Latest / The Starting Block / Bond yields hitting highs & European backlash on stablecoin reward bans

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Bond yields hitting highs & European backlash on stablecoin reward bans · The Starting Block

0:07
Welcome back to The Starting Block.
0:08
Happy Thursday to you, wherever
0:10
you're joining us around the world.
0:12
If you are here for the first time,
0:13
welcome to the show. My name is
0:14
Gareth Jenkinson.
0:15
I'm the host and head of multimedia
0:16
here at The Block.
0:18
Some quick housekeeping.
0:19
If you're watching us on YouTube,
0:20
please subscribe to our YouTube
0:21
channel. If you watching us in X,
0:23
please like and retweet the
0:25
broadcast so more people can join us
0:27
on this live stream this afternoon
0:29
or morning, wherever you are.
0:32
Today's show is gonna be a great
0:33
one. We've got two guests joining
0:34
us. Andre Dragos,
0:36
becoming a bit of a regular here
0:37
from Bitwise, is gonna be talking to
0:39
us about T-Ball yields
0:41
around the world hitting two
0:43
decade highs and what
0:45
that means for Bitcoin and
0:47
crypto markets.
0:48
And then we have Katie Harries,
0:49
who's the head of policy for Europe
0:51
at Coinbase, joining us
0:53
in the hot seat to talk to us about
0:54
policy, both in the US and
0:56
the EU. So very interesting
0:58
show, jam-packed today.
1:00
But of course, before we get into
1:02
those interviews, we are going to be
1:03
giving you.
1:04
A breakdown of the top stories you
1:06
need to know in the last 24 hours
1:08
in the world of crypto.
1:10
And that is of course, the block
1:11
briefing, which is a curated
1:13
news bulletin from
1:15
our exceptional newsroom right
1:17
here at the block.
1:18
Without further ado, I'm gonna jump
1:20
straight into today's headline so we
1:22
can carry on with our programming
1:23
today. And our first story,
1:27
big one from the UK this morning,
1:29
Lloyd's and Visa just wrapped up a
1:30
seven day live pilot settling
1:32
three quarters.
1:34
Of a million dollars using stable
1:35
coins.
1:36
Lloyds brought USDC through
1:38
the regulated exchange, Arcax
1:40
booked it out of its Jersey
1:42
branch and sent it to Visa in
1:44
the US. And here's the kicker, the
1:46
money landed in under an hour,
1:48
even over the weekend.
1:49
Lloyds is calling it the first
1:51
stable coin settlement trial between
1:52
Visa and a major UK banking
1:54
group. And this was bank to bank
1:56
settlement, not customer payments,
1:58
but it's a signal that stable coins
1:59
are creeping into traditional
2:01
finances plumbing.
2:03
Then over to the markets, and we
2:04
will extrapolate on this with Andre
2:05
in a little bit, Bitcoin's holding
2:07
steady after a softer than expected
2:10
inflation print called bets
2:12
on another Fed rate hike
2:13
this month.
2:15
The Fed's preferred gage
2:17
core PCE rose just
2:19
two-tenths of a percent in August,
2:21
three percent on the year.
2:22
And as I say, that's welcome news.
2:25
If September's data points the same
2:26
way, the pressure for an October
2:28
hike eases, and that's a potential
2:30
tailwind for Bitcoin and other
2:32
risk assets.
2:33
There is a caveat here, yields are
2:34
still elevated and inflation is
2:36
sticky, so the backdrop stays
2:38
uncertain, even with institutional
2:39
demand flowing in through ETFs
2:42
and tokenized treasuries.
2:43
But once again, we'll be chatting to
2:44
Andre a little bit further about
2:46
that. He can unpack in a lot more
2:48
detail than I can.
2:49
Then a bold call from Standard
2:50
Chartered, the bank is initiating
2:52
coverage on Athena with a
2:54
$2 price target on its ENA
2:56
token by the end of 2028.
2:58
ENA is trading around 26 cents right
3:00
now. So that implies north
3:02
of a 600% upside.
3:05
The thesis here, standard charted,
3:07
expects Athena's USDE stablecoin
3:09
supply to grow more than eightfold
3:12
from under five billion today to
3:14
roughly 40 billion by 2028,
3:17
backed by a bigger buyback program.
3:19
Athena is already the fourth largest
3:21
stablecoin issuer and second
3:23
among yield bearing stablecoins.
3:25
It's ambitious numbers and worth
3:27
watching whether that growth
3:28
actually materializes.
3:30
Into Washington, where a prediction
3:32
market power struggle continues
3:34
to heat up. We've been reporting on
3:35
this for weeks now.
3:37
The White House is reviewing two
3:38
proposed rules from the CFTC that
3:41
would cement the agency's grip over
3:43
prediction markets.
3:44
The CFTC wants to expand
3:46
the definition of a swap to include
3:48
event contracts and explicitly
3:50
carve out casino style gambling
3:52
products.
3:53
This matters because platforms like
3:54
Polymarket and Kalshi are now
3:56
each valued in the tens of billions.
3:58
And states have been pushing back on
4:00
who gets to regulate them.
4:02
The rules are sitting with the White
4:03
House's regulatory review office
4:05
right now, a jurisdictional
4:07
turf war with real money on
4:09
the line.
4:10
And then across the pond, the
4:11
regulatory clock is now ticking.
