The Wolf Of All Streets - GENSLER TESTIFIES ON CRYPTO | 2 ETFs DENIED | Crypto Town Hall

Episode Date: September 27, 2023

Crypto Town Hall is a daily Twitter Spaces hosted by Scott Melker, Ran Neuner & Mario Nawfal. Every day we discuss the latest news in the crypto and bring the biggest names in the crypto space to share their opinions. ►►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.

Obviously, we were trying to decide whether or not we should live stream the Gensler hearing. But since it's not specific to crypto and only has some smaller parts about crypto, at least initially, we decided that we weren't going to stream the whole thing because we can read you the pre-prepared statement that he's about to actually give himself. We know what he's going to say. And we figured that you would much rather hear it in our sultry, sexy voices than in the nasally pain train of Gary Gensler's face. So we're going to try to save you guys from having to actually listen to him. And then we might bring it back when the questioning starts, because we know that they're going to go hard after him on crypto for sure, because this is the committee that's been attacking him for a long time.

Mario, can you hear me? Yeah, man, I can. My headset is not connected. It's connected in a second. Did you see these first? Did you see? I mean, this is how Gensler literally just, how Chairman Patrick McHenry came hot out of the gate.

He said to Gensler, you've done nothing to remedy legitimate and bipartisan concerns. That is disgraceful. Our patience is wearing thin. And then after Maxine Waters spoke, McHenry came back and said, you do not want to be the first SEC chair to receive a congressional subpoena for ignoring oversight requests. I mean, literally like hitting him with just absolute body blows from the beginning. It's going to be a fun hearing.

Yeah, exactly. McHenry, again, you do not want to be the first SEC chair to receive a congressional subpoena. But then Maxine says you're doing exactly the job the American people want. And by the American people, she means Maxine Waters and Elizabeth Warren, who are both American. But do you expect – so how long is it going to go on for? Because today's hearing is not just about crypto, correct? Yeah, it's hard to know. So this is called – it's the testimony of Chair Gary Gensler

before the United States House of Representatives Committee on Financial Services. And it's specifically about all technology, not necessarily just crypto. But if you read the prepared remarks, I don't know if we want to start yet. It's largely about the history of the SEC protecting the public, which I think as much as we're critical of the SEC, very true. If you look at 90 years, the SEC has largely been a very effective and important agency in the United States. How they update their rules to address new technology, efficiency and competition. I mean, maybe we should wait a minute till we have a few more people, but I can happily just go ahead and read what he's about to say about crypto and then we can go into the questioning afterwards yeah exactly if you can read his prepared remarks i think it'll be good i started reading it just before the show um so it

kind of gives you an insight into what he's gonna say and um there's nothing new is exactly what we expect but maybe you want to start there yeah so so to be clear he talks about crypto here and but he also says i'm going to discuss two areas of emerging technology, predictive data analytics and crypto, and then turn to two issuer disclosure rules regarding climate and cyber risks. So the first thing he's talking about is artificial intelligence and predictive data analytics. And there's been a bit of a sentiment that the SEC is shifting a bit out of crypto and towards AI.

I don't think that's necessarily true. I just think it's another battlefront for them. But here we go. I'm going to read you what he is about to say in his statement about crypto because it's scripted. There's nothing about the crypto asset securities markets that suggests that investors and issuers are less deserving of the protection of our securities laws. Congress could have said in 1933 or 1934 that the securities laws applied only to stocks and bonds, yet Congress included a long list of 30-plus items in the definition of a security, including the term investment contract. As I previously said, without prejudging any one token, the vast majority of crypto tokens likely meet the investment contract test.

Given that most crypto tokens are subject to the securities laws, it follows that most crypto intermediaries have to comply with securities laws as well. These laws have been on the books for decades. Sections 5, 15A, and 17AB of the Securities Exchange Act of 1934 require that intermediaries acting at securities exchanges, brokers, and dealers, and clearing agencies are subject to the securities laws and must register or satisfy requirements for an exemption. Given this industry's wide-ranging noncompliance with the securities laws, it's not surprising that we've seen many problems in these markets. We've seen this story before.

It's reminiscent of what we had in the 1920s before the federal securities laws were put in place. Thus, we have brought a number of enforcement actions, some settled and some in litigation, to hold wrongdoers accountable and promote investor protection. The SEC also has addressed the crypto security markets through rulemaking. We issued a reopening release that reiterated the applicability of existing rules to platforms that trade crypto asset securities, including so-called DeFi systems. That one's a little, that's a little bit of a shot at DeFi. This release also provided supplemental information for systems that would be included in a new

proposed exchange definition. While our current investment advisor custody rule already applies to crypto funds and securities, our proposal updating it would cover all crypto assets and enhance the protections that qualified custodians provide. These are just two examples of the rules we've proposed that touch the crypto markets. While I'm happy to discuss the SEC's work, I will not be able to comment on any active ongoing litigation. That's the end of it, by the way. He's clearly getting ahead of the Grayscale, Coinbase, Binance, et cetera, questions that would inevitably be coming from the committee. So that's what he had to say.

I think, Mario, as you kind of hinted at before, it's par for the course. I did find it interesting that he singled out DeFi without naming any other sort of single sector of the industry. But, Ran, go ahead. Can we maybe talk for one second about what happened yesterday with the letter that was written to Gary Gensler by the bipartisan letter that was written to him? And then 45 minutes later, to kick the can down the road and delay all the Bitcoin ETFs? I mean, was that coincidental? I don't know. It seems like they were going to probably kick the can.

It's hard to know. To be clear, it was a bipartisan letter from four congressmen, but they're the same exact congressman on this same exact committee that's questioning him today, that has been the same group that's been critical of him from the very beginning. I think it was Flood and Emmer on the Republican side, Nicol and Torres, who we've had on the show, on the Democrat side. So there's really nothing surprising there, right? This is the same McHenry, Davidson, Emmer, Flood group

that we've been seeing very vocal. What's surprising is that they never usually, I mean, since my interactions with the SEC, they've always waited until the last minute. Yeah, they had until November 11th on the mark. They had until November 11th, and they already kicked the can down the road. I thought that was definitely a statement, right?

Look, it could have been coincidental. It just seemed a little bit too coincidental for me that there was a 40-minute gap 40 but mario you're very quiet can't hear you it's just it's in the sauna i mean the speakers aren't the speakers in the sauna microphone is melting as we speak no no i'm actually you know sitting in an office so you can't hear me he's very quiet i'm better in the sauna you sound better in the sauna i'll fix it i'll leave it extremely quiet um yeah you think so you think that it was you think that it was coincidental i don't know i it's this is one of those things where it doesn't matter we know

the fact whether it was coincidental or not i think that uh we know that i would love to get john reed stark's opinion on this actually listen, since we have you here and I think you've been relatively adamant and consistent in your view that the SEC is going to do what the SEC is going to do. Denzel is going to do what he's going to do, regardless of obviously these outside pressures or whatever. Maybe this is a bit of an FU saying, hey, I don't really care what anyone has to say. I don't care about your letters. I'm going to do what I want on the ETF. I mean, what's your feeling here? Sure.

I think you've got a lot of it right. So I was at the SEC in the Division of Enforcement for 20 years. And during certain times, I also served while being chief of the Office of Internet Enforcement. I was also counsel to the director. And in that role, I helped prepare testimony before Congress. So I drafted testimony before. And it's actually a very intense process at the SEC when you draft testimony in the sense you draft it. It goes to the Office of the General Counsel, the Office of Legislative Affairs. It goes to all the operating divisions, so they can comment on anything that has to do with them, like the Office of Compliance

and the Office of Examinations, Division of Examinations, Division of Corporation Finance, and of course, enforcement. Now, there's a couple things that I've... So I've worked on lots of testimony before the House Committee. It's always just a complete circus. It's always absolute theater. They have five minutes and they scream and yell at whoever the chair is if they're angry. There were some periods during some chair that I worked for where it was a bit of a love fest from all sides. Arthur Levitt was very good at really making sure that no big issues came up that made him look bad or made the SEC look bad. And he did that with a lot of preparation and a lot of meetings and a lot of

efforts at bipartisanship. So it's possible. But those days are long, long gone. I really almost think since Madoff, every one of these are always very contentious, always very partisan. And there's lots of posturing. It means nothing to the chairman. He's not going to go back and change anything that he's done or doing because of this hearing. He's on the firm ground when he says he can't comment on things like, you know, applications, litigation, investigations. And I like that, you know know as a lawyer and as a libertarian i really believe that you know law enforcement should never ever ever comment on

anything they're doing unless it's with the public filing there's also a very famous letter in it's called the very famous case called wheeling pittsburgh and that's a very important case and that case says that the the SEC can never investigate someone because Congress has told them to do that or has implied that they should do that. So oftentimes when I would get letters, especially when I was chief, hey, you should investigate this, or you better do this, or you better do that. My response was always, well, in accordance with Willings Pittsburgh and our responsibilities, you know that we cannot act at the direction of Congress. We're an independent agency. So he's on very firm ground for acting that way. I think he's gotten better and better at these hearings, but he never seems to lose his cool

