Bankless - 105 - Crypto in Washington | Congressman Tom Emmer

Starting point is 00:00:07 Welcome to bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Guys, we have a fantastic episode for you today. We're talking about crypto in Washington, D.C. How we win over Washington, D.C. for crypto. And we're talking with a sitting Congress representative today. We're going to go through five things. Number one, why Congress doesn't actually hate crypto.

Starting point is 00:00:38 Number two, what's at stake if America gets crypto policy wrong? Number three, the answer to all of the shadowy super regulators we see, turns out is legislation. Number four, why the digital currency path China is taking is totally wrong for the U.S. Number five, how we win over D.C. as a crypto community. David, fantastic discussion with Representative Emmer today. What were some of your thoughts? Representative Emmer is definitely one of those representatives. who has no problem updating how he thinks about the world as new technology comes into it.

Starting point is 00:01:12 And there's a line that I've seen pro-crypto versus anti-crypto representatives. The pro-crypto representatives tend to be really like first principles, deep philosophical thinkers and really ground their positions in some sort of, you know, idea about the world that goes down to seemingly the roots. in contrast to the anti-crypto regulators out there that kind of just don't really seem to have a coherent stream of ideas. It's very surfacy. Yeah, just like kind of taking issue by issue without having some sort of core fundamental principles that guides them through that. And Tom Emmer is definitely somebody that thinks in the big picture and is able to zoom all the way out and place crypto in its moment in history and how the United States as a nation can engage with this new technology. And it's holistic fashion rather than just like what it is currently, which is, you know, perhaps not the

Starting point is 00:02:07 version of crypto that we want to see in the distant future. So I definitely appreciate Tom, Emma, for that. He is well respected in Congress for advocating for crypto and also has a pretty optimistic outlook for how crypto will come to be a part of the governance conversations for the United States. He thinks that crypto is better received and I initially thought this was a fantastic conversation. The fact that we're getting sitting members of Congress on crypto podcasts like bankless, you know, that couldn't have happened three to four years ago. And that is happening now. So that shows you kind of the growing influence. Representative Emmer also talked about the actions that the bankless community took, the crypto community took in August that actually had a massive

Starting point is 00:02:47 impact. We didn't see the impact that it had. But Representative Emmer talks about that. If you're based in the U.S., this is a must listen episode. If you're not based in the U.S., this is also a must listen episode because this same conversation is happening in all of your governance bodies, in all of your respective countries. So this is sort of a microcosm of the conversations that are going on all over the world right now. Fantastic episode. As usual, David and I will give our thoughts on the episode in the post episode debrief, which is available to you if you are a premium subscriber. Talk about some behind the scene stuff. It'll be a lot of fun. Guys, we're going to get into the episode in just a minute. But before,

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Starting point is 00:06:08 trades with others and find other tokens to ape into. Bankless Nation, we are super excited to introduce you to Representative Tom Emmer. He's a fourth term member of the House. He represents Minnesota, serves on the House Financial Services Committee, believes that free financial access is a core human right and advocates for crypto in Congress as a result of that. I think we've got some shared interests, some shared values to talk about. Representative Vemmer, welcome to Bankless. How are you doing today? Good morning, Ryan. David. Great to be with you. And love the introduction. I'm looking forward to the conversation. Well, we love what you're doing in Congress right now for

Starting point is 00:06:43 crypto. And I want to start with this question, just to dive right into it. It feels like almost no one in D.C. is fighting for crypto right now. But you are. Why? Why are you sticking your neck out for us? Well, because I know this is the future. And you know what? I seem to believe in this concept that our founders had that government exists to serve its people, that people don't exist to serve their government. And crypto to me, first off, to put in context, because we were joking about the fact that my pop culture references are probably dated before maybe even you guys were alive, right? Well, you are coming in black and white, too, Representative Emery. So it's good. It's all part of the conspiracy. When it comes down to me, I've got seven kids, which, you know, the oldest is 31, youngest is 20, about to be 21. These guys have kept me very well grounded, despite,

Starting point is 00:07:44 the fact that I really like my childhood. I like my formative years. But what I learned from those, and I should also tell you, while I spent some time out east, I actually graduated from the Harvard of the Northwest, the University of Alaska, in Fairbanks, Alaska, which gave me an opportunity for a period of time to literally live in the woods in a cabin with no running water and, you know, outdoor plumbing and wood heat. And why is that important? Because I guess I learned that I'm responsible for me. And I don't want the government making my decisions. I'm capable of making really good decisions. I'm capable of making really bad decisions, right? And I've done both. But I don't need my government telling me. And when I got into crypto, probably seven

Starting point is 00:08:32 years ago now, and I told this story way too many times, but we had a staffer here who's now over on the Senate Banking Committee, awesome guy, Landon Zinda. We now have Lizzie that you guys have probably dealt with. She worked directly with Landon, but he gave me this book about seven years ago called The Age of Cryptocurrency. And I don't know how many of my colleagues, when a member of their staff gives them a book, they literally take it and read it and bring it back. But that's what I do. And I loved it. It's like, look, this is an opportunity. I see this is where it's going. You know, I had done this radio show with a guy who claimed he was a libertarian. In fact, he's an anarchist, right? All we ever heard during the show,

Starting point is 00:09:13 was shut her down, she's pumping mud. You know, we don't need this, we don't need that. At the end of the day, he caused me to look at our society and government in more of a holistic nature. While we have come through our world's history from the Stone Age to the Agrarian Age to the Industrial Age, and now we're in the Age of Technology, right? Which is advancing in warp speeds. Think about this for a second.

