The Breakdown - US Politicians Explain What Should Come Next in Crypto

Starting point is 00:00:04 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Sunday, February 16th, and that means it's time for Long Read Sunday. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation. Come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Hello, friends. Welcome back to another Long Reads episode. Today we have something cool that I think is really reflective of the state of where things are. We are obviously now about a month into this new administration, and we're starting to get down to the business of actually governing. And in that, there is a ton of

Starting point is 00:00:52 potential crypto legislation that could come to the four, and not one but two different opinion pieces this week on CoinDesk by sitting representatives around exactly this topic. The first that we'll read is by Representatives French Hill and Brian Steele, and is called Waild. Congress needs to act on digital assets. I'm going to turn it over to the 11 Labs version of myself, and then I will be back to introduce the second piece. Last November, the American people clearly spoke. They support President Trump in the agenda he campaigned on, a golden age in America. A key component of President Trump's agenda is leveraging the U.S.'s leadership in advanced technology and economic strength for the benefit of all Americans.

Starting point is 00:01:29 Nowhere is this renewed focus on using our strengths for the future more necessary than in the development of digital assets and blockchain operations, where Washington has been asleep at the wheel for far too long. According to surveys, 55% of American investors own Bitcoin and more than 40 million own some type of cryptocurrency. Even our largest financial institutions are now embracing digital assets and the transformative power of blockchain technology. There is little doubt that these innovations will make financial products more affordable and accessible. From stable coins to tokenization of assets to decentralized finance applications, these advancements have the potential to lower costs and expand opportunities for both investors and consumers.

Starting point is 00:02:06 Despite its transformative potential and widespread adoption, the Biden-Harris administration refused to recognize the promise of this technology. Officials weren't just indifferent, they were openly hostile. No matter how safe or innovative, products associated with crypto or digital assets were stonewalled and litigated into purgatory. Regulators refused to provide meaningful guidance on how this technology could be implemented in a compliant manner. Worse, they implemented new policies to make adoption even more.

Starting point is 00:02:33 more difficult. Today is a new day. There is broad agreement that we need fit-for-purpose regulation that unlocks opportunities while providing the consumer and national security protections Americans deserve. The world counts on us to ensure that global payment systems are not used for nefarious purposes, including financing terrorism and drug trafficking. Because of the Biden-Harris administration's abdication of responsibility over the past four years, the United States has fallen behind, and others, including our adversaries, are developing products and systems that threaten the primacy of the dollar. Despite the Biden-Harris administration's reluctance, during the last Congress House Republicans led the charge in past landmark legislation, creating a forward-looking regulatory

Starting point is 00:03:12 framework for digital assets. This bipartisan bill provides appropriate protections for consumers, and proactively addresses national security and money laundering issues while securing the United States as a leader in digital assets and blockchain innovation. Congressional Republicans will now pick up where we left off and work in a bicameral manner with the Trump administration and financial regulators to ensure that the open hostility from the executive branch of the past four years is eliminated. Congress has a unique opportunity to enact legislation that plays to American strengths. We will provide a foundation that will unleash innovation in the digital assets in blockchain space, while at the same time solidifying the status of the U.S. dollar as the reserve currency and the

Starting point is 00:03:50 preferred method of payment for lawful transactions around the globe. As leaders of digital assets on the House Financial Services Committee, our immediate priorities include establishing a federal framework with clear rules around stablecoins, providing clarity for the initial sale and distribution of tokens, creating pathways for the registration of centralized platforms for the trading of tokens, implementing strong protections against money laundering and terrorist financing, and ensuring fair competition. We have already begun this work by recently releasing our discussion draft to establish a framework for the issuance and operation of dollar-denominated payment stablecoins in the United States. There are those who share the Biden-Harris administration's view that the

Starting point is 00:04:25 digital assets ecosystem is, in the words of former SEC chair. Gary Gensler, full of hucksters, fraudsters, and scam artists, but that sentiment only underscores the urgent need for these efforts. Effective legislation and proactive regulatory engagement will ensure good actors with innovative products can thrive in the U.S., and consumers are appropriately protected from rugpoles, market manipulation, and other fraudulent activity. We are the world leaders in finance and technology because over our history, we have looked forward and embraced innovation as a means of lowering costs, increasing opportunity, and enhancing protections. We need to be true to our history and do it again.

Starting point is 00:05:03 With our newly formed bicameral working group for digital assets, we will work in lockstep with Senate Banking Committee Chairman Tim Scott, Senate Agriculture Chairman John Boosman, House Agriculture Chairman G.T. Thompson, and White House Crypto Tsar David Sachs to advance legislation that delivers on the promises we made to the American people. The golden age of digital assets in the United States begins now. Hello, friends. I am thrilled to share that Ledger is once again partnering and sponsoring with the breakdown. Many of you know, but for those of you who don't, Ledger is the most secure hardware wallet for your crypto and logins.

Starting point is 00:05:37 It's trusted by 7 million users and secures 20% of the world's digital assets. What's more, Ledger is a lot more than wallets. Over the recent years, they've built a comprehensive ecosystem of products and services, all of which are designed to make digital ownership more secure and accessible. You can buy your Bitcoin with Ledger and Ledger Live and so much more. Basically, not only did they want to keep your assets secure, they want you to be able to do more with them. Ledger's newest devices, the Ledger Stacks and Ledger Flex, introduced the world's first secure touchscreens, making it easier and safer to manage your transactions and assets.

