Speaker 1: Hello, and welcome to the Votes and Verdicts podcast, hosted
Speaker 1: by the litigation and policy team at Bloomberg Intelligence, the
Speaker 1: investment research platform of Bloomberg LP. This podcast series examines
Speaker 1: the intersection of business policy and law. I'm Elliott Stein,
Speaker 1: an analyst with Bloomberg Intelligence covering financials litigation.
Speaker 2: And my name is Nathan Dean, and I'm an analyst
Speaker 2: with BI covering financials policy.
Speaker 1: So we're delighted today to be joined by Jason Gottlieb,
Speaker 1: partner and chair of the White Collar and Regulatory Enforcement
Speaker 1: Group as well as Chair of the Digital Assets.
Speaker 3: Group at the law firm Morrison Cohen here in New York.
Speaker 1: Jason he is one of the pre eminent lawyers in
Speaker 1: the digital assets space, and he was named to the
Speaker 1: National Law Journal's inaugural list of Cryptocurrency, blockchain, and Fintech Trailblazers.
Speaker 1: He's been widely published and quoted in the media for
Speaker 1: his cryptocurrency and blocking expertise, and he's one of my
Speaker 1: favorite Twitter accounts to follow when it comes to crypto
Speaker 1: and law, since it takes I find to be always
Speaker 1: smart and measured.
Speaker 3: So we're really excited to have Jayson.
Speaker 1: Here today since there's in my mind, really no one's
Speaker 1: better to discuss some of the legal and regulatory issues
Speaker 1: around crypto, and I think it's a really good time
Speaker 1: to discuss the future of crypto law and policy, since
Speaker 1: just last week SEC care Gary Gentifler testified before the
Speaker 1: House Financial Services Committee, and we also had a stable
Speaker 1: point here in before the same committee, and we are
Speaker 1: in the midst of what appears to be a pretty
Speaker 1: aggressive regulatory enforcement crackdown on crypto in the US.
Speaker 3: So with all that, Jayson, welcome to the Votes and
Speaker 3: Verdict podcast.
Speaker 4: Thanks so much, Ali, it's great to be here, and
Speaker 4: welcome to Nathan as well.
Speaker 1: Thanks all right, So Jason, before we jump into some
Speaker 1: of the substantive discussion about crypto law and policy, you know,
Speaker 1: we'd like to ask our guests a little bit about
Speaker 1: their background. So maybe before we get into, you know,
Speaker 1: the real content, maybe you can tell us a little
Speaker 1: bit about your legal career, your current practice, and perhaps.
Speaker 3: Most importantly, how you got into crypto law.
Speaker 4: Yeah. Absolutely, I've been a long time nerd, right going
Speaker 4: back to you know, blowing all my bar Mitzvah money
Speaker 4: to buy an Apple two see computer to try to
Speaker 4: learn to code. So technology has always been a part
Speaker 4: of my life. Before law school, I worked at a
Speaker 4: computer and internet company in Tokyo. Before coming back to
Speaker 4: New York for law school. I started at the law
Speaker 4: firm Cleary Gotlieb and was trained there and had a
Speaker 4: really terrific time. I wanted to branch out through a
Speaker 4: sort of smaller, more entrepreneurial firm where I could build
Speaker 4: up a technological practice, and really that's what I've been
Speaker 4: able to do here at Morrison Cohen, building up a
Speaker 4: practice that started as a general fintech litigation and enforcement practice,
Speaker 4: but in the last few years we've moved very heavily
Speaker 4: into digital assets, which includes cryptocurrencies, but all aspects of
Speaker 4: a Web three environment. It's been fascinating to me ever since,
Speaker 4: sort of early on I read the Satoshi white paper,
Speaker 4: and my first thought was not about the privacy implications
Speaker 4: or the cryptography implications. My first thought was, oh, man,
Speaker 4: regulators are going to hate this. And it took him
Speaker 4: a while to catch on, but when they did, they
Speaker 4: certainly did hate it. So we're dealing with the aftermath
Speaker 4: of all of that as well.
Speaker 3: What was it in particular that made you think that
Speaker 3: regulators are going to hate it.
