>if you're listening on a podcast platform such as Spotify,

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<v Speaker 2>Apple or wherever you get your podcasts, please be sure

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<v Speaker 2>to follow and hit the five star rating. I'll let

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<v Speaker 2>you get back to the content.

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<v Speaker 3>Thank you so much. You made a.

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<v Speaker 2>Pretty profound point there where you highlighted at somebody's institutions.

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<v Speaker 2>They may not care to hold bigcoin or even have

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<v Speaker 2>a bigcoin product. However, the blockchain rails they're interested in

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<v Speaker 2>that the actual networks that they can go build on

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<v Speaker 2>which benefits the tokens, but they don't necessarily have to

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<v Speaker 2>participate with the token at.

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<v Speaker 1>All, exactly exactly. And that's like, you know, sort of

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<v Speaker 1>going back to my origins in the space. It wasn't

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<v Speaker 1>that folks were doing icos, at least my clients. It

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<v Speaker 1>was really using the rails, using tokenization to fractionalize, using

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<v Speaker 1>tokenization to be able to have quicker settlement, using tokenization

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<v Speaker 1>or tokenization to enable distribution.

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<v Speaker 4>And so it's all of those.

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<v Speaker 1>Elements of the technology that firms are looking at using

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<v Speaker 1>that I think results in a broad subsection.

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<v Speaker 4>Of firms who were interested in it.

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<v Speaker 2>Now, you testified last year before Congress the Subcommittee on

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<v Speaker 2>Digital Assets. Tell us about that and what was the conversation.

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<v Speaker 2>These were the early days in trying to get the clarity.

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<v Speaker 1>Active Assue going, yeah, so this is super early. So

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<v Speaker 1>to kind of set the stage. That was back in

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<v Speaker 1>April of last year. That was before the House had.

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<v Speaker 4>Actually came out with Clarity.

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<v Speaker 1>So they were sort of working a little bit around

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<v Speaker 1>Fit twenty one, taking us way back. And so this

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<v Speaker 1>was the first hearing on market structure that sort of

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<v Speaker 1>set the stage for that Congress to introduce what became Clarity.

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<v Speaker 1>And so in my testimony, I talked about the need

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<v Speaker 1>for legislation for digital assets, how they were distinct and

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<v Speaker 1>different from you know, typical securities, which resulted in the

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<v Speaker 1>rules for securities not being a perfect fit. I talked

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<v Speaker 1>about the consequences of not having regulatory clarity and so

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<v Speaker 1>in the need for really why we need legislation. And

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<v Speaker 1>so that was just over a year ago. A few

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<v Speaker 1>weeks later, maybe a month or so later, we actually

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<v Speaker 1>had the first draft of what became Clarity introduced by

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<v Speaker 1>the House. History like that they passed it.

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<v Speaker 4>Now it's sitting before Senate banking.

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<v Speaker 2>So we owe you thank you because you are certainly

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<v Speaker 2>one of the folks to help get this.

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<v Speaker 4>Small small thank you, small thank you, small thank you.

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<v Speaker 2>Obviously, the draft of the bill came out today, everybody's

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<v Speaker 2>still going through the you know, with a fine tooth comb.

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<v Speaker 3>We're recording this on Tuesday, May.

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<v Speaker 2>Twelfth, and the markup is going to happen in two

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<v Speaker 2>days on Thursday, May fourteenth.

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<v Speaker 3>So what are you anticipating with this process?

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<v Speaker 2>Maybe can tell us about the sausage making here, like,

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<v Speaker 2>is it going to be a lot of back and forth?

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<v Speaker 2>Remove this line, put this line in that type of thing.

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<v Speaker 4>Yeah.

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<v Speaker 1>So during during a markup, both sides have the ability

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<v Speaker 1>to introduce the amendments, and so we need there to

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<v Speaker 1>be bipartis and support, Like, you know, the version of

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<v Speaker 1>the bill that passed Senate ag pass on a parison basis,

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<v Speaker 1>and in order for the bill to actually pass Senate,

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<v Speaker 1>we bipartis and support. So I imagine that there's going

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<v Speaker 1>to be some amendments made by the Democrats to make

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<v Speaker 1>sure that they have whatever compromise language they need in

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<v Speaker 1>there that's not already there. So they feel comfortable passing it,

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<v Speaker 1>so you can get out of committee, because we still

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<v Speaker 1>have a couple more steps to go. And so where

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<v Speaker 1>we're at now is because market structure touches both the

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<v Speaker 1>SEC and a CFTC. There's two separate Senate committees of jurisdiction.

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<v Speaker 1>So the Senate agg which has already passed their version

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<v Speaker 1>right now, Senate Banking, they're going to have their mark

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<v Speaker 1>up on Thursday. Once it passes out of Senate Banking,

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<v Speaker 1>we need to go down to the Senate floor, and

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<v Speaker 1>once the full Senate votes on it, then the bills

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<v Speaker 1>that are passed by Senate would need to be reconciled

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<v Speaker 1>by what was passed by the House last year. So

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<v Speaker 1>we're still a few steps removed. And President Trump has

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<v Speaker 1>called for the bill to be passed by July fourth,

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<v Speaker 1>So there's a lot of work to be done that's

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<v Speaker 1>going to actually happen.

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<v Speaker 3>Fingers crossed, Tiffany, they can get this done.

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<v Speaker 2>It would be so amazing, especially if you get it

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<v Speaker 2>done by I know July fourth is the two hundred

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<v Speaker 2>and fiftieth year anniversary of the United States and celebration

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<v Speaker 2>and all that. All that's going to happen if they

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<v Speaker 2>can get it done, it'd be pretty momentous.

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<v Speaker 4>Yeah, yeah, absolutely.

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<v Speaker 1>Another thing I think that not everyone fully appreciates is

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<v Speaker 1>that getting a bill is really.

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<v Speaker 4>Just the first step.

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<v Speaker 1>Once you have legislation, then you actually need to go

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<v Speaker 1>into the rule making phase, and that can be quite significant.

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<v Speaker 1>For example, Genius, which is really only about payment stable

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<v Speaker 1>cliwings so much much more narrow had over fourteen rule

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<v Speaker 1>makings that were required by that legislation, and some of

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<v Speaker 1>the rule makings that came out were like over three

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<v Speaker 1>hundred questions, and so if you think about the Senate

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<v Speaker 1>Banking version, which is over three hundred pages, I can

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<v Speaker 1>only imagine them or rule makings are going to be required.

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<v Speaker 1>So it's really imperative that we get legislation passed so

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<v Speaker 1>the rule making can process, can get started, so the

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<v Speaker 1>bill can actually be enacted by the agencies.

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<v Speaker 2>So, Tiffany, as it relates to rule making, the SEC

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<v Speaker 2>seems to be getting ahead of curve here. They put

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<v Speaker 2>out a lot of guidance and this is very much

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<v Speaker 2>in your lane because you have a plethor.

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<v Speaker 3>Experience with securities laws.

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<v Speaker 2>I would love to start with the SEC's recent guidance

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<v Speaker 2>on crypto securities with the four categories they put out.

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<v Speaker 3>What is your take on that?

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<v Speaker 1>So, first, I think the SEC did a wonderful job.

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<v Speaker 1>It was a huge undertaking to provide that clarity, and

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<v Speaker 1>I think it's helpful and we're already starting to see

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<v Speaker 1>the market react to that. And so that is commission

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<v Speaker 1>level guidance. There's a different there's a number of different

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<v Speaker 1>types of guidance that can be put out by the SEC.

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<v Speaker 1>You have staff level guidance. There's been a lot of

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<v Speaker 1>staff level statements. Sort of the highest level of guidance

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<v Speaker 1>you can provide without a rule is commission level guidance.

