On The Brink with Castle Island - Rep. Tom Emmer (R-MN) on FTX, the SEC, and the House Crypto Agenda for 2023 (EP.382)

Episode Date: December 20, 2022

Minnesota Representative and newly elected House Whip Tom Emmer joins the show for a discussion of the FTX fallout, the House hearings, the SEC's behavior throughout the process, and developments in the House looking ahead to 2023. Rep. Emmer's thoughts on the House hearing with John Ray How the FTX collapse was about a failure of centralization How the timing of the SBF arrest was not coincidental - and who had an incentive to stop SBF testifying Why the Bahamian authorities may not have wanted SBF to testify The meaning of Rep. Emmer's march letter to Gensler and the SEC Chairman Gensler's role in the FTX scandal Has Gensler been concealing his calendar from the public? Gensler's poor track record over the crypto crisis Oddly close links between SEC Chair Gensler, FTX, and subsidiary exchange IEX House Republicans will gain the subpoena authority in the next legislative session and what they will do with it What are some of Emmer's responsibilities in his new role as Majority Whip? The importance of Rep. McHenry taking charge of the House financial services committee What are the prospects for stablecoin legislation? McHenry's likely crypto agenda for the new session Rep. Emmer's commitment to financial privacy Senator Warren's draft legislation and risks to the crypto ecosystem The importance of Rep. Emmer's Securities Clarity Act Modernizing a securities regulation regime for crypto How are Rep. Emmer's colleagues reacting to the FTX crisis The role of journalists in assessing the FTX situation Content mentioned in the episode Rep. Emmer & colleagues original March '22 letter to SEC Chair Gensler Rep. Emmer's annotations of the March letter in response to Gensler's criticisms

Hello and welcome back to On the Brink. I'm Nick Carter. Today we're sitting down for a very special episode with Representative Tom Emmer of Minnesota and newly elected House Whip. This is a very timely episode focusing on the recent hearing with the FTX CEO John Ray in the House, of course covering Mr. Emmer's thoughts on SBF and the fallout from FTX, what his colleagues think, whether their attitudes towards crypto have changed at all, and curious links between SEC chair Gensler and FTX and IEX. We also look ahead to the crypto agenda in 2023. Maybe this will be the first year where we get meaningful crypto legislation. Mr. Emmer has plenty to say about that. Very excited to share this one with you all. I want to thank Representative Emmer's team for making it happen and of course to Mr. Emmer for joining us once again. I also want to wish every member of Brink Nation a Merry Christmas and happy holidays. Thank you for being with us for an another year. Let's dive right into it. Welcome back to On the Brink. I'm sitting down for the second time

with Representative Emmer from Minnesota. We're very excited to have him back. A lot has happened since we talked. The midterms occurred. Tom, you're now, you've been elected whip in the house. So congratulations for that, just right off the bat. That's incredible. It's a great new challenge, Nick. Fun to be with you again. It's great. We're moving into the Christmas week. We're already in the Christmas season, but a lot has happened. You're right since you and I last sat down. Yeah, thank you for making time. So much has changed. The Congress, or at least the House, has changed hands. The Senate did not. So now we have a split Congress. We had a hearing last week. We had a massive fraud in the crypto markets. Unfortunately, that's not good. But it's also,

you know, I feel like crypto is growing through this and hopefully will be more anti-fragile and functional. on the other side. So yeah, why don't we just start with the hearing, actually? You made waves at the hearing. Crypto Twitter was on fire with your comments. I think you're maybe the star of that hearing. So we were denied the opportunity to hear from Sam Bankman-Fried. He was obviously arrested by Bahamian authorities the night before the hearing was due to happen. But we did get to hear from Mr. John Ray, who is currently presiding over the bankruptcy. What did you make of Mr. Ray's comments? What were your sort of personal impressions from that? He's been brought into a job. He's a guy who, you know, when all the, when the painting falls off the wall and the glass breaks,

he's the guy who comes in and has to pick up all the pieces and try and put the painting back together again as best as he can. And he's just getting started, which was evident. It would have been nice to talk to Sam Bankman-Fried. I frankly, I don't have any evidence of it, but I don't think his arrest the night before the hearing was coincidental. I think it was purpose. And I think we'll find that out going forward. As far as Mr. Ray, and it's nice, Nick, but we don't go into these hearings to be the star. We can go in to get the information. And what I find so interesting, And there were some great questions, by the way. Brian Stile from Wisconsin was fantastic. Andy Barr from Kentucky. Bill Hizenga. I thought Richie Torres from New York was good. I thought

