On The Brink with Castle Island - Rep. Tom Emmer (R-MN) on MMT, CBDCs, and crypto policy for 2022 (EP.276)

Episode Date: January 10, 2022

House Representative Tom Emmer (R-MN) joins the show to share thoughts on his crypto policy agenda for 2022, as well as his views on inflation, MMT, stablecoins, and CBDCs. In this episode:  How Rep. Emmer came to be interested in public blockchains Rep. Emmer's interest in Austrian economics How Rep. Emmer stays up to date with the industry Are MMTers the establishment or an outsider group? Is Washington dominated by covert MMT ideology? Is fiscal conservatism dead in Washington? Why Rep. Emmer voted for the CARES act any regrets he has How the massive injection of cash in the last two years warped our economy Is inflation driven by fiscal spending or corporate greed? Is crypto inherently a partisan issue? Rep Emmer's concerns about a CBDC Why the US should not take cues from China Why CBDCs are not akin to physical cash Why insisting that stablecoins need bank charters is deeply ironic Problems with the Presidential Working Group's guidance on stablecoins Is crypto favorable or hostile to American interests? What are Rep Emmer's colleagues' residual objections to crypto? The purpose of Emmer's Securities Clarity Act Will the midterms alter Congress' approach to the crypto industry? Useful links:  Support the Emmer 2022 reelection campaign (crypto donations accepted)  Follow Rep. Emmer on Twitter Emmer's cosponsored Securities Clarities Act (press release) The Keep Innovation in America Act (press release) About the Blockchain Caucus Sponsor notes: Compass Mining is the world's first and largest online marketplace for bitcoin mining hardware, hosting, and ASIC reselling. Start mining your own bitcoin by visiting compassmining.io

Hello, Brink Nation. Welcome back. So this is at first. We're kicking off a policy mini-series now, and we're sitting down with our first sitting member of Congress, Representative Tom Emmer, a fourth term member of the House representing Minnesota. He is a member of the House Financial Services Committee. He is the co-chair of the Black Chain Caucus. And he has introduced and sponsored a number of pieces of legislation pertaining to the crypto industry, Representative Emmer is certainly one of the most vocal and active supporters of the crypto space. And I'm very, very happy to be sitting down with them. He introduced the Blockchain Regulatory Certainty Act, the Safe Harbor for Taxpayers with Forced Assets Act. He is a sponsor of the Securities Claredities Act and a co-sponsor of the Keep Innovation in America

Act, which is a bill which seeks to undo some of the damage in the infrastructure bill as a pertains to the crypto industry. So Tom has a very well-established resume when it comes to looking out for the interest of the crypto space. I'm so excited to have him on, especially as it's a critical year for the crypto agenda in Congress following a disappointing 2021. So let's dive right into it. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market. It is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage

giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars and all of a sudden people started to worry. So out of this worry, we have something called the Bitcoin. Bitcoin. So I have the immense pleasure and privilege to sit down with Representative Tom Emmer from Minnesota.

He is among other things. co-chair of the blockchain caucus, certainly one of the most vocal advocates for crypto and blockchain in the house today, has co-sponsored a number of bills pertaining to crypto. Very excited to have you on. So thank you so much for joining us today. Great to be with you, Nick. So we have a lot to talk about. I think the first thing just by way of context is, you know, how did the blockchain space come on your radar in the first place? What got you interested in the industry initially. You know, I, so I'm a member of the House Financial Services Committee.

And when I came to Congress, Nick, Minnesota had always had a representative on that committee. It's one of the what they call eight committees, one of the four eight committees in the house. And as it turned out, there was a Minnesota member on the committee. His name was Keith Ellison. and the local financial community didn't feel that he was serving the needs of the financial community. So they wanted a different Minnesota rep to at least join him. That's how I got there. At that point, though, Nick, my big attraction to financial services had to do with, I believe it's the definition of our freedom, the ability to go out and secure capital to start new ideas.

And there's some fundamental factors that are involved, right? That capital will go to the place where it's utilized best, assuming there's no intermediary meddling. Anyway, those types of things. The Federal Reserve was a interest of mine for lots of different reasons. But once I got on a committee, I had a great staffer who was still very involved in the space, Landon Zinda, Minnesota Kid, who introduced me to a book called The Age of Cryptocurrency, written probably six, seven, eight years ago. Now the first iteration of it, I think the authors have put out a second.

It was the beginning. Once I read that, I was hooked for lots of different reasons, and I'm sure we can get into those as we continue. So how did you ever dabbled in Austrian economics or anything? like that. Now you're now you're starting to get to where I this this all starts from as uh as Lizzie knows as well as anyone you know I read a book a couple years ago and yet the answer is yes I mean if you want me to I don't want to just suck out all the time but the answer is yes more importantly studying over over time different authors I came across one a few years ago called the

information theory of capitalism, Nick. And you're probably familiar with it. The theory provides that wealth is knowledge and that economic growth is actually the result of knowledge growth. And as entrepreneurs like yourself take risk and learn from the risk that you're taking, assuming you're working in a true free market, that knowledge will advance. And not only do you do better, but us as a society, we experience incredible advances in our quality of life. life. And the result is real economic growth and the expansion of wealth, whereas politicians like to refer to it generally prosperity. That's, you know, if you start to look at how the free market is supposed to work, and yes, Austrian economics, by the way, not necessarily the economics

