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The Breakdown
A highlight from Congressional Republicans Lash Out At Gensler
"And at the end of it all, after dealing with several more non -answers from Gensler, an exasperated ogles closed the hearing with the call to open up the floodgates, hit him with subpoenas, get the information we need. The obfuscation, the not answering questions, I'm sick and tired of it. Dude, you wear tap dancing shoes better than Fred Astaire and enough is enough. It's time that questions are answered and that we have the information that we need. 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 28th, and today we are talking about Gensler's combative hearing. 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, we had yesterday another hearing featuring SEC Chair Gary Gensler. This was a House Financial Services Committee oversight hearing. And what makes this one a little bit more interesting, even in the Senate hearing that we heard last week, is one, it had some interesting lead -in in the fact that a bipartisan group had just sent Gary Gensler a letter encouraging him, in the strongest possible language, to approve a Bitcoin spot ETF. And two, it had the setup for some very interesting fireworks heading in. And indeed, that is exactly what we got. Committee Chairman Patrick McHenry set the agenda from the beginning with his opening remarks. He addressed Gensler saying, Last time you were before the committee, I voiced my concerns regarding your reckless approach to rulemaking, lack of capital formation agenda, crusade against the digital asset ecosystem, and unresponsiveness to Congress. So many things changed, so many things remain the same. Those are the same issues on the docket today. McHenry went on to accuse Gensler of doing nothing over the past five months to remedy the legitimate and often bipartisan concern expressed by this committee, adding that this is disgraceful and that their patience was wearing thin. Now, the Republican critique of Gensler's rulemaking agenda is that a huge number of rules have been proposed during his term without an economic analysis being performed on their cumulative effect. Regarding the crypto crackdown, McHenry rebuffed Gensler's constant assertion that the law is clear. He stated, your actions have created more confusion and lasting damage. Indeed, he said that contrary to the SEC's role of consumer protection, that Gensler's actions had, quote, pushed legitimate digital asset activities outside of regulated financial institutions where consumers are best protected. Keep in mind, this is all in the opening statements. McHenry went on noting that the SEC's regulation by enforcement agenda has been ineffective and has been on a massive losing streak in the courts. Still, the main point, the main thrust of McHenry's opening, was that it was unacceptable that the SEC had not engaged with Congress. Wrapping it up, McHenry said, the SEC is not above the law, nor is it unique. I do not want to be the first chairman of this committee to issue a subpoena to the SEC, and you should not want to be the first SEC chair to receive a congressional subpoena. Either we find a path forward where the SEC recognizes Congress as a co -equal branch of government and is responsive to our oversight duties, or my option is to issue that subpoena. It's time for you to consider the lasting consequences of your actions and what that means to the SEC's reputation long -term. While your time in this role may be temporary, the repercussions for your actions may be permanent for the agency. It was a fierce opening that sent the signal right away of what we were in store for. Now, a couple other quick notes around other opening statements. Democrat Ranking Member Maxine Waters used her time to rail against MAGA Republicans for pushing the government into a shutdown, and effectively defended the SEC's agenda on all fronts, and asserted that their rulemaking agenda was moving quote thoughtfully and effectively. Now, Gensler himself also got a chance to give an opening statement, and most of his time was spent on justifying the agency's regulatory agenda. He claimed overall that the rulemaking process had been measured with ample time and consideration given to public comment. Now, from there we moved into the question section of the hearing. McHenry as committee chair got to go first and used his questions to focus on Bitcoin. He asked Gensler whether he stood by his previous comments that Bitcoin is not a security, which Gensler evaded by talking in circles, never reaching a point. Notably frustrated by this process, McHenry snapped, I'm asking you to answer my question now. This is not supposed to be hard. Unable to get a straight answer, McHenry moved on to his point that there is currently no regulator with authority over Bitcoin's spot markets. He asked whether Gensler believed legislation should be passed to close that regulatory gap. To the surprise of no one, Gensler continued in his noncommittal manner, acknowledging the existence of said gap but failing to engage with the need for legislation. After that, McHenry left the crypto topic to press Gensler about when he can expect a response to document requests. Becoming ever more frustrated with Gensler's mealy -mouthed answers, McHenry said, This should not be the hard work of a chairman. You have 30 major rulemakings, but you won't even provide basic documents to us. Your unresponsiveness is non -compliance and we'll have to take action if you're not willing to comply. Now Maxine waters again as ranking minority member got to speak next. She, too, continued on the crypto theme, although she used her time to accuse the industry writ large of quote gross violations of the law that end in investors getting ripped off. She asked Gensler what the SEC has done to quote shut down crypto firms and whether quote crypto firms are getting the message. This, of course, mainly served to set up Gensler's usual sound bites. This is a field, he said, that's rife with fraud, manipulation and scams, and the American public is still getting hurt by the non -compliance in this field. Waters also used this chance to castigate Republicans who quote too often protect crypto firms. Now it was very clear listening to Waters that she wants the public to see the crypto industry as just Luna and FTX, to extrapolate them to everything and effectively shut the industry down. Now moving into the rest of the questioning, much of the substantive discussion centered on SEC staff accounting bulletin 121. Better known as SAB 121, this measure requires financial institutions to place intangible assets on their own balance sheet rather than in segregated customer accounts. The rule has been widely criticized for making crypto custody essentially unworkable for banks. Dissatisfaction was expressed from numerous representatives, including one of Gensler's usual allies, Brad Sherman. Sherman noted that the rule lumps all intangible assets together from real estate to crypto. He suggested that specifically designed rules for vastly different asset classes would be more appropriate. The most robust questioning on this topic, however, came from Republican Mike Flood. Flood put to Gensler that his staff did not consult with prudential regulators on SAB 121, which Gensler acknowledged. After stating that he had personally looked into this issue, Flood noted that the Accounting Standards Board had not published any guidance around crypto custody. This contradicted Gensler's comments from a previous hearing when he stated that the SEC was simply applying existing accounting rules. Flood said quote, With regard to SAB 121's potential effects on a bank's balance sheet, it's fair to say that fact pattern we have is that the SEC is not just going out of its lane, but it failed to comprehend the existence of any conflict with prudential rules. He suggested that there are only two explanations for this action. Either the SEC knew there was no justification for SAB 121 and chose to do it anyway, or that there were fairly obvious mistakes made during that process. Flood concluded saying quote, The case of SAB 121 raises the question of whether the SEC is compromised. Now, as you might expect, minority whip Tom Emmer lined up to take his shot with a series of rapid -fire yes or no questions. The main thrust of his questioning was around whether Gensler's history as a partner at Goldman Sachs had colored his agenda at the SEC. To get a sense of Emmer's opinion on this, just look at his tweet from yesterday where he said, Fact, Gary Gensler is not an impartial regulator, and his answers to my questions today prove just that. He's made a career of being relentlessly loyal to the largest institutions in America at the clear expense of innovation, competition, and everyday Americans. One example, Emmer presented Gensler with a quote he previously gave about bank executives being concerned about depositors moving money into crypto. Emmer asked, Can you assure this committee that your style of regulation by harassment towards digital asset innovation is to the benefit of every American and not driven by your desire to protect industry incumbents? At another point, Emmer asked whether Gensler believed that all crypto tokens were securities, which was, once again, avoided with a rambling noncommittal answer. And all of this built up to the big finale in which Emmer said, Mr. Gensler, despite your years of rhetoric, I'm convinced you are not an impartial regulator. Instead, it's clear you are working to consolidate your own power even though it means crushing opportunities for everyday Americans and, frankly, the financial future of this country. Even the federal courts are highlighting the damage you, sir, are doing to our constituents and they are telling you you don't have the legal authority to accomplish your goal of squashing competition in the financial markets. Now, while this was extremely satisfying to watch if you happen to agree with Emmer, in general, I find that this type of interaction is exactly why these hearings are so much about and not really about productive anything. This was a chance to articulate the Republican position against Gary Gensler. There's no real place for listening. It's about laying out a narrative. Now, in this case, I happen to agree with Emmer's narrative, but it still doesn't make for the most effective governance. Another notable line of questioning came from Democrat Richie Torres. Torres used his time to dig into the issue of whether crypto should be governed by securities law. He said, I worry that the term investment contract has become so infinitely malleable and I worry that when it comes to crypto, your interpretation of the term investment contract has no limiting principle and therefore could invite arbitrary and capricious enforcement action. Torres referenced an August report from six law professors which examined the history of the Howey test. That report had noted that no Supreme Court ruling has ever determined the existence of an investment contract scheme without recognizing one or more contracts underlying that scheme. When pushed to provide a case that contradicts this research, Gensler was unable to do so. When Gensler began to waffle, Torres cut him off, stating that, This is a question to which you should know the answer because the definition of an investment contract is the central issue. That's what determines the extent of your authority. That's what determines the applicability of federal securities law to crypto transactions. Your inability to answer that question is baffling to me. Switching tactics, Torres asked whether purchasing a Pokémon card would constitute a securities transaction. Gensler, as always, was unable to give a straight answer, stating that he would know what the context was, although generally he acknowledged that it would not be. Torres followed up by asking whether purchasing a tokenized Pokémon card would be considered a securities transaction. He asked Gensler if, For you, the process of tokenization is what transforms a non -securities transaction into a securities transaction? Gensler, of course, did not get to a real answer and just fell back on restating the elements of the Howey test. One other topic that you might be wondering if it came up was the Prometheum question. Prometheum was, of course, the first crypto firm to obtain SEC registration as a crypto brokerage, despite the fact that that licensing seems to give them no ability to actually offer digital asset trading. Prometheum is also minority -owned by a prominent Chinese firm. After Gensler failed to express any serious concern with the Prometheum situation, Congressman Ralph Norman noted that the SEC had taken 10 weeks to respond to a letter on the issue. He said, Andy Ogles brought the four -hour hearing full circle, saying, And at the end of it all, after dealing with several more non -answers from Gensler, an exasperated Ogles closed the hearing with the call to, So, what can be drawn from this hearing, if anything? Well, Gensler appears to be stubbornly sticking to his plan to evade document requests and oversight from Republican representatives. Over the four -hour hearing, there were few, if any, answers from Gensler that produced any new information or even, frankly, attempted good -faith engagement with the questions. Throughout the hearing, Gensler acted as if he knew there would be no serious repercussions and he could continue to treat congressional oversight as a joke. Republicans, for their part, are clearly fed up and ready to act. McHenry began and ended the hearing with a threat to subpoena the SEC and Gensler to compel a response to the numerous document requests that have gone unanswered. The threat seemed to carry little weight for Gensler, who seemed more than willing to allow that controversial action to play out. Now, on the flip side, establishment Democrats appear entirely disengaged with the legislative process and committed to the current strategy of naming failed crypto projects and demanding that the SEC continue its rampage throughout the industry. No senior Democrats appear at all concerned that the SEC is losing in court, as long as that litigation remains a roadblock for the industry. Representative Torres remained a bright spot and one of the few Democrats breaking with his senior colleagues. His questions showed a deep understanding of the legal issues surrounding token lawsuits and the need for additional clarity and crypto regulation. Overall, the hearing really just confirmed what we already knew about Gensler and his leadership of the SEC, which is, of course, that it seems very unlikely that anything will change. However, Republicans have now clearly reached the end of their rope and are ready to play hardball by using subpoena power. As Bill Huizenga put it to Gensler, what's your plan? Because we've got a plan. Until next time, guys, be safe and take care of each other. Peace.