occasionally. I mean, remember, he's not a lawyer, so sometimes he might be asked something that is a little beyond because he didn't go to law school. But it's always fun theater to watch. But it's also kind of sad to watch because, you know, you take someone like Emmer. I mean, it's so incredibly hypocritical, whether you're a fan of his or not. And I don't find myself in either camp. But the group of congressmen who wrote a letter over to the SEC saying you should your your subpoenas to FTX and and other crypto firms are too broad you're going too far you're exceeding your your uh you're you're exceeding your authority and all this just hateful letters to the sec saying they're they're pushing crypto too far then ftx collapses and they send another letter just a few weeks later saying you've completely failed because of ftx and you've

been derelict in your duties i mean it's it's total hypocrisy. I don't see how you can take any of the ramping seriously, although it's fun. It's fun to watch. John, I have a question for you. It's run. In the pecking order, it feels to me like Gary Gensler doesn't really care about the congressman. It just feels to me like he almost looks like he he he almost like looks down on them and says like if i remember correctly uh if was it patrick mchenry or one of them she turned around once and said saying like you don't reply to our letters you know you don't even bother replying to our letters so it's almost like you you don't care you you really really really don't care and you don't even reply to our letters so like interested to hear like like you know other than the theatrics and what gets broadcast and you know what people see

like is there any downside to Gary Gensler in making enemies of these people or fighting against these people I think there I think there is I think you should always be you know my counsel is always to be incredibly respectful and calm no matter what or how extreme or how obnoxious the questions are. You raise a great point though, Ron, because something that people don't realize is Congress is constantly sending letters over to the SEC demanding information. And the letters are like, they're like subpoenas within themselves. And they take forever to respond to. They're exhaustive. They're very detailed, and they require, again, the kind of thing when you respond to one of those letters, which I had to do on occasion. constituencies that could be impacted by the answer. So the SEC, I think, works very hard to do their best to respond to those letters because it's their responsibility to do that. There's something called an Office of Legislative Affairs. The head of Legislative Affairs is one

of the few politically appointed jobs at the SEC. So the actual head of the Legislative Affairs Office at the SEC, this is typical, is typically a, the deputy is not, but is typically what's called a political appointee. The SEC has very, very, very few political appointees. There's the commissioners themselves, and those are called schedule A appointees. So there's the political appointee, the head of legislative affairs, the political appointee is usually the head of the communications office, but the deputies are all just like permanent staff. So even all the directors are permanent staff, you know, as opposed to the Department of Justice, Ron, where every single person is like politically, all the heads are politically appointed. They have to be confirmed

by Congress or by the Senate. You know, so it's a much, much different agency. There's just zero political people anywhere except in legislative affairs. There might be one or two people who work for Gensler himself. Each commissioner only has like three staff people, maybe two lawyers and a receptionist, you know, or maybe three lawyers and a receptionist. So the chair has lots and lots of staff, maybe has one or two political appointees within that as well, like maybe their chief of staff or something like that. But generally, nobody even knows what your political party is. So I think there's a general effort to try to do things where you're being respectful and mindful, because remember,

there's different downside congressional go ahead what's the downside like it just feels like like i mean if i was sitting in gary gansler's situation and i'm i'm really looking at this from the outside i'm sitting in gary gansler's situation yeah in inverted commas i'm protected because i've been appointed by the president and right you guys are sending me letters. And I'll get I'll reply to your letters, you know, as and when I can. And sometimes I won't. Sometimes, you know, I think he does. No, I'm sure he replies to everything that he can. I can't imagine them just saying we're not going to reply. They might say we can't reply to this letter

because of Wheeling-Pittsburgh or we can't reply because it concerns an ongoing examination. But I doubt he ever doesn't reply. But I'm sure every congressperson will always say, hey, your reply was crap. We didn't like the reply you gave us. It was incomplete. It was insufficient. And it sounded like a bunch of boilerplate. So I get what you're saying. Just to be clear, hey, just guys, just to jump in, they are actually talking crypto pretty aggressively right now in the actual hearing. And they asked, is Bitcoin a security? Gensler, I would say it's not a security.

It does not meet the Howey test, which is the law of the land for being a security. Gensler finally says it's not a security. Can we stream it? Can we stream it? We're streaming it. Rand, check WhatsApp. We're trying to get you to stream it? Is it worth streaming it? Rand, check WhatsApp. We're trying to get you to stream it. And we also have then Maxine Waters,

who has obviously been praising Gensler, said he's doing a fantastic job, exactly the job the American people want, is now talking about how crypto is a fraud and going back in on Luna, FTX, etc. So we're going to work on getting the stream up for the parts where they are talking about crypto. I guess, you know, John, to Rand's point, or to your point, even, this is a very, as much as it's making great headlines, and they're great soundbites,

this is a very small group of congressmen on one specific committee that are aggressively pushing back and they get their opportunity every once in a while to bring him on stage and dunk like crazy. But it's very important that people don't extrapolate that and believe it's the sentiment of the entire Congress. Right. Yeah. No, I agree. I think this is which committee is it wrong? I didn't even this is the this is the sorry, the financial financial services. It's the same one that passed the Stablecoin Act. Right, right. No, no. Yeah, yeah. Right. And I've worked with that committee on occasion as well. And I can say this is that they also have what's called oversight responsibilities. So they can get a little more information than other committees can get. So they're the ones who are the ones figuring out

what the SEC budget is. And the SEC is very sensitive. I think the chair is especially sensitive to the committee that has oversight responsibilities, and they get extra attention. And we used to have briefings for them all the time during my 20 years, because it was important to sort of make sure your oversight knew what you were doing. It's just become so partisan that I'm sure there's a part of the chair who says it's sort of like with the two dissenting, you know, Mark, Mark Ueda and Hester Purse. Right. They dissent on everything. They now publish their dissents, which is really a relatively new phenomenon. Most of the time in FCC history, if you dissented from something, whether it was a rule, whether it was an announcement, whether it was a regulatory

position, whether it was an enforcement recommendation, you never published a dissent. Well, now that has really become routine. And I feel like the chair has sort of said, you know what, all these people are going to hate me no matter what. So I'm going to stand my ground and be respectful. I'm not going to try to really get everyone in the same room and reach consensus and please everyone. But that was the way of several, I worked for maybe six or seven or eight different chairs. And there were certain ones that were really big on that. The biggest thing that a chair wants, the biggest thing they're afraid of is not being re-nominated i've never had a chair that didn't want to be re-nominated so that's always something they're worried about that interesting question there though john as we get the stream ready you say they they've never uh they always

want to be re-nominated to kind of their goal i think that's you could extrapolate that to all politics right everyone wants to get re-elected But you generally see that an SEC chair's tenure is only, you know, two to three years before they actually move on and do something better. And I think we all know that Gensler has larger aspirations, right? A lot of people saying he would like Janet Yellen's job at the Treasury. So, I mean, is that sort of you go ahead and you get reinstated, you get the job again, and then move from there? Is it a matter of being embarrassed if you don't get it? I mean, we all know that if a Republican wins, we all know Gensler's not going to be the chairman anymore. Yeah. I mean, I think these are some of the most

Machiavellian people you'd ever meet. The most successful, incredible achievements in their life, typically, to what it takes to become an SEC chair and get appointed and get confirmed. And they all have different ambitions. You know, I'm always surprised. Some of them want to stay for a long time. The commissioners, remember their term, each commissioner's term is typically five years, but it depends whose seat they get appointed to. So you could become a new commissioner who fills the seat of another commissioner whose term ends in two years. And Hester Peirce, she was appointed with Republicans, and so she got a very long term. So she's going to be there longer.

If a Republican becomes president, then the chair of course- She could become chair. Yeah, she could very well become chair. She would be acting chair. I don't know if she'd become chair but i could say that typically senior republican i thought back on my back on the senior republican would yeah the senior republican would become acting chair and then that could take a week there could be a new chair put in or that could take six months before they put a new chair in. So and the powers are sometimes the acting chair does a lot. Other times, you know, I worked with an acting chair once who was very frustrated because she felt that the staff, especially the operating staff, weren't letting her do anything because she was acting.

So I think you're right. You know, the chair generally, who knows what they want to do next? If you remember chair Jake Clayton, I think it was, he wanted to be U.S. attorney of the Southern District of New York. The bottom line is once it gets out what they want to do, they're never going to get that because everyone gets too much hate, you know? Yeah. Too much hate. And then everybody who else was thinking about it immediately steps up and make sure that they take care of that before there's any opportunity. That makes perfect sense. So we have a couple more kind of sound bites coming through. And this was one we were discussing yesterday, so it gives us some clarity.