Starting point is 00:09:39 The Stone Age, you were scattered. the agrarian age, and I'm short-circuiting it, obviously, for the students that are out there, it's more detailed than this, but for a very crude explanation, you've got the agrarian age where suddenly we have cities, dense populations forming on essentially waterways, because you bring the produce in from the field and you deliver it by water. That's how our city started. Then you have the industrial age. Now you've got all the labor moving into these big cities.

Starting point is 00:10:10 everything is centralized. Guess what you guys are doing. We are in the era of not only technology, but decentralization. There is coming a day when the family that's lived on the family farm, the land grant farm, whatever you want to call it, they have certificates from presidents like Abraham Lincoln. They will stay on the home place, as they call it, because everything will have smart technology. they will have a 3D printer. So if they need healthcare treatment, for instance,

Starting point is 00:10:44 and this may be bizarre to people outside of this podcast, but I'm going to believe the people that listen to bankless, Ryan, they know this is coming. Let's say I need a new hip. Well, guess what? With the technology that we're going to have, as long as government doesn't get in the way and allow different actors to fence out competition

Starting point is 00:11:05 and protect their bottom line, if government will allow this to grow, you're going to be able to have that hip transplant right at home because they'll print up the parts, for lack of a better description, the replacement parts on a 3D printer. You'll have robotics and you can have a surgeon who is remotely conducting this hip replacement from somewhere else. That's the future. And when you look at crypto, taking it full circle now to your question, why crypto? This is facilitating all of that. I mean, you've got Web 2, which requires intermediaries.

Starting point is 00:11:43 Everything throughout history has required an intermediary, at least when we talk about our traditional banking system. There was a day when, you know, you'd work on my barn and I'd give you a cop, right? And that we just dealt direct. But now we have intermediaries. And we're in this technology phase where you want to get your social, content out there. You've got to go through Facebook. You've got to go through YouTube. You've got to go through Twitter. There's coming a day when you don't need intermediaries. It will be decentralized.

Starting point is 00:12:17 And I'm going to tell both of you with that long explanation, that's what excites me, is that takes the authority away from the middleman and it puts the power where it should have been put, well, where our founders put it in the first place in you and me. That's why it sites, mean crypto, again, is facilitating that development, that evolution, if you will. Representative, Emma, I see a difference in a lot of pro-crypto and anti-crypto politicians, where the pro-crypto politicians tend to be like big picture thinkers and more grounded in first principles thinking, where the anti-crypto politicians, I don't really share that same type of, like, mental thinking of just zooming all the way out and trying to put this industry

Starting point is 00:12:59 in perspective. So I certainly appreciate your ability to see this. thing from the lens that it needs to be seen, which is a super, super wide view. So I want to get into this schism that we see growing in D.C. Because there does seem to be people like kind of picking sides. Are you pro-crypto or are you anti-crypto? And there definitely seems to be a lot of anti-crypto people showing up in D.C. And so I want to just pick your brain as to why do you think that is? Like, why does it feel like Washington hates crypto? You know, I guess I don't have the same feeling, David. I understand where that comes from. But to me, here inside of this swamp. I think that it's a nonpartisan issue for people who literally understand

Starting point is 00:13:40 it. It doesn't matter if you're a Democrat or Republican. What I just talked about, I think you have people on both sides of the aisle in different, I used this term yesterday. I said, we have members all across the spectrum. And I said, oh, that might be a Freudian slip. I don't think I want to use the spectrum term. But we have members who have different understandings. crypto and it's growing. So if you feel, and again, this is not limited to you because I've heard it from others, if you feel that there's an anti-crypto sentiment and that people are picking teams, I don't want to go there yet because I don't think that's baked in. I think what you really see, if you put in perspective, that long answer that I gave you earlier, it really is the pro-government,

Starting point is 00:14:28 anti-government split. I mean, if you were going to talk about Republican and Democrat in its most pure form, and by the way, this has changed through time, each party has been on different sides of this, and I think we're in the process of another evolution of how the Republicans are going to be in terms of policy versus the Dems. But as I gotten involved, a Democrat would typically believe that government should provide the best solutions to our problems. A Republican in the truest sense of the word, again, in my world, would say that no, the individual provides the best solutions available. The truth is, the answer lies somewhere in between, right? At least in our history, it's people working with government. And I think what you've got here, you've got what you

Starting point is 00:15:17 would refer to as the pro-crypto people, myself, looking at this thing and saying, I'm pro-people. I'm pro-people self-determining. You know, this debate about the society. scope of our government versus the right of an individual to self-determine, as you can tell, I always default to the individual. And you left something out earlier, at least, that I would add, which is fear. There are people that are afraid of things that could happen. And I think that drives them with their policymaking, too, if they don't understand crypto. So I'm pro-crypto, because I see this is where the financial system is going. It's completely disruptive. People are going to be able to do business directly with one another for full value without having our government skim

Starting point is 00:16:02 off the top and those types and others by the way. Then there are those that, and again, Republicans, Democrats that are coming our direction. They just don't understand it yet, David. I mean, I'm going to tell you a lot of these people, their first real involvement came last August when the Senate had this so-called bipartisan infrastructure bill that the Treasury Secretary, I'm told, lobbied Senator Portman from Ohio to include a tax provision that would apply to miners, right? Crypto miners, Bitcoin miners, et cetera. Well, the thing was drafted poorly. It cast a net so wide that you don't know how it can be applied. By the way, the number that they came up with some genius in the government accounting office, it came up with a number that,

Starting point is 00:16:54 oh, we're going to get X amount of revenue from all these people. That should scare everybody. But this is what drove it. And I tell you that background, because what happened next is those interested and involved in the crypto committee rained down on Washington, D.C. like they never have in the seven years that I've been here. There were reports of one Senate office getting 30,000 calls in one day. And what that did is, one, you've got government policy.

