Latest / The Paul Barron Crypto Show / CLARITY Act Under Threat From Banks!🚨Rep. Warren Davidson INTERVIEW

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CLARITY Act Under Threat From Banks!🚨Rep. Warren Davidson INTERVIEW · The Paul Barron Crypto Show

0:00
Speaker 1: Things are heating up in Congress this week and we
0:02
Speaker 1: are getting ready to see clarity come in. I think
0:04
Speaker 1: it's going to be a good We have a special
0:06
Speaker 1: guest for you, and that will be Warren Davidson coming
0:09
Speaker 1: in today to talk about this. Before we get started,
0:11
Speaker 1: I want to kind of hit on a few points.
0:13
Speaker 1: The biggest issue is the date and the timeline here.
0:16
Speaker 1: This of course coming in from Senator Tim Scott, chairman
0:19
Speaker 1: of the Senate Banking Committee, who announced that the Committee
0:22
Speaker 1: will be holding the Market Structure markup on Thursday, the
0:25
Speaker 1: fifteenth of January, so that is right around the corner.
0:29
Speaker 1: It is going to be very critical, I think for
0:31
Speaker 1: the crypto industry, but more importantly, I think for what
0:35
Speaker 1: technology and blockchain is going to be representing here in
0:39
Speaker 1: the United States, and of course Congress in the middle
0:41
Speaker 1: of this.
0:41
Speaker 2: Right now, I want to.
0:42
Speaker 1: Lead off with a clip that will introduce Warren Davidson,
0:45
Speaker 1: who is a Republican congressman out of Ohio who has
0:48
Speaker 1: been pretty much I think, in the right place at
0:50
Speaker 1: the right time representing blockchain. We'll start with that and
0:54
Speaker 1: then we'll bring him in take a look. So I
0:56
Speaker 1: personally have great respect for the courts.
0:58
Speaker 3: You're making the case for this bill easier every day
1:02
Speaker 3: you are the chairman. The one notable partial loss in
1:05
Speaker 3: the SEC's track record, of course, is the Ripple case
1:08
Speaker 3: to rhiners. I hope no one's listening to you about
1:11
Speaker 3: this market has to be willful ignorance. We're going to
1:13
Speaker 3: spy on your bank accounts. If you had six hundred
1:15
Speaker 3: dollars in your bank and the public said, will you what?
1:18
Speaker 3: Why you spine on my bank account? Because when you
1:20
Speaker 3: asked the unbanked, why are you unbanked? A lot of
1:23
Speaker 3: it is because of surveillance capitalism.
1:25
Speaker 2: People aren't banked because they don't have any money.
1:27
Speaker 3: If you can remember twelve or twenty four words, how
1:29
Speaker 3: are you going to cancel that exchanges are trying to
1:32
Speaker 3: comply with the BSA framework, It would be evidence that
1:34
Speaker 3: they're trying to comply correct.
1:38
Speaker 1: Yes, well, obviously I'm a post to this bill, but
1:44
Speaker 1: I just want to know what am I going against.
1:47
Speaker 3: It's been painful.
1:49
Speaker 1: So Congressman Warren Davidson joining us. Now, Hey, listen, I'm
1:53
Speaker 1: a big fan. I have got so many good laughs
1:57
Speaker 1: out of your rhetoric against the Democrats and just in general.
2:01
Speaker 1: So thank you for your work up there, for sure,
2:04
Speaker 1: but welcome to the show.
2:04
Speaker 2: How are you?
2:06
Speaker 3: It's an honor to do it. Thanks for the little
2:08
Speaker 3: highlight reel. There a lot of memories flowing past some
2:11
Speaker 3: of those hearings.
2:12
Speaker 1: How hard has it been trying to educate Congress and
2:16
Speaker 1: DC broader around what's happening really in blockchain?
2:19
Speaker 3: Well, if you talk to the average person, they truly
2:21
Speaker 3: don't understand bitcoin or crypto broadly. And for the average person,
2:27
Speaker 3: they conflate everything in the digital asset space with central
2:30
Speaker 3: bank digital currency, and they think that it's all essentially
2:33
Speaker 3: the same kind of thing. And I think that's why
2:35
Speaker 3: it's so important that really we should have been leading
2:38
Speaker 3: with a ban on central bank digital currency. President Trump's
2:41
Speaker 3: executive Order nailed every component that we need to do,
2:44
Speaker 3: and he came in and just got it right. You know,
2:46
Speaker 3: it wasn't great on it, frankly in his first term,
2:48
Speaker 3: but as President number forty seven, he just crushed it
2:51
Speaker 3: right out of the box, and that's helped us build
2:55
Speaker 3: the momentum we need to get action. I mean, we've
2:57
Speaker 3: been right on policy since twenty seven eventeen twenty eighteen.
3:01
Speaker 3: It's just how do you get it in position to
3:03
Speaker 3: make Congress take action, and here we are. You know,
3:06
Speaker 3: we at least got a stable coin bill across the
3:09
Speaker 3: finish line this year. I didn't love that version of
3:12
Speaker 3: the bill, didn't vote for it, but broadly, as you
3:14
Speaker 3: can tell, very supportive of the sector.
