Latest / The Paul Barron Crypto Show / Banks vs CLARITY Stall Tactics⚖️Consensus Lawyer Bill Hughes INTERVIEW🚨

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Banks vs CLARITY Stall Tactics⚖️Consensus Lawyer Bill Hughes INTERVIEW🚨 · The Paul Barron Crypto Show

• 0:00
  Speaker 1: Let's get into some delay tactics that the banks are
• 0:02
  Speaker 1: putting in play now into genius and this has an
• 0:06
  Speaker 1: effect on crypto in a very big way. So we
• 0:08
  Speaker 1: wanted to get basically an attorney to come in and
• 0:11
  Speaker 1: tell us a little bit more about it. We'll break
• 0:13
  Speaker 1: it all down for you. Let's get started. I do
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• 0:44
  Speaker 1: All right, So I wanted to bring on Bill Hughes,
• 0:47
  Speaker 1: who is the senior counsel and director of Global Regulatory
• 0:50
  Speaker 1: Matters over at Consensus. Bill, how are you.
• 0:53
  Speaker 2: I'm wonderful. How are you ok y, Sue?
• 0:56
  Speaker 1: Yeah, So obviously a lot of things are happening now.
• 1:00
  Speaker 1: The banks have dropped this most recent comment period extension
• 1:05
  Speaker 1: to I assume delay tactic. What's happening around all this
• 1:10
  Speaker 1: regulatory alignment? Kind of give us why this is happening
• 1:13
  Speaker 1: right now.
• 1:13
  Speaker 2: Well, they say it's about sequencing. They want to wait
• 1:16
  Speaker 2: for the OCC's element of the final Treasury rule to
• 1:22
  Speaker 2: be fully finalized before commenting on any of the other
• 1:25
  Speaker 2: agency rules, the FDIC, finn sent Ando FAC and a
• 1:30
  Speaker 2: broader rule from Treasury. The problem is the delay they
• 1:33
  Speaker 2: are asking for. The banks are asking for comment periods
• 1:37
  Speaker 2: to stay open until sixty days after the OCC would
• 1:41
  Speaker 2: issue its final rule. The OCC rule is still in
• 1:44
  Speaker 2: its own comment period until May first, and then once
• 1:48
  Speaker 2: all those comments come in, finalization typically takes months at
• 1:52
  Speaker 2: the quickest. If Treasury gave them what they asked for,
• 1:57
  Speaker 2: that could push these deadlines for all these other rules makings,
• 2:00
  Speaker 2: all of which are important to putting Genius into effect,
• 2:04
  Speaker 2: all these deadlines into late twenty twenty six, more likely
• 2:07
  Speaker 2: into twenty twenty seven. The Act technically goes into effect
• 2:11
  Speaker 2: January twenty twenty seven at the latest, so we need
• 2:14
  Speaker 2: these rules in place. So the banks are not asking
• 2:17
  Speaker 2: for a modest extension. It's really an open ended pause
• 2:21
  Speaker 2: to this rule making tie to the CC's rule making,
• 2:24
  Speaker 2: and the results is everything would go off the rails.
• 2:27
  Speaker 2: But it does look like Treasury has no interest in
• 2:30
  Speaker 2: extending this period. So that's good.
• 2:32
  Speaker 1: That's good news there. I'm curious though, in terms of
• 2:36
  Speaker 1: policy that the OCC is laying down right now under
• 2:41
  Speaker 1: the guise of what the Genius Act dictated. Is there
• 2:44
  Speaker 1: anything that we should be concerned around? I was looking
• 2:47
  Speaker 1: at your tweet right here. What about some of the
• 2:50
  Speaker 1: things that would be implemented through the OCC and how
• 2:53
  Speaker 1: it would affect crypto?
• 2:54
  Speaker 2: So I think two things to pay attention to. First,
• 2:57
  Speaker 2: expanding the prohibition on stable coin yield beyond what the
• 3:02
  Speaker 2: Genius Act actually says, and thus sweeping in rewards programs,
• 3:06
  Speaker 2: affiliate payments, third party arrangements that Congress didn't explicitly prohibit
• 3:12
  Speaker 2: prohibit when they could. I think the second thing would
• 3:15
  Speaker 2: be making OCC's final framework the effective ceiling for every
• 3:18
  Speaker 2: other agency. If the banks get both of those, essentially
• 3:24
  Speaker 2: it would be using the rulemaking process to refashioned Genius
• 3:27
  Speaker 2: into something different, much narrower than what Congress had passed.
