WEBVTT 1 00:00:00.240 --> 00:00:01.960 The one criticism I give to a lot of the 2 00:00:02.000 --> 00:00:05.000 regulators at the time who are now leaving, like Michael 3 00:00:05.080 --> 00:00:10.160 Sue from the OCC who live through the financial crisis, 4 00:00:10.199 --> 00:00:14.160 is comparing crypto to the financial crisis, which to me 5 00:00:14.279 --> 00:00:16.559 is like the crime of the century. How can you 6 00:00:16.640 --> 00:00:21.160 say at technology that's showing new ways of conducting banking, 7 00:00:21.679 --> 00:00:24.920 of having possibilities. As you know, there are people who 8 00:00:24.960 --> 00:00:26.399 lose money on meme coins, but there are a lot 9 00:00:26.440 --> 00:00:30.160 of people who've created wealth, intergenerational wealth for themselves. How 10 00:00:30.199 --> 00:00:35.159 can you say that's a financial crisis. 11 00:00:37.359 --> 00:00:39.640 This episode is brought to you by Propy, which is 12 00:00:39.759 --> 00:00:43.439 leading to charge in putting real estate on chain. Propy 13 00:00:43.560 --> 00:00:46.119 is a game changer. You can buy and sell real 14 00:00:46.200 --> 00:00:50.439 estate with cryptocurrencies using the propty platform, which is powered 15 00:00:50.479 --> 00:00:53.240 by a blockchain of course, and they have a native 16 00:00:53.280 --> 00:00:56.600 token call pro And I've been an investor in the 17 00:00:56.759 --> 00:01:00.359 Propy token since twenty eighteen. So Propy is a Jason's 18 00:01:00.359 --> 00:01:04.359 Web three pioneer operating since twenty seventeen. They have facilitated 19 00:01:04.400 --> 00:01:08.239 over four billion dollars in transactions. They're putting titles and 20 00:01:08.280 --> 00:01:12.120 deeds on chain. They use coinbase for their crypto escro service. 21 00:01:12.519 --> 00:01:15.359 So this is a great platform and once again they 22 00:01:15.359 --> 00:01:17.239 are ahead of the curve when it comes to putting 23 00:01:17.319 --> 00:01:20.079 real estate on chain, and they just launched a great 24 00:01:20.120 --> 00:01:22.959 campaign where you can earn some of the Propy tokens, 25 00:01:23.400 --> 00:01:26.760 and it's simply by doing tasks such as sharing their 26 00:01:26.840 --> 00:01:30.280 vision video, signing up, and inviting a friend, and much 27 00:01:30.359 --> 00:01:32.959 more so. If you'd like to learn more about Propy, 28 00:01:33.159 --> 00:01:34.799 visit the link in the description. 29 00:01:35.400 --> 00:01:36.159 Welcome into the. 30 00:01:36.120 --> 00:01:39.000 Thinking Crypto Podcast. I'm your host, Tony Edward and my 31 00:01:39.079 --> 00:01:41.920 guest today is Jason Brett, who is a former US 32 00:01:41.959 --> 00:01:48.319 regulator at the FDIC and a managing director at Keybridge Advisors. Jason, 33 00:01:48.359 --> 00:01:49.079 great to have you on. 34 00:01:50.120 --> 00:01:52.760 Thanks so much, Tony, appreciate you having me. Love your show. 35 00:01:53.519 --> 00:01:57.760 Jason, you and I met at the Digital Chamber event, 36 00:01:57.799 --> 00:01:59.560 if I remember correctly, I think that was the first 37 00:01:59.560 --> 00:02:03.840 time we met. And your background is fascinating, spending time 38 00:02:03.879 --> 00:02:08.319 at the FDIC, spending time consulting for different crypto companies 39 00:02:08.360 --> 00:02:09.400 going back years. 40 00:02:09.879 --> 00:02:12.240 So I think your perspective. 41 00:02:11.639 --> 00:02:13.960 On everything that's happening in this market is going to 42 00:02:14.000 --> 00:02:16.960 be very valuable and I'm excited to chat with you 43 00:02:17.080 --> 00:02:19.479 and maybe we'll get kick off with your background. 44 00:02:19.719 --> 00:02:22.080 Tell us where you're from and what's your professional background. 