Unchained - Crypto's Clarity Act Collapses. Two Days Later, the SEC Introduces Its Innovation Exemption

Episode Date: September 18, 2026

Days after Clarity failed, the SEC granted a major exemption for tokenized stocks. The Digital Chamber’s Cody Carbone explains whether agencies can replace the law. ======================================================== Thank you to our sponsor! ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Visit⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 1inch.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to swap tokenized securities, crypto and more. Simple. Secure. Self-custodial. Whatever asset you’re buying - swap it at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 1inch.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ======================================================== The Clarity Act failed its cloture vote this week, with every Senate Democrat voting no and sinking crypto's biggest legislative shot in years. Cody Carbone, CEO of the Digital Chamber, joins Laura Shin to unpack what killed the bill: an ethics fight over Trump's blind trust and digital-asset dealings, stablecoin-reward limits the banks wouldn't accept, and a Blockchain Regulatory Certainty Act rewrite that stripped noncustodial developers of criminal-liability protection. Carbone argues Democrats rejected 80% of their own ethics demands rather than hand Republicans a win, and traces how crypto PAC money and the threat of Maxine Waters chairing House Financial Services shape what happens next. Two days after Clarity died, the SEC granted an innovation exemption for tokenized stock trading, and Carbone says the SEC and CFTC are about to unleash years of rulemaking with or without Congress. The question now is whether that agency-driven momentum outlasts the next hostile administration, or gets undone with a single signature. Host: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Laura Shin⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, Host / Unchained Guest: Cody Carbone - CEO of The Digital Chamber Timestamps 🏛️ 01:18 Why the Clarity Act's cloture vote failed: 'politics beat policy' ⚖️ 02:38 Scoring Trump's corruption against Nixon and Suharto fuels the ethics fight 🗳️ 06:51 Election pressure: a lame duck vote and crypto PAC money's next targets 🏦 11:57 Why Cody blames the banks' stablecoin rewards fight for killing Clarity 🌊 14:35 1inch Aqua: See how LPs back multiple positions with one token balance at http://unchainedcrypto.com/go/1inch-yt 📜 15:23 The SEC's new innovation exemption for tokenized stock venues 🔓 18:28 Could 2 years of SEC and CFTC rulemaking replace a crypto law? 🧩 23:20 Why regulators are staying silent on synthetic stock tokens 🤝 26:46 What's left to negotiate: developer liability and stablecoin yield 🔮 31:14 Is the lame duck Clarity's last shot, or could agency rules become permanent? Learn more about your ad choices. Visit megaphone.fm/adchoices

How far do we want to go to get a bill? At what point are we harming this industry's growth and potential and the competitive nature for this industry to thrive with other industries? For the Blockchain Regulatory Certainty Act, on the Sunday's release text, they lost the criminal liability shield. That's exactly what Senator Cortez Masto wanted. It removed all reference to the 1960 criminal statute. And so if you're a non-custodial developer,

you have civil liability protections from this bill. You can't be tried civilly, but if someone uses your technology that you've created for some kind of illicit activity, you can still be criminally liable. And that's exactly what we were trying to fight against. Hi, everyone. Welcome to Unchained. You're no hype resource for all things crypto. I'm your host, Laura Shin. Thanks for joining this live stream.

First, we're going to take a quick word from the sponsors to make the show possible. This episode is brought to you by 1 inch Aqua, the shared liquidity layer from 1 inch, back, multiple liquidity positions with one wallet balance and keep your tokens in your wallet until a swap fills. See how it works at one inch dot com slash aqua. Today's guest is Cody Carbone, CEO of the Digital Chamber. Welcome, Cody. Thanks so much for having me, Laura. Good to be here. So the Clarity Act failed to pass the cloture vote that would have allowed it to move to the floor for debate. This caused a lot of consternation on crypto Twitter. There was also a lot of finger pointing between the Democrats and Republicans,

finger pointing from crypto Twitter to various politicians of all stripes. What went wrong? What was the ultimate blocker? Yeah, it sucks. There's no way to sugarcoat it. It really does. We've been spending years on trying to get this bill over the finish line. Ultimately, politics beat policy.