The Crypto Overnighter
A highlight from 682:SECs Power Struggle: Congress, ETF Delays, and a Pivotal Hearing
"Good evening, and welcome to The Crypto Overnight -er. I'm Nick Ademus, 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 Wednesday, September 27th, 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're diving into the SEC's ongoing tango with the crypto industry. From Gary Gensler's controversial stance ahead of a congressional hearing to the SEC's foot dragging on Bitcoin ETF approvals, the regulatory landscape is becoming a battleground. And don't think Congress is sitting idle. They're stepping into the ring, demanding answers and action from the SEC. Buckle up, it's going to be a rollercoaster of a night. US Securities Exchange Commission Chair Gary Gensler has been vocal, and his recent statements ahead of a congressional hearing are stirring the pot. Gensler testified in front of the House Financial Services Committee, and we're going to get to his testimony in a bit. He's holding fast to his stance that most cryptocurrencies and crypto firms fall under federal securities laws, laws that, mind you, have been on the books for decades, according to his testimony. Gensler's view is a direct challenge to the crypto industry's ethos of decentralization and financial freedom. He likens the current state of the crypto market to the 1920s, before federal securities laws were in place. A comparison that's not just a stretch, but a leap back in time, ignoring the innovative nature of blockchain technology. Again, during his testimony today, he reiterated his belief that Bitcoin is not a security. He stopped short of saying that Bitcoin is a commodity. When he was asked if he believes that Bitcoin is a security, Gensler responded that he, the SEC staff, and prior chairs have said that it does not meet the Howey Test. However, he was reluctant to say that Bitcoin was a commodity during a follow -up question. When talking about Bitcoin's categorization, he said, quote, the test is otherwise for other laws. Again, refusing to answer the question. Gensler is not without his critics. Patrick McHenry is the chair of the House Financial Services Committee. He was the one asking questions about Bitcoin and receiving non -answers in return. McHenry accused Gensler of lacking clarity, and McHenry's point is valid. How can you punish digital asset firms for not adhering to laws when it's unclear if those laws even apply? It's like being ticketed for speeding when there are no speed limit signs. On the other side of the aisle, some Democrats like Maxine Waters are siding with Gensler. They believe that existing securities laws can work for crypto firms, but let's be real. This isn't just about regulation. It's about control. The government wants a piece of the crypto pie and they're using outdated laws to stake their claim. The House Financial Services Committee has advanced two bills. One aims to transition a digital asset from being a security to a commodity. The other looks to regulate stable coins. Both are clear indicators that lawmakers are scrambling to catch up with an industry that's already miles ahead. While Gensler was testifying, crypto entrepreneurs were in Washington for Coinbase's Stand With Crypto Day. They met with lawmakers and discussed how crypto is creating jobs. It's a counter narrative that needs to be heard, especially when the SEC is painting the industry as the Wild West. The SEC, under Gensler's leadership, is pushing for crypto compliance based on antiquated laws. That not only stifles innovation, but also contradicts the very principles that make crypto a beacon of financial freedom. And as the government tries to rein in the crypto world, the industry is fighting back, making it clear that they will not be easily tamed. Gensler's testimony is a pivotal moment for the crypto industry. His unwavering stance that most cryptocurrencies should be regulated as securities is a red flag. It's a philosophical clash with the ethos of decentralization that many in the crypto community hold dear. Gensler's comparison of today's crypto landscape to the 1920s is a thinly veiled warning. He's essentially saying that the crypto industry is a Wild West that needs taming. Now let's not forget, the crypto industry isn't Wall Street. It's a new frontier with its own set of rules and innovations. But Henry's criticism of Gensler is noteworthy. It reflects the frustration that many feel about the SEC's unclear guidelines. How can crypto firms comply with laws that aren't explicitly defined for them? It's like being asked to read a book, but the pages are blank. The advanced bills are a mixed bag. While they offer some regulatory clarity, they also paved the way for more governmental oversight, which could stifle innovation. As we unpack the SEC's heavy handed approach, it's clear that the regulatory web around cryptocurrencies is tightening. Gensler's testimony is sure to fan the flames of the ongoing debate on governmental control versus financial freedom. But folks, this isn't the only arena where the SEC is flexing its muscles. The SEC's recent move to extend deadlines for Bitcoin ETF applications from ARK21 shares and GlobalX is emblematic of the same regulatory hesitance. It's a systemic issue. The SEC's rationale, market manipulation and weak investor protections. But as many of you know, the real crux of the matter is control. The same control that the government is keen on exerting over the broader crypto space. And let's not overlook the timing here. While Gensler prepares to defend his stance in Congress, the SEC is simultaneously delaying decisions on Bitcoin ETFs. And why? All under the shadow of a looming government shutdown, adding another layer of complexity to this regulatory maze. And it's not just individual critics or lawmakers putting the SEC under the microscope, it's the entire crypto industry who is watching and waiting. Which brings us to the SEC's recent move to extend deadlines for Bitcoin ETF applications from ARK21 shares and GlobalX. Another chapter in the ongoing saga of regulatory hesitance and it's happening as the US government teeters on the brink of a shutdown. ARK21 shares and GlobalX had their hopes dashed when the SEC pushed back its decision deadlines. ARK's new deadline is January 10th, while GlobalX has until November 21st. This isn't the SEC's first radio. They've got 240 days to make a call after starting a review. But this time they've acted well before their interim deadlines. Why the rush? That looming government shutdown might be the culprit. ARK Investment Management and 21 shares have been in the game since 2021. They faced SEC rejections before. GlobalX is a newer player. They aim to offer investors a safer way to get Bitcoin exposure, but the SEC isn't biting. True to form, they cite market manipulation and weak investor protections as the reasons for their reluctance. Now, a federal court recently called the SEC arbitrary and capricious in its ETF decisions. Despite this, the SEC is continuing to drag its feet. ARK's CEO, Cathie Wood, expected this delay. She believes the SEC will approve multiple Bitcoin ETFs at once, if at all. Meanwhile, the SEC is also reviewing applications from big names like BlackRock, Fidelity, VanEck, and Invesco. ARK21 shares was leading the pack, but now it's anyone's game. The SEC's hesitance is a sign of the regulatory uncertainty that's stifling innovation in the crypto space. And as the government faces a potential shutdown, this regulatory limbo could extend even further. So really, this shutdown could not have come at a worse time. But shutdown or no shutdown, the SEC has been dragging its feet on crypto for years. So let's be real. This is less about protecting the investor and more about maintaining control over a financial system that's rapidly evolving without them. The recent court ruling that called the SEC's past decisions arbitrary and capricious is a signal that their time of unchallenged authority is coming to an end. Cathie Wood expects more than one Bitcoin ETF to get approved eventually, and she's probably right. The SEC can't hold back this tide forever. And they need to be careful because first mover status brings a huge advantage in this kind of market. The delay might be frustrating, but it's also a sign that the SEC is feeling the heat. They're running out of excuses and with each delay, they're losing more credibility. So while we wait for the SEC to make up its mind, the crypto community gets stronger and the traditional financial system gets a little more nervous. The clock is ticking and it's not in the SEC's favor. While the SEC continues to drag its feet on Bitcoin ETF approvals, citing concerns that many in the industry see as smokescreens for control, it's not just the investors and financial firms that are losing patience. The political arena is starting to bubble with dissatisfaction and it's coming from both sides of the aisle. In fact, recent court rulings and bipartisan demands indicate that the SEC's longstanding resistance to crypto innovation is reaching a tipping point. Lawmakers have decided they've had enough of the SEC's hesitation and are now stepping into the ring guns blazing. And trust me, they're not missing words. A bipartisan group of lawmakers urged Gensler to approve the listing of spot Bitcoin ETFs immediately. This comes after that court ruling we were talking about involving Grayscale Investments. Grayscale secured a win when three judges in the US Court of Appeal ruled that the SEC had to re -review its bid for a spot Bitcoin ETF. This was after Grayscale sued the SEC for rejecting its proposal. This exposed the SEC's double standard. The court specifically addressed the SEC's differential treatment of spot Bitcoin ETFs in similar funds based on futures contracts. The lawmakers argued that a spot Bitcoin ETF is indistinguishable from a futures Bitcoin ETF. The lawmakers in question are representatives Mike Flood, Tom Emmer, Richie Torres, and Wiley Nickel. They argued that a regulated spot Bitcoin ETF would increase investor protection by making access to Bitcoin more transparent and safer. They sent a letter to Gensler, stating that Congress has a duty to ensure that the SEC approves investment products that meet requirements set out by Congress. During Gensler's testimony today, McHenry did not mince words. He called out Gensler's lack of responsiveness as unacceptable, which is funny because the SEC, the very agency tasked with enforcing transparency, is itself under fire for being opaque. The irony is palpable. McHenry's frustration isn't isolated. It's part of a broader sentiment that's been building up for months. The SEC has been aggressive in its enforcement actions against various crypto entities. Yet it's the same agency that oversaw one of the largest financial crimes in U .S. history, and within the crypto industry, no less. Congress wants answers, and they want them now. They specifically targeted Gensler's communications with FTX. McHenry said, quote, "'You refuse to be transparent with Congress regarding your interaction with FTX and San Bankman Free.'" Now, this is crucial. FTX was a major player in the crypto space, and any interactions between it and the SEC could have far -reaching implications. I remember back then that people were accusing SBF of setting things up with the SEC to be more favorable to FTX than the competition. McHenry revealed that the committee made multiple requests for documents from the SEC. Seven months pass, they've received zilch. Not one single non -public document. McHenry's patience is wearing thin, and he's made it clear that the SEC is not above the law. McHenry is calling for a path forward, one where the SEC is responsive to congressional requests. If not, they're looking at the first congressional subpoena issued to the SEC. This showdown is a reflection of the growing distrust between regulatory bodies and those who hold them accountable. And let's not forget, this is happening in the backdrop of a crypto industry that's already skeptical of centralized authority. McHenry's ultimatum to Gensler is a significant moment. It's a challenge to the SEC's authority and a call for greater transparency in an industry that values it above all else. The ball is in Gensler's court. Will he play or will he forfeit? Either way, the crypto community will be watching closely. The SEC has been all too eager to slap lawsuits on crypto companies. Yet when it comes to their own dealings with FTX, one of the industry's major players, they're as tight -lipped as a sealed vault. What are they hiding and why is it taking a congressional threat of a subpoena to get some answers? McHenry's frustration is palpable and frankly justified. The SEC is supposed to be accountable to Congress and by extension, the American people. Their lack of responsiveness is not just unacceptable, as McHenry puts it, it's a breach of public trust. And let's not forget the irony here. The SEC, which has been so keen on enforcing transparency in the crypto world, is itself becoming opaque. This isn't just hypocrisy, it's a red flag. If the SEC can't be transparent about its interactions with FTX, how can we trust them to regulate an industry that's all about decentralization and transparency? The bipartisan push for immediate approval of Spot Bitcoin ETFs is a significant development. It's not just a win for the crypto community, but it's also a slap in the face for the SEC. The agency's inconsistent stance on Bitcoin ETFs has long been a point of contention. The court ruling in favor of Grayscale adds legal weight to the argument that the SEC's current position is, in fact, untenable. What's even more intriguing is the bipartisan nature of this push. In an era where political divisions run deep, the united front from both sides of the aisle speaks volumes. It suggests that the benefits of a regulated Bitcoin ETF, increased transparency and investor protection, are universally acknowledged. As I have long said, if crypto becomes a left versus right issue, both sides will lose. So it's good to see the left and the right working together on something for once. The SEC's reluctance to greenlight Spot Bitcoin ETFs is a blockade on financial innovation. This is especially glaring when you consider that futures -based Bitcoin ETFs have already received a nod. This differential treatment is not only consistent, but also discriminatory. Gensler's oversight hearing was a pivotal moment. The lawmakers are not just asking for explanations, they're demanding action. And given the court's ruling and the mounting pressure from Congress, the SEC might finally have to yield. This is not just about one type of financial product. It's about the broader acceptance of cryptocurrency in the financial ecosystem. A Spot Bitcoin ETF could serve as a gateway for mainstream investors, making it easier for them to enter the crypto market. And let's not forget, easier access means more capital inflow, which could significantly impact Bitcoin's value, and by extension, the entire crypto market. So what happened? In the showdown between Gary Gensler and Patrick McHenry at the House Financial Services Committee, the SEC's stand on regulating most cryptocurrencies as securities collided head on with the crypto industry's ethos of decentralization. Gensler likened the crypto landscape to the 1920s, a comparison met with skepticism and criticism. The SEC extended deadlines for Bitcoin ETF applications from ARK21 shares and GlobalEx, citing market manipulation and investor protection. But let's call it what it is, another play for control. And this comes amid a looming government shutdown, adding another layer to an already complex regulatory landscape. A bipartisan group of lawmakers is pushing back against the SEC's hesitance on approving Spot Bitcoin ETFs. This comes hot on the heels of a court ruling in favor of grayscale investments, adding legal weight to the frustrations with the SEC's inconsistent policies. Lastly, McHenry's calls for transparency in the SEC's dealings with FTX and other crypto entities culminate in a broader sentiment of distrust. He made it clear that the SEC's lack of responsiveness is unacceptable and even threatened the congressional subpoena. The overarching theme tonight is the intensing struggle for control and clarity between the SEC and the crypto world. On the one hand, the SEC is holding fast to ancient regulations that don't align with the ethos of the crypto industry. On the other, Congress and the courts are increasingly pushing back, demanding answers and more rational policies. This power struggle is affecting everything from how digital assets are classified to the approval of new financial products like Bitcoin ETFs. This regulatory tussle dictates the rules of the game, affecting your investments, your financial freedom and the future of the crypto industry itself. The struggle is far from over and each move has consequences that resonate throughout the crypto community. As we wrap tonight, it's clear that we're at a crossroads. The decisions being made by these institutions will either open new doors for the crypto industry or erect walls that stifle innovation and financial freedom. What's certain is that Congress is paying close attention to Gensler and exerting pressure on him to act soon, for better or worse. And that's going to do it for us tonight. I want to thank you, my listeners, because when you stop listening, I will stop talking. If you enjoyed tonight's show, then please like, follow, subscribe, leave a rating or maybe a review. And in the meantime, we'll see you tomorrow night. See you next time.
Thinking Crypto News & Interviews
A highlight from SEC GARY GENSLER HEARING & SUBPOENA SOON? COINBASE CRYPTO ADVOCACY WITH NANCY PELOSI!
"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 5 star rating and review. It supports the podcast and it doesn't cost you anything. Well, folks, as you all may know, Gary Gensler testified before the House Financial Services Committee today. He got grilled. He got a lot of pressure questions and things that he was shaking and unable to answer. It's the same old nonsense. And I'm sure many of you saw the clips, so I'm not going to play a whole bunch of clips for you, but I'm going to give you the big takeaways. What can we expect next? And McHenry, Patrick out of the gate, started grilling Gary Gensler. He asked him, is Bitcoin a security? And Gary was like stumbling, like he couldn't even answer it. And of course, you know, Patrick McHenry was like, what are you doing, man? I'm giving you softball questions. You can't answer me. Is Bitcoin a security? So Gary Gensler continued his clown show. This guy's a scumbag regulator, as I've been saying for a long time, and needs to be fired. But the big takeaway from what Patrick McHenry said, folks, he threatened Gary Gensler and said, don't make me have to send a subpoena. And he highlighted that Gary has not sent documents about FTX. He highlighted Gary's losses in court and much more. So I think the next step, you know, I haven't seen this level of threat about a subpoena from these folks. So I think we're getting there, folks. And I'm actually going to be interviewing Congressman Warren Davidson, who also did a great job grilling Gary tomorrow. And he's going to I'm going to ask him about the subpoena and what are the next steps. And of course, he highlighted his SEC Stabilization Act, which essentially fires Gary Gensler and replaces that chair seat, adds another commissioner and an executive director. So it makes the SEC less political and more balanced. And he has some great questions to Gary. You know, he even alluded to the EITH Ethereum free pass. Some of you may have seen the clip. So he did a great job. And once again, I'm interviewing him tomorrow. So be sure you're subscribed on the podcast as well as the YouTube channel. And Tom Emmer also brought some heat on Gary Gensler saying, I'm convinced you are not an impartial regulator. And he went on and did a press conference about this. And Gary Gensler is a bureaucrat who does not answer to Congress and much more. So, you know, similar types of comments that we've seen historically. But I think the subpoena threat was the big takeaway for me. The other stuff was, you could argue, was said historically and said before and other hearings with Gary Gensler. Now, Democrat Richie Torres did a great job of talking to Gary and getting specific, like he highlighted, is buying a Pokemon card a security? Gary said no. So he said, well, what if that Pokemon card got tokenized on the blockchain? It's a den of security. And that's where Gary was going back and forth and saying he needs more details and yada, yada. But great questions by Representative Richie Torres, very laser targeted in detail where Gary is just like caught off guard and he's trying to dodge the questions. So Gary continues to get exposed. And I like what happened today. I think the clips and all the news that are coming out of it, while they may not be very much actionable, where Gary is getting kicked out tomorrow, right? They do paint Gary Gensler in a very bad light. And remember, I've said many times, a lot of politics is simply optics. And if you have bipartisan support against Gary Gensler, that's not good. He's not going to be in that seat for very long. So it's great to see Democrats coming out against Gary Gensler. Now, quick word from our sponsor folks, and that is Uphold, which makes crypto investing easy. I've been a user of Uphold since twenty eighteen. They have ten plus million users, two hundred and fifty plus crypto currencies, and they're available in one hundred and fifty countries. You can also trade precious metals and equities on Uphold. If you'd like to learn more, please visit the link in the description. Also, a great comment from Representative Andy Barr to Gary Gensler on capital markets. He said, if the U .S. capital markets are a gold medalist, you are the Tonya Harding of securities regulation because you are kneecapping the United States capital markets with the avalanche of red tape coming out of your commission. Wow. That is a pretty strong remark there. Many of you know about the Tonya Harding story. If you don't look it up, Nancy Kerrigan and Tonya Harden and someone who was sitting behind Gary Gensler started flashing the Coinbase stand with crypto NFT shield. Many of you have seen that. And someone also highlighted the stand with crypto logo on a piece of paper. So this is similar to what happened with the guy who did the buy Bitcoin behind Janet Yellen years ago. So they put this right behind Gary. So it's pretty funny. This is another one that's going to go in the record books. And on that note, the SEC did acknowledge that the 1 .5 trillion dollar asset manager, Franklin Templeton, spot Bitcoin ETF application. Now, that doesn't mean anything because we need an approval. But things are moving ahead for these new applicants. Now, as all this was happening, guess who was in D .C.? Brian Armstrong and the Coinbase folks. Pretty incredible. And they did this whole campaign where they're at the Hill and a Brian Armstrong tweet out here at our nation's capital for a stand with crypto day with 40 founders from across the country. It's time for America to join the rest of the G20 and get some clear rules on the books. So great move here by Coinbase because the juxtaposition of what Gary is saying and what a big publicly traded crypto company is doing with a whole bunch of founders in D .C., educating and providing advocacy is really, really great. So I love this. And you hear you see Brian posted some photos, he said a great meeting with Speaker Pelosi. Now, all feelings about Nancy Pelosi aside, this she's a Democrat, folks, and I think this is a very smart move, Brian. Very, very smart move, because today even Maxine Waters was praising Gary Gensler. Oh, he's the knight in shining armor. And Gary, you know, you've been doing your thing, protecting Americans from these crypto scammers. Right. So remember, just like two years ago, she was hugging up FTX saying she loves Sam Beckman Fried, blowing kisses, taking campaign donations from FTX. So she's can be bought and sold right pretty easily. And I really like this. Coinbase is playing chess here while Gary Gensler is getting grilled. I love it, love it, love it. And they took a whole bunch of photos here at the Capitol Hill. So smart move by Brian. Really, really smart move. Now, finally, Kraken sets sight on stock trading. So Kraken, the crypto exchange, they're looking to expand their services. And, you know, this makes sense. If you're ordering already an exchange where you sell crypto, you can easily move to stocks. And then I know some other folks have been looking to tokenize stocks and sell those. So this is a pretty big move. And we're going to see that these crypto exchanges are going to expand to other markets. And with the advent of tokenization, you know, they're going to tokenize a lot of the traditional financial markets and assets and commodities and much more. And allow people to easily get access to them globally, 24 seven trading and much more. So obviously this would put them up against like Robinhood, essentially right where you have stocks and you've got crypto in the mix. So I think it absolutely makes sense. Well, folks, that's the news. Let me know what you think. What did you think about Gary today in the hearing? And once again, I'll be interviewing Congressman Warren Davidson tomorrow. So be sure to check out that interview once it's published on Friday. And I'll talk to you all later.
