Speaker 1: Hey, folks, we are recording at Chainlink's smart Con event
Speaker 1: and joining me is Adam Mainhardt, who is the head
Speaker 1: of public policy at Chainlink.
Speaker 2: Adam, great to have you. Thanks for having me.
Speaker 1: Adam, excited to chat with you. You have a very
Speaker 1: interesting background. You could be considered a crypto og because
Speaker 1: you worked in Tradify, you worked at different crypto companies
Speaker 1: and so forth.
Speaker 2: Tell us a bit about that. Yep.
Speaker 3: Sure, I started off really in government. I worked at
Speaker 3: the Federal Reserve. Then I went to Capitol Hill for
Speaker 3: the majority of my career. I spent seventeen years on
Speaker 3: Capitol Hill, Wow, working for a member, a member who's
Speaker 3: senior on the Financial Services Committee, so deep in financial
Speaker 3: services policy, which now has jurisdiction over a crypto digital assets.
Speaker 2: Yep.
Speaker 3: From there, I actually went to City Group, where I
Speaker 3: worked in government affairs and policy there. And that was
Speaker 3: right around at the time that the PWG report on
Speaker 3: stable coins came out. Sure, crypto was starting to become
Speaker 3: a little bit more widespread, and being in a big
Speaker 3: bank at that time was very interesting. There was you
Speaker 3: might say, some reluctant to engage on a issue area
Speaker 3: that was not quite yet mainstream. Obviously a lot has
Speaker 3: changed for sure. From City, I went to Stellar Development
Speaker 3: Foundation Layer one. While I was there with some colleagues
Speaker 3: in the Layer one space, started a Layer one coalition
Speaker 3: of about fifteen Layer ones where we really engage collectively
Speaker 3: on policy issues in DC from the Layer one infrastructure perspective.
Speaker 3: And then moved to FS Factor where I stood up
Speaker 3: a crypto policy practice with a lot of major players
Speaker 3: in the space. And then more recently about six months ago,
Speaker 3: joined Chainlink Labs as they're head of policy, really standing
Speaker 3: up their government engagement.
Speaker 2: Side of things. So it's been fun.
Speaker 3: I've loved crypto every minute of it.
Speaker 1: Yeah, I mean you've seen different facets of crypto, and
Speaker 1: you know, even being at City, it's amazing now cities
Speaker 1: embracing crypto, just recently partnering a coinbase, looking to launch
Speaker 1: custody and things like that.
Speaker 2: Yep.
Speaker 3: I think the journey of a lot of Jesives, the
Speaker 3: largest banks has been one of probably opposition to reluctance
Speaker 3: to now embracing it. So I think we've seen that
Speaker 3: that that process play out. I think at the beginning
Speaker 3: you saw this really across Wall Street that hey, we
Speaker 3: don't really want to touch this. But as the industry
Speaker 3: has matured, as I think we're starting to see a
Speaker 3: regulatory framework emerge, I think there's growing comfort and I
Speaker 3: think now if you look at if you read the
Speaker 3: Tea Leaves, crypto is going to be part of the
Speaker 3: financial services market, echo ecosystem for the you know, for
Speaker 3: for the foreseeable future.
Speaker 1: And chain Link is playing a big part of that.
Speaker 1: I'm amazed at the adoption chain Link is getting, not
Speaker 1: only from trad five, but native crypto firms and competing
Speaker 1: blockchains which need chain link services.
Speaker 2: No exactly.
Speaker 3: Chain Link really has positioned themselves at the center of
Speaker 3: a lot of what's happening in distributed ledger technology. They're
Speaker 3: really becoming the connective tissue for really any institution that
Speaker 3: wants to connect with the blockchain, they want to do
Speaker 3: so in a compliant manner. They want to do so
Speaker 3: in a way that allows them to interoperate with other systems,
Speaker 3: and they also want to be able to bring critical
Speaker 3: off chain data onto the blockchain. So you put these
Speaker 3: things together and you really end up with a full
Speaker 3: stack of technology that's really enabling anyone. It could be
Speaker 3: Web three, it could be someone like AVE the world's
Speaker 3: largest DeFi protocol to someone like a DTCC JP Morgan
Speaker 3: that have similar needs to want to access blockchain, but
Speaker 3: in a way that's structured and makes sense from a
Speaker 3: regulatory perspective. So chain Link is really well positioned I
Speaker 3: think for the foreseeable future.
Speaker 1: Yeah, I mean it's incredible technology Surgey and the team
Speaker 1: have built, and I gues say, I'm blown away that
Speaker 1: these these different facets, which sometimes can seem like they're
Speaker 1: competing with each other, all integrating with chain Link they do.