4:13
For UK crypto firms, the
4:14
Financial Conduct Authority has
4:16
opened its authorization process
4:19
ahead of a new regime taking effect
4:21
in October 27.
4:23
Firms that wanna keep operating in
4:24
the UK have until the end of
4:26
February next year to get their
4:27
applications in.
4:28
The new rules are very broad,
4:30
covering trading, transactions,
4:32
staking, and custody, and they bring
4:33
in requirements around disclosures,
4:35
market abuse, prudential standards,
4:37
and consumer protection.
4:39
In short, if you're a crypto
4:40
business in Britain, the window to
4:42
get authorized has officially
4:44
opened.
4:45
Our last story of the day.
4:46
Over to the tech side.
4:48
Coinbase's layer two network base
4:49
has gone live with its third
4:51
main net upgrade
4:53
called Cobalt.
4:54
The headline feature is validity
4:56
transactions.
4:57
Time-bound transactions that stay
4:59
dormant until specific conditions
5:01
are met.
5:01
Picture a trader submitting a swap
5:03
that only becomes eligible if
5:05
a pool's price hits a certain level
5:07
before a given block.
5:08
If it gets there in time, base
5:09
includes it, otherwise it never
5:11
runs. The upgrade also adds new
5:13
functionality to base's B20
5:15
token standard.
5:16
It's about giving traders more
5:18
precise control over the timing and
5:20
conditions of their transactions.
5:22
That's it for the block briefing.
5:23
If you're interested in reading more
5:25
about these stories, you can head
5:26
over to the block's website that's
5:28
at theblock.co to read
5:30
some more of our fantastic reporting
5:32
from our team. And of course, you
5:33
want to catch up with any of our
5:35
multimedia content.
5:36
You can find that on YouTube and
5:38
X, as well as our other social media
5:40
handles.
5:41
That is it for the Block Briefing.
5:43
I'm gonna welcome back to the
5:44
show, the regular,
5:46
Andre Dragos, to talk to us
5:48
about the markets.
5:49
Andre, first things first.
5:51
How are you doing?
5:52
Good, good, how are you?
5:54
Yeah, very good.
5:55
It's great to have you back on the
5:56
show.
5:57
My producer, Jordan, sent me a
5:58
message this morning and he's like,
5:59
man, have you seen, have you see
6:01
these headlines about all the, the,
6:03
you know, treasury yields hitting
6:04
all time highs across the board?
6:06
Some of them going back as far as
6:08
2002.
6:09
And I thought, I need to phone
6:10
Andrea because he's the only person
6:11
that explain can explain what this
6:13
means and extrapolate
6:15
that to Bitcoin in the crypto
6:17
market. So first things first, I'm
6:19
sure you've seen all these headlines
6:20
across different news.
6:22
Platforms on Telegram or X.
6:24
Can you give our audience a little
6:26
bit of an understanding of why
6:28
these yield rates matter
6:30
and why we're seeing them hit these
6:32
highs that we haven't seen since
6:34
the early 2000s?
6:37
Yeah, very good question.
6:38
So starting with my personal
6:41
big picture view on market.
6:43
So I mean, you could argue that
6:45
fiscal policy is already easy,
6:47
right?
6:47
You've seen this bond buyback
6:49
announcement by the cent, right
6:51
doubling of bond buybacks.
6:53
You've seem the TGA announcement
6:54
that they want to use $1 trillion
6:56
in the Treasury General
6:58
account to buyback bonds, right.
7:00
Trump wants to hand out stimulus
7:02
checks to every American after the
7:04
midterms, maybe, right
7:06
and so on.
7:07
But you could definitely argue,
7:08
okay, fiscal policy is easy.
7:10
At the same time, monetary policy
7:12
is on a collision course with
7:14
markets.
7:15
So Fed just hiked rates,
7:17
ECB hiked rates, Bank of Japan
7:19
hiked rate, and so and so major
7:21
central banks on hiking mode.
7:24
But as we all know, I mean,
7:26
the Fed in itself is
7:28
in a kind of dilemma, right?
7:30
And it was this of Jeff Gundlach
7:32
tweet, he made a post on Twitter,
7:34
right? He said, ah,
7:36
They're essentially between a rock
7:37
and a hard place.
7:38
Because if they hike rates or
7:40
continue hiking rates,
7:43
they worsen the
7:45
fiscal expenditure problem.
7:46
If they cut rates, they worson
7:49
the inflation problem.
7:50
So they're between a Rock and a
7:52
Hard place.
7:54
And so why is that important for
7:56
Bitcoin? Because I think
7:58
a pause or a pivot
8:00
of monetary policy is one
8:01
of the key scenario drivers
8:04
for Bitcoin right now.
8:06
So once you have both fiscal
8:08
policy and monetary policy
8:10
that are easing,
8:12
as my take is from a macro point
8:14
of view, then all systems go for
8:17
this bull market, essentially.
8:19
And so it's one of the key scenario
8:22
dominoes to fall.
8:24
The question is, when will the Fed
8:25
or other major central banks pause
8:27
or pivot?
8:29
And I think it depends on stock
8:30
market, right?
8:31
We've seen already some
8:34
kind of contagion, all kinds of
8:35
different markets, pockets of the
8:37
market.
8:38
For instance, corporate bonds,
8:40
high yield bonds, spreads are
8:42
starting to increase, right, more
8:43
credit risks are starting be priced
8:45
in.
8:46
We've see the spike in the move
8:48
index, the implied vol index for
8:50
treasury bonds, highest
8:52
since the tariff tantrum in 2025.