Speaker 4: The fundamental insight in that white paper and of cryptocurrency
Speaker 4: in general, is disintermediation, the ability to conduct financial transactions
Speaker 4: in a secure way without having to have them go
Speaker 4: through banks or other financial intermediaries. The regulators are going
Speaker 4: to hate that because regulators rely on intermediaries. Right, Regulators
Speaker 4: both set the rules for the markets, but they're also
Speaker 4: the enforcers. They're the cops who make sure that nobody's
Speaker 4: doing anything bad, whether it's money laundering or securities fraud
Speaker 4: or commodities markets manipulation. That they need to watch the
Speaker 4: entire markets, But cryptoregulators are not Michelle Yal. They can't
Speaker 4: be everything everywhere, all at once, so they need to
Speaker 4: rely on intermediaries to watch the markets for them, and
Speaker 4: they essentially deputize the big banks, the broker dealers, the
Speaker 4: transfer agents, everyone who plays an institutional role to follow
Speaker 4: rules designed to prevent wrongdoing. Cryptocurrency sweeps all that away.
Speaker 4: It says, we don't need any of the intermediaries. We
Speaker 4: can do all all of this ourselves. And if you're
Speaker 4: taking away the regulator's ability to monitor the markets, they're
Speaker 4: going to resist that. They're going to insist on having
Speaker 4: these intermediaries for a legitimate consumer protection and even national
Speaker 4: security issues.
Speaker 1: Yeah, that's that's actually really interesting, and I think it
Speaker 1: tees up my next question, which is, you know, I'm
Speaker 1: gonna talk a little bit about SEC chair Gary Gensler.
Speaker 1: He's obviously taken an aggressive stance and saying that basically
Speaker 1: every digital asset other than bitcoin is a security and
Speaker 1: needs to be registered as such. And what you were
Speaker 1: just talking about, I think also ties into one of
Speaker 1: the reasons we reached out to you because you had
Speaker 1: a really interesting thread on Twitter. It was like twenty
Speaker 1: five tweets, so I won't read the whole thing, but
Speaker 1: you know, let me read the first tweet of that thread,
Speaker 1: because I think it sets things up. You wrote, quote
Speaker 1: people asking why the SEC fraash Gensler are taking a
Speaker 1: ridiculous position on crypto, I e. Come in and register,
Speaker 1: but ha ha, you can't, actually because crypto doesn't fit
Speaker 1: our REGs. Is it dumb evil just protecting incumbents. No,
Speaker 1: it's that they don't see the paradigm shift.
Speaker 3: End quote.
Speaker 1: And I think that disintermediation is probably the paradigm shift
Speaker 1: that you're talking about.
Speaker 3: But my question really is you.
Speaker 1: Know what happened to Gary Gensler, Because prior to coming
Speaker 1: to the SEC he was a.
Speaker 3: Professor at MIT, he taught an intro class.
Speaker 1: On blockchain, and I think there was a sense of
Speaker 1: optimism in the industry that he understood the benefits of
Speaker 1: crypto and that he would be favorable to the industry.
Speaker 3: But you know, it's in the exact opposite.
Speaker 1: He's essentially become enemy number one of the crypto industry,
Speaker 1: and I'm curious to get your thoughts on what happened.
Speaker 4: I think that what's happened is he's, as I said,
Speaker 4: missing what you would call this this fundamental paradigm shift.
Speaker 4: And it's not just the disintermediation, because that's really more
Speaker 4: on the exchange front, but on the security front, where
Speaker 4: a Chair Genstler has taken a position where virtually every
Speaker 4: cry cryptocurrency is a security. I think he's missing what
Speaker 4: makes cryptocurrencies fundamentally different from securities, and it is really
Speaker 4: a fundamental paradigm shift. Now, I had had some hopes
Speaker 4: that when Chair Genzler came in he would do very
Speaker 4: much the same thing that he did when he was
Speaker 4: at this CFTC. He went on a rule making binch.
Speaker 4: And you know, many people in the industry didn't like
Speaker 4: the rules he was making, and you could differ whether
Speaker 4: they were you know, the best rules, great rules, okay rules,
Speaker 4: and not so good rules. But they were rules and
Speaker 4: they could be followed and all you had to do
Speaker 4: is follow the rules and you could have a good,
Speaker 4: successful business. He did that with fearless abandon at the CFTC.
