Latest / The Paul Barron Crypto Show / CLARITY & Privacy Final Battle?🚨Rep. Warren Davidson INTERVIEW

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CLARITY & Privacy Final Battle?🚨Rep. Warren Davidson INTERVIEW · The Paul Barron Crypto Show

0:00
Speaker 1: A Clarity deadline is fast approaching. Today, we'll break it
0:03
Speaker 1: down for you. Let's get started. I do want to
0:05
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0:07
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0:09
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0:11
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0:13
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0:15
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0:18
Speaker 1: to set up super secure. One of the best ways
0:20
Speaker 1: to get in self custody that I know of, and
0:23
Speaker 1: it should be on your checklist if you're in crypto
0:25
Speaker 1: at all.
0:26
Speaker 2: I want to get into a few things.
0:27
Speaker 1: We'll have Congressman Davidson on with us to talk about
0:30
Speaker 1: the Clarity Act. If you look at what's going on
0:32
Speaker 1: right now, the Clarity Act signed into law in twenty
0:34
Speaker 1: twenty six. Probability wise, it has been dipping and sliding
0:38
Speaker 1: and going sideways, and here we are again. Time is
0:42
Speaker 1: definitely our enemy, and we are going to talk about
0:44
Speaker 1: that today. If you look at the people that care
0:47
Speaker 1: about this, we put out a petition not too long
0:49
Speaker 1: ago defend the American right to earn affair and return
0:53
Speaker 1: on savings and when I first put this out, we
0:57
Speaker 1: just kind of did it just to see from our
0:58
Speaker 1: own audience standpoint, who really cares about stable coin yields? Well,
1:02
Speaker 1: right there, eleven three hundred. This is a live petition
1:06
Speaker 1: right now. You can go out there and sign it.
1:07
Speaker 1: But the point is is that this matters to Americans
1:11
Speaker 1: and it continues to matter. If you look at some
1:13
Speaker 1: of our videos going behind the tab here to kind
1:17
Speaker 1: of break down the yield fight video that we did
1:20
Speaker 1: with Corey not too long ago, and the Digital Chamber,
1:24
Speaker 1: this started gaining a lot of ground and has just
1:27
Speaker 1: continuously continuously climbed. This only tells me one thing, guys,
1:33
Speaker 1: and that is that Americans do care about how stable
1:36
Speaker 1: coin yields are going to be done. That's why we're
1:38
Speaker 1: seeing such a fight right now in DC, all playing
1:41
Speaker 1: down on it. So we wanted to bring in a
1:43
Speaker 1: DC insider, that of course is Congressman Warren Davidson. You
1:46
Speaker 1: guys know him, and his support of crypto has been
1:50
Speaker 1: out there both on Clarity Act. He is there, he
1:53
Speaker 1: co sponsored it. Also, interesting enough, his pushback on Genius.
1:58
Speaker 2: We're going to get into all of that.
1:59
Speaker 1: Let's bring in Congress and Davidson right now, how are
2:02
Speaker 1: you welcome to the show?
2:03
Speaker 3: Doing well? Nice to talk with you.
2:05
Speaker 2: Let's get into it a little bit.
2:06
Speaker 1: I want to hit on a few points real quick
2:09
Speaker 1: around the clarity component right now. If you look at
2:13
Speaker 1: the stable coin yield issue right now, do you think
2:18
Speaker 1: this is a situation right now where this absolutely causes
2:22
Speaker 1: the Clarity Act to fall apart or do you feel
2:24
Speaker 1: like there's any way that these two sides can come together.
2:28
Speaker 3: Yeah, I think it's a good conversation for really where
2:30
Speaker 3: the war is. It's essentially the banking industry versus the
2:34
Speaker 3: fintech world that wants clarity for digital assets and the
2:39
Speaker 3: banking world that has frankly worked pretty aggressively for a
2:44
Speaker 3: decade now to make sure that they don't have clarity.
