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Transcript

Crypto vs. SEC U.S. Hearing️🔥Robinhood & Bitcoin ETF Testify️🔥 · The Paul Barron Crypto Show

• 0:05
  Speaker 1: Don't miss it. My name is Small Baron. Welcome back
• 0:07
  Speaker 1: into tech Path. Let's just get started right into the
• 0:10
  Speaker 1: clips today. This is the hearing that was happening.
• 0:13
  Speaker 2: I loved it.
• 0:14
  Speaker 1: Hearing entitled Dazed and Confused breaking down the SEC's politicized
• 0:19
  Speaker 1: approach to digital assets. This is pretty crazy. A couple
• 0:23
  Speaker 1: of SEC formers in here with Michael Liftick, also Dan Gallagher,
• 0:27
  Speaker 1: who's the chief legal compliance officer over at Robin Hood.
• 0:30
  Speaker 1: You also have Fasorrow in there from bit Wise. So
• 0:33
  Speaker 1: there's a pretty good group in here. And then, as usual,
• 0:37
  Speaker 1: we have the naysayers and that's going to come to
• 0:39
  Speaker 1: us today in today's movie coming over from the lecturing
• 0:43
  Speaker 1: fellow from Duke mister Lee Rayner. So let's go over
• 0:46
  Speaker 1: to the first video. Take a look and you'll kind
• 0:48
  Speaker 1: of get a framework.
• 0:49
  Speaker 3: Take a look.
• 0:50
  Speaker 4: I come before you as someone who worked at the SEC,
• 0:53
  Speaker 4: respects the agency and believes in its mission. This approach
• 0:57
  Speaker 4: has stifled innovation, caused companies to move offshore, and ultimately
• 1:01
  Speaker 4: harms US consumer's ability to engage reliably with the industry.
• 1:06
  Speaker 5: My name is Dan Gallagher and I'm chief Legal Compliance
• 1:08
  Speaker 5: and Corporate Affairs Officer at Robinhood Markets, Inc. And I
• 1:11
  Speaker 5: served as an SEC Commissioner and deputy and co acting
• 1:15
  Speaker 5: director of the SEC's Division of Trading and Markets. Unfortunately,
• 1:19
  Speaker 5: the current commission instead wistfully calls on the cryptocurrency platforms
• 1:24
  Speaker 5: and token issuers to come in and register. Robinhood did,
• 1:29
  Speaker 5: and for all our efforts. In return, Robinhood received wells.
• 1:33
  Speaker 6: Notice what message does that send to startups, to developers
• 1:37
  Speaker 6: who want to bring their products into the United States.
• 1:39
  Speaker 7: I think the message is clear, the messages go away,
• 1:42
  Speaker 7: find somewhere else to do. The United States is not welcoming.
• 1:46
  Speaker 8: My name is Teddy Fasorrow, and I am the president
• 1:48
  Speaker 8: of Bitwise Asset Management. We also believe that the approval
• 1:53
  Speaker 8: of bitcoin et apps came too late. We believe that
• 1:57
  Speaker 8: investors will benefit if any more digital assets are approved
• 2:02
  Speaker 8: for trading and listing in such a manner.
• 2:05
  Speaker 1: We've already seen robin Hood really have a fairly good
• 2:08
  Speaker 1: success in the EU and continuing to launch products over there.
• 2:12
  Speaker 1: So it's striking to me that we have to continuously
• 2:16
  Speaker 1: re represent that very case of innovation is moving away.
• 2:20
  Speaker 1: This is a problem in the US. I get some
• 2:23
  Speaker 1: that you know, some of these lawmakers may not be
• 2:24
  Speaker 1: fully aware of this, but it's kind of interesting to
• 2:27
  Speaker 1: see this.
• 2:27
  Speaker 6: Now.
• 2:28
  Speaker 1: What I want to go to next is Lee Reiners.
• 2:30
  Speaker 1: He's talking about the potential or the component of no
• 2:35
  Speaker 1: adoption and no use case. Listen to what he had
• 2:37
  Speaker 1: to say.
• 2:38
  Speaker 6: The crypto industry has resorted to narratives and aggressive lobbying
• 2:42
  Speaker 6: because it has yet to produce a product or service
• 2:45
  Speaker 6: that provides genuine economic utility to most Americans. But the
• 2:49
  Speaker 6: reality is that very few Americans own or use crypto,
• 2:53
  Speaker 6: and among those that do, there's no evidence to suggest
• 2:56
  Speaker 6: that their vote is principally influenced by candidate stance on cryptocurrency.