on this one, but I tell people all the time, if they haven't read it or if it's been years since they read it. You might want to read the Road to Surfdom by Hayek, an Austrian economist, who wrote this to his political elite buddies back during World War II, talking about a lot of the things that you and I are experiencing right now. Love it. Love it. Excellent recommendation. So in terms of staying up to date with the crypto and blockchain space, you know, I feel like I'm always inundated with information. But so how do you, how do you stay up to date? I mean, do you listen to a podcast. Do you read the occasional book that comes out of the industry? I mean, how do you do it? Both, all of the above, Nick. In fact, I was listening to you and Walsh

over the Christmas break. I think I listened to two or three of your podcast, which I found incredibly interesting and full of attitude, which I love, by the way. Absolutely. I loved every second of it. But that in books, yeah. And then what I try to do, Nick, is take the written stuff that I've absorbed, the current stuff that you and some incredible people are putting out there, you know, content, and then mesh it with life experience because I've hit this great age of 60. The financial system as my generation has known it, frankly, has been mismanaged for decades. You've got the Federal Reserve that's been manipulating the marketplace controlling interest rates. And you know, near zero interest rates literally are, they're fraudulent because you're not pricing capital at its actual price. You're literally borrowing from tomorrow for today.

And once you put all this together, and I was talking to Lizzie Fallon, who's a great staff member that we have, to your other question, I get a lot of my information from people like Lizzie, too. We've got a great group back in Washington, D.C. that stays on top of this, because they know this is a passion of mine. Because it goes, all of this intersects. And I'd love at some point today to talk about an idea that I have that, quite frankly, the new modern monetary theorists that litter the White House, these MMT folks who believe you can print money without any consequence, as long as you control,

the government controls its own fiat currency, isn't cryptocurrency a direct result of that kind of behavior? And that's ultimately what we're looking at, because you've got the Fed manipulating the cost of capital, keeping it down. I use the term fraudulent. It's pretty strong. but it's a tool that they use to manipulate the cost of capital, so it's not actually the real cost of capital. So then capital does not go to the places that it would normally go. And in fact, it's kind of like healthcare. If you reimburse people a higher amount for COVID-related deaths, guess what you're going to have more of? You're going to have more COVID-related deaths.

Not that I'm saying that's happening. but the idea is when you incent the marketplace, the marketplace can be very selfish and self-interested, and they will use that incentive for their own gain rather than allowing the marketplace to do that. I think right now you've got the place where these MMT folks, which are the traditional establishment, in my mind, are now literally clashing with people like yourself in the crypto community that exists. and frankly has taken hold because of the mismanagement of the monetary policy. And because what happens when the next crash comes, Nick? I mean, that's really, when you do this with the interest rates, when the next crash comes,

guess what? The cost of capital will actually price itself appropriately. Assets will return to their real value, right? But debt will remain elevate. And what does that mean to people in the crypto community who have found a different store of value, which people like to liken to a precious metal like gold. We'll see. But I think that's whether people know it or not, what they're doing is they're protecting themselves against the meddling of the intermediary that's, quite frankly, distorted the marketplace.

So I think your analysis is very astute. Biologist Renovassan, if you know him, he also, says that the most profound battle of the next decade is effectively sound money through crypto folks versus MMTers. And I certainly see it that way. I guess the MMTers like to say, well, we're actually not the establishment. You know, we're this sort of, you know, outsider group. And, you know, we're trying to speak our own truth to power. And, you know, it's actually sort of neoliberal and Keynesians that have power in Washington. But I, from my perspective, when I see the rampant spending occurring in Washington where you're talking about, you know, I think in Q2 2020, government expenditure was over 50% of GDP, you know, and so you're looking

at, you're looking at the government, which is the, is not just the dominant player in the economy. It's actually the largest entity, you know, accounting for more than half of financial, of total output in this country. And it looks to me like an MMT normalization, even if, it's not Bernie, you know, and Stephanie Kelton there in control. It still looks to me like a covert implementation of MMT in Washington. I don't know that I'd call it covert. I mean, I actually think it's very overt. It's out in the open.

I love the people that are MMTers, and I'll use the word offended. You did not, but, you know, they don't want to be viewed as the established. We're not the Keynesians. We're not the, well, you are. You are the next layer. will, you're like a growth ring around a tree. You're the next ring where the Keynesians go when they've gone too far. So now rather than trying to play, you know, have one leg on either side of the fence, which is very dangerous, you're all in as an MM tier, right? You have formulas that you can do

this and we can print and spend money to our heart's desire and never get in trouble. Well, that's like I tell them, I could tell you today, Nick, that I'm going to take a snowball out in the backyard because we got a lot of snow, although it's too cold right now to make a snowball. But theoretically, if we can make one, I'm going to tell you today, I'm going to throw it up in the air and it's never going to come down. It's just not going to happen. So they're just making excuses in my mind, and it's intellectual inconsistencies if they were to sit back and take out. their own ideology, their own greed, their own desires, self-interest, they would have to acknowledge that that doesn't ever end well. It's not going to end well. And that's literally why the battle, the battle within the crypto community is they're going to win. The question is, what is it going

to look like? Look at the evolution within the crypto community. You really don't have much before 2008, but there was, I will call it leakage, my term, you can correct me, Nick. There were people out there that were already dabbling with some other form of value exchange, right? Some other form of, you know, crypto, pre-crypto. You have the crash in 2008. The mysterious Satoshi white paper appears. This thing starts up. And you've got the traditional financial industry, the establishment.

they don't think much of it. Because, you know, they didn't think much of it before 2008. It's just a fringe thing. We've got all the power. We control the Federal Reserve. We've got all of these levers here in this country and around the world. The dollar's still the reserve currency. We're fine.