That's it. This became political. You saw every single Democrat vote no on the motion to invoke closure. They were aligned together. They weren't going to allow a win here for Republican offices. It's a 630-page bill. Four pages of that is ethics. I know that there were some other issues on the substantive side around BRCA and stable coin yield

that we can get into, but ethics really carried the day. And unfortunately, there wasn't enough alignment. And politics won. And that's a pretty sad state of affairs for an industry that has been trying to ask and achieve regulation for so long. And now we have to go to plan B, C, and D, which I think we can, but it's unfortunate. So I have to ask a spicy question. So I probably align a little bit with the Democrats that Trump's self-dealing and grifting was pretty beyond shameless. The funny thing is the timing of this is kind of crazy. Somebody who's not a crypto person who has a background,

I think an intelligence did an analysis of corrupt world leaders just in the last day or so and took the UN's definition of corruption, turned it into eight criteria and gave each 100 points, or maybe it was altogether, it was 100 points, and scored the leaders that history remembers for looting their countries. So like Marco Suharto, Mobufu, Abacha, Putin, beyond. Anyway, you know, I don't know all of these. I definitely know Suharto, though, because I used to live in Anisha. But anyway, so she put every president, U.S. president, since Eisenhower, on the same scale, you know, both parties. And she ended up scoring Nixon at a 41. There was no other American president that scored above a 25. But Trump's second administration scored a 91, which puts him in league in the same league as Sele Hartel and Mobufu and above Marcos and Abacha. her conclusion was that Trump is, quote, not only the most corrupt president in American history, at this pace, he finishes his term level with the most corrupt rulers of the last hundred

years. So given that situation, so I understand that I took us out of crypto for a moment, but, you know, I understand the ethics provision didn't land in a place that the Dems would be okay with. But, you know, I'm sort of wondering, you know, here they are. They have now, blocked passing anything. So now the status quo will prevail. So then how does that square with their desire to curb some of this corruption? It's bizarre to me that they would take the status quo over what we've heard Democrats and Republicans both say were 80% of the ethics demands from Democrats.

I was shocked. I honestly shocked on Sunday night when we saw the updated text. And the president had to agree to state AGs having enforcement power here, to putting his assets in a blind trust. I thought from the first ethics provision that came out several weeks ago, initially from the White House, that was immediately dismissed from Democrats, that that was as far as the president was willing to go. You know, putting limits on himself. It was unprecedented. Everything about this administration is unprecedented. But I was shocked that he was going to go even further.

And I think it illustrated how much that Republicans and the White House specifically wanted to get this bill done, how much they cared about this. I was hoping that this is a negotiation, there's going to have to be give and take on both sides, that Democrats would see, okay, he gave us a little bit of what we wanted. It's not perfect, but now we have some constraints on his ability to deal in digital assets. Now we know that we have some control and we can sell this back to our base and it wasn't good enough. and that was disappointing to me. And that wasn't just on ethics. That was on every single provision that they had been negotiating this far, that from my position, sitting in the room,

sitting with these offices, both Democratic and Republican staffers who have been wanting this for so long, that there needed to be negotiation on both sides. And at the end of the day, what it seemed to come down to is that Republicans were continuing to negotiate sometimes at, you know, the harm of the crypto industry. I don't like what they did on DFI. into that, but Republicans were negotiating, negotiating, negotiating and giving and giving and giving.

And I think what pissed them off at the day and why everyone walked away from the table, walked away from the table after this bill failed is that Democrats were saying, we're not negotiating. You're giving us what we want or there's no bill. There is no middle ground here. There is no compromise here. Give us what we want or there's no bill. And unfortunately, that's where it ended up. And that's why every single Democratic office voted no. Okay. And then I have to ask, so I saw that last night, Eleanor Territ of Crypto in America, she tweeted that the Democrats who support crypto legislation want to try to pass it in the lame duck. And so it made me think, do you think that some of the reason that they balked was because of the election coming up,

but that after that, then they'll be okay with the compromise and pass it? I don't know how sincere this message is from those Democratic offices. I'm going to be completely honest. I think that if they wanted to vote yes, they would have continued to negotiate and at least voted yes on the motion to proceed and the motion to invoke closure. I think a lot of people, what they get wrong here about what happened on Tuesday is that this wasn't a vote on final passage. It was just to continue debate.