2:47
Speaker 3: And essentially they've tried to delegitimize the industry at every turn,
2:52
Speaker 3: and for the most part, Congress has complied. They've failed
2:55
Speaker 3: to move legislation. Elizabeth Warren Hatter anti crypto army. Gary
3:00
Speaker 3: Gensler was leading the war against crypto at the Securities
3:03
Speaker 3: and Exchange Commission. But you see, I mean President Trump
3:06
Speaker 3: this term got very good on digital assets. He came
3:09
Speaker 3: in with a really strong executive order, and unfortunately, you know,
3:14
Speaker 3: we've kind of lost a lot of the momentum that
3:16
Speaker 3: we had last year. And you know, for a lot
3:19
Speaker 3: of folks in industry, they feel like, well, crawl, walk, run,
3:23
Speaker 3: we can you know, build a habit, we can start
3:25
Speaker 3: small and win a bigger win. But what I've seen
3:29
Speaker 3: over and over again in Congress is, especially to get
3:33
Speaker 3: something through the Senate, it takes pressure in deadlines. And
3:37
Speaker 3: you've still seen ever since last summer when Genius passed,
3:40
Speaker 3: it led a little bit of the pressure out, so
3:43
Speaker 3: that pressure cooker has to be reheated up and reinvigorated,
3:47
Speaker 3: and the deadline has still just sort of been a
3:50
Speaker 3: moving window, right, So recreating a deadline that really matters
3:55
Speaker 3: on the Senate has been challenging, and that's I think
3:59
Speaker 3: what it's going to take to it across the finish line.
4:01
Speaker 3: And you know, election cycle is part of what got
4:05
Speaker 3: the Senate good on crypto in the first time. In
4:08
Speaker 3: twenty four you saw the industry had largely you know,
4:13
Speaker 3: if they had given it had been small amounts comparatively,
4:17
Speaker 3: and a lot of it had been through C four's
4:19
Speaker 3: where you can do so privately. They went very public
4:23
Speaker 3: in a big way in twenty twenty four, and in
4:26
Speaker 3: part because of the promises President Trump made, and he's
4:29
Speaker 3: delivered on those with his own executive order, he's delivered
4:32
Speaker 3: on those with the Securities and Exchange Commission. The question
4:35
Speaker 3: is is that going to be followed through with legislation
4:38
Speaker 3: in the House and Senate. So I think senators, in
4:41
Speaker 3: particular Senator Tim Scott, the chair of the Banking Committee,
4:43
Speaker 3: needs to hear from the industry to kind of re
4:46
Speaker 3: energize that pressure cooker.
4:49
Speaker 1: Do you think it's going to be a situation where
4:51
Speaker 1: they're going to drop this bill this week or whatever
4:54
Speaker 1: the date ends up being and just kind of all
4:58
Speaker 1: of a sudden, it's just here and we're going to
4:59
Speaker 1: kind of have to take it as it's written. Is
5:02
Speaker 1: that kind of the format that we're looking at right
5:04
Speaker 1: now because time is very short on this.
5:07
Speaker 3: Yeah. I think Bernie Marino, one of my home state
5:10
Speaker 3: senators is also on the Senate Banking Committee, had a
5:12
Speaker 3: good quote, you know, time kills all deals, and it's
5:15
Speaker 3: just it's hard to sustain pressure over a long period
5:18
Speaker 3: of time. And that's kind of, you know, what I
5:21
Speaker 3: think he's getting at with that statement, and in general,
5:24
Speaker 3: the Senate does like to do that, just sort of
5:26
Speaker 3: cobble something together, they've reached it, and boom, here it
5:29
Speaker 3: is because the longer you have to kind of dwell
5:33
Speaker 3: on the details, the more time the factions have to
5:36
Speaker 3: start lobbying it and tearing it apart. So I think
5:39
Speaker 3: that's probably the most likely way that something actually gets
5:42
Speaker 3: across the finish line is there's been a little bit
5:45
Speaker 3: of deal making in the Senate and then it drops
5:48
Speaker 3: and they try to force it across the finish line.
5:50
Speaker 3: And to an extent, that's kind of what happened with
5:52
Speaker 3: the Genius Act. And I talked with everyone in the
5:56
Speaker 3: House and Senate team in the White House, including David Sachs,
5:59
Speaker 3: and at that time I'm Beohinds and like, look, if
6:01
Speaker 3: you let the pressure out, it's going to be almost
6:03
Speaker 3: impossible to recreate it. I was hoping to be proven wrong,
6:06
Speaker 3: but so far it's been pretty validating to see, you
6:10
Speaker 3: know what happened there.
6:11
Speaker 1: What was it in the Genius Act that spoke to
6:13
Speaker 1: you a little bit to where you'd vote against it.