8:55
And so you're seeing all these
8:56
pockets, like market breadth in the
8:58
SB500 is already quite weak.
9:00
If you look at the constituents
9:01
itself, like most of
9:03
the index constituents, they're in a
9:05
bear market already.
9:06
So they're below their 200-day
9:08
moving average.
9:10
And so, you're starting to see
9:11
some kind of cracks.
9:14
And I think it has to do with
9:16
tightening financial conditions.
9:18
And
9:20
my personal base case is
9:22
you'll probably see a pause
9:24
or even a pivot of
9:27
the next weeks.
9:28
I don't think we're talking about
9:30
months anymore because if you look
9:32
at these different markets,
9:34
they're telling you, okay, there's
9:36
some kind of correction imminent in
9:38
the stock market already Because
9:40
it doesn't matter whether the
9:42
fat will hike a second time
9:45
at this point, because the damage
9:47
in my view has already been done.
9:49
If you look at the degree of
9:51
tightening, it's
9:53
the strongest tightening since
9:55
this kind of post-COVID
9:57
Powell hiking era.
10:00
And so I think there's some kind of
10:02
growth repricing imminent because
10:04
it's not only affecting
10:05
government bonds.
10:07
If look at hyperscaler
10:09
CDS, credit default swaps
10:11
of Oracle, they're hitting you
10:13
all time high thread.
10:14
If you look at the French government
10:17
spread to Germany, it's
10:19
like highest since the euro crisis.
10:21
So I think we're very close to some
10:23
kind of policy response.
10:25
And I think Bitcoin has already
10:27
started to anticipate
10:29
this.
10:30
It started in August with this
10:32
double bond buyback announcement.
10:35
Now, once you get a
10:37
pause in Fed rate hikes and
10:39
other major central banks, I think
10:40
then it's all systems go.
10:44
Let's finish off with a question
10:45
just very specifically on Bitcoin
10:47
and the crypto markets.
10:48
It's been an interesting few weeks
10:50
and I think the last time we had you
10:51
on the show, Bitcoin was already
10:53
pumping again last week.
10:56
It's cooled slightly, but
10:57
we're still trading in the same sort
10:59
of range-bound area.
11:01
How do you see things playing out in
11:03
October?
11:04
It's being historically called
11:06
October.
11:07
What are we in for?
11:09
Yeah, I mean, October is
11:11
the second best month
11:13
performance for Bitcoin.
11:15
It's one of the highest monthly
11:16
performances on record.
11:18
That's why it's called October.
11:20
Q4 in general is quite positive,
11:22
especially November is very
11:23
positive.
11:25
But I think so far we have seen
11:27
a kind of divergence from the
11:29
seasonal picture, especially because
11:31
we were mired in a bear market.
11:34
But maybe there's a catch up to this
11:36
seasonal or typical seasonal
11:38
pattern, which implies some
11:40
kind of Santa Claus rally, Q4
11:42
rally.
11:43
And it's very typical to see that
11:45
in the traditional stock market as
11:47
well. You tend to see after this
11:49
summer lull,
11:51
especially August, September,
11:53
they're one of the worst months of
11:55
the year. You just tend to see
11:57
a revival in activity and
11:58
also performance towards the end of
12:00
the But like my
12:02
general view is...
12:04
So we've probably entered
12:06
a new bull market.
12:08
We're we're exiting this kind of
12:10
crypto winter into a crypto
12:11
spring Right
12:14
and you can look at things like
12:15
profitability across
12:17
all kinds of wallets
12:20
ETF cost basis true
12:22
market mean we've taken all these
12:24
major pricing levels.
12:25
So the average investor is
12:27
Essentially in profit right now has
12:29
unrealized gains.
12:30
And so we're in this kind by the dip
12:32
mentality again So I
12:34
think overall we're in a new bull
12:36
market.
12:37
But that being said, I think
12:38
sentiment,
12:41
especially after the run up in
12:42
August and also the most recent
12:45
run up to 85k,
12:47
I think is somewhat euphoric.
12:50
And so I think it's quite likely
12:51
that we continue to consolidate
12:53
from here.
12:54
I think the next big kind of
12:56
price target is 92K
12:59
because that's when we had this kind
13:00
of plateau before this kind of
13:02
February capitulation
13:04
during the bear.
13:05
So 92K, but my base
13:07
case actually, we'll revisit
13:09
probably like the true market mean
13:11
towards 75K,
13:12
you know, or continue to consolidate
13:14
before we continue
13:17
in this bull market because I
13:19
mean, now we're seeing some
13:21
kind of decoupling between Bitcoin
13:23
and the stock market and the S&P
13:25
500 in particular.
13:26
If you look at the trend-wise
13:28
correlation between Bitcoin and the
13:30
S&P 500, it's at the lowest level
13:32
since 2015, so since
13:34
11 years, so it's been quite
13:36
a decoupling.
13:37
But I think if you have some
13:39
kind of stock market grout in the
13:41
short term, that could affect
13:43
Bitcoin, of course.
13:44
And so I do think there's
13:46
volatility ahead, although
13:48
in general, we're
13:50
trending higher now.
13:53
Perfect. Andre, thanks so much for
13:55
taking the time to join us on the
13:57
market polls today. It's always good
13:58
to chat with you.
