1 00:00:02,560 --> 00:00:06,360 Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News, 2 00:00:06,720 --> 00:00:10,400 Speaker 1: and this is Bloomberg Crypto, a daily Bloomberg I heard podcast. 3 00:00:10,640 --> 00:00:19,360 Speaker 1: It's Friday, August five. With every additional bankruptcy filing or 4 00:00:19,400 --> 00:00:23,000 Speaker 1: accusation of insider trading and crypto regulators seem to turn 5 00:00:23,079 --> 00:00:26,079 Speaker 1: up the heat ever so slightly when it comes to 6 00:00:26,120 --> 00:00:29,760 Speaker 1: their focus on the digital assets industry. But who's planning 7 00:00:29,800 --> 00:00:32,839 Speaker 1: on doing the regulating and what would that even look like? 8 00:00:33,600 --> 00:00:37,240 Speaker 1: More importantly, what does it mean that the regulators themselves 9 00:00:37,440 --> 00:00:41,239 Speaker 1: don't entirely seem to agree joining me to bring us 10 00:00:41,320 --> 00:00:43,360 Speaker 1: up to speed on what's happening these days with US 11 00:00:43,400 --> 00:00:47,639 Speaker 1: crypto regulation. We have to Bloomberg reportes Alison verse Bro 12 00:00:47,920 --> 00:00:50,720 Speaker 1: in d C. So the CFTC has argued, we feel 13 00:00:50,760 --> 00:00:53,240 Speaker 1: like we have the expertise to do this, and Alex 14 00:00:53,320 --> 00:00:57,000 Speaker 1: newin the current regulation framework in the US is a 15 00:00:57,040 --> 00:01:03,640 Speaker 1: patchwork and it's inadequate. Welcome and thank you both so 16 00:01:03,720 --> 00:01:07,960 Speaker 1: much for being here. Alison, you're in d C. You are, 17 00:01:08,160 --> 00:01:10,959 Speaker 1: you know, dialing in from the studio that we have 18 00:01:11,040 --> 00:01:13,959 Speaker 1: there in the office, and as a result, you have 19 00:01:14,400 --> 00:01:19,240 Speaker 1: probably more real time access to what's going on as 20 00:01:19,280 --> 00:01:22,240 Speaker 1: it relates to legislators on the hill, as it relates 21 00:01:22,280 --> 00:01:25,440 Speaker 1: to how regulators are thinking about things. So I'm going 22 00:01:25,480 --> 00:01:28,039 Speaker 1: to start with you. We've seen the collapse of an 23 00:01:28,040 --> 00:01:32,720 Speaker 1: algorithmic stable coin. We have seen prices of assets across 24 00:01:32,760 --> 00:01:36,720 Speaker 1: the board being quite far from their old time highs. 25 00:01:36,760 --> 00:01:42,200 Speaker 1: We have seen multiple enforcement actions including the SEC, the 26 00:01:42,280 --> 00:01:46,040 Speaker 1: d o J, other regulators, and other entities of the U. S. 27 00:01:46,080 --> 00:01:52,160 Speaker 1: Government accusing people of everything from insider trading to wire fraud. 28 00:01:53,000 --> 00:01:55,560 Speaker 1: Is this environment one that you think is adding some 29 00:01:55,760 --> 00:01:59,720 Speaker 1: urgency to the activity that you're seeing there? I think 30 00:01:59,720 --> 00:02:03,559 Speaker 1: it is, and in certain places, right I think, Um, 31 00:02:03,600 --> 00:02:07,080 Speaker 1: you know, you mentioned the collapse of of Terra, so 32 00:02:07,240 --> 00:02:10,840 Speaker 1: that obviously added some urgency around the stable coin discussions. 33 00:02:10,840 --> 00:02:14,200 Speaker 1: And we do see those, um, you know, starting to 34 00:02:14,240 --> 00:02:16,720 Speaker 1: go somewhere, at least trying to go somewhere. Of whenever 35 00:02:16,760 --> 00:02:20,760 Speaker 1: you're talking about legislation in the US, it's quite difficult 36 00:02:20,760 --> 00:02:24,280 Speaker 1: to get that done on a bar partisan basis, um. 37 00:02:24,320 --> 00:02:28,880 Speaker 1: But basically, you know, we've seen Treasury actually getting involved, um, 38 00:02:28,880 --> 00:02:31,560 Speaker 1: in particular with a bill that's being worked out on 39 00:02:31,600 --> 00:02:35,720 Speaker 1: the House side between a Chairwoman Maxine Waters and ranking 40 00:02:35,720 --> 00:02:40,280 Speaker 1: Member Patrick McHenry on the House Financial Services Committee. UM, 41 00:02:40,320 --> 00:02:41,720 Speaker 