6:16
Speaker 3: Well, there's a couple of things in there, but one
6:19
Speaker 3: of them is, as you see there's unresolved issues even
6:22
Speaker 3: with the stable Coin Bill, and they're trying to deal
6:24
Speaker 3: with that in the Clarity Act. So a lot of
6:28
Speaker 3: the weakness in the stable Coin Bill is still causing
6:33
Speaker 3: problems in Clarity. And you know, bad news done, you
6:37
Speaker 3: get better with time. You could have resolved that, and
6:39
Speaker 3: instead you let the pressure out to deal with the
6:41
Speaker 3: whole package. I think we could have got the entire
6:44
Speaker 3: Trump Executive Order on digital assets if we kept the
6:47
Speaker 3: pressure up and held it all together as one package.
6:50
Speaker 3: And the other one is self custody. You know, payment
6:53
Speaker 3: stable coins are designed to be an instrument that is
6:57
Speaker 3: used for payments. And if you can't have custody of
7:01
Speaker 3: your own money, I mean that is a complete Who
7:05
Speaker 3: are you going to disintermediate when everything has to stay
7:09
Speaker 3: account based? I mean there is no DeFi without self custody.
7:13
Speaker 3: So that's been one of my core principles both for
7:16
Speaker 3: Genius and Clarity, but it's especially important in Genius because
7:21
Speaker 3: that is where you're dealing with payments. You know a
7:23
Speaker 3: lot of the securities. Once you toke anize the security,
7:26
Speaker 3: there's a limited way you can have custody of those
7:29
Speaker 3: things already because you go through broker dealers. For securities,
7:32
Speaker 3: there's a credited investor rule. You know that bearer bonds,
7:37
Speaker 3: for example, have been outlawed, so you know, self custody
7:41
Speaker 3: means very little in the realm of securities, and it
7:44
Speaker 3: means everything in the realm of payments.
7:46
Speaker 2: Right.
7:47
Speaker 1: Yeah, with this, and to your point, I think with
7:50
Speaker 1: the way that the Senate has been kind of moving
7:53
Speaker 1: around so many topics, a lot of different versions of
7:56
Speaker 1: the bill. Obviously the ABA very of active on lobbying
8:00
Speaker 1: for this. For the banking industry, where do you stand
8:04
Speaker 1: on stable coin yields?
8:06
Speaker 2: I mean, where would your position be?
8:09
Speaker 3: I mean, personally, I think they should pay be able
8:10
Speaker 3: to pay interest. But then again, I think the Fed
8:14
Speaker 3: is trying to be helpful here by trying to create
8:16
Speaker 3: a skinny master account. So I think if if you
8:19
Speaker 3: meet the base criteria for a master account, and I
8:22
Speaker 3: think those should be objective. Custodia Bank had a lawsuit
8:26
Speaker 3: actually got some limited amount of standing to argue with
8:29
Speaker 3: the Federal Reserve. The Federal Reserve basically just has toltal
8:33
Speaker 3: discretion to say your in or you're out, no matter
8:38
Speaker 3: what criteria you meet. I think we need to get
8:40
Speaker 3: a clear criteria and once companies can have a master account.
8:44
Speaker 3: I mean, you know, banks are getting basically a four
8:46
Speaker 3: percent rake from the Federal Reserve for having money on
8:49
Speaker 3: deposit there. And that's you know, it takes a lot
8:52
Speaker 3: of active management to produce in the marketplace. They get
8:55
Speaker 3: it with essentially no one in underwriting. They just move
8:57
Speaker 3: money at the bed and are getting a big grip
9:00
Speaker 3: and so and then they don't want to pass that
9:02
Speaker 3: through to consumers. Just to be competitive. The fintech wants
9:06
Speaker 3: to pass it through to consumers, and you know, this
9:09
Speaker 3: is this is something that you know, they kind of
9:13
Speaker 3: broker the compromise on rewards that's not a direct pay through,
9:17
Speaker 3: but even that proved to not be good enough for
9:19
Speaker 3: the banks. They want to turn that off too.
9:22
Speaker 1: You've got a FISA reform bill that you've proposed. This,
9:27
Speaker 1: of course, is also co sponsored with Senator Warrent. Normally
9:30
Speaker 1: I don't see her name on things like that, but
9:33
Speaker 1: it's there. First of all, tell me about this, how
9:36
Speaker 1: does it affect Section seven oh two.