Godheimer from New Jersey was good. These are Republicans and Democrats who are going after this thing. And if there was one common thing, which I think we were able to distill as well as anybody, this is about centralization, centralized finance. This is not about decentralization, which is really what the whole crypto community has been about from the beginning. It's about open, permissionless, and decentralized transactions on a public blockchain that you can literally follow. It's self-policing, right? And it's interesting because you get to the end of this hearing. John Ray was great because we teed up a bunch of very simple questions about, you know, this guy didn't. This typically, the only difference between this and fraudsters, financial fraudsters from the beginning of time,

is we've now moved into digital assets as opposed to hard currency, bear bonds, you know, all this things that have been used in the past. It's the same problem. though you had a centralized authority with just a handful of people, Sam Bankman-Fried being the center of that centralization. And they were self-dealing. They were self-dealing, whether it was Alameda or was FTX international. The funds were being shared. There weren't controls. There weren't internal controls. The typical things that you see just did not exist. And it's amazing, if you think about it, Nick, because the investors were very sophisticated. Where was the due diligence that they were doing?

And then you look at the SEC. Gary Gensler is in this thing up to his eyeballs, which we should talk about, because I think that ultimately is where the blame goes. But it was about decentralization versus what this fraud is all about, which quite frankly is what led us to the problems in 2008, which is what's led us always to the, the financial issues that we've had, it's why the technology, the technology did not fail, Nick. That was our point. Decentralization is the point. And you will see crypto continue to grow,

but when we're talking centralized finance, whether it's digital assets or the assets that pre-existed the crypto community, you've got to have adequate safeguards and oversight, and they clearly did not exist. And the SEC was asleep at the wheel and or, and or was complicit in this fraud in some respect. Wow. Very strong words there. I mean, so actually you mentioned that you felt that the timing of the indictment was maybe not entirely coincidental. Can you elaborate on that?

I mean, who do you think had an incentive to sort of stop the general public from hearing, to stop the House being able to interrogate Mr. Bankman-Fried? I think there's a whole bunch of people that possibly had an incentive to keep Sam Bankman-Fried from coming out in public and having this open hearing because they don't know what he's going to say. I mean, the government of the Bahamas has an incentive. I mean, for good of sakes, you got Sam Bankman-Fried and Mr. Wang allegedly opened all the doors to allow the Bahamas government to literally take $100 million of funds to reimburse, to reimburse 1500 residents of the Bahamas. I wonder what that was all about, Nick. You also have the government in the Bahamas, whoever that is, right?

If it was the leader, if it was the prime minister, whoever it was, they got them to print, I'm sorry, to what meant, not print, mint, 300 million in tokens? Hmm, what's going on there? And then to see the speed with which this indictment apparently moved at, it's an unusual speed that it moved at by any account you talk to anyone in the prosecution business they'll tell you that this this really went in a much faster fashion than most of these that they have ever seen out of the southern district of new york i mean what's the connection because we've got a we've got an executive branch that was heavily invested into

F-TX, and I shouldn't probably use the word invested, but they were spending time with Sam Bankman-Fried. I mean, Gary Gensler spent more time with Sam-Bankman-Fried than anyone else in the, it appears, than anyone else in the crypto community over the last six to eight months, Nick. Why was that? And we have information that he was talking with Sam-Bankman-Fried, F-TX and then a trading firm in the U.S. called IEX. He was talking to them about a digital assets trading platform. By the way, something he wasn't allowing anyone else. When I say he, Gensler, was not allowing anyone else to get into.

In fact, he was, I would argue, being very aggressive in his oversight of all the good actors in the environment while he was meeting with someone that we now know. was a fraud from the beginning, which, by the way, apparently Gary Gensler's SEC is now telling us that FTX and Sam Backman-Fried were a fraud from the beginning in 2019. Nick, when did they know that? When did they know that he was a fraud? And why are they meeting with Sam last March, having conversations about how they might create a special path for him, an I-E-X, F-T-X and I-E-X, to create a digital training platform. Why were they working this all the way through? And you and I, a lot of us didn't see how bad this was because they weren't sharing with us. We sent a letter,

you might remember, in March, asking for very detailed information, which if we would have gotten it back then, we probably would have been able to be on top of this a lot sooner. But Gary Gansler and the SEC wouldn't give us the information that ourselves and our colleagues, both Republicans and Democrats in the Financial Services Committee were requesting last March. We had to wait until this fall to find out when the whole thing started unravel and they released text that they were working on over in the Senate of a bill that was going to essentially give FTX, Sam Bankman-Fried, what I would argue is a monopoly in this country on a digital assets trading platform. That's when this whole thing started to come apart.