Speaker 3: I mean, there is a lot of vision from Sergey
Speaker 3: and the folks that created this technology to really understand
Speaker 3: the needs of blockchain technology and how it would work,
Speaker 3: and really the need for verifiable data that is critical
Speaker 3: for the operation of this whole ecosystem, for smart contracts
Speaker 3: to work, you know smart it's called smart Cohn the reference.
Speaker 2: Are at.
Speaker 3: Chain Link has basically made themselves almost indispensable for all
Speaker 3: of this infrastructure to really operate.
Speaker 1: So absolutely, now, Adam, we still got a lot of
Speaker 1: work to do in DC, which you're very well versed,
Speaker 1: and we know the government shut down, but once it
Speaker 1: opens back up, we're hoping to get the Clarity Act
Speaker 1: passed through the Senate. Tell us about what you're seeing there,
Speaker 1: what are some work chain link and the team has
Speaker 1: been doing to advocate okay for Crypto.
Speaker 3: You know, an interesting thing about the shutdown is while
Speaker 3: the executive agencies are shut down, we and we do
Speaker 3: know essential workers are still working travel TSA, air traffic controllers.
Speaker 3: Congress is open. Congress is open, they are not They're
Speaker 3: not off. So in many regards, the shutdown has actually
Speaker 3: enhanced some of the work on key legislation. So we've
Speaker 3: seen a lot of critical meetings occur with regard to
Speaker 3: the Senate version of these past Clarity Act. Yeah, there
Speaker 3: have been key meetings. Within the last couple of weeks.
Speaker 3: The Senate Democrats hosted ten plus CEOs and executives. Sergey attended.
Speaker 3: The Republicans did the same. So I'd say during the
Speaker 3: shutdown there have been a lot of critical discussions. I
Speaker 3: think there's some optimism now about the process being able
Speaker 3: to move forward before the end of the year. Do
Speaker 3: we get to the point where there's a bill going
Speaker 3: to the President's desk?
Speaker 2: I don't think so.
Speaker 3: Okay, but I think we're going to see progress, So
Speaker 3: that's the hope. But you know, I will say a
Speaker 3: lot of key meetings are occurring during the shutdown on
Speaker 3: the hill, So progress is happening.
Speaker 1: That's good to know it because from the outside, you know,
Speaker 1: you think nothing is happening, but glad to hear certain
Speaker 1: factions of it is.
Speaker 3: We're still working, definitely, definitely, and I think, you know,
Speaker 3: hopefully the shutdown ends somewhat soon.
Speaker 2: And when it does, I think.
Speaker 3: That will open up some other areas of engagement, sure,
Speaker 3: Treasury for instance, things like that they can actually help
Speaker 3: move the process forward even more.
Speaker 1: Oh absolutely, So are you thinking and this is we're
Speaker 1: all guessing here, but maybe Q one is when it
Speaker 1: goes to President Trump's desk?
Speaker 3: Yep, I could see uh spring next year being a
Speaker 3: realistic timeframe to maybe get a bill to the President's desk. Sure,
Speaker 3: I think there will be meaningful progress towards the end
Speaker 3: of this year. Does that mean a bill gets through
Speaker 3: the Senate? I don't know, Maybe through committee?
Speaker 2: Sure?
Speaker 3: And you know, I would say the legislative process is nonlinear,
Speaker 3: it's at best complicated.
Speaker 2: Sure, so.
Speaker 3: This thing could potentially hit another hard spot. That doesn't
Speaker 3: mean it's ever dead, right, So oftentimes sometimes you do
Speaker 3: have to have these critical points where maybe things stop
Speaker 3: working and that actually causes people to come back to
Speaker 3: the table in a more meaningful way. So, you know,
Speaker 3: I'd look for a lot of ups and downs in
Speaker 3: this process. We see it with every sort of policy issue.
Speaker 3: There's a degree of brinksmanship involved psychology.
Speaker 2: So I think we'll see more of that.
Speaker 1: It's it's hot, a sausage is made, as it would say, right,
Speaker 1: it's ugly, but you know, this is how government works.
Speaker 2: Yep.
Speaker 3: And one thing I'll add to that, I think overhanging
Speaker 3: a lot of this was the last Biden administration, what
Speaker 3: we saw out of the SEC. Yes, so I think
Speaker 3: to industry and you know, you really always overvalue the
Speaker 3: present versus what maybe could happen in the future. Sure, so,
Speaker 3: could we see another Gary Gensler at the SEC? Could
Speaker 3: we see another democratic administration? So I think that's in
Speaker 3: the back of everyone's head. Like, so if you get
Speaker 3: market structure that can put some rules around all of
Speaker 3: this to potentially mitigate some of that.
