Unchained - DEX in the City: A Founder's Death Sparked a Fight for Ondo's Boardroom

Episode Date: August 13, 2026

Ondo's founder died at 32, and now his mother and its ousted president are fighting for control. Katherine, Jessi, and Vy on the succession lesson crypto keeps skipping. ======================================================== 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 ======================================================== Ondo Finance co-founder and CEO Nathan Allman died suddenly this summer at 32, leaving the real-world-asset tokenizer with zero sitting directors and two people claiming to run the company: ousted president Ian De Bode, and Allman's mother Kathleen, acting for his estate. Katherine Kirkpatrick Bos, Jessi Brooks, and Vy Le use the fight to unpack a problem that has nothing to do with crypto and everything to do with it: what happens when a fast-growing company never writes down a succession plan. They also cover the White House's new frontier AI oversight framework, which officials confirm exists but will not publish, a proposed FDIC and OCC certification that would let a fintech satisfy every bank's diligence questions at once, and the CLARITY Act's newly scheduled September 15 cloture vote, squeezed into a narrow window before midterms. Vy Le asks the harder question underneath all three stories: can boundaries this important really be left voluntary? Host: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Katherine Kirkpatrick Bos⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, Host of DEX in the City and General Counsel of Chainlink ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Jessi Brooks⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, General Counsel at Ribbit Capital⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Vy Le⁠⁠⁠⁠⁠⁠⁠⁠⁠ - Co-host of DEX in the City and General Counsel of Veda Timestamps 🤖 01:40 Jessi on why AI agents are getting great at goals, bad at intent 🏛️ 08:12 Why the White House's new AI framework is finished, but secret 📣 13:42 1inch Aqua: See how the shared liquidity layer works at https://1inch.com/aqua ⚖️ 14:30 Ondo's board hits zero directors after founder Nathan Allman's death 🚌 20:08 KK's 'hit by a bus' rule: the succession plan every startup skips 🏦 27:06 The FDIC's plan to let one fintech certification satisfy every bank 📜 37:51 Why KK is nervous about the CLARITY Act's September cloture vote 🦥 46:16 Crypto good news: robot sloths saving an endangered species Learn more about your ad choices. Visit megaphone.fm/adchoices

a fintech that gets one of these certifications, like that fintech blows up. And your regulator comes to you and says, okay, well, what diligence did you do on it? And, like, realistically, you're not going to say, well, they have the certification. So, like, we didn't do that much more. Like, that's just not going to happen. Hi, all, and welcome to Dex in the City where the wallets are cold and the takes are hot. Before we get going, remember, we're lawyers, but we're not your lawyers. Nothing you hear on Dex in the City is legal or financial advice, and it doesn't create an attorney-client relationship. For the fine print, check Unchained Crypto.com. We'll be back in a minute, but after we

hear from our generous sponsors. 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 1-inch.com slash aqua. And we're back. First, we have Jesse Web3 prosecutor turned Web3 protector at Ribb3 Capital and V from the SEC to Web3. And I'm your host, KK, fluent in tradfi and conversant in deep tech at Chainlink Labs. So we're going to start you off today with our usual AI segment that often comes later in the program.

But as is the norm, this AI segment is terrifying. So with that, without further ado, oh, and by the way, I should also mention Jesse and I are filming or live streaming from Chicago. We just got a tornado warning on our phones. We're going to just tough it out and live stream this odd for you. But if we mysteriously drop off, you'll know why. So, Jesse, please tell us what is going on with swarms of AI agents. Well, my mood about AI matches the color of the skies right now behind me. But I will say, and I love you, Kagan, you're the best moderator. But I think that our framing of AI just being terrifying is probably not super helpful and one that I have contributed to. So I'm sort of hoping that in this segment, I can scare you

and then bring you back to the present and try and figure out like, what can we get from all these stories? Because lately the AI news of the week has been largely this scary AI hack this or this model lied or cheated or conspired or tried to manipulate a human. And don't get me wrong, there are many of those. I mean, there is a great robot video kicking a child. Well, no, you're right. I mean, I don't have to interrupt. I just shouldn't laugh, but they do have to say, AI is not all that. Like, I told everyone on last week's episode that I hit an emergency appendectomy and Claude diagnosed my appendectomy immediately, like hours and hours and hours before the doctors diagnosed it and then walked me through like as my basically medical consultant walked me through the