Everything's good. Then guess what? And by the way, prior to 2008, you probably know people like Ron Paul in Congress were already talking about these problems. But, you know, they're fringe. They were marginalized. They're not seen as the norm. All of a sudden, you've got these huge financial concerns trying to kill crypto.

First, they take the attitude. It's not going to take hold. Then when it starts taking hold, they want to kill it. And guess what they're doing today? Today, they're trying to, I sent Lizzie a note, said they're trying to lasso it like a wild horse so they can get control of it. And then they want to absorb it into their existing environment. because that way they can control it.

And this is where central bank digital currency comes in. This is where all of these bad things come in. And it's going to be a very interesting time over the next two, four, ten years to see this disruptive force. And who ultimately is going to win? Because at the end of the day, one side really is all about individual freedom. And the other side is more whether people want to acknowledge it or not. It's more about you turning over the very essence of your identity to a central authority. So I want to get into the stable coin CBDC debate.

That's one of the most fascinating ones for me. Just quickly on the topic of the level of expenditure we've seen in the last two years, you know, I was disappointed by the Republicans in Congress who, in my view, didn't really sufficiently push back against the, you know, enormous fiscal impulse that we've seen, you know, since 2020, you know, regardless of whether you think it's warranted or not, we're looking at government spending at a level equivalent to effectively World War II, despite the fact that we're in peacetime, we're not fighting a total war, although some might characterize it as such. Would you say that fiscal conservatism is dead at this point, or are

any sort of prospects to revive it? No, I don't think it's dead. I mean, even I was a victim of this, And I wouldn't go back and change the vote. I think if you look at my short history in Congress, I've never voted for increased spending, quote unquote, except with the CARES Act. That was the big exception that I made in the spring of 2020. And I did that, Nick, not based on my core values. I did that because I had a government that literally was taking away

private citizens' revenue streams, you know, their business. they literally stepped in and said, no, you can't run your business, which, I mean, that's the debate we should have been having. But, of course, if you stand up and say that's wrong and we all need to get on with living, all of a sudden you're against science, you're, you know, you're shame. They use shame for anyone who wants to challenge their basic premise. So I did the one. And I know there are others like me that.

I do not see this ending well. I mean, the number for me that I think we've already eclipsed, and if we haven't, we're right there is $30 trillion. You just start looking at the math, which apparently doesn't mean anything to some of these people, it's really hard to turn that around. You're going to have to control government spending. You're going to have to allow the economy to realize the full potential that's there.

And you're going to have to make some serious. policy decisions over the next two to four years that deal with our workforce, Nick. I mean, nobody's talking about it. Clearly, you've got inflation for several reasons, but not the least of which is the current administration killed American energy independence on its first day in office. That's number one. Energy is what drives our free economy, or what's supposed to be a free economy. But then you throw in the fact that you've got, you're flooding the marketplace with these printed dollars. You got pent up demand because you've locked people up for a year or more.

And then you've got these supply chain issues that have been created, at least in the beginning, a lot by our own doing with policies where we supplement unemployment insurance. We in effect, we in effect incented our workforce to stay off us. of the workforce. And now you layer on top of that what is actually coming, and that is an aging population that is going to be aging out of the workforce anyway. It's the perfect storm, Nick. And, you know, the spending's got to get under control. We're not going to be able to do things the way we did. It doesn't mean we're not going to be great. It means that people like you and people in the crypto industry can provide a huge safety net. And I don't mean in terms of support.

the government, but in terms of generating new economic growth and prosperity. So with regards to inflation, I mean, it's interesting because, you know, Bitcoiners have a lot in common with gold bugs, I would say, right? You know, I consider them ideologically very proximate. And of course, for the last 10 years since 2008, you know, we, speaking loosely, have been calling for inflation with the rampant quantitative easing. And it turns out it just didn't emerge, right? We were wrong about that. And then, you know, I think what changed is that, you know, you went from this QE, which was kind of being trapped in the financial system, wasn't making it into the real economy. And now you have this direct sort of fiscal monetization

with the government directly spending money into the economy direct to households. And so it wasn't surprising there was an actual inflationary impulse. You know, what's interesting is the MMT is always maintained prior to the inflationary shock that inflation wasn't. the constraint to MMT. It was the only constraint. Is that the MMT agenda, okay, debt doesn't matter, the absolute level of spending doesn't matter, the amount of intervention in the economy doesn't matter. The problem is, is if you get inflation. Now we get inflation, and yet the MMTers are unrepentant. They're not saying, well, you know, okay, we were wrong. We, you know, we did too much. We interviewed too much. They're saying, oh, no, no, no, this actually isn't a real inflation.

