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A highlight from Ron Hammond Interview - Crypto Regulation News! SEC Gary Gensler Hearing, FTX Trial, Crypto Bills, Coinbase, Stablecoin Regulation
"Last time he spoke in front of the House Finance Service Committee, he kept saying multiple times, we have not lost a court case on crypto at all. We have brought several actions. And again, remind you, they call settlements wins. And so in their case, they were. They had won every single court case. But now that talking point is really faded because, as you mentioned, the Ripple's case, the Grayscale case, there's also ones like the Coinbase suit going on right now. This content is brought to you by Link2, which makes private equity investment easy. Link2 is a great platform that allows you to get equity in companies before they go public, before they do an IPO. Within their portfolio includes crypto companies, AI companies, and fintech companies. Some of the crypto companies you may recognize include Circle, Ripple, Chainalysis, Ledger, Dapper Labs, and many more. If you'd like to learn more about Link2, please visit the link in the description. Welcome back to the Thinking Crypto podcast, your home for cryptocurrency news and interviews. With me today is Ron Hammond, who's director of government relations at the Blockchain Association. Ron, great to have you back on. Thanks for having me. Always a pleasure. Ron, it's going to be a busy week. It's already a busy week here in DC. Tomorrow is, of course, the hearing with chairman of the SEC, Gary Gensler. Tell us about that and what can we expect. Definitely. For those who may not know, Gary Gensler, the chair of the SEC, is going to be testifying in front of the House Financial Services Committee for the second time this year. That's a really big deal because, to remind you, last year, they barely saw him at all in that committee when the Democrats had control. But if the Republicans can control, they want to exercise oversight of the SEC as much as possible. And again, it's pretty typical, though, for the opposite party to try to put the screws on to the party that has the White House. But in this case, a lot has happened, both in crypto, but also just generally, that it's going to get a lot of flack for Gary Gensler, whether it be on private funds, ESG. And again, crypto will definitely come up a lot after talking to several folks on the House side. He recently testified, though, in front of Senate Banking two weeks ago, and we didn't get too much out of that candidly. We saw a couple of questions from Senator Hagerty from Tennessee on the issues of promethium, for example, and Bitcoin ETF. We also saw some questions from Senator Lummis on SAB 121, which is more crypto accounting standards, and how do you custody actual crypto for banks. So I think we're going to see a lot more hard -hitting points from the House, especially on the Republican side. But I'd also like to caveat, as well, that the shutdown approaching, a lot of Democrats are going to use their time to hit the Republicans. It's just standard politics here. The Republicans are the ones in the House that are really slowing things down, unfortunately, when it comes to funding the government. So Democrat, any for the most part, is going to utilize their five minutes to not really talk about Gary Gensler, but talk about the Republicans shutting down the government. Because again, that's a major, major thing here. As much as crypto is big for us, the macro of all of the shutdown has a lot of implications. So we won't see crypto come up too much, but after talking to a couple offices, it does seem like we're going to have some definitely hard -hitting questions, very similar to what we saw earlier this year in the House. Yeah, and to your point of, you know, things have certainly changed since the last time he appeared, because you had the Ripple lawsuit decision, you had the Grayscale decision, where Grayscale won that, Ripple won a big chunk of theirs as well. And the Prometheum details are more about what Prometheum is and what they're up to. So do you think there's going to be some hard -hitting questions around that, those cases and those things that happened? Definitely. So if you recall, last time he spoke in front of the House Financial Services Committee, he kept saying multiple times, we have not lost a court case on crypto at all. We have brought several actions. And again, remind you, they call settlements wins. And so in their case, they were. They had won every single court case. But now that talking point is really faded because, as you mentioned, the Ripple case, the Grayscale case, there's also ones like the Coinbase suit going on right now. That's got a lot more attention. Actually, it looks a lot better for Coinbase post those decisions. And so he can't rely back on the courts here or say that, hey, look, I'm winning in all these court cases. And actually, especially in the Grayscale case, he lost 3 -0. And two of those judges were Democrat appointees and they're based here in D .C. And so I think that having that set the tone of like, look, you are really overextending here and you're losing in the courts, not by a small margin, by unanimous margin sometimes. And it's just not crypto. You are pushing the balance elsewhere where other industries like ESG or like private equity are seeing these wins and saying, you know what? I think we're going to actually have a chance to win against the SC as well. So like the ETF situation where crypto really just goes out ahead and fights a lot of these fires for more traditional finance. And then those folks kind of benefit from crypto's push. I think we're seeing some of that happening now with the Grayscale case and Ripple case and Coinbase case empowering other industries who feel like they are also having overreach from the SEC saying, you know what? I think we have actually a case here when we can actually win the courts. So I think it's going to be a major theme of this hearing going forward. But also there's going to be several other questions to your point about Prometheum. That was a major issue for that committee, which had Erin Caplan in front of that committee just a couple of months ago. And they reiterate all the talking points, securities laws are clear. The SEC gave us a way to work forward and move things forward. But that argument really fell apart pretty quickly. And we're seeing that in this case, that the Prometheum line that there is a pathway forward registration, there is a way to comply, just doesn't hold water. And so I'm pretty sure we'll see some members of Congress tighten the screws a little bit there because it's been really more of a black box, the SEC, of how this process went. Caplan just kept saying that we actually kept working the SEC and they were clear, but that has yet to even show itself. So I think there'll be a major other theme for this hearing as well. Now you mentioned Coinbase and everyone's looking at that lawsuit. There was also news reported, I think you mentioned it, where Coinbase CEO Brian Armstrong will be on the Hill. They've also launched an education campaign around crypto. Tell us about that. Yeah, Coinbase has been a godsend, candidly. Again, we used to have only about five or six lobbyists during the infrastructure fight. And again, we're going up against the banks who have over 150 plus lobbyists. We have going against other agencies or other groups that have way more funding. But Coinbase really has stepped up and said, look, the fights here in DC, we are committed to the United States and we're committed to resources here in the United States and DC to educate Congress, to educate regulators, and to showcase in DC why crypto is important for the future of the United States. And so they're having a huge Hill day tomorrow, actually. Again, it lines up not on purpose at all with Kerry Gensler testifying and of course also the shutdown too. But they're going to be having a whole set of presentations for Hill staff and members of Congress to learn from founders. It's not just Coinbase itself. They're also bringing in other founders from other companies and having a whole demo day, a Hill day, you can say, to educate various offices. And so I think it's really important to have. We're all seeing a lot of other folks from the industry come down. So it's going to be quite the crypto week here in DC. Of course, bad timing with the shutdown, but no one can really plan it like that. So we're really excited to see how that plays out, especially with all the heat recently more moving to AI in terms of interest, but also scrutiny. I think it's good to have more adults in the room and say, hey, look, crypto was the AI about one or two years ago. We're still here. We're fighting a lot of big battles. We need Congress's help to move the needle. But at the same time, let's show you why this is important and why this technology needs to be in America and not be based elsewhere. Because unfortunately, we're seeing a lot of folks migrate over to London, migrate over to the EU. And Coinbase is really taking a strategic stand saying, we're here to stay. We're here to comply with the rules, but we also need some action from Congress. So we'll see how that goes. Sure. Yeah, that's really great that they're doing that. And education advocacy are certainly key. And speaking of legislation and regulations, obviously, we had the market structure bill get marked up in the house. You also have the stable coin bill. What's the latest with those and the next steps? I know the shutdown is probably delaying a lot of things. What are the latest on those items? Yeah, so we were kind of expecting by October timeframe to have a vote on the stable coin bill and the market structure bill. There are other crypto bills as well that passed out of the house financial service committee, but those are the two main big ones. And so the plan was, hopefully, was after this whole shutdown drama that we would have a vote probably in October, but it's looking more like November now. And again, our message to folks is the closer we get to that 2024 election, we're almost a year out, all of a sudden, all bipartisan politics goes away and folks start retreating back to their bases. And it's my team versus your team. And that's when everything grinds to a halt in DC. We're already seeing that right now a little bit with the shutdown where folks are saying it's my team versus your team, but the Republicans are a lot more splintered on their teams. And so we want to make sure that we get these bills pushed out of the house on a good bipartisan basis and then showcase to the Senate why it's important to take up this legislation. Now, there are been some rumors going around recently. Again, Politico report on it, Punchbowl report on it recently, too, that Patrick Henry gave an interview saying, look, the Senate Bank Committee, my Senate counterpart, they're doing completely different things than we're doing in the house. We're focusing on crypto and capital formation and data privacy. They're more focused on marijuana banking, exec compensation, and banking regs. So we are in two different camps on two major different issues. But if we were able to make a trade of some sort, the priorities that Sherrod Brown, who's running for reelection in deep red Ohio, who's going to need all the help he can get, would at least his case to voters saying, look, I'm actually working on this committee that traditionally has not passed that many bills. Mind you, again, they haven't passed a bill, except for this year, for four years before that. And that's during his time as well as Republicans in the chair time. It's crazy. And so in order for this to move the needle, they have to have a trade. And I think that's what's really important to say. If this trade were to happen, a lot does have to happen. But this does provide a pathway potentially for crypto legislation to move forward to the president's desk. Again, a lot has to happen. A lot can mess this up. But this isn't one of the first few times we're seeing kind of a light at the end of the tunnel. And we're really excited by it now again. But we have to have a lot of education because the Senate has not really given too much thought to this issue besides a couple handful of really powerful champions. Yeah, boy, fingers crossed, toes crossed, everything, hoping they can get something through the House and then we can go through the Senate. Boy, I'm hoping something happens by early next year before the madness of the election cycle. Now, there's also the trial for Sam Beckman Fried and the whole FTX debacle. In addition, there's been new updates around Sam Beckman Fried's parents and how money was moved to his aunt and Stanford University and much more. What do you expect to happen in October with this trial? So the main issue that we're going to have here in D .C. is just the noise. A lot of people are going to be talking about the SPF trial. It does have a huge media attention, for better or for worse. And again, we've really at least made sure we tell folks in D .C., again, this is not a crypto problem. This is a complete scammer just using newer technology. But guess what? Same old playbook as we've seen with Madoff and others. But there is concern that there are, at least in the case of the House, for example, we're voting on these big bills. FTX came up as a reason to support the bill, as a reason also to oppose the bill. Some folks say, look, there's no coming of a customer funds. That's what FTX did. And this bill bans that. On the other end, they're saying, you know, well, this legitimizes the crypto market. So this could potentially make more FTXs come up down the road. And so we've seen FTX kind of being pulled in two different directions when it comes to supporting or opposing legislation. And so our concern is the 300 plus members of Congress who have not sat in a crypto hearing who may not even know what Bitcoin or Ethereum is, are they going to listen to the headlines and say, look, actually, SPF is all crypto, which we all know it's not the case. Or they're going to say, SPF did this fraud. That's why we need to pass legislation to make sure this doesn't happen again. And so we're trying to really thread that needle. Of course, you know, we still know everything is going to come out through the trial. There could be some regulatory implications. Again, the campaign donations is a major factor and a major reason why a lot of folks in Congress are a lot more put back by crypto and kind of staying away on the sidelines because they don't get burned again. But as we're seeing kind of recently with the indictment with Senator Menendez recently from New Jersey, some members of the Senate took money from his PAC. And so there's a lot of, you know, just it doesn't matter if you're in crypto, doesn't matter if you're a Singh Senator, there's a lot of issues when it comes to campaign financing as a whole. And a lot of folks are on their toes here. But I think, you know, we want to make sure that we showcase it. Folks, SPF kind of went abroad and tried to really railroad the industry here in D .C. by trying to screw DeFi with his legislation and trying to protect his fraud and scam. Let's make sure it doesn't happen again. Let's put some rules on the road because, yes, SEC is not providing that right now. They haven't for years. And so it's time for Congress to act. So we'll see how that makes the dynamics. I'm sure, again, there'll be a lot of D .C. ties and connections with that court case. So if there's anything damning, we'll soon find out. But our hope is that this actually encourages Congress to act rather than sit on the sidelines saying, no, we're good. Crypto is kind of all SPF, FTX. And what do you think about the dynamic of and I don't know if this is going to be discussed in the trial at all, but Sam Beckman Fried and FTX officials met with the SEC many times. These are confirmed things on the calendar. I believe Sam met with Gary Gensler, according to some calendar updates. Does that play a factor at all? Because obviously we don't know what was discussed and what was the agenda items. But would that bring any pressure on Gary Gensler? Like you met with this guy. Yeah. He said in the New York Times article back in December that he met with SPF, I think it was twice actually, SPF and Gensler personally. But again, also remind you, it's a big organization. SPF was in D .C., more than any CEO in any industry I've seen in my time in D .C. But at the same front, staff meet all the time too. I mean, it wasn't just SPF. He had a whole team of staff that helped out on this front, both at the CFTC, at the SEC and of course with Congress as well. And so Gensler said again explicitly that he met with SPF twice. But I think it'd be good to know, look, how many times does your staff interact? How long do those conversations go? What do they lead to? Because there were some rumors swirling around that FTX is going to get a pass of sorts. And again, those are rumors. We have not had confirmation of that. But the one thing about the court case is that it's going to bring all this to light. So if there's anyone that's saying anything half -truths here or they're trying to protect their character or protect their image, it could really bite them if they have been lying to the press or they've been getting half -truths here. And so if I were to chair Gensler, this likely will come up in tomorrow's hearing. The question is like, look, it's going to come out. The truth will come out. We just want to make sure you're shored up here because it's going to be really bad for you on top of all the other things that have been happening in the courts if you've been caught potentially lying here. And again, I don't see any reason why he would in this situation, but I think the focus should be also not just on SPF and Garrett Gensler, but where do the staffs and the senior level execs and regulators also meet from FTX and the SEC? Hmm. I'm very curious to get those details. Now, speaking of FTX, obviously with the relation with Binance, and I forgot to ask you this earlier, the judge recently said it blocked the SEC from conducting further discovery, if I'm not mistaken, with Binance US. Have you heard anything about that? Not as much, at least in the DC front, but at least when it comes to the Binance situation as a whole, there's still that looming DOJ investigation that a lot of folks in DC are waiting for that shoe to drop. Again, there's various rumors of why that DOJ lawsuit hasn't dropped. There have been confirmation reports of central sanction evasion violations, as well as money laundering violations by Binance and the parent company, not Binance US to my knowledge, but Binance. What is the relationship though between Binance US and Binance? Is that there much cohesion there or is there actually a pretty separate line between those two entities? So one thing's for sure though, a lot of folks in DC or in the early of 2023 are hearing a lot more from Binance. They were definitely hitting DC a lot more, trying to get their narrative out. And I think the mounting allegations are pretty damning. And we've seen a lot of folks who were in DC for Binance trying to deliver that message. They're not here anymore. It was a very short stint for them. So whether that be for the company having financial problems, whether it be more of the regulatory issues, that's unclear at the moment. I would lean more to the regulatory issues, but I think it's all going to come more to light as time goes on, but it's pretty bad. So we'll see exactly how Binance recovers from this, if at all. But at least here in DC, the folks that they had speaking, they largely aren't here anymore. Wow. And final item here, obviously you got the Gensler hearing tomorrow with the House Financial Services Committee. Is there any other major hearings for the remainder of the year that we should be aware of? Not at the moment, at least in terms of big ones. We are seeing some small hearings, rumors coming up right now for more of Senate banking. Again, if they do consider crypto legislation, they've only had one major crypto hearing so far this year, whereas the House has had over 13. But again, like I mentioned earlier, that's just two separate priorities for two separate chairs. But if this trade were to happen, I think I'd just keep an eye on Senate banking. They just had their first AI hearing last week. And as they kind of get more into the AI issues and tech issues in finance, that's going to eventually loop in crypto more and more. So I think we'll keep an eye on Senate banking. And then finally, if we are looking for those votes happening on the House floor for the stablecoin bill, as well as the market structure bill, I probably keep a little eye on the House as well. I guess I think lastly, I'll say now, too, is tax issues. We've been talking a lot about securities law, commodities law for quite some time. But tax issues are really percolating to the surface here. Senate Finance, which is Ron Wyden, who's a big champion for crypto, Democrat side, as well as Mike Crapo from Idaho, they actually put a request out to the industry and another stakeholder saying, look, what does taxation for crypto look like? Please help us. Who should be reporting 1099s? Who should be doing various filings and such? So that's just a request ended in early September. And so we potentially could see some action or at least some legislative hearings on what does crypto taxation look like. And I think it's a very important issue with the broker definition coming out from Treasury. There's a lot of comments going through that system right now. So we'll see where that lines up by keeping an eye on tax issues. That's going to be a major fight for quite some time. And I think it's going to be really important. It's a little nitty gritty, but it's very important for any business to operate in the United States. Yeah, absolutely. That's a big one. And I know there's been some other things happening. I think the FASB rule and with corporations being able to hold Bitcoin and things like that on their balance sheet, I believe there were some updates there. Don't have the full details, but there's certainly a need for further clarity and for individuals and institutions. Ron, always great information, man. Thank you so much. Happy to help. Thanks for having me.
A highlight from Shockingly, Gary Gensler Doesn't Like Stoner Cats
"Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Thursday, September 14th, and today we are talking about stoner cats. Before we get into that, however, if you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review, or, if you want to dive deeper into the conversation, come join us on The Breaker's Discord. You can find a link in the show notes or go to bit .ly slash breakdown pod. Alright, friends, well, I have to tell you, at this point we really have about four archetypes of breakdown shows. There's number one, oh god, more cleanup from 2022. There's number two, hey look, a new TradFi player is getting in the game. There's number three, hey look, a judge or elected official is smacking a regulator down. And then there's number four, hey look, an unelected bureaucrat is trying to expand their power again. And today's show is indeed an example of the fourth, and the reason it matters is not just because it's another SEC enforcement action, but because I do really think that this represents and is a great example of that impulse to authority expansion. So what am I referring to? Well, of course, I am referring to the SEC bringing its second enforcement action ever against an NFT project. This time, the regulator targeted Stoner Cats, a profile picture NFT collection that was sold to finance a web series. The SEC alleged that the sale of collectible NFTs constituted the sale of unregistered securities. The production company behind the project settled the allegations without admitting to the SEC's findings. So the details. Stoner Cats sold out their collection in around 35 minutes at the height of the NFT bull market in July 2021. The project raised $8 million from the sale. Marketing highlighted materials Hollywood producers and big -name celebrities attached to the web series, and suggested that the success of the show would increase the value of the NFTs in secondary markets. The company received 2 .5 % of royalties from secondary market sales, which produced $20 million in volume. In the settlement, Stoner Cats agreed to a cease -and -desist order and a $1 million penalty. In addition, a fund will be established to refund investors and all NFTs held by the company will be destroyed. Gurbir Gural, the director of the SEC's Division of Enforcement, said in a statement, Regardless of whether your offering involves beavers, chinchillas, or animal -based NFTs, under the federal securities laws, it's the economic reality of the offering, not the label you put on it or the underlying objects, that guides the determination of what's an investment contract and therefore a security. As an aside, I wonder sometime if they find their own writing as clever as they seem to. Beavers, chinchillas, or animal -based NFTs, wah. Moving on, the statement reads, Here the SEC's order finds that Stoner Cats marketed its knowledge of crypto projects, touted that the price of their NFTs could increase, and took other steps that led investors to believe they would profit from selling the NFTs in the secondary market. It's therefore hardly surprising, as the order finds, that Stoner Cats sold its entire supply of NFTs in just 35 minutes, generating proceeds of over $8 million, most of which were then resold, not held as collectibles, in the secondary market within months. Carolyn Welschans, the associate director of the SEC's home office, added, Stoner Cats wanted all the benefits of offering and selling a security to the public, but ignored the legal responsibilities that come with doing so. Now, Commissioners Hester Peirce and Mark Ueda offered what has become their customary dissent against the SEC's actions. They claimed the enforcement represented a perverse extension of the SEC's jurisdiction and the borders of the Howey Test into the realm of art and collectibles. In a statement they wrote, The application of the Howey Investment Contract Analysis in this matter lacks any meaningful limiting principle. It carries implications for creators of all kinds. Were we to apply the securities laws to physical collectibles in the same way we apply them to NFTs, artists' creativity would wither in the shadow of legal ambiguity. Rather than arbitrarily bringing enforcement actions against NFT projects, we ought to lay out some clear guidelines for artists and other creators who want to experiment with NFTs as a way to support their creative efforts and build their fan communities. The Commissioners claimed the NFT project was more properly characterized as a fan crowdfunding. More broadly, they expressed concern that, through this enforcement, the SEC were attempting to exert jurisdiction over collectibles in a way they had never previously done with physical objects. The Commissioners likened stoner cats to a scheme surrounding the launch of Star Wars toys in Christmas of 1977. The toy maker sold early bird certificate packages in lieu of actual toys due to problems with production. These certificates were redeemable for toys in due course, but could also be resold for a profit in secondary markets at the time. The Commissioners asserted that, Using the analysis of today's enforcement action, the SEC should have parachuted in to save those kids from Star Wars mania. The main point of the dissent was that the SEC should not use its enforcement to stifle innovation in creative industries through the use of NFTs. The Commissioners said that, They argued that the SEC's More generally, it contributes to the legal ambiguity facing artists, writers, musicians, filmmakers, and others seeking to build a loyal, engaged following. There are a few different categories of reactions from people in the crypto community. Some honestly said that the stoner cats were not necessarily the best example to be a standard bearer for the industry. Gabriel Shapiro, General Counsel at Delphi Labs said, NFT trader, ex -lawyer, NFTs said, And the natural extension of that is any collectible that has a robust resale market — Jordans, baseball cards, comics, rare whiskey and wine, etc. — is potentially sold as a security. That is not the law, but it seems that the SEC is using essentially dicta in an order to creep its jurisdiction. Crypto criminal lawyer Carlos says injecting language like this into settlement seems to be a recurring pattern. To which ex -lawyer again responded, Obviously to us that's not true, but the SEC doesn't play fair and will take advantage of it. And indeed, this take that the SEC was overreaching here was by, in a way, the most common take. Marissa Tashman -Koppel, the Senior Counsel at Blockchain Association said, So now the SEC is in the business of regulating creatives and artists? Creating opportunities for ownership in the creative process is one way crypto and Web3 transforms how we interact online. The SEC shouldn't interrupt this process. Crypto lawyer Ujin writes, Hester Peirce emphasized in her dissent that the SEC's position limits legitimate ways for artists to make a living and she is right. Speculative sales of art are the basis for many sales of art, and that doesn't make those sales a security offering. Now still one more take was that we are seeing something of a positive pattern of dissent. Framework Ventures' Vance Spencer said, Peirce was on her own for a long time. Important to remember for something like an ETF approval, which requires three of five. Now staying on the theme of Gensler for a moment, it's like after the Senate hearing where he had to take some punches earlier this week, he had to go out and find a venue to get his own shots in. Appearing at a conference hosted by lobbyist group Better Markets on Wednesday, Gensler said, Millions of investors have been hurt in this field. It's an area that can hurt investors, but it can also hurt the broader economy because it can hurt investor confidence and finances ultimately built on trust. The conference was of course being held to mark the 15th anniversary of the collapse of Lehman Brothers, giving Gensler plenty of opportunity for histrionics about financial risk. Gensler trotted out his usual talking points, although adjusted to consider recent criticisms raised in court. Still, there was one kind of awkward and sweet moment where the host suggested that the crypto do seem to be finding some sympathetic judges recently, to which Gensler was uncharacteristically silent in response. Now, Jason Franek from Alliance Dow really sums it up. He wrote, Now, somewhat related, while presenting a speech at a conference hosted by the Practicing Law Institute, CFTC Enforcement Director Ian McGinley pressed home his agency's antipathy towards DeFi. McGinley said, McGinley presented the complete list of CFTC victories in DeFi cases, including a settlement with prediction market PolyMarket and derivatives exchange operator UkiDao. He said, All of this is to say, the CFTC has brought groundbreaking actions in the DeFi space, standing for the proposition that when offering core derivatives products based on digital assets to the public, whether in a centralized or decentralized manner, you must comply with the law. The comments came just a week after the CFTC announced settlements with DeFi trading platforms Open, 0x, and Derridex for offering quote illegal digital asset derivatives trading. The enforcement actions were widely viewed as the regulator taking on easy targets in an attempt to send a message. Indeed, the attack on DeFi was so brazen that one dissenting commissioner even openly suggested that the CFTC was quote, creating an impossible environment for those who want to comply with the law. Bankless co -host Ryan Schott Adams tweeted, The IRS is attacking crypto, FinCEN is attacking crypto, the SEC is attacking crypto, the CFTC is attacking crypto, OFAC is attacking crypto. This is what the now they fight you phase looks like. Now speaking of the fight and not going down without one, Coinbase CEO Brian Armstrong has called for DeFi protocols to take the fight to the CFTC and defend enforcement actions in court. He said in a tweet on Wednesday, The CFTC should not be creating enforcement actions against DeFi protocols. These are not financial services business and it's highly unlikely the Commodity Exchange Act even applies to them. My hope is these DeFi protocols take these cases to court to establish precedent. The courts have proven to be very willing to uphold rule of law. The only thing this is accomplishing is to push an important industry offshore. Now following last week's enforcement action against that trio of DeFi platforms, many commented that the order was a stretch of existing law. And while their cases may have been defensible, the diminutive DeFi platforms were unlikely to have had the resources to take on the US regulator, which is of course why many believe they were targeted in the first place. Now while Brian Armstrong stopped short of offering funding, many others in the space urged collective defense. Crypto law US founder John Deaton said, The industry needs to create a legal fund of some sort to help defend these winnable cases. LEO Trades amplified that, saying, Brian, if you really want to affect policy change, you and Coinbase should help create a fund for projects facing enforcement. Let's be real. Everyone is worried about the financial burden of litigation. This would honestly be a better use of resources than vague political campaigns. Now a different take was summed up by Jamison Lop, who wrote, My hope is that DeFi protocols be so decentralized that the notion of them going to court is absurd. Lawyer Jason Gottlieb wrote a thread about this as well, saying, I agree with Brian Armstrong that DeFi protocols should challenge the CFTC and SEC in court on overreaching settlement demands. The sad reality is that the agencies first attack smaller outfits for whom it makes vastly more economic sense to settle rather than litigate. We see what happens when well -funded projects go to court to fight shaky theories of DeFi liability. Cases or causes of action are dismissed, partial liability can be dropped, the dynamics are greatly changed. But the regulators start with huge advantages. They have typically worn down projects with an expensive investigation first. Even just satisfying the overbearing demands for document production in these investigations can cost six figures easily. I've said it before, I'll say it again. Every single subpoena a regulator sends to a blockchain project is one less engineering job in America and more money for lawyers. Even the lawyers who benefit from that, hi there, think that is a terrible trade -off for America. One problem is funding. The regulators can wear projects down and then offer deals that, while expensive and onerous, are better than more years of continued litigation where even if the project wins, it has massively lost time, funding runway, and momentum. Another problem is that these are people's lives. An investigation is obtrusive enough. Litigation is personally highly disruptive. For us litigators, it's just what we do, it doesn't feel bad. But for founders, devs, people just trying to build, it can feel terrible. So I would love for more DeFi projects to take the CFTC and SEC to court. And is this attorney advertising? I'd love to be the lawyer who represents them. But it costs a lot of money and it's emotionally hard. Companies that have taken on the fight have done great work protecting the space, sometimes behind the scenes in ways people won't widely know about. We need more. But not everyone is well financed and in a fighting mood. So we need to support the smaller projects financially and otherwise. Everyone who believes in the efficiency, privacy, and self -control advantages of digital assets is in this fight together. The battle over the future of crypto is the battle over the future of all digital assets. And since more and more of our lives are digital, that's more and more of our lives. This fight is far more important than when moon antics. It is literally the battle for the future of your digital life. The legal battles over digital assets are the battles over the direction of our collective future. Here, here. I think I will let Jason have the last word on that one because I can't do any better. I appreciate all you guys listening. And until next time, be safe and take care of each other. Peace.