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<v Speaker 1>And so there it has five different categories. So you

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<v Speaker 1>have digital digital tokens like the like you know, ether, salon,

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<v Speaker 1>et cetera. There's fourteen different assets identify there, digital collectibles

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<v Speaker 1>such as n FT's digital IDs, payment stable coins. And

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<v Speaker 1>then the last categories token is securities. And so the

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<v Speaker 1>first three that I mentioned are presumptively not securities, which

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<v Speaker 1>is helpful because it lets the industry know that they're

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<v Speaker 1>kind of fall outside the jurisdiction of the feraoh securities laws.

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<v Speaker 1>It does where it gets a little bit complicated, is

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<v Speaker 1>it talks about how pursuance to how you can be

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<v Speaker 1>a non security crypto asset and still be so pursuant

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<v Speaker 1>to an investment contract. And so it sort of has

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<v Speaker 1>like the analysis as to when you're an investment contract

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<v Speaker 1>versus not. But it's helpful to have that guidance because

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<v Speaker 1>once you sort of have something to you have the

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<v Speaker 1>Commission's views. It allows companies to build, to react or

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<v Speaker 1>when necessary, seek additional guidance.

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<v Speaker 2>Do you think this is comprehensive or there needs to

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<v Speaker 2>be any additional items or it filled in all the gaps.

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<v Speaker 1>I think it's a good start, and so that's why

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<v Speaker 1>I started to buy applauding them.

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<v Speaker 4>It's much more difficult.

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<v Speaker 1>To start with something even though that's not going to

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<v Speaker 1>be perfect. And so because they did, like you know,

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<v Speaker 1>sort of setting the stage, and Crypto Task Force was

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<v Speaker 1>started over a year ago and they have been taking

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<v Speaker 1>tons of meetings. They've provided a foundation for industry to

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<v Speaker 1>provide input and they kind of took all of that

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<v Speaker 1>and that result culminated in the in the Commission level guidance,

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<v Speaker 1>and so I think it's a great start. I think

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<v Speaker 1>there are still questions, right, I think, for example, folks

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<v Speaker 1>still have questions about when a NASA is subject to

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<v Speaker 1>an investment contract versus when it separates and some of

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<v Speaker 1>the statements made there.

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<v Speaker 4>But I think because we have the.

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<v Speaker 1>Commissions the Commission's interpretation as of March, it gives firms

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<v Speaker 1>the ability when they have additional questions to go in

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<v Speaker 1>and seek additional guidance.

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<v Speaker 3>Yeah, it helps out.

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<v Speaker 2>They're more friendly and open to dialogue versus you come

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<v Speaker 2>in and you get a hit with a law suiter

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<v Speaker 2>a Wells notice.

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<v Speaker 4>Yeah, Like I think.

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<v Speaker 1>So you know, during those times, we you know, defended

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<v Speaker 1>a number of clients Buith publicly and you.

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<v Speaker 4>Know, non publicly.

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<v Speaker 1>And I think when you're trying to run a company

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<v Speaker 1>based on looking at a complaint or a settlement, it's

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<v Speaker 1>very difficult because when you read a complaint, you're trying

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<v Speaker 1>to compare sort of what that company did to what

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<v Speaker 1>you did. And it's like, okay, well they mentioned in

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<v Speaker 1>this complaint against X company that you know this particular

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<v Speaker 1>asset is a security. Does that automatically mean that I

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<v Speaker 1>have to delist the asset?

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<v Speaker 3>Right?

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<v Speaker 1>Or you know this staking program is an investment contract,

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<v Speaker 1>does that mean mine is?

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<v Speaker 2>Like? Right?

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<v Speaker 1>And so I think any type of guidance is super

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<v Speaker 1>helpful because it gives firms some direction and sort of

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<v Speaker 1>something like a type of north star to sort of

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<v Speaker 1>aim for. And because the SEC's willing to engage, they've

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<v Speaker 1>asked for comments even with that interpretation, So it really

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<v Speaker 1>provides an industry and ability to provide more feedback to

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<v Speaker 1>kind of get to the right place.

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<v Speaker 3>Yeah, that makes sense and that's really great to hear.

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<v Speaker 2>Now, Prior to this guidance, pretty much securities lawyers and

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<v Speaker 2>everybody in industry have to look to how we test.

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<v Speaker 3>So how does this fit with the how we test?

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<v Speaker 3>Or doesn't have to fit.

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<v Speaker 2>It could just be this is for digital assets specifically,

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<v Speaker 2>while it takes some of the how how we test

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<v Speaker 2>LINGO for token I securities and things.

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<v Speaker 1>Like that, so that so I kind of I would

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<v Speaker 1>separate out token I securities. When I think of token

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<v Speaker 1>I securities, I think of you know, take you know

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<v Speaker 1>X ticker which is on uh, this is on the

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<v Speaker 1>stock exchange, and just having a digital version of that.

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<v Speaker 1>I think where the how we test comes into play

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<v Speaker 1>is when you have a new asset that is like,

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<v Speaker 1>you know, not a security that's being so pursuant to

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<v Speaker 1>an investment contract, and the guidance interpretation talks about instances

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<v Speaker 1>where an issuer issues a new asset and makes promises

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<v Speaker 1>and the purchasers of that asset rely on those promises,

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<v Speaker 1>and it kind of talks about how you can have

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<v Speaker 1>an asset that's not a security, but it's so pursuant

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<v Speaker 1>to an issue, we're making promises, and how until those

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<v Speaker 1>promises are fulfilled or abandoned, it's still considered a security.

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<v Speaker 1>And so that's what and that's something that the industry.

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<v Speaker 1>There was twenty nineteen guidance which was less clear, and

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<v Speaker 1>then it was a lot of confusion during the intervening times,

427
00:21:15.240 --> 00:21:19.200
<v Speaker 1>particularly because there were various court cases in different courts

428
00:21:19.559 --> 00:21:22.240
<v Speaker 1>that had different versions of this theory. And so that's

429
00:21:22.240 --> 00:21:24.079
<v Speaker 1>the kind of the clearest guidance we have. But I

430
00:21:24.079 --> 00:21:27.960
<v Speaker 1>think it's super important that you had the Commission saying

431
00:21:28.400 --> 00:21:32.640
<v Speaker 1>very firmly that a non security crypto asset can be

432
00:21:32.680 --> 00:21:36.240
<v Speaker 1>sold pursuant to an investment contract, and then talking about

433
00:21:36.240 --> 00:21:38.640
<v Speaker 1>when that investment contract no longer exists.

434
00:21:41.119 --> 00:21:43.559
<v Speaker 2>And I know the SECI, I think I recall Chair

435
00:21:43.640 --> 00:21:47.799
<v Speaker 2>Atkins said they still have to release guidance or rulemaking

436
00:21:48.039 --> 00:21:51.440
<v Speaker 2>on tokenization itself, right, I think that's still to come,

437
00:21:51.480 --> 00:21:53.200
<v Speaker 2>and they may be in the process working on it.

438
00:21:53.640 --> 00:21:56.720
<v Speaker 1>So there's a couple of different I think types of

439
00:21:56.759 --> 00:22:00.759
<v Speaker 1>guidance we're waiting for. So the staff has shoot guidance

440
00:22:00.799 --> 00:22:04.640
<v Speaker 1>about tokenization several different models, whether it's issuers driven or

441
00:22:04.680 --> 00:22:09.319
<v Speaker 1>third party or synthetic, and then the commission level interpretation

442
00:22:09.480 --> 00:22:12.119
<v Speaker 1>sort of reference that guidance to bring that staff level

443
00:22:12.160 --> 00:22:15.039
<v Speaker 1>guidance up to the commission level. There are still I

444
00:22:15.039 --> 00:22:18.640
<v Speaker 1>think some questions about you know, what additional guidance has

445
00:22:18.720 --> 00:22:24.680
<v Speaker 1>needed for tokenization. But unlike you know other assets, other

446
00:22:24.759 --> 00:22:27.480
<v Speaker 1>crypto assets, we are when it comes to tokenization, there

447
00:22:27.480 --> 00:22:30.400
<v Speaker 1>are one hundred percent emphatically securities. It's just a matter

448
00:22:30.519 --> 00:22:36.480
<v Speaker 1>of how the securities laws fit with a digitally native asset.

