The Pomp Podcast - #629 Infrastructure Bill is Torpedo’d By An 87 year old Senator

Starting point is 00:00:00 What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Today I break down the most recent analysis of the infamous infrastructure bill. It includes how crazy the governance process is, why Bitcoin is good for business, and what is going to happen next. You can watch more segments like this every day on our new live show, The Best Business Show, which is streamed on YouTube each day from 11 a.m. to 1 p.m. Eastern. Highly suggest you check it out. Before we get into this episode, I want to quickly talk about our sponsors. First up is Amber Group. With low yields and looming risk of inflation around the

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Starting point is 00:03:31 This podcast is for informational purposes only. The infrastructure bill yesterday absolutely torpedoed by an 87-year-old politician. Here's what happened. We had, over the last week, a $550 billion infrastructure bill that was put together. As part of that bill, there was a section, a couple of paragraphs, that was going to use more onerous tax reporting requirements to help pay for the bill. It was estimated that over $20 billion, maybe as much as $28 billion, was going to be generated in revenue from this new part of the bill. Now, where they get $28 billion, I have no clue.

Starting point is 00:04:15 I don't think they know either. It's a guesstimate. They basically pretend it's an estimate, but really they're guessing. And so $28 billion was the guesstimate as to how much revenue could be derived from this. But as the bill got put forward, the language was very, very concerning to market participants, both investors, entrepreneurs, operators, and also government lobbying organizations, all said, wait a second, this language drastically expands the definition of a broker.

Starting point is 00:04:44 A broker historically has been somebody who allows party A and party B to transact with each other. Think of that as like a crypto exchange. But with the definition of broker, it became apparent that maybe somebody like a miner could be considered a broker. Or what about a software developer? The legislation was asking people to do something in terms of reporting 1099s and tax structures that they actually could not do. If you are a software developer and you put software out in the world, are you going to issue a 1099 every time somebody uses your software? Well, if you're not an exchange, it may be hard to do that. And so that was the big controversy. There was multiple amendments that were proposed from

Starting point is 00:05:27 different sides of the aisle and also different parties or politicians. Luckily for us, through all of the advocating, the calls to the senators, the tweets, all this stuff, all the politicians came together. They worked and they worked. They were up late at night, probably using candles to look at their pieces of paper. And what they realized was the most important thing here was to reach an agreement that would create a better structure for that definition of a broker and for this crypto provision. They then ran it by, reportedly, the White House, the Treasury, etc. And when they got thumbs up, everyone said, this is good.

Starting point is 00:06:09 Bipartisan support, unelected official support, and it got put forward on the floor. But because of the way that the amendment was put forward, what we needed was for no politician to object. We just need everyone to say thumbs up. When we think of democracy, we usually think of majority vote. You need 51% or more of the vote and you can get things done. But in this specific situation, because of the structure of the way that the amendments were put forward, we actually needed 100% of people to agree. Well, of course, when you have 100 senators, two from every state, there's always somebody who's got to ruin the party. And the person who's getting majority of the blame for ruining the party is Senator from Alabama. His

Starting point is 00:06:55 name is Senator Shelby. He is 87 years old. 87 years old. And he was able yesterday to object, say, nope, I don't want this. Not going to happen on my watch. I don't like this amendment. But he didn't have any opinion on Bitcoin, cryptocurrencies, taxes, or anything else. He simply was being spiteful because he wanted $50 billion more in the bill for defense spending, and he didn't get it. This is the equivalent of John and I going somewhere, and when I ask for something and they tell me no, and then John asks for something else and they say yes, I ruin it for him. It's spiteful. It's stupid. And it's what we expect of four year olds, not 87 year olds that are elected officials that are there to represent the will of the people. But Senator Shelby had his own plan. He decided to be an idiot and he decided to end up being spiteful. So because he

Starting point is 00:08:01 didn't get his $50 billion for defense spending, he ended up torpedoing the amendment. Now, here is the most fascinating part. At 87 years old, it is impossible for Senator Shelby to have any opinion on most technology, let alone this new area of innovation. On top of that, when you look at his biggest donors, surprise, it's defense contractors. So here we have the exact thing that most people in the Bitcoin or cryptocurrency industry is going against. We have an incumbent 87-year-old politician who has no reason to be governing at this point in his career, who also has already said that he will be retiring after this session. And on his way out the door, he basically kicked and obliterated one of the most innovative industries for the future.

