Latest / The Paul Barron Crypto Show / 🚨Supreme Court Destroys SEC!!🔥Crypto Regulation Update with Cody Carbone
Transcript
- Let's dive into some regulation news today. We're going to be breaking down some of the things that are happening on Capitol Hill. And of course let's not forget while we're doing all of this, it's also prep time for the first presidential debate that we'll be airing tonight. So if this video gets it out there, it's going to be a good one. We've got a great guest today, you guys are gonna love it. My name is Paul Barrow. Welcome back into Tech Path. Let's get into it today. I want to first go to a breaking news clip and play this for you guys first before we bring our guests, Let's go to the clip. We do want to get back to more breaking news from the Supreme Court. The decision coming down that it's curving the SEC's use of in house judges in fraud cases, that it backs the right to jury trial for some SEC defendants. It is indeed, Katie, the SEC uses this in house tribunal system to try hundreds of fraud cases a year, and now that power is going to be pulled back by the highest court in the land. And this potentially is removing a key enforcement mechanism for these securities in Exchange Commission under the chair Gary Gensler. This will very much change the way in which the SEC conducts its enforcement actions and cases. And this is not the only decision that the Supreme Court has to decide within the next few days as we reach the end of the term here that could affect the SEC. Not only does the Court potentially have the power, as they did today to deal a blow to the in house judges and the way the SEC does business. In that case, we are still awaiting a verdict from the Court on the Chevron doctrine. This is something that essentially gives agencies, including the likes of the SEC and the EPA, the leeway to read law that is unclear in the way the regulators choose. If they pull that back, that would significantly restrict the ability of these agencies to do so. So we're still awaiting that decision, all right. So what this simply means, guys, is this is really pulling the fangs out of the SEC. When you look at and I think a lot of people will look at government overreach, especially in the crypto space. This of course is one of the biggest blows that the SEC has taken now that they don't have that internal tribunal to be able to basically kind of run roughshod over these cases, everyone's going to have a right to a jury trial. So we're going to break all this down for you guys today because there's a lot happening in DC. Joining me is Cody Carbone, who is the chief policy officer over at the Digital Chamber. Welcome into the show, Cody, Yeah, great to be back. Paul. All right, sorry about cutting you off there, but I wanted to get the breaking news out just so that everybody kind of got a chance to hear that, Cody. When you look at the scenario that's playing out right now with the SEC, and not only in the Chevron deference, they kind of explained a little bit about that, but really it's more government overreach scenarios, this of course being a big part of that. What has been the tone of DC, especially in what's happening now with the Supreme Court, in terms of how Congress is looking at this, Well, you said it best, Paul. The Supreme Court is going after government overreach. They're going after the administrative state and this unchecked power that these independent agencies had have had for so Long. I'm an originalist and I believe in what the Constitution says, and the Constitution lays out three branches of government, the judicial branch, which is the Supreme Court, the legislative branch which is Congress, and the executive branch, which is the White House. And what the Supreme Court is doing through the case that was dropped today that we just talked about, as well as the Chevron deference case that there were still waiting for, that opinion is saying hey, no more that this fourth branch of government, this administrative state, can't just act blindly and without rules. That there needs to be checks and balances, whether it's through Congress or it's through the court system, and we're seeing the court system and the Supreme Court provide that check today. Yeah. I think this is a big move in the right direction that will start to at least lean a little bit more toward openness around innovation, which is really I think from a crypto and blockchain industry, that's one of the big ones. But we're probably gonna see this kind of regulatory framework fight in terms of things like AI, which will continue to be a huge charge. I think from a standpoint of new regulation coming to the market. All right, so you've got the ETF for ethereum coming up very shortly. I'm kind of curious you think about the ETHTF. It gets approved and immediately after Nancy Pelosi goes and buys it. Uh, what happens to the THETF. Nancy Pelosi is the best trader of all times. I mean, I'm just gonna follow her trades for sure. It's a genius business move. If you want to get rich, follow Nancy Pelosi's trade. I mean, what happens to the ETF. We saw Chairman of the SEC Gary Gensler say at a Senate hearing last week that he is expecting final approvals this summer. So I think that foretells that the SEC is saying, you know what, We've tried our hardest to say that eth is a security. We've lost this battle. We we the facts are not do not line up on our side. Those ETFs are going to go live, likely sometimes this summer. And we already saw it today that people are already thinking about what's next in the or in the ETF space. I saw that Van k this morning applied for the first ever Solana ETF in the United States. So it's it's a great future if you're in the ecosystem that these ETFs are likely to go live sometime this summer. I'm looking at August during the congressional recess for Gary Gensler to make this news. Okay, well that's interesting, so you things will be a little bit later before we actually see it go live, all right. You look at the current state of