45 00:02:22.919 --> 00:02:27.039 Sure, sure, yeah, I'm from North Jersey originally, and then 46 00:02:27.080 --> 00:02:29.800 I moved to Washington, d C. After I worked in 47 00:02:29.960 --> 00:02:33.159 banking for a little bit in Wall Street, Morgan Stanley 48 00:02:33.960 --> 00:02:36.599 and Washington, d C. Is really where I caught my 49 00:02:36.840 --> 00:02:42.280 stride because I ended up working for the FDIC while 50 00:02:42.280 --> 00:02:46.800 getting my MBA in the Division of Finance in two 51 00:02:46.840 --> 00:02:50.000 thousand and eight when it was very quiet, and then 52 00:02:50.080 --> 00:02:52.520 literally the timing meant that I got involved in all 53 00:02:52.560 --> 00:02:57.039 of these different crazy things, including the INDIMAC BAC failure 54 00:02:57.360 --> 00:03:00.199 in California, where the division I was in had to 55 00:03:00.199 --> 00:03:03.280 fly out to California to help with taking over that 56 00:03:03.360 --> 00:03:07.039 bank because it was it was the largest bank failure 57 00:03:07.080 --> 00:03:11.080 of its time under the FDAC, and then shifting back 58 00:03:11.120 --> 00:03:14.759 to that, I then was sent over to the Capital 59 00:03:14.800 --> 00:03:17.680 Markets Division to continue the work I was doing there 60 00:03:17.800 --> 00:03:21.159 in the fall, and as it turned out, then Lehman 61 00:03:21.240 --> 00:03:24.479 Brothers fell in September, and so there was a little 62 00:03:24.520 --> 00:03:26.360 bit of a joke of don't follow Jason around their 63 00:03:26.400 --> 00:03:30.520 racetrack because that department was directly responsible everything with Lehman 64 00:03:30.599 --> 00:03:33.080 and then everything else aig. So I got to work 65 00:03:33.080 --> 00:03:35.960 on some incredible things. I had really within one year, 66 00:03:36.960 --> 00:03:39.439 something that I think for a lot of people, like 67 00:03:39.719 --> 00:03:41.719 you know, lucky to touch a few of those subjects 68 00:03:41.800 --> 00:03:44.240 in twenty years. So I was very fortunate to be 69 00:03:44.280 --> 00:03:46.080 where I was, although it was very you know, not 70 00:03:46.240 --> 00:03:48.479 fortunate for the country, but I saw all of these 71 00:03:48.479 --> 00:03:51.080 things happening in real time. And then from there it 72 00:03:51.080 --> 00:03:55.080 really opened my eyes before experiencing bitcoin or crypto, to 73 00:03:55.199 --> 00:04:00.560 seeing in my mind the dangers of our current financial system. 74 00:04:01.039 --> 00:04:03.520 And now everybody talks about that regularly, like the Federal 75 00:04:03.520 --> 00:04:05.159 Reserve they're doing this, But at the time, no one 76 00:04:05.199 --> 00:04:06.879 was really talking about that in two thousand and eight, 77 00:04:06.879 --> 00:04:09.000 two thousand and nine the way we do today. So 78 00:04:09.080 --> 00:04:10.719 I felt kind of alone. You know, it was like, 79 00:04:10.800 --> 00:04:12.439 am I the only one looking at this? Like this 80 00:04:12.479 --> 00:04:14.719 doesn't seem right? Like what are we really relying on 81 00:04:14.800 --> 00:04:17.639 to keep this financial system going? I mean, how much 82 00:04:17.720 --> 00:04:19.120 gum do I have to pull off the bottom of 83 00:04:19.120 --> 00:04:21.040 my shoe to put on the building to keep the 84 00:04:21.120 --> 00:04:24.519 you know, financial wheels turning. I mean, he had Ron Paul, 85 00:04:24.560 --> 00:04:26.759 which was great. So I say all that to say 86 00:04:26.759 --> 00:04:29.000 is I continue doing regulating for five or six years, 87 00:04:29.040 --> 00:04:31.319 and then when I discovered bitcoin, actually went to work 88 00:04:31.399 --> 00:04:34.879 for the Chamber of Digital Commerce in twenty sixteen, where 89 00:04:35.000 --> 00:04:37.839 was their Director of Operations, helping with things like policy. 90 00:04:38.600 --> 00:04:41.560 And then I work for a consensus in the Ethereum 91 00:04:42.240 --> 00:04:45.759 community here in the States, helping them with developing their 92 00:04:45.800 --> 00:04:49.279 government policy strategy. And then since then I've been moving 93 00:04:49.279 --> 00:04:51.920 on doing you know, advising the crypto companies. And really, 94 00:04:51.959 --> 00:04:55.160 i'd say feeling so fortunate, Tony, because I see all 95 00:04:55.160 --> 00:04:57.319 the younger people now I'm a little older, but like 96 00:04:57.639 --> 00:04:59.639 people in their twenties and thirties kind of where I 97 00:04:59.680 --> 00:05:02.639 was in the financial crisis, who are seeing what I 98 00:05:02.680 --> 00:05:04.920 saw when I was alone and talking about it publicly. 99 00:05:05.319 --> 00:05:07.279 So it's almost like a treat. Just sitting at a 100 00:05:07.319 --> 00:05:10.519 conference or hearing people discuss the problems of our current 101 00:05:10.560 --> 00:05:13.399 financial system and how to fix it has really been 102 00:05:13.439 --> 00:05:14.120 for me a joy. 103 00:05:15.439 --> 00:05:16.199 That's amazing. 