Speaker 1: If we get a bipartisan vote here, Democrats are going
to say that this bill was all about ending Trump
crypto corruption, whether you believe that or not. And so
it's a political game Washington. It's all about politics. It's bitter,
but I still think that there is enough motivated offices
Republican and Democrats who want to get this done, who
are willing to push through on the ethics side, hopefully
so the substance can prevent.
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the description. Hey, folks, welcome into the Thinking Crypto podcast.
Speaker 3: I'm Tony Edward and I'm Amanda wick Croft.
Speaker 2: And joining us is Cody Carbone, who is the CEO
of the Digital Chamber. Cody, great to see you.
Speaker 4: Great to see you, Tony, Amanda, always glad to be here. Cody.
Speaker 2: I don't know what to say. The clarityac Ethics and
all the dialogue in the debate that's happening. It's kind
of tiring me out, but I think it's good time
for us to be talking because there is potentially a
vote that may be happening next week, the week of
August third. Let's start with the ethics issue. What's the
latest there.
Speaker 1: So there was new ethics language from a bipartisan ethics
agreement from Senator Tom Tillis and Senator Reuben Diego and
some other Democratic centers that was sent to the White
House just yesterday. Now we don't know how the White
House is going to respond to this. Ultimately, the ethics
language is about the president. You could say it's about
all federal government officials, but it's about the president, and
Democrats are looking to take the president to task. They
trying to get to a yes on this bill, have
to sell to their base that they did everything they
can and to stop the president from profiting off digital assets.
So the ethics language, while it's not publicly out there,
we know that it does include some of the things
Democrats have been asking for since the initial text came
out two weeks ago.
Speaker 4: They want state attorneys general to have a role here.
They don't feel.
Speaker 1: Comfortable with just President Trump's own US Attorney General being
the sole law enforcement mechanism, so they want that. They
want the President to divest all of the money he's
made on crypto. So ultimately it'll come down to what
the White House thinks, how they respond. Is the President
comfortable signing onto this ethics deal? If that's yes, and
hopefully we know very soon now that they've had almost
twenty four hours to look over it, and probably will
look over it through the weekend.
Speaker 4: I feel very comfortable about this bill moving forward.
Speaker 1: Because this bill has become solely about ethics, which is unfortunate.
It's a six hundred and sixteen page bill, a bill
that will be a landmark passage of statute that will
create a foundational framework for regulation, allow the US to lead,
but it's all become about politics and ethics. So hopefully
we understand where the White House is, if they're going
to sign on to it, if they have more feedback
for it, that will dictate where this bill moves forward
over the next week and into the fall as well.
Speaker 3: Did people you know, including yourself and your organization, anticipate
this to some degree that the Democrats would do this
double down on Trump and his profit and you know,
kind of straying away from the actual agenda.
Speaker 4: That clarity is, yes, that's what it's become. Again.
Speaker 1: Unfortunately, there have been twelve Democrats who have been working
in earnest with Republicans throughout this entire process, and all
of those negotiations leading up to this point were on substance.
It was creating a stronger banking title, stronger agg title,
making sure that Democrats really did have their concerns address
on the substance of the bill. It's no longer about
that anymore. And I think that if let's say there
was ethics was not a part of this, and there
was no concern about the president and his dealings with
digital assets, that this bill would have passed a long
time ago because the substance is agreed upon. Yes, there
are some still, like some issues on DeFi and BRCA,
but overwhelmingly this bill is agreed upon and it is bipartisan.
There is a lot of language in the revised text
that is directly from Democratic offices. But again, when they're
going to have to take this vote, what they worry
about now going into a midterm election is how they're
going to sell this to their base, and we heard
just this morning that they are passing around polls to
show that Democrats don't like crypto.
Speaker 4: Voting Democrats don't like crypto.
Speaker 1: They said that crypto is more unpopular than data centers
or big oil, and that's what they're passing around to
their base right now. So it's not about substance anymore.
We need to get it back there and hopefully we
can get this done and we can start to really
regulate this industry. But it's about politics, and ultimately for
President Trump, he's sitting there knowing, Hey, I would like
to win here. I want the US to be the
crypto capital world. I want to sign this bill, but
I'm going to have to take some lumps here because
no matter what, if we get a bipartisan vote here,
Democrats are going to say that this bill was all
about ending Trump crypto corruption, whether you believe that or not.
And so it's a political game. Washington's all about politics.