1: so we know that they've been trying to work out 42 00:02:41,760 --> 00:02:45,200 Speaker 1: a deal. We know that they're getting pretty close, um, 43 00:02:45,280 --> 00:02:48,200 Speaker 1: that there are still some hang ups. So that's definitely 44 00:02:48,240 --> 00:02:51,519 Speaker 1: a place where we could potentially see action and maybe 45 00:02:51,600 --> 00:02:54,720 Speaker 1: even by the end of the year though mid terms 46 00:02:54,760 --> 00:02:57,120 Speaker 1: are coming up in November and we know that Congress 47 00:02:57,200 --> 00:02:59,760 Speaker 1: kind of gets a little side checked, um anytime that 48 00:02:59,840 --> 00:03:04,840 Speaker 1: we have an election year, So we'll see what happens there. UM, 49 00:03:04,919 --> 00:03:09,240 Speaker 1: I'd say another area, definitely, you know, we're seeing a 50 00:03:09,240 --> 00:03:12,639 Speaker 1: lot of enforcement. UM. In particular, we've seen some actions 51 00:03:13,639 --> 00:03:16,280 Speaker 1: or we saw an action over the last last month 52 00:03:16,639 --> 00:03:19,960 Speaker 1: on an insider trading case at the SEC. Broad we 53 00:03:20,000 --> 00:03:22,840 Speaker 1: also know that the SEC it has an active probe 54 00:03:22,840 --> 00:03:25,680 Speaker 1: into coin Based, the largest US exchange, and it's whether 55 00:03:25,880 --> 00:03:29,720 Speaker 1: it's offering you know, unregistered securities on its platform. The 56 00:03:29,840 --> 00:03:32,920 Speaker 1: SEC looking into coin based, it raises the question of 57 00:03:33,000 --> 00:03:35,640 Speaker 1: defining what is the security, what is the commodity? Who 58 00:03:35,680 --> 00:03:38,360 Speaker 1: has control over what? I mean? How far away are 59 00:03:38,400 --> 00:03:41,360 Speaker 1: we really from getting those answers? But we can expect 60 00:03:41,360 --> 00:03:43,600 Speaker 1: I think some of that to pick up as well. UM. 61 00:03:43,640 --> 00:03:45,120 Speaker 1: And then the last thing I would say is we've 62 00:03:45,160 --> 00:03:50,080 Speaker 1: definitely seen sort of a growing um effort on Capitol 63 00:03:50,200 --> 00:03:54,040 Speaker 1: Hill to you know, give the Commodity Futures Trading Commission 64 00:03:54,640 --> 00:03:59,080 Speaker 1: more authority to regulate cryptocurrency directly. So basically, right now 65 00:03:59,280 --> 00:04:03,040 Speaker 1: it has most a jurisdiction over crypto derivatives. But you know, 66 00:04:03,040 --> 00:04:06,440 Speaker 1: if there are some folks I think certain coins like bitcoin, 67 00:04:06,640 --> 00:04:09,880 Speaker 1: ether are commodities and that they should be directly regulated 68 00:04:09,880 --> 00:04:15,000 Speaker 1: by the CFTC. We've started to see some lawmakers um 69 00:04:15,280 --> 00:04:17,760 Speaker 1: supporting that effort. You know, I think it remains to 70 00:04:17,800 --> 00:04:20,800 Speaker 1: be seen whether or not you could get enough lawmakers 71 00:04:20,880 --> 00:04:23,360 Speaker 1: on board to actually pass something in the House and Senate. 72 00:04:23,440 --> 00:04:25,800 Speaker 1: But you know, another one to watch um at the 73 00:04:25,880 --> 00:04:28,240 Speaker 1: end of this year and into next year. So just 74 00:04:28,279 --> 00:04:32,320 Speaker 1: to unpack that for the folks who aren't necessarily paying 75 00:04:32,320 --> 00:04:36,680 Speaker 1: attention to the minute of which US regulators involved in crypto, 76 00:04:37,440 --> 00:04:40,360 Speaker 1: there's there's almost like factions might be too strong a word, 77 00:04:40,400 --> 00:04:43,360 Speaker 1: but there are definitely different perspectives and approaches here, right So, 78 00:04:43,400 --> 00:04:46,159 Speaker 1: as you've identified, on the one hand, we have the 79 00:04:46,240 --> 00:04:49,599 Speaker 1: U S Securities and Exchange Commission in the SEC which 80 00:04:50,120 --> 00:04:54,040 Speaker 1: typically does not get involved in anything that looks like 81 00:04:54,120 --> 00:04:58,560 Speaker 1: a commodity, which, for argument's sake, let's say Bitcoin