Starting point is 00:08:58 the old person ended up saying to themselves, I don't care about the future because I wasn't able to get $50 billion for the past. Now, I have nothing against older people. Actually, I've learned more from older people than probably younger people through my career and through my life. But what I do have a problem with is when we have people who know nothing about an industry having the ability to govern it and having the ability to stand in the way. And so I'm not the only person who believes this. Ted Cruz, the second time in two days that we're going to talk about Ted Cruz. Ted Cruz stood in front of the Senate and absolutely destroyed them. It was incredible. So here's part of what Ted Cruz had to say yesterday. We're going to play it.

Starting point is 00:09:52 And when you hear what Ted Cruz had to say, I want you to sit there and think for a second that he is talking about one of the areas of innovation, economic prosperity, and job creation for America. And there's an 87-year-old politician who ended up saying no and just threw his middle finger up to an entire industry. So here's what Ted Cruz had to say. Those who would have to collect information on cryptocurrency consumers and report this information to the IRS.

Starting point is 00:10:21 It would force every single participant in the cryptocurrency structure to operate as a financial institution, which would mean they would have to provide consumer information to the IRS, even if they don't have access to that information. So this overly broad definition of the word broker will block rapid innovation in cryptocurrencies, and it will endanger the privacy of many Americans in cryptocurrencies. This is wrong. So I applaud my colleagues for trying to find an incremental approach. Unfortunately, because the senator from Vermont objected, that incremental approach hasn't been adopted.

Starting point is 00:11:00 So let's exercise a brief shining moment of common sense. And let's recognize if we've gathered all 100 senators in this chamber and ask them to stand up and articulate two sentences defining what in the hell a cryptocurrency is. that you would not get greater than five who could answer that question. Given that reality, the barest exercise of prudence would say we shouldn't regulate something we don't yet understand. We should actually take the time to try to understand it. We should hold some hearings. We should consider the consequences. We shouldn't destroy people's lives and livelihoods from complete ignorance.

Starting point is 00:11:46 Now, there's a lot of people who don't agree with a lot of things that Ted Cruz has said, done, or believes. But that might be one of the most rational thoughts around this entire debacle, is how can we ask a group of 100 people, with his estimation, less than 5% of them could even describe what the industry is or what the assets are, and ask them to govern it?

Starting point is 00:12:11 We can't. But my biggest takeaway from this is not anything to do with Bitcoin, or cryptocurrencies. It's actually not even anything to do with innovation, because I think that America will continue to be innovative. Entrepreneurs and investors will be told what rules are, and they'll still continue to operate within them. Some will leave and go elsewhere. Some will stay and innovate. But my biggest takeaway from this entire situation is that the government may be one of the most ineffective and inefficient organizations in the world. The fact that we have gotten a front row seat, as I described yesterday, Bitcoin taught me

Starting point is 00:12:49 economics, Bitcoin taught me personal finance, and now Bitcoin is teaching me politics. And I don't like it because we have people who know nothing, who are making the rules that govern the people who know everything. And so when you think through that dichotomy, what it suggests is where else are they making mistakes? Where else is this happening? What about health care? What about monetary policy or fiscal policy? Where else is the government making rules where they know nothing about the topic? Probably more than we think. So, John, let's start with you. What did you think about Ted Cruz and also kind of this 87-year-old senator just coming in with like an axe and

Starting point is 00:13:38 cutting down trees left and right yeah ted cruz gets it right he's not only playing the part of what he believes but he's also playing into the um bitcoin like economy and the bitcoin uh i guess like ecosystem right of all the people that are backing bitcoin he understands that um the rule itself i think is dumb i think this this amendment should have passed everything that goes along with that people have been they've been cutting products and everything to kind of in preparation for this regulation right so bitcoin's almost kind of regulated itself making sure they cut down leverage people's leverage that they you can't i mean people are doing like 20x 100x leverage 100x baby but they you see that in other industries as well yeah i think the big

Starting point is 00:14:23 piece here is the free market as we talked about yesterday with the wage prices continue to increase because the free market takes care of it what they're talking about here is they're not trying to actually solve a problem. Like this is my biggest, I think, issue with it is if a government or a politician walked in and said, okay, we have a problem. Let's go ahead and solve the problem. Then they would actually end up probably making better rules than they are. So an example here would be the problem they're trying to solve is how do we drive revenue to pay for this bill? Okay. We think that we can go into the crypto world and do that. Okay. Well, guess what? There's already rules in place. They're not increasing the rules. All they're doing is they're

