The Wolf Of All Streets - Breaking! First Glimpse At New Crypto Bill From US Government! | Eleanor Terrett & David Lin

Episode Date: July 21, 2023

U.S. House Republicans introduced a new Crypto Bill on Thursday that aims to establish a regulatory framework to protect investors in the crypto sector. My guests Eleanor Terrett & David Lin join me to discuss the bill and what it means to our industry.  Eleanor Terrett: https://twitter.com/EleanorTerrett David Lin: https://www.youtube.com/@thedavidlinreport ►►MELD MELD will bring to bear the full power of decentralized financial instruments to the masses. Banks are at the heart of the economy, MELD will become a new set of banking tools that are by the people and for the people. 👉 https://www.meld.fi/early-access-apply?source=crypto_banter ►►OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $60,000!  👉 https://www.okx.com/join/SCOTTMELKER  ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

Yesterday evening, we had breaking news that the Financial Innovation and Technology for the 21st Century Act, they're calling it FIT, Financial Innovation and Technology, was introduced by Congressman Glenn French Hill, Dusty Johnson, but it's Glenn Thompson, right? Yeah, excuse I do my due diligence in advance. Glenn Thompson, Dusty Johnson, and French Hill, a lot of people were expecting that to come from Patrick McHenry or Warren Davidson or Tom Emmer, but they are all supporting this bill. It really lays out a very comprehensive framework for digital asset regulation in the United States. Finally, this is a real bill actually proposed, actually on the docket, will be marked up in the coming weeks and will likely see a final version that could pass and go to the Senate and

to the president. This is absolutely huge news. So of course, we have Eleanor here today, who broke that news yesterday. She has a habit of breaking huge news these days, really ahead of all the stories. And I've got David Lynn today here with me to co-host. We're trying something new out. My favorite co-host. I love going on his show and watch his channel religiously. So amazing to have the two of them together to discuss this watershed moment. Let's go. What's up, everybody? I'm Scott Melk Ross, known as the wolf of all streets before we get started please subscribe to the channel and hit that like button now we usually do a week in review on friday but we reviewed almost all the news during this week and it was a relatively slow week but not anymore this is absolutely huge news and we've been seeing a major uptick in legislation

around digital assets. Of course, we have this bill in Congress. We have a stablecoin bill coming in Congress. But we also had the Lumison-Gillibrand bill reintroduced in the Senate. And there are probably parts of each of those that make a lot of sense to incorporate. I have a feeling that's what's going to happen. First, before we get started, I want to go ahead and bring on David Lin. We woke you up extremely early today to do this on a Friday. Sorry. I was telling you, I don't even get up this early for my own show. This is how much I like you guys. So thank you for having me here. Good morning. Pleasure. And I do like that we have somewhat matching backgrounds. That's awesome. I feel like I'm copying you. Now I need the Scott Melper report right here. We have to aesthetically match.

Otherwise, the picture on picture wouldn't look good. Yeah. So before we get started, obviously, David, when I met him, was with Kitco and was doing these massive interviews here. Then one day I got an email. He said, I'm done. I'm going on my own. So could you just give us the quick pitch on what happened there on your own channel? What kind of interviews you're doing?

Like I said, guys, first of all, his interviews get like tens and tens and tens of thousands of views. Like the first week he was up, massively popular, huge engagement. So what are you doing there? What's the goal? Thanks. Well, thank you for introducing me, Scott. Pleasure working with you. I've interviewed you a couple of times over the last couple of years, actually. We've known each other for a while, so you're great. Everyone should subscribe to the Wolf of Wall Street if you haven't already. So my channel is dedicated to finance and economics, geopolitics and tech. I started my channel in March, mostly with interviews, a few solo reports, but mostly through interviews like you've mentioned. And with experts in those areas, I've grown to close to 91,000 subscribers as of today

in about four months and up about 7.7 million views total, averaging around 1.7 to 1.8 million views a month. My goal is just to educate the public about finance, economics. We cover stocks, commodities, crypto, blockchain, AI, any tech news, trends. Yeah. Yeah, it's amazing. And guys, if you make a comment over there, if you want me to dress like David on Fridays, I'll literally do it. I'll show up in a tie, suit on.

I feel just wildly underdressed. And now, if you want to make me look even worse, let's go ahead and pre-watch. Eleanor, Eleanor, welcome again. As usual, breaking news here, right? I can show it right here. Breaking the Financial Innovation Technology for the 21st Century Act was introduced today by Congressman GT Glenn Thompson. I butchered it at the beginning, Rep. French Hill and Dusty Johnson. How do you get this breaking news, first of all? How are you always the first one reporting on everything? I have great sources that I trust and luckily trust me.

So we're in contact constantly. I do channel checks every day. And I did have a tip off in the morning that it might be coming. It wasn't entirely clear whether it was ready yet. And we know that Glenn Thompson said that it would be ready or it would be introduced by the end of the week. So it could have been yesterday. It could have been today. I just had a sneaky suspicion it was going to happen yesterday. And it did. So maybe you can just give us and then David can dig in more with you. Maybe you can just give us the broad strokes of what this bill is attempting

to at least do? Because I already, of course, see horrible takes, bad conclusions, the usual Twitter nonsense. Yeah. So for me, I think this is a really positive step forward. I went over the bill, I went over the comments, the news articles. And basically, the breakdown is that this is the first step in the right direction for some kind of comprehensive legislation for cryptocurrency. It gives both the SEC and the CFTC a seat at the table in terms of being able to regulate this thing, jurisdiction over different things. The SEC gets jurisdiction over digital assets that are not digital commodities that don't meet the decentralization tests. The CFTC gets jurisdiction over digital commodities and their intermediaries. So kind of