A highlight from Ron Hammond Interview - Congress Next Move with Crypto & Stablecoin Regulations & SEC Gary Gensler Upcoming Hearings & Bitcoin ETFs
"This content is brought to you by Link2, which makes private equity investment easy. Link2 is a great platform that allows you to get equity in companies before they go public, before they do an IPO. Within their portfolio includes crypto companies, AI companies, and fintech companies. Some of the crypto companies you may recognize include Circle, Ripple, Chainalysis, Ledger, Dapper Labs, and many more. If you'd like to learn more about Link2, please visit the link in the description. Welcome back to the Thinking Crypto Podcast, your home for cryptocurrency news and interviews. With me today is Ron Hammond, who's Director of Government Relations at the Blockchain Association. Ron, great to have you back on. Always a pleasure. Thanks for having me again. So Ron, Congress is back to work, if I'm not mistaken, this week. And I want to follow up on the two bills that were in the House that were marked up, the stablecoin bill, as well as the market structure. What can we expect? Could we expect some of these bills to go to the floor to get voted on? What's the latest? Definitely. So just to recall here, there were two big votes, as you alluded to, the stablecoin votes, as well as the market structure bill. Those were in the committees. That's kind of the first step in terms of getting a vote in the House floor. So these cleared the committees. We actually had six Democrats and all the Republicans vote for the market structure bill, which was a huge surprise. Again, that was a really tough bill. It was very dense. But at the end of the day, they got across the finish line and set it up for what hopefully is going to be a good bipartisan bill vote, hopefully sometime in the fall. And then for the stablecoin bill, that's where we saw a little bit of derailments. We saw the White House get involved literally hours before the vote happened. We thought that we would probably get a decent amount of bipartisan support, potentially even getting Maxine Waters, the chair of the Democrats Fine Service Committee. But unfortunately, the White House got involved. It was mostly around the issues of state versus federal regulators. And we have state regulators like NYDFS, the New York banking regulator, who say, look, we believe that we have the role to regulate stablecoins. We've been doing it for quite some time and we have a good regime. We believe that we have a role here. Whereas the folks at the Federal Reserve and Treasury and now the White House are saying, I think actually it should be done more at the federal level. And we've seen more Republicans line up as well as New York Democrats line up with the state pathway and the more broad consensus of the Democrat Party, more in line with the federal pathway and following the White House. And so now we're going to go here to September, October, November. It's a pretty busy time right now here on Capitol Hill. But the biggest thing right now is a shutdown. It looks like there's going to be potentially a shutdown happening at the end of the month. So everything else, including the crypto bills, FAA reauthorization and a whole slew of other issues out there, will get put on the back burner until we can actually fund the government. And it looks like this is going to be quite the dramatic push. And so we potentially could see votes on these bills in October, but maybe actually November as well. And the longer that it takes to get these bills voted on the House, it means it gets less time for the Senate to potentially take these up as well. And in order for that to happen, though, we need to have a strong bipartisan support for both bills. And I think that's going to be the main crux here is that if the Democrats in the House would get a decent amount support that bill, it gives more of a reason for the Senate Democrats who do control the Senate to say we would actually take a piece or look at that piece of legislation. But until then, they need a strong bipartisan support and a vote in the House. And again, I would probably look at October or November for those. Oh, boy. Yeah, this shutdown is going to throw a monkey wrench in the whole process. And to your point, everybody's going to be focused on that. That's the higher priority. OK, so October, November, we could expect something. Now, the stablecoin situation is pretty interesting because, like you said, the NYDFS, you know, they obviously ordered BUSD Paxos to shut down BUSD issuance, but they approved PayPal to go issue their stablecoin. So it seems like a power struggle here. And who do you think might win this battle? You know, Maxine Waters pushing for the Treasury and the Fed to do things on their end. But we know they're exactly. So there's a lot of players involved here. So we have the crypto industry lobbying mostly for the rules of like, look, we just need a framework. We don't really engage too much on the state versus federal pathway for us. A regulatory framework means the businesses know what they can and can't do. And there's a licensing regime in place. On the other end, though, we have the banks lobbying, for example, and they're lobbying for more of the fact that only banks should be the ones issuing stablecoins. It shouldn't be Circle. It shouldn't be Paxos. It should just be the banks. And then finally, the same front, we do have the federal regulators and a little turf war in terms of the state versus federal, who is the big dog here in terms of the regulators. Now, that battle happens all the time for a variety of financial bills, not crypto in particular. And so I've seen this play out several times. Usually the Fed wins in most of these fights. However, we're seeing a larger majority of members of Congress supporting that state pathway and again, including the Republicans being all in lockstep. There were no defections on their end. We saw defections more on the Democrats side. So the numbers do favor the Republicans and the Democrats who are supporting NYDFS and others. But at the same time, the White House is a very strong force. And that was enough to get several Democrats who were lined up potentially to vote for in support of the stablecoin bill to back down. And again, most notably Maxine Waters as well. So it remains to be seen. I call this, it's in the holding pattern right now because there is a bipartisan push to get this done. I mean, even Maxine Waters, even though she voted against it, she put out an article a couple of weeks ago saying, look, I think we need to get stablecoin regulation done, especially with the narrative more picking up now recently, a big tech in the finance. And that's more in regards to X or Elon trying to get some money transmitter licenses for Twitter, whatever you want to call it these days. And that also builds off the Libra Facebook narrative. And so I think what we're seeing now is that there's a lot of things in play right now. There was a report in 2021 from the Biden administration saying Congress has to act on stablecoin legislation. We cannot do this alone. We need to have a congressional authority. So there's impetus here. So we'll see how that happens again on that front. But I'm still shocked even to this day that we were able to get more folks to support the market structure bill, not the stablecoin bill, because that dynamic, it seemed like stablecoins was almost good to go. But of course, it's politics. Something always happens at the last moment. And in this case, the White House got involved. And I think that's also important to highlight, though, the White House would not have gotten involved in this stage, if they didn't think this bill was going to become law. Nine percent of bills don't become law. But in this case, they did weigh in. And I think that's because they thought that, look, this is the time to weigh in. So my hope is that we can still be optimistic in this being done in some shape or form. But someone's going to have to negotiate a little bit here. And right now, both camps are pretty firm in their positions. Hmm. Boy, I can't wait to see how that plays out. But it seems, you know, given that stablecoins very much will obviously deal with the currency and the Fed and Treasury control of currency, I can imagine that they want to make sure they have their stamp on it. So you have the market structure bill in the House, but there's also the Lummus Gillibrand bill in the Senate. Is that making any progress or could that even be an option? Or is it just on hold as well? I wouldn't say it's on hold. I think it's a really important marker in the Senate. I mean, look, it's very different from the market structure bill that's in the House for Patrick McHenry. There's no question about it. But at the same time, the Senate really hasn't had a regulatory framework bill besides Lummus Gillibrand. And if you recall last Congress, the FTX bill or the Digital Commodity Consumer Protection Act, DCPA, that was the other major regulatory framework bill. So there is impetus. There is bipartisan support in the Senate to get something done. But I think what's going to have to happen is the House needs to pass their bill, their market structure bill, and say, look, there is a clear bipartisan desire to move forward on crypto regulation and market structure regulation. Senate, here is a bill where you hope you take up either some elements, all the elements, or even just build off the work that we've done in the House.
A highlight from 1387: One Bitcoin Will Be Worth $1 Billion By This Date - Fidelity
"Let's get it. In today's show, I'll be breaking down the latest technical analysis, as well as breaking news. Google Cloud to digitize El Salvador's governance, healthcare, and education, as well as Elon Musk's ex moves closer to crypto payments with their newest state license they just received, as well as breaking news. The SEC's first deadlines to approve seven Bitcoin ETFs are coming over the next week. We'll also be discussing Grayscale's roadmap to a Bitcoin spot ETF following the most recent SEC triumph, as well as Fidelity, one of the world's largest asset managers that currently control over four and a half trillion in assets under management are predicting a $1 billion price action for each Bitcoin. In fact, did you know they started accumulating Bitcoin all the way back in 2014, literally almost a decade ago? We'll also be taking a look at overall crypto market, all this plus so much more in today's show. 87. That's right. I'm your host JV. And we have a jam -packed session for you today. Looking at the market watch here, we can see Bitcoin after almost staying above 28 ,000. Unfortunately, it broke that support and we're back down to 27 ,200 at this time, but Ether also back in the red down 2 % for the day trading at just above $1 ,700. And checking out coinmarketcap .com, we're barely sitting above a trillion dollars, which is that milestone we've been sitting at for quite some time regarding the overall crypto market and about 34 billion in volume in the past 24 hours with the Bitcoin dominance at 48 .9 % with the Ether dominance at 18 .9%. And checking out the top 100 crypto gainers of the past 24 hours, we have XDC up 8 % trading at 6 .4 cents, followed by TonCoin up 6 % trading at $1 .75, followed by BlockStax up almost 3 % trading just under 53 cents and checking out the top 100 crypto gainers for the past week. Yesterday was a sea of green as the price action pumped literally $2 ,000 in a span of 30 minutes off of the news of the SEC losing their trial versus grayscale with the conversion of the GBTC product into a spot ETF. But today we have corrected some with HEXB crypto greed and fear index. We're currently rated a 49, which is neutral. Yesterday was a 39 in fear last week at 37 and last month a 50, which is neutral. So there you have it. How many of you are currently bullish on the king crypto? Let me know. And how many of you are anticipating a lower price action so you can keep stacking them sats on the low? Holla at your boy. Now let's break down today's Bitcoin technical analysis. Check out the charts and what is popping right now in the markets. As you can see here, Bitcoin drifted towards $27 ,000, which again, we're just sitting above $27 ,200 at the time of this recording. At the Wall Street open, the dust settled on the digital asset manager, grayscale's legal victory. Here you're looking at the Bitcoin one hour candle chart. Now data from Cointelegraph showed a positive verdict for grayscale against US regulators, sparking almost 8 % gains. Bitcoin managed to tap $28 ,100 on Bitstamp, its highest in almost two weeks, before returning to the current level. So despite closing the daily candle above two key moving averages, these had yet to return as definitive intraday support. And on the day, analysts were quite cautious. In a quick take post from on -chain analyst Crypto Quant, he goes on to share, noting that the grayscale move had originated on derivative exchanges. So despite funding rates remaining fairly neutral, there was a clear absence of value. However, it is difficult to see that the spot exchange led the price increase when the Bitcoin price rose yesterday. The reason is that the trading volume ratio shows that it had decrease rather than increase. Now additional data showed trading volumes were still below those seen during the upticks of earlier this year, quoting them here. Of course, there is a tendency for prices to change significantly, even with small trading volumes, because of the overall liquidity in the crypto market, which has decreased. However, it seems that there is a need to be a little cautious about the fact that this rally leads to a dramatic rally. Now let's discuss many similarities to Bitcoin's all -time high. According to crypto analyst Brett Capital, quoting him here, we're seeing many similarities between the double top of 2021 and what we're seeing right now, he warned. Should the similarities play out and Bitcoin produce a full fractal, 26 ,000 would flip from support to resistance to initiate further downside. So for the time being, we're seeing a lot of signs really playing into all of this in which he reiterated alongside this chart. Now, another target analysts are talking about right now is 23 ,000 becoming increasingly important. Rec capital likewise flagged that level of 23K as a prominent level versus the 2022 bear market bottom structure and inverse head and shoulders pattern, as he mentioned here, that's the level that we can see the price rebound from. So there you have it. Let me know if you feel we're likely to drop sub 25 ,000, potentially touch 23 before rising back up. Or do you think we'll take off from here, off of one of the biggest news stories of the year, which is a big fat L for the SEC and a big fat victory for the entire crypto industry. Let me know your thoughts. And with that being shared, fam, now let's discuss breaking news coming out of El Salvador with Google, which is actually quite interesting. Yesterday, I saw Nigel Bokele made a tweet and this is what it was in regards to Google Cloud announced a new partnership with the government of El Salvador. Interesting, right? On August 29th to establish an office and provide Google distributed cloud services in their country, the partnership aims to digitize the country, update government services and improve the healthcare and educational systems. The GDC will also help bring infrastructure closer to where data is generated for El Salvador. Bokele, the country's president said he believes El Salvador is quickly becoming a hub for innovation. As he shares here, El Salvador is moving forward. We believe technology and foreign investment are key for development. And here's where he announced the partnership in this, I shouldn't say tweet anymore, but on this post on X quoting Bokele, Google plans to establish operations in El Salvador and he shared the official press release from Google. Now, Thomas Curain, the CEO of Google Cloud said he believes cloud computing can truly transform Latin America. As shared here, access to cloud computing has dramatically expanded across industries and regions throughout the world, he said, enabling both small companies and the public sector to utilize the very same apps and services as more mature markets. Now, Cointelegraph also reached out to Google Cloud for additional comments on its recent expansion. The additional GDC infrastructure will help support El Salvador's active stance on Bitcoin adoption and integration into society. It allows for Bitcoin full nodes with ordinal protocol support. And additionally, back on August 8th, a few weeks ago, El Salvador granted the crypto exchange Binance a license to offer crypto services to users in the country. Bitcoin had began as legal tender in El Salvador back in 2021. And recently the Bitcoin Beach Initiative took to the classroom and taught over 25 ,000 students about Bitcoin, helping them earn a Bitcoin diploma via the country's educational system. The country has already seen immediate returns on the program with the example of one teenager who earned the diploma and then returned to his former school to teach the educators about the digital asset. That's what's up. I think mass adoption is likely to continue, especially in places like El Salvador that are ahead of the rest of the world. And I think more and more major companies are going to be opening up shop because it just makes so much sense. Why wouldn't they? That's why Binance just got their license. Jack Mallers Strike Company just got their license. Bitfinex got their license and they're opening up shop. And I believe that the Bitcoin game theory is in full effect and will continue to play out as the days go by. And with that being shared, fam, now let's break down our next story of the day. As you probably know, major news was actually released yesterday regarding X, which is the platform owned by Elon Musk to integrate crypto payments. We made a pretty big development, so let's break this down before we dissect the ETF deadlines. Rhode Island's regulators have granted X, formerly known as Twitter, a currency transmitter license, marking a step forward for the company's foray into the financial services sector. The license is legally required for companies conducting financial activities on behalf of users related to sending and receiving money, a definition that includes both fiat as well as crypto assets. Now, this approval will allow for X to custody, transfer and exchange digital currencies. Now, X's Rhode Island currency transmitter license was approved on August 28th, two days ago, according to the nationwide multi -state licensing system, NMLS. The move marks an important step forward for Elon's push for X to become an everything app, which would include crypto as well as fiat payments. Now, naturally, social networks like X are massive, so this could help usher in that mass adoption. Now, while sources have suggested that X's upcoming payments feature will initially only offer support for fiat currencies, Elon had reportedly instructed developers at X to build the platform's payment system in such a way that crypto functionality can be added into the future. Yeah, if you're not integrating Bitcoin into your payment system, then do you even have a payment system for the future as Bitcoin is the future of money? Just saying. The approval comes nearly two months after X secured money transmitter licenses, also in Michigan, Missouri, and New Hampshire, which were well -approved on July 5th. X's latest license marks a total of seven American states it secured transmitter licenses in, so my guess is they're going to have to continue getting more and more licenses for all the states. It remains unclear exactly what financial offerings will be made available if and when X rolls out their payments feature. People familiar with the company's plans have indicated that X will initially offer fiat currency transaction services similar to PayPal, which Musk co -founded with room for future crypto integration. Do you think Bitcoin will likely be an announcement that they will be accepting crypto payments? I mean, who cares about Doge if you don't have Bitcoin integrated? So, I feel Bitcoin is a given if they're going to be integrating crypto and it seems to be going that way. But how do you feel this is likely to play out? Let me know your honest thoughts in the comments right down below. And now let's break down everything you need to know regarding the recent spot ETF deadlines for the United States and regulators. And after we discuss all these deadlines, we're going to specifically be talking about the GBTC Grayscale product, getting that victory over the SEC and what that means moving forward with the Grayscale Bitcoin ETF. And then we'll be dissecting Fidelity, one of the largest asset managers in the world, and their $1 billion Bitcoin price prediction. And then we'll wrap up with our live Q &A. So yeah, let's discuss this. The US SEC is facing its first deadlines to decide on seven spot Bitcoin ETF apps, with the latest being September 4th, which is what, virtually five days away amid its defeat to Grayscale Investments in the US Federal Appeals Court. Investment firm Bitwise will learn if its ETF will win the SEC's approval September 1st, which is what, two days away. While BlackRock, VanEck, Fidelity, Invesco, and WisdomTree will all be awaiting the SEC's decision for their funds by September 2nd, three days away, according to several SEC filings. So, that's right around the corner. It's going to be a big week. Meanwhile, Valkyrie is set to hear back from the SEC on September 4th. The US Court of Appeals ruled on August 29th that the SEC's rejection of Grayscale's app to convert their GBTC into a spot Bitcoin ETF was arbitrary and capricious. But this doesn't mean that the SEC must approve Grayscale's app or others in the future, says Bloomberg ETF analyst, James Safart. And in August 29th Bloomberg Review, he explained that Grayscale's win will definitely increase the odds of a successful outcome for the SEC. But he is unsure when that day may come though, as the SEC can delay his decisions and has two more proposed deadlines for each fund before being forced to make a final decision on the 240th day post filing. Now, what a shame it would be if they make us wait the 240th final day before giving an answer. But hey, don't run it by them. I mean, don't put it past them, especially with Mr. No Clarity Gary as the chairman. But anyways, for the awaiting applicants, the final deadlines for the SEC are all in mid -March of next year. And as someone shared here, odd and free, 99 .9999 % chance that the world doesn't know that the SEC has to decide on seven Bitcoin ETFs within the next three days. And this does include the largest asset manager in the world, BlackRock, Bitwise, VanEck, WisdomTree, Investico, Fidelity, and Valkyrie. The suits are at our doorstep per each. And how many of you weren't aware of that, that the decision within the next seven days is going to be on those seven major asset managers. Now, after the August 29th ruling in favor of Grayscale, the regulators have 90 days to file an appeal with the US Supreme Court or apply for an en banc review where the full circuit court can overturn a ruling made by a three judge panel. However, the SEC hasn't made clear what the next move will be. If the SEC doesn't appeal, the court will need to specify how its ruling is executed, which could include instructing the SEC to approve Grayscale's app or at the very least revisit it. But either way, Safer only saw two viable options for the regulator. The first option is to concede defeat and approve Grayscale's conversion of its GBTC as a Bitcoin spot ETF. But alternatively, the SEC would need to revoke the listing of Bitcoin futures ETFs entirely or deny Grayscale's app based on a new argument, says Safer, quoting him here, the second potential avenue is to deny on reasons not used before yet, which I have been saying for months could have to do with custody or settlements of Bitcoin, which is not something that futures ETFs have to worry about. The SEC has made a lot of noise around custodians. However, fellow Bloomberg ETF analyst, Eric Balchunes, considered the odds of the SEC revoked in the Bitcoin futures ETFs as highly unlikely because of the SEC reported openness to Ethereum futures ETFs, in which he makes a great point, quoting Eric here. This guy turned the last paragraph of Judge Rao's legal smackdown today into a MGMTS stylish banger, really captures the modern. Well done. Well, so there you have it. I guess this is some song I haven't even listened to yet. So I'll jam to it a little later on. We'll see if it's any good. But anyways, fam, how do you think this is likely to play out by the SEC? Do you think they're likely to approve any of these seven ETFs or do you think they'll just continue to push it back until next year? Let me know your honest thoughts in the comments right down below. Now let's dive deeper with the latest breaking news regarding the grayscale ETF and their conversion of their product into a spot ETF. And did you know that their product literally has over 600 ,000 BTC? Hence, they'd be the perfect candidate for a spot Bitcoin ETF because they already hold the underlying asset. They don't need to purchase it. So I mean, they'd be a prime candidate along with BlackRock. Which one will get approval first is the million dollar question, but let's break it down. In a seismic shift for the Bitcoin industry, the DC Circuit Court ruled in favor of grayscale investments yesterday, which is breaking news, which we've been hearing all across social media. Now, Jake Stravinsky, the chief policy officer at Blockchain Association, described the ruling as massive, emphasizing it's extremely rare for a federal circuit court to find an agency like the SEC in violation of the Administrative Procedure Act. Stravinsky stated that the DC Circuit soundly rejected the SEC's view that grayscale's ETF proposal was not designed to prevent fraudulent and manipulative acts and practices. So good for them. He also pointed out that the court did not order the SEC to approve the proposal, but rather mandated a review of grayscale's proposal with the court's ruling in mind. Stravinsky speculated on two possible scenarios for the SEC's next steps. One theory suggests the SEC could find another reason to include no clarity Gary towards crypto. And alternatively, the SEC might take this as a semi graceful exit from their anti ETF stance, especially under political pressure from traditional finance sectors ready for a Bitcoin ETF as we are long overdue. They first rejected the first Bitcoin ETF for a spot in the United States over a decade ago. And the app was from the Winklevoss twins with Gemini, just FYI. Now, many other issuers have proposed ETFs this year, include BlackRock and Larry Fink throws heavy punches in DC. Therefore, here's what the lawyer thinks. The only question is if the SEC wants to make this more painful for itself. Trust me, if there is another denial, there'll be another lawsuit. I strongly recommend that the SEC picks sooner. Let's see. Now, James Safart, the ETF analyst over at Bloomberg, corroborated the significance of the ruling stating it's a complete and utter rebuke of the SEC spot Bitcoin ETF denial orders. And quoting him here, I was initially thinking something like a deadline of 45 days or 60 days, but nothing in here saying that. However, he noted that the SEC has 45 days to file for that en banc hearing, which would involve all 17 judges on the court, good Lord, as opposed to the initial subset panel of only three judges. The Bloomberg analysts also outlined two main motions for the SEC. If they still wish to prevent the spot Bitcoin ETFs from listing, they either need to revoke the listing of Bitcoin futures ETFs or denied based on new reasons, possibly related to custodial or settlement issues, which have been a focal point for the SEC staff accounting bulletin 121. Now, Adam Cochran, partner of CEHV added another layer to the timeline speculation. He alludes to the SEC's pending decision on six other Bitcoins spot ETF filings due by September 1st for Bitwise and September 2nd for BlackRock, Fidelity and others. Here's what he had to share. Some folks are getting ahead of themselves thinking that grayscale decisions means bulk approval of ETFs by this Friday. Likely not the case. My hunches were looking at a late October, November timeline for an approval still, unless the SEC appeals in which case next spring. Now I'm not a gambling man, but if I was a gambling man, I just want to throw out there. I don't think the SEC has any intention to approve a spot Bitcoin ETF in the United States anytime soon because their actions demonstrate the complete opposite. The only thing they have interest in approving are more futures ETFs so they can continue to manipulate the markets through derivatives, which are financial weapons of mass destruction. Quoting Warren Buffett, it is what it is, but nonetheless, this is still a victory overall because they could only push it back for so long. And especially with BlackRock demanding, I shouldn't say demanding, but in so many words, they're the one that started this domino effect with new ETF apps arising with the SEC. They are the largest asset manager in the world, controlling over $10 trillion in assets under management. So I think if Larry Fink wants something, it's going to get done. But the million dollar question becomes when? I think they're going to push it back this year and probably spring next year, we're going to finally start to see the approval of spot Bitcoin ETFs in the United States. And as soon as we get that approval, that can help usher in literally trillions upon trillions of dollars that are currently sitting on the sidelines directly in to the best crypto asset in the world, which is none other than BTC. If you'd love to see that happen, let me know. And by what date or deadline do you think we're likely to get that first approval? And you already know once that approval comes, money is going to start ushering in and the Bitcoin price is going to go parabolic and in perfect time because we also have another major bullish catalyst around the corner. Six months out, the scheduled halving is estimated to be sometime in April of 2024. So between the ETF apps being approved by the United States regulators and the Bitcoin halving, I couldn't be more bullish on Bitcoin right now, which leads us to our next story of the day, which is going to be a $1 billion prediction from one of the largest asset managers in the world, which is Fidelity. Let's break this down. Then we'll dive into our live Q &A. Make sure to say hello in the live chat. Let me know where you're tuning in from. A massive shout out to everyone interacting. I greatly appreciate all the continued support. So here we go. $1 billion. That's a lot of zeros. That is nine to be exact. In 2021, a billion dollars seems like a lot of money. FYI, Fidelity initially made this prediction in 2021. I also want to point out here from some tweets, Fidelity head of sales, quoting them here, we started mining and accumulating Bitcoin all the way back in 2014. I bet you a lot of you did not know that. This was kind of under the radar, but they have been accumulating BTC almost for the past decade. So is this a surprise that they're predicting a $1 billion Bitcoin price by 2038? They're putting their money where their mouth is. But anyways, we have Julian Timmer, Director of Global Macro Fidelity, believing that one Bitcoin could be worth $1 billion per coin by the year 2038. Send it and let's go. Timmer also believes that the orange coin could hit $1 million before this decade is over, which means by the year 2030, roughly seven years away. So that would represent a 20X multiple, the current Bitcoin market price of 48 ,000. But now obviously we're half that price of what we was. So that would now be 40X. And I know anyone can make predictions like that, but Timmer lays out his cause using his own valuation model and another well -known model, which we all know here on the channel, known as the stock, the flow. Timmer's demand model is based upon Metcalfe's law. Metcalfe holds that as the number of users of a network grows linearly, the value of the network grows exponentially. Thus, if the number of users doubled, its value would grow at four times or the square of two. Now Timmer's demand model grows steadily to about $1 million by the chart. Now, by contrast, now let's discuss the stock to flow model created by synonymous analysts. Plan B is based on the supply of new coins growing at a decreasing rate each year. This occurs because of the built -in happenings every four years. So given increases and adoption and demand, the result will be prices expanding exponentially. Indeed, the price of Bitcoin has grown approximately 10X every four years. Take that, Peter Schiff. These are facts, not just by 50 % slowdown in supply, pretty powerful stuff. That's right. Now, stock to flow predicts even faster growth in the price than does Timmer's demand model, especially after the year 2030. As I commonly cover here in the show, the stock to flow model is projecting roughly a half a million dollar Bitcoin price past the halving in 2024. In fact, the model shows a very wide array in their expectation, anywhere from a hundred thousand to a million dollars, with a half a million being dead in the middle, hence in a couple of episodes previously, if you missed it, we discussed Plan B's most recent prediction, which he shared on his YouTube channel, that he believes the Bitcoin price will be north of $530 ,000 per coin proceeding the Bitcoin halving in 2024. But let's get back to this math. This is the stock to flow model you're looking at right here. Now let's go back over here. This is some more insights. Timmer stated the value of the dollar changes in relation to other assets. And he further pointed out that just a dollar invested in stocks in the 18th century would be worth $4 billion in today's money. Isn't that insanity? Talk about super hyperinflation. So going by this assumption, $1 million in today's money can be worth a billion dollars in 20 years time. Good Lord. You better start stacking them now, fam. So changes in the dollar's value, especially depreciation over several decades, render the same amount with less purchasing power, which is why huge sums back then appear less by today's standards. For instance, $1 million can purchase a lot of significant things a few decades ago, but in today's perspective, reasonably higher end houses in the US cost between, I would say $200 ,000 and $500 ,000. The same $1 million may not suffice for the same class of houses today. This is a fact. Just here in Puerto Rico alone, I've seen the real estate market literally shoot up 100 to 300 % since moving to this island roughly four years ago. And that's not just an exception to the rule. It's all across the United States, hyperinflation. I mean, check out the rent prices. That will give us some insights to the true nature of inflation. You can check out Zillow, check out real estate five years ago in comparison today, and you'll probably see something quite similar. But anyways, there's an increasing number of billionaires across the globe. Facts. Some observers even believe we may see the first trillionaire in this lifetime. I think it could potentially be CZ, the finance CEO, or even Michael Saylor of MicroStrategy. Now, the same applies to organizations with several companies now passing the $1 trillion mark valuation cap. Fidelity previously pegged Bitcoin to hit $1 million in initial prediction made by Jerry and Timmer by the year 2035. However, he ultimately said, we're way too conservative. Let's move this target on up from $1 million by the year 2035 to $1 billion by the year 2038. So there you have it. Do you feel the Bitcoin price can likely exceed their conservative target of $1 million by the year 2030 within the next seven years and hit as high as $100 million to $1 billion per coin by the year 2038? Let me know your honest thoughts in the comments right down below. And don't forget to check out cryptonewsalerts .net for the full premium experience with video and to participate in the live Q &A. And I look forward to seeing you on tomorrow's episode. HODL.
