WEBVTT - This Is What the Crypto Industry Actually Wants From Trump 0:00:00.040 --> 0:00:03.720 Hey, they're Odd Lots listeners. We have a very special announcement. 0:00:04.080 --> 0:00:07.200 Joe and I are hosting our annual Front Lots Pub 0:00:07.320 --> 0:00:11.319 Quiz on Thursday, February thirteenth in New York City, and 0:00:11.440 --> 0:00:14.880 it's going to feature some very special guests and prizes. 0:00:15.200 --> 0:00:18.840 So come test your wits in finance, markets and economics 0:00:18.880 --> 0:00:22.959 for a chance to win the ultimate Odd Lots glory 0:00:23.079 --> 0:00:26.000 and hang out with your fellow listeners. Tickets are on 0:00:26.120 --> 0:00:29.760 sale now at events dot Bloomberg Live dot com slash 0:00:29.880 --> 0:00:33.199 Odlots Pub Trivia. You can also find links on our 0:00:33.240 --> 0:00:36.120 Twitter feeds or in the newsletter, and you can find 0:00:36.120 --> 0:00:38.519 the link also on our show notes. We hope to 0:00:38.520 --> 0:00:39.080 see you there. 0:00:42.320 --> 0:00:56.200 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:57.840 --> 0:01:01.640 Hello and welcome to another episode of the Odd Lots Podcast. 0:01:01.720 --> 0:01:04.160 I'm Jill Weisenthal and I'm Tracy Alloway. 0:01:04.640 --> 0:01:08.240 Tracy, here's two things that I know, or I think 0:01:08.280 --> 0:01:11.160 that I know. One is that a lot of people 0:01:11.200 --> 0:01:14.920 in the crypto industry are excited about the new Trump 0:01:15.000 --> 0:01:19.080 administration and perhaps regulatory changes that may come about. And 0:01:19.360 --> 0:01:21.679 it also seems like a lot of people affiliated with 0:01:21.760 --> 0:01:25.200 the Trump administration have an affinity for the crypto industry, 0:01:25.640 --> 0:01:29.000 but beyond that, I don't know what any of that means. 0:01:29.120 --> 0:01:31.320 Like it's one thing for different groups of people to 0:01:31.400 --> 0:01:33.920 like each other have some affinity, but what it means 0:01:33.959 --> 0:01:37.560 in terms of substantive changes in the world or at 0:01:37.640 --> 0:01:39.920 least in regulation, I don't have a clear idea. 0:01:40.040 --> 0:01:43.520 Yeah, there's definitely been a vibeh the vibes, yes, but 0:01:43.720 --> 0:01:47.319 in terms of what that means concretely in the real world, 0:01:47.520 --> 0:01:49.760 I am also unclear. I will say I'm looking at 0:01:49.760 --> 0:01:52.120 a chart of bitcoin right now, and I mean you 0:01:52.120 --> 0:01:55.680 can see, like beginning of November it shoots up. And 0:01:55.760 --> 0:01:58.760 obviously there have been some things that are sort of 0:01:58.960 --> 0:02:03.400 happening all ready. So for instance, you know Gary Gensler 0:02:03.640 --> 0:02:06.120 is out at the SEC and he's going to be 0:02:06.160 --> 0:02:09.480 replaced by Paul Atkins, who is a I think he's 0:02:09.520 --> 0:02:13.400 generally considered a crypto proponent, So that's one thing. Crypto 0:02:13.480 --> 0:02:16.720 kind of hated Genstler, So there's that expectation. But beyond that, 0:02:16.760 --> 0:02:20.760 there's talk of like a strategic bitcoin reserve and all 0:02:20.800 --> 0:02:24.080 these other things. And I guess I guess the difficulty 0:02:24.160 --> 0:02:28.520 is crypto is never a unified body like everyone wants 0:02:28.560 --> 0:02:31.320 different things, and there's all this infighting, and so I'm 0:02:31.360 --> 0:02:34.799 just curious, like, what is it that the different factions 0:02:34.840 --> 0:02:36.440 are basically after at the moment. 