It's bitter, but I still think that there is enough
motivated offices Republican and Democrats, who want to get this done,
who are willing to push through on the ethics side.
Speaker 4: Hopefully, so the substance can prevail.
Speaker 2: There have been a lot of Republican voices who've shown
their support, and we know is the large majority on
the Republican side. But who are the let's say, top
ten Democrats. It's a tough question if you can list
off some names at the top of your head, but
who are the top Democrats who will likely show their
support for this bill?
Speaker 1: Well again and all hinges on ethics, but Senator Kirsten
Jellibrand has been the leader here. She has been the
one who, before it was cool, has been getting on
the Lumbus Jillibrand bills of the previous Congress, has been
pushing for a regulatory framework here. You've got other Senate
Democrats on the Banking Committee, Ruben Diego Angela, also Brooks,
Senator Warnock, Senator Asoff, Senator Andy Kim. Even on the
AG side, you've got Senator Booker who who's been pushing
for this. So there are and I would look to
for everyone listening here if you want to know where
a lot of the Democrats are, and who do you
think the gettable Democrats are, which is important, look to
the vote of the Genius Act. There were eighteen Democrats
who voted yes on that bill. That's how we're looking
at it, is that they're interested in passing digital asset
rules of the road. Even Minority Leader Schumer has been
interested in getting this done. Senator Ron Wyden is one
of the ones who didn't vote for the Genius Act,
but has introduced with Senator Cynthia Lummis the BRCA Blockchain
Regulatory Certainty Act as a standalone. Wants to get this
BUIL done. Senator Rosen from Nevada wants to get this
bill done and said, if you have an ethics deal,
we'll get this bill done. So there is a handful
who are willing to support clear market structure rules if
you get ethics. And that's why I think if you
get an ethics deal done here over the weekend into
early next week, while we might not have time to
at least to pass the bill fully through the Senate,
we could begin the process, get some procedural votes, and
I'll feel very good that they can pass this once
they get back and SIPT.
Speaker 3: I'm surprised to learn Senator Lummis recently said that Senator
Holly Republican is resistant on signing clarity and I don't
think he signed Genius either. Do you understand his positioning
and why that is?
Speaker 1: Both him and Senator Paul did not support the Genius Act.
They have taken a position very similar to Senator Elizabeth
Warren that is just anti big tech, and they have
grouped in digital assets with big tech that there needs
to be hands off when it comes to big tech.
Speaker 4: We don't need more rules of the road on big tech.
They don't like it.
Speaker 1: They think it is corruption, they think it is bad
influence on the American people. So Holly has never been
interested in engaging with this industry. Paul's the same way.
So when you're doing a vote count at home, you
have fifty three Republicans, you need sixty votes. That's at
least two Republicans that are likely to know Mitch McConnell.
We don't know where he is, so we don't know
if he's voting yes or no or voting at all.
So really you need to get all other fifty Republicans.
That means then you have to get ten, at least
ten Democrats. Again, go back to Genius. You've got eighteen Democrats,
so you're looking to get at least ten of those
eighteen and probably twelve thirteen fourteen to feel comfortable.
Speaker 2: Now. In addition to ethics, we see the banks are
still drumming up noise about the stable coin yield issued
despite a compromise that was made in the Senate Banking Committee.
Do you foresee that also being a challenge or they
just trying to get as much as they can.
Speaker 4: I wish they would stop. They're relentless.
Speaker 1: It's funny that I think they could have had a
lot of their issues resolved if they were paying attention
when we passed the Genius Act, or paid attention when
we passed the Clarity Act out of the House a
year ago. But they didn't realize what stable coins were
until just a few months ago, which is somewhat shocking
because supposedly they are completely detrimental to their entire business model.
I feel confident that the yield language and the agreement
between Senators Tillis and also Books also Brooks, the bipartisan
agreement will remain steady and will hold strongly. There is
not a lot of interest in relitigating this now. Where
the banking lobby has been pretty effective is talking to
both Republicans and Democrats who are off the Banking Committee
who have not spent a lot of time with the
TI also Brooks amended language. But you know, to me,
I don't understand the bank's play here. If you try
to tank this bill, then there are no prohibitions on
stable coin yield. The only way to get any limits
on stable coin yield and rewards is to pass this
bill with the amended language. There's not enough support for
blanket prohibitions on yield when it comes to transactions and activities.
I don't know where they're going to be successful. I
know they want to amend the Attelis Alsobrooks language.
Speaker 4: I don't think there's enough appetite for it.
