TFTC: A Bitcoin Podcast - Tales from the Crypt #62: Jake Chervinsky

Episode Date: March 12, 2019

Join Marty as he sits down with Jake Chervinsky, a lawyer with a focus on government enforcement defense and securities litigation, as they discuss the law and how it pertains to Bitcoin and everything created in its wake. Topics covered include, Jake's path to Bitcoin, the concept of light touch regulation, organizations like Coin Center, how the SEC has been treating ICOs, how the SEC may treat these ICOs going forward, and hope for a less Orwellian future. Shoutout to this week's sponsor, Lolli! Head over to https://lolli.com/ref/tftc right now and start stacking sats as you shop online today!

Well, hey there, freaks. I hope you're enjoying this beautiful Tuesday afternoon in March, the week that we set the clocks forward to get a little bit more sunlight, my favorite time of year. I do not like it in the winter when the sun goes down at 5 p.m. every night, but you know what I do like? Stacking sats. I know you freaks do, too. This episode of Tales from the Crypt is brought to you by Lolly. Lolly has worked out relationships with over 750 merchants. again that's 750 merchants to help you earn up to 30 back in bitcoin when you shop online you just go online you shop like you normally would at merchants like jet overstock c geek priceline hotwire walmart cvs best buy gap macy's hilton marriott and many more there's more than 750 i wouldn't have enough time to name all of them on this podcast right now again lolly you download the extension you shop like you normally would if you want to give tftc some love go to

lolly.com slash ref slash tftc that's our ref link there i think we also have spend fiat stack sats.com if you want to make it easier to remember lolly they're helping you guys stack sats they're helping us stack sats go show them some love and if you're liking this podcast please subscribe share rate review all the love goes a long way i hope you guys love this episode with Jake Stravinsky, because I know I did. What is up, freaks? Welcome back to Tales from the Crypt. It's your boy Marty Bent here on an early Tuesday night, about 4 p.m. here in Williamsburg.

Cold, brisk night. I have a very special guest, a very special topic. We're going to jump into Bitcoin and law. We've got a lawyer in the house, my lawyer in the house I'd like to introduce you freaks to Jake Shervinsky Jake, welcome to the podcast Hey Marty, thanks for having me I'm not your lawyer, just to be clear

So there's no miscommunication But yeah, thrilled to be here I've been listening to Tales from the Crypt for a long time I think you do amazing work I love talking to Bitcoiners So yeah, happy to be here Yeah, I've been telling my mom you're my lawyer Just so she has some comfort, you know

Yeah, just give me her address I can send her a letter correcting her on that. Okay, I will. Well, we have a lot to talk about in regards to Bitcoin and how it relates to law and Bitcoin from a lawyer's perspective. But before you put your lawyer hat on, this is about you and not Bitcoin in the law in particular. How did you get into Bitcoin?

How did you end up here? Okay, so yeah, let me give you the short version and then we can dive in further depending how much you want to go into. So I actually, I came across Bitcoin for the first time in, I want to say, 2013. Like most people, when I first came across it, I did not understand it. I did not think it was interesting. What happened was I was working at a different law firm from the one I'm at now. And I had an assignment to look at the recent regulations that had been issued by FinCEN, the Financial Crimes Enforcement Network.

and this was right around when they had put out their first guidance about bitcoins this was 2013 guidance saying that basically bitcoin exchanges qualified as money transmitters under the bank secrecy act and so just for this one assignment i read through this guidance and i spent maybe 20 minutes just to understand enough that i could write a quick summary of what it was and then i thought you know uh this whole virtual currency thing seems pretty silly to me I'm not going to look into this anymore and that was that was it for me in 2013 and I didn't really think about it again until probably 2016 when I was working for a judge a federal judge in Los Angeles and I was a law clerk so I had a one-year term position with this judge

and my judge brought in another clerk to work with me there's a few clerks in in chambers and And this clerk had just come from an exchange in San Francisco where he had been working for the last couple of years. And so I thought, wow, three years later, this Bitcoin thing still exists. I'm kind of surprised. I thought it would be gone by now. And I was talking to this guy when he first started working. And I said, so Bitcoin, that must be really interesting, right?

And he looked at me and he said, no, not really. I'm pretty glad to not be working for that exchange anymore. I don't really think it's going anywhere. And I thought, OK, well, I guess I was right. And I guess there's really nothing to see here, so I'm going to forget about it. And then I want to say in early 2017, I saw an article about price, right? Price brings a lot of people into this space. And the price was going up.

Maybe this was when it went up to $3,000 for the first time. That would have been like spring, summer. Yeah, I think that's what it was. I think that's what it was. And there was an article about, you know, Bitcoin on the rise again. And I thought, okay, if this thing isn't going to die, I need to figure out what it actually is. And I started reading about it. And I went down the rabbit hole, right, like so many people do.

And I spent days and weeks doing nothing but learning about what Bitcoin was, how it functioned as a technical matter. So I was studying public key cryptography and proof of work and hashing and digital signatures and, you know, the game theoretical underpinnings of mining and all this stuff. And I was just blown away by it. And, you know, for me, it brought together a lot of different areas that I found really fascinating that I've always been really interested in. And so I just, you know, like I said, fell down the rabbit hole and here I am. Was there anything like education wise? Like what did you study before law or were you driven philosophically to Bitcoin at all? So I was a psychology and criminal justice double major in college.

So maybe not directly related to Bitcoin, but honestly isn't everything related to Bitcoin in one way or another. It touches everything at some point. It really does. I think going back further than that, when I was a kid, I was really into technology. So I was a 90s kid. I grew up building PCs and doing a little bit of coding.

Nothing serious like HTML, CSS websites, things like that. So I certainly couldn't look at the Bitcoin code and have any idea what it is or what it's doing. But I've always been really fascinated by technology. And so I think that aspect of it really spoke to me. Just the power of emerging technology that changes fundamentally how we interact with each other. The story of our lives has been the rise of the internet,

which has fundamentally changed everything about human society. 20 years ago, maybe 25 years ago, the internet was a fad that most people didn't think would amount to much at all. And now, basically everything in the entire world runs in one way or another on the internet. And when I started learning about Bitcoin, I saw the same promise. I know it's a cliche, but I still strongly believe that Bitcoin does for money what the internet did for information.

And I think we're just starting to see that happen. now it's i mean it's the biggest theme here at tales from the crypt is how quickly uh the pace of technology uh sort of innovation is increasing like it's changing so fast like you said like a 90s kid building pcs to think of where we are now uh with the native digital currency we got we got bendable phones coming out uh drones that can follow you like how quickly this is all happening and everything's changing so fast and trying to adapt to that is is mind boggling especially so that's maybe the first like law topic we can jump into like trying to to craft the legal system to to adapt and evolve with with the technology some would argue it's

probably happened slower than than they would like but what are some sort of the obstacles that uh from a lawyer's perspective perspective that we face how much time do we have because that's plenty the time. I told you. Look, there's a lot. And, you know, I guess I would start with the fact that generally speaking, the law moves slower than technology, no matter what the technology is. So and just to give you some background about my work. So I'm a litigator. Most of my work is trial oriented. I do a lot of securities litigation and government enforcement defense. I talk a lot about regulatory and compliance issues, but mostly what I focus on day to day is conducting investigations or litigating disputes.

So, you know, a lot of my experience comes down to what happens in a courtroom. And just as an example of how slow the law is to catch up with technology, when you have a trial, you often have expert witnesses who testify. And experts are usually utilizing whatever the newest, best technology is to perform some type of analysis. So, for example, in a case involving narcotics or controlled substances, you have experts who are conducting tests using, let's say, a GCMS machine to determine what a substance is. It takes courts years, maybe decades, past the point where the scientific community has accepted a new type of technology for the court to decide that it's reliable. So always the law is trying to catch up with technology.

we're seeing the same thing now in the crypto industry and with bitcoin we have a set of laws in the u.s both on a state and federal level that are designed for a financial system governed by intermediaries a financial system where with the exception of transactions of cash person to person by and large all financial transactions are routed through third parties that are able to surveil those transactions and then report to the government on what is going on with those transactions. In fact, they are obligated to do so by state and federal law. Cryptocurrency offers a completely separate system. And I think it will take a while for most lawyers, regulators, politicians to understand that the technology can't neatly fit within this old system where you

have centralized third parties in between all transactions that occur at a distance so i you know i think it will i think it will take a while both to try to adapt the old system to the extent that it can be adapted but then to think of an entirely new system uh to the extent that we need one to govern a new financial system that i think we agree will emerge at some point uh using bitcoin yeah that's fascinating thank you for the explanation i feel like we're going to learn a lot in this episode freaks i'm very excited uh because this is something that still confuses me like and one thing in particular is like what is bitcoin like in japan it's legal tender here depending on what regulatory agencies speak to it's a different thing what is bitcoin in the

eyes of the law in the united states um i think uh the easiest answer is it's a commodity the reason i say that is because a commodity under the commodity exchange act which is the federal statute that the CFTC, the Commodity Futures Trading Commission enforces, the definition of a commodity under that law is basically anything that trades through a futures contract somewhere. That's the definition of a commodity. That includes securities. It includes things like wheat or gold. It includes basically everything except for money. Coffee, treasuries. Yeah. You name it it's a commodity um you know there are other legal qualifications that might apply to Bitcoin but we're not totally sure yet so for example the

IRS seems to think that Bitcoin is property for tax purposes the Financial Crimes Enforcement Network FinCEN seems to think that Bitcoin is money for money transmission purposes there were at some point some rumblings that maybe Bitcoin is a security as well, although it seems pretty clear now that no one thinks Bitcoin qualifies as a security. So I think the law is still trying to figure out how to define this and what asset class or what definition is most applicable based on the current regulatory frameworks that we have. I think it's entirely possible that at the end of the day, we define a new asset class, which is the class of digital assets that is scarce assets but that are natively digital

with no physical representation whatsoever and it may be that we need a new type of classification for that type of asset and it's just too early to really make any progress on that right because i mean that's the industry i come from in particular is futures trading so you have uh commodities like corn wheat coffee uh they're thrown into like rains and you have currencies us dollar yen euro whatever then you have precious metals uh gold silver palladium and all that and like i can definitely see like cryptocurrencies or digital assets uh i think it would be most closely to those precious metals and like an asset definition that's right as as a sort of funny aside to the extent that legal humor is funny to the freaks out there uh the only two

things that are not commodities by law are onions what yeah onions and uh box office receipts for movies there are exceptions written into the law i'm not joking over the last 50 years two exceptions written into the law for onions and box office receipts anything else can be a commodity not those two things why not um so they both have to do with random events that occurred decades ago Onions, there was a time, I forget when this was, maybe it was in the 50s or 60s, when there was a market player that cornered the market on onion futures and basically destroyed the entire market for onions. And as a result, Congress was convinced to pass a law saying that onions would not qualify as commodities.