449
00:22:36.599 --> 00:22:37.720
<v Speaker 4>So I do that it's different.

450
00:22:38.240 --> 00:22:42.559
<v Speaker 1>The other thing that we're waiting for is guidance on

451
00:22:43.000 --> 00:22:46.119
<v Speaker 1>it's called like reg crypto, which sort of provides a

452
00:22:46.160 --> 00:22:50.839
<v Speaker 1>safe harbor for issuers of new crypto assets to be

453
00:22:50.839 --> 00:22:54.880
<v Speaker 1>able to offer that asset, you know, with like limited

454
00:22:55.400 --> 00:22:57.279
<v Speaker 1>I'll say, like some type of exemption from the feral

455
00:22:57.359 --> 00:22:59.920
<v Speaker 1>securities laws. And then the other type of guidance that

456
00:23:00.720 --> 00:23:04.000
<v Speaker 1>has been teased, and the industry is anxiously awaiting the

457
00:23:04.000 --> 00:23:07.920
<v Speaker 1>innovation exemption, and that provides a way for on chain

458
00:23:08.000 --> 00:23:13.160
<v Speaker 1>liquidity providers to provide liquidity to trade assets on chain

459
00:23:13.200 --> 00:23:16.519
<v Speaker 1>without having to comply with the full registration requirements.

460
00:23:16.920 --> 00:23:21.880
<v Speaker 2>Let's double click on the reg because that one's interesting.

461
00:23:21.960 --> 00:23:24.599
<v Speaker 2>Is that kind of what people were waiting for in

462
00:23:24.640 --> 00:23:27.440
<v Speaker 2>twenty seventeen for icos that if I want to launch

463
00:23:27.440 --> 00:23:31.319
<v Speaker 2>a network, a layer one with its own token that

464
00:23:31.799 --> 00:23:33.519
<v Speaker 2>takes handles that type of situation.

465
00:23:33.680 --> 00:23:39.400
<v Speaker 1>Yes, that's my understanding. It's sort of like the safe

466
00:23:39.400 --> 00:23:43.160
<v Speaker 1>harbor that Commissioner Purse had been had proposed and reproposed

467
00:23:43.200 --> 00:23:46.400
<v Speaker 1>a couple of years ago. So it talks about instances

468
00:23:46.440 --> 00:23:49.640
<v Speaker 1>where you're issuing a token to raise capital, the types

469
00:23:49.680 --> 00:23:52.960
<v Speaker 1>of disclosures you need to make, and I'm understanding, but

470
00:23:53.039 --> 00:23:56.039
<v Speaker 1>have some type of tests that determines when you're no

471
00:23:56.119 --> 00:23:59.480
<v Speaker 1>longer essentially a security and required to make those disclosures

472
00:23:59.559 --> 00:24:01.599
<v Speaker 1>versus when you're like fully decentralized.

473
00:24:02.319 --> 00:24:02.920
<v Speaker 3>Interesting.

474
00:24:03.400 --> 00:24:06.119
<v Speaker 2>I'm really fascinated by that because that goes back to

475
00:24:06.799 --> 00:24:08.519
<v Speaker 2>lawsuits that happened even under.

476
00:24:08.400 --> 00:24:10.160
<v Speaker 3>Jay Clayton yeh, when he was chair.

477
00:24:10.680 --> 00:24:12.279
<v Speaker 2>So that's going to be a big one, and I

478
00:24:12.319 --> 00:24:15.240
<v Speaker 2>wonder if you know, I'll just give an example. I'm

479
00:24:15.279 --> 00:24:17.720
<v Speaker 2>not picking on them in any way, but Circle just

480
00:24:17.759 --> 00:24:20.480
<v Speaker 2>did a pre sale on their arc blockchain token, and

481
00:24:20.559 --> 00:24:23.359
<v Speaker 2>black Rock was a participant, Apollo and some big names,

482
00:24:24.079 --> 00:24:26.079
<v Speaker 2>So I wonder if folks are going to try to

483
00:24:26.079 --> 00:24:28.359
<v Speaker 2>get ahead of this and launch share tokens before that

484
00:24:28.400 --> 00:24:29.160
<v Speaker 2>comes out.

485
00:24:29.359 --> 00:24:34.160
<v Speaker 1>So I think the interesting distinction between what's happening now

486
00:24:34.279 --> 00:24:39.119
<v Speaker 1>versus twenty seventeen twenty seventeen prior to the Dow report,

487
00:24:39.480 --> 00:24:44.960
<v Speaker 1>I don't think firms or projects either they didn't realize

488
00:24:45.000 --> 00:24:47.559
<v Speaker 1>they were issuing securities or they took the view that

489
00:24:47.599 --> 00:24:49.759
<v Speaker 1>they weren't going to comply with the feral securities laws,

490
00:24:49.920 --> 00:24:53.440
<v Speaker 1>like right one of the two things here after you know,

491
00:24:53.599 --> 00:24:56.400
<v Speaker 1>years of enforcement in all of the ICO cases, I

492
00:24:56.440 --> 00:25:00.440
<v Speaker 1>think it's pretty clear to most projects that offering a

493
00:25:00.480 --> 00:25:04.400
<v Speaker 1>token is a securities transaction, and so they typically comply

494
00:25:04.759 --> 00:25:07.000
<v Speaker 1>most of the time because it's easier. They comply with

495
00:25:07.160 --> 00:25:10.079
<v Speaker 1>the with the reg D or some type of offering

496
00:25:10.119 --> 00:25:13.799
<v Speaker 1>exemption and only sell to credit investors. So to me,

497
00:25:14.160 --> 00:25:19.240
<v Speaker 1>I think the most powerful part of reg crypto would

498
00:25:19.279 --> 00:25:23.119
<v Speaker 1>be the potential to offer the token in the US

499
00:25:23.319 --> 00:25:26.960
<v Speaker 1>to retail investors, right because right now, if you think

500
00:25:27.000 --> 00:25:28.839
<v Speaker 1>about some of the I'm not going to name names

501
00:25:28.880 --> 00:25:31.720
<v Speaker 1>because you know lots of clients, but some of the

502
00:25:31.880 --> 00:25:36.400
<v Speaker 1>larger crypto projects who have issued tokens, some of them

503
00:25:36.440 --> 00:25:40.480
<v Speaker 1>indeed did either did it offshore or they only only

504
00:25:40.519 --> 00:25:43.400
<v Speaker 1>sold them to credit investors because of the securitious law issue.

505
00:25:43.920 --> 00:25:47.000
<v Speaker 1>And so that's why I think that having reg crypto

506
00:25:47.200 --> 00:25:51.039
<v Speaker 1>and allowing these tokens to be issued directly to retail

507
00:25:51.079 --> 00:25:54.799
<v Speaker 1>investors who want to participate is a big unlock. I'm

508
00:25:54.839 --> 00:25:57.160
<v Speaker 1>not providing securious advice. I'm not saying that everyone should

509
00:25:57.160 --> 00:25:58.720
<v Speaker 1>go out and buy them, but I think just having

510
00:25:58.759 --> 00:26:01.119
<v Speaker 1>the ability to access these markets.

511
00:26:02.240 --> 00:26:05.000
<v Speaker 4>Because we because they have it in the past, would

512
00:26:05.079 --> 00:26:06.359
<v Speaker 4>be it's going to be a big unlock.