14:00
I know that you're probably not
14:01
heading to Token 2049, but I think
14:03
we'll be seeing each other in person
14:04
at Bitcoin Amsterdam.
14:06
So we'll catch each other
14:08
early next month.
14:09
Not too long away.
14:11
Thanks again for joining us.
14:12
We are going to take a very short
14:13
break and then we're going to be
14:14
back with Katie Harries from
14:15
Coinbase on
14:17
the hot seat.
14:18
Don't go away. We'll be right back
14:20
after a short break.
16:01
Welcome back to The Starting Block.
16:02
We took a short break.
16:03
We are back with the hot seat.
16:05
It's a great pleasure to welcome
16:07
Katie Harries. She's the head of
16:08
policy for Europe at Coinbase.
16:10
And we're gonna be having a wide
16:12
ranging discussion starting
16:14
over in the US and then moving
16:15
things across into her jurisdiction
16:17
in the UK
16:19
and Europe.
16:20
First things first, Katie, thanks so
16:21
much for joining us on the show and
16:23
taking time out of your busy
16:24
schedule. How are you doing?
16:26
Very well, absolute pleasure to be
16:27
here. So thank you very much for
16:28
having me.
16:29
You're welcome. Thank you.
16:31
We were across the pond in
16:33
New York a couple of weeks ago for
16:34
Avalanche Summit.
16:35
And we spent a lot of time talking
16:37
to a lot people in the know,
16:40
the likes of former CFTC
16:41
chairman, Chris Giancarlo,
16:44
to unpack the news of the Clarity
16:46
Act kind of stalling in the
16:48
US Senate two weeks ago.
16:50
And we got some really interesting
16:51
takes there. But obviously,
16:53
Coinbase has been quite actively
16:55
involved.
16:57
In the overall kind of policy
16:59
push in the
17:01
US and here in
17:03
the UK and Europe with
17:05
stand with crypto.
17:06
But I want you to tell us a little
17:07
bit of the story behind that.
17:09
Starting over in the U.S.,
17:10
obviously, this clarity vote has
17:12
happened.
17:13
I want to know your general thoughts
17:14
on that and what you
17:16
think comes next in the U.
17:17
S. Before we move across to
17:19
discuss some of the policy
17:22
here, this side of the world.
17:24
Yeah, Clarity Act.
17:25
Where to start on the Clarity Act?
17:28
I think the place to start is that
17:30
the industry moved a bipartisan
17:32
bill with White House backing
17:33
further than anyone ever
17:35
thought was going to be the case,
17:37
which I think in itself is
17:38
remarkable.
17:39
It passed the House with an
17:41
overwhelming bipartisan vote,
17:43
had the support of the White House
17:45
and senators in both parties.
17:46
I think there were 78 Democrats that
17:48
joined Republicans in the support.
17:50
And then, of course, when it went to
17:51
the Senate, negotiations produced
17:53
by partisan committee.
17:54
Bill, but the legislation ultimately
17:56
failed to reach the 60 votes that it
17:58
needed for Cluture blocking
18:00
the floor considering the
18:02
bill. But I think despite
18:04
all that wide-ranging support,
18:07
unfortunately, it was the
18:09
legacy institutions that
18:11
used their influence to block the
18:13
bill, I think from an industry
18:14
perspective, from a coin-based
18:15
perspective, we're going to keep
18:17
pushing until we have that kind of
18:19
comprehensive regulatory framework
18:21
and consumer protection
18:22
sections framework.
18:24
In law.
18:25
But I think in the meantime, we know
18:27
the bill didn't advance.
18:29
I think we don't see it being
18:31
resurrected immediately,
18:34
but we
18:36
still think that we will get the
18:37
clarity that we need
18:39
through rulemaking.
18:40
Regardless, the SEC and the CFTC are
18:43
already moving forward under their
18:44
existing authorities with
18:46
rule proposals. So we think we will
18:47
the clarity we need.
18:49
We've already seen some really
18:51
interesting things come out of the
18:53
CFDC. And then the SEC already,
18:55
I think it was an innovation
18:56
exemption which came out recently
18:58
which does some really remarkable
18:59
stuff.
19:00
Yeah, Chris Giancarlo said as much
19:02
when we chatted to him.
19:03
He was like, look, politics
19:05
may have gotten in the way, but the
19:07
CFTC and the SEC
19:09
are kind of saying, hold my beer,
19:11
we'll take it from here.
19:12
And, you know, you're already
19:14
getting much better rules of the
19:15
road, which I think says a lot about
19:17
the agencies that are kind hitting
19:19
up these very specific
19:21
parts of the industry.
19:22
Let's talk a little bit about the
19:24
stand with crypto. You know, it
19:25
started over in the US and it's
19:26
grown internationally with
19:28
sort of you know, different flavors
19:30
of that, both in the UK and the US,
19:32
but for our viewers out
19:34
there, that might not be too
19:35
familiar with the history of
19:36
standard crypto. Can you give us a
19:38
quick TLDR?
19:39
Yes, I will.
19:40
But I wanted to come back just very
19:42
quickly on the point that you've
19:43
made in terms of the
19:45
agencies doing some interesting
19:46
rulemaking. You mentioned the CFTC.
19:49
Just for interest,
19:51
the innovation exemption that
19:53
I referred to, I think it's doing
19:55
some really amazing
19:57
stuff on the tokenization agenda,
19:59
which you might find interesting.
20:01
So really innovative models of
20:03
where you can trade
20:05
equities, tokenized equities.