The Breakdown
A highlight from Chokepoint Across the Pond: Chase UK Says No Crypto Transactions
"We've got election season coming up, remember? And if the Dems win and Gensler comes back to the same office, he doesn't care because he has the wind at his sails. And if he loses, he also doesn't care because he's out of the job. I would expect, in other words, for every court decision that goes against the SEC to be answered not with a rational shift in policy and approach, but instead two blazing middle fingers from a bureaucrat potentially on his way out the door. 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 Wednesday, September 27th, and today we are talking about this crazy, strange Chase UK letter banning people from accessing crypto from their bank accounts. 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 the link in the show notes or go to bit .ly slash breakdown pod. Well, friends, I have to start the show by eating some crow. In the morning yesterday, a letter started going around that people were, of course, breathlessly posting as fact long before it was confirmed, and it just did not read right to me. So much so that as more and more people started tweeting about it, I actually posted it saying, I think this letter is fake. Let me just read the whole thing to you. So it's not long, so you have a sense of why I was skeptical. The header says Chase, and it says our policy around crypto is changing. Here's what it means for you. Hi. To help keep your money safe from fraud and scams, we're changing the type of payments you can make from Chase. From 16th of October, 2023, if we think you're making a payment related to crypto assets, we'll decline it. If you'd still like to invest in crypto assets, you can try using a different bank or provider instead, but please be cautious as you may not be able to get the money back if the payment ends up being related to fraud or a scam. Please head to our website for more info about how to protect your money. We've made this decision because fraudsters are increasingly using crypto assets to steal large sums of money from people. Declining these payments is one of the ways we're help keeping you and your money safe. All the best, the Chase team. So a couple of things that really stood out to me. One was the tone in general non -professionalism of the letter. The use of the word fraudsters seemed very, very strange from an official corporate communication. This is obviously quite a colloquialism and so the idea that it was being used as a formal explanation for why a bank would be denying an entire category of payments options to its users seemed a little crazy. Continuing that questionable tone was the ending, all the best. That's how I sign off my emails. That's not how a major bank signs off its emails. Now, of course, there was also the general grossness of the policy if it were to become real, but that really wasn't even what I was thinking about initially. And yet, shockingly, it was confirmed to be real. I was wrong and somehow a bank associated with Chase had sent out that letter. Now, later in the day, it became clear that the policy was for Chase UK rather than the broader US or international banks. But even if it was only a domestic UK policy, the aggressive move still rubbed many people, perhaps most people, I would say, in the industry the wrong way. Coinbase CEO Brian Armstrong tweeted, Now, Andrew Griffith is the UK Economic Secretary to the Treasury and Minister for the City of London and Rishi Sunak is, of course, the Prime Minister who was formerly the Chancellor of the Exchequer who said while he was at that post that he wanted to make the UK a crypto hub. LightSpark CEO and former head of the Libra project at Meta, David Marcus, added, Now, UK commenters were surprisingly quiet and that's perhaps because Chase is a relatively minor player in the UK despite being a major global banking brand. Chase has, in fact, only had a presence in the UK for around two years and has less than two million customers. They're also limited to offering online services, so are, in practice, a lot closer to a fintech platform than a traditional bank. Just by way of comparison, relative to the population, Chase UK has a similar footprint to Huntington National Bank in the US. Now, if Huntington banned crypto transactions in the US, you can bet we would be chattering about it, but it wouldn't ultimately be seen as that big of a deal which perhaps explains the lack of outrage from UK crypto investors. That said, of course, Chase isn't Huntington. Regardless of whether they have a large customer base, Chase UK is still a subsidiary of the largest western bank in the world and because of that, the important part of the policy change is unpacking whether this is an idiosyncratic decision of an insignificant bank or speaks to a broader policy outlook at JPMorgan Chase. Now, the reason given in the letter for this policy change was, of course, to prevent fraud. When fielding questions from media throughout the day, a Chase spokesperson doubled down, saying, Austin Campbell rightly points out, quote, Bitcoin attorney Crypto Hat responded, Austin, eminently reasonable as he always is, responded, and other financial institutions to fight said fraud, not turtling. Now, of course, even if this policy change only affects a couple of million Brits, it still matters in the broader fight to ensure crypto investors and firms have fair access to banking services. This has, of course, been one of the biggest themes throughout this year. The pushback from the US crypto community matters in order to ensure that banks can see that these sort of blanket bans are simply not an acceptable way to deal with issues around fraudulent transactions. And for a place that said it wants to be a crypto hub, the UK in particular has had a string of larger banks rejecting crypto payments over the past year. In February, a group of CEOs from major UK banks appeared at a parliamentary hearing. Multiple CEOs said their banks were blocking crypto payments, and although they listed fraud as a major concern, they also mentioned the volatility of crypto investments. The problem became so large that the UK's Financial Conduct Authority published a report on de -banking earlier this month. The report stated that the regulator had facilitated conversations between banks and crypto firms to ensure that they would be able to open and maintain accounts. Still, some large UK banks, including NatWest, are currently refusing to service crypto firms across the board. Now, one alternative opinion came from Francis Pulio, the founder at Bull Bitcoin. He said, via video chat, and essentially interrogate them to make sure they aren't being sucked into a yield, cloud mining, or other crypto ponzis. Still, as you might imagine, even among Bitcoiners who share Francis's disgust with crypto scams, this wasn't the primary opinion out there. Indeed, by and large, the sentiment was, and this is the end -then -they -fight -you phase. So what to do? Well, some, like dGen Spartan, basically say vote with your feet. They write, but getting banks to open accounts for crypto individuals and companies is another. Just vote with your money. My crypto -friendly banks get my highest share of account. The others? Meh. Now, another response is the entrepreneurial opportunity. Rama Lawalia, the CEO of Lumida Wealth, said, Although, indeed, later he tweeted, I don't know, man. All in all, it feels a little choke pointy to me. Remember, the whole point of Operation Choke Point and why it's problematic is that it creates a scenario where government and regulators don't have to ban anything because they just make it so economically untenable and politically risky for big service providers like banks to work with crypto companies that a de facto ban is the natural response. And speaking of de facto bans, let's turn now to the intransigent SEC, a bipartisan group of House Financial Service Committee members have written to SEC chair Gary Gensler calling for the regulator to immediately approve spot Bitcoin ETF applications. Mike Flood, Tom Emmer, Willie Nickel and Richie Torres penned the letter, which asserted that, The SEC's current posture is untenable moving forward. Following the Court of Appeals decision, there is no reason to continue to deny such applications under inconsistent and discriminatory standards.
Thinking Crypto News & Interviews
"house finance services committee" Discussed on Thinking Crypto News & Interviews
"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 any Democrat, 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 there that 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.
Thinking Crypto News & Interviews
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.
Thinking Crypto News & Interviews
A highlight from JPMORGAN CHASE BLOCKS CRYPTO IN UK! SEC GARY GENSLER DELAYS BITCOIN SPOT ETF & HEARING!
"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, tomorrow's scumbag regulator, Gary Gensler, will be testifying before the House Financial Services Committee at 10 a .m. Eastern. So I definitely will be watching that. I'm hoping that he gets grilled, that he comes down on this clown because he has not been abiding by the law. He has made the SEC political. And there's many different topics that I hope the members of the financial committee go after him on. First, of course, the loss to Ripple in the XRP lawsuit, right where XRP was declared intrinsically not a security. So that is a total contrast to what Gary has been saying, that the rules are clear in 1933 -34 how we test for stocks and bonds. But it's like you buffoon digital assets exist on decentralized blockchains distributed globally. This is not a U .S. market. This thing is global and it's decentralized. So we need updated rules for this. And I'm not saying that every crypto asset is not a security. There are some that are. But how do we differentiate? That's the need for the updated rules. So the other aspect is Gary and the SEC took a big loss in the grayscale lawsuit. And the three judges went against the SEC and they said the denial of the grayscale Bitcoin's bond ETF was arbitrary and capricious. Gary's taking big losses in court here. Right. And obviously, Gary, going after the Coinbase folks is really bad, given that they greenlighted Coinbase to go public. The other aspect is Promethean, because since Gary was before this committee, a lot of stuff came out of a Promethean that they had they got the license, but they weren't even selling crypto and that this guy is clearly a plant by Gary Gensler and Elizabeth Warren. So I'm hoping they bring the heat on this buffoon and expose him. Last time they did a great job, but they got to keep the pressure on and expose him. Now, ahead of the hearing, Gary released his testimony. But it's the same old bullshit. Right. There's nothing new here. I don't even want to read anything. He just brings up the securities laws of 1933 and so on and so forth. Now, what also happened was a bunch of letters were sent to Gary Gensler and some other folks as well. So the first is a bipartisan letter was sent to Gary Gensler by GOP members and Democrats. So this is really great that it's bipartisan and they're urging the SEC to approve a Bitcoin spot ETF. The GOP members included Tom Emmer and Representative Mike Flood. The Democrats included Ritchie Torres and Representative Wiley Nickel. So this is really good. You know, they highlighted the grayscale lawsuit and how the court of appeals sided with grayscale. So I'm hoping that these folks bring the heat on Gary tomorrow. In addition, there was a letter sent to Gary Gensler and FINRA from Congressman Blaine stating his concern over the SEC's insufficient scrutiny of registered broker dealers with ties to the Chinese Communist Party, such as Prometheum, Webull and Moomoo app. Honestly, never heard of Moomoo app, but certainly Prometheum. We know, guys, that is a shady business and we will see what happens tomorrow. So they got to bring the heat and they got to keep putting the pressure. We have to use social media to our advantage. Folks, I want you all to be tweeting, sending emails to your representatives, making phone calls. We got to use the hashtag fire Gary Gensler. That stuff matters because I've said many times, optics play a big part in politics. I know we're not there in the capital, you know, forcing these folks to sign the bill or to fire Gary Gensler, but we can make our voices heard and we can amplify the facts and the truth and expose Gary Gensler for the corrupt scumbag that he is. And here, folks, the SEC has delayed the ARK Invest slash 21 shares Bitcoin spot ETF filing. They also delayed the global ex ETF application, which was due October 7th. So, you know, James Seyford is essentially saying, you know, will this mean that BlackRock, Bitwise, VanEck, all these folks are going to be delayed, too? You know, it wouldn't surprise me, Gary, I don't know what he's up to, but I hope the members call tomorrow him out on this. What are you doing? The courts clearly are saying you're not doing the right thing and they're siding with the crypto industry. So we once again, guys, are dealing with a corrupt scumbag regulator. He's a puppet on strings doing the bidding of his tradfi buddies and trying to slow this industry down, trying to kill crypto startups. So let's see what happens tomorrow. Now, speaking of Gary Gensler's tradfi puppet masters, Chase UK, yes, JP Morgan, Chase in the UK to block crypto payments, citing fraud and scams. Unbelievable, unbelievable, folks. And I'm going to give you the context of this. But let me give you the details of what they're trying to block. Banking giant Chase is banning crypto linked payments via debit card or by outgoing bank transfer for UK clients starting October 16th, according to an email to customers. If we think you're making a payment related to crypto assets will decline it, the email said, adding that the customers are free to use a different bank or provider to invest in crypto. However, finding a crypto friendly bank in the country may not be the easiest thing as UK credit institutions have a history of blocking or limited limiting customer access to crypto. The local financial watchdog, the Financial Conduct Authority, recently said it had facilitated discussions between banks and crypto firms because lenders have shown a reluctance to offer services to that industry. The fact that JP Morgan Chase is doing this is despicable. Why? Just today, just today, folks, JP Morgan agrees to pay seventy five million dollars settlement over ties to who? Jeffrey Epstein. Do I even need to say anything else about that name? Right, folks? These banks themselves are participating in a whole bunch of criminal scumbag activity, right? We've seen over the years. How many fines has JP Morgan gotten here? Kyle Schnapps, he highlighted this. He said JP Morgan Chase has paid nearly 40 billion dollars in fines for financial fraud and predatory practices since 2000.
The Crypto Overnighter
A highlight from 676:GOP vs CBDCs, JPEXs Collapse, and Vivek Ramaswamys Crypto Vow
"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 Tuesday, September 21st, 2023. Welcome back to The Crypto Overnight -er. Yes, but we do have the news, so let's talk about that. Tonight, we're diving deep into the House Republicans' latest move against central bank digital currencies. We'll also unpack the turmoil surrounding JPEGs in Hong Kong and what it means for global crypto regulation. GOP presidential hopeful Vivek Ramaswamy has some bold plans for crypto policy, and you'll want to hear them. Meanwhile, the Republic of Korea grapples with a significant offshore crypto stash, and PayPal pushes its stablecoin into Venmo. And don't go away, we have an update on the never -ending Mt. Gox saga. House Republicans advanced a bill opposing U .S. central bank digital currency efforts. The bill, known as the CBDC Anti -Surveillance State Act, aims to prevent the Federal Reserve from issuing a CBDC to individuals. It was introduced by Representative Tom Emmer and has gained the support of 60 members in Congress. The bill has passed the House Financial Services Committee and will next face a congressional vote. Democrats, led by Maxine Waters, criticized the bill. Waters renamed it the CBDC Anti -Innovation Act and argues that it could threaten the U .S. dollar status as the global reserve currency. The bill has also faced scrutiny for its language and its impact on CDBC research. The Federal Reserve has been exploring the possibility of issuing a CDBC, but is not close to developing one. Some conservative politicians, including Florida Governor Ron DeSantis, have taken strong positions against CDBCs. The bill prevents the issuance of a CDBC without an act of Congress. This aligns with the Federal Reserve's stance. The committee rejected amendments to the bill and passed it, recommending it to the full House on a vote of 27 to 20. The advancement of the CBDC Anti -Surveillance State Act is a significant move in the ongoing battle over financial privacy and government control. Emmer's bill is a clear attempt to seize as an overreach by the Biden administration. His concerns about CDBCs turning into surveillance tools echo a broader distrust of government power. Maxine Waters' opposition to the bill highlights a divide not just among politicians, but also in the nation. Her renaming of the bill to the CDBC Anti -Innovation Act suggests that Democrats see CDBCs as a potential innovation, not a threat. However, her stance could be seen as naive, especially when considering the potential for CDBCs to be used for mass surveillance, as is the case in China. The bill's passage to the House Financial Services Committee is a telling sign of the times. It reflects a growing skepticism about the role of centralized financial systems and a preference for decentralized solutions. The rejection of amendments to the bill, especially those that would allow the Federal Reserve to study the Chinese digital yuan, indicates a reluctance to even explore centralized digital currencies. All that said, I don't see it passing. I've said many times that when crypto becomes a left versus right issue, both sides lose. The same thing goes for CDBCs. This bill likely doesn't stand a chance of becoming law because I don't see it passing the Senate. As divided as Congress is, I don't see the two sides putting down their torches and pitchforks long enough to do some good for the country. From lawmakers playing defense against CDBCs in the U .S. to a complete offensive on crypto exchanges in Hong Kong. Next up, the whirlwind around JPEGs. And hey, if you want to stay ahead of such storms, hit that subscribe button.