and 82 00:04:58,600 --> 00:05:01,599 Speaker 1: ether are considered to be. But then over on the 83 00:05:01,600 --> 00:05:04,719 Speaker 1: other side, you have somebody which literally has commodities in 84 00:05:04,760 --> 00:05:08,960 Speaker 1: the name, um, the CFTC, which is like, hey, we're 85 00:05:09,000 --> 00:05:12,400 Speaker 1: here and we're very interested in doing these things. Now. 86 00:05:12,920 --> 00:05:14,719 Speaker 1: One of the things that we've talked a lot about 87 00:05:14,760 --> 00:05:19,200 Speaker 1: on this podcast is that everything else in crypto that's 88 00:05:19,200 --> 00:05:23,560 Speaker 1: not Bitcoin, that's not ether, seems to be up for 89 00:05:23,600 --> 00:05:26,680 Speaker 1: grabs over whether it is defined as a security or 90 00:05:26,720 --> 00:05:29,479 Speaker 1: if it's just defined as a commodity. Is that a 91 00:05:29,520 --> 00:05:33,000 Speaker 1: fair assessment of the of the fight right now? I 92 00:05:33,000 --> 00:05:35,440 Speaker 1: would say that's a fair assessment, And I think, you know, 93 00:05:35,480 --> 00:05:39,240 Speaker 1: we definitely see the crypto industry kind of pushing for 94 00:05:39,240 --> 00:05:42,159 Speaker 1: for the CFTC to be its main regulator. Um. You know, 95 00:05:42,240 --> 00:05:46,160 Speaker 1: I have heard a few reasons why. Um, the industry 96 00:05:46,160 --> 00:05:48,000 Speaker 1: will say that they feel like the CFTC is more 97 00:05:48,040 --> 00:05:49,720 Speaker 1: open to working with them, and that they feel like 98 00:05:49,720 --> 00:05:53,440 Speaker 1: their assets truly our commodities, um, and thus that regulator 99 00:05:53,600 --> 00:05:56,800 Speaker 1: is a better one for them, whereas maybe more cynical 100 00:05:56,839 --> 00:06:00,320 Speaker 1: folks would say, I would say that the CFCC has 101 00:06:00,839 --> 00:06:04,600 Speaker 1: you know, less stringent investor protection standards, and you know, 102 00:06:04,800 --> 00:06:08,200 Speaker 1: there's some thought that they may be a little bit 103 00:06:08,240 --> 00:06:12,080 Speaker 1: of an easier regulator than the SEC, though I will 104 00:06:12,120 --> 00:06:15,160 Speaker 1: note UM Chair Rosten Venom of the of the CFTC 105 00:06:15,200 --> 00:06:18,400 Speaker 1: has pushed back against that aggressively. UM you know, always 106 00:06:18,400 --> 00:06:21,440 Speaker 1: points to their enforcement record. You know, they have brought 107 00:06:21,560 --> 00:06:25,880 Speaker 1: dozens of enforcement cases UM over the last several years, 108 00:06:25,880 --> 00:06:29,040 Speaker 1: and so he's continued to say that the CFTC is 109 00:06:29,040 --> 00:06:31,760 Speaker 1: aggressive of the c CFTC will continue to go after 110 00:06:31,960 --> 00:06:36,680 Speaker 1: fraud and manipulation in this area. You know, there's there's definitely, uh, 111 00:06:36,800 --> 00:06:39,719 Speaker 1: some debate as to as to why the industry would 112 00:06:39,720 --> 00:06:41,839 Speaker 1: be pushing for the CFTC, but it's definitely something that 113 00:06:41,839 --> 00:06:45,200 Speaker 1: we're seeing right now. And Alex you have written about 114 00:06:45,279 --> 00:06:47,919 Speaker 1: exactly that that Allison is describing this idea of the 115 00:06:47,920 --> 00:06:50,560 Speaker 1: CFTC saying, hey, no, we're here, We're serious, We're ready 116 00:06:50,600 --> 00:06:52,599 Speaker 1: for this. Can you talk a little bit more about that. 117 00:06:52,800 --> 00:06:56,000 Speaker 1: The SEC has seemed to have taken a more aggressive 118 00:06:56,040 --> 00:06:59,560 Speaker 1: effort when it comes to enforcement actions, but the CFTC 119 00:06:59,720 --> 00:07:04,360 Speaker 1: chair have also recently signaled that the agency is also 120 00:07:04,480 --> 00:07:08,279 Speaker 1: going to ram up it's UM enforcement actions as well. 121 00:07:08,880 --> 00:07:12,560 Speaker 1: Pointing out that the current regulation framework in the US 122 00:07:13,320 --> 00:07:16,880 Speaker 1: is a patchwork and it's inadequate in terms of UM 