Bankless - 100M$ Fight for Crypto in D.C. with Ryan Selkis

Episode Date: June 7, 2023

Today we're joined by Ryan Selkis, the Founder and CEO of Messari and an outspoken political advocate for the crypto industry. We explore the current state of Crypto Regulation and how Ryan plans to fight in Washington with the Digital Freedom Alliance. ------ 📣 ASYMETRIX PROTOCOL https://bankless.cc/asymetrix  ------ 🚀 Airdrop Alpha is waiting for you on Bankless.com  https://bankless.cc/Alpha    ------ BANKLESS SPONSOR TOOLS:  🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2     🦊METAMASK LEARN | HELPFUL WEB3 RESOURCE https://bankless.cc/MetaMask   ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum   👾STADER LABS | ETHX LIQUID STAKING https://bankless.cc/Stader   🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/Toku   🎮IMMUTABLE | GAMING ECOSYSTEM https://bankless.cc/Immutable   🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle   ------ Topics Covered 0:00 Intro 9:34 Does Washington Want to Kill Crypto? 15:45 How the US Affects Global Regulation 27:54 Ryan Selkis Proposal 43:10 What we can learn from SBF 51:20 The Digital Freedom Alliance 59:08 Why we have to Play Politics 1:03:49 What’s Next 1:08:00 Closing and Disclaimers ----- Resources: Ryan Selkis https://twitter.com/twobitidiot   Join the Digital Freedom Alliance https://joindfa.org/  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures 

The $100 million fight for crypto in Washington, D.C., that's what Ryan Selkis, our next guest, feels like we need in order to take this battle to D.C. and to win. Some questions we had for him in this episode, can we actually raise $100 million to fight for crypto in D.C.? What would that even look like? What would we spend this on? Is the U.S. really the place we should fight? I thought crypto was international. Why do we need money in politics to fight this fight anyway? We talk about the window of opportunity to actually get this right. Ryan Selkis thinks, we have a very narrow window in which to deploy these funds or else we lose the opportunity. And then we get to Ryan's proposal for a new organization that he is creating to help win this

fight in D.C. David, this is the year of regulatory. It's 2023. I feel like that's been a major theme for the year. And that's why this episode is important. Yeah, it's been the year of bad regulatory guidance, bad regulatory oversight. And Ryan Selkis wants to make it the year of good regulatory oversight with what he is proposing here with a digital freedom alliance. But Before we get into that conversation with Ryan, I want to talk to you about asymmetrics protocol with our friends and sponsors at asymmetrics. If you are familiar with pool together, it's quite like that except with eth staking. So what does asymmetrics do? Is that just 4.5 to 5% eith staking yield just too boring? How does anywhere between zero and 99% sound? Because that is what you

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It's bankless.cc.c. slash asymmetrics. Or you can follow them at Twitter at Asymmetrics underscore Eath. David, $100 million is pretty ambitious here. But Ryan makes a great case for why we need that much. What do you think of his plan? I think bankless listeners who are going into this episode, I think the imagination that they could strike is like, hey, you know how good SBF was at playing the D.C. game?

He was very good at it. He was very, very effective. Sadly, he was a fraud. What if SBF was playing the game actually in line with Crypto's interests? That is the question that Ryan is presenting to the industry saying, hey, we need to do the thing that SBF was doing, but for the good guys, for us, for our own interests. It's the correct game to play. And it's that we have a very small window of opportunity to play it.

And we need to be effective because if we lose the game, unwinding that game, this game of playing the political fight in D.C., it's a one to two year-long game. If we lose that game, it is 10 years of repair and going backwards in order to get back to where this industry needs to be. So Ryan makes a very strong case that now is the time and DC is the place. And so I think that's kind of the imagination now I leave with listeners. It's like, man, what if SBF was a good guy in DC and he actually had fought for our interests? How nice would that have been?

Ryan's proposing that we do that, sadly, a year or so late, but regardless, it's the right place to be. I think he makes a great case for that. And if you think that doing nothing is a viable strategy, I think you should listen to Ryan's case for why it's not a viable strategy, how doing nothing leads to more SBFs actually stepping in to D.C. And representing us in ways that we might not want to be represented. So we get into all of that today.

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in the space. Protocol Labs, Hedera, Gitcoin, and many more. So transform your employment and token payroll operations with Toku. You can reach out to Toku at Toku.com slash bankless or click the link in the show notes. Bankless Nation, I would love to introduce you to Ryan Selkis, the founder and CEO of Misari. Also, an outspoken political advocate for the crypto industry, which is in short supply these days. And he is here to propose something new for crypto's fight in Washington. Ryan, welcome back to Bankless. Always going to be here, guys.

So if you're holding up well. Ryan, are you picking a fight for us? A little bit. And you know me. I feel like I mix it up with different. folks on different occasions throughout the years. This is year 10 for me within crypto. And I would like to think that at this point, my staying power and the fact that I'm still around and still have a few friends in the industry means that I've been picking smart fights over the years. And I think that this is

just the most recent smart fight that is worth fighting down in DC. And a lot of it is damage control and just resetting the narrative post-FTS collapse in November. I think we took a huge hit, I think, DC moves slower and public sentiment move slower than crypto does. So as focused as people are within the industry on moving forward, on building our way out of this, and getting to the next milestones and kind of next killer apps and laying the foundation for all the infrastructure improvements that have come out between e-scaling and all the roll-ups chains that have launched, we are still feeling the after effects of FTX from a public policy standpoint. And we probably will be for some time. So there's a couple of ways out of that. And I think,

there is a general lack of understanding within the crypto community as to how public policy works, and in particular, like, how DC works. And what I hope to do today is basically talk about some of those misconceptions and potentially some of the solutions that I do think are going to require pretty proactive engagement and not just taking a step back and saying, you know, oh, it's fine. The rest of the world will move on and the U.S. will be left behind. Or, you know, we're just going to focus on the tech and we don't really need to engage with policymakers. I think both of those are incorrect. And I think you've got a couple of guests on from the regulatory sphere that have said as much.