0:02:36.600 --> 0:02:38.320 Yeah, there's a really great way to put it. And 0:02:38.360 --> 0:02:42.040 it's clear even as you described, there's a range of 0:02:42.120 --> 0:02:46.480 ideas that are sort of some seem more perhaps realistic, 0:02:46.600 --> 0:02:48.679 or in the short term, some strike me as sort 0:02:48.680 --> 0:02:51.760 of fantastical. But I would never count out anything. If 0:02:51.760 --> 0:02:54.880 we one day have a strategic bitcoin reserve in the US, 0:02:55.040 --> 0:02:58.680 Like I don't know, it's twenty twenty five. Anything could happen, 0:02:58.840 --> 0:03:01.119 but there is possible. Is like a range, right, there's 0:03:01.160 --> 0:03:04.600 a range of what's pursued. Maybe is it more regulatory 0:03:04.800 --> 0:03:07.960 clarity on certain sort of like token projects. Is it 0:03:08.040 --> 0:03:10.840 a way so that some sort of stable coin regulation 0:03:11.000 --> 0:03:13.840 can be resolved in some way that expands their ability 0:03:13.840 --> 0:03:17.040 to be a source of payments? Many big questions, many 0:03:17.200 --> 0:03:20.399 interesting possibilities. So, as you know, with the new administration, 0:03:20.800 --> 0:03:23.160 I think we should get a better sense of what 0:03:23.240 --> 0:03:27.040 people in the industry are actually substantively looking for. 0:03:27.720 --> 0:03:28.880 Absolutely, let's do it. 0:03:28.960 --> 0:03:29.120 Well. 0:03:29.160 --> 0:03:31.080 I'm really excited to say we have I believe the 0:03:31.120 --> 0:03:34.560 perfect guest. Someone we've had on the podcast before, and 0:03:34.600 --> 0:03:36.840 I said at the time we were talking about stable coins 0:03:36.840 --> 0:03:39.760 specifically that time. But I think I said at the time, 0:03:40.360 --> 0:03:42.280 this guest should really be the crypto industry. 0:03:42.280 --> 0:03:45.680 It's only you said the crypto industry should shove everyone 0:03:45.720 --> 0:03:46.640 else in a boom close. 0:03:46.760 --> 0:03:48.840 Yeah, that's right. I just have this guest be their 0:03:48.880 --> 0:03:52.600 spokesperson at least when talking to the mainstream media like us. 0:03:52.640 --> 0:03:55.400 Maybe like on crypto podcasts, they could have other people, 0:03:55.640 --> 0:03:57.560 but when they sort of address someone up for the 0:03:57.560 --> 0:04:00.880 mainstream media and want to be presentable, I really think 0:04:00.920 --> 0:04:02.880 this is the only guest that they should have. Very 0:04:02.920 --> 0:04:05.240 excited we're gonna be speaking with Austin Campbell. He is 0:04:05.280 --> 0:04:08.640 an adjunct professor at the NYU Stern School of Business, 0:04:09.080 --> 0:04:13.360 and he is also the CEO of WSPN USA, where 0:04:13.360 --> 0:04:16.320 he does stable coin stuff. So, Austin, thank you so 0:04:16.400 --> 0:04:18.279 much for coming back on the show. 0:04:18.640 --> 0:04:20.799 Yeah, well, I'm glad I'm not stuck in the broom closet. 0:04:22.000 --> 0:04:25.800 Thank you for coming out. I think the WSPN job 0:04:26.000 --> 0:04:27.840 is news since the last time we talked to you. 0:04:27.880 --> 0:04:28.640 What's going on there? 0:04:28.920 --> 0:04:32.040 Yeah, it is new. So WSPN is an up and 0:04:32.080 --> 0:04:36.120 coming stable coin Issuer. I think one of my observations 0:04:36.120 --> 0:04:38.760 about the industry right now, and the way I sort 0:04:38.800 --> 0:04:40.120 of try to say it to people who are not 0:04:40.200 --> 0:04:42.320 deep into it, is we've got a whole lot of 0:04:42.360 --> 0:04:46.120 MySpace and very little Facebook when it comes to stable coins, 0:04:46.640 --> 0:04:48.880 which is to say, I do have immense respect for 0:04:48.920 --> 0:04:51.280 the work people have done so far with things like 0:04:51.440 --> 0:04:54.440 you know, tether Circle, etc. But the reality is none 0:04:54.480 --> 0:04:58.040 of these are, in my opinion, fully formed implementations. Yet 0:04:58.520 --> 0:05:00.400 I think the industry still has a lot long way 0:05:00.400 --> 0:05:05.040 to go to get genuinely professionalized. So WSPN is an 0:05:05.040 --> 0:05:09.400 effort started out of Singapore really and expanding globally to 0:05:10.200 --> 0:05:12.760 take a run at that problem. So Knock on Wood 0:05:12.800 --> 0:05:16.480 hopefully will be a little bit more Facebook. But til tell. 0:05:17.120 --> 0:05:20.279 Okay, so let's talk about what's I don't know what 0:05:20.360 --> 0:05:23.600 crypto is excited about, because it does seem to be 0:05:23.760 --> 0:05:26.839 very excited, and a bunch of different coins have been 0:05:27.040 --> 0:05:30.080 rallying off the back of Trump's When what's going on 0:05:30.200 --> 0:05:31.880 here other than the vibes? 