Speaker 1: They had again, plenty of windows and opportunities to negotiate
and to make their stance hurt over the last few
years and failed to do so. And now they're trying
to do something at the eleventh hour. And again they're
effective lobbyists, they're great advocates. They've been doing it for
over one hundred years. They don't know what it's like
to feel to lose. And hopefully the bipartisan agreement that
Tillis and also Brooks have reached will remain strong and
I'm confident in that.
Speaker 3: Speaking of institutions and lobbying, you know, Jamie Diamond's been
very quiet. Has JP Morgan's position changed behind the scenes?
Are they lobbying privately instead of publicly?
Speaker 2: Now?
Speaker 3: What's going on there?
Speaker 1: I think he only likes to talk when he calls
crypto executives' assholes. So I'm waiting for the next interview
there for him to do.
Speaker 2: So.
Speaker 4: It's fascinating to me. You know.
Speaker 1: You even hear the American Bankers Association come out recently.
I believe its a CNBC interview where they said, hey,
there's a lot to like in Clarity, and that's because
the banks need the Clarity Active pass. Not only for
the stable coin yield prohibitions, which again they want, but
there's a whole title in the Banking section on Permissible
Activities for banks. Here will would allow them for the
first time to interact with permissionless blockchains, which creates like
clear custody standards, asset segregation standards. They banks need this
bill to pass for them to really flourish in the
digital asset markets. The banks have an opportunity to truly
compete and have institutions be the leader in the digital
asset markets if this bill passes, so I'm not surprised
to hear some of the banks like AJP Morgan start
to be more quiet as this is getting towards the
finish line, because while they might rail against digital assets
sometimes in some venues, they're all trying to compete here,
and so looking at what they're really saying at face value,
they are trying to hold off the crypto industry as
much as possible so they can catch up. And so
if this bill stalls a little bit longer, they can
catch up more and more because they are building. I've
always been fascinated. While JP Morgan and Jamie Diamond publicly
have said like bitcoins a scam, cryptos a scam, we
don't need it, they have been the largest employer of
blockchain developers in the entire world because they know this
is where the this is where the markets are going.
People are demanding faster, cheaper opportunities. So all what Genius
did overnight in the payment space, that's what the market
structure bill Clarity will do for every other financial asset,
provide cheaper alternatives within twenty four hours of signing. The
banks will compete here they want this bill. I wish
they would just say so publicly.
Speaker 2: So, Cody. The ideal scenario, the White House agrees to
the ethics language, the banking complete, the bank's complaining about
the same coin yield issue not such a big item. Monday,
everybody agrees on the current draft of that bill. When
could the vote happen on Tuesday? Wednesday? And let's say
passes a Senate. Do we have enough time for it
to go to the House to pass.
Speaker 4: The House won't. We won't have enough time for it
to go to the House. The House is already out
of session.
Speaker 1: So this is becoming a I've changed my expectations of
what success is over the next week, and thank god
it's only a week.
Speaker 4: We need to begin.
Speaker 1: The process, as you like outline, Tony. We need to
start to have some of the procedural votes. I think
for all the people who are unfamiliar with the legislative process,
they probably just think, all right, there's one vote in
the Senate that's a pass, and then there's one vote
that has this past. No, there's a motion to proceed
vote that needs to happen. It needs to get on
the Senate calendar first. Then there's a cloture vote, which
is what needs sixty They need a cloture vote, which
is a motion to end debate on the bill. There's
going to be amendments, so there's some timelocks here. You
need at least like thirty hours of debate before you
can go to end debate. So there's a lot of
steps that need to happen before you get the final passage.
What everyone is looking for now, because we're running out
of time and there's still some other priorities for the
Senate to take on next week before they leave for
a month, is can we get the bill on the
Senate calendar? Can we begin debate on this bill? And
can we get a cloture vote? Can we see where
the senators are? Can we get sixty votes there to
end debate? Can we then t ourselves up where the
first week they're back in September, all they need is
just that one passage vote. Then all the House needs
is that one passage vote and it can move very
very quickly to the President's desk. If we can get
some procedural votes next week that show where senators are,
that can get us to at least sixty sixty five
where we feel really comfortable that this bill is moving
immediately when they're back in September.
Speaker 4: That is success.
Speaker 1: Right now, we're not going to get the bill likely
to pass the full Senate and just don't have enough time.
As I mentioned, the House has already gone, so it's
not going to pass the House anyway until September when
they get back. So can we set ourselves up where
we make it as easy as possible for us in September.