But even from a crypto-native standpoint, I would try to make that argument and maybe first fact from fiction in terms of what's going on and what's going to get us to the other side of this bear market. Let's start with the first fact from fiction question. Right. I think you've basically said, and this may be a direct quote, Ryan, Washington wants to kill crypto. Do you think that's hyperbole or do you think that's really the case? Like, is something different about 2023 where Washington has taken this, I'm not just going to stifle crypto, we actively want to kill it? Of course, Washington is a complex beast. So you can't talk about every faction wanting to kill crypto. Maybe you're just referring to a specific contingent,

but tell us about that. Does Washington want to kill crypto? I don't think everybody in the crypto industry feels that way. Well, if you're talking about Bitcoin and you're talking about the government's version of crypto, then I think there's probably some shades of gray, right? The government doesn't necessarily want to, or they won't at least overtly say that they want to kill those upstarts or those more established projects. They might be focusing on, okay, how do we make sure that we prevent another situation like FTX? How do we ensure we prevent another situation like Terra? But for all intents and purposes, the folks that matter in D.C. right now are in the Biden administration of the financial regulators, right? We've seen what's happened in

past few months with chokepoint 2.0 and the debanking issues that many companies have had in the industry. We've seen this personally, you know, at the Missouri level and this new entity, Digital Freedom Alliance that we're talking to banking partners. And even for pretty plain vanilla organizations that are crypto adjacent that don't actually process transactions that don't actually touch native assets, it's still a challenge to get through the compliance process, you know, for banking. On the SEC side, I think that ground has been well-trotted. What is this security versus a commodity versus a currency. Chair Gensler has his knives out for the industry.

And that's going to impact basically every asset not named Bitcoin. And he's even extended, in fact, and the SEC has extended to claiming that stable coins are somehow part of their purview. And then I think when you talk about the other miscellaneous regulators, whether you're talking about the Fed and Treasury, they'll talk about financial stability, they'll talk about national security. We don't have a lot of friends within the Biden administration right now. That's just the ground reality.

to your point, Washington is not a long way. There are folks on both sides of the aisle. There are folks in different generations, not just in terms of age, but in terms of experience and kind of like old school, new school, where do they come from politically, that are very mixed on crypto. And it is fairly split, or at least it seems like it's fairly split between what I'd call the ones and the fives, right? The ones being the Elizabeth Warrens of the world, the Brad Sherman's of the world,

that just want to outright kill this and recruit their anti-executive. crypto army. Then there's the fives. Maybe that's the, you know, the Tom Emmer's, the Rokanas, the folks that are really good and tempered in terms of thinking about how to regulate crypto. But the reality is that the vast majority, you know, 80 plus percent of representatives in Congress are somewhere between two, three and four. And most of the time, they're at a three because they just don't care and they kind of think that crypto is already dead. So I think, I mean, you guys have done a couple episodes on X-Risk with AGI, right? Like the X-risk with AGI is not that these like AGIs are and they want to squash everything.

It's that they just don't care. Like, you know, we're like ants. And there's like, there's a little bit of that that you can analogize to in D.C., which is they see the five bullets like what has happened in the last year. They think this is bullshit. We have to fix this. And they don't really take the time necessarily to get into the minutia and the details, many of them.

And so what may happen if we are not coordinated and highly engaged in D.C., the next 12 to 18 months is they're just going to steamroll over some of that nuance and ultimately create structures that are going to be untenable for the industry in the U.S. for years to come. And I think we do have a very short window. I think the 2024 election is very important. And I think the work that we do in kind of resetting the narrative and reestablishing trust and in some cases self-regulating or at least trying to act according to the spirit of existing consumer protection laws is really going to dictate what type of long-term outcomes we have in the

We can have a global conversation that's adjacent to that, but I think about the U.S. as in the medium term, a 2x delta in crypto success. You know, we have the first, second, fourth, fifth, tenth amendment, you know, on our side. We have a pretty libertarian populace. We've got the largest tech economy in the world. We've got the largest financial markets in the world. We've got the reserve currency. You know, if the U.S. is hostile to crypto versus friendly or least. common sense in its approach of crypto, you're talking about a 2x in market size, one way or the other.

So I think the risk that Washington kills crypto is not necessarily that it comes down, top down, evilly, and says, you know, I think that might be a little bit of tinfoil hat territory. But I think the reality is more likely that they just see the risks here, a lot of other big problems that we need to focus on. We're going to steamroll over it. And then in the process, we as an industry will have lost a pretty critical foothold that I think people underestimate in terms of the U.S.'s importance in the crypto economy, in the medium term, and basically what a hostile U.S. would do in having the potential for the market in the next five years if things go the wrong way.

I just want to capture that last point because this isn't just about the United States. I mean, some people might be listening to this and being like, Ryan, crypto, like, get out of your American bubble, man. Like, crypto is a global movement. Okay. Yeah, America has the problems right now. but America is not the rest of the world. But I think you just made the case that the U.S. actually is the hill to die on, at least for crypto. Can you get into that a little bit more? Can you kind of reinforce that case?

Why does what happens in the United States matter globally? Doesn't America just get left behind and crypto innovation moves elsewhere and so we soldier on? Why take this fight to Washington so hard? I mean, I think you have to just be realistic about where funding comes from, around where demand has come from historically and where a good chunk of development is right now. And then also which nations have the rule of law and kind of the existing societal norms that are going to foster innovation in an area like crypto. And the easiest way to do that is to look just very simply, China, US, Europe, rest of world, right? Do you want to be building decentralized technologies

behind the great firewall of China? And do you think that that ultimately is going to be a healthy market for technologies that decentralized power, that decentralized authority, and that ultimately empower individuals to make private transactions or own their own data

or otherwise kind of live as self-sovereigns? That's a pretty easy yes or no question. I'll leave that to the listener to decide, but I think that it's so much straightforward. Another court of the world you can break down as European. And I think Europe is actually an area that we've made some progress from a regulatory standpoint. I'm not totally convinced that we're going to love all the solutions that come out of Europe.