Starting point is 00:06:08 Alongside Ledger Stacks and Ledger Flex, the company also launched the Ledger Security Key app, offering a safer alternative to traditional passwords and enhancing your digital security. If you are in this space, you owe it to yourself to at least check out Ledger and their ecosystem what they have available to you. So thanks, once again, to Ledger for sponsor. the show. Next up, we have a piece from the other side of the aisle from Senator Kirsten Gillibrand, who has long been one of the big bipartisan proponents of common-sense crypto legislation, and indeed this piece she writes is called Why We Need a Bipartisan Stablecoin Bill. In so many

Starting point is 00:06:41 ways this picks up on the same themes of that last piece and puts it specifically in the context of stable coins. Once again, this is called Why We Need a Bipartisan Stable Coin bill. For the past century, the U.S. has reigned as the economic superpower of the world. The key to this sustained economic might is a regulatory environment that encourages and enables technological innovation. From semiconductors to personal computers to internet 1.0 and 2.0, U.S. companies have led in developing cutting-edge technologies because our country empowers its builders and creators. Unfortunately, when it comes to Web3, the next generation of the internet built on blockchain, digital assets, and cryptocurrencies. We are trailing and our efforts. We are trailing and our

Starting point is 00:07:19 at risk of falling further behind. In 2023, the European Union passed comprehensive cryptocurrency regulation, and numerous meaningful provisions went into effect this past summer. China's central bank has been promoting its digital yuan, which threatens the U.S. dollar's role as the global reserve currency. The U.S. is just watching while our opponents move pieces on the chessboard. It is absolutely essential to our country's future that the U.S. enact clear and sensible cryptocurrency regulations that foster innovation and keep Web3 jobs within our borders, protect consumers, maintain the dominance of the U.S. dollar. We should start with stablecoins. For newcomers, stablecoins are cryptocurrencies whose values are pegged to national currencies or high-quality financial

Starting point is 00:07:59 assets. This gives them stability and enables them to play a crucial role in the digital economy, where they combine the transaction speed and low cost of digital assets with the price stability of traditional reserve currencies. The U.S. is already playing a major role in this space. According to one report, more than 95% of stable coins are linked to the U.S. dollar. The many use cases of stablecoins have earned them support from policymakers across the ideological spectrum. Conservatives value their low-cost, frictionless, and instantaneous payment abilities, which can lower costs on merchants and consumers in spur startups and economic activity. Progressives appreciate their use in lowering the cost of remittances and reaching the underbanked and underserved, and their ability to increase

Starting point is 00:08:37 access to basic financial services. It must be acknowledged that, as with any new technology, stable coins have challenges. Some stable coins backed by complex algorithms instead of stable reserve currency have collapsed due to design flaws. Additionally, unlike bank deposits, stablecoins are not FDIC insured, creating risks should the issuer go bankrupt. While concerns have been raised about money laundering, stablecoins aren't misused for this purpose any more than traditional cash. But for the public to have confidence in stablecoins and for businesses to adopt them, we need clear regulations to provide consumer protection, to govern issuers and to guard against money laundering. The bipartisan guiding and establishing national innovation for U.S. stablecoins,

Starting point is 00:09:16 Genius Act, which I introduced Feb. Four, alongside Senators Bill Haggerty, Cynthia Lummiss, and Tim Scott, will address these challenges and create a clear regulatory environment that enables the cryptocurrency environment to thrive. It protects consumers by holding stablecoin issuers to strict reserve requirements, requiring them to maintain one-to-one reserves in cash and cash equivalence. The bill prohibits the issuing of unbacked algorithmic stablecoins, the collapse of which have led to substantial losses. To address their use for illicit purposes, it requires approved stablecoin issuers to comply with U.S. anti-money laundering and sanctions rules.

Starting point is 00:09:50 Finally, the bill clarifies rules around conservatorship and procedure should a stablecoin issuer experience insolvency. While this bill will undoubtedly be tweaked as it moves through Congress, it has already received input from a wide swath of stakeholders, including industry participants, academic experts, and federal regulators. It's a true bipartisan effort that will empower innovators and builders while simultaneously rooting out bad actors. Laying the groundwork for the next century of American exceptionalism is a mission that should unite us all, and positioning the United States at the leading edge of the next iteration of the internet is key to that goal. Stablecoins are already playing an important role, and it's critical we act now to maintain our position as the leader in global economic competitiveness.

Starting point is 00:10:31 All right, back to real NLW here. It is extremely notable to me that from both sides of the aisle, we have this language of golden age of crypto and American exceptionalism. I think in many ways the first piece that we read really just amounts to saying, hey, this is important. But the second piece does more to get into the specifics of stable coins and what they mean to America. In that piece, Gillibrand makes it clear that she views stable coins as a counterbalance to threats to the U.S. dollar's role as global reserve currency. This is, of course, a line of logic that has long been popular in the crypto space. It's something that, for example, Nick Carter, who's been one of the longest term advocates

Starting point is 00:11:08 for stable coins, has always talked about and discussed. But the fact that the fact that that this is now making it into the major policy arguments is really notable, and frankly, very important. I think it's also really valuable that Gillibrand articulates both the conservative and the progressive reasons for liking stablecoins, that they express different values, all of which are important to different people. Now, the devil is going to be in the details, and there is a lot of competition for what a stable coin bill is going to look like. However, I think it's extremely positive that we have people like Gillibrand in the Democrat minority, who are far more likely to help drive ahead important, sensible rules that are out.

Starting point is 00:11:41 actually pro-crypto and pro-stable coin than if they weren't there. Overall, I think it's just hopeful to see these politicians being willing to take the time to write op-eds that clearly place importance on this set of issues. For now that that is going to do it for today's breakdown. Appreciate you listening, as always. And until next time, be safe and take care of each other. Peace.

The Breakdown - US Politicians Explain What Should Come Next in Crypto

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