Speaker 4: To do that? We need to get the ethics steal, and.
Speaker 1: That's a lot of pressure on the White House, who
has already given a lot here and it's the first
time that a president is going to self impose some
limits on his activity. That was what was offered initially.
Democrats didn't like that. So can we get that ethics steal?
And can we start the procedural process? Majority Leader thun
has committed he wants us to that process. You've heard
Senator Lamas say, we have to start that process for me,
no matter what success or failure, and we're pushing for success.
You have to begin voting next week on some of
these procedural votes, because if you do not begin voting
next week, you likely lose all chance that this bill
is going to move forward in the fall.
Speaker 4: September.
Speaker 1: There you got only three weeks and they're gone again
the entire month of October, and then it's the election
and then it's lamed up. So if you don't begin
voting right now before the election heats up in earnest,
then why are Democrats motivated to get this done. You
have to hold them accountable. You have to get a
vote on the record. You have to show some of
the political fundraising arms out there and muscle out there
where people are, and you have to begin this process.
We need that no matter what. Next week, and if
we were talking a week from today and we didn't
begin that process, I would say this bill likely doesn't
have a chance to move forward this year.
Speaker 2: Quick follow up, because there's talks of potentially the August
recess being canceled where they would stay hont. I don't
know that's a possibility that might happen.
Speaker 4: I would be shocked.
Speaker 1: There is nothing that a US cenator likes more than
going home, and especially in an election year, it doesn't
make sense for both the Republicans and Democrats, who need
their candidates to go be in the state campaigning to
keep them here in Washington. I know that the President
wants to get some of his legislative priorities done. I
would love if they stayed a little bit longer to
get this done so we don't have to worry about
this into the fall. But it all comes down to
the electoral map, and the most important thing is not clarity.
It's not the same Act, it's not Russia sanctions, it's
not even funding the government. The most important thing to
both parties here is winning the majority in November. And
the only way they can do that is the Democratic
candidates have to be home in Ohio and Michigan running
their seats. The same thing with the Republican candidates. The
cumbents need to be home and all of these states
running for their seats to make sure that they keep
the majority. So I would be shocked if the recess
was canceled.
Speaker 4: It's good. It's a good it's good theater. Though, yeah
like it right now. People like to threaten it a lot.
Speaker 3: Well, does does President Trump in his legal right? Can
he impose that? Should he wish sue? Or is that
not legal?
Speaker 4: I so that's a good question. I don't know for sure.
Speaker 1: I would be surprised if there wasn't some separation of
powers concerns there, Like, I don't think president can the
president can dictate what Congress does. I could be completely
wrong right now. I mean, the vice president is technically
the president of the Senate, so maybe there is some
wiggle room there. I just don't know enough about that.
Speaker 3: Okay, I want to pivot to your your decision to
sue the state of Illinois. Could you give an overview
of the state's digital tax bill Illinois.
Speaker 4: Yeah.
Speaker 1: So, Illinois, in the darkness of night, without any stakeholder engagement,
and within hours of breaking for the year and ending
their legislative session, decided to pass and enact a taxation
on digital asset transaction activity, a zero point two percent tax,
which may sound like not a lot to people, but
it is completely discriminatory. This tax doesn't apply to any
other financial instrument. It is just targeting digital asset activity
in the state. There's no reason for it except because
you want to curb and limit digital asset activity in
the state. We thought it was prejudicial towards the industry.
It was discriminatory, that is against the Illinois State Constitution
of imposing attacks of that nature. So we want to
stop it, and so what we're seeking right now is
an injunction to at least stop it as the courts
continue to look at it before the tax goes into
effect in January. We are encouraging all other associations or
impacted institutions in the state of Illinois to work with
us and join our suit. We've already had a ton
of interests from both Illinois institutions from large federal organizations
in joining our suits. So very confident that we will
get the resolution that we want and we will get
this injunction.
Speaker 4: But we can't.
Speaker 1: Allow states to unfairly target one specific industry. You might
not like crypto, but it's here to stay and every
person in Illinois who wants to trade should have the
right to do so without feeling like they are getting
hit with a penalty. And that's exactly what the Illinois
government decided to impose on crypto.
Speaker 3: No, just to follow up question quickly, I know you
mentioned this is a way to curb the industry from
innovating in that particular state, and there's prejudice, but to
your point, it's you know, somewhat in the eyes of
many a small tax percentage. Is this also a way
you think that the state is seeing a loophole to
kind of profit as well?