If you think about what's happening with MECA right now, there are restrictions on, you know, how much you can have in self-custody accounts. There are going to be disclosure requirements. There are already tremendous speech restrictions in the EU, whether you're talking about, you know, just the drama last week with Twitter and the disinformation issues that they have. the Ministry of Truth, you know, as it were in the EU, if you're thinking about the health of the euro and just like the governance issues that you have in the European Union, I don't think you want to put all of your eggs in that basket. And so then you're basically left with half of the global economy,

you know, 25% of it being the U.S., 25% rest of world. We should focus on, I think, Europe and the U.S. I'm an American, you guys are American. So I kind of feel like the EU is run by technocrats and Mika is already fairly far along, so we're just going to have to adapt to that kind of post-MECA world in the crypto community. The other half of the world and the one quarter and one jurisdiction that we can actually control and make an impact is going to be the U.S. And given the U.S. is outsized dominance in financial services and technology, the rest of the world will more likely than not follow some of the U.S. regulatory model and the EU regulatory model, then they will kind of bootstrap their own. And if they do bootstrap their own, is it going to be adopted by similar countries, or is it more likely

that them going their own way, like El Salvador, is a good example, like, are they going to create risk for themselves with the IMF, with the other kind of global power structures that just dwarf them in size? And I think that's a pretty hairy question that some emerging economies are going to have to wrap their heads around is, you know, do we want to gravitate towards the U.S.? Do we want to gravitate towards the EU? Do we want to gravitate towards, you know, China? Like, who's meta rules are we ultimately going to think about playing by when it comes to international finance and tech. And I think it will be the exception, not the rule, that smaller countries will go their own way. What you'll instead be left with is, you know, some version of the U.S. crypto rules or some

version of the EU crypto rules or the Chinese crypto rules will ultimately be what are enacted by and that people follow internationally. So what we need to do is we need to make sure that the U.S. is the most laissez-faire of those major three markets so that it can be, I think, a great, gravity well or magnet for some of these other developing economies to adopt their models and ensure that we actually have the ability to build self-custody and advance some of these kind of new applications that we've been working on. I also want to just grab one other point. It also seems like there might be just a small window of opportunity in which to do this

and get it done because once legislation is in place, it's very difficult to kind of roll back. And we're seeing Mika's in place. China already has its posture on crypto, which has basically been previously. to ban it unless they reverse course. And now there's the U.S., which is still unwritten. The future is still unwritten here. But you can't imagine it going five years from now and still like the U.S. hasn't weighed in on this crypto thing, right? Like they're going to have to do something within the next five years. So that feels like there is a maybe shrinking window of opportunity to get something done and to do it well in the U.S. Would you agree with that?

I think it's a very short window of opportunity. Sentiment is temporary laws permanent. It is very difficult to get old laws off the books. It's difficult to pass legislation. It's arguably even more difficult to repeal or alter existing laws. And you just think about how many years we've been talking about, hey, we need common sense frameworks in the U.S. for crypto. The asset class is swollen to, you know, over a trillion in size. You have hundreds, you know, over $100 billion of euro dollars that are digitized. and trade it on chain. And there's no federal legislation or really anything that's close to federal legislation right now on crypto. That is going to come to a head at some point. And it's

either going to come to ahead because the executive branch will seize control and basically do everything in its power to stamp out anything that isn't overtly regulated and doesn't fit within existing, you know, regulatory norms. Which is the default if legislation doesn't happen. Yep. And then there's bad legislation that would be. potentially cripple out of the industry. So we really need to thread the needle here in terms of getting good kind of narrow legislation that can eke out iterative progress. A couple of months ago, I had written a letter to a number of senators and congressmen just kind of laying out, you know, fact versus fiction and also, you know, what do we need to see in terms of a public policy

framework that will help advance the industry and America's interest in being a dominant player within the crypto market for years to come. And I think most others, it kind of breaks down into three subpieces of legislation. And one of the problem, as everybody's trying to have this universal theory of everything for crypto. And it's an emerging market that's just not going to happen right now. If instead we broke it into three pieces, perhaps, stable coins, market structure, which would basically be how do you handle exchanges and custodians? And then how do you handle the assets?

Right. So three different pieces. I think we could thread the needle and we could have really positive public policy frameworks in the U.S. That foster innovation, that extend the dollar's dominance because you continue to ensure that the U.S. dollar and U.S. dollar denominated stable coins are the reserve currency for crypto, and you make sure that you safeguard investors and avoid blowups akin to FTX and many of the other issues that we saw largely international, right? So I think the highest probability

legislation that could be passed in the next couple of years would probably be around how do you regulate stable coins and how do you regulate exchanges, custodians, and the like. And by the way, this was something that, you know, with the DCCPA, the Stabin-Ozman bill last year. There was a lot of noise around this. You had the famous debate between, you know, Eric and Sam. That bill, I don't think people appreciate, like, you're always like a few sentences between like a really shitty piece of legislation and like something that can actually be positive and workable. And the issue with the DCCPA last year was, particularly with the reaction from the crypto community, people were looking at a draft piece of legislation that was still getting the fine-toothed comb and

and people were arguing about the words and trying to make sure that they were technically accurate, that the spirit of what the legislators were trying to do was consistent with the actual letter of the law that was written and basically changed the several sentences that would make a good market structure bill, a good stable coin kind of legislation would make it work without crippling defy or pushing every single crypto asset through the SEC or something similar. And we didn't get there for numerous reasons, not the least of which was, you know, events of November and FTX's collapse, I think, through cold water on any forward progress that we had there.

But I do think that there were four pieces of that legislation. There are core pieces of a couple of other pieces of legislation that have been sponsored by Tom Emmer and Chair McHenry and Axine Waters. I think I have good stable coin legislation. These things aren't that far away, but some of the splits that we see, it takes time, energy and attention to actually close those gaps. And that's what I think is working against us right now is, you know, generally speaking, I think the Democrats are okay with the status quo because they feel like Gary Gensler and the financial regulators are clamping down on the industry and making

sure that it can no longer do any harm. But some of the more forward-thinking legislators are trying to say, we would like to actually come to a compromise here. We'd like to set some clear guidelines. And we would also like to ensure that we're not just delegating public policy that's going to have a long-term economic impact to one man that's temporarily heading a regulatory agency and grabbing as much power as he possibly can. So to come full circle, one of the reasons that I'm spending more time, and I'm sure we'll talk more about this maybe as a segue, but one of the reasons I'm spending more time kind of formally on public policy is how do we call attention to some of this overreach in a constructive way? And then how do we advance our own narrative?