It was really a vote to talk about the bill. They needed them go into the amendment process, and they could have offered amendments on ethics. They wanted to kick the can down the road as far as possible. And I think if the Democrats had it in a perfect world, that they would have made sure that they never had to go on record and they didn't vote on this bill until after the election, that they wanted to see if they can keep the crypto super PAC money at bay as long as possible.

after this vote has already been delayed several months. I mean, we talked about the initial Senate banking markup in January. Senate Ag marked this bill up in January. I know then it got delayed for several reasons until May, and then we've continued this process. But I think Democrats wanted to kick the can down as far as possible. And maybe after the election, they'll be willing to go back to it. But I don't know if that's going to be good enough for Republicans.

Republicans have been very, very clear. This was our best and final offer. We're not willing to go any further. I don't think Republicans are comfortable going back to the White House and saying, okay, we've already had to twist your arm twice, Mr. President, on this ethics deal. Can you go back and give more, more here, more here? So Democrats can say that they have a win. I don't know if that's realistic.

And so I don't know if lame duck is possible. Maybe cooler heads will prevail. Maybe everyone will walk away from this week and say, let's forget about clarity for a little bit. We've got, you know, six weeks until the election. Maybe we come back after and we're sitting in a lame duck. We don't have that much to do. We've got to fund the government.

Yes. We've got to do NDAA, yes. But maybe this is a good time. Everyone forgot about September's failed vote and we come back to the table. I think that's unrealistic and unlikely. But crazier things have happened in D.C. And just to expand a little bit on a point that you made, obviously, crypto money has been very influential in at least the last election. And I'm sure a lot of the politicians are

going to be aware of that as a factor going forward. So expound on what you said about how election money or, yeah, just any kind of influence from the crypto industry might have influenced the thinking around this vote. Yeah. I mean, crypto PAC money, the political arm of the crypto industry, was one of the most influential sectors in the 2024 election. single-handedly won races. If you look at Ohio where Bernie Moreno beat then the Senate banking chairman, Sheriff Brown, a lot of them, and Bernie was a great candidate, Senator Morano was a great candidate, but a lot of that was crypto pack money.

And for, you know, for the super PACs out there that can influence races, specifically at the House level, those smaller races, smaller dollar races, they've been sitting on the sidelines saying, okay, let's see what happens with this vote. Now, if you're a Democrat and you are concerned and you don't want to vote yes on a bill because you don't want to get Trump a win and you don't think you're ever going to get vote yes because it looks like then Trump can continue to do

what he does is self-dealings and digital assets, then you want to delay this vote as long as possible. Hey, you can say in the media, I am pro-digital assets, I want to get a bill done, I'm listening to the industry, I am engaging with Republicans, I want to get a bill done, but if you're not going to vote yes, then you're probably a little nervous and hesitant

about what the PAC money can do to your race if you're up for election. And so if you can continue to push this, now we're past the primaries. So they've already moved it that far and we're going into a general election. If you can keep the crypto PAC money at bay where they still think you're an ally,

even if you're never going to vote yes, that's the best place you want to be. As soon as you're put on the record, you're forced on the record and you vote no, then you're showing that you don't really, you're not really that interested in regulating this industry. This is a bipartisan bill. You've done a lot for it. If you want to actually prioritize this industry, put politics aside, do something that's good for the economy, good for the country,

then you've got to vote yes. And I think the PACs, hopefully, we're looking at this vote very closely on Tuesday, and now we'll start to deploy capital very quickly into some of these races where some of those people voted now. Okay. And last question on the blame game issue. How much are the banks to blame for this failure? I will always be perplexed by their strategy. I am fascinated by it. I don't understand it one bit. From the beginning, the banks have said, we want to tank this bill. We don't like the stable coin reward provision. Stable coin rewards weren't even a concept for the Clarity Act when the House passed the bill. They made it a vocal issue of this legislation. and they were willing to tank this bill up until Tuesday's vote because they don't like the rewards issue.