whole process which gave me a high degree of you know understanding and comfort so there's so many funness you thought as your doctor or lawyer or any other professional it's not a good idea we're not advocating for all right i've lost it i've lost it i've okay anyway sorry back to the topic so because we focused on this so many times and i do want to say that more of it happened this week because moonshot broke out, meta joined the fun, and there's been endless of this. For us all, I think it's sort of turned into this self-protection of like these stories running together, sort of like when we talked about defy hacks, right? It's hard to keep track. It's hard to know what to do about it. So we hear agentic misalignment, AI hacking, and think, well,

the robots are out of their coop, right? The world is futile. We're screwed. AI overlords just come now, right? And even though there are super interesting hacking stories we could talk about this week, and I've been thinking a lot about, I thought it might be useful to like hold our horses, take a step back, and really think about like, what are we learning from all of this and what should we take away from it? Because these incidents are not all the same. And it lets us separate sort of what's happening here. So AI is getting super good at achieving the goal. And for all the clawed code users out there, like backslash goal, like you understand how good it is getting that. But it is getting worse or at least equally bad at respecting everything humans think about

when they want to achieve a goal. So at OpenAI, what we talked about with Hugging Face, the model's objective was to solve the evaluation. And yeah, they broke out and broke into Hugging Face, but they did reach the solution. And an instant out of the UK this week, which was actually a Security Council in the UK. They had an agent who was using fake identities to fool another human. But it was doing also to achieve an objective. And this is a funny one because we're trying to keep this a little light today. There was the first public sort of exposure in Australia where this guy essentially

programmed his open claw, I think it was, to help him get buff, was essentially what it was. And so the agent broke into, oh my God, something just blew by my window. The agent essentially broke into a workout platform and canceled other people's reservations at classes and booked him into all these different classes and got him off waiting list. So like it is helping him get buff, but by doing so is hacking and getting people out of classes. So the systems are getting better at getting to done than in honoring what humans mean by do it right, right? And this gap is what we talk about when we say the word alignment, which is something that you've probably heard about. And I've said on here before. To put that in lawyer speak, it's essentially like, can the system follow not just the letter of the instruction, but the spirit of it?

And we talk about that in law all the time. And that's super hard because humans communicate through unstated assumptions, which is like me moving my hands, let facial expressions. I have, all of that, and shared social rules that are actually super hard to program in, and people are realizing that more and more. So when we're just like common sense. Common sense, right? Like if you told your kids or like another person to like go achieve success, my God, my poor dog, we silently mean like do it honestly, do it safely, don't be an A-hole, right?

But the model doesn't have that written into it. And part of the reason for that is all the incentives that we've built into these models is you get rewarded for achieving the goal. And so it's all about let's pat the agent on the head if it achieves the solution, right? And this is something called good arts law, which I've learned about in the past few months. So once a measure becomes the target, it stops being a good measure. So in other words, if you reward goals, don't be surprised if stuff just gets blown up, right? And humans, obviously, find loopholes. This isn't new. But what we're seeing is the difference in speed and scale with AI. And that's why the stories just keep and keep coming. And for us, this means that like our concept of alignment needs to change. And we need to make sure that like there is clarity and what we provide. It will get to clarity in a different way shortly. But that the ambiguity.

is gone as much as possible. Someone has to define the boundaries. Someone has to build the controls, monitor what happens, answer what happens when those controls fail? And normally, that would be the government, yeah? And we've talked about the different government's regulation and lack of regulation. This should be where they enter the story, because the number one thing that agents need is clear boundaries, right? So there's a lot that's been going on around the world here. The EU AI Act is getting rolled out. We could talk about that in a different episode. I want to talk about today what happened this week, which is the U.S. administration's actions in this respect. So let's start with the good. We've talked before about the administration creating a framework for overseeing the

most powerful models. But what we learned is that although this framework is done, it is now a secret. It's a rulebook that we don't get to see, at least not right now. And many of the players in the space don't into C. So we talked about the executive order, and that creates two things, a classified benchmark, which is classified for determining where the national security risks are. But then a voluntary framework under which qualifying AI companies can give government access to covered frontier models for 30 days. And lately, we know what voluntary in D.C. means, which is maybe not so voluntary as we saw with Fable. So the White House said this week, or it came out that the framework is finished, but it hasn't published it. And neither has the benchmarks been published. And so when asked by