Speaker 4: Some of those rules got some pushback in court. Some survived,
Speaker 4: many survived, some didn't. But he was really against the
Speaker 4: rule maker, and I had had some hope when he
Speaker 4: came into the SEC, then he would be against the
Speaker 4: rule maker again to take an area where the rules
Speaker 4: weren't very clear and to put some sort of order
Speaker 4: in it. And nobody in the industry was going to
Speaker 4: be thrilled with every single rule. And there are a
Speaker 4: lot of people in the industry who don't want any rules,
Speaker 4: and that that's just not realistic. But I had thought
Speaker 4: he would come in and create a set of rules
Speaker 4: that would balance technological innovation and consumer protection, both of
Speaker 4: these are goals of the SEC. But instead all we've
Speaker 4: gotten is crypto No, you can't do that, And that's
Speaker 4: really quite unfair both to this industry but also to consumers,
Speaker 4: both consumers who want to be using these technologies, but
Speaker 4: also to consumers who are looking to the SEC for
Speaker 4: customer protections. I think what happens if you take this
Speaker 4: hard line saying that crypto just has to obey the rules,
Speaker 4: but you don't have rules that are capable of being obeyed,
Speaker 4: then what happens is you start to lose the domestic
Speaker 4: cryptocurrency industry. It all goes abroad. Now, some people may say, well, good,
Speaker 4: if we thought they were all lawbreakers and we don't
Speaker 4: want them here anyway, good riddance to them. But the
Speaker 4: problem is we live in an interconnected economy. It is
Speaker 4: a global internet system, so Americans can just as easily
Speaker 4: find their way to international exchanges and other kinds of
Speaker 4: ways to trade by hold use cryptocurrencies, and if we're
Speaker 4: not going to allow them here and provide for robust
Speaker 4: consumer protections, then people will go get them elsewhere and
Speaker 4: they may have robust consumer protections. Right if you're using
Speaker 4: a platform that is registered in Europe, or in Singapore,
Speaker 4: or in Caymans or BBI, you will have the benefit
Speaker 4: of those countries' regulatory regimes, but there's no guarantee that
Speaker 4: that's going to be the same as our regulatory regime,
Speaker 4: and there's no guarantee you'll be using a system that
Speaker 4: was designed for those regimes, or designed for any regime
Speaker 4: at all. And the result is more and more of
Speaker 4: the economy either goes underground, becomes anonymous, which is not
Speaker 4: good for consumer protection because there's nothing you could do
Speaker 4: if something goes wrong, or it goes offshore where the
Speaker 4: protections may be robust but they may not be. They
Speaker 4: may be in countries where we are friendly and can
Speaker 4: cooperate with law enforcement, but they may not be. So
Speaker 4: all of this is, on a net position, extremely bad
Speaker 4: for American consumers and it's extremely bad for American financial innovation.
Speaker 2: So I'm going to take the conversation a little bit
Speaker 2: in the policy front, and then you bring up an
Speaker 2: excellent point with the international piece, because we saw several
Speaker 2: members testify at the House Financial Services Committee last week
Speaker 2: on stable coins and they're expressing that exact viewpoint. Now,
Speaker 2: in your opinion, is there a jurisdiction that you think
Speaker 2: will win versus others, Because you know, we've seen MICA,
Speaker 2: we've seen the HM Treasury people have been talking about Dubai.
Speaker 2: Is there anything off the top of your head that
Speaker 2: you're thinking is where the industry is going to be
Speaker 2: going well.
Speaker 4: Financial regulations around the globe, it's always a bit of
Speaker 4: a push and pull game. Countries and regions are always
Speaker 4: trying to attract a strong innovation by creating friendly rules.
Speaker 4: But also, you know, nobody wants to be a pushover.
Speaker 4: Nobody wants to be known as the jurisdiction where all
Speaker 4: the scoundrels come and hide out. So we've seen a
Speaker 4: lot of very good regulations and regulatory frameworks springing up
Speaker 4: in Europe with the Amiga for work in the United Kingdom.
Speaker 4: In Singapore, Dubai has its own way of doing things.
Speaker 4: Switzerland even before Mika and as I said Caman m
Speaker 4: bv I both have a Virtual Asset Service Provider Act.