0:05:32.839 --> 0:05:35.440 So I think some of this is just the expectation 0:05:35.520 --> 0:05:39.200 that people can do business potentially with some degree of clarity. 0:05:39.520 --> 0:05:42.560 So Trump coming in and keep in mind the Trump 0:05:42.640 --> 0:05:45.599 administration in particular is just one piece of this puzzle. 0:05:46.240 --> 0:05:49.120 Has the industry pretty hopeful that we're going to get 0:05:49.160 --> 0:05:53.240 a significantly greater degree of regulatory clarity around what you're 0:05:53.240 --> 0:05:55.800 allowed to do in the United States without breaking the rules, 0:05:55.800 --> 0:05:59.159 which is something that it transparently has not had. And 0:05:59.240 --> 0:06:02.919 like a good example of this is the SEC. So recently, Coinbase, 0:06:03.120 --> 0:06:05.719 in their case against the SEC, was just granted an 0:06:05.760 --> 0:06:08.560 appeal which is going up to the Second Circuit now, 0:06:09.160 --> 0:06:11.640 And if you read the judges ruling a lot of 0:06:11.640 --> 0:06:14.520 the reason for that as well, you know, we have 0:06:14.640 --> 0:06:16.720 my case, and then there's a case against crack In, 0:06:16.800 --> 0:06:19.200 and a case against Finance, and a case against Ripple, 0:06:19.240 --> 0:06:23.159 and helpfully, multiple federal judges are all coming to different 0:06:23.200 --> 0:06:25.880 conclusions on what the law is and what you're allowed 0:06:25.880 --> 0:06:29.360 to do here. So if people were saying there's regulatory clarity, 0:06:29.400 --> 0:06:31.839 you have at least four federal judges who disagree with 0:06:31.880 --> 0:06:34.880 you on that point right now. And it looks like, honestly, 0:06:34.920 --> 0:06:38.200 if you understand how like circuit splits work, a fast 0:06:38.200 --> 0:06:40.599 track to scotus to get some clarity on this, which 0:06:40.640 --> 0:06:44.200 could be exciting, But I think the idea is that 0:06:44.839 --> 0:06:47.440 with turnover in the leadership of the SEC, there's at 0:06:47.520 --> 0:06:50.400 least a non zero probability that they'll like write the 0:06:50.480 --> 0:06:53.600 rules down before going after people for not obeying them, 0:06:53.640 --> 0:06:57.320 which would be helpful. There's probably going to be significantly 0:06:57.320 --> 0:07:00.400 more access as in maybe any access to bankings in 0:07:00.440 --> 0:07:03.640 the United States for crypto companies, which would be particularly helpful. 0:07:04.080 --> 0:07:06.000 And then the other part of the puzzle is beyond 0:07:06.040 --> 0:07:09.480 the admin. Having the Republicans take the House and the 0:07:09.520 --> 0:07:13.320 Senate means that you have a much more friendly environment 0:07:13.840 --> 0:07:17.800 for actually passing legislation, and I would say even more 0:07:17.840 --> 0:07:20.120 than the Biden administration. If you want to know why 0:07:20.160 --> 0:07:22.720 we're currently in the case we're in, it's the inability 0:07:22.720 --> 0:07:25.680 of Congress to pass laws. Because if you're trying to 0:07:25.760 --> 0:07:28.400 use the forty Act to regulate crypto, I will remind 0:07:28.480 --> 0:07:31.800 people that was written closer to the Civil War than 0:07:31.840 --> 0:07:35.080 the current day, and before the creation of the Internet. 0:07:34.840 --> 0:07:36.760 Certainly before the creation of big clin. 0:07:36.720 --> 0:07:38.920 Correct, So I can see why that may be a 0:07:38.920 --> 0:07:39.920 little bit complicated. 0:07:40.320 --> 0:07:42.760 So this really gets into a core thing, which is 0:07:42.800 --> 0:07:45.960 that it might be nice to have some sort of 0:07:46.040 --> 0:07:50.560 clarity on, say, what constitutes a security in the crypto age, 0:07:51.040 --> 0:07:54.680 and because of how hard it is to pass laws 0:07:54.760 --> 0:07:58.640 period in this country, especially on big things, let alone 0:07:58.720 --> 0:08:02.480 sort of small or more traversial things, basically been gridlocked. 