things that we thought were going to happen, a lot of stuff that was actually in the original bill from June, a lot of stuff that wasn't, a lot of new stuff. I think the key thing here, though, is, you know, aside from both regulatory agencies being able to get a hold of this thing, there's also a safe harbor that was brought up, which basically means, you know, existing digital assets, existing companies can file a notice that they will register with, you know, either the SEC or the CFTC, and they will be exempt from any enforcement actions on digital tokens, offerings, any kind of, you know, things on their platform that the SEC or CFTC might think is, you know, regular. But if they apply and they say, hey, we have the intent to register, we're going to protect our customer assets

and we're going to put these disclosures in full force, then we will not regulate. So kind of that safe harbor you mentioned, Scott, earlier we talked about before the show, what Hester Pierce suggested a couple of years ago, right? So these technologies can have this safe space to grow while the Congress is coming up with these rules and the agencies are putting them into place. This thing could take a while, you know? I mean, we've got to mark it up in the House,

obviously, then it's got to go to the Senate, then it's got to go to the President. And then, you know, but that takes a long time. It could take a couple, I don't know, years maybe. I'm not sure if we get the Dem votes on this thing, which I think it's looking decently okay, but not great for sure. And this is still a very much Republican-led effort. So those are kind of the biggest takeaways, I think, and also providing a pathway for digital assets that were started out as securities and have transitioned to commodities. They've written sort of a way forward for tokens that have those attributes. So I think that's important, too.

Yeah, that I actually in reviewing it and digging in did not really see the major safe harbor parts of it for existing projects. That's really interesting. Can you talk just a little bit more about that? Yeah. So what I read, it would be existing tokens and existing projects, existing companies. They have to submit their intent to register to either the CFTC or the SEC. And, you know, depending, I think they have to do a review of it. But while that's being reviewed, they're able to function.

They're able to trade and exist as they normally have done. But in exchange for that, they promise to safeguard customer funds, to provide disclosures if either agency requires it. Basically, like a promise saying, we'll let you function if you promise us that you're not doing anything shady. Yeah. I mean, David, have you been giving this a look at all? I mean, I kind of dug through it and a lot of it is, like I said, sort of obviously legal. This is over 200 pages, right? So I've just been reading summaries. I didn't get to dig into the bill. Was there anything that struck you as really out of the ordinary or unexpected? For me, I will tell you, and we'll talk about it in a little while, was the part that is actually going to allow unaccredited investors in the United States to participate. But we can get to that in a moment. David, was there anything that, any takes that you had, anything immediately that struck you? Well, there was an enforcement section in the bill. I'm curious as to how this is going to be enforced. Maybe Eleanor has more thoughts. The whole point of having crypto on,

let's say, DEX, a decentralized exchange, is that you're supposed to be able to self-custody your own assets. So suppose it's not registered, you're trading something where you own something that's not properly registered with the SEC. What is the recourse on that? How are they going to tell you to shut down, hand over your keys? I think that's a good question. And something that also refers back to Scott, what you just brought up with the accredited investor allowance, right? How are they going to know, you know, your income, right? Because it's based on a certain percentage of your income, are you going to have to disclose every single way, you know, you make money every single four

you have? I mean, it's, and I think to your point, David, I think, you know, these are methods that I think it's going to be difficult to get off the ground, but, you know, it's sort of wishful thinking in a way, but I think there's ways to make it work. I'm not entirely sure how, or something, it'll be based on the previous tax year. Because otherwise, if it's February 1st, 2023, and they're going to do your taxes in April of 2024, they have no way of knowing. Just so people understand, let's talk about exactly what this is saying. So this is really, to me, this was the point that struck me massively because unaccredited investors in the United States have never been able to participate in literally anything. Forget even crypto. You can't invest in your friend's company. You can't participate in private equity. And they've changed those laws over and over again. But generally, you need to have 5 million in assets or be making a million every two years or something,

whatever the accredited investor laws are. So this says, issuers of tokens would have to limit purchases to 5% or less of an individual's annual income or net worth, whichever is greater. Regardless of income, in order for the exemption to apply, an issuer could not sell more than 10% of its tokens to any one purchaser, and the transaction could not involve other digital access or traditional debt or equity. So to be clear, this is if someone's creating a new token, to my understanding, which usually, honestly, they don't even let American accredited investors in token sales, right? It's usually just easier to say foreign, but sometimes American accredited investors get in through a SAFT or some sort of other way of doing it. But this is saying that your average person could put 5% of their annual income, that annual income into a private sale and get the same access as everyone else. Unaccredited investors have never been able to participate in anything. This to me is just massive. Yeah. And I think it's one of the first things you pointed out yesterday, Scott, on

Twitter. I saw you take that specific section in a tweet about it. I think that is definitely huge. And I think people are going to take that with open arms. It worries me slightly that, you know, this is sort of precedent setting and they've never been able to get in before. Why, you know, the Democrats who are kind of so staunch on traditional regulation and sticking to the way things have been, why would they necessarily allow for this to happen? So I wonder if that'll be something that, you know,'ll be something that gets amended maybe in next week's markup or is a point of contention because I feel like this is almost too good to be true. Yeah. It's funny that now we think 5% is too good to be true, right, David? I mean, there's a lot of people who probably want to be all in these assets. But I'm curious to understanding, what is this? Issuers could offer up to $75 million worth of tokens in a 12-month period.

