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Speaker 1: This is Bloomberg Crypto Daily Bloomberg I heard podcast and

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Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News.

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Speaker 1: It's Friday, October seven. It's been another busy week in

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Speaker 1: digital assets. What's the latest in the markets? Are there

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Speaker 1: any crypto CEOs left regulation? When will it happen? Unclear?

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Speaker 1: Here to help me break down the news is Bloomberg

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Speaker 1: Crypto editor Beth Williams. This market is here to stay

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Speaker 1: in one form or another, and that there's money to

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Speaker 1: be made from it. And Bloomberg reports to Alison very Sprill.

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Speaker 1: We have so many different regulatory bodies, different agencies that

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Speaker 1: want a piece of the crypto pie. Allison. So good

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Speaker 1: to have you back on the show. So as usual,

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Speaker 1: it's busy story, pretty much the story of our lives.

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Speaker 1: You know. We we wake up, we record podcasts, we

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Speaker 1: firefight whatever is happening in markets. We we write some stories,

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Speaker 1: we do some stuff. Beth, what has been going on?

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Speaker 1: Because I feel like in preparing for this episode, trying

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Speaker 1: to read everything that we published and I gave up

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Speaker 1: because it was too much stuff. Of course, Well, we

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Speaker 1: are still in the midst of crypto winter quote unquote,

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Speaker 1: which I describe as there was a big steep decline

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Speaker 1: in prices that we saw earlier in this year as

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Speaker 1: the Fed was raising rates, and then we saw these

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Speaker 1: follow on effects of several crises hitting between Terra three

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Speaker 1: arrows Hedge Fund collapsing, Celsius bankruptcy, and now we're at

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Speaker 1: the point where the market is sort of bottomed out,

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Speaker 1: sort of treading water, yes, treading water, and meantime we're

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Speaker 1: seeing these bankruptcies play out and liquidations. We haven't seen

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Speaker 1: any further damage in terms of contagion. We're keeping an

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Speaker 1: eye out on it, and kind of in a funny note,

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Speaker 1: even though the market is sort of treading water, we've

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Speaker 1: sort of prepared ourselves for a next leg down if

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Speaker 1: there is a next leg down in a particularly Bitcoin,

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Speaker 1: which is the big cahuna of crypto, but it hasn't happened.

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Speaker 1: So there's a growing sense that perhaps we've reached a bottom,

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Speaker 1: that the shakeout has happened, and so we've seen Bitcoin

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Speaker 1: again the main crypto that that people really focus on,

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Speaker 1: kind of center around this twenty thousand dollar level. It

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Speaker 1: also at times it had been highly correlated with risk assets,

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Speaker 1: particularly tech stocks. We've seen that break apart a little

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Speaker 1: bit cut it seemed to go its own way again.

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Speaker 1: Some of the gyrations that the stock market has been

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Speaker 1: through in recent weeks, you could argue the crypto market

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Speaker 1: had already done in June, July, etcetera. So we're kind

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Speaker 1: of at this stage where we're sort of watching the

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Speaker 1: effect of earlier this year sort of play out to

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Speaker 1: sort of the next level, as it were. The absence

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Speaker 1: of retail, the absence of the individual investor, is what's

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Speaker 1: sort of keeping the market from rebounding. Perhaps it's hit

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Speaker 1: the bottom, but it's not necessarily rebounding at this point.

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Speaker 1: You know. We were talking to one of our other

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Speaker 1: editors earlier before we recorded this episode, Philip Lagerkranzo, who

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Speaker 1: of course has been on the show, and he was

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Speaker 1: making kind of a football analogy, and I used football

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Speaker 1: in the appropriate non American sense of I suppose you'll

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Speaker 1: call it socker, where the idea is that you know,

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Speaker 1: it's crypto has been like a game of two halves

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Speaker 1: this year, where in the first half of the year

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Speaker 1: it was like up down whatever, chaos, and then the

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Speaker 1: second half the year has just been like it's just

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Speaker 1: the occasional breakout, but not a lot of really intense folatilty.