Speaker 4: There's also an element of international coordination, right Everyone recognizes
Speaker 4: that a race to the bottom, whatever the bottom might mean,
Speaker 4: might not be very helpful. So you have coordination with
Speaker 4: the Financial Action Task Force countries to combat money laundering,
Speaker 4: which is a global problem. So there's an interrelation between
Speaker 4: the areas both trying to compete for business but also
Speaker 4: cooperating to form a strong global protection system. The United
Speaker 4: States doesn't really seem to be interested in joining this
Speaker 4: international conversation. Again, we're taking a very negative approach which
Speaker 4: is going to be replaced by some of these other regimes.
Speaker 4: So if people come to me now and say, you know,
Speaker 4: I want to start a crypto platform that does X,
Speaker 4: y Z, some of those conversations are fine, yeah, sure
Speaker 4: you can do that here, But many of them, increasingly
Speaker 4: we either say no, just absolutely not, there is no
Speaker 4: path to do it here, or we have to say
Speaker 4: there is a path, but you need to get a license,
Speaker 4: and they're not granting licenses for that right now, which
Speaker 4: effectively is the same thing. There is no path.
Speaker 2: So let's go back to the States then, you know,
Speaker 2: and just a reference that twenty five tweet thread that
Speaker 2: you did. In your twenty first tweet, you stated, the
Speaker 2: quickest way to change the game is legislation. We need
Speaker 2: Congress to pass new and favorable laws. So if you
Speaker 2: control Congress, I'm going to give you the power to
Speaker 2: control both the House and the Senate and so forth
Speaker 2: like that.
Speaker 4: What would you like to see pass Well, definitely, it
Speaker 4: would be a terrible idea to give me that much power,
Speaker 4: because if I controlled Congress, probably the first thing I
Speaker 4: would do is make illegal the Firemen sam theme song.
Speaker 4: But that's probably more of a personal issue than anything else.
Speaker 4: I think, yeah, parents everywhere rally to that cause. But
Speaker 4: in terms of the crypto world, I think that what
Speaker 4: I would want to see is a framework, something like
Speaker 4: MICA or something like the Vast Acts. And you know
Speaker 4: I won't. I won't sit here and detail the statute
Speaker 4: that I would pass, because if you thought my tweet
Speaker 4: threads were long, you should see the legislation that I
Speaker 4: would write. It would put everyone to sleep by somewhere
Speaker 4: around page four hundred and seventy six.
Speaker 3: That doesn't sound much different than legislation.
Speaker 4: That's exactly right. But as a general principle, what I
Speaker 4: would have is essentially a regulatory regime where people could experiment.
Speaker 4: If you wanted to issue a token, you could do so.
Speaker 4: You just had to register with a very short paper
Speaker 4: that says who you are, what your plan is, what
Speaker 4: your so called tokenomics are, and what you plan to
Speaker 4: do technologically. Because I think providing that sort of disclosure
Speaker 4: in a public doxed sense is going to get rid
Speaker 4: of ninety five percent of the problems that we're looking
Speaker 4: to avoid in this space. What are we worried about.
Speaker 4: We're worried about people without the technological capacity to build
Speaker 4: something that has consumer protections. We're worried about people rugging
Speaker 4: and taking the money and running. But if you have
Speaker 4: people who aren't anonymous, and everyone can see what kind
Speaker 4: of technological expertise they have, or what kind of security
Speaker 4: audits they're going to undergo, what's their plan, I think
Speaker 4: you'll eliminate virtually all of the fraudsters because very few
Speaker 4: people are going to line up and register if they're
Speaker 4: planning on absconding with the money. But also enact what
Speaker 4: we have a giant reserve of in the United States,
Speaker 4: which is trigger happy plaintiffs lawyers. So if you file
Speaker 4: your five page easy registration statement and you end up
Speaker 4: doing something completely different, or you end up rugging and
Speaker 4: taking all of the money, then the private lawyers will
Speaker 4: have some recourse as well. So I think that the
Speaker 4: SEC and Congress could solve ninety five percent of the
Speaker 4: problems we have in this space by making a much
Speaker 4: lighter touch regulatory framework. Now, is there.
Speaker 3: Just can I just ask a question?
Speaker 1: But it would be the SEC as the main regulator
Speaker 1: in this hypothetical legislation.
Speaker 4: I don't think that it matters much for something like this,
Speaker 4: whether it's the SEC, the CFTC, or some new regulator.