Am I getting that right? So basically, if you're a large project, what do you do? That's not enough. It seems like if you're launching to issue 75 million tokens in a year, it's pretty good. And this is basically like addressing the come in and register. Well, hold on. If you're an FTX, think about it. If you're a net TX and you want to make another FTT, you've only got a $75 million a year window. I mean, that. Yeah. I think that's very

fair for larger projects and exchanges who want to do a security token. But if you're like a brand new NFT project or something that has a token attached to it either way this is okay so maybe that that shows me it's really aimed for the it's really aimed for the smaller yeah right and i like that yeah but the thing i like about that is that it's at least saying that coming in register is nonsense and that there is a threshold whatever that may be, in markup where you don't need to come in and register in the same way. I don't know if you guys saw this, but I'm just going to bring it up. Maybe this is the best way to do this. This is the Agriculture Committee did a myth. They did a fact or fiction on the bill,

which I found just absolutely incredible when you dig into it. But they said, here's the first one. All digital assets other than Bitcoin are securities that should be regulated by the Securities Exchange Commission. That's the myth. Fact. Not all digital assets are securities. While some digital assets can be offered as part of an investment contract and some may be tokenized, a clear framework for determining when a digital asset is not a security is critical. Here's my problem though. Okay. I love that they're saying, hey, Gary, back off. What I don't love is that we still don't have a framework, to my knowledge, even in this 200-page bill, that's really clear on how they're going to determine what these things are.

I think a lot of it, from what I understand and from what I've read, it's all focused on the decentralization argument, right? Like, I don't think they mentioned Howie in here or anything. I know they mentioned it in one of their supplemental documents. But to my understanding, the key test for whether something is a digital commodity or a restricted digital asset, which would be under SEC jurisdiction, is the proof of decentralization. And you really have to prove you don't have to, like, I don't know how you do it. I'm assuming like paperwork and meetings, but you have to prove to the SEC and the CFTC that you are either sufficiently decentralized to be a commodity or not to be a security. So yeah. Can I just jump in here real quick for,

Eleanor, I have a quick question. Have you seen anything in this bill that says that if you want to register anything, you have to basically, well, you have to submit your identity. Can you do it anonymously? It doesn't get that specific. Not that I saw, David. I think this is very kind of baseline right now. And that- Because I'm just thinking of this segment. I'm sorry. Sorry, go ahead. No, it's okay. I was just saying it'll probably come with maybe amendments and as we get kind of deeper into sort of the whole how and why and the DeFi stuff, because this doesn't really, I know a lot of people have said, you know,

DeFi people have said this is going to destroy DeFi. I'm not the biggest expert on DeFi and all that kind of stuff, but I think I see sort of their point because they specify what a digital asset is in a certain way that excludes some DeFi products, like liquidity. Or puts language where they think that, if you're digging into it, they put language where they think that the SEC

could then utilize that language to say that maybe these things are not, and it's the same sort of slippery slope that we always have. But I don't know, man. I'm an eternal optimist. I think that we're heading in the right direction. David, to somewhat answer your question,

it says token issuers would have to be organized in the US, so they will have to create a legal US entity. So I think that you can't do that being anonymous. Would have to have a business plan. Yes, you can chat, JPT, that in five minutes. And not be subject to any enforcement order from the SEC in the five years before it offers a token under the exemption. So you don't have to necessarily come in and register your business for the offering,

but you do have to come in and register which they're giving you a path for it. So they at least know who you are and that this is happening and that this is a real asset. And so listen, you're not going to launch... What I like about this is you're not going to just launch a meme coin, register with the SEC and then rug pull. They'll know who you are. That's exactly where I was going with this. Yes. Yeah. And so I think that that's really good news because I think that this is going to allow people who, whether they have a good or a bad idea, to at least attempt to be entrepreneurs and build in this space without the restrictions of come in and register, which would have cost you $10 million and you would have

gotten rejected and called a security anyways. So this I think is actually huge. It's like they're threading the needle. You do have to register in some way, but basically gives anyone who wants to issue less than $75 million and is willing to at least probably KYC at AML and submit a business plan the opportunity to launch. Listen, I understand the criticism of it. I understand we can bring up, it's this guy, Gabriel Shapiro. It's right here. I'm assuming this was what you were alluding to, Eleanor, because this tweet has gone somewhat viral, but was a huge fan of this bill and they took a lot of feedback, but unfortunately, they made one change that completely alters the value prop of the bill, re-intros massive

ambiguity, re-empowers SEC enforcement and would wreak havoc on DeFi and then he kind of gets deeper into it. He also said that he thinks it's noteworthy that McHenry is not a sponsor of the bill. And maybe that's why that's complete crap, guys. We've talked to McHenry's team. He's the head of this committee. He's psyched. He's writing quotes. He's in the media talking about this. But my point being, yeah, I'm sure that the 75-year-old and 55-year-old guys who wrote this bill about crypto didn't nail every single exact principle I could to the first draft. Right. And I think there will be amendments. I think it will go deeper. This is kind of, like I said before, just the sort of baseline. But having a baseline is good, right? Because we can only go up from here. Yeah. I mean, David, what else does it say? Yeah. Go ahead.

It also says an issuer cannot sell more than 10% of its tokens to any one purchaser, right? Does that include the issuer of the token? That's a huge question and a great one that I don't know the answer to. Yeah. I've actually reached out to the policy team just to run me through exactly what all these things mean. They haven't gotten back to me yet. Hopefully by the time we do the spaces, Scott, they will give me the answer. Yeah. Because that would solve the issue of people not trusting premines, right? Yeah. So, possibly that would force you to sell 90% and not hold beyond 10% yourself

is basically what you're saying. Uh-huh. Yeah, I think that makes a lot of sense. I want to go through a couple more of these myths because I love that they're actually laying these out because it dispels a lot of even the classic fun that we've had about the digital asset space. Myth.