Axios, you know, a news publication, the White House official was like, we don't need to broadcast it to everyone. And look like, we can debate whether that's true or not. It, you know, keeping some of it a secret could be a good idea because you don't want adversaries to know how to get around it, but like the benchmark, which is classified and the framework are not the same thing. And I know this seems like technical, but the framework governs how it should be built and the process. It's a whole point of like transparency and government and elected officials and how can companies or us as citizens evaluate or contest the rules that we can't see. And so we also allegedly found out that like open models are excluded, but we thought those were the scary ones,

according to the news two weeks ago out of the administration. So there's just been so much ping ponging around, hard fork, one of my faves, called this regulatory Calvin ball, which is essentially there are no rules. And so we have to play at a game that we don't know the rules of. So the argument is not that like every benchmark and vulnerability or threat model needs to be public. It's like secrecy needs to end and accountability. needs to begin somewhere. And what I, you know, started off by saying is like,

models will keep getting better at exploring ambiguity and our government should not be contributing to it. So it's like this whole crazy conflagration right now of models attacking, people using models for things that are seemingly funny but could go off the rails. Well, at the same time, the government is supposedly putting in protections, but we don't know what they are. They're voluntary. Nobody really knows what to do. So us as citizens sitting here using this tech, of course people are scared. So how do we move beyond that to some sort of world that we can actually live in? The question I always have is like, is it even possible to perfectly constrain an agent or AI, right? Because the question is, there's basically like an infinite number of

ways to achieve like a given outcome, maybe not infinite, but probably more than you can conceive of or anticipate, right? So like, how do you design for that? And, and that's like, I totally get your point, but that's the same argument you could make for like any regulation, right? Like, we can't stop all hacking in crypto. We're not going to ban crypto. We're not, we can't stop all bad activity at banks, but we maybe don't enhance it beyond what the current BSA already provides burdensome levels. So I just think we got to do better than this, right? I'm still thrown by the term regulatory Calvin Ball, which I just had to look up as we discussed. It describes a chaotic rulemaking or legal environment where standards shift constantly. Enforcement is improvised in

authorities make up or alter criteria on the fly. You know what it's from? Calvin and Hunt. So my son is obsessed with Calvin and Hobbs and I used to love Calvin and Hobbs and I'm just now obsessing out there listening to this or people under the age of 35. It can be used in so many contexts. Like it truly is. I mean, look, regulatory Calvin Ball can be used for AI, but also for crypto. Let's be honest. But I think, look, like, I'm not going to not take another opportunity to shill Jesse and I's

paper on autonomous agents and programmable risk management for autonomous agents. But look, this is the whole point. This is the whole point that we're analyzing, meaning are there standards? Are there, it is, does the ability to restrict an agent's activity exist? Yes. And look, the activity of agents are scaling so quickly, growing so quickly without the accompanying risk parameters or any risk parameters. So maybe, like, again, let's not let the perfect be the enemy of the good here. What can we do to kind of mitigate these problems on a macro basis without getting everything perfect? So on that note, we are going to go to break and be back with more interesting topics. $540 million. That's how much concentrated liquidity sat idle in a given week in the first half

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That means more activity across deeper liquidity. See how it works at one inch.com slash aqua. Remember that providing liquidity carries risk and fees aren't guaranteed. And we're back. So we're shifting to another topic. And it's a sobering topic in many ways. But it was really important to discuss this actually just as a flag, as an opportunity for everybody to consider these issues at their own company. So what I'm talking about is Ondo finance.

As many people know, Nathan Olman was the founder and CEO of Ondo. And Ando tokenizes traditional real world assets. I believe they were one of the first to tokenize treasuries and brings them on to public chains. They've been doing really well. They're a trad-fi darling. And it's obviously a fast-growing thriving company. And Nathan passed away tragically earlier this summer at the age of 32 years old. Awful. So he was the CEO, the sole sitting director and the controlling shareholder of Ando. And so his voting shares passed into his estate. And after this happened, Ian DeBode, which was Ondo's president, was announced as CEO. So it was clear that Ando tried to shepherd a smooth transition. It's not clear whether Nathan's death was unexpected or not. But no matter of the circumstances, it was like, okay, now the president's CEO, we're moving right along. But Nathan's mother, Katz's, Leam was the personal representative of his estate. So, you know, when someone dies, it goes into a probate

process. It can be very complicated. It can take a long time to resolve their estate, depending on how while the estate is set up, you know, whether there was a will, whether there were trusts, and also largely dependent on state law. And Ando, like many other companies, the majority of companies, crypto or not, was headquartered in Delaware. So this was kind of winding its way through the Delaware process. And so Alman's mother then sued asserting control of Ando. And in some, basically, because