9:39
Speaker 3: Well, Section seven oh two is part of the Foreign
9:41
Speaker 3: Intelligence Surveillance Act, and you know broadly this was touched
9:45
Speaker 3: on in the Patriot Act. So some people think all
9:47
Speaker 3: of the authority on spying is goes to the Patriot Act.
9:51
Speaker 3: It was just kind of modernized. The Foreign Intelligence Surveillance
9:54
Speaker 3: Act goes back to the seventies and section seven oh
9:56
Speaker 3: two was sort of a modernized extension of it, so
10:00
Speaker 3: that you deal with electronic communications with foreigners, so emails
10:05
Speaker 3: and phone calls, text messages, things like that. And the
10:09
Speaker 3: target has to be a name for an individual that
10:12
Speaker 3: is targeted, and inherently that potentially sweeps up American citizens
10:18
Speaker 3: data and so that's known as incidental collection. So you
10:22
Speaker 3: might be targeting, you know, back in the day, Osama
10:25
Speaker 3: bin Laden for example, but you know he's got family
10:29
Speaker 3: or extended family in the United States. So because of that,
10:33
Speaker 3: some of the people that are being monitored end up
10:36
Speaker 3: making calls back to you know, cousin so and so,
10:39
Speaker 3: and it might only be about you know, things back
10:42
Speaker 3: home and not about terrorism, but the communications still swept up.
10:46
Speaker 3: If you're a US citizen, of course, the federal grument
10:49
Speaker 3: is supposed to get a warrant before they do searches
10:51
Speaker 3: or seizures of your information. In this case, the seizure
10:54
Speaker 3: has already taken place. They have the data, but when
10:57
Speaker 3: they search it. The question is what are the limit
11:00
Speaker 3: limitations on that? And I think where we've landed is
11:02
Speaker 3: broadly if you're going to use it for domestic law
11:05
Speaker 3: enforcement purposes, which is, you know, by all means do
11:08
Speaker 3: the foreign intelligence. We want to stop all the acts.
11:11
Speaker 3: We want to protect us and share information. That was
11:13
Speaker 3: the reason that we created these kind of programs. But
11:17
Speaker 3: now that you've shifted and go to start building a
11:20
Speaker 3: criminal case for domestic law enforcement purposes, then you're supposed
11:23
Speaker 3: to have to opt out of that program and get
11:26
Speaker 3: a warrant. And those are some of the safeguards. And
11:28
Speaker 3: I think the other thing is the language of the
11:31
Speaker 3: authorization doesn't empower the federal agencies to just buy their
11:36
Speaker 3: way around the Fourth Amendment, but that's what they're doing.
11:39
Speaker 3: You can buy the data sets and find out pretty
11:42
Speaker 3: much anything about anybody, Especially if you get three or
11:44
Speaker 3: four data points, you can piece together a pretty interesting
11:47
Speaker 3: record without ever having to get a warrant or a subpoena.
11:51
Speaker 3: And so people's rights are being really trampled on in
11:55
Speaker 3: that sense, and there's a bipartisan by cameraal approach to
11:59
Speaker 3: trying to comit that. I think it's especially timely that
12:02
Speaker 3: we do that with respect to privacy, because where it's
12:04
Speaker 3: headed with with artificial intelligences, they won't even buy the data,
12:08
Speaker 3: they'll just lease it from an AI company.
12:12
Speaker 2: Is there a deadline for this? How does that lay out?
12:16
Speaker 3: Well, this is what creates the moment, you know, what
12:18
Speaker 3: gives you the chance for reform. People want this reform
12:21
Speaker 3: or oppose it day in and day out in Congress.
12:24
Speaker 3: But section seven oh two is what's coming up for
12:26
Speaker 3: reauthorization on April twentieth. Yeah, so that makes obviously seven
12:30
Speaker 3: oh two right, but maybe some broader reforms ripe as well.
12:34
Speaker 3: So that creates this opportunity where you have some chance
12:37
Speaker 3: to create pressure and of course you have a real deadline.
12:40
Speaker 3: So that's why we're talking about it right now.
12:43
Speaker 2: So would this get extended?
12:46
Speaker 1: This would automatically get extended if it's not brought down.