Starting point is 00:17:24 makers, again, I don't want to get into the partisan fight, but it really is this hungry government looking for revenue so they can spend more and more money. And suddenly, they've seen there's money in crypto. We want some of that money. You know, the man wants a little bit off the top to fund everything the man wants to fund. That was the first thing. The second thing was, Oh my goodness. All these people are involved. I had no idea. I better learn this thing. I better understand it. We got years of education in a matter of two or three months. And I think those people haven't made up their mind yet. Which side of this are they on? And then to conclude, David, yes, you do have a small group. I'm not going to name names. People watch them. They look incredibly

Starting point is 00:18:14 foolish and ignorant when they talk during hearings about things. that make absolutely no sense in the crypto space. And someday, you know, those will be the ones that people say, hey, remember when you said the world was flat and that if Columbus actually went off on this journey that it was going to end badly? Well, welcome to the 21st century. People saying that the internet will never work will never amount to anything is another equivalency and sticking to their fax machines.

Starting point is 00:18:43 But what's really cool, Representative Emmer, is because I think what you're referring to was happened with the infrastructure bill and kind of the push and the outcry from the crypto community. And I've actually never heard it described that way from someone inside of D.C. Okay. So here we are at bankless and we've got like an entire crypto community who is passionate. Some of these people are single issue voters, right? And we, you know, we told them, many in the crypto community told them, call your representatives, make your voices heard. It sounds like that shook Washington a bit. Like we don't know if some of these messes are going out into the void and like disappearing or they're actually having an effect. It sounds

Starting point is 00:19:20 like they're having an effect in this case, which is amazing. The other thing I just learned is from your perspective, it's not that there are a lot of, you know, crypto haters in Washington. There are some, but there is a vast majority of representatives in Congress who are undecided. And it's this middle area that we can really target. But I want you to maybe, I guess, make the case for us a little bit more. The national case, America's case. So I'll want to talk about two things. First of all, what's at stake if America gets this wrong? If we screw up crypto, let's talk about the costs first, and then we'll switch and we'll talk about the benefits. But what's at stake here? Well, a lot of people. This, you know, some of your listeners,

Starting point is 00:20:01 by the way, you did make a difference. So just know that the messages you guys were sending out on your podcast, your peers, you made a huge difference because lobbying, which has a terrible name here in Washington, D.C. can be done through paid representatives who are very good at it. And no, Congress has not bought off by them. They are a resource teaching members what they may not understand and trying to educate them from a certain point of view so we can make a thoughtful decision. But then there's also the citizen lobbyist. And what you guys did is you activated those citizen lobbyists. I haven't seen in seven years since I've been here. So you should. Pat yourselves on the back. Everybody in the community should recognize that they made a huge difference, but their work has just begun. What is it stake? Well, this is the part that I don't want to be partisan. For me, it's U.S. supremacy as a leader around the world on a lot of different things. But if you want to strip that away, if you're one of those people that has grown up in a different era than I did, right? I had coaches who yelled at me. I had coaches who shamed me. You know, today, you wouldn't have.

Starting point is 00:21:14 have a coach behind a bench anywhere if they did that to a young person the way we had. So maybe you grew up saying, hey, it's not about U.S. being the supreme whatever. It's about the United States doing the right thing and being able to compete the world over, making sure that the members of our society, people who are lucky enough to be Americans or to come to this country and experience this great experiment and freedom, that they be afforded the opportunity. to create and grow anew. I mean, right now, the big fight is, do we really want to be like the Communist Party of China?

Starting point is 00:21:55 Right? Do we really want to allow government officials in this country, whether they're at the Treasury, whether they're at the Fed, whether it's a combination of those agencies in the defense community, right? The defense community, who they're so scared of everything that's out there

Starting point is 00:22:12 that we have to give up, our liberty so they can protect us. I said it yesterday to somebody, and I've said it for years, you can become a prisoner of your own security. We need to take control of this. Ryan, what's at stake? Your opportunity to, and people are going to think this is overly dramatic, but it's not. If you let the Fed and the Treasury do what I suspect that they have set off to do, regardless of what their words are saying, because this thing is already in motion, if they create a central bank, currency that is nothing more than a surveillance tool for Americans, much like the digital authoritarianism that's being practiced in China. We are going to lose not only potentially the dollar

Starting point is 00:22:56 as the world's reserve currency, but more importantly, we're going to lose what really makes this country special, which is a place where, you know, you and me, I used to tell people where a dumb slub like me can come up with this great idea, this business plan, and go see my local community banker in the tiny little town that I live in and go, I got this great idea for a thing that I want to call Amazon. I got a great idea for something I want to call Harley Davidson or I want to call Walt Disney. By the way, all those companies started in someone's garage. That, Brian, is what I think we're risking the loss of because if people struggle with the concept that special interests, right? Pay public relations people, aka lobbyists to influence Congress? How are you going to

Starting point is 00:23:45 feel when we don't need those anymore because the government knows exactly who you are, what you're doing every day because they can monitor your transactions, they can monitor where you're traveling. And by the way, if you have some new disrupted change, well, it's one thing to be fighting with Bill Gates for market share, right? He's a lot of. He's, got all the money, but you still have the citizen lobbyists that can fight back. What happens when it's the government that is all powerful and they're the ones that are protecting their own market share? That's what's at stake to me. Representative Emmer, I want to take a devil's advocate stance here and put myself in the shoes of somebody like Elizabeth Warren, for example,