Speaker 4: Right if Congress is defining the laws and it wants
Speaker 4: to essentially define an offering like that as a security
Speaker 4: and provide that that kind of regime, it makes it
Speaker 4: less important whether it's the SEC, which is regulating investment
Speaker 4: contracts and securities, or the CFTC regulating the tokens as commodities,
Speaker 4: or some new agency, as long as we sort of
Speaker 4: pick someone and go with it, because right now we've
Speaker 4: got one of the problems that we have in the
Speaker 4: industry is that all these tokens are you know, I
Speaker 4: call them Schrodinger's tokens. Right, It's a token in a box,
Speaker 4: and what it is you have absolutely no idea until
Speaker 4: you open up the box and take it out and
Speaker 4: look at it. Is it a security, is it a commodity?
Speaker 4: Is it money? And you don't actually know until a
Speaker 4: regulator takes out and looks at it, and then it
Speaker 4: magically becomes whatever it is that that regulator regulates. So
Speaker 4: you know, at the end of the day, As long
Speaker 4: as we have one regulator who is reviewing these statements,
Speaker 4: we don't actually have to upset the entire regulatory framework
Speaker 4: very much for this. It's a fairly low touch way
Speaker 4: of providing a path for crypto companies to operate and survive.
Speaker 2: So do you think Congress will actually do anything this
Speaker 2: year or even you know, there was some momentum I
Speaker 2: think in stable coins until you know, ranking member the
Speaker 2: House Financial Services Committee makes me more ar sort of
Speaker 2: gave some tough language on that. Can we see Congress
Speaker 2: do anything or are we just going to be talking
Speaker 2: about regulations for the next two years or sorry, regulators
Speaker 2: for the next two years.
Speaker 4: I think it's possible for Congress to pass something on
Speaker 4: stable coins because I think that there is some broad
Speaker 4: agreement on some basic principles. And you know, I see
Speaker 4: that crypto may be edging more towards a partisan political issue,
Speaker 4: which is unfortunate, But I think that it is not
Speaker 4: quite there yet. I think that there are some prominent
Speaker 4: folks on both sides of the aisle who would like
Speaker 4: to see a sensible set of financial regulations come into play.
Speaker 4: Stable coins may be a sort of lowest common denominator
Speaker 4: bill you know, I think we can get.
Speaker 3: There on that.
Speaker 4: The DCCPA and the RFIA that were being considered in
Speaker 4: the last Congress seemed to be getting some momentum. But then, unfortunately,
Speaker 4: after FTX collapsed, I think a lot of people wanted
Speaker 4: to distance themselves from the notion of crypto at all,
Speaker 4: even though the collapse of FTX, you know, frankly, to
Speaker 4: me sounded exactly like MF Global or refco and nothing,
Speaker 4: having nothing whatsoever to do with the fact that it
Speaker 4: was crypto.
Speaker 1: So I want to ask you a question that's sort
Speaker 1: of been on my mind for a while and has
Speaker 1: to do with, you know, whether something is a security
Speaker 1: versus a commodity. And you know, I mean that's obviously
Speaker 1: one of the bigger questions in the current regulatory framework.
Speaker 3: And you know, last week, and I could say that
Speaker 3: we're recording this on April twenty fourth, but.
Speaker 1: Last week, Congressman McHenry opened his question in for Genswer
Speaker 1: with you know, a question that hit right on that issue,
Speaker 1: and he asked Gensler whether ether is a.
Speaker 3: Commodity or security? And I thought it was a really effective.
Speaker 1: Opening question, and Gensler, I think, really struggled to answer it.
Speaker 1: But my question for you is whether it's possible for
Speaker 1: a digital asset to be both a commodity and a security,
Speaker 1: which we saw in the New York Attorney General's enforcement
Speaker 1: action against Qcorn, where the ag alleges, you know, in
Speaker 1: various places and that complaint that ether in some is
Speaker 1: a commodity but also a security in different parts of
Speaker 1: that complaint, and the complaint cites.
Speaker 3: To New York law one old case I believe.
Speaker 1: For that position. But you know, my question for you
Speaker 1: is whether there's anything allowing or preventing a similar approach
Speaker 1: under federal law. And maybe what I'm going is, you know,
Speaker 1: it's an investment contract is more of a transactional test.
Speaker 1: Why couldn't you have an asset that's a commodity in
Speaker 1: one instance, but then transactions involving that asset would be
Speaker 1: considered securities.
