Latest / The Paul Barron Crypto Show / Biden Halts Crypto Vote Again!!🔥BitGo CEO Mike Belshe

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Biden Halts Crypto Vote Again!!🔥BitGo CEO Mike Belshe · The Paul Barron Crypto Show

0:06
The business of blockchain is getting huge. We're starting to see implications on the
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political front what it might mean around the world, and of course a lot
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of what's happening in the markets itself are also affected. Today, we'll break
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it all down for you. It's going to be a good one. We've
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got a special guest that you don't want to miss. My name is Paul
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Baron. Welcome back in the tech path. Let's get started on this.
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I want to do first kind of just to give you guys a kind of
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an outline of what's really happening in the space right now. This came out
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from CNBC. These were Digital Asset Award companies and you'll notice here, I
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mean, we've got quite a few of the American based companies. Bitco,
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who's going to be on with us here in a second chain analysis, coin
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track or coinbase, Consensus, Crypto, dot Com, Singapore. Point is
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is, we've got a larger a lot of major initiatives and around companies that
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are starting to make real moves going forward, so much so that we've seen
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activity in the Capitol Hill of course, had a whole slew of things happening
1:03
yesterday along with the round table. We'll get a chance to talk a little
1:06
bit about that. The round table had a pretty interesting group. This was
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the group that was advising the White House. You've got Mark Cuban, We're
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gonna have Mike Belshie on from BICCO. But you've got garling House, Nova
1:21
Grats quite a few that were asked to come over to advise the White House
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on potentially where crypto is going. So on that note, I want to
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bring in Mike Belshie of bitgo to bring him in the show. How are
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you, Mike, I'm good. How are you, Paul? Excellent?
1:37
Excellent, Thanks for coming in today. So obviously a big news in the
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sense of DC paying attention, especially this administration seeming to pay attention a little
1:46
bit more to what's happening in crypto. I want to kind of get your
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opinion on the round table yesterday that occurred. I know that you've been in
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touch with you know, Rocana, one of the organizers of this event.
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What is been the feedback that you've been able to kind of garner from what's
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happened yesterday. Sure. Well, Look, I've known Roe for a while.
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He's our representative out here in Silicon Valley, And just for the record,
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I ended up not going. I canceled a couple of days before,
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so the report that I was there is inaccurate. But it seemed like they're
2:20
pretty well represented by crypto, which is part of why I didn't go.
2:23
Look, there's been a lot of focus on this SAB one twenty one for
2:29
the last couple of months, and in general, SAB one twenty one shouldn't
2:32
exist. We all know that it shouldn't exist. For your viewers that aren't
2:37
familiar with it, the SEC came along earlier this year and said, Hey,
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if you're a public company and you are holding crypto assets on behalf of
2:47
your clients, you need to put it on your balance sheet. And this
2:51
is a weird thing to do. You don't usually put your client's money on
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your balance sheet. This has a bunch of side effects. The most notable
3:00
one is that it makes it very difficult for the major custodians to the United
3:05
States. And I'm talking about Bank of New York, Melon, I'm talking
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about JP Morgan, I'm talking about State Street. None of these guys are
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gonna put crypto assets on their balance sheet because it creates a problem with them
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and tern of how they do other accounting in terms of safety and soundness.
3:22
All right, So the word on the street is roughly that SAB one twenty
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one prevents the major custodians from entering into crypto, and of course we want
3:30
the major custodians entering into crypto. If you want to de risk crypto,
3:32
what's the best way to do it. Take the guys and know how to
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manage risk and bring them into the industry, all right, So that's kind
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of where things started. As soon as it went through the House, Biden
3:43
set announced pre announced that he would veto it even if it gets passed by
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the Senate, and it passed the Senate, and sure enough, then Biden
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vetoed it. So that's an interesting stance. And one thing that most people
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don't know is that the GAO has already ruled that SAB one twenty one is
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major rulemaking which is subject to this rule called the CIRA, the Congressional Review
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Act, and Gary Gensler and the SEC did not follow the process and procedure.
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They did not go to Congress and give them an opportunity to approve it.
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So it's illegal by definition, and yet somehow the current administration has kind
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of just said, yeah, okay, so the GAO rejected it. We're
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still gonna let the SEC do it. It's it's regulators run amok, and
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there's no way, there's no other way to describe it anyway. That's kind
4:38
of what's led to all of this. And then Row led a round table
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just this week going to DC to try to educate some of the folks in
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the White House staff about what is crypto about, what does this SAB one
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twenty one do, and what we should By the way, interesting, Roe
4:53
initially voted no on the SABE twenty one repeal, which was general, I
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mean, reviewed negatively by crypto ficcionados like myself. But he just on the
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revote that they just had, which this morning he voted, he voted yes.