A highlight from THE HASH: Court Rules SEC Must Review Rejection of Grayscale's Bitcoin ETF Bid, Bitcoin Jumps 5%
"This is the hash podcast. Stay informed with the latest on Bitcoin, ETH, the metaverse, web3, and more. All on the hash for your ears. You're listening to the CoinDesk podcast network. We got some big news today. It's also Taco Tuesday, and since it's going to be our last Taco Tuesday, you better get ready for some actual tacos. That's a major news, but there is also real major news, and I'm starting us off today. Here we go. Let's go over to Grayscale. An appeals court ruled just today that the SEC must review Grayscale's ETF bid after they were previously rejected. It's being seen as a victory in the prospects for getting a spot Bitcoin ETF into the marketplace in the US, and the market is responding enthusiastically. Bitcoin surged on the news, adding quite a bit of value, and now we're seeing some further chatter about what this means for the prospects, again, of the long -awaited Bitcoin spot ETF. This note, Grayscale is a sister company of CoinDesk. They share ownership from Digital Currency Group, but we're going to talk about it. Gloves off, no holds barred anyway. I'm so excited, you guys. This is the absolute best news ever. The fact that we continue to see the SEC take these massive L's is music to my ears. I really, really feel that they have just been so predatory in their actions and wanting to litigate instead of give some sort of guidelines, help these honest entrepreneurs know what they're supposed to be doing and know what they can't do. To me, that's just super problematic behavior. We should want to support entrepreneurs. We should want to guide people in the right direction, and more importantly, we should want to build back the American economy better. I think with all of these massive wins the crypto industry is seeing, things hopefully will get better. All right, Will, you can take it now. This does not mean the ETF is going through now. It just means that the SEC has to go back and review the application again, and they have to give an actual opinion. There's a few lawyers on crypto Twitter talking about this this morning, what does this actually mean? What did the judge actually say? They basically stated that the SEC did not have a good basis for making its past decision, and now they need to go back to the books, relook at the application, and come up with a better decision, whether that means that this is going to be approved or not, we still have to wait. This probably means it's going to be approved because there's a lot of political pressure now on the SEC after a judge took a look at this and said, you know what, guys? You didn't do your homework. You should have let this pass, or you should have put some more thought into why you didn't want this to go through, and you didn't, so we're kicking it back. Go study the books, and maybe we'll get something out of this. Now, of course, what's on the line? A lot of ETFs are out there. A lot of people are lining these things up. I'd say there's about a half dozen plus ETFs that are possible to move forward over the next 180 days or so, and if that opens up, that means a lot of mom and pop retail investors can get into the Bitcoin market for the first time because they probably weren't comfortable touching Bitcoin in other ways. There's lots of different ways to get exposure to Bitcoin. There's lots of different ways of purchasing financial assets, but an ETF itself means that you can put Bitcoin into your 401k, into any sort of trust with a Schwab or Fidelity, something like that. That means that maybe coin go up. Who knows? A little speculation there. It could have some more apathy because the crypto markets right now are not great, but a lot of people in the crypto industry are looking at this and saying like, this could be our salvation from the depths of crypto winter. Jen? So I look at this court ruling in favor of Grayscale and the partial ruling in favor of Ripple, and I think that there's a glimmer of hope, right? I think that these two cases show us that maybe this clarity we're seeking from the SEC, we are not going to get, but some of these decisions are going to be made in the court, and some of them may lead to precedent setting decisions down the line, or they may at least force the SEC's hand so that we can get some more clarity. So good news all around. I want to point to one of the lawyers who have been commenting on this, who has been commenting on this on Twitter this morning, Jake Trevinsky, who's the chief policy officer at the Blockchain Association. He said that it's rare for a federal circuit court to make a decision like this and said that there are two ways that this could possibly go. The SEC could come back and just provide another reason for rejecting it, or they could say their hand was forced by the court, and so they're going to do it, but it's not because they wanted to do it, but they were forced by a judge. And so it will be interesting to see which way they go. I think it's important to note that an ETF has not been approved, but I think it is definitely a step in the right direction. Zach? Yeah, there's a lot of speculation that once one gets approved, several will be approved, right? So we have the BlackRock one, we have a bunch of other ones, I forget all the names, but there's a ton of Bitcoin spot ETF proposals that are sitting for rejection or approval. And I think the ETF watchers out there in the world have said that maybe when one gets over the finish line, others will likely also get over the finish line, such that SEC isn't seen as picking a winner and giving an unfair advantage to one applicant over the others. So I think that's why there is sort of this buoyant sentiment across the space as a whole. This isn't necessarily just a win for Grayscale, it's potentially a win for others such as BlackRock and others in the space who are looking to offer this product to, again, mom and pop investors who want it in their brokerage account and don't want to have to deal with the nonsense of dealing with the crypto itself. So that, I think, is why that sentiment is out there, why the market has reacted pretty positively. Bitcoin's up about 5 % on the news, a nice little surge given that Bitcoin has been pretty flat around 26K for the last little while now. So interesting to see what's going to follow this, but yeah, definitely the SEC may have taken an L on this one while they fight other fights and may rack up dubs on those ones. And I think we'll talk about that in a little bit. Who wants next? Oh, we're talking about that right now, Zach. NFTs. Sure, let's do it. Yeah, they've entered the chat. So the SEC has issued its first enforcement action targeting NFTs. The regulator ordered Impact Theory, an LA -based media company that raked in nearly $30 million from selling tiered NFTs to compensate investors, arguing that the transactions were illegal, unregistered securities, offerings, Impact Theory has agreed to set up a fund to reimburse investors, destroy remaining NFTs, and they will pay a fine of $6 .1 million. Wendy, going to toss this one off to you. What do you make of the SEC's first NFT enforcement action? We all knew that this was coming. The reason why we knew it's coming is when we're talking about NFTs, people like to call them digital assets or digital collectibles, but that's just really skirting around what an NFT actually is. It is a token. It is a little adorable little token that kind of just lives on that blockchain that's just kind of there, just kind of chilling. But it really depends the way that these entities are set up and how they're using the NFTs, because let's face it, when we do talk about collectibles, again, I was an eBay seller, I would go to thrift stores, I would buy used designer vintage goods or things that I saw that were in style that I knew I was going to be able to flip. Because I knew I was going to be able to flip and make money off of them, it kind of makes you think, is this a security? Is this not a security? But in fact, it's just a tangible good. But that's the kind of the way that I view NFTs. I literally view them as collectibles that you can buy and then you hope that they appreciate, but you're not 100 % sure if they're going to appreciate. For this particular lawsuit, I forget exactly how the company went about it. I'm planning on doing a video on my channel about it, YouTube, CryptoIndio, go subscribe. But I do think it's very interesting. I think we're going to see a lot of other NFT projects get hit. And it's very important if you do plan on launching a project, you probably should obtain some sort of legal advice, just so you have some sort of guidance and just have some basic understanding of the law. Because again, you guys were in very, very uncharted territories. Will, what is your thought about these adorable little single tokens that kind of just live on the blockchain? Are they securities? What's going on? What about the tchotchkes, as Zach would say? I like the tchotchkes, depending on if they're penguins or not. No. Okay. So I think this case specifically more refers to how this NFT rollout occurred. I did see some people, including Zach BTC, who's sort of like the on -chain sleuth of the last cycle, talking about how this NFT drop had some dubious parts about it. And that's why they saw this case going forward, right? This is the first one we've seen with an NFT. So there's that. On the other hand, looking at the dissent from Hester Peirce and others at the SEC who were judging on this decision, they thought it was a little odd to come after a single NFT case. Why? For the reasons Wendy just sort of laid out there, right? We have art markets. We have designer bag markets. People sell these things on street corners, so we're not going after them. But the SEC in this case decided to go after it. I think it does fit a longstanding pattern for the SEC that enforcement actions target select groups and select people where they can have easy case wins. And then that sets sort of like a precedent for the rest of the industry, right? They go after the Ripple Labs, they go after this NFT case, they go after a library. They go after the ones where they think they can sort of win. In the case of Ripple Labs, they have a lot of money, so I don't know how it was the best target because that one's been hauled up in court for the better part of three years. The library one was sort of a slam dunk though, right? They like won that and the library didn't have enough money to go back and fight against them. So they've basically been on a social media campaign. And I think with this SEC one here, you know, it's NFT market, they just had to like put up with it. They had to pay disgorgements and let it go. And that's the case. Now for all these NFT creators out there, they have to think about these things a little harder than they were previously. If that's good or bad, I don't know. I don't love the strategy. The SEC has been walking out for the last few years. I think we've all opined on that a lot in this show. But there is something to saying maybe we should have like a little bit more consumer protection with some of these new markets are popping up. Permissionless innovation is great, but that also means that you have permissionless rugging.
A highlight from BREAKING: Grayscale Wins Lawsuit Against SEC!
"Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. Welcome back to a special late breaking episode of The Breakdown. Today we received a decision which the crypto industry has been waiting for with absolutely bated breath. At 1023 this morning, Fox Business reporter Eleanor Tarrant tweeted, Breaking, a DC Court of Appeals has granted Grayscale's petition for review to convert its Grayscale Bitcoin trust into a spot Bitcoin ETF, and has ordered the SEC's order to be vacated. So what we're going to do today is break down what this case was about, the background and how it came to be, the immediate reactions from the community, the specifics of the decision, the immediate reactions of the community, and what happens next. To understand the context, let's actually go back in time a little bit all the way to last June, June 7, 2022. On that day, Grayscale tweeted, As we enter the final month before a response is due on our application to convert Grayscale Bitcoin trust into an ETF, we have retained Donald B. Verrilli Jr., former Solicitor General of the United States, as additional legal counsel. Grayscale continued, We want to ensure that we have the strongest possible team of legal minds ready to support our Bitcoin ETF application. Verrilli will serve as senior legal strategist. He is one of the nation's most experienced attorneys with a deep understanding of legal theory, administrative procedure, and the practical matters of working with the judiciary branch. Over the course of his career, he has argued more than 50 cases with the United States Supreme Court, including several that dealt directly with Administrative Procedure Act violations. Now, basically, what was going on is that Grayscale had filed for the ability to convert their trust into an ETF. This was their chosen way to resolve what was a huge problem at the time and what has continued to be a problem, which is the discount to net asset value that GBTC was trading at. What that means is that the value of GBTC shares was less than the value of the underlying Bitcoin held within them. That made holders of the shares underwater. And since so many people were effectively using GBTC as a proxy Bitcoin ETF, it meant that a lot of investors were simply stuck in this asset that they didn't want to be in anymore without a lot of recourse. Now, even back in June, it was clear that Grayscale was anticipating that their proposal to convert the trust into a Bitcoin ETF was going to be denied. Blockchain Association Chief Policy Officer Jake Trevinsky said as much, quote -tweeting that Grayscale tweet I just read and saying, Strong move. Grayscale means business. The SEC's deadline to approve or deny the application to convert GBTC to an ETF is July 6th. No doubt it should be approved. I don't see how the SEC survives a legal challenge if not, especially one led by Don Verrilli. Mark your calendar. Well, of course, July 6th came and went and the application was indeed denied. There were some at the time, even all the way back then, who were saying that the crypto industry needed to avail themselves of the legal system more. On March 9th, 2022, Johnny Deaton, the founder of Crypto Law US said, I've questioned why no one has sued over the denial of a Bitcoin spot ETF. Former SEC Commissioner Grunfest is dumbfounded by this as well. He said the denial is arbitrary and capricious, indefensible and the SEC would lose. Well, in October last year, Grayscale finally did exactly that and filed a lawsuit against the SEC. The lawsuit called the spot ETF rejection arbitrary, capricious and discriminatory. Now, at core to Grayscale's argument was the inconsistency of approving a Bitcoin futures ETF, or at this point, numerous Bitcoin futures ETFs, but not approving a Bitcoin spot ETF. The SEC had said its concerns were around market manipulation. But as Grayscale pointed out, the spot ETFs that had been approved and denied were using the same price feeds that fed the Bitcoin futures ETF. Presumably, if it comes to market manipulation, the issue is, of course, the price feeds themselves. And more specifically, the exchanges where the data of those prices comes from. How then could you approve a Bitcoin futures ETF that references the same price feed as a spot ETF and say that somehow there was more of a risk of market manipulation with the spot ETF, even though it was the same underlying price feed? Now, in March of this year, it seemed like Grayscale was getting some traction with those arguments. On March 7th, Coindesk published a piece, Judges expressed skepticism of SEC arguments in Grayscale Bitcoin ETF hearing. In what will be a relevant question as we see in a minute, Judge Naomi Rao asked, Now, at the time the market started to get the sense that given the judges questioning that day, the case might be moving towards a positive resolution for Grayscale and the crypto industry at large. Of course, the next thing that happened a few months later was the absolute flurry of Bitcoin ETFs. This was kicked off, most notably by BlackRock, who have been successful in 572 out of 573 ETF proposals that they've had or something like that, but included a huge number of other players who updated and refiled their applications, seeming to think that BlackRock knew something that everyone else didn't. One of the updates was that Coinbase would be specifically tasked with providing market surveillance for the proposed funds, and it appeared that those ETF issuers hoped that that surveillance sharing agreement would be sufficient for the SEC to finally reverse their decision and move on. Of course, a lot of discussion subsequent to these filings has been around the relationship between an anticipated win for Grayscale on the courts and the success of a future Bitcoin ETF filing. Well, this morning, as we said, Grayscale won. As Michael Schonenstein, the CEO of Grayscale, said, The D .C. Circuit ruled in favor of Grayscale in our lawsuit challenging the SEC's decision to deny GBTC's conversion to an ETF. The response from the industry was immediate. Rodrigo, who does legal and policy at Paradigm, writes, The great thing about the American political system is that it's designed to curtail administrative overreach. In the face of an intransigent SEC, the courts will ensure crypto has a future in the U .S. Brown -Rudnick partner Stephen Paley writes, The D .C. Circuit Court of Appeals holds that the SEC acted in an arbitrary and capricious way in denying Grayscale's proposed Bitcoin fund. This is a hard standard to meet. It's the court telling the SEC that it had no basis for the decision and just made it up. Now, looking at the decision specifically, Judge Rao wrote, It is a fundamental principle of administrative law that agencies must treat like cases alike. The Securities and Exchange Commission recently approved the trading of two Bitcoin futures funds on national exchanges, but denied approval of Grayscale's Bitcoin fund. Petitioning for review of the Commission's denial order, Grayscale maintains its proposed Bitcoin exchange -traded product, is materially similar to Bitcoin futures exchange -traded products, and should have been approved to trade on NYSE ARCA. We agree. The denial of Grayscale's proposal was arbitrary and capricious, because the Commission failed to explain its different treatment of similar products. We therefore grant Grayscale's petition and vacate the order. Now, one of the things that people noted is that the court kind of didn't pull any punches when it came to telling the SEC why they were wrong. As Nick Carter summed up, The D .C. Circuit Court just called the SEC utter casuals and told them to get good, adding skill -issued TBH. The relevant section of the decision, The Commission neither disputed Grayscale's evidence that the spot in futures markets for Bitcoin are 99 .9 % correlated, nor suggested that market inefficiencies or other factors would undermine the correlation. The Commission faults Grayscale for failing to provide other types of evidence. Without further explanation, however, the Commission's assertion that Information in the record for this filing does not support the claim that any fraud or manipulation in the underlying spot market will affect both products in the same way is unreasonable. And here's the real money shot. The Commission's unexplained discounting of the obvious financial and mathematical relationship between the spot and futures markets falls short of the standard for reasoned decision -making. From a previous court decision, it would be presumably arbitrary and capricious to ignore an obvious fact. So what does this not mean? And this is really important. This does not mean that Grayscale Bitcoin Trust will be automatically converting into an ETF. Now, I think most people in the crypto industry aren't getting this wrong, but a lot of people who are passively observing and a lot of people who are perhaps on the fringes in this industry and not paying tons of attention to it might be getting that information from headlines that are if not outright wrong at least a little bit vague. What this means is that Grayscale's petition needs to be reconsidered alongside the other ETFs once again and that the SEC's reasoning that they provided at least in this case would not stand. Now, what this also doesn't mean is that a Bitcoin ETF is guaranteed. The court ruled that in this particular case, the SEC's reasoning was arbitrary and capricious. Not that there is no way for an ETF to be sensibly denied by the SEC, just that the way they denied this one wasn't it. Jay Chervinsky once again did a good sum -up thread of this. He writes, Grayscale's victory over the SEC is massive. It's very rare for a federal circuit court to find that an agency has violated the APA by acting arbitrarily and capriciously. The DC Circuit just delivered a huge embarrassment for the SEC, but the ETF isn't approved yet. The DC Circuit Court soundly rejected the SEC's view that Grayscale's ETF proposal was not, designed to prevent fraudulent and manipulative acts and practices. The SEC has spent a full decade denying spot Bitcoin ETF proposals under this reasoning. That era has now come to an end. But the court didn't order the SEC to approve Grayscale's ETF proposal. It just said that the SEC's analysis on the fraud and manipulation issue was wrong. Now the SEC has to go back and review Grayscale's proposal again, with the court's ruling in mind. What will the SEC do? One theory is that the SEC will just pick a different reason to deny Grayscale's proposal and force more long and costly litigation. That's possible. It's hard to understate the extreme hostility of SEC leadership towards crypto. Will Sher Gensler really accept this loss? But another theory is that the SEC will take the DC Circuit's decision as a semi -graceful exit from their anti -ETF position. I'm in this camp. It's the right move. We disagree, but we're following the rule of law is a convenient excuse to back out of a losing battle. There will be political pressure on the SEC to approve spot Bitcoin ETFs. This isn't just about Grayscale. All of TradFi is ready for a Bitcoin ETF. Many other issuers have proposed ETFs this year, including BlackRock, and Larry Fink throws heavy punches in DC. Sher Gensler can also spin up a face -saving narrative out of a spot Bitcoin ETF approval. The SEC has been getting blasted for its regulation by enforcement approach to crypto. Here's a chance to say, look, we aren't anti -crypto. We're willing to approve the right products. I have no doubt that we'll get a spot Bitcoin ETF sooner or later. The only question is if the SEC wants to make it more painful for itself. Trust me, if there's another denial, there will be another lawsuit. I strongly recommend the SEC picks sooner. So that we will call the Sophisticated Nuance Complex Correct Analysis. But for the sake of completeness, we also have to look over at Scoopy, who tweets the mid -twit meme with the agonized crying guy in the middle of the bell curve saying, it's not a victory. It's only a middle step in getting the SEC to review their ETF application. And the genius on the moron on either side of the bell curve saying, Grayscale won, send it. And send it the markets did. Bitcoin jumped about $1 ,000 or 3 .8 % in the moments after the announcement. At the time of recording, Bitcoin was actually up about 5 % and GBTC was up even more, up about 17%. What's more, as Rich Rosenblum from GSR points out, while this Grayscale news may have been the catalyst, Chartists would argue the Bitcoin pop was overdue as fresh shorts got exhausted at the bottom of the recent range and capitulated. Now, when it comes to what's next, there are still a lot of people who are GBTC holders, who are in a semi -battle with Grayscale, trying to force them to redeem. David Bailey, the CEO of Bitcoin Magazine writes, Our number one goal with Redeemed GBTC is to reduce the discount to NAV and bring relief for investors. Today's decision is an initial victory for shareholders, but we will not stop our efforts until the discount is eliminated. We now need next steps and a firm timeline from Grayscale. Ryan Selkis from Masari echoes this but puts it in more political terms. He writes, Never forget, the U .S. courts protected retail investors while the SEC held them hostage and hurt them to the tune of billions of dollars. The SEC is an illegitimate institution with a corrupt leader. It took the courts to rule that the SEC stick to its mission and rules. Selkis also tweeted, Now is a perfect time to remind the president that his absolute chump of an SEC chair, Gary Gensler, is losing him votes and embarrassing him in court. Corrupt, inept and embarrassing is no way to run a financial regulator. Now, lest you think this is just tough talk from someone on Twitter, Selkis and many others in the crypto industry are determined to make crypto a losing political issue for people on the other side in this coming election cycle. And while the industry may be down right now, there is still a lot of capital and appetite to bring that fight to the elected politicians. Caitlin Long writes, Still shocked at how Biden administration's hatred of anything crypto drove it to poor judgment, now boomeranging back on it in courts. Better to have worked with law -abiding players. This was their choice. Courts curbing federal agencies' power impacts far more than crypto. I think what's clear is that opposing the Bitcoin spot ETF at this point is just a losing issue. Even Cass Piazzi, who is a co -host of the Crypto Critics Pod, which admittedly I think is one of the more good faith and thoughtful critiques of the industry, tweets, Skeptics and critics are not going to like me saying this, but I believe the Grayscale ETF will be approved. I also see no real issue with the spot Bitcoin ETF. But at the end of the day, when it comes to what to feel right now and what the industry is feeling, Anthony Zassano nails it when he writes the ETF promised land awaits us friends. Just try not to blow yourselves up doing something stupid before the party really gets going next year. And maybe the best summary comes from Will Clemente, who writes, This is one of the biggest days for Bitcoin in its history. We are so effing back. That is going to do it for today's breakdown. Until tomorrow, be safe and save some change for the Bitcoin ETF. Peace.