513
00:26:06.960 --> 00:26:09.599
<v Speaker 2>Yeah, because that was certainly a challenge in the years

514
00:26:09.640 --> 00:26:13.720
<v Speaker 2>prior twenty seventeen onward with the icos, where people would

515
00:26:13.759 --> 00:26:16.799
<v Speaker 2>send money to their cousin in Germany, Hey buy this

516
00:26:16.880 --> 00:26:19.359
<v Speaker 2>coin and then send it back to me via thiss wallet,

517
00:26:19.440 --> 00:26:21.240
<v Speaker 2>right because they couldn't access it here.

518
00:26:22.319 --> 00:26:24.240
<v Speaker 3>But how does that dynamic play out?

519
00:26:24.279 --> 00:26:27.559
<v Speaker 2>Do you think where these tokens are on the globally

520
00:26:27.640 --> 00:26:30.599
<v Speaker 2>distributing network. The supply can be in different parts of

521
00:26:30.599 --> 00:26:31.519
<v Speaker 2>the world, so to speak.

522
00:26:33.279 --> 00:26:34.920
<v Speaker 3>And if people.

523
00:26:34.680 --> 00:26:37.480
<v Speaker 2>Overseas don't have to comply with the US laws and

524
00:26:37.519 --> 00:26:41.680
<v Speaker 2>they can have the token, but I can send my uncle, Like,

525
00:26:41.839 --> 00:26:44.039
<v Speaker 2>how does that? I don't understand how the SEC would

526
00:26:44.079 --> 00:26:44.640
<v Speaker 2>even manage that.

527
00:26:45.880 --> 00:26:46.519
<v Speaker 3>It's tough.

528
00:26:47.119 --> 00:26:48.119
<v Speaker 4>It is tough.

529
00:26:48.440 --> 00:26:52.279
<v Speaker 1>The SEC has very broad jurisdiction when it comes to

530
00:26:52.400 --> 00:26:56.920
<v Speaker 1>US persons, and so I think that if you know,

531
00:26:57.000 --> 00:27:01.160
<v Speaker 1>there's limited instances where people send money to their cousins

532
00:27:01.160 --> 00:27:04.119
<v Speaker 1>and participate in offering, I think that's one thing that's

533
00:27:04.160 --> 00:27:06.680
<v Speaker 1>really hard to police. I think it's another thing if

534
00:27:06.680 --> 00:27:10.119
<v Speaker 1>it's happening on full scale, that's sort of part of

535
00:27:10.119 --> 00:27:13.680
<v Speaker 1>the distribution plan, because then it's like the project or

536
00:27:13.680 --> 00:27:16.599
<v Speaker 1>the token issuer is avoiding is like kind of avoiding

537
00:27:16.799 --> 00:27:17.440
<v Speaker 1>complying with.

538
00:27:17.440 --> 00:27:18.720
<v Speaker 4>The US securities laws.

539
00:27:18.839 --> 00:27:19.000
<v Speaker 2>Right.

540
00:27:19.319 --> 00:27:20.880
<v Speaker 1>But I think we sort of we want to get

541
00:27:20.880 --> 00:27:24.079
<v Speaker 1>past that, right And I think that, as a lot

542
00:27:24.079 --> 00:27:26.519
<v Speaker 1>of folks have said, the US has the most liquid

543
00:27:27.039 --> 00:27:31.519
<v Speaker 1>capital markets, and so I think that once the SEC

544
00:27:32.160 --> 00:27:35.240
<v Speaker 1>provides guidance about how to issue tokens in the US,

545
00:27:35.839 --> 00:27:38.960
<v Speaker 1>people are going to sort of around the globe will

546
00:27:38.960 --> 00:27:41.519
<v Speaker 1>come here and we're seeing this now, even with respect

547
00:27:41.519 --> 00:27:45.599
<v Speaker 1>to crypto projects. Right before, when everyone's sort of looking

548
00:27:45.640 --> 00:27:49.079
<v Speaker 1>offshore because of regultory uncertainty, now they're all sort of

549
00:27:49.160 --> 00:27:51.920
<v Speaker 1>coming back. You see every week you see a new

550
00:27:51.920 --> 00:27:56.240
<v Speaker 1>project or protocol who previously only did offshore offerings is

551
00:27:56.279 --> 00:27:58.400
<v Speaker 1>now coming to the US and setting up shop.

552
00:27:58.599 --> 00:27:58.799
<v Speaker 3>Right.

553
00:27:59.279 --> 00:28:02.839
<v Speaker 1>And so I agree that crypto assets are global, but

554
00:28:02.920 --> 00:28:05.240
<v Speaker 1>I think because everyone wants to be in the US,

555
00:28:06.079 --> 00:28:09.319
<v Speaker 1>once standards are set here that allow people to participate

556
00:28:10.480 --> 00:28:13.519
<v Speaker 1>and not just institutions, I think that the you know,

557
00:28:13.759 --> 00:28:17.119
<v Speaker 1>people will comply with whatever the standards are and they'll

558
00:28:17.160 --> 00:28:18.880
<v Speaker 1>and there'll be lots of token offerings here.

559
00:28:19.400 --> 00:28:20.279
<v Speaker 3>That's a great point.

560
00:28:20.680 --> 00:28:23.559
<v Speaker 2>We have the largest capital markets mostly good as you mentioned,

561
00:28:24.039 --> 00:28:26.839
<v Speaker 2>and you know, once the rules are clear, I could

562
00:28:26.839 --> 00:28:29.559
<v Speaker 2>see more people coming back because at one point they

563
00:28:29.559 --> 00:28:31.519
<v Speaker 2>were like, you know what, screw to US. I don't

564
00:28:31.519 --> 00:28:33.079
<v Speaker 2>want to get in trouble there. I'm gonna go do

565
00:28:33.119 --> 00:28:35.920
<v Speaker 2>it overseas. But once the rules of the road are clear,

566
00:28:35.920 --> 00:28:37.079
<v Speaker 2>it will be a lot easier for them.

567
00:28:37.559 --> 00:28:39.839
<v Speaker 1>Absolutely, And even like air drops like right, that's a

568
00:28:39.839 --> 00:28:44.200
<v Speaker 1>great example. Like back in the twenty nineteen SEC guidance,

569
00:28:44.640 --> 00:28:47.680
<v Speaker 1>there was language indicating that air drops could even be

570
00:28:47.759 --> 00:28:50.440
<v Speaker 1>security as offerings. And with this Commission guidance, we were

571
00:28:50.480 --> 00:28:53.640
<v Speaker 1>just talking about you know, there's instances where air drop

572
00:28:53.680 --> 00:28:55.680
<v Speaker 1>you can give air drops to us persons like right,

573
00:28:55.720 --> 00:28:57.759
<v Speaker 1>So there's just all of these little unlocks that we

574
00:28:58.000 --> 00:28:59.640
<v Speaker 1>have as a result of this clarity.

575
00:29:00.400 --> 00:29:02.400
<v Speaker 2>Boy, I can't wait for air drops to come back.

576
00:29:03.000 --> 00:29:07.720
<v Speaker 2>Make make air drops it great again. That would be

577
00:29:07.759 --> 00:29:10.240
<v Speaker 2>really good. So that's a big one that I think

578
00:29:10.400 --> 00:29:13.160
<v Speaker 2>I'm really looking forward to the other thing that the

579
00:29:13.200 --> 00:29:17.279
<v Speaker 2>SEC provided was guidance on user interfaces. SEC staff issues

580
00:29:17.319 --> 00:29:21.240
<v Speaker 2>broker dealer registration guidance on certain user interfaces tell us

581
00:29:21.279 --> 00:29:22.400
<v Speaker 2>about the significance of this.

582
00:29:23.079 --> 00:29:24.160
<v Speaker 4>So it's actually really huge.