Now, it's the same thing on ethics where I won't understand the Democrat strategy. The banks get the status quo now that the bill has failed, which means rewards can thrive. I already saw that Coinbase has upped the reward for on Coinbase, for Coinbase 1 members. I wouldn't be surprised if every exchange starts upping the rewards. The status quo now exists and continues and will probably thrive and the banks get nothing. and even put the stable coin reward piece aside, the banks needed this bill. You talk to banks privately. You talk to the bank trades privately.

This is a good bill for them. There is a huge section in the banking title about activities that banks can now do with digital assets. It allows them to interact with permissionless blockchains for the first time. I am shocked that they went all in on taking this bill when they need this bill. And it was another example. It was pretty illustrative that they were not willing to. to compromise because they thought they could get their way and this bill would still pass.

And now there's no bill. And now they have to take their ball and go home and stable coin rewards will exist. And now it's a lot more difficult for banks to compete on the digital asset side. So I think they deserve some blame. I am again, still shocked and perplexed by it. Crazy advocacy strategy to me. I would love to hear how they're feeling today now that this bill may not have a chance to go forward, but they deserve some blame.

because there are Republican members here. You know, four Republicans voted no. One was Senator Tillis, who really changed his vote for a procedural reason from yesterday. So three Republicans voted no. And I think if you ask all three, it was because of the banks. They felt like they were hearing from their community banks at home

that this was going to cause deposit flight, lending concerns. So the banks deserve a lot of the blame as well. All right. So in a moment, we're going to talk a little bit more about what this status. quo will look like going forward, but first we'll take a quick word from the sponsors who make the show possible. $540 million.

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Remember that providing liquidity carries risk and fees aren't guaranteed. Back to my conversation with Cody. So as we're streaming here, the SEC announced this morning, and it was actually just as we started this live stream. We should have an article on the website at this moment that they are granting an innovation exemption for tokenized securities venues, aka TSVs, which basically means AMMs, and also for liquidity providers on them.

And the stock tokens that trade on them will be required to be fully one-to-one, meaning they will have all the same rights and dividends, et cetera, as a normal stock. I'm curious for your reaction about that announcement. And if you think it indicates that the U.S. doesn't necessarily need a crypto law, that it can accomplish what it needs to with simple rulemaking by the SEC and CFTC. Well, you're breaking the news to me. So I'm pumped to hear this is out. It's unsurprising.

We've known this innovation exemption has been worked on by the SEC for months now. And they were ready to go and there's been some fits and starts. But I think the most compelling thing here is, that it is illustrative that these agencies are now going to move like gangbusters. That as soon as this bill failed, they had pages. We have met with the SEC. We've met with the CFTC. They have binders of proposed rules and guidance ready to go to implement as much of the ethos, objectives, goals of clarity as possible.

And this isn't going to be a short-term effort between now and the end of the year. I think this is going to between now and the end of the administration. But the next two and a half years are going to be an onslaught of proposed. rules and guidance from these two agencies. And I think the innovation exemption was just the start. I think they're going to try to see it and push the bounds of their authorizing statutes, implement as much of clarity as possible through these two agencies. So it just shows that to your question, we're going to move forward. Yes, we don't get legislation. And there's concerns about that. There are going to be questions about what can't the agencies do that the statute,

that Congress was going to be able to do. There's going to likely be a lawsuit. against the agencies as we see and it's not unique whenever there's a rulemaking and how fast and quickly can they do it and the durability side too you know agency action is not as durable as legislation you are essentially leaving it up to the whims of administration to administration and so if you get a hostile administration in two years what does that do to the agency action that we received over these two years that are coming up if you're a company that's building in this space are you comfortable enough with proposed rules and guidance that could be overturned in two years.