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Speaker 1: What I'm hearing from you is what we are starting

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Speaker 1: to say is that if there is a breakout, it

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Speaker 1: will be to the upside of twenty thousand rather than blue.

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Speaker 1: It seems that way. I think just nineteen and a

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Speaker 1: half was the where it hit, and maybe July it

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Speaker 1: gets down to that level and it seems to to

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Speaker 1: find some support. There don't seem to be any major

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Speaker 1: systemic for lack of a better word, further clouds on

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Speaker 1: the horizon. Of course, you know, never say never and

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Speaker 1: that kind of stuff. That's the worst thing I could

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Speaker 1: possibly say, I bet. But another interesting thing that I'm

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Speaker 1: that I'm noticing during this period, after this bit of upheaval,

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Speaker 1: there's been a bit of turnover in the upper management

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Speaker 1: across a lot of major crypto firms for a lot

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Speaker 1: of different reasons. And I was looking back at our

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Speaker 1: headlines since I don't know, since the summer or so,

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Speaker 1: and there have been at least two dozen moves, either

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Speaker 1: upper management leaving or someone coming onto a firm. That's

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Speaker 1: a bit of movement in the echelons of firms. From

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Speaker 1: f t X, which is the big crypto exchange to Celsius,

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Speaker 1: which is bankrupt and kind of going through a reorganization,

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Speaker 1: so perhaps not surprising there and also has some some

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Speaker 1: legal clouds over it, to something like a crack In,

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Speaker 1: which is another exchange where a founder has stepped aside

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Speaker 1: and are letting in other types of management. Perhaps if

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Speaker 1: the market is going higher from here, if the market

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Speaker 1: is going to gain more mainstream adoption, does it require

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Speaker 1: new leadership, does it require a different kind of management,

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Speaker 1: does it require more governance? And so you may be

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Speaker 1: seeing just a reorientation knowing that the crypto market maybe

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Speaker 1: going into a new phase of its maturity or if

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Speaker 1: it's evolution. The other big backdrop there is regulation. With

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Speaker 1: all the turmoil that happened and great loss to individual investors,

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Speaker 1: really bringing home that sster protections are sorely lacking in crypto.

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Speaker 1: There's definitely been a sense that the regulation is something

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Speaker 1: that has to be figured out. One of the things

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Speaker 1: that I am finding slightly shall we say, wacky about

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Speaker 1: regulation in the US right now is we have all

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Speaker 1: of these issues that Beth you've just described, you know,

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Speaker 1: significant losses to individual investors and you know, retail traders

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Speaker 1: in particular, you have fairly serious allegations of mismanagement to

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Speaker 1: criminality at different types of entities, you know, funds, companies, etcetera.

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Speaker 1: You have multiple people in the field kind of clamoring

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Speaker 1: for clarity around the next steps for regulation, and then

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Speaker 1: you have Kim Kardashian. And I'm like, of all of

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Speaker 1: the regulatory priorities in the world, why is finding Kim

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Speaker 1: Kardashian one point to six million dollars at the top

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Speaker 1: of anyone's list. Listen, I'm gonna ask you that question. So,

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Speaker 1: in talking with attorneys and former regulators, I mean, this

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Speaker 1: kind of case is, you know, probably on the on

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Speaker 1: the SEC's list for a number of reasons. Right, It's

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Speaker 1: relatively a slam dunk. It was kind of an easy

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Speaker 1: case of you know, you touted this particular token and

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Speaker 1: you didn't disclose that you were paid for that promotion.

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Speaker 1: We've seen the SEC go after other celebrities like boxer

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Speaker 1: Floyd Mayweather and music producer DJ khaled Um. So it's

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Speaker 1: well known that this is the SEC stands, and you

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Speaker 1: know what they win here is that this is a

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Speaker 1: very big name. Pretty much, I think everyone pretty much

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Speaker 1: knows who Kim Kardashian is they also are loving by

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Speaker 1: far the largest fine we've seen, you know, almost one

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Speaker 1: point three million dollars from from the folks die talk to.