A highlight from The Treasury's Broker Definition Could Crush US Crypto
"Welcome back to The Breakdown with me and LW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Monday, August 28th, and today we are talking about the new broker definitions from the US Treasury and all of the scuttlebutt around them. Before we get into that, however, if you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit .ly slash breakdown pod. Hello friends, hope you had a great late summer weekend. Today we are getting into news that broke just before the beginning of the weekend but has continued to reverberate throughout. The US Treasury has finally released their definition of a broker as part of broader crypto tax reporting rules. The nearly 300 -page rule proposal was published on Friday to codify language in the 2021 Infrastructure Investment and Jobs Act. The rule would require centralized crypto exchanges, payment processors, and other entities that regularly redeem crypto issued by them to report customer transactions to the IRS in a similar way to stockbrokers. Now the issue is that the definition of broker is so broad that it captures some hosted wallet services, some DeFi applications, and potentially much more. In addition to the reporting requirements, the rulemaking introduces a new dedicated tax form, the 1099 -DA, which settles confusion around which form crypto brokers should file. Miners and validators are expressly excluded from the reporting requirements, but the rules seek to capture essentially all other web -based services that provide access to trading platforms within their own user interface. Now of course, this set of rules was controversial from the start. In late 2021, as the infrastructure bill was being negotiated, there was an industry outcry that the rulemaking instructions as drafted would be unworkable. These concerns were shared by many lawmakers, including a small group of pro -crypto -democrats. Still the loudest complaint came from Republican Patrick McHenry, who said the current language is completely unacceptable, it needs to be fixed. The major concern in 2021 was that the loose language would be used to put reporting requirements on miners, validators, and self -hosted wallet providers, who plainly did not have the personal information and transaction data required to comply. As the bill moved towards a vote, the Treasury attempted to ease nerves. One source told Bloomberg that the Treasury Department wasn't looking to go after businesses that don't have transaction data, however they noted that much of the lobbying was aimed at limiting the Treasury Department's authority to collect legitimate tax information. This was viewed as an indication that the rules were not intended to place an unworkable reporting burden on miners and validators. The Treasury has stuck to their word on this end and ensured that the rules do not apply to those groups within the crypto ecosystem. Alexis Goldstein, Financial Policy Director at the Open Markets Institute, and frequent anti -crypto witness at Congressional Testimonies, argued that DeFi protocols should not be given a carve -out from the new rules. She said at the time, Ultimately, an eleventh -hour effort to amend the language in the bill was snuffed out by an unrelated procedural quirk which forced an unamended vote. Crypto lobbyists recognized that the rules would need to be objected to once published. Since then, there have been multiple legislative efforts to repeal the rules before they were issued but none have progressed. The rulemaking is being justified as a measure to close the tax gap. The Joint Committee on Taxation estimated that these provisions would raise up to $28 billion in additional tax payments over the next decade. The Biden Administration and the IRS under them view unpaid taxes on digital asset trading as a major contributor to the tax gap which is the difference between taxes owed and taxes collected. Some estimates put this overall tax gap issue in the ballpark of $500 billion per year. The Treasury directly addressed this issue as the reasoning behind the rulemaking and stated that it was an effort to crack down on tax cheats while helping law -abiding taxpayers know how much they owe on the sale or exchange of digital assets. This isn't really the main point but obviously the crypto industry as a source of tax revenue looks very different to the way it looked in mid -2021 when the infrastructure bill was passed. And what's more, even if somehow this rulemaking brought in the entire $28 billion in additional revenue over the next 10 years, which most think is extremely overzealous, it would still barely make a dent in the $1 trillion price tag for the Infrastructure Act. Maybe because of that, the Treasury gave the impression that funding the Infrastructure Act was a secondary consideration. Now, speaking of Patrick McHenry, he said that he was Other than that, however, he was disappointed in how broad the rulemaking was. He stated that However, it fails on numerous other counts. Any additional rulemaking related to the other sections from the law must adhere to congressional intent. McHenry also directly called out the White House for yet another piece of bad faith policy, adding that Now on the flip side, Elizabeth Warren, leader of course of the anti -crypto army, didn't think the Treasury went far enough. She said in a statement Kristin Smith, the CEO of the Blockchain Association, noted that by overreaching, the Treasury has presented both an unworkable set of rules and failed to execute on policy which could lower the burden of calculating taxes for everyday crypto users. If done correctly, she said, these rules could help provide everyday crypto users with the necessary information to accurately comply with tax laws. However, it's important to remember that the crypto ecosystem is very different from that of traditional assets, so the rules must be tailored accordingly and not capture ecosystem participants that don't have a pathway to compliance. Another concern was the cost of implementation and the sheer difficulty of compliance, even for well -established centralized exchanges. Coinbase Vice President of Tax, Lawrence Latkin, said in a statement The practicality of the IRS's requirement to report, let alone enforce this incredible minutiae of taxpayer data, is questionable at best. Miles Fuller, head of government solutions at crypto tax software company Taxbit, was a little more credulous about the feasibility compliance for large firms, stating that Quote, There's obviously an immediate investment cost to brokers that will have to implement this and digest and figure out how to do it, but the longer -term outlook in my view is good for the industry because it'll help bring more mainstream adoption. Still, by far the most common discussion point on Twitter was that these rules were overly broad and capture far too much of DeFi infrastructure in their definition of a broker. Crypto commentator Spreak writes, So to recap the new proposed tax rules, Metamask is a broker and has to KYC and report all users unless it removes swaps. Uniswap is a broker and is required to update its UI to a new KYC version. Anything with a multisig is a broker and required to add KYC. For completeness, the proposed definition of a broker includes A person who, in the ordinary course of a trade or business, operate a non -custodial trading platform or website that stands ready to affect sales of digital assets for others by allowing persons to exchange digital assets directly with other persons for cash stored value cards or different digital assets, including by providing access to automatically executing contracts, protocols or other software that automatically affects such sales.
A highlight from 650:IRS Tax Overreach, BRICS Anti-Dollar Alliance, Powells BTC Fluctuation
"Good evening, and welcome to the Crypto Overnighter. I'm Nickademus, and I will be your host as we take a look at the latest cryptocurrency news and analysis. So sit back, relax, and let's get started. And remember, none of this is financial advice. And it's 10 p .m. Pacific on Saturday, August 26th, 2023. Welcome back to the Crypto Overnighter, where we have no sponsors, no hidden agendas, and no BS. But we do have the news, so let's talk about that. I do seem to be coming down with a bit of a cold or something, but I think we can keep it together enough to put out the show. And it's a good one, because tonight we dig into the IRS's sweeping new tax rules targeting DeFi and NFTs. We'll also explore the significant implications of BRICS ditching the US dollar and what it means for cryptocurrencies. Federal Reserve Chair Jerome Powell sends shockwaves through the Bitcoin market, and we'll tell you why. WorldCoin faces regulatory hurdles, and we examine why PayPal's stablecoin, PYUSD, is struggling. Finally, we discuss the recent moves by HashKey and the Hong Kong Monetary Authority to reshape the financial landscape. Strap in, it's going to be quite the ride. The IRS and the US Treasury have proposed new tax rules affecting the crypto industry. The proposal is part of the 2021 Infrastructure Investment and Jobs Act. It aims to define brokers in the crypto space, affecting centralized exchanges, payment processors, some hosted wallet providers, and some decentralized exchanges. A new tax form, 1099 -DA, has been introduced for these brokers. Miners are exempt from these rules. The proposal is open for public comments until October 30th, with public hearings scheduled for November 7th and 8th. The IRS's new draft rules are a double -edged sword. On the one hand, they bring clarity to an industry plagued by regulatory uncertainty. On the other, they're an overreach that could stifle innovation in the DeFi sector. The proposal's broad definition of broker could rope in entities that don't have the means to comply with such regulations. It's a clear sign of the government's lack of understanding of how decentralized systems work. Congressman Patrick McHenry criticized the proposal for not being narrow, tailored, and clear. The Blockchain Association and the DeFi Education Fund have also expressed concerns. The Blockchain Association warns that rules must be tailored to the unique nature of crypto assets, while the DeFi Education Fund called the proposal confusing, self -refuting, and misguided. The government's move to regulate crypto is not just about tax revenue, it's about control. The decentralized nature of crypto is a direct challenge to the centralized power structures that the government and traditional financial institutions represent. While the IRS assures that new rules could help everyday crypto users comply with tax laws, the broader implications are worth considering. The crypto community must actively engage in the public comment period to ensure that the final rules are fair and conducive to innovation. Alright, we've dissected the IRS's sweeping new tax rules. If you're enjoying this kind of deep dive, hit that follow button and turn on notifications so you don't miss a beat. Speaking of government oversight, let's pivot to international waters. BRICS nations are making some audacious moves that could redraw global financial maps. Buckle up, you don't want to miss this.
A highlight from Tornado Cash Arrests: Attack on Terrorism or Attack on Privacy?
"Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin and the big picture power shifts remaking our world. What's going on, guys? It is Thursday, August 24th, and today we are talking about tornado, cash and some big announcements of arrests yesterday. Before we get into that, however, if you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit .ly slash breakdown pod. Well, friends, a bit of a big announcement yesterday. On Wednesday, the Justice Department unsealed charges against two tornado cash co -founders. Roman Storm, who lives in Washington state, has been arrested and Roman Semenov, a Russian citizen, remains at large and is believed to be currently residing in Dubai. In addition to the charges, Semenov has been added to the Office of Foreign Asset Control Specially Designated Nationals list, which is the list of sanctioned companies and individuals. The pair are charged with conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money -transmitting business. A third co -founder, Alexey Pertsev, you will remember, was arrested in the Netherlands in August of last year, and Pertsev is currently awaiting trial on money laundering charges from home detention after spending over six months in jail. Ofack said in a statement that, quote, tornado cash has been used to launder funds for criminal actors since its creation in 2019, including to obfuscate hundreds of millions of dollars in virtual currency stolen by Lazarus Group hackers. Alongside Semenov being personally added to the sanctions list, eight Ethereum wallet addresses were identified as belonging to him. According to Elliptic, these addresses have processed more than $11 .5 million in crypto transactions. Now, the DOJ claims that tornado cash has, quote, facilitated more than $1 billion in money laundering, including, quote, hundreds of millions for North Korea's Lazarus Group. The key to the case, according to U .S. Attorney Damian Williams, is that the pair here charged, quote, knowingly facilitated money laundering. He said in a statement, while publicly claiming to offer a technically sophisticated privacy service, Storm and Semenov in fact knew they were helping hackers and fraudsters conceal the fruits of their crimes. Today's indictment is a reminder that money laundering through cryptocurrency transactions violates the law and those who engage in such laundering will face prosecution. Now, Storm's lawyer claimed that the case hinged on a novel legal theory. He said in a statement, Now, let's take a step back and put this in the context of what happened last year. In August of last year, tornado cash was placed on the sanctions list. The use of sanctions to prohibit the use of anonymizing services was controversial within the crypto industry. Both Coin Center and a group of individuals backed by Coinbase have sued the Treasury Department over the sanctions, with each lawsuit claiming that the sanctions impinge on U .S. protections around the execution of computer code. In addition, they claim that autonomous smart contracts cannot be the subject of sanctions law as they are not the property of a sanctioned individual or group. Last week, however, the Coinbase lawsuit was dismissed, with the judge writing in their decision that smart contracts are analogous to vending machines in the way they carry out their predetermined task. The judge wrote that, Now, let's dig into the charges a little bit. The newly unsealed charges explain the functionality of tornado cash and how Storm and Semenov established a token system around the protocol in order to profit from its operation. Tornado cash allows users to deposit ETH to be mixed with other depositors. Users receive a secret note, which can be redeemed for the deposited ETH at a new, unrelated address. In order to facilitate the withdrawal of ETH to fresh wallets that could not pay gas fees, tornado cash established a system where users could use relays to process withdrawal requests using the smart contract. Relays would take a fee for providing this service. This process makes private transactions possible on the Ethereum network, breaking the ability to trace funds through blockchain analytics. Storm and Semenov, the government accused, would frequently give instructions on how to maximize the anonymity provided by the service, including waiting several days before withdrawing to ensure that transactions couldn't be linked. Nine months after the launch of tornado cash in August of 2019, the developers updated the smart contract to remove their private keys. This made it impossible for the code to be further modified and relinquished any ability to control its operation. In December 2020, the founders created the tornado cash DAO to make governance decisions around the protocol. The DAO issued torn tokens and distributed them with 8 % of the supply going to each founder and 6 % going to venture capital backers. The DAO then used these tokens to create an incentive scheme to encourage relay to compete to process transactions and to incentivize users to deposit funds to increase the anonymity set for the protocol. The indictment alleges that the founders profited from the price appreciation of the torn token, ultimately cashing out for $2 .6 million each in August of 2022. Now where the nuance in this case comes in is the question around were these charges for writing code or were they charges for some other type of activity that the government sees as beyond the pale. Obviously, when we're talking about something where the implications are the big thing that matters, these sort of details are essential to really understand. And indeed, in this case, the charges against Storm and Semenov go deeper than just writing and publishing the code underlying tornado cash. In fact, the DOJ appears to be much more focused on the actions taken by them to support, promote and profit from the protocol after its initial deployment. The indictment claims that the developers were aware and indifferent to the use of tornado cash to launder the proceeds of crime from the beginning. As far back as November 2021, the government says the developers considered whether they should implement KYC and anti -money laundering features into tornado cash and chose not to. This consideration became more serious after the $552 million Ronan Bridge hack in March of 2022, given that the following month the attack was attributed to the Lazarus Group, which had been on the sanctions list since September 2019. The stolen funds were very publicly identified as being laundered using tornado cash. According to encrypted chats disclosed in the indictment, Storm sent a message to his fellow developers as the news broke in April stating, Guys, we are effed. The tornado cash team then implemented some perfunctory controls on the protocol's front end, such as the website used to access tornado cash would now block deposits from wallet addresses on the sanctions list. However, in encrypted chats, the developers acknowledged that these controls would be quote easy to evade by interacting with the smart contract directly. The indictment also introduces evidence that the developers were aware of just how rampant money laundering was on tornado cash. In encrypted chats, they shared an article which claimed that more than 90 % of transactions through the service were related to criminal acts. In the three months that followed the Ronan attack, as much as 15 % of volume was attributed to the laundering of those funds. The key allegation in the indictment is that, quote, Throughout this time period, the Tornado Cash founders continued to operate the Tornado Cash service and facilitate the Lazarus Group's money laundering and sanctions evasion, including by paying the U .S.-based web hosting service to continue to host the Tornado Cash website, continuing to maintain and keep the UI accessible to customers, and promoting the Tornado Cash service in public statements. Moreover, they maintained the Relayer algorithm and the Relayer registry, which allowed them to profit financially from the continued use of the Tornado Cash service by the Lazarus Group. As to the charges, the developers have been charged with three counts each. Conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business. As you might imagine, the crypto legal community has a lot to say about whether the facts alleged in the case established that Tornado Cash or the system of relays around it legally qualify as a money transmitting business. Peter van Valkenburg, the director of research at CoinCenter, said, The factual allegations of unlicensed money transmission are in conflict with FinCEN's longstanding guidance that a, quote, anonymizing software provider is not a money transmitter. In an accompanying article, Valkenburg says that the only part of the indictment that indicates the developers were operating an unlicensed money transmission business is that they, quote, engaged in the business of transferring funds on behalf of the public. According to Valkenburg's analysis of the law, this falls short of the legal definition which requires acceptance of funds from a customer for the purposes of transmission. The implication is the same one that Tom Emmer has been putting forward in his blockchain regulatory certainty bill that, quote, if you don't custody consumer funds, you are not a money transmitter. However, Preston Byrne, a lawyer at Brown and Rudnick, noted that there is some legal nuance in the way the DOJ went about charging the developers. He said, The feds don't need to show that they accepted or received funds because defendants aren't charged with the underlying offense, they're charged with conspiracy. Preston expanded that thought, There is a huge difference, he wrote, between a, merely publishing code for discussion purposes which could be used unlawfully, and b, running an unlawful business which monetizes that code. After reading the tornado cache indictment, if things are as alleged, it was the latter. For the purposes of 18 USC 1960, the publication of protocols on GitHub isn't the same thing as operating a whole damn system, including hosting a UI and bolting on a shitcoin to it, where the returns from the coin are linked to the provision of liquidity for the system. I think it is that involvement with the essential functionality of the system which makes it not subject to the network access carve -out from the definition of money transmitter. Do we need privacy in crypto? Absolutely. Are there ways for people to run code that does this lawfully? Yes. Was tornado cache the way? No. Now of course, as much nuance as there might be in the specifics of how the defendants were charged, one of the big concerns is the chilling effect on privacy norms in open source development that it might have no matter what the charges actually are. In a rare moment of speechlessness, Jake Travinsky, the chief policy officer of the Blockchain Association said, I'm struggling to think of something, anything, useful to say about the tragic mistake that is the DOJ's decision to treat privacy in speech as crimes. I'm blank. Later, he followed up, Privacy is normal. Code is speech. The right to anonymity is essential to a free society. These are fundamental principles embodied in the U .S. Constitution. In time, I'm confident they will be confirmed by the judiciary, even if today they were ignored by the executive. Chris Bleck wrote, The arrest of Roman Storm and Roman Semenov of Tornado Cache isn't about money laundering. This is an attack on privacy. It's an attempt to chill the open source community into compliance. The government does not want you to do anything that it's unable to observe and judge. Dystopia Breaker writes, Take a moment to consider the broad and absurd implications of writing software that is used in a bad way makes the author legally responsible for every bad use would mean. No signal. No privacy tools. Total handover of power to centralized orgs and illegalization of privacy. Ultimately, this position is so absurd that it seems unlikely to be accepted. It's remarkable that they went with it. Masari's Ryan Selkis said, We are so far from our founding principles, we just jailed a software developer for building encryption tech and daring to empower citizens to transact freely. Utterly disgusting. We need a total evisceration of our political police state and D .C. No reform. Mass layoffs. And Udi Wertheimer really summed up many people's feelings when he said, Today is a sad day for America and for freedom. Privacy is for everyone, and it is crucial that as an industry we keep fighting for it, no matter the setbacks. No one else is going to. At this point, I think in crypto, we're almost anesthetized to more government actions against the industry. But I think this one is worth holding aside and putting in a slightly different category. The conversation here isn't really about cryptocurrency, except in so far as it was used as a reward mechanism for people who are promoting this protocol. Obviously, the much bigger questions are about the nature of privacy, about the rights of software developers, about the responsibilities of software developers, about the tools that the government uses to fight money laundering and terrorism. They are, in other words, emblematic of bigger concerns and bigger questions. It's reasonable to have contradictory feelings about this, but that's exactly why we need regulatory clarity, not just for crypto, but for software development. And guess what? In a world of AI, these questions are coming up all over again. The question in particular of whether the developers of software can be held accountable for how it's used is becoming an even bigger question than it ever has been in the past. In other words, this one is worth considering for far more than the implications for just this industry, but for the very basis of the technology -driven society that we live in. Anyways, guys, that is going to do it for today's breakdown. I will, of course, keep you updated as the situation evolves. Until next time, be safe and take care of each other. Peace.
A highlight from BIG CRYPTO NEWS! COINBASE CIRCLE USDC, SEC GARY GENSLER GEMINI RIPPLE XRP & CRYPTO REGULATIONS
"Welcome back to the thinking crypto podcast, your home for cryptocurrency news and interviews. If you are new here, please hit that subscribe button as well as the thumbs up button and leave a comment below. If you're listening on a podcast platform such as Spotify, Apple or Google, please leave a five star rating and review. It supports the podcast and it doesn't cost you anything. Well, folks, we got some very big news today between Coinbase and Circle. So Coinbase acquires a stake in stable coin operator Circle and USDC adds six new blockchains. The center consortium jointly managed by Circle and Coinbase is being shut down and Circle is bringing issuance and governance of the USD stable coin in -house. So this is a big move, but it actually doesn't surprise me because we've seen Coinbase embrace USDC. They offer some APY, staking, yield, or whatever you want to call it, interest on USDC. I personally do that through Coinbase, so I'm earning some really great returns there. So big partnership, and I think this is a move to combat Tether. I think Circle being the largest stable coin in the United States, it's regulated. They use US treasuries as part of their reserves and Coinbase being the largest crypto exchange in the US that's regulated in public. It makes sense for them to come together and really make a push here for a global dominance, so to speak. And we got a lot of competition playing out in market. That's great, right? And it's also a move, I think, to combat PayPal's new stable coin, because as you can imagine, PayPal has huge branding, huge reach outside of crypto, and they have millions of customers. So Circle, I think, needed to make this move to go up against Tether and PayPal. And here's what the folks at Coinbase tweeted out. Today, Coinbase and Circle announced a few updates to USDC. Stable coins will be a key component of a new financial or a new updated financial system, and we look forward to helping unlock additional utilities and growing the USDC ecosystem. Expanding networks, USDC will be launching on six new blockchains for native support. Coinbase has taken an equity stake in Circle to continue our alignment and investment in long -term success of stable coins and specifically USDC. We have streamlined operations in governance with Circle having full responsibility and accountability for USDC as an issuer. For Coinbase customers, there will be no changes to the USDC on Coinbase, and Coinbase will continue to support USDC across all platforms with all the same benefits you enjoyed today, including gas -free transfers and rewards. So big update, my friends, and once again, this is a strategic move by Circle to combat Tether, which is the largest stable coin in the world, and PayPal's new stable coin. And as you can imagine, there's other players that are going to be entering the stable coin wars, and we're going to see possibly Amazon, possibly Google, we'll see. It would really make sense for Amazon to have a stable coin given the amount of customers they have. They have an e -commerce platforms where people transact. They have a prime membership subscription, and they could easily create something called a prime coin that's a stable coin base, and boy, would that go a far way. That will give a lot of these stable coins a run for their money, but I love it. This is what we want to see, competition in the market, and that's usually really good for users and customers, so great big strategic move here by the folks at Circle and Coinbase. Now quick word from our sponsor, and that is Uphold. Uphold is a great crypto exchange that I've used since 2018. They have 10 plus million users, 250 plus cryptocurrencies, and they're available in 150 countries. You can also trade precious metals and equities on Uphold. If you'd like to learn more about this platform, please visit the link in the description. Well, folks, Gemini is looking to dismiss the SEC lawsuit claims accusations are flawed. The exchanges lawyers argued that the SEC hasn't provided key details about alleged securities such as sale date or parties involved making its case a week against Gemini. Of course, what can we expect from scumbag regulator Gary Gensler? They continue their same old nonsense. They're not giving any specifics. They're not giving any clarity. It's just a bunch of ambiguity. It's a bunch of gotcha type of moves, right? They'll ask you to come in. Oh, come on in. Don't worry about anything. They'll grab a bunch of information about you, and they don't meet with you in good faith, and then they'll stab you in the back, right? Even Coinbase CEO Brian Armstrong mentioned about this. He tweeted out the SEC has been acting shady about a year and a half ago, and I think it's going to kill these crypto startups so that his Wall Street banking buddies can come in and take over the market. We see many of them are filing for Bitcoin spot ETFs. They're launching their own crypto exchange, right? Fidelity, Charles Schwab, Citadel launched their own crypto exchange called EDX Markets. So it's pretty clear what's happening. Attorney John Deaton weighed in on this, and it's pretty long his thoughts, but it's really good. He said SEC lawyers like Jorge Tenreiro and SEC enforcement director have learned nothing from the Ripple case. Their arrogance is mind blowing. In the Gemini reply, Cameron and Tyler state the fact that the SEC cannot decide what is the security at issue only underscores the weakness of its position. It also violates fundamental fairness and the requirement of fair notice. In other words, the SEC makes up new arguments disregarding any previous argument in made early in the case that my friends sums up the SEC and its approach to litigating crypto assets. As we learned in the Ripple case, the SEC is 100 % transactional in its arguments, always shifting its theory or position. And he goes on to highlight how, you know, they are hypocrites on regarding the bill him in speech. Remember, they tried to have it both ways. And Judge Sarah Nemper and a judge said this about them, that they lack faithful allegiance to the law. It's pathetic what the SEC has become. They're rotten at their core, and it needs to be revamped, disbanded, whatever it is. Congressman Warren Davidson had a good idea by getting rid of the chairman's seat, having a board and have an executive director instead. And, you know, the it will be much better that way because you have these corrupt bureaucrats like Gary Gensler coming in and you have political agendas when they're not supposed to. It's pretty insane what's happening. So here's the thing, though, my friends, the courts are the balance of power here. What we're seeing, as you know, as we saw in the RIPPLE lawsuit, the judges are not putting up with the bullshit from the SEC because they don't have time for that. They follow the law. And, you know, they are, for the most part, siding with the crypto companies. We saw even in the Coinbase lawsuit, the judge was also throwing out comments like, what is a security and what is not? You haven't provided any guidance. You're just saying, hey, they sell unregistered securities, give an example. But of course, they won't do that. And of course, with the Ethereum situation, they can't even mention Ethereum because Bill Hinman, we know he was bribed essentially to give Ethereum a free pass. And I hope he sees the hands of justice coming after him. But, you know, we'll see what happens. And Jay Clayton as well. Now, Ron Hemmen of the Blockchain Association, who's a frequent guest on the podcast, he gave an update here regarding crypto regulation and what we can expect. So he said this week in Congress and crypto, two weeks until Congress is back in D .C. And they have a large number of issues to tackle when they return, including crypto. Earlier this month, Representative Mike Flood hosted his fintech flyover with experts and policymakers. Here's what we learned. The first ever fintech flyover was in Lincoln, Nebraska, and was a very substantive crypto policy summit. A full day of panels from experts such as Tiong Wei, if I'm saying that right. She's partner and head of regulatory policy at Bain Capital Crypto. Dan Nunez of Crypto .com. Jared Favel of Circle.