0:08:02.480 --> 0:08:05.200 So maybe there's a chance of getting legislation if I 0:08:05.320 --> 0:08:09.400 recall the issue at coinbase in the SEC is basically 0:08:09.520 --> 0:08:12.960 like the SEC said, you're selling or your platform for 0:08:13.000 --> 0:08:15.600 the dealing the trading of unregistered security. 0:08:15.720 --> 0:08:15.840 Right. 0:08:16.160 --> 0:08:18.680 So it's one thing, and I guess this gets to 0:08:18.720 --> 0:08:21.119 the question about legislation. It's one thing to say, Okay, 0:08:21.160 --> 0:08:25.120 regulatory clarity is good, but what does that regulatory clarity 0:08:25.160 --> 0:08:26.440 look like in the good version? 0:08:27.040 --> 0:08:31.800 So I'll say, to echo something Tracy said earlier, there 0:08:31.880 --> 0:08:34.120 is never one opinion out of the crypto history. But 0:08:34.160 --> 0:08:36.480 I would say if you talk to like the mainstream 0:08:36.600 --> 0:08:40.199 exchanges and some of the more call it regulated, call 0:08:40.240 --> 0:08:43.280 it non libertarian maximalist people in the space, here is 0:08:43.320 --> 0:08:46.360 fundamentally what they want. They want to know what the 0:08:46.440 --> 0:08:49.920 rubric is for understanding when a token is a security 0:08:50.040 --> 0:08:53.080 and when it is not. Because the reality is there's 0:08:53.080 --> 0:08:56.520 been an overwhelming focus on the use of ledger technology, which, 0:08:56.559 --> 0:08:58.599 if you step back and leave crypto is kind of 0:08:58.640 --> 0:09:02.280 transparently insane, right, Because if I'm at JP Morgan and 0:09:02.320 --> 0:09:05.080 I'm trading a book and it's got securities in it, 0:09:05.120 --> 0:09:07.120 and i just move my back end ledger from like 0:09:07.160 --> 0:09:11.480 Microsoft Excel to Microsoft Access, that shouldn't change whether those 0:09:11.480 --> 0:09:14.199 things are securities or not. It's an economic substance test, 0:09:14.840 --> 0:09:18.480 and the theories promulgated around this have been overly focused 0:09:18.480 --> 0:09:20.760 on the ledger, and you need to ask tokenized gold 0:09:20.840 --> 0:09:24.160 is pretty obviously not a security, but tokenized applestock pretty 0:09:24.200 --> 0:09:28.080 obviously is. And where is the dividing line between these 0:09:28.120 --> 0:09:31.480 two sorts of things as you start mixing stuff. That 0:09:31.559 --> 0:09:34.920 question we need answered. Then the second question you need 0:09:34.960 --> 0:09:39.000 answered is crypto dispenses with some of the traditional functions 0:09:39.040 --> 0:09:41.840 of a securities market, Like we don't need a clearing 0:09:41.880 --> 0:09:45.120 agency when we have a blockchain. The blockchain does the clearing, 0:09:45.640 --> 0:09:48.440 So how does that work? Can somebody just write it down? 0:09:48.880 --> 0:09:51.600 Which is a problem similar to like when the abs 0:09:51.600 --> 0:09:54.479 market came into existence. A lot of the original securities 0:09:54.520 --> 0:09:57.360 issue where things are kind of meaningless, like who is 0:09:57.480 --> 0:10:00.719 the senior management of an SPV? It's like a sort 0:10:00.760 --> 0:10:04.600 of weird question, and so the sec helpfully at the time, 0:10:04.679 --> 0:10:07.080 and they are totally capable of doing this if they want, 0:10:07.240 --> 0:10:11.080 created a whole rubric for registering asset backed securities, and 0:10:11.120 --> 0:10:14.000 that's gone from not existing to like a trillion dollar 0:10:14.080 --> 0:10:17.640 market because of that. So I think what the industry 0:10:17.679 --> 0:10:20.800 wants in a responsible way is just like, listen, any 0:10:21.400 --> 0:10:24.200 vaguely reasonable set of rules are fine, Just what are they? 0:10:24.240 --> 0:10:25.640 Can we write them down? 0:10:25.880 --> 0:10:30.400 Is there any concern there that when you get regulatory clarity, 0:10:30.559 --> 0:10:33.560 it might not be the regulatory clarity that you want, 0:10:33.679 --> 0:10:36.640 right like, it might go the other way. And in particular, 0:10:37.000 --> 0:10:39.600 I kind of I always think of, you know, elderly 0:10:40.120 --> 0:10:45.040 politicians gathered in rooms trying to wrap their heads around 0:10:45.280 --> 0:10:49.000 blockchain and all this new technology. It seems like there's 0:10:49.040 --> 0:10:49.760 a risk there. 