104 00:05:16.319 --> 00:05:19.720 And you know, going back to when you're at the FDIC, 105 00:05:20.279 --> 00:05:22.800 you got thrown into the fire man. I can't imagine 106 00:05:23.040 --> 00:05:25.399 having to deal with these bank collapses, and like you said, 107 00:05:25.720 --> 00:05:29.439 no one thought that was possible before that two thousand 108 00:05:29.439 --> 00:05:32.319 and eight crash, right, everybody thought everything is fined, a 109 00:05:32.360 --> 00:05:36.600 housing market will never collapse. The banks are our biggest institution. 110 00:05:36.759 --> 00:05:39.879 Zerre fine, and then it all fell apart. I can't 111 00:05:39.879 --> 00:05:43.560 imagine what that was like. And I mean, were you 112 00:05:43.560 --> 00:05:45.920 guys all stressed of the FDIC? Was there a lot 113 00:05:45.959 --> 00:05:47.079 of pressure and things like that? 114 00:05:47.920 --> 00:05:51.759 Yeah? Yeah? And actually, well exclusive for you, I'm actually 115 00:05:52.800 --> 00:05:55.759 finishing up my first book that I've ever written. That'll 116 00:05:55.800 --> 00:05:58.639 be it's called like From Regulator to Rebel, kind of 117 00:05:58.680 --> 00:06:02.399 exploring how Bitcoin and found opportunities within the financial crisis. 118 00:06:02.399 --> 00:06:03.959 I don't know if that's going to be the exact title, 119 00:06:04.040 --> 00:06:06.600 but the story I have to tell I think is 120 00:06:06.600 --> 00:06:08.519 so important I want other people to hear it. It's 121 00:06:08.519 --> 00:06:11.000 not even really about me and what I want to write. 122 00:06:11.040 --> 00:06:14.439 It's understanding what that stress was like. So, like, just 123 00:06:14.480 --> 00:06:17.959 to give you one example, right, if you remember what 124 00:06:18.079 --> 00:06:20.879 Covia Bank and Washington Mutual both failed, I don't. I 125 00:06:20.959 --> 00:06:22.959 remember that they failed back to back in the two 126 00:06:22.959 --> 00:06:27.720 thousand and eight financial crisis, really big banks, and we 127 00:06:27.759 --> 00:06:30.600 had before that happened. We had to do these analyzes 128 00:06:30.879 --> 00:06:32.639 and I was just the junior person, but the senior 129 00:06:32.639 --> 00:06:36.160 people were told, hey, spend the weekend analyzing can the 130 00:06:36.199 --> 00:06:39.680 deposit Insurance Fund for the FDIC that has billions of 131 00:06:39.720 --> 00:06:43.759 dollars support the fact that Washington Mutual and Wacovia might 132 00:06:43.759 --> 00:06:47.279 fail at the same time. Well, deposit Insurance Fund still 133 00:06:47.720 --> 00:06:50.600 remind us people every day, only covers one percent of 134 00:06:50.639 --> 00:06:53.279 the deposits in the whole banking system. So it's not 135 00:06:53.360 --> 00:06:55.600 like it doesn't cover all the dollars. Covers one one 136 00:06:55.680 --> 00:07:00.800 hundredth of everything. And so the analysis was that the 137 00:07:00.800 --> 00:07:03.759 Deposit Insurance Fund would survive, but only if Wall Covia 138 00:07:03.920 --> 00:07:07.319 and Washington Mutual were bought by bigger banks, if the 139 00:07:07.360 --> 00:07:10.240 fund had to support it. And so that to me 140 00:07:10.319 --> 00:07:13.319 showed there was this incentivization of making the bigger banks 141 00:07:13.319 --> 00:07:16.040 bigger because there was these shotgun marriages. If you have 142 00:07:16.120 --> 00:07:18.519 this bank like Washington Mutual that's going to fail, we 143 00:07:18.560 --> 00:07:20.639 can't just let it fail. You have to just find 144 00:07:20.639 --> 00:07:23.120 a buyer like Jamie Diamond or someone to come in 145 00:07:23.160 --> 00:07:26.600 and buy it. But I say that I explain that 146 00:07:26.720 --> 00:07:31.399 because not only was their stress or disbelief, but I 147 00:07:31.439 --> 00:07:34.680 still remember to this day the senior folks grumbling and 148 00:07:34.959 --> 00:07:37.600 just infuriated that they had to spend the weekend away 149 00:07:37.600 --> 00:07:40.720 from their family saying things like what, COBE is never 150 00:07:40.800 --> 00:07:42.920 going to fail, Like they'd say, it's like you, Tony, like, 151 00:07:43.079 --> 00:07:45.120 WELLKBE is not going to fail. I