Speaker 2: Hey, folks.
Speaker 1: We are recording at Chainleing Smart Coon event and joining
Speaker 1: me is Patrick Witt, who is the executive director of
Speaker 1: the President's Council of Advisors for Digital Assets.
Speaker 2: Patrick. Great to have you, Thanks for having me.
Speaker 1: Great to be here, Patrick, I was looking forward today's
Speaker 1: conversation all day because a lot of eyes are on
Speaker 1: the Market Structure Bill and what's happening in DC. Tell
Speaker 1: us a bit about what you're doing and any updates
Speaker 1: around the.
Speaker 2: Market Structure Bill.
Speaker 3: Well, I'm pretty much camping out on Capitol Hill these days.
Speaker 3: It feels like going from office to office and dealing
Speaker 3: with both Banking Committee members and ad Committee members. Very encouraged,
Speaker 3: especially over the past few weeks, some of the traction
Speaker 3: that we're getting with different offices, different members who are
Speaker 3: really starting to engage. You know, many of them have
Speaker 3: been engaged for months and years, you know, on this
Speaker 3: text and these different concepts. But there's a lot of
Speaker 3: them that are you know, going to be asked to
Speaker 3: vote here pretty soon and are now starting to really
Speaker 3: grapple with these issues and ask for the explain and
Speaker 3: kind of the you know, job aids if you will,
Speaker 3: to help them understand the bill.
Speaker 2: And what it does.
Speaker 3: Nobody wants to get this wrong, you know, and so
Speaker 3: as you get closer to a vote, kind of you know,
Speaker 3: sharpens the focus. But very encouraged Republicans and Democrats are
Speaker 3: engaging with this this text now offering you know, improvements,
Speaker 3: edits asking good questions, and I think we're going to
Speaker 3: get there. But you know, clock's ticking, and we're trying
Speaker 3: to keep the pressure on. Gentle pressure, but make sure
Speaker 3: that folks know what a priority this is for the
Speaker 3: president and for my boss David Sachs.
Speaker 2: Absolutely.
Speaker 1: If you heard President Trump say he wants to make
Speaker 1: America number one in cryptodigital assets, so I'm assuming him
Speaker 1: making those statements is lighting some fire or on the
Speaker 1: deceits of some of these folks to get things done.
Speaker 3: Well, he said it again just the other night on
Speaker 3: sixty Minutes, you know, reiterating that commitment that he made
Speaker 3: on the campaign trail, and he means it, you know,
Speaker 3: I mean, he understands what an engine this is for
Speaker 3: American growth. You know, our economy, the innovation engine, you
Speaker 3: know that it unleashes. And so we're doing everything that
Speaker 3: we can to to make that vision to make the
Speaker 3: US the crypto capital of the world, or as David
Speaker 3: likes to say, of the planet, you know, a reality.
Speaker 3: So every day I wake up, you know, wondering about
Speaker 3: what we can do to move the ball forward, not
Speaker 3: only on Capitol Hill with the legislation, though that's definitely
Speaker 3: taken up you know, the vast majority of my time,
Speaker 3: but also with inner agency actions and guidance and you know,
Speaker 3: removing regulations or previous policy statements from from the Biden
Speaker 3: you know, Gensler Elizabeth Warren era that we're still trying
Speaker 3: to to, you know, remove some of the vestiges from I.
Speaker 1: Have so much trauma from that era, being in the
Speaker 1: crypto industry, and it's a breath of fresh air under
Speaker 1: this administration to have the openness to innovate and to build,
Speaker 1: and I see a lot of entrepreneurs are breathing a
Speaker 1: sigh relief and they feel more optimistic about where things
Speaker 1: are at.
Speaker 3: We're you know, we're working hard to make sure that
Speaker 3: there is appropriate regulatory clarity, you know, with DOJ, with
Speaker 3: Deputy Attorney General Blanche's memo that he put out in April,
Speaker 3: ensuring that we're reversing course and making sure that we're
Speaker 3: not criminalizing innovation, right, and so I think that's providing
Speaker 3: the protection and the certainty that innovators, developers need in
Speaker 3: order to build their products here, because.
Speaker 2: That's what we want.
Speaker 3: You know, everything that we do we filter through the
Speaker 3: lens of is this going to drive innovation offshore? And
Speaker 3: if it does, then you know, we need to think
Speaker 3: very very hard about whether we want to pursue that path,
Speaker 3: because I think the misconception that the you know, again
Speaker 3: the Genstler, you know, the Warren crowd had is that
Speaker 3: if we just you know, stiff arm crypto, it's ultimately
Speaker 3: going to kill the industry. Well it didn't. That proved
Speaker 3: to definitely be incorrect. It just drove it off shore.