you know, it's fake inflation, it's transitory, or it's supply chain driven exclusively, or it's because of corporate greed or monopolistic action. I mean, this inflation, do you see it as a consequence of the expenditure, or do you see merit to the points that the MMT years make about it being driven maybe by monopolies or corporate greed? No, I mean, how do you define corporate greed? To them, any profit-making business is all about corporate greed. To us, it's about if the government stays out of the equation,

it's about capital and goods actually finding their way through human activity, right? Through human ingenuity and hard work, as opposed to government selecting, you know, where, when, and who. So no, I don't think it's corporate greed, but can you make arguments? Oh, yeah, all day long. You know, it's like when I used to practice law, you hired experts and it's, I was, I was always amazed. You could always find an expert on your side of the argument. There was always somebody that could give you an opinion on your side of the argument. That's when I think you've got to go back to the things that we've known since before we, our founders created,

this government. I mean, you can go back in world history and see that this doesn't end well. So rather than get caught up in the entertainment news media of the day in these, you know, whether they're self-interested, Nick, or their pride is just so high that they can never be wrong. I mean, in recent history, we've got some folks who had the same issue with their foreign policy, right? They made certain decisions based on what they understood the truth was. And then when the truth wasn't what they thought it was, then they just said, well, they had to do it anyway because, you know, there are other bad actors in the world that they got to control. So, no, I think, and I'm not going to do what most people do. Most people would be doing the name calling. I think everybody has a

valid argument, but at the end of the day, we got to take the emotion out of this. We got to take out, you know, the need to be right out of this. And we got to sit down and see what made this country what it was. What made this country what it was. It was not the financial system as it exists today. It was literally recognizing that Nick Carter has value unto himself. And if he decides to direct that value with some new idea, he's going to take a risk in the marketplace. You know what? Tom Emmer as a consumer might actually see value in that thing being created by Nick. Guess what? Not only does Nick suddenly have his prosperity boat raised, but Emmer got something that made his life easier, made his life better. It was absolutely worth every ounce of value

that I gave Nick for that. So I just think you've got to go back to those. And you've got to start to recognize the government, they're not right. I mean, people have used government. There's a reason why people pay so much money on K Street to influence government is because they're trying to protect their own self-interest, their own bottom line. And we've got to have more people in Congress that start to recognize that, you know, kind of like I don't want this crypto issue to become a partisan issue. I don't think it should be. But I think I have some folks in government that just believe in the old banking system the way it exists. They're not willing to have the discussion, Nick, about, all right, we are going to look differently in 10 years. Our financial system is not,

we're not going to recognize it in 10 years based on what it is right now. Does that mean that we have to have a bunch of dinosaurs that get absorbed in the tarpits of the changing economy? No, it means we can actually put light touch policies out there if they're thoughtful that allow the existing rails to evolve. I mean, those who choose not to, the history books are littered with stories of Sears Roebuck and things like that. Certain companies, it just didn't make those changes. But we need to look forward. We can't protect the way things are because if we do that, then we'll never have what could be. This episode is brought to you by Compass Mining. Compass Mining is the world's first and largest online marketplace for Bitcoin mining hardware hosting and ASIC reselling.

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or public sector take over with CBDCs. I'm certainly a big critic of CBDCs. I'm honestly fearful of what the U.S. would look like if we had one and we gave the Fed, you know, untrammeled power to surveil and, you know, everyday retail transactions. And, you know, it seems like a lot of our policymakers are taking inspiration from China on that, which is extremely troubling to me. So, you know, you've been vocal on this issue. What are your concerns about a CBDC regime in this country? Well, I thought we are the greatest experiment in free.

that the world has ever known, that being the case, Nick, or if that is the case, why would we ever want to emulate the Communist Party of China? In this country, government should never be in the business of competing with people in the private sector. And just to your concern, I share it because I just don't see a digital dollar controlled by the Federal Reserve or the government in general is being the answer to anything. Depending on how it's designed, it could actually put the United States on the same level as China when it comes to digital authoritarianism. Again, why would we ever want to compete with China? It's amazing to me that we're even talking about it. Although it does show you how deep this goes into our government so far about people not willing to give up where they're at in allowing this brave new world to actually fully blossom.

If they were to do it, Nick, I've said this from the beginning. My office has said this from the beginning. A central bank digital currency, if you were ever going to do it, has to be open, permissionless, and private. it has to maintain the privacy elements of cash. Now, I'm not telling you I know how someone could do that. I'm telling you, if you were ever going to have one, it would have to have those qualities. And we should never. I mean, this one just drives me insane.

We should never allow the Federal Reserve to turn itself into a retail bank that's able to collect all sorts of information on the American people and track their transactions. You've got a current Treasury Secretary, Janet Yellen, who wanted, language in this massive bill that looks at least for now like it's failed to spy on American bank accounts that have cumulative transactions of $600 or more. That should send up every red flag that we have. In my mind, you've got to protect privacy at all costs. You know, Nick, there's two types of, at least as far as we know right now, there's two types of potential central bank, digital currencies. One would be central bank accounts, right? The central bank collects individuals know your customer information and issues CBDC directly to the individuals. And then the central bank

would be able to track all transactions, which sounds a lot like China to me. The other one would be using our existing financial system. Our banks is the on-ramps. The banks could collect, like they do, collect the individual customers' K-Y-C information. But the problem would be that the central bank would still be able to track the transactions on the blockchain. So I just, I don't think either of these proposals. One, to me, is China. just the definition. The other one is not much better because it really would be no different from the digital dollar we use today when we swipe our credit or debit cards.