0:10:50.559 --> 0:10:52.360 Well, the good news is most of this stuff is 0:10:52.400 --> 0:10:54.240 going to be written by twenty to thirty year old 0:10:54.240 --> 0:10:58.080 staffers instead of the elderly politicians. Right just talking about 0:10:58.080 --> 0:11:01.040 how the sausage is really made you make a good point, 0:11:01.080 --> 0:11:03.640 which is, you know, always be careful what you wish for. 0:11:03.760 --> 0:11:07.360 With Washington, I would say, in the current situation where 0:11:07.360 --> 0:11:09.560 you've had an administration trying to just wipe out the 0:11:09.600 --> 0:11:13.120 industry and make it illegal. Almost any regulatory framework is 0:11:13.160 --> 0:11:16.760 better on a forward basis. I think there's also at 0:11:16.840 --> 0:11:20.200 least some degree of hope with the current crop of 0:11:20.240 --> 0:11:23.960 Republicans that they won't make the mistake of overspecifying a 0:11:24.000 --> 0:11:26.719 particular approach or technology, because that's the way you could 0:11:26.760 --> 0:11:28.960 really get into trouble here. Like I was talking to 0:11:29.120 --> 0:11:32.560 somebody who's a staffer recently, and my caution on this is, 0:11:32.600 --> 0:11:36.080 imagine if the United States in the mid nineties canonized 0:11:36.160 --> 0:11:39.800 AOL right as the tool for accessing the Internet and 0:11:39.880 --> 0:11:42.439 using email right, that would have been a big mistake. 0:11:42.559 --> 0:11:47.360 So principles based regulation focused on economic substance is probably 0:11:47.400 --> 0:11:50.559 the best outcome. If you get something worse than that, 0:11:50.600 --> 0:11:52.840 there will at least hopefully be enough attention on it 0:11:52.880 --> 0:11:54.439 that you could start chipping away. 0:11:54.679 --> 0:11:57.240 Sometimes a bit when I think about alternative histories of 0:11:57.280 --> 0:11:59.080 the Internet, like I wonder if there could have been 0:11:59.120 --> 0:12:03.280 a situation in which it's still largely like the darp 0:12:03.320 --> 0:12:05.800 in it they are, and they are like furious debates 0:12:05.840 --> 0:12:08.560 like should we allow commercial access to the Internet, you know, 0:12:08.600 --> 0:12:10.320 in the year twenty twenty five, It's like, oh no, 0:12:10.440 --> 0:12:13.679 It's kind of actually easy to imagine these other versions. 0:12:13.800 --> 0:12:16.280 What's wrong with the Howie test when we're talking about 0:12:16.280 --> 0:12:19.520 like a rubric or something to determine what is a security? 0:12:20.040 --> 0:12:23.440 You know, it looks to me like many things that 0:12:23.520 --> 0:12:29.400 are tokens that get traded, there's an investment contract, expectation 0:12:29.559 --> 0:12:33.199 of profit, common enterprise, a lot of these things. I 0:12:33.240 --> 0:12:36.120 don't know. I'm like, guess, I'm not convinced that it's 0:12:36.160 --> 0:12:39.560 so ambiguous that these are, oh these are securities, like 0:12:39.679 --> 0:12:41.600 they kind of look like they are in many cases. 0:12:42.080 --> 0:12:45.640 Yeah, So I would say my personal view again, there 0:12:45.640 --> 0:12:48.280 are some tokens that to me are pretty obviously not securities, 0:12:48.280 --> 0:12:50.320 and some tokens that are pretty obviously. 0:12:50.280 --> 0:12:52.719 Rather than bitcoin, what is what are some tokens that 0:12:52.760 --> 0:12:54.000 are obviously not securities? 0:12:54.040 --> 0:12:56.960 Well, great example like dollar backed stable coins that don't 0:12:57.000 --> 0:12:59.520 pay interest, like, somebody help me out with that one 0:12:59.679 --> 0:13:02.760 token gold, the things that purely do governance and have 0:13:02.840 --> 0:13:04.640 no expectation of cash flows, because what. 0:13:04.800 --> 0:13:08.920 About a governance token for a decentralized crypto trading platform. 