we've got to know, by the way, why, what was Gary Gensler doing with that? Why was he allowing that to proceed? Why wasn't he doing his job? Why wasn't the SEC doing the oversight that, and by the way, let's talk about Elizabeth Warren, because Elizabeth Warren now introduces a bill to take us to the next level of surveillance, I would argue. She's going to use the FTX experience to try and push her, you know, China-styled central bank digital currency or oversight. Look, Sam Bankman-Fried is corrupt with centralized authority. I would argue that this is the problem with our government and people like Elizabeth Warren, who are pushing for that same type of centralized authority inside government to be a surveillance. you, Nick Carter and anybody else who's out there transacting business in this sector. And I'm sorry, I'm rambling, but it's pretty amazing to me. This is as old as the hills. This is a centralized

finance operation run by a crook. This was a failure of business ethics. This was a failure of a individual who was corrupt at the core. This was not a failure of the technology, because again, as we said at the hearing, decentralization is the point. Lots to digest there. Let's dig into the March letter. So you and some colleagues wrote this letter to Gensler in March, asking for more insight on his contact with crypto platforms. And then more belatedly,

now Gensler and his proxies in the press are trying to spin that letter, pejoratively, basically saying that you were attempting to stymie his effort. to investigate these platforms. Was there genuine investigation of these platforms? Were you in any way stymying him? Or was this just an attempt to understand his interactions with these platforms? Well, I think if people read the letter, which we tweeted out again, I think within the last two weeks, with annotations so people can literally compare the language in the letter to the annotations and say, oh, I see why they were asking for that, right? And you got four, Republicans. You got four Democrats on the committee hearing. So he's alleging the Democrats who have a

Democrat in the White House and control the Senate in the House that they were actively trying to stymie his investigation. What investigation is first, Nick? I mean, he clearly hasn't been doing investigations because if he really was doing real investigation, substantive work, how did he miss Tara, Luna. How did he miss all these other ones? And the biggest one, of course, is FTX, which he appears to be working with directly. So I don't know that his narrative is going to stand up. It certainly doesn't stand up when you start looking at what we were asking for. Because he did that, you might remember back in March. We sent the letter. And the reason we sent this letter, Nick, was because the community anonymously, I mean, we know who they're.

are. I'm not going to disclose, but it wasn't FTX, by the way. Nobody associated with FTCX was giving us its information, but people who were getting entities that were getting voluntary requests for information were contacting our office and say, these don't feel voluntary. We don't know what they're doing. It was like the SEC led by Gary Gensler was throwing out this huge net, even as their own enforcement had admitted to me at a hearing a few months. ago to entities beyond their jurisdiction. They were sending these letters, you know, it's like a sweep letter where they're trying to bring in all kinds of data and information. From our perspective, we're hearing from the community that these don't feel voluntary. We're getting information

inside the SEC that says if someone doesn't respond to their satisfaction, the SEC satisfaction, with these sweep letters, then their job was to make their lives miserable, which, you know, there's a huge expense to that because you've got to hire lawyers, you've got to keep going through the process. It seems now, in retrospect for me, and we've got a lot of investigation to do, and thank goodness we'll have subpoena authority going forward. Not only were they doing this, but why were they doing it to all of what appear to be the good actors in the crypto space, but they were leaving FTX, which at some point, they had to know how corrupt they were. You know, ultimately, we know what happened is it hurt everybody.

So Gary Gensler can tell us that he thinks, you know, that he's not telling us. He can tell the world, oh, these members of Congress were the ones that were trying to stop me. But it doesn't match with any of the actions that he took. Right. And Gensler's received criticism, I believe, you know, even outside the crypto industry for not being fully transparent with his calendar. I think we're trying to figure out exactly what's going on with his public calendar disclosures, which appear to not be comprehensive. What do we know about his meetings with either FTX directly or his meetings with IEX, which according to the FT was

FTX owned a controlling stake in that organization? What do we actually know about those meetings, if anything. Well, first of the calendar thing. I know what you're talking about. And it appears that he has, or someone, has removed things from his calendar, possibly. I mean, so we don't know that this is complete, right? We need to do more investigation. But what we do know right now is back in October of 20th,

2021, right? So more than a year ago, Nick, the date was October 29th, 2021. Gensler himself met with IEX. That's the U.S. trading firm that, you know, we have information that the way it was disclosed later after this meeting, and I'll get to that in a second, is that FTX and IEX, FTX U.S. and IEX, the trading firm, entered into a partnership. Well, you may know that recently the financials leaked on Alameda, the Hong Kong entity that literally was, it appears, co-mingling funds with FTX International. It's listed on Alameda's financials, again, that were late, that that was an acquisition by FTCS, that FTX paid $27 some million for IEX. We've got a lot of work to do there to find out what the relationship is, who the individuals are, why they were connected to Gensler, why he's meeting with them. Actually, who he's meeting with specifically and why he's meeting with them back in October of 2021. By the way, prior to that meeting, so I should put these in chronological order.