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So he changed his mind. Yeah, So here's the list right here
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on the representation, and I want to show a clip for this in general.
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But you had Moscow this is our Florida flipped, which was not good.
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But you had Philip Dean Phillips. I was surprised he flipped. Cheryl
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flipped, and Vis's flipped. But you had Jackson Rocanna and then Sozy and
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thunder all came over. So that was for I guess, almost a little
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bit more of a positive if you were really looking at some of the details
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here around the fact that this did not go through. But at the same
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time, there was some Democrats as well as you know, cross party als
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that were able to come in. I want to play a clip for you
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to kind of outline a little bit about what happened, because this was interesting
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right here. Let's go to the clip. Speaker, a message from the
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President of the United States. I am directed by the President of the United
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States to deliver to the House of Representatives a message in writing some deal that's
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being made. I have no details of it, but I was just wondering
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if, mister speaker, if I could inquire the ranking member if there's paper
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on this or any published accounts of what the ranking member said, what he
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said. He's asking you about comments that remade, whether when has worked out
6:32
between the ends. I'm happy to yield to the ranking member. I'm interested
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that this deal that you've talked about, that certain banks can custody digital assets,
6:41
and there's a deal made with the Securities Exchange Commission. So I wonder
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if there's any published account of this or anything in writing we have from the
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SEC. As I said when I made the presentation that they're close to working
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out the deal with SAB and the custody banks. Look, let's re check
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this idea that we just wait for a couple of people to strike some private
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deal for a group of banks. That's amateur hour. That's trying to avoid
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the embarrassment of having the House of Representatives vote like it did on fit fit
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twenty one, where better than two thirds majority were in support of this very
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policy, and my colleagues after twenty one voted to repeal this stupid accounting.
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I'm sorry. So I would say those fifty Democrats, look at this anew
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you want to send a message to your voters that you're pro crypto. Those
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fifty that voted for the market structure but didn't vote for this should vote with
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us. President Biden actually interrupted that vote with a message. And then,
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of course, clearly there's something going on in the back room between the SEC
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and some of these banks. So what do you make of this, Mike,
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what's your opinion about what's happening right there? I mean, look,
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this is all a sideshow, and it's all theater. Yeah, honestly,
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it doesn't matter. So one of the things that are referencing there is this
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little oddity that this other bill called the FIT twenty one bill, which would
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introduce some market structure for crypto. It also happens to obliterate SAB one twenty
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one, so it would be a second way to do it. And some
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of the congress people voted yes on one, and okay, but here's here's
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the real thing that matters. And I'm kind of surprised that SAB one twenty
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one gets so much attention. There's three regulators that matter when it comes to
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crypto, custody and banking. Of course, the SEC is the one that
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people think of the most. That has to do with whether these securities,
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et cetera. They have put Gary Gensler in front and center. He's the
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lightning rod for all attention related to crypto matters. There's two others the matter
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at least as much, if not more so. One is the OCC that's
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the Office of the Control of the Currency. All of the major custodial banks
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are regulated by the OCC, and the OCC, under the director Michael's shoe,
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has control with the currency. He has made it very clear that anyone
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touching crypto is not meeting his safety and soundness guidelines. Now there's nothing written.
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But you know, we had the previous control of the currency under the
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previous administration, which was allowing crypto to be held by OCC chartered banks,
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and then all of a sudden, without a single law changing, without a
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single regulatory word being rewritten, all of a sudden, the new administration has
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taken a completely opposite view. I mean, this is very difficult to run
9:30
a business, right like if if nothing written changed, if the lawmakers changed
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nothing, and yet the regulators can just take a one pint eighty like,
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uh, who's in charge here? So I think Congress should be pissed.
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Congress was not consulted on this stuff, and yet somehow it happened, all
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right. The second, the third third regulator that matters is the FDIC.
9:50
So of course OCC and FDIC are both federal regulators. OCC regulates federally chartered
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custo. Thanks, but state banks are not covered by that. So state
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banks are still open to work with crypto companies, and in fact many of
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them do. However, now enter in the FDIC, pretty much every bank
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in America is subject to the mercy of the FDIC. And the FDIC has
10:18
also made it very clear that if you touch crypto, we are going to
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scrutinize you, and we are going to look at all kinds of information that
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otherwise we won't and they announced this via letter on April twenty twenty two.
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I think is the data right? So all three of these guys matter.