I'm sure that's a question every compliance team is asking right now, or I'm sure much would rather legislation that can have the durability of two decades versus two years. So it's going to be a fascinating, fascinating to see what happens over the next two years if all these builders, institutions in this space take the agency action and say, okay, we trust this enough. We're going to still go full deployment of capital into digital assets and block. in the United States. So I, you know, want to talk about that a little bit because I saw this really interesting

tweet where somebody basically said that if the U.S. gains or, you know, if the U.S. gets wide adoption of crypto during the next two years, simply based on the SEC and FTC rolemaking, that then essentially it would be nearly impossible for the next administration. to roll back a lot of their regulations. So, yeah, do you see that as a potential possibility that just, so let's say clarity never gets passed. And during that time, the CFDC and SEC create a lot of rules that allow the industry to just thrive and get rooted here in the U.S.

Then, you know, and then let's say that the next administration is unfriendly to crypto. what could happen or what would not be possible at that point? So the hope is that SEC and CFTC, as you mentioned, do all these rules, all this guidance over the next two years, that the market does respond and we don't take our foot off the gas and every big institution keeps building and building and building. That they say, you know what, this is enough for us. This is the guidance and clarity we need. We don't need the legislation. We're going to keep going in the U.S. If that happens, then I think that tweet that you reference is right, that it gets very difficult for the next administration to overturn everything day one because then you're creating systemic risk.

If digital assets in blockchain are already woven into the fabric of the U.S. economy because everyone just said, you know what, we never needed a bill. We're taking this guidance as gospel. We're reading it as law. And we're going to keep going and going and going. Over the next two years, it gets very hard to undo all of that. If the market doesn't respond like that, and we see some of these big institutions that have had huge plans in the United States, say, you know what, we're going to pause a little bit. We're going to look to other jurisdictions that are moving ahead with clear regulation. Our compliance teams are uncomfortable building with the thought that everything can change in two years and we can have a hostile administration two years.

We're just going to pause and slow down. and we don't see this mass deployment of capital into the U.S. digital asset markets, then I think it becomes, you know, where the next SEC, CFTC can very quickly undo everything because you're not going to have that huge market reaction. And that's where it gets scary. Legislation is very, very hard to undo. You need to pass another bill. You need to amend it.

In terms of agency guidance, the next SEC chair, whenever they're sworn in in 2029 with the new administration, with a stroke of the pen can undo everything Atkins did. That's scary. So how will the market respond over the next two years? That's what we all need to look to. If people are celebrating this agency guidance and say, we're going to continue to go, you start to see offshore talent and capital come back and liquidity come back in the U.S.

will be in a good spot where I think then you almost tie the hands of the next SEC and CFTC where they can't do much. And so this exemption for tokenized securities venues, I just mentioned to you, it's actually only granted for five years. So let's say that there is no crypto legislation that's passed, you know, before the next administration and the next administration is unfriendly to crypto. What could happen to that rule? Would it just depend on how integrated, you know, that kind of trading is in society or, yeah, what are the possibilities there? I think that's exactly it. I think the next SEC will have to come in.

and look, how integrated is this? If we're going to undo this overnight, what will that look like for U.S. retail investors? What would that look like for U.S. institutional investors? Are we going to be taking away a lifeline that, you know, if they're a mass amount of Americans, retail and institutions are starting to use tokenized equities, and that becomes a massive part of the U.S. capital markets, it gets very difficult for the next SEC to overturn it.

If it doesn't take off and we don't see the growth that we expect that we've seen in the offshore markets for tokenized American equities, then it doesn't get that difficult. Then we say, you know what, we go back. How will the institutions respond, the issuers themselves? That's what I'm going to be fascinated about. Are the issuers going to take advantage of this and say, hey, we think this is a good option for us? Or are they all going to be like the AMC CEO and Ball can be like, no, I don't want this? that'll be very fascinating. I think that will dictate what the next SEC can do

or what happens after the five years runs out on the exemption. Yeah, and just to expound on this rule for the listener, what was interesting is the way that it's set up is that the venue has to reach out to the issuer and notify them that they're intending to do this. And then the issuer has 30 days to respond. and if they don't respond, then the venue can use that as a green light to go ahead and list. And, you know, obviously if they hear back, you know, cease and desist, as the AMC CEO said,