Nathan was the sole director, his death left the board with zero directors. And Kathleen has alleged that Ondo's bylaws allegedly required the board to appoint the CEO. So she has said that while Nathan's shares were tied up in this

probate process, DeBoad asserted that he had automatically become CEO and he used a voting agreement to make himself sole director. Those are all her allegations. Nothing has been proven. I know nothing about the actual facts or what occurred. But because Allman's mother, Kathleen, was the personal representative. She has, or she's alleging she has the ability to exercise these states voting rights. So she appointed herself to Ando's board. And she first kept Ian DeBote as president, then she put an interim operating. policy in place and sought out corporate records. And in the lawsuit, she's alleged that Ando's counsel and Ian DeBode wouldn't give her the records to recognize her board seat.

So she then added Nathan's sister to the board and that board voted to fire Ian DeBode entirely and install Kathleen Nathan's mother as interim CEO. And she has said, I don't intend on running Ando permanently, but temporarily while the board finds a new CEO. Ian DeBode, on the other hand, doesn't recognize any of this. And he says that Ando's investors in the Ondo Foundation supports his leadership. Very, very, very messy. I mean, like, very dramatic. Obviously, a crypto story, but like, how could you only have one board member and call it a board? And it's not unheard of. No. But how long has Ondo been around? it's not unheard of at all. And in the grand scheme of crypto companies, Ando is not a new company.

I know I remember Ando being a maple competitor back in 2022 when I was at Maple. But you make a great point, Jesse. Like, this is not a crypto thing. This is actually a Delaware law thing and a state planning thing, a succession planning thing. But when I read about the story, I thought, we need to talk about this because crypto companies grow very quickly. And corporate governance, which is the whole like who's doing what? Is there a board? What is a structure of the board, etc. It's not always a focal point. And further, when you have a young founder and or CEO, estate planning isn't always on the top of their list. But you have to think about these things. You, you always have to think about the hit by a bus scenario to ensure that the organization is long term sustainable.

Because if you don't, you could have this situation. I mean, we were talking about. We were talking before about how a lot of tribe by institutions and entities respect Ando and like its products. And, you know, that might be true. But like, did no one do diligence on this? Like, before you build with a product, don't you want to know what the board composition is? Like, are we all just moving too fast? But it's not fast. Like, they've been around a while. So this isn't the first time something like this happened. I'm just shocked that it's with a company that has so much money poured into it. And maybe that's just my idealism about the world. Well, it's also an, and you raise a good point, Jesse, because the other thing to think about is, look, no one is requiring a board in a lot of structures. Now, certain legal

structures or jurisdictions require a board. Others do not. So there are companies that don't have a corporate governance structure, and sometimes there's very good reasons for that. Like, nobody needs a board of five people. So maybe they made a specific choice that's justifiable. However, if they did that, then obviously there needed to be an appropriately documented succession plan in place if there was a death or some sort of takeover or some sort of extenuating circumstance. That is, I think, the lesson to take away from this. Obviously, look at your structure and make sure it makes sense from a kind of a mechanical day-to-day legal fulfillment perspective, like if you're required to have a board, have it. If you need a board, what do you want from your board? You know,

sometimes boards want kind of supporters. Sometimes boards want strategic advisors or insight. Different boards exist for different reasons. But first and foremost, you need to look at your leadership and say, tomorrow, if so-and-so is hit by a bus, do we have a clear succession plan? Do we we have, have we thought through all of the scenarios like estate planning if they pass away or control of various entities? And my fear is in crypto, when you have a 32-year-old CEO or founder, that maybe is something that's new as old in crypto as a 40-year-old. Well, this is why lawyers are like, weren't ever invited to the party. Like, that is definitely something I would do as a G. I see who all to go to lay parties anymore.