Speaker 3: So do we want to be number two or you know,
Speaker 3: a distant third, or perhaps even farther down the ladder,
Speaker 3: or do we want to dominate this industry as we
Speaker 3: have dominated the financial you know, ecosystem for the past,
Speaker 3: you know, one hundred years.
Speaker 2: So this is the future.
Speaker 3: We've got to make sure that we retain the United
Speaker 3: States place of primacy in it. And that's what we're
Speaker 3: committed to doing every day.
Speaker 1: Many are calling the time we're in the Fourth Industrial
Speaker 1: Revolution where you have the convergence of different technologies crypto, blockchain, AI,
Speaker 1: new space exploration opportunities. Is that how the administration is
Speaker 1: looking at it, that we are in the midst of
Speaker 1: the next tech boom and could be incredible for the
Speaker 1: United States to create wealth, jobs, and much more.
Speaker 3: Like you mentioned, I think that's exactly right. You mentioned
Speaker 3: a few of them. Crypto obviously, you know, my primary focus,
Speaker 3: but also AI the other side of the house under
Speaker 3: David you know, I would throw in there as you
Speaker 3: mentioned the space race, some of the defense tech innovations
Speaker 3: that are taking place with autonomy, you know, there's there's
Speaker 3: a number of others. Probably bio would be another area
Speaker 3: where these you know, different molecules, and AI has a
Speaker 3: lot to do with that too, with some of the
Speaker 3: development of different medicines. Sure, it's it's an incredibly exciting
Speaker 3: time to be alive, and so I think it's appropriate
Speaker 3: to call it the fourth Industrial Revolution.
Speaker 2: But it's not just one.
Speaker 3: There's there's many different ones happening in a lot of
Speaker 3: different fields, and they're unlocked by these different technologies that
Speaker 3: cut across them.
Speaker 1: But it feels that blockchain may have a bigger reach
Speaker 1: because it seems like it's going to be the fabric,
Speaker 1: kind of like the Internet, another layering that the economy,
Speaker 1: the markets will all run in because you see Wall
Speaker 1: Street firms and banks now looking at stable coins, tokenization,
Speaker 1: and much more.
Speaker 3: Yeah, I would say there's the point that I make,
Speaker 3: you know, when when talking with folks, you know, when
Speaker 3: we're regulating crypto right now. You know, cryptocurrency is one application.
Speaker 3: Obviously it's you know, the one that most people know
Speaker 3: when it comes to blockchain, but what we're doing also
Speaker 3: has implications for you know, decentralized infrastructure projects, you know,
Speaker 3: Helium and these others that are approaching, you know, the
Speaker 3: buildouts of different infrastructure using decentralized you know, blockchain models.
Speaker 3: I think there's going to be a lot more that
Speaker 3: pop up in that space. So very excited about what
Speaker 3: that could do. And you think about, you know, autonomous
Speaker 3: vehicle fleets for exams. You know, there's different ways that
Speaker 3: you could conceptualize business models that crypto and decentralized blockchains
Speaker 3: and applications can can enable. So I'm incredibly bullish about
Speaker 3: the future. But that's why it's so important that the
Speaker 3: Market Structure Bill that we get done here provides those
Speaker 3: developer protections, allows people to innovate here at home so
Speaker 3: that they could build these products and these companies in America.
Speaker 1: So are you anticipating once this bill makes it the
Speaker 1: President Trump he signs it into law, we see massive
Speaker 1: innovation here in the United States.
Speaker 3: I think there's going to be a lot of folks
Speaker 3: that continue to resure. We've already seen some of them.
Speaker 3: And I point to, you know, the Genius Act that
Speaker 3: we got passed for stable points. You know what happened
Speaker 3: shortly thereafter Tether decided to open up their US operations.
Speaker 3: You know, So I think that kind of you know,
Speaker 3: flash to bang, clear connection between the two is what
Speaker 3: we want to see.
Speaker 2: And we love telling good news stories.
Speaker 3: You know, anyone that comes in to meet with us
Speaker 3: in our office, we always make sure to tell them,
Speaker 3: you know, if there's a good news story to tell,
Speaker 3: we want to amplify it. Because there are very few
Speaker 3: times when you actually get to pass a particular you know,
Speaker 3: piece of legislation, or repeal a policy, or pass a
Speaker 3: new regulation that you then immediately see the benefits that
Speaker 3: come from it. But we're seeing that very much in
Speaker 3: this industry because you know, it's it's such a one
Speaker 3: eighty from the treatment that it got previously that you know, folks,
Speaker 3: folks are excited, they're grateful. You know, they come in
Speaker 3: and they think, you know, they thank us, but really
Speaker 3: they should be thanking President Trump and David for setting
Speaker 3: the tone in the direction, and we're just there to execute.