In regards to the government shutdown, for everyone who doesn't know, the government could shut down if a budget is not agreed upon by September 30th. In regards to the government shutdown, Gensler says that of just under the 5,000 employees that work at the SEC, 92 to 93% will be furloughed and the agency will be down to a skeletal staff. So by the way, clearly, if the government shuts down, the SEC is not going to have the staff for a whole lot of enforcement or ETF approval. Right. I've written extensively about that, about what happens during a shutdown at the SEC. It's unbelievable. I've worked at the SEC during a shutdown, but they usually were able to find some money somewhere to keep going. But lately, they haven't been able to. And during the last shutdown, I think in the cyber area,

they only brought one case. The only people who come to work in the building are the senior executives. Everybody else stays home, as far as I can tell, because I think everyone else is deemed non-essential. And they might say that things don't come to a grinding halt. And I think, and there's some truth to that, because certain things have to go on, like Edgar filing. You know, the electronic data gathering and retrieval service is the one that you file your quarterly and annual reports with if you're a public company or your 8K, which are reports of material developments. I think it's already been pointed out by the ranking member that we stop all IPO in their tracks. This is Brad Sherman. all ipo in their tracks this is bad chairman does this also apply to companies that are already public but are issuing additional shares and this would also apply uh to uh new bond issuances

um i mean we landed on a follow-up staff chat with you it's more nuanced yeah let's go back on whether they have filings. Because I want to say, this one's going to get you based on the conversation we had the other day. So to end the crypto conversation, right before we start streaming, Maxine Waters finished her line of questioning on crypto by stating her colleagues across the aisle protect crypto firms, quote,

too often in too many different ways. It's my recollection that FTX seemingly had protection from her side. Is that a fair assessment? I mean, you ran, didn't you go on a rant the other day, basically about how Maxine Waters said that we need to, against the same committee, on the same committee, by the way, saying that a CBDC is important technology that the United States needs to be focused on. And if we ban CBDCs, we'll get behind China. And you absolutely pointed out, holy shit, she could just literally be talking about crypto right now and doesn't see the talking about CBDCs. Yes. So isn't this- She said they can't fall behind. They can't fall behind. They can't fall behind in the technology, to word it correctly. Can't fall behind. They can't fall behind. They can't fall behind in the technology, to word it correctly.

Can't fall behind China in the development of this technology. I mean, she was literally talking about blockchain technology, just applying it to CBC, which was crazy. But I mean, what do you make of the fact that, I mean, Maxine Waters famously is the one who's, you know, like buddy-buddy doing selfies with Sam Bankman-Fried. Don't get me started on Elizabethizabeth warren on maxine waters and i mean don't get me started this is not the right forum for this because this is i mean we could we could go on forever and i think bruce is also in the crowd this is crazy yeah have at it bruce well he's right i mean uh you know the 70 million or 30 million that sam Sam stole from investors and gave to Democrats, he didn't just do that because he likes stupid woke politics.

He did it because he thought he was going to get influence. And he did. He got access to Gensler that nobody else has gotten. Brian Armstrong can't get that access. And he runs one of the biggest companies, you know, in FinTech, a huge and important company. And for a year, you know, he banged his head against the wall. He can't get that access. Gensler, you know, gave Sam unprecedented access. It was really interesting. And it's a shame that last hearing that the Republicans didn't press him on this. They said, how many times did you meet Sam? And Gensler gave this very slimy lawyer-like answer. He said, I believe my public calendar says two meetings. Well, to me, that says that he had more than two meetings, but they weren't in his public calendar. What the Republicans should have asked is they should have

said, Mr. Gensler, how many times did you meet him that are not in your public calendar? He probably had lunches and stuff like that that he didn't even include. But at the very least, we know from the public calendar, because it's public information, because there is still some semblance that these people actually work for us. They at least pretend that they do. So there is a public calendar.

And he did meet Sam. He met Sam and he met Sam's general counsel, who used to work for Gensler. And he had Sam's girlfriend, who was president of Alameda, who was the daughter of Gensler's friend. So it's this old, you know, hey, pat on the back, a bunch of buddies, a bunch of old friends. The big, big shot Sam, who had all the doors in Washington open to him because he was throwing around stolen money by the millions and millions and millions in in some cases even so-called pro-crypto PACs which ended up donating to people like Maggie Hassan up here in New Hampshire who has a 98 similar record to Warren

you know and and so he did have this access so so it's very relevant to talk about people like Maxine Waters. Why does Maxine Waters have a selfie with Sam? Is it just because he just happened to be there? No, it's because he stole money and gave it to her party. That's how he got the access. And everybody knows this. It is completely and totally corrupt. And Gensler is absolutely in the thick of it.

He is absolutely corrupt and should not have this job. I mean, I as a member of our industry, I want our industry to be clean. I don't want scumbags and dirtbags. I don't want Sam in our industry and I don't want a scumbag dirtbag criminal like Gensler, you know, rubbing rubbing elbows with with criminals and paying favors and doing whatever maneuvering he has to do on behalf of Elizabeth Warren so that he can line himself up for his treasury secretary job. It's completely and totally unconscionable. Well, he's not going to get that job. So at least at least we good.

He doesn't deserve it. He doesn't deserve to be in government. If you're going to be if you're going to be in this kind of position, you have to have the highest possible standards. And, you know, these are the same clowns that say things like, well, you know, this may not be impropriety, but it has the appearance of impropriety. It's like, give me a break. This is beyond appearance. He had, he gave unprecedented access to Sam that nobody else had. That is inexcusable and unforgivable. And frankly, I can't believe that he lasted two weeks. I started criticizing him openly and publicly, which I've never, ever done in 30 years of my career about any SEC person, because nobody does that, because you're afraid that these vindictive children are going to go and come and screw your business. It's a big risk for me to criticize Gensler publicly, because these are just the type of vindictive clowns to go and say, hmm, let's see how we can screw this guy.

You know, you wink, wink, nod, nod to some enforcement clown who goes in and starts digging into my life. And all of a sudden I find myself getting all kinds of audits, just like, by the way, when I ran for Senate last year, interestingly, the day that I said that I started criticizing the IRS, within a couple of days, they ramped up their audit. I was already getting audits like every crypto person, but they ramped it up significantly. And I think that, you know, a lot of people have fear to criticize the SEC because they're afraid of, you know, this is exactly the kind of weaponized justice system that they're going to go and and attack somebody so i started criticizing that side that that side feels like it that that tide feels like it's turning the fear of the sec you know the right sort of more judicial pushback and clearly you know yeah i mean well one reason i spoke out is because i thought he wouldn't last two weeks. I think Bruce got a call.

We just got him started. Yeah, 17 minutes later, we were getting ready. It's like when you catch a chief of police. Still going. Yeah, it's like you catch a chief of police who's hanging out in the local gambling parlor and is friends with it. I mean, I just couldn't believe it. But here we are, we have this completely, you know, complete bad actor who's, you know, rubbing elbows with a criminal. And also, you know, not to mention doing a horrible job at protecting investors and doing a horrible job at, you know, one of their mandates, which is capital formation. You know, it's very difficult to do capital

formation in the US. They failed on all counts. They haven't protected investors. They haven't facilitated capital formation and they haven't insured efficient markets. So I'm surprised he made it. I thought he would have been gone a long time, but I'm glad, you know, now he's so unpopular. It's not as much of a risk for people to speak out against him because there's they can't you know, they can't do bogus charges against hundreds of people you know mike mike i saw you giving a bunch of thumbs ups and fists and high fives and uh you know over there clearly you agree i mean what's your sentiment on what's happening well specifically on the what we've talked about with this with this uh hearing that's happening right now but but in general well i agree wholeheartedly withedly with Bruce on the sentiments there. And I also fear a little bit

speaking out against the SEC, but I think it's important to do that. I mean, I think the difference between Gensler and a lot of the failed crypto founders and CEOs and exchange heads and folks that are still committing crimes today is that Gensler does what he does under the auspices of the government. So he's got this official endorsement, which allows him to meet with Sam and, again, be part of the Democratic machinery and collect money in the form of regulatory capture after he leaves the office. And there's all kinds of soft and hard forms of influence. And it's very clear that he's not above board on the stuff that he's doing.

But unlike, you know, Sam Bankman Freed or Do Kwon or CZ or any of these folks, you know, he's doing it all under the auspices of the U.S. government. You know, he's doing it with this official seal of approval. And I would reiterate what I've said before. I think he's going to end up going down as one of the worst SEC chairpersons in the history of the SEC. I think there's a very real possibility that there's enough pressure over the next six to nine months that more people will call for his ouster. So that's another pathway for Bitcoin and crypto industry to get what it wants, even if he doesn't approve an ETF, which, by the way, is looking less and less likely that that's going to happen this year.

And it may not even happen next year, but it's possible that he gets removed or fired beforehand, which would be a wonderful outcome, I think, for the space. Sure. And as I'm listening to you guys talk, not that it's so exciting to look at price action anymore when Bitcoin is basically chopping sideways, but it did have that little move up today. It literally just dumped it all the way back below where it started. Unbelievable. We can't catch a break. We just can't catch a break. It goes up and it comes straight back down. No, no, but Scott, can you hear me now finally? I'm at higher volume. Mario, you sound great. Oh, perfect. Yeah, I had it muted. That's why you couldn't hear me earlier I'm at a much higher volume. Mario, you sound great. Oh, perfect. Yeah, I had it muted. That's why you couldn't hear me earlier.