So it's not just the crypto community, you know, whining about getting regulated after all of the sins of 2022. That's just not going to play in D.C. It's not going to play in Europe. It's not going to play anywhere. I think everybody recognizes that a redux of 2022 in a future market cycle is not a scenario that global policymakers are, you know, going to allow. And they will deputize anyone that they believe is going to prevent it. And right now, that's Chair Gensler, that's Chair Burenberg from the United States. the FDIC to a certain extent through choke point and a couple of the other regulators. So our only hope right now actually makes some forward progress between now and 2024 election is a bipartisan, stable coin or market structure bill that solves some of these jurisdictional issues or some

changes in many cases generation change in D.C. in the next 2024 election. So it's a long time to wait by crypto standards to feel like we're in a holding pattern. So I used to take consolation and the idea that it's not as impossible to ban crypto. You only ban your citizens from accessing crypto. And if America was going to just shoot itself in the foot and ban crypto, then so be it. But I now take the perspective that America banning crypto is the fight. Because if America leads by example and does great legislation and great leadership, and we as the crypto industry get to advocate for ourselves inside of Capitol Hill, inside of Washington, then the downstream net effects of that are significant. If we win this fight, we win 10, 15,000.

20 other fights across the globe. And so I think what you're saying, Ryan, is that it behooves the crypto industry to make the full court press here and now inside of Washington. And I think what you're also saying is like not only is the battleground, the correct battleground to fight America, but also the time is now. This is not something that we can choose to wait on. The vultures are circling. Decisions are going to be made in the next two years around those three things that you outlined, market structure, stable coins, and the nature of assets. And so what you're saying is like, this is the moment for the crypto industry to make a full court press because, like you said, laws tend to go one way. They get approved and then they don't get pulled back. And so my question to you is like, well, okay, great. I think we, at least part of the crypto industry would accept this. And that's why we have things like Coin Center and blockchain association and all the other crypto advocacy groups in Capitol Hill. So what are you proposing that's different? What are you coming to the table with that is unique from all the other efforts? that we've already had in this crypto industry.

So great question. So I think a lot of these other organizations are doing great work. And they will be the first ones to say where there are gaps in the market today. So taking a step back and then I'll drill down into what we're doing with Digital Freedom Alliance, this new 501C4 that we just started. In order to win over the next 18 months, hold the line, advance some positive narratives of the industry, potentially advance some positive legislation, and continue to elect more pro-crypto members of Congress.

what we're going to need is around $100 million of total spent, right, for that campaign. A hundred million. Yeah. And I think we're probably about a third of the way funded to that. No. Well, I mean, if you think about the annual budgets of not the organization I'm talking about, I'm talking about the top down, right? The top down approach, right?

So if you think about the operating budgets for Coin Center for the Crypto Council for innovation, for blockchain association, if you think about the in-house policy spend and lobbying that's going on at some of the corporates. And you just kind of tally all that effort. It's probably around, you know, $30 to $40 million. And last year, you know, that's not that big a difference year over year if you take out FTX, right? So kind of the status quo is intact. So just to drive that point home, the crypto industry spends about $30 to $40 million in advocacy in Capitol Hill is what you're saying collectively. I would say last, you know, post-influctor bill, I think, yeah, we got up to that level. So last year, I'd say that.

That's about the right number. I think this year is probably similar. And the way that that breaks down, ideally that $100 million, you have the status quo with the trade associations and the advocacy groups that are just doing like the shoe leather lobbying, right? They're meeting with members. They're trying to educate members about what is defy, what is self-pastity. How does the tech work? Why are these things important?

How does this already fit in some cases into the current, you know, public policy framework and regulatory framework? And it really historically has been, I'd say, 90 plus percent's education and advocacy, right? And I think that's really important because you're talking about a novel tech and you're talking about, you know, why should you care about this? Why is it important for American competitiveness? Why is this good for consumers? And basically, you know, painting the picture of, okay, what does the world look like in five, ten years if we can allow these technologies to thrive, but also safeguarded consumers and individuals? and what does it look like if we just push everything offshore, which is kind of the current direction. So that's basically like education advocacy and kind of tech 101.

And when you say education advocacy, you're talking about education to political leaders, to regulators. This is not like to lawmakers, to folks in Washington, D.C. Another problem that has emerged that sometimes part of that bucket of what the trade associations or groups like Coin Center will do is litigation finance. And this is essentially just like holding the line. and challenging some of the overreach that we've seen from the financial regulators, right? You can probably put another $10 to $15 million in that bucket, but some of the cases like Ripple's own case are orders of magnitude more expensive than that.

But there's probably about half dozen to a dozen cases, you know, all of which are going to cost, you know, probably on average about a million dollars because they're smaller scale, just to actually hold the line and check the overreach of some of these regulators and, you know, basically call balls and strikes or try to avoid negative press. just because people aren't paying attention, right? So a good example would be the Wahi case with Coinbase and all the briefs that you saw from friendly entities and from some of the pro bono work that came in from different groups to actually challenge some of the claims that the regulators

were making in that case so that it didn't create poor precedent and push us further in the direction of, okay, this is tech that should be treated as, you know, securities issuance technology and everything should kind of fall in the SEC's bucket. Right. This is just like the trench warfare of court battles. The tornado cash, OFAC, court cases come to mind as well. Exactly. So, you know, I'd say collectively this is probably like half the battle. The other half is campaign finance, which I'll talk about in a minute.