So there are no futures contracts for onions. It is illegal to have a futures contract trading on onions. It's safe from experience. I've never traded an onions future contract. That's exactly right. You can find weather derivatives. You can find basically anything in the world you want to trade, not onions, and similarly, not box office receipts. That's hilarious. How did the box office get involved with this? That one, I'm not sure. It's probably some similar weird regulatory capture type industry issue. But yeah, look, that's how law gets drafted sometimes. You start out with big principles,

and then you tack on little bits here and there, and it makes less and less sense as time goes on. So, what does the world, and more particularly the regulatory landscape, look like in a world where a new asset class is created and Bitcoin falls under this definition? Is everything easier? Is there a period in which there's more figuring out to do? Do you think there would be more clarity if that's the case? I think there's a lot of figuring out to do. I think the reason for that is because of how law enforcement functions in the 21st century. So just to give you a little bit of background on that, in the old days, I mean many, many years ago, policing and investigations conducted by law enforcement agencies did not depend on financial transactions or surveillance of financial transactions in nearly the way that it does now. So many years ago, if the police or the FBI or name an enforcement agency wanted to investigate a potential crime, they would have to find the crime itself. As time went on, it became easier and easier for them to find crimes through the financial transaction behind the crime as opposed to the crime itself. So a really famous example of this is the gangster Al Capone, who was running all kinds of rackets and gambling and drug dealing and murders and all this kind of stuff.

They didn't get him on any of that. They got him on tax evasion by tracking the money that he was making from his criminal conduct and then hitting him for the financial crime as opposed to the violent crimes or any of the other crimes. As the global financial system has developed, the requirements for financial institutions to report suspicious activity to the government have increased to the point where we now have a law enforcement system designed so that law enforcement finds crimes by surveilling our financial activity rather than by detecting the crimes that people are committing. With Bitcoin, at this moment, that is still very easy for them to do. So we have a government that isn't that concerned about Bitcoin, and you'll hear a lot of FBI agents and federal prosecutors saying, we would love for every criminal to use Bitcoin to conduct their criminal transactions because it's so easy for us to track what they're doing.

When that goes away, when privacy technology comes to Bitcoin, as I think we all know at some point it will, the entire law enforcement system that has been developed gets turned on its head. The FBI and other law enforcement agencies can no longer catch criminals solely because of their financial activity. That's going to be a huge problem for the government. I don't know what they're going to do to try to combat that but you better believe the government is not going to give up its best And in some cases, only way of enforcing other laws. So I think that it will take a long time and a lot of hard thinking to figure out how we're going to approach law enforcement in a new world where financial surveillance is not so easy.

Yeah, I think a lot of Bitcoiners would just say tough luck back to the old days of hard, hardcore investigations and on the ground police work. Yeah, I think that makes a lot of sense. And that's in very many ways what we've done with the Internet, right? The Internet enables many different types of criminal activity that weren't allowed or enabled before. That doesn't mean we're going to shut down the Internet, right? The Internet is a neutral tool that humans can use for whatever purpose they want. If humans can use something to commit crime, they will. That doesn't make it an evil or bad technology.

and we have seen that the benefits of the internet far outweigh the issues that it has created even now as we are struggling with all kinds of issues on social media and with data privacy you know no one is saying let's shut off the internet and i think we get to a point with bitcoin where it's the same thing we're not going to shut it off we're just going to have to figure out how to deal with some of those tougher issues again it reminds me a lot of the conversation i just had with Mr. Mamadov about we got into the argument of is Bitcoin amoral versus moral or can you imbue immorality or morality on it and we agreed that Bitcoin is like an amoral technology and again the morality is on the second layer above the protocol which is dumb and literally

has no idea what us humans are doing to use for it it's just transferring data from or just manipulating data in the ledger, basically. I completely agree. Bitcoin just is. Bitcoin is a tool and people can use it for good or bad. And I think that we do have to acknowledge that Bitcoin can be used for bad, just like US dollars are used for bad, just like anything that allows us to transfer value from one person to another can be used for bad. That doesn't make Bitcoin bad bitcoin itself is is a phenomenally powerful and i think uh positive tool that can be used for much more good than otherwise yeah and that's i love where this conversation is going to so that's i guess that's where we find ourselves like we're at this inflection point where we have built this

almost like panopticon like surveillance system uh via the financial system that we're uh that we're participating in and therefore being tracked within uh and sort of now that we have this tool, this tool of leverage where we can sort of take back some of that, I would argue, like inherent freedom and liberty that we should be rewarded as humans, especially here in America. From a lawyer's perspective, and I don't know if you've done any lobbying efforts or something like that, but somebody who's interacting with the government and trying to explain this stuff for them, how is that process and is it a fun one and is it worthwhile?

Yeah. So I'm not a lobbyist. I do, however, talk a lot with regulators about how they're approaching the space. Now, keep in mind, as a litigator, most of the people I'm talking to are enforcement lawyers in the government. So we're talking about the SEC's Division of Enforcement. Same thing at the CFTC, federal prosecutors at the Department of Justice or in the United States Attorney's Offices. I don't spend a lot of time talking to politicians. the interesting thing is law is made by legislators but it's enforced by lawyers working for these

enforcement agencies and so there are a couple of different ways to try to get a sense of what the government is going to do with a new technology like this one is to talk to the politicians and figure out what kind of laws they intend to pass to govern this new industry the other is to talk to the prosecutors about what they're actually going to enforce and we see in the u.s plenty of laws on the books that the enforcers just decide are not going to be enforced so we're seeing this right now to some degree with marijuana laws right marijuana is without question uh illegal it's a schedule one drug under the controlled substances act under federal law and yet you see so many states that are adopting, you know, laws that either decriminalize or legalize medical or

recreational marijuana use. And then we see entire industries popping up in these states. So, you know, the reason this is allowed to occur is because the federal government more or less has taken the view that it's not going to go after that type of conduct. So we spend a lot of time, you know, as defense attorneys talking to the prosecutors about what are they really going to go after. So far, they are taking a pretty intelligent view, I think, on the space. I don't think the SEC is out to destroy the crypto industry. They're certainly not out to destroy Bitcoin. I don't think that the SEC cares much at all about Bitcoin. I think that other agencies like OFAC, the Office of Foreign Assets Control, which handles trade sanctions laws, and FinCEN,

I think they're more interested in Bitcoin, but they're not talking about shutting it down. They're talking about understanding what the value is and what the benefits might be for the U.S. in terms of innovation and entrepreneurship, right? The last thing that the government wants to do is drive an emerging industry overseas to other countries that are willing to let it flourish, because that means lost jobs, which means lost profits, which means those politicians don't get votes anymore. And, you know, a lot of the folks who are running government enforcement agencies are political appointees. They're folks who have other political aspirations. They're people who want to go back to the private sector. And they know they may be working with crypto companies in the future.

They don't want to be seen as being against the industry. Ben Walsky. You know, so, I mean, I'll refrain from commenting about any particular individuals or companies. but uh you make a good point there are as i said people who are thinking about what they're doing after government and they're not necessarily thinking entirely about what the policy should be but rather how they can position themselves to make more money and be more successful when they're done with their their term in government it's it's you know in dc we call it the revolving door and it's it's a very real thing yeah no it's interesting it's fascinating like so

didn't mean to call that individual out by name let's talk about uh the law that was enacted the bit license i mean that i mean it seems to hold it's funny because like new york has some like as somebody who lives here in new york and the bitcoin community here thrives like the the mind share that in this city like working around bitcoin like chain code labs and there's a bunch like gemini's here a bunch of other uh people and not as many companies but more people and developers in particular working on it live here but uh the state in particular do you think it was uh worthwhile for them to act as early as they did it seemed like they were just trying to get ahead of everything and put something out there and it seemed like a bunch of word vomit

i think that in retrospect the bit license was a mistake i can't say because i wasn't paying attention at the time. As I said, I really wasn't focusing on Bitcoin when the BitLicense framework was adopted. But, you know, I think that having a state regulatory framework for the transaction of an asset that is inherently borderless doesn't make a whole lot of sense. So what you end up having is companies in New York that have to follow certain rules, even though they are serving customers all over the world. And then you have companies in other states that are playing by different rules and then have to decide whether they want to bother with New York or not. So an example of this is Kraken. So Kraken and Jesse Powell is a

very interesting guy, the CEO of Kraken, decided he didn't want to put up with the BitLicense. And so they're just not doing business in New York. I think that's still the case now. It's still the case, yep. And so to me, I don't think that state regulation of this type of technology makes any sense at all. I think that you need a federal standard so that every single company in the United States is playing by the same rules. And in an ideal world, you would have cooperation among agencies in other countries. So you might have the U.K. and France and Germany and other allies of the U.S. who tend, by the way, to cooperate a lot with U.S. regulatory agencies in other areas coming up with a similar framework for how to handle this type of technology. And that I think would help the industry flourish a lot more. I also think that the BitLicense framework just isn't that effective. I don't think that it makes a whole lot of difference in terms of the quality of the custodianship of New York companies versus others or the likelihood of an exchange hack or any of the other types of risks that might come with an entity that's regulated under that framework.