I'm a stupid idiot. I thought it was a glitch. No, but we're complaining about no price action. But then, Scott, you had a great interview with Hasib, who's a regular on the show, talking about, like, guys, like, considering what we've been through over the last year and the amount of attacks that we're facing from the SEC and all the issues, all the snaps, and obviously FTX, the fact that we're at the levels where we are today, like if we went back a year, we talked about, hey, all this is going to happen, Coinbase, Binance, all the tokens are security, et cetera. And the price levels, and we mentioned the price levels, like we would expect Bitcoin to be at 5, 10, 15K. Ik i think he said 5 10k in your interview so like i'm no longer looking at no price action is a bad thing like the fact that we're maintaining

those levels are a good thing but yes not being dead is a positive and i don't mean that sarcastically we're not even close to being dead like you guys also referred to in in asia like guys what do you mean we're in a bear market or not in a bull market we've been up what 70 80 percent this year how is this not a bull market we're not complaining about mean we're in a bear market or not in a bull market? We've been up, what, 70%, 80% this year? How is this not a bull market? We're not complaining about price. We're not complaining about price. I think we're complaining about sentiment, and we're complaining about the lack of volatility.

I think what's shaking people out now is a time-based capitulation where nothing's happening. We're drifting slowly down. We're at 27. We're going back down towards 26. It's a slow bleed. Every time we get a pump, the pump is unsustained. And it's, I mean, we see it in our numbers, Mario.

We know we see, we get to see trading volume from exchanges. We've got a couple of dApps and apps, like we've got crypto bantam bubbles, which is our bubbles version. And, you know, we get And we see how people, that's a great gauge because it shows you how many people are looking at prices

and how often they're looking at prices. And we're at a point now where people just don't care anymore. It's just not an exciting place to be. It's a very boring place to be. The question I wanted to ask is the letter we saw earlier and James, you can maybe touch on this

and give your comments. How impactful is it, the letter we saw earlier and James you can maybe touch on this and give your comments how impactful is it the letter from the committee because it is signed by Patrick, French Hill, Pete and Frank because it you know it's damning of the SEC and I think Scott you've talked about it earlier but and then I'll read out two parts here they talk about no rule should be finalized or implemented until the commission takes the following actions. Conduct a comprehensive cost-benefit analysis of the aggregate impact of rules in the aforementioned categories and seek public comment on this analysis and propose a reasonable, workable, and staggered schedule for public

comment on the adoption and implementation of the proposals, etc. But does that mean anything beyond just posturing could we see anything out of this is that is that pressure on Gensler or not really well my interpretation of this was um it does put political pressure and it comes at a time no one's I'm surprised I was discussing this today in this space is about the grayscale decision. You've got the DC circuit and the appeal from the SEC. And we are just like deliberating, what can the SEC credibly come up with? They've got this political pressure now.

They've also got this, you know, what are they going to come up with credibly that demonstrates that the spot market is being manipulated? I'm really struggling to figure out what that would look like. And let's say they go to the dc circuit and then everything is um dismissed by the judge that is an open road then for the grayscale to that's on the 13th of october that's an open road then for the grayscale to launch an etf so things could turn around very quickly here i mean the one risk is they come out with a curveball that I'm really not thinking about,

but maybe others on the call could demonstrate what the SEC might come up with that's credible in front of the judges. That's a great question if anybody has an answer to it. I don't have anything great, but they can clearly, I mean, I think they can be pretty creative, James. Yeah, I thought, John Reid, I mean, I don't know if you've got any views on that i just you know is there something some credible analysis that you think they can come up with a judge is going to say yeah that's good enough and what are your thoughts for for grayscale you mean yeah uh yeah

well i think there's plenty in general i think he's saying, yeah, because they lost on that. I get it. I get it. Yeah. No, I mean, it was a bizarre situation because it's not like under the Administrative Procedures Act where you're filing a case because you say the SEC didn't meet its obligations to examine a rule proposal in light of its costs and benefits and do an economic analysis. And in that situation, a judge can just strike the rule down. Here, it's the reverse. So, the judge essentially said, go back and rewrite your letter. And so, they can write instead of a 70-page letter, which, I don't know, contained maybe 20 or 30 pages of actual analysis, they can write a 500-page letter. And remember, the letter that was used in Grayscale was also written prior to the Binance case, prior to the Coinbase case, prior to a bunch of the NFT cases. So I think that the SEC has lots of new data. They can sit back

and say, you know, we've looked at this and here are all the things that we think are good reasons for denying a Bitcoin spot ETF. And they can look at that in light of the judge's concerns and then go through the process all over again. They could even do the nuclear option and just and this came up during the hearing, the original hearing, which I listened to and just reverse their decision with respect to a futures ETF. So, I mean, the thing that I think seems least likely is that I don't know Gary Gensler personally. I've never met him, but I've studied him carefully and studied lots and lots

of chairs. And I mentioned the word Machiavellian before. Machiavellian people like this, they don't just back, they don't back down. They don't say, oh, you know what? We've got our back against the wall here. Let's just change course. I just don't see that from a personal standpoint. I mean, I'm not like I'm some expert psychoanalyst, but I just don't see him doing that. I see him sitting back and saying, okay, what are our options? And somebody says, well, one of our options is to resubmit and write the same letter, but instead of 70 pages, make it 500 pages and incorporate all the new things that we've learned since then. So I think, and then what does the judge do again? You know, I guess you have to file some sort of writ to force the SEC to approve a Bitcoin spot ETF. I don't know that

there's a procedural posture that works legally. I guess it's possible, but I don't know that there's a procedural posture that works legally. I guess it's possible, but I don't know that there's one that works. If there is one, the lawyers will certainly try it, but I haven't seen one like that before. Really interesting to see this ETF thing play out consistently in real time. Mario, did you want to maybe kick through the news in general? Hold on, just sorry. Scott, I wonder what the ETF analysts are saying because they had like a 70% chance of a Bitcoin ETF being approved this year. I'd love to hear

what they think. They downgraded it yesterday. Who downgraded it? The folks from Bloomberg. Fortunis and Zaynberg. Downgraded it from what to what? I didn't hear that news i know that bernstein's analysts say they say potential bitcoin etf approval by early 2024 that came out yesterday but who downgraded it from what to what the bloomberg folks said that they had it at a 70 chance and they didn't give another downside number they just said

that the delay which was very, it was actually several weeks before their calendar deadline, that that is a basis for why they're downgrading prospects in the immediate term. I think that's just a bit of a tweet. That makes sense. And I think the tin hat, tinfoil hat, which I do not ascribe to, would be making way for BlackRock, right? foil hat which i do not ascribe to would be making way for blackrock right uh and i think i think the day that they kick the blackrock can down the road a lot of people will then change their tune

very aggressively as to the odds of it happening anytime soon but we still i'm i'm less surprised that we saw the no name etf and the arc etf kicked although surprised we saw it uh you know remember yeah but i mean that was a very very very immediate without the grayscale uh you know without the grayscale news as part you know what when is the next deadline when's the next deadline for black so the next the next set of deadlines hits in uh in or mid-october two weeks two and a half weeks like october 15th or 16th i think think 15th. Remember, all the October ones have now been kicked down the road

and the next deadline is actually January. I think BlackRock has October for sure. The BlackRock deadline which has not been kicked is October 17th. Is there any other? Which ones are in October? i thought everything

was kicked as well they're not they're not wise bit wise vanek wisdom tree and vesco wise wise origin and valkyrie um are the ones all due on the from the 17th through literally everybody still still yeah no hold on hold on i so, hold on. The information that I got was that all these 17, 16, so you've got iShares Bitcoin Trust that was on the 17th of October. You've got BitPi's Bitcoin ETF, which

is on the 16th. You've got VanEck, which is a refiling on the 17th. WisdomTree and Vesco. All those apparently have been kicked down the road to the 15th of January. I've not heard that. I believe that's incorrect. Yeah, that's incorrect.

That's not right. That's poor analysis. So here's what I'm looking right now at the website. OK, so here are the deadlines that remain. OK, you've got the iShares. You've got Bitwise, Bannock, WisdomTree, Invesco, Wise Origin, Valkyrie, and GlobalX. All of these are still set to be responded to at some point in October. And John, I'd let you jump in, but BlackRock, is there any chance that any ETF could get approved and BlackRock getting kicked?

Because in my eyes, BlackRock, if they want to approve any ETF, it's BlackRock before anybody else. Is that a fair statement? Yeah, I think, sure. You know, Joe's got it down. I don't know the deadlines. And I don't know how the SEC can work with those deadlines or what kind of extensions they can get. But I think we do know for sure that if a Republican is elected, then all those ETF applications are very likely to sail through. And one of the things that I always find so interesting is one of the best friends I have in the world is Anthony Scaramucci. I've mentioned this before.

We've been friends for 50 years since we were 10 years old. And he's a big crypto advocate. And he's always said to me, you know, John. I had no idea. I had no idea, John. That's amazing, by the way. Oh, yeah. He's like my favorite person. But the two of you arguing about crypto, I got to put, you know, John. I had no idea. I had no idea, John. That's amazing, by the way. Oh, yeah. He's like my favorite person.