Starting point is 00:15:02 saying, Hey, we're really serious about this. And we're going to try to better put a clear definition around it. So people know when to pay taxes and when not to generally a good idea. But the fact that they basically wrote laws that they don't understand the industry leads to incredible mistakes and also just shows the arrogance of an industry, right? Plano, what do you think? Did you just call me Joe? No, I thought about it though. He called me joe guys my name is on my on my oh how do you know their names are john and polina wait show everybody i did so so if you she's she's a rookie she doesn't know how to lean the other way it's the other way there so if you get confused it's right here so here's here's my

Starting point is 00:15:50 problem with this and and you know it's not necessarily an age problem because there's plenty of older people who understand that you don't just stifle innovation because there's something you don't understand. You just learn more about it. I think it's embarrassing for the United States where other people are watching from other countries to look at the conversations they're having in the laws they're trying to pass and be like, oh, look at the United States stifling innovation over something they know nothing about and not even trying to hide the fact that they don't understand it. It says here the Senate's average age is sixty four point three years old, older than the House's fifty eight point four years. And among U.S. investors over

Starting point is 00:16:35 50 years old, 76 percent say they have never even heard of cryptocurrencies. Joe, you're fired. You're fired. But I do want to make a personal note here the other day, for example. So I think i think as an older person you just need to have a self-awareness of like maybe i don't understand technology as much as i think i do the other day actually yesterday we were at the grocery store and um anthony was sticking his card his chip into the thing and i was like you know you can just tap your card now and he was like no i'm a boomer i don't get that i stick my card in and it took him forever to stop swiping and now you're inserting before you were swiping now you're inserting next thing you know you'll be tapping but but my point is yourself you're only

Starting point is 00:17:21 33 years old and you're you know that you're already like fallen behind imagine being 87 years old i'm just saying you're about to be fired are you coming on the show roasting me right now just a little bit geez my whole point here's my thing with the credit card thing ready is the tap every single person i see that goes to tap their card it looks like they're hitting like a little kid on the head they tap it it doesn't work to hit it again they hit it again i know with certainty stick the card in it tells me to take it i take it out one shot one kill done there's no tap oh didn't work let me tap again let me hold it where is it on this machine it's like uh you ever seen people go uh up to the machine and they don't know if they're supposed to swipe or insert or

Starting point is 00:18:08 whatever it has to be like an olympic sport are you staying at a cash register people don't know what to do tapping just added in a whole nother variable i know exactly i walk up i insert the card i chill i pull it out and i walk away it's easy that with that mentality next thing you know you're 87 years old not passing bills through congress or senate no because i'm not dumb enough to ever do anything that i don't need you know what i need to do i need to pay for something done what john i used to be an anti-tapper too don't worry i used to like things like oh there's did another like little innovation to it like a big anti-tapper i only don't like it because it makes me think that someone's gonna walk by and like somehow scan my car and the next thing i

Starting point is 00:18:47 know i gotta use it and it gets declined you do not want to get it yeah so so do you tap or not tap i tap now all right quick quick very professional poll we have two seconds leave a comment right now in the chat do you tap do you insert or do you swipe do we have swipers inserters or tappers what does everyone do my guess is that insert is the most popular what do you think i got a question for you what what so if you if this bill wasn't up for debate when do you think the timeline would be for them to think about more regulations and taxes in the crypto industry damn everyone taps now there's some insert in there there's some inserts some inserts taps tappers taps yeah but also they get it and tapping is really big in europe like people

Starting point is 00:19:31 have been tapping in Europe way before the U.S. Somebody said stick it in. All right, John, what was your question? My question is, if this bill wasn't up for debate, when do you think the timeline would be for regulations and taxes to be passed in the crypto? Like crypto is already pretty heavily regulated in my mind, but this is obviously going to increase the taxes and the regulations around crypto. When do you think that timeline would have been? We need to have a serious conversation in this country. And here's what everyone needs to hear. The Bitcoin and cryptocurrency currency industry is over-regulated compared to the traditional market. Here's two great examples. The first is in the capital of finance on Wall Street in New York City. If I want to start a