3:17
Speaker 1: So, Congressman, when you look at the current status right
3:20
Speaker 1: now for clarity and whether or not we'll get this
3:23
Speaker 1: markup done, because this has been something that has been
3:26
Speaker 1: attempted last year, there were some target dates that were missed.
3:31
Speaker 1: Do you think this is a Q one opportunity right
3:34
Speaker 1: now because it feels like we've got so many things,
3:37
Speaker 1: you know, facing Congress right now that this may get
3:40
Speaker 1: lost in the shuffle.
3:41
Speaker 3: Yeah. I mean that's basically what happened last year is
3:44
Speaker 3: they were supposed to move all of it together and
3:46
Speaker 3: then they were breaking down over the market structure bill
3:49
Speaker 3: and the CBDC ban. Protecting self custody still is a
3:54
Speaker 3: sensitive partisan topic. So they said, well, at least we
3:58
Speaker 3: have consensus on stable coins, get that done in July.
4:01
Speaker 3: And unfortunately, and what I think happened is that that
4:04
Speaker 3: was you know, part of the consensus building was stable coins,
4:08
Speaker 3: and with that action taken, it kind of took some
4:11
Speaker 3: of the pressure off that was building for action. And
4:15
Speaker 3: they promised to move this bill through Senate banking in
4:18
Speaker 3: September last year. They didn't. Then they promised to do
4:21
Speaker 3: it in December. They didn't. Now they're promising to vote
4:25
Speaker 3: on it in committee next week, so hopefully they'll do that.
4:29
Speaker 3: But having said that, no one's come out and said
4:32
Speaker 3: we've got the votes to pass it even out of committee.
4:35
Speaker 3: So that's a cost for concern, and so the text
4:37
Speaker 3: is still being jockeyed about, probably all the way up
4:41
Speaker 3: to the finish line next week on Thursday.
4:44
Speaker 1: Okay, so timing wise here, if Clarity Act doesn't pass
4:48
Speaker 1: before mid terms, do you feel like this would be
4:52
Speaker 1: a dead issue and we just would never get it?
4:55
Speaker 3: Well, I mean eventually, I mean eventually, good policy makes
4:58
Speaker 3: good politics.
4:59
Speaker 4: Right.
4:59
Speaker 3: I've felt like eventually this is going to work for
5:03
Speaker 3: a long time, but it has taken so much longer.
5:05
Speaker 3: I thought this was just easy remedies back in twenty
5:09
Speaker 3: eighteen when I introduced the Token Taxonomy Act, But here
5:12
Speaker 3: we are still fighting over So I think eventually it's
5:14
Speaker 3: going to get done. But in this data play in
5:17
Speaker 3: Congress in general, if you don't get it done by summer.
5:21
Speaker 3: Odds of anything meaningfully market influencing rarely passes into the
5:27
Speaker 3: lame duck, So there's a chance in a lame duck
5:29
Speaker 3: after the election it could ride on something, but that's
5:33
Speaker 3: kind of rare too. So tell if you don't get
5:35
Speaker 3: it done by June, it doesn't look good.
5:39
Speaker 1: Okay, all right, So that's a good statement, I think
5:41
Speaker 1: in the sense for us in the market being prepared
5:44
Speaker 1: for this. One of the things that, of course has
5:47
Speaker 1: been the biggest I think in terms of our industry
5:50
Speaker 1: concern has all been around the banks and whether or
5:54
Speaker 1: not stable con yields could be accepted. I want to
5:57
Speaker 1: play a clip because I want to kind of get
5:58
Speaker 1: your opinion on this.
5:59
Speaker 2: Take a look.
6:00
Speaker 3: The way I think about stable coins is they should
6:03
Speaker 3: not pay interest and and.
6:05
Speaker 2: Not not not even the little bit of interest I
6:07
Speaker 2: get up, well, not to start out with, I think.
6:11
Speaker 3: So it's worse there, Thank you, chairman. That was a
6:14
Speaker 3: very interesting dialogue.
6:16
Speaker 2: All right.
6:17
Speaker 1: So this is the DAMS trying to ban stable our
6:19
Speaker 1: stable coins yields particularly.
6:21
Speaker 2: Are banks winning right now in this in this fight?
6:24
Speaker 3: Yeah, I think they are. I mean they they kind
6:26
Speaker 3: of got a bit of a win even in Genius,
6:28
Speaker 3: and now in the Senate they're building momentum to have
6:32
Speaker 3: a rewards ban. So what pasted Ingenius was, you know,
6:37
Speaker 3: banks can pay interest, but fintech companies other stable coin
6:41
Speaker 3: issuers who don't have a bank charter can't pay interest.
6:46
Speaker 3: But they could offer rewards, you know, some sort of
6:49
Speaker 3: sort of like a credit card rewards program. You could
6:52
Speaker 3: have incentives for doing it. Now banks are essentially building
6:55
Speaker 3: momentum to ban even that. So that's one of the
6:58
Speaker 3: controversial things. Uh, the Senate Banking Committee's wig is limiting
7:03
Speaker 3: the ability for stablecoin issuers who aren't banks to pay interest.