October 19th of 2021, Gensler meets with FTX and Sam Bankman-Freet. October 29th, about a week later, he meets with IEX. Okay, interesting. In March of 2022, March 23rd, so this is after our letter. Our letter was March 16th, okay? March 23rd, SEC staff met with FTX and IEX representatives together. we understand and again all of this that I tell you we're going to have to confirm through ongoing investigation in the next Congress we understand the discussions were about giving this soon-to-be-formed

entity special treatment that the SEC was going to allow them to operate almost in a safe harbor And this is, I think, ultimately looking forward from that point, March of last year to where we are now. My guess is they were already talking about giving this entity that they were going to create the monopoly in digital asset trading. On March 29th now, about a week later, remember, I told you it was March 23rd that staff at the SEC met with Sam Bankman-Fried and representatives from IEX. Six days later, Gary Gensler met with Sam Bankman-Fried, F-T-X, and IE-E-X representatives. And then in July, I want to say April of this year is when IEX and F-TX announced a partnership. And we were trying to find out what was the nature of that partnership? What was it supposed to do?

It was never confirmed, and they would never be. clear exactly what it was going to be. And then the last one that we'd know of was last July, July 29th, Gary Gensler met with IEX. And we know that subsequent to that, FTC was putting a huge push in Congress, specifically on the Senate side of the building to move legislation that we subsequently find out was very beneficial to FTX and not very beneficial to anyone else in the community because it would have effectively, I believe, given FTX and IEX a monopoly on digital asset trading in the U.S. And presumably, which is what we have to find out, presumably with the blessing of Gary Gensler himself. So by the way, after FTX collapse,

we did talk with IEX and they told us they told us they were never sure of the point of their partnership they also said they never needed FTX and they again have never disclosed that the so-called partnership was in fact an acquisition so there's a lot of questions Nick to be answered the timeline is very suspicious it raises a whole bunch of questions and ultimately you know, if this is truly what it looks like, if Gary Gensler and company at the SEC were either not doing their job or had reason to believe that, you know, they were giving special treatment to a bad actor. Wow, Nick, this is, this is a bad, bad situation. And Gary Gensler should probably think about drafting his resignation letter.

It's interesting. You mentioned subpoenas. So as far as I understand, do you gain the subpoena ability when the House changes hands? Obviously, now Republicans control the House. Is that how that works? A Republican House can now issue subpoenas, whereas they sort of couldn't before. Yeah. So we are the minority right now. So Patrick McHenry is the ranking member. In effect, the chair of the minority members of. of the committee. As such, he does not have subpoena authority. That Maxine Waters, as the chair, has that authority. As you correctly point out, that'll change in January. Patrick McKenry will be the chair of the House Financial Services Committee. As soon as he becomes the chair, he can unilaterally issue subpoenas for information to individuals and or regulators like Gary Gensler. And there, people should understand these subpoena. subpoenas are not, how would I say it? They're not the end all. They're not like the ultimate authority, but because they do have limitations. But for crypto, I would just say having a chairman who is in charge and is ready to use the subpoena authority that is available to them, that's great news. And I guess I'd give you an example. The committee can give out subpoenas to witnesses they want. to come in and testify before the committee or a subpoena can be sent out to order a group or a regulator,

again, like Gary Gensler, to gather documents and records that would aid the committee's investigation. And as you and I have been talking at length for the last 15, 20 minutes, there's a lot of information that we need documents, I mean, emails. We asked John Ray the other day specifically about the, the communications involving, you know, FTX and IEX and what the SEC knew. Obviously, he's not inside the SEC, but John Ray, who is trying to pick up all the pieces from FTX International and all it's related, I think there's like a hundred different entities that are related. You can imagine, Nick, there are going to be a ton of written communications, whether they're

emails, their texts, their maybe even, you know, written letters, et cetera, all kinds of communications that we are going to try and obtain. He told us that he would work with us to get us those. We can do that through that entity and then we can also do it through the SEC itself by virtue of a subpoena and start to get to the bottom of what's going on there. And I think Representative McHenry did state in his comments at the hearing that he intended to use that authority. So I think we're all very much looking forward to understanding the truth of what happened there. In terms of your own role, so as I noted, you have been elected whip for the next session. What does that actually mean? I mean, for those that aren't as familiar with Congress,