20:07
In a defire environment.
20:09
And so I think the ambition that
20:10
we're seeing coming out of the US in
20:12
terms of fundamentally re-imagining
20:15
kind of global capital markets and
20:16
how these tokenized equities will be
20:18
traded is really gonna set
20:21
the marker for
20:22
what other jurisdictions do on
20:24
tokenization. Some really
20:25
interesting stuff to watch out
20:27
for there.
20:28
I think on the grassroots side,
20:30
so you mentioned Stanford Crypto,
20:32
yes, born in the US several.
20:34
Years ago I think there was a
20:36
recognition that there are millions
20:37
of people that really believe in the
20:38
power of the technology, that crypto
20:39
speaks to communities that feel
20:41
disenfranchised, that the current
20:43
financial system has not served them
20:45
and that they wanted to be involved
20:46
and heard in the policy-making
20:48
process and we found that
20:50
during the election in particular
20:52
this concept of the kind of crypto
20:53
voter emerge and of course in the
20:55
election there were bigger issues
20:57
than crypto, definitely not
20:59
the number one issue but on the
21:00
margins we think that It
21:02
had, it had a
21:04
an impact in terms of
21:06
support in certain
21:08
communities.
21:10
It's grown in
21:12
ways that I don't think anyone could
21:14
ever have imagined.
21:15
I think in the U.S.
21:16
Now, there are over three million
21:17
advocates, which is really
21:18
remarkable.
21:20
I think the number of individuals
21:21
that engaged in the clarity process,
21:23
I think, in the last few
21:25
months alone, a million people
21:27
wrote in to
21:29
express their support for clarity,
21:30
and it's grown into a real...
21:33
International grassroots
21:34
organization.
21:35
It's live in several jurisdictions,
21:37
so it moved from the US, it then
21:39
moved to the UK,
21:41
the EU, Canada, Australia
21:42
and most recently in Brazil.
21:44
So it truly is an international
21:46
grassroots organization now
21:48
with over four
21:50
million advocates globally, which I
21:51
think is a rather remarkable
21:54
accomplishment from the the standard
21:55
crypto community.
21:57
Yeah, and it kind of
21:59
took hold in the UK next.
22:01
I remember seeing a year or two
22:03
on social media that the first
22:05
meetings of Stand With Crypto UK,
22:07
which is a very important place for
22:09
an organization like that
22:11
to be, because I think the UK,
22:13
I mean, whether or not the
22:15
people at the helm there would like
22:17
to admit it, is kind of behind both
22:20
the US and the EU in terms of the
22:22
regulatory approach and the kind of
22:24
innovation thinking,
22:26
forward thinking.
22:27
That these other parts of the world
22:28
are having.
22:29
Talk to us a little bit about
22:31
Standworth Crypto UK and
22:32
why it's important to have that
22:34
there, especially with some of the
22:35
context of this gateway opening
22:38
for crypto asset service providers
22:40
in the UK to go through
22:41
registration.
22:43
Yeah, so as you say,
22:45
an important milestone in the UK
22:46
where the gateway has opened for
22:48
firms to apply for their license
22:50
to be regulated under the broad
22:51
crypto framework.
22:53
So a real milestone in
22:55
the calendar and I think the UK has
22:56
done a pretty remarkable job.
22:59
They've really used their second
23:00
mover advantage.
23:01
They looked across to see what the
23:03
EU and other jurisdictions had
23:04
already done. They've come up with a
23:07
very robust but very proportionate
23:08
framework and so the nuts and of the
23:10
rules that are applied to crypto
23:12
firms. I think have landed in a
23:14
very, very good place.
23:15
And I think that's testament to the
23:17
engagement that the regulators
23:19
had with industry.
23:20
But also, I should say that in
23:22
the UK, I think there is also a very
23:24
strong and powerful tone from the
23:26
top.
23:27
And just as an aside, I'm
23:28
digressing, but I will come back to
23:29
your question.
23:30
Just as an side, I was actually at
23:32
the Labor Party conference this
23:34
week where, obviously, Andy Burnham
23:36
was setting out his stall to
23:38
the electorate. But I also.
23:40
I had the benefit of speaking with
23:42
Lucy Rigby, the city minister, when
23:43
she gave remarks at the business
23:45
day. And she's
23:47
just relentlessly pro-innovation.
23:49
She's pretty remarkable.
23:51
And she talked passionately
23:53
about how digital assets are going
23:55
to be the future of financial
23:56
services.
23:57
She was very clear that this is not
23:58
just about wholesale.
24:00
It's also about retail adoption,
24:01
which I think is fantastic.
24:03
And she taught at length
24:05
about the benefits of stablecoins.
24:07
So we have people
24:09
in government.
24:10
Who are really making the case for
24:12
this technology and creating
24:14
a regulatory regime that works in
24:15
order for the industry
24:18
to invest and grow in the
24:20
UK, which I think is fantastic.
24:22
I can share more in terms of my
24:23
thoughts of the actual rules where
24:24
the UK may be going,
24:26
things may not be going as well, if
24:28
that's helpful.
24:29
But just on the standard crypto
24:30
question in particular.
24:32
So yes, the UK
24:34
I think was the first jurisdiction
24:36
that standard crypto expanded into
24:38
after the US.
24:39
Again has grown absolutely
24:41
remarkably 300,000
24:44
advocates in the UK.
24:45
And just to put that into context,
24:47
that's more than any UK political
24:49
party has members.