But the two of you arguing about crypto, I got to put you guys in a room. Oh, yeah. Anytime. I have to. Yeah, we did it for the Wall Street Journal once. I mean, I love Anthony. I would take a bullet, you know, maybe not in the heart for Anthony, but he might, you know, he's that kind of friend. I mean, we go back to when we were 10 years old.

One of the best people. Just a massive shout out to Scaramucci. One ofell one of the best people yeah one of the kindest people just for the audience that don't know him that's right right i don't think i've got a lot of friends i mean how many people have friends of 50 years and anthony i i you know we were very close he was president of the student body i was vice president when he was vice president student body i was treasurer. So we had our homeroom together and we've been close buddies. I mean, like I said, for 50 years, it's never slowed down. He's one of the most loyal friends I could ever have in my life.

And we just disagree on crypto. But one of the things Anthony loves to tell me, because he loves to tell me everything, and we love to argue about this stuff, is that crypto people vote, and they might be one-issue voters. And if the Republican candidates really rally around this and get crypto people to vote in their favor, it means, I think it's pretty clear, Joe would probably agree with this, I think it's pretty clear that all this stuff, that the enforcement would grind to a screeching halt, that whoever, whether it's Hester Peirce or anyone else, they're going to, in the least, approve a Bitcoin spot ETF. And things are going to be very, very, very different. You know, I don't know how I'm going to vote. I really don't. I still haven't decided. But I know that Anthony believes that crypto voters are a very important constituency. And it's not just because his economic future depends on it. He's also an incredibly astute guy when it comes

to just people and politics and everything, despite his short track record working for President Trump. But you got to hand it to Anthony. When things don't go his way, he moves on. And I think Anthony's heart's in the right place. So that's one thing I know for sure. I don't go his way, he moves on. And, you know, I so and I think Anthony's heart's in the right place. So that's that's one thing I know for sure. I don't know how long they can kick the can down the road. You know, I think Joe would know better than that on that issue. But I and it's very difficult to predict all these handicappers. Don't don't give these handicappers too much credence. You know, I've been a law professor for 20 years, 15 years at Georgetown, five at Duke. I've made all kinds of predictions. You know, I've been a law professor for 20 years, 15 years at Georgetown, five at Duke.

I've made all kinds of predictions. You know, sometimes you're right. Sometimes you're shocked. You know, I mean, it's a difficult space and it's a lot of gray area. So it's very difficult to handicap. You know, I appreciate people try to do that, but it's tough to do.

Joe? Yeah, I just want to go back for a second. I agree with everything John said there but the logical conclusion if you just follow the ruling okay that we got from the dc circuit and john alluded to this as the nuclear option uh the logical conclusion is to revisit the futures application and i'll explain why because if you if you believe that the underlying market, the spot market, which, you know, the citation from the opinion was that ninety nine percent correlation between spot and futures. If you believe that those two markets are inextricably linked, which is effectively what the court came down in its in its verbiage there. And you also take the FCA face value that the market's a black box. We can't see anything into it. We can't detect fraud or manipulation in the spot market. That's why we treat it

dissimilarly. The appellate court basically said, well, you can't treat these two markets differently because they're basically the same. They're tied at the hip. They're inextricably linked. There's the 99% correlation. Necessarily, you have to revisit the futures application because if you're going to conclude that the SEC has a role in detecting fraud, and that's what the SEC lawyers argued in court, that our goal is not to prevent manipulation markets. Our goal is to have the tools to detect it. And they're saying we can't detect it.

How can you let the futures application stand? How can you let that vehicle sit out there? And now you actually have cover from a court decision saying basically, no, we have to treat these markets very similarly. And we can't we can't we can't arbitrarily and capriciously discriminate against one but not the other. So I think the market is a good time to discuss the odds of an ethereum futures etf being approved because there's a pretty large groundswell now of people believing that the valkyrie blended bitcoin and ethereum futures etf could actually be approved next week i believe the date being i don't want to throw it out incorrectly, October 2nd or October 3rd, but sometime next week. Joe, that's going to give us the answer, right? Because

they have very little grounds to reject an Ethereum futures ETF unless they're revisiting futures ETFs in general. Yeah, I think that's probably right. Yeah. And so it's a lot. Yeah. I have a separate question. What I'm curious about is, and John, you were talking about Gary's personality and you don't think he'll give up and you'll always find a way to achieve what he thinks is right. But my question is, when can we say there's enough pressure for Gary to fold. Because it just seems to me, and this is the first time I witnessed this, it seems to me like from that letter to the hearings that he is losing support. He's getting a lot of pushback,

but he hasn't backed down yet, which came as a surprise to me. John, maybe get your thoughts again and other panelists. Sure. Whether that would mean, whether that could lead Gary to change course. And maybe he even maybe touched on his shift more and more towards AI as well. Well, I don't know. You know, it's

always tough to say, but if you look at some of the other things that Chair Gensler has done, for example, the case against Covington and Burling, maybe people don't know what happened, but the SEC subpoenaed the names of Covington and Burling's clients, because Covington and Burling, one of the greatest law firms in the country, in the world, experienced a cyber attack. It impacted some, potentially some data was exfiltrated from some of their clients, and the SEC wanted to see if their clients had properly disclosed in their public filings that the cyber attack at one of their vendors. I mean, it was the most absurd subpoena enforcement action in the history of the SEC to actually ask a law firm to name all their clients. It's sacrosanct, you know, the kind of attorney-client privilege. But he did it anyway. And I think over 90 law

firms signed on in amicus saying that this was a horrific action by the SEC. Everybody talked about how awful it was. When I worked at the SEC, they would never have done anything like that, but he did it anyway. He was completely criticized. The judge sort of said, well, look, the SEC has authority because the standard is official curiosity. There's no federal protection for attorney-client privilege. So the judge let some of it through and forced Covington to name a few of their clients. And you look at also the public, some of the rules that have come, the cybersecurity disclosure rule, which randomly says you have to disclose a cyber attack after four days in your public filings. And it's just ludicrous. Where did they come up with four days?

So there's all kinds of really aggressive, the private advisor requirements, the rule that just came out. So he's done a lot of really extreme rulemaking. And despite incredible opposition to all of that, he just plows forward. capitulate on crypto when he's so aggressive in so many different areas and doesn't seem to be at all stifled by you know even 90 law firms saying what you're doing is wrong it doesn't matter i think it's right you know and there's nothing you can do about it so i think um i don't see him uh backing down that's just my analysis doesn't that doesn't that contradict a little bit though though, just what Joe said in terms of the futures ETF and backtracking on that as one pathway? Because

wouldn't that be admitting that he was essentially wrong and put consumers at risk? Because if the futures market is manipulated, he allowed those ETFs to go in place. Wouldn't that be sort of admitting defeat and sort of be the beginning of the end for for people's uh you know view of him maybe maybe you're right i don't know joe what do you think because i'm sure you could spin it if you asked me to write uh the the retraction of that i think i could write something that would sound like it made perfect sense and wasn't uh necessarily admitting that they were wrong what do you think joe no i agree exactly david i want to ask you that same question as well. Go ahead, Mike, and I want to go to David as well,

get his thoughts on that same question. Yeah, I was just going to say, I mean, again, if that's the path they take, it's very interesting because I think it is a blow to the credibility and probably the beginning of the end, but also just keep in mind that the futures are what's used in a lot of cases to sort of keep the price of Bitcoin in certain ranges, right?

So, like, if there is manipulation, it's probably coming from the futures market. used in a lot of cases to sort of keep the price of bitcoin in certain ranges right so like if there is manipulation it's probably coming from the futures market of course there's some offshore spot hold on hold on this that's not within the sec's jurisdiction right the futures themselves are cftc and the s when you securitize it in an etf structure that's what we're no i get that but they're making they're making a call when they approve that this is the reason why they rejected the spot application they said because they can't prove that there isn't manipulation but for some reason they're okay uh with the idea that there's not manipulation i guess in the futures market which allows them to approve a futures product

i mean that's the the great consistency here well in the grayscale case they argued just really briefly like in the grayscale case they argued they're effectively they were arguing they're separate and distinct markets that there's no uh basis for suggesting that the futures market is is as tied to the spot market that that was their position and right or wrong could black Blackrock or Uck or one of them, could they also take the SEC to court in a similar way that Grayscale took the SEC

to court? Mike, you can unmute me and I can see the 100% emojis. That's actually a good question. I just wanted to quote the great Kevin Garnett who said, anything is possible. I know anything is possible, Has that been the case? I know anything's possible, but, I mean, is it probable? You know, in Grayscale's case, you know,

Grayscale did some kind of calculation. They said, look, you know, there's a reasonable chance that we'll win this, and if we win this, X, Y, Z will happen. Question is, could there be a similar situation with Bitwise, ARK, maybe even BlackRock would protect the SEC? It's much less likely that BlackRock or Fidelity or one of those big firms would do it because they have a relationship with the SEC that spans a number of other asset classes, hundreds of other products. They wouldn't want to jeopardize that over a spot ETF that they know is eventually going to be inevitable, if not in this administration, but next administration. So it's only going to be the people that are on the ropes,

the crypto focus firms, the firms that have nothing to lose effectively, they're going to be the ones that continue to fight legally. Fidelity and BlackRock will just wait patiently. And keep in mind, the basis for their success, right, the reason they won on the arbitrary capricious standard was because of the futures ETF, because they said there's no reason to discriminate between these two markets when you do discriminate, it's arbitrary and capricious. Had there not been a futures ETF approval, the Grayscale case would have gone nowhere. Okay. So next question is a lot of people say if the administration changes, then you know the new administration are we confident that if the administration changes that gary gensler will be one of the counties or is that not is that i hear america 100 percent yeah it's gone if a republic happens

i mean typically an administration changes the chairman usually resigns at some point sometimes they hold on a little longer um at least up until January 20th or whenever the inauguration is. But the people from the White House immediately get engaged with the staff at the SEC. And they decide, I don't know who makes the decision as to who's going to be acting, but that usually happens fairly quickly. And so what you're saying is, what you're saying is if Americans want Gary Gensler out, what you're saying is just vote anyone that's not Democrat. Yeah, yeah, that's one way. But that's a 2025 story.