12:50
Speaker 1: How long would that go for? What does it extend
12:53
Speaker 1: out too?
12:55
Speaker 3: Well, it expires if it doesn't get reauthored, So that's
12:59
Speaker 3: where the sun set. So there's a little bit of
13:01
Speaker 3: a one year tail on the back. It does disrupt
13:04
Speaker 3: some of the things that are supposed to go on,
13:08
Speaker 3: but it is I think an important program that it exists,
13:11
Speaker 3: I do think it should have some reforms, and for
13:14
Speaker 3: some people there like look, if there's no reform that
13:16
Speaker 3: I don't think the program should be able to continue
13:18
Speaker 3: to exist. And that's, you know, to some extent brinksmanship,
13:22
Speaker 3: but it creates a real opportunity to deal with it.
13:24
Speaker 3: When you think about privacy though, this is one of
13:26
Speaker 3: the things I always thought, like the coalition that loves crypto. Generally,
13:30
Speaker 3: if you love the Patriot Act, you don't like crypto.
13:33
Speaker 3: If you dislike the Patriot Act and the kind of
13:36
Speaker 3: surveillance programs, then you tend to love crypto. But for
13:39
Speaker 3: whatever reason, the Democrats who've been great working with me
13:42
Speaker 3: on privacy issues haven't worked with me on central bank
13:46
Speaker 3: digital currency, and so that right now is a party
13:48
Speaker 3: line debate. But that, to me is the creepiest surveillance
13:52
Speaker 3: tool ever developed. Not only does it monitor and surveill
13:55
Speaker 3: all of your transactions, it's got the coercive force of
13:59
Speaker 3: limiting your ability to use your own money. So we're
14:02
Speaker 3: hopeful to be able to extend that coalition, to be
14:05
Speaker 3: able to make the opposition to central bank digital currency
14:09
Speaker 3: and digital ID bipartisan.
14:11
Speaker 1: I want to go to our lightning round here, because
14:13
Speaker 1: there's quite a few questions on where you think this
14:17
Speaker 1: industry is heading. And also, I think you know, from
14:19
Speaker 1: a standpoint of regulatory alignment, this is the first one
14:24
Speaker 1: the only answer to a lackluster US data rights and
14:26
Speaker 1: costly EU GDPR is basically a Web three protected sovereignty.
14:31
Speaker 1: Do you think that's going to be the case?
14:34
Speaker 3: Yeah, we haven't been able to pass a real privacy
14:36
Speaker 3: law in the United States, and I think that's a shame.
14:39
Speaker 3: And unfortunately, you know, David Sachs left as the sort
14:43
Speaker 3: of leader for this in the House. He's also been
14:46
Speaker 3: leading the AI and right now the people pushing for
14:49
Speaker 3: this blanket exemption for AI are working one hundred percent
14:53
Speaker 3: of odds with a privacy regime. They want the AI
14:55
Speaker 3: companies to be able to harvest all the data and
14:58
Speaker 3: essentially have immunity for every law to be able to
15:01
Speaker 3: do all the harvestings. So I think we're headed in
15:03
Speaker 3: the wrong direction.
15:04
Speaker 1: There so no opportunity here of getting into some sort
15:08
Speaker 1: of Web three because you'd have to have, you know,
15:11
Speaker 1: a champion like David Sachs or someone like that that
15:14
Speaker 1: understands where this is going for this to take place.
15:18
Speaker 3: Yeah, and I think like AI is eating the world here.
15:20
Speaker 3: There's just so much potential money in it that everybody's
15:23
Speaker 3: everybody's chasing the returns there, and I think it poses
15:27
Speaker 3: an incredible threat to our civil liberties. I mean, huge opportunity.
15:31
Speaker 3: I'm an AI fan, but I do think you know,
15:34
Speaker 3: to do AI ethically, you've got to get privacy right.
15:37
Speaker 1: Okay, biggest threat to the Pfiser reform bill right now
15:41
Speaker 1: isn't the intelligence bureaucracies.
15:43
Speaker 2: It's big data lobbyist, you know.
15:47
Speaker 3: I think it's the lack of credibility within the intelligence community.
15:50
Speaker 3: I mean, there are a lot of reforms that we
15:52
Speaker 3: passed last Congress, and I've been able to get some
15:56
Speaker 3: good insight into the progress on those reforms. I still
15:59
Speaker 3: think they're not entirely complete. But anytime you know, the
16:03
Speaker 3: FBI or the intelligence community right now says no things
16:06
Speaker 3: are going fine, trust us, it's just a hard sell.