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Speaker 1: It's basically just sending a message, right, you know, we've

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Speaker 1: given you fair warning that you can't do this. Now

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Speaker 1: we're showing you that we aren't afraid to love you

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Speaker 1: these even larger fines on you, so, you know, kind

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Speaker 1: of knock it off. And and the reason we're probably

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Speaker 1: seeing cases like this and maybe not some other cases

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Speaker 1: against say exchanges where the sec has consistently said that

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Speaker 1: a lot of these exchanges are you know, listing securities

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Speaker 1: and so that they need to be registered with the agency.

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Speaker 1: I think we are not seeing really as many of

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Speaker 1: those cases because those are more difficult to prove, especially

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Speaker 1: if you have a lot of high power attorneys sort

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Speaker 1: of arguing against each individual token and saying these are

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Speaker 1: the reasons we don't think it's a security. So I

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Speaker 1: think that's why we're seeing this kind of case come out. Well,

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Speaker 1: to your points, all fair and legitimate points, I will concede,

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Speaker 1: we're seeing this kind of case come out. But what

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Speaker 1: we're not seeing is policy, right, We're seeing kind of

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Speaker 1: enforcement of policies that all exist, whether the sec will

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Speaker 1: already exist. So in this case, there is a Securities

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Speaker 1: Act that says, if you tell something that looks like

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Speaker 1: a security that we've defined as a security, not only

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Speaker 1: do you have to disclose that you are doing some telting,

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Speaker 1: that you're getting kind of material compensation for this, but

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Speaker 1: you're supposed to go into kind of the level of

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Speaker 1: detail that hashtag ad does not quite fly by in

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Speaker 1: terms of things that you're putting on you on your Instagram.

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Speaker 1: But we're not seeing significant movements in legislation. We're not

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Speaker 1: seeing significant movement as you've reported on this podcast and

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Speaker 1: in other places in you know, like the issues relates

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Speaker 1: to the executive order of different agencies kind of coming

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Speaker 1: out and saying, Okay, this is specifically what we're going

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Speaker 1: to be looking at. Here is concrete next steps. What

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Speaker 1: is causing this relative lack of inaction on the policy

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Speaker 1: and legislation inside of the House. So there are several

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Speaker 1: things that play on the agency side. We have so

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Speaker 1: many different regulatory bodies, different agencies that want a piece

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Speaker 1: of the crypto PI and it's not necessarily clear you

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Speaker 1: know which assets fall under which agencies jurisdiction. I think

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Speaker 1: stable coins are a good example of this. You know,

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Speaker 1: the SEC has previously said that in some cases stable

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Speaker 1: coins might be securities. The Commodities Features Trading Commission has

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Speaker 1: said that sometimes they might be commodities. And then we

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Speaker 1: know the banking regulators are interested in them. So, you know,

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Speaker 1: I think I think it's just the fact that so

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Speaker 1: many people want to be involved, so many people may

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Speaker 1: have jurisdiction. And then on the legislative front, I think

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Speaker 1: we're just seeing, uh, what we know has been an

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Speaker 1: issue over the last several years. Right Congress is getting

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Speaker 1: more partisan. It's harder to pass big pieces of legislation.

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Speaker 1: This year, in particular, we have the upcoming midterm elections,

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Speaker 1: so kind of there's a point in Congress where everyone

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Speaker 1: shifts focus and shifts it away from from policy to

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Speaker 1: you know, getting re elected. So a lot of different

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Speaker 1: things at play. And then also on the legislative front,

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Speaker 1: there are still some substantive issues that you know, these

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Speaker 1: different committees have to hash out. For instance, on the

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Speaker 1: stable coin bill, I've talked to folks who have said,

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Speaker 1: you know, there's still a question of how much overrule

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Speaker 1: state regulators should be able to play in overseeing stable coins.

