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<v Speaker 1>Hey everyone.

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<v Speaker 2>I'm Tony Edward and I'm Amanda Wickcraft and we.

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<v Speaker 3>Are recording at the Salona Policy Institute's summit and joining

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<v Speaker 3>US is Land and Zenda, who is the counsel to

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<v Speaker 3>the Truman and senior advisor for the Crypto Task Force

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<v Speaker 3>at the SEC.

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<v Speaker 1>Landon. Great to have you. Thank you for having me Landon.

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<v Speaker 3>We're recording this on a day the SEC made some

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<v Speaker 3>big announcements. Can you tell us about that and the

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<v Speaker 3>details around it?

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<v Speaker 4>Yeah, I like every SEC employee need to start with

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<v Speaker 4>a kind of a disclaimer, and I thought i'd be

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<v Speaker 4>a little bit educational about it. The Securities and Exchange

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<v Speaker 4>Commission is a commission. It really only acts by the

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<v Speaker 4>votes of the commissioners, and so I am just a

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<v Speaker 4>staffer at the SEC. I do not speak on behalf

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<v Speaker 4>of the commission. But yeah, today, what day is it?

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<v Speaker 1>Monday?

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<v Speaker 4>The Division of Trade Markets issued a statement clarifying certain

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<v Speaker 4>circumstances under which certain wallets, interfaces and front ends that

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<v Speaker 4>trade crypto that if they were to trade token is

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<v Speaker 4>Securities would not have to register as a broker at

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<v Speaker 4>the Securities.

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<v Speaker 1>And Exchange Commission. So it's a big deal.

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<v Speaker 4>It talks about transaction based compensation, which is typically a

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<v Speaker 4>big factor in broker regulation. Even if these interfaces take

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<v Speaker 4>that commission compensation, these things act more like tools for

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<v Speaker 4>the user. They allow them to execute their own decisions

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<v Speaker 4>and make decisions for themselves, and they just relay those

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<v Speaker 4>messages to the blockchain. And so the staff is making

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<v Speaker 4>a big statement that these things don't have to register.

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<v Speaker 3>You are obviously an advisor for the Crypto Task Force.

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<v Speaker 3>Tell us a bit about the task force and a

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<v Speaker 3>mission there.

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<v Speaker 4>Yeah, so the task force is about fifteen staffers at

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<v Speaker 4>the Securities Exchange Commission US, the commission dedicated to creating

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<v Speaker 4>pathways and regulations for crypto at the SEC and up today,

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<v Speaker 4>we've issued a number of statements clarifying security status of

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<v Speaker 4>different things like meme coins, stable coins, proof of work,

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<v Speaker 4>proof of stake. The Commission itself issued an interpretation about

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<v Speaker 4>two weeks ago, trying to provide as much clarity as

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<v Speaker 4>they could as to win tokens our securities and when

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<v Speaker 4>they're not And that was probably one of the biggest

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<v Speaker 4>actions that the staff myself was at least partially helpful

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<v Speaker 4>and working towards. But that was a commission statement, meaning

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<v Speaker 4>that is official Commission position. So win things are securities

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<v Speaker 4>and when they're not, and so it's a really organic group.

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<v Speaker 4>We do not lead the policy that comes from the

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<v Speaker 4>other staff themselves in like this the statement today on interfaces,

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<v Speaker 4>but it's really ground up trying to have the entire

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<v Speaker 4>Commission catch up and get up to speed on crypto

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<v Speaker 4>and establish good regulatory pathways for compliance and for not

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<v Speaker 4>securities registration when appropriate.

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<v Speaker 2>Can you give us a little bit about your background

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<v Speaker 2>and also, while we know your title, what that exactly

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<v Speaker 2>entails at the SEC?