But of that, you call it 50 million. There is, I think, one really important gap in the market, which is in messaging, message testing, paid advertisements, you know, just general campaigning for crypto and changing our negatives from like 9 to 1 in the mainstream media or in D.C. maybe to three to one or two to one, right? So just getting more of the pro-crypto voices out there, muting some of the most outrageous, you know, fud-inducing claims that we see on a day-to-day basis about how, you know, crypto is used for all these illicit activities or, you know, people have only lost their shirts with this tech. It's not really good for anything. It hasn't really hit, you know,

any mainstream scale. We need to counter some of those narratives and have actually, like, you know, polling data and message testing that is going to help advance our narrative with those right audiences and then just saturate them with it. So like research driven pro-crypto messaging that we first research and then broadcast to the right people. Exactly. And it's, you know, talking points for kind of mainstream media surrogates. It's actually just understanding like what language works with policymakers, whether they're a one or a four, whether they're Democrat or Republican, and making sure that we stick to some type of campaign message, right? You always hear political campaigns talk about staying on message. An advocacy organization like

Digital Freedom Alliance, which is this is all we're going to be doing is messaging, coordination, grassroots engagement, and helping tell the story of crypto and then saturate DC with that story. Everything that we're doing right now has to be about staying on message as if you think about crypto as like the candidate, right? The crypto campaign needs to stay on message and we need to talk about American competitiveness. We need to talk about tech innovation and what that has done for our economy long term. We need to talk about the threats to the dollar and to our international dominance of financial services if we push this technology offshore. And kind of three to five kind of bulleted messages that are going to resonate on both sides of the aisle and we're actually

going to be able to make a positive impact. And we also need to turn this into a campaign issue. So out of the messaging focused advocacy groups, I'd say we're lacking that right now in terms of like a single group that's going to coordinate, you know, shouting to the megaphone and really kind of nailing messages at work. Coin Center does a great job of this with a very narrow set of issues. So privacy, software developer rights, the case for Bitcoin and generally are following a pretty disciplined approach towards protecting constitutional rights of crypto users in the U.S. I think about CoinCenter almost like the Knights Watch, right, to use the Game of Thrones comparison, right?

they're at the wall defending some of the big constitutional issues where any encroachment over that line is breaking some law or some norm and they're the first line of defense in terms of calling that out and actually actively fighting that in the courts. We don't really have an organization right now that's focused on like the fight for King's Landing, which is really like the muck of DC and the political campaigning that I think is required to make anti-crypto policy politically damaging for our biggest opponents or their allies and to make pro-crypto advocacy something that is going to be rewarded at the ballot box. So there's on one side of the wall, a messaging campaign that goes around that.

And then on the other side, we're talking about actual hard money that's going to go into electing pro-crypto politicians. So out of that $100 million general campaign that we're talking about, about $50 million is going to messaging, advocacy, lobbying, litigation finance, where you're fighting and you're making the case for crypto with the existing incumbents. The other half has to do with electoral politics, right? So how do we advance more pro-c crypto candidates through primaries? how do we elect more pro-crypto Dems, more pro-cropto Republicans in both chambers of Congress, and then ultimately how do you make the crypto voting block very loud so that it will be perceived as politically damaging to be on the wrong side of this issue if you're Elizabeth Warren

or one of her close allies? That's where I think super PACs and PAC funding comes in, which is the direct contributions that are being made to campaigns or the indirect contributions that are going to different groups that are generally aligned for or against a political candidate in a race. And that ultimately, you know, kind of is responsible for the TV ads, the print ads, and, you know, every dollar that's going into fighting in the trenches in some of these swing states or some of these, you know, key districts or key races that, you know, are going to be within, you know, five points come November of 2024. Arbitrum One is pioneering the world of secure Ethereum scalability and is continuing to

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So global movement, we'll get there eventually. Don't worry about the milieu of Capitol Hill fights. But we've already passed that part in the conversation where we've established that now is the time and Washington, D.C. is the place. But this is like a known science, right? We're not inventing anything new here. This is what other industries do. I think perhaps what you're suggesting is like, oh, we're doing a great job and more narrow efforts to fight the fight for crypto. But I think you're just saying, hey, let's zoom out.

Let's get bigger. And let's be more strategic with how we advocate for our industry and copy the strategies that other industries have employed for decades. Is that a fair summary? One thing about Sam Bankman Fried is his understanding of the political system and the political game, was unparalleled within the crypto industry. What he did last year was very savvy from a political standpoint. We basically need to do something, but here's the thing. The silver lining is we know that, but we need to be better as an industry.

And you need to run a very similar playbook, but with a decentralized based of contributors and a set of honest actors that have been in the trenches four years, for the sole reason that we actually believe in this tech and its potential to be a force for good. So, Ryan, who could that be? Okay. Who could that be right? Like he was played. Well, we got, we got three of them on the call. Okay. Well, I don't know. That's ambitious for me. But like, okay, SBF was playing the right game and he was maybe one of the first people in crypto to actually start playing that game. And by the way, people who didn't understand this game, like zoom out and they look at, oh my God, how far he got so fast.

It's like amazing what you can do if you play the game and you play it well. And you're saying that we need better, honest, good actors, rather than sending our worst to DC, SBF, a literal fraudster. We need to send the right people to DC. We need to have good leadership here. Also, we need to keep it decentralized and accountable as well. But the game that he played, we need to play a similar game. That's what you're saying. I think so.

I mean, he had all of the wrongs of that campaign. but we can't do it the same way that he went about it, obviously, right? I mean, I think the crypto brand is pretty tornished from a lot of folks that are not true believers of the tech within D.C. You know, he gave money to so many people and he put so many people in a bad place politically, or he made them look silly or, you know, he, the one rule I think we should learn as an industry is don't embarrass your friends in D.C. and he just was a nuclear bomb that went off in D.C. based on the amount of time that he's spending there with members, with staff. He embarrassed everybody. Well, but we think about it as like he embarrassed us, which is true. But he also embarrassed a lot of folks in D.C. And I think led folks that we were making progress with to clam up. And so part of the job that we need to do as an ecosystem, and again, going back to the messaging, is we need to advance some of the true narrative.