what does the role of a whip entail? Well, first off, in the leadership structure in the House, the speaker obviously is the top leadership position. And then you have a majority leader, which in the next Congress will be Steve Scalese. And then the number three position in the House is the Whip. The Whip has a very interesting, I would argue, the most important job in the House. It is the nerve center for everything that's going to happen. The speaker obviously will direct the agenda. The majority leader essentially builds the calendar for the year and then is the one responsible for what comes to the floor. You know, what are we? actually going to be voting on. The whip is the one that is in communication with every single

member. And by the way, it's not just Republican members. Yeah, the Republicans are going to take control, but the WIP's office is responsible for the entire house to the extent that we have Democrats that want to work directly with us because they have priorities they have to get done. It's all one and the same. It's what can we reach agreement on? and then how can we move it through the House so that I can report to the majority leader that this area, for instance, if we're talking about one of the bills that I've introduced, the Security Clarity Act, for instance, if it comes out of Patrick McKenry's Financial Services Committee, I can report to the majority leader that we have the votes to pass the Securities Clarity Act out of the House. and then the majority leader, obviously I'd be involved in the discussions with the majority leader and the speaker would make a decision amongst us. Yeah, that's one that we want to move and we want to send over to the Senate. I would add, Patrick McKenry will have a huge role in this

because the chairs of the different committees, they're the ones that will be driving the agenda out of their committee. And obviously, we have to be in constant communication with the chairs and the members of those committees, committees, to know what their priorities are so that we can help translate that up the chain to the majority leader and the speakers so that we can move these things. And I think for the crypto community, it's huge. Patrick McKinney, I sat down with him again yesterday. He's made it clear to me that he has a very significant agenda that involves digital assets. And it's, you might remember, he was, he was actively engaged in negotiations on stable coin legislation last summer and leading in the fall. I'm grateful that it

didn't happen. He was working his, his best to try and get to a point where, you know, we'd have something that was substantive that we could move. Maxine Waters had led him to believe that she was willing to do that. And remember, she's got members over there that do see, crypto, I'm going to to remind everybody is not a Republican thing and it's not a Democrat thing. This is the most nonpartisan area and must stay that way that there is. So he was trying to do that, you know, communicating with Treasury, communicating with the Fed at all. And it just, they just wouldn't come far enough. It was a bridge too far. They wanted too much for the, I would argue, for the authoritarian, the digital authoritarian state that they would like to create.

Thankfully, Patrick McKenry was having none of that. So good news for the crypto community is that Patrick will be the chair. Patrick does have a, I mean, he knows what it is we're doing. And he's got members on both sides of the aisle that want to push some important stuff for the crypto community. The McKinery Stablecoin bill, I know these things are sort of constantly. changing. So as far as I understand, it's kind of a McHenry Waters bill, and that was, you know, drafted under obviously political constraints. It'll be a little bit different going forward.

Do you expect any stable coin legislation under McHenry's aegis to be sort of promoted to be on the agenda, you know, as we start the new year? No, I think he'll be looking at more markets stuff. I think he'll be looking, you know, he'll have two tracks. And I don't want to speak for him, even though I told you I just met with him. He will make his plan known as he feels comfortable as we get into the next Congress. But knowing Patrick and knowing our committee, I believe where he's going to head in this area is more of market issues as opposed to a stable coin.

Let's talk about the market. Let's talk about how digital assets play a vital role. role in the financial markets, not just here, but around the world, and how we can make sure that that innovation stays here in this country as opposed to driving it to the Bahamas, where you might not have the oversight that, I mean, that's one of the big questions people should ask themselves. Why was Sam Bankman-Fried operating out of the Bahamas in the first place? You should have been here in this country. I would expect that while stable coins are important, and I'm not going to say that you won't

see something, you won't see what they were working on before. I'm pretty sure because like you say, things have changed. And I think Patrick is in the best position, as is the financial services committee that he will be chairing to really make a, I would say, an honest difference in this space. And I'm really looking forward to what we're going to be able to do with his leadership. Yeah, the stable coin space is interesting because I felt that it's actually one of the more salubrious corners of the crypto market. I mean, frankly, stable coins seem to work pretty well, especially we have a robust environment of onshore stable coins that are issued by credible

entities. I don't see really any major issues. I mean, if things could be more codified, right now, they're issued under a variety of state trust licenses or the state-by-state money transmitter. They all seem to work pretty well. So as far as priorities are concerned, I think, you know, maybe spot market regulation, clarifying regulatory status for tokens or commodity, you know, crypto assets. Those seem to be the more pressing issues. And as you note, I mean, the crypto industry has been so offshore historically with the onshore exchanges being punished to a certain degree. They come to the table. They talk to the regulators. They kind of get punished. And meanwhile, you have Binance manages 60% of volumes worldwide. And they don't even