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So even if you nuke SAB one twenty one, which is getting all of
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the focus and the attention, which is basically this silly, tiny little accounting
10:41
rule that the SEC never should have been allowed to put in play, it's
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not going to change the OCC or the FDIC. We'll fit twenty one actually
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address this. I think actually Congress doesn't matter right now. So I don't
10:56
believe crypto is a partisan issue. I don't think it's a Republican or a
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Democrat thing. You know, some people are thinking that the Democrats hate crypto,
11:05
but that's not really the case. There's a few spot people in the
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Democratic Party that don't understand crypto. They tend to be over the age of
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eighty and they're very negative on it. Okay, one of them is the
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President of the United States. The President of the United States puts in all
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of the lead regulators, Gary Gensler, Michael Schue, Office of the of
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the Sorry Control of the Currency, and also FDC. Right, So,
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basically, what we're at is a world where the only guy that matters is
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Joe Biden and Eve. Even if Congress manages to get a bill to nuke
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SAB one twenty one through both the House and the Senate, Biden will veto
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it anyway. Right, it turns out there's only one guy that matters.
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I know that there's a lot of talk about, you know, who's the
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dictator, but when it comes to crypto right now, Joe Biden is the
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lynchpin. So all right, with that being said, I got to play
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this next clip for you. I think it'll add on to your sentiment.
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Here. Let's go to that climp. People are talking about Biden is too
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old. Hell, I'm older than Biden. It ain't gonna be no other
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Democratic candidate. It's gonna be Biden, and we better know it. They've
12:20
seen President Biden, they've lived through his presidency. They've also seen former President
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Trump. They've lived through his presidency. They've heard these arguments about democracy,
12:28
about the fate of the election, and yet Trump is not only winning,
12:33
but winning increasingly by a larger margin. So what is the plan among Democrats
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to change that trajectory. It sounds like you're talking about saying and doing all
12:45
the same things. But do you believe that something needs to change? I
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think we need to keep working. Sometimes I just wonder I do so too.
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It's too good. It's better than real life. I feel like Mike
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that one Back to Back Seen Waters when she's blowing a kiss to SBF.
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Oh, yes, that's fraud. That would have been a good one,
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you know. So I don't know that would have been a good one.
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Well, I think the point is he is do you think Biden is gonna
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gonna get the nomination? Well, he's got the nomination. Do you think
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he's going to be on the ballot? I should say come November. I
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guess I mostly think that they will swap him out. But to be honest,
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I don't have a I don't have a lot of conviction around it.
13:24
Part of the reason I didn't end up going to this this meeting is because
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you know, look, I would love to help the White House. I
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would love to help Biden have a better understanding of crypto, the advent,
13:37
the advantages it brings to the financial system, and what we're trying to do.
13:41
There's a bunch of stand up people that were in that room that are
13:43
trying to build a better financial system for Americans, and you know, the
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opportuey to help him would be great. But because of where he's at,
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I'm not sure who's the president today and I'm not sure who who's really calling
13:58
the shots behind the scenes. So who do you and go meet with at
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the White House have an impact? And I think that's an important thing for
14:05
people to think about as they think about who should be the next candidate to
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run. Yeah, I think, well, this is something that I was
14:11
concerned with even when we heard that you know this, you know this roundtable
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would would take place, because it sounds to me based on most of the
14:20
tweets and things coming out Anita Dunn, who is basically you know, the
14:24
President's right hand in terms of administrative But one of the notes there at the
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end was Cuban saying that Biden should fire Gary Ginsler, So that kind of
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clarifies that it wasn't in the room. Do you think the SEC has lost
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enough and could it be still a position of the Democratic Party to maybe,
14:43
you know, hand mister Gensler his walking papers before a November election to try
14:48
to win over some of the crypto crowd. You know, if you just
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asked the simple question, well, what happens if Paxos decided to go public
14:54
or if Ripple decided to go public and they walk into the SEC with an
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S one? Are they going to get a fair treatment from the SEC.
15:01
The regulator's job is not to decide I like you, I don't like you.
15:05
Their job is to say, okay, here's your S one. You
15:07
want to go public? Have you done abc D? And make sure that
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the checklist is met, and if it's met, you let them go public.
15:15
But I don't think anyone believes that under Gary Gensler's watch that he would
15:20
give these companies a fair shake exactly. So that's a problem. We need
15:22
regulators that are regulators instead of you know, agents of politicians. So a
15:28
couple of things are happening globally. We've got Mika going on in the EU,
15:31
You've got Japan, Hong Kong, and you look at how far it
15:35
appears to be that the US is behind on almost every front, both in
15:41
Asia and in the EU. Do you think that that is breaking through to
15:46
any of the regulators or the you know, the politicians like Rocana, Do
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they really understand what's at risk right here? I think they are aware,
15:56
and they're getting more aware, but I think also they're they're acting politically.