don't even know 152 00:07:45.120 --> 00:07:47.240 what I'm doing here. This is so stupid, you know. 153 00:07:47.279 --> 00:07:49.839 And it was just like wow, you know, because when 154 00:07:49.879 --> 00:07:51.360 I took it back, I was I was like, yeah, 155 00:07:51.399 --> 00:07:53.879 I guess this is stupid. But then three weeks later, well, 156 00:07:53.959 --> 00:07:57.000 COVID failed and Washington mutual the exact thing that they 157 00:07:57.000 --> 00:07:59.480 were told to analyze. So there was a lot of 158 00:07:59.519 --> 00:08:03.959 frustration and then just complete disbelief. And then when something 159 00:08:04.000 --> 00:08:06.319 happens that you don't believe can happen, like you know, 160 00:08:06.360 --> 00:08:09.839 Bitcoin hitting on hundred thousand dollars or something, you're a 161 00:08:09.839 --> 00:08:11.480 little off guard for a while. You're kind of on 162 00:08:11.600 --> 00:08:14.319 shaky territory. So then when stuff just keeps hitting you 163 00:08:14.360 --> 00:08:16.720 and hitting you, and it's like what we see these 164 00:08:16.759 --> 00:08:19.480 disasters like hurricanes and everything, it just gets worse and worse, 165 00:08:19.519 --> 00:08:22.639 to the point that literally people thought in September like 166 00:08:22.680 --> 00:08:24.560 they felt like the building was going to fall down 167 00:08:24.639 --> 00:08:27.480 pretty soon, you know, they got that close, I think 168 00:08:27.480 --> 00:08:29.519 to the financial markets seizing up. 169 00:08:29.680 --> 00:08:34.200 So yeah, and I'm I'm definitely looking forward to reading 170 00:08:34.240 --> 00:08:37.480 your book because I'm sure it's some interesting stories in there, 171 00:08:38.440 --> 00:08:41.120 because that was such a crazy time, and you know, 172 00:08:41.159 --> 00:08:43.279 a lot of people look back to that and say, 173 00:08:43.480 --> 00:08:46.600 you know, did the real economy die at that point? 174 00:08:46.720 --> 00:08:49.360 And will America be the same? 175 00:08:49.559 --> 00:08:53.840 And I'm optimistic that hopefully bitcoin, blockchain and all these 176 00:08:53.840 --> 00:08:56.399 things can help solve those problems. We don't have a 177 00:08:56.480 --> 00:08:59.159 repeat of them, and we can come out of the fire, 178 00:08:59.240 --> 00:09:01.519 so to speak, and already ashes rise on the ashes, 179 00:09:01.720 --> 00:09:05.440 more stronger, with a better financial system that doesn't have 180 00:09:05.519 --> 00:09:07.600 all those pitfalls in it. 181 00:09:08.799 --> 00:09:13.000 Yeah. I get really emotional about this because a lot 182 00:09:13.080 --> 00:09:17.000 of people really don't realize that. Ben Bernaki, who was 183 00:09:17.080 --> 00:09:20.000 the chair of the Federal Reserve at the time, definitely 184 00:09:20.000 --> 00:09:23.679 gets credit for saving us out of that crisis. But 185 00:09:23.799 --> 00:09:27.399 he was a man who followed the Great Depression, and 186 00:09:27.480 --> 00:09:29.879 he was a student of the Great Depression and the 187 00:09:29.879 --> 00:09:32.559 Great Depression. The problem was the credit markets seized up, 188 00:09:33.480 --> 00:09:36.080 and so that's why things got worse and worse. So 189 00:09:36.159 --> 00:09:39.879 his goal, or his modus operandi, was to make sure 190 00:09:40.320 --> 00:09:44.080 that this credit markets didn't seize up during that timetable. 191 00:09:44.639 --> 00:09:47.200 Now that's a positive thing. Again, I give him credit 192 00:09:47.240 --> 00:09:50.000 for that. But the unintended consequence of that is I 193 00:09:50.000 --> 00:09:52.440 think what we're living with today because you saw the 194 00:09:52.440 --> 00:09:55.320 Federal Reserve come out with so many programs and beloaded 195 00:09:55.320 --> 00:09:58.519 their balance sheet to make sure that credit markets didn't 196 00:09:58.559 --> 00:10:02.960 seize that it's like we're left with like a bruise 197 00:10:02.960 --> 00:10:06.960 in our arm that's still bleeding, you know, and it's 198 00:10:07.000 --> 00:10:10.919 now transformed into that was the solution that we came 199 00:10:10.960 --> 00:10:13.679 at this crisis from. We'll never know if there was 200 00:10:13.720 --> 00:10:16.840 another way to go about solving the crisis, and we're 201 00:10:16.919 --> 00:10:20.679 still living with what our very potential dire consequences to 202 00:10:20.679 --> 00:10:24.440 our economy because the size of the FED now has 203 00:10:24.480 --> 00:10:29.320 gotten so large and still today, I don't think that's 204 00:10:29.399 --> 00:10:33.320 changed among government officials. Like we had a financial crisis tomorrow, 205 00:10:33.919 --> 00:10:35.799 I think we still try to handle it the same way. 206 00:10:36.159 --> 00:10:37.759 I don't think we do something different. 