So I'm not a fan, and I think we should be screaming about this like crazy. I've also said we should not be sending any athlete to Beijing. And if we do send an athlete or athletes for the Olympics to Beijing, not one of them should be crazy enough to accept any digital yuan, which, you know, this is what China wants to do is start dishing out their digital yuan to athletes. It's one of their plans. Just all of it stinks to high heaven in my mind. Yeah, that's right. They want to pilot their CBDC with the Olympics. The interesting thing I find with CBDC is if you read the white papers, and I think every

central bank practically in the developed world has written one, they don't talk about, recapturing the qualities of cash in a digital context. So physical cash gives you total autonomy in where you spend it. And it gives you total privacy. The cash doesn't maintain a record of the expenditures. And you have full discretion with whom you can transact. But you never see any white paper saying we want to create that experience and poured it into the digital realm. We see stuff like, oh, we need to impregnate this system with AML. And we need to incorporate KYC into it and transaction thresholds and above the threshold you of AML. I mean, it's it's like we've forgotten what it's like to have cash and we've normalized

surveillance. And so CBDC to me it seems like a different thing from cash. I mean, I'd be concerned that cash is going to disappear entirely. You should be, although it never will because I believe human beings, I will, when their government commits injustice, human beings will take it upon themselves to do what they need to to protect themselves and their families and their communities. And I think that does mean that they will transact business in different ways. I mean, when government creates an incredibly onerous tax policy, Nick, you create a market for a cash society, right? You create a market where people literally are doing, are trading other things of value that the government doesn't track. So,

you know, it's, I'm not advocating for that, but this is something that policymakers need to keep in mind while you were talking. I mean, you think about where we're at right now. And I, look, wherever people are at with vaccines and all the rest of it, I don't care. I think vaccines are good. I think people should consider taking them. But I also believe that, That's their choice. Right. Right. Think about this.

This is almost a definition of our times. You and I are talking about a potential digital authoritarianism where our government, through a central bank digital currency like China, could track our every transaction. And literally could, with the data that's available out there, could build all kinds of information. on individual U.S. citizens. Why not when it comes to these mandates they've been putting out, Nick? Sure. I mean, think about what they did in Wuhan.

And you can correct me if I'm a little off on my facts, but when they knew that they had a virus outbreak, they just locked people down by stopping their access to their cash. You couldn't rent a hotel room. You couldn't buy a bus table. ticket, a train ticket, or a plane ticket. You couldn't get out of Wuhan. And by the way, they'd tell you when you could go to the grocery store to get something to replenish the refrigerator. So is that the society that we actually strive for in this country? Absolutely not. And people need to start

to have these very serious discussions and don't let the naysayers shame us and try to marginalize us by claiming that we're just being fear mongers because it's actually happening. I mean, frankly, I see politicization of finance as a stated goal of the far left in this country. I mean, it's not a secret, you know, like there is a stated goal to starve the energy sector of capital. That's an absolute clear agenda, which is, you know, stop bank, stop credit finance. for hydrocarbon extraction companies. We have seen Operation Choke Point under the Obama administration, which starved certain key industries like gun manufacturers of access to payment processing.

So, you know, these things, they seem like maybe exclusively Chinese ideas, but then they're also in practice. And then, you know, you see rampant financial deplatforming. It's not just at the social media level. It's at the financial level, too. And so this stuff is already soft. implemented in this country, which I think, I guess, brings us to stable coins. So, you know, there's $150 billion to stable coins that exist now. And certainly they're not all perfect.

You know, some of them occasionally break their peg. But in my mind, I see that as kind of a reaction to the politicization of finance. If you look at why stable coins were created is because exchanges, crypto exchanges, were exiled from the bank sector. And so stable coins are created to facilitate their relationships with their clients outside of the banks. And obviously that raises eyebrows, but it's also direct reaction to the highly sclerotic and exclusionary bank sector. So now the proposal is to bring stable coins back into the bank sector and force them to get bank charters.

Does that kind of strike you as ironic? And what do you make of that idea? It's the, it's kind of funny. Our discussion this morning is kind of following a circular. theme, we keep coming back to the same thing all the time. It's no different than when crypto started. What happens? These guys, the establishment, those that want to keep things the way they are, and people like Gary Gensler, which I really don't understand what he's doing other than it's just purely about power, they try to exclude crypto from the traditional marketplace.