Speaker 4: Well, I think that that lot of approaches the right
Speaker 4: way to approach it. And we can look at the
Speaker 4: origins of the definition of an investment contract in the
Speaker 4: HOWI case to for an illustration of this. Right in
Speaker 4: how we we were talking about interests in an orange grove,
Speaker 4: and the oranges themselves were not the securities. It was
Speaker 4: the interest in the profits that they would generate that
Speaker 4: was the subject of the investment contract. So similarly, I
Speaker 4: mean fast forward, and you can have a gold or
Speaker 4: any other kind of traditional commodity repackaged and sold as securities.
Speaker 4: If I sold interests in my gold fund, it may
Speaker 4: well be considered an investment contract or a security, but
Speaker 4: the gold itself would not be. And here, I think
Speaker 4: is where we were discussing the paradigm shift before, and
Speaker 4: this is I think the fundamental point that the sec
Speaker 4: is still grappling with securities. In the old world, securities
Speaker 4: can printed on share certificates, right, It's say you own,
Speaker 4: you know, one share of IBM, and that piece of
Speaker 4: paper embodied certain rights that you had for voting, for dividends,
Speaker 4: for ownership, et cetera. But the piece of paper was
Speaker 4: just a piece of paper, like you didn't really need that.
Speaker 4: And when we digitize securities and everything resides in digital
Speaker 4: form at DTCC, we can sort of realize how unnecessary
Speaker 4: that piece of paper is. So we're used to thinking
Speaker 4: of it as the security is just disembodied nature of
Speaker 4: the rights of the investment contract. But with cryptocurrency we
Speaker 4: have something that is fundamentally different. It is software, it
Speaker 4: is code, and that code, like the piece of paper,
Speaker 4: can convey certain rights, but those rights are divisible from
Speaker 4: the medium in which it is delivered. So the SEC's
Speaker 4: notion that the crypto token embodies those rights is completely wrong.
Speaker 4: And my good friend Lewis Cohen has written about this
Speaker 4: at great length and a fantastic article that he and
Speaker 4: his colleagues put out. The SEC's embodiment theory just doesn't
Speaker 4: make sense and it isn't supported by the courts. What
Speaker 4: you have now is something where you can peel the
Speaker 4: rights away from that share certificate, that piece of paper.
Speaker 4: But the piece of paper, being software, is as infinitely
Speaker 4: flexible and composable as your imagination can allow. It's just
Speaker 4: software and the division of the commodity and the medium
Speaker 4: that embodies it is the paradigm shift that I believe
Speaker 4: that the SEC is missing. You know, every ten or
Speaker 4: twenty years, as I said in that tweet thread, someone
Speaker 4: comes along and says, my thing's not a security. It's
Speaker 4: interested in orange growth. It's oranges. Those aren't securities, or
Speaker 4: it's you know, beavers or whiskey or chinchillas. They come
Speaker 4: around and saying this time is different, and the SEC
Speaker 4: and to be fair, courts generally look at it and
Speaker 4: say no, no, no. The securities laws are very flexible,
Speaker 4: and this is swept into the definition of an investment contract.
Speaker 4: I think fundamentally this time actually is different, and for
Speaker 4: the reasons I've described, reasonable minds can disagree.
Speaker 3: Right.
Speaker 4: I don't think that Chaired Gensler is dumb or evil.
Speaker 4: I just think that he is disagrees with this notion
Speaker 4: of a pair paradigm shift.
Speaker 1: It's sort of related to that you were recently quoted
Speaker 1: in an article saying, uh, and I'll quote again, uh.
Speaker 3: The SEC is simply seeking.
Speaker 1: To ban DeFi protocols in America, and then I'm doing so.
Speaker 1: The SEC is substitute in its own opinions for Congress's
Speaker 1: prerogative on a major question central to the future of
Speaker 1: the American economy end quote.
Speaker 3: So that that that touches on a couple issues that
Speaker 3: I wanted to ask you about. The first is what's.
Speaker 1: Been called Operation Choke point two point zero, which I
Speaker 1: think you know it was the two point overs and
Speaker 1: was a.
Speaker 3: Term coined by Nick Carter. I think to refer to,
Speaker 3: you know, what's perceived as a coordinated effort to.
Speaker 1: Marginalize crypto and cut it off from the banking industry.