It's something I've done at every company. I've been like, what are we doing in terms of succession planning? And like, nobody wants to talk about that stuff. But it's important. Okay. So what's going to happen here? Like, is like what's going to happen to Ando? Does it matter to the token price? Does it matter to their contracts? Like, are we rooting for the mom? Like, I don't know. It's a great question, Jesse, because look, like right now you have two competing change of authority. You know, DeBode's version and Kathleen, slash. the estate's version. Now, arguably, the company is sustainable under either scenario. But now, given this litigation, it's hard to envision a scenario where if Kathleen wins, Ian DeBode stays as CEO. So then there's the question of actual succession. Who's going to be president? Who's going to be CEO? That degree of volatility, that leadership, that vision is in question. So of course, there's likely going to be collateral damage to the question of strategic partnerships or ongoing operations. That's just a specter whenever you're dealing with a company where there's any degree of volatility or question mark with the senior team. I don't know how they're going to

kind of move forward from here. But it's still a thriving company with an interesting value proposition. So if the estate wins, I would anticipate that, like, Kathleen and others would do a very comprehensive CEO speak and find someone well suited to this role. However, who knows? Because how can you replace institutional knowledge like Ian DeVote? I'm certainly not taking sides, but I feel like I'm watching a movie and not in a good way, like a sad, dramatic movie. Yeah. Yeah. You know what it made me think of, like, as someone who works at a defy company, Like we think about, quote unquote, succession planning a lot in the context of things like multi-sigs and dependencies on like people who hold the keys, you know, like emergency councils

and like what happens if there's a governance attack and a protocol. I mean, literally, like if we had a team offsite, we would have to do all of this coordination around like how many of the signers are going to be at the same, you know, on the same flight or whatever it is. Right. So like, I think in crypto, this sort of thing really does take on, like, special and unique importance. And so if you're a company and you're holding, like, really important pieces of tokenized financial infrastructure, like, you really do need to think carefully about not just all of that, like, operational and security stuff, but all of the boring sort of corporate governance stuff that is, like, maybe too morbid. And so people, you know, don't always think about it or want to talk about it.

But when you have a situation like this, you're like, oh, well, that's why it makes sense to have multiple directors on a board or like clear vigency provisions and succession plans. And in unambiguous like process and authority, like if a founder or a CEO dies or something. What if someone's kidnapped? I mean, many crypto come back. That happens. Have all about this. Yes. The time it seems like. This is why the buzzkill lawyers are in the room.

Like, let's think about the most horrifying scenarios that exist, but they are important, and it's a great point. And look, TradFi has learned this lesson. I even remember when I was at a law firm, the law firm, despite having hundreds of partners, had a policy where no more than ex-partners could fly on the same airplane flight, which talk about morbid and a little over the top. A lot of married couples do that. Well, actually, I don't get out of that together.

That's extra. creepy. But yes. Well, it's true. Yeah. Well, it's true. Yeah. Airplanes are very safe, guys, if you look at the data. Probably not do a car. Yeah, maybe we just shouldn't ride in a car with our partners. Okay. Now let's get now come on. I like being a passenger princess. Let me tell you. But the point is, if any of my listeners take, if any of our listeners take anything from this today, it's think through these issues like with your clients, with your organizations, before you're caught in a scenario where it's unnecessarily difficult or dramatic.

It's a sobering assessment of next steps. It's actually super sad. You know, like this is all just really sad. It's sad that, you know, the founder died so early. It's so sad that it's devolved into this fight because there wasn't the planning. So at the very least, do it to protect the people who come next. 100%. Yeah.

So sad but educational. and important. Moving on to a brighter topic, if new regulatory bodies can be a brighter, more interesting. I mean, we come up with our own subheadings for this pod. So for those of you who aren't watching, the subheading is new FDIC body at the party. And that was all me. I was like, yeah. Party that lawyers are invited to. Party that never stops. Regulatory party. Cool's party around. No, it's not the 10 so we can go home. Yeah. I like parties started five and ended nine.

Yeah. V, tell us more about this party. Okay. So this one caught our attention this week because apparently the FDIC, and I think Jesse you mentioned right before we got on, is the OCC like a part of this now, too? Yeah, not especially, but that's the rumor mill. Yeah, yeah.