Starting point is 00:24:26 because you listed off some companies that perhaps started in their garage and started building really, really cool things. But the difference is those companies like Apple or Google that started off in their garage has much less of a capacity to do harm in the way that we've seen inside of the crypto industry. For example, like, you know, we just had a $320 million exploit that somebody sold, you know, $320 million of funds from this one thing in the crypto space. We also recently have seen an ex-felon be a treasury manager in the DFI space who is completely anonymous. And then there's also Tether, which is, you know, dubiously unknown to be backed. And there's also USDA, which has just much less regulations

Starting point is 00:25:08 than a typical bank. So, like, I wanted to ask the devil's advocate question about like, all right, like, what about all of the scams? Like, what about all of the craziness that's going on? How do you square that with representing that side of the industry? Well, David, I would say, first off, the wild, wild west that people want to claim crypto is this isn't, this isn't, this isn't crypto. from 15 years ago. This is crypto from 10 years ago? It's not crypto from five years ago. You've mentioned some bad actors. And by the way, I don't care if it's the crypto space or it's your local church or fraternal organization. You know what? There's creeps and crooks everywhere. And does that mean

Starting point is 00:25:52 that everyone you should assume is up to no good? No. No, but that is the place for government, right? If there is a place, but we can overthink this, right? Like I had a colleague in our leadership meetings a couple weeks ago suggests that the colonial pipeline hostage situation where they paid the ransom in crypto, right? He suggested that we only got some of that back. No, we got all of it back. I mean, we have the ability and we should empower law enforcement to do what they need to do to enforce laws where one individual or one entity is literally scamming or taking advantage of another or others, right? We should also have what I would argue is light touch regulation in the crypto space.

Starting point is 00:26:40 I think these sandboxes are the way to go with safe harbors, right? Until you know what you're dealing with, don't start regulating before you know what you're trying to regulate or the problem that you're trying to resolve. You might need to learn a little bit more on the go and then create guardrails as you see And then to the Elizabeth Warren thing, you know, the place where, and I amazed that I'd say this, I don't know that we'd agree. By the way, I love our friend from Tesla, his back and forth with the good senator. That was really entertaining. I won't repeat it here, but it was fun to watch on Twitter. We'll include a link in the show notes.

Starting point is 00:27:19 Elon Musk is, he's got a sense of humor, man, and it's a good one. But where we might agree, the senator from Massachusetts and myself, is we have anti-eastern. trust laws for a reason. And really, I just don't know. We've got a Department of Justice that just seems to be so out of touch with Main Street USA instead of behaving like a political entity that does the Republicans bidding when they're in office and does the Democrats bidding when they're in office, you know, their agendas. Why don't you start doing stuff for the American people? You know, when you've got companies that have gotten so large that they literally are killing companies. in the marketplace, that's what we have antitrust for, right? That's the idea is you've got to let

Starting point is 00:28:06 everybody participate. And I think the senator from Massachusetts and I might agree on that. Last thing, David, I think you've got to have a complete rewrite of the banking laws in this country. This is not the 1930s. We do not have the same challenges. And you bring up a company like Tether, which unfortunately, you know, there are issues, but you can solve an issue with Tether by requiring reserves and specifying what is a valuable and reliable reserve and what do you have to put up behind whatever it is your offering so that a person that is trusting you actually knows that there's something backing up that investment. So there are things we can do. But here's, when you play devil's advocate, I love it because in our committee, you know, we've got,

Starting point is 00:28:53 these guys aren't as detailed as you. You know, they want to talk about climate change. They want to talk about, you know, everybody's dirty. This is Silk Road. I mean, they're reading off a playbook from like 2012, 2014. I just, come on. By the way, you want to talk to drug dealers and those doing illicit activities in this country? I'm going to guarantee you, they're going to tell you cash is still king. Crypto, I would argue, is not the preferred venue or medium of exchange. Yeah, absolutely. And it's a middle area that really needs to be educated. You were talking about the colonial pipeline incident in the ransomware. People look at that and they say, oh, isn't crypto bad?

Starting point is 00:29:35 But it's like that also happened on another set of protocols called the Internet. Should we turn off the Internet? Because there's a ransomware attack on the Internet? No, of course not. It provides so much more utility than just these things. And I think that will become more obvious in time as crypto builds and continues to provide utility for its citizens. But let's flip this and talk about the good side. Okay?

Starting point is 00:29:56 So we talked about what's at stake if America. it gets this wrong. But there's also an opportunity for crypto here. This is what we see at bankless, and I think, Representative Emmer, what you see. You see tremendous opportunity for America to lead. What are the benefits if America gets policy right on crypto? Well, just to ask yourself, using your example, and I love it, the Internet. Yeah. You know, someday the Internet might amount to something, right? It's that old argument. And you're right, it's causing all kinds of problems. We better turn it off. You're never going to turn it off.