of crypto, not the woke shibboleths or whatever he called them, you know, when he thought he was off the record, basically him just blowing smoke to key members in both parties when he was meeting with them. But we need to actually narrow in on like, what are the true bipartisan messages that we just need to focus on and like show the impact of and just browbeat the DC establishment into understanding over the course of the next 18 months? And I think the narrative development there is very often understated because we have a decentralized community. So, okay, who is going to elect like one spoken representative for this entire like decentralized community? You know, why would we play the DC game when we can just opt out and build in all these different pockets? Let ripple fight

their case. Let coin base fight their cases. Let whoever kind of, you know, going to, you know, fight their individual battle and we'll just engage in trench warfare from all these different corners of the industry. The reality is that we have some overarching messages as a community that, Whether you're a stable coin issuer, whether you're a Bitcoin maximalist, whether you're diehard Ethereum fan, like these kind of core truths, I think, are things that we can rally around and that we can win a lot of swing voters in D.C. over, right? So the proliferation of stablecoins being number one, the kind of individual economic empowerments of, you know, previously disenfranchised or, you know, underbanked or creative classes, like those are pretty powerful narratives because you're talking about positively impacting the livelihoods of different individuals

in different up-and-coming parts of the economy. And you're talking about American competitiveness long term. And then the last is just the rule of law, right? So I think we lost some of the moral high ground when it comes to use cases and a case for crypto and like this is going to change the world last year just because that's what happens when you go from a bull to a bear cycle. The one thing that we really have right now is the constitution and the rule of law. on our side. And some of the overreach that we've seen from the regulatory state is so egregious

that we just need to be able to wrap those stories in a tight narrative and actually saturate DC with some of these stories and help people understand even what the issue is that we're fighting against because I think a lot of members and a lot of their staff just don't understand what's going on with debanking, what's going on with the SEC's, you know, kind of double speak when it comes to regulation and the fact that it essentially amounts to a shadow ban in the industry. So if we can focus on kind of the three pro-crypto, you know, kind of positive messages, and then the three combating kind of opposition narrative kind of counter messages, that's, I think, all we can do to hold the line for the next 18 months. And then give the folks that are at the trade associations,

that are actually actively lobbying in D.C. and that are going to be running campaigns, give them the air cover to operate and, you know, going to help move the incumbents and some of the newcomers to Congress in the right direction. This marketing piece, I think, is going to be important, not just from like a single entity, but hopefully some of the research that we put out is going to help folks like you. It's going to help folks when they're meeting with members. It's going to help folks when they're on mainstream media outlets triangulate on the things that they know have a 30-point net favorable rating when it comes to talking points, right? So maybe we don't want to say, hey, anyone in the world should be able to use crypto, regardless of whether they're

on the sanctions list. Like, that's not a smart narrative, right? Sure. I love some of the libertarians in the industry, not a smart narrative. But if you want to talk about the dollar's dominance and the benefits of a U.S. dollar denominated stable coin versus the Chinese digital yuan from a competitiveness standpoint or from a U.S. CBDC from a surveillance standpoint, you know, that's a pretty good narrative to rally around and say, you know, there are pretty common sense solutions here where this close, you know, tell your members that you would like to see stable coin legislation. Tell your members you'd like to see more structure, you know, regulation so that we can feel safe and secure when we're using Coinbase or Crackin or Gemini or another U.S. regulated entity.

If we get it right, this could be very powerful. This is the reason, you know, D.C. listened to SBF and not someone like Eric Forhees, even though we wish he would listen to an Eric Forhees sometimes. You have to kind of massage the message. here. And so I want to make sure that people hear the punchline because this is so important. So you and the Digital Freedom Alliance, the DFA, this is a new organization that you're helping to form, are raising between $100 million or above to $125 million, I believe. That's kind of the range. That feels like a lot of money, maybe, but I don't know how it compares to other organizations

doing this. You're raising that in order to put this structure in place and do things that the coin centers and the blockchain associations aren't doing, they're kind of manning the wall, they're the night's watch, but there's all sorts of political activity that we need to have, that we need to coordinate around if we actually want to win during this very narrow window of opportunity. So what do you call this thing, Ryan? Is this like a pack? Is this like a super pack? And by the way, are we trying to influence lawmakers here? Are we doing kind of the pack game of like, you know, we're running commercials to voters. And we're talking about like the virtues of crypto and we have kind of talking points around that. Like, so anyway, I want to make sure you

kind of nail the point of what you're actually doing because this is beyond talk. This is not you just standing up here and getting on the bankless podcast and saying, hey, guys, we need to do more stuff. You're actually organizing it. You got the outlet. So what are you going to do with $100 million? I'm not going to do anything with $100 million. So the Digital Freedom Alliance is going to raise probably about five to ten of that, right? And our ability to actually execute against the roadmap that we have on the messaging side, we can do a lot with five million or so. And then it scales up from there.

And basically the variance is how much messaging and how many, you know, kind of paid campaigns are we able to run and how many different kind of areas are we able to move swing voters in D.C. And kind of move sentiment and kind of mainstream media outlets. It's a marketing machine, right? in equals some outcome on the other side of that from a brand and a favorable standpoint. The 100 to 125 million, I think, is what it costs to run like this multifaceted campaign. So DFA, I think, is on one side of the wall, one of the missing ingredients, maybe the missing ingredient from an education advocacy standpoint.

Coin Center and DFA are kind of like in and yang. I'd say Coin Center is very focused on the constitutional issues, whereas we want to focus on the messaging issues that are actually going to change public sentiment and D.C. All the other trade associations are responsible for lobbying and thinking about what are legislative solutions that are going to work, that are going to get some bipartisan support and then potentially get enacted into law. They're also the ones that are engaging directly with regulators through rulemaking and helping them understand how crypto can fit into existing regulatory structures in the meantime before we

have clear legislative guidance. The other 50% of that, so the other 50 plus, you know, 75 million, that's where the PAC and the super PAC funding come in. And that's the electoral finance side of the state. equation. What I have said is I want to spend time on this only because I've already spent time on this the last two years. Basically, ever since the infrastructure bill, as you know, I've been more outspoken. I've spent more time with these policy groups. And so I know the executives and their policy teams pretty well. What I'm trying to wake other executives and investors up to in the

industry is the need to make this investment. And to basically like two to three X, the investment that we currently have, which is the first comment that we made about 30 to 40 million, and where we need to be, which is closer to $100,000, $125 million. A good chunk of that is going to come on the political giving side, actually supporting financially the pro-crypto members of Congress that have been very good on the issues. They've dug deep. We want them to be holding pen on new legislation

because they just understand it technically, and we have faith that they're going to get the balance right. Engaging in primaries is going to be the work of some of the super PACs and some of the other electoral politics. focused organizations that we have. And the goal there is to basically look at if it's a swing district, who is going to be the better candidate in the general election? If it's a 40-point Democratic district, who's going to be the best Democrat that we can get through that primary? If it's a 40-point Republican district, same thing. Who's the best Republican we can get through that primary on these