15:58
Now. Remember Bicco. You know, we are a licensed custodian here in
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the United States under DFS under South Dakota as well, but we're also licensed
16:07
in Germany under Boffin. We are one hundred percent meeker ready today. If
16:11
you're not familiar to the German Boffin regulator is it's kind of like the New
16:15
York DFS of the EU. We're also regulated out of Dubai and out of
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Singapore, so we have a lot of experience with these regulators, not just
16:22
in America but abroad, and the approach to crypto is completely different in America
16:29
versus elsewhere Elsewhere. Wants to attract business to run it properly. They know
16:34
that it's changing super rapidly, and they recognize that that's okay, right,
16:38
Like, all right, this thing is innovative and it's changing, but it's
16:42
better to bring it into your jurisdiction where you can start to look at it,
16:47
understand it, and build better. Now in the case of Tokyo and
16:49
Japan in particular, remember that's where we just had. I just had ten
16:53
years ago. Mount Cox was kind of the first crypto company that really blew
16:57
up in a bad way. Frankly, any amount of trivial oversight probably could
17:03
have caught the failure amount Cox, you know, much much earlier than it
17:07
did and saved millions of dollars of losses. But the Tokyo regulators, the
17:11
FSC there, you know, they long recognize that they needed to make some
17:15
changes. They put in a crypto license long ago, and they require cold
17:18
storage of all of the crypto licensees, and they require a significant amount of
17:23
it go back to cold on a nightly basis for very specific reason. So
17:27
they've been on top of crypto. By the way, I think about a
17:30
quarter of them are using Bichco technology for the cold storage in Japan right now.
17:36
So anyway, Japan's got a long history. It's helped them kind of
17:40
navigate things. They're a very proud country and they're much more advanced than America
17:44
is today in terms of regulatory of crypto Well, they may be getting ready
17:48
to really separate themselves. I want to play a clip for you, especially
17:52
around what the Japanese are doing. Let's take a look, nik, I'll
17:56
performing in the SMP sence then up over fifty percent. The SMP up just
17:59
about thirty six percent since then, a lot of money is going into Japan
18:03
since then, perhaps it has more legs to go. In our view,
18:07
in Japan, there is a plethora of investment opportunities where the return on equity
18:11
has been low for a very long time. That is all changing, and
18:15
it is changing for the first time in more than thirty years. And that's
18:18
so we think that this paradigm shift makes it for such an interesting opportunity to
18:22
invest in this space. And I can I can assure you a lot of
18:26
global investors also find this part of the market very very interesting. The interesting
18:30
things is the Japanese government made vicity as a national strategy. After making the
18:37
waversity as a national strategy, they have already changed somewhe without reguration. So
18:41
crypto currency is cryptocurrency in Japan. It's not security all bucs. All people
18:47
can invest in crypto currency. I got you know, Shira it's certainly start
18:55
to UPI SA save us and we are going to deploy public brochane to get
19:08
over Sony incoming monthsies. But once we launched a chain, I think this
19:12
is the only media one of the biggest project in the wall IBD. Yeah,
19:18
could Tokyo become the next Silicon valley you know here of what we could
19:22
see on you know, real innovation going forward. What are your thoughts?
19:26
Well, Like, Japan has been a big market for crypto for ten years,
19:30
so it's been in the top three four kind of the whole way through.
19:36
I think probably the challenges for Japan involve a little bit more opening up
19:40
on maybe the banking side, making it so that non Japanese can participate more
19:44
easily. It's a difficult market to navigate, and they're competing against you know,
19:48
Singapore and Dubai who are also very much trying to open up and having
19:55
pretty good inroads. Frankly, the the US politicians often worried from uh,
20:00
you know, protecting the United States. But what's going to happen is one
20:06
of two things. Either we figure out how to put sensible regulation regulation in
20:11
play here and then today's most solid markets, which are the US markets can
20:15
start to adopt crypto in various ways, and the world's money comes into the
20:19
United States, right, you know, the US is money goes out of
20:23
the United States. Sure, whether it ends up being Japan that wins,
20:29
or you know, Singapore or Jubai or or you know, maybe maybe even
20:33
somewhere in europ although I guess they're kind of the underdog right now. We'll
20:37
see, but I think there's gonna be a lot of choices, and you
20:41
know, we may see the isolation as a reaction to that, which would
20:45
be just unfortunate for Americans. Americans would just lose all around. Hey,
20:49
Mike, it's been always a pleasure having you on the show. Thank you
20:52
so much for coming in today. We appreciate it. Well, I do
20:56
want to be optimistic and I want to say, like, I think the
20:59
US will figure it out. We're going you know, we have the best
21:03
markets here, and you know, there's a few people in Congress, and
21:07
you know, Biden obviously doesn't like crypto, but it's not a systemic problem,
21:12
so it's going to get fixed. It's going to be all right.
21:15
America's best markets. Yeah, yeah, very cool. Anyway, thanks for
21:19
coming on. The side end of the show today. Appreciate it. Okay.
21:22
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