Starting point is 00:30:29 It's going to continue to grow. So when I answer this question, you should ask yourself, what would have happened if we didn't allow the Internet to develop here in the United States? What if we said, oh, we're scared of this? This is where all the bad actors are. This is going to corrupt our children. This is going to be awful. I mean, think about all the bullying that can take place on social media sites and just terrible things. say, well, what if China would have been the leader? How different would it look today? And what would

Starting point is 00:31:04 that mean to economic growth, safety and security, our future here in this country? I would say the same thing here. I mean, do you really want to say, because I used to say this long before there was crypto, money will always go to the place where it can thrive. So if you're going to put a roadblock in front of it, guess what? Like water, it's going to find its, somewhere else to where it can actually move. Okay, so you think the Bahamas should be the ground zero for crypto development and evolution and growth or the United States of America? Do you think Europe should be or the United States of America? More importantly, you think China should be. I think China's made a serious mistake, gentlemen. I mean, by shutting down mining, which I love

Starting point is 00:31:54 when Lizzie and I talked about this a few weeks ago, she was helping me with some talking points and she said yeah they've lost 60% of their mind and Texas has gotten all 60% 100% of the 60 the China is driven away and I said Lizzie yeah but they shut it down so it's 100% you're just telling me 60 and she smiled and said you can't shut it all down I mean you can't this thing is going to continue and it's going to continue somewhere so why not here in this country because think about what it will mean to our safety and security. I know the traditional defense hawks, you know, it's like they have to have all the control. You know what happens with decentralization? I can protect myself. You decentralize. You put me

Starting point is 00:32:41 back in charge of my health records. You put me back in charge of my bank accounts. You put me back in charge of who I'm dealing with as opposed to a middleman right now when I do business with a bank. And all of a sudden, I'm getting all kinds of solicitations from somebody that the bank is sold its list to or is doing business with because I unwittingly somehow without knowing gave them consent to share my information all over the place, which by the way has value. And I'm not the one that's getting the value. Somebody else is getting it. And I know I'm rambling off, but it's, I just tell you, this is so much bigger than crypto, but crypto is the, it is the basic building block for making this whole evolution happen, which is why I'm going to continue

Starting point is 00:33:27 to advocate for it and support it. I'm going to continue to push back on these ideas. Most recent one is, well, how do we do economic sanctions? Well, figure it out, right? I mean, what, I got to stay riding in a train when I could be taken a plane. Or for you guys, because you're much younger than me, a rocket ship, right? You guys are going to space. I was just trying to get from here to Chicago. But you get what I'm saying. I think it has to be in this country. And we're falling behind right now. I mean, my LinkedIn was talking about how a Canadian firm has just put on their balance sheet, different crypto offerings. And it's like, come on, man, that should be happening right here in this country. Absolutely. A lot. Completely agree. We're falling

Starting point is 00:34:13 behind. There's an exodus of crypto builders leaving the U.S. Lots more we could talk about, but the opportunity to miss is of the size and magnitude, maybe larger than the internet. But let's talk about the solution here a little bit. So I want to talk about legislative solution and three branches of government and executive. We'll ignore judicial, right? So, but legislative and executive branch. So on the legislative side, we've had a number of regulators on, I would say crypto-friendly regulators. You know, Brian Quintends from the CFTC, Hester Perce, from the SEC, and they kind of tell us the same thing, Representative Emmer, which is regulations could be improved. There could be better posturing on the regulatory front, more friendliness towards crypto, but part of the root problem is we have old

Starting point is 00:34:58 laws, orange groves from like the 1940s for our SECR securities laws. So do you agree with that? Do you think that they point to legislation? They point to changes in the legal system as the answer. Do you believe that the change has to come from the legislative side, that Congress ultimately has to act? That's the real solution here. The Gemini Exchange has been my exchange of choice ever since I got into I use Gemini to both buy the dips and also manage my regular automatic monthly purchases of my preferred crypto asset. On Gemini, you'll find over 50 different cryptos, including many of the top defy and Metaverse tokens like Wi-Fi and Axi Infinity. Using Gemini Earn, you can earn yield on your various cryptos, including 8% on the GUSD stable coin.

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Starting point is 00:37:07 Bankless is proud to be sponsored by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum that lets you trade any token at the current market. price. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. The Uniswap Grants program

Starting point is 00:37:33 is accepting applications for grants. Do you have something of value that you think you want to contribute to the Uniswap ecosystem? No matter how big or small your idea is, you can apply for a unique grant at Uniswapgrant.org and help steer Uniswap in the direction that you think it should go. Thank you, Uniswap for sponsoring bankless. Yeah, I do, but it's a little bit more complicated. By the way, there were great champions, as you point out, in the last administration. But I would argue they were up against many of the same things that I suspect the champions that I have yet to know in the Biden administration are up against, right? The traditionalists that, oh, you can't do that here, right?

Starting point is 00:38:10 You mentioned Hester, you had Brian Brooks. I think you might have mentioned Giancarlo. I think some of those same people are in the current administration. but they're getting overwhelmed by those traditionalists that are really invested into how our financial system has grown and developed. And this, as you guys would admit, is the most disruptive change that could take place, right, where I don't necessarily need an intermediary, a bank, to do business with you, right? A financial business with you. Now, that scares them. And what I keep saying out loud before I get to your question is we need to talk about how we, well, it's going to

Starting point is 00:38:53 answer your question. So we got people like Gary Gensler out there who my mother used to say, you're too smart to be so stupid. I would say that to Gary Gensler. You're too smart to be so stupid. He is literally impacting the marketplace through his public comments, misguided public comments and through enforcement actions. That's why the answer your question is, yes, we're going to need to legislate Congress legislative branch of government is actually going to have to do something in this area to rein in these regulators, all right? Because if we don't, and I would argue that Congress has done very little that it's supposed to do since 1998. That's why everybody's so frustrated. I mean, we haven't done a budget 12 appropriations bills through the House, through the Senate, and across the president's desk on or before September 30th of each year, midnight.