even have a domicile. We don't know where they're incorporated. FTCX was a, you know, top three largest exchange. Domicel in the Bahamas clearly didn't have the institutional infrastructure to regulate them appropriately. They were a dominant exchange. So I think the challenge is now, you know, how on earth do we bring the lit crypto markets back onshore and in a manner such that, you know, end users can get the products they need and deserve without, you know, pushing them away. So in terms of like specific bills, which could address that, I know you've been prolific actually in terms of introducing various types of draft legislation. Is there anything in particular that you are interested in kind of promoting in the new session that might address

these market considerations? Well, before before I go there, what you just said, I'm going to tell you that our incoming chair and our members who are very interested in this technology and having Congress do its job. Let's put it this way. Some of the members, Republican Democrat, who want to work in this area, what you just identified is exactly where I think the majority of the committee is already pointing their attention to, with one exception. I think where it all starts as privacy. I think that will be the priority is the privacy component because we can talk about all these great things that we might do. And you're right. I mean, we've got the, we've got the stopping CBDCs. We've got all kinds of stuff that we've offered for very specific reasons.

You broke them down very well just now in laying out what the issues are, where the real problems are. It's not with stable coins. We've got some market issues that we need to address, but it really comes back to privacy. When you see what Elizabeth Warren has offered, and she's doing it by suggesting that this is going to clean up fraud, this is going to protect investors, that's not what she's doing. She's literally the same, you've got the Sam Bankman Freeds out there with their centralized operation committing fraud. that has been around since there were financial markets to be defrauded and investors. And now you've got a government representative who, under the guise of Nick, we're here to protect you.

But in order to do that, we need to take all of this information in-house and we need to control it. Because if we can control all your information and all Tom's information, everybody else's, is we can keep you safe from the Sam Bankman Freeds of this world. Nick, my question is, how do you keep me safe from the Elizabeth Warrens of this world? And her people who are going to use that information, you know, and sorry, I'm going to get off just a little bit because I've heard Kevin McCarthy talk about one of the first things we're going to do is we're going to defund the 87,000 new IRS agents that Democrats created in their a so-called inflation reduction bill.

You know what I think should be at the top of that list? We should get government out of the business of surveilling people who have cumulative transactions of $600 or more. We called, we blew the whistle on this more than a year ago. It was the same time that the infrastructure bill that all of you in the crypto community was so interested in because they were going to suddenly tax you because they saw you as a cash cow that they could now find a new revenue stream coming out of crypto into government to support many of their worthless programs, and some of the ones that are important, too, I'm sure.

But at the same time, what they were trying to do in that bill is they want a government through a forced oversight mechanism, forced, meaning every bank, every credit union, everybody that holds your money, they would have had to report to the fact. federal government, specifically the IRS. I don't think it was the Treasury back then, but I could be wrong. Tom Emmer has cumulative transactions of $600 a month or more. They raised it trying to tell us that, oh, no, it's okay. We raised it to $10,000. Think about that, Nick. You got a car payment. You got to pay rent or you got a mortgage. You're buying food. You can get to that $10,000 cumulative number. really fast. And right now, what they did was they snuck it in on these payment systems. So if you're, for instance, transferring cash by Venmo, do you know that if you have cumulative transactions of $600 or more, Venmo has to report that to the federal government? I don't think most people

understand that, Nick. That's where the Elizabeth Warrens of this world want to go. They want to be able to know what Nick Carter and Tom Emmer are using their money for. This is the Chinese model of digital authoritarianism that we absolutely have to stay vigilant on and make sure that they can't do. So I would say in addition to all those market issues that we're talking about, it starts with privacy. We've got to make sure that these central authority bureaucrats and politicians don't take over. So in looking through the various pieces of draft legislation, you've published, you have your sort of bill which addresses CBDCs. You have a forked assets tax treatment bill. Yep.

You have the Blockchain Regulatory Certainty Act and the Digital Commodity Exchange Act. Is that right? Yep. Which of those would you like the crypto community to sort of dig into? I think the Securities Clarity Act first and form. I think it's very important because Congress needs to take back its authority, make sure that the SEC knows we're the ones who make these rules. They're just the ones who are supposed to be working with the community to make sure they know the rules and that they can comply with them. And I think the Securities Clarity Act, unlike my colleague Warren Davidson from Ohio, who's got the tokenization, what is that thing called? his act is to me, and I love Warren.