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Speaker 1: There's some disagreement about whether non banks should be able

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Speaker 1: to get access to federals or master accounts. So these

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Speaker 1: are you know, they're not necessarily easy issues to pass through,

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Speaker 1: and now we have a very limited time left on

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Speaker 1: the congressional calendar to get through those issues. So it's

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Speaker 1: starting to look less and less likely that we'll see

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Speaker 1: something this year, though people are still pretty optimistic for

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Speaker 1: next year on the legislative front. We'll be right back

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Speaker 1: with more of the week's top crypto stories with Bloomberg

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Speaker 1: reportor Alison Versprol and Bloomberg editor Beth Williams. At the

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Speaker 1: beginning of which was kind of what I started. Yes,

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Speaker 1: it feels like a lifetime, but at the beginning of

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Speaker 1: twenty I mean, I remember there was so much optimism

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Speaker 1: that is going to be the year of regulation, the

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Speaker 1: year of legislation, and you know, here we are in

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Speaker 1: October and we still haven't really seen all that much progress.

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Speaker 1: So I think the fact that we've actually started to

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Speaker 1: see some pretty substantive proposals, the fact that there is

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Speaker 1: some bipartisan interest, I can see some of the reasons

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Speaker 1: for optimism. But I think We'll have to see how

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Speaker 1: things go, and it will also depend on how the

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Speaker 1: midterm election shape up and what the makeup of Congresses

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Speaker 1: next year. You know, do we have a Republican Congress

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Speaker 1: and a Democratic president and what does that mean? They

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Speaker 1: think some of the losses we've seen this year did

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Speaker 1: create some urgency the stable Coin bill. Again, I mean,

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Speaker 1: I guess I'll point out that that bill has not

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Speaker 1: even been released, it's still being drafted. Um, we've seen

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Speaker 1: some draft floating around, but there was some additional urgency

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Speaker 1: after you know, terra USD collapsed. I do think, unfortunately,

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Speaker 1: the further we get from that incident, the less it's

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Speaker 1: on people's minds, and maybe it stops being as much

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Speaker 1: of a driver for legislation. You know, I've talked to

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Speaker 1: folks who have worked in this area for a long

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Speaker 1: time that we're that are essentially you know, it kind

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Speaker 1: of takes a crisis for for Congress to act quickly. So,

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Speaker 1: you know, do we need another Tara situation before this

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Speaker 1: becomes a serious consideration? And of course you also have

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Speaker 1: a Congress that in additions of thinking about mid terms,

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Speaker 1: just thinking about oh, I don't know, nuclear war. So

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Speaker 1: the list of priorities ahead of crypto at this moment

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Speaker 1: seems seems quite long and quite important from a global

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Speaker 1: death perspective, I would say, right. And I think there

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Speaker 1: are some too who say, you know, look, the banking sector,

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Speaker 1: the traditional financials actors haven't gotten that involved in crypto yet,

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Speaker 1: so there's been a limited amount of contagion into those industries.

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Speaker 1: Which you can be sure if there was kind of

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Speaker 1: a knock on effect to traditional finance and it was

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Speaker 1: having a big broad effect on the economy, that people

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Speaker 1: would be a little bit more concerned about it. But

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Speaker 1: we're not necessarily seeing that yet. But some people are concerned.

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Speaker 1: You've been reporting to the f s C, which I'm

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Speaker 1: gonna ask you to explain because I can never remember

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Speaker 1: that acronymics for um has expressed some concern abouts contagient

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Speaker 1: and stability risks. Yes, so the Financial Stability Oversight Council,

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Speaker 1: which is led by the Treasury Department, they did put

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Speaker 1: out a report this week and they did talk about

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Speaker 1: the potential financial risks, but they mentioned, you know, like

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Speaker 1: this becomes more of a risk the more that banks

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Speaker 1: and some of these other traditional players get involved, kind

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Speaker 1: of the more consumers are exposed to this, so you know,

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Speaker 1: it's something to keep an eye out for going forward,

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Speaker 1: and it could become a big problem down the road.

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Speaker 1: And so to that effect, they talked a little bit

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Speaker 1: about the risk of this report, and then they also

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Speaker 1: offered some recommendations for legislation that they would like to

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Speaker 1: see Congress act on. And that's just kind of like

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Speaker 1: throwing back to you. You know, we've got potential ongoing

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Speaker 1: consumer crisis and crypto we have this increasingly stressed macroeconomic environments.