Starting point is 00:39:47 September 30th since 1998. What does that do? Well, that tells all of these bureaucrats that nobody's going to be supervising. Okay. So they come before a committee and they think their job today, unlike it was in the 80s, the 70s, they think their job today is to be as vague and evasive as possible because they're the king or queen of their little fiefdom and they're going to run it just how they want. So yes, we are going to have to take back the authority. And that means we're going to have to do something. What do we need to do? Just very simple things to start. I mean, let's talk about money transmitter licenses, right? Why don't we have a federal law for money transmission and money transmitters? So you only, if you're in that business, right? And by the way, we need to further

Starting point is 00:40:35 define it because some never possess any actual currency, if you will. So how do they fall within that definition? We need better definitions. I better back up before I say the money transmission. You've got to better define what is a currency, what is a commodity, and what is a security. So we can get away from this idea that the crypto space should be a full employment opportunity for lawyers in this country. Because why is the Howie test that you referenced from the Orange Grove in Florida? Why is that important? Because the court has said that test, which was created before anybody even knew what crypto was, that test is what we use now to determine. and whether something is a security or not.

Starting point is 00:41:20 And if it is, then it's subject to all of the SEC regulations, et cetera. We're going to have to change that because you're losing opportunities. There's a guy who started a $1.4 billion project outside of this country more than a year ago who looked right at me and said, I'd love to do this in the United States, but there's too much uncertainty. If I start it, I don't know if I'm going to have the smorgas board of regulators that are all going to want a piece of it. I'm going to be spending way too much money trying to get things clarified so he did it elsewhere. You've got to clean that up, but Congress is going to have to do it.

Starting point is 00:41:57 Light touch stuff. Where we should preempt state law, so we have a one-stop shop, we should do it. I use the example of money transmitter licenses. We should create safe harbor, right? Where people that haven't done something before that's brand new have the ability to do it. And as it evolves and we understand what it is, then we can define what a set of regulations apply. Same thing with the IRS. We should have a situation where there's no look back. You get to start your opportunity. And once we realize it should be taxed as currency, it should be taxed as an asset, a commodity or something else under the securities provision, then we would tax it going forward. But that's a very broad stroke, Ryan, the answer your question is Congress is literally going to have to do its job. And I'm hopeful that

Starting point is 00:42:50 in the 117th Congress, that there's going to be an appetite to get that started. And Representative MRA, you actually have a proposal out, I believe called the Securities Clarity Act that can help kind of progress this conversation forward. Can you just elaborate for our listeners, what is inside the Securities Act and what it's attempting to fix? Well, this is kind of what I was referring to, with innovators leaving this country, right? The bill would amend the existing securities law, David, to distinguish a token from the securities contract that it might have or might not have been part of it at one point, right, at the beginning. It does this by creating a new definition in the law. It's very simple. The language is an investment contract asset. Tokens are investment

Starting point is 00:43:35 contract assets. So we did this because, as I referenced, the SEC has been regulated. by enforcement action. And because you never know if you're going to be subject to the next enforcement action, a lot of entrepreneurs are taking those opportunities, those projects outside of the country. And look, if we do this, this simple change, I believe entrepreneurs would have clarity in the security space, which will help them expand things like capital formation opportunities,

Starting point is 00:44:07 employment, and other, all kinds of new projects. And I know Ryan will be happy to know that the bill actually fits into the already existing Howie Test Framework, but it simply provides more clarity so you don't have the same problems that we're seeing right now. And just to illustrate this for the listeners, if something like this got passed by Congress, this would start to force the SEC and Gary Gensler to adhere by these rules. Basically, everyone in the industry is very frustrated with the SEC and the actions of Gary Gensler. And if we want to express that frustration, we can start to vote in laws and or elect

Starting point is 00:44:45 representatives who will vote in laws for us that make Gary Gensler have to heal to those laws. And so if we think that Gary Gensler is overreaching, a solution for that is to write new laws that Gary Gensler has to follow. Is that right, Representative Emmer? It's exactly right. And I mean, David, I think what's interesting over the last couple of years, with all the vitriol, I was talking about this to another. remember on the floor yesterday, but you know, you can very quickly become part of the swamp where the only thing you're hearing are the echoes of this chamber, right? You need to stay grounded on Main Street in the communities that you come from, Main Street across this country. And I do that.

Starting point is 00:45:28 I mean, I'm proud of it. I think that's one of the things that people say to me when they meet me is you're not who I thought you were going to be because you're not, it's like you don't really fit here. Well, okay, I take that as a compliment because I never want to fit here, right? I always want to be where I'm from, but I'm a Republican. And I think this is what I was telling this member yesterday. I think more and more people out there really don't care anymore about whether you're a Republican or a Democrat. They're actually starting to pay attention to what is he or she talking about? What do they stand for? So it's funny in this space, too, you guys might get a kick out of this. I feel like I've run into more Democrats, if you were going to put a, they'd hate it, by the way, so I will not name names because they're great people.

Starting point is 00:46:15 But their background compared to mine is a more, it would be my grandfather's idea, you know, that the government is good, it's supposed to do good things, et cetera. They have a more Democrat, historical Democrat outlook, but we work really well together because it's not about being a Democrat. It's not about being a Republican. It's actually about looking at opportunities that we all want. And I just happen to see it going beyond, you know, changing, fundamentally changing how we handle our financial business. I just think it's so much bigger than that.