583
00:29:24.160 --> 00:29:27.640
<v Speaker 1>So, as I mentioned, I grew up as a broker

584
00:29:27.680 --> 00:29:30.559
<v Speaker 1>dealer attorney, and it's sort of you know, you're ingrained

585
00:29:30.599 --> 00:29:34.559
<v Speaker 1>as a broker dealer attorney that someone's engaging in a

586
00:29:34.599 --> 00:29:39.079
<v Speaker 1>security transaction and they received transaction based compensation that they're

587
00:29:39.079 --> 00:29:41.640
<v Speaker 1>a broker, and that's sort of how a lot of

588
00:29:41.640 --> 00:29:44.079
<v Speaker 1>the guidance that has been issued over the last couple

589
00:29:44.119 --> 00:29:47.480
<v Speaker 1>of years, really twenty thirty years has indicated. And so

590
00:29:47.559 --> 00:29:51.440
<v Speaker 1>this guidance basically says that if you provide a wallet

591
00:29:51.519 --> 00:29:56.759
<v Speaker 1>or user interface that allows a user to direct transactions

592
00:29:56.799 --> 00:30:02.480
<v Speaker 1>to a liquidity provider, whether centralizer decentralized. If you follow

593
00:30:02.559 --> 00:30:06.799
<v Speaker 1>certain standards or certain conditions, that interface doesn't need to

594
00:30:06.880 --> 00:30:11.079
<v Speaker 1>register as a broker dealer, even though that interface is

595
00:30:11.160 --> 00:30:15.920
<v Speaker 1>allowed to get transaction based compensation. So from a broker dealer,

596
00:30:16.880 --> 00:30:22.720
<v Speaker 1>you know history perspective, it's quite significant, and you know,

597
00:30:22.799 --> 00:30:27.839
<v Speaker 1>the thing that it leaves open is the destinations to

598
00:30:27.920 --> 00:30:31.880
<v Speaker 1>which the order are routed, whether it's decentralized or centralized.

599
00:30:32.279 --> 00:30:34.839
<v Speaker 1>It doesn't talk about the status of those destinations, so

600
00:30:34.880 --> 00:30:36.240
<v Speaker 1>it's a little bit disjointed.

601
00:30:36.400 --> 00:30:36.599
<v Speaker 3>Right.

602
00:30:36.680 --> 00:30:38.920
<v Speaker 4>You're allowed to have a wallet that.

603
00:30:40.400 --> 00:30:45.200
<v Speaker 1>Allows a user to direct or messages to a liquidity pool,

604
00:30:45.279 --> 00:30:48.119
<v Speaker 1>but it doesn't talk about the status of that liquidity pool,

605
00:30:48.400 --> 00:30:50.880
<v Speaker 1>and that's what the innovation exemption is supposed to cover.

606
00:30:51.359 --> 00:30:54.720
<v Speaker 2>So I'm assuming this is very big for self hosted

607
00:30:54.759 --> 00:30:56.799
<v Speaker 2>crypto wallets crypto walts in general.

608
00:30:56.559 --> 00:30:58.480
<v Speaker 4>Correct, Yeah, absolutely, yeah.

609
00:30:58.519 --> 00:31:02.400
<v Speaker 1>So if you think back to some of the cases

610
00:31:02.400 --> 00:31:05.079
<v Speaker 1>that were brought under the prior administration, I can think

611
00:31:05.079 --> 00:31:07.720
<v Speaker 1>of at least two where crypto wallets were alleged to

612
00:31:07.759 --> 00:31:13.160
<v Speaker 1>be unregistered brokers. This essentially provides clarity that under these conditions,

613
00:31:13.480 --> 00:31:16.759
<v Speaker 1>a crypto wallet is not acting as a broker dealer.

614
00:31:18.079 --> 00:31:20.279
<v Speaker 3>There's something the CFDC also did recently.

615
00:31:20.319 --> 00:31:22.200
<v Speaker 2>I don't know if you're more on the security side,

616
00:31:22.240 --> 00:31:23.400
<v Speaker 2>but I don't know if you're aware of this, and

617
00:31:23.440 --> 00:31:26.079
<v Speaker 2>I it's escaping my mind right now, but I interviewed

618
00:31:26.119 --> 00:31:29.039
<v Speaker 2>that one of the folks from Phantom, the crypto wallet company,

619
00:31:29.400 --> 00:31:33.039
<v Speaker 2>and it was pretty big and it was something related

620
00:31:33.079 --> 00:31:34.880
<v Speaker 2>to broker dealer as well. So you got both the

621
00:31:34.920 --> 00:31:37.079
<v Speaker 2>SEC and CFDC providing the clearance.

622
00:31:37.160 --> 00:31:39.079
<v Speaker 1>Yeah, that one's a little bit different. It talks about

623
00:31:39.079 --> 00:31:45.519
<v Speaker 1>introducing brokers and it provided a way for introducing brokers

624
00:31:47.480 --> 00:31:51.480
<v Speaker 1>wallet providers essentially to send orders to introducing brokers.

625
00:31:51.480 --> 00:31:52.759
<v Speaker 4>On the CFTC side.

626
00:31:53.160 --> 00:31:54.920
<v Speaker 1>It's a little bit different because, as I mentioned, the

627
00:31:55.000 --> 00:31:58.880
<v Speaker 1>SEC guidance permitted orders to be sent to centralized or

628
00:31:58.920 --> 00:32:02.119
<v Speaker 1>decentralized protocol that allows it to be sent to centralize

629
00:32:02.119 --> 00:32:05.160
<v Speaker 1>and it's on the CFTC side, So it's distinct.

630
00:32:05.519 --> 00:32:06.160
<v Speaker 4>But I think.

631
00:32:06.079 --> 00:32:11.119
<v Speaker 1>Overall, anytime there's guidance that sort of talks about the

632
00:32:11.119 --> 00:32:15.079
<v Speaker 1>parameters of when you can comply with the laws, you

633
00:32:15.119 --> 00:32:17.160
<v Speaker 1>don't have to comply with the laws that are applicable.

634
00:32:17.440 --> 00:32:19.920
<v Speaker 1>I think that's helpful for the industry and for builders

635
00:32:19.920 --> 00:32:23.039
<v Speaker 1>because I know they have standards that they can build towards.

636
00:32:24.200 --> 00:32:27.920
<v Speaker 2>I love that these agencies are providing the guidance, and

637
00:32:27.960 --> 00:32:30.799
<v Speaker 2>it's like a breath of fresh heir to have them

638
00:32:30.880 --> 00:32:32.519
<v Speaker 2>just working together closely.

639
00:32:32.519 --> 00:32:34.160
<v Speaker 3>The Mike c like cheer Atkins.

640
00:32:34.720 --> 00:32:37.920
<v Speaker 2>They had to I remember a joint hearing together and

641
00:32:38.000 --> 00:32:40.319
<v Speaker 2>much more saying Hey, we're gonna do this, We're gonna

642
00:32:40.359 --> 00:32:42.400
<v Speaker 2>work together Project Crypto and all that jazz.

643
00:32:42.519 --> 00:32:43.680
<v Speaker 3>So it's really great.

644
00:32:44.160 --> 00:32:46.359
<v Speaker 4>Yeah, and it's great for a number of different ways.

645
00:32:46.440 --> 00:32:51.119
<v Speaker 4>It's it's great for firms who are in.