and they try to find ways to create obstacles or friction so you can't, you can't transact. But you know what? The beauty of this whole community, Nick, is that's how it got created in the first place. This community finds solutions, finds ways to move value no matter what the government tries to do to stop it. That's why I'm really bullish on the future stable coins. You're right. reaction to bad policy. And now, when the community comes up with the solution, and to your point

about they aren't all perfect, no, they aren't. And by the way, whether it's cash, whether it's crypto, whether it's health care, whether it's, you name it, you're always going to find some bad actors somewhere, right? But the idea, because of one or a small group, should not be immediately shot down because of there might be a bad actor. That's experience. Remember, when you take risk, you get knowledge. When you build knowledge, you're able to improve on these solutions. You're able to improve on whatever it is your offering in the marketplace. A stable coins, I think, have a bright future. I would recommend that all of my colleagues in elected colleagues and their staff in Congress, if they haven't already, start to take a very close look at this area as being

a potential solution when it comes to the future of cryptocurrencies and how they're traded and how they're negotiated. You know, Nick, that recently there was a quote unquote presidential working group that issued a report. And I just have to complain a little bit right now because the last administration was not as favorable as I would have hoped towards this community. I was hoping that this administration would, you know, breathe some new life into it. Give us some new champions that actually understand the potential and that it's already arrived and it's, we need to help, help it grow and, or at least allow it to grow because government really doesn't help you with anything. It just gets out of the way. What do they do? They just, they disappointed us again.

This presidential working group issued a report that recommended that stable coin issuers be treated like banks. Think about that, Nick. We hardly have any startup banks these days anyway because it's so difficult and expensive to start a bank and comply with the regulation that's out there already. So why do we not understand that this recommendation would kill innovation? Yeah. From our standpoint, rather than try and jam stablecoin issuers into the existing bank framework, I think we should be a lot more creative about any regulation or regulatory framework. And maybe we need an option similar to the OCC's fintech chart.

Maybe. Yeah, and, you know, we do have, some people characterize stable coins as unregulated. I mean, that's the case for some of the offshore ones, but onshore ones are issued either under MTRs, which is maybe not that suitable. But then you also have the New York Trust Charter, and then you have a Nevada Trust Charter. And those include certain disclosure, audit requirements. They treat issuers as fiduciaries, so you can't invest it in crazy stuff. there's certain liquidation provisions there that depositors are privileged in liquidation. So there are protections there.

Would you seek to go over and above and then create some sort of federal legislation or federal model that would give stable coin issuers, you know, kind of certain oversight? Yeah. So I want to be very careful with this because I think I, One of the complaints I have of people like Gary Gensler is he makes public statements that then, you know, people in the community have to take is this could be a problem. Regulation by public statement is just as bad as regulation by enforcement, et cetera. Granted, I'm just a member of Congress, so if I say something, it's not like it's going to happen tomorrow. But I would say two things.

One, to your point about regulation, remember, people who are ignorant. about the community, or they just have, you know, their whole financial experience is based on the traditional financial system as we've come to know it, as opposed to this new community that's the fastest growing thing that we've seen in decades. The first thing they say, you know, Nick, is it's totally unregulated. It's the Wild Wild West. There are no regulations out there. Well, I think that's a full argument. There are areas, certainly, you can always find something. But for the most part, as you just noted, they make this argument because there's not some all-encompassing federal law that it fits neatly within.

Instead, the community is working to make sure that they comply with existing regulatory frameworks out there at the state level. and frankly doing it amongst themselves. With stable coins, the one thing I would say is maybe we could talk about some reserve standards for stable coins. And then I know that we've been told that Cynthia Lummis, our friend over in the Senate, is talking about, we haven't seen it yet. She hasn't provided text and she hasn't given detail. but she's talking about some new regulators specifically assigned to this community. I don't know that I'd be in favor of that, but I'm also not going to say I'm opposed to it until we start talking about what it might look like. The problem we have right now is that every regulator out there thinks that that regulator has some jurisdiction over this community.

And it's just, it's wreaking havoc. It creates problems. And from my standpoint, it drives, it drives. it drives capital offshore. And I think before I leave it, Nick, I'll stop with this. I think our federal government has to work with the industry in a way that will allow stable coin issuers to innovate while at the same time ensuring that Americans are protected. You can't just do it on your own, is what I'm saying. The elected officials, the policymakers have to work with the industry to make sure that we're doing the right thing. I just don't think legislation is the most expeditious way to do

that. So I think we've got to think about, you know, a standard setting framework or a federal charter option or something else because what the feds are doing right now, I think you would agree. It's not helping anyone. Well, it's been interesting to see that you had certain constructs like the special purpose depository institution in Wyoming, which a couple issuers, actually did obtain that license, but then they've been stonewalled in terms of their Fed master accounts. And so they weren't able to get Fed access that way. So it's, you know, it's interesting that, you know, Stapoint insurance have been trying to obtain, you know, these charters, but largely unsuccessfully so far. It's going to break, Nick. It has to. And by the way,

another example of our federal government, I'm assuming, ignoring the concept of federalism, what this country was built on. Right. Yeah, that's part of the reason I moved to Florida, actually, was just I felt that the policymakers here were more crypto-friendly, and I wanted to encourage them. So maybe you'll have an influx into Minnesota as well. I hope so.

So one thing I find interesting about stable coins is it flips the script a little bit because crypto is often portrayed as this sort of anti-American thing by certain critics, you know, oh, you're competing with the dollar, how dare you? you know, the dollar is, you know, our exorbitant privilege, as they say, and it allows us to do sanctions and project power and allows us to monetize their debt cheaply, sort of maybe less true today. But, you know, stable coins, on the other hand, are almost all dollars nominated, and they're almost all backed by treasuries. So they're actually a big source of buying power for treasuries where, frankly, foreign central banks are not buying treasuries anymore.