16:11
Speaker 3: And I think, you know, there are things that are
16:13
Speaker 3: going well. So let me say that as a long
16:15
Speaker 3: time privacy advocate, there are things that are going the
16:17
Speaker 3: right way under John Ratcliffe at the CIA, under Cash
16:21
Speaker 3: Hotel at the FBI. I do think there's some important
16:23
Speaker 3: reforms we need to get here, and I think that'll
16:25
Speaker 3: go a long way towards at least helping pivot a
16:28
Speaker 3: little bit more credibility into an industry that has certainly
16:32
Speaker 3: hurt their credibility with a.
16:33
Speaker 2: Lot of Yeah for sure.
16:35
Speaker 1: Well for me, I just you know, I look at
16:37
Speaker 1: it on the just the amount of data brokers that
16:39
Speaker 1: are out there and the lobbyists that they, you know,
16:41
Speaker 1: are dealing with, and I'm concerned about that. I think
16:44
Speaker 1: that's the real biggest issue.
16:47
Speaker 3: Yes, we can spread the privacy, but but Fazas specifically,
16:50
Speaker 3: I think it's the IC.
16:51
Speaker 1: Okay, all right, there should be a public hearing on
16:54
Speaker 1: banning stable coin yields, just not time, No time this point.
17:01
Speaker 3: Yeah, I mean we've talked about the stable coins with
17:03
Speaker 3: a number of hearings already. I don't think there's a
17:05
Speaker 3: lack of information. I just think there's you know, you
17:09
Speaker 3: can't go two directions at once. You need to pick
17:11
Speaker 3: one and put it in the base text. And the
17:13
Speaker 3: easy thing is pick whatever version you want and put
17:16
Speaker 3: the rival amendment on the floor and let everybody vote. Yeah,
17:19
Speaker 3: I mean, it doesn't have to be hard, it doesn't
17:22
Speaker 3: have to be all or nothing. The whole legislative process
17:25
Speaker 3: is supposed to be able to solve this by having
17:27
Speaker 3: a debate about amendments exactly exactly.
17:32
Speaker 1: Capital flight from banks into people's wallets is a legitimate
17:35
Speaker 1: concern for Americans.
17:39
Speaker 3: I mean I think it could be, but the reality
17:41
Speaker 3: is most people want an account based relationship. And if
17:45
Speaker 3: nothing else, I mean, if you want just yield right now,
17:48
Speaker 3: it's a piece of cake to set up a money
17:50
Speaker 3: market fund, right So, I think the banks are overstating
17:56
Speaker 3: that problem.
17:57
Speaker 1: Yeah, I'm gonna agree with you on the note. Would
18:00
Speaker 1: you vote on clarity if it banned passive stable coin
18:03
Speaker 1: yields but protected self custody and DeFi would that be
18:08
Speaker 1: good enough or no deal?
18:09
Speaker 3: I mean, directionally, that's exactly what I'm looking for. I mean,
18:12
Speaker 3: a bright line test that really is bright you know
18:14
Speaker 3: for sure whether it's a security at commodity or some
18:17
Speaker 3: real world asset, and everyone that looks at it across
18:19
Speaker 3: the same conclusion. And you protect self custody. I think
18:22
Speaker 3: those are the two critical things to me.
18:24
Speaker 1: Yeah, I think this far into it, the good enough
18:27
Speaker 1: area is probably we're going to land.
18:29
Speaker 2: The House will.
18:30
Speaker 1: Blindly vote on whatever the version of clarity goes through
18:33
Speaker 1: the Senate, Yeah or nay.
18:37
Speaker 3: I'd say that it's a high probability that you get
18:40
Speaker 3: a vote in the House. I think it could get
18:42
Speaker 3: a vote, subject to amendment, depending on what version the
18:45
Speaker 3: Senate passes.
18:47
Speaker 1: All right, all right, so I'm going to put you
18:48
Speaker 1: on yes in that in that section, Hamilton would have
18:54
Speaker 1: enabled yield onto stable coins if it was possible.
18:59
Speaker 3: I don't know if Hamilton would allowed private banking.
19:02
Speaker 2: There to go.