Digital assets facilitate financial crimes such as money laundering. Legislation would legitimize a harmful industry. We hear this all the time from the Elizabeth Warrens of the world. Fact, blockchain technology allows for better transaction tracing and asset monitoring than what is available with traditional finance. I mean, is it fair to say at this point that crypto is pretty crappy for crime? Crappy for crime? Yes. I think that's something that the older incumbents don't necessarily realize because that age-as-old-as-time argument is, oh, crypto is used for money laundering and bad purposes, but everything is immutably recorded on the blockchain.

So at the same time, yeah, we can. I think they cited that in there, right, Scott? They alluded to the, was it the Silk Road? Yeah, there's the Colonial Pipeline. I know they have here where obviously the FBI was able to very quickly track down the assets because the guy says it's a Coinbase or something to cash out.

I don't remember, but it was something absolutely ridiculous. But yeah, I mean, the FBI has had it. Yeah, especially with Bitcoin, to be quite honest. Like this isn't privacy coins. This isn't tornado cash. These guys were just trying to like move Bitcoin through mixers and failing.

Then the next one, existing legal frameworks. This is the one I was alluding to when we came over here. Accommodate digital assets. Digital asset market participants simply need to come in and register with the sec come into compliance with u.s security laws and operate

legally and then they basically just tear that to shreds so are we done can we finally say you can't come in and register is gary gonna keep pounding this david what do you think i think he's gonna keep pounding it oh he's not he's not he he well there's other things that he has to enforce um you know um i don't yeah i i'm curious to how existing tokens are gonna are gonna uh are gonna survive um so that would be interesting to develop and uh to your point about the what about things like ethereum you know is that is that gonna have to be registered? Who's going to register that? What about larger coins? Some of these coins supposedly have multiple parties involved. Who's responsible for registering it? Why would anyone be incentivized to register? These are questions that's going to come up. There's 10,000

coins. Here's another question for, I guess, either one of you. Of the thousands of coins, I don't suspect all of them are going to want to file or probably go through this process. Are we just going to see a complete washout of the altcoin market? I mean, it's my opinion that we've already seen a complete washout of the altcoin market, right? I think that we've already seen a complete washout of the altcoin market, right? I think that they would just continue existing how they do, right? If you're non-invest, you don't want to come in and register.

I don't think that even changes your current status because the regulatory view on it is so aggressive. I mean, Gary already assumes that they're all securities. I don't know if they'll be giving a pass. It's a really interesting question about ones in the past, but I think this is more about how the industry moves forward. That's my take, Eleanor. Do you agree? I mean, maybe I'm wrong,

but it feels like most of this is written for, this is what you're going to be able to do if you want to innovate in this space. Yeah, 100%. I think it's a pathway forward for people who want to keep existing and want to keep doing the right thing and not get targeted. Unwarrantedly by the SEC can actually make their business work. I think it's kind of a safety blanket for people like that.

But also, you know, Gary has said that he believes that all of these, most of these tokens are securities. And I think they made a point in one of the fact sheets they sent out that 70% of the market that is digital commodities, 70% of the market have been deemed digital commodities, but that's only Bitcoin and Ethereum. So then you've got everything else, right? Well, maybe XRP now because of the Ripple ruling, but you've got everything else. And where does that fall?

Let's talk about that. Let's talk about the ripple ruling because you were obviously on top of that as well. We've talked it to death, but I think that there's still a lot of nuance there. I think it's very clear that that secondary sale, whether it will be appealed or not, the narrative for the next year,

year and a half will be YOLO, right? We're not, these are not securities, Solana, you know, ADA, all of them are taking that ruling. But there is the whole part of, it was a security offering, right? And so there's really no path right now because of that, if this bill doesn't pass, where you can innovate or be an entrepreneur or launch in the United States. So in the existing status, if this doesn't pass, you still can't do anything here because of the Ripple thing. So it's really bad. The Ripple news was really good for existing coins, being my point, because

now they can say we are not securities, at least on secondary sale, but really bad for anyone who wants to launch a new project. Right. You've got the people who are sort of grandfathered in at this point, but then these people who want to come into the market are left sort of, you know, underwater. What am I going to do here? I think what the Ripple case has done for this legislation is, you know, kind of light a fire under the Democrats saying there actually is a need for legislation because look what this judge ruled. She she ruled in two she ruled in two parts right she ruled that the token itself is not a security but the transactions surrounding it are sometimes securities when they're institutional sales not necessarily secondary market sales so that is sort of a a way of saying you know like we do need legislation sensible

legislation around this thing so hopefully the democrats kind of see that because it is still sort of a contentious ruling right and? And even Gary himself, I think they referenced this in the documents as well. He said in 2021, we could use better regulations surrounding crypto. And then all of a sudden in 2022, he's like, oh, no, we're good. We just need more resources. But everything that we're doing right now, everything we have is enough to regulate this space. So yeah, it's like something more a million this space. Yeah, it's like $72 million yesterday. Literally, I think yesterday he was in Congress or two days ago asking for $72 million,

which to me just means that Gary's bit off more than he can chew and doesn't have the staff to go after everybody that he wants to. I mean, David, is your perception here that Gary's on his heels? I don't know if this is an echo chamber. I'm asking you because maybe I'm in the echo chamber and that's my opinion because I'm getting all of my tapes from crypto Twitter. But I mean, you know, it feels like he's

losing and that sentiment is turning heavily against him, not only in crypto, but his job in general. I mean, the way he's handled the SG and other things. Is he the most reviled man in crypto right now? I thought that was SBF. Is he now the crowniled man in crypto right now? I thought that was SBF. Is he now the crown winner?

I don't know. I think he's always been above SBF in the most hated line. Do you remember when Gary Gensler retired? I don't know if his job is in danger. You actually interviewed Warren Davidson, right, Scott? I mean, what was his sentiment on how the rest of Congress perceives, or even the opposition we've had, I think we spoke three times on Spaces and once on a podcast. I think he sees it as very bipartisan, but doesn't think it should be. You know, I saw him retweeting Richie Torres just a day or two ago, who's obviously a Democrat from from New York. He was also kind of joined in on the fire.