7:07
Speaker 3: And think about the advantage banks already have. I mean,
7:09
Speaker 3: if you're a bank with a Federal Reserve Master account
7:13
Speaker 3: with current yields, you're getting almost a four percent rake
7:17
Speaker 3: right now just for having money on deposit. So think
7:20
Speaker 3: what you're doing with a stable coin. You literally just
7:22
Speaker 3: back it with treasuries, which is what a Federal Reserve
7:25
Speaker 3: Master account has, it's treasuries in it, so it's fully compliant.
7:30
Speaker 3: You get a four percent back end deal that other
7:34
Speaker 3: operators can't. Now, yields on treasuries are in that range.
7:38
Speaker 3: Right now. So you can manage your own balance sheet
7:40
Speaker 3: and get it, but you can't pay it out. So
7:44
Speaker 3: if you're looking at Circle, for example, who went public,
7:47
Speaker 3: you can see what they're doing with their balance sheet.
7:50
Speaker 3: They're investing it in treasuries. They're taking a yield from
7:54
Speaker 3: the invested capital that they're holding in treasuries, and then
7:59
Speaker 3: there are offers and stable coin, so they have a
8:01
Speaker 3: fair bit of cash just to operate the company because
8:04
Speaker 3: of the yield on the.
8:05
Speaker 1: Treasure So okay, so banks somewhat winning right now in
8:09
Speaker 1: terms of their assignment. Is there any way that they
8:12
Speaker 1: could come in and actually get the Genius Act changed
8:17
Speaker 1: even though we've already got a Genius Act in place.
8:20
Speaker 3: Yeah, I mean, that's what they're fighting to do, and
8:22
Speaker 3: they may well succeed. I mean, And are Bank's really winning.
8:26
Speaker 3: I don't think so, because they've largely avoided it, and
8:29
Speaker 3: in essence, they're trying to destroy the industry. So a
8:32
Speaker 3: lot of the industry industry is just like losing interest, right.
8:35
Speaker 3: So they've fought so hard to effectively kill self custody
8:39
Speaker 3: because they're afraid they're going to get disrupted. When reality
8:42
Speaker 3: is customers might say, yeah, I want a conventional bank account,
8:45
Speaker 3: but for part of my money, I want to send
8:47
Speaker 3: a wire transfer for a reason, and I'm sick of
8:50
Speaker 3: this one week lag and everything else on it. I
8:54
Speaker 3: just want the money to move at the speed of
8:55
Speaker 3: light because the tech makes that possible, So I'm happy
8:59
Speaker 3: to keep a bank account. Banks have avoided this like
9:01
Speaker 3: the plague, but regulators have made it hard on banks
9:04
Speaker 3: to do it. I mean Biden administrations were on crypto
9:08
Speaker 3: essentially killed several banks because of this and drove banks
9:14
Speaker 3: out of the sector broadly. When some banks really wanted
9:17
Speaker 3: to do it, they were driven out of it. But
9:19
Speaker 3: I think banks are missing an opportunity here to serve
9:22
Speaker 3: a clear market demand that customers want. They want to
9:25
Speaker 3: have an account, some portion they want to have in
9:29
Speaker 3: self custody. That's one of the things that really needs
9:31
Speaker 3: to be protected. There are people that want it to
9:33
Speaker 3: be one hundred percent account based, and they don't want
9:36
Speaker 3: you to have any of your own money. These are
9:37
Speaker 3: generally the same kind of people that want to ban
9:39
Speaker 3: cash is they don't want you to have freedom and
9:42
Speaker 3: discretion about how you spend your own money, and they
9:46
Speaker 3: like having a regulated entity between you and your money,
9:49
Speaker 3: so they don't really trust you, and they trust their
9:52
Speaker 3: ability to leverage the third parties.
9:56
Speaker 1: I want to go to a clip because this kind
9:57
Speaker 1: of is in line with what you're talking about around
10:00
Speaker 1: self custody and the Democrat position on this, because I
10:04
Speaker 1: think a lot of people may be new to crypto
10:06
Speaker 1: right now, they're just now getting into the markets because
10:08
Speaker 1: of all these ETFs in Wall Street becoming so active
10:11
Speaker 1: in the space.
10:13
Speaker 2: Let's cut that clip and play it real quick.
10:16
Speaker 3: To keep your coins Act the Right of individuals to
10:20
Speaker 3: keep their coins.
10:21
Speaker 2: I couldn't oppose this bill more. It is everything that
10:24
Speaker 2: I oppose. For the record, say exactly how you can
10:27
Speaker 2: guarantee that when you bring on a crypto asset that
10:29
Speaker 2: that value has not been used in an illicit transaction.
10:32
Speaker 2: A good place to start might be something like sanctions.
10:35
Speaker 3: We have sanctions regimes in place.
10:37
Speaker 2: We're told it's about personal privacy. Is that really just
10:40
Speaker 2: a code word for tax evasion?
10:42
Speaker 3: Now, none of you have ever been successful criminals, so
10:46
Speaker 3: you don't know what it takes to be a successful criminal.
10:48
Speaker 3: Since none of you are successful criminals, you're not really
10:51
Speaker 3: in a position to tell us this.
10:54
Speaker 1: Okay, Well, you know listen, we've had a really good
10:59
Speaker 1: round of good hit it's coming out of DC. There's
11:02
Speaker 1: very few of people like you who actually understand what's
11:05
Speaker 1: going on in the market when you look at that
11:07
Speaker 1: right now and you consider self custody, which is one
11:10
Speaker 1: of them, I would say the cornerstones of crypto in general.