Starting point is 00:46:49 So, yeah, pay attention to who's running for once. Look at it. Don't get frustrated like I told this member yesterday. You know, you hear a lot of people right now that go, I have had it so much with this shit. I don't want to hear another word about it. Republicans, Democrats, all you morons ever do is arguing. with each other. I'm sick of it. But guess what? They do want to make a difference, as I was

Starting point is 00:47:12 telling this member, they're telling you when they say that to you, I don't want to talk to you anymore because you're part of a problem. But that doesn't mean they're disengaging. I think just the opposite is happening. I think more people are engaging because they understand, you know, listening to guys like you and your whole community, when you tell them in August, look, guys, these, well, we'll call them Mr. Dumas. These, uh, Mr. and Mrs. Dumas at the Congress, they don't know what they're doing. You need to call them. You need to email them. You need to weigh in. You need to let them know this is important. And look, you make a significant difference. But again, I said this earlier to Ryan, David,

Starting point is 00:47:53 the community has just gotten started. Just gotten started. You are on the verge. There's going to, there'll be an election that takes place next fall. And people can say, yeah, I'm done with this. But understand, the people that hold these election certificates, they literally do a affect your lives. And in this space, it can make such a difference if you start talking to candidates and incumbents and finding out where they stand on this issue. Because the more people that you put in here, to your point, David, that have an understanding of crypto that are favorable to change, to evolution, to new opportunities on the horizon, you can literally start to rewrite the laws and get rid of some of these ridiculous regulations.

Starting point is 00:48:37 that Brian pointed out were created in a different time for different reasons. Rep, Emmer, we've got just two more things to cover because the last thing we want to do is close this out with some action items, things that the bankless community can do to get involved and do exactly what you're saying. But before we do, got to touch on this briefly. So China's been making moves on central bank digital currency for a while, and it's been no secret, right? 2014, they started down this path and then they got to beta. Now they're releasing at the Olympics. I know you've tweeted this out. a statement that I agree with. I've never seen a representative tweeted out this way,

Starting point is 00:49:12 but you're talking about the costs and benefits of central bank digital currency at the Fed. And you said any CDBC implemented by the Fed, if that's even a good option, must be open, permissionless, and private. Of course, China's is not like that. And they are deploying it right now at the Winter Olympics. I tweeted this out recently. And I was just frustrated, Representative at Congress's and the U.S. government's lack of action on this. I said, if you're mad about China, China's digital wand at the Olympics, why don't you support the free and open crypto industry in your country in the U.S.? At least China's building something? All you do is talk. That is an expression, not at you because I know you are acting in Congress, but at the U.S.

Starting point is 00:49:57 government as a whole, I'm not sure that the U.S. understands how high the stakes are. If we don't adopt a free and open and private and permissionless, digital currency of some form, whether that's crypto or America's central bank digital currency, guess what? The world will adopt something from a more authoritarian regime and their way ahead. So what do we do about this? And can you talk about that briefly? You just can't blindly trust anyone. Not that you shouldn't, I don't want people walking around with the idea that everyone is bad until they're proven to be good. I think human beings generally are good. They're well-intentioned, but you can't trust necessarily blindly everything someone tells you, and especially your government. You've always got to be looking at what

Starting point is 00:50:48 your government is putting out with a critical eye, and I think even more so today. And this is a nonpartisan statement, because I'm not going to play any favorites. This is on both ends. of the political spectrum and everything in between. I think we've got to be a little bit more critical in our thinking, critical in our research. And on this issue, I mean, Ryan, this is the issue. China's been practicing digital authoritarianism ever since this began. And I'm really disappointed that with all of their human rights abuses, all the things that they're doing to their own population that we actually are supporting them in this Beijing Olympic thing. But, you know, hats off to our young people that are competing. I would never want to deny them the opportunity

Starting point is 00:51:35 to represent their country. So I'm not, I'm not being critical of them. But this idea that the Fed, and they're going to try to do it, Brian. So I will tell you right now, I don't see them actually creating a central bank digital currency that is literally open, permissionless, and private. They might hit one of those. It's open. And I think maybe we should change, if our government's going to do this, I think we should change it from a central bank digital currency to a central bank digital control system. because their idea is they want to keep all of the information.

Starting point is 00:52:19 Well, the whole point of blockchain is decentralization. If you allow them to centralize all this stuff, you have just made them the all-powerful. This will date me, but I'm just going to tell you in your audience, if you've never read the book Road to Serfdom that was written by an Austrian economist during World War II, while he was, I guess you could call exiled or not, living in Great Britain. He was writing it to all of his intellectual elite buddies because they all

Starting point is 00:52:50 thought that a central government, a powerful central government that allocates scarce resources, just think about it, housing, food, clothing, opportunity, if you will, that that is the best form of society because everyone has the same opportunity. And if I just boiled the whole book down to a couple of lines, what Hayek basically told his intellectual buddies is okay. I mean, that's actually great if you have a central authority that decides how to divvy up scarce resources as opposed to allowing human beings through their own talent and initiative to do with the invisible hand, if you will, that Adam Smith wrote about. Okay, he said that's great, as long as you're the one that's making a decision on how to allocate those resources.

Starting point is 00:53:39 if you're not in the group that makes the decisions, well, then you might not like the decisions. And by the way, if you object to the decisions that your central authority is making, the first thing that will happen is they will start to restrict your liberties. The second thing that could happen is a lot worse. And his conclusion was, it sounds great, but it never ends well. And literally, China has gone into the technological age of authority. authoritarianism, and our central bank, our Fed, which I think needs complete reform, our central bank should never, never hold all of our information.