Okay. So apparently the FDIC and the OCC are working with banking and fintech trade groups to create an independent standard-setting organization for fintechs and other vendors that work with banks. And the basic idea is pretty straightforward. So, you know, banks spend a huge amount of time doing diligence on their fintech partners. But if the same fintech works with like 10 different banks, it has to answer like slightly different versions of the same questions about, you know, cybersecurity. and compliance and operational risk and controls and all that stuff like a million times, right?

So the proposal is basically, why don't we standardize all of this? So according to Bloomberg, the organization would develop baseline third-party risk management standards, and then FinTech could be evaluated against those standards by independent assessors. They get a certification, and then they can reuse that certification with multiple banks. It's going to be voluntary, apparently, and it wouldn't have, like, enforcement authority. And it's not like the certification would give banks, like, a regulatory safe harbor or anything like that. But the FDIC's draft is explicit that, like, you know, even though the bank still owns all the risk and remains responsible for compliance and consumer protection and monitoring and oversight and all of that, like, it could still be valuable. Right, even though, like, in practice, it might mean the bank still has to do a lot of that stuff anyway.

So I think, you know, there are probably like two possible outcomes here. One is that it ends up actually working really well. So a fintech gets evaluated once against this set of standards. Banks stop asking the same, like 200 diligence questions over and over again. Community banks might, in particular, find it easier to work with different tech providers. and then regulators sort of get a more consistent picture of what good third-party risk management looks like. And then the other possibility is that the certification just ends up becoming like an additional thing that isn't really a substitute or a time saver for anything. Because like,

you know, imagine if you're a bank's GC or chief risk officer, right? And a sort of a fintech that gets one of these certifications, like that fintech blows up. And you're, regulator comes to you and says, okay, well, what diligence did you do on it? And, like, realistically, you're not going to say, well, they have the certification. So, like, we didn't do that much more. Like, that's just not going to happen. So I personally think in practice that banks may end up still having to do a lot of their own diligence. And fintechs might feel pressure to obtain the certification because, like everyone else is doing it, or even though it's not mandated by the regulators, like in practice, they feel pressure to obtain it anyway.

I think, like, you know, crypto should be paying attention to this. Like, I feel like as an industry, we could either end up loving it or hating it, right? Like, obviously having, like, a transparent set of standards could make it harder for banks to debank crypto companies, right? something that like we dealt with for a long time based on this idea of reputational risk. On the other hand, I think having a certification standards that are really, you know, either like conservative or leave a lot of room for interpretation could actually end up formalizing de-risking in a way that is harder to change, right?

So I think what the actual standards end up being is going to matter. a lot just in general, but especially for crypto. But, you know, I personally really like, I like the efficiency argument for this. Like, I've lived the diligence process firsthand as a bank GC and it is not fun. So I think standardized diligence could solve a very real problem. I don't. Sorry. I think that was like a great overview, but I just want to be a little more optimistic about it if that's okay. So, you know, we invest a lot in FinTech that has nothing to do with crypto or adjacent to crypto, etc. And what has happened over the past five years with community banks and fintechs, and fintech is obviously such a big category, is pretty crazy and pretty unsustainable for smaller banks.

And what you saw with the baspocalypse, although I think it was the SaaSpocalypse, and I'm just turning into the baspocalypse here, you know, when Sinapacepath, When like all these banks and people have their money stuck and there's all these bankruptcy is essentially what happened to like simplify it as much as possible is that fintech got super huge and all this tech and had all these layers and how all these vendors and they were taking on customers customers customers customers. And community banks saw their only way for them to survive in this increasingly digital world is to really lean on fintech for it. And community banks like we've all. interacted with community banks, whether it be on a personal level. Growing up, I was very into

the community bank nearby. It was where I first got my checking account or just in the business level, right? And they can try their best, but they do not have huge compliance teams like the big banks we've all heard of have. Instead, they're very, very small and they can't possibly fully diligence of fintech. You know, and like even they can't even do it as well as a business. VC has done it because they have so much more going on. All they hear is like they are getting these services. And so I think this is a pretty good solution. I mean, definitely not perfect. And there needs to be plenty more. But if a community bank can say like, look, this federal agency says that they're doing a pretty good job, that's much better than starting from no. So I don't know.