A highlight from 1214. EU Beats U.S. To Bitcoin ETF SEC Delays Again
"All right so more action on ETFs and the only difference is is now that ETFs are being approved but they're being approved across the pond in the EU we'll break down all that for you guys today what this might mean to the US in terms of an ETF approval and hopefully going forward with Bitcoin and the modern era of finance we'll break all that down for you my name is Paul Baron welcome back and the Tech Path. All right so a couple of things I want to hit on today of course is the news Europe launches its first spot Bitcoin ETF I know that that's a little bit let me kind of zoom in on that from watchaguru I know that's a little bit misleading because there has been ETFs in the EU before this one is a little different I'll explain why there is so it's technically there is a new ETF out there so Jacobi Asset Management lists Europe's first Bitcoin ETF euro on next this of course is the difference let me kind of zoom in on a few things here they implemented a verifiable built -in renewable energy so it's a rec solution which allows institutional investors to access the benefits of Bitcoin also meeting the ESG goals which is a big deal in in the EU trades under the ticker Bitcoin custodial services are provided none other than by Fidelity and all of this is created in collaboration with digital asset platform called Zumo and the Zumo is gonna be interesting because we'll play into that they're a kind of a everything as a service type platform further into the release it's exciting see you're moving ahead of the u .s. opening up Bitcoin unlike other products in the European market which are debt instruments our funds own the underlying asset directly so that's kind of the biggest deal this is the first true ETF that is owning the the asset itself the underlying asset one -to -one so that's the the big point that they're trying to make the Kobe solution differs from carbon offsetting products by quantifying the electricity consumption attributable to Bitcoin in the ETF by purchasing equivalent wrecks and the standardized instrument for procuring clean power so again going back into those ESG requirements that are a big deal in the in the EU so as you look at this and you just wonder you know when will the United States start to actually get into the game EU obviously now scoring what is feels like a two to zero match if you're into soccer and that is with Mika's advancement and now here with a true spot it Bitcoin ETF so along with that and then you've got technology that's starting to play into this Zumo which is the company behind this latest update of Zumo's app is now available on the App Store and the Google Play Store you can trade doing fast transactions you can also do a full what they call infinite control your funds on the blockchain and then you can do some buying and selling over there in etherium and Bitcoin so this gets into how and what will be the next step here in the United States because obviously we already know that we are at the cusp of we hope at the cusp of the SEC actually approving one there's a lot of other things that are playing into this that I think are the political aspect and this is what I talk about a lot is that this has become so much more political than anything what I mean by that is by the SEC actually doing the approval of a Bitcoin spot ETF one thing that is happening is you've got things like this and that is Senator Lummis now filing an amicus brief supporting coin bases dismissal motion against the SEC this would be a big deal because if the SEC or if we get a dismissal on the Coinbase case it would be a pretty big loss for the SEC and already we've started to see this issue facing the SEC as a whole just with what's happening in the ripple case so I think that in the support of what's happening from the lawmaker side of things you can kind of see that the statements here says the constitutional empowers Congress not the SEC to legislate in such an area of profound economical political significance this to me gets into the point that is often under looked and I think that is the political power that is happening globally much like what happened with the EU on filing an ETF for Spock Bitcoin and I think this is now in the case of a lot of lawmakers who have said all right we've had enough we've got to be able to get moves and move forward on this further in this article says also also although the SEC seeks broad authority over crypto assets most legislative proposals in Congress would instead grant much of the authority to other agencies I'm satisfied the SEC seeks to circumvent the political process to commandeer that authority itself this is a senator talking about a government agency in the SEC of course met a lawman who's been on our show many times kind of breaks it down I'll show you his tweet right here it kind of goes into the the brief and what she's arguing let me zoom in on that Congress has not granted the SEC authority so that's number one defined defining the contours of crypto regulation in this country is a job for Congress not the SEC back to the point of where a bipartisan effort of lawmakers is really the goal here because the SEC has kind of taken the reins of what crypto has been about in terms of legislation by enforcement which has been the the biggest knock on the SEC over the past few years SEC's claim that virtually all crypto assets are securities exceeds the securities authority encroaches on Congress's lawmaking and contravenes the separation of power so again very much said and I think this is one thing we've talked about so many times here on the show the key is when is that next step when do we see a potential for this going forward I think the key with this is how many people are starting to support what's happening in the not only the but lawmakers also in support of Coinbase also other organizations out here so you've got crypto lobbyists urged now a court to also dismiss the case and you'll look in total here let me kind of zoom in on that you've got the blockchain Association the crypto council for innovation Chamber of Digital Commerce defy education founder Chamber of Progress consumer tax association and even firms like Andreessen Horowitz which obviously is a huge VC come organization that supports what's happening in blockchain further into this one says this is a no run -of -the -mill run -of -the -mill enforcement case through this case the SEC seeks primary influence over economic political and legal questions under active consideration by Congress and multiple agencies that is the real rub that I think is occurring and it's as I've said many times that this is such a political ploy right now I don't of trying to dominate the conversation and also the actions from a control factor I think it's either it's a controllable grab or there is a political you know substance behind this that's really driving what Gensler's decisions are pushing so a couple other points in here Loomis brief did note each of these bills recognizes that the crypto industry's not fit entirely within the existing securities law and transcends the current statutory powers of the SEC simply stating we know that there's a lot of things here in modern finance and modern you know blockchain technology that is really kind of going outside the ecosystem what how it meaning the investment contract concept of how securities are ruled and governed has changed so Congress is attuned to these important considerations and obviously they're trying to do something about that right now so we do know that all of that is happening right now and it's moving pretty fast now here's John Reed Sartre another attorney out there on and SEC especially securities law he talks a little bit further about this about the the partisanship around this so crypto regs have unfortunately become increasingly partisan at the SEC remember that right now the SEC the governor's or the commissioners at the SEC split pretty much down the red the middle right now a Democratic Republican crypto crackdown began under Republican appointed the SEC chair Clayton fierce and relentless crypto critic if we do see a Republican elected president likelihood is that we'd probably see a potential Republican lead as the Commission now that could be Hester Pierce a Republican all this does play into so it has become very partisan I would agree was was stark on this so it is something to watch for question is whether or not there will be anything of major substance happening between now and when that occurs meaning when we see lawmakers actually shift in that if we do see lawmakers shift in the administration here's a clip right here by Raul Powell kind of breaking down why all of this is happening listen in to this one what he had to say the problem is is US regulation is run by a bunch of baby boomers who only referenced the past like we have to figure out how to deal with AI we have we got a lot of really existentially important things that can't be just shoehorned into something from the 1930s because that's how a boomer wants it to be and other governments are doing it and the US is not whether it's the power of the people or just the politicians are so old now that they'll be replaced by younger people I hope Raul is right you know working in Capitol Hill with lobbyists in the past I've seen the birth of you know kind of this political and governmental heft that just sits in DC and I think crypto and blockchain in general is just like any other great technology moving forward AI will face this as well in terms of regulatory environments and what that might mean because really at the end of the day what we are talking about here is corruption corruption at the highest level we're talking about whose pockets are lined that's why this is slowing down it really is more about who wins and until there is a framework for the right politicians winning it the right way we may not see action and that's the biggest concern and obviously Raul is talking about that is that there's so many other countries that have already stepped into this and moving forward you have John Deaton saying though that there could be a major move here and this could also sway into the fact that we might get more pressure this and this is coming from our court system not from our politicians so be on the lookout today Friday for potential decision this was earlier this should hopefully give crypto even more momentum even though arbitrary capricious is a high and difficult standard mean I've always maintained the SEC will lose if someone fought back regarding a spot Bitcoin ETF he's talking about grayscale so Eric Balcones kind of jumps in very good possible possibility that we learn grayscale SEC outcome tomorrow this was just here end of yesterday we haven't heard it yet as a filming right now so likelihood is we may get an actual case win here and that would really put the SEC in a bad position it would put them in a bad position from a legal standpoint and actually start to put a lot more pressure on them and that's when it gets a little bit unusual because now we're talking about a court that is ruling on this so meaning it's ruling from a court of law as opposed to regulators who are trying to essentially create a pathway for this technology and all these kind of companies to exist so that's the biggest thing I think that's playing out I want to play another clip right here this of course is of Jay Clayton talking about the current status of not only crypto but also Bitcoin listen to what now remember Clayton former SEC chair Gensler's boss used to be and now he's taking a little different listen well look the SEC postponed the decision but they are they are seeking public comment and the landscape for Bitcoin and retail access to Bitcoin has definitely changed and let's just let's just look at where we are today I when I was SEC chair was very skeptical of the Bitcoin trading markets and and whether you believe Bitcoin is going to go to whatever or dry up and go away I think that's no longer the question you know you had Russ Benjamin he was talking about it's clearly a commodity it should be regulated like a commodity we have large retail participation around the globe and people want access to it now what do we have we have very credible financial institutions who have fiduciary duties duties of best interest to their customers who are saying we want to deliver this product and we can do so consistent with those obligations last thing all right so right there you can kind of see he has pivoted his position this is a guy who was a staunch critic of crypto changed completely and he did hit on all the markers there major financial institutions the blockchain itself Bitcoin as a whole not going away likelihood whether you want to treat it as a commodity which I think obviously they will the key here is is that it doesn't it's not really on regulators like the SEC to decide who wins and who loses the markets do that and I think that's the most important thing that he does hit on here on this so for but again that coming from Jay Clayton pretty interesting stuff for sure all right so Bitcoin ETF is now pushing a slice of crypto ETF trading volume which would be around 99 % this of course means simply that though the EU has launched an ETF a true spot ETF the real volume is going to come from the United States this is the big behemoth if you look here there's actually a chart that shows that North America accounts for ninety seven point seven percent of all crypto ETF trading volume if and when a spot ETF comes out in the US it will likely go to ninety nine point five percent so as interesting as the EU is that's why we probably didn't see much of a move on Bitcoin in general it really is all about the United States and I think that's what Raul was getting at is that there is so much power coming out of the United States in terms of investment capacity and what that might mean that the opportunity here is pretty significant so I just think it's one of those things that you have to just be aware of especially as we see both what's happening on the EU and also what's happening obviously here in the United States when it comes to ETF so one thing to be aware of for sure all right so just kind of supporting a little bit of the activity that's occurring right here here's the news on this eagerly awaited Jacobi Bitcoin ETF lukewarm reception on the debut and they're kind of hitting on the whole issue only four transactions this of course happened after its first listing you can kind of see it right here in the listings themselves transactions for so again this just reinforces the whole point that it everything of round bitcoins ETF future is going to set here in the United States it just is going to be the case I want to just a further why this is so important I want to go to this tweet right here and there's a clip I want to play from this but I want to go to the statement here a lot of Bitcoin ETFs have been filed but just black rock is the 800 pound gorilla truly the one why is black rock different it comes down to lobbying power and the connections with the SEC listen in to what he had to say let me play this one for you one of the major narratives driving the last cycle was the institutions are coming those institutions came in small part you know but that promise of the institutions arriving and really diving headfirst in the crypto never quite materialized so that's what's so interesting about our current period which you know we may be in a crypto winter we might be coming out of it but if there are signs that we're coming out of it it's exactly this this institutional investment so black rock for example is the largest asset manager in the world and they just filed a Bitcoin ETF with SEC a lot of Bitcoin ETFs have been filed in the past years but none from an asset manager as high profile and well connected in Washington as black rock as you can see the key here is how much you know power does black rock have well they have an immense amount of power now one thing that our team kind of mentioned on what we were doing this video is what happens if black rock gets an ETF or art gets an ETF and we just don't see any transaction I'm kind of interested in your thoughts do you think we'll see a massive inroad of people going into Bitcoin I believe we will mainly because of the power of the marketing that will come behind this it'll come from arc it'll come from galaxy it'll come from black rock Vanek you name it they're all gonna be competing pretty much at the same time meaning they're gonna spend a lot of money to get out there and educate people and get things going that's why I do think it's gonna pop Bitcoin as a whole for sure all right further on into this just to show you a market Bitcoin ETF approval could help power up the new crypto cycle this is coming in from Bernsten I would talked about him before he hits on a couple of points here leading global asset manager you know is big in Bitcoin spot ETFs probability of this approval has risen we've already talked about that ETF will benefit a strong brand marketing push that's back to my point is that all these financial advisors and all these groups are going to push very hard which is going to elevate the awareness around blockchain of crypto and especially Bitcoin as a whole so new capital is gonna power up the new cycle this will come in from fresh stable coin supply tokenized traditional assets native crypto infrastructure tokenization of ETFs etc all of that plays out and back to the clip that was we just played here by Sam just a second ago with the Forbes writer is you know he is right the last cycle was kind of deemed as this is going to be when institutions come in this is but Black Rock wasn't in the game nor was you know these 15 others that have started to move in that we did not have an ETF being proposed and most likely going to get approved it right on the heels I believe of what happens with Bitcoin none of that was occurring we didn't have regulation in play we didn't have the clarity in the market where we had to go through basically the Wars of FTX is the voyagers the Celsius is seeing what was all done wrong now we have a much more you know aware market we have a much more savvy investor and we have these major organizations starting to step in so I think it is in the right place right now of course we're recording this there's constant news always hitting our research team one of the things that has happened is this tweet right here and that is about Kunis talking about it looks like no grayscale decisions so this has been delayed meaning grayscale trust this is now going to Friday 11 a .m.
A highlight from A Flurry of Amicus Briefs in Coinbase vs. SEC
"Welcome back to The Breakdown with me and LW. It's a daily podcast on macro, Bitcoin and the big picture power shifts remaking our world. What's going on, guys? It is Monday, August 14th, and today we are talking about a wild set of amicus briefs filed in the Coinbase against SEC case. Before we get into that, however, if you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review. Or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit .ly slash breakdown pod. All right, friends. Well, today, as I said, the main focus of the show is a slew of amicus briefs filed in the Coinbase case at the very end of last week. But first, a quick update in the SPF saga. Now, I'm sure all of you guys are at least a little bit familiar with what happened at this point, but let's present it for completeness. TLDR, after months of playing fast and loose with bail conditions, Sam has been sent to jail to await his trial. Now, the big catalyst for this was, of course, last month's leaking parts of former Alameda CEO Carolyn Ellison's journal to The New York Times. Carolyn was the CEO of Alameda during the final months of operations, was at times Sam's girlfriend, and will also be a key witness in Sam's trial. Now, SPF had said through lawyers that he was merely trying to, quote, give his side of the story. This is something that he has done a lot of, apparently. Indeed, he has notched up over 100 phone calls with one New York Times journalist in particular, and that's just one of the many reporters that he has been in touch with. The prosecutor argued effectively that this was indirect witness tampering. They said that even though there hadn't been an overt communication with Ellison, the intention was clear, stating, I think the fact the defendant was more subtle in his methods than a mobster doesn't mean it was benign. Now, the judge ultimately sided with the DOJ, finding that Sam's conduct was closer to witness intimidation than constitutionally protected public defense. During the hearing on Friday, the judge said Sam had been willing to, quote, risk crossing the line in an effort to get right up to the line wherever it is. Of Ellison's writings, which Sam shared, the judge said, The documents are in part personal and intimate. They are personally oriented, not business oriented. They are something that someone who had been in a relationship would be unlikely to share with anyone except to hurt and frighten the subject. Ultimately, the judge said, My conclusion is there is probable cause to believe the defendant has attempted to tamper with witnesses at least twice. There is a reputable presumption that there is no set of conditions that will ensure Bankman -Fried will not be a danger. So the other witness tampering attempt that the judge was referring to came shortly after Sam's arrest and release on bail when he had reached out to former FTX U .S. General Counsel Ryan Miller, suggesting that they stay in touch, coordinate communications, etc. Sam had also previously broken bail conditions when he had used the VPN to access the Internet, something that he claimed was just to watch the NFL playoffs, which very few people bought as totally true. Part of Sam's argument for remaining out of jail had been that incarceration would make it more difficult for him to prepare his defense. Prior to locking Sam up, the judge ensured that he would have access to a laptop to continue his trial preparation, which it seems like is just about the only good thing about the facility that he is on his way to. The judge said, I am focused on the possibility that he will be detained at the MDC, not on anyone's list of five -star facilities. That said, I understand he could have a dedicated laptop at the MDC 9, 10, 11 hours a day. Sam's trial is set to begin on October 2nd. His legal team has, of course, appealed the decision to revoke his bail and requested that he remain on house arrest pending appeal, but were denied on that motion. Former journalist Dan Nguyen really captured, I think, the sensibilities of the entire Twitter sphere when he wrote, SPF got one of the sweetest bail deals in history, and all he had to do was chill at his parents' Stanford home, play with the new dog his parents bought for him, and not use a VPN to secretly commit more crimes on the Internet, and yet, clown face emoji. Anyways, guys, just another gross chapter in a bad story. But with that, let's move on to something much more positive. On Friday, Blockchain Association Chief Policy Officer J. Chivinsky wrote, Today is a fun day. The deadline for amicus briefs on Coinbase's motion for judgment on the pleadings of the SEC's enforcement action. I expect to see many excellent briefs on many different issues. They should start hitting the docket soon. And indeed, hit they did. On Friday, a slew of briefs were filed in support of Coinbase's motion to dismiss the SEC's lawsuit. Now, most crypto lawsuits from the SEC have seen numerous amicus or friend -of -the -court briefs filed, but the Coinbase lawsuit attracted more attention from the legal community than usual. The Coinbase motion for judgment on the pleadings was supported by venture firms Paradigm and A16Z, who filed a joint brief, crypto lobbyists including the Blockchain Association, the Chamber for Digital Commerce and the DeFi Education Fund, and perhaps most notable were briefs from Senator Cynthia Lummis, as well as a group of six legal scholars. Coinbase is, of course, being sued for offering the sale of unregistered securities. The SEC's lawsuit hinges on the claim that 13 tokens offered on Coinbase's centralized exchange are securities. In addition to alleging that the main trading venue requires registration as a securities exchange, the SEC also alleges that Coinbase's self -hosted wallet is an unregistered securities brokerage and clearing agency. Finally, the lawsuit also alleged that Coinbase's staking product is a securities offering. As usual, all of these claims rely on the Howey Test, which is a Supreme Court test to determine when a transaction is deemed to be the sale of an investment contract. Coinbase's argument is that none of the tokens they offer fully satisfy the test, and as such, the lawsuit should be thrown out without the court hearing any further facts of the case. In addition, Coinbase is arguing that the SEC has attempted to expand its jurisdiction beyond the authority it was granted by Congress. This argument, as we have discussed, is brought under the Major Questions Doctrine, which is a relatively recent legal doctrine put forward by the Supreme Court. The Major Questions Doctrine holds that administrative agencies must have explicit authority from Congress to oversee an industry which forms a major part of the U .S. economy. So now let's go through the set of different briefs kind of organized in the context that they came in. We'll start with the VC and lobbyist briefs. The joint brief from Paradigm and A16Z focused extensively on the damage that could be done to the industry if the SEC's view of the law was held to be correct. They wrote, The brief noted that the SEC claimed crypto tokens themselves embody the terms of an investment contract, so continued to carry a classification as securities into the secondary markets long after their initial sale. This approach was rejected in the recent Ripple case, but remains contentious among federal court judges. The brief warned that allowing the SEC to take this approach could extend their reach into an endless array of commonly sold assets including fine art, classic cars, and vintage wines. Now, a group of crypto lobbyists led by the Blockchain Association said in their brief that the SEC seeks to cast aside the nearly century -old understanding of an investment contract and usurp Congress's authority to decide how to regulate a burgeoning industry. They claimed that the statutory text, history, precedent, and common sense all foreclosed the SEC's attempt to rewrite the definition of investment contract to reach digital asset sales unaccompanied by any ongoing contractual obligations. In a Twitter thread discussing the joint brief, G. Kim, the General Counsel at the Crypto Council for Innovation, wrote, The SEC is trying to short -circuit the legislative process and seize the power to resolve questions of massive economic and political importance by presenting its flawed interpretation in enforcement actions. The Chamber of Digital Commerce echoed their fellow lobbyists in making the point that the SEC is exceeding their authority and using inappropriate methods to bring the crypto industry to heel. They wrote that the SEC is choosing to use the blunt and unpredictable tool of enforcement proceedings to the exclusion of all other methods. They characterized the lawsuit as Coinbase's turn on the SEC's roulette wheel. Now, the DeFi Education Fund took a different approach, focusing their brief on the technical side of the case and linking the underlying functionality of crypto products to the legal arguments. The DeFi lobbyist explained that both Coinbase's staking service and wallet are software products rather than regulated financial service products. They argued that a decision in favor of the SEC's overly expansive theories related to this software application would have a chilling effect on the developers and service providers that innovate in DeFi and consequently the users of this technology. With regard to the wallet, they pointed out that Coinbase does not route orders nor take control of customer assets, so it's difficult to see how they could be viewed as a broker in that context. In discussing staking, they noted that while Coinbase administers the validators which deliver staking rewards to customers, their, quote, function is squarely ministerial as an IT service provider. Put another way, Coinbase provides an IT product that leads to a financial reward, but that reward stems from the crypto protocols themselves rather than from Coinbase's efforts. Now, maybe the most striking brief in support of Coinbase was co -signed by not one but six law professors with expertise in securities law. This includes experts from UCLA, Boston University, Fordham Law School, Widener University, the University of Chicago Law School, and Yale Law School. And importantly, this isn't a group of outspokenly crypto -friendly professors. Between them, this group has written multiple textbooks and authored countless academic papers. Some of them quite literally wrote the book on securities law. Their brief focuses on the definition of the term investment contract and argues that it has a much more limited scope than the SEC seems to think. A key part of the SEC's crypto lawsuits has been the idea that a crypto token is one part of an overall investment scheme which does not require a formal contract between the parties. This would mean that a token could be considered a security even when the issuer doesn't make any promises to holders and doesn't take any direct investment from purchasers. The professors rejected this as ignorant of the history of securities law. Their opinion is that the Securities Act of 1933 used the very well -established language of investment contract to refer specifically to situations where, quote, the investor receives, in exchange for an investment, a contractual undertaking or right to an enterprise's income, profits, or assets. They argued that this definition of an investment contract had been present in state legislation and cases leading up to the passing of federal regulation in 1933. They added that this definition has been consistently used by the courts to decide lawsuits following Howey to this day. This historical argument flies in the face of SEC briefs, which have often discarded state legislation and cases prior to 1933 as irrelevant. The legal scholars wrote that nowhere in the Howey decision does the Supreme Court, quote, suggest that it was doing away with the court textual and historical anchor of the statutory term investment contract, i .e. contractual undertakings. Rather, Howey's reference to a scheme or transaction simply reflected the instruction that courts should consider the economic reality of a business venture to determine whether an investment contract exists. The law professors suggested that by agreeing with the SEC's definition of an investment contract, the court would be going against almost a century of case law. They urged that, quote, The court should adhere to the settled meaning of the term, consistently applied by the state courts interpreting state blue sky laws, as well as by the federal appellate courts before and since Howey. Under that settled meaning, an investment contract requires contractual undertakings to deliver future value, reflecting the income, profits, or assets of a business. Paradigm policy director Justin Slaughter writes, It takes real skill to so mismanage the situation that you have serious institutionalists like Professors Macy and Hammermesh filing amici briefs against the SEC in an enforcement case. This case is on track to blow up the SEC's powers and maybe weaken agency powers across the board. That people invested in the current securities regime are still siding against the current SEC position speaks volumes. Finally, Senator Cynthia Lummis has also filed an amicus brief addressing the question of whether the SEC has overreached its authority. Lummis began her brief by drawing the court's attention to the numerous bipartisan efforts currently underway in Congress to craft regulations for the crypto industry. She wrote that she, Has a special interest in upholding the Constitution's separation of powers by ensuring that federal administrative agencies do not exceed the authority conferred upon them or encroach upon Congress's ongoing legislative efforts. Amicus believes that the SEC's approach to enforcement in this case, and in the crypto asset industry more broadly, contravenes that separation of powers. Now given that the cornerstone of any major questions doctrine argument is that an administrative agency is exceeding the powers granted to it by Congress, it seems extremely relevant to be told by a sitting US Senator that they believe this to be the case. Lummis continued, When Congress created the SEC to regulate securities markets, it did not grant the SEC power to reimagine the definition of securities to expand the agency's sphere of influence into other asset classes or to encroach on other agencies and regulatory schemes. The SEC's attempt to shoehorn an entire new class of assets into the existing definition of a security and thereby add to the definition enumerated by Congress exceeds the SEC's authority, encroaches on Congress's lawmaking, and contravenes the separation of powers. Put simply, she said, Basically, the brief is an attempt to provide evidence to the court that Congress is not content with the status quo when it comes to crypto regulation. Much of the brief describes the various ongoing legislative efforts. And after outlining these bills, Lummis writes, The multitude of interests at stake require a holistic approach beyond the scope of a single agency. Ultimately, she says, Lummis urged the court to, Now, I think where most of the analysis lands, holding aside deep legal minutiae, which obviously will become very important in terms of how the case actually resolves, is from a sentiment shift it feels to people, of course, outside observers, that this is going to be a hard one for the SEC. Algorithmic trading firm CEO Xi Zhen writes, Now, I would never go that far given that Let's hope that these friends of the court are correct. Appreciate you guys listening as always. Until next time, be safe and take care of each other. Peace.