Starting point is 00:20:13 financial firm, I have to go and I have to create a business. I have to go through all the LLC type corporate creation. I then have to go get things like a registered investment advisor, or maybe a broker-dealer license or a money transmitter license. I have to do KYC and AML. These are all standard regulatory requirements depending on the business line I want to go into. If I want to create a crypto business in the state of New York, in New York City, on Wall Street, the financial capital of the world, I have to go do every single one of those same things. I have to create a legal entity. I have to go and get the required regulatory approvals or licenses, things like broker-dealer licenses, money transmitter licenses, etc. I have to do KYC and

Starting point is 00:20:54 AML. But I also have to go get an additional license called a BIT license. And that BIT license has only been given to a handful of companies. And therefore, regulators in the state of New York are actually being able to play kingmaker. So in the financial capital of the world, it is harder to start a crypto company than it is a traditional financial company. The banks may not support your bank account. They may literally take down your bank account. You may not be able to use traditional services like Stripe or others, depending on if you are in a crypto business.

Starting point is 00:21:27 On top of that, you may not be able to advertise your business on certain platforms like Facebook or Google, depending on if you're a crypto company or not. So there is more regulation and also more obstacles and complexity to running a crypto business in the financial capital of the world than a traditional financial business. So from a business perspective, if you run a crypto company, you have more regulatory hurdles to jump over than a traditional financial business. That's not how it should be. It should be an even playing field.

Starting point is 00:21:55 And if we're serious about innovation in this country, we should even the playing field between the incumbents and the challengers. On top of that, a second example is that if I go to dinner tonight, John and I go rip some McDonald's and I pay for dinner with US dollars. I simply buy the meal and I pay sales tax. And I'm happy to do that because that's what's required of me by my government. But if I was to not use US dollars as the currency and instead use the digital currency of Bitcoin, I not only would pay for the meal and the sales tax, but I would also be required

Starting point is 00:22:31 to pay capital gains tax on that Bitcoin purchase. And so what ends up happening is whether I'm running a business or operating as an individual trying to use a digital currency as a medium of exchange, I am actually taxed more aggressively for using the digital currency. So the mainstream narrative that this industry is not regulated is false. This industry is actually regulated more than the traditional market. And so if we are serious about creating innovation in this country and creating economic prosperity and creating jobs and making sure we are the leader on a global stage, we must even the playing field. The traditional financial firms must not have an advantage in the market compared to the

Starting point is 00:23:15 challengers. Imagine if when competitors to, let's say, Microsoft or IBM or any of the other incumbents today actually had to go through more regulatory hurdles to start their business. You are, in fact, protecting the incumbents. What you are doing is you are allowing them to continue to use that degree of separation because of the regulatory barrier and allowing them to survive, even though the free market may determine them not to be the best thing for the end user. And so if we want to serve users, if we want to serve consumers, if we want to create change and make sure that the best products

Starting point is 00:23:56 and the best services are built here in America, we have to even the playing field. There is no under-regulation. The industry actually has more hurdles to overcome than less. That is the truth. Any last thoughts about Bitcoin, crypto, the legislative situation or Ted Cruz? Oh, newsflash. Hold on, timeout, timeout. Breaking news, breaking news, breaking news.

Starting point is 00:24:22 Ted Cruz team. I tweeted yesterday. I said, I want Ted Cruz to come on the show. It took 27 seconds and people DMed me and said, I know somebody on Ted Cruz's team. I've already reached out to them for you. And I got a message very quickly shortly thereafter. from, I don't think I want to say their name

Starting point is 00:24:42 because I don't know if they're comfortable with me saying it, but Ted Cruz is in. I got told yesterday, Ted Cruz is in. Ted Cruz has committed to coming on the show. Let's go. If he backs out, Ted, we're going to have a conversation publicly. But I feel like his team is going to be people of their word. He is in.

Starting point is 00:25:02 He could not do it today because of some scheduling conflicts. I understand. I kind of sort of just publicly blasted and said, hey, can somebody get Ted Cruz? I don't think he was gonna come on the next day. But Ted Cruz said, his people said that he will come on the show. We're gonna try to find a time for later this week

Starting point is 00:25:18 to have him come on. If we get Ted Cruz on, don't say I never did anything for you. I'm super excited to hear what Ted Cruz has to say.

The Pomp Podcast - #629 Infrastructure Bill is Torpedo’d By An 87 year old Senator

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