646
00:32:51.039 --> 00:32:54.519
<v Speaker 1>The crypto spaces, especially because, as I kind of laid

647
00:32:54.559 --> 00:32:58.960
<v Speaker 1>out before, you know, certain crypto assets are digital commodities,

648
00:32:59.079 --> 00:33:02.200
<v Speaker 1>certain of them could be securities, and so having the

649
00:33:02.240 --> 00:33:05.400
<v Speaker 1>agencies work together is helpful because it allows firms to

650
00:33:05.440 --> 00:33:08.000
<v Speaker 1>go in and request one meeting and talk to both

651
00:33:08.000 --> 00:33:11.519
<v Speaker 1>agencies at the same time and talk about how their

652
00:33:11.559 --> 00:33:16.480
<v Speaker 1>products should be categorized, what registrations they need. We haven't

653
00:33:16.480 --> 00:33:19.839
<v Speaker 1>got into it yet, but Chair Atkins and Chair saleg

654
00:33:19.920 --> 00:33:23.920
<v Speaker 1>have teased the ability for you know, a company to

655
00:33:23.960 --> 00:33:27.160
<v Speaker 1>be registered with one agency and sort of like have

656
00:33:27.400 --> 00:33:30.720
<v Speaker 1>lighter registration by the other entity, by the other agency,

657
00:33:31.000 --> 00:33:33.640
<v Speaker 1>which is significant because today a lot of entities are

658
00:33:33.680 --> 00:33:37.640
<v Speaker 1>duly registered and so that really helps from the perspective

659
00:33:37.720 --> 00:33:42.079
<v Speaker 1>of competitiveness. In the US, Unlike a lot of other jurisdictions,

660
00:33:42.119 --> 00:33:45.000
<v Speaker 1>we have a number of different regulators, right, and so

661
00:33:45.559 --> 00:33:48.200
<v Speaker 1>you can be one one company and you're registered with

662
00:33:48.240 --> 00:33:52.519
<v Speaker 1>the CFDC, the SEC, the banking regulators, right, whereas and

663
00:33:52.559 --> 00:33:55.160
<v Speaker 1>another jurisdiction you might only be registered with one with

664
00:33:55.200 --> 00:33:58.799
<v Speaker 1>one agency. And so as the SEC is sort of sorry,

665
00:33:58.839 --> 00:34:02.599
<v Speaker 1>the SECCFDC has of thinking about competitiveness and how this

666
00:34:02.720 --> 00:34:06.519
<v Speaker 1>global asset is going to impact the markets. They sort

667
00:34:06.519 --> 00:34:08.639
<v Speaker 1>of have that hat on that type of thinking to

668
00:34:08.760 --> 00:34:12.639
<v Speaker 1>think about how US firms can stay competitive and how

669
00:34:13.440 --> 00:34:16.159
<v Speaker 1>the US shouldn't be kind of falling behind from an

670
00:34:16.159 --> 00:34:19.480
<v Speaker 1>investment perspective because it's too burdensome to be regulated here.

671
00:34:19.800 --> 00:34:21.280
<v Speaker 3>Absolutely, it's twenty twenty six.

672
00:34:21.599 --> 00:34:24.800
<v Speaker 2>You should make this so easy, right, Digital and these

673
00:34:24.840 --> 00:34:28.679
<v Speaker 2>agencies should have some interoperability where they can share information

674
00:34:29.159 --> 00:34:31.760
<v Speaker 2>and it could be one platform that they pull the

675
00:34:31.880 --> 00:34:33.880
<v Speaker 2>same data from that I don't have to go register

676
00:34:33.960 --> 00:34:36.840
<v Speaker 2>here with this guy and that guy. And especially with

677
00:34:37.039 --> 00:34:39.119
<v Speaker 2>AI and plus blockchain technology.

678
00:34:39.760 --> 00:34:45.039
<v Speaker 1>Come on, guys, Yeah, no, absolutely, I think that like

679
00:34:45.239 --> 00:34:48.159
<v Speaker 1>understanding that you have to be regulated and being regulated

680
00:34:48.199 --> 00:34:50.800
<v Speaker 1>should be the easy part, right, because the point of

681
00:34:50.800 --> 00:34:53.079
<v Speaker 1>regulation is to protect investors, make sure that people get

682
00:34:53.079 --> 00:34:55.719
<v Speaker 1>their right disclosures right. And so if you spend all

683
00:34:55.719 --> 00:34:58.079
<v Speaker 1>of this time and energy trying to figure out which

684
00:34:58.119 --> 00:35:00.639
<v Speaker 1>regulator to go to, what the requirements are are, that

685
00:35:00.760 --> 00:35:03.400
<v Speaker 1>is not actually helping the bottom line and helping investors,

686
00:35:03.480 --> 00:35:06.719
<v Speaker 1>like right, And so I agree regulation should be easy,

687
00:35:06.800 --> 00:35:09.360
<v Speaker 1>like regulation is burdensome, like once you're regulated, it's not

688
00:35:09.360 --> 00:35:12.360
<v Speaker 1>supposed to be easy, But the process of getting registered

689
00:35:12.400 --> 00:35:15.800
<v Speaker 1>and regulated and understanding you know which agency need to

690
00:35:15.800 --> 00:35:18.119
<v Speaker 1>be regulated with like that should be easy so that

691
00:35:18.159 --> 00:35:20.360
<v Speaker 1>you can get to the bottom line and protect investors.

692
00:35:21.079 --> 00:35:24.679
<v Speaker 2>Absolutely, tell us a bit about as much as you can,

693
00:35:25.079 --> 00:35:28.039
<v Speaker 2>because we know there's NDAs and privacy and so forth.

694
00:35:28.079 --> 00:35:30.559
<v Speaker 2>With your clients, you probably can't give names. Well, what

695
00:35:30.599 --> 00:35:34.519
<v Speaker 2>type of clients are you working with? How are are

696
00:35:34.519 --> 00:35:37.199
<v Speaker 2>they viewing the change in the landscape under the Trump

697
00:35:37.199 --> 00:35:39.280
<v Speaker 2>administration as well as the guidance from the SEC.

698
00:35:40.119 --> 00:35:43.400
<v Speaker 1>So I have a very broad client base, So I

699
00:35:43.519 --> 00:35:46.719
<v Speaker 1>work with a lot of crypto data firms, from centralized

700
00:35:47.119 --> 00:35:52.480
<v Speaker 1>platforms to infrastructure providers, to wallets, to venture capital firms

701
00:35:52.480 --> 00:35:55.559
<v Speaker 1>to trade associations, also work with a number of the

702
00:35:55.599 --> 00:35:59.480
<v Speaker 1>traditional firms, including you know, the ones who are ogs

703
00:35:59.519 --> 00:36:02.480
<v Speaker 1>who have been kind of experimenting with crypto for years,

704
00:36:02.519 --> 00:36:04.360
<v Speaker 1>as well as the ones who are sort of newer

705
00:36:05.000 --> 00:36:07.880
<v Speaker 1>to crypto, are not even like publicly on the radar,

706
00:36:08.280 --> 00:36:12.519
<v Speaker 1>So very very broad client base. I think at bottom,

707
00:36:13.000 --> 00:36:18.920
<v Speaker 1>each firm wants to understand which rules apply to them

708
00:36:19.039 --> 00:36:21.840
<v Speaker 1>and wants a path to comply with the applicable rules.

709
00:36:22.280 --> 00:36:26.320
<v Speaker 1>And so for some of my crypto native firms matricularly

710
00:36:26.360 --> 00:36:29.440
<v Speaker 1>ones that really provide software, is trying to figure out

711
00:36:29.559 --> 00:36:33.519
<v Speaker 1>under what circumstances they need to be registered. And then

712
00:36:33.679 --> 00:36:37.920
<v Speaker 1>for my traditional firms, which were already registered and regulated,

713
00:36:38.039 --> 00:36:42.519
<v Speaker 1>is figuring out okay, because you know, on chain assets

714
00:36:42.639 --> 00:36:46.559
<v Speaker 1>behave differently, what types of you know, how should their

715
00:36:46.559 --> 00:36:49.239
<v Speaker 1>regulations be modified so that they can continue to meet

716
00:36:49.280 --> 00:36:53.039
<v Speaker 1>their regulatory requirements for a different type of assets. So

717
00:36:53.079 --> 00:36:56.079
<v Speaker 1>I think at bottom, everyone wants clarity. And we're talking

718
00:36:56.119 --> 00:36:59.280
<v Speaker 1>earlier about about my testimony lest year, and that's essentially

719
00:36:59.320 --> 00:37:02.000
<v Speaker 1>what I said, Like you have clarity, it helps both

720
00:37:02.320 --> 00:37:07.199
<v Speaker 1>crypto native and traditional firms. And it's also super important

721
00:37:07.239 --> 00:37:11.920
<v Speaker 1>from a competitive perspective because once we start, once we

722
00:37:11.960 --> 00:37:15.079
<v Speaker 1>had genius, for example, you see all of these firms,

723
00:37:15.079 --> 00:37:18.519
<v Speaker 1>both crypto native and traditional, sort of getting into the

724
00:37:18.519 --> 00:37:21.280
<v Speaker 1>stable coin space from different perspectives, whether it's getting an

725
00:37:21.280 --> 00:37:25.760
<v Speaker 1>OCC charter, whether it's partnering with a stable coin provider,

726
00:37:25.960 --> 00:37:28.199
<v Speaker 1>whether it's like figuring out how to use stable coins

727
00:37:28.239 --> 00:37:31.239
<v Speaker 1>in the back for like payment settlement purposes. So it's

728
00:37:31.280 --> 00:37:34.360
<v Speaker 1>really that clarity that really drives innovation and drives competition.