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Speaker 1: Like you know, the R word for recession is being

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Speaker 1: thrown around a lot. Is that affecting anybody's optimism about

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Speaker 1: you know, as you as you called it like the

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Speaker 1: big Huna of crypto bitcoin, but more broadly about where

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Speaker 1: the market might go. I think that macroeconomically, if you're

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Speaker 1: talking about sort of the slashing around of liquidity, the

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Speaker 1: very ultra ultra low rate environment, even the COVID relief

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Speaker 1: that came out, there was just a lot of of

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Speaker 1: money that people had to spend. There was excitement around

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Speaker 1: crypto rates were really low again for a lot of people.

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Speaker 1: It was sort of a fun experiment. This has taken

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Speaker 1: that part of the market out the rising rates, other

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Speaker 1: risk markets down and now things becoming more expensive. Inflation

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Speaker 1: is out there. I do think that there is a

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Speaker 1: damper put on the general enthusiasm around this market. But

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Speaker 1: I also think at the same time that you know,

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Speaker 1: we keep reporting, you know, week after week, there's a

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Speaker 1: steady drum beast of institutions and banks that are getting

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Speaker 1: involved in small ways at first custody or through derivatives

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Speaker 1: rather than you know, the actual coins, and I think

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Speaker 1: that's something to watch. I do think that there's a

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Speaker 1: sense among the you know, what you would call trad five,

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Speaker 1: which is the traditional finance, that this market is here

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Speaker 1: to stay in one form or another, and that there's

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Speaker 1: money to be made from it. And that's where you

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Speaker 1: may see the beginnings of a true reco coovery. And then,

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Speaker 1: you know, retail can be fickle. Those customers will come

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Speaker 1: back to, but a market that used to be dependent

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Speaker 1: very much so on retail, maybe the recovery this time

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Speaker 1: will not come from the individual, will come from these

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Speaker 1: institutions actually coming on board. And again regulation will have

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Speaker 1: to play a part in that. The great institutional wave

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Speaker 1: that people have been talking about. Another thing we'll just

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Speaker 1: have to see, Well, you know. Thank you very much

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Speaker 1: to you both. It's always a pleasure to have you

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Speaker 1: on the show. I'm sure I'll have you both back

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Speaker 1: and good luck with all the things, including Kardashians, So

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Speaker 1: thanks for having us. Take care. You can find more

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Speaker 1: of their reporting on the Bloomberg terminal, on Bloomberg dot

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Speaker 1: com or on Twitter. Beth is at b Willie Lou

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Speaker 1: that's b w I l l I l I O U,

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Speaker 1: and Allison is at Ali ver Sprill that's e L

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Speaker 1: L y V E R s p R I L

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Speaker 1: l E. On the next episode of Bloomberg Crypto. It

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Speaker 1: used to be all of say a year ago, that

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Speaker 1: if you worked on Wall Street and we're looking for

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Speaker 1: a change, then a crypto startup was the go to

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Speaker 1: place to head over to. Now, as prices fall and

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Speaker 1: sentiment declines right along with those prices, these buzzy crypto

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Speaker 1: companies are laying off staff, including those new hires. And

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Speaker 1: what are those staffers doing heading right back to where

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Speaker 1: they came from? Wall Street. This is Bloomberg Crypto, a

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Speaker 1: daily podcast from Bloomberg and I Heart Radio. For more

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Speaker 1: shows from i Heart Radio, visit the i Heart Radio app,

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Speaker 1: Apple Podcasts or wherever you get your podcasts. Send us

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Speaker 1: your comments, questions, or suggestions for the show to Crypto

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Speaker 1: at Bloomberg dot net or find us on Twitter. We're

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Speaker 1: at Crypto. The supervising producer of Bloomberg Crypto is Vicky Vergalina.

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Speaker 1: Our senior producer is Janet Babin. Our producer is Sharon Burriro.

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Speaker 1: Associate producer is Ty Butler. Desta wonder At is our engineer.

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Speaker 1: Original music by Leo Sidrn. I'm Stacy, Marie Ishmael. Have

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Speaker 1: a great weekend.