I mean, what we tell you about this. Which, Joe, aligns perfectly with the cycle theory, right? Because 2025 should be the parabolic expansion phase historically. So wouldn't it be funny if magically Gensler turns over, the cycle theory, right? Because 2025 should be the parabolic expansion phase historically. So wouldn't it be funny if magically Gensler turns over the ETFs approved in 2025? It doesn't mean people won't front run that possibility in 2024, but that could align perfectly with the cycle theory that a lot of people talk about. If the Republicans don't win, is there anything else, any other way that Gensler could change course? Maybe John, that goes to you.

He could be caught with a prostitute on some back street. Like losing in the courts, for example, John, isn't that enough? I mean, well, as I said in the grayscale, I don't know that the loss means that there has to be an approval. That's the issue is that I don't know. Like I said, Joe, maybe you could get some kind of writ and be creative to force the court to force the sec to approve an application i don't know that they can do that that there's a proper like i said a procedural posture a way there isn't there is because they ultimately you can just you can just get their their decisions their denials reversed right if

they're arbitrary that's itious, that's it. But you get it right. So the denial is reversed, but it brings you back. It doesn't mean approval. Right, but they're not going to reject another ETF under the same basis, John. You know that. They're not going to do it for administrative purposes. They're going to follow faithfully the court's order.

Yeah, I agree. But don't you think, given everything that's happened since the Grayscale application, the SEC could just write a treatise in a new letter with new bases, with new justification, and do that with a straight face? But then wouldn't the SEC have a case to go back and say, hold on, when you denied this, you had the opportunity to tell us what was wrong, and you didn't tell us that this was wrong. Why are you now coming back and saying it was wrong? Well, this is why I made my earlier comment, because yes, John, you're correct that they could write a treatise based on probably new information that they've gained in their enforcement actions and elsewhere. But you have to confront the question lingering out there, why did you approve the futures ETF? That has to be

addressed somewhere. Yeah, I guess so. And then maybe they would just say it was an early time in the marketplace and we didn't have the data to justify the denial at the time. But now we have the data based on the manipulation that we see. And we're concerned that without any transparency into the current marketplace, and the fact that you've nominated as the entity that you're using an entity that we believe is operating unlawfully, that would be Coinbase, unlawfully as a broker-dealer, unlawfully as an exchange, and unlawfully as a clearing firm,

we can't in any way approve your application given that glaring, in and of itself, given that sort of glaring fact how can how can the sec approve an application that names someone that they believe is operating unlawfully well that that alone even doesn't meet the standard right because they've been they've been denying spots saying it's not a market of sufficient size and they they would they define a market of sufficient size as being one that you would necessarily have to trade on to influence and manipulate the markets. Well, Coinbase doesn't fit the bill for that.

It never has. You could, in the majority of spot volumes abroad, you don't need Coinbase to attempt to manipulate the market. So it fails on their own test that they've already imposed. Yeah, yeah. No, I agree with that. I think there's plenty of room in there. If I were on the staff and I had to write the treatise, I think I could i could do it i mean anybody who knows me knows anything i write is always a treatise so i could i think i could do it um you know there's another point your tweets are war and

peace so i definitely believe you there's a there's another point here because we're also obviously focused on on the short term of like what genzer's going to do in the sec but from a market standpoint i don't think it matters whetherensler's going to do in the SEC. But from a market standpoint, I don't think it matters whether the ETF is approved in the very short term. I think the more that that catalyst kind of hangs out there in front of you, the better off you are. Because you could have a sort of buy the rumor, sell the news type of event here. You may not actually want it to happen. You may want to give the market a few quarters from a seasonality standpoint. This fall, there's going to be a lot of people accumulating going into 2024.

It's going to be a lot of people focused on what the next bull market's going to look like. You want to give people time in the market to accumulate. I mean, this is sort of a gift, right? The fact that there's so much uncertainty and so much regulatory drama is actually a gift for longer-term speculators and investors in the space. And so I think that this issue is going to be hanging out there potentially all the way until the end of next year. But I don't think that's necessarily bearish for the market. Yeah, I think we all agree an ETF is inevitable. So I don't understand why – it's a really good point, Mike.

Like what's the point of rushing it, especially when we're at a time where any good news is getting, you know, not having much impact on the market, considering the cycle. So maybe it's better for us, as Mike said, it's better for us if the ETF does take time. I'm not sure if anyone disagrees with this, but David, I'd love to get your thoughts. Go ahead, Joe. I'll just say briefly that I think it's naive when we're talking about this to think that the entirety of crypto and Bitcoin policy is driven just by Chair Gensler and folks that look for his exit as being drawing some huge departure from the norm. I think that's wrong. I think there's plenty of players in Washington that have very strong views that are not Chair Gensler and their input has been probably solicited from the chair. Yeah, I agree. I don't think it's inevitable, Mario.

Yeah, I mean, because they could replace if a Democrat is elected, they could replace Gensler. Maybe he decides he wants he doesn't want another term or maybe someone quietly whispers in his ear that, you know, there's too much heat on you. We'd like you to move on. Maybe that happens. Who knows? And there's no indication that there isn't like, I think, exactly what Joe said. There are plenty of people they could pick to become the chair if they felt as extreme as they do. And you can listen to the extreme views when you hear the testimony today

and you hear the Democratic side talking about how good a job the sec is doing so i i agree with joe again um and is there much in terms of the sec other than gensler and would you say the sentiment is in support of gensler and his his uh stance on crypto john or is there a lot of resistance within the sec uh towards gensler's stances because you know from from listening to different people speak about this kind it kind of makes it seem like it's all about Gensler and not the SEC. It's Gensler making those calls. Well, remember, no, you're right, Mario. That's a great point to make.

No, I think there's tremendous support for his crypto position amongst the staff. My group, the Office of Internet Enforcement, is now – there are still people who were in that group who are now part of the specialized group that does crypto. And that's really, I think, one of the largest, if not the largest specialized group in the division of enforcement. And also, they've really just begun and they keep bringing cases and cases and cases. I think there's tremendous staff support. I mean, the idea of unregistered investments and protecting investors, that's a big thing for SEC staff. I don't think there are people – But, John, doesn't that mean that if – that's actually a really interesting point. So, first, how much power does Gensler have within the SEC?

How are decisions made within the SEC? I'm actually curious. And number two is – so does that mean if Gensler is replaced, it's just not enough if the sentiment within the SEC aligns with Gensler's actions or sentiment? Well, you know, I could imagine a scenario where a Republican appointee comes in and this happened to me. And as I said, the crypto stuff really slows down because the word from the top is that these types of actions are not a priority anymore. It's possible. It generally doesn't happen when there's a change because enforcement is enforcement. But the way cases work, Mario, it's pretty simple and straightforward. You find a lead. You might get that lead from another division. You might get that lead from a member of the public who emailed to complain.