11:13
Speaker 1: Almost anybody that's ever invested in it is considering self custing,
11:17
Speaker 1: and a lot of people coming into it are wanting it.
11:20
Speaker 1: It's one of the things that draws them in. Are
11:21
Speaker 1: we at risk of losing this in the current Clarity
11:24
Speaker 1: Act during this markup phase?
11:26
Speaker 3: Yeah? I mean both. All the legislation that has passed
11:29
Speaker 3: the House so far passed without self custody, and that's
11:33
Speaker 3: a big factor why I've voted against the Genus Act.
11:36
Speaker 3: It's a payment stable coin, and you don't have the
11:40
Speaker 3: ability to use it as a payment as an individual.
11:43
Speaker 3: It's all through a third party. Okay, fair enough. It
11:46
Speaker 3: doesn't overtly ban self custody. But what you see is
11:49
Speaker 3: previous administrations, including really Steve Minuchin when he was Secretary
11:53
Speaker 3: of Treasury for President Trump's first term, have tried to
11:56
Speaker 3: limit your ability to do self custody, even at the
11:59
Speaker 3: end of the vitamin that we're still working on this
12:02
Speaker 3: at the Consumer Financial Protection Bureau. So this is a
12:06
Speaker 3: clear position where democrats want to ban it or they
12:08
Speaker 3: want to make it, you know, credentialed. Well, if you
12:11
Speaker 3: give us your digital ID, will grant you permission to
12:15
Speaker 3: use some portion of your own money, and that fundamentally
12:19
Speaker 3: changes the whole concept of private property in Western civilization.
12:23
Speaker 3: So if you go back to first principles, you know,
12:25
Speaker 3: and no government gives you the right to transact. The
12:28
Speaker 3: right to transact predates government. So if you're trading, you know,
12:31
Speaker 3: say fish for fruit, it would be kind of nosy
12:34
Speaker 3: for your neighbor to come over and say, hey, what
12:35
Speaker 3: you guys doing over there. That's essentially what government's trying
12:39
Speaker 3: to do on every single transaction, has put themselves between
12:41
Speaker 3: you and the person you're transacting with and then condition
12:45
Speaker 3: your access to your own money. The only way you
12:48
Speaker 3: do that is the same features that cash has. And
12:51
Speaker 3: so if you look at the Bitcoin white paper and
12:53
Speaker 3: go out and read it, even in the you know,
12:55
Speaker 3: the abstract right at the beginning that says here's why
12:58
Speaker 3: we're doing bitcoin. It talks about a permissionless system where
13:02
Speaker 3: you can facilitate peer to peer transactions at a speed
13:06
Speaker 3: of light across time and space over the Internet. So
13:09
Speaker 3: this is this is the promise of the technology. It's
13:13
Speaker 3: the clear capability of the technology, and it's completely arbitrary
13:17
Speaker 3: that the government would somehow come in try to impose
13:20
Speaker 3: that as limitations. And make no mistake, the government is
13:23
Speaker 3: trying to do that both in the United States all
13:25
Speaker 3: over you know, the European Union, the European Central Bank,
13:29
Speaker 3: the Bank of England, the Bank of International Settlement in Switzerland,
13:33
Speaker 3: which is essentially the central bank for central bankers. They're
13:36
Speaker 3: all trying to limit your ability to have self custody.
13:40
Speaker 3: So that's why we need to overtly protect it because
13:43
Speaker 3: we know what they're what they're trying to do.
13:46
Speaker 1: This is so this obviously not looking good right now.
13:50
Speaker 1: At least, I feel like hopefully there's going to be
13:52
Speaker 1: something in this that will get maybe at least some
13:57
Speaker 1: agreement coming out both sides of the House going forward.
14:01
Speaker 1: When you look at AML and KYC, do you feel
14:04
Speaker 1: like there is there any kind of poison pill that
14:06
Speaker 1: potentially could come out of this in the Clarity Act,
14:09
Speaker 1: especially during this markup phase. Anything that you're worried about.
14:11
Speaker 3: There, Well, I am a little worried that. You know,
14:15
Speaker 3: if you people that follow like Tornado Cash and Samurai Wallet,
14:19
Speaker 3: these people were writing software. And if you don't really
14:22
Speaker 3: know those things, everyone's aware of XL, Microsoft, XCEL. So
14:26
Speaker 3: imagine suing Microsoft and putting Bill Gates in jail because
14:30
Speaker 3: he made it possible for criminals to track their proceeds
14:34
Speaker 3: in a spreadsheet and then the password protected the spreadsheet,
14:38
Speaker 3: so US encrypted. I mean, this is essentially a sophisticated
14:42
Speaker 3: version of what you could do with an Excel spreadsheet.
14:46
Speaker 3: Is what a digital wallet really is. It's a digital
14:49
Speaker 3: way to store your keys, your credentials. And so the
14:54
Speaker 3: founders of this were prosecuted for, you know, operating an
14:58
Speaker 3: illegal money service business. Now that's the problem is we
15:01
Speaker 3: should be clear that in this law that writing software,
15:06
Speaker 3: you're not building a security. Just if you're selling a
15:09
Speaker 3: hard drive, you're not facilitating anything. It's just a way
15:13
Speaker 3: to store information, whatever kind of information you want on it.