Speaker 3: We're on the front lines, you know, trying to lead
Speaker 3: it forward, but the direction comes from the top.
Speaker 1: You know what it feels like, Patrick, if my history
Speaker 1: is correct here nineteen nineties President Clinton and I believe
Speaker 1: Al Gore, they got to write with the Telecom Bill
Speaker 1: at which allowed the Internet to flourish, and it feels
Speaker 1: like we're at that moment for blockchain and crypto.
Speaker 2: I think that's exactly right.
Speaker 3: Brad garling House brought that up this morning when I
Speaker 3: was talking with him, you know, and the point that
Speaker 3: we were making is, you know, we need to establish
Speaker 3: the appropriate safeguards, you know, the rails here to ensure
Speaker 3: that we're not overburdening the industry. But we're providing that
Speaker 3: you know, efficient frontier of regulation that will allow these
Speaker 3: markets to flourish. And you know, back then they did
Speaker 3: exactly that, right, It was a base layer of regulation
Speaker 3: and rules of the road that allowed the Internet industry
Speaker 3: and everything that was enabled by the Internet to grow there.
Speaker 3: But you know, twenty years from now, I don't think
Speaker 3: anyone can predict exactly, you know, what the future will
Speaker 3: hold for you know, blockchain, for crypto. So we need
Speaker 3: to make sure that there's appropriate play in the joints
Speaker 3: and there's the ability for the you know, regulatory framework
Speaker 3: to adapt to all of the things that are coming
Speaker 3: you know, down the pike that we can't even predict
Speaker 3: right now. You know, who could have predicted exactly what
Speaker 3: the Internet would do and enable in the late nineties now,
Speaker 3: So we need to make sure that what we're doing
Speaker 3: allows for that appropriate level of adaptation and evolution that
Speaker 3: will inevitably happen in this industry.
Speaker 1: Oh absolutely, I'm very fascinated how government will adopt blockchain
Speaker 1: technology and maybe solve some of the legacy issues, will
Speaker 1: current issues that we deal with it and which we
Speaker 1: may may become the legacy issues for example, blockchain with voting,
Speaker 1: blockchain for payments via whatever it is, IRS, tax payments
Speaker 1: and so forth, and even with communications more more out
Speaker 1: trust in communicating with the government and agencies are there
Speaker 1: talks with David Sachs and other folks about integrating blockchain
Speaker 1: in these things?
Speaker 3: Well, I think you saw it already with commerce, you know,
Speaker 3: Secretary Lutnik, you know, putting some of the economic data
Speaker 3: on chain, they publish that on chain. I think there's
Speaker 3: going to be more of a movement to get other
Speaker 3: government data on chain. I mean, the government has tremendous
Speaker 3: amounts of data that are out there that putting that
Speaker 3: on chain, they can then integrate through oracles into different
Speaker 3: applications and use that data.
Speaker 2: Couple that with you know, the AI element of it.
Speaker 3: You know, you've got this massive trove of data and
Speaker 3: now you've got the engine that can parse it and
Speaker 3: develop real insights off of that.
Speaker 2: You know.
Speaker 3: I'm passionate about other areas that we can you know,
Speaker 3: enhance our cybersecurity, you know, and also deliver products and
Speaker 3: services to citizens, you know, in a way that's more efficient. Yeah,
Speaker 3: you know, you mentioned some of the benefits you know
Speaker 3: that could potentially be distributed in a more secure way
Speaker 3: that can also root out a lot of waste, fraud,
Speaker 3: and abuse that might exist in the system. I'm thinking
Speaker 3: healthcare in particular, right, you know, benefits distribution. But yeah,
Speaker 3: the possibilities are endless.
Speaker 2: You know.
Speaker 3: The difficulty we have is trying to filter through all
Speaker 3: the different opportunities that we could pursue because your bandwidth
Speaker 3: is limited and so you're trying to get the biggest
Speaker 3: bang for your buck. But that's a trend that's going
Speaker 3: to continue beyond just this administration.
Speaker 1: My ideal scenario from my own perspective, of course, is
Speaker 1: that having blockchain integrated with my tax payments, voting, my
Speaker 1: digital identity and just makes things more efficient and whether
Speaker 1: I'm interacting with the federal agencies or whatever it is,
Speaker 1: is just faster and more secure, and yeah, hopefully also
Speaker 1: curb some of the wasteful spending if you put things
Speaker 1: onto blocked. I know Elon tried to do that, but
Speaker 1: I think maybe eventually we'll get there.