Warren's a great friend, but his was too rigid to me. I think the Securities Clarity Act, and I'll leave the people in the community to make their own judgment. But you've got to have something that's flexible enough going forward because things are going to change. You were talking about stable coins earlier. One of my problems with the stable coin legislation wasn't just that it's working really well right now the way it is, right? The way stable coins are being used. But more importantly, a stable coin. coin today, Nick, is that what a stable coin's going to look like two years from now? Let's not

have government rush in and build the house that you have to live in when in fact, you got all kinds of space to move around and explore. So I think that's one. The other one that I do think, this is always going to be at the heart of what I do is the CBDC bill that tells government, you don't get to, you don't get to create a currency. Because I think there's so much of this that follows, right? If we allow the central government to create a central bank digital currency, what's the next step, Nick? The next step is the Federal Reserve suddenly becomes a retail bank that every American has to have an account at the Federal Reserve.

Is that where we want to head? This is, you know, and when you hear Republicans, and Democrats alike. Because again, it's not a partisan area. But when you hear them talk about studies, no, no, don't even go there. Because a study is just the first step. It's that old phrase about the camel getting its nose under the tent, right? The second you let the nose under, guess what?

The rest of it is eventually coming. I didn't know that one. Well, maybe it's just my generation. Maybe we had camels. That might be an original. So the Securities Clarity Act, you know, I think there's a view in, well, I can assure you, there's a view in the crypto community that the Howie test, that is decades and decades old, and that is currently used to ascertain whether something is a security or not. And crypto introduces a whole new design space and maybe it's not as clear or maybe it's not as fit for purpose to apply this test to crypto assets, which blend elements of utility. of cash flows or governance, which is maybe the security.

You're talking about the howie test? Correct. So do you feel that that is currently appropriate in order to determine whether a crypto asset is a security or not? Or do you feel that maybe there's some sort of new, you know, envisioned approach, which we could use to regulate crypto securities in a way that treats them or is sort of more modernized? I do. That's the whole. reason for doing the Securities Clarity Act, the Clarity Act to begin with. I don't think a case that pre-exist digital assets that dealt with oranges in Florida and control, when is it, you know, just an investment versus when does it become, you know, part of a securities offering or

vice versa, right? Because initially it could be a securities offering, which can morph into something else, right? And I think the key is, who's responsible for that? Is it the SEC? Is it another entity within the alphabet soup of government executive branch regulators? I think that's the issue. When we've been using this how we test, why? Because it's the closest thing that we had. I think it's time that Congress actually do its job and have this discussion. And what I would say to everybody in the crypto space, way in.

Way in. Tell us, you know, the different things that you're doing out there, don't expect that myself or one of my colleagues are actively doing this with you. We're not. We have staff that is, some are participating in the, in the actual markets, but all of them are studying it. You guys are living it. So from your life experience, please relate that to us so that we can actually do good in this space over the next two years. Because again, I think anything, the beauty of having the Republicans in charge of the financial services committee. The beauty of, this could be Democrats, but under the leadership that Ms. Waters has shown over the last two years, she didn't help us

very much. I mean, we had 40 hearings on housing. Everything was looked at from a, from a perspective of us and them. And it was a constant, it just, that's not what government. It's what it's become. We've got to change that. I think the crypto community can help us change that as well. It's about we. It's about Democrats and Republicans. It's about people from all walks of life with different political views. We all want the same things. We want to be able to succeed the way we believe we define success, right, for us and our families. And one of the big things about the experience in this country that makes the experience what it is, is access to capital, is the ability to do business with others and not be restricted.

And I think crypto is that opportunity to return us to what has made this country great and what will continue to make it great, which is allowing people to explore and innovate and be entrepreneurs. The key is going to be for the community that you plug in with your specific – because I could do this all day, Nick. We could talk about the specific stuff that I put in because I have very – it might be surprised, but I have some very strong opinions about what government should do and what it shouldn't do. And I love the crypto community, not because of the transactions, but I love the crypto community because you are facilitating evolution of the internet, the technology itself, from what we experience right now, which is much like the centralized authority that Sam Bankman-Fried took advantage of. It is a world with intermediaries.

And what you promise is a world that will not be void of intermediaries. There's always going to be a need for a third party to intermediate a transaction or oversee a transaction. And there will be value that the parties to that transaction are willing to give that intermediary to do whatever function we want. But you know what's important is it Tom Emmer and Nick Carter? we're going to make that decision. We're going to be able to say to each other, all right, I want to do business with you. You and I, Nick, we can get an intermediary

and it's going to add this cost to the transaction that we're going to do. Or I don't need an intermediary anymore. I can go directly. I can exercise my freedom directly with Nick Carter and he in return directly with me, which, again, that's why I'm in the space. I can go through every bill and tell you what my priorities are.