15:16
Speaker 3: It's not a security just because you're recording securities on it.
15:20
Speaker 3: And so there are poison pills like that that some
15:22
Speaker 3: people want and you need to fight off. And the
15:25
Speaker 3: reason it should be addressed, and the bill is not
15:28
Speaker 3: because whether these guys may well have engaged in working
15:33
Speaker 3: with criminals knowing they were criminals, and trying to help
15:36
Speaker 3: criminals commit crimes, I don't know all the facts of
15:39
Speaker 3: the case. And part of the reason we don't is
15:41
Speaker 3: they took a settlement, so you didn't hear the full
15:43
Speaker 3: presentation in court. They did plea agreement. So what I
15:49
Speaker 3: do know is writing software that is neutral should not
15:54
Speaker 3: be considered a crime, and so in that sense, we
15:57
Speaker 3: should protect it. So that's a turf war that still
15:59
Speaker 3: isn't fully resolved, and often, you know, the resolution in
16:03
Speaker 3: Congress is to, well, let's just avoid talking about that
16:06
Speaker 3: for now. But that's part of what's been going on
16:09
Speaker 3: this whole time is Congress hasn't taken action, and that
16:14
Speaker 3: ill defined nature has left the executive branch the ability
16:17
Speaker 3: to go with you Elizabeth Warren's anti crypto army and
16:21
Speaker 3: Gary Gensler and others to kind of wage war on
16:24
Speaker 3: the sector. So while we're safe under President Trump's executive branch,
16:29
Speaker 3: the reality is the point of Congress is to pass
16:31
Speaker 3: a law that provides these protections. So I hope they
16:35
Speaker 3: nail all of it and really codify the fact that
16:38
Speaker 3: you know, speech and code aren't money service businesses anymore
16:44
Speaker 3: than you know, building a hard drive or writing software
16:47
Speaker 3: is some sort of security. It's just software and hardware.
16:52
Speaker 1: We're getting into the language of the bill coming up
16:56
Speaker 1: next week. It looks like the markup will occur the
16:59
Speaker 1: Senate version versus the House version. We saw a lot
17:02
Speaker 1: of concessions on the House version Senate version. Do you
17:05
Speaker 1: think we'll see similar kind of concessions to try to
17:09
Speaker 1: offset this to get this through? What do you think
17:11
Speaker 1: will be the balance?
17:13
Speaker 3: Well, I'm encouraged with a number of senators who've worked
17:16
Speaker 3: to you know, keep your coins protected. You know, self custody,
17:21
Speaker 3: for example, is one of the main reasons that I
17:23
Speaker 3: was concerned about House legislation here, and the Senate seems
17:29
Speaker 3: to have gotten that message and they're working hard to
17:31
Speaker 3: provide some level of protection for self custody. They've lost ground,
17:34
Speaker 3: I mean, they started with the essentially when Senator Lumbas
17:38
Speaker 3: led the initial working group, they started with the base
17:40
Speaker 3: text that we've got for the Keep Your Coins Act,
17:42
Speaker 3: and they've kind of negotiated to kind of whittled that down.
17:45
Speaker 3: But I think they're going to protect self custody. So
17:48
Speaker 3: in that sense, it's going to get better than what
17:50
Speaker 3: you've seen from the House if you can get out
17:51
Speaker 3: of the Senate. And that seems to be the case
17:54
Speaker 3: so far, but you know it's not over till it's.
17:58
Speaker 2: Over right, right, no, no doubt out.
18:00
Speaker 1: I want to go to a clip because this is
18:02
Speaker 1: you one of your great hits out there talking about
18:05
Speaker 1: CBDCs in general and how the government is aligned with this,
18:07
Speaker 1: because this is getting into my questions here. In a second,
18:10
Speaker 1: let's go to that.
18:11
Speaker 4: It's time for the United States government to take charge
18:16
Speaker 4: and our Central Bank to recard everything in everybody who
18:21
Speaker 4: owns token so that we don't have issuing crypto without
18:26
Speaker 4: the federal government being in control.
18:29
Speaker 3: Is the financial equivalent of allowing the Empire to build
18:33
Speaker 3: the Death Star so long as they promise not to
18:35
Speaker 3: turn it on.
18:36
Speaker 1: This Congress passes a bill against even studying CDBC.
18:41
Speaker 3: By all means, continue to study it and come to
18:43
Speaker 3: the conclusion that it is a terrible idea. Nobody knows
18:47
Speaker 3: whether a CBDC is a good idea.
18:49
Speaker 2: It's not clear.
18:50
Speaker 3: Breathless stupidity. Breathless stupidity, what I heard was you don't
18:54
Speaker 3: know the power of the dark side. We don't literally
18:57
Speaker 3: need to further explore the power of the dark side.
19:00
Speaker 3: It's evil. We should have resisted.
19:02
Speaker 1: I'm with you, Congressman. I believe there is a dark
19:05
Speaker 1: side out there. We should avoid that. And of course
19:08
Speaker 1: CBDCs are one of them.
19:11
Speaker 2: Within that, what would you say is the.