Gary Gensler, at least least Gary Gensler back off because Ripple put an end to your crusade. So I do think that it should be bipartisan, but I do think that a lot of these guys are still playing partisan politics. I mean, obviously this bill is dominated by Republicans. I think the question really goes back to Eleanor's, which is, has enough happened now with Ripple, with the bills being proposed, with all the pushback to start to bring some Democrats on board? Because I think even Warren Davidson said he doesn't think it's Democrats that don't like it. He thinks it's a sect of the Democrats, like the Elizabeth Warren, Gary Gensler side. And everyone else is basically just afraid to say anything because they're afraid of those people.

I was going to say a very, very vocal part of the Democrats and Democratic leadership, too. It's not just these sort of freshman people you've got coming in. It's the Brad Shermans, it's the Elizabeth Warrens, it's the Sherrod Browns who sort of, you know, they're leaders. They sort of influence how these people think. And that's a problem when they're thinking one way and an entire section of the financial markets are thinking another. This is my perhaps unpopular take, unpopular because maybe some crypto people may disagree with this, but I think Gary Gensler is just reacting or perhaps overreacting to all the fallouts and failures we've seen over the last year and a half. And they're like the Fed. They've perhaps, some might argue, over-tightened, but time may tell that perhaps this is a step in the right direction in terms of bringing clarity in the regulatory landscape. So I don't necessarily disagree with that, actually. But the untold part of that, I think, is that he's over-correcting for his own heart in it, right? So I think that there's an argument that they're over-correcting in a vacuum because of FTX and Voyager and Celsius and BlockFi.

I would take the more sinister view that he is embarrassed that he and Maxine Waters and basically a big swath of the Democrats were doing photo opportunities with SBF and meeting with him. And that Gary himself was allegedly, but there's some clear documentation, considering basically carving FTX out of the regulation and giving them a safe harbor themselves. So yes, I agree with you. I'm just not sure that it's all in good faith, an accident, so to speak. Fair enough. Fair enough. We saw Kennedy's take on it, didn't we, on Tuesday when he grilled Gensler saying, why wasn't the SEC there? Where were you? How could you have let this happen? And Gary said, well, we were there. It takes a long time to conduct an investigation. You're having meetings with him. And actually, Kennedy didn't ask about that,

which I was a little bit surprised at. Yeah. I mean, and David, to your point, I just think that, A, there's the fact that they were meeting with all these people. But I think a lot of the action from the SEC is probably totally reasonable. Like 90% of this stuff probably are securities under existing law. I think they probably have grounds to go after Binance. I think the bridge too far was Coinbase. That's my feeling. Their aggressive action towards Coinbase,

that pissed a lot of people off. Well, Scott, we know that it's aggressive towards Coinbase because we can see Coinbase in full transparency. It's public. It's listed. We know their financials. I'm just saying why can't we extend the same treatment

in terms of transparency to other exchanges even if you're not a public entity? Should that be in the regulatory framework? I mean, you've got assets under management. If you're an asset manager and you should disclose, how much of FGX's co-mingling was actually known by the SEC and Gary Gensler and all the people taking photos with him, SBF, before the fallout. I'm just posing questions.

I don't have the answers. I think they were blindsided. I mean, you guys, I don't know. I don't think that they were complicit in that way. I think that everybody put the guy on a pedestal. They thought he was the genius who was going to solve everything. And obviously, we were in a bull market. Prices were high.

People were making money, not losing it. I think it was just a very different world. But to your point, to see it in this bill, and maybe Eleanor has more specifics on it, they do go pretty deep into how the exchanges would actually have to operate moving forward, the transparency, whether it be CFTC or SEC. And I think, as she said earlier, what many people might like about this and might give it a path, I'm not that confident, but might give it a path, is that it really does leave quite a bit of power still with the SEC. Yeah, it really does. And like I said earlier, I feel like that might be a good bargaining chip for the Democrats because they do want to see the SEC involved. We know that they do like Gary Gensler. So it does.

And everybody in crypto is calling for the SEC to get out of crypto, right? They don't have the authority. They don't have the jurisdiction. But this bill does give them quite a lot of authority. But in a way that is not disproportionate to the CFTC, I feel like they both have pretty balanced roles. Although we don't know because we don't know which tokens are deemed what yet. We're not sure who's going to have that balanced roles. Although we don't know, because we don't know like which tokens are deemed what yet. We're not sure like, you know,

who's going to have that quite yet. So, you know, that'll be remained, that remains to be seen. But, you know, the, I think a big focus of this bill, and that goes back to the FTX sort of debacle, is that you type in, you know, control F and you type in segregating customer assets. And that is a huge part of this bill.

Like no matter what, whether you're registered with the CFTC, the SEC, you have to make sure and promise that your customer funds are segregated and they are not commingling. And I think obviously FTX was a you think that that's the most obvious take that any regulator could take at this point is that we should not have exchanges be custodians and that custodians should not be OTC desks and basically that we need this sort of wall of separation between the roles. I mean, we don't nobody seems to talk about prime trust, which blows my mind. But like one of the biggest custodians in the crypto space, allegedly just lost private keys and then committed fraud. I think you covered it up, right? Did you guys watch that Gary Gensler interview on Bloomberg? I don't know, about a month and a half ago, the reporter was asking, it's like a 12-minute segment. The reporter was asking him about why he's going after Binance.