I was trying to bring some positivity back in this episode. Yeah. No, that's a good point. I like it. is a good point. And look, as background, I think people recall what synapse was, but it was essentially plumbing between FinTech apps and regulated banks. So I always think of that because I think of so much of crypto is plumbing, like bringing, you know, on things on chain, for example. And what really happened is there was a nasty single point of failure there, which again, a emerging technology is designed to solve a single point of failure. So I think it's very important to understand, or maybe very important to ask ourselves the question, because this is something I always agonize over, is does a standard setting body of any kind help? Like, maybe it helps efficiency,

although this one's kind of unique because it sets the standard, but you still have to do the work. So it's, it helps and it doesn't. And then I always worry a little bit about standard setting. bodies because who makes up the body? You know, I mean, that's been discussed ad nauseum in crypto. Should we have some sort of standard setting body for defy? Should the regulator set a standard, which, I mean, if you ever want to trigger a defy hardcore person, you ask them that question and then they freak out, you know, because we're all afraid that these standards that are set are going to re-intermediate defy or the standards that are going to be set are going to be set by people who don't understand the technology. So it goes to a broader issue where like I see this this is a good effort. It's been

discussed for years and years. It's not brand new. But is it really going to help? And should we be gravitating towards standard setting bodies for the solution to problems or a reactive solution to issue? Well, we can't pass legislation. So maybe that's where we are. But it's, you know, one of the concerns is like, you're right, KKK, right? Like what the standards end up being and who actually sets it is really important. Like this is voluntary, but like I said, it could end up being like de facto sort of required and expected, right? And if that becomes the case, like, is it really different than like a regulation or a law that like a company has to comply with? And if that happens, that means that these standards were put in place without like any sort

of process, right? Like if they end up being like effective. law or regulation, normally it would go through notice and comment, right, at these agencies. We talk about this all the time. Like, there's a reason for notice and comment. And so it's almost like this is a way to get around that. And super interesting because it rhymes with what I just talked about, which is the EO, right? That is a framework that had no notice and comment. We don't have any process behind it and look where we are. At least this probably will be a public. public framework that people can look at. But you're right. Like, where did we lose process in all of this? And where did we lose transparency in the government? I know, like, it wasn't always transparent

in every way and there's been problems forever. I'm not that much of an idealist. I worked there for a long time. But, like, now we're not even pretending. Well, look, it's such a fine balance between, like let's have a process and let's get shit done. Okay. So, oh, right? I mean, some part of me, I think, I think it's so admirable when people have the best intentions and they're like, let's plow through this red tape. And sometimes it works out really well. But I also totally agree that especially with things like standard setting bodies, if someone just decides to set the standards and doesn't consult the experts in the room that creates real problems fundamentally. So I don't have an opinion one way or the other here because I don't know what is the best course of action.

Also, we don't know what it is or what any of these are. This is no transparency. Yeah, exactly. Well, speaking of being unable to pass legislation. Oh, gosh. Our last topic today is clarity. And, you know, I'm going to harken back to what was it like a month or two ago when we all gave, you know, percentage bets on the passage of clarity. And I'm not going to go back and talk about what those

percentages were. But I am a little worried, you guys. So first I want to clarify where we are. Because yet again, crypto Twitter is so confused about where we are. So what happened? Basically, a cloture vote is now set for September 15th. Cloture is a special vote used in lawmaking. and what it does is it stops endless talking. It breaks a filibuster, which means a legislator can just talk for hours and hours and hours to prevent voting.

And that vote is set for September 15th, which is already frustrating because that's a long time away. Invoking cloture requires 60 votes and does not pass the bill. Okay. So now we have a date. The Senate reconvenes

for legislative business on September 14th. And here's the problem with this cloture vote on September 15th with this progress that we're going to see in a month is the Senate is scheduled to be out of session for nearly all of October and the first week of November with midterms on November 3rd. So there is a very, very, very narrow window to get this done. We've always had a narrow window like over the summer or there were vacations, there were priorities. And here we are in a situation where the window of time is even narrower.

In terms are not looking great for the Republicans, which will take the wins out of the singles for clarity as a legislative priority. We are still dealing with kind of the three issues that we've talked about before, one being the ethics provision that a lot of legislators, one, inserted in the bill, two being law enforcement having issues with the blockchain regulatory certainty act, the piece of the bill that protects developers. Three ongoing conversations regarding how to treat yield. we've made great progress on all three of those areas.