Speaker 3: I'm hopeful. I think we will definitely make improvements. But yeah,
Speaker 3: I think there's we as citizens have every right to
Speaker 3: demand that our government, you know, not only delivers certain services,
Speaker 3: but delivers them in a customer you know, friendly way,
Speaker 3: right right, And there hasn't been as much attention paid
Speaker 3: to that. Uh. Joe Gebbia, you know, uh, founder of
Speaker 3: Airbnb has kind of been you know, it got some
Speaker 3: press a few weeks ago or months ago, I'm not
Speaker 3: remembering the exact timeframe, but it's kind of this you know,
Speaker 3: chief chief customer, you know experience officer like you know,
Speaker 3: citizen experience officer. So, uh, he's got some interesting ideas
Speaker 3: and some projects that he's pursuing to enhance, you know,
Speaker 3: the the interaction of citizens with their government. So I
Speaker 3: think block chain is absolutely a technology that can be
Speaker 3: used to get after some of those problems. So, you know,
Speaker 3: more to come on that. But you know, we're thinking
Speaker 3: about government differently. We're thinking about you know, the relationship
Speaker 3: of citizens to their government differently in a way that
Speaker 3: I think everybody's going to benefit from. It's not partisan
Speaker 3: at the end of the day. You know, folks have
Speaker 3: every right to demand that their government is responsive to
Speaker 3: them and as efficient as possible.
Speaker 2: Absolutely well said.
Speaker 1: A big topic that folks are very curious about is
Speaker 1: the big strategic Bitcoin reserve. What can you tell us
Speaker 1: there as far as the process of identifying revenue sources
Speaker 1: to buy and set up that.
Speaker 3: Yeah, so you know, kind of two parts to it.
Speaker 3: Number one, we've got to get the custody and kind
Speaker 3: of the safeguarding of the existing assets right with those
Speaker 3: that have been seized, you know, the different sieging agencies
Speaker 3: make sure that they can centralize those over at the Treasury,
Speaker 3: put in place appropriate cybersecurity protocols sure to ensure that
Speaker 3: those assets are you know, safely kept. And then second,
Speaker 3: you know, having discussions with different agents ncies about creative
Speaker 3: ways that we can in a budget neutral fashion, add
Speaker 3: bitcoin and other digital assets potentially to the balance sheet.
Speaker 3: So my other hat over at the Department of War
Speaker 3: is as the acting director of the Office of Strategic Capital.
Speaker 3: You know, that's a large federal credit program with two
Speaker 3: hundred billion dollars balance sheet. You know, there's interesting ideas
Speaker 3: that are being kicked around about ways that you could
Speaker 3: potentially over capitalize some of the loans that the government
Speaker 3: is making, you know, not just in the Dow space,
Speaker 3: but also you know fhf A, you know, on housing loans,
Speaker 3: because you know, we want you know, digital assets on
Speaker 3: the government balance sheet, we also want them in the
Speaker 3: hands of everyday Americans, and so one of the ways
Speaker 3: that we could do that is potentially through you know,
Speaker 3: housing and urban development and some of the loans that
Speaker 3: the government is making there, so early days of discussions there,
Speaker 3: but I know that there's interesting, innovative, you know, forward
Speaker 3: thinking folks at these different agencies who when you have
Speaker 3: some of these discussions, they don't go, oh, you know,
Speaker 3: reject them out right, They say, huh, that's interesting. Let's
Speaker 3: have another talk, you know, discussion about that, sure, and
Speaker 3: see if we can move out on it. So you know,
Speaker 3: we have we have the right mindset of folks in
Speaker 3: this administration.
Speaker 1: Is there any chance, terror for if you could potentially
Speaker 1: be used to buy some of these.
Speaker 3: Assets potentially, I haven't had that conversation, but yeah, I
Speaker 3: would say all options are on the table. And again,
Speaker 3: we have some creative folks, uh, you know, deal makers,
Speaker 3: business people, whether that's Secretary lut Neck over at the Pentagon,
Speaker 3: Deputy Secretary Fineberg, you know, obviously Secretary Besson at Treasury.
Speaker 2: You know, these are these.
Speaker 3: Are folks that are are creative in their thinking and uh,
Speaker 3: you know, deep business minded oriented folks. So I think
Speaker 3: that there's going to be exciting discussions that happen in
Speaker 3: the future.
Speaker 1: Patrick, thank you so much for taking a time. I
Speaker 1: would love to have you back on as things progress
Speaker 1: and I'm Fringers crossed this market structure bill goes through.
Speaker 3: Yeah, we'll talk again once the bill is done. Thank
Speaker 3: you so much for the time.
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