24:51
I think it's bigger than the British
24:52
army.
24:53
So we think that
24:55
Stamacrypto in the U.K.
24:56
Is the largest grassroots
24:58
organization.
24:59
We're not aware of a
25:00
larger one.
25:02
And it has been very active
25:04
and vocal on policy issues.
25:06
So, The Stammer Crypto team
25:08
ran a campaign last year in
25:09
response to the Bank of England's
25:11
stablecoin caps.
25:12
This was a proposal to put a cap
25:14
on individuals' holdings of
25:16
stablecoins, which received a
25:18
lot of pushback from industry.
25:21
Stamme Crypto, 80,000
25:23
people signed a petition to
25:25
push back on those stablecoin cap.
25:28
As a result of that, there was
25:30
a House of Laws committee that
25:32
called an inquiry.
25:33
And eventually, over time,
25:35
the Bank of England rode back.
25:36
Now, of course, there are lots of
25:39
elements that probably would have
25:40
moved the debate further in terms of
25:42
firm engagement, industry
25:43
engagement. But I do believe that
25:45
having the user
25:48
voice, the community voice,
25:50
speak on this topic went
25:52
a long way in terms addressing
25:56
the Bank Of England's concerns, but
25:57
also moving them into a more
25:59
positive place.
26:00
So that was the first campaign.
26:01
And then... Just very quickly, there
26:02
is a new campaign, which is live
26:04
at the moment, the standard crypto
26:06
in the UK, and
26:08
that is around the
26:10
bank blocks issue, whereby
26:12
the majority of UK
26:14
banks are putting either
26:15
restrictions or complete bans on
26:17
individuals being able to move their
26:19
money from their own bank account to
26:21
crypto asset exchanges, which which
26:23
is really quite remarkable,
26:25
particularly given that...
26:26
Some of these these crypto
26:28
asset changes are registered with
26:30
the with the FCA and
26:32
so Stanford crypto is
26:34
calling for individuals
26:36
to write to their banks to complain
26:38
to lift the
26:40
lift the bank block so that campaign
26:42
is still running encourage all
26:44
of your listeners to write to their
26:46
bank to tell them to lift lift the
26:47
blocks because i think the key point
26:49
here is that banks should not be
26:51
allowed to apply blanket
26:53
restrictions across the whole
26:54
industry i think What we're
26:56
saying, what Stanford Crypto is
26:57
saying, what the industry is saying
26:58
is that they should be applying a
27:00
case-by-case risk-based approach
27:02
to the sector, as opposed to
27:04
choking off the entire sector,
27:06
which is the effect that
27:08
this is having.
27:09
Yeah, and I mean, that speaks
27:10
volumes of kind of how far we've
27:12
come as an industry.
27:14
And I think back to Kate and Long
27:15
talking about, you know, debanking
27:17
in the U.S. And that's the kind of
27:19
things that she took exception to.
27:20
And also just to your point on the
27:23
earlier stand with crypto vote, if
27:25
you get 80,000 people pushing back
27:27
against, you know, regulators
27:29
ruling that they all feel unhappy
27:31
with and it gets changed.
27:33
It shows that numbers
27:35
mean something and people's voice
27:36
means something.
27:37
So I just to echo your thoughts,
27:39
like if you're watching this and you
27:41
live in the UK and you are unhappy
27:42
with some of the sort of
27:46
regulatory parameters in place that
27:48
are holding things back, you should
27:49
say something.
27:50
And again, yeah, I agree with you as
27:52
well, Katie, a bank shouldn't be
27:53
telling you or blocking you from
27:55
moving funds to an exchange,
27:57
especially if they are registered
27:58
with the FCA.
27:59
It's like...
28:00
I want to do this with my money.
28:02
What's the problem here?
28:03
These people aren't, you know,
28:04
they're playing by the rules.
28:05
This shouldn't be the case.
28:08
And look, I think there's a lot of
28:10
strong voices in the UK that
28:12
are either in Bitcoin space or the
28:13
crypto space that also speak out
28:15
a lot about this.
28:17
So luckily, there are a lot these
28:19
voices there. And I think that's
28:21
fantastic.
28:22
Just with your role, you sort of
28:24
working across the EU,
28:26
let's talk a little bit by Mika.
28:28
And some news that came out this
28:29
week.
28:31
Obviously, Stanford's crypto EU is
28:33
pushing
28:36
to the European Commission to
28:38
reconsider stable coin rewards
28:40
and how that kind of works in
28:42
the MECA regulations.
28:43
Can you talk to us a little bit
28:44
about this campaign and what the
28:46
rules currently are and what
28:48
SWCEU would like to see?
28:50
Yeah, sure.
28:51
And at risk of never asking
28:54
your the first question, first
28:56
question immediately.
28:57
One other point I just wanted to
28:58
make in the UK while it comes
29:00
to mind.
29:02
I may I mentioned that I was at the
29:03
party conference this week
29:06
with Andy Burnham.
29:07
One of the things that Stanford Crypto
29:09
has done in the U.K.
29:10
Is over a long period of time
29:12
has gone all across the
29:14
UK to showcase and spotlight
29:16
all the founders that are building.
29:18
In every postcode across the UK.
29:20
And we had an amazing moment about
29:22
two years ago where we invited
29:24
the mayor, Andy Burnham,
29:26
to come to one of the Stanford
29:27
crypto events to meet the founders.