729
00:37:35.280 --> 00:37:37.960
<v Speaker 2>Yeah, so do you imagine that you know, once clarity

730
00:37:38.039 --> 00:37:41.280
<v Speaker 2>is past, President Trump signs it that we're going to

731
00:37:41.280 --> 00:37:44.960
<v Speaker 2>see a kickoff of innovation and these companies, especially trad

732
00:37:45.000 --> 00:37:48.840
<v Speaker 2>fin institutions, building out their divisions, hiring people, creating jobs,

733
00:37:49.719 --> 00:37:51.760
<v Speaker 2>coming up with things we didn't even think of before

734
00:37:51.920 --> 00:37:54.199
<v Speaker 2>for blockchain innovation and applications.

735
00:37:54.639 --> 00:37:59.199
<v Speaker 1>Absolutely, I think for so, I think the traditional firms

736
00:37:59.800 --> 00:38:04.800
<v Speaker 1>they really need legislation and you know, in some respects

737
00:38:04.880 --> 00:38:09.119
<v Speaker 1>like affirmative, the affirmative ability to engage in this this

738
00:38:09.199 --> 00:38:13.360
<v Speaker 1>asset class before they invest. And so if I think

739
00:38:13.440 --> 00:38:18.519
<v Speaker 1>back twenty twenty twenty twenty twenty twenty one, there were

740
00:38:18.559 --> 00:38:21.960
<v Speaker 1>a number of large traditional institutions who sort of came

741
00:38:22.000 --> 00:38:24.119
<v Speaker 1>to us. They were investing in crypto, they wanted help

742
00:38:24.159 --> 00:38:27.440
<v Speaker 1>trying to figure out, you know, getting.

743
00:38:27.159 --> 00:38:28.639
<v Speaker 4>How to get into this industry.

744
00:38:29.239 --> 00:38:34.000
<v Speaker 1>And then once the price after like you know, various

745
00:38:34.039 --> 00:38:37.760
<v Speaker 1>scandals and bankruptcies and then we had the enforcement cloud,

746
00:38:37.800 --> 00:38:40.880
<v Speaker 1>they all sort of deinvested. They got rid of those teams, right,

747
00:38:40.920 --> 00:38:43.480
<v Speaker 1>And so I think everyone is looking back at history

748
00:38:43.920 --> 00:38:47.039
<v Speaker 1>and being very cautious about investing until we have enough

749
00:38:47.159 --> 00:38:51.480
<v Speaker 1>like regulatory clarity and really regulatory durability.

750
00:38:51.599 --> 00:38:53.360
<v Speaker 4>So that's why. And this is like.

751
00:38:53.440 --> 00:38:58.039
<v Speaker 1>Cha Atkins has mentioned that, so clarity the bill is

752
00:38:58.079 --> 00:39:03.000
<v Speaker 1>important not just be because it provides guidance about the

753
00:39:03.039 --> 00:39:05.840
<v Speaker 1>status of assets, but it's important because it provides a

754
00:39:05.880 --> 00:39:10.239
<v Speaker 1>regulatory durability. And that's why even though the sec let

755
00:39:10.280 --> 00:39:13.079
<v Speaker 1>the Commission and staff have done a great job in

756
00:39:13.199 --> 00:39:18.599
<v Speaker 1>providing guidance about how different products and services can comply

757
00:39:18.760 --> 00:39:22.880
<v Speaker 1>with the laws of other their jurisdiction, that's not they

758
00:39:22.880 --> 00:39:24.880
<v Speaker 1>need to engage in rule making so you actually have

759
00:39:25.119 --> 00:39:28.480
<v Speaker 1>durability so that the next administration can't sort of reverse

760
00:39:28.519 --> 00:39:29.480
<v Speaker 1>what has been done.

761
00:39:29.840 --> 00:39:32.599
<v Speaker 2>Yeah, that's the key, right, Even if the SEC does

762
00:39:32.719 --> 00:39:35.760
<v Speaker 2>all this great work. Another administration can come and say,

763
00:39:35.840 --> 00:39:38.360
<v Speaker 2>you know what, Nope, change it, throw it all out yep.

764
00:39:38.800 --> 00:39:42.480
<v Speaker 1>Yeah, and they're super you know, both in public discussions

765
00:39:42.519 --> 00:39:45.239
<v Speaker 1>and private discussions. The SEC and staff are fully aware

766
00:39:45.280 --> 00:39:49.280
<v Speaker 1>of that. And so just last Friday, Chair Atkins made

767
00:39:49.280 --> 00:39:53.159
<v Speaker 1>a speech talking about how the staff and the Commission

768
00:39:53.199 --> 00:39:55.639
<v Speaker 1>has put out guidance and statements, but in order to

769
00:39:55.679 --> 00:39:58.559
<v Speaker 1>have durability, they need to start engaging in rulemaking.

770
00:39:59.079 --> 00:40:03.280
<v Speaker 2>Oh absolutely, I know this is kind of taking a

771
00:40:03.320 --> 00:40:06.360
<v Speaker 2>backseat because all eyes are on the Clarity Act right now,

772
00:40:06.400 --> 00:40:08.519
<v Speaker 2>but defiant tax legislation.

773
00:40:09.039 --> 00:40:11.119
<v Speaker 3>Are you in talks with anybody you are you hearing

774
00:40:11.119 --> 00:40:11.639
<v Speaker 3>anything there?

775
00:40:11.639 --> 00:40:14.440
<v Speaker 2>Are your client saying, hey, okay, we need clarity, but

776
00:40:14.480 --> 00:40:15.480
<v Speaker 2>what about tax?

777
00:40:16.239 --> 00:40:16.440
<v Speaker 4>Yeah?

778
00:40:16.480 --> 00:40:19.559
<v Speaker 1>So tax is I think the next big thing that

779
00:40:19.679 --> 00:40:25.599
<v Speaker 1>folks are thinking about just a consensus. Last week, Representative

780
00:40:25.639 --> 00:40:28.719
<v Speaker 1>horse For from Nevada was talking about the Parity Act,

781
00:40:29.119 --> 00:40:31.559
<v Speaker 1>So I know that there's a draft, there's draft legislation

782
00:40:31.639 --> 00:40:32.159
<v Speaker 1>out there.

783
00:40:32.599 --> 00:40:33.920
<v Speaker 4>We just help a.