issues? And that's just a ground game that I think is not something that can be developed in-house at any of the crypto companies. But we do have some good political operatives that are running those PAC and Super PAC operations that can help us both recruit and then elect great like pro-crypto voices as generation change in Congress takes hold. Just to give you an example, last cycle, we elected out of the open primaries that one of the industry's primary super PACs was focused on. We went basically 17 for 18 in terms of pro-crypto candidates. You know, there's 430 some members of Congress. So to actually move the needle, you're going to need to do that every two years, the next decade. And then you ultimately win over time just by having a more educated,

digital native base of members. That is going to handle, I think, a good chunk of our long-term challenges. But in the meantime, we have to make sure that we get some pretty important districts and some pretty important Senate seats swinging in the right direction, because if we have blockers at important committee chairs or important, you know, kind of senior members of either the Senator of Congress that are going to slow down any legislative proposals that come across their desk just because they are so far in the one category that they're not salvageable for our intents. Then we need to figure out if there are candidates that are better suited for us as an industry, you know, how do we help support them? And by and large, I think the strategy to date has

been support incumbents, work with incumbents and their staffs, educate incumbents in their staff, educate the regulators and tell the right story. And the areas that we've fallen. flat are in actually financially supporting them and then arming them with data and research that can help them make the case as they're going out and they're stumping for this is one of the key primes of their campaigns. The last thing I'll say on this point is the reason that this $100 million number is so important. Again, it's not to put, you know, kind of money in our organization. I think we're probably five to ten of that on the 50% education advocacy side, along with all the other existing groups that we have. But I think a problem that many executives and investors in

the industry make is they don't want to play in electoral politics for whatever reason, right? They either think that it's not a good use of time, good use of money. They don't want to feel like they're getting, you know, it just, it feels untoward to a good chunk of the community, especially the libertarian strain that got into crypto, particularly to opt out of politics. And I understand that. But if we don't get over that, then what you have is a situation where all of those groups, whether it's Digital Freedom Alliance, it's Coin Center, it's the Blockchain

Association, it's CCI. They're going into a meeting and they're having a really good session with members and their staffs. And those members and staff come out all rah-rah. And then they look at their watch and say, well, I have to go meet with the Bankers Association because I have a fundraising lunch. And so, you know, you're basically thrown an alley-up, but there's- Guys, I mean, this is what we've done in crypto.

I mean, this is what they say in D.C., it's true. If you're not at the table, you're on the menu. And crypto kind of sat back and we basically let somebody who is more ambitious represent our industry in D.C. and that person's name was SBF, and look what he did. And so if we don't fill that vacuum with something, like, it's not, unfortunately, I wish this was the case. It's not an option to just step out of the game and not play. It's a mollock trap. You have to play the game. You have to play this game. So if we're in a position where we're forced to play the game, let's do it well. We can maintain our ethics,

we can maintain our values, but we've got to play this game well. And also, if you do it right, you don't have to do it in the future now. Yes. Yes. Yes. And it's much more expensive to do the cleanup work as we're seeing post-SP. One thing, just to make this super tangible, because I know $100 million is a big number, it sounds like it's kind of out of left field, but there is some science behind it. But if we want to just do like back a napkin, what is the return on that investment, if you will, right? I think about this as an insurance policy, right?

Because if you're not at the table, you're on the menu. And regulatory risk is probably the greatest risk that we have as an industry right now in the U.S., right? it's going to be hard to envision another kind of boom cycle in the U.S. where crypto is thriving here under the current construct that we have in the current situation that we're in with the SEC and his jurisdictional issues, the FDIC and kind of banking regulators, it's hard to see a catalyst there. So I go back to the very first thing that I said, which is this is important because I think a pro-crypto U.S. is a 2X in market cap, right?

That's the quick and dirty, right? Like I think everything thrives. The infrastructure, the use cases, the consumer. adoption and then yes, the price of some of these assets. But if you think that there's a 10% chance that that $100 million will move the needle for a pro-crypto U.S. versus a more hostile U.S. after 2024, that's the only 1,000 X there is in the market, right? It's the only thousand X there is in a market. 10% expected value of a trillion dollars, $100 billion, $100 billion, $100 billion is a thousand times more than $100 million. It's that simple. You're saying it's good for our

bags. It's that simple. You're saying it's good for our bags. If we are interested in financial upside, we would fight this fight. If we are primarily interested in number go up, this is a high value opportunity. Here is the issue that I think we're confronting this year. I think it's good for everybody this year. And I think last year it was good for Sam. Yeah. That was what so many of us were kind of fighting behind the scenes in these smoke-filled rooms

or whatever other bullshit people levied at me. People don't smoke in those rooms anymore. Yeah, for trying to coordinate some of these conversations. What we were trying to do is we were trying to slow down Sam, who was running kind of unilaterally and trying to just advocate for his own efforts. And we were trying to make sure that there was a good group of folks that were actually engaged with the policymakers that were writing some of these bills and that were at the table and felt like, you know, all of these diverse interests in the industry were well represented. That ultimately, you know, maybe it was moving the right direction, maybe not, but it fell apart because FTX fell apart. And so now we're kind of back to square one where can we get the honest brokers in the industry, the people that have been here for years, the people that didn't just pump and dump on their followers, the folks that actually believe that triple entry accounting to be as boring as that is, right? But triple entry accounting is such a profound technical innovation in an era of declining institutional trust that this is worth protecting at all costs, right?

And I think that has to be at least a quarter, if not half of the focus for any serious executive or investor in the industry right now. Because the cost of getting it wrong, long term is so damaging and just stunts our potential to such an extraordinary degree that we just can't afford to risk it. So I think I've been enthused by my conversations with other founders, with other investors, but it's a tough market, right? It's tough to make this pitch in a declining market. And it's tough to feel like we're trying to squeeze blood from a stone. But I think the stakes are high. The time is now. And if we can get through the other side of this bearer market and we can.

we can have these hard conversations now and move the needle and be the very best that we are from a narrative and from an ethics perspective, then I think we can get through the other side of this and you'll see a much stronger vibrant ecosystem emerge on the other side, both in the U.S., and then internationally as other markets draft off of us. Really quick, Ryan, just to throw some quick questions at you. What are the just like the near-term next steps? Like what's happening in the next week, month, two months to get the DFA up and running the Digital Freedom Alliance?