29:30
And you know what?
29:31
He was genuinely blown away.
29:33
He thought it was really remarkable.
29:35
He went out on a stage in front of
29:37
everyone and said, you know, what?
29:39
I like, I've...
29:40
It's so fascinating,
29:42
this technology, it's about economic
29:45
progress, it is about social
29:46
progress and I'm in.
29:48
And I think it's remarkable that we
29:50
now have a Prime Minister that
29:52
has been on record and
29:54
has given a statement which
29:56
is so pro crypto.
29:58
So I think that's fantastic.
29:59
And the Stammer Crypto team were out
30:01
in force at party conference with a
30:02
huge billboard outside
30:04
of Liverpool train station
30:06
with exactly the quote that
30:08
Angie Burnham gave.
30:09
So. Telling the electorate
30:12
telling the party conference
30:14
attendees that this Prime Minister
30:16
has gone on record on crypto, which
30:17
I thought was fantastic.
30:18
But I'm actually going to answer
30:19
your question.
30:20
Go ahead.
30:20
He did it!
30:22
So, EU, I think
30:24
the EU is fascinating
30:26
because lots of other jurisdictions
30:28
are just catching up in terms of
30:29
putting in regulatory framework.
30:30
We just talked about the UK as
30:32
regime, which the gateway has just
30:34
opened.
30:35
The EU, it's been live for some
30:37
time now and they're actually
30:38
getting to the spot where they are
30:39
reviewing Mika.
30:40
So, they have the opportunity to
30:42
kind of go back, work out
30:44
what's working, what's not working.
30:46
We actually think from a Coinbase
30:47
perspective that there's a lot in
30:49
Mika which is very good and is
30:50
working and we would encourage.
30:51
Policymakers to
30:53
think of the Mika review as kind of
30:55
fine tuning, finessing
30:58
some of the rules and thinking about
30:59
some of these new opportunities that
31:01
Mika can unlock versus a kind
31:03
of fundamental unraveling.
31:05
I think in terms of standard
31:07
crypto and again,
31:10
in the EU, phenomenal growth
31:12
from standard crypto, 450,000
31:14
people have signed up to standard
31:16
crypto. So they launched a
31:18
petition calling for
31:20
a pro.
31:21
Innovation, stablecoin strategy
31:23
in the EU, and I think they've had
31:24
125,000 signatures.
31:27
So again, very remarkable.
31:28
And then more recently,
31:30
the Commission has been consulting
31:31
on the MECA2 review,
31:34
asking for submissions.
31:36
Normally these are
31:38
firms, these are trade associations,
31:40
organizations that respond.
31:42
50,000 people,
31:44
Stammer crypto advocates, have
31:46
written to the Commission asking
31:48
them to focus on.
31:49
Number of key aspects
31:51
of the review.
31:52
I think the most important one,
31:54
which I think would have most
31:56
impact for consumers, is on the
31:58
ability to offer rewards
32:00
in the EU.
32:01
This is a debate that came up in
32:03
Clarity, as many will know.
32:05
In the UK, they are
32:07
allowing rewards.
32:10
The EU currently doesn't allow
32:12
rewards or it doesn't provide
32:13
sufficient legal certainty
32:15
clarity for firms to be able to
32:17
offer rewards on their stable coins.
32:19
And we think that the MECA
32:21
2 review is an opportunity to lift
32:23
that ban and to
32:25
drive better outcomes for consumers.
32:27
I think the key point here is
32:29
that this should be about
32:31
enabling a mixed
32:34
money ecosystem where different
32:36
forms of digital money can compete
32:38
on a level playing field and then
32:39
you let the market decide.
32:40
We all know that
32:43
competition drives better outcomes
32:44
for consumers and
32:47
rewards.
32:49
Will increase adoption and
32:51
allow stable coins to compete with
32:53
other forms of digital money.
32:54
And I think the key issue here,
32:56
which I think is important to take
32:58
away, is that the EU does
33:00
not want to rely on
33:02
US dollar-denominated stable coins.
33:04
The only way that it can drive
33:07
adoption of
33:09
euro-denominator stable coins is by
33:12
allowing competition in the market.
33:13
And we think that
33:16
that rewards is.
33:17
The unlock, the key
33:19
thing for this.
33:21
So again,
33:23
we think this is an incredibly
33:24
important initiative.
33:25
Stablecoin Rewards should be
33:26
unlocked in the EU to drive
33:28
competition in payments, to drive
33:30
stablecoin adoption, to drive
33:32
innovation in Euro-denominated
33:34
stablecoins.
33:35
And we'd encourage everyone to sign
33:37
the petition and to
33:39
write to the commission.
33:41
Just to pull on that a little bit,
33:42
Katie, when you say a ban,
33:44
I mean, the lack of
33:46
clarity on the rewards
33:48
means that most operators
33:50
in Europe simply wouldn't offer
33:52
awards because they don't want
33:54
to break potential rules
33:56
that aren't there, but they don't
33:57
want to get in trouble, right?
33:58
They don't wanna do anything they
33:59
shouldn't be doing or run the risk
34:01
of losing their license or something
34:03
like that in the future because
34:04
there's just not clear rules of the
34:05
road.
34:06
That's exactly right.
34:07
I think under the
34:09
banner of rewards, there are
34:10
different types of activity on which
34:15
consumers can
34:17
benefit. And I think the rules of
34:18
the road aren't entirely clear.