207 00:10:38.879 --> 00:10:42.919 But Jason is that like there is no other option 208 00:10:43.080 --> 00:10:47.120 because the world is so financialized, so globalized, and our 209 00:10:47.159 --> 00:10:51.039 markets are so connected, and the only way in this 210 00:10:51.240 --> 00:10:53.600 Fiat system. And it goes back to the root of 211 00:10:53.639 --> 00:10:56.279 the Fiat system. It's not on a goal standard. This 212 00:10:57.240 --> 00:10:59.360 is what you have to do unless you move to 213 00:10:59.440 --> 00:11:03.000 some sort of of hard money system. With blockchain, we 214 00:11:03.000 --> 00:11:05.440 have more transparency where you can weed out the fraud, 215 00:11:05.480 --> 00:11:08.759 you can weed out the insane leverage that is being 216 00:11:09.000 --> 00:11:12.080 piled up and people are doing things they shouldn't. Until 217 00:11:12.080 --> 00:11:14.039 we get to that point, this is the Fiat SYSM 218 00:11:14.080 --> 00:11:16.480 and they have to build it out because if they don't, 219 00:11:16.600 --> 00:11:21.320 it collapses, and it could potentially collapse society because everybody's 220 00:11:21.360 --> 00:11:25.000 retirement is wrapped up in these assets. So if you 221 00:11:25.080 --> 00:11:28.600 let the collateral the assets go to zero, it's game over. 222 00:11:31.039 --> 00:11:33.480 That's a great point. I totally agree with you. I 223 00:11:33.519 --> 00:11:37.960 don't think that there's any other way to handle it either, 224 00:11:38.240 --> 00:11:39.799 not on top of the fact that we don't really 225 00:11:39.840 --> 00:11:42.279 have another game plan. I mean, we do have sort 226 00:11:42.320 --> 00:11:44.559 of the bitcoin maximalists and the focus on what we 227 00:11:44.600 --> 00:11:48.159 could do with sort of the Austrian method, but we 228 00:11:48.240 --> 00:11:52.559 also what I would challenge the bitcoin maximalists to do. 229 00:11:52.919 --> 00:11:54.320 And I'm probably gonna get a lot of hate on 230 00:11:54.759 --> 00:11:57.799 x nown for saying this, to come up with what 231 00:11:57.840 --> 00:12:01.039 the credit system looks like in that world, right, because 232 00:12:01.080 --> 00:12:04.919 there's a fundamental concept that does work in the US, 233 00:12:04.960 --> 00:12:08.120 which has to do with as dollars come into a bank, 234 00:12:08.759 --> 00:12:11.559 that's at least how we today come up with mortgages 235 00:12:11.600 --> 00:12:14.559 and the ability people borrowing and credit. So is it 236 00:12:14.960 --> 00:12:18.279 the fiscal responsibility of credit? How do we manage that? 237 00:12:19.039 --> 00:12:21.639 The truth is we've had a financial crisis every seven 238 00:12:21.720 --> 00:12:24.039 or eight years, you know, we haven't had one in 239 00:12:24.080 --> 00:12:26.879 a while. But also after the Great Depression there wasn't one. 240 00:12:26.879 --> 00:12:29.879 There were some aftershocks, like to me, I think Silicon 241 00:12:29.960 --> 00:12:32.279 Valley Bank, and those were sort of an aftershock of 242 00:12:32.360 --> 00:12:34.759 two thousand and eight. So han't yet really seen what 243 00:12:34.799 --> 00:12:38.519 the next financial crisis might look like. So they're not abnormal. 244 00:12:38.720 --> 00:12:41.799 It's what happens in the FIAT world. And that's at 245 00:12:41.879 --> 00:12:44.320 least why fundamentally they thought to put things like the 246 00:12:44.320 --> 00:12:47.799 Federal Reserve and others in place. What's happened, though, I 247 00:12:47.840 --> 00:12:50.480 think is that you've now seen, and this is a 248 00:12:50.600 --> 00:12:54.960 challenge for the FEDS, is people who are openly criticizing 249 00:12:55.000 --> 00:12:59.559 the system on a regular basis, right, and also coming 250 00:12:59.600 --> 00:13:02.440 up with and it's not just you know, the bitcoin 251 00:13:02.480 --> 00:13:06.759 maximalist right coinbase is throwing daggers at the FDIC. Right, 252 00:13:06.799 --> 00:13:10.440 they're suing the fdi C, they're pulling Foyer requests. I 253 00:13:10.519 --> 00:13:13.720 cannot tell you how unheard of that is that a 254 00:13:13.799 --> 00:13:17.399 non bank is pressing one of the prudential federal regulators. 