Speaker 1: But the second part of your quote has to do
Speaker 1: with I think the Supreme Court's Major Questions Doctrine, which
Speaker 1: you know for listeners who don't know, holds that agencies
Speaker 1: have to have clear congressional authors to act on issues
Speaker 1: of major political or economic significance. So I was just wondering,
Speaker 1: you know, if you thought that the Biden administration is
Speaker 1: in fact engaged in from sort of operations chow point
Speaker 1: two point oh. But then I also want to ask
Speaker 1: you about the Major Questions doctrine and how you see
Speaker 1: that playing out in the courts in terms of crypto.
Speaker 4: So I think that there's been efforts from all corners
Speaker 4: of the administration, from CFTC, from SEC, from Treasury, from
Speaker 4: from OCC to put more pressure on the crypto industry.
Speaker 4: I'm not sure you know that that I would label
Speaker 4: it choke point or not. It sure seems like that,
Speaker 4: but we haven't seen sort of an announcement this is
Speaker 4: a coordinated attack. It's it's just it just happens to
Speaker 4: be coming. So I'll let other people debate whether you
Speaker 4: know how much coordination is going on behind closed doors,
Speaker 4: or whether there's anyone behind closed doors who's calling up
Speaker 4: the chairs of these various agencies and directing them to
Speaker 4: clamp down on crypto. But you know, if we're going
Speaker 4: forward on that, and you asked about the major questions doctrine,
Speaker 4: and you're exactly reading that quote correctly, I think to
Speaker 4: the extent that the SEC is saying crypto cannot exist
Speaker 4: in America, and we're seeing that through its action against
Speaker 4: cryptocurrency tokens. We're also seeing that coming out of the
Speaker 4: recent meeting on amendments to the Exchange Rule and the
Speaker 4: recent meeting extending the comment period. Chair Gaenstler made crystal
Speaker 4: clear that these rules were designed to apply to defive
Speaker 4: protocols and frankly in a way that defive protocols are
Speaker 4: literally technologically incapable of meeting. And the result of that,
Speaker 4: I think really very much, is that regardless of what
Speaker 4: the law says or what the regulations say, the SEC
Speaker 4: is just interested in saying that DeFi exchanges have to
Speaker 4: be exactly as regulated as traditional exchanges or ATS's, which
Speaker 4: by their own nature is just impossible. So it's another
Speaker 4: version of coming in register, except the time. Instead of
Speaker 4: coming and regisue your token, it's coming in regisue or exchange.
Speaker 4: But the rules won't allow an exchange with that design
Speaker 4: to be registered in any way. So the result of
Speaker 4: this is that the SEC is simply saying that cryptocurrency
Speaker 4: tokens and crypto exchanges can't exist in America, and that,
Speaker 4: I believe is a question of major importance to the
Speaker 4: American economy because we're seeing other countries around the world,
Speaker 4: as we've talked about, explore how to embrace this new
Speaker 4: wave of technology where anyone at any time could launch
Speaker 4: a fork of a defive protocol and have that be
Speaker 4: a new exchange. This is frankly a title wave that
Speaker 4: I you know, whether I fear or welcome, it can't
Speaker 4: be stopped. So the question is how are we going
Speaker 4: to deal with it. Are we going to embrace it?
Speaker 4: Are we going to look to take advantage of all
Speaker 4: the benefits that it can bring and look too consciously
Speaker 4: and conscientiously blunt any downsides, or are we going to
Speaker 4: step out of the arena, abandon dealing with it at all,
Speaker 4: and seed leadership in the next generation of financial instruments
Speaker 4: and exchanges to the rest of the world. That question
Speaker 4: is I believe of critical importance to the American economy,
Speaker 4: and I don't believe that the SEC or the CFTC
Speaker 4: have clear Congressional authority to decide that question. I think
Speaker 4: a question of that kind of importance, the Supreme Court
Speaker 4: has already instructed us those kinds of questions need to
Speaker 4: be answered by Congress. So you asked if we're going
Speaker 4: to have legislation in the next two years, or we're
Speaker 4: going to talk about regulators until we die. I would
Speaker 4: certainly hope that Congress can put aside whatever other differences
Speaker 4: it may have and come together to create a framework
Speaker 4: that will allow for the future of financial innovation in America.
Speaker 2: And we're certainly going to see that kickoff because you know,
Speaker 2: we've heard that several crypto bills are going to be
Speaker 2: released in the next few weeks.
Speaker 4: So just we want to go.