So, you know, I think as we move forward we're gonna see a lot of different state efforts to regulate this space But ultimately we're gonna need some federal action before we make a real progress in you know Getting all these legal issues sorted out. Yeah Do you think that'll be anytime soon federal action or no? I don't so, you know in and it depends also what you mean by federal action so, you know, there is regulation would you consider what Japan has done federal action just completely labeling it legal tender and defining it as that and then letting it run wild or yeah

sure i mean that's a that is a um do you think it's a good action for them to make or that's hard to say i also i i hesitate to make any value judgments at this point not knowing how things will develop uh you know look there there is a risk that comes with crypto exchanges that that does not come with traditional finance companies right we see this right now with quadriga in canada where you have a crypto exchange used by a very large number of customers that was custodying a whole lot of assets a lot of value for those customers and it turned out it was just one guy who had his private keys on his laptop allegedly and he right allegedly and maybe he died and maybe he didn't You might be on an island with red fixing a boat right now somewhere.

Exactly. I mean, we can talk about Quadriga. It's a fascinating case. But I think it's a good example of the fact that we do need to pay attention to these exchanges. And we need to make sure that in instances where you do have a third party providing custody for retail investors' assets, that they're doing a good job. It would be better if people understood not your keys, not your coins. Well, that's it's been another reoccurring topic on this podcast is so that's been something that's been in my mind, excuse me, in the last six weeks in particular is helping to make it clear to people that read and listen to my content that Bitcoin is a bearer asset, which is fundamentally different than the cash assets, quote unquote, that you hold in your bank account. Like there's a different responsibility, different gravity at which you need to approach Bitcoin in particular.

And I think definitely there's some legal education that needs to go on, but just general education of understanding what this asset represents. Right. I think that people have trouble with it because it is natively digital. I think that even those of us who understand what the technology is capable of have trouble wrapping our head around this new type of scarce digital asset. If you were to think of it, on the other hand, like a diamond or like gold or some other very valuable good that you can hold in your hand, would you ever walk up to some random person on the street and say, hey, I'm going to give you this however many thousands of dollars worth of gold or diamonds.

Please give it back to me someday if you feel like it. no of course he would never do that and that's essentially what we do with a lot of these exchanges and so like custody in particular and that's one thing uh another initiative around these parts tales from the crypt is is proof of reserves and so like again with this new type of asset uh it being a digital bearer asset affords us some new functionalities and some cool things that we can do to to ensure that the institutions that we're engaging with actually have what they say they're selling us and so do you see a future in which there's a regulatory sort of mandate that demands proof of reserves or something like that i think there

could be something like that you know there already are some regulations around qualified custodianship now typically that has to do with securities and i don't think bitcoin is one so It may not apply in that sense. But there are also some custodianship requirements for, just as an example, commodity pool operators. Would this be like a Basel III type? Because that's what Basel III is about. So Basel III was part of the Dodd-Frank Act or an offshoot of it that tries to ensure capital reserves of the banks. And they had to prove that at certain points in time to the government.

Yeah, I think that's related. And I think it's possible that one thing that Congress could do is pass some kind of specific legislation regulating crypto exchanges that requires them to provide some proof of reserves. Now, whether you can convince the U.S. government that there should be 100% no fractional reserve, you know, that's kind of hard because that's not how politicians tend to think, right? traditional banks have 10% in reserve, and it may be difficult to convince politicians that 100% reserves are required. But, you know, I think it would be good to have transparency. And so many of these regulations come down to not forcing a company to do a particular thing or refrain from doing a particular thing, but rather disclosing to their customers and to investors what it is that they are doing and i think it would be you know i think it's a great idea to have some kind of

proof of reserves um or some requirements of you know open auditing on a blockchain right where it would be possible for third parties to check and see what kind of reserves an exchange is holding and uh you know it seems like exchanges aren't going to do that on their own so maybe we do need some government intervention there let's make the case for as little regulation as possible As a lawyer, do you envision a framework, a sort of very basic framework from which we can operate and sort of with light touch instead of being as intrusive as I would argue the BitLicense is, like creating 500 grand barriers to entry just to comply with this stuff? Yeah, I think light touch is a great way to describe it. I think that whenever you have any merging technology, the light touch is the best possible approach because we just don't know yet what the technology is going to do. If we had had onerous regulation of the Internet in the early days, it may not have flourished into what it is now.

I feel the same way about Bitcoin and crypto more broadly. you know what those regulations turn into in the future i think has to be guided by what the technology turns into and i think we're still so early in learning what bitcoin can do you know we understand its use as money and we understand its use as a store of value and with a lightning network as a medium of exchange but what else can we build on top of it is an open question and how will a regulatory framework apply to for example non-fungible tokens that are issued using liquid which blockstream has been working on or some other type of decentralized application running on lightning these are things that we don't know yet and i i think the light touch is the only way

to approach it until we know what the technology does right and um what was i gonna say i had a great follow-up to that i'm always a little bit forgetful here it'll come back to me um it's the it's the whiskey i'm sure it's the whiskey it always we're we're enjoying some bowman brothers uh pioneer spirit virginia whiskey straight bourbon shout out to the brothers for sharing this with us yeah thanks guys this is uh this is really good thanks yeah but in the lines with like oh so this is what i wanted to get to you just go off you ramble for a little bit and it comes back to you so again we said we don't want we want light touch but like uh a quote that i wrote about in the bent last week is the price of freedom and liberty is never

ending vigilance and so as people as users of bitcoin and in this space like the users in particular i would argue so we were talking about proof of reserves instead of having the government get to a point where they're like all right people are getting so gypped that we need to step in and mandate that you do proof of reserves like uh let's make the argument for like active users like speaking out to these industry players and maybe uh avoid the government having to step in like do you have anything to say around that like look i i think that's a wonderful idea yeah and in principle i completely agree with you i think that to the extent that you can have either self-regulation or in free market influence right if if there was such a groundswell of enthusiasm

among Bitcoiners, that Bitcoiners would only use an exchange that made it absolutely transparent that they had proof of all their reserves, then that would be fantastic. That hasn't happened. Franken offered it and nobody used it. Right, and look, after Mt. Gox,

if there was anything that was ever going to get the crypto world to demand proof of reserves, it was Mt. Gox. Three quarters of a million Bitcoin is definitely a catalyst to think about this stuff. Exactly, and we're still trying to unravel the damage that Mt. Gox did, and we're still trying to understand

how the whole thing happened the way that it did. And so I guess what I would say is if Mt. Gox can't convince people to look out for their own personal best interests, I'm not sure what will. There are some interesting self-regulatory efforts in progress right now. You know, there's a new trade association in DC called the Blockchain Association. It has some pretty big players behind it, like Coinbase and Circle. I know that the Winklevoss Brothers at Gemini are trying to launch or have launched their own self-regulatory association. I think it's called the Virtual Commodity Association or something like that.

So, you know, I find that interesting. But in the meantime, unfortunately, we are still seeing the victimization of less sophisticated, less informed retail investors who want access to cryptocurrencies, but don't understand how to care for themselves, or frankly, don't understand what they're buying in the first place. And I do think that there is some role of government in protecting those types of investors. Now, that's a very broad statement, and when you dive into the details of how that gets done in an effective and fair way, it becomes much more difficult. And as you point out, the BitLicense was an early attempt and I think a very unsuccessful attempt at doing that, so it's easier said than done. But what we don't want to see is the proliferation of more frauds and Ponzi schemes and truly malicious conduct that then paints the rest of our entire industry with that unlawful, illicit brush. And so whatever way we can make this work, I think we need to make it work. you know i would argue are the most egregious sort of breaches of that user trust and that naivety it would be the icos that we went through in 2017 um i mean just the the enabling of of that

type of money raising mechanism really unleashed human greed on the world the likes of which we probably haven't seen uh obviously icos are not hot right now they're they're very quiet i haven't heard of a new ico launching in months uh it seems as though uh regulatory agencies are starting to put their cases together and it seems like that the hammer might come down on this this part of the industry in particular what can you say about this i absolutely agree that the ico market the public ico market is dead the sec killed it for the better in my opinion in my opinion as well um what was the second part of of what you just said um the ico's like probably the most egregious like money grab of retail money in the space like uh

sec is coming down like what's happening yeah like what are they doing oh right you said right so you said that the hammer was going to come down so i would say the public ico market is dead I would not say that the hammer is going to come down. Not in the way that you might be imagining. So I think that there are a lot of people who believe that any project that issued an unregistered security will be destroyed by the SEC. That's not the case. There's too many. Right.

There are too many, and also it is too hard for the SEC to achieve that level of an enforcement action against an ICO. you know you there have only been three settlements so far with with companies or projects that issued uh tokens in a public sale uh there was paragon and airfox last year and then i think last week there was the gladius network none of them had to pay all that much it was a 250 000 penalty the promise of rescission for investors who wanted to get refunds for the money that they had put in in the ICO, and then the requirement to register the token and comply with the obligations of the Securities Act. Now, that's not easy to do. It is expensive. But it's also a far cry from the SEC shutting down those companies. And in fact, last week,

the Gladius Network got away with no penalty at all, in part because they had voluntarily self-reported their ICO as a potential securities violation. And, you know, that's three companies out of how many ICOs were there in 2017, a thousand more. So, you know, I think that for the SEC to go through those companies one by one by one by one and hammer out settlements with each and every single one of them

is hard to imagine happening. Seems logistically nightmarish. Yeah, I mean, look, they are an agency filled with enforcement lawyers who have limited time to dedicate to any given case and especially limited time to dedicate to crypto so we think crypto is everything going on in the whole world right it's the most important industry on the face of the earth now that may be true i do think that that's true but the sec

doesn't most of what they do is in the traditional finance industry which is many many times many orders of magnitude larger than the market capitalization of the crypto industry i think that the sec believes they've more or less set the tone now for what is and isn't legal they have as I mentioned, killed the public ICO market. People understand now that you cannot issue a token to raise funds to develop a non-existent network on the promise that the people who bought the token will make profit off of your efforts. This is clear now. So, you know, I don't think that the SEC is spending nearly as much time as some people would think or would hope in addressing those 2017 icos that are still out there interesting that's uh actually a bit surprising for being

here i would uh i was probably fell in that camp of thought they were going to come down a little harder than uh well but it makes sense as you describe it like it logistically seems like a nightmare the news came out that they hired like 50 uh new employees for enforcement actions and people were like ran with that like oh they're grabbing that for the icos like yeah right and And of course, the crypto industry thinks that they went and got 50 crypto experts to prosecute crypto cases and that couldn't be further from the truth. They're hiring great lawyers who can take care of any type of securities issue that comes up, including crypto and including, you know, other financial services companies and large banks and what have you. So, you know, will there be more focus on crypto than there was maybe a year or two ago? Absolutely.