And he answered the question more broadly. He says, well, it's not just a binance problem the entire crypto industry has been commingling funds um and it's not it's not just one single exchange this is just kind of the norm he said and that's true he's going to your earlier question is he done no he there's a lot more actors he's going to go after oh i think there's a lot more actors he's going to go after. Oh, I think there's a lot more coming if he gets the resources. I just think maybe he's run into a brick wall here. You know, I've heard a lot of conjecture that the next targets would be smaller and mid-range VCs, you know, basically, and maybe some other projects and stuff. But a lot more low-hanging fruit, people who would settle and it wouldn't require resources

to actually go after them in court now that they're dealing with Ripple, Coinbase, and Binance at the exact same time. Yeah. Eleanor, who do you think is next? Have you received a tip off if it's getting sued next? Actually, come back to me for a second

because I did have a conversation with someone the other day and let me just, I'll get back to you on that question. But the, what was i gonna say the um not on my head come back to me no problem yeah we'll come right back to you i listen i i prime trust obviously is gonna have a whole lot of action against them but that's pretty obvious i don't mean, I think there's some element of DCG that might have some problems. I just, you know, very shady what's happening with Genesis and the sort of

incestuous relationship with Grayscale and such, but I can't really speak. But every time I dig into this exact question, David, with anyone privately, they say, well, Barry Silbert, right? They're like, he was kind of behind all this lending and the whole C5 movement and the GBTC trade that collapsed everybody. And so I wouldn't be surprised if at some point we see action there. And if GBTC ceases to be the cash towel that it is, DCG is in big trouble regardless. So if they convert to an ETF and can't collect their 2%, that's big trouble,

even though they're trying to convert to an ETF. Alador, do you find that out? Yeah, so we were saying how, you know, how he always mentions trading against customers. He mentioned that several times during the hearing. So this person, my source, who I was having a conversation with,

they said, I will bet you that a case on that is coming next or in the near future, where an entity trades against their customers. Who might that be? Who do you guys think? Well, BitMEX did it and got in trouble for it already. Coinbase had the insider trading case, but that wasn't trading against.

It was just using insider information to personally benefit. I can't imagine an exchange in the United States necessarily that's trading against their customers, but I think if you go internationally, almost all of them. I think all of these exchanges, largely a bunch of them, have prop tests. I'm going to jump back to your earlier question about what do you think the regulators want in terms of exchanges and self-custody? My take is that they want exchanges to offer self-custody and then regulate that part.

Because why would they want self-custody to be unregulated? Think about that. I agree with that. And I think one of the stories that kind of went untold is at EDX markets, the one that's Schwab, Fidelity, and Citadel, the institutional exchange that was launched by them. That exchange is non-custodial. You trade it apparently from your own wallet. They don't custody any of your assets. And that's the approach from Schwab, Fidelity, and Citadel. They don't get any bigger than that. So I think that, David, I think you're right there. The question is, how is that going to happen? Yeah. Yeah. In that particular case, they have intermediaries doing the custody. So if somebody's still doing the custody, it's just not the originator.

I guess. Yeah. I guess you're not trading from your own wallet per se but it is that they call it a non-custodial exchange yeah yeah yeah but how would they how would they regulate self-custody do we think like you have to report it on your taxes type of thing i mean they can't really regulate how you do it but are you talking about effectively tracking the assets and making sure that they know where it is and what you have yeah but like i said before it's just that's so that's so much information and how are you gonna compile that you're gonna need to they're gonna have to hire a heck of a lot more people for this undertaking i mean for both cftc and the se state because these are such nuances that they're not dealing with right now. And if they really want to put this into play, it's going to take a lot of work, a lot of kind of pioneering of this new frontier.

On that front, though, they do have something else that stood out to me. They're suggesting that there be an advisory committee with, I think, around 20 market participants that would report to the SEC and the CFTC joint committee and give them advice, kind of collaborate on new things, new things in the industry, keep them abreast of what's going on, and suggestions. So I feel like this collaboration with industry is good, right? Because it's kind of, since everything we've seen up until now has been very much regulatory versus industry, no sort of collaboration. So I think that is a good development. You know, we're having the conversation now.

I agree. Listen, I think we've unpacked this bill pretty well. There's one other thing that I just crossed my mind because of the people in the comments I want to ask you about. So, David, you guys see this? Senators Kristen Gillibrand and Josh Hawley have officially introduced the bipartisan Ban Stock Trading for Government Officials Act. The bill bans stock trading, stock ownership, and blind trust. How will Nancy Pelosi survive? Was it your tweet, Scott? You said you were like, sorry, Nancy.

Yeah, that's me. I mean, you know, I love a good Nancy. She's not even the best trader, though, and she gets all the attention. But there's some that are out trading her. But I mean, yeah, her husband is out trading her. That's right. This won't pass, though, right? I doubt it.

Isn't it the very people benefiting from it that need to pass it? This is kind of like trying to pass term limits for Congress. Yeah, and something I've learned is that it's notoriously hard to prove insider trading, right? So this is just, you know, it's a good sort of, I don't know what you call it, like a good front. I guess it's like makes them look good, but is it ever going to pass? Is it ever really going to have any impact? Probably not. Yeah, I agree. It's never going to pass. Well, Eleanor, I'm going to let you go

because you have to join me in 30 minutes on Spaces and we're going to talk about this again. The Spaces topic today is actually the lack of VC funding in crypto. But because of this breaking news, you and I are going to at least break this down at the beginning of the show. So let me know what you will see if you find anything else new out of the next 30 minutes. But thank you as always, guys. Everybody, her Twitter is in the description. Please follow her. She literally breaks all of the news that we report on here. So she's the person you need to be following, not us.

Thanks, Scott. Thanks, David. Thank you, Eleanor. Nice to meet you. Thank you. So I know it's, you know, 6.45 a.m., David. Anything else on your mind worth discussing before we get out of here?