• 3:01
  Speaker 9: Bitcoin's been around since two thousand and nine, so it's
• 3:03
  Speaker 9: been fifteen years. And you look at most other technological innovations,
• 3:08
  Speaker 9: usually they have a huge adoption, and that has not
• 3:12
  Speaker 9: happened in crypto.
• 3:14
  Speaker 8: Consumer demand for spot bitcoin ETPs has been nothing short
• 3:18
  Speaker 8: of remarkable. They've taken in net inflows of over sixteen billion.
• 3:23
  Speaker 2: Dollars this year.
• 3:25
  Speaker 8: That is the most successful exchange traded product launch of
• 3:30
  Speaker 8: all time, top twenty five fastest growing ETPs of all time.
• 3:35
  Speaker 1: I think, as usual, it shows that Congress is not
• 3:37
  Speaker 1: doing their homework, they continue to not understand where the
• 3:40
  Speaker 1: market is going, and many things that break down within
• 3:44
  Speaker 1: that the years in time that it takes to get
• 3:47
  Speaker 1: a technological advancement really global. I think what we've seen
• 3:52
  Speaker 1: with bitcoin has been already accelerated. But if you look
• 3:55
  Speaker 1: at Web three and a lot of the projects that
• 3:57
  Speaker 1: are really driving blockchain usage as a whole, most of
• 4:01
  Speaker 1: those are less than five years old, and this technology
• 4:04
  Speaker 1: is still evolving, so it's very similar to the early
• 4:06
  Speaker 1: stages of the Internet. And I'll go to this next clip,
• 4:10
  Speaker 1: and this is getting into the SEC talking about their
• 4:14
  Speaker 1: case performance, how they've been doing listening.
• 4:17
  Speaker 10: Which of any of these actions can any of you
• 4:21
  Speaker 10: point to that as you have discovered, were absolutely wrong,
• 4:29
  Speaker 10: that the facts were not correct. Which one would you
• 4:33
  Speaker 10: point out that the SEC was involved with Seedling.
• 4:40
  Speaker 6: Was wrong, as I'll go first, congress Woman, and I'm
• 4:46
  Speaker 6: assuming my fellow panelist would disagree with me on this,
• 4:49
  Speaker 6: so you know, I can't really identify any of course,
• 4:53
  Speaker 6: you know, sort of. The one notable partial loss in
• 4:56
  Speaker 6: the SEC's track record, of course, is the Ripple case,
• 4:59
  Speaker 6: my testimony reveals, But the SEC is simply doing the job.
• 5:02
  Speaker 6: Congress tasked it with. They have no basis to be
• 5:04
  Speaker 6: mad at the SEC for enforcing them. To paraphrase Matthew
• 5:07
  Speaker 6: McConaughey's character in Dason Confused. That's what I love about
• 5:11
  Speaker 6: these federal securities, law Man. I get older, they stay
• 5:14
  Speaker 6: at the same age.
• 5:15
  Speaker 11: Sir Reiners, I hope no one's listening to you about
• 5:18
  Speaker 11: this market, especially as a student trying to understand the space. Frankly,
• 5:22
  Speaker 11: the idea that you could point out that there's only
• 5:24
  Speaker 11: one time that the SEC was even partially wrong has
• 5:28
  Speaker 11: to be willful ignorance. I mean, I don't know how
• 5:30
  Speaker 11: it could be anything other than de seed. I don't
• 5:32
  Speaker 11: It's hard for me to understand because on August twenty ninth,
• 5:35
  Speaker 11: twenty twenty three, the Circuit Court up held a position
• 5:38
  Speaker 11: that the SEC violated the Administrative Procedures Act when it
• 5:41
  Speaker 11: denied gray Scale's application to convert Grayscale Bitcoin Trust into
• 5:47
  Speaker 11: a Bitcoin ETP. Was a pure rebuke. Lawyers would normally
• 5:52
  Speaker 11: get disbarred for the conduct of SEC in the debt
• 5:56
  Speaker 11: Box case. So there are lots of cases where they've
• 5:59
  Speaker 11: been caught and told that they were wronged by the courts.
• 6:02
  Speaker 6: So it's important to note that the SEC is, in
• 6:04
  Speaker 6: my opinion, doing their job as a cop on the beat.
• 6:07
  Speaker 6: But with crypto it's very hard.
• 6:09
  Speaker 10: The law is the law, and the SEC is right
• 6:12
  Speaker 10: to protect investors when you break it.