123 00:07:16,920 --> 00:07:20,280 Speaker 1: regulating the industry. And he has also said that they 124 00:07:20,280 --> 00:07:25,160 Speaker 1: will creatively use their authority in this field to do 125 00:07:25,240 --> 00:07:29,120 Speaker 1: so without really naming exactly what that would look like. Yes, 126 00:07:29,440 --> 00:07:31,800 Speaker 1: the thing that various people in crypto seem to be 127 00:07:31,800 --> 00:07:34,840 Speaker 1: clamoring for is the C word, which is clarity. You 128 00:07:35,040 --> 00:07:36,560 Speaker 1: you hear this a lot. They're like, we just want 129 00:07:36,560 --> 00:07:39,680 Speaker 1: to know what rules we have to follow, as um 130 00:07:39,680 --> 00:07:42,360 Speaker 1: Allison said earlier, more cynical folks might argue they want 131 00:07:42,360 --> 00:07:44,040 Speaker 1: to know what those rules are so they can immediately 132 00:07:44,120 --> 00:07:46,360 Speaker 1: higher lawyers who can help them not have those rules 133 00:07:46,360 --> 00:07:49,520 Speaker 1: applies to them. But there definitely does seem to be 134 00:07:49,520 --> 00:07:54,560 Speaker 1: a very strong and explicit desire for at least some boundaries, 135 00:07:54,640 --> 00:07:58,240 Speaker 1: guardrails whom I regulate. Is what those things are? As 136 00:07:58,400 --> 00:08:01,239 Speaker 1: you know, Alex has pointed out the cfc C is saying, Hey, 137 00:08:01,280 --> 00:08:03,400 Speaker 1: we're here where we want to be able to do this, 138 00:08:03,960 --> 00:08:06,360 Speaker 1: What in your experience would that look like? And how 139 00:08:06,440 --> 00:08:08,840 Speaker 1: might that be different from what the SEC is proposing. 140 00:08:09,040 --> 00:08:10,800 Speaker 1: That's one of the arguments that they make. But I 141 00:08:10,840 --> 00:08:13,760 Speaker 1: do know that. The CFTC also has pointed out that 142 00:08:13,800 --> 00:08:16,360 Speaker 1: if it were to get more authority and more jurisdiction, 143 00:08:16,400 --> 00:08:19,560 Speaker 1: that it would need additional resources. I think an important 144 00:08:19,600 --> 00:08:22,640 Speaker 1: important point to make is that the CFTC is a 145 00:08:22,760 --> 00:08:26,360 Speaker 1: much smaller agency than the SEC, which some say is 146 00:08:26,400 --> 00:08:28,760 Speaker 1: an argument for why the SEC maybe should take this 147 00:08:28,800 --> 00:08:31,120 Speaker 1: over just because it has more resources, that has more money, 148 00:08:31,120 --> 00:08:34,720 Speaker 1: it has more staff. UM. So the CFTC has argued, 149 00:08:34,800 --> 00:08:37,240 Speaker 1: you know, we feel like we have the expertise to 150 00:08:37,280 --> 00:08:39,760 Speaker 1: do this, but yes, we do need Congress to give 151 00:08:39,840 --> 00:08:42,880 Speaker 1: us more money. UM. There's been talk of maybe, you know, 152 00:08:43,000 --> 00:08:46,160 Speaker 1: imposing some sort of user fee um like exists in 153 00:08:46,200 --> 00:08:49,920 Speaker 1: other industries to help pay for for some of this 154 00:08:50,040 --> 00:08:52,240 Speaker 1: extra work. So, you know, we'll have to see how 155 00:08:52,280 --> 00:08:54,880 Speaker 1: that all shakes out in terms of the you know, 156 00:08:54,920 --> 00:08:57,280 Speaker 1: the money, resources questions that would all have to get 157 00:08:57,280 --> 00:09:01,920 Speaker 1: approved by legislatives. Is that correct? That is correct? Um? 158 00:09:01,960 --> 00:09:03,560 Speaker 1: And like I said, some of the bills that we've 159 00:09:03,559 --> 00:09:06,000 Speaker 1: seen out there, such as the UM you know, there 160 00:09:06,040 --> 00:09:08,720 Speaker 1: was a bill from Senators Lammis and Jilla Brand and 161 00:09:08,800 --> 00:09:11,559 Speaker 1: that would have had some sort of user fee as 162 00:09:11,600 --> 00:09:15,320 Speaker 1: like the funding mechanism for this extra power. So I know, 163 00:09:15,360 --> 00:09:19,280 Speaker 1: that's been something that's been pretty popular in terms of 164 00:09:19,600 --> 00:09:22,679 Speaker 1: legislative