Speaker 4: Absolutely, it is.
Speaker 1: It's all about revenue for them, because I think they
are thinking that all right, it's you know, zero point
two percent tax, which does add up anytime I'm moving
my crypto, if I'm moving my you know, for my
self custody while back to coinbase, I'm getting tax and
that could add up. If you're talking about B to
B payments millions billions of dollars. The state wants a
cut of it, and they're probably thinking, well, no one's really.
Speaker 4: Going to leave the state because of this.
Speaker 1: It's got it's becoming a trend to leave states now
in America because of unfair tax treatment. And we have
already heard from a lot of businesses who are considering
leaving the state of Illinois because of this. It does
not make sense when you could drive over from Illinois
into Indiana, go all the way up in Michigan and
you could save potentially millions of dollars if you're a
business in the digital asset space, just because of this tax.
So yes, I understand like that there's a revenue component here,
and states usually have a lot of leeway and finding
ways to build revenue. It seems to be unfair in
the way that they are imposing this and unfair on
one specific industry.
Speaker 2: That's what we're trying to stop, you know, Cody, I
had googled a governor's name and I put Elizabeth Warren
next to it at and I saw there's some deep
connections there, campaigning together some anti crypto opponents or going
against crypto folks who are pro crypto. So it seems
like this idea may have been seated by Elizabeth Warren.
Speaker 4: I wouldn't be surprised.
Speaker 1: I have no evidence to back it up, but I
really like that you went there and I saw you
tweet that out when this happened.
Speaker 4: You know, there is this group of.
Speaker 1: A group of the progressive wing of the Democratic Party
who view crypto as a threat. It is a threat
to there ethos that more government is good and crypto
being born out of this libertarian movement, you know, removing intermediaries,
removing you know, regulated control and putting more power in
people's hands to transact directly with one another. That scares
the hell out of people like JB. Pritzker, the governor
of Illinois out of Elizabeth Warren, and they view that
the only solution in stopping that empowerment of people is
putting more government control and eradicating this industry. And that's
what we're fighting against. And this tax, and you know
this might sound dramatic, but this tax to me is
illustrative of that where it's like, we don't like you,
we want to get rid of you, and we're going
to punish you if you continue to engage in this industry.
It's the same thing where Warren runs on an anti
crypto army that's not going away anytime soon. She is
continuing to be loud about that. Pritzker is doing the
same thing and joining the anti crypto army by saying,
I want to put hurt on anyone who's going to
be in the crypto space.
Speaker 3: Are you seeing other states looking to do this follow
suit after Illinois coming out publicly.
Speaker 1: I haven't seen an right now. I think probably other
states are going to watch what happens in the courts
right now. How does the court respond to our lawsuit?
How big does our lawsuit get in terms of again,
more interested parties potentially coming on very very soon. But
I wouldn't be surprised as other states who have governors
and governments that are very similar to the most progressive
wing of the Democratic Party, if they start to impose
as well. There is this group as political group that
just really hates this industry, and for me, I don't
understand that. I don't think the democratic holders of crypto
feel that way. We ran a poll last October that
showed that a majority of US crypto in investors actually
lean liberal, that actually vote Democratic, and they are being
alienated from some of their representatives. So I don't know
why that this technology has become so partisan for some
of these people, why it scares them so much. I've
got my theory I laid out on like just their
ethos and how this offends them. But we need to
get to a point where crypto is completely nonpartisan, the
technology is completely non partisan, where it doesn't matter if
you're a democratic or a democratic government or Republican government.
You want to find ways to embrace this technology because
it's empowering your citizens and empowering your businesses, and they're
using it for cheaper, more competitive, more efficient alternatives. That's
the goal that's what we're fighting for every day. So
hopefully no other state copies this and replicates this and
they see this as a fool's errand by Illinois, and
Illinois is laughed at about this, but we'll see TBD.
Speaker 2: Well, Cody, thank you guys for fighting a good fight
and you know we got your back.
Speaker 4: And ready to support.
Speaker 1: And again, like I will make the public plea if
you are a business in Illinois or you have any
business in the state of Illinois and you want to
join our lawsuit, reach out to us directly. You can
email info at Digital Chamber dot org or you know,
email me directly reach out to us. We want as
many parties that are impacted by us as possible to
join our suit.
Speaker 3: Thank you, Gody. It until next time.
Speaker 4: Yeah, thanks guys,