255 00:13:17.960 --> 00:13:19.960 And I see that as a good thing because I 256 00:13:19.960 --> 00:13:21.559 think there needs to be a shake up in how 257 00:13:21.600 --> 00:13:25.320 they're doing business, particularly with the reputation risk. That's something 258 00:13:25.360 --> 00:13:28.240 that camels that has evolved into something that's really bad. 259 00:13:28.279 --> 00:13:32.840 But anyway, to your point, though, I really agree fundamentally 260 00:13:32.879 --> 00:13:36.240 that not only is there not you know, not only 261 00:13:36.279 --> 00:13:38.279 would this be the way we would handle another crisis 262 00:13:38.320 --> 00:13:40.440 today as we did in two thousand and eight, but 263 00:13:40.480 --> 00:13:42.639 there really there aren't many other options on the table. 264 00:13:43.600 --> 00:13:47.519 Yeah, And I think going back to you notice much 265 00:13:47.679 --> 00:13:51.480 better than I do. It's not that people had mortgages 266 00:13:52.159 --> 00:13:55.480 or fractional reserve banking. It was the abuse of it, right, 267 00:13:55.519 --> 00:13:59.879 they started giving bad mortgages to people. But yes, you 268 00:13:59.879 --> 00:14:04.200 know there was the A category a great mortgages, right, 269 00:14:04.279 --> 00:14:06.399 and but then there was like the d N the 270 00:14:06.519 --> 00:14:10.919 C or C and D right the level where no income. 271 00:14:10.639 --> 00:14:12.440 No docks the abuse of it. 272 00:14:12.559 --> 00:14:15.720 But and then the regulatory agencies, I don't know why 273 00:14:15.720 --> 00:14:17.759 didn't catch it or what was happening there, and then 274 00:14:17.799 --> 00:14:20.639 the grading agencies were a part of it. 275 00:14:20.960 --> 00:14:24.840 So it was just human behavior playing out. 276 00:14:25.039 --> 00:14:27.960 And I keep going back to, you know, maybe when 277 00:14:27.960 --> 00:14:30.279 all this stuff is on the blockchain, but with what 278 00:14:30.360 --> 00:14:33.320 kind of Elon's trying to do now, I'm not sure 279 00:14:33.360 --> 00:14:36.240 it's going to stop everything, because things happen in life, 280 00:14:36.279 --> 00:14:38.840 but it will help curb a lot of that from happening, 281 00:14:38.919 --> 00:14:42.720 the abuse and that oh I'm gonna slip a C 282 00:14:42.919 --> 00:14:46.399 note to this regulatory agency, let them grade me higher 283 00:14:47.120 --> 00:14:49.240 and and you know, get away with it. Maybe that 284 00:14:49.360 --> 00:14:50.320 those things will stop. 285 00:14:51.080 --> 00:14:53.559 Yeah, I think it's important to remember back in eight 286 00:14:54.519 --> 00:14:57.279 there was not a lot. It was very opaque understanding 287 00:14:57.320 --> 00:14:59.720 the derivatives. So when I look back now, it's very 288 00:14:59.759 --> 00:15:01.840 easy to see because I had to calculate all the 289 00:15:01.879 --> 00:15:05.000 derivatives and the exposure with AIG when AIG was about 290 00:15:05.039 --> 00:15:09.120 to fail, and it was very hard to try to 291 00:15:09.120 --> 00:15:12.000 dig into what was in all of these products. So 292 00:15:12.679 --> 00:15:16.919 to the degree that blockchain could help reduce that opacity 293 00:15:16.960 --> 00:15:19.480 and allow people to see more into what they're buying, 294 00:15:19.559 --> 00:15:24.240 like up front, that might help determining things. But then 295 00:15:24.279 --> 00:15:28.039 you need the regulators, the people who are hopefully not 296 00:15:28.080 --> 00:15:30.519 going to take the C notes to actually be responsible, 297 00:15:31.000 --> 00:15:34.159 or the ratings agencies to you know, really enforce that 298 00:15:34.399 --> 00:15:36.679 or highlight that, right, because what if you have a 299 00:15:36.759 --> 00:15:40.759 quote unquote captured blockchain, like a permission blockchain that is 300 00:15:40.840 --> 00:15:43.039 regulated and it's from like, you know, let's call it 301 00:15:43.080 --> 00:15:46.480 Moody's blockchain or whatever, sorry Moody is, you know, like 302 00:15:46.679 --> 00:15:48.639 and and they're doing things in a way, but it's 303 00:15:48.679 --> 00:15:50.879 coded in a way where it doesn't quite really show 304 00:15:50.919 --> 00:15:54.159 you everything. So how do you get to the underlying assets? 