Is this, has this narrative or idea that actually the crypto industry is proliferating dollars to all four corners of the globe? Has that caught on at all in Congress? You know, are your colleagues aware of that? I should never paint with a broad brush. Are some of my colleagues aware of that? Yes. Is that a majority understanding? No.

Not at all. There are so many things out there, Nick. as you know, I mean, I'm going to suggest that you just asked me a rhetorical question because you knew the answer. It's, we are in the stages right now. We're kind of getting to the end of the educational phase. And I think this is this and a topic that I'm still trying to understand. I listen to you and Walsh talk about it. The idea that crypto can actually generate a huge huge pluses in our energy sector, which, you know, this kind of stuff, this type of information is positive about the industry. And it would actually promote the industry well beyond just a

source of value exchange, right? Or a method of value exchange. It is about growth in our economic, of our economy, in growth of wealth, which we've got to get back to. doing. We haven't been doing that in this country for a few decades. It's all been about growing debt. We've got to be creating things again. And these types of ideas, we've got some work to do. I mean, even myself, when it comes to the energy thing, when you were talking about that, what, maybe two weeks ago, it really caught my ear about what this could mean for different state economies, what it could mean in different places in this country with the job market. market, et cetera. Those are things now that we have to go to the next level with the education.

And then I think we're going to be transitioning with our congressional blockchain caucus that I think you're familiar with. We've been growing it. It's now over 40 members. I think Lizzie was telling me when they do updates with staff, it's staff from both the Senate side and the House side from all different offices. They've had 100 or more attend different briefings. we're going to go from that education phase and we're going to transition hopefully for the next few months and into the next Congress into the policy phase, which I think it's going to be very important again if we're going to have a legislative branch that directs the executive branch again as opposed to an imperial presidency where they're running it. And hopefully it can help us help this community. I don't like calling it an industry, but this community grow and provide all these amazing possibilities that are out there.

Well, Lord knows we took some L's, as they say, in 2021 from a legislative standpoint. We'll see if we can reverse those this year. Before we talk about your legislative agenda, when you talk to your Republican colleagues, because, you know, I know we try to not characterize crypto as a partisan issue. It seems unfortunately a shakeout that way all too often. So when you talk to your Republican colleagues, what are their main objections to sort of your crypto advocacy? What is it that they come back to in terms of not being fully convinced?

Well, we've already covered one of them. It's the unregulated part. And these folks will go unnamed. It's really interesting. the more that I hear from traditional banking folks. They're moving in our direction. By the way, I think it is still nonpartisan. I can point to half a dozen eight Democrats

on the Financial Services Committee that are not just playing politics with it. I think they're literally trying to learn it on the fly and they want to be a source of help, not a traditional political garbage, where people grab an issue just to advance themselves. I think they literally want to be part of the solution, which is really exciting to me.

And I think it's coming faster than you know. Because while my conversations are much deeper with Republicans, I'm seeing the same things on the other side with traditional finance guys. Jim Himes from Connecticut participated in something. type of podcast that I did. Lizzie would know better what it was. I didn't realize they were going to have us on at the same time, Nick. And it was clear that he was coming from a different place, a place where he's, this is a really

smart guy and he's just learning it. So he's got some of the same concerns that some of my guys have. And I could hear it in his answers because he wasn't willing to commit in certain places. And that just told me that's because he's not ready to commit because he doesn't know enough about it. So the two main issues that I hear on the Republican side, which I'm going to guess are the same ones that a representative like that might have. One, it's the regulatory issue. And two, it's the sanctions issue.

Those are the two biggest ones that I hear on a regular basis now. And the other issue that I have personally is convincing them that a central bank digital currency is not the answer. Right. And I think we've got a ways to go on that yet because, you know, the traditional banking folks don't have as big a problem with the traditional banking system. Let's just face it. Right. Yeah. I actually think, you know, having worked inside one of these large financial institutions that was very pro-crypto, I actually see a lot of alignment between Wall Street and the crypto industry.

I think they see it as a profit center, frankly. They can still earn very, very robust margins from crypto products. But I see it primarily as a battle between people that have government take over all finance and then people that would have the private sector have a role. Speaking of bipartisanship, so you've done work with Rokana, Florida's Darren Soto. You have a bill that you are sponsoring, I believe, called the Securities Clarity Act. Is that right? Yes.

So that's one of your key agenda items for this coming year? Yeah. Well, it's, you know, I'm going to continue to promote it. We actually did this in the last Congress as well. Again, I told you it's education and turn it into policy, right? Convert to policy. And that's what this is all about. The Securities Clarity Act would create a new definition. The investment contract asset that allows the SEC and token issuers to easily distinguish a token when it's offered as part of a securities contract. as opposed to when it isn't. And it's such a basic change. There are some other proposals out there. The reason why I think this one is the appropriate direction to go. And my pride of ownership is not that great. I'm willing to adjust and modify based on what the industry suggests, based on what my colleagues might suggest. But I look at this as we've got to be more flexible in terms of understanding that where we're going is going to happen very fast. And if Congress creates a rigid

standard in place of what we have now, I don't like what we have now. I don't like the idea that every time it's full employment for lawyers, Nick. Every time, well, it is. You should be celebrating. You know, my whole life was God bless lawyers. And I support them. Free societies need lawyers. It's interesting that when tyrants take over, authoritarians in history, the first people they want to get rid of are the people who understand the law and justice. But that part aside, I don't believe in creating work for lawyers where you don't have to have lawyers involved. And the Howie test is literally just government punting. And the courts saying, all right, here's the Howie Test. Why don't you, you know, this was applied to an orange grove long before they decided it was going to be used in crypto.