Congress right now and what's happening both on stable coin bills, the fifth twenty one, and then you also consider what the SEC just did in dropping their case against consensus. Does Congress know that that happened and do they understand what that means to the market. Absolutely, Congress is paying attention, especially when it comes to the SEC. I think that so much of this momentum, as it relates to those legislative bills and proposals that you highlighted, whether it be stable coins or market structure with fit twenty one, has come from Congress looking at the SEC and how the SEC has interacted with the entire industry, and how the courts have started to rain the SEC in and say enough is enough. I mean, this goes back to the initial conversation at the top of the call about this unchecked administrative power. Congress has provided the SEC with this unchecked power. The courts are starting to rain them in, and Congress saying, wait, what are we doing? Why did we give the SEC so much power to just regulate this industry without direct legislative authority? And so when court decisions like this happen, and when there's a Wells notice and the SEC says, you know what, we're gonna relent here that the facts are on the side, Congress saying it's time for us to wake up and provide the clear rules of the road where the SEC isn't making all the decisions, it's the people, and it's us legislators making the decisions. Well, I mean, obviously, I think that's the point that everybody's kind of questioning, why did it take so long to Gary Gessler kind of get into this place. We'll explain that in a second. When you look at the FIT twenty one performance, what we saw in the House, this was a tweet that Eleanor put out right here, Mueller, the seventy one Democrats just helped the Republicans pass the overhaul. You look at household names like Pelosi, shift all coming over and voting yes on these bills. When you look at that and you kind of consider the chances of this being duplicated in the Senate, what is the likelihood of that occurring? I think the likelihood this year is very slim. Unfortunately, the legislative calendar is unforgiving, and we don't have much time left, especially when you think about that only there's not only a race for the Oval office that's going on, but a lot of these legislators in the Senate and the House are running for reelection. And so I think what the Senate is doing right now over the next few months is they're taking Fit twenty one. They're seeing where they're maybe some issues with it. There may be where the industry would like to amend it a little bit, and to see if they can get a product that could be ready to be introduced sometime this year and to start next Congress we can get the ball rolling and get something finally enacted in the law. What is Elizabeth Warren's power over this bill right now? How does she could she potentially still kind of kabash this whole thing. I think her power in the Senate has waned and has really been diminished throughout this entire legislative process for the year that was May twenty twenty four, where these bills started to move and these household Democrats started to get on board. I think that she lost a lot of power. Now, where her power remains and sustains is in the executive branch. Elizabeth Warren has a ton of what I call disciples, but former staffers and folks that she has worked with forever, spread across all the various regulatory agencies. And so when the President vetoed SAB one twenty one, when the President has come out against digital last sets, a lot of that rhetoric is coming directly from Elizabeth Warren, and that is where she put all of her eggs into that basket and still being able to influence the administration. But when it comes to Congress, I think her time is up. And we saw that with the sab on twenty one repeal, with Chuck Schumer, the Democratic leader, saying, hey, enough is enough, we need clear legislative rules here for crypto. So I think her power is truly diminished when it comes to Congress. Well, I'm glad you mentioned you know the significance with the administration because I'm kind of looking at this. Let's say we get FIT to FIT twenty one through, it makes it through the Senate. Would Biden dare veto this? Do you think he would kind of step in? And I don't think he can. Okay, I don't think he can. I think when you look at the statement of Administration policies that came out one before the SAB one twenty one vote and one before the FIT twenty one vote. In the SAB one twenty one vote, Biden explicitly said I'm going to veto this if it comes to my desk, and he did. In the FIT one ahead of that vot, he did not say anything about vetoing it and said I want to work with Congress to create legislation. That was a massive change and shift in tone, and so I think Biden sees the writing on the wall when seventy one Democrats in the House, members of your own party, say, hey, enough is enough. We can no longer just blanket give this authority to Gary Gensler. We need rules. I think Biden has to listen to his party, and he has to listen to American people. So I get that in the sense that I mean he's already kind of shown his position the administration overall against crypto being not for crypto. They've done nothing so far that has really shown even any significant or significance in terms in terms of terms of policy to support crypto. I feel like they still would potentially take a shot at this and possibly think about this also if, especially if this comes after the election in November. Well, that's the big thing. I think policy only gets us so far. The other thing that the other factor here is politics, and where former President Trump, who is the direct opponent to President Biden, has taken advantage and says, Okay, I have made the calculus that I'm likely not going to lose voters by being pro crypto, but boy, I can get a lot of voters by being pro crypto. And with an election that really drives all of their thinking is coming up now. If it's after the