19:14
Speaker 1: Deal breaker for clarity, If that we would just come
19:17
Speaker 1: to an impasse and it would not happen, what would
19:19
Speaker 1: be the deal breaker?
19:20
Speaker 3: Well, just looking at the lay of the land here
19:23
Speaker 3: in Congress, Genius had a hard time getting a vote
19:26
Speaker 3: because before you vote on something in the House, you
19:29
Speaker 3: have to pass a rule to say, here's the terms
19:32
Speaker 3: of the debate, and we agree, amendments are made in
19:35
Speaker 3: order or not made in order. These amendments were included
19:38
Speaker 3: or not included, et cetera. And in the House, the
19:42
Speaker 3: Genius Act had a provision about central bank digital currency,
19:47
Speaker 3: the closed off offering that offering a quote retail CBDC
19:51
Speaker 3: like the Federal Reserve offering a direct account to consumers.
19:55
Speaker 3: But that's not what the Federal Reserve is working on.
19:57
Speaker 3: What they've been building, the death star they've been building
20:00
Speaker 3: is called a wholesale CBDC. So they've been designing the
20:04
Speaker 3: system so that on the back end all the data
20:08
Speaker 3: has collected on the front end by the banks or issuers,
20:12
Speaker 3: and then on the back end all the rest of
20:14
Speaker 3: it is stored in the blockchain and it has all
20:17
Speaker 3: of the functionality. It's like hydra, lots of different heads
20:20
Speaker 3: but the same beast in the back end. And because
20:24
Speaker 3: Genius didn't ban central bank digital currency, we had a
20:27
Speaker 3: separate bill, Tom Member's bill to ban central bank digital
20:30
Speaker 3: currency like the President's Executive Order does, and without that
20:36
Speaker 3: being linked together, a number of members blocked the rule
20:41
Speaker 3: vote in the House. Now, I was in a long
20:43
Speaker 3: series of meetings trying to help that rule pass so
20:46
Speaker 3: that we could get a vote on Tom Members' bill.
20:49
Speaker 3: But they need to lead with banning central bank digital
20:51
Speaker 3: currency because to your point about where does this stack
20:55
Speaker 3: rake and the rank and the stack of stuff for members.
20:59
Speaker 3: You know, even in Silicon Valley, if you talk to
21:01
Speaker 3: like Roe Connor or people that represent New York City
21:03
Speaker 3: and the capital markets there, people that are representing Miami
21:07
Speaker 3: and Nashville and Austin, this isn't their top issue, right.
21:11
Speaker 3: Lots of people do own crypto, but it's not the
21:14
Speaker 3: most important issue. And for me, I've been able to
21:17
Speaker 3: speak on it because I'm on the Committee of Jurisdiction
21:19
Speaker 3: on it and it's broken, but it's not because it's
21:22
Speaker 3: the most important thing that Congress solves this year. So
21:26
Speaker 3: I think that's the risk that if you don't deal
21:30
Speaker 3: with the one thing every member of Congress is hearing about,
21:33
Speaker 3: it's easy for a coalition to just tank anything. And
21:36
Speaker 3: that's why I think it really is important to lead
21:38
Speaker 3: with a central bank digital currency, and I think the
21:41
Speaker 3: band to ban central bank digital currency. And I think
21:44
Speaker 3: the other thing is is, you know, pro freedom part
21:47
Speaker 3: of the whole reason people love it. Bitcoin and other
21:50
Speaker 3: assets are viewed as freedom money. And if you can't
21:53
Speaker 3: even own it without permission self custody, what is the
21:57
Speaker 3: point of the entire sector. And there are people lobbying
22:01
Speaker 3: hard to make sure that they get that exact thing. Yeah,
22:04
Speaker 3: why even bother with his sector. Let's just keep everything
22:06
Speaker 3: the way that it works today, and that kills the
22:09
Speaker 3: entire promise. You can't have decentralized finance without the decentralized part,
22:14
Speaker 3: and so no intermediaries get disrupted until you have self
22:19
Speaker 3: custody totally.
22:21
Speaker 1: And I think the point is this seems like it's
22:23
Speaker 1: coming down to a last stand, especially around CBDCs. And
22:27
Speaker 1: obviously we've heard Chair Powell talk about this before. I
22:29
Speaker 1: think I have a clip on that around him promising
22:33
Speaker 1: against CBDCs.
22:34
Speaker 2: Let me cut that clip.
22:35
Speaker 3: Do you acknowledge that this asset class has staying power
22:38
Speaker 3: in the US economy? It appears to have some staying power.
22:42
Speaker 5: So can I have your commitment that as long as
22:44
Speaker 5: you're the Chairman of the Federal Reserve System, that we
22:47
Speaker 5: will never have a central bank digital currency.
22:50
Speaker 2: Yes, thank you for that. I think that's extremely important.
22:54
Speaker 1: So Bernie pinned him down right there, and I thought
22:56
Speaker 1: that was a great question. Chair Powell was balls enough
23:01
Speaker 1: to answer it and say, yeah, that's going to be
23:03
Speaker 1: the case. Do you think that will be the case
23:05
Speaker 1: in the new incoming chair potentially coming in? Do you
23:08
Speaker 1: think that is the most important at least from our industry,
23:12
Speaker 1: from the blockchain industry, from crypto industry. Is that the
23:15
Speaker 1: most important thing to look out for?