Crypto is in the sights of the SEC now. They are paying very close attention in a way that I think that they weren't maybe two years ago. But to imagine a bunch of indictments coming down from the Department of Justice charging the CEOs of ICOs with securities fraud and locking them away for 10 years in prison,

I don't think that that's really going to happen. I think that what the SEC wants... bunch of 23 year old bros just breathe the sigh of relief well you know look i'll also say if you get a if you get an indictment or a subpoena give me a call that is my job so if it happens i have a great lawyer i have a great lawyer um okay so so i mean look i you know i think what the sec has been saying in in most of their enforcement orders and these speeches is uh the ico market it was illegal and if you conducted an ico you should come talk to us that's what they want they want people to come in and talk to them just like the gladius network did last week and work out a

deal and maybe a year from now they'll pick the top 10 icos that haven't come in yet to hammer out a deal and they'll turn on the gas and they'll see what they can work out and you know they they have sent a lot of subpoenas which uh you know i can go into a little more about what that means But basically, a subpoena is just an initial request for information about a potential violation that the SEC is looking into, but they haven't made any decision about. And they send subpoenas to most ICO projects just to get more information, but they haven't launched enforcement actions against most of them. And often what happens is they send the subpoena, and then they don't say anything again for six months or a year because they get distracted by some other case and come back to it. So this stuff moves very slowly. yeah so all right this is a good segue like back to like the pace of innovation like do you see a

future in which like bitcoin and the innovation that happens on top of it maybe via lightning and the use cases enabled just like makes it so like the government or regulators cannot act and if they do act it's just like all right this doesn't even matter anymore yes there's a yes there is a point to which the government does what they can and forgets about the rest and we see that with the u.s dollar now right so cash still exists cash is not illegal cash is used for illicit transactions and the government's perspective i think on a drug deal that you could execute using only cash is they're just not going to catch you.

And they just kind of have to accept that. And if you become a big enough target, they'll go after you in some other way. But they do what they can and they leave the rest alone. We're going to see this, I think, in the trade sanctions area first before anything else. Where right now, if you wanted to send money to someone in Iran, you would not be...

This is a big topic on crypto Twitter this week with the lightning torch. Yes, it was. Yeah, it was. I saw Pierre Rochard and Steve Pally, who's another lawyer in D.C., had an interesting exchange about the lightning torch being sent to someone in Iran. Now, I will tell you that sending money or something of value. As a punk rock mentality, I was willing to send it to Iran. To this dude in particular, because I've talked to him.

I've DM'd him. You've got to denigrate between Iran and Iranians, right? and yeah look i i think it's all really interesting so in december not denigrate excuse me yeah so in december ofac the office of foreign asset control which does all the trade sanctions enforcement sanctioned two iranian individuals who ran a crypto exchange for their alleged involvement in a ransomware attack on the u.s where ransom was being paid in bitcoin and the bitcoin was supposedly being laundered through this exchange in iran i think it was um the cry what was it um yeah uh wanna cry wanna cry yeah that's right so ofax sanctions

these two guys who ran these this exchange in iran and as part of the sanctions listed their bitcoin addresses as part of the sanctions meaning it is illegal to send bitcoin to either of the two addresses that are listed in the sanctions so what do you imagine is the first thing that the bitcoiners do when they see these bitcoin addresses in the sanctions list right they start sending bitcoin to the addresses as a fuck you to dofac excuse my language i imagine it's okay on this podcast so look i think that's hilarious as someone who supports bitcoin and uh the right to transact with whoever you want to transact with as long as you're not hurting anyone or committing a crime uh as a lawyer i would say that's a dangerous thing to do because it is

very easy for the government to see that you have conducted that transaction and indeed it does violate trade sanctions laws. Now, consider the transaction conducted with an Iranian citizen from the United States in Monero instead of in Bitcoin. OFAC can't detect that, assuming that Monero is secure and private in the way that we believe that it is. Imagine the same thing happening through CoinJoin or TumbleBit or some type of privacy technology on Bitcoin. Like a P2EP transaction or something. You name it, right? If it's private, the government isn't going to see it. Now, what they could do is spend an extraordinary amount of time and resources and effort trying

to uncover those private transactions, or they could make an intelligent and effective allocation of resources and decide, we can't stop this, so we're not going to look for it. And I think that, especially in talking to some of my colleagues who focus on national security law, that's probably what happens, is they focus on what they can do, and they let the rest go because there's there's no point really in trying to stop it and that's sort of the nature of trade sanctions to begin with is it's really a tool of foreign policy to try to influence conduct but it only goes so far as as the government can make it go and so i do think

there's a point where crypto stops them from being able to address some of these issues wow i think beauty on like shaking his fist in the air right now like pumped like he's fist pumping right now somewhere maybe so that this does not mean by the way and i should i should say this probably should have said this at the outstart nothing that i say here is legal or financial advice i'm not encouraging anyone to send money to iran using monero or any other privacy technology we're just having a friendly conversation about the future of this industry exactly and no but it is i mean that's why i wanted to have you in because i love your takes on the space particularly around the sec announcement i'm somebody who's like been in

the space been waiting for an etf excuse me the etf in particular been waiting for an etf since 2013 and tell people like it's coming around the corner i'm like don't hold your breath like it's not coming around the corner there's no custodial service in the world that would be ironclad enough for an etf product like yeah i i have a love hate relationship with etf because i don't think it's nice i mean i just think it's like if you want exposure to bitcoin why i get it via an etf that's my whole argument so i i think ultimately you're right i think in the long term you're right and i actually think that a lot of the people who are at the forefront of pushing for an etf would agree with you so for example i think gabor gerbach is the director of digital asset strategy for van

VanEck. I don't know if you've had him on or not. He's a great guy, and he is in every way a true believer in the power of Bitcoin. He has a phenomenal personal story about why this matters to him. But I think that even they at VanEck, and VanEck is one of the funds that is, I think, closest to getting an ETF passed and is most aggressive in pushing the SEC for approval. Even they understand that long term, there isn't a need for the ETF. The ETF is a transitional device to get risk averse investors to buy into the space. That is both institutional investors and retail investors who understand the power of a natively digital scarce asset, but do not have the confidence or perhaps aren't willing to take on the risk of custodying those assets themselves. Or of engaging on crypto exchanges that it seems are heavily manipulated and perhaps not the safest to use for any number of reasons. You know, I think that the ETF matters for some period of time until and unless you have Bitcoin take on a greater global role, for example, as a reserve currency, where all of a sudden, if we have good applications with good user experiences and other ways to custody assets that are easier, like through Casa or Zappo or Biko, whoever it is. when when it gets easier and safer to custody the asset itself i think the etf probably doesn't

matter anymore in the interim uh there are a lot of people who want access to bitcoin who are simply not willing to deal with actual bitcoin custodial risk yeah exactly it's custodial risk and and it's also it's a stamp of approval from the sec it's one of many trojan horses for legitimacy right yeah i i think that's right and especially because the main issue with the etf and we don't have to get too far into this if you don't want to but i want to we're getting into everything we're 51 minutes in we got plenty of time all right cool so look the main issue with the etf is market manipulation that is the one problem that is stopping the sec from approving the etf and market manipulation would come not on the ets in particular but the futures contracts exactly and

there's a big dispute about this between hester pierce one of the commissioners who has been given the nickname Crypto Mom and the other commissioners who are against approval of an ETF. The prevailing view at the SEC is that for an exchange to list an ETF, the ETF has to be, and this is under Exchange Act Section 65, this is just the law, the ETF has to be designed to prevent fraudulent and manipulative acts and practices. The dispute is about whether that means fraud and manipulation on the exchange listing the ETF or fraud and manipulation in the underlying spot and derivative markets where the asset is trading. Hester Pierce says the only thing that matters is whether the ETF itself will be

manipulated on the exchange. In other words, if CBOE wants to list the VanEck SolidX ETF and can guarantee, to a reasonable degree, that the ETF itself will not be manipulated on CBOE's exchange, The ETF should be approved. That's what Hester Pierce things The remaining commissioners say that doesn't matter because someone who wants to manipulate the ETF on CBOE Can just go to bitmex and finance and coinbase and bittrex etc and manipulate Bitcoin there Inputs the index inputs exactly and by doing that manipulate the price on CBOE So this is the main concern now the reason that I say approval of an ETF is an important signal from the SEC and from the government is

If the SEC were to finally approve an ETF, what they're saying is this asset is no longer more manipulated and less trustworthy than gold and oil and the other precious metals and base metals and nuclear materials, etc. Which are all pretty heavily manipulated. Which are all very heavily manipulated, but in a way that makes the U.S. government feel comfortable. Palatable. Exactly. And there are also very large, well-established exchanges for those assets that cooperate with governments that are willing to do intermarket surveillance, like the London Bullion Exchange, etc., where the government feels comfortable with them. i don't think the government feels that comfortable with the exchanges that have the most trading volume which again i will leave nameless but we all know there are certain exchanges outside of the u.s that don't seem to play too well with u.s regulators i don't know

if we can name this one in particular but the u.s government just returned some bitcoin to it uh i haven't heard about those uh so i'm gonna name it now since you haven't heard about it but bitfenix uh after their hack of 2016 uh they had 120 000 bitcoin uh stolen from them and the u.s government i believe confiscated i forget it was from something i forget what it was in particular but one of the exchange uh exchanges that the u.s government came down on they had found that like following the utxo pathway that like something like 40 bitcoin had come from like the hack Bitfinex account so they send it back to Bitfinex like so what does this mean the U.S. government's like hey we found your lost Bitcoin and we're sending it back to you

so I'll avoid saying anything too specific about Bitfinex um I think all yes we don't and I'm not even talking about there's like the fact that the U.S. government's like hey we found this we're sending about any exchange yeah you know I think I think all that really is I wouldn't read too much into it I think what that is is the government probably being obligated to return to the original owner the assets that were taken i wouldn't call that a vote of confidence in any way in the exchange i could see the government sending an asset back to a particular company and then immediately suing them saying that they owe that asset to the u.s government as a penalty for some other type of conduct so i wouldn't read too

much into that okay no because that was something that people were like whoa what is this like and that's like and so like what what are things like the uh the uh silk road auction where tim draper bought 30 000 bitcoin like the government was willing to auction bitcoin to the public like what does that say about their stance or their uh sort of incentive in this this whole new thing yeah i think all it really means is they don't view bitcoin itself as a criminal asset so you know, when the government seizes assets in any way, whether it's in the course of an investigation or what have you, they have a process to auction off those assets. So you see auctions of cars that were used by drug dealers or yachts or houses or whatever.