• 6:14
  Speaker 3: Thank you, and I yo back.
• 6:15
  Speaker 12: But in my opening statement I reference to the legal
• 6:18
  Speaker 12: face plants the Commission has repeatedly had before federal courts.
• 6:23
  Speaker 1: All right, I like that last statement. Legal face plants
• 6:25
  Speaker 1: for sure has been the case, and the SEC has
• 6:27
  Speaker 1: been a continuous losing streak in terms of digital assets
• 6:32
  Speaker 1: and their position upon them. Here's Stuart aar Loroadi talking
• 6:34
  Speaker 1: a little bit about this, the SEC finally admitting their
• 6:37
  Speaker 1: number one, their crypto asset security statement is a made
• 6:40
  Speaker 1: up term and number two. To prove a crypto asset
• 6:43
  Speaker 1: security is an investment contract, the SEC needs evidence of
• 6:46
  Speaker 1: a bundled contracts. Obviously none of that has ever happened.
• 6:49
  Speaker 1: So continuous, and we've shown this and talked about this
• 6:52
  Speaker 1: quite a bit before. It continues to show I think
• 6:56
  Speaker 1: the position of the overreach that we've continued see coming
• 6:58
  Speaker 1: out of the SEC itself. Now I want to go
• 7:01
  Speaker 1: over to this other clip because we're going to get
• 7:02
  Speaker 1: into another layup here I think from Richie Torrez and
• 7:07
  Speaker 1: I love this one. Let's take a look.
• 7:09
  Speaker 13: Does the term digital asset security appear anywhere in any
• 7:11
  Speaker 13: rule promulgated by the SEC? No, sir, did the SEC
• 7:15
  Speaker 13: invent the term out of thin air?
• 7:19
  Speaker 2: They certainly created it.
• 7:20
  Speaker 13: In a recent court filing, the SEC apologized for using
• 7:23
  Speaker 13: the term correct digital asset security because it's misleading. Is
• 7:27
  Speaker 13: that correct?
• 7:28
  Speaker 5: I saw that, Yes, you know, found it very odd,
• 7:31
  Speaker 5: you know, admission by the Commission that they've been using
• 7:35
  Speaker 5: this this term, you.
• 7:37
  Speaker 2: Know, basically out of thin air.
• 7:39
  Speaker 5: And if you recall the judicial decision in the Ripple
• 7:43
  Speaker 5: case said that secondary market transactions do not give rise
• 7:46
  Speaker 5: to investment.
• 7:48
  Speaker 6: Is this simply an argument for us to pass FIT
• 7:49
  Speaker 6: twenty one?
• 7:50
  Speaker 2: Well, I think I think you need to pass Fit
• 7:52
  Speaker 2: twenty one.
• 7:53
  Speaker 1: Regardless, because I think, yes, there's many arguments around Fit
• 7:56
  Speaker 1: twenty one. And I think that is going to be
• 7:58
  Speaker 1: the big setup for Congress. Whether it happens in this
• 8:02
  Speaker 1: next session or if it happens in early twenty twenty five,
• 8:05
  Speaker 1: we'll find out. But I think we're going to see
• 8:08
  Speaker 1: a landslide of crypto regulation starting to make its way
• 8:11
  Speaker 1: through now. Of course, there's always got to be the
• 8:13
  Speaker 1: naysayers that kind of support the guys that don't know
• 8:16
  Speaker 1: what they're talking about on especially when you look at
• 8:19
  Speaker 1: what was going on in this particular hearing, and it's
• 8:22
  Speaker 1: always the same guy. It never fails. So we have
• 8:25
  Speaker 1: to introduce mister Sherman.
• 8:27
  Speaker 12: It works for soups, it works for nuts, it works
• 8:31
  Speaker 12: for bonds, it works for stocks. On mister Reiner's, does
• 8:36
  Speaker 12: the American court system work? Yes, that's an easy answer. Okay,
• 8:50
  Speaker 12: let's see. Would any of you support legislation that would
• 8:54
  Speaker 12: just eliminate this whole controversy and just declare that crypto
• 8:59
  Speaker 12: is a secure If you're in favor of such legislation,
• 9:02
  Speaker 12: please raise your hand. I'll point out that one witness
• 9:06
  Speaker 12: raised his hand.
• 9:08
  Speaker 1: These people, these people, I don't understand this anymore. It
• 9:12
  Speaker 1: just it's it's chaos. It's chaos up there. Wiley and Nicol,
• 9:15
  Speaker 1: of course, had some statements. He wanted to add in.