proposals. But we'll have to see, you know, if 165 00:09:22,720 --> 00:09:26,720 Speaker 1: that's ultimately um, what ends up happening. Coming up, we'll 166 00:09:26,720 --> 00:09:37,360 Speaker 1: have more from Allison Verse, Brol and Alex Newin. One 167 00:09:37,400 --> 00:09:39,920 Speaker 1: thing we haven't talked about is what if everybody just 168 00:09:40,080 --> 00:09:42,800 Speaker 1: got along. They're like, we're all going to regulate crypto 169 00:09:43,000 --> 00:09:44,560 Speaker 1: and it's gonna be great, and we're going to combine 170 00:09:44,600 --> 00:09:47,520 Speaker 1: forces and we'll have twice as much ability to you know, 171 00:09:47,800 --> 00:09:50,480 Speaker 1: keep everyone in line. Like, what is the vibe, as 172 00:09:50,480 --> 00:09:52,480 Speaker 1: it were, that you're getting from folks that you've spoken 173 00:09:52,520 --> 00:09:58,920 Speaker 1: to the agencies? You know, the agencies always say, um, 174 00:09:58,960 --> 00:10:01,320 Speaker 1: that they that they worked together. And I think the staffs. 175 00:10:01,360 --> 00:10:03,199 Speaker 1: You know, if I talk to folks at these agencies, 176 00:10:03,320 --> 00:10:06,440 Speaker 1: they say the staff in particular the career staff. You know, 177 00:10:06,480 --> 00:10:10,160 Speaker 1: they've worked together for years on these types of issues. UM. 178 00:10:10,200 --> 00:10:14,360 Speaker 1: I do think more recently, you know, the SEC brought 179 00:10:14,480 --> 00:10:17,800 Speaker 1: an insider trading case. Uh. In that case, it chose 180 00:10:17,840 --> 00:10:22,800 Speaker 1: to identify nine tokens as securities. If they were found 181 00:10:23,120 --> 00:10:25,840 Speaker 1: to have traded securities, then the company may well have 182 00:10:25,960 --> 00:10:31,200 Speaker 1: to file register with the SEC. As in exchange, and 183 00:10:31,240 --> 00:10:35,479 Speaker 1: I know that that created some frustration at the CFTC. 184 00:10:36,920 --> 00:10:38,880 Speaker 1: According to the sources that I talked to, they've been 185 00:10:38,880 --> 00:10:42,319 Speaker 1: conducting sort of a parallel investigation. There was a lot 186 00:10:42,360 --> 00:10:44,160 Speaker 1: of thought that maybe some of the tokens that were 187 00:10:44,200 --> 00:10:47,920 Speaker 1: identified by the SEC um could have actually been commodities. 188 00:10:48,720 --> 00:10:51,080 Speaker 1: And so you know, there's a feeling of being a 189 00:10:51,080 --> 00:10:55,360 Speaker 1: little bit bigfooted with that with that case. Um, So 190 00:10:55,400 --> 00:11:00,520 Speaker 1: I think that has created maybe some attention, and yes, 191 00:11:00,880 --> 00:11:04,440 Speaker 1: has exacerbated the tensions. And you know, there's been some 192 00:11:04,520 --> 00:11:07,320 Speaker 1: thought amongst staff. From one of the people that I 193 00:11:07,400 --> 00:11:09,559 Speaker 1: talked to, they said, the staff are concerned that are 194 00:11:09,600 --> 00:11:12,360 Speaker 1: they now going to have to go to the SEC 195 00:11:12,559 --> 00:11:15,000 Speaker 1: every time they want to carry out an enforcement action? 196 00:11:15,040 --> 00:11:19,120 Speaker 1: Do they need SEC approval? Um? You know, given sort 197 00:11:19,120 --> 00:11:23,199 Speaker 1: of this jurisdiction grabs. So we'll have to see how 198 00:11:23,240 --> 00:11:27,240 Speaker 1: that continues to kind of, you know, play itself out 199 00:11:27,280 --> 00:11:30,800 Speaker 1: in the coming months. Um if that causes maybe more 200 00:11:30,840 --> 00:11:33,760 Speaker 1: of a rift than we've seen before. Interesting. So it 201 00:11:33,840 --> 00:11:37,240 Speaker 1: sounds like, you know, in addition to folks in the 202 00:11:37,280 --> 00:11:40,480 Speaker 1: industry saying they want clarity, and I'll give a specific example. 