I think ultimately having crypto-friendly people in leadership, having crypto-friendly people actually busy building the agenda and bringing you in, be willing offer yourselves to come in and talk about different things that you're working on and where you think government oversight is necessary and where you think it's unnecessary and why. I think for centralized financial operations, I think you should always have oversight. I think telling me that I'm too dumb to make decisions on my own and take risk on my own, and I have to have government involved in every single transaction.

I think that's outrageous. And I think this country was built on the fact that we've got people who don't think the same, who don't live the same, and yet are still able to do business together and improve each other's lives. And I think that's the beauty of crypto. We've had you on for a long time. You've been very generous with your time. I guess as we wrap, what I'm really curious about is post-FTX. Obviously, FTCS was a calamity and I think influenced policymaker and regulatory attitudes worldwide, as it should, right? I mean, this is a top exchange going down, causing enormous harm to retail and institutional investors, right? Have your

colleagues, have their attitudes changed towards the industry post-FTX, either on the Republican under the Democratic side, are you seeing, you know, more market hostility from their camp? Or is it still the same general objective, which is cleaning up these markets and making them more functional? I think I see three things. I see those that who have loved government centralization and control authority. I've seen them. These are the Elizabeth Warren types.

They have jumped on this. I couldn't believe it. It was Juan Vargas the other day, too, from California. These guys have jumped on it. Oh, you see, it's corrupt to the core. We've been warning you. And these people, I've gotten a kick out of the fact that a couple of them want to point towards myself and others on the Republican side. Right.

They want to make this a partisan issue. When they've got colleagues sitting right there with them that are with me, that agree with us, right, that this is not partisan. And they look foolish, Nick, because that's the one group. Elizabeth Warren's probably the most dangerous, I would say. Maybe that's a strong word, but she's good at what she does. These guys who don't know anything of what they're talking about, they just, they sound stupid. When you respond and, you know, those of you in the community, when you listen to them,

the more they talk, the more you know they don't have a clue of what they're talking about. There's that group that has jumped on board. They're either, they were either scared of it or they prefer. government authority and frankly they would take us down the road of digital authoritarianism. Then there's a group which I would say I belong to that already understands that this was a failure of an individual or individuals. This was a failure of centralized finance, something that is as old as the hills. This is business ethics 101 that failed. And it's not the technology. then there's a third group. They're kind of not sure what they want to believe. They have constituents,

the sad part about it, all of us do, but they have constituents who are hurt pretty badly by this thing. And they're staying low, probably being very smart, listening to all the different things coming in. Those are very responsible and thoughtful people because they know what they don't know. And I think there's a larger group of them than there are in either the two groups I just described in Congress right now. I think over time, over time, they will be influenced by us, those of us in Congress, and they will pick one side of the other. The other place where they'll be influenced is perhaps the public square. You know, you have the, sometimes the fools in journalism, sometimes. I mean, you do have responsible journalists, but you got some out there that were literally,

you tell me, Nick, I felt like they were trying to write excuses for Sam Bankman-Fried. It's like, by the way, this kid is not well. I think somewhere along the way, Sam Bankman-Fried, this gaming, you know, billionaire, I think he lost the ability to discern reality from the virtual world that he's in. It's almost as though he thought he was playing a virtual game. He's Super Mario, Super Mario, who just got knocked off the top block. And now guess what? He just pushes the button and gets to start all over again.

That's not the way this works. And I think those three groups, the most important thing will be responsible journalism, not conflating centralized finance with decentralized finance, right? And digital assets. As long as they're reporting that accurately and people recognize decentralization is the point. Open, permissionless public blockchains are self-policing. When you have centralized authority that's operating in a back room with the doors closed, you can't see what they're doing. That's where you need government oversight.

That's where you need the bulk of your government regulation. And frankly, that's what failed in this case. because the government regulator most responsible, Gary Gensler and the SEC, it looks like they were either buying into the romance of Sam Bankman-Fried and FTX, or literally they were bought off like a lot of other people by Sam Bankman-Fried and FTX to look the other way and help them get what it was they were trying to do. And in the meantime, the ones that lost were all of these investors. Well, I think that's our time today. I can't thank you enough for joining us again. And certainly we're looking forward to your work in the next legislative session and getting these answers that I think we deserve about in particular the behavior of our regulators.

So Mr. Emmer, thank you again for joining us. Keep up the great work, Nick, you in the community. And remember, plug in. You don't want people making decisions that. that they don't have a clue of what they're working on. Make sure you're plugging in and keep informing and educating every elected official out there. Appreciate you, Nick.

Have a great Christmas, great holiday. Thank you, same to you.