The Breakdown
A highlight from Anti-CBDC Bills Advance in Congress
"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 Monday, September 18th, and today we are talking about anti -CBDC legislation being advanced. 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. Happy Monday. Welcome to another week, another frankly weirdly quiet week right now. I don't know. There's something out there. There's some bad juju. I guess it could just be another example of this weird period of the cycle that we're in that's sort of past the worst, but definitely before the good stuff starts again, but I'm excited. But we are not going to dwell on that. Instead, we are going to hop, skip, and jump through a number of things that have happened over the last few days, kicking it off with what has become a surprising political issue this election cycle, which is central bank digital currencies. The House Financial Services Committee will hold a markup section on Wednesday, which will include two bills aimed at preventing the issuance of a US CBDC. The first bill is Tom Emmer's CBDC Anti -Surveillance State Act, which would prevent the Federal Reserve from offering any products or services directly to individuals. Fed branches would also be prohibited from keeping accounts for individuals or issuing a CBDC or similar digital assets. Emmer's bill was recently reintroduced during last week's CBDC hearing and now boasts 49 co -sponsors. On September 14th, the House Majority Whip tweeted, A governmental tool for financial surveillance is un -American. We must urgently develop a digital financial system that is 1. Open and freely accessible to all. 2. Without requiring permission from the government or anybody else. 3. Private safeguarding the user's identity. In a separate tweet, he had said, If not open, permissionless, and private, like cash, a CBDC is nothing more than a CCP -style surveillance tool that can be weaponized to oppress the American way of life. The second bill is sponsored by Alex Mooney and is called the Digital Dollar Pilot Prevention Act. That bill is structured as an amendment of the Federal Reserve Act of 1913 that would prevent Federal Reserve branches from even conducting CBDC testing and development. Now, of course, senior Fed officials have gone on the record to say they have no plans to issue a CBDC without the approval of Congress. In May, Minneapolis Fed President Neil Kashkari even questioned the need for a CBDC given the existence of instant payment fintech services. He noted that CBDCs would be a powerful financial surveillance tool and could enforce negative interest rates, but questioned why the U .S. government would have any interest in constructing such a system. Now, all that said, some Fed branches still do seem to be interested in the development of CBDC technology. The San Francisco Fed, for example, recently advertised a position for a crypto -architect for a CBDC project, and Project Hamilton was concluded and wound down in December after two years of collaboration between the Boston Fed and MIT. Now, in terms of where this legislation actually is, the markup process allows committee members to comment on the drafting of bills. A vote is then taken on whether or not to approve legislation for a full House vote. Both bills are only a few paragraphs long, so shouldn't drag out to an all -day, contested affair as we recently saw with the stablecoin bill. Instead, the bills could act as a bellwether for congressional sentiment around CBDCs. Multiple Republican presidential candidates have made opposition to a CBDC a part of their campaign. For example, Florida Governor Ron DeSantis said at a July event, If I am president, on day one we will nix central bank digital currency. Done. Dead. Not happening in this country. Outsider Democrat candidate Robert F. Kennedy has also been outspoken on the need to oppose the issuance of a CBDC. So given all that, if either of these bills progress to a vote in the House, they could be an opportunity to put members of Congress on record about their support for a CBDC coming into election season. Now, we could spend shows and shows and shows talking about why this seemingly small issue, at least to the rest of the world. Obviously, I'm not talking about for our audience and our community. But this issue, which is for all intents and purposes very small to most people, has become such a central piece of the opposition narrative heading into this election cycle. I think there are probably a few different elements of it. One, I think it feels to many like an extension of government power. And as we've seen and discussed, it is quite clear that how much power governments have is going to be a major issue. And of course, while that's coming from the Republican side of the House, it's also coming from Democrats. And this is perhaps not surprising. It's not surprising because we're still coming off the COVID period, which brought up major questions of how much authority the government has to be involved in people's lives. And so in many ways, this is an extension of that conversation. I think there is also a little bit of nervousness around technology in general. This is something that we've seen in crypto. It's certainly something that we see in AI as well. And while this is technology in the hands of the government, not technology in the hands of big tech companies, it still has that feeling of lots of data, lots of power, lots of information, big black holes, and not a clear way for citizens to exert influence when it comes to this important domain of their lives. Anyway, right now, there's no one who's really actively arguing for a CBDC, which could frankly be another reason why it's a nice political issue. It gets to stay a little bit, at least in the realm of metaphor for some of these larger topics, but it's still something that can be legislated upon with lower stakes than going after government power directly. Anyways, it's one we're going to keep an eye on to see just to what extent it continues to be an issue in elections or whether it's just part of this early narrative testing process at this very nascent point in the election cycle. Next up, we go halfway around the world to Hong Kong, where the Hong Kong Monetary Authority has issued a warning to crypto users that unregistered crypto firms could be presenting themselves as banks. The HKMA, which serves as the region's banking regulator, said that firms which use language associated with the banking industry could be in violation of recently implemented Hong Kong crypto regulations. The regulator said it had become aware of firms using terms including crypto bank and offering quote banking services. They even went so far as to call out firms that use the word deposits or promote their quote savings plans as low risk with high return. The HKMA said in a statement that quote, The regulator noted that these firms advertising themselves as crypto banks were not supervised by the HKMA and are not covered by the region's deposit protection scheme. Now, Hong Kong's crypto regulations coming into force in June was one of the big stories of this year. The rules were intended to permit retail crypto trading on regulated exchanges and they're being administered by the local securities agency rather than the banking regulator. Since then, only a small handful of firms have been granted licenses. This includes HashKey and OSL, who were licensed to provide retail trading exchanges, as well as Swiss -based crypto bank Ciba, which has received in principle approval to offer over -the -counter derivatives trading and asset management services. Now, enforcement of Hong Kong's crypto regulations has also begun in earnest. Last Wednesday, the securities regulator issued a warning against Dubai -based crypto exchange J -PEX. They alleged the firm had been promoting its products and services in Hong Kong without applying for a license. A press release from the securities regulator included allegations that J -PEX were advertising their services using the prohibited terms deposits, savings or earnings. They noted that many J -PEX products had quote, The regulator also accused influencers and local OTC desks of making false and misleading statements on social media that J -PEX had applied for licensing. Following the warning, J -PEX employees seemingly disappeared from their booth at the Token 2049 conference in Singapore, where they were a platinum sponsor. And on Sunday, the exchange ramped up withdrawal fees to $999 and also implemented $1 ,000 withdrawal limits, essentially being a withdrawal halt. Now, J -PEX addressed this on Sunday, blaming quote unfair treatment by relevant institutions in Hong Kong towards J -PEX. They said that quote, J -PEX said they were currently negotiating with these market makers to resolve liquidity issues. The exchange promised to quote, They claim that emergency withdrawals are still being dealt with manually and also announced that trading on their earned trading platform would be halted on Monday. Now, adding something to the story, on Monday, the South China Morning Post reported that local police had received at least 83 complaints about J -PEX involving assets worth around $4 .3 million. They say the securities regulator had escalated investigations to the Commercial Crime Bureau on suspicions of fraud. Follow -up reporting said that lawyer turned crypto influencer Joseph Lamb -Chalk had been arrested on Monday in connection to promotion of the exchange. Sources also said an office building had been raided on Monday morning. Now, there's a lot that's actually really worth watching here. Hong Kong creating this licensing regime is not just relevant for citizens of Hong Kong, although it certainly is for them. This has been seen, rightly so, as a marker of slightly shifting Chinese attitudes towards crypto in general. When these rules were first announced as forthcoming at the end of last year, it was widely anticipated that it would include a retail trading ban. Remember, crypto trading has been banned in China for the last few years. However, in the wake of FTX, and in particular the US's aggressive response to it, it appeared that the Chinese authorities might be reconsidering their position and in so doing using Hong Kong as a vehicle for testing the waters on the market without changing any policy in mainland China. In that light, I don't know exactly what this enforcement action around J -PEX actually signals. Arresting an influencer certainly sends a signal, but to what the ends of that signal are, I'm just not sure. I do think, however, it's probably worth weighting this issue as a little bit more significant than just a regional crackdown, as it may have bigger implications given the unique role Hong Kong plays relative to China when it comes to crypto. Next up, we move back to bankruptcy proceedings in the US where Gemini have slammed the proposed settlement between DCG and their subsidiary, Genesis, calling it misleading at best in a court filing on Friday. Now you'll remember that earlier last week, DCG had filed a proposed deal which would settle approximately $630 million in outstanding loan payments to Genesis. DCG said the deal could result in 90 % recoveries for unsecured creditors and recoveries as high as 95 % to 110 % for Gemini Earn customers who form the largest creditor entity in the Genesis bankruptcy. Gemini said in their court filing, however, that, quote, DCG touts proposed recovery rates that are a total mirage, misleading at best and deceptive at worst. Make no mistake, Gemini lenders will not actually receive anything close in real value terms to the proposed recovery rates under the current agreement in principle, end quote. DCG had proposed a repayment schedule for $1 .65 billion in total loans over seven years. Although the agreement had a substantial payment in the first year, criticism of the deal noted that recovery calculations were contingent on crypto -denominated payments becoming more valuable over time. I think the numbers were something like Bitcoin going to $85 ,000 and ETH going to $8 ,500. Gemini customers are owed around $1 .1 billion and it appears that taking on long -term risks associated with crypto prices and the continued solvency of DCG are simply not acceptable to them. Gemini said in their filing, quote, receiving a fractional share of interest in principal payments over seven years from an incredibly risky counterparty is not even remotely equivalent to receiving the actual cash and digital assets owed today by Genesis to the Gemini lenders. They added that, quote, DCG's proposal is markedly parallel to an attempt to satisfy its significant obligations through the issuance of IOUs instead of paying any real cash and digital assets. Gemini lawyers also slammed DCG's negotiation tactics, claiming they had made efforts to suggest that they would become desperate enough to take a significant haircut just to move on. On their creditors update blog, Gemini put it even more pointedly, stating that, quote, DCG is gaslighting creditors and testing earned users' resolve by baiting them with false promises of high recoveries. Now, hanging over the current state of the Genesis bankruptcy is the firm's right to exclusively propose recovery plans. The judge had granted a 30 -day extension to the exclusivity period through to early next month. That order was contested by Gemini and ended up falling short of the 60 -day extension requested by Genesis. After the exclusivity period has elapsed, creditors will be able to organize their own proposed deal to bring the bankruptcy to a close. Finally, separately on Friday, Gemini updated their lawsuit against DCG and CEO Barry Silbert. They now include four direct allegations that intercompany loans between DCG and Genesis were designed to, quote, make the market believe it had actually fixed Genesis's cratering financial condition. So there you have it. There are a number of other things that happened over the weekend or around the end of last week that we may touch on in conversations later. Mark Cuban got fished for almost a million bucks, for example. The New York Times leaked parts of a 15 ,000 -word Sam Bankman -Fried ramble that amounts to a very self -pitying reflection on the state of affairs. And Google's head of Web3 is begging the industry to build something actually useful. For now, though, we are going to wrap it there. We're going to get to the hard work of building back this industry from the ground up. I appreciate you hanging out here with me as we go about that work. So until next time, be safe and take care of each other. Peace.
The Bitboy Crypto Podcast
A highlight from PayPal Launches Stablecoin That Could Change The World! (But There's A Catch...)
"The safest, easiest way to pay just got easier or at least has moved further into the cryptoverse. Online payment behemoth PayPal has launched its own stablecoin, becoming the latest TradFi company to make the attempt. You may remember Meta, the parent company of Facebook, trying to shove their own stablecoin down our throats and subsequently shuttering the project in early 2022. Will PayPal USD, aka PYUSD, succeed where others have failed? We're going to dive into the pros and cons. It's time to discover crypto. If you're new to the cryptoverse, you may be wondering what exactly is a stablecoin. It's a coin for horses. I'm kidding. It's all in the name, baby. A stablecoin is meant to do exactly that, maintain a stable price. Many of them are pegged to the US dollar. It's a way for investors and traders to keep their assets on the blockchain without having to deal with extreme price volatility. Well, at least that's what's supposed to happen with stables as long as they maintain their peg. If you want an example of what happens when a stablecoin loses its peg, take a look at our video on Terra UST. In case you've been living under a rock with all your cash buried in some dragon's lair, PayPal has a veritable monopoly on online payments. Founded in 1998, the company went public in 2002 and was soon taken over by eBay. Fast forward to today, the company has expanded astronomically and subsequently gobbled up would -be competitors like Venmo, Zoom and Zettle and many others. It also boasts 435 million users at time of recording. The original team is actually referred to as the PayPal Mafia. You'll recognize some familiar faces including Elon Musk, Yammer's David O. Sachs, LinkedIn's Reid Hoffman and Jawad Karim, who co -founded our own little slice of paradise, YouTube. So my question is, with Elon Musk's historic ties to PayPal, will the PayPal stablecoin become the favored cryptocurrency for X? Unseeding would -be Prince of X, doge? Leave a comment below and tell us what you think. PayPal's stablecoin release also comes a couple months after the announcement that Celsius will use it to distribute payments to its creditors, a decision that has sparked outrage and questions from Celsius's creditors. Raking in fees for millions of bankrupt Celsius isn't a great way to start your stablecoin debut. Now, PayPal has been interested in crypto for a while. They first allowed customers to buy, and hold a short list of cryptocurrencies back in 2020, including Bitcoin, Ethereum, Litecoin and Bitcoin Cash. Then in 2022, they finally began supporting crypto withdrawals and deposits in and out of PayPal. And PYUSD is their latest attempt to make a name for themselves in the Web3 landscape. They announced its development at the beginning of 2022, but then pulled back citing regulatory issues. Was it you, Gary? But I guess their concerns are no more because there are full steam ahead with their stablecoin pursuits. Okay, enough about lost funds and heartbreak. Why would PayPal want to get into the stablecoin game in the first place? Well, it turns out stablecoins can be quite a lucrative business worth around $120 billion. PYUSD's top competitors Tether and USDC both have remarkable profits this year. Tether is projected to bring in $6 billion, while Circle, the parent company of USDC, has brought in $779 million so far this year. If PayPal can capture even a percentage of this market, they could bring in some serious bank. How do these companies do it? Well, both USDT and USDC maintain their peg by holding cash and investing in US Treasuries. And the yields of these Treasuries have soared to 5 % recently, so they're able to bring in a lot of profit and able to add to their reserves. PayPal intends to follow a similar model with the stablecoin being backed by USD bank deposits, US Treasuries and US Treasure reverse repurchase agreements held in custody by Paxos. You may recognize the name Paxos for managing the soon -to -be -deceased Binance stablecoin BUSD, which Binance has taken off the market due to SEC lawsuit. RIP. PayPal has announced that Paxos will begin issuing monthly reserve reports in September 2023, and these reports will be verified by an external and supposedly impartial accounting firm. Can we just get Kevin an Oscar? Remember, guys, having a public and verifiable proof of reserve is so important, not only for stablecoins, but also for exchanges. Make sure you do your research before you buy or send your crypto places. PYUSD is an ERC -20 token written in Solidity and running on the Ethereum blockchain. You can exchange PYUSD for fiat as well as send it to other PayPal users and buy crypto on PayPal's platform. You can also buy from PayPal's merchants, and PayPal will send PYUSD to make the purchase. There are zero fees to send this stablecoin to other PayPal users, but there are fees for buying cryptocurrencies and withdrawing PayPal USD from the platform. Currently, you can withdraw or deposit PYUSD and it's compatible with Metamask and Coinbase Wallet, soon to be supported by Venmo. A week after PayPal's stablecoin mania hit the media, Ledger, one of the top cold storage wallet solutions, announced that its users would be able to buy crypto with their PayPal accounts. Coinbase has allowed American and Canadian users to buy crypto with their PayPal accounts for a while, but recently, Coinbase partnered with PayPal to bring this option to users in Germany and the UK. This comes in handy since PayPal decided to pause crypto purchases on its own platform in the UK, citing financial regulatory shifts. With all these exchanges supporting PayPal accounts to purchase crypto, it seems like only a matter of time before Ledger and other wallets begin to support PYUSD as well. Currently, you can get your hands on some PYUSD on Coinbase, Kraken, Gate .io and Crypto .com if you don't want to buy it from the PayPal platform. Right now, we're a little less than a month into their release, so are people actually using it? Well, it seems like members of the crypto community have been a bit wary so far. The block reported that smart money is avoiding the coin and smaller investors are as well. And really, can you blame them? Most people are still traumatized from the Terra fiasco. And why would you switch your funds from Tether or USDC when they've stood the test of time? There have also been concerns about PYUSD launching on ETH and associated high fees. And there are real regulatory concerns here in the US. Congresswoman Maxine Waters, the top Democrat on the House Financial Services Committee, was quick to wag the finger at PayPal and yell, Shame! Shame on you! She's mad at business as giant as PayPal would move forward with a stablecoin without federal regulatory framework. She may want to point that finger right back at herself because the Fed is at fault here twofold. One, they allowed PayPal to get this giant. And two, they can't figure out how to actually regulate the space. Probably due to our officials being older than dinosaurs. Look at this! Are you kidding me? Another issue that has some worried is that PYUSD is centralized and has a sordid history of randomly freezing people's accounts. And last year, the company threatened to fine users up to $2500 to posting misinformation. After immense backlash, PayPal retracted the statement saying it was an error. The terms and conditions of PYUSD also state, PayPal can stop supporting the stablecoin at any time without informing holders. All of this has members of the cryptoverse worrying that PayPal would arbitrarily freeze or deduct PYUSD from their accounts just like the big banks are able to do. Well, don't freeze up yourself. Hit that like button and subscribe to the channel to discover more crypto. PayPal freezing accounts is not good. We want control over our funds and the right to privacy. But just for context, Tether and USDC are centralized as well. Tether is held by an international company, and USDC boasts BlackRock, Fidelity, and Coinbase among their investors. So nothing is totally safe. And while it's great PYUSD has added the trove of stablecoin options, the space really needs more decentralized stablecoins. Okay, so now I want to mention a few reasons PYUSD makes me feel bullish for crypto in general. Anytime a TradFi company gets into crypto signals wider adoption. And PayPal could be going after a completely different retail demographic for PYUSD, which would explain the slow adoption. But the coolest thing about PayPal launching a stablecoin is the ability to pay for things IRL without taking funds off the blockchain. You can already use PYUSD to pay millions of merchants through PayPal. This kind of thing has started on a small scale elsewhere, but PayPal is going to majorly increase mass adoption. I don't think we're far away from being able to pay our rent with crypto through Venmo or PayPal. And that kind of thing makes me bullish. It gives me chills up my spine. Guys, I can hear the bull market calling. Can you hear it too? And it says, Wind Moon. That's all for me. Thanks for watching Discover Crypto! Hit that like button on your way out. And we'll see you at the top.