0:13:09.000 --> 0:13:12.400 So here becomes the question what are the underlying economic 0:13:12.480 --> 0:13:14.760 characteristics that it might give you access to? And you've 0:13:14.800 --> 0:13:17.200 gotten to the place I was going, which is the 0:13:17.280 --> 0:13:20.199 annoying part is a lot of these tokens do exist 0:13:20.240 --> 0:13:23.080 at the gray area of Howie in general, because like, again, 0:13:23.160 --> 0:13:26.000 let's zoom out from crypto and create one that I 0:13:26.160 --> 0:13:28.480 think actually sort of reveals the problem. 0:13:28.600 --> 0:13:28.680 Is. 0:13:29.640 --> 0:13:34.480 Let's say that I buy some sort of collectible shoes, right, 0:13:34.640 --> 0:13:38.000 Jordan's or something like that. Okay, so if I'm purely 0:13:38.080 --> 0:13:41.040 a buyer of the shoe, I'm probably not in a 0:13:41.080 --> 0:13:44.839 collective enterprise with Nike. But the ecosystem theory from the 0:13:44.880 --> 0:13:47.960 sec that they've raised as well, hold on, if there's 0:13:48.000 --> 0:13:51.319 a whole network of brokers and promoters and Nike is 0:13:51.440 --> 0:13:54.120 sponsoring events and all of this hype around that you 0:13:54.240 --> 0:13:57.840 are buying with the expectation of profit, Like, where really 0:13:58.040 --> 0:14:00.760 is the boundary between that and form owning a share 0:14:00.800 --> 0:14:04.840 of Nike stock. If you're genuinely buying hundreds of thousands 0:14:04.880 --> 0:14:07.200 of dollars of Jordan's a year to resell them with 0:14:07.240 --> 0:14:09.920 an expectation of profit, are you not in a sort 0:14:09.960 --> 0:14:12.960 of collective enterprise? And I would say you can take 0:14:13.040 --> 0:14:17.600 that principle and pretty transparently ported onto DeFi and I 0:14:17.600 --> 0:14:20.080 think the problem that people in crypto have had if 0:14:20.080 --> 0:14:22.720 you talk to the really savvy lawyers in this space, 0:14:22.840 --> 0:14:25.120 like for instance, Lewis Cohen who's in New York wrote 0:14:25.120 --> 0:14:28.360 a paper about this called Inteloctable Modality of Securities Law. 0:14:28.920 --> 0:14:31.800 And what you run into is there are things in 0:14:31.880 --> 0:14:34.480 traditional markets where they haven't gone after this, but they 0:14:34.520 --> 0:14:38.120 did go after essentially the same activity in crypto. So 0:14:38.240 --> 0:14:42.080 now one, where is the dividing line? And then two, 0:14:43.200 --> 0:14:45.720 even if you agree that what I just said might 0:14:45.760 --> 0:14:49.320 be a securities arrangement, does that make the Jordans themselves 0:14:49.320 --> 0:14:52.520 a security? Not necessarily right to go back to Howie 0:14:52.960 --> 0:14:55.840 the oranges are not the security. So one of the 0:14:55.840 --> 0:14:59.840 big dividing lines is take the ripple case. XRP may 0:14:59.840 --> 0:15:02.840 have and sold as part of an investment contract, but 0:15:02.880 --> 0:15:06.280 it does not necessarily follow from that that XRP itself 0:15:06.360 --> 0:15:21.040 is a security. 0:15:23.360 --> 0:15:27.520 Can I ask a provocative question? And crypto people on 0:15:27.560 --> 0:15:30.240 Twitter slash x please don't come at me for this, 0:15:30.400 --> 0:15:34.480 but was Genstler really that bad for crypto? Like I 0:15:34.520 --> 0:15:37.520 know he went after Coinbase and like prosecuted a bunch 0:15:37.520 --> 0:15:40.760 of other frauds, but he also approved the ETFs. And 0:15:40.800 --> 0:15:44.280 it's not like the crypto industry necessarily shrunk under his 0:15:44.400 --> 0:15:47.480 tenor Crypto seems to be doing pretty well. 0:15:48.240 --> 0:15:51.880 So I'll answer that question in two ways. I do 0:15:51.960 --> 0:15:55.880 think Genszler intended to be quite bad for crypto, and 0:15:55.920 --> 0:15:58.360 the things I would point at about the SEC at 0:15:58.360 --> 0:16:00.640 the time and the heart of my past critiques of 0:16:00.680 --> 0:16:04.800 them are one, you somehow managed to go after preemptively 0:16:05.040 --> 0:16:08.760 like Coinbase and crack In and meta mask and people 0:16:08.840 --> 