Starting point is 00:54:22 And right now, unless it can do that, open permissionless and private, the same qualities that cash offers you and me, hard cash, they should never be in this business. Because it's kind of like the Patriot Act guys. They created the Patriot Act so that they could get a special court to give them permission to spy on foreigners. Bad enough, right, to spy on foreigners that they suspect of terrorism. And they said, this will never be used against American citizens. Oh, until it was. Right.

Starting point is 00:54:57 So don't trust your government when they tell you, we can do this better. I mean, for God's sake. The thing that makes America special is guys like you. in the community that you're a part of that you're communicating with. You're the ones that make the difference. Government, quite frankly, does provide some benefits if it stays very limited in its focus and gets out of your way. Representative Emmer, I hope that all the listeners feel inspired and ready to take some action, but we want to also tell them or inform them about the possible actions that they can take to actually move the needle in the right direction. So what advice do you have?

Starting point is 00:55:37 for us for how do we win in D.C. Could you kind of give us the high level game plan? We have the 2022 midterms coming up, but there's going to be elections every two years. How do you see the roadmap to victory for the crypto industry? What advice for us do you have? Two high level things, because we could start to split hairs and get in much detail. But the two things I would tell you is if you are inclined, if you're inclined, I don't care if you're Republican, Democrat or other, just really could give a damn less. But if you're inclined, if this is important to you, find out who your representative is in Congress where you live. All right? By the way, don't stop with Congress. Find out who your state representative is. Find out who your state senator is. What you should be doing

Starting point is 00:56:24 is, again, if you're so inclined, get involved in a campaign this summer. You know, get to know them. It's really funny how it works with members of Congress. They'll be walking in parades again this summer. You know, if you're in the crypto community and you want to get close to a member of Congress, you do it first by just showing up at a parade and volunteering. I mean, it may sound really stupid, but again, this is if you are so inclined because they get to know you, you get to know them. Pretty soon you've got this connection. I've got some great kids that started with me, well, 15 years ago when I was doing the state level. They've grown into this area and they know so much more about it than me, but I know them. And so now I'm

Starting point is 00:57:05 I trust them, right? The other thing that you can do, which I think is an even bigger one, David, which is started back in August, is make your presence know. Show up in Washington, D.C. You know, it's not just the member that you want to get to know. If you want to get to know the staff for that member, you want to get to know the staff on the Senate side. And by the way, I hope Lizzie and Landon and all these guys will forgive me. But they're your peers. These guys who are working for people like me, and I should say working with people like me, they're your peers. So the more that you can socialize, the more that you can open up the lines of communication on a friendly basis, doesn't matter again, whether it's a Democrat representative or a Republican one. It's going to

Starting point is 00:57:51 help you in the long run, because like I said, this political thing goes back and forth. I think we're going to see a change next fall for reasons unrelated to crypto. Well, it is actually related to crypto and that the monetary policy in this country has been so screwed for so long, probably since the early 70s. That's the whole reason there is crypto. So I guess crypto is indirectly or directly involved in the upcoming election because of the ridiculous inflation that we didn't need to see and we created. But when the change happens, we're in the 116th Congress. The 117th, you guys may not know everyone yet, but we've been working on this for 70s. years and there is a growing number of members that I believe are going to be poised and ready to do

Starting point is 00:58:40 things in the next Congress, that if we can get this president to hopefully want some victories before his presidency is over, I hope that he says, this is a legacy that I want to be part of. I want to help this grow and keep America at the forefront of, you know, economic evolution and opportunity. So those two things. One, find a candidate or candidates. Get involved with them. If that's what you're inclined to do, two, just start infiltrating.

Starting point is 00:59:10 I know it sounds like a dirty word, but that's what you're doing, is get in, embed yourselves in these different government halls, whether it's here at the federal level or at your state level. And start grabbing people who look like me, even though it will be fewer and fewer as we go forward and go, hey, man, do you have a virtual wallet? What do you have in your wallet? You know how many of them are going to look at you and go, huh? You got to help.

Starting point is 00:59:36 You got to help. Excellent advice, Representative Emmer, we appreciate the work that you are doing in Congress, fighting for crypto, which is not really a fight for an industry. It's fighting for the American people. It's what David and I firmly believe. We appreciate all your efforts. And thank you for spending the time talking to the bankless community today. You guys are awesome.

Starting point is 00:59:53 Keep it up. You inspire people like me. That's why we're here. And I don't know how long I'll do this. But as long as you guys have this kind of energy, for an issue like this, I want to give it everything that I've got. So thank you for what you do. Well, please stay. We definitely need you. Action items, bankless listeners. We need you as well. Infiltrate. That was the word representative emer used. Find out who your representatives are.

Starting point is 01:00:15 I love it. Make your presence known. Get to know the Staffords. You can also check out this website, pack.xy Z from one of our friends to see how your representative score on how crypto-friendly they are or how crypto toxic they are. Also, remain politically active in 2022. Vote, Voice Capital. You hear that a lot on bank lists. We're giving it to you today. Got to do that this year. Finally, we got a cool book recommendation from Representative Emmer today. We'll include a link to that in the show notes. The Road to Surfdom by Frederick Hayek. I haven't read it myself. Sounds pretty good. Don't forget the scandal of money. The scandal of money. We didn't talk about it today. Two book recommendations for you. Of course, guys, risks and disclaimers, none of this has been financial advice.

Starting point is 01:00:57 is. It's not even political advice, although we should get involved in politics as often as we can. Eith is risky. Bitcoin is risky. So is crypto. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.

Bankless - 105 - Crypto in Washington | Congressman Tom Emmer

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