19:03
Speaker 1: That might have been in a general sense, for sure,
19:07
Speaker 1: banning stable coin yields only adds to inflation for the
19:11
Speaker 1: poorest Americans, no way for them to earn any money
19:15
Speaker 1: on that money that they do have.
19:17
Speaker 3: Yeah, I mean, I think to the extent. I mean
19:20
Speaker 3: where that's linked is if you could turn off interest
19:23
Speaker 3: on reserves to the banks, and if banks want to
19:26
Speaker 3: get you know, of course they have required reserves, but
19:29
Speaker 3: they used to have to manage those on their own.
19:32
Speaker 3: It's relatively recent innovation seven oh eight that they were
19:35
Speaker 3: even getting interest on required reserves, right, and then they
19:39
Speaker 3: went into paying interest on excess reserves. So now no matter.
19:42
Speaker 3: You know, if you've got a billion dollars, you're required
19:44
Speaker 3: to have and keep five billion at the FED. You
19:46
Speaker 3: get interest on that whole stack. Yeah, And I think
19:50
Speaker 3: this is a little bit related to the fact that
19:52
Speaker 3: you know all the non bank lenders that are out
19:55
Speaker 3: there in the market. Part of that goes back to
19:57
Speaker 3: Dodd Frank, but another part of it I think goes
19:59
Speaker 3: back to the FED paying yield at a time when
20:03
Speaker 3: interest rates are relatively high. I mean, you know, the
20:06
Speaker 3: four percent rake right now is bigger than most hedge
20:08
Speaker 3: funds get for their base management fee.
20:11
Speaker 2: Yeah.
20:11
Speaker 1: For sure, you should a co sponsor a stable and
20:17
Speaker 1: Yield protection bill with ro Conna'd.
20:21
Speaker 3: Actually at least consider that. I don't think there's a
20:25
Speaker 3: path to pass a standalone bill on it, so I
20:27
Speaker 3: haven't spent a lot of energy on that. It's going
20:29
Speaker 3: to be part of whatever package comes through.
20:31
Speaker 2: Yeah, for sure.
20:33
Speaker 1: What's the real difference here between a JP Morgan deposit
20:35
Speaker 1: token and a CBDC If they can just turn this
20:37
Speaker 1: off just like a CBDC in essence, just like your
20:42
Speaker 1: bank account, Yeah.
20:44
Speaker 3: I mean, I think that's an important question. And this
20:47
Speaker 3: gets to what Jerome Powell. He always has this qualified
20:51
Speaker 3: answer when people ask him about a central bank digital currency.
20:55
Speaker 3: He says, well, to launch a retail central bank digital currency,
20:59
Speaker 3: we would need congression authorization. But what we're working on
21:02
Speaker 3: as a wholesale CBDC. The reality to me is a
21:05
Speaker 3: wholesale CBDC is like hydra. You could have many heads
21:09
Speaker 3: all tying back to the body of the same beast,
21:13
Speaker 3: and it's the same beast. And I think that's the concern.
21:16
Speaker 3: That's one of the things that I don't think we
21:17
Speaker 3: adequately addressed with genius.
21:20
Speaker 2: Yeah, that's the problem. Just sounds a little less scary
21:22
Speaker 2: At this point, pro.
21:24
Speaker 1: CBDC arguments will evolve into pro cbs arguments central bank
21:29
Speaker 1: stable coins. Do you think they'll go there at some point?
21:34
Speaker 3: Yeah, And I think that's where the market naturally moves.
21:36
Speaker 3: If you have lots of stable coins early on, eventually
21:40
Speaker 3: there'll be a real dominant market player and that will
21:42
Speaker 3: be the go to products. I mean, right now, without
21:45
Speaker 3: the regulation, tether is the is the dominant player.
21:49
Speaker 1: Yeah, Republicans should have pressure Doze to simply audit everything
21:55
Speaker 1: on a public blockchain rather than the meddling that happened.
21:58
Speaker 1: If they had just put it on the blockchain, what
22:01
Speaker 1: do you think, Warren?
22:03
Speaker 3: I think it still would have had the lack of trust,
22:05
Speaker 3: Democrats would have still found fault. I mean, you're finding
22:08
Speaker 3: overt fraud and they're complaining about it. I think it
22:11
Speaker 3: still would have stayed a partisan Yeah, no doub Yeah,
22:15
Speaker 3: it'd be great to get the payments on blockchain because
22:17
Speaker 3: if we were.