• 9:18
  Speaker 1: We're going to hopefully have Wiley on. Mister Nichol, I
• 9:22
  Speaker 1: should say on the show here very soon, and he
• 9:25
  Speaker 1: talks about SAB one twenty one listening.
• 9:29
  Speaker 14: Can you provide us with some insight as to why
• 9:31
  Speaker 14: the SEC would approach SAB one twenty one in this manner,
• 9:34
  Speaker 14: and what's the impact of this confusing approach.
• 9:38
  Speaker 7: So, unfortunately, I can't provide much insight as to why
• 9:40
  Speaker 7: the SEC is pre sedding this way because it is confusing.
• 9:43
  Speaker 7: What we're left with is quote, non binding staff guidance
• 9:46
  Speaker 7: in the form of SAB one twenty one that has
• 9:49
  Speaker 7: been updated by a non binding staff speech that suggests
• 9:54
  Speaker 7: that there may be exceptions to SAB one twenty one,
• 9:57
  Speaker 7: as well as one off conversation with the SEC's staff.
• 10:02
  Speaker 7: This is not clear at all.
• 10:04
  Speaker 13: Correct me if I'm wrong. Did FTX put custodial assets
• 10:07
  Speaker 13: on its own balance sheet?
• 10:09
  Speaker 2: I believe so?
• 10:10
  Speaker 7: At least there are a lot of.
• 10:11
  Speaker 13: Things, isn't That isn't ironic that SAB one one contains
• 10:14
  Speaker 13: a cruel irony that it's asking banks to do what
• 10:18
  Speaker 13: FTX did, which has put custodial assets on its own
• 10:22
  Speaker 13: balance sheet?
• 10:23
  Speaker 1: All right, So you can kind of see there's a
• 10:25
  Speaker 1: lot of confusion in this whole idea around how the
• 10:28
  Speaker 1: SEC is trying to articulate many of these rules and
• 10:31
  Speaker 1: laws and legislative tracks that they've been continuously peppering the
• 10:36
  Speaker 1: industry with So the fact I think is now that
• 10:39
  Speaker 1: Congress is may be educated enough to where they've just
• 10:41
  Speaker 1: kind of thrown their hands up and said, yes, clear,
• 10:43
  Speaker 1: we have a rogue entity out there in the SEC,
• 10:46
  Speaker 1: and we're going to get that stopped, hopefully with some legislation,
• 10:48
  Speaker 1: because I think that's going to be the only way
• 10:50
  Speaker 1: actually it takes case. And with that, there's of course
• 10:55
  Speaker 1: some other scenarios that are playing out right now in
• 10:57
  Speaker 1: the n FT space, and it may open up up
• 11:00
  Speaker 1: some opportunity here, So take a look.
• 11:02
  Speaker 14: On August twenty eighth, Opense, one of the leading NFT marketplaces,
• 11:06
  Speaker 14: received a wells noticed from the SEC, threatening to sue
• 11:08
  Speaker 14: the firm for hosting unregistered securities on their platform, and
• 11:12
  Speaker 14: on Monday, Flyfish Club settled with the SEC forever seven
• 11:16
  Speaker 14: hundred fifty thousand dollars for an NFT offering that simply
• 11:19
  Speaker 14: allowed for exclusive restaurant access. In these cases, did the
• 11:24
  Speaker 14: SEC articulate a standard that they employed to determine whether
• 11:27
  Speaker 14: the sale of an NFT is considered a securities transaction.
• 11:31
  Speaker 4: The challenge is that we consistently analogize to Pokemon cards collectibles,
• 11:36
  Speaker 4: whether it's arts or watches or baseball cards, and we've
• 11:40
  Speaker 4: not heard a compelling response to that out of the SEC.
• 11:44
  Speaker 13: When mister Genser was a testifying before the Financial Services Committee,
• 11:47
  Speaker 13: I asked him whether the sale of a Pokemon card
• 11:50
  Speaker 13: constitutes a security transaction, and he said no. I then
• 11:54
  Speaker 13: asked him whether the sale of a Pokemont card via
• 11:57
  Speaker 13: the blockchain, whether that constant to security transaction, and he
• 12:03
  Speaker 13: equivocated value if a Pokemon card does not depend on
• 12:06
  Speaker 13: Pokemon Corporation. That's right, it's a collectible.
• 12:10
  Speaker 6: That's right.
• 12:11
  Speaker 13: I'm done, thank you.