And then also throw a question at the end for this. How much harder is this now that SBF was playing this playbook a year or two ahead of us? And then blew that strategy up and now we have to like do that same strategy. But now there's like the shadow as of SBF in Capitol Hill. Like how much harder is this now as a result of that? So I'll throw those two questions at you. Well, I mean, I think step one is, you know, the same strategy, but the complete opposite. Right.

So, you know, we're not trying to do this, you know, behind the scenes. You know, I'm putting bullseye on my forehead. and come and talking to you guys and being pre-vocal about what we're working on. So it's hidden in plain sight, but I think the reason that we should be a little bit more transparent is that's what the industry is based on, and that's ultimately the only way that we're going to get to the other side of this FTX drama. Remember, that court case is coming up. So we're going to have a whole other cycle where, like, that is going to be top of mind for folks.

And if we don't have a very strong counter narrative that includes just a massive slug of entrepreneurs that are, you know, ready to be like, you know, articulate. really powerful surrogates for the industry that can tell some of these positive stories, that can tell, you know, policymakers the way that they are approaching the industry is in good faith and in the right way and in keeping with some of our existing laws and norms, then, you know, we're going to be able to, I think, get some of the results that we want. But from a DFA standpoint, you know, we've got some world-class, you know, colleagues that are working with us on this campaign, the messaging strategy, the go-to-market, the research, both polling, foyer,

requests, freedom of information requests, you know, opposition research, and then the storytelling kind of masters that are going to help, you know, packages in a digest that's going to be accessible for people that might not otherwise have time given all their competing priorities in D.C. to fully digest, you know, what's going on with layer twos and, you know, what's the new hot NFT project? Like, none of that really matters. We have to abstract all that away and kind of just focus on some of these core issues. That's great. I mean, no question we need to do this work. So to summarize all this, Ryan, your message today is crypto needs to get going on this right now. The time is really now.

We're spending maybe $30 million a year collectively on the crypto policy machine. And we need to 3 to 4x that investment across the industry. So we need to get to between $100 and $125 million. You are starting this Digital Freedom Alliance, which is going to be a 501C4 advocacy group. And what that's going to do is it's going to occupy this niche of helping to fight the FUD, helping to tell a story that propagates across both policymakers and mainstream. And maybe that costs something like $5 million of that $100 to $125 million. But that will allow us to scale and amplify the rest of the investment that we put on this space.

And maybe that takes the form of the future of other PACs, us getting more active in campaigns. but we really need sort of a narrative machine in order to propagate the right messages, and honestly to coordinate on them. If we don't do this, by the way, the next SBF comes in and like pumps their own bags instead of pumping the values that we want expressed across crypto. So that is what you're here to tell us, and that is the work that you're going to do in this space, particularly setting up the Digital Freedom Alliance, and then also making the call for us to triple our investment in this crypto policy space and being a leader in this space as well,

not the only leader, but a group of leaders that can push this forward. Did I get that right? I think you nailed it. I'd say, you know, I didn't abscond with customer funds, so I don't have as much personal capital to deploy at this as other folks in previous cycles. So it has to be decentralized, right? And I think if we can pass the hat around, what I would say is an action item from this episode is you go to join dfa.org. If you want to learn more about what we're working on, and then you want to find ways to get involved. The first bit of fundraising that I'm doing is for that first $5 million. We'll ultimately open it up for public contributions in the next couple of months.

But if you want to subscribe for updates, we've got a substack, they can subscribe to on the join dFA.org website. And if you're an executive in the industry and you or your company would like to contribute to this $100 million campaign, and you're just flying blind and you don't even know where to start, what I've volunteered, is that if you're ready to spend serious time and money, I will pick up the phone and try to help orient you towards which groups need this capital the most, right? So I think we need to continue funding CCI, Blockchain Association, Coin Center. I can make the case for like why the Digital Freedom Alliance is a really important prong of that side of the equation. And then I think we also need to make sure that those that have done really well in the last couple of cycles are funding

the PAC and Super PAC efforts so that we actually make long. term and medium term change in Congress that is going to set us up for long-term success and not just this perpetual firefighting we've been doing last year or so. That's great, Ryan. We'll end it there and we'll leave a link in the show notes. It's been awesome to have you on. Thank you so much. Thank you for doing this too. Yeah. Apparently we need it. Thank you guys. Cheers, Ryan. I just want to say one last thing as we close, guys. We'll include a link in the show notes to join dFA.org. And let me just say, Ryan has been in this space for 10 years. All right. And there's a certain Lindy effect that we talk about, often about protocols. I think Lindy effect also applies to individuals as well. People who've

been through multiple cycles without stealing anyone's funds, without screwing people over, like by being honest actors. And I think we are, um, we have swung a little bit too far on the pendulum of not trusting anybody right now in 2020 through, the crypto industry. Okay. And that's understandable. Look what we went through in 2022. How about just scam artists screwing the space? over. No wonder we have trust issues collectively. But let me say, let's not air too far on the other side and come to the conclusion that there are no leaders and we can't trust anyone in this space. There have been people that have developed a reputation, been through multiple cycles, and are trying to do the right thing. And I think Ryan Selkis is one of those people.

I'm really excited to support, join DFA and for the work that we're doing. It's sorely needed. If we don't fill the gap here, somebody else will. And I'd like to see Ryan, and some of the other leaders. Brian Armstrong is one of them. I know the folks at Cracken, lots of good folks that are still here pushing this work forward. So don't get disinvolved in politics, okay? We've got to involve ourselves if we're going to take this fight to D.C. and propagate the values that we talk so much about. That was my sermon. Rather than disclaimers, you got that. But let me end with disclaimers. Of course, none of this has been financial advice. It's not really political advice. We're just figuring this stuff out as we go, guys.

But eth is risky. So is defy. You could definitely lose what you put in. We are headed west, though. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.