Speaker 2: To the grant back portion of our podcast. And you know,
Speaker 2: we saw on Twitter that you said you were a musician,
Speaker 2: and you know, for the listeners who are familiar, Elliott's
Speaker 2: also a musician. So we've got several musicians here. What
Speaker 2: kind of music do you play with instruments? And most importantly,
Speaker 2: we saw on your Twitter feed that you, uh, you
Speaker 2: debuted a song called Folding Hexa Flexigons with your son
Speaker 2: at the New York Museum of matt Can you just
Speaker 2: give us a heads up on what.
Speaker 4: Your debut album is gonna look like? Well, So, I
Speaker 4: started playing piano when I was five, and i've been
Speaker 4: You called me a musician, and I think that's an
Speaker 4: extremely kind way to describe it. I've picked up a
Speaker 4: number of instruments across the years, and I've recorded a
Speaker 4: number of albums just kind of all by myself in
Speaker 4: my living room. And I believe that my mother has
Speaker 4: purchased a couple of copies, but probably not even of
Speaker 4: all of them.
Speaker 1: Uh.
Speaker 4: And that that goes to the uh, the essential quality
Speaker 4: of these albums. I make music for myself and for
Speaker 4: my friends and and for fun, and that's pretty much it. So,
Speaker 4: you know, it's it's been a lot of fun over
Speaker 4: the years to exercise the right half of my brain
Speaker 4: and to kind of noodle around. Uh. And and yes,
Speaker 4: I guess we started this podcast describing how much of
Speaker 4: a nerd I am, so, you know, doing a an
Speaker 4: Alexander Hamilton parody called Folding Hexaflexigons at Live at the
Speaker 4: New York City Museum of Math is quite possibly one
Speaker 4: of the nerdiest things that anyone has ever done, but
Speaker 4: we had a lot of fun doing it. My eight
Speaker 4: year old at the time was obsessed with folding strips
Speaker 4: of paper into hexagons that could be unfolded and refolded.
Speaker 4: It's actually a way of folding them that creates multi
Speaker 4: dimensional shapes in a very interesting way. So, you know,
Speaker 4: we decided to write a song about it. You know,
Speaker 4: we're folding hexaflexigons. My son is folding hexaflexigons and is
Speaker 4: going to fold them all day long and all night, Yes,
Speaker 4: all night. It goes on it's on YouTube. That's embarrassing enough,
Speaker 4: I'll stop. That's great, we love it.
Speaker 3: Yeah, it's not embarrassing at all.
Speaker 1: And you are our first guest to sing a sample
Speaker 1: of a song on an episode.
Speaker 3: So just one more question for you, also related to music.
Speaker 3: Before we go, we asked this of all of our guests.
Speaker 1: If you were stranded on a desert island, what three
Speaker 1: pieces of music.
Speaker 3: Would you want to take?
Speaker 1: And it can be a song, it can be an album,
Speaker 1: it can be you know, catalog of one artist.
Speaker 4: That is an amazing question, and I would find it
Speaker 4: virtually impossible to limit myself to three, so I'm going
Speaker 4: to cheat a little bit. I would probably take the
Speaker 4: Well Tempered Clavier by Bach, a complete works of the
Speaker 4: Piano Sonatas by Beethoven, and then probably something much more modern,
Speaker 4: probably an album I don't know, be The Food Fighters
Speaker 4: My Chemical Romance. There's some pretty terrific rock albums in
Speaker 4: the last twenty years. It's hard to pick.
Speaker 1: I like that combination Bach, Beethoven, and Foo Fighters together
Speaker 1: at last.
Speaker 4: Is more in common than you might think that that's
Speaker 4: a nerdy conversation for another podcast.
Speaker 3: Well, we'll pick you up on that.
Speaker 1: Well, I think with that we're going to have to
Speaker 1: wrap up this episode of Votes and Verdicts. We're extremely
Speaker 1: grateful to you, Jason, Jason Gottlieb for appearing on this episode.
Speaker 1: I think it was really illuminating and educational and fun
Speaker 1: at times, and so we thank Jason, and we thank
Speaker 1: you the listener for taking the time for joining us.
Speaker 1: As well as a reminder, you can read all of
Speaker 1: our Bloomberg intelligence research on the Bloomberg terminal at Big
Speaker 1: And with that, thank you and have a great day,