34:20
As a result, we've not seen rewards
34:22
offered on stablecoins across
34:25
the EU from key players.
34:27
We think we need certainty on that.
34:29
And we think that they should be
34:30
unlocked to drive competition and
34:32
better outcomes for consumers.
34:33
Um, I mean...
34:36
Stablecoins offer so many
34:38
benefits and we
34:40
think that they should be embraced
34:41
by the EU.
34:43
Yeah, feel free to push back or
34:45
even say no comment to this but my
34:47
mind kind of does always wonder to
34:49
the point of, you know, governments
34:51
wanting to have as much control as
34:53
possible over money and we know that
34:55
the European Union wants to push
34:56
through with a digital euro.
34:58
Do you think that this is where,
34:59
you, know, that lack of clarity sits
35:01
because maybe the plans are in the
35:03
future to have a digital euro that
35:05
would have its own rewards to
35:06
incentivize people to use a digital
35:08
Euro over sort of
35:10
independently minted or managed.
35:12
EU-based, Euro-based
35:15
or Euro-denominated stablecoins.
35:17
We are seeing this debate in every
35:19
jurisdiction.
35:21
What jurisdictions are going to
35:23
back in terms of whether it should
35:24
be stable coins, should it be
35:26
tokenized deposits driven by the
35:28
banks, should it be central bank
35:29
digital currency?
35:31
Our view is that we should allow
35:33
a thousand flowers bloom,
35:35
let the innovation take hold and
35:37
let the market decide.
35:39
We are seeing different
35:40
jurisdictions take different
35:41
approaches.
35:42
So the US, for example, very notably
35:44
has decided that.
35:45
It wants to win on tokenization,
35:47
and to win on tokenisation,
35:49
stablecoins are the only on-chain
35:51
settlement asset that currently
35:52
exists. And so if you want to win
35:54
tokenisation you have to embrace
35:55
stablecoins.
35:56
So that's
35:58
the US.
36:00
The UK, I think, is having a
36:02
big internal debate on this.
36:04
The banks want to see tokenised
36:05
deposits.
36:08
The fintech, the crypto sector want
36:10
to see an embrace of stablecoins,
36:11
and then you still have the Bank of
36:12
England that that for very core
36:14
wholesale markets.
36:15
Still debating what kinds of second
36:17
assets should be allowed and should
36:18
it be a wholesale CBDC.
36:20
So a lot of debate and
36:22
that's exactly what we're seeing in
36:23
the EU.
36:25
What is the role of tokenized
36:27
deposits? What should the role
36:28
stablecoins be?
36:29
What's the role CBDCs
36:32
be? But what I do know is
36:34
that this is a question of
36:37
what standing and what role does
36:38
the Euro have on a global stage
36:41
And in the context of very
36:43
large jurisdictions backing
36:44
stable coins.
36:46
We think that the EU also
36:48
needs strong EU,
36:50
Euro denominator stable coins that
36:52
can emerge at scale.
36:54
And we think that Mika Review
36:56
should do everything to encourage
36:58
that development.
37:01
If people want to go and find
37:03
out more about the
37:05
Stand With Crypto
37:07
petition or where they can sign it,
37:08
I don't know if you have that
37:09
offhand, where they can find that is
37:11
a specific website or anything.
37:13
Yes, there is a Stanford Crypto
37:15
website for every jurisdiction which
37:17
is live.
37:19
So feel free to go there.
37:20
Please register as an advocate.
37:22
Please write to your policymakers,
37:24
sign petitions, send in emails
37:26
because your voice really does make
37:28
a difference.
37:29
Beautiful. I just Googled it quickly
37:31
myself. So it's a
37:32
standwithcrypto.org.
37:33
If you wanna find out more
37:34
information or sign the petition,
37:35
get involved.
37:36
Over 4 million advocates,
37:38
the website tells me, are part of
37:40
the Stand With Crypto movement.
37:42
So that's fantastic.
37:43
Katie, thanks so much for taking the
37:44
time to join us today.
37:46
I really enjoyed this conversation
37:47
and I do hope that you will indulge
37:49
us the next time we need a policy
37:51
expert joining us on the show.
37:52
Love to.
37:54
Awesome, thank you very much.
37:55
Thanks so much, Katie.
37:56
And thank you for joining us today
37:58
for the starting block.
37:59
That is it for today's show.
38:00
If you want to catch up on any of
38:01
the content that we've put out over
38:03
the last few months, you can go and
38:04
check out the block's YouTube
38:05
channel. And just to plug to our
38:07
fantastic multimedia team, we are
38:09
launching Around the Block, which is
38:10
a very special documentary focusing
38:13
on the story of crypto
38:14
in South Korea, and also how
38:16
that ties back to the financial
38:18
history of South Korea.
38:19
Absolutely amazing work done by my
38:20
colleagues at the block.
38:22
So keep an eye out on our socials.
38:23
That should be out later today.
38:25
Just in time for Korean Blockchain
38:27
Week, so very timely.
38:28
Go and check that out on our
38:29
socials. If you don't already,
38:30
follow us on X and subscribe to our
38:31
YouTube channel.
38:32
We will be back next week live
38:35
in person at Token
38:37
2049. So keep an eye out where
38:39
you can catch us online.
38:40
And if you're on the ground in
38:41
Singapore, come and say hello.
38:43
I promise I don't bite.
38:45
Until next week, we'll catch you
38:46
next time. Take care of yourself.