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<v Speaker 4>Yeah, my title is very long. I guess I just

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<v Speaker 4>say I'm a crypto staffer at the SEC. I worked

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<v Speaker 4>for Hester Purce. I also work for the chairman, and

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<v Speaker 4>so it's a kind of dual hat just doing crypto

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<v Speaker 4>policy for them. Prior, I spent six years working for

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<v Speaker 4>Representative Tom Emmer in the House doing a lot of

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<v Speaker 4>his crypto policy. The Blockchain Regulatory Certainty Act is a

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<v Speaker 4>very relevant bill right now in market structure negotiations helped

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<v Speaker 4>drop that for him. Went on to go work at

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<v Speaker 4>the Senate Banking Committee for Senator to me working on crypto,

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<v Speaker 4>doing some early stable coin legislation, and then went to

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<v Speaker 4>Coin Center, which is a think tank in DC dedicated

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<v Speaker 4>to individual liberty, protecting people's rights to write and publish code.

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<v Speaker 4>And from there interacted with Commissioner Pursus Staff and Commissioner Judas,

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<v Speaker 4>the third Commissioner at the SEC, and they brought me

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<v Speaker 4>along to join the task force. And it's a it's

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<v Speaker 4>an amazing time to work at the Commission.

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<v Speaker 1>Yeah, the SEC is.

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<v Speaker 3>Doing an amazing job. There's so many rulemaking and guidelines

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<v Speaker 3>have been put forth. One that Chirp Paul Atkins recently

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<v Speaker 3>you talked about was rage crypto for fundraising. That seems

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<v Speaker 3>he's going to be a pretty impactful one. What can

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<v Speaker 3>you tell us about that?

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<v Speaker 4>Yeah, so we we the Commission issued the interpretation about

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<v Speaker 4>how they look at the Howie test and when certain

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<v Speaker 4>tokens are or on not securities. The next step in

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<v Speaker 4>that process, which the Chairman outlined somewhat is rege crypto

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<v Speaker 4>and it's it's you know, the community can kind of

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<v Speaker 4>think of it as hester Purson's safe harbor, the thing

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<v Speaker 4>she's been talking about for at least five years now.

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<v Speaker 4>How do you how do you do a fundraising in crypto?

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<v Speaker 4>You know, potentially comply with some disclosures. If you're doing

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<v Speaker 4>a securities offering, but at some point, you know, disseminate control, decentralize,

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<v Speaker 4>you know, however, you want to put it such that

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<v Speaker 4>you're no longer in charge of this project, project, you're

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<v Speaker 4>no longer providing the essential managerial efforts that are necessary,

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<v Speaker 4>and and when is a safe harbor appropriate to make

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<v Speaker 4>it clear you're not a security anymore. So the Chairman

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<v Speaker 4>talked about that that is really the only thing that's

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<v Speaker 4>public at this point. So I'd point everyone to his

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<v Speaker 4>his statement. But that's been a you know, a thing

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<v Speaker 4>that the commissioner person has been talking about for years.

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<v Speaker 2>When can we expect some uh, some clarity around or

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<v Speaker 2>guidance on tokenization?

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<v Speaker 4>On tokenization, Yeah, so Congress recently had a hearing on

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<v Speaker 4>tokenization in the House. We are thinking very deeply about tokenization.

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<v Speaker 4>The staff, just like the staff put out a statement

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<v Speaker 4>today on UH interfaces have in George's brokers. The staff

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<v Speaker 4>of several different divisions of the sec put out a

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<v Speaker 4>statement about a month ago talking about the different ways

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<v Speaker 4>to tokenize securities. You could do it from the issue

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<v Speaker 4>where you could have third party issuers. It could carry

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<v Speaker 4>along all the rights like a stock. It could not

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<v Speaker 4>like just give you, you know, a representation of what

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<v Speaker 4>the stock is worth. There's different ways to tokenize that,

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<v Speaker 4>and the staff is thinking very deeply along about how

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<v Speaker 4>how to classify those things when registration is appropriate. There's

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<v Speaker 4>also been a lot of talk about a innovation exemption,

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<v Speaker 4>which is essentially, how do you trade tokenized stocks on

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<v Speaker 4>automated market makers? How do you, you know, use your wallet

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<v Speaker 4>like the staff talked about today, which may not be

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<v Speaker 4>a broker to trade a stock on, you know, an

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<v Speaker 4>automated market maker, something that may not even be an

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<v Speaker 4>exchange itself. You're really just using your wallet to transact

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<v Speaker 4>yourself with someone else. So the innovation exemption will, at

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<v Speaker 4>least as contemplated, will provide an exemption for folks who

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<v Speaker 4>want to create liquidity polls to trade stocks on amms.