The only thing they want auction is a criminal asset. So if they seize a bunch of cocaine from a drug dealer, they're not going to auction off the cocaine. So all that means, in my mind, is they are comfortable that Bitcoin is, at this moment, under current law, not illegal to allow it to circulate among individuals. Otherwise, it means nothing at all. Yeah, no, that's pretty dope. And that makes you like, I mean, obviously, Bitcoin is just the ethos behind it. It's very anti-cypherpunk.

It's very anti-state. And there's a lot of anti-state sentiment in Bitcoin, I would argue. I have a lot of anti-sentiment in myself as well, but it also is like keeping basically your heart open to the fact that these people may actually be good at the end of the day and the U.S. government may have America's best interests. Do you think that things like this may show that, hey, the government views Bitcoin as legitimate? Maybe do you think the U.S. government wants to become a leader in this industry, quote unquote, into the future? Not yet. I think that they can be convinced. I think that we have only started to think and talk about how something like Bitcoin could be used, again, as a tool by the government to vindicate some of their interests.

For example, we know in Venezuela that Bitcoin has been extremely useful for individual citizens to survive the Maduro regime. in theory the u.s government could deploy something like bitcoin as a weapon against authoritarian regimes i would prefer that to military action exactly right and and you hear people like alex gladstein i don't know if you've if you've talked to him a couple weeks ago he talked about and he's you know i think that when you think about the power of bitcoin there's so much to be excited about but what he's working on at the human rights foundation is one of the most interesting, if not the most interesting aspects of what this technology can do, I think it is absolutely possible to convince politicians and regulators of that power of Bitcoin, not just

to free people in other countries, but to effectuate U.S. foreign policy in really important and fundamental ways. In peaceful ways. Exactly, exactly. And in ways where you can send Bitcoin, let's say you're trying to provide aid to Venezuela which we're trying to do right now and we can't because the aid is being held on the border of Colombia imagine if instead of having to pass aid through the borders and through the government that we're trying in some ways to dismantle in the first place right do it via radio waves yeah exactly right we can get that money directly to the people who want it that is extremely powerful on the other hand as we were talking about earlier there is a threat that bitcoin poses to the order that the government

has been able to maintain especially through law enforcement but also through the federal reserve and through the control of the money supply yeah and that is probably more threatening than the promise of fighting authoritarian regimes is uh you know uh an attractive concept yeah to most politicians no yeah and so that's why i'm into bitcoin i've put my whole life into this at this up to this point um because i do believe that the actions of like the federal reserve in particular uh are undermining sort of the quality of life and and the the ability to climb the social ladder in the united states which then eats at the fabric of what this country was built on and i don't i am a burn it down guy i'm a burn it down guy i'm like a burn down the system

and like i think i do think bitcoin is like a a better alternative that we can transition to so like my i'm not like a burn it down right away guy i'm a hey i do think that like a bitcoin standard is something we should transition to like how do we do that in an orderly fashion some men just want to watch the world burn i want to watch this system burn not the world i want the world to cherish right i think the world to cherish we need to burn this system down yeah and start it now so look my my take on this is uh the the system that we've had for a long time which is a purely fiat currency system where we have dollars backed by nothing other than i guess the full faith and credit of the united states in other words our belief that the fed will not inflate our money

into nothing uh has worked okay for a while there are problems with it but if you look at human progress over the last hundred years we've gone really far with this system it hasn't broken yet it looks like it's gonna break so this is where i yeah the ammo the the the tools and the the tricks which the fed has in its its pocket seem to be dwindling exactly and you know this is one of these things that like so much else happens slowly at first and then all of a sudden so uh to compare the u.s dollar to something like bitconnect which i think is an interesting comparison look bitconnect traded at 400 until the day that it crashed down to nothing trevin james yeah you know there's uh i gotta check in on that securities litigation because that's an

interesting one didn't he have to go uh didn't he have to go testify they've all been named all those guys uh you know forget their other the rest of their names yeah they've all been uh named as defendants in the case and anyway but you know my point is and this is how i explain bitcoin to to most people who uh aren't that interested and i want to make sure i grab their attention what i explain to them this is within the u.s people who care more about u.s policy than what goes on in the rest of the world, which, for better or worse, is how a lot of people in this country are.

They care about what's happening here. What I tell them is, we have a $22 trillion national debt. We have a $1.2 trillion deficit. We have absolutely no plan of how to reduce the deficit or how to pay off the debt whatsoever. There are only three possibilities. One is, that doesn't really matter,

and we can keep growing the debt forever in perpetuity and nothing bad will ever happen. Modern monetary theory. Exactly. I don't find that terribly persuasive, especially when a lot of our debt is held by our enemies. Just go back to the simple proverb of nothing lasts forever. To think that you can roll the debt over forever

is just hubristic in my mind. Right, and the fiat currency system has not existed for terribly long, and it wouldn't be that surprising if it did take, you know, 40 or 50 years before it really unraveled after Nixon decoupled the dollar from the gold standard, you know, finally. And look, the value of the dollar has been propped up since then by the petrodollar, right? All oil transactions are conducted using the dollar. That creates demand for the dollar.

That is now starting to end. You've got futures contracts being denominated in other currencies, which is the first domino of one to fall before. Right. So, okay. So, option number one, the debt is fine and nothing bad ever happens not very likely option number two the u.s defaults on its debt that's a very very bad i just i just yikes yes uh we all know that that would be extraordinarily bad not just for the u.s but for the world because of of how much uh of a role the dollar plays that's option number two option number three is the fed prints our way out of the debt which is almost as bad i think as defaulting and i don't really see a fourth option i mean in theory the fourth option is that we return to some kind of balanced budget and slowly

but surely we pay off our debts and look at our government now i don't see that happening they can't agree on anything right so you know not to get too political but this is how i explain bitcoin which is bitcoin is a hedge against the currency risk of the u.s dollar doing what it appears it's going to do which is lose value very rapidly and so you know i think people grab onto that and understand that at a sort of an intrinsic level why you would want to have a scarce valuable asset that survives in this kind of of circumstance right and it's i mean you're preaching to the choir like this is my and this has been my investment thesis for bitcoin for seven years now like i remember vividly in chicago sitting down one of my one of my one of my good

friends originally met him through my cousin he's a bit older than me but like sitting in a bar and like vividly remember where we were sitting like and i was like just like being in the futures markets talking to fund managers for like three years and literally asking them about fed policy and like what they think and coming to the reason coming to the realization that nobody knew what the fuck this policy was going to end in was like it's just going to end bad and like we had the potential with bitcoin to transition i don't know if like so what i'm trying to get at is like can the transition to uh a world which is run on a digital currency where we have a reserve currency on the internet could there be an orderly transition like could the government ever

come out and say hey we fucked up probably can't do this but like we're going to actively like start transitioning to this stuff slowly but surely obviously would you would lose confidence in the currency overnight but like maybe by slightly supporting bitcoin uh and not overtly saying hey we're going to transition to this but like being uh again like uh light touch or being light touch regulation like sort of just let bitcoin happen and be like all right we're on bitcoin now i mean i hope so because the alternative is not pretty right you know i think it depends on on everyone doing a really good job of explaining to each other why this matters and how important it is and i i mean i do i feel like one of the most amazing things about

bitcoin is that in a way it markets itself because all of us learn about it and get so deep into it that all we want to do is evangelize what it is and why other people should care about it as much as we do there is no bitcoin incorporated marketing department coming up with you know the advertisements and the narratives and and what have you for selling bitcoin to other people it's funny i was so i went to uh over the weekend i went to uh father son alumni breakfast at my high school i went home my brother my dad and i went to his breakfast and you sit at a table and alumni get awards and speak and we had a teacher sit with us uh shout out mr grock but he was like yeah so do you work for the bitcoin company and i was like no like there is no bitcoin company so

there is that perception that they're like bitcoin is a company right and and many more people than you might think still believe that and that includes politicians and regulators so we still have conversations with them where what they want to know is uh who is the ceo of bitcoin and why haven't we had them in like we've had jack dorsey and mark zuckerberg and whoever to explain what their company is doing and it takes a really long time to explain why that doesn't make any sense right yeah and so we have like the coin centers of the world where what are your thoughts on like coin center and what they're doing i think they're fantastic i i think i do too i think huge fan of mirage peter valkenberg is great at explaining the stuff in person and in an eloquent

way yeah and and jerry bruto you know all of them i mean jerry bruto's paper on cash and privacy was incredible right they're they're doing really phenomenal work i you know they get accused of being industry shills i i don't think that's fair to them at all i think that they do a phenomenal job of not just explaining bitcoin and the crypto industry more broadly but also putting it in terms that make sense to regulators and politicians yeah and i think that again that cash and privacy piece in particular i don't think they're signaling or anything but i think it's signaled to me at least like hey you guys are in this for human rights like perspective and and bent and i mean the beauty i i love you i'm keen i love you i know you don't like queen center but like i i do think