784
00:40:33.840 --> 00:40:37.880
<v Speaker 1>Group of clients submitted an amicus brief on the Garret case,

785
00:40:37.920 --> 00:40:40.119
<v Speaker 1>which is a crypto tax case. So I think people

786
00:40:40.159 --> 00:40:43.800
<v Speaker 1>are definitely thinking about it. It's sort of like not

787
00:40:43.920 --> 00:40:46.159
<v Speaker 1>the most, not not at the top of the list

788
00:40:46.239 --> 00:40:48.159
<v Speaker 1>right now because of all of the back and forth

789
00:40:49.400 --> 00:40:52.880
<v Speaker 1>with clarity. But in order for crypto to really meet

790
00:40:52.920 --> 00:40:55.239
<v Speaker 1>its full potential, you sort of need to have the

791
00:40:55.280 --> 00:40:58.719
<v Speaker 1>assets tax at the proper way, right, And I think

792
00:40:58.760 --> 00:41:01.039
<v Speaker 1>even I'm not a tax lawyersoever, but just you know

793
00:41:01.079 --> 00:41:04.440
<v Speaker 1>my recent work, you know, getting into the jerokees, just

794
00:41:04.480 --> 00:41:09.519
<v Speaker 1>really understanding how the mistreatments of a monastic can have

795
00:41:09.679 --> 00:41:13.559
<v Speaker 1>like really fundamental consequences. It really made me realize just

796
00:41:13.599 --> 00:41:16.079
<v Speaker 1>how important tax law for crypto is.

797
00:41:16.639 --> 00:41:18.880
<v Speaker 2>Yeah, I think the keyword you mentioned there, it's so

798
00:41:18.880 --> 00:41:23.039
<v Speaker 2>important for adoption because yes, I'll have clarity, but if

799
00:41:23.079 --> 00:41:24.559
<v Speaker 2>I don't know what I can do with my staking

800
00:41:24.599 --> 00:41:26.639
<v Speaker 2>rewards or how it can spend my crypto if want

801
00:41:26.639 --> 00:41:29.599
<v Speaker 2>to buy something or whatever, uh, it's going to.

802
00:41:29.639 --> 00:41:31.880
<v Speaker 4>Hold me back from exactly exactly.

803
00:41:33.239 --> 00:41:35.760
<v Speaker 3>Boy. So we got to get this Clarity Act done.

804
00:41:35.599 --> 00:41:38.559
<v Speaker 4>Tiffany clarity and then parody then parody.

805
00:41:38.639 --> 00:41:43.199
<v Speaker 2>Right, it's exciting, but you know, look, we got genius done.

806
00:41:43.719 --> 00:41:45.760
<v Speaker 2>And that's often to racist, even though some of the

807
00:41:45.760 --> 00:41:49.440
<v Speaker 2>banks are pushing back on stable corn yield, but you know,

808
00:41:49.559 --> 00:41:52.039
<v Speaker 2>it's it is law. So if we get Clarity done,

809
00:41:52.039 --> 00:41:55.159
<v Speaker 2>that would be so impactful for this industry and I

810
00:41:55.159 --> 00:41:58.599
<v Speaker 2>can't wait to see the innovation posts that becoming law.

811
00:41:58.840 --> 00:42:03.039
<v Speaker 1>Yeah, and I think that using Genius as an example,

812
00:42:03.840 --> 00:42:06.519
<v Speaker 1>that's why we saw all the really innovative products that

813
00:42:06.519 --> 00:42:10.559
<v Speaker 1>I've sort of mentioned like right, and so I'm just

814
00:42:10.719 --> 00:42:13.559
<v Speaker 1>really excited, Like based on Genius and you're talking about

815
00:42:13.639 --> 00:42:16.639
<v Speaker 1>just payment stable coins and all of the innovation and

816
00:42:16.679 --> 00:42:21.320
<v Speaker 1>all of the new market participants in entering there, It's

817
00:42:21.360 --> 00:42:25.719
<v Speaker 1>been like dramatic because Clarity is so much more broad

818
00:42:25.760 --> 00:42:28.199
<v Speaker 1>and captures so much more of the market. I'm excited

819
00:42:28.199 --> 00:42:31.000
<v Speaker 1>to see having that legislation, what it unlocks.

820
00:42:32.199 --> 00:42:33.360
<v Speaker 2>What do you have on your road map? Are you

821
00:42:33.440 --> 00:42:35.320
<v Speaker 2>going to any end of the conferences? Are you testifying

822
00:42:35.320 --> 00:42:36.280
<v Speaker 2>before the Congress again?

823
00:42:37.360 --> 00:42:41.239
<v Speaker 1>So no plans to testify. This week, I'm going to

824
00:42:41.320 --> 00:42:45.679
<v Speaker 1>be speaking at the Kansas City FEDS Innovation Conference. It's

825
00:42:45.679 --> 00:42:47.400
<v Speaker 1>a group of community bankers, so that's going to be

826
00:42:47.440 --> 00:42:52.280
<v Speaker 1>super interesting and just you know, a lot of travel,

827
00:42:52.719 --> 00:42:54.920
<v Speaker 1>a lot a lot of conferences. I think, you know

828
00:42:55.039 --> 00:42:59.280
<v Speaker 1>my road map. A lot of my clients are looking

829
00:42:59.320 --> 00:43:02.360
<v Speaker 1>forward to making and making sure that all of the

830
00:43:02.400 --> 00:43:05.400
<v Speaker 1>great guidance of the SEC put out is durable, and

831
00:43:05.480 --> 00:43:08.440
<v Speaker 1>so there's been a lot of guidance out there for

832
00:43:08.599 --> 00:43:11.239
<v Speaker 1>like different aspects of the Exchange Act. There's been less

833
00:43:11.280 --> 00:43:14.199
<v Speaker 1>about what it means to be a clearing agency, and

834
00:43:14.239 --> 00:43:17.920
<v Speaker 1>so that's something that Commissioner Akins or Chair Akins mentioned

835
00:43:17.920 --> 00:43:19.679
<v Speaker 1>on Friday. So that's sort of like some of the

836
00:43:19.719 --> 00:43:22.079
<v Speaker 1>stuff that we're working on exciting.

837
00:43:22.360 --> 00:43:24.400
<v Speaker 2>Well, tell the folks of the FED, you know, we

838
00:43:24.480 --> 00:43:26.360
<v Speaker 2>need their help as well. All right, get these banks

839
00:43:26.400 --> 00:43:30.920
<v Speaker 2>on board. I got some wrap up questions here for you, Tiffany,

840
00:43:31.360 --> 00:43:35.679
<v Speaker 2>the rapid Fire, favorite food, seafood, favorite musician.

841
00:43:35.320 --> 00:43:40.639
<v Speaker 1>Or band Beyonce of course, favorite movie? Don't have one really,

842
00:43:41.079 --> 00:43:41.920
<v Speaker 1>not movie person?

843
00:43:42.199 --> 00:43:44.079
<v Speaker 3>Okay, okay, how about favorite book?

844
00:43:45.360 --> 00:43:46.239
<v Speaker 4>That's a hard one too.

845
00:43:46.679 --> 00:43:51.280
<v Speaker 1>The last book I've read was Let Them by Mel Robbins.

846
00:43:51.280 --> 00:43:52.679
<v Speaker 4>But don't really have a favorite book either.

847
00:43:53.360 --> 00:43:55.239
<v Speaker 3>And when you're not working, what do you do for fun?

848
00:43:55.360 --> 00:43:57.639
<v Speaker 4>I like to travel, like to travel, I like to work.

849
00:43:57.440 --> 00:44:00.840
<v Speaker 2>At nice Tiffany, we're gonna have to do a round two,

850
00:44:00.960 --> 00:44:03.760
<v Speaker 2>especially when ray crypto guidance comes from the SEC.

851
00:44:04.239 --> 00:44:06.000
<v Speaker 3>You've got a lot of knowledge. But thank you so.

852
00:44:06.000 --> 00:44:07.960
<v Speaker 4>Much for joining me today, thank you for having me.

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<v Speaker 2>Thank you so much for tuning in, Please hit the

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<v Speaker 2>like button subscribe if you haven't as yet. If you're

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<v Speaker 2>listening on a podcast platform such as Spotify or Apple,

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<v Speaker 2>please follow and leave a five star rating.

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<v Speaker 3>Thank you so much,