203 00:11:40,600 --> 00:11:44,520 Speaker 1: So right after this enforcement action, these allegations against the 204 00:11:44,640 --> 00:11:47,200 Speaker 1: former employee of coin base, as well as against coin 205 00:11:47,280 --> 00:11:50,480 Speaker 1: Base itself came to light. UM their chief legal officer 206 00:11:50,840 --> 00:11:53,880 Speaker 1: like went on Twitter and in a blog post to say, 207 00:11:54,240 --> 00:11:56,200 Speaker 1: you know, we have no securities on our platform. We 208 00:11:56,280 --> 00:11:59,120 Speaker 1: have an extensive review process that prevents there from being 209 00:11:59,160 --> 00:12:02,520 Speaker 1: securities in the pros platform. We've engaged with the SEC previously. 210 00:12:02,920 --> 00:12:07,319 Speaker 1: So you're definitely getting the impression that people do want clarity, 211 00:12:07,559 --> 00:12:10,480 Speaker 1: they want more communication, but they would much prefer that 212 00:12:10,480 --> 00:12:13,680 Speaker 1: that clarity being a direction that works better for them. Yes, 213 00:12:13,840 --> 00:12:17,599 Speaker 1: I think yeah, going back to the cynical view. Um. 214 00:12:17,640 --> 00:12:21,120 Speaker 1: You know, we had that a Bloomberg Crypto summit of 215 00:12:21,400 --> 00:12:25,320 Speaker 1: pretty recently and at that summit, SEC chair former SEC 216 00:12:25,480 --> 00:12:28,240 Speaker 1: chair Jay Clayton made a comment when he said, you know, 217 00:12:28,280 --> 00:12:30,920 Speaker 1: the industry, when they talk about wanting regulatory clarity, what 218 00:12:31,000 --> 00:12:34,040 Speaker 1: they really want is de regulation and to be treated, 219 00:12:34,400 --> 00:12:36,880 Speaker 1: you know, differently than every other market. One of the 220 00:12:36,920 --> 00:12:41,160 Speaker 1: things that I think is important about regulation of digital 221 00:12:41,160 --> 00:12:45,720 Speaker 1: assets is to look at the etymology the genesis of 222 00:12:45,720 --> 00:12:50,600 Speaker 1: digital assets. They came about in a different way from 223 00:12:50,600 --> 00:12:56,880 Speaker 1: most financial innovations. Most financial innovations are domestic and institutional. 224 00:12:57,760 --> 00:13:04,359 Speaker 1: Digital assets our global and largely retail that has presented 225 00:13:05,040 --> 00:13:10,000 Speaker 1: a regulatory challenge that we really haven't encountered before, which 226 00:13:10,040 --> 00:13:15,040 Speaker 1: is trying to have global coordination UM across a new 227 00:13:15,080 --> 00:13:18,040 Speaker 1: type of asset class at the retail level. So I 228 00:13:18,080 --> 00:13:20,600 Speaker 1: think if you think about it that way, you understand 229 00:13:20,640 --> 00:13:30,720 Speaker 1: why there's some challenges. So, you know, I I do 230 00:13:30,840 --> 00:13:34,960 Speaker 1: think though to the industry's point, you know, we haven't 231 00:13:35,040 --> 00:13:38,360 Speaker 1: really seen a ton of real rags or guidance in 232 00:13:38,400 --> 00:13:42,000 Speaker 1: this area. UM. I think in part because you know, 233 00:13:42,080 --> 00:13:44,080 Speaker 1: I've talked to folks that agencies where you know, this 234 00:13:44,120 --> 00:13:46,560 Speaker 1: is an emergency, emerging area. It takes a little while 235 00:13:46,640 --> 00:13:49,480 Speaker 1: for people to get educated on this stuff. And I 236 00:13:49,480 --> 00:13:51,719 Speaker 1: think you're actually starting to see more movement of late 237 00:13:51,800 --> 00:13:55,240 Speaker 1: because government agencies has had to have had some time 238 00:13:55,280 --> 00:13:58,560 Speaker 1: now to understand crypto a little bit more. Alex, just 239 00:13:58,640 --> 00:14:01,080 Speaker 1: as a closing question, I want to ask you about 240 00:14:01,080 --> 00:14:03,600 Speaker 1: an agency that doesn't often come up in crypto, which 241 00:14:03,600 --> 00:14:07,199 Speaker 1: is the fd I C. You wrote a story recently 242 00:14:07,480 --> 00:14:10,760 Speaker 1: about the fd i S the Federal Deposit Insurance Court, 243 00:14:11,160 --> 00:14:17,280 Speaker 1: which exists to help customers of banks be protected in 244 00:14:17,320 --> 00:14:19,440 Speaker 1: the event that something happens to that bank. But they 245 00:14:19,440 --> 00:14:23,720 Speaker 1: had to wait into a crypto situation. What was that? Yes, 246 00:14:23,880 --> 00:14:26,800 Speaker 1: So recently the fd i C and I believe the 247 00:14:26,800 --> 00:14:33,040 Speaker 1: Federal Reserve UM demanded Voyager is a now bankrupt crypto platform. 