Speaker 2: So I think that's I think that's what we're all
Speaker 2: wrestling with.
Speaker 1: Oh absolutely, And boy, I can't wait for this bill
Speaker 1: to be passed Adam to see the innovation and the
Speaker 1: economic boom that's going to come out of this industry.
Speaker 1: What are you anticipating posts this bill being passed.
Speaker 3: I think we're going to see a lot of For me,
Speaker 3: it's really an increase in asset tokenization and increase in
Speaker 3: tradfy engagement. I think we're going to see more entities
Speaker 3: enter the space who perhaps have been on the fringes.
Speaker 2: Sure.
Speaker 3: I also think we may be at the point where
Speaker 3: we start to see an inflection point for consumer adoption. Really,
Speaker 3: a lot of the people that use crypto today, at
Speaker 3: least regularly, are people who have a technology background. They've
Speaker 3: been in the space for a long time. They can
Speaker 3: handle the UAC, that's right. So I think getting it
Speaker 3: to more mainstream consumers to do so, I think what
Speaker 3: you really need is a regulatory framework to make them comfortable.
Speaker 3: So I think I think that could be a really
Speaker 3: big outcome of all of this.
Speaker 2: Yeah, because I think.
Speaker 1: About the applications and the things I do on a
Speaker 1: daily basis, whether it's YouTubers or podcasts or whatever app right, yeah,
Speaker 1: health app, whatever it is, I'm waiting for when blockchain
Speaker 1: could be integrating to that and it creates new features
Speaker 1: and new benefits and things like that.
Speaker 3: And I think, uh, I think that UX is something
Speaker 3: I don't think we talk about a lot.
Speaker 2: Yeah, I think we.
Speaker 3: I think the more you have these regulatory guardrails, more
Speaker 3: people will use it. Perhaps the features the ease of
Speaker 3: use will get better. They're looking at technology. So if
Speaker 3: you lose your seed phrase, yeah, your key. So there's
Speaker 3: this key recovery type technology. There's other areas that can
Speaker 3: maybe lessen the uh A version of more mainstream consumers
Speaker 3: to say, wait, I could look at this as a
Speaker 3: payments platform. Maybe I want to invest directly here. Maybe
Speaker 3: I want to try DeFi. So I think a lot
Speaker 3: of that could be unlocked here.
Speaker 1: Is DeFi included in the market structure Bible or is
Speaker 1: its own separate thing.
Speaker 3: It's been exempted from the House past version they exempt
Speaker 3: They largely exempt DeFi in the Senate. One of the
Speaker 3: main issues that they're trying to reconcile is how much
Speaker 3: will they regulate or include DeFi. Most of all of
Speaker 3: us in the industry would just prefer hands off, let
Speaker 3: the technology grow in a way that allows for its
Speaker 3: evolution without the constraints of regulation. I think there's a
Speaker 3: big education gap in terms of understanding of what DeFi
Speaker 3: is and isn't. I think people have an idea of
Speaker 3: what they think DeFi is, and it usually ends with
Speaker 3: North Korea, and you know that. You know, when people
Speaker 3: hear that, they're like, we need to regulate this. The
Speaker 3: reality is is that that's not really what DeFi is, right,
Speaker 3: we need to really ring fences to allow the technology
Speaker 3: to evolve at this point.
Speaker 2: So that's the hope. That's the hope.
Speaker 1: Yeah, well said, and hopefully they can get it right.
Speaker 1: I know it's complicated. I know, I can't imagine being
Speaker 1: a lawmaker policymaker, remember of Congress. Then you're just like, whoa,
Speaker 1: this technology is like, yeah, moving so fast, it's so
Speaker 1: different from anything that we've seen over the past fifty
Speaker 1: years or whatever it may be, or more than that.
Speaker 3: Well, definitely, I mean even people in the industry who
Speaker 3: have technological backgrounds, you know, understanding what DeFi is and
Speaker 3: isn't through a policy lens is really complicated. Ideas of
Speaker 3: control of custody, of how pools work, who can enter
Speaker 3: the pool. These are both complex technological questions, they're complex
Speaker 3: legal questions. Government agencies haven't thought of it in this
Speaker 3: context before, So a lot of it's new and a
Speaker 3: lot of it's, frankly, intellectually a steep learning curve to understand.
Speaker 3: Even if like if you know computer science, great, but
Speaker 3: understanding the policy and legal overlay that's a different that's different.
Speaker 3: So whole is it's really tricky.
Speaker 1: Yeah, I don't be the regulators in that front and
Speaker 1: what they the work they have to do.
Speaker 2: It's just so.