election, that's a different story. But ahead of the election, if this is to move, I think Biden has to say this can only hurt me, and there's no reason for me to veto something like this. That would be my hope. Maybe I'm a little too optimistic, Yeah, I think, you know, from a political standpoint, You're right, it is a bit of a baggage on the Democrats right now with what's happened in crypto in general. And I do think that what at least I believe that the Dems are watching, even though there are times I wonder if they actually are really understanding the power of what's happening. And of course we'll showcase that in a second with some the New York sixteen district race that is I think has been proven maybe that crypto had some potential benefits of how that race turned out. But I have a quick question on that one as well. But I want to go to the debate tonight. If we get this video out, we've got the debate coming up. My question, I put a poll out on Twitter X and was kind of just curious, what do you think the probability is for the two candidates to mention crypto, blockchain technology, whatever you want to call it tonight. Do you think there's a probability or they might actually say the words absolutely. I I mean I if you asked me that a few months ago, I'd say no chance. But a lot has happened in these few months, and so I think that I was shocked that it came up at the Republican Debate when CBDCs came up and Ron De Santis and Vivid Ramaswami had to answer about it. Trump has gone full into crypto and he has brought it up unprompted at several of his campaign speeches. So I wouldn't be surprised if it comes up. I wouldn't be surprised if there's a question on it directly from the CNN moderators. You know, this is something too that has come up. You look at some of the fundraisers that Trump has been part of, and one of the things that was mentioned here recently of a fundraiser done by David Sachs was the amount of new fundraising efforts coming into the Trump campaign which weren't there in twenty sixteen or in twenty twenty. And I think that's a big step in a different direction that maybe you would think that the Biden camp would kind of understand. I'm just wondering if they're prepared for something like that tonight other innovations. We talk about AI quite a bit here on this channel. What are your thoughts do you think they'll mention it? Also on the debate tonight, AI Blockchain. I mean, those are two leading techs really that are kind of in front of politicians today. I think tech generally will be brought up, and what is the US position in terms of techno logical leadership on the world stage. I imagine that will come up. Whether these specific technologies themselves what we mentioned individually, like AI and like blockchain. I'm less optimistic that that'll be the case, but I think, you know, each candidate hopefully will give their position on US economic and innovation technological leadership, and so I think especially at the competitiveess angle about how the US is competing with jurisdictions in the Middle East like Dubai and the UAE or in Singapore, I think that'll come up. Well. I think it's going to be an interesting one, that's for sure. I want to go into other political races out there. The sixteen district in New York. This was a Democratic primary. Latimer wins over Jamal Bowman. This was a big blow. I think overall, maybe it was a wake up call as well, especially when you look at the percentage fifty eight almost sixty percent of the vote here for Latimer and an incumbent who essentially kind of either missed it completely or didn't understand what was happening within that jurisdiction. What are your thoughts on how some of these other races are going to come out here this year. Yeah, that race wasn't even close, which I was shocked about, especially for an incumbent. I think when it comes to crypto, we're at the point now where every candidate for federal office needs to have an opinion on crypto because the leaders at the top of the ticket are starting to talk about it. And it has been proven and illustrative that being anti crypto, just blanket anti crypto saying hey, I want to ban this technology is not a winning message. And so what has happened is that the crypto industry has really matured where for the first time, whether we've had a good ground game in terms of advocacy, but for the first time we're showing political muscle where we're putting dollars behind it. We're starting to influence races by putting out the messaging so that the everyday voter can st are to understand what is at stake here as it comes to the crypto industry. So I think it's going to have a huge impact in a lot of these races. I'm getting a lot of mentions on this, you know, in some of the circles I hang in. You know, there's a lot of political forward us here in Florida. We have a lot of i would say crypto forward companies, but also blockchain as a whole that's looked at very positively, you know in the state of Florida. Obviously with the Mayor Suarez and what we've seen with rond de Santas, so both some of our political offices very form formal and they understand the potential focus here in terms of blockchain. You look at Jamal Bowman, I mean his statements on crypto. He voted against the CBDC, the fifth twenty one, the SAB I mean he was, you know, full on anti crypto, definitely part of the anti crypto army with Senator Warren. However, you've got Latimer here, who we really don't have any statements on yet. Are you guys finding anything from George Latimer that is even indicating his position on blockchain technology as a whole. I think we look at it as an opportunity where even if there's members who are blank slates that that's something we can work with. What we have found from Latimer and some of his previous statements is that he's pro innovation, and he's pro US leadership, and he wants the US to lead on a global stage, and that is something we can work with. When it comes to Jamal Bowman, unfortunately, he was very anti crypto. He was