I don't think we've talked about FedNow yet. Let's do that. Yeah. So you and I actually, on our last interview, I think one of them was when FedNow was initially discussed and FedCoin was the big talk. Yeah. Right?

Yeah. You know, I'm reading some, well, there's a lot of articles on FedNow, but the Federal Reserve is saying that the FedNow service, I'm going to quote, the FedNow service is not related to a digital currency. The FedNow service is neither a form of currency nor a step toward eliminating any form of payment, including cash. They really want to make the distinction that this is not a precursor to FedCorp. Yeah, and I actually agree. It's not using any blockchain technology.

Jerome Powell has come out and openly said, we will never launch a central bank digital currency for retail. The only way we would do something like that would be for institutional use. And the more I dig into FedNow, it feels like the government finally just got Venmo, literally. And it's like they were using a system from the 1980s. The rest of us can transact in real time, digitally, face to face. Why wouldn't the Fed be able to do that? Why wouldn't these banks be able to do it? Yeah. You know, from a technological improvement standpoint, this certainly seems to be a step in the right direction. I'm looking forward to having the financial institutions of tradified banks implement some of this technology to just make transferring money more efficient, cheaper and faster.

I mean, forget the oversight and the privacy concerns, just make money, sending money easier. You've got the trust. Look, at the end of the day, people trust their own banks still more than some unregulated exchange, especially given what's happened now. People are literally asking me, how do I transfer your money and vice versa? I said, just use your wallet. And it's like, I don't want to do that. It's a process. It's a hassle.

I don't want to set up my own. Whatever, right? I tell them, doing it over your bank, international transfer, is going to take days. Solve that problem for us, guys. Yeah, and I think this does solve that. Literally, nobody wants to send a wire transfer that takes a week right and so this should be much faster i actually wrote a newsletter intro a week or two ago say how crypto is just not there yet and making effectively the

same point that you did it's funny because i was sitting at a table at a conference with five bitcoiners and crypto guys and we decided we going to like split the bill for dare. And not one person proposed that we use crypto to do it. We all, everybody Venmo'd me money and I paid on my credit card. Like we are like four people, active wallets, five wallets sitting there,

access to crypto. And not one of us was like, we should do this with Bitcoin. Yeah. Yeah. It doesn't tell you everything you need to know that even us who are deep down the rabbit hole just viewed Venmo as a hell of a lot easier for doing this? You know, another development that we should probably bring to light is in Europe with Mika, now banks are on the path towards being able to hold crypto. I don't know if we're seeing that in the US. Have you noticed any developments on that front, Scott?

Interestingly, before this administration, when we had Clayton at the SEC, Brian Brooks at the OCC, and John Carlo at the CFTC, we had those chairpeople, at least some of them, writing letters that were giving some precedent to allow it. I think it was Rupps that wrote the letter at the OCC that allowed banks to, he said that banks like the NY Mellon, State Street, Custodians, would be able to custody crypto assets. We just haven't heard about it since, but it still is technically allowed. I think a lot of them are moving in that direction. NASDAQ actually was supposed to be uh looking to cut the assets and yesterday i think

they withdrew that actually uh because i think blackrock's coming in with an etf and it's unnecessary and then the other thing was that clayton had written uh not clayton brooks i think had written a letter that said that banks could test stable coins rather than swift wire transfers for international payments so So it was loosely proposed here, and then we just got regime change, and obviously the new chair people just pretended it didn't happen. Yeah. And I'm curious to see how the crypto exchanges will respond to the day when your bank can just transfer Bitcoin for you to another bank account, aka wallet? I think it's going to be huge. So I think people want an ETF, right? Because as much as we want

every Bitcoiner to want to self-custody and own their Bitcoin and hold it forever, you made the best point, which is 99% of people just trust their bank, right? And those same 99% of people, if they are the ones fortunate enough to be able to afford to buy stock or to invest in general, they want to buy an ETF. They don't care that it's paper Bitcoin or that it's not in their wallet. They're buying it as an investment, not as a hedge against Mad Max dystopian future. And so it's by the same end, I think they would just rather trust these legacy institutions. And that's what's going to bring mainstream adoption, whether we like it or not. Yeah. I'm just going to push back slightly on the notion that retailers are interested in the Bitcoin ETF. Why would you,

like you and I, we're not BlackRock or any large fund. Why would you want to buy a Bitcoin ETF when you can just buy spot? Why would you pay a management fee for a product that already exists? I understand the prospect of owning a Bitcoin ETF for an institutional investor who has a mandate to only invest in certain types of securities. That makes sense for them. But for the retailer, I don't see much value. I do because of the same sort of argument that we made before, but I think it's just less friction. If you already own a Schwab account and you don't have a Coinbase account and you've seen five out of seven available crypto exchanges in the United States collapse last year, I don't see you rushing off to get a Gemini account right now and they're in litigation

with Genesis and have lost customer funds in their earn program. I just think it's a friction argument. Maybe I'm overestimating how many people actually want to own Bitcoin and right now are saying I won't because of the process. Maybe I'm just wrong there. But I think the argument really is that it just becomes another asset for people. This is just another thing I'm going to have in my stock portfolio, and an ETF gives them that. And certainly being able to custody and send it in a bank, they want more than having to self-custody it on a ledger in their safe.

I understand that argument, but for me, I have some Bitcoin, I have some Ethereum, I hold those in my MetaMask. If I need to convert, I instantly transfer to my exchange, which takes no time at all. And then I'll just transfer to fiat. I don't use my exchange to custody. I use it to off-ramp to fiat. I 100% agree with that. Here's a great point from the comments.