• 3:33
  Speaker 2: And so, look, these are legitimate substance of discussions to
• 3:36
  Speaker 2: have in the common process. But the question is how
• 3:39
  Speaker 2: should we be having that common process? And we shouldn't
• 3:43
  Speaker 2: be trying to extend a regulatory clock here. We need
• 3:45
  Speaker 2: these rules.
• 3:46
  Speaker 1: Now, how does this tie to clarity?
• 3:48
  Speaker 2: So it's all connected the comment process. You're seeing a
• 3:52
  Speaker 2: lot of the same arguments from the trade groups that
• 3:55
  Speaker 2: you see on the clarity side of things. That say,
• 4:00
  Speaker 2: trade groups pushing to extend the genius comment period are
• 4:04
  Speaker 2: the ones fighting the stable cooin rewards provisions and clarity
• 4:08
  Speaker 2: Genius governed stable coin issuinges clarity is the broader market
• 4:11
  Speaker 2: structure framework. Both are happening at the same time. The
• 4:15
  Speaker 2: discussion over clarity and this genius rulemaking, the overlapping stakeholders
• 4:19
  Speaker 2: and overlapping issues really hit home with the yield issue.
• 4:24
  Speaker 2: If the rule making drags, that affects the legislative calculus
• 4:28
  Speaker 2: in the Senate and the House. If clarity slips, it
• 4:30
  Speaker 2: affects the rule making environment. So these things are really
• 4:34
  Speaker 2: working in tandem.
• 4:35
  Speaker 1: What if the occ bans yields entirely on the policy side,
• 4:39
  Speaker 1: will the banks be okay with passing clarity?
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  Speaker 2: Then do you think, well, I think to the extent
• 4:43
  Speaker 2: that clarity would be new law and would be inconsistent
• 4:46
  Speaker 2: with the prior rule. Clarity would be clarity. The legislation
• 4:51
  Speaker 2: would be construed as over overwriting whatever rule and agency
• 4:55
  Speaker 2: would put in. But I just want to be clear.
• 4:57
  Speaker 2: Clarity and the rulemakings are definitely on separate tracks. They
• 5:00
  Speaker 2: both touch on the same issue. But the reason why
• 5:04
  Speaker 2: the discussion at the agency level can really impact the
• 5:08
  Speaker 2: negotiations in the Senate as to the stable coin issue.
• 5:11
  Speaker 2: If it seems that Treasury is siding with the banks,
• 5:14
  Speaker 2: then people on the fence in Congress wonder whether or
• 5:17
  Speaker 2: not to support stable coin yields or not. Having Treasury
• 5:22
  Speaker 2: on the bank side would be a big thing, but
• 5:23
  Speaker 2: Treasury certainly has not been on the bank side. The
• 5:26
  Speaker 2: Treasury in the White House really want there to be
• 5:28
  Speaker 2: a meeting of the minds and some sort of negotiated
• 5:30
  Speaker 2: solution here.
• 5:31
  Speaker 1: What do you make of this post from the Bank
• 5:34
  Speaker 1: Policy Institute they're wanting to do Congresses now considering whether
• 5:38
  Speaker 1: to extend AMLCFT obligations to all digital asset service providers.
• 5:45
  Speaker 1: What do you make of this AML on everything?
• 5:46
  Speaker 2: Well, I think the doubles in the details. The question
• 5:49
  Speaker 2: is what sort of services there are services that look
• 5:53
  Speaker 2: at kind of broker dealers, are services, kind of money transmission.
• 5:57
  Speaker 2: There are also lots of services which are just very
• 5:59
  Speaker 2: technical in nature. And so to the extent that they
• 6:02
  Speaker 2: want to expand the definition to cover more technical non
• 6:06
  Speaker 2: financial services, that would be a dramatic augmentation of the
• 6:11
  Speaker 2: Bank Secrecy Act. And yeah, for a lot of people
• 6:13
  Speaker 2: in crypto and the broader economy would feel very strongly
• 6:16
  Speaker 2: about that, no doubt.
• 6:17
  Speaker 1: You look at one thing right now, and this kind
• 6:20
  Speaker 1: of makes me think Scott Bessen And do you think
• 6:23
  Speaker 1: Scott Besson is actually defending yields now? Because of the
• 6:26
  Speaker 1: most recent activity over on tether the top Trump administration
• 6:31
  Speaker 1: froze three hundred and forty four million in crypto, primarily.
• 6:34
  Speaker 2: Was tied to Iran.
• 6:36
  Speaker 1: So this gives Bessent and you know, essentially the Treasury
• 6:41
  Speaker 1: the ability to do a little bit more pressure now
• 6:44
  Speaker 1: in the crypto realm as well as the traditional banking reals.