Thinking Crypto News & Interviews
A highlight from SEC GARY GENSLER CONTINUES CRYPTO FUD, BILL HINMAN PROMOTED, FRANKLIN TEMPLETON BITCOIN SPOT ETF, & COINBASE VECHAIN!
"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, scumbag regulator Gary Gensler testified before the Senate Banking Committee today and there weren't too many takeaways. He continued his lies about crypto, saying it's ripe with fraud, manipulation and, you know, his same bullshit narrative. But what we saw, there was some more members pushing back and asking him questions about regulation by enforcement. When are you approving the Bitcoin spot ETF and much more? I believe there's going to be more fireworks and more pressure on him in the House Financial Services Committee at the end of the month. So today, crypto made up a small portion of the questions that Gary Gensler got. He got a lot of questions around A .I., ESG and so forth. Here are some takeaways from some of the questioning that he received. The first is from Senator Steve Daines, a Republican out of Montana. The vast majority of the agency's rulemaking agenda has been a voluntary undertaking. Chair Gensler, you are not an elected official that is beholden to your constituents. You are an unelected bureaucrat that has taken it upon himself to reshape American markets. We do all we can do based on Congress's authority, Gensler responded. Not to be fair, Congress makes the laws. But Gensler, of course, is a corrupt bureaucrat out of control, right? He could be trying to put out clear guidelines working with Hester Peirce, who has provided many great solutions, such as the safe harbor proposal, and to be working with the crypto industry until Congress acts. But of course, he's not doing that. I just look recently, CFTC Commissioner Caroline Pham, she introduced a pilot program or proposal for a pilot program to work with the industry. So he could be doing these things. But of course, he's not. We know he's a puppet on strings controlled by the bankers in Wall Street who are looking to weaponize him, or they are weaponizing him, to shut down, to kill these crypto startups, such as Coinbase, such as Ripple, and so to allow his big buddies like the BlackRocks, the Goldman Sachs, and JP Morgan to come in and take over this market. Now, here's what Senator Bill Hagerty, Republican out of Tennessee, said. He asked what the SEC would need to see in order to approve a Bitcoin spot ETF, an issue the industry has been increasingly frustrated with. We're still reviewing that decision, Gensler said, about a federal court granting Grayskills petition for review of the SEC's denial of its Bitcoin ETF. I'm looking forward to the staff's comments. Now, once again, not much grilling happening. Yes, he got some criticism, but nothing like what the last House Financial Services Committee was like, where Patrick McHenry and all these folks were grilling the hell out of Gary Gensler. So this is pretty softball.
The Breakdown
A highlight from Crypto 2023: Even Vitalik Is Getting Hacked
"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 Monday, September 11th, and today we are catching up on everything in the cryptosphere from last weekend, including the founder of Ethereum getting hacked. Before we dive 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 weekend. Like I said, today we are doing a grab bag, catching up on just a ton of news, and let's start with the weird one. On Saturday, Ethereum co -founder Vitalik Buterin's Twitter account was compromised. The attacker used the account to tweet about a time -limited NFT promotion. Users that followed the link that tried to mint the NFT instead had their wallet drained. Around 700 ,000 in crypto tokens and NFTs were stolen. Now, the attack followed a similar pattern to many SIM swap attacks which have plagued high -profile crypto figures recently. An attacker fraudulently obtains control over the target's phone number and then uses two -factor authentication to gain access to Twitter or other services. The attacker then posts a link to a poison transaction for victims to sign. According to Unchained Sleuth's ZackXBT, there have been more than 53 SIM swap attacks over the past four months which have led to the theft of over 13 .3 million in crypto assets. Now, at this stage, we don't know exactly how the attacker gained access to Vitalik's Twitter account. Some assumed that Vitalik would be using more complicated security design than simple phone number based 2FA. If so, this attack speaks to much more sophisticated attacks targeting crypto figures. What was particularly insidious about this attack was how believable the fake communication was. The attacker's fake message was promoting a Q &A on a forthcoming Ethereum feature known as proto -dank sharding. Numerous high -profile industry figures were taken in by the fake message and signed transactions with their wallets. The highest profile NFT that was drained was the very first crypto punk to be claimed, valued at around $250 ,000. To some, the attack demonstrates a clear change in targets for scammers. DC Investors said, Still, others pointed out that it could have been a lot worse. Coin Bureau tweeted, Putting it more simply, CL207 tweeted, While Mac's short ETH, dude would have made $100 million, not $1 million. Still to others, this was just an example of how difficult it is still for normal people in the cryptosphere. Harrison at PompPunk on Chain wrote, Next up, staying in and around the Ethereum ecosystem, consensus -owned blockchain infrastructure firm Infura have announced plans to release a decentralized version of their service by the end of this year. Infura provides a range of blockchain infrastructure but are most well known for their Ethereum RPC nodes. As much as 50 % of Ethereum transactions are routed through Infura infrastructure, making their centralization an ongoing risk. As regulatory efforts move from enforcement to compliance, it's anticipated that regulators will look for intermediaries within the crypto ecosystem to deputize. And to many, a centralized Infura would be a natural fit for compliance enforcement. Indeed, we've already seen multiple instances of Infura being used as a tool for compliance. Last November, the firm announced that some 20 million Metamask users would have their wallets and IP addresses tracked using Infura. Consensus pushed back on the controversy by noting that Metamask allowed users to opt out by switching to a different RPC provider. In March, consensus blocked IPs from certain regions in an effort to comply with sanctions requirements. Also, in March, consensus blocked IPs from certain regions in an effort to comply with sanctions requirements. Users from Venezuela and Iran were among those who complained they could no longer use Metamask through Infura. At the time, consensus were criticized for restricting access more broadly than the sanctions called for, including blocking some U .S. residents who had emigrated from sanctioned nations. Still, it appears that consensus and the Ethereum ecosystem at large have grown increasingly uncomfortable with the censorship risk of RPC nodes. And Infura have been working on this decentralization project for over a year now. Now, the project will be rolled out in a number of phases. Infura refers to the first stage as the quote federated phase, where trusted partners will be brought on to run redundant versions of key infrastructure. Tom Hay, decentralized infrastructure product lead at Infura, said in a statement, We're looking to launch something later this year, and that is going to be a federated phase. The federated phase will last at least six months and will provide the network with the insight on how to build a sustainable model before introducing further decentralization. Now, according to the team at ConsenSys, aside from censorship resistance, adding more diversity and redundancy in RPC infrastructure could also improve the robustness of Ethereum in general. ConsenSys head of strategy Simon Morris said, If you have different people setting up their infrastructure in different ways on different cloud providers using different node software, then you can start to build antifragility into the system. Next up on this breakdown, a regulatory roundup. On Friday, the SEC filed their response in the Ripple lawsuit, arguing that the case should be allowed to proceed to appeal. Ripple had previously objected to the appeal, stating that the regulator had not made a sufficient argument to ground an appeal. The SEC is filing hitback, stating that, quote, The defendants themselves say that the issues have industry -wide significance and are of special consequence. They claimed that this pivotal decision should be subjected to the scrutiny of an appellate court to ensure a clear precedent is made. The SEC is filing hitback, stating that, quote, The defendants themselves say that the issues have industry -wide significance and are of special consequence. End quote. They claimed that this pivotal decision should be subjected to the scrutiny of an appellate court to ensure a clear precedent is made. The SEC noted that one judge has already rejected the Ripple decision as a persuasive precedent, opening the door to contradictory rulings. The regulator further argued that halting the rest of the Ripple case to deal with the appeal immediately would, quote, preserve the resources of the court. They even went so far as to take a swipe at Ripple, claiming that the firm was deliberately dragging out court proceedings. Speaking of the SEC, Republican House Whip Tom Emmer has introduced an appropriations amendment to rein in the SEC's crypto enforcement agenda. In a tweet, Emmer wrote, "...Gary Gensler has abused his authority to grow the administrative state to the detriment of the American people. Congress must use all our tools, including the appropriations process, to restrict Chair Gensler from further weaponizing taxpayer dollars." The appropriations amendment would limit the SEC from utilizing funds to pursue digital asset enforcement until comprehensive rules and regulations are put in place. Now, of course, Emmer has long been critical of the SEC's approach to crypto regulation. In June, he supported fellow Congressman Warren Davidson's SEC Stabilization Act proposal which would limit the authority of the SEC chair by introducing a sixth commissioner to require bipartisan support for regulatory actions. Gensler is scheduled to appear at an oversight hearing before the Senate Banking Committee on Tuesday. The House Financial Services Committee, meanwhile, will hold their SEC oversight hearing on September 27th. So we should get a chance to hear more about whether there has been any shifts in the Gensler -SEC attitude since some of these court proceedings have gone through. Now, moving over to the Fed. In a speech given at a fintech event on Friday, Fed Vice Chairman of Supervision Michael Barr made a number of comments about CBDCs and stablecoins. When it comes to CBDCs, Barr emphasized that the Fed is still firmly in the quote basic research phase and is far from making any decisions. Barr said that quote, Investigation and research are very different from decision -making about next steps in terms of payment system development and we are a long way from that. By way of detail, he explained that the research is currently focused on system architecture and tokenization models. Barr continued to reinforce the idea that the Fed won't make any decision on CBDC issuance without quote, clear support from the executive branch and the authorizing legislation from Congress. On stablecoins, Barr said quote, I remain deeply concerned about stablecoin issuance without strong federal oversight. If non -federally regulated stablecoins were to become a widespread means of payment and store of value, they could pose significant risks to financial stability, monetary policy, and the U .S. payment system. It is important to get the legislative and regulatory framework right before significant risks emerge. Now, Barr has recently spearheaded the Fed's Novel Activities Supervision Program, which requires banks to obtain a written non -objection before they can interact with stablecoins. He claimed that the safeguard was in line with previous guidance issued by the Office of the Comptroller of the Currency. Barr argued that strong federal oversight of dollar -backed stablecoins was in the Fed's interest, arguing that the tokens quote, borrow the trust of the central bank. Now, of course, federal oversight of stablecoin issuers has become a line in the sand for establishment Democrats who sought to hold up the progress of stablecoin legislation back in July. Barr also reflected on the July launch of FedNow, which is the new instant gross settlement system operated by the Fed. He said that FedNow has been made available to depository institutions of all size, but quote, while current volumes on FedNow are small, I expect that participation will grow over time. Now, next up, one we talked about a bit in the weekly recap, but giving the details just for completeness. On Thursday, the CFTC announced enforcement actions against three D5 firms — Open, 0x, and Derridex — all settled lawsuits for offering unregistered derivatives products to U .S. customers. The fines were relatively small — $250 ,000, $200 ,000, and $100 ,000, respectively — but the message was clear. CFTC Director of Enforcement Ian McGinley said in a statement, Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts. They do not. The DeFi space may be novel, complex and evolving, but the division of enforcement will continue to evolve with it and aggressively pursue those who operate unregistered platforms that allow U .S. persons to trade digital asset derivatives. Now, while both Open and Derridex were offering derivatives trading, the situation around 0x was a little more complex. 0x is an Open DEX platform which allows anyone to list tokens. They attracted the attention of the CFTC by simply having derivative tokens with embedded leverage listed. The CFTC claimed that simply retaining the ability to draw fees from the trading, though not actually profiting from the platform and having access to shut down the platform, was sufficient to be held liable for how other developers use the platform. Now, one CFTC commissioner offered a scathing dissent to the enforcement action. Commissioner Summer Mersinger wrote, Although each case presents different facts, they have been lumped together for commission consideration and vote, presumably for messaging purposes, as quote -unquote DeFi cases. She added that, I am concerned that the Commission in these cases is taking another step down the path of bringing enforcement actions when we should be engaging with the public. It is important to emphasize that Enforcement First has not always been the CFTC's default position. These cases are especially concerning in that they represent a significant shift in position on the merits of engagement with DeFi market participants. Finally today, over in the UK, the United Kingdom Financial Conduct Authority have pushed back the commencement date of some elements of strict new crypto advertising rules. The core rules will come into force on October 8th. They require advertisements to be clear, fair, and not misleading. In addition, risk warnings will now be mandatory in incentivizing platform use with both monetary and non -monetary rewards is prohibited. Other parts of the regulations could be pushed back to as late as January according to the FCA. Individual firms would need to apply for additional time on a case -by -case basis. The regulator explained that firms are running up against technical issues implementing some parts of the new rules. In particular, a 24 -hour cooling -off period which would allow customers to ask for full refunds is proving difficult to comply with. It would require programming changes to platforms at a minimum, if not an overhaul to business models. Lucy Casseldine, Director of Consumer Investment at the FCA said, As a proportionate regulator, we're giving firms that apply a little bit more time to get other reforms requiring technology and business change right. We'll maintain our close eye on firms during this extended implementation period. Now, the FCA's strict new rules have been criticized for their broad scope and draconian punishments. Foreign firms that advertise to UK customers would be covered by the regulations, which capture social media posts, websites, and in -app advertising. Influencers would be held liable for their promotion of crypto products, and the failure to adhere to the new regulations could result in criminal charges. The maximum punishment for breaches includes an unlimited fine or even jail time. The FCA has said that the strict rules are designed to Prevent harm to consumers from investing in crypto assets that do not match their risk appetite. The regulator added that It is up to consumers to decide whether they buy crypto assets, but they should do so based on fair and accurate information that helps them make effective investment decisions. So friends, this is the other side of the prepping for the next bull run. It is going to be a much tighter environment, certainly for any types of promotions. Although whether that will end scams given where we started this episode, I think that remains to be seen. However, that is going to do it for today's episode. I appreciate you guys listening as always. Until tomorrow, be safe and take care of each other.