part of the anti crypto army. And it's one thing to be opposed to the technology, understanding that hey, there's US businesses and there's Americans wallets that are at stake here, and we just don't want to seed this leadership to others, to other jurisdictions. We're hoping that every candidate, even if they're a blank slate, if they've come out and say, hey, the US should lead and we want to protect Americans to make sure that they have the opportunities that this new innovation provides, that's something we can work with and we can continue to educate them on the promises of blockchain tech, AI and crypto more broadly. Yeah, I think the key here is now we're kind of behind the eight ball in terms of innovation regulatory framework. All that we'll talk about Mika in a second. I want to get your opinion on that. But back to the point of innovation kind of making its way into the White House and in the administration, you've got Rokana who's coming in on their blockchain roundtable, this of course with Mark Cuban, and this could be good, I think to a certain extent, But I wonder if this is a softball to the administration in terms of a round table that is a little bit too friendly in the sense of being able to really position the crypto industry as a whole, blockchain as a technology, a true technology, because there's so much opportunity here in solving a lot of these problems. What's your take on this particular roundtable and how well it's going to do. Don't get me wrong, I'm ecstatic to see it. I'm glad that Democrats, specifically the administration, are joining the conversation. There's been too many Democrats that have been on an island for too long calling for this type of engagement. Here at the Digital Chamber, we called for a roundtable with the Biden administration almost four years ago now when he was elected and we received crickets. And now when it's become a political issue. It's something that they realize that they need to check the box and to do. And you know, I don't care how they get there. I'm glad they're getting there. Whether it's a little too little, too late, that's something that will likely see come November. But I'm glad that they're finally sitting down and realizing that they need to have the conversation and can't just ignore this technology any longer. Yeah. Well, I think a lot of the industry, at least you know in our comments, you know, they look at it, Hey, this is it seems like a meeting to have another meeting, to have another meeting kind of scenario. So there's not a lot of hope for it when you look at the current administration and what could change voters' minds. Would now that you got the Supreme Court, you know, ruling today, You've got potentially Shavron deference. I could also play into this, which is probably causing a little bit of fear in the SEC on cases they may have already in play. This is lost after loss, so political baggage or not. Would maybe that be the one thing that Biden's administration could do, and that is eject Gensler out of the sec you know, pop someone else in there as a last, you know, last ditch effort to try to win a crypto vote in before November. Do you think that would be the only way he could do it, because that'd be an act, that'd be an action, that would be an action. I would personally be very surprised Gary Gensler for as you know, much criticism as he rightly deserves from our industry and from the broader public. He has been a stable voice in the Democratic Party. You know, don't forget that, Gary Gensler. This is not his first time in democratic politics. He was CFTC chair for eight years under Obama, and so he has ingratiated himself within the administration, has made some very powerful allies within Congress, as in that anti crypto army with Elizabeth Warren and Sharon Brown and some others, And so I would be surprised if it happened. But when you want to talk about, hey, how Biden can make an action and a show of goodwill for the digital asset industry and saying enough is only huge we want the US to lead, that would be huge. Yeah, Well, I think I look at it this way with the amount of opportunity here and the also at the same time you have all these technological challenges. I mean, this was a good news release right here from NBC. US record labels now suing AI music generators, so you've got listen. Blockchain solves this problem. It also solves the issue that we've seen with Apple, what we're going to see most likely in gaming, a lot of different especially in IP and especially I think in digital music rights, et cetera. Does Congress really understand that the technology that we're presenting, I think that the industry is presenting actually solves a lot of these kinds of challenges that they're faced with today. We're getting there, I would say right now. The general sentiment in Congress is that blockchain is just crypto and there's this massive conflation, and so we have been very tailored to try to make our messaging about No, there's vast applications for blockchain technology. It doesn't matter what sector you work in, whether it's supply chain or life sciences and healthcare, or it's entertainment and gaming and music that the blockchain technology can solve inefficiencies that we've been dealing with for far too long, and so those use cases are starting to become more apparent to members of Congress where they're starting to separate just crypto, which has an awesome blockchain technology use case, from the other use cases in the other sectors. And that just takes painstaking amount of education for some of these folks. But that's why we're up here and that's why we're doing it. So you guys had a round trade table with Treasury. How'd that go? It went great. We talked about their NFT Illicit Finance Risk Assessment that was released at the end of May. We met with the policy folks at Treasury in the Office of Terrorism, Financial Intelligence and o FAC and FINCENT and they were just there to learn. And you know, it's really a rare opportunity that you have to just