• 6:47
  Speaker 2: What do you think Bessant has been fantastic. He has
• 6:50
  Speaker 2: been consistent that stable coins are good for the dollar,
• 6:53
  Speaker 2: good for treasury demand, and that genius needs to work,
• 6:56
  Speaker 2: as Congress wrote it. He's also publicly called clarity and
• 6:59
  Speaker 2: notional security priority. We agree. We've he has been very
• 7:03
  Speaker 2: bullish on innovation in the markets generally that is a
• 7:06
  Speaker 2: tremendous breath of fresh air, but on specifically, Treasury really
• 7:09
  Speaker 2: hasn't drawn a bright public line. But the fact is
• 7:12
  Speaker 2: that the rulemakings need to be moving on the schedule
• 7:16
  Speaker 2: that that was set out by Treasury, and that Treasury
• 7:19
  Speaker 2: seems to be sticking to that schedule, and that tells
• 7:21
  Speaker 2: you something about the administration's posture. You know. I think
• 7:25
  Speaker 2: it's no surprise that the White House's Council of Economic
• 7:28
  Speaker 2: Advisors just to release the report in the last couple
• 7:31
  Speaker 2: of weeks finding that if you prohibited yield, the effect
• 7:36
  Speaker 2: on bank lending would the the the impact would be deminimus,
• 7:40
  Speaker 2: it would be a rounding error. So I think that
• 7:43
  Speaker 2: lends credence to what Crypto has been saying, is that
• 7:46
  Speaker 2: the case against yield, that that it's a meaningful threat
• 7:50
  Speaker 2: on the banking system, especially community banks, is overdone, isn't valid,
• 7:57
  Speaker 2: and that what we really need to be talking about
• 7:59
  Speaker 2: is is the traditional banking system can an upstart start
• 8:04
  Speaker 2: to compete against that and offer consumers an alternative, which
• 8:07
  Speaker 2: may in fact be better well, and.
• 8:09
  Speaker 1: For our audience, we've done a couple of videos on
• 8:11
  Speaker 1: that very report that Bill's talking about, which was done
• 8:15
  Speaker 1: i think independently. They had a lot of universities involved
• 8:18
  Speaker 1: economists all over the world. But the banks came back
• 8:21
  Speaker 1: and pushed back against it. You know, they pretty much
• 8:24
  Speaker 1: just took a dump on it. It was pretty pretty
• 8:27
  Speaker 1: hard on basically telling the economists, hey, no, actually you're wrong.
• 8:32
  Speaker 1: The economists are saying, no way outlined it. So it
• 8:33
  Speaker 1: was a back and forth with where this goes. But
• 8:37
  Speaker 1: it kind of goes into another area that we've been watching,
• 8:39
  Speaker 1: which is these banking licenses. Do you think that the
• 8:43
  Speaker 1: banks themselves are trying to slow down the banking charters
• 8:47
  Speaker 1: for these crypto companies as they start to go through
• 8:50
  Speaker 1: the OCC.
• 8:51
  Speaker 2: Well, there's been an opposition to OCC approvals of national
• 8:54
  Speaker 2: trust charters for crypto firms. That's certainly true. But you know,
• 8:58
  Speaker 2: the banks, and I'll give them a little a little
• 9:01
  Speaker 2: harbor here, they've been whipsawed by public policy over the
• 9:04
  Speaker 2: last couple of years. Just a couple of years ago,
• 9:06
  Speaker 2: under the prior administration, they were told to shun crypto entirely.
• 9:10
  Speaker 2: My own company was debanked during that period right before
• 9:15
  Speaker 2: the election. Right after the election, the very same bank
• 9:17
  Speaker 2: called us up and said, hey, can we take you
• 9:19
  Speaker 2: to a basketball game? So I can be somewhat charitable
• 9:22
  Speaker 2: here about their situation, But the moment now is different.
• 9:26
  Speaker 2: The right answers to bring these companies inside a federal
• 9:29
  Speaker 2: regulatory perimeter where they can be supervised, where they can
• 9:32
  Speaker 2: innovate and operate safely. And yes, there may be on
• 9:35
  Speaker 2: the margin some ways that a charter or the regulatory
• 9:39
  Speaker 2: ramifications of it may need to be tweaked to fit
• 9:41
  Speaker 2: the model of their business. But this is why we
• 9:44
  Speaker 2: iterate on regulation all the time, is to get a
• 9:46
  Speaker 2: better situation for the American consumer. And so you know,
• 9:50
  Speaker 2: the traditional finance they can engage in comment with the agency.
• 9:56
  Speaker 2: But the time for obstructionism is over.