0:16:13.000 like that, but you missed all of FTX, Celsius, Terraform 0:16:13.120 --> 0:16:16.520 Labs Block five, like basically, if you were a fraud, 0:16:16.560 --> 0:16:19.160 they didn't preemptively enforce, and if you weren't they did, 0:16:19.240 --> 0:16:22.240 and that's a pretty poor track record. And then number 0:16:22.280 --> 0:16:26.000 two is that complete inability to just write the rules down. 0:16:26.560 --> 0:16:28.960 I think even if Crypto didn't like the rules, if 0:16:28.960 --> 0:16:31.160 they had just written them down and said this is 0:16:31.160 --> 0:16:34.800 what you do, they would have been at least tolerable, because, 0:16:34.840 --> 0:16:36.920 like I would tell you, that's where the CFTC is, 0:16:37.080 --> 0:16:39.920 Like people in crypto don't love the CFTC, but don't 0:16:39.920 --> 0:16:42.240 feel like they're being treated unfairly because they'll at least 0:16:42.280 --> 0:16:45.240 just tell you what they mean to a much greater extent. 0:16:45.280 --> 0:16:47.080 And again, when we're in a point where four federal 0:16:47.200 --> 0:16:50.440 judges who are all individually very bright people, can't agree 0:16:50.480 --> 0:16:53.000 with each other on the rules. That's kind of a problem. 0:16:53.480 --> 0:16:56.480 Now to answer your question literally, actually, I think Kensler 0:16:56.560 --> 0:16:59.240 might have been good for crypto. And the reason I 0:16:59.320 --> 0:17:03.960 say that is it sort of by swinging the pendulum 0:17:04.000 --> 0:17:07.679 that far, it brought a lot more public attention to 0:17:07.760 --> 0:17:09.880 this sort of thing than you otherwise would have had 0:17:09.920 --> 0:17:15.040 had shot the streisand principle. Yeah, like his trying so 0:17:15.359 --> 0:17:19.159 hard to kill the industry ironically may have won Trump 0:17:19.240 --> 0:17:20.800 the election, right if. 0:17:20.720 --> 0:17:21.360 You look at it. 0:17:21.840 --> 0:17:26.399 So Stand with Crypto mobilized literally over one hundred thousand 0:17:26.480 --> 0:17:29.040 people to go vote and was pushing them to the polls, 0:17:29.080 --> 0:17:30.840 And if you look at the margins and some of 0:17:30.880 --> 0:17:34.640 the swing states, it's entirely possible, especially because I mean, 0:17:34.680 --> 0:17:37.439 remember it looks like men under the age of thirty 0:17:37.560 --> 0:17:41.000 just straight voted Republican and a shocking number of those 0:17:41.080 --> 0:17:44.880 are registered with Stand with Crypto. So I have questions. 0:17:44.960 --> 0:17:46.359 I kind of buy it. I kind of buy it. 0:17:46.400 --> 0:17:49.760 Actually talk a little bit more about stable coin regulation 0:17:50.160 --> 0:17:52.080 when we hit you on last time, and I'm like 0:17:52.200 --> 0:17:55.320 kind of a stable coin convert at this point or 0:17:55.320 --> 0:17:58.120 at least potentially because just the idea that this could 0:17:58.200 --> 0:18:01.320 be like a very like powerful like to find software 0:18:01.400 --> 0:18:05.960 rail or payment rail that could not be done under 0:18:06.080 --> 0:18:10.320 traditional legacy rails because you couldn't coordinate the different parties. 0:18:10.560 --> 0:18:13.960 I find that actually pretty compelling. I'm still a little 0:18:14.040 --> 0:18:16.200 not sure. I'm not sold how big the use case 0:18:16.240 --> 0:18:18.760 will be. But as for other people to argue about 0:18:19.040 --> 0:18:24.240 what regulatory ambiguity today in your view, holds back stable 0:18:24.240 --> 0:18:24.879 coin growth. 0:18:25.600 --> 0:18:27.960 So there's kind of two parts to that. One has 0:18:28.040 --> 0:18:31.639 been the banking regulators, primarily led by the FDIC, but 0:18:31.720 --> 0:18:34.320 to a lesser extent, the OCC and the Federal Reserve 0:18:34.680 --> 0:18:38.040 kind of saying you just can't do these things right. 