that like queen center is doing their best they can to put their best foot forward to educate congress and that sort of and not uh sort of uh manipulate the laws in in their view they just want to educate that's what it seems to me yeah i i think that's absolutely right i think they do a really good job of pushing the light touch concept uh you know i hear peter van balkenberg say light touch all the time i completely agree with him when he says that but i also just think they've done a great job of distilling down for politicians what Bitcoin is and how to understand it in terms that are easier for politicians to grasp. So when Peter Van Valkenburgh testified most recently before the Senate, he gave a phenomenal introduction. The one where him

and Robini were given a... Yes, it was him. Yeah. And I actually went to watch. It was it was almost like a boxing match it was like van valkenberg versus rubini uh i'll i'll uh i'll i'll leave it to other people to say what needs to be said about about mr rubini but um you know peter van valkenberg he gave this fantastic introduction to his testimony where he described bitcoin as a public payments infrastructure and i encourage everyone out there to just you know pull that up on youtube he did a great job during that whole hearing yeah he did a phenomenal job the whole time but seriously his first two and a half minute explanation of of how bitcoin works i just thought was so fantastic and such a great way to get your head around it

in a way that doesn't require you telling a politician my goal is to destroy the fed and eliminate your ability to monitor any of my transactions so that i can buy drugs on the silk road thank you very much which is not going to be an effective argument to them so i think i think coin center is critical for making the argument that needs to be made so that the government doesn't go after bitcoin now to the point where honestly and this is sort of how i think this ends up developing which is um by the time the government realizes that they need to take action against bitcoin it will be too late for them to do anything about it and they might be relieved exactly and i do think that's the case and i would tell you that if today the government

were to decide bitcoin is a threat to our monopoly on the money supply we must destroy bitcoin they would be able to do so how so uh it's all technology the government i think right now could could produce enough hash rate to take over the network if they wanted to now obviously you can fork and you can create a new network and you can try to avoid the government all you want but as long as they can print the money that has value in the world they can buy whatever they want

and that includes enough mining equipment to perform 51% of tax but I believe there would be indicators going off through that supply chain like hey we've got the biggest buyer like throughout history something's going on here

there are alarms I would agree with you I do think Bitcoin is vulnerable to a state attack at this point in time. No, I agree. But it would be... I sort of want them to try. I sort of want them to try. Is that bad?

It's not bad. Look, I love the idea that if the government were to say tomorrow Bitcoin is illegal, that price and adoption would immediately skyrocket. I love that idea. I don't know that that's true. And I'll tell you why,

at least in the short term i don't think that's true i know a lot of people who own bitcoin including my father so my dad who would never have been interested in this at all boss he thinks social media is like the worst thing that's ever happened and we should just get rid of twitter and facebook and all these horrible things and go back to the old world of the new york times and the wall street journal telling us what's true and etc but still i convinced him to buy bitcoin by explaining to him why it matters and what it does and how it does for money what the internet did for information etc if the u.s government said tomorrow bitcoin is illegal my dad is selling all of his bitcoin no questions asked really definitely he's not looking to break

any laws on crypto anarchist principles about separating money from state that's just not what he's doing i will tell you as a lawyer who has law licenses in multiple u.s states and wants to keep them by not committing criminal conduct i might have to sell bitcoin if or get rid of it in some way if the government were to say that holding it was illegal i think it'd be a huge setback i don't think it would kill bitcoin because i think nothing can kill bitcoin but i don't want to see that happen because i think we should support as rapid adoption as possible right so what does that say like again like you said like as much as you would like it to increase price immediately you probably wouldn't because people would be scared but then eventually over time

want to kill bitcoin like but what does that like again like the government and how they react to this is going to say a lot like do you want to look like a scared reactive uh sort of hurt deer flailing in the corner or do you want to sound like a strong leader like all right fuck it this stuff's gonna happen no matter what we might as well lead and right how do you how do you get the government to be like all right let's just lead do whatever you want right uh i agree yeah and i don't think that they're going to ban bitcoin i i don't see any signals whatsoever that that's going to happen near to it you can count i think on one hand the number of politicians who have come out and said this should be illegal uh full stop there's only one person i can name for you

right now a california congressman brad sherman who thinks that bitcoin is only for money launderers and criminals and should be illegal i haven't heard anyone else say that i think the the the challenge for us is articulating to politicians why they need to support bitcoin and why the country will be better off and equally importantly their constituencies will be better off if they support the development of this technology and innovation and adoption of it and there are a lot of good arguments but they are sometimes very hard to convey and to distill and to make concise and easy to comprehend for people who are of an older generation and don't understand technology in the way that you and i do um but that's i mean i think that is the

challenge now right and it's i mean the way you make them understand it i think that's like the weird uh sort of like or the weird position between iraq and the hard place i believe the politicians find themselves in because their constituencies most of america let's face it like most of america is struggling like the gap between the guinea index is at its highest it's been ever uh people are living paycheck to paycheck living on the dole whatever it may be uh and it seems like i would argue so what i have been arguing pretty art uh ardently and pretty strongly the last three months in particular is that like bitcoin uh and sound money in particular like is is a money for the common man the average joe like you should be able to save your purchasing

power throughout time like your your month this is what me miss here talked about like bitcoin has time like bitcoin as a money uh is is the best representation of your time in in a value structure uh whereas u.s dollar uh you sort of get paid for for expending your time expending your energy a certain amount at one point in time but the government prints so much money that you basically devalue that work over time and so trying to figure out where i was going here the whiskey's hitting me hard right now but like the the government finds itself between a rock and a hard place like hey like what i would argue is like the best way you can help your constituency is implementing like a sound monetary policy built on bitcoin where people can save

their money and the the average joe that you're supposed to be representing will be better off but they also can't do that because you can also delegitimize everything that the government has worked for up to this point with deficit spending and all of that right but i guess i would what i would add to that i totally agree with you what i would add to that is you don't have to agree with me no i i do i do i think it's i think it's more about targeting particular politicians who have particular beliefs that lend themselves to approving of bitcoin so i think one thing that you've identified is absolutely correct which is that wealth inequality is increasing in the country there there's a political disagreement about what the cause is and what the solution is but we all

i think agree that wealth inequality is inherently a problematic thing and in most cases precedes revolution right the more wealth inequality you see the more likely you are to have violent even violent revolution yeah that doesn't mean you take all of the money away from the billionaires to solve wealth inequality that's not no necessarily the solution but wealth inequality is a big problem one of the drivers of wealth inequality is the conduct of the financial services industry as it exists today the less money you have as an American the more expensive it is for you to live if you have under a certain amounts of dollars for example in your checking account most of the large banks

will charge you a fee to keep your account open meaning the less money you have the more you have to pay the smallest twelve dollars a month but it means something to those people it really does it can be the difference between eating dinner or not or feeding your children or clothing your children or not and that's just one example this adds up this compounds in any number of different ways of how expensive it is to be a person without means in america talk about like payday loans shit like that exactly yeah and there are a lot of politicians who understand that issue and don't have a solution for it other than regulating that industry more and more and more, or breaking up the banks, or using some kind of government

intervention to address the problem. I think if you go to those politicians and you say to them, there is an engineering solution to this problem that will be much more effective than the political solution that you are considering, and you should support using something like Bitcoin to disintermediate rent-seeking third parties in the finance industry, that those people would be very interested in that idea. And I think most of those people are probably Democrats. And then you look at the Republican side of the aisle, and you see a lot of people who are still very interested in sound money, and who think that the Fed should be audited, and think that QE is insane, and that we are on the wrong path in terms of monetary policy. And I think that you can convince them of the more

traditional Bitcoiner concept, which is that we should have sound money, not this thing that the government decides how much to print on a given day and tomorrow could decide to start printing more because the s&p 500 is starting to go down again right yeah fucking love that jake i i feel like this has fired i'm jacked up about to run through this glass window i feel like this hasn't been very legal but it has been very fun so i hope that i hope this is uh i hope the freaks are enjoying this and that's what uh tftc is about i want to hear more about you i don't care about your profession i mean i do care about it but and your perspective on your profession yeah yep and and that's so like that's like a question i've been asking myself in my head more recently like

am i crazy like thinking this the solution to this problem is that easy just providing people with because like right even in a world where bitcoin we where we have a bitcoin standard and people are able to secure their wealth throughout time there will be people who spend their money thriftily and like or excuse me like uh willy-nilly and and make poor financial decisions my argument is like give people the opportunity to just conserve their wealth over time and i believe better things will happen throughout time and i don't know like like like you said like it's getting to a point where things could get violent like that's how drastic things are right i i think that i think things are getting tougher i think that um you know just another example of you know

when i'm talking to people who don't fully understand what sound money is or why it would matter even sound money people don't know what money is no and look neither did i and that was when i first started going down the rabbit hole that was the first question i had to ask myself which was what is money anyway why is this green piece of paper in my wallet worth anything to anyone and why should it be and i think that we are coming to a point where more and more people will start learning what money is i think that in however many generations people will look back and think how crazy we were for not thinking about what it was that we were using to transact for goods and services right and that's something i've been writing about in the bend like bent it goes

back to like iran 1291 uh the caesar or whoever it was in charge of their financial institutions tried to institute like a a debt money policy and he got thrown in the streets and torn to pieces and they had they tried to take them off the silver dinar system which they're running on silver is not even hard as gold but it is hard money at the end of the day and for 690 years until 1931 until the UK took the world off the gold standard like they had sound money and right and like bankers have warned of this like I care not who writes the laws like give me control the money and that's all that matters like Thomas Jefferson Andrew Jackson in particular forefathers like we should not have like these messages are there throughout history it seems like

the last 50 60 years in particular we've just ignored them right and and look it's it's easy to ignore as long as the system is working and by and large let's be honest our system works okay it's working right i mean i have a bank account i would say it works in spite of itself it works because like and that's funny you see the chart of uh like inflation and and what has become like less costly and it's technology which is enabled by software which is like anybody who can think and write code and think of like literally the strings of letters and words that make the code that run the world like it doesn't take any there's no barrier to entry the capital needed to learn that other than especially in the internet age like that