And I just, I don't think it's the right answer going forward, Nick. And I think it creates too much uncertainty. If every time you're going to make a business decision, part of that decision is, all right, I'm going to get sued by the government or I'm going to have to get into a legal dispute with the government. How long is that going to last and how much is that going to cost and what's it going to do to my overall, idea. I'm going to bet if I'm making that decision more often than not, I'm finding a different venue to start that project. That's my concern. And we're absolutely seeing it. We're seeing startups go overseas. No question about it. They're shopping around for jurisdictions, which is unfortunate, obviously. It's a U.S.-based firm. So I know we're almost out of time here.

I promise I'd let you go by 11. Just in terms of, I know you're involved with the NRCCC, in terms of your outlook for the midterms, assuming things go well there. And, you know, maybe we see a red wave. Who knows? Will Congress's ability to pass more pro-cryptial legislation change? What do you kind of expect from that? I believe it will. But let's talk about the election. First, you know, I try to caution my colleagues. I love the, to me, it's a lot like sports. If you pay attention to sports where, or maybe the stock market where everybody's gaming and trying to tell you, well, this could happen and that could happen and on paper, look, there's a long time. If we got 10 months to go until the next election, there's a lot that can happen. I do think the momentum for Republicans is there. I mean, to win

elections, Nick, you've got to have great candidates, you've got to have the right message and you've got to have enough money. I think Republicans will have all three. The other thing that we can't control, the other side doesn't appear to be the listening. You know, if you look at Virginia, you look at New York, you look at other jurisdictions with the elections that were had a little bit more than a month ago, those elections, if they tell you anything, they tell you that the Democrats that we're running are not listening to people on Main Street. They aren't listening to them when they say we want to be involved in our child's education. They're not listening to them when they say you're doing the wrong things with the

economy and you're driving prices up at the gas pump in the grocery store, everything. They're just not listening. That's why I think there will be a change in leadership. But I don't tell anybody. I think it's offensive. When I used to practice law and I try a case, I think it's offensive to tell the jury what they should do. The jury will tell you what they're going to do. You just got to make your case to the jury. And I think we will make a case. It's a good one. But once we win, Nick, then we got to govern. And part of governing is addressing issues like this.

So do I think it's going to change? Yes, I do. But when it changes, and I think you're going to see new leadership, obviously in the House Financial Services Committee, you're going to see some renewed new leadership on the Democrat side because there's a huge transition taking place. Keep in mind the top three leaders, for the Democrats in the House, Nick, they're all in their 80s.

They're all leaving. I don't care what people say, and this isn't a partisan statement. Nancy Pelosi, Steny Hoyer, James Clyburn, their era is ending. And as they leave the building, as they leave the institution, there's a whole new group that's going to be coming into leadership, and there's going to be a whole new group that's coming into the membership of both the Democrat Party in the House and the Republican Party in the House. And do I think that bodes well?

Yes, I do. I think you're going to see some policy that's going to come out of Congress in the next two, three years that directly addresses some of these bigger issues. I don't know that it means a regulator for the industry. I would prefer that it's addressing some type of light-touch framework that allows this community to grow much like the industry. internet, you know, 20 plus years ago, 30, I guess. I'm aging faster than I think. But the point is, yeah, I do think good things are coming, Nick. And I just, before everybody starts fighting with

each other at, you know, the next family get together about their politics, understand we all have different politics. But at the end of the day, there's some basic things that we all want to do. We all want to make our own decisions that best impact us. We all want to. We all want to to have the opportunity to chase our version of the American dream. And that really is whatever level you want to achieve. This community, I believe is that next generation of entrepreneurial growth that we could see not just crypto, not just the way we exchange value for value, Nick, but more important, how it's going to impact energy, how it's going to impact health care, how it's going to impact

transportation, just how it's going to impact and already has education. If we are willing to look at the forest instead of being focused on just a tree or two, the sky is the limit on this thing. And I do think you're going to see that from Republicans and Democrats going forward. Because remember, the institution lags behind Main Street. We are the voices of Main Street all across the country. But the problem is, I don't know, ask somebody who's a better expert. It's at least 10 years behind Main Street. You know, you've got to have these two-year elections and six-year elections and these new voices start showing up and they're more reflective of the current day. I think our founders did it right because you don't want this thing changing in an instant.

But it's going through that natural course of change and I think good things are going to come. Much better here than in China as long as we don't emulate China. Right. Well, on that note, I think we'll leave it. I could definitely chat for another hour. and we didn't even get through all the pieces of your agenda, but I will link your various legislation to the extent it's available in the show notes. Mr. Emmer, this has been a real privilege. I thank you for coming on, and I thank you for being our advocate in Washington because, you know, we have relatively few of those, but they really matter. So thank you so much for the work that you do. Your kind, keep doing it and keep promoting.