248 00:14:33,280 --> 00:14:37,320 Speaker 1: Voyager announced that they suspended UM deposited trading withdraws and 249 00:14:37,440 --> 00:14:41,600 Speaker 1: now they filed for a Chapter UM eleven bankruptcy productions 250 00:14:41,680 --> 00:14:45,200 Speaker 1: to clarify to their customers that the fd i C 251 00:14:45,760 --> 00:14:51,320 Speaker 1: doesn't ensure products issued by Voyager, and I think they 252 00:14:51,400 --> 00:14:58,360 Speaker 1: wanted the platforms to correct any misleading statements around that. So, Allison, 253 00:14:58,480 --> 00:15:00,560 Speaker 1: you know hearing things like this for the ft i C, 254 00:15:00,760 --> 00:15:04,240 Speaker 1: which really center around this idea of customer confusion. We 255 00:15:04,320 --> 00:15:08,280 Speaker 1: have customers being confused, we have crypto companies being confused, 256 00:15:08,320 --> 00:15:11,440 Speaker 1: we have regulators being confused. What hope is there for 257 00:15:11,440 --> 00:15:14,120 Speaker 1: clarity anytime soon? You know? I think we could see 258 00:15:14,120 --> 00:15:17,520 Speaker 1: some clarity around the edges on some of this stuff. Right. 259 00:15:17,600 --> 00:15:20,680 Speaker 1: So with the f d i C, they approved regulations 260 00:15:20,680 --> 00:15:24,920 Speaker 1: in May clarifying that, you know, the agency's procedures for 261 00:15:24,960 --> 00:15:28,240 Speaker 1: taking action against firms and people who make misleading claims 262 00:15:28,280 --> 00:15:32,400 Speaker 1: about deposit insurance, you know, essentially saying that you can't 263 00:15:32,440 --> 00:15:35,240 Speaker 1: do this, UM, we will come after you if you do. 264 00:15:36,000 --> 00:15:38,400 Speaker 1: And so I think we could see agencies putting out 265 00:15:38,440 --> 00:15:41,920 Speaker 1: little actions like this all around the perimeter that sort 266 00:15:41,920 --> 00:15:46,000 Speaker 1: of help investors and help clarify the rules in terms 267 00:15:46,000 --> 00:15:49,320 Speaker 1: of big action. You know. Again, I'll say that I 268 00:15:49,360 --> 00:15:53,080 Speaker 1: think the the stable coin effort, it's for sure one 269 00:15:53,080 --> 00:15:56,480 Speaker 1: of the most likely to the most likely to pass 270 00:15:56,480 --> 00:15:58,840 Speaker 1: in the near term. I say that with hesitancy because 271 00:15:58,880 --> 00:16:02,480 Speaker 1: whenever you're talking about legislation on Capitol Hill, um, it's 272 00:16:02,520 --> 00:16:04,960 Speaker 1: always kind of like take the timing with a grain assault, 273 00:16:05,040 --> 00:16:08,240 Speaker 1: you know, you always have to use as soon as 274 00:16:08,280 --> 00:16:12,240 Speaker 1: because things just they change pretty fast. Um. But we have, 275 00:16:12,400 --> 00:16:14,400 Speaker 1: like I said, I mean, it seems like the big 276 00:16:14,440 --> 00:16:17,040 Speaker 1: hang up with stable quail legislation right now is over 277 00:16:17,760 --> 00:16:23,280 Speaker 1: a provision regarding custodial wallets, and essentially Democrats and the Treasury, 278 00:16:23,280 --> 00:16:26,080 Speaker 1: which has been working with lawmakers, want a provision in 279 00:16:26,120 --> 00:16:30,560 Speaker 1: there that would protect customers in cases where intermediaries uh 280 00:16:30,760 --> 00:16:36,200 Speaker 1: go insolvent um. And so this would separate assets that 281 00:16:36,240 --> 00:16:39,160 Speaker 1: they keep in custodial wallets from the proprietary assets of 282 00:16:39,200 --> 00:16:42,960 Speaker 1: these crypto firms and maybe have some protections to prevent 283 00:16:43,120 --> 00:16:45,960 Speaker 1: you know, situations like we've seen with some of these bankruptcies, 284 00:16:46,640 --> 00:16:48,560 Speaker 1: and