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<v Speaker 4>Following that innovation exemption, I think the Commission will think

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<v Speaker 4>a lot about what sort of rules need to change,

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<v Speaker 4>what sort of flexibility should happen to make sure that

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<v Speaker 4>this sort of stock trading and other securities trading can

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<v Speaker 4>happen in the future, and what rules are appropriate, what

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<v Speaker 4>rules should should be tailored for this type of trading.

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<v Speaker 3>And with the rule making that's being put forth, how

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<v Speaker 3>will that fit into CLARITIAC or it doesn't necessarily have

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<v Speaker 3>to go in the CLARIAC claritiac fully it can just

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<v Speaker 3>be referenced as far as the title of the rule

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<v Speaker 3>making is that kind of the dynamic.

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<v Speaker 4>There's a lot of distinctions at the SEC between rule making,

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<v Speaker 4>exemptive authority staff statements. I did my disclaimer at the beginning.

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<v Speaker 4>There's a lot of like nuance that now that I'm

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<v Speaker 4>at the SEC, I very much appreciate. But technically we

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<v Speaker 4>have not done rulemaking up until this point. It has

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<v Speaker 4>been a series of staff statements commission interpretations as to

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<v Speaker 4>what is the existing law. Commissioners have talked about doing

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<v Speaker 4>rule making, and I you could expect something like that

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<v Speaker 4>in the future, but.

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<v Speaker 1>We're doing a lot of things that that.

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<v Speaker 4>Are very similar to legislation, that are in tandemal with legislation.

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<v Speaker 4>The commissioners who are in charge of the Commission very

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<v Speaker 4>much support market structure, and so you know, we're talking

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<v Speaker 4>to the same people that go into Congress and talk

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<v Speaker 4>about the Clarity Act.

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<v Speaker 1>We're trying to harmonize.

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<v Speaker 4>Between US and the CFTC as much as possible, and

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<v Speaker 4>you know, they do support legislation win and if legislation

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<v Speaker 4>becomes law, we will fully implement it and try to,

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<v Speaker 4>you know, provide as much flexibility as we can. So

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<v Speaker 4>I'd say these things are complementary rather than opposed to

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<v Speaker 4>each other. And we talk with Congress all the time

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<v Speaker 4>about what we're working on, how this relates to Clarity Act,

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<v Speaker 4>and ultimately we do support that becoming law.

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<v Speaker 3>When do you think the Clarity Act might pass?

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<v Speaker 4>I mentioned my history having been in Congress for quite

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<v Speaker 4>a while. It's an arduous process. There's one hundred and

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<v Speaker 4>one year to one of five hundred and thirty five

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<v Speaker 4>different people that have to get this across the finish line.

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<v Speaker 4>It's it's tough, but I know a lot of very smart,

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<v Speaker 4>brilliant staffers and members working on this, and they're really pursuing,

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<v Speaker 4>you know, as altruistically as they can. How do you

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<v Speaker 4>create a good how do you compromise in creating a

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<v Speaker 4>regulatory pathway for these things? And so there's a lot

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<v Speaker 4>of good people doing a lot of honest work just

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<v Speaker 4>trying to get this across the finish line, and we're

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<v Speaker 4>doing what we can to support them.

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<v Speaker 2>Well. Landon This has been super informative. Thank you so

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<v Speaker 2>much for joining us.

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<v Speaker 1>Absolutely thanks for the time.

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