BlackRock, ARK, et cetera, bring credibility and a perception of safety. I think that's it. I just think that if BNY Mailman, State Street, or say, hey, we will custody Bitcoin assets, and BlackRock is giving it a stamp of approval, and you can buy it, I think that the gateway for most people before self-custody is going to be one of these assets.

At the end of the day, is it just good to have more options for people to buy this stuff? Even the hardware wallet manufacturers are a potential risk. I'm just going to comment. Yeah, right there. And that's true, right? So now Ledger was considered the gold standard in safety, and now people are questioning Ledger.

I'm not necessarily. It's an opt-in program. But let me throw this at you, Scott. Let me throw this at you, Scott. Look, we can't live in a world where we can't trust anybody. I mean, sure, maybe. It's a probability of risks and rewards. I mean, who is more likely to basically screw you up? Is it BlackRock? Is it a hardware wallet? Is it an exchange? Who do you trust the least? And then who do you trust more? It's a spectrum, right? What's on your spectrum? Do you want the answer? Who I trust the least? And then who do you trust more? It's a spectrum, right? What's on your spectrum? Do you want the answer? Who I trust the least, unfortunately? Yeah, please go. Me.

What does that mean? Well, that's the problem with self-custody. I'm not saying that necessarily as myself, but I'm saying it as an example. I think that for nine, and there's a very unpopular take, CZ once said it, I think for at least nine out of 10 people, they are much more likely to screw up their own self-custody than to get screwed by one of these other people that you mentioned. I see what you mean. Yeah. I think I'm more likely to lose my keys. It was funny. I had Pascal from Ledger, the CEO, on my show the day that all their FUD broke. We put it out, and then an hour later, literally,

all the FUD broke. But he said that he told me a story where he had lost his private keys to a wallet. This guy literally created the ledger. It's his thing. We see it all. Prime Trust lost keys. They're a trusted custodian. So the point being, I'm not saying I don't trust myself in full competence, but if someone walks in and tries to rob me, if I fall on my head, if I get in a car crash, God knows what happens to my assets. And leaving that breadcrumb trail for your kids, it's a hell of a lot easier. And it's not the same. I'm not saying it's the same. It's a hell of a lot easier for your wife to go into your Schwab account and sell your BlackRock ETF if something happens to you. Let me extend that argument one step further. You're probably not... You're not an idiot,

and Scott, I know you. You're a smart guy. You are probably not prioritizing this right now because you just don't need to. Are you going to go to your bagel shop down the street and pay with XRP? Are you going to pay with Bitcoin? Never does it. It's a simple transaction. Who wants to track that? The day that you pay with Bitcoin on anything that you buy, that would be the day that you are actually going to start prioritizing your keys and there's going to be a whole new development and infrastructure in helping you with that process. Yeah. It's the pitch.

So that's a big problem. and infrastructure and helping you with that process. Yeah. So I think that needs to come first before people start to really start to care. Yeah, I don't disagree. A new ledger pitch, like their new product that's designed by the guy who did the iPod, you've seen it, but it's pretty slick. It's awesome.

It's called Stacks and they stack up. Right. And so like you kind of have the one you'll leave in the safety deposit box, that's your bank account, but you can stack them and transfer assets. But then maybe you have the one that you carry around that has a hundred bucks in cash and your cool NFT on the screen that you want to show. That's their solution for it. It's going to work exactly like your bank account. You've got your Apple Pay on your phone, so you've got your wallet for custody, and then you've got a checking account for payments. You put your Bitcoin, whatever security or token you want into that payment account, and then you just scan it with the vendor. You don't have to really think about it on a regular basis. Yeah.

Yeah, I think that that's the future. Really interesting discussion. See, Dave and I didn't plan this at at all we're just really good at banter guys smart well scott scott's just a smart guy so you know but it's funny we're both putting each other on the spot on the opposite side of the mic that we're that we're used to it makes it fun though that i can come on here and actually have someone ask me a question every once in a while. Never happens on my channel. What time do you record your shows now? What's the rest of your day look like? I don't have a fixed live stream schedule like you.

Everything I'm doing so far is just pre-recorded. So I've got another one later in the day. It just varies day to day. So usually I film, I'm based on the West Coast. I don't know, where are you based these days, Scott? I'm in Florida. Yeah, I'm in Florida. Okay, so you're three hours ahead.

So I'm three hours behind you. So I usually wrap up filming by around like 2 p.m. Eastern. And then I spend the rest of my day kind of editing and preparing for the next day. So that's kind of my schedule. Guys, I'm not kidding, please. Listen, his channel has been up for like two or three months and it's as big as this one, right? And not our biggest subscribers. You'll be there in like a week, and your views are out of control.

But we really wanted to try this out, and if David's amenable, we're going to really, I think, work on this and make it a more regular show. Obviously, we'll come up with a name for it and all the proper stuff, not just throw him out here in front of you on a random friday and make you wonder what the hell is happening but uh you know uh one of the people i respect by far the most and just a really incredible interview incredible interviewer so you always ask the great questions and to be frank and by friday sometimes i just run out of steam you might have the same feeling but uh all right so i really appreciate that scott yeah yeah i'm happy to come on more

often and you know help help about your channel in any way it's just fun to banter with you i don't i don't really care what platform so yeah i'm happy to be here and you're forcing me to wake up early so that's good yeah he's going right to the gym after this everybody and for a very healthy breakfast obviously obviously or the seventh cup of coffee already at 7 a.m. Well, I gotta get out of here and head over to Twitter Spaces in 15 minutes, where you're also always welcome. David, thank you so much. We're gonna get offline, guys,

and figure out how to do this even better. But in my mind, this was a great test. I think it went exceptionally well. David, thank you so much, man. All right. And everybody check out his channel and follow him do it now thanks guys bye bye see you Monday