Thinking Crypto News & Interviews
A highlight from GARY GENSLER CALLS ALL CRYPTO SECURITIES AHEAD OF CONGRESS HEARING & SEC RIPPLE XRP APPEAL
"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, I want to start with news around scumbag regulator Gary Gensler. Tomorrow, SEC Chair Gary Gensler will be testifying before the U .S. Senate Banking Committee. And there will be two hearings this month that he's going to be appearing at. And tomorrow is the first. At the end of the month, he'll be testifying before the House Financial Services Committee. I think that's the one that's going to have the most fireworks the last time. It certainly did. Gary got a lot of grilling from Patrick McHenry and a whole bunch of other folks. So I can't wait for that one. So we'll see if he gets any pushback tomorrow. But ahead of his testimony tomorrow, he released a letter. And of course, he's reiterating the same old bullshit about how all crypto tokens are securities. And here's one of his quotes. Given this industry's wide ranging noncompliance with the securities laws, it's not surprising that we've seen many problems in these markets. Now here's what Taylor Barr of the Digital Chamber of Commerce had to say regarding those statements from Gary. Without clear rules of the road and notable regulatory gaps, it's not noncompliance. It's navigating uncharted waters. Yeah, I think we've seen this time and time again. Gary continues these false narratives. We know the market does not have clarity. We're seeing the judges and the courts. The judges are also like, what is the SEC calling a security? You can't even say which ones are security and which ones are not right. They're just the SEC is just throwing anything at the wall right now. And Gary continues lying. This is why we have to keep fighting folks. And we have to tweet. We have to use social media to our advantage. We have to make content. We have to contact our representatives. Now, Mike Selig, who is a crypto and a fin regulation lawyer at Wilkie Farr. He tweeted out some items regarding Gensler's letter. Chair Gensler says the vast majority of crypto tokens meet the investment contract tests. Now, former chair Clayton said every ICO is I've seen is a security. This is similar rhetoric, but different meaning. Unlike Clayton, Gensler says tokens themselves are securities. Judge Torres disagreed. So we know the Ripple ruling was certainly important for case law, highlighting Gary's lies and his false narratives. And even goes back to the Howie case where I've interviewed Hester Peirce, SEC commissioner, where she said she's trying to tell the folks there not to focus on the asset, but rather how it's packaged. So in the case of Howie, it wasn't the oranges, right? It wasn't the trees and the orange groves and all of that. It was rather his investment scheme, because if it was the fruit and the trees, that means every orange tree today is a security. All the oranges in the supermarket and that you have at your house is a security, which is nonsense, obviously, right? Because these tokens, folks, they exist on decentralized blockchains and they are distributed globally. They're outside the United States as well. Right. And you can't get the same rights as stocks. If you hold a token, you don't have voting rights in the sense of having equity and shares of the company and things like that. So it's not a security, but rather how it's packaged. That's the key. That's the differentiator. But Gary Gensler continues his lies. So we got to fight. Let's see how this hearing goes tomorrow. And if he gets pushed any type of pushback, I'm hearing a lot of Democrats and as well as Republicans, of course, are not happy with Gary with how he's doing things with the crypto market. Obviously, him taking a big loss with Grayscale and Ripple is significant. And I hope Coinbase mops the floor with this clown Gensler. And then I hope he gets he gets forced to resign. Now, the SEC is, of course, trying to file an appeal with the Ripple ruling. And here, attorney Frederick Foley shared some thoughts about that. He said, XRP community, SEC made decent arguments and Ripple countered them. Well, certifying the appeal is a discretionary standard. Judge Torres can do whatever she wants if she determines the three statutory conditions are met and there is enough wiggle room for her to certify, he says. But as I predicted earlier, I still say the likely outcome is she does not certified mainly because of the prejudice to the humans involved. Brad Garlinghouse and Chris Larson, without the claims against them, I would have to say 100 percent chance she certifies. Lastly, this case has a political element. So if that is a factor for Judge Torres, I don't think it is, but it's not without reason to think the opposite. She can avoid that issue by certifying and putting the onus on the second circuit as the court can simply deny the request. So we'll see. I don't think the SEC has any chance here. You know, once again, they can go ahead and file the appeal. Nothing wrong with that. But will they actually get it through and get something done? I don't think so. I think Gary Gensler has lost the narrative. Optics look very bad for him. And I can't wait to see what the ruling will be with the Coinbase situation. And I think another loss will be really bad for Gary Gensler. Now, a quick word from our sponsor, and that is Uphold, which makes crypto investing easy. I've been using Uphold since 2018, so I can certainly vouch for this platform. They have 10 plus million users, 250 plus crypto currencies, and they're available in 150 countries. You can also trade precious metals and equities on this platform, as well as 37 national currencies. You can swap between different currencies with precious metals and crypto currencies. It's pretty unique. So if you'd like to learn more about Uphold, please visit the link in the description. All right, folks. Now, with Ripple acquiring Fortress, which is the custodian, and this was a big move by Ripple, of course. Well, some details are coming out that Swan Bitcoin's custodian was Fortress and that Fortress was hacked, apparently. And some customer funds were lost and Ripple in their acquisition had to step in to cover the customer losses. This is wild. Now, you may say, who cares? Well, Swan Bitcoin is run by a bunch of Bitcoin maxis. Max Kaiser supports it. The other guy, Corey, I forgot his last name, but these guys are toxic. I mean, they're going around calling everything a shitcoin. They're attacking other coins. They're always, you know, just doing nonsense. It's like their M .O., right? That's the persona they've taken over. But a lot of people recognize it. They're just just toxic, man. Just disgusting people. And lo and behold, the irony, folks, that Ripple came and bailed them out. Right. And apparently this was confirmed because Mike Belshi, who was who is the CEO of BitGo, who I've had on the podcast many times, he confirmed some of this and that the folks at Fortress Trust have not been clear about the lost funds and things that have been happening. And it's spilling over to BitGo because BitGo's clients are calling and saying, hey, what's going on here? Right. What's with the breach and all that jazz? So it's a mess right now. So it's pretty incredible that these Bitcoin maxis got bailed out by Ripple.
The Bitboy Crypto Podcast
A highlight from This Altcoin Just WON BIG! (Huge SEC Loss)
"What's up, crypto fam? Welcome back to the most talked about show on the entire interweb. Today, you're gonna be joined by Joshua Jake, who is myself. I'm going to be coming from TikTok. A lot of you in the chat already know who I am. And I'm excited to be here. We have a lot to break down with these markets. We had some huge announcements come from some lawsuits with Uniswap, which are going to impact Gary Gensler and his entire motion in attacking the crypto sector. And of course, today, I am joined by Deezy himself. So thank you for having me here today. Deezy's in the corner today, folks. Deezy's in the corner. How are we all doing today? Hit that like button, everybody. Hit the like button, hit the like button. So they're jumping straight into markets here today. Bitcoin coming back down a little bit off this initial pump up to the 28 ,000 levels. We had a massive spike, right? Everybody was talking about we're going back down. We're going back down to 23 .8. We're gonna go back down to 22 .7. We're sitting in panels all this last week, people trying to figure out where prices were gonna go. And we had some pretty bullish opportunity this week with the Grayscale announcement. So ,661 27 right now for Bitcoin. We have Ethereum sitting at a 1 ,700 level. And in terms of markets, we're gonna click on this 24 % right here. We're seeing some pretty big gains. Bitcoin Cash, TON, XDC, which I was watching yesterday's show. And Deezy actually pointed this out. XDC does always seem to be with Stacks in that top moving section. It's always pumping. Yeah, then you got Phantom and Injective. I don't know what it is. They just like to move a lot. Is it no liquidity for these coins? What's going on? I mean, don't tell that to their communities. They're gonna believe that liquidity is sitting there very well. My order book is the thickest order book in all the order books. Yeah, there's nothing going on the inside there. But yeah, seeing some good price action once again today. Stacks obviously is gonna be moving with the Bitcoin announcement. That's gonna be your direct layer one that's building those smart contract protocols and bringing those smart contracts to Bitcoin's network. So it makes sense that it's moving with this price action. But we're gonna jump into the first article because this is gonna spark a massive discussion lawsuit with Uniswap dismissed, DeFi crypto exchange not liable for scam tokens. This is huge. There is going to be a claim coming out from these judge once we get down the article just a little bit more. I'm gonna go through all the highlights here with you guys. But a class action lawsuit brought against Uniswap was tossed out by a district judge on Tuesday who found those associated with the decentralized exchange were not liable for so -called scam tokens that purportedly burn traders. So this is big. This is a big news, especially for decentralized exchanges. I think a lot of people in this industry are scared of the phrase DeFi is dead. And what I mean by that is this is a huge conversation that people don't really know where compliance is, KYC, and the way that the United States is not only lagging behind on regulations, but they are worried about in terms of what does that mean for a lot of these decentralized exchanges and the tokens that they're gonna be trading on these platforms. So I don't know if you've used Uniswap a lot, so if you're gonna be looking from pancakes, I don't know where your fan base token is gonna be for your DEXs, but what have you seen coming out of these centralized or decentralized exchanges with these lawsuits? What does this mean for you? Well, it's always funny. It's like, all right, where are we serving these subpoenas? Who are we suing? Are we suing the guy that pays the light bill? Are we suing the guy that has the domain? Are we suing the guy that has a Twitter account? There's varying degrees of decentralization. I'm more excited about disclosure. We could kind of peek behind the curtain and actually see, are you really a decentralized exchange or you've just been centralized this whole time. It's like Scooby -Doo. What are we gonna see when we rip the mask off? That's so true. You run in between the door. I feel like that's how our regulators work. They're just running into doors that they don't know and they just keep popping out in the hallway back and forth, and it's never ending. But so some of these tokens that were included in this lawsuit were Matrix Samurai. I don't hold any of these, but it's Rocket Bunny, Alpha Wolf Finance, and Southern District of New York judge Kathryn Falia, Polk and I might be mispronouncing that one, who dismissed the case, said the plaintiff's dilemma is the pseudo -anonymous nature of those token issuers. So again, huge win for this industry, huge win for crypto. And if I scroll down right here, this is probably the most important phrase. I'm actually looking for it as I scroll down here. Here it is, the lack of clarity. So the lack of clarity surrounding how securities laws apply to DeFi was noted by the judge. Reference a warning from Securities and Exchange Commission chair Gary Gensler in September 2021. That class of projects were under increased scrutiny. Now Gary's really not, I don't think anybody in this chats, I know everybody on the stage, who may not be the most ambitious people towards, you know, we're not the biggest fans, but I'm trying to find, I don't think we highlighted it here, is going to be the fact that out of this lawsuit, the judge did say that both Ethereum and Bitcoin were commodities, and that is a massive breakthrough for the entire crypto sector. If you guys come from the XRP community, you would know that Bill Hinman and the entire things that went on over the summer, we needed that clarity. We don't have those security laws and everything implemented. We don't know where the regulation is for the future of these tokens. But as a commodity, this is a very interesting topic because they didn't say digital currency. They clearly didn't say, you know, a security. And if this means a commodity, what is the outlook for this? Because this brings in the questions. This brings in, okay, now is there gonna be more compliance measures from a commodity -based token? If you're gonna be looking at Ethereum, now there's gonna be market manipulation laws and everything that they have to address that we're now gonna have to see in court. So very interesting, at least from the terms of Ethereum, and comparing that to Bitcoin, because they're completely different functionalities. Yeah, and just kind of what I was saying earlier, we get to peek underneath the hood, see what's going on. Have they been doing those oil changes? What is up with the gas? So it'll be interesting. It definitely will, it definitely will. I'm excited for it though, guys. This is a huge moment for the industry. It's coming off the grayscale when the SEC's losing back -to -back lawsuits. Uniswap taking this beautiful, beautiful victory lap, and that leads us perfectly into the next article right here with SEC Chair Gary Gensler to testify before Congress twice this September. Now, out of this, we're looking at the Securities and Exchange Commission, guys, to testify twice, we're reading that twice, but in front of the House Financial Services Committee on September 27th. So the hot seat here is gonna be Gensler has been under fire for his comments about firms they need to register with the SEC. The House Committee on Financial Services asserted that Gensler's push for registration is a willful misrepresentation of non -existent registration process. So, and we all know this, we all know this, we've seen the regulatory by -enforcement, we've seen them come out and battle not only the CFTC, Congress, our politicians, our government, the United States has no idea what they're doing. You have Jerome Powell with the Federal Reserve now coming out and obviously stepping on Congress's toes by issuing new advisory boards that are gonna be advising and supervising stablecoins, which is a direct threat and competition to the policies Congress is pushing in. And then on top of this, you have the people supposed to be protecting investors from the CFTC and the SEC just clashing heads nonstop. And so this is just, again, another moment we're gonna be seeing Gary Gensler in the hotspot, especially as he just lost, again, multiple lawsuits back to back, and yeah, I mean, I'd be scared to be in his position. Is he gonna get the grilled treatment by the House subcommittee, the Fauci treatment, as some people call it? Yeah, I mean, look at this. He's what, a year away from proving that he deserves this position. And it's not only just the people that are saying, hey, we need to fire Gary Gensler. You've seen the hashtags trend on Twitter. This is more than that. This is committee members, this is people of Congress, this is, I think, even Elizabeth Warren has said things now as well. These are things that are putting him, again, in that hot seat. Moving on to our next article here, though, this is probably gonna be one of the most favorite announcements today, but it's gonna be, XRP may have just become one of the biggest threats to big banks following Ripple's historic SEC win.
The Breakdown
A highlight from Crypto: It's So Over. We're So Back.