so the big hang up there is they want 285 00:16:48,560 --> 00:16:51,200 Speaker 1: a federal requirement and I was told by sources that 286 00:16:51,240 --> 00:16:53,400 Speaker 1: Republicans are looking for that to be set at the 287 00:16:53,440 --> 00:16:55,600 Speaker 1: state level, and so you know that's one of the 288 00:16:55,640 --> 00:16:58,400 Speaker 1: hang ups. But if it's something that they can overcome 289 00:16:58,440 --> 00:17:02,000 Speaker 1: by September, which is their their next goal for considering 290 00:17:02,000 --> 00:17:05,680 Speaker 1: this legislation, then you know, I think, uh, it's looking 291 00:17:05,720 --> 00:17:07,399 Speaker 1: more likely that we get something by the end of 292 00:17:07,400 --> 00:17:11,360 Speaker 1: the year. Well, as you said, we'll see and if 293 00:17:11,359 --> 00:17:13,119 Speaker 1: it's and if it does happen, we'll report on it, 294 00:17:13,520 --> 00:17:15,240 Speaker 1: and if it doesn't happen, we'll probably have to report 295 00:17:15,240 --> 00:17:17,639 Speaker 1: on that too. So that is how it works. So 296 00:17:17,760 --> 00:17:19,719 Speaker 1: thank you so much, Alison, and thank you so much 297 00:17:19,760 --> 00:17:22,480 Speaker 1: Alex for joining us today. You can find more of 298 00:17:22,560 --> 00:17:25,639 Speaker 1: both Allison and Alex's work on the Bloomberg Terminal on 299 00:17:25,640 --> 00:17:29,960 Speaker 1: Bloomberg dot com and on Twitter. Allison is at ali 300 00:17:30,080 --> 00:17:33,920 Speaker 1: very Sprill that's a L L y V E R 301 00:17:34,440 --> 00:17:37,480 Speaker 1: s p r I L l E, and Alex is 302 00:17:37,640 --> 00:17:42,680 Speaker 1: at Alex nwin eleven. That's a L E x N 303 00:17:42,800 --> 00:17:48,639 Speaker 1: g U y E N two three one one. On 304 00:17:48,720 --> 00:17:51,920 Speaker 1: the next episode, of Bloomberg Crypto. I used to argue 305 00:17:51,920 --> 00:17:55,080 Speaker 1: you could divide folks into two categories, people who play 306 00:17:55,160 --> 00:17:59,119 Speaker 1: video games and people who don't. Gaming is bigger in 307 00:17:59,240 --> 00:18:04,160 Speaker 1: revenue terms worldwide than the film and television industries combined. 308 00:18:04,800 --> 00:18:08,040 Speaker 1: It's also a complex universe that's currently dealing with hard 309 00:18:08,080 --> 00:18:13,160 Speaker 1: and necessary conversations over who benefits from that profitability, over 310 00:18:13,200 --> 00:18:16,920 Speaker 1: things like labor conditions, and of course about intellectual property. 311 00:18:17,600 --> 00:18:19,480 Speaker 1: And then you add blockchain and n f t s 312 00:18:19,520 --> 00:18:23,159 Speaker 1: into the mix and things get even more complicated. In 313 00:18:23,200 --> 00:18:26,360 Speaker 1: the next episode, you'll hear from Bloomberg reportos Cecilia donastells 314 00:18:26,400 --> 00:18:29,639 Speaker 1: you for a discussion of why and how crypto is 315 00:18:29,680 --> 00:18:35,399 Speaker 1: showing up in video games. This is Bloomberg Crypto, a 316 00:18:35,520 --> 00:18:38,880 Speaker 1: daily podcast from Bloomberg and I Heart Radio. For more 317 00:18:38,880 --> 00:18:41,560 Speaker 1: shows from I heeart Radio, visit the iHeart Radio app, 318 00:18:41,800 --> 00:18:45,919 Speaker 1: Apple Podcasts, or wherever you get your podcasts. Send us 319 00:18:45,920 --> 00:18:48,800 Speaker 1: your comments, questions, or suggestions for the show to Crypto 320 00:18:48,880 --> 00:18:52,000 Speaker 1: at Bloomberg dot net or find us on Twitter. We're 321 00:18:52,040 --> 00:18:56,560 Speaker 1: at Crypto. The supervising producer of Bloomberg Crypto is Vicky 322 00:18:56,680 --> 00:19:01,480 Speaker 1: ver Galina. Our senior producer is Janet Babin. Our producer 323 00:19:01,520 --> 00:19:06,119 Speaker 1: is Sharon Burriro, Associate producer is Moses and um Dasta 324 00:19:06,160 --> 00:19:09,720 Speaker 1: wonder At is our engineer. Original music by Leo Sidrn. 325 00:19:11,560 --> 00:19:13,919 Speaker 1: I'm Stacy, Marie, Ishmael. Have a great weekend.