0:18:38.080 --> 0:18:40.280 There was a note in the Federal Register in early 0:18:40.320 --> 0:18:43.480 twenty twenty three where they essentially said public blockchains are 0:18:43.520 --> 0:18:46.359 not compatible with safe and sound banking practices, which is 0:18:46.440 --> 0:18:49.080 kind of a blocker if we're being totally honest, and 0:18:49.119 --> 0:18:52.040 I think has really inhibited the United States's ability to 0:18:52.080 --> 0:18:55.000 approach new technology. And to be clear, this kind of 0:18:55.160 --> 0:18:58.000 rides on the back of the technophobia of banking regulators 0:18:58.000 --> 0:18:59.880 in general, because I don't think in their case there's 0:19:00.040 --> 0:19:03.720 singling out, you know, cryptos so much as they're singling 0:19:03.720 --> 0:19:06.359 out any new use of technology because they're still angry 0:19:06.359 --> 0:19:09.320 with the traditional FinTechs as well. The other thing that's 0:19:09.359 --> 0:19:11.879 really held it back is the complete lack of any 0:19:11.920 --> 0:19:14.800 federal legislation. So I'm dealing with fifty states on a 0:19:14.840 --> 0:19:17.520 state by state basis that kind of all vaguely disagree 0:19:17.560 --> 0:19:20.120 with each other about how to do things. And one 0:19:20.119 --> 0:19:23.439 of the things I'm most optimistic about in twenty twenty 0:19:23.480 --> 0:19:27.520 five is federal legislation on stable coins moving, and part 0:19:27.520 --> 0:19:29.600 of that is back to just how the sausage is made. 0:19:29.600 --> 0:19:33.359 In Washington, we've had McHenry Waters in the House, Lumus 0:19:33.400 --> 0:19:36.439 Gillibrand in the Senate, and Senate Banking is working on 0:19:36.480 --> 0:19:39.439 a draft of something like there's legislation that people know 0:19:40.160 --> 0:19:43.360 that they're reasonably comfortable with where the ven diagram overlap 0:19:43.440 --> 0:19:46.040 is pretty significant, Like it's not perfect, there's things they're 0:19:46.080 --> 0:19:50.960 fighting about, but it's majority agreed. That's something you could pass, 0:19:51.280 --> 0:19:55.359 unlike say market structure, where I don't think if you 0:19:55.400 --> 0:19:58.000 look at that bill, there's majority consensus even on how 0:19:58.000 --> 0:19:59.520 it should work or what they should do with it. 0:20:00.240 --> 0:20:03.959 Could you ever envision a future where the big banks 0:20:04.000 --> 0:20:07.040 get on board with stable coins, because I think generally, 0:20:07.119 --> 0:20:10.399 like right now, they're kind of considered competition in terms 0:20:10.440 --> 0:20:13.200 of payments technology. But on the other hand, they could, 0:20:13.480 --> 0:20:15.960 as you've laid out in a previous episode, allow them 0:20:16.000 --> 0:20:17.639 to make payments more efficiently. 0:20:18.880 --> 0:20:22.120 I do think so, and I think banks in general 0:20:22.280 --> 0:20:25.520 need a path forward where they can do something new. 0:20:25.880 --> 0:20:27.680 You know, we talked about last time how it's hard 0:20:27.760 --> 0:20:29.800 to take a current bank balance sheet and create a 0:20:29.800 --> 0:20:33.040 stable coin with it because they're not fungible between each 0:20:33.080 --> 0:20:36.480 other in terms of assets and liabilities. But in theory, 0:20:36.640 --> 0:20:40.040 like legally, there would be nothing stopping people with federal legislation. 0:20:40.160 --> 0:20:42.040 You know, a JP Morgan and Wells Fargo a b 0:20:42.119 --> 0:20:45.520 of A from starting a segregated trust company and just 0:20:45.640 --> 0:20:47.919 using that to launch a stable coin. They can totally 0:20:47.960 --> 0:20:49.480 do that. And you know, what the banks do have 0:20:49.760 --> 0:20:52.440 is a ton of distribution. Chase has a lot of customers. 0:20:52.480 --> 0:20:55.800 I don't think that's news to anybody. And so to 0:20:55.880 --> 0:20:58.720 answer your question, could there be an effort like that, Yes, 0:20:59.000 --> 0:21:01.959 and also it could take many forms, Joe, to your 0:21:02.000 --> 0:21:06.639 earlier point, I think I'm very pro stable cooin technology 0:21:06.720 --> 0:21:09.800 winning in the long run, I am not yet convinced 0:21:09.840 --> 0:21:12.679 on the exact form that's going to take commercially, because 0:21:12.720 --> 0:21:14.840