305 00:15:54.159 --> 00:15:57.840 So I think the connection between when you you know, 306 00:15:57.960 --> 00:16:01.080 tokenize something right like or whatever, you need some kind 307 00:16:01.080 --> 00:16:05.120 of verification system and you need to have that verified 308 00:16:05.159 --> 00:16:07.639 maybe on chain is maybe something that we can start 309 00:16:07.639 --> 00:16:11.320 to do, have independent reviewers you know, of that process. 310 00:16:11.799 --> 00:16:14.799 And I think, look, there's always always going to be abuse. 311 00:16:14.919 --> 00:16:18.600 People always find cracks in the system, but that is 312 00:16:18.639 --> 00:16:20.559 going to take just the fact that we can see 313 00:16:20.600 --> 00:16:23.919 it better will reduce that possibility of having this huge 314 00:16:23.919 --> 00:16:26.039 buildup of as you say, all this B and C 315 00:16:26.240 --> 00:16:28.360 stuff under the A stuff and we think it's fine, 316 00:16:28.440 --> 00:16:31.679 and then you know, leading at least to another issue 317 00:16:31.679 --> 00:16:33.840 in the financial crisis in two thousand and eight was 318 00:16:34.360 --> 00:16:36.320 you know, the credit to fault swaps, right, because then 319 00:16:36.320 --> 00:16:39.279 people were taking on insurance on the fact that the 320 00:16:39.279 --> 00:16:41.799 bonds were going to fail, and then there were short 321 00:16:41.840 --> 00:16:45.480 selling companies like City and if you remember, then SEC 322 00:16:45.519 --> 00:16:48.120 had to come in and stop the short selling for companies, 323 00:16:48.159 --> 00:16:51.240 which I still find to this day very interesting because 324 00:16:51.279 --> 00:16:56.080 the SEC chairman at the time said that was if 325 00:16:56.360 --> 00:16:58.399 that was, he regrets that decision and he will for 326 00:16:58.440 --> 00:17:01.480 the rest of his life stually interceded in the financial 327 00:17:01.519 --> 00:17:05.519 markets and stop people from allowing to short specific stocks 328 00:17:05.559 --> 00:17:08.039 because they were in the category of banks. Hmm. 329 00:17:09.200 --> 00:17:13.160 Yeah, there's so many levels to this because it's a 330 00:17:13.240 --> 00:17:15.960 human aspect. You know, bad actors will do bad things 331 00:17:16.039 --> 00:17:21.079 human beings. Obviously we're not infallible, and so it's tricky. 332 00:17:21.079 --> 00:17:24.160 But to your point, if we can progressively raise the 333 00:17:24.200 --> 00:17:27.039 standard with blockchain technology, would be in a better place. 334 00:17:27.640 --> 00:17:30.400 So let's talk about operation choke point two point zero. 335 00:17:30.440 --> 00:17:32.839 I was thinking, so I was. 336 00:17:32.799 --> 00:17:36.279 Salivating about asking you about this, but given your perspective 337 00:17:36.680 --> 00:17:41.480 and your background at FDIC, because we're seeing information come 338 00:17:41.480 --> 00:17:44.079 out that the FED, the FDIC and so forth, we're 339 00:17:44.880 --> 00:17:47.400 kind of trying to block crypto. I don't know if 340 00:17:47.440 --> 00:17:51.480 they Elizabeth Warren and her cronies were part of trying to, 341 00:17:51.759 --> 00:17:54.559 you know, stop or could the collapse of Silicon Valley 342 00:17:54.599 --> 00:17:56.039 Bank and debanking crypto. 343 00:17:56.519 --> 00:17:58.319 What are your thoughts on this whole situation. 