• 9:58
  Speaker 1: Yeah, for sure. What's your position right now? In terms
• 10:01
  Speaker 1: of clarity.
• 10:02
  Speaker 2: Passing cautiously optimistic? There are conflicting reports on where we
• 10:08
  Speaker 2: are with stable coin rewards, whether there's a compromise, how
• 10:11
  Speaker 2: far along is it. Defive provisions have been negotiated heavily,
• 10:17
  Speaker 2: some reports that they're finalized. Maybe that's true, maybe that's
• 10:20
  Speaker 2: not the problem. Really is a calendar. The Senate Banking
• 10:23
  Speaker 2: Committee markup is targeted now. My latest intel today is
• 10:28
  Speaker 2: for sometime in mid May, and maybe that's a partisan markup,
• 10:33
  Speaker 2: where what that means is the Republican majority basically ignores
• 10:37
  Speaker 2: the objections of the Democrat minority and pushes through a markup.
• 10:42
  Speaker 2: Not Ideal Fit twenty one, another legislation never got a
• 10:47
  Speaker 2: partisan markup. It was basically the end product can go
• 10:50
  Speaker 2: to the floor as more of a bipartisan bipartisan product,
• 10:54
  Speaker 2: which is better for it's treatment on the floor, but
• 10:58
  Speaker 2: if it clears committee, we be targeting a floor vote.
• 11:01
  Speaker 2: This is when the Majority leader's office would be targeting
• 11:05
  Speaker 2: a floor vote for some time this summer before the
• 11:07
  Speaker 2: August recess, and then after that you need to reconcile
• 11:12
  Speaker 2: what Clarity says against the House text that already passed.
• 11:15
  Speaker 2: So there's lots to do, but the White House is pushing.
• 11:19
  Speaker 2: We have senators like Lummis and Marino and Tillis and
• 11:22
  Speaker 2: ch Chairman Scott signaling that this has to move forward.
• 11:26
  Speaker 2: Floor time is scarce, and really the hour is getting late.
• 11:30
  Speaker 2: We need to move this thing forward. But it can pass.
• 11:33
  Speaker 1: So you're feeling it. It still has a window of
• 11:36
  Speaker 1: being able to get through, even if it does stretch
• 11:38
  Speaker 1: into early summer. What about Trump, I mean the administration.
• 11:41
  Speaker 1: He's done this already with one truth post out there
• 11:44
  Speaker 1: kind of saying, hey, we need to get this done.
• 11:47
  Speaker 1: Do you have bestt coming out there kind of validating
• 11:50
  Speaker 1: that this is you know, it's basically an issue of
• 11:53
  Speaker 1: national security. What do you think do you think the
• 11:55
  Speaker 1: White House is going to come out with a more
• 11:59
  Speaker 1: impressed post to the banks to try to get this
• 12:02
  Speaker 1: across the line.
• 12:04
  Speaker 2: Well, if there's one thing this president knows is how
• 12:06
  Speaker 2: to wield a bully pulpit, so I would not pat
• 12:08
  Speaker 2: against it. So, as you mentioned, he already did it
• 12:11
  Speaker 2: once he said Americans should earn more money on their money.
• 12:16
  Speaker 2: I don't think you can find an American who disagrees
• 12:18
  Speaker 2: with that. So that single post moved the negotiation material materially.
• 12:23
  Speaker 2: But if I had to guess, these are sent strategically,
• 12:27
  Speaker 2: and you don't just send them whenever you send them
• 12:30
  Speaker 2: when it can actually affect an actual debate, so I
• 12:34
  Speaker 2: would expect more weigh ins. And I think he's been clear.
• 12:40
  Speaker 2: The President has been clear about where he stands. Everyone
• 12:43
  Speaker 2: in this debate is aware of that dynamic. It is
• 12:45
  Speaker 2: a tremendous benefit to getting this thing resolved that the
• 12:49
  Speaker 2: President is so clear throated about where he wants this
• 12:53
  Speaker 2: thing to end, and I think his support is critical
• 12:58
  Speaker 2: in all of this.
• 13:00
  Speaker 1: Do you think would be another wrench that the banks
• 13:03
  Speaker 1: could throw in to try to delay this?