23:17
Speaker 3: Yeah, I think it's the most dangerous thing that the
23:19
Speaker 3: government can do. Is if you look at a central
23:22
Speaker 3: bank digital currency coupled with a digital ID. Everything about
23:26
Speaker 3: your access to your own money is then conditioned and
23:31
Speaker 3: permissioned and surveilled by the government, by the central bank,
23:35
Speaker 3: central government. So I think, like that's a real problem.
23:39
Speaker 3: But the concern I've got is pal in other clips
23:42
Speaker 3: with Frenchhill, for example, the Chairman of Financial Services, he
23:45
Speaker 3: had an exchange where he's explaining the distinction between a
23:48
Speaker 3: retail CBDC versus a wholesale CBEC. And it's possible to
23:52
Speaker 3: design an inner bank blockchain network that doesn't function exactly
23:59
Speaker 3: the same way as a central bank digital currency. But
24:01
Speaker 3: that's not the version they're building. So if you look
24:04
Speaker 3: at what you know, I took a trip where I
24:07
Speaker 3: met with the Bank of England, the European Central Bank,
24:10
Speaker 3: the Bank of International Settlement. They're all working and they're
24:14
Speaker 3: working with our Federal Reserve bank. If you look at
24:16
Speaker 3: Federal Reserve job boards, they're literally hiring people to write
24:19
Speaker 3: code to develop a central bank digital currency. They're not
24:23
Speaker 3: accidentally investing all this money to do it. They're doing
24:27
Speaker 3: it because they plan to launch it. It's like, that's
24:30
Speaker 3: the reason I developed the analogy to the death Star.
24:33
Speaker 3: They're building the death Star. They're planning to use the
24:35
Speaker 3: death Star, so we need to turn that off. And
24:39
Speaker 3: I had a question for a Federal Reserve member here
24:43
Speaker 3: this year and Mickey Bowman, who's the vice chair for Regulation,
24:47
Speaker 3: and I asked her, is the Federal Reserve subject to
24:51
Speaker 3: the President's executive orders, namely the one banning central bank
24:55
Speaker 3: digital currency? And you know, it was an evasive answer, like, well,
24:58
Speaker 3: we're not actually launching as central bankser's recurrency. Okay, great,
25:02
Speaker 3: but let's be clear you are subject to the executive orders.
25:07
Speaker 3: And that's not clear. And this is part of the
25:10
Speaker 3: reason why the federal government needs to resolve this, both
25:13
Speaker 3: in law from Congress and it's a pending court case.
25:17
Speaker 3: They're fighting over the ability for the President to fire
25:20
Speaker 3: somebody from the Federal Reserve Board. But I've encouraged them
25:24
Speaker 3: to actually argue over is the Federal Reserve subject to
25:29
Speaker 3: executive orders? And I've also asked the Inspector General for
25:33
Speaker 3: the Federal Reserve to look into that. Are they complying
25:35
Speaker 3: with the President's executive orders?
25:37
Speaker 1: Well, this seems to me like the number one issue
25:40
Speaker 1: if we can get through that. Of course, the other
25:42
Speaker 1: scenario that plays out within the Clarity Act is how
25:44
Speaker 1: do we get it across the line. There's going to
25:46
Speaker 1: have to be at some point, could be some concessions
25:48
Speaker 1: drapped up here. One of the questions is around Trump's
25:51
Speaker 1: meme coin, and I want to play a clip because
25:54
Speaker 1: this is a debate around this, and then I want
25:56
Speaker 1: to get your opinion on how to maybe approach this
26:00
Speaker 1: to get clarity through Let's take a look coin.
26:02
Speaker 2: You know about trump Coin? Right?
26:03
Speaker 5: Are you okay with trump Coin?
26:05
Speaker 2: I mean, I'm not sure that's on him. It's it's
26:07
Speaker 2: it is.
26:07
Speaker 5: On him, but I don't think it's a clear sign
26:09
Speaker 5: of corruption. Trump Coin is own seventy five percent by
26:13
Speaker 5: Trump and his family. It vests throughout the term. What
26:15
Speaker 5: this allows is for people in an untraceable manner to
26:18
Speaker 5: donate to this and then get favors.
26:20
Speaker 2: You don't know any of that's happening. When you don't
26:22
Speaker 2: know that any of this is.
26:23
Speaker 5: Happening with that Trumps, you know, Justin son Is tell
26:27
Speaker 5: me he sells Trump watches, he sells Trump commemorative coins.
26:29
Speaker 5: I think it's really important to draw a distinction between
26:31
Speaker 5: monetizing your name, monetizing the presidency by selling things, and
26:35
Speaker 5: actual corruptions.
26:36
Speaker 2: How much do you think Trump knows about mean points.
26:39
Speaker 5: It doesn't have to know about it for him to
26:40
Speaker 5: know it's a good channel of corruption money.
26:42
Speaker 2: Biggest papers.
26:43
Speaker 5: No, because bitcoin isn't being held by the president and
26:45
Speaker 5: used for favors. Do you remember Obama coin or like
26:48
Speaker 5: Hillary coin. No, there was no Obama coin.
26:52
Speaker 2: Look at all that.