Speaker 1: Do you think maybe DeFi comes years later as we
Speaker 1: continue to fine tune to legislation and so forth.
Speaker 2: I think so.
Speaker 3: I think you know, what they did in Europe under
Speaker 3: MIKA was they pretty much punted on DeFi. They left
Speaker 3: it out. They chose not to put anything in it
Speaker 3: in Mica. So it's kind of was put aside. Sure,
Speaker 3: And I think that's really what we're looking at in
Speaker 3: the US. I think that's the sensible approach, is to
Speaker 3: make sure you don't really constrain the technology at the beginning.
Speaker 3: If you did this with the Internet in the early
Speaker 3: to mid nineties, you could have constrained the growth of
Speaker 3: the Internet, and I had a lot of the promising
Speaker 3: uses we see.
Speaker 2: Of it now.
Speaker 3: I think DeFi is at that point. It's a foundational technology.
Speaker 3: It's not well understood. Let's take a beat, let's continue
Speaker 3: to monitor it, and I think get to it at
Speaker 3: a later point. I think that's the sensible tact. Sure,
Speaker 3: we're seeing other jurisdictions look at that approach, so I
Speaker 3: would hope that's where.
Speaker 2: We end up.
Speaker 1: Are you hearing anything new about bitcoin strategic reserve or
Speaker 1: the digital acid stockpile?
Speaker 2: Yep.
Speaker 3: So we know Treasury is in the process of thinking
Speaker 3: about this, about how to stand it up. I think
Speaker 3: with the shutdown a lot of those plans have been
Speaker 3: have been put on hold. One thing I will note
Speaker 3: is that states. Three states have passed strategic reserves Texas, Arizona,
Speaker 3: and New Hampshire, and they're all in varying degrees of
Speaker 3: thinking through through how this would work from a custody perspective,
Speaker 3: a taxpayer transparency perspective. So I think this may be
Speaker 3: an area. You know, the cliche is like states are
Speaker 3: the laboratory of democracy. This could be an area where
Speaker 3: the states do provide some initial work in the area
Speaker 3: that maybe Treasury can draw on. So the short answer
Speaker 3: on the federal level is I have no news on
Speaker 3: that front. I know they're thinking about how to do it.
Speaker 3: Shutdown has delayed, but I think we're starting to see states.
Speaker 3: Uh three states who who've passed laws signed by their
Speaker 3: governors are now moving those along.
Speaker 2: So that's exciting.
Speaker 1: So maybe that's the better way because from the ground up, right,
Speaker 1: the states can pivot and move versus the federal government.
Speaker 1: It's like a tanker ship trying you're trying to you
Speaker 1: can't move it like a cruise ship. Totally totally vote,
Speaker 1: I should say, right, and uh, I mean that it
Speaker 1: has a lot more eyes on it in a different way.
Speaker 1: So I think thinking through the structure of this, the transparency,
Speaker 1: the rules for holding it, the rules for custoding it,
Speaker 1: when do you sell, all of these are complicated decisions
Speaker 1: that will require a good amount of transparency so people
Speaker 1: have an understanding of what's going on here. After all,
Speaker 1: these are taxpayer funds when it comes down to it.
Speaker 1: So I wonder this has been floated around potentially tariff
Speaker 1: revenue being used to fund some of these things.
Speaker 3: Yeah, I mean there's been a lot of discussion about
Speaker 3: tariff revenue being used for a lot of different purposes.
Speaker 3: I think I think the one of the key questions
Speaker 3: is will governments and states have wrestled with this in
Speaker 3: the legislation, be allowed to just hold on to the
Speaker 3: crypto assets that they have seized as part of law enforcement,
Speaker 3: or take taxpayer funds and make open open market purchases
Speaker 3: of additional assets. So I think that's a critical distinction.
Speaker 3: I think what we think is going to happen in
Speaker 3: the US here is really the former.
Speaker 2: But I think it's open.
Speaker 3: I mean, using taxpayer funds to acquire new assets is
Speaker 3: very different than just taking seized assets that were part
Speaker 3: of a criminal action, right and saying, look, look we've
Speaker 3: already seized them, they're in the government custody. Yeah, let's
Speaker 3: just not sell them because we think we can make
Speaker 3: more money by holding.
Speaker 2: Them rather than selling them.
Speaker 3: So those are questions I think we're gonna have to
Speaker 3: wrestle with.
Speaker 1: Yeah, well, I hope the government can get all this
Speaker 1: result by Q one six.
Speaker 2: That'd be really great.
Speaker 1: That'd be awesome, Adam, Thank you for taking the time,
Speaker 1: Thank you for having me.
Speaker 2: Really enjoyed it.
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