• 13:05
  Speaker 2: I think it's DC And there's always procedure that is
• 13:10
  Speaker 2: the inside baseball ways of getting trains off tracks. So
• 13:14
  Speaker 2: I don't want to speculate. I don't There isn't an
• 13:17
  Speaker 2: idea that I could offer that they probably haven't already
• 13:20
  Speaker 2: thought of thought about. But it's a very it's a
• 13:22
  Speaker 2: very fluid situation, and it's really in the hands of
• 13:27
  Speaker 2: Senate right now to keep the ball moving. And so
• 13:30
  Speaker 2: we have exceptional leadership on the Senate Banking Committee really
• 13:33
  Speaker 2: on both sides, and Senator Warner and some of his
• 13:36
  Speaker 2: colleagues on the minority very much. Do you want to
• 13:38
  Speaker 2: get a job done? We just need to join issue
• 13:41
  Speaker 2: and resolve some of these outstanding items. But look, this
• 13:45
  Speaker 2: is this is brass knuckles politics. A lot of people
• 13:48
  Speaker 2: on the fence are wondering, like, who are they more
• 13:51
  Speaker 2: comfortable making mad? Yeah, and they need and they need
• 13:55
  Speaker 2: to figure out whether that's crypto or the banking industry.
• 13:58
  Speaker 2: And the fact that crypto is going total of banking
• 14:01
  Speaker 2: on this and such a landmark bill and really we're
• 14:05
  Speaker 2: fighting to the twelfth round tells you we are we
• 14:08
  Speaker 2: have very much derived and everybody understands that this is
• 14:10
  Speaker 2: very much the future.
• 14:12
  Speaker 1: Well, I also think that, you know, the Trump administration
• 14:15
  Speaker 1: has also you know, aligned very heavily with trying to
• 14:18
  Speaker 1: get this across the line. So for whatever, you know,
• 14:21
  Speaker 1: concessions need to be made. It'll be intriguing to see
• 14:24
  Speaker 1: what actually falls at the end and where both sides
• 14:28
  Speaker 1: end up. One position though kind of more of a
• 14:31
  Speaker 1: def con position. If it doesn't go through, whether we
• 14:35
  Speaker 1: miss a deadline and it just it's you know, it's
• 14:37
  Speaker 1: not physically able to get past and Clarity uh doesn't
• 14:41
  Speaker 1: make it through. Do you think the market goes out
• 14:44
  Speaker 1: and spends this as a positive.
• 14:46
  Speaker 2: I think a lot of work is getting done that
• 14:49
  Speaker 2: makes things dramatically better and dramatically clearer for the industry.
• 14:54
  Speaker 2: There are going to be some issues if Clarity doesn't
• 14:56
  Speaker 2: get done. First of all, that doesn't mean we throw
• 14:59
  Speaker 2: Clear in the dustbin. I think this is the legislation
• 15:02
  Speaker 2: that would be re raised in the next Congress. There's
• 15:05
  Speaker 2: actually some people optimistic that it would receive even if
• 15:08
  Speaker 2: it was a Democratic controlled House or Senate or both,
• 15:12
  Speaker 2: that it would receive more attention than some people are fearing.
• 15:15
  Speaker 2: But the work that Treasury is doing on the rulemaking process,
• 15:18
  Speaker 2: the work the SEC is doing in creating an innovation
• 15:22
  Speaker 2: exemption putting token is securities on chain, which I think
• 15:25
  Speaker 2: we're going to see, really is going to open a
• 15:28
  Speaker 2: door to Wall Street and broader trad fi to get
• 15:31
  Speaker 2: more invested in this space, open a door for crypto
• 15:35
  Speaker 2: to expand past like the current watermarks that it's used
• 15:40
  Speaker 2: to treading. We're in an era of crypto expansion right now,
• 15:45
  Speaker 2: which is tremendously positive. Clarity would be a great watershed
• 15:50
  Speaker 2: moment for us. Is it essential for us to move forward?
• 15:53
  Speaker 2: It is not. And just because we don't get it
• 15:55
  Speaker 2: done this year doesn't mean it's not going to get
• 15:56
  Speaker 2: done eventually.
• 15:57
  Speaker 1: Yeah, I think it is kind of the sale of approval.
• 16:00
  Speaker 1: But to your point, there's many factions out there within
• 16:03
  Speaker 1: crypto that are looking at this in either way, you know,
• 16:07
  Speaker 1: whether it gets done or it doesn't get done. Most
• 16:09
  Speaker 1: of which they are looking for long term. I agree
• 16:12
  Speaker 1: with you is clarity is almost a necessity for sure.
• 16:16
  Speaker 1: Hey Bill, it's been good having you on. Thanks for
• 16:18
  Speaker 1: some clarity here and trying to understand what's going on
• 16:21
  Speaker 1: with all these things. So we do appreciate it.
• 16:23
  Speaker 2: My pleasure great to see.
• 16:31
  Speaker 1: If you like this video, like and subscribe, drop a
• 16:34
  Speaker 1: comment down below, and also join our free private member group.
• 16:38
  Speaker 2: The link is in the description.