22:18
Speaker 2: Paying a lot, at least you'd know where it's going, right.
22:22
Speaker 3: Yeah, So like part of the problem, and Scott Bessen
22:24
Speaker 3: said this that as much as a third of the
22:26
Speaker 3: payment's treasury makes, there's not even like small business level
22:30
Speaker 3: audit trail where it's like who authorized the payment, which
22:33
Speaker 3: fund was it out of. It doesn't map the same
22:35
Speaker 3: way that even quick books would in some cases, which
22:39
Speaker 3: is pretty scary. So if you really did, you know,
22:42
Speaker 3: a blockchain payment system for federal payments, boy, how do
22:47
Speaker 3: you get away with fraud on that? You know, you
22:49
Speaker 3: could audit it for sure. Even the Department of Defense
22:52
Speaker 3: or Department of War would be able to pass an
22:54
Speaker 3: ondit because everything would be on a blockchain.
22:57
Speaker 1: Well, that would be the perfect thing right there. The
23:01
Speaker 1: Save Act criticism aggregating state voter data to a federal
23:04
Speaker 1: government database should not be allowed.
23:08
Speaker 3: I'm one hundred and eighty degrees on that one hundred
23:11
Speaker 3: percent you need it. Part of the reason people say, oh, well,
23:16
Speaker 3: non citizens aren't voting, you don't have a detection system.
23:19
Speaker 3: And many states have declared themselves sanctuary states. They're actively
23:23
Speaker 3: working to get all these illegals in the country. They
23:26
Speaker 3: actively work to make sure they are counted in the census,
23:30
Speaker 3: and they have no screening mechanism to make sure that
23:33
Speaker 3: they're not registered to vote.
23:35
Speaker 2: Okay, interesting, all right.
23:38
Speaker 1: Congress should immediately pass a version of the Credit Card
23:40
Speaker 1: Completion Act. This opens up payment networks to blockchain networks.
23:45
Speaker 3: Do you think no, I oppose the Credit Card Competition Act.
23:48
Speaker 3: I think, you know, if you want to take that payment,
23:51
Speaker 3: you should be able to. And Jack Dorsey's ahead of
23:54
Speaker 3: the market already. He's you know, just went live today
23:56
Speaker 3: with Bigot enabling payments for Square on square.
23:59
Speaker 1: Yeah, all right, and then Treasure in IRS has completely
24:03
Speaker 1: fumbled the crypto tax reporting nightmare. Have you seen what's
24:07
Speaker 1: going on with coinbase and understand what's happening there.
24:11
Speaker 3: Well, Coinbase has got a lot of challenges with you know,
24:15
Speaker 3: everyone that works of the IRS has got problems too,
24:17
Speaker 3: And fundamentally, you go back to you know, the time
24:21
Speaker 3: that they did the Infrastructure Bill and they added this
24:24
Speaker 3: kind of crypto ambush. You got the ten fifty I
24:26
Speaker 3: reporting requirement where any payment above twenty five thousand you're
24:30
Speaker 3: supposed to collect. All this information is if somebody handled
24:33
Speaker 3: you a duffel bag of cash. Well, you don't get
24:35
Speaker 3: that same sort of information. You know, when you run
24:40
Speaker 3: a node to move a bitcoin, for example, or when
24:43
Speaker 3: you mine a bitcoin. All these kinds of things, you
24:45
Speaker 3: don't have collection mechanisms. So the entire architecture isn't designed
24:50
Speaker 3: to work with the IRS. And the I R S
24:53
Speaker 3: is getting pretty draconian in some of the information requests
24:56
Speaker 3: that they have to do, and these things really skirt
24:59
Speaker 3: what it's even legal for the I R S. I
25:02
Speaker 3: think the safest thing to do is just close the
25:04
Speaker 3: I R S.
25:05
Speaker 2: Okay, all right, that's uh. I think you you at
25:09
Speaker 2: least I agree with you there, so I mean, I mean, I'm.
25:13
Speaker 1: On your side. Warren, Thank you so much for coming
25:16
Speaker 1: in today. This has been a good conversation. We appreciate it.
25:20
Speaker 3: Likewise, thank you nice talking with you.
25:28
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25:31
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