talk to some of these offices directly in a very candid and open forum. And they asked great questions. They were extremely educated on the topic of blockchain technology and digital assets more broadly, and so it was an awesome opportunity to just bring an industry leader to say, Hey, here's our issues and here's how we believe this technology can solve them. We need you guys to get on board, and I think Treasury was extremely receptive. Who who was on that roundtable, you know, as from the industry, Could you give us a couple of names? Yeah, it's all when you think of NFT leaders, it's it's those types of names. It's Stapper Labs, Magic Eden, Animoka Brands. We also had some of the big blockchain analytic companies, Yacht Sue in the room. It was it wasn't Yu, it was their CFO. Okay, you know, we've had Tom Emmer on our show probably a year and a half, two years ago, when he was really kind of coming onto the scene. I like Tom, I don't feel like he really helped us in moving the ball forward until Patrick mckenrrey kind of came into the game and we started to see some action within and there could have been I won't you know, I won't say that was negative for Tom Emmer because there could have been a lot of and most likely was a lot of political maneuvers being done. But man, how slow is this when you look at what's happening right now with Mika. You look at this chart right here, the implementation phase on Mika alone, we are now getting ready to say we the industry for blockchain in Europe is getting ready to launch. We are going to see real change going forward with MIKA. And when you look at that and then you add in this component right here, this is blueprint. This is the compliant de closures for crypto projects in the EU already ready before they roll this out, before we're going to start seeing stable coins roll out within the EU. This seems like it's light years ahead of where the United States is. You're not wrong. I mean we have dropped the ball. And I think there's been a very elitist mindset in Washington when you look at these other jurisdictions that are moving along and going forward, and we've got a brain drain in the US of talent and companies going overseas. I go to members of Congress and I say, wake up, like, what are you doing? And this mindset that I've been hit with for so long has been we'll figure it out. Who's really going to leave Silicon Valley or New York. The UK's attitude to have that's the worst. It's awful. And I think, I say, this isn't you know, the dot com boom, This isn't two thousands where it was difficult for those things. Were you owned Valley, New York. We owned it. There was nobody even close to it without a doubt. Now, this is a global effort that's happening everywhere. But I look at the actions that are happening on Capitol Hill. I was just looking at eleanor Terra's tweet this morning. I mean, this is the kind of stuff that's that's going on in the halls of Congress right now. I'm gonna just highlight this, let me zoom in on this. This is kind of a campaign. And I'm not four or pro or against tether, but I'm against disinformation and this is a good example of it. Sure you've got this tethered cut corruption thing going on. I mean these are what else did they have on there? They have door hangers. That's a door hanger on Ship Roy's office of Texas. Look at that craziness. What are you guys have a whole team out there like burning these trying to get rid of them. It's pretty disgusting. And you know, I don't know who's behind it. I know the organization that is sponsoring this, but that's a small organization that receives is getting a lot of funding from somewhere else to do this. You know, it doesn't do any it doesn't do the crypto community any good on Capitol Hill, when again, we are really just trying to educate members of Congress on this technology who have been blinded and all their education has come solely from headlines and misconceptions, and it's been market failures, right t X and Celsius and Voyager, And when they read something like this, that becomes their sole perception of the team exactly, and so it really hurts us. It's a disservice. And yeah, I've got my team going up there and trying to take those down. Well. Good Listen, next time I'm in DC, I will I will call you up and we will make some rounds through Congress and check and see what disinformation is out there so we can go out there and try to fight some battles. Listen, it's been good having you. We appreciate all the things you guys are doing kind of going forward here. If anybody's listening to this in Congress, we have a lot of people I know staffers listen to this show quite a bit. We of course keep an open mic here on this show. For anybody in Congress that is willing to step forward and talk about innovation technology. Because we talk about blockchain, AI, the gaming sector, a lot of the creator space. We go into that in a very deep way. So you're welcome to reach out to our producers and we'd happy to be happy to host you on the show to get you guys out there in terms of your position. So, Cody, it's been great having you. Thank you so much for coming in on the show today. We appreciate it. Always great to be here. Thanks, Paul, you've bet all right. So you guys are tuned in, maybe on the podcast side of things, jump over to the YouTube channel. You're going to get additional content over here by just subscribing to the show, and of course this will get into the YouTube algorithms and hopefully we'll get you on your way of really understanding what's happening in blockchain, especially from a regulatory front, because I think if you're an investor, you have to understand the regulations that we are faced with here in the United States and also the challenges because this is a very critical point in a huge opportunity going forward. So make sure and just subscribe to the channel pok that little button down there. If you're not following me out there on x DO that, it's just Apple Baron. We'll catch you next time right here on tech Path