A highlight from 638:SECs Standoff, CFTCs Swift Moves & Binances Plan
"Rockstar Energy punched, bringing a bold and unapologetic flavor packed with energy through a blend of B vitamins, corona extract, and 240 milligrams of caffeine to fuel what's next. Rockstar Energy drink. Good evening and welcome to the Crypto Overnight -er. I'm Nickademus and I will be your host as we take a look at the latest cryptocurrency news and analysis. So sit back, relax, and let's get started. And remember, none of this is financial advice. And it's 10 p .m. Pacific on Saturday, August 12th, 2023. Welcome back to the Crypto Overnight -er where we have no sponsors, no hidden agendas, and no BS. But we do have the news, so let's talk about that. Tonight we delve into the SEC's face -off with Coinbase and the outpouring of support for the crypto exchange. We'll investigate the CFTC's swift action against a deceptive crypto venture and the SEC's prolonged decision -making on ARK Invest's ETF bid. Further, we'll explore Binance's strategic move towards AML compliance in Taiwan, California's new stance on crypto donations in the political arena, and Canada's proactive approach to managing the implications of the crypto boom. A consortium of blockchain advocacy groups voiced concerns over the Securities and Exchange Commission's lawsuit against Coinbase. They argue the SEC is attempting to usurp Congress's authority. In June, the SEC accused Coinbase of selling and trading securities on its platform without registering as a securities exchange. Notably, these alleged securities include prominent crypto assets like Cardano, Solana, and Polygon. The advocacy groups have requested the court to grant Coinbase judgment on the pleadings, supporting Coinbase's stance that the SEC lacks overarching regulatory authority over the crypto sector. Two tech -focused venture capital firms, Andreas and Horowitz and Paradigm, have also expressed concerns about the SEC's alleged overreach in the crypto industry. They filed a joint amicus brief supporting Coinbase. The firm stressed that the SEC's unpredictable actions threaten blockchain technology's growth in the U .S. U .S. Senator Cynthia Lemus, several crypto lobbying organizations, and a group of professors also urged the federal court to dismiss the SEC's lawsuit against Coinbase. They allege that the SEC is trying to exceed its authority by claiming that platforms like Coinbase are unregistered securities exchanges, brokers, and clearinghouse trading unregistered securities in the form of crypto assets. The Blockchain Association, Crypto Council for Innovation, Chamber of Progress, and the Consumer Technology Association have all raised concerns about the SEC's approach. They believe the SEC is trying to bypass the legislative process and seize power to resolve significant economic and political questions through its enforcement actions. The major questions doctrine has been a focal point in these discussions. This doctrine clarifies that only Congress has the right to answer policy -related questions with significant economic and political implications. That right is not granted to the regulatory agencies. The doctrine suggests that if an agency wishes to decide on an issue of national importance, it must have clear congressional authorization. Both Coinbase and the supporting firms have invoked this doctrine in their arguments against the SEC. The crypto industry's significance cannot be understated, with trading volumes reaching as high as $500 billion per day at its peak. The SEC's approach could potentially devastate the industry by undermining blockchain's ability to operate. Given all this support on Coinbase's behalf, it's evident that the SEC's actions are viewed with at least some skepticism. The crypto community sees these actions as an attempt to protect the traditional decrepit financial system. The SEC is overstepping its bounds, trying to regulate an industry it does not fully understand. The support Coinbase has received from various quarters underscores the broader sentiment that the crypto industry needs clear regulations, but those should come from Congress, not an overzealous regulatory body. The ongoing battle between Coinbase and the SEC is emblematic of the larger struggle for the future of the crypto industry in the U .S. The outcome of this case could set a precedent for how crypto businesses operate in the country, making it a watershed moment for the industry. While the SEC Coinbase standoff continues to stir debates, another regulatory body swiftly springs into action to protect unsuspecting investors. Because protecting investors is what regulatory bodies should be doing, not choking the life out of an industry they clearly don't understand.
A highlight from 1197. Elizabeth Warren Demands More Crypto Taxes Pro-CBDC Army vs Stablecoins
"So, Elizabeth Warren up to her antics again, this time using taxes, using CBDC, and many other tools to her disposal to try to take a position against crypto. We're going to be breaking down all of this for you guys today. My name is Paul Baron. Welcome back into Tech Path. I want to get into the first story here. Democrat senators want Treasury, IRS, to pick up the pace on crypto tax rules. So a few things that I want to break down in this article so you kind of know who the players are. I'm going to zoom in on this one. Elizabeth Warren, Bernie Sanders, Robert Casey, and then Richard Blumenthal, all involved in this. The idea is pretty simple. Treasury and IRS have until the end of the year to finalize new rules to help close the estimated $50 billion crypto tax gap. Now, this is something we'll break down because this is not necessarily the real scenario. It's what they're proposing out there. The other thing they want to put in here is, without quick action, your agencies are at risk of failing to meet congressionally mandated deadlines and the implementation of the final rule. We urge that you act swiftly and implement strong crypto tax reporting rules for cryptocurrency brokers. All of this, which we'll get into, one of the things the industry has said has become very antsy waiting on guidance, particularly with regards to the IRS defines a broker. Industry observers have claimed that the broker definition is very broad. We all know that because it could include miners and also software developers. That's another problem that already exists in crypto of who is a broker. And then secondly, or additionally, what are we hoping for? An industry perspective that is updated with the 6045 regulation, which basically gives different qualifications based on type of activity. The other thing they break down is it'll hopefully make it clear that not everyone effectuating a transfer of a digital asset would be subjected to a broker reporting. So this gets into some of the details of when taxes do apply, and we'll show a little bit more about this. The letter, the senatorial letter, comes days after the IRS issued new guidance update in 6045 regarding crypto staking, which is the other part of this that's pretty big, in which the agency ruled that staking income, regardless of the gains are realized, will be taxed as income. So you have to think about that for a second. You're staking ETH, you get ETH in return. You haven't sold ETH, but you're taking that as an income. That is the argument I think that everybody, of course, is up in arms about. If a cash method taxpayer takes stakes cryptocurrency native to a proof of stake blockchain and receives additional units of cryptocurrency as rewards, which is what happens here when the validation occurs, the fair market value of the validation rewards received is included in the taxpayer's gross income. So if you are staking, that's a problem. The interesting thing is that you do not take tax gains if you're putting that in a money market and you're getting paid interest. That's not gains until you exit those kind of scenarios. So this is an interesting aspect of how the IRS and how Elizabeth Warren is really putting pressure on it. Another point I want to get to here. This was coming from the 2021 Infrastructure Investment Employment Act, which is where all this came from. But basically, it said if we do not act quickly, that is, if the Treasury and the IRS do not implement these new rules in a timely manner, we risk missing out on roughly $1 .5 billion in tax revenue for fiscal 2024. At this point, you should not give this chance to tax evaders, which is what they're calling crypto people. And I think this is something that people don't realize just how much taxes are being paid by people in crypto. In fact, countries with the most taxpayers currently in cryptocurrency, United States leading the way, number one, Japan, number two, Germany, United Kingdom, and Austria. So you can kind of see we're already handling this because crypto is like any other really asset out there if you think about it. If you take a gain, if you sell an asset and you take a gain, that's a capital gains tax. And it applies to capital gains rules. Those are the same kind of scenarios that play into it. What I don't necessarily think is going to be popular is for them to continue to reach in to these unrealized gains, like taking unrealized gains and taxing them in any other corporate infrastructure, just not necessarily the model in which this plays out. The other thing that income tax is payable on is you're getting paid in crypto. That's revenue. So you're paying tax on that. You get an airdrop. That's a new asset you've received. Getting taxes on that. Staking rewards. That's the other scenario that plays into this. DeFi interest. Mining rewards and then even referral bonuses. All of those are income taxable at this time. There was a couple of things here in a report from CoinLedger that I want to showcase. And this was really kind of going through the people in their survey of who understood when a taxable event occurs. So 65 % of investors correctly identified that selling cryptocurrency is a taxable event. Now you have to sell it for a profit, of course. If you sell it for a loss, that's not obviously a taxable event. But only 38 % of the investors correctly identified that a crypto -to -crypto trade is a taxable event. So this is still questioning and also it's still not completely clear so that the IRS, but also even your tax preparers understand really what's happening out there in the place. And I think, again, this all goes back down into regulation, which will flow into the tax code and many other aspects. This is kind of interesting right here. This was further from the CoinLedger report. 50 % of non -taxpayers don't report because they haven't made a profit currently in cryptocurrency. You have to remember the last two years, really since 2021, almost anybody in crypto, along with other assets out there, have been in the negative. Right now, haven't made a profit, so you're not going to be paying taxes on that. I didn't know I had to report. Some people said that. I don't understand how to report, 12%, and then I don't want to pay taxes, 7%. So that should have been larger. Government doesn't know about my cryptocurrency. Okay, those are the bad guys right there. So the likelihood is if you guys are watching our show and maybe you're brand new to crypto, it's treated like any other asset class. Doesn't have any really differentiation. It is money. If you're taking it as revenue, if you're taking it as income, if you're taking a sale and getting profit from it, you're going to be able to take taxes at that time. Those are taxable events. The other problem is that it's not like an investment if you do lose money where you get to use that as a tax loss. So that's another problem of how this could. Now you can do some tax loss harvesting, of course, obviously you should get with your own CPA to understand how that works. I want to go to a clip here because the clip will go into a little bit about where, and we're kind of transitioning out of taxes into CBDC, but where Warren stands on CBDCs. Let's know what she said. So that's not so hard on stablecoins. The harder one is what do you think Bitcoin is about? If you think it's about being able to transfer value without having to go through banks, and little side note, I think banks have done a really bad job of a lot of the things they're called on to do. Yeah, the biggest advocates of Bitcoin sound like you. Yeah. Meaning they want to break up these big banks have been terrible, right? That's exactly right. And they've cheated consumers and they've kept prices high and they're slow and they won't cash a check. Five to seven days to three to five days. There you go. And it was a huge victory. Huge victory, right? That they only held onto your money for five to seven days. So a lot that banks do wrong, if you think we could improve that in a digital world, the answer is sure you could. But in that case, let's do a central bank digital currency. Are you there? Oh, for a central bank digital currency? Yes. All right, so you can see she's very pro central bank digital currencies. If you look at Warren Davidson's tweet right here, in America, CBDC should be banned. This was one option, a jailable criminal offense declaration of war and implemented. Obviously that was his kind of poking fun at, but banned is the big one is that we shouldn't use it. This is a big scenario that plays out, has been playing out for quite some time on the CBDC front. So let's just understand that CBDCs, if we do get to that, and I think this is one of the reasons that obviously crypto in general has been more popular and started to become more popular around the world, especially in countries that already have problems with their fiat. And I think that is going to be an issue that will continue to face here in the U .S. of how that does play out on a digital currency. If you look at what's happening in China, obviously their social credit system is all tied to eventually to the money. So definitely a problem. Now the other things that play into this is that there could be some scenarios right now where Gensler is going to start trying to do some other things to try to deflect maybe a possible loss that could be coming at him. One of the things that's happening right now, this of course, hacks crypto founder used investor funds to buy almost four and a half million Black Diamonds. This is the SEC. So this again is nefarious actors like Richard Hart and others that have been in the crypto space. Listen, this is not the only place that has those kinds of actors out there, but this is a good example of just how the SEC is trying to go in and deflect a little bit. Here was one of the things they charged, SEC charges 18 Utah defendants with a $50 million crypto fraud scheme. So again, Gensler and the SEC are on the warpath right now. And I always wonder why, because these are small fraud. And I look at this, they're definitely not a Binance, they're not an FDX, and they're definitely not a Coinbase. So why are they going out after these very low hanging, I'm sure they should, but it's almost making mountains out of molehills in the kind of scenario that this is faced into right now. Are they maybe setting up for deflecting off of a potential big loss, such as possibly an approval through the House on these crypto bills? Just to give you an idea of just how close Gensler is to the regulatory and the political landscape, look at the timing here. January 12th, this was 2023, he sued Genesis. During that time, we had the House Financial Services Committee announcing their subcommittee on digital assets, so nice timing there. February 12th through the 14th, Wall Street comes in and says they've issued a Wells Notice for Paxos. At the same time, you had a committee hearing on crypto crash, why financial system safeguards are needed. Then you had this one, March 19th, he goes in and he publishes the op -ed in The Hill, and then you had the Senate Ag Committee saying we're going to do these crypto hearings. Then he does April 27th, and you can kind of see it just all ties in to activity that's happening in the political forefront. He is coming in, or the SEC coming in, and timing is everything. So the reality is that all of this is going to play into the hands, I think, of the industry and also to the lawmakers understanding what the SEC's overreach has been. So it's going to be one that will probably play out in a very short period of time. I want to go to this next clip of Ron Hammond from Blockchain Association. Listen in. At least in the market structure bill, which again, got more votes than the stablecoin bill from Democrats, which blew everyone's mind in D .C. No one expected that to have ever happened. We were expecting like four or five. We had six Democrats join. Stablecoins were expecting 12 or so Democrats to join. We only got five. All right. So simply kind of taking a little bit of a victory lap of what has happened here recently on the House floor in terms of the committees and getting ready to send both of these bills to the House for a potential vote. This will happen in September. Let's take a listen to this next clip on Hammond on Gensler. And I think the market structure vote in particular just shows how much he's lost his own party in terms of buying the narrative that, A, the status quo is fine, B, there's no need for legislation, and three, he's doing a good job on the enforcement end. And we saw that on all three arguments from different Democrats fail each time. And I think the fact that there's six Democrats who bucked their own party, who bucked the SEC and said, yeah, we're going to advance the market structure bill forward. Even the House Act Committee said, yeah, we're going to advance this bill forward, too, without any opposition recorded. That's huge. All right. So I think the play out on this, you know, when you look at the current landscape right now of what Warren's attack is, the crypto army, you look at the positioning that really D .C. is doing currently, and now could this play into the political landscape for 2024? Yes, it could. But the bigger play here, I think, is still the regulatory front. And that means that either the SEC is going to lose some of its power and the CFTC is going to come in and start to have a little bit more divvy up of what digital assets and how they're controlled through these government agencies. But really, how does this play out maybe into the future? This note right here from the block, they were talking about the commission being the SEC has so far received 52 letters about these proposed funds. This is in reference to ETFs, with most of them expressing support. So it's very possible that we could see an ETF actually get passed here. And you've seen some of the things we've talked about here on the channel before in the last couple of weeks, you know, everything from the Bloomberg team and so on around the potential of the ETF getting passed, the Bitcoin ETF. If that does get passed, that would be huge for the market, would absolutely legitimize what's happening in this space. And I think it would probably, in most cases, put so much pressure on D .C. that they have to move to going in and actually getting some landscape in play. Most of the comments against the approval appeared in multiple letters from a business consultant calling themselves the due diligence. I think basically this is a bunch of banks tied in behind this and this was the counter argument to what an ETF should be. So there is full political folly in play here and it is happening at, I think, light speed right now, much faster than what I anticipated even. One of the last things here is the comment period wraps up next week. So the SEC accepting letters for the final funds around August 11. So meaning that Gensler is getting ready to have to actually make some decision either for or against or a delay, which is probably what most likely will happen. But the good thing is that, like I said, there's going to be a potential right now which keeps increasing of a potential approval coming from some of the best ETF experts in the world that are analyzing where the situation is and kind of how it's going forward. Additionally, you've got anti -crypto movement now escalating Congress's assault on privacy. This is where a lot of people are starting to look at the idea of cash and just personal privacy, which is one of the biggest issues really around the world. And if you think about just how important that is, this would give you an example, cash matters, free citizens entitled to privacy and the protection of their data. In the UK, 74 % of people say cashless society would take away the people's right to choose. In the U .S., it's 73%. When it comes to purchases, personal preferences should remain exactly that, simply meaning that with a CBDC, we all know what that means, the control of the cash, control of what you spend on, then it gets into the control of what you spend on based on your political viewpoints or other aspects of your life that all start to play it. So cash does pretty much empower citizens to become capable of kind of voting with their wallets. And I think this is a very critical scenario that's playing out right now. CBDCs will be a big part of this. So you've got CBDCs happening, you've got what we're going to be dealing with on a taxable side and then the legislative. So all of this happening right now, literally in 2023, and it seems to be coming to a head very quickly. I think as we move forward, there's going to be two things that come out of this, and that is how these bills start to move their way through Congress and eventually, if we do get approvals, to the president's desk. Here's of course, the Senator Lummis and Gillibrand bill. Just another piece of legislation that is making its way through. Most likely, this is one that will not happen, mainly because of the association and the collaboration, I think, with the ICC. The bill involves a broader swath of agencies, so this is kind of interesting because it gets into the Office for Foreign Asset Control, the FTC, OFAC, FinCEN, et cetera. The SEC is provided also with something that a section -by -section overview claims resolves a long -standing issue with the SEC custody requirements. Probably the bill that will not make its way through, which gives us back to the scenario of the two bills that are currently on the floor that most likely will make it. So good news, I think, in general, bad news for the crypto army and CBDC is still coming to a head, but I think the good thing here is that, in many cases, it's like bad PR is even good PR, but the point is that the industry, lawmakers, finance community, they're all talking about crypto, and in the end, that is good for the asset class. One other thing that did happen, which is kind of interesting, this was a letter to Tim Cook, and we did a full video on this, so I won't go into the detail of this, but mainly it was trying to get Apple to get less and less constrictive on asset classes that are making their way through apps or innovation that are involved with blockchain. One of the things that they got into was purposely limiting choice and stifling innovation at the expense of user experience. This is a problem that Apple kind of faces for quite some time. And we broke down a lot of this, but the big deal is this right here, responding to the following questions no later than 5 p .m. on August 14th. So this is another issue that is coming to a head here in August of Apple having to actually address what's happening in Capitol Hill around the blockchain and the crypto industry as a whole. So again, just another big benefit, I think, for where this market is going. I want to go to this next clip here, and this is again Ron Hammond, on where he thinks Apple's position is. Listen in. But this is a bipartisan letter from the leaders of the subcommittee on innovation. That sends a message that says, look, I mean, Apple's getting hit on a number of fronts, but this definitely sends a message saying, you know, hey, look, you're on the clock right now. We're looking at you. So that committee is going to be taking more of a role over time because we've seen this talk and this narrative of crypto really shift more and more in D .C., at least, talking about the tech itself, which is perfect, is exactly what I want to talk about, the innovation and the technology itself. And that's the Energy and Commerce Committee. That's a bipartisan letter that sends a pretty good warning shot to others in the industry saying, look, you know, crypto is here to stay. We have concerns that the U .S. are probably blocking them out. And that's not good on our watch. All right. So I think this is one of those things, again, that the thwarting of innovation is a concern here in the United States because it's one of the things that pretty much pushed the U .S. ahead of the entire planet when it comes to really capital growth, entrepreneurship, how we grow our own economies, but more importantly, our position in the hierarchy of the global structure in terms of just being the global power. And I think if you consider that, you have to look at what's happening in Europe. And with the EU, markets and crypto assets regulation, this is MICA, this is a regulation that's pretty much been in place, and it's now starting to take form. And one of the things that you have to kind of look at here is their consultation package three. These are all actually happening now. Qualification of crypto assets and financial instruments, monitoring detection, notification of market abuse, investor protection is happening, you can kind of see the things there on reverse solicitation, policies, procedures, all that. System resilience and security access, all that is building. Mainly what is going on right now in MICA is they're prepping to get all of this regulation in place so that they can roll out this program. And when they do, it is going to put the EU at the front and center of one of the biggest asset classes that has ever been created. This is the power of what crypto and blockchain is bringing to the planet. And that's why I think we are seeing all of this scrambling going on here in 2023 in the U .S. Look at the timeline here of MICA. June hits, publication goes out. July, the consultation package one already rolls out. October of this year, we're going to see package two. And then by Q1, that's when that consultation package three goes into play. And then we have early entry into the application and then the rollout by end of next year. So this is pretty significant. Further into their rollout, this kind of, let me kind of zoom out on this a little bit. This shows more background on all the transitional measurements that are going to take place. And this looks complicated, but really what it simply means is these are the deadlines that they're trying to meet to get all of the organizations that are applying for regulatory position in the EU into play so that they can go into the markets with all of these things in a legal way. And I think that is what is interesting. I think they're going to stay very sharp on these timelines because they don't want to look stupid. And right now, the world is watching. Everybody's looking at this. Asia's watching this now. The U .S. is pretty much on a big race with it. I want to go to a next clip here. And this next clip is a little bit more about the BRICs, now why the BRICs matter. And listen to this one. This is an important one. Yeah. So BRICs is a collection of countries that are trying to find an alternative to what they see as the hegemonic dollar based U .S. run global economy. So BRIC stands for Brazil, Russia, India, China, South Africa. But what happened in the wake of the Ukraine invasion is that the U .S. seized Russia's presumably to try to set off a banking crisis. Now, ironically enough, for separate reasons, our banks crashed. But anyway, that didn't work. But the problem, yeah, the problem is that every country on earth saw that happen. All right. And you've got now all these countries that they were never really hostile to the U .S., but they're starting to wonder now, could they come after me? Could they try to crash my banks? But at this point now it's accelerating. And so they've got a meeting coming up in August. And one of the items that may or may not be on the agenda is the prospect of a gold backed BRICs currency. What I think is interesting is that if any country did gold back a widely used currency, that would I mean, it would be catastrophic for the U .S. dollar. Right. That would give the world an alternative sort of payment rail that is even stronger than the dollar is today. All right. So hopefully you guys are seeing how all of this is connected. You go from everything that Elizabeth Warren is doing on the legislative front to basically tax Americans, kind of setting up the scale of what and how this asset class is going to be dealt with, to how we're going to control the digital dollar, which is the CBDC, and whether or not FedNow will play into that in the future. Then you tie into all this regulatory framework. And then lastly, but not least, is BRICs and their importance on the global front. If you look at this tweet right here on World Statistics, GDP at purchasing power parity of the world. Here's the G7. You can kind of see U .S., Japan, et cetera, all the way in there, 45 percent 1993, all the way down to 2028, around 27 percent. The BRICS nations, all the way down to 2028, they will actually accelerate over the GDP of the G7. This is pretty significant because all this was, again, projected by the IMF, the International Monetary Fund. One of the things around this is whether or not, and St. Auge talked about that, Peter, the guy that we just did a clip on, he talked about the importance of this gold -backed dollar or BRICS currency. If that were to occur, that would be, as he said, catastrophic for not only the U .S. dollar, but I think catastrophic for the globe because we would see a shift in power pretty quickly. So here's the alliance right here. This is a scary picture. BRICS alliance will discuss the usage of local currencies for cross -border transactions in the upcoming summit in August. Now, the good thing, the good news, if there is some, is they're talking about using local currency as opposed to gold. Had they used gold, that would have been a huge blow into, really, the future of the U .S. dollar, and they still may go that direction, so you have to be considering that. Again, why is it important to be investing in cryptocurrencies or digital assets? We've just painted out a picture for you and the reasons why all of this flows up in a very interesting domino effect toward how just monetary systems are going to be run in the next 100 years. Stablecoins' potential counter to de -dollarization, that's a big part of this. So in this particular scenario of this article, people familiar with the talk said that the last moment the White House National Economic Council, this was Lael Brainard, dumped cold water on this stablecoin bill saying it didn't put federal regulators in a strong enough role. And remember, if you'll recall, we did a video on this where, of course, Patrick McHenry and Maxine Waters were negotiating that. And there seemed to be an agreement prior to going to the vote. And then at the last minute, Maxine Waters pretty much got the phone call from the red phone and that was dislodged. And then, of course, McHenry went to the floor with what was the old bill that did not have all the changes in it. So again, a lot of politics being played out right here in D .C. And again, this is very important because of the global position and what we are trying to do to essentially compete at a very high level. I want to close this out quickly with our last clip here. This is just the stablecoin timeline from the Blockchain Association listening. It does, unfortunately, hinder it a little bit, but I've had conversations with staff and members of Congress after the fact, and they seem very gung ho in trying to resolve this issue before the whole entire House votes on that bill. But likely what's going to happen is that in the fall, there's going to be a general House floor vote. Every member of the House gets a vote on this, which, again, it's a lot of education. So I've already had some Republicans reach out to me for more the right wing of the caucus saying the stablecoin bill is just a CBDC bill. And it's like, no, it's not. It's nothing related to that. On the left, we're seeing a little more consumer protection concerns and also just the general crypto skeptic concern as well. So August, we're going to have a break and in the fall, you're going to have a vote, right? Exactly. But I think for sure in twenty twenty three, we'll have a general vote on the House floor. And then you can see for yourself what your members of Congress are supporting crypto or guardrails for crypto and which ones say, you know, nah, you know, I don't I think the status quo is fine. All right, so big actions happening this fall and part of this will, of course, will be the stablecoin bill, but also crypto and digital assets in general hitting the House floor. This and as Hammond said, this will be a critical time because the scenario that plays into this right now is it's going to showcase into a lot of what we'll see in the political runs and the campaigns that are being run next year in twenty twenty four. So this could become a little bit more of a voting scenario. So hopefully this has given you guys a rundown. I know it's it's it is a lot here to to kind of digest. If you're new to our channel, we try to break these down. And I promise we're going to try to get these in a little bit, maybe smaller bite sizes. But you can see the breadth of what's happening globally, especially here in the United States right now, because this is a fight for your wallet. And that's why it's so important and that's why we're seeing so much activity happen. You guys are part of the Diamond Circle. Great. Glad to have you in. But if you're not, make sure and join. All you have to do is click the link down below. We we do, of course, a podcast over there, a lot of additional research. I even do additional analysis over there. So it's a great place for you to start here with the PBN team. And of course, it's the best way to get to us. Just go to our website. You can join right there. Of course, if you're not following me at that out there on X, it's just at Paul Baron. We'll catch you next time right here on Tech Path. We'll be right back.