• 12:13
  Speaker 14: My proposed legislation, the New Frontiers and Technology Act, seeks
• 12:17
  Speaker 14: to address Chairgensler's unjustified assault on non financial en fts
• 12:21
  Speaker 14: by exempting them from securities regulations.
• 12:24
  Speaker 1: So that's going to be a big one, and it
• 12:26
  Speaker 1: is on the agenda there that they were talking about today.
• 12:28
  Speaker 1: Here's his bill that's coming in. He's going to be
• 12:32
  Speaker 1: proposing that, mister Timmans New Frontiers and Technology NFT Act.
• 12:35
  Speaker 1: Maybe we get a little bit of a head run
• 12:37
  Speaker 1: on what's happening in MIKA and in the EU, but
• 12:40
  Speaker 1: unlikely with the speed in which Congress addresses these things.
• 12:45
  Speaker 1: Of course, all this is still up in the air.
• 12:47
  Speaker 1: But I do think we are getting some attention in
• 12:50
  Speaker 1: a big way. And of course the key here is
• 12:52
  Speaker 1: having lawmakers that actually care about Americans, care about companies
• 12:57
  Speaker 1: and innovation and jobs, and can execute on their job
• 13:02
  Speaker 1: in Congress to get it done. I'll leave with this
• 13:05
  Speaker 1: last clip.
• 13:08
  Speaker 3: How are you Are you a crypto attorney?
• 13:12
  Speaker 4: I am a securities a lawyer.
• 13:15
  Speaker 10: How are you related to crypto? Are you advocating for
• 13:19
  Speaker 10: robin Hood? Is that what you're doing?
• 13:21
  Speaker 5: Yes, Ranking Member Waters, I'm here on behalf of robin Hood.
• 13:24
  Speaker 10: Robin Hood is attempting to get what license for crypto.
• 13:29
  Speaker 5: We were a ranking member for a good part of
• 13:32
  Speaker 5: twenty twenty two and into twenty twenty three.
• 13:35
  Speaker 3: So robin Hood been turned down, turned back?
• 13:40
  Speaker 2: Correct?
• 13:40
  Speaker 3: Why?
• 13:41
  Speaker 5: I don't have the rationale. We didn't get an explanation.
• 13:45
  Speaker 2: We just got a stop sign.
• 13:47
  Speaker 3: That's odds.
• 13:48
  Speaker 10: You don't know why your client was not licensed TETU
• 13:53
  Speaker 10: for cero. How are you involved with crypto?
• 13:59
  Speaker 8: I'm the president of a digital asset and cryptocurrency asset
• 14:03
  Speaker 8: management firm.
• 14:04
  Speaker 3: Do you believe there needs to be serious guard rails
• 14:09
  Speaker 3: with crypto to protect the investors?
• 14:12
  Speaker 8: We do, and we think that the exchange traded product
• 14:15
  Speaker 8: or exchange traded fund provides a lot of those benefits.
• 14:19
  Speaker 10: Do you agree with any of the actions that have
• 14:22
  Speaker 10: been taken or you disagree specifically with any of the actions.
• 14:26
  Speaker 8: I don't agree or disagree with any of the specific
• 14:29
  Speaker 8: actions you mentioned. I'm not a lawyer or a specialist
• 14:32
  Speaker 8: on enforcement actions.
• 14:34
  Speaker 3: Thank you very much. Can you go back to balance
• 14:37
  Speaker 3: of my time?
• 14:38
  Speaker 1: Yes, so that's good. I think term limits are now
• 14:41
  Speaker 1: and should be in order for situations like this. I mean,
• 14:45
  Speaker 1: you've got to be able to do the research and
• 14:46
  Speaker 1: really understand what's happening within these things to really make
• 14:49
  Speaker 1: a difference, because these are real serious issues that need
• 14:52
  Speaker 1: to be addressed by Congress. We'll continue to cover this
• 14:55
  Speaker 1: and much more. A lot is happening this week, of course.
• 14:58
  Speaker 1: We've got things with oh gosh, it's a Salona breakpoint.
• 15:01
  Speaker 1: We've got the FED decision coming out. Just came out,
• 15:04
  Speaker 1: So be on the look here. If you guys are
• 15:05
  Speaker 1: not in the diamond circle, get in right now. We
• 15:07
  Speaker 1: always leave a link down below. Catch me on X
• 15:10
  Speaker 1: at Paul Barron. We'll get to catch you next time.
• 15:12
  Speaker 1: Right here on Techpath