then, of course, the venue cannot list it. So, you know, the two paths to listing would be either like an explicit blessing or even just silence. But the other thing that was interesting is so I explicitly asked them, well, what about all these synthetics, you know, these derivatives where you don't get the voting rights, you don't get the dividends, all those things. And they said, you know, this exemptive, exemptive relief only applies to the ones that are one to one and are basically like a stock just in a blockchain wrapper. And when I kind of kind of, push them because so there's the securities transfer or what's it called securities transaction association or something like that yeah yeah they they requested that the u.s that the SEC all explicitly only allow the type of stock tokens that they just gave this exemptive release to to to relief to exist and to never allow any synthetics on the U.S. on shore. And when I asked if, you know, this exemptive relief was the answer to the STA in terms of like we will not allow it, they wouldn't

say, you know, whether or not they were making any statement about synthetics whatsoever, but they just reiterated that they are currently illegal in the U.S. And they said actually a few sort of disparaging remarks about the synthetics. So it sort of seems like their dispositioned in a negative way toward those assets. But it was just interesting to me because I was like, well, I'm pretty sure a lot of the crypto community is very interested in this synthetics. Yeah, and I'm fairly surprised that they didn't address it at all. Because this is what, you know, this innovation exemption we've been talking about for months, as we mentioned. And this was supposed to come out several months ago, but it was held up at the last second because of the synthetics, that they wanted to fully grasp it and understand it and see how they can address it in this exemption.

So I'm fairly surprised that it wasn't raised. I'm going to be fascinated what it means for that market because it's thriving offshore. So are you going to see synthetic will continue to use the AMC example, synthetic AMC tokens offshore, but not in the U.S., what will that do for some of the liquidity? these markets. I don't know how the SEC will respond to that, but it seems like they're making their position clear that by ignoring it in this exemption that they don't think it should exist here. Yeah. The actual quote was something about how the synthetics will continue to exist out in the wilds was how that spokesperson described it. Okay, so let's move back to clarity because obviously we had this failure this week, but as I mentioned earlier, there still is

talk that this could happen. We still do have two and a half years. So I'm curious, you know, this ethics provision has seen numerous different iterations. Each side is given concessions. Are there any other kinds of changes that are left to be tried that haven't yet? So the two other big issues that were continuing to be debated up until the vote were on amending the blockchain regulatory certainty act, which essentially is this protection for non-concounter custodial developers and other infrastructure providers, but from having to be money transmitters and comply with Bank Secrecy Act obligations. The other issue was Stablecoin yield, which we've talked about given the banks,

you know, this limitation on rewards that there has been this mass concern from community banks, regional banks, and the largest G-sives that if you allow Stablecoin rewards to exist, even if they're just limited to transaction activity like this bill had it, then you're going to cause this mass flight of capital from these. banks and they're not going to be able to lend. Democrats were given a lot here in the Sunday released text from Republicans on these two issues specifically. And I think as a digital asset industry, we want a bill.

We want to build bad. But we've already given so much on blockchain regulatory certainty act specifically and on stable coin yield. How far do we want to go to get a bill? At what point are we harming this industry's growth and potential? competitive nature for this industry to thrive with other industries. For the Blockchain Regulatory Certainty Act, on the Sunday's release text, they lost the criminal liability shield.

That's exactly what Senator Cortez Masto wanted. It removed all reference to the 1960 criminal statute. And so if you're a non-custodian developer, you have civil liability protections from this bill. You can't be tried civilly, but if someone uses your technology that you've created for some kind of illicit activity, you can still be criminally liable. And that's exactly what we were trying to fight against. And it wasn't good enough. And it's exactly what some of the Democrats asked for. So going back to the drawing table, if we're going to get clarity pushed, how much is the

digital asset industry going to be willing to sacrifice? How much further are we going to be willing to go? I don't know the answer to that. And I think it's something that all advocates, all businesses in the space who have been engaging Washington need to ask themselves. We all want to get a bill done. We've been willing to compromise. I don't like that there's any prohibitions on stable coin rewards, but that's what we had to do to compromise to get a bill done. We had to prohibit getting any reward that looked like an interest-bearing deposit.