344 00:17:59.359 --> 00:18:02.279 Yeah, well, it's funny by the way, that I'm former 345 00:18:02.519 --> 00:18:05.960 FD I see because I've talked with folks. In fact, 346 00:18:05.960 --> 00:18:07.559 I was at conference a couple of years ago and 347 00:18:07.599 --> 00:18:10.240 I was at a table chatting with Nick Carter and 348 00:18:10.359 --> 00:18:12.319 Nick Carter and you know, Austin Campbell, the real like 349 00:18:12.440 --> 00:18:14.880 leaders on this stuff. We had a good conversation. I 350 00:18:14.920 --> 00:18:17.480 explained my background. I was playing some things, and as 351 00:18:17.720 --> 00:18:20.279 we left the table, Nick said to me, you know, 352 00:18:20.319 --> 00:18:22.640 I really don't like the FD I see that much. 353 00:18:22.759 --> 00:18:25.000 And I was kind of like, you doesn't like me 354 00:18:25.079 --> 00:18:27.720 that much because I wasn't I see, But I was like, 355 00:18:27.759 --> 00:18:29.720 point taken, and now I could see, Yeah, you really 356 00:18:29.720 --> 00:18:32.440 didn't like the FD I see that much with what 357 00:18:32.480 --> 00:18:35.319 you you know, you know shown. But the truth is, 358 00:18:35.400 --> 00:18:41.640 though Operation Showpoint, the first one was very much covert, right, 359 00:18:41.759 --> 00:18:45.200 It was not known what was happening. This was really 360 00:18:45.200 --> 00:18:46.880 out in the open. I mean, you had the Biden 361 00:18:46.880 --> 00:18:49.680 administration saying that there were dangers of crypto in the 362 00:18:49.720 --> 00:18:53.079 financial banking processes. So I think a lot of people, 363 00:18:53.519 --> 00:18:56.440 a lot of regulators took the message from up high 364 00:18:56.480 --> 00:18:58.279 and said we need to do things to keep this 365 00:18:58.279 --> 00:19:01.279 stuff out of the system, like we're just not comfortable 366 00:19:01.319 --> 00:19:04.000 with it and we feel like it could lead to 367 00:19:04.079 --> 00:19:07.279 a financial crisis. The one criticism I give to a 368 00:19:07.319 --> 00:19:09.599 lot of the regulators at the time who are now leaving, 369 00:19:09.759 --> 00:19:14.880 like Michael Sue from the occ who live through the 370 00:19:14.880 --> 00:19:19.559 financial crisis, is comparing crypto to the financial crisis, which 371 00:19:19.559 --> 00:19:21.920 to me is like the crime of the century. How 372 00:19:21.920 --> 00:19:25.680 can you say at technology that's showing new ways of 373 00:19:25.759 --> 00:19:30.119 conducting banking, of having possibilities. As you know, there are 374 00:19:30.119 --> 00:19:31.920 people who lose money on meme coins, but there are 375 00:19:31.920 --> 00:19:35.160 a lot of people who've created wealth, intergenerational wealth for themselves. 376 00:19:35.640 --> 00:19:38.519 How can you say that's a financial crisis? Like I 377 00:19:38.599 --> 00:19:42.480 understand that it's new and technology does disrupt it. And 378 00:19:42.519 --> 00:19:44.720 that was my thought about it is it's not like 379 00:19:44.759 --> 00:19:48.960 a financial crisis, right, But there's these new technologies. How 380 00:19:48.960 --> 00:19:51.400 are the banks going to adapt to it? So the 381 00:19:51.400 --> 00:19:54.440 fact that you had people who use their authority to 382 00:19:54.480 --> 00:19:58.039 simply shut out a certain technology and therefore shut out 383 00:19:58.079 --> 00:20:02.440 certain people trying to build in this country, is abhorrent. 384 00:20:03.000 --> 00:20:06.319 I think the people that did that, not necessarily the 385 00:20:06.319 --> 00:20:09.160 people on the ground, but certainly the supervisors of each 386 00:20:09.160 --> 00:20:12.559 of these offices if they were had a condoning a practice, 387 00:20:12.799 --> 00:20:15.200 whether it was written or not, telling to like not 388 00:20:15.319 --> 00:20:19.039 bank people or d bank people particularly. You know, you 389 00:20:19.079 --> 00:20:21.440 put in two two million dollars in the bank, excuse 390 00:20:21.480 --> 00:20:23.799 me for your company, whether you're like Anchorage Digital, you're 391 00:20:23.839 --> 00:20:25.480 a bank, and then you pull it the next day, 392 00:20:26.119 --> 00:20:29.200 so and you realize very quickly how much power the 393 00:20:29.240 --> 00:20:34.799 banks have over you in that regard. So look, I'm human. 394 00:20:35.240 --> 00:20:37.960 People the fd I, c N Federal Reserver are human too. 395 00:20:38.000 --> 00:20:39.799 And I like to tell people, you know, don't hate 396 00:20:39.799 --> 00:20:42.319 the players hate the game. The game is really set 397 00:20:42.359 --> 00:20:45.519 up in a way where, because of the ratings, if 398 00:20:45.519 --> 00:20:47.519 I go into your bank, let's say you're the CEO 399 00:20:47.559 --> 00:20:49.839 of a bank, it's camels, right, So I have to 400 00:20:49.839 --> 00:20:53.359 analyze what your capitalism of your bank, what your assets are, 401 00:20:53.839 --> 00:21:00.359