"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 Sunday, August 27th, and that means it's time for Long Read Sunday. 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. Well, today our theme is where we are in the cycle. I think we are in a very transitional moment and both of the pieces today have something to do with exactly that. The first is by John Rizzo, the Senior Vice President for Public Affairs at Clyde Group and was featured on CoinDesk on August 16th. The piece is titled How PayPal Upended the Crypto Debate in Washington, D .C. John writes, As the end of July arrived, House Financial Services Committee Republicans achieved its goal of passing a bipartisan stablecoins bill. Still, they left D .C. without the broad bipartisan vote Chair Patrick McHenry had labored to achieve. The session ended with new recriminations over old disputes, namely the degree of federal versus state regulation in a new regulatory framework, casting a dark cloud over the prospect of legislation that could garner support from McHenry, Ranking Member Maxine Waters and the Biden White House. And then PayPal and Paxos entered the chat. The surprising unveiling of PiUSD may be the accelerant needed to forge compromise in D .C. and bring about the legal enshrinement of a comprehensive regulatory framework for stablecoins. It may also represent a new, more aggressive strategy for how American fintech companies deal with the federal government and D .C. regulators. Now Rizzo continues to explain just why it's such a big deal. There are a couple parts to that. First, he says the sheer scale of PayPal's reach is really significant. As he puts it, with the flip of a switch, hundreds of millions of users can access and transact in stablecoins through a service with which they are already familiar. But the second piece is the contrast to Libra, which obviously became DM, which was Meta, then Facebook's failed stablecoin project that was announced all the way back in 2019. Rizzo writes, had it succeeded, DM would have presented two challenges which were discussed publicly at the time for the federal government to wrestle with. Libra stablecoin would have launched when the U .S. lacked a comprehensive regulatory framework for stablecoins, meaning it would exist in a legal and regulatory gray space. Beyond that, he writes, its regulatory challenge would have been turbocharged by the fact that Facebook's billions of users would have had access to this sort of regulated, sort of not regulated crypto token overnight. Now while PayPal is not at the scale of Meta and Facebook, Rizzo says, it is at a scale that creates a new urgency to actually reach a compromise and figure out a regulatory framework that is workable. And as he points out, that pressure didn't exist when only a handful of Democrats broke rank to vote in favor of McHenry's stablecoin bill. As he puts it, Democratic policymakers in D .C. who resisted McHenry's stablecoins bill in search of a better deal must account for the prospect that stablecoin adoption and usage could speed up rapidly soon, heightening some of the risks that D .C. policymakers identified when assessing stablecoin regulation. Interestingly, Rizzo also points out that PayPal is operating in an area where the federal government's ability to intervene is actually somewhat limited. The piece continues, forcing financial policy innovation without the pre -approval of regulators is daunting unless you operate in the one area of financial services primarily regulated by states. That's PayPal's ace in the hole. It's the reason it could partner with Paxos Trust and change the pool of potential stablecoin users overnight. Its core business, money transmission, is regulated through a state -by -state licensing regime, meaning the federal government's ability to impose a cost on PiUSD's backers for launching a stablecoin without seeking prior approval is limited. Basically, Rizzo's argument is that in this launch, PayPal claimed power instead of asking for permission. He concludes, Having observed power up close during 14 years of federal service, achieving a result in D .C. is not always about winning the competition of ideas. Instead, influencing power is about power and leverage. Supporters of stablecoins and market participants now have leverage over the federal government in a way that didn't exist weeks ago. It could grease the wheels for a comprehensive regulatory framework for stablecoins in Congress and begin an era in which American crypto companies forced the federal government to deal with them on their terms. Alright, so that's piece number one, and instead of discussing it alone, I'm going to read the second piece and then we'll talk about them both together. The second piece is by Daniel Kuhn, also on CoinDesk, and has the great title, The End of the End of Crypto. Daniel begins, Trying to figure out whether crypto is here to stay isn't as simple as tallying up the industry's wins and losses. For a while there, it genuinely seemed possible that the US SEC could wipe crypto off the map. Then again, there's practically a cottage industry of people who've made it their business to count all the times bitcoin or crypto supposedly died. However, as Daniel notices, it seems like the overall mood of the crypto scene has shifted. Daniel writes, Beginning with BlackRock's surprising move into the realm of crypto ETFs and running through PayPal's just -launched stablecoin, it seems like most of the major crypto news headlines are pointing a way forward. Daniel also points to Ripple sort of winning, SPF going to jail, and 3AC getting sued once again. So, Daniel asks, is the bottom in? He's not sure, but he does point out that, Now that the SEC has finally unloaded its worst against sector giants Binance and Coinbase, FedNow didn't siphon off all interest in crypto and meaningful legislation has passed never -before -seen hurdles, it seems like the worst is over. So what are the risks that remain? Daniel points out things like, The proposed custody rule changes that could put crypto in a hostage situation, DCG's bitcoin trust unraveling, and zooming farther out, quantum computers that could one day break cryptography's back. As he says, there's likely plenty of tail risks and black swans and bitter ends ahead. However, as Daniel says, At this point, it seems clear enough now that Bitcoin is battle -tested, and while governments may want to step up oversight of crypto, the real anarchic core of all of this is basically untouchable. There is a technological force loose in the world that enables completely permissionless transactions and that inspires others to build and build and build, creating a functionally self -perpetuating loop. So, okay, these pieces go together, both I think under the theme of the title of the second one, The End of the End of Crypto. And why I think this is such a compelling title is that in the period after the collapse of FTX and the unveiling of the fraud of SPF, this industry was on very, very fragile footing. I hardly need to say this to you guys as you've all lived through it, but between Operation Chokepoint 2 .0, deplatforming from banks, the ceaseless grind down of prices, one could be forgiven for losing some amount of hope. Now, of course, for those paying close attention, not all that much hope was actually lost. People were fighting fiercely against government overreach, builders were still doing all sorts of weird things, and of course, Bitcoiners didn't care really what anyone else thought. And yet from the outside looking in, we have just gone through a two -part inflection point moment. The parts are exactly what Daniel pointed out. On the one hand, BlackRock planting its flag, which by the way was reinforced by BlackRock CEO Larry Fink on national TV a number of times, and then PayPal exerting its influence, which was of course the subject of the first piece we read. These aren't crypto -native companies rising up, these are traditional finance companies coming back in, or rather saying they never left and that they believe more people are coming in the future. It might not have mattered to those who are still here listening to the breakdown this many months into the bear market, but for the people outside who will bring new energy and new capital into the space, these things are signals and they're big ones. And so yes, I believe it is true we have had and experienced the end of the end of crypto. Until next time, be safe and take care of each other. Peace.
The Bitboy Crypto Podcast
A highlight from Congress Defending Crypto! (Gary Gensler's Pawns Exposed)
"It was a rush job to replace Sam Bankman -Fried and FTX because they lost them. So I think that's the best take. Yeah. It was a rush job. They had a hold. Meanwhile, they're like all these moving parts and like, guys, we got to do it. We find somebody. And then Promethean was like, hey, I'll do it. So they just created this entity. Promethean. Looks like we have a little press release here. Republicans, press regulators regarding Promethean's special purpose broker dealer approval. Pat McHenry from North Carolina led the committee here in sending letters to FINRA president Robert Cook and SEC chair Gary Gensler regarding Promethean's approval as the first and only special purpose broker dealer for digital assets. Kind of, they came out of nowhere, got all these approvals and no one ever heard of them before, you know, we covered it months ago. What the heck is Promethean? Where's Promethean coming from? We discovered a lot of insiders. Well, you know, some Republican senators looks like they had some issues with it. Here we have a quote. I think this is McHenry here. The timing and circumstances surrounding the approval of Promethean as the first special purpose broker dealer here raises serious questions. The approval comes as the committee is considering addressing gaps in the regulation of digital assets. We held a joint hearing just seven days ago prior to the approval of this asset or SBBD. In that hearing, members discussed their plan to propose legislation on digital asset market structure. While Promethean claims it is a silver bullet for digital asset offerings, it has not yet served a single customer. There's also refused to make public the digital asset securities that they would support on his platform. And since they're limited to digital asset securities, the SEC has refused to provide any biting guidance on what digital assets are securities. It is unclear what assets would even be eligible here. I want to show this story as well. They respond. All right, so we got to respond. So we got the Republicans. They're like, hey, this is fishy stinks. You know, they're ripping the mask off like it's Scooby Doo. Something's not right here. What are your thoughts on the approval? Do you think there's any chance that there's no insiders? No, there's absolutely insiders. And the fact that Congress is noticing is actually a breath of fresh air. But there's clearly fishiness. Ben made a video. We posted it, what, two weeks ago, three weeks ago, maybe at this point, just on the sketchiness of this entire story. It's the coincidence is just go too far to not have some weight to them. All right. We have Asmyr. F this ATL traffic. Hey, ATL in the house. Boomer Sooner. Do this move. That's what I know. Actually, do that. Or you do the, uh, the wafting, uh, move to it's like a drowning man. All right. Uh, Promethean responds to Republican concerns on the FINRA and the SEC approval. So Promethean, they got a little response here. There's a Pacma Henry. He's the one, you know, raising the questions. So the, the LLC, the response takes the spotlight amid growing concerns raised by members of the house financial services committee. Uh, here we have a friend of the channel, Eleanor Terrett, uh, tweeting about it as well. And reactions, uh, Promethean issued a statement. The purpose built its technology with the goal to develop a market infrastructure for digital asset securities that is compliant with federal securities laws. So they basically said nothing while saying a whole lot of something there, uh, in separate letters from house committee, Pat McHenry and 22 other members that they directed it to the CEO of FINRA and Gensler. And then, you know, we kind of covered this, uh, just kind of covering their concerns regarding the timing of the approval. One of the authors of the letters voices reservations and called for transparency regarding the approval of a company with strong ties to the CCP. Meanwhile, Coinbase, uh, CEO praise the letters and shared his concerns. Remarking blatantly political behavior from a regulator undermines trust in our institutions further emphasize the importance of equal treatment for all under all individuals under the law. Uh, Hey, what do we have here? Adding to the conversation crypto influencer BitBoy crypto echoed similar concerns regarding the links to the sec, suggesting a potential undisclosed crypto takeover plan involving the crypto startup and the sec chair. Uh, I will say this it's going to be interesting. So defense industry. All right. So every time you see a general talking about, you know, Hey, we got to do this. And you know, they're on these committees and joint national, where do they end up? They end up at like Raytheon. They end up at a Lockheed Martin, you know, they, they end up in these other companies. We're going to follow Gary Gensler. And do you think Gary Gensler, you know, I think going to have too much of a spotlight on it. He's not going to be able to take that Promethean advisor. I don't, I think we're, he's going to have too much of a spotlight to do those hundred and $50 ,000 speaking zoom call. Um, but it's too much. It was a rush job to replace Sam Bankman freed and FTX because they lost them. So I think that's the best take. Yeah. It's it was a rush job. They, they had a whole meanwhile, they're like all these moving parts and like, guys, we gotta, we gotta do it. We find somebody and then a Promethean was like, Hey, I'll do it. So they just created this entity, uh, controlling humans. Isn't it as easy as it used to be Mark, the shark. That's what he says. Yeah. Dang that pesky internet and, uh, you know, people, you know, sharing ideas and, you know, uh, objectives. Yeah, that's true. Although we do have big tech censorship. Drew, what are your thoughts on big tech censorship? Is it overblown understated? Understated. I would say so. And I it's, it's got amazing capabilities. You can speak in metaphors about specific information that's public domain, and you can be kind to the community and the algorithmic robots will still find you. So it's got very powerful potentials that I've experienced personally.
The Bitboy Crypto Podcast
A highlight from MASSIVE Crypto News To CRASH Prices?
"We are, uh, here in the Bahamas. We are going to make it right. If you became a millionaire, would you keep working? The commander is here. What's going on right now is California's trying to figure out if this is going to be something that will pop your butt. Yeah. Oh, I can. Welcome to BitBoy Crypto! We're just talking about the Joker movie, everybody. Today is August 16. It's 1130 a .m. because we always start on time. We're going to have an hour -long show talking about crypto. We're going to talk about Coinbase. We're going to talk about a secret ETH whale that is a former president. You're going to want to stick around for that one. Also, some CFTC stuff. Another crypto millionaire found dead and some Thor chain stuff. So all my Thor fans, Chris Hemsworth, not Liam. We don't like Liam, right? Because the whole thing he did, he cheated on his wife. Yeah. But we do like Thor. I'm down with Thor. We're down with Thor. And he's got a little bit of time left before dementia kicks in, so. Alright, alright. Well, let's get right to the show, guys. Make sure you follow us, you know, and make sure you go buy some merch at hitmerch .com. You can see this cool ATB hat I got on, the cool ATB hoodie. Let's look at the crypto markets, though. How are they faring? We're going to go ahead and hit refresh. Oh, I want to give a shout out to a BitSquad member. They threw away the piece of paper with your name, but he gave us a mouth. Where's the mouse? Uh -oh. The mouse moved. Yeah, we had a BitSquad member send us in a Logitech with a track wheel. It was here last night. Owen. It's Owen. I'm going to get to the bottom of it, and, yeah, well, they threw away your name, buddy, but we appreciate the mouse there for us trackpad challenge folks, though. But let's look at the crypto market. It looks like it's taking a little bit of a tumble down. We are now down 1 .6%. We've fallen below 1 .2 trillion. I feel like we've been above that for a hot minute. 24 -hour volumes coming up a little bit. It was in the 30s. Now, we're at 41, basically $42 billion. Bitcoin dominance risen a little bit. It was 46 .9. Now, we're at 47 .3. Gas coming in at 36 Gwei. Bitcoin is down 0 .8%, and Ethereum is down 0 .9%, but some of these alts are really bleeding, folks. So, the alts are taking a hit. BNB isn't really feeling too much pain at 2 .3%, but XRP is down about 5%. Dogecoin down about 6%. Cardano down about 5%. Solana was 7%. Now, it's down about 6 .5%. Polygon down about 6%. What was that 7 % I just saw? SHIBA in you. Should have sold it. Should have sold. The sell wasn't in me. That's also down as well. Is the money flowing to... How do you say this coin, Tim? Yeah, I was talking about it this morning. See or say has to be the two options here. So, let's go with say. I'm going with say. I say say. Yeah. I think a lot of money is flowing into say. You see the 24 -hour volume is $1 .2 billion. Now, that could be $1 changing hands a billion times. But volume significant right here. The market cap is coming in at $380. That's not most of the tokens being sold for that much, but, you know, the tokens that are circulating, it is up. Do you think some money flowed into say? Yeah, I mean, clearly. I don't know if you saw it there, but on CoinMarketCap, it's up over 2 ,000. It was 2 ,100 % in the last 7 days. So, a lot of money flowed in, but if you look at the tokenomics, a little more than 10 % of the max amount of tokens are actually operating. So, not necessarily something I'm rushing to buy in, especially after the last 7 days being up over 2 ,000 % and the fact that it's the tokenomics are all good. I'm not buying yet. We'll have to see more developed before I'd be willing to buy. I looked at CASPA an hour and a half ago. It hadn't moved up that much. Maybe it was just a dip about 24 hours ago. CASPA is one of the top gainers of the day along with say CASPA up 6 .1%. But other than that, largely flat and then into the negative, but alts are bleeding, folks. We have HBAR, had big news, bullish news, now down 12%. Terra Luna's down, of course. Apecoin, down 10%. IMX, down 10%. Uniswap, you know what I'm seeing here, Tim and Drew, I'm seeing a lot of the SEC listed coins and the 48 coins listed in the Binance .US and I think Coinbase suits there. So, a lot of those coins that were listed in that Coinbase suit, they're beaten down. Do insiders know something, you think? Maybe, I don't know. Is there, yeah, there's no news that would bring them down necessarily. I just thought the whole crypto market as a whole is taking a little bit of a bath. All right, Servanda Estrada comes here for the nonsense. I like Eric Estrada, Chip, California Highway Patrolman. Servanda Estrada is one of my favorite names to read when we read names on Investing Bros. So, shout out to Servanda. Good to see you here. All right, all right. We also have Crypto Brat. Okay. All right. They get bratty when it goes down, I guess. Any thoughts on the new Celsius disclosure statement? We're talking about it, I need to dive down into it. It's a lot of moving parts, so I don't want to just have a cursory glance of the facts when still a lot of things we might not know. All right, let's talk about Promethium here, folks. Wait a minute, first, yeah, yeah, Promethium. Looks like we have a little press release here. Republicans, press regulators regarding Promethium's special purpose broker dealer approval. Pat McHenry from North Carolina led the committee here in sending letters to FINRA President Robert Cook and SEC Chair Gary Gensler regarding Promethium's approval as the first and only special purpose broker dealer for digital assets. They came out of nowhere, got all these approvals, and no one ever heard of them before. We covered it months ago. What the heck is Promethium? Where's Promethium coming from? We discovered a lot of insiders. Well, some Republican senators, looks like they had some issues with it. Here we have a quote. I think this is McHenry here. The timing and circumstances surrounding the approval of Promethium as the first special purpose broker dealer here raises serious questions. The approval comes as the committee is considering addressing gaps in the regulation of digital assets. We held a joint hearing just seven days ago, prior to the approval of this asset or SBBD. In that hearing, members discussed their plan to propose legislation on digital asset market structure. While Promethium claims it is a silver bullet for digital asset offerings, it has not yet served a single customer. There's also refused to make public the digital asset securities that they would support on his platform. And since they're limited to digital asset securities, the SEC has refused to provide any biting guidance on what digital assets are securities. It is unclear what assets would even be eligible. Here, I wanna show this story as well. They respond. All right, so we got a response. So we got the Republicans. They're like, hey, this is fishy. Stinks, you know, they're ripping the mask off like it's Scooby -Doo. Something's not right here. What are your thoughts on the approval? Do you think there's any chance that there's no insiders? No, there's absolutely insiders. And the fact that Congress is noticing it is actually a breath of fresh air, but there's clearly fishiness. Ben made a video. We posted it, what, two weeks ago, three weeks ago maybe at this point, just on the sketchiness of this entire story. The coincidences just go too far to not have some weight to them. All right, we have Asmyr, F this ATL traffic. Hey, ATL in the house. Boomer Sooner, do this move. That's what I know. Actually, do that or you do the wafting move too. It's like a drowning man. All right, Promethium responds to Republican concerns on the FINRA and the SEC approval. So Promethium, they got a little response here. There's Pac McHenry. He's the one, you know, raising the questions. So the LLC, the response takes the spotlight amid growing concerns raised by members of the House Financial Services Committee. Here we have a friend of the channel, Eleanor Terrett, tweeting about it as well. In reactions, Promethium issued a statement. The purpose built its technology with the goal to develop a market infrastructure for digital asset securities that is compliant with federal securities laws. So they basically said nothing while saying a whole lot of something there. In separate letters from House Committee, Pat McHenry and 22 other members, they directed it to the CEO of FINRA and Gensler. And you know, we kind of covered this, just kind of covering their concerns regarding the timing of the approval.