Rewards are now only limited to transaction activity, what was in this bill. I don't think that's fair, but I'd, you know, bite my tongue and say, okay, it's best to get this bill forward. You have to compromise us to be a give and take. Are we willing to go further? I don't know the answer to that right now. It really depends on how constructive negotiations are. And are we going to get any assurances that if we continue to give and give,

and I think Republicans in the White House are asking themselves right now, are we going to get any assurances that if we give, you're going to vote yes on the Democratic side, that you're going to get the 60 votes. That's a, it's a tough place to be. And now, you know, we've got two weeks left of session in September. Then it's the election and then it's the lame duck. and then you're possibly going into a divided Congress

where you might, legislation may never see the light of day. So the timing is tough. We want to get a bill done. I don't think anyone from the digital asset side is saying, hey, we're completely wiping our hands of this and walking away, but we need to make sure that we're not giving up the farm to get a bill and then the bill is not great for our industry. So it almost feels like the lame duck really is the last best chance?

I think so. I don't think we see a bill next Congress. if the election turns out to be a divided Congress. If you look at the House, if the House flips to Democratic control, Maxine Waters will likely be the chairwoman of the House Financial Services industry. She is not a fan of this industry. I think her focus has been very clear on what it would be as chairwoman, would be on subpoenas and investigations into the president

and some of his digital asset dealings. there has been very little appetite from not all i mean we almost got a hundred house democrats to vote for the clarity act last year um but in terms of the people who are in leadership there doesn't seem to be any appetite um to get this bill down so i i would find it very difficult that we would see some mass bipartisan compromise between a democratic house and republican senate but crazier things have happened but i think this is likely the last chance uh to get it done until we have a full reset and we go to the 2028 election, which is kind of terrifying. But it's why it's so critical that agency rulemaking continues and goes out like this.

I was hopeful that we would see the agency rules come out right away. And I think now the SEC saying, hey, we're coming out with the innovation exemption two days after this bill failed. I would imagine the CFTC starts coming out with things very quickly. And we start to see us onslaught of proposed rules over the next few weeks. Okay. So then just last question, it almost feels like, so let's say that there's no law passed during the lame duck and the SEC and the CFC do furious rulemaking and the industry goes to town for the next two and a half years. So let's let's just say, you know, for like a hypothetical that crypto really does gain a foothold and the industry starts to thrive and the market responds.

and then we have this new administration, you know, it doesn't matter really what administration because the facts are at that moment that crypto is now like a thing in the U.S. So then would it ever be possible that then the U.S. would just never even have any crypto law ever and it would just be all done with this rulemaking that would be just too difficult to unwind for business reasons? It's possible.

I think eventually over time as this rulemaking, really takes hold and to your point crypto has this foothold in the U.S., then it becomes easier for Congress or say, you know what, let's just codify some of the things the SEC and CFTC have done. And we're not trying to come up with new concepts, new ideas, you know, in this bill, it's all new concepts. It's the ancillary asset test. It's the network token test. It's the decentralization and name-only test. I think what will happen over time as this industry matures and if they, you know, if truly people get behind the SEC and CFTC rulemaking that over the next few years, you will just see legislation that codifies what those agencies have already done.

And it's why it's so critical that these agencies get it right. I have all the faith in the world. No two better people than Paul Atkins and Mike Sealing to lead us here who know the industry so well. And then Congress, you know, it becomes less partisan. It becomes less political. It probably becomes less newsworthy. Hey, we're just going to codify the innovation exemption. So it stands the test of time.

I think that's the most likely scenario at this point. All right, Cody. Well, it's been such a pleasure chatting with you, despite it being a disappointing week for the crypto industry. Thank you so much for coming on Unchained. Thanks so much for having me. And thanks to you all the livestream audience who came and watched. Hope you have a great weekend.

Bye for now. Nothing you hear on Unchained is investment advice. This show is for informational and entertainment purposes only. and my guest and I may hold assets discussed on the show. For more disclosures, visit UnchainedCripto.com. Thank you.