stuff has depreciated in cost and the the barrier to entries and those industries in particular have fallen at such a degree that like it has provided us the world that we have today I would argue that the world has gotten to where it is in spite of the monetary right it's right it's it's worked it's almost worked by mistake up until this point it's the the your tip it's like your prototypical correlation of that right but but here's one of the here's one of the side effects of allowing of keeping this system working the way it is which is if you want to store your value today right you make money you

work hard you want to put money in savings you cannot save the US dollar right the only thing the US dollar has ever done since its inception is lose value, period. Exactly. So now for some unknown reason, for you to store your value, you are going to be an equity holder of a series of corporations that you have absolutely no interest in. And you're going to have a vote in the decisions that the corporation makes, even though you never actually vote, because why would you? And you're going to hope that the financial services industry doesn't manipulate the value of those equity shares you've bought so much that you lose all your money and freaks be aware the uh the incentives of the financial uh services industry

are perfectly aligned with you right of course of course absolutely without any sarcasm whatsoever so look i you know i think what i was saying before is one thing that i explained to people is it is crazy to live in a world where to store your value you need to be an expert in finance and learn how to diversify your portfolio so much that when the s&p 500 crashes 60 percent like it did in 2008 you're perfectly hedged you're ready exactly that is your five percent managed futures allocation to hedge that right like you knew about that as a bus driver i don't think we should have to live that way i think there should be an asset that we can buy to store our value that persists for the course of our lives and people this is one of these things that just like money where

people don't really think about what money is until it stops working for them people don't really think about this idea of investing and how to provide for the rest of their lives until the system stops working. And I think that started for us in 2008 when that system crashed. And QE was so effective in pumping liquidity back into the markets that people basically forgot what happened. Ten years later, we have very short memories. We all forgot how hard it was to live through that time and i don't want something like that to happen again but i'm looking at the same you know fundamentals in the same chart that everyone else is and it's looking a little bit rocky and maybe that's something ultimately that's required for people to start thinking a little bit

harder about not only what their money is but how they are storing their value right and there's and this plays into the whole like high versus low time preference like everybody's so high time preference in today's day and age that they they don't have the time for introspection to even like think about the the mechanics of the way your world works and money being money is one half of every transaction on the fucking face of the planet like it is the most important tool that we have as humans and nobody understands what it is which is crazy right uh yeah i mean time preference is one of those amazing things that i would never have thought of exactly until i got into Bitcoin and started learning about Austrian economics and lowering my time preference to the

point where now I have thoughts and conversations with people about issues in terms of decades or centuries as opposed to months or years. And I've found myself uninterested to some degree in conversations only about months or years if it isn't about what's going to happen at the end of my life and in generations beyond. And I think that's a really important shift of focus that bitcoin is is helping a lot of people make right and one thing i actually learned via playing lacrosse but always fascinated me as like uh just always fascinated me from like the age of 18 when i first found out i was like the the iroquois nation concept of seven generation thinking like thinking seven generations ahead of you and acting to to make the world of which the

seventh generation ahead of you is is the best off that they can be based off your actions and thinking that way and i think really changes like we're talking about like so that's like i hate to put you in this conversation but like climate change like climate change in particular is everybody's like we need to tax tax tax we need to spend our way out of this it's like no think about yourself what you can do individually what you can do to cut waste in your own life what you can do as an individual uh to set an example like fucking use reusable bags fucking clean up the dirty beaches that you see like do shit individually as an example to the generation that comes beyond you hopefully they'll pass that on seven generations beyond everybody's like we

need to fix it now no no it's like what can we enact like as what example can we set where people think hey let's think beyond us right yeah well here i'll give you my really quick point on climate change as as it relates to bitcoin and uh this this comes somewhat from a tweet that i put out probably three or four months ago and uh it was one of the first tweets i put out that made me think you know what i hate twitter and i really want to stop doing this because i got so much trouble i've had so many of those tweets yeah look i and i should say i love crypto twitter it's fun people can troll me all they want it really doesn't bother me at all but i had this one tweet and it was after i read an article by dan held you know him i think you've had him on

actually yeah he's like a brilliant guy and he did a really great article about energy usage of bitcoin versus uh fiat currencies he was doing fud fud debate or debunking fud exactly and i think the the title of the article so that people can look it up i think it's uh proof of work is efficient something like that and he makes the point that if you were to even though we all talk about bitcoin boiling the oceans and all this stuff if you were to transition from the fiat currency system which requires tearing down trees and printing ink on paper and mining gold which also pours cyanide into the rivers and all these awful horrible things more importantly protecting the oil with military protecting the oil and burning the oil and keeping the lights on and

all the banks all over the world and all this stuff and you compare that to the energy arbitrage that you can do with bitcoin where you can mine bitcoin and keep the blockchain secure using renewable energies in parts of the world where energy is otherwise completely useless right the problem is not is not using the energy it's transporting the energy from solar and geothermal and hydroelectric etc to where people are exactly but if you make that transition you would make a much greater impact on the climate change issue than you will by giving tax incentives to buy electric vehicles exactly and that's hard to think about because how hard is it to transition from the fiat currency system to a bitcoin system right but that would probably be much more effective

than other efforts that we're making and in particular with the stranded green resources hydroelectric geothermal in particular like what people need to begin to realize is like these previously untapped resources like nobody's gone out to tap into those energy because before bitcoin and then arguably in the future like artificial intelligence uh servers uh may use these resources as well but like they have never been tapped into and and who cares if you uh care about sound money or bitcoin at all the fact that these miners are using this energy just like naturally will create innovation like they'll figure out ways to get the most that they can out of this energy which might hey maybe they'll find a way to fucking transport it to the cities

like just by being out there and testing it right exactly and and to circle back to something we were talking about before uh about how do you convince politicians in united states of america that they should support this kind of innovation that kind of thing creates so many jobs because it's an entirely new industry figuring out how to harness these resources and then keep data centers running and all of that kind of kind of behavior that is a really strong argument for politicians to get behind the the advancement of this technology yeah and then like going even beyond that like even in cities like where electricity is made like that they talk about the duck graph for like the amount of electricity expended like you can look at it on a graph like

it goes up in the morning then when people are at school and work it goes down then like from five to nine p.m it like spikes up and then goes down and as people go to bed and overnight like instead of powering down then powering back up the power plant like that would cost too much energy you find some power plants like orchestrating and engineering ways to sort of create energy so they don't have to turn it down so they'll like push water up a hill shout out joe looney who made me impressed with this uh rare pepe's creator but like some of these energy like factories will like get barrels of water push them up a hill dump the water and have it come down so they can like recapture the energy and like just sort of have like a net like zero like

energy use overnight like to this through this sort of rigged way instead you just plug bitcoin miners and make a digital sound currency liquidate that and then like take the profits of whatever did not expend right yeah bitcoin is is money minted by energy i think it's a really interesting you can like like and when you think about like securing the grid and and leveling everything off and and making the energy market as efficient as possible like that is what we should be pushing right right and look none of this is to say that bitcoin is the solution to every problem facing humanity i think it may be today i think i mean i just i guess all i'm saying is i think there are a lot of really interesting applications that we need to explore and who knows how powerful

this is but let's find out all right we're damn this has been awesome i went 35 minutes in how much time you have are you i can hang out but uh what else you got i don't know i guess i guess that's where where i want to turn now is like so you you seem optimistic but i want to make sure so like are you optimistic or pessimistic about the future of bitcoin uh how governments interact with it or react to it more importantly um i'm very optimistic yeah for i guess two reasons one is i think that with enough explanation uh the benefits are obvious and we can explain the power of bitcoin to governments that would otherwise take a negative view toward it um but secondly and maybe more importantly i i think bitcoin is the honey badger of money

and I really don't think it can be killed. I think it's just a matter of time and I think that it will prove itself in the market as an asset that has true value for people around the world and I think that will start in countries like Venezuela.

It's being proven. It already is. There was a New York Times article that came out maybe one or two days ago. Two days ago, yeah. Yeah. Opinion piece. Shout out to her.

We bash the mainstream media here. pretty hard but that was a very good piece right but good for them for for doing that i mean especially the new york times who is usually publishing uh paul krugman articles about how bitcoin is is useless and only for uh you know money laundering and criminal activity but no there was this this uh op-ed from a venezuelan economist who says that bitcoin is saving his family and i think that that is uh the type of narrative that we need to convince people of why this is such a powerful and important technology, and it will

take care of itself from that point forward. You know, the Lightning Network is such an amazing piece of technology. I just started playing with it recently because of the Lightning Torch. Did you have the Torch? I haven't had the Torch. Well, we gotta get it to you. Take it from Reid Hoffman. I think he's got it

right now. Look, I really want the Torch. What I want to do is I want to send the Torch. Make sure you have your channel set up. That's what, like, I got the Torch, and I had, like, shitty autopilot channels. I had to wait like two hours to set up new channels and make sure I could send it through. Yeah. So I'll admit something embarrassing to you,

which is that I don't have my own Lightning node. So I would have to use a custodial Lightning wallet if I were going to do it, which I feel like goes against the whole ethos of the whole chain. Luckily for you, Pierre has got like a nice node launcher tutorial. If you got a computer, you can make it happen.

I know I have to do that. Also, my favorite thing, since you mentioned that, my favorite new thing on crypto Twitter is Pierre responding to anyone, no matter what they've said with a, by the way, have you seen my lightning node launcher? It's like the greatest strategy ever. He's a great growth hacker.

Yeah, shout out to Pierre. But anyway, what I wanted to do was to get the torch and then send it out from the steps of the Federal Reserve in Washington, D.C. Who's ever got the torch? When you're listening to this episode, just think about this. Yeah, shoot me a DM because I would love to do this. I would love to hold up a sign that says hashtag reckless in view of the Federal Reserve and hashtag stacking stats to exactly stack them stats.