The Breakdown
A highlight from Coinbase Launches Crypto Policy Coalition as FDIC Warns of Crypto Dangers to Banks
"Welcome back to The Breakdown with me, N .L .W. It's a daily podcast on macro, Bitcoin and the big picture power shifts remaking our world. What's going on, guys, it is Wednesday, August 16th, and today we are once again talking about a day that shows on the one hand regulatory challenges and on the other hand, the crypto industry just keeping chugging forward. 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. So as I said, today is a day of contrasts, which really, I think, sums up the moment that we are in in crypto right now. Let's start on what could be interpreted as the negative side with a new set of FDIC warnings. The Federal Deposit Insurance Corporation, the FDIC, has added crypto as one of the five most important categories of risk to the banking sector in this year's annual review. The FDIC report reflected on last year's calamities within the crypto industry and said the agency was prepared to engage in, quote, robust supervisory discussions with the banks it oversees in relation to crypto. Now, for completeness, the other four risks to the banking sector were credit risks, market risks, operational risk and climate related financial risk. But obviously, we are concerned mostly with the crypto risk here. The FDIC noted that it has, quote, generally been aware of some banks interest in crypto asset related activities through its normal supervision process. However, as that interest has escalated, the agency has desired to better understand the risks that crypto could impose on banks. In their accounting, the FDIC included a long list of potential risks, including fraud, legal uncertainties, misleading or inaccurate representations and disclosures, risk management practices exhibiting a lack of maturity and robustness and platform and other operational vulnerabilities, end quote. In addition, the report highlighted contagion risk due to the close interconnections within the crypto industry, which they said can present concentration risk for banks with exposure to crypto clients. While the report adds no new policy or supervision requirements, the FDIC did say that it, quote, continues to closely monitor crypto asset related exposures of banking organizations. Now, of course, this report comes just one week after the Federal Reserve introduced its new novel activity supervision program. This new policy provided a framework for banks to seek approval for crypto related activities and established a dedicated supervisory team to deal with issues related to crypto. The concern is, of course, that these statements from regulators are just a formalization of what has become known as Operation Choke Point 2 .0, effectively a sub legal way for regulators to financial institutions that they should not be dealing with the crypto industry. By not putting forward official restrictions, there are no formal crypto bans that could be challenged in court. The FDIC was careful to include in their report the now common phrasing that, quote, banking organizations are neither prohibited nor discouraged from providing banking services to customers of any specific class or type as permitted by law or regulation. And thus, regulators are making it clear that they are not legally restricting banks from dealing with the crypto industry, but simply working to better understand the, quote, novel and complex risks represented by crypto. The open question is whether the threat of enhanced regulatory scrutiny is enough to dissuade banks from working with crypto customers. Now, there is a lot of really interesting tension in this document, as well as in the statement from the Fed last week. On the one hand, there was never going to be an annual report that didn't include this. Two banks that did have crypto concentration risk blew up this year and tapped the FDIC to shoulder losses. And even if we believe that those were hit jobs, it's still a notable part of this year's review. The problem is the same that it always has been, that general warnings without specifics that banks and financial institutions can follow de facto mean a freezing process where banks just decide that it's not worth the risk to deal with this industry. Now, interestingly, the most recent Fed document seems to be nudging to a different phase in this, in which even if onerous and even if increasing regulatory supervision, they are nominally providing a path for banks and financial institutions to deal with stablecoins. In that case, they sort of have the have your cake and eat it to benefit of in the short term, still probably having something of a freezing effect on activity in that area, but in the more medium to long term, still providing some path for those in institutions that are willing to take on the risk, giving them cloud cover to say, look, we were never trying to freeze activity. These were just the important hoops to have to jump through. In many ways, it's hard to get too chuffed about this particular FDIC report in that it feels both inevitable after what happened over the last six months, as well as sort of in line with what we already knew. Now let's flip over to the other side of this coin and talk about how the crypto industry has continued to respond to these regulatory challenges. Coinbase has launched an independent advocacy group, the Stand with Crypto Alliance. The group is aimed at mobilizing support for legislation that would form the basis of a regulatory framework for crypto in the US. Coinbase says that the group will be quote crypto's first true grassroots movement that will be organized on chain. Now, of course, other lobbying groups focused on crypto have represented industry voices. However, this group is intended to be much more focused on getting real legislation done. Coinbase wrote in a statement, by providing a launchpad, the Alliance is mobilizing the is over. America's crypto constituency is strong and we'll be holding them accountable this fall when Congress votes on common sense legislation to protect consumers and their right to crypto. Varyar shares that Coinbase's chief policy officer said, I think a few politicians are seeing crypto as an easy shot to take. I don't think they have fully understood the passion in the community behind it. Now it's worth noting that previous mobilization efforts of crypto constituents have proved to have a powerful impact on influencing lawmakers. In August of 2021, passionate crypto voters contacted the representatives in an effort to soften reporting requirements in the infrastructure bill. Now the bill was ultimately passed without amendment due to an unrelated political move of one intransigent senator, but the mobilization effort was viewed as a success, with the crypto community frankly holding up efforts for weeks and many lawmakers recognizing for the first time just how large and passionate the crypto community is. In rallying this new group, Coinbase are attempting to remind Congress that this community is still here and still care deeply about the passage of functional crypto legislation. Now interestingly, this Coinbase group was not the only advocacy organization announced yesterday. I saw a tweet from Nick Carter that read, sorely needed excited to see where this goes. Proof of work has been an afterthought in crypto conversations in Washington for too long. What he's referring to is the fact that the crypto mining industry now has its own lobbyist group in Washington. The Digital Energy Council is designed to push Congress for sensible regulation that will allow Bitcoin mining to continue to grow in the US. The group said in a statement on Tuesday that will be advocating for policies that, quote, promote responsible and sustainable energy development, grid resilience, maintain United States competitiveness, and protect national security. Miners have of course faced a stream of criticism from Democrat lawmakers in recent years based on assumptions around environmental harm and concerns over excessive energy usage. The political attacks reached a crescendo in May when the White House proposed a punitive 30 % tax on the mining industry to account for the, quote, harms they impose on society. Tom Mapes, the founder of the Digital Energy Council, said that the organization will, quote, focus on how both the digital asset mining and energy industries can collaborate and work together to bolster energy infrastructure, increase resilience, and support energy sustainability and efficiency that has been lost in policy conversations, yet is critical during this pivotal moment of energy modernization. Mapes previously worked on energy policy at fellow lobbying group the Chamber of Digital Commerce and was also the chief of staff at the Department of Energy's Office of International Affairs. A key part of the lobbying group will focus on dispelling lawmakers' misconceptions around digital asset mining, and the group will also have a focus on cultivating economic development in rural and overlooked communities, which can benefit from investment by the mining industry. The goal, Mapes said, is to highlight that digital asset mining is a real -world tool that can be utilized to meet the United States' energy goals. Zach Bradford, the CEO of mining company CleanSpark, noted that the new lobbying group is, quote, uniquely focused on the intersection of mining and energy abundance. He said in a statement that, quote, politics is a team sport, and the broader our coalition and the more dedicated the efforts, the better. Senator Lisa Murkowski of Alaska was one of the first lawmakers to pay attention to crypto mining as a relevant industry. She said in a statement, in 2018, as the chairman of the Energy and Natural Resources Committee, I held the first hearing to explore digital asset mining and the applications and potential impacts on our nation's energy supply. In the past five years, this industry has grown exponentially throughout the United States, and I've seen this technology already bring new opportunities to rural states like Alaska. I look forward to working with the Digital Energy Council to develop best practices for collaboration throughout Alaska and the United States. Senator Cynthia Lummis, who of course has long been a staunch advocate for the crypto industry, said financial innovation will unleash new prosperity and opportunity for the next generation of Americans, and crypto asset mining is an important part of this future. Innovative mining technologies will allow us to harness underutilized energy sources and drive jobs in rural America while generating provably scarce wealth. All Americans should be paying attention to the important work being done by crypto asset miners. Now, one last note on this theme at this intersection of crypto regulation versus crypto lobbying. Republican allies have continued to push their efforts to figure out just how the hell Prometheum was granted a special purpose broker dealer license. Now, this new category of SPBD license was established in December 2020 in order to allow firms to custody and transact in digital assets. For over two years, FINRA, which is the industry oversight arm of the SEC, refused to issue any licenses to applicants. Prometheum was granted the first of its kind SPBD license in May, which was just in time coincidentally for the firm's co -CEO Aaron Kaplan to appear in a congressional hearing the following week. Kaplan promoted just how viable the SEC's existing path to regulatory compliance is for crypto firms, which was of course a distraction from efforts to engage with the table legislative efforts. However, as everyone noted, the appearance was incredibly weird. Following the hearing, it became clear that Prometheum couldn't actually legally offer any crypto assets for sale. It had no viable business model, and even had some strange ties to a Chinese megafirm. Despite multiple media appearances subsequently, Kaplan and Prometheum appeared to have no clear answers for literally any of these issues. This has led to much scrutiny, and now House Financial Services Committee Republicans led by Chairman Patrick McHenry have asked both the SEC and FINRA to explain themselves. In a letter made public on Tuesday, the lawmakers asked for documents and communications related to the approval of Prometheum's license. They noted that the timing and circumstances surrounding the approval of Prometheum as the first SPBD raised serious questions. The letter raised concerns that the approval was aimed at demonstrating that legislation is not needed and that regulators had touted the Prometheum approval multiple times in public statements to support their position that digital asset firms can comply with the existing regulatory framework. The lawmakers pointed out, however, that while Prometheum claims it has the silver bullet for regulated digital asset offerings, it has not yet served a single customer. They said, quote, It is unclear why FINRA would have chosen to approve a firm with no operating history and no track record of serving customers over all the applications that it has received. The letter also addressed the troubling ties between Prometheum and Chinese firm Shanghai Wangqing Blockchain, which has, quote, deep ties to the CCP. The letter claimed this raises, quote, serious national security and data privacy concerns. Senator Tommy Tuberville of Alabama said, The SEC and FINRA are dragging their feet and failing at their core mission. It's past time they look into Prometheum's ties to China. Thank you to Patrick McHenry and the Financial Committee for keeping up the pressure on this issue and looking out for American investors. Now, as you might imagine, the crypto industry remains extremely skeptical of this company. Jared Klee tweeted, Besides not being able to settle transactions, a director with deep ties to the China Communist Party and zero customers, Prometheum looks like a great company. The SEC and FINRA have been given until Tuesday to produce the relevant documents and communications to explain this frankly baffling licensing decision. So, friends, that is the story from here. We are in a very in -between moment. It feels like the plates are shifting and like things are starting to line up in a productive direction for the industry. But there's still a lot of work before us. Appreciate you listening as always. And until next time, be safe and take care of each other. Peace.
The Breakdown
A highlight from The Massive Significance of the PayPal Stablecoin
"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 Saturday, August 12th, and that means it's time for the weekly recap. Sort of. 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. And 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. Happy Saturday. At the end of this week, I had to travel a little bit last minute. And so my choices were either one, skip the weekly recap altogether or to do something just a little bit different. So obviously, I decided to go with doing something just a little bit different. And basically what you're getting is a long read Saturday on top of a long read Sunday, which is coming tomorrow. Tomorrow's episode is a fun walk down memory lane. If you are interested in Bitcoin, the piece is actually from twenty nineteen. I think you'll really like it. And for today's weekly recap, I have two pieces that are obviously much more contemporaneous. And I think in some ways do certainly reflect big themes that have been on display both this week and last. The first is by Brian Brooks and Charles Calamiris. And of course, Brooks was the acting U .S. comptroller of the currency in twenty twenty and twenty twenty one. And before that, the chief legal officer at Coinbase and is now a partner at Valor Capital Group. Calamiris is now dean of economics, politics and history at the University of Austin, and was the chief economist of the Office of the Comptroller of the Currency under Brooks. The piece they contributed to the Wall Street Journal was called stable coins can keep the dollar the world's reserve currency. And if you listen last week to long read Sunday, you will have heard this argument. Stable coins, they write, blockchain based assets backed by bank deposits and treasury securities are at the heart of a dollar based revolution happening throughout the developing world. Their price is supposed to stay steady, often at one dollar. Think of them as digital versions of prepaid cards with the potential to be important tools of American soft power in a world where the role of the dollar is in question. Stable coins aren't merely a more efficient means of electronic payments. With some economists and policymakers worrying about de -dollarization, i .e. the eclipse of the US dollar as the world's reserve currency, stable coins could bolster the post -war arrangement in which the dollar's dominance helped foster global trade and the biggest reduction in global poverty ever. But that can happen only if Congress implements a sound and stable regulatory framework. That is why House Financial Services Committee Chairman Patrick McHenry's bill to regulate stable coins is vital. It would establish federal and state oversight for stable coin issuers, impose qualifications for reserve assets, and implement rules on redemptions and public disclosure. It's hard to argue with these seemingly bipartisan goals, and Mr. McHenry has collaborated on the bill with Representative Maxine Waters for more than a year. Yet, at last week's vote on the measure, Ms. Waters and most of her Democratic colleagues pulled their support, with no clear reason for their sudden change of heart. Did they suddenly decide stable coins aren't important? Any tool that could boost the US dollar should be considered. Dollars as a share of reserves held by foreign central banks have fallen in the past generation. In 2000, dollars represented almost 73 % of global central bank reserves. Today, the share is around 59%. Though much international trade and many commodity transactions are still settled in dollars, this year, large countries including Brazil and Argentina entered bilateral agreements with China to use the yuan and their local currencies for trade settlement. Rumors abound that a summit next month, including Brazil, Russia, India, China, and South Africa, will consider creating a new currency arrangement. While leaders of the so -called BRICS countries deny an impending currency union, Anil Suklao, South Africa's ambassador -at -large for Asia and BRICS, said, The days of a dollar -centric world are over, and BRICS nations intend to settle trades in their local currencies in the near future. This year, Saudi Finance Minister Mohammad al -Jaddad said Riyadh is open to settling oil trades in currencies other than dollars, once an unthinkable idea. U .S. policy hasn't boosted global confidence in the dollar. The asset freeze on dollar holdings in Russia's central bank imposed after Russia invaded Ukraine, while understandable politically, shocked investors and central bankers, who realized for the first time that the dollar may not be the safe store of value it once was. A de -dollarized world would damage the U .S. The dollar's reserve status reduces U .S. borrowing costs, which is crucial in an era when government borrowing and spending are at a record high and still climbing. Reserve status also insulates the U .S. government, banks, and the general public from foreign exchange risk. All things being equal, reserve status also allows American consumers to buy foreign goods more cheaply, since foreign producers would rather have dollars than other currencies. The nationalist and anti -colonialist impulses behind de -dollarization in the developing world aren't likely to help citizens of those countries. Argentina's decision to price trade deals with China in Yuan and Pesos may reflect Argentina's national pride, but the country's 114 % annual inflation rate means that workers there will see their purchasing power quickly decline. And that's nothing compared with Zimbabwe's 175 % rate or Venezuela's 400%. At the end of last year, 17 countries had inflation rates above 20 % and 57 had rates above 10%. This is where stablecoins come in. Faced with the dismal prospect of saving their wages in local currency stored in local bank accounts, more citizens of high -inflation countries are opting to use dollar -backed stablecoins as a synthetic savings account. Dozens of startups offer stablecoin savings and payment options in Latin America and Africa, often in countries whose leaders are vocally and visibly moving away from the dollar. Dollar -backed stablecoins have market capitalization in the hundreds of billions of dollars, and they support transaction volumes many multiples of that amount. These offerings are attractive to ordinary people in those countries because they don't require an account at a local bank, only an internet connection. In addition, many stablecoins pay interest and have no minimum balance fees and low or no transaction fees. More important, they free people from tyrannical developing world monetary policy and allow them to store the value of their hard work in relatively stable dollar form. Stablecoins could be to finance what Voice of America has been to diplomacy. They can communicate U .S. monetary policy directly to the people living in other countries when American efforts to engage other governments aren't succeeding. If stablecoins flourish, citizens of other countries will increase the demand for dollars independent of, and perhaps contrary to, their government's political decisions. But for stablecoins to succeed, U .S. politicians need to agree that redollarizing the global economy is important. The McHenry Bill is a good place to start.