You might have found that lead yourself and you're a staff person. You open an investigation. You can do that on your own. You don't need Chair Gensler's permission. And then you work through that investigation and maybe you make it formal by getting formal order authority, which gives you the right to issue subpoenas from the commissioner. And you can do that via duty officer and sometimes from delegated authority. And no one's ever going to deny you the right to a formal order. So you get the formal order investigation. You bring the case. You feel like you have a case. You start talking to the other divisions, corporation finance, examinations, market

regulation, general counsels. They concur. They think you've got a good case. You then bring it to the commissioners in the form of what's called an action memorandum. And you seek the commissioner's authority to bring a case. And that might be the first time they've heard of the case. They've probably been briefed. Typically, the director gets what's called a calendar briefing and a pre-calendar briefing. So the director of enforcement might hear about the case during any and all sorts of different types of briefings and then the director might um the might brief the chair about or brief uh the commission

maybe in a in a meeting might brief them about a case but typically won't the commissioners can't talk about a case because of the sunshine act amongst themselves so their staff will scurry around and discuss it if there's a recommendation pending. And then the unique thing that I mentioned before that's happening that never used to happen is that then you go to the table and the commissioners vote and they'll vote 3-2. It seems to happen a lot with Hester Peirce and Mark Ueda, who were both staff attorneys when I was a staff attorney, and both of them worked for very conservative commissioners as staff assistants, as their assistants. So Ueda and Peirce vote no, and Ueda and Peirce then decide after the case is filed to actually publish their dissent,

which again was not something that happened in the SEC until just recently. So that's how the case goes, and there isn't any, there isn't, Chair Gensler doesn't step in at any point and say, no, stop this investigation or move forward. But so you said there's commission, there's five members on the commission, correct? On the committee? Yes. Yes. Okay. And then if three vote, that means the decision, the, the, the, whatever it is passed is correct. It needs three votes. Yes. And how does Gensler fit into this? He's just part of the commission. How much authority does he have? Exactly, Mario. He's just one vote. So you come up and if the authority that the chairman has, though, he can say we're not going to have a meeting. We're not I'm not going to put that on the calendar because I don't want to see that. Does that happen? Has Gensler done it or does it happen?

I don't know if when I was there, it didn't happen very often at all. But sometimes they'll do what's called tabling it. You know, they'll see a recommendation from the staff and they'll say, you know what, this raises all kinds of concerns. Table it and let's talk about it. Never happened on one of my cases. What happens when you vote against the chairman? It doesn't sound like you're doing yourself any favors. Well, no, it's not a big deal. You vote no.

You know, you vote no. You're a commissioner. You vote no. And then the case passes. It's filed. But does does gensler have the ability to replace a member of that commission no no no they're all presidential appointees so wow you know they can they can vote no and like i said they can even vote no loudly like now they don't just vote no they dissent publicly these are all secret proceedings this is so confusing not confusing but this is this is new to me because the way everyone keeps attacking Gensler just makes it seem very authoritative.

I know. It just kind of goes against the American system. I know. It's not true. Gensler is just the face of something more systemic. The SEC as an entity is – they have this particular stance towards crypto, which we're not happy with. But replacing Gensler may not be enough. Now, how much influence does he have, not in terms of decision making, but

employees, the staff? Well, that's a great question. He sets priorities, and he's obviously made priorities. Sometimes the big things, the SEC is an agency of people. There's really not a lot of systems or infrastructure. So the big question is, okay, where does the money go? Like when I was chief of the office of internet enforcement, we had a lot of support. So we need more people. The chairman's office is the one who decides if I get 10 more positions to fill. So the crypto unit has been, I think in the last appropriation, there were 33 positions added to the crypto unit that they could fill. And that's a huge thing. So you fill all those positions with people.

They want to bring cases. They didn't come to the – these are very talented people. They didn't come to the SEC to sit around. And who fills those positions, John? Is it the committee or Gensler? No, it's not Gensler at all. It's the Division of Enforcement. It has a hiring committee.

And the hiring committee will post the job vacancies and interview and then hire people. And it's a pretty good hiring process. It's pretty careful. Sorry, John, but my question, I mean, who determines how many, how much, how much resources to add to each division? Well, that's, that's the chairman. So that's what I'm saying. Sometimes the congressional appropriation will be specific and we'll say like with my unit, one time we got an appropriation that said my unit was going to get 10 new people. So the chairman didn't have discretion there and the director of enforcement didn't have discretion. But generally, you're given positions and the director of enforcement decides, OK, I want to send five positions to the L.A. office, five positions to the New York office. I want five positions in the specialized group for crypto five positions in the

specialized group for assets um for fcpa but you're right i think you're i think you're absolutely right it's not gensler who determines the investigations usually rise up from the staff there's lots of but what i spotted here sorry to keep interrupting but this is fascinating at least to me if i'm boring anyone i apologize but like at least we're understanding how the sec works rather than just going after which you know which hunts whether it's gensler or anyone else but john but but there is one point here is that you said gensler the chair he's the one that determines the resources being allocated to each division so if the chair decides to allocate a lot of resources to crypto like from the foundationally he's targeting crypto

and he has influence but if he removes resources from crypto that does the opposite so this is where he has a lot of influence would you can influence. So the committee doesn't need to agree on the resource allocation. It's the chair, correct? Yes, it's the chair. I mean, as far as I know, I mean, I guess the commissioners themselves could express an opinion, but you want the chair. Like when I was chief, I wanted my office to grow because we had lots of cases. We were doing lots of good things. And I was glad that internet fraud was a priority of different chair, of different enforcement directors. Sometimes they'll defer to the enforcement director. Sometimes the chair will just say, you know, you look, you're the director of the enforcement

division. You figure out where these resources, let's have a meeting and come up with how you're going to do it. And, you know, there's all sorts of laws that make sure that when you're allocating these kinds of resources, you do it in a way that's lawful and in a way that's consistent with whatever regulations there are. So it's not as if the chairman can one day – maybe a new chairman could come in and say, look, I want to shift crypto people from crypto to municipal bond fraud or from crypto to financial reporting fraud. That's going to be a slow process. I don't think you can automatically reclassify people and strip them out of one group and move them to another. I don't think that happens often. But you can slowly shift priorities, and you can certainly make your priorities known to

the director who you've typically appointed. Remember, you've appointed these people. They're going to be loyal to you, those directors. Sometimes chairs come in and they don't appoint new directors. And it's always mind boggling to me because the director starts undermining them because they weren't appointed by that chair. So typically a good chair will come in and say, okay, all these directors, I want all of you gone. Let's get some new directors in here and makes all makes all those appointments last question that i

have and david will get your final thoughts before we wrap john um it's a it's unrelated question but why not many members or ex-members of the sec come up and speak publicly as you do like the the amount of knowledge that we've got now like i've just learned a lot of basics about how the sec works that no one in crypto ever mentions in any of those shows or spaces. So that's because we all choose to share our own uninformed bad takes. I think Joe would agree with this more than anything. I think Joe would agree is that, sorry, someone's at the door. I think Joe would agree that the situation is very simple. For SEC lawyers, the reason I'm so outspoken about this is because I don't make any money

from crypto in any way, shape or form. Most other SEC lawyers who work at law firms have partners who are looking for business in crypto, maybe have a lot of business in crypto. And they're very cautious about what they say, because from a business development perspective, you don't want to undermine your partners or undermine your own ability to get a beach house. And you're going to do that if you don't. Why are you? How rich are you, you man why are you undermining those abilities you seem like good abilities i don't know i just don't have it in me to take on anything that's crypto related i just don't and um i'm reaching more towards you know i'm the boomer i'm not even a boomer i'm worse than a boomer you know i'm 60 years old

i'm not trying to make any money from these positions i'm completely objective and i just don't have a stake in the game. Okay. I don't know how old that photo is on your profile photo, but you definitely don't look 60. Thanks, brother. And once you finally break that rule and accept a crypto project, it's got to be Scott's project. He's your number one fan. And we'll announce it live on the space.

I keep trying to hire John. john won't let me hire him i mean like i gotta like beg i got to beg for experts to understand what they're doing i beg john john says no no thank you hold on david i'll do your favor joe joe joe is great but honestly we need more people like this like your knowledge of the sec and your understanding of crypto as well, as much as many of us disagree with a lot of your takes, they're important takes. I think we need that level of – you'll do good for the industry if you actually start making those exceptions.

And we're getting more regulated now, so I genuinely would consider it – I just wouldn't work with David. That's the only way I'm talking. Everybody says that. David and Joe. would consider it i just wouldn't work with david that's the only way i'm talking david and joe have everything covered as far as i'm concerned and as with john deaton these are amazing amazing attorneys so i agree they've got it covered they've got it covered all right good luck everyone i gotta run thanks john yeah we're wrapping the show bruce any any final quick words yeah just one point i think that you know don't underestimate how important voting is everyone. I got to run. Thanks, John. Yeah, we're wrapping the show. Bruce, any final quick words? Yeah, just one point. I think that, you know, don't underestimate how important voting is and how important a president, you know, the presidency can be. I mean, it absolutely would completely shift this 180 degrees if we have the right president. I mean, I support Vivek. I'm his

co-chair for New Hampshire campaign. He has publicly said that he would fire 75% of the staff at the SEC, and he'd close a whole bunch of other agencies, and he would reassign people, and he would also instruct the SEC and other agency heads to—there's an important legal decision called EPA versus West Virginia, which basically said that agencies don't have the scope to, you know, go beyond what Congress says. And the Vakes platform says to, you know, appoint agency heads who will run with that and basically line item strike out every single, you know, action that an agency has taken so you just so you would basically scrap a whole bunch of rules with the fda the sec these kind of things you just go

through and just scrap them and they would write an opinion letter that basically says this is not this was this this rule was beyond our scope we don't we're not going to have this rule anymore and that could cover something like uh you know all all kinds of things relating to AML, KYC and the credit investor rules. And, you know, there's just tons and tons and tons of stuff that has been added on over the years that Congress never voted on. So most of what Gensler is doing, it isn't something that we the people have voted members of Congress who went out there and said, OK, here's the law. Go enforce it. This is stuff that was just made up, not even by him, but by predecessors of him going back decades. And you see that across all kinds of agencies. So it's a big deal if you had a shift in that. And I think that, you know,

as I've said before, you know, keep in mind the times that we're in right now. These are times of, you know, epic change where, you know, the world is in chaos. You know, we don't want to just be complacent and say like, well, you know, nothing we can do. He's going to be there forever. Yeah, that's not the case. I have high hopes that, you know, things will change and they have to. They have to. Otherwise, our country is going to be gone and we won't have an America. So maybe this election, maybe next election, we don't have much time. You know, hopefully it'll happen this election. And we could have, you know, really radical change that completely changes it around and makes the United States the way it's supposed to be, which is the leader in these kind of things, not the left.