And in the shadow of the Federal Reserve, send, you know, a lightning payment and what will be, I think, the payment rail of the future. But it hasn't happened yet. Why do you think lightning is going to be the payment rail of the future? well i guess i subscribe to the uh container ships not parcels theory of on-chain transactions i i don't think that it's a problem for on-chain transactions to be expensive i think that you know there's some legitimacy to the idea that they must be expensive to be secure uh but i also think that we want bitcoin to be a system that allows us to transact on a daily basis for our normal you know uh buying coffee buying goods and services right buying coffee is the classic example

and as far as i can tell the lightning network does that extremely well transactions are basically instant they're basically free um i am not a computer scientist so i cannot attest to the security of the network but i feel like enough really smart people are working on this that i do put my trust in them that when they say this thing works that it does i'm not putting my life savings on lightning and no one is saying that i should or that anyone else should but they're mine but we got to keep testing it in the wild and if it keeps working then we should keep using it exactly and i completely concur with you like i think this is the future i think there's a lot of fun out there like oh my god like obviously there's flaws with lightning uh like your node

could crash you could lose the state uh the channel state and potentially lose your funds this is a real risk know this and i would argue people like flooding lightning like oh my god you're gonna lose your funds like it's a custodial number one it's not custodial number two the risk of losing your funds is real but like i think everybody has been up front with that like hey this is experimental it's beta the more we can test it uh the faster we'll be able to build it out and that's why i think there's been like a uh like a cheery like almost like sarcasm about like experimentally like goading people to be like quote-unquote reckless but like obviously don't complete disclosure i think i've had like less than a half a percent of my total bitcoin holdings

on lightning network but it has been fun to test it out and any of you freaks out there getting scared by the fud like bitcoin was in a similar situation not too long ago like this stuff is it's a expanding universe that we're discovering every day and it is going to be inherently sort of risky in the beginning and but the pace at which it's getting more fortified is surprising the hell out of me like i'm not expected to be at this point a year and a month into it you know Right. I totally agree. I think that so far, it is an experiment that has passed with flying colors to this point. The vision is there. You can see it, right? You can see it when you play with it. It is, I mean, it really is. It's one of those things

where, you know, the first time I did a Bitcoin transaction, I was just blown away at the idea that I was sending value without having to go through a third party, without anyone being able to stop me that i could send it anywhere i wanted to and even though i had to wait for six confirmations it was still amazing right and that took an hour but that was okay and i had the same feeling when i did my first lightning transaction which was this is really amazing that i can do this and it is trend it's sent instantly and it's almost no cost and i trust that if i want to take this out of the lightning network i can and in fact it works so far so you know I think it's the same as everything has been which is don't put more in than you're willing to

lose don't treat this like it is already the new financial system it's not it's an experiment and I think that Elizabeth Stark and everyone else working on this would say the same thing just like in the 1980s you wouldn't send some extraordinarily important piece of information by email because who knew if it was going to work or not right but the vision as you said is there It's, to me, one of those things that, for most people, will be impossible to see in advance, but will be obvious in hindsight. And I think we, who are doing these podcasts now in 2019, are just the people who realize that it's obvious in advance and will be laughing at the people who figure out that it was just obvious in hindsight. Right? It just makes sense, freaks.

It makes sense. like and again think about like we talked about the beginning episode like the pace of change and government trying to react to that change as it's going on but like take government out of the equation i mean government is made up of a bunch of individual people like individual people trying to keep up with this change as it's happening in real time is his proven heart and i do think it will get better i do think it will become more obvious over time so that was like a question i asked monsieur mamadov last week was how do you think adoption happens from here do you think it's from a conscious decision that like oh my god this makes sense or do you think people

are sort of forced into it like via do you think we're forced into bitcoin from knowledge or situations like venezuela where people have no other option and they start adopting it like i need this yeah i mean i guess to give you my answer to that question you know i think on the one hand the speculators will continue to speculate right so i don't even know what bitcoin's price is right now is it like 3800 something couldn't tell you today right it was in the 4000s for a second then it was down look all the people who are gambling with bitcoin will keep doing that and some people will get into it in that way price will go up again i'm sure at some point maybe it's tomorrow maybe it's in two years people will get into it because of price i don't think that's

what drives real adoption for Bitcoin. I think the genuine use cases, as you say, where there is no other option but Bitcoin is what will really lead Bitcoin to assume its rightful place as either an extraordinarily useful tool or as a global reserve currency. And that means, on the one hand, folks like Venezuelans who cannot rely on their government's money because it is inherently unstable. Or people in countries where they cannot rely on their banks because the banks are the criminal actors who are trying to seize their money. Or the people in countries who are opposing authoritarians and need to be able to transact for goods and services without those authoritarians knowing what they're doing because they're the opposition. And in the traditional

system, the authoritarian would see their transaction, stop it, and then find them and punish them i think that that is where this really gets adopted i also think that corporations who want to get money into new emerging markets where they are having trouble i mean even goldman sachs at one point was talking about how great bitcoin was going to be for getting money into emerging markets where there is no financial infrastructure i think that helps as well so i mean this is what i mean when i say bitcoin takes care of itself the value that it offers in allowing borderless permissionless censorship resistant transactions will prove itself to people who need that and and that will lead to its its adoption now i tend to occur with that too because

that's been like another thing like people don't realize they need this until they need it and there are people around the world who need it now and i think it's happening i think it's happening right now as we speak um and that's why we do this podcast too like to educate people and try to help real like i i'm not saying i i know all this for a certainty but i'm saying like hey like this sort of makes sense like i think we should focus on this at least in in this particular juncture in time and i'm very happy that we were able i love this conversation this was incredible yeah this was super fun i think the freaks are gonna like this i think we learned i learned a lot tonight yeah no no me too it's always it's it's awesome meeting people in this space you

know we we all talk to each other on twitter and then it's like i know you before i meet you so you know i just i think it's a great community to be in anyway it's a mission driven one right would you argue definitely no look we all we all come to this i think from very different places you know i'm from massachusetts originally i'll tell you i was uh raised in a family that had a very traditional liberal democratic view of the world which was instilled in me uh and as i've grown and developed i've i've developed new ideas and new thoughts but i bring some of that to this space and there are so many people who have such different backgrounds and i think it's just amazing for all of us to get together and have a common sense of purpose to disagree about many things

but to agree about this very fundamental issue which is freedom of money separating money from state and disintermediating some of these large corporations that we feel are not a service to humanity at this point and uh you know i think it's just amazing to be here and to to see what happens next well thanks for taking the trip to williamsburg man really appreciate it no it's uh off the beaten path you hopped off an amtrak and right here i really appreciate that no my pleasure thanks for uh the very good conversation and good whiskey well that's i guess that's all i'm good for you know it was like a conversation good whiskey i uh i think we learned again i think we learned a lot tonight i really enjoyed your perspective i would i had no idea like honestly

when you came in i was like where are we going to take this conversation i'm very happy where it went and uh i hope we can do this again yeah yeah i mean next time we can do the whole securities law icos thing if you want to i don't really care about icos i care about you know i guess here's this is what i'll leave the freaks with which is um the securities issue has gotten a lot of press in the last couple years the reason that it's gotten so much press is because unregistered securities issuances were the first and maybe only uk use case of the erc20 standard on ethereum if not for that we would never have talked about the securities laws as applied to bitcoin or any cryptocurrency and within i think two maybe three years the securities issue will

be dead and gone in the past we will have resolved all these issues the icos will have either succeeded as securities or evolved into something other than securities or died off and we'll be talking about very different issues and so you know i'm always happy to talk about securities law because that's the area of law that i practice but it's just as much fun to talk about these bigger broader issues that are still going to be with us in five or 10 or 20 years yeah no that's what i wanted to bring you on i could tell via tweeting or reading your tweets and dming with you that uh you have sort of like a pure bitcoin perspective which is refreshing to see in dc because maybe that's what we can have what's it like living in dc being in that quagmire

i love dc not everyone does look it's uh it's an interesting place it's the kind of place where you find out after six months of living in a particular apartment or townhouse or whatever that your neighbor is an enforcement lawyer at the SEC. And it's just that kind of city. It's all over the place. But it's part of the culture in a way to pay attention to what's going on in the country.

You go to a bar in D.C. and some news channel is on and you're paying attention to what's going on. and for better or worse it's where the federal government is it's where the sec and the cftc and all these other agencies are yeah so you know i think it's a great place to be to meet with those people uh that's not to say new york isn't fantastic as well or san francisco or many other places in the country and in the world but each has their unique tilt i think dc in particular that's right i mean i guess i guess the thing i like the most about dc is you know we we get a bad rap for putting on suits and ties every day and i do feel like a lot of people in crypto land

discount me because mostly i'm wearing a suit or a tie um but you know everyone in dc also has their own thoughts and motivations and ideas behind this individual dc man there are indeed what you may be hard to detect but it is true and uh you know i think there's a lot more interesting stuff going on there than than it may seem at first glance no that's why i want to bring you on because I honestly do respect your takes. I've written about you in the band a couple, or your tweets in the band a couple times, your tweet threads in the band a couple times,

and I just got that innate feeling that you have this unique perspective, and I feel like we did a good job of explaining it to the freaks tonight. Well, thanks. I hope I didn't let you down. It's impossible to let me down. I'm very,

as long as you're willing to sit here and drink whiskey with me and talk about this subject, you can never let me down. Anytime, anytime. Jake, it's been a pleasure. I hope you enjoy the rest of your trip to New York. I really appreciate you coming through here.

I think the freaks learned a lot tonight. Do you have any last parting, like, sentence, note, anything? I guess I'd just say thanks. It's awesome to be here. Thanks for having me. My DMs are open. Feel free to get in touch with me. Follow me on Twitter, at Jay Chervinsky.

Feel free to email me. I love hearing from people. and um yeah i'm just thrilled to to be in the industry and see what happens next yeah we'll put all that information in the bio thank you for joining us this week freaks uh really love this conversation jake thank you too again final thank you peace and love freaks