"blockchain association" Discussed on Tech Path Crypto
"I wanted you to see these are some of the research that we do on really trying to find what's happening around the world. And this really broke down a full strategy. I mean, they are way into this now. So my question is, can we catch up? Can the United States catch up with this kind of advanced movement? So I've never seen that clip before, and it was disheartening to hear, A, they have things like a definition of NFTs. We don't even have that here in United States. They have a Bitcoin ETF. We don't have that. We have futures, we don't have a spot yet. We'll see what happens to BlackRock and the others. But look, they have a detailed roadmap. They know what they want. Mind you, again, there still needs to be a lot of legislative input. But there has to be at least a task force identifying, here's what we need to do and here's what we're going to do in the future. This is what businesses love to see. They want to engage with these policymakers. They want to make sure that they can domicile or at least set up business. And there are clear rules where they can and can't do and gaps that they identified that need to be filled. We don't have that in the United States. And also, we have infighting saying, actually, am I even sure if the rules are clear or not? So it's disheartening to see that we've seen one country in particular really advances on so much. And the rebuttal I get from some folks here in D .C. is, well, you know, look, they can come back to the United States when the time comes. We have strict rules and regulations, but let's look at the microchip industry. We had to spend billions on subsidies to get these guys to come back to the United States. And it was a national security ploy mostly. Are we going to be doing that in a couple of years saying, oops, we screwed over years ago on crypto and now there's a national security implication or a economic implication that's very massive and we're missing out.
"blockchain association" Discussed on Tech Path Crypto
"Interesting. So with the Blockchain Association, why not generate a list like this, getting somewhat of an alignment here from the crypto industry and trying to build a task force, so to speak, at least in the sense that I feel like there's still a lot of effort being done by many companies, but it doesn't feel like it's come together just yet. I agree. So when I worked on this issue back in 2017 in Congress with Warren Davidson, it was a high fives. There were a couple of folks here and there from certain companies or trade associations. But I think we've ensured, especially in 2022 and 2021, the number of folks boots on the ground we have in D .C. has more than tripled, maybe five times more now. Where it used to be just like six or seven, now it's 40 lobbyists, policymakers, lawyers who are all easily working together and communicating. So even though they're not part of the Blockchain Association, we still coordinate with other groups all the time, crypto or not, to make sure we can get this all in one cohesive regulatory parameters here. And so it takes a lot of work, especially with our complicated rules and regulations. But there seems to be a lot of buy in, both from the administration as well as Congress. The problem is it takes a lot of political efforts to move things as well as bipartisan support. And so that's where I think we've had a little bit of a hiccup on the education front, especially. But it's making a lot of progress here. It's amazing, though, what happens when you have one regulator really pushing the gas on the other end. But I think we're winning on that fight. But the longer we take here, the more we're going to be losing out as a whole. And that's been the main theme we're seeing. And it's pretty unfortunate and candidly. Yeah, ending on that point, you know, for many of the policymakers that are most likely going to be listening to this or watching this, because we find that a lot of policymakers actually watch our channel because we do so much of the congressional hearing breakdowns.
"blockchain association" Discussed on Tech Path Crypto
"It's really exciting to see other states doing this, even if they are just task forces or they are just these small, incremental steps. This is progress. And I would rather see that happening at the state level, thanks to a lot of state blockchain associations pushing that message forward, rather than here in D .C. where it is a slug. We are fighting on a number of fronts from a very aggressive regulator and a very tough political climate. But the time is now. We're seeing this happening internationally, where they're already passing frameworks. They understand the tech, they understand the future of the innovation here. And we're sitting on the sidelines. And I think John Carlo, former CFTC commissioner, did best when he took a picture of the New York Times and Japan and said the U .S. loss in crypto is Japan's gain. And that's so very true. We're seeing a lot of folks saying, I'm just going to go to the U .K., Japan, Hong Kong. It's already starting to happen. And if I operate here in the United States, I'm going to get slapped with a force in action. And it's going to hinder my business for years to come or be the end of it. And that's just not the risk that I'm willing to run. Well, we're going to talk about Japan in a second. I want to jump over to the EU. This was a leaked strategy, metaverse strategy, proposing regulatory areas around new global governance. Sandbox was involved in this, Sandbox as a working center, not the project. But the commission is going to support a creation of a technical multi -stakeholder governance process address to essential aspects of virtual worlds. They are what we'll probably see in the metaverse. All of this now playing into the strategy of what is happening in the EU under Mika. With that pressure, I'm just kind of curious, you get a chance to talk to a lot of lawmakers there. Are they mentioning what's happening in the EU right now as a driving force?
"blockchain association" Discussed on Tech Path Crypto
"He does some interesting things on information release. But who wins for this? Is this something coming from Senator Warren's camp? Where is this this almost defiance and especially at the level that we're talking about now within an entire industry that has basically put this guy on the wall with a dartboard? What is causing it? And where is the political connection that causes this to move at the accelerated point that he's driving it? I think the Congressman from the Bronx, Richie Torres, said it best. Gary Gensler is a regulator acting like a politician. And that's exactly what it is. You know, politicians time a lot of their tweets for various political reasons. They tried to maximize the media coverage to promote their agenda. But he's a securities regulator. He's supposed to say the facts and circumstances, balls and strikes. But he is doing a lot of underhanded things, again, in the media especially, but on a number of fronts like suing Coinbase an hour before they were to testify on the market structure we were talking about earlier. These are political moves, very calculated, very obvious, candidly, that it's coming from him. We've seen a lot of plant articles, too, from a lot of his favorite resources to try to get his talking points and narratives out there. But like I said, it does seem like he's losing on a lot of fronts. And I think he really overextended on Coinbase. He wanted to go after them because they were really poking the bear candidly on a number of fronts. And he wanted to make an example out of them. We've been hearing that for over a year now. I think he really overextended here, especially with Prometheum, and seeing how that has really unraveled in terms of that's not the story that he probably should have used as a talking point. They did a really bad job candidly on Capitol Hill when they testified. And so it's been exciting to watch the Democrats who, again, politically, you always want to back your own party, especially in elections coming up. They're breaking from their own party and saying, you know, I think they're easily doing a bad job here.
"blockchain association" Discussed on Tech Path Crypto
"What are your thoughts there? I think she is. And candidly too, it's a very complicated issue. It's not her top priority. Housing is a very big, important issue for her. And we met with her years ago to talk about crypto in 2017, 2018. And she was very want to learn more about it. Stable coins, especially, she has said multiple times this year. She wants to get that done. We'll see. I mean, if Maxine Waters does not get on board fully on the market structure bill, for example, there are still several other senior Democrats who hold a lot of weight as well. And I think it's important to watch those members like a Jim Hynd, Connecticut is a good example. You know, again, I mentioned Josh Kochheimer and Richie Torres, Wylie Nicoll, these are other Democrats who are already in the camp of we need legislation. I think it's a good start to this bill. So I think she's going to come around. But not everything hinted at her. But she does carry a significant amount of weight when it comes to the future of crypto legislation. All right. So a few things. We've been watching Patrick McHenry, the chairman's list of upcoming hearings. Nothing appears to be coming up soon. So the thoughts is, when would be the next potential very strategic thing within, you know, within the House that we would see around crypto and digital assets in general in terms of - So Politico read an article, I think, recently, it said July 19th. That's why I put in a tweet that there's a public notice that probably is going to be happening soon, a vote on crypto legislation, again, both stable coins and market structure here. And so it seems like we're done with the hearings. We're done with the educational hearings. What do we need to know as members of Congress from the industry experts and those who are skeptics? It's now time. Let's have a vote on a bill. They put a bill out forward.
"blockchain association" Discussed on Tech Path Crypto
"She said tokens, plural, indicating that she believes that there are more than just one token that is non -security. And then she also said we need something on spot market regulation. The SEC has pivoted from the 2021 view against her testified saying we need more legislation and crypto, to saying that there is no need for legislation. The rules are clear. And so Maxine Waters could have asked a question solely to the SEC and said, I need your opinion because I just got this from actually very, very recently from Secretary Yellen and her view. But she asked for both. I think that's important because it provides us a little bit, A, a holistic view, but B, some political cover in terms of what direction she wants to go, because if they do conflict, which they do now, then she can make a decision for herself, you know, what direction she thinks is the most appropriate. And I think it's very important to highlight that she's taking both views into consideration because she could just ask for her SEC opinion only. And I would say that direction. But she's looking for a more open minded view. So I think it's a positive sign. So with that being the case, Yellen conflicting with the SEC and what Gensler has really kind of put himself out there on where and who from the Dems side, do you feel like much like what you just said, giving a little bit of political cover? Do you think we would see a large amount of the Democratic House start to maybe line up with what we've seen on the Republican side? It's tough to say we'll get a majority, but I can see we're getting a couple of folks already. And we have Richie Torres, who's a progressive from the Bronx. We have Josh Gottheimer, who is more of a moderate from New Jersey. We've seen also folks like Kristin Gillibrand, for example, in the Senate, who is a Democrat, who's been very critical of Gensler on a number of fronts, including crypto especially. And so I think what's happening, and we're seeing this over time, is that Gensler's losing allies on the Democrat side.
"blockchain association" Discussed on Tech Path Crypto
"All right, so today we're going to break down what's happening in D .C., take a look at some of the legislation that is being proposed, and also look at the impact around the world and what this might have in terms of the crypto markets, blockchain in general as an industry all around the United States, and I think this is going to be a good one. My name is Paul Bearer. Welcome back into Tech Path. Joining me today is Mr. Ron Hammond, who is the Director of Government Affairs over at the Blockchain Association. He's been on our show before, but welcome back. Thanks for having me. Really appreciate it. Always good to be back. Yeah, so Ron, we've got a few things to break down into today. The first thing I wanted to cover was your tweet. This tweet right here, this week in Congress and crypto, three weeks, two bills, and one date, July 19th coming up. July could be the month that we see crypto legislation make its way out of committee and in line for the first ever House floor vote. All right. So is this a good sign? Are we seeing too much urgency here between the two committees that have started to formulate a new bill, or do you feel like this is moving at a good pace that we can get some real traction? So to level set, there's two bills to take into consideration. There's the stablecoin bill as well as a market structure bill. The stablecoin bill, actually, ironically, we are almost at this spot this time last year. The Republicans and Democrats, mind you, the Democrats controlled the House when they had the stablecoin bill last year, but they were working together on getting a framework for stablecoin regulation, largely in the wake of Terra, also concerns around Tether and the reserves. And so there's an idea, look, we need to work with the administration, Treasury, SEC, and other financial regulators to come up with a framework for stablecoin regulation. That effort, unfortunately, fell to the wayside right by the November elections.
Is the SEC's Proposed Crypto Custody Rule a Threat to the Industry?
"We're starting with what I see as one of the big crypto battles right now. It's something that might seem subtle, but I think could actually have a pretty dramatic impact. I am talking about a new proposed SEC crypto custody rule. And to get a sense of the significance, I'd point to this tweet from Tyrone Ross, who wrote, I really don't think folks understand how damaging this particular part of the new custody rule is for the space as a whole. No adviser in their right mind will attempt to comply with this. So what is going on? Well, a group of crypto players, including the blockchain association, andreessen Horowitz, and coinbase have all filed letters calling for major revisions to the SEC's proposed changes to custody rules. Jake javins gave the blockchain association tweeted, in February, the SEC proposed a new investment adviser custody rule that would restrict capital formation and put U.S. investors at greater risk. Today, the blockchain association filed a comment letter explaining how the proposal both contradicts the SEC's mission and violates federal law. Miles Jennings, the general counsel at andreessen Horowitz wrote on Friday, we filed a comment letter to the SEC's safeguarding custody rule. We did not mince words. The proposal is another misguided and transparent attempt to wage war on crypto, and if past, it will result in investor harm, market inefficiencies, and poor capital formation. Coinbase's chief legal officer Paul grill wrote earlier this year, the SEC proposed major revisions to a rule requiring RIAs to hold client assets at qualified custodians. Today we're adding our comments to the pile to explain where this proposal is misguided and how it can be improved.
New York Magazine Finds Evidence of Operation Choke Point 2.0
"Let's shift to our story today, and it is a bombshell. Last night, gen Vietnam from New York magazine dropped a story all about operation choke .2. And while some have commented that they were surprised that this particular piece appeared in New York magazine, they clearly haven't been following Jen. Jen has been covering crypto for more than 6 years now for numerous publications and has a very good read on the industry. She also went to northwestern as an undergrad, so obviously, you know, she has game. Anyway, we'll come back to Jen's story in a moment, but we have to move a bit farther back. I don't think that any of you listening to the show right now won't be familiar with the idea of operation choke .2. Operation choke point was an Obama era program that basically used political pressure to block unwanted or unloved industries out of banking access. So it was things like payday loans or gambling or pornography, right? That program was eventually halted during the Trump administration, but the seeds of it clearly remained. In fact, one of the people in charge of architecting operation choke .1 would go on to become the head of the FDIC under Biden. There has been a strong suspicion among the crypto crowd that ever since the collapse of FTX, there has been a largely coordinated push to block out legal crypto businesses from having access to the banking industry. It has at times seemed very transparent and has at other times just been reflected in what feels like impossible to ignore coordinated actions. Well, trying to get a little bit more information about how real this thing is. On March 16th, Jake stravinsky, the chief policy officer at the blockchain association, wrote today, blockchain association sent freedom of information act request to the fed, FDIC, and OCC demanding information about the unlawful de banking of crypto companies. We're also collecting evidence of de banking. Here's the situation. There are troubling reports of crypto companies having their bank accounts closed, often with no notice and no explanation. They've struggled to open new accounts, too. This disturbing trend suggests that regulators are trying to cut crypto entirely out of the banking system.
Don't Ban Crypto! The Case for Pro-Innovation Regulation
"Regular listeners will have heard me reference a number of times a recent essay in foreign affairs by professor Hilary Allen called the case for banning crypto. Hillary Allen is a Professor of law at American university and she has appeared numerous times in front of Congress as a congressional witness about the crypto industry. The point being that she's not some fly by night critic. She is a respected and legitimate voice in Washington, D.C.. Her argument is quite clear in this piece. It's that as the subtitle says, blockchain's risks far outweigh its rewards. I don't need to go through piece by piece or line by line. A few weeks ago, I read a couple of rebuttals. It is notable that she threw many of the arguments that crypto advocates have right back in their face, including the idea that America could lose leadership and push crypto companies overseas. Alan basically says we shouldn't want them here because this isn't an industry we should want to be a leader in. I don't think that the point of this piece was actually Hillary Allen thinking that she could get people to ban crypto. I think the point of this piece was to shift the overton window to include banning crypto as an option. If that's the case, it's obviously very important to have voices who are also respected in Washington. Bring the conversation back to a more middle ground. And for that, we turn to the blockchain association's Kristen Smith. Kristen is extremely sharp. You can go see her in my holiday interviews from last year, and she has just published a piece on coindesk called the case for regulating not banning crypto. Kristen writes, American university professor Hilary Allen, who recently wrote an article titled the case for banning crypto in the influential publication foreign affairs, is part of a very small cohort of, quote, crypto banners, working toward that end. In addition to engaging the media, Alan and her peers are pushing the argument that crypto does more harm than good while speaking with federal agencies. She is testifying before the congressional hearing on the future of digital assets on Thursday afternoon. The case for banning crypto is a pipe dream. It won't happen by Allen's own admission, blockchain is a general purpose database technology that supports a $1 trillion industry, employing thousands globally, nonetheless, the efforts to ban rather than regulate crypto have only backfired and harmed Americans.
A Landmark Moment for Crypto in Europe As MiCA Passes
"So the last couple of days on this show, we've been focused on hearings in the U.S.. On Tuesday, Gary gensler finally was dragged before Congress for an SEC oversight hearing, which lasted about four and a half hours, and which while wildly cathartic probably wasn't all that productive. It was a chance for Republicans to lay out why they think that in some ways genzler has been asleep at the wheel, such as FTX, and in other ways he's been an active opponent of the mission that the SEC is supposed to complete. Democrats, of course, don't agree, and a big theme of our conversation has been how crypto and Bitcoin are getting more politicized than ever in the United States. The second hearing on Wednesday was a little bit more productive. It was nominally about the new stablecoin legislation, which was in fact old stablecoin legislation, which was just reintroduced. That hearing had a number of witnesses who were, I don't know, actual experts in crypto. Believe it or not. Those included Austin Campbell who was on the show a couple weeks ago and who used to work with paxos, it included Jake chervinsky from the blockchain association who's probably in contention for my most quoted person on this show, and even the witnesses that they had who were nominally supposed to represent perspectives outside the crypto industry weren't antagonists in the way they've sometimes tried to get. Adrienne Harris, who helms the New York department of financial services, made it pretty clear that crypto isn't a problem for her as long as it follows the rules. Which frankly, even if you don't like her particular rules, it's refreshing after what we've seen from people like gensler, who really just want this industry gone. Now, one of the things you'll often hear from that type of person, be it Gary gensler, or Elizabeth Warren, or Brad Sherman, is that the crypto industry just doesn't want to play by the rules. There is very fond of saying that the issue with regulations for crypto in the U.S. isn't that there's a lack of clarity. It's that there's a lack of compliance that the crypto industry should by all accounts know what its rules are. It just doesn't want to follow them.
"blockchain association" Discussed on Thinking Crypto News & Interviews
"The <Speech_Male> magazine or whatever you want to <Speech_Male> call it and Ron Hammond <Speech_Male> of the blockchain association <Speech_Male> <Speech_Male> retweeted <Speech_Male> Gary's tweet <Speech_Male> here and said, it is <Speech_Male> pretty rare for a <Speech_Male> regulator to pen <Speech_Male> an op-ed and <Speech_Male> purposely drop <Speech_Male> it in an <Speech_Male> hour before <Speech_Male> the financial committee <Speech_Male> hearing on the administration's <Speech_Male> approach <Speech_Male> to crypto <Speech_Male> reminds me of <Speech_Male> Democrat Richie Torres <Speech_Male> statement <Speech_Male> on gender <Speech_Male> a few months ago. <Speech_Male> A quote, <Speech_Male> a politician <Speech_Male> pretending to <Speech_Male> be a regulator. <Speech_Male> <Speech_Male> So <Speech_Male> we need Congress <Speech_Male> to act. <Speech_Male> The way <Speech_Male> to stop this is where <Speech_Male> Congress to act to <Speech_Male> come together Democrats <Speech_Male> and Republicans <Speech_Male> because Gary <Speech_Male> is out of control. <Speech_Male> <Silence> We also <Speech_Male> got some <Speech_Male> folks correcting <Speech_Male> Gary gensler. <Speech_Male> So <Speech_Male> <Speech_Male> Cody <Speech_Male> carbone of <Speech_Male> the chamber of digital <Speech_Male> commerce, <Speech_Male> he <Speech_Male> responded to some statements <Speech_Male> Garry cancer <Speech_Male> made against <Speech_Male> her rejects crypto <Speech_Male> threat to go <Speech_Male> overseas, <Speech_Male> quote from Gary <Speech_Male> as we lose <Speech_Male> more if investors <Speech_Male> get harmed here, <Speech_Male> he said, it's a <Speech_Male> basic bargain <Speech_Male> in finance. If you <Speech_Male> want to raise money <Speech_Male> from the public disclose <Speech_Male> certain facts and triggers, <Speech_Male> well, <Speech_Male> Cody carbone <Speech_Male> said genser <Speech_Male> is incorrect in <Speech_Male> his statements. One, <Speech_Male> Micah, <Speech_Male> which is the <Speech_Male> regulatory framework <Speech_Male> in overseas, <Speech_Male> does <Speech_Male> cover does cover <Speech_Male> Bitcoin under its definition <Speech_Male> of a crypto asset <Speech_Male> to U.S. <Speech_Male> investors are <Speech_Male> already getting harmed <Speech_Male> because they're seeking <Speech_Male> out offshore <Speech_Male> opportunities <Speech_Male> to invest IE <Speech_Male> FTX. <Speech_Male> So remember FTX <Speech_Male> collapse right under <Speech_Male> Gary's nose, <Speech_Male> Gary <Speech_Male> was meeting with sandbank <Speech_Male> and freed and the other FTX <Speech_Male> officials <Speech_Male> and Gary <Speech_Male> did not stop <Speech_Male> Celsius. <Speech_Male> He did not stop <Speech_Male> Terra Luna. He <Speech_Male> did not stop Voyager. <Speech_Male> He did <Speech_Male> not stop three hours <Speech_Male> capital, right? <Speech_Male> But he did stop Kim <Speech_Male> Kardashian. <Speech_Male> Thanks, thanks a lot, Gary. <Speech_Male> Yeah, Kim Kardashian <Speech_Male> is the one who lost billions <Speech_Male> of dollars. <Speech_Male> Kim Kardashian was the one <Speech_Male> who was in your office. <Speech_Male> No, no, that was actually <Speech_Male> sandbag me afraid. <Speech_Male> <Speech_Male> <Speech_Male> So Gary, you <Speech_Male> know, same old talking <Speech_Male> points. He just lying. <Speech_Male> He's not providing <Speech_Male> the clarity, but <Speech_Male> once again, <Speech_Male> his job is to <Speech_Male> slow this thing down. <Speech_Male> <Speech_Male> Just muck up the <Speech_Male> entire process <Speech_Male> and the industry cause <Speech_Male> confusion. So <Speech_Male> who's banking buddies <Speech_Male> can come in, <Speech_Male> swoop in <Speech_Male> and take over. <Speech_Male> Now, <Speech_Male> there's also <Speech_Male> reports here <Speech_Male> that Gary gensler has <Speech_Male> apparently, <Speech_Male> he has multiple SEC <Speech_Male> email accounts <Speech_Male> that he uses. <Speech_Male> Eleanor <Speech_Male> Tourette of Fox <Speech_Male> business said, why would <Speech_Male> he need to do this? I've <Speech_Male> reached out to the SEC <Speech_Male> for comment. <Speech_Male> So <Speech_Male> Gary, of course. <Speech_Male> <Speech_Male> Continues to shady <Speech_Male> activity. This is <Speech_Male> what we're dealing with here, <Speech_Male> my Friends, <Speech_Male> corruption, <Speech_Male> nonsense, <Speech_Male> hypocrisy, <Speech_Male> and <Speech_Male> he needs to be kicked out of <Speech_Male> office. <Speech_Male> All right guys, <Speech_Male> once again, <Speech_Male> not good news when news <Speech_Male> you should know about. <Speech_Male> It's pretty tough <Speech_Male> out there. <Speech_Male> Once <Speech_Male> again, I'm bullish <Speech_Male> long term, but <Speech_Male> right now <Speech_Male> things are tough. I think <Speech_Male> the silver gate situation <Speech_Male> is a black swan <Speech_Male> event. We could <Speech_Male> see Bitcoin's price <Speech_Male> just roll over, <Speech_Male> maybe <Speech_Male> go back down to, <Speech_Male> I don't know, 17, <Speech_Male> 18 K, our <Speech_Male> lower, I just don't <Speech_Male> know what's going to happen. <Speech_Male> <Speech_Male> And I think <Speech_Male> Bitcoin's retracement <Speech_Male> is going to be <Speech_Male> delayed. I hope I'm <Speech_Male> wrong, but <Speech_Male> what <Speech_Male> we're seeing right now, <Speech_Male> the all <Speech_Male> out attack the market <Speech_Male> is <Speech_Male> going to react to that. <Speech_Male> Once again, it's not <Speech_Male> that crypto is dead <Speech_Male> or is going to die. <Speech_Male> That's <Speech_Male> not what's happening here, <Speech_Male> but we are <Speech_Male> under attack. <Speech_Male> <Speech_Male> But <Speech_Male> this tech will win <Speech_Male> <Speech_Male> and <Speech_Male> once again, as history <Speech_Male> has shown us disruptive <Speech_Male> attack always wins. <Speech_Male> Anyway, guys, <Speech_Male> let me know what you think <Speech_Male> and I'll talk to you all. <Speech_Male> Later. <SpeakerChange>
"blockchain association" Discussed on The Bitboy Crypto Podcast
"And we founded a group called the digital currency traders alliance. D CTA is the nation's only pro cryptocurrency consumer protection group, a focused specifically on retail investors. And I know you were talking earlier about how there's no one in D.C. actually representing retail. In your absolutely correct. We saw this gap a long time ago. We figured someone actually has to step up for the little guy and we figured between our two ourselves we have 25 years of experience and we wanted to teach the average American, the tools of the trade and giving us some insider tips on how to actually lobby politicians effectively. Nate, do you have anything add on? No, I mean, one of the things, one of the things we've seen when it comes to getting folks active is they think their voice, their voice, it doesn't matter. And I think it's important for people to understand. It's like, I've been doing this 15 years. I've got a speech impediment. I was an average guy, and I showed up, I helped organize, you know, history is written by those by those who show up. So, you know, your voice matters. And that's the big thing we want folks to work in all this. And we're really trying to also focus on the state level because the state level is going to be the next big the next big battleground. Yeah. Well, I think and of course we have, you know, we have coinbase with their coinbase 35, I think it is. To 435 congressional districts, right? And they're looking for a push. And I think they're really, look, we would like to partner with them if they're going to go on the congressional on the state level or on the district level because their coinbase is pushing for industry standards. They're not exactly to protect the little guys. So people hear this they hear this four 35 and they're like, oh, it's cool. They're going to, guys, they're looking for their own interests. They're not looking out for your interest. I'm not saying coinbase is bad. I'm just saying, they're hyper focused in what they're doing. And this is not a push for the average person in crypto. Like for that to be the case, somebody's got to get out there and do it. And it's us. We're the ones that are out doing it. You guys are on the West Coast. We're over here on the east coast. And even some of these other even the blockchain association and coin center are like, I'm concerned a little bit there for the industry and everything's already industry. But what about investors? Yeah, no. That's one of the main reasons oh here, all that. Oh, it's just going to say I was just going to say you're spot on, man. And we thought it was so funny. We announced our stop the SEC campaign last week. Within 48 hours of us launching coinbase saw this crypto launch this crypto four 35 campaign. And I'm literally in Washington. I'm in Washington talking with the Congress the day they release it, you know? And we always hear people say, you know, like, oh, your voice doesn't matter. You know, what's the point of doing any of this? I'm like, are you guys stupid? Look, coinbase literally launched this campaign because they're worried about the consumer voice being co opted.