Bruce, I have a question for you. In the previous election, should we have seen this coming? Like, I remember when Gary Gensler was elected or elected by the president. I remember how excited everyone was about the fact that we had Gary Gensler. So now in hindsight, were they writing on the wall to say that this is not going to be good for crypto? Should we have picked up something? I just want to make sure. Yeah, there's a lot of people. I want to make sure we don't miss it this time. Yeah, there's a lot of people. I want to make sure we don't miss it this time. Yeah, there's a lot of people who don't, you know, I mean, to be polite, they don't know what they're talking about.

Anybody could have known that Joe Biden is, you know, on the socialist side of things and that that's a failed ideology that cannot work and will not work. And everybody, you know, people, it's the same dimwits who were cheering for Gensler saying, oh, my goodness, he taught Bitcoin. Those are the same people who cheered for Ben Losky. And they say, he's giving us clarity with the BitLicense. And they're the same people who are down there like, we should do the digital assets bill that Sam pushed for. again and again and again, go and push for more statist authoritarian busybodies to get up in our business and make piles and piles of millions of regulations that their friends can get through and the regular honest people can't get through. That's a failed program.

It cannot work, will not work. And we should have seen that. So yeah, people thought that Gensler was going to be great. That's just because they're dimwits. They're dimwits who don't understand how the world works. They don't understand freedom or securities or politics or anything else. And you look at it, I mean, I don't want to pick on people particularly, but you can point to the same people who've been wrong on the five major things. They were wrong on the California A-B bill going back. They're wrong on BitLicense. They're wrong on Ben Lasky. They're

wrong on Gensler. They're wrong on Biden. And yet, and there's still people, there's still amazingly people who are still in crypto who are still like, you know, still Democrats. I mean, which, you know, I guess if you just don't prioritize, if you say like, I prefer woke stuff so much that I don't, I want to kill my industry. And that makes sense. But otherwise, it doesn't make any sense at all. It's just ideology. You know, bad ideology. Joe? Yeah, I'll just say briefly, I think the trend you're seeing over the last several years, and I expect it to fully continue, is that crypto and Bitcoin are increasingly becoming

partisan issues. You're seeing one camp very being uh firming around the fact that they are opposed and one group more willing and open and accepting and you should expect more of that and i don't see any reason to that change that's crazy to me joe seeing that unfold is insane how everything's becoming partisan in the u.s including crypto it just doesn't make sense but do you think yeah but i mean do, do you think that there's enough crypto people to actually sway the vote? I think that the crypto people like us, and I mean, right now there's six and a half thousand of us listening to this live and probably by the end of the stream, there'll be a hundred thousand or two hundred thousand. And then there are people that are, you know, we're pro-crypto, but it's not a single voting issue for us and i think you know again against the backdrop of more people losing money in crypto than actually making money in crypto i

think a lot of people actually hate crypto like you know a lot of americans we came in here for the financial dream we ended up losing a lot of money um crypto is full of scams cryptos and there's like you know like i mean there's a certain number of us who are part of the fight and you know obsessed with this industry and still here now i wonder how many of those there are and that's a significant voter base in the united states unfortunately there's a there's a nate silver breakdown of this of the folks that i think i'll try to find it um he broke down likely voters who happen to hold crypto or invest in crypto and among likely voters they have a very small extremely small influence um actually much lower

than you would think because who are they they're young people they're uh they tend to be from more diverse backgrounds they don't vote they're they're not the the gray hairs that vote in every single election that make the bedrock of voters you know unfortunately you know we talk tough like we're some kind of big voting bloc and i really believe no one gives a shit but we're just no one gives a shit we're not at all significant or at all even serious and and you know frankly it's amazing it's amazing that politicians even give us so much credibility you know it's because of some of it's because of the fumes of Sam's money that he stole and gave around. People had a reputation of thinking that crypto people could give away a lot of money to campaigns.

But other than that, it's amazing that these people, you know, the politicians pay attention to the crypto kind of lobby or whatever, because it isn't a big voting block and it's not even a big donation block. Crypto people don't really donate in any significant way. We really don't have that influence. So why have so many presidential candidates brought it up? Why has RFK brought it up? Why? I mean, okay, Mayor Francis Suarez. But barely, but barely, barely.

Like bringing it up is like, all right, cool, we're getting a bunch of extra dollars. That's it. It's not a major issue. It's effective to raise some money. And a lot of them, you suarez just jumped suarez and adams and others just jumped on the bandwagon when sam got all that money you know they don't really believe in crypto they just they just did it because they thought they could get some checks

and there's a lot of politicians who've reached out uh you know and they benefit from packs and others that that donate to them and then sometimes those packs get close to them in the case of rfk junior and others and say hey here's why these things are important and and so but there's also a difference between general election appeal and primary right and you have to understand where we're at right now is in the primary cycle where you get a small sliver of people that are passionate about crypto they can literally put someone on the debate stage just that just that cohort can because of a primary now in the general it's just a non-issue yeah so i want to add one thing bruce you're back on stage uh yes now you can hear me so so

one thing i've learned obviously doing the shows moving to political shows etc is how little voters give a shit or politicians oh if voters don't give a shit and politicians don't give a shit about crypto um like we live in our own little echo chamber me included um before doing the political shows and i thought it was a big issue but then when you start looking at the numbers the ones that even care about crypto don't necessarily have a good uh a good perception of crypto it's like becoming more of a detriment being someone in the crypto space is like a liability now rather than than something to be proud of at least when you get outside the crypto world you don't give a shit and br, Brish, you mentioned it as well.

And I think Randy asked, why is RFK, et cetera, talking about it, barely mentioning it to attract a few voters, not really making it into a big issue. Like Scott getting RFK to come in onto a crypto show is very unusual. I think Vivek and RFK are kind of exceptions. We got Suarez, although he's kind of disappeared uh in the ring i just count rfk and vivek like probably the two biggest we will get vivek right bruce yeah it'll be great to get vivek again yeah that would be great for sure he's

fortunately he's he's doing so well that he's busier and busier now yeah i remember the days like scott i don't know if you know this we can wrap on this point like i remember the days in our early political show like vivek would be messaging us like guys can i jump in guys can i jump in let's do a show it's crazy now yeah yeah he's like jesse like a few weeks later he's he's like we have to message you like hey do you want to jump on would love to give me a week etc oh shit mr popular it's insane how quickly that shifted though um yeah, I think it's a good place to wrap it, guys. Ran, Scott, anything else? I think that was great.

I loved it. By the way, just for the audience, there's a lot of news. Yesterday and today, we couldn't cover it. Yesterday, we had the glitches, and we talked about the Vitalik story and a bit about BitBoy before it crashed twice. But there's a lot of news um that we haven't talked about it's mostly good um um but that's being dwarfed by the big stories of uh yesterday is the whole vitalik allegations and today it's the uh gensler and obviously yesterday's bit boy so uh we'll do another show tomorrow

obviously and we'll be covering a lot of news that we've gone through over the last three days and um i think it's just a shame it's gone unnoticed. How about that big red logo, Mario? Everybody, see that big red logo on stage? Crypto underscore town hall. We need you guys to follow that account. First of all, now it's become an extremely active breaking news account, which I now follow. It's actually really good. Yeah, exactly. For actual news and updates.

So we've really worked very hard to add value to that account. But it also will. I know we always say soon it's just uh where you know takes us a while it takes a long time to turn a turn an aircraft carrier but that will be where we'll be hosting the show from eventually and massive shout out to the team doing it ryan carlos you know obviously shout out because they do a lot of my time literally behind the scenes trying to steal mario's amazing employees in whatsapp publicly right in front of his face and utterly

failing but the team doing it is incredible carlos everything yeah just so just so you know guys anything that me and scott say he publicly is shit happening behind the scenes like scott's scott's willingness to talk about bitboy today scott you wanna give us a last update about bitboy before wrap up you ever seen that uh bugs bunny meme where he just goes, no, that's me? Never. Have you ever seen the movie Encanto? Because there's a song, we don't talk about BitBoy, no, no, no. Are we going that route again?

I thought it was we don't talk about Luna. Yeah, it's BitBoy now. It was Luna. Bye, guys.