26:52
Speaker 5: So you're saying Trump is the second crypt first, I
26:54
Speaker 5: want I want to take it all.
26:56
Speaker 1: Right, So Adam Mockler right there kind of debating a
26:59
Speaker 1: lot of conservatives or on this, and I think the
27:02
Speaker 1: angle that I would take, because you know my position
27:05
Speaker 1: on Trump's token. When I first heard it, I thought, Oh,
27:07
Speaker 1: interesting way to raise capital. But at the end of
27:10
Speaker 1: the day, it probably ended up hurting the market timing wise,
27:13
Speaker 1: probably a bad time. Had he just waited till after,
27:16
Speaker 1: you know, Clarity acts, we wouldn't be dealing.
27:19
Speaker 2: With any of this.
27:20
Speaker 1: But would this be an option where maybe Republicans could
27:24
Speaker 1: give the Democrats a little bit of a win and
27:28
Speaker 1: allow them to force Trump to sell his meme token
27:32
Speaker 1: as maybe the way to get Clarity through. Do you
27:34
Speaker 1: think that would be any kind of agreement to get
27:36
Speaker 1: this through the last face?
27:38
Speaker 3: Honestly, I think there's Honestly, I think that's the only
27:40
Speaker 3: way you're going to get Democrat votes on it. If
27:42
Speaker 3: you think about it as a Democrat, it's very easy
27:45
Speaker 3: for them to just say, well, until that's done, I
27:47
Speaker 3: don't even have anything to talk to you exactly, yeah,
27:49
Speaker 3: and use that as leverage. And they have no pressure
27:52
Speaker 3: from their base to do anything other than that. And
27:54
Speaker 3: I think unless they make that concession, it's going to
27:57
Speaker 3: be hard. And look, look, I've clear really talked about
28:00
Speaker 3: crypto a lot. I remember in twenty twenty when the
28:03
Speaker 3: bottom fell out for a little bit during COVID and
28:05
Speaker 3: the market was falling, I talked to my mentor and
28:08
Speaker 3: I'm like, bitcoin's for like four thousand dollars. People lost
28:11
Speaker 3: their minds And he said, well, I never seen anybody
28:13
Speaker 3: get in trouble buying mutual funds, but I'd steer clear
28:16
Speaker 3: of it, especially as much as you're doing in space,
28:20
Speaker 3: even though bitcoin isn't in the financial services space because
28:23
Speaker 3: it's not a security, and you know that gets in
28:26
Speaker 3: the weeds for the average person. I personally chose not
28:29
Speaker 3: to buy any since I've been in office, which has
28:32
Speaker 3: cost me quite a lot of money, right, And so
28:36
Speaker 3: I've known about it. I believed in it. I've shared
28:38
Speaker 3: all kinds of information with lots of people about the space,
28:42
Speaker 3: and it's done incredibly well just since you know, I've
28:46
Speaker 3: been in office, right and when President Trump came in
28:49
Speaker 3: and does not like an investment in bitcoin but a
28:53
Speaker 3: true mean coin. This is often conflated with pump and
28:56
Speaker 3: dump scams, where you know, this is one of the
29:01
Speaker 3: key reasons why we need what is a security, what
29:04
Speaker 3: is a commodity and stuff. I'm not saying trump coin
29:08
Speaker 3: was a pump and dump scam, but when you think
29:10
Speaker 3: about meme coins, some people say, well, look, it's like
29:12
Speaker 3: mine a baseball card. You buy it, you like it, Okay,
29:15
Speaker 3: no big deal. I think you should be free to
29:17
Speaker 3: do that. But I think the concession that needs to
29:21
Speaker 3: be made here is pretty pragmatic, and at this point,
29:25
Speaker 3: I don't think there's like a lot of huge upside
29:28
Speaker 3: to the trump coin at this point, so I don't
29:30
Speaker 3: think you're really asking them to forego lots of money
29:34
Speaker 3: with a huge potential upside.
29:36
Speaker 1: Well, hopefully the Trump camp is watching the show today,
29:39
Speaker 1: because I think that would be one of the ways
29:41
Speaker 1: to get this through, to get Democrats feel like they've
29:43
Speaker 1: got to win in here and protect some of the
29:46
Speaker 1: sovereign rights of Americans, which is really around CBDC and
29:49
Speaker 1: self custody. I think those are the two things that
29:52
Speaker 1: are cornerstone to really crypto in general that have to
29:55
Speaker 1: make it through. So Congressman, that's been great having you on.
29:58
Speaker 1: Thank you so first of all, thank you so much
30:00
Speaker 1: for your work, and please keep the hits coming. We
30:04
Speaker 1: love the hits coming out of DC, but thanks for
30:07
Speaker 1: coming in well.
30:07
Speaker 3: Hopefully all of my colleagues are better informed and more
30:10
Speaker 3: supportive and they'll just do the right thing get this
30:12
Speaker 3: across the finish line. But in the meantime we'll continue
30:15
Speaker 3: the fight, all right.
30:16
Speaker 2: Thank you very much for stopping in. We appreciate it.
30:19
Speaker 3: Thank you.
30:26
Speaker 1: If you like this video, like and subscribe, drop a
30:29
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30:33
Speaker 2: The link is in the description.