"blockchain association" Discussed on Thinking Crypto News & Interviews
"Notice defense is key, my Friends. I can overemphasize that. It's so important and a lot of crypto companies and projects can use this. Here's a statement or a quote that John tweeted. As in bittner, the government's prior guidance appears to contradict its present litigating position. And as in bittner, many experienced securities law practitioners and industry partners participants were unable to anticipate the government's current theory. And what was great guys, what we saw just in the past, let's say, four to 5 months, is that a lot of different crypto companies like coinbase and so forth started putting out amicus briefs to support ripple in the lawsuit. So a lot of crypto companies going against the SEC, a lot of advocacy groups like the chamber of digital commerce and the blockchain association and so forth. John says that's the reason it was file so late. If judge Torres finds that ripple offered and sold XRP as a security, this Supreme Court decision gives ripples for your notice argument a few more teeth. Finally, he says here, I've already went on the record to say that I have no doubt ripple wins before this current Supreme Court. The West Virginia versus EPA case alone is reason to believe ripple wins, the recent decision is icing on the cake. So all around great news, not just for ripple and XRP holders, but for the entire crypto market because imagine ripple getting this win, right? And sets the presidents for these other crypto companies and projects that Gary may go after. We know he's trying to go after everything. NFT stablecoin staking, you name it, exchanges projects. So they can also try to use that fair notice defense guys, so it is so critical for ripple to win. And I'm hoping they do not just because I'm biased and I'm an XRP holder. But I also hold other tokens. I want to see the clarity we put out in the market. And if ripple were to win, you know, I think they're going to really shine a light on the SEC's hypocrisy, the vile ethics violations. We know the SEC does not want Bill hinman's documents out there because of the conflicts of interest with the Ethereum foundation and it's just going to expose the SEC on multiple levels. So we need this victory. We need Gary gensler to take a big fat L and to be stopped and with that big L, this is a high profile case. There's going to be a lot of media coverage. A lot of people taking victory laps rightfully so because Gary's been taking his victory laps, right? Going on TV as soon as the SEC gets some sort of settlement, trying to paint a picture that he's doing his job, but he's really not.
"blockchain association" Discussed on CRYPTO 101
"So it doesn't crash from a DDoS, right? So you need to have a phone number behind it because that's not spoof able, not just anybody could have a phone number. And I don't think they let you do the Google Voice numbers or the voice-over IP stuff. I don't know, man, there's plenty of bots at that phone numbers these days. They tend to call me nonstop if I ever owe anything. So you should have to refute that one. But there's also plenty of things like H capture and things that don't give away your personal information or link you to link your personal data to whatever's going on over there. So again, I just don't know about that. But it's good to know, I guess, that they're trying to use these tools to maybe air drop me a free NFT that I might be interested in as opposed to like snooping on every transaction I might make or who my Friends are. At least for now. So let's think positive about this stuff too. Personally, I like targeted ads, whatever I mean, I'm a sucker for buying things from Instagram. Show me a lot of cool stuff all the time. Honestly, it's Instagram and Facebook have nailed their algo. I was golfing with a buddy the other day who had Twitter, his whole outfit he had shoes clubs, gloves, everything that he bought from Instagram ads. And he was just a walking Instagram. I was hilarious. Wow. I got the shirt from an Instagram ad. Alex, how'd you get interested in this stuff? How did you get interested of being on the other side fighting the marketing algos? And even more than that, just empowering the individual. What were you doing before and what got you interested? Yeah, I mean, this is sort of my forehead to crypto began really. I joined or got involved in crypto in 2017, but my Fourier probably started when I learned about central banking several several years, even earlier. And to me, the issue has always been about rehypothecation, fractional reserve lending. That's sort of where the imbalance begins. And so to me, Bitcoin presented a brilliant and to me comprehensive solution at the monetary level and DeFi does a really good job at the level of finance. The challenge is that the virtual domain is being used sort of foundationally to create an implement and use these systems and therein data becomes rehypothecated as the foremost form of wealth. And so that's where you run into some new challenges, where to me, rehypothecation is now taking place all over again. And so privacy to me sort of seals the gap, it brings the whole vision full circle. It's what's needed and it's especially needed in the decentralized layer one environments like Ethereum. And I think but even to take that one step further, whether it's addressable or whether it's just this linking that's the issue is that if you're in the digital environment and you want this one siloed closed in space where you're private, if any element of that, like just again, on chain address is visible, it's really difficult because you've hooked in your phone number here, your name there. You've hooked in your every lot of different other transactions and stuff that's public data. And so there's so many easy ways to develop really sophisticated, true, but they are very, very much in existence now, algorithms that can link the stuff that's private about you to the stuff that's public about you. And so you really need a way of restoring your anonymity on Shane. You need to be able to do it's sort of like digital housekeeping, I would call it. Yeah. No, I think that's a pretty good analogy digital housekeeping, cleaning the cobwebs out. But do you ever kind of worry not worry, but maybe think about or consider other kind of privacy preserving technologies and the uphill battle that they face with regulators. How do you guys think about that? Yeah, that is a big challenge. I think on one hand, you know, the mission for everyone is to develop a decentralized solution and fully pass off. I mean, if you're in DeFi, if you're in the crypto space and your goal isn't to eventually pass off to dissolve, so to speak and pass on everything to a Dao, you're not really in line with the mission. So that's obviously a big part of it. Is that you want to be decentralized and community governed and community run and community owned. That is part and parcel of what crypto is about. As far as the challenges with regulators and authorities, I think Jake trevino is someone who's sort of been a big leader in the space and has emerged as someone with the blockchain association that are doing some really important work on behalf of the small grassroots teams across the space where certainly a grassroots team. Because once you start picking up the money, once you start working and getting the VCs involved in some of the big organizations that you can fund legal development and have those individuals on your team, then of course you're kind of getting away from that decentralized grassroots ethos that whole narrative. So I think the big thing though is that you have to just go ahead and do the thing that you know is right at the end of the day. I had a fireside chat with Edward Snowden last year where he sort of said that he said that in the long run the projects that are doing the right things and operating with integrity will make it and he believes that firmly. So do I. I think it will be a bumpy ride and there are a lot of things that we can't control that no one can control, but having at least at the very least the blockchain association, like I said at the forefront, some people that can represent the space is really important and I think it's also again about education. There have been a few people in Congress, some MRI believe, and you have Cynthia Loomis. So there are some people who are starting to show up and say, hey, actually, I've done my homework actually. I've educated myself and some of the stuff that's going on in this space needs to be protected. And we need to be hands off and respectful. So I think there is hope. But yeah, it's going to be a challenging and bumpy ride, no doubt. Yeah, and anything that's new always scares the government. Back in the 90s when PGP encryption first came out, Congress wanted to ban it due to it being a threat for national security. Like, oh my God, people can code their messages like the CIA can now. We can't let this happen. But because they've backed off and did allow that to happen, now we have ecommerce, and the world is completely transformed because of it. Bingo. So,
"blockchain association" Discussed on Bloomberg Radio New York
"You from the Bloomberg 99 one studios in Washington. I'm Joe Matthew today in for David Westin, thanks for joining us on balance of power. The blockchain association calls itself the collective voice of the crypto industry. And so a pretty good place to start on the many questions we have following the meltdown at FTX and now the apparent looming testimony here in Washington by Sam bankman freed that ought to be well attended. Kristen Smith is blockchain association's executive director and Kristen it's great to have you back as you anticipate here a real effort in the new Congress. To try to set up more guardrails on crypto and you anticipate the testimony by sbf, which may not be terribly well received, knowing he donated millions of dollars to politicians, namely democratic politicians here in Washington. Are you worried about this going too far? Well, yes, I think first, I do think it's important that Congress look at this issue because what was going on with STX is vastly different than the way most U.S. based crypto companies operate. This was an old fashioned crime of seeking customer funds and gambling with it when he wasn't supposed to do it. So I think it's important that we look at what he actually did before jumping into legislation in the right regulatory response. That being said, though, I do think there are some good and thoughtful ideas about how we can fill some of the regulatory gaps. There is already some regulation of crypto in the U.S., but I think we can do a better job of it and we're looking forward to having that conversation with lawmakers in 2023. Will it be isolated to the on ramps and off ramps, so to speak? Does this have to do with exchanges or does it go further? Well, I think there are separate issues out there. I think finding a way to look at the markets and look at the exchanges is one of the most important pieces of regulation that is needed. There's also an issue around stablecoins and how to regulate stablecoins that are backed by dollars in bank accounts. I think those two pieces are sort of the low hanging fruit. There are some other questions as to whether or not other parts of the ecosystem need additional regulation. There have been proposals out there that would regulate dealers and brokers and even DeFi. We disagree that all of those pieces need regulation. I think it's really important that policy makers have a good understanding of what crypto is because the risks can be very different. But when you do have these centralized entities like exchanges that are taking customer funds, that is an appropriate place for regulation and one that I think we could do better than we are than we are doing today. Well, okay, that's interesting because a lot of folks say, how about you start, including our own Joe wiesenthal? How about you start by enforcing the laws already on the books that could have prevented this bankruptcy? Do you see it that way? Yeah, no, you know, what's interesting about FTX is FTX was headquartered in The Bahamas. And so they weren't part of the U.S. regulatory structure. Now they did have a separate entity STX U.S., which did get licenses here in the United States. And it seems as if that largely prevented the same sort of problems that FTX U.S. as we've seen at XX, the international company. But no, I do think that if FTX had been headquartered in the United States and complying with the laws that we have on the books today, this would not have happened. Now, what appears to have happened is a fraud, right? They crime. And sometimes when you have criminal behavior, regulation, they will skirt, they will lie, they will get tried to do whatever they can to continue their crime undetected. And so that gets more difficult to stop. But yes, I think having the regulatory licenses that exchange is having the U.S. would prevent something like that from happening here. So if this had not been in The Bahamas, you don't think it would have gone this way. And if that's true, should we start by avoiding doing business with companies in the Caribbean and other countries than the U.S.? Well, you know, it's interesting. The reason that people flock to those jurisdictions is because there are often products and services available that because we don't have a more comprehensive structure here in the United States, people here in the U.S. will use VPNs to get around their geofencing to use their services, particularly we want to trade derivatives or margin products. And so I think what we need to do here is figure out how can we make the regulatory environment attractive enough that companies don't want to leave overseas that they can meet customer demand here in the United States in a way that is safer and there is more oversight. So we don't have a situation like we had with FTX. By 15 year old over the weekend, explained this to me, how the VPN means no borders. And if my 15 year old knows that. Then I'm guessing a lot of people in the crypto space do. I sometimes wonder about lawmakers, however, as they're all learning as they are regulating. And that presents its own challenge, if not risk here, correct, to get it right. To understanding blockchain as a concept is a college course in itself. These are complex topics and we spend a lot of time at the blockchain association doing education with policymakers, book lawmakers regulators, and others who are involved in these processes. And it takes time. And the good news is, though, that I think we've made a lot of progress in the past several years. We have a lot of lawmakers who have really invested in getting to know this space and listen, we don't have to get to all 535 members of Congress to get your legislation. But we need the folks on the committee who are tasked with getting into the weeds to have a good understanding. It's an ongoing process. We're educating them really on a daily basis doing meetings and briefings. And we're going to continue to do that work into next year because I do think there's going to be a lot of legislative activity and we want to be a resource to policymakers as they're trying to navigate to figure out the next steps. Do they like hearing from you or do they think that you have a compromised interest at the association? Yeah, so the good news is FTX was number a member of our association. So they knew their team and we spoke with them. But we actually had pretty vast strategic differences in how we were approaching regulation. And so I think that, you know, we've been around at the blockchain association for four years. We have a very highly regarded team. We try to be an honest broker when dealing with policy makers. And I think that
"blockchain association" Discussed on Bloomberg Radio New York
"Coming up on balance of power, the House and Senate planning hearings in December. Not only into the Hunter Biden laptop. But what the heck happened at FTX, the role that Sam bankman freed played in it and how crypto should be regulated. We'll talk next about that with blockchain association executive director Kristen Smith first, let's get a look at the markets right now speaking of crypto here's Charlie Powell. I thank you very much indeed Bitcoin Joe Matthew down now by 1.9% down $311 15,943 right now on Bitcoin. Stocks are trading mixed in fact, stocks have trimmed declines after San Francisco fed president Mary Daly warned that too much tightening could be quote unnecessarily painful for the economy. Both the S&P and NASDAQ 100 index are off session lows. The NASDAQ 100 index now down by 9 tenths of 1%, the NASDAQ composite index also down 9 tenths of 1% down 103 points. The S&P is down 11, drop there of three tenths while the Dow is up 9, a by less than one tenth of 1%. Ten year yield 3.82% right now, the two year 4.54% spot goal down 7 tenths of 1% 17 38 beyond 1738 on gold, bought West Texas enemy approved down three tenths of 1%, 79 86 a barrel on doden TI. As for the broader stock market outlook, Sylvia jablonski is the CEO and cofounder of defiance ETFs. What we're really also looking
"blockchain association" Discussed on Bloomberg Radio New York
"Kinks to get worked out for things to get developed And so I think it's actually healthy for policy making to have these conversations and do the education when there isn't all of this excitement And so the euphoria around rising prices So yeah we're certainly going to continue to push forward to educate lawmakers regardless of where prices are But yes it does allow us to have a more thoughtful and conversation All right Kristen smith's executive director of the blockchain association lots to continue to watch this year Thanks so much Meantime PayPal is exploring the launch of its own stablecoin as part of its cryptocurrency push The company confirmed the development of a developer discovered hidden code inside its iPhone app Stablecoins are cryptocurrencies backed and priced by the value of an existing currency or commodity All right and we have some breaking news that meta of course apparent company of Facebook is requiring its staffs to get to COVID booster shots in order to reenter the office This according to a report in The Wall Street Journal meta saying that they're also pushing back their return to the office to some time in March That's slightly more liberal than some of the other companies we've seen so far this year Lyft for example pushing back the return to the office until 2023 Of course we'll continue to watch but of course the news that meta is now requiring staff to get a booster shot In addition to a vaccine to come back to the office Coming up Red Dead meat FarmVille Take two interactive buying mobile game developers inga why take two stock is tanking on news of the 11 $1 billion deal We will explore next This is Bloomberg How will I have to adjust or not as a result of your greener ambitions 32 can be more than 30,000 people goodbye And as you say there was a big cat who became people that were worried about climate and people that were active in action When you think about schools in particular in children where we've seen pediatric hospitalizations actually on the rise amid the spread of this variant Do you think keeping schools open is the right move If done well at school is a relatively safe environment for kids masking tests especially during the surge of cases I think if that is a very important for kids to be in school and I think the chance that school becomes an explosive source of new infections is low with precautions 10 million cases in just a week Are we reaching a peak of this wave considering how quickly it is spreading through the population I think at a certain point it really has to slow down and it's probably within a couple weeks or a few weeks away And I think going to be good news the question is can we keep hospitalizations down enough during this period so we're not swamping hospital Then interesting reality is now with autocross is that you're seeing that it's not just about part availability It's about people availability You see that hospitals are struggling to have full levels of staffing And that is actually in a holistic sense of supply chain problem Video.
"blockchain association" Discussed on Bloomberg Radio New York
"That there would be one regulator if so which one Well listen I think ideal world it would certainly be easier to have a single regulator But I just think realistically we're not going to see our existing regulatory system completely changed around to accommodate crypto We have some types of cryptocurrencies that probably should be like stable planes that should be regulated within the banking regulators We have other applications of crypto networks that trade like securities and in that case the SEC makes sense But many of them are like commodities and so you have the commodity futures trading commission which there's a role for them to play there So I know there have been some proposals for a single regulator Certainly in an ideal world I think you know the blockchain association would like to see that But we understand that jurisdictional battles can be a big hurdle towards getting something done like that And not just at the regulatory level but within Congress right Because just remember these committees in Congress there are different committees involved that oversee different agencies and they certainly don't want to give up their jurisdiction as well So I think we're trying to look at sort of the art of the possible here and work within a slightly more complex but realistic framework Yeah I suspect spending a fair amount of time educating all of us about exactly how these things work because someone is don't understand it Okay thank you so much really great to have you with us today it's Kristen Smith of the blockchain association Coming up in Europe is facing a difficult window Winter and I'm not talking about natural gas right now I'm not even talking about Russia on the border you with your pain I'm talking about COVID cases They are surging again We talk with Bloomberg's drew Armstrong about what lies ahead Some people say it's worse than they've ever seen it in places like.
"blockchain association" Discussed on Bloomberg Radio New York
"The global energy crisis boosts demand WTI high a WTI higher today Brent crude at 83 59 up by one and a half percent Gold a little changed 1754 the Alps I'm Charlie palika Matthew is a Bloomberg business flash Charlie we do thank you Do you feel the anxiety As I read on Bloomberg JPMorgan Chase CEO Jamie Dimon says cryptocurrencies are going to be regulated as anxiety around stable coins and the asset class more broadly has been growing in Washington Certainly got my attention Jamie Dimon says he personally well you'll have to hear what he says about Bitcoin specifically Spoke about it at the institute for international finance annual membership meeting Listen to Jamie Dunn I personally think that Bitcoin is worthless But I don't want to be as both of them I don't care It makes no difference to me Our clients are adults They disagreed That's what makes markets So if they want to have access to buy yourself Bitcoin we can't custody it but we can give them legitimate as clean as possible access Okay if you want it And that story on the terminal links to one arguably more important from days earlier treasury pushing to impose bank like rules on stable coins is this finally about to happen We pick up the conversation with Kristen Smith executive director at the blockchain association It's great to have you Kristen Do you cringe when you hear Jamie Dimon say Bitcoin is worthless Well it's clearly not worthless because markets currently think of Bitcoin as valued at $57,000 So I think Jamie Dimon thinks he has greater wisdom than the market So I think he needs to go back and textbooks But listen I think he's right in that regulation is coming There is already regulation in this space but I think there are probably better ways that we can go about doing regulation of crypto assets And folks in the crypto community are super open and eager to have this conversation because we do think that having the right proper sort of balance of regulation will make these markets safe will make these markets something that consumers want to invest in and we're eager to have a seat at the table and be a part of the conversation The blockchain association of course that's your operation claims to be the unified voice of the blockchain and cryptocurrency industry And so when you hear stories like this that I just mentioned the treasury pushing to impose bank like rules on stable coin is that the beginning of regulating the entire market for crypto Yeah well stable coins are just one sub sector of cryptocurrency And there are many flavors of stable coins but the most common are ones that are backed by dollars and treasury bills And the point is that you can have the benefits that cryptocurrencies have of being available 24 hours a day being able to move quickly quickly and with a low cost from person to person But to have that feature of having a stable tokens so that you know if you decide the way a few minutes before trading and the price drops you might have leaked out right So wouldn't that make sense then as a place to start for the SEC to actually begin writing rules Yeah well for stable coins we think banking regulators are probably the better place right Because you're dealing with reserves of dollars that are being held in bank accounts And we need to kind of rethink stable coins are full reserve banking right They're not fractional reserve banking So we want to look at making sure we have the right kind of regulation Now the SEC is a regulator that deals with information asymmetry issues This is to make sure investors know they have information about the investments that they're looking to invest in And there is a role for the securities regulators to play and Gary gensler the head of the SEC is very knowledgeable in this space and has a lot of ideas how to do that And we want to be a part of these conversations But you have to remember crypto networks are open-source anyone can see the information they can go under the hood and look at the code of these crypto networks You can't do that with banks today You can't do that with big Internet companies today So we just need to make sure that the regulation fits the risks that these new these cryptocurrencies and the networks that they fuel provide Because sometimes the risks are different Well I know that you see the space as already regulated as an association to your point When you hear Jamie Dimon making comments like this Now he thinks Bitcoin is worthless but he sees a market there and JPMorgan like a lot of firms want to be able to do this efficiently and safely You know when is the when do we get to the point where we're talking about a crypto ETF What's taking Gary gensler so long Yeah well you know Gary Templar is looking at future EPS right now And to me it's a little bit strange that you would permit a future ETF without permitting and underlying spot market ETFs right Because it's the futures are safe and so since the spot market So I know that that's something the SEC is actively looking at But I think more importantly we need to figure out how investors can get easy access to investing directly into Bitcoin It's difficult to do.
"blockchain association" Discussed on WNYC 93.9 FM
"I've been speaking to senator E. Kenyan. He's a fintech, lawyer on a former general secretary of Nigeria's Blockchain Association. See Ban I asked him what's behind the popularity of crypto currency in Nigeria. Alone. Nigerians find that cryptocurrencies provide if faster, way off. I'm sending money cause border. The traditional financial system does not provide a very complicated way off sending money abroad. When it comes to cook to adoption in danger area. I think most of the young people were involved in this. They just want solutions, who stopped the consider problems in the traditional financial services pace, Nigerian naira has lost its value up to 25% say in the last one year. And these a young people who are working hard every day saving in NYRA, and they're losing the value off all of their savings within a year. But just think about one of things that's happened a lot recently. In the last few weeks and months is you seen enormous fluctuations in the value of crypto currencies. So isn't there a danger that people simply dues money because it's also speculative. And also because some of these currencies aren't necessarily trustworthy in and off themselves. Yes, that's the concerns who the volatilities issue is a big issue in crypto. In the last six months, we've seen institutional money. Been invested in Bitcoin, and that's bringing some measure of stability as well. But this is a new technology. As it evolved, there will be some stability at the end of the day. But I'm really still interested in the mindset of I don't know. 20 year old Nigerian who's putting hard earned savings away. Why not just invest in dollars? You know where you are. It's the issue of trust. Those who have come to invents Bitcoin and other Cryptocurrencies is believe that we're looking at the economy and becoming more decentralized. We're looking at a paradigm shift. Where the network the power the network where the people who own data They want to exercise on power and be able to say this is what we want. So it's beyond just money. This is this philosophical ship from others who rely on centralized authorities or third parties or intermediaries. That over centuries, they've not been doing so well when it comes to managing in relationships or the economy or even the banking system. Some people think that this is being the rich getting richer and the poor are getting poorer. And so let's just have a bridge somewhere where people can also say this is what I want, and this is what I want to do. All right. I want to transfer more into my sister in Africa. I He doesn't spend seven days with him for that money to cross to the other parts of the country. Just because I have to go truce on am l or see if you're okay. Wise, you requirements Just send the money back on. My sister is hungry. Somewhere on my sister needs some school fees off where You can't lady stuff as I speak to you my own neighbor accounts. I can't. He won't spend more than $100 in a month. How do we expect you May Nigerians ever enterprises doing business across the world or insolence could be limited Tow $100 a month. You can't do that. When you talk about a philosophical shift, Do you think this reflects then? Ah kind of mistrust or antipathy towards governments and traditional institutions. Perhaps that mistrust always existed. But what technology has enabled is for people to sidestep to. Actually, it's given them an alternative. So just look at what happened in world streets recently, the game stop on the readies and on hold. There's distrust in the system, and people want to take their power back and money, their fares, not by being immobile anything. But by relying on a book it on the technology that is all about having tough in the code, whether than trusting the human being. This is what it's all about. That's lawyer and former general secretary of Nigeria's Blockchain Association. See Ban Senator Hen Yuan. He is fascinating because he raises lots of important regulator issues which we will definitely come to But he's also suggesting Katherine that there's greater trust in the code than there is in people. Is he right about that? I think he's completely right. So I mean, if you look again at the reaction to game stop, people were effectively many average everyday. People were laughing at the hedge funds, basically for losing that kind of money. Then do the hedge funds. People in hedge funds have often looked down at individual investors, and they actually have the name. Stupid money right for those individuals, non institutional investors, so absolutely, I think people are saying Well, if I can place my trust in the code. Will trust that over the human element. By the same token, however, what you're actually genuinely placing your trust in when you are using things like Cryptocurrency is you're placing your trust in the people who have coded your Cryptocurrency on having met many coaches over my life. I'm not sure I would place my 100% trust in all of them. So Yeah. Garrick, I wonder. What do you make of that? Yeah, No, I think it's a great point. First, I completely agree with the General Nigeria's pointed jury is one of our biggest markets. I just wanted to make that point that you for the billion plus people out there that don't have you No proof of where they live or any kind of idea. You can still use Cryptocurrency. You could still use blockades. But one big thing, the question of fraud, according to a 2019 paper in the.