But we don't know how long that progress is going to last. There are a slew of other legislative priorities like wildfires and wars and a bunch of other issues. And also, let's not forget that the specter of all of this is once the Senate votes on this bill, it's not like, boom, it's law. Like the Senate needs a vote. And then the House version of the bill needs to be recognized. reconciled with the Senate version. So that's another big step that needs to happen before this can become law. So where are you, Jesse V? What are you thinking? I am going to remain optimistic because I want this to

happen. We need this to happen. Talk about not letting the perfect be the enemy of the good. Like, let's get this done. But I am frustrated. This is so embarrassing, but I think the last time we like hold each other, I was at, God, this must have been like in February or March. It was like during a very, like some, like a lot of positive developments. And I don't even remember what they were. But I think at one point, I was like just feeling so good about it. It was at like 90%. So we don't have to talk about that or bring it up.

But obviously things are very different now. I think, you know, it's good that we have a date. Right? Yep. Absolutely. It's always hard to move that once it's actually on the calendar. I just, I don't know. I think it's going to take a miracle. I agree. One thing I'll say is that there have been real champions on both sides of the aisle for this. And you can see a lot of positivity from there. Now, I don't know if that's going to lead to a vote. But it does show that people in Congress are beginning to really understand. the issues a bit more and realize how important they are. So that's my silver lining of this. I mean, there's news that the SEC is finally going to release reg crypto in the next week or so.

But there is, you know, the narrative that this doesn't mean that they've sort of given up on clarity, but that is like politicking as well. So I don't know. I think my number has always been 20% or lower. So I wouldn't say it's gone above that. Yeah. Do you think there was anything to that timing? Like I know people are sort of reading in time. No, I just think people like to stir up rumor mills. It's hard to pass legislation. I mean, it's hard to pass legislation on anything. And the issue too is we cannot forget. We're sitting here in our bubble. Crypto does not remain or has never been a legislative priority for a number of legislators. And look, that's okay to some degree. National security is really important, guys. That being said, so I remain cautiously

optimistic in the long, long term because we've come so far with education and an understanding with regulators about this industry and how much underlying economic value it can add to the United States, we're making progress with legislators. We need to keep fighting the good fight. There is a scenario where two and a half years, there's a Democratic administration that rolls back everything the financial regulators are doing. But there's also a scenario where great work. Yeah. There's a Democrat that doesn't do that or there's a Republican. And I think we tend to think worst case scenario as legal as as is appropriate. I still genuinely hope that this happens because I think of this as the last institutional unlock for crypto.

And we are so behind the ball here. Like we talked about Japan. We talked about the UK. We could go through all the G20 countries and how they're proactively putting appropriate legislation in place for our industry. So I remain cautious. Totally like doom scenario of like, what if a Democrat gets like to? I think that's BS. And I think you can tell from this.

current like process and the fact that there is real process here and there's people on both sides like there was one person at the head of the SEC that we've talked a lot about who you know made crypto life very difficult. He who shall be named. Baltimore. People on both sides of the aisle both in industry and in government that care about this issue. And so let's not live only in our bubble because there's many,

many issues out there and midterms is a big part of it. Yes. And look, obviously, crypto should not be a partisan issue. Technology should be neutral. This is good for America's bottom line. End of story. So I certainly hope our legislators now and in the future will understand and acknowledge that the industry is diverse and has multitudes and a lot of good in that industry, as we are evidence of, obviously. But we will keep our listeners brief. on the behind the scenes progress of clarity. And actually, there's a big meeting on Friday at the SEC, as Jesse alluded to, on reg crypto.

So I'm waiting with bated breath to see that. I was very happy to see that open meeting on Friday to consider whether to issue a release proposing new rules to create a tailored offering regime for certain investment contracts involving crypto assets. So that's big of that twice fast. Yeah. Boom. Okay.

from the SEC perspective. So we are going to end, as always, with our crypto good news. But look, we took a break from Animal News for a while. And we're back to Animal News. I know this is why you're listening, but you really need to stay tuned and watch this on video because Jesse's Good News is just going to, like, I don't know, break you into a puddle once you see this picture.

Jesse. I think this should be renamed, like, Tech Good News, especially in light of starting with such AI humorism. There's so much good happening in the world right now. And I could talk about like all the great science developments with AI. Some scary, some not. But there's one that's just super fun and positive. So everyone pull up this video when you can if you need a smile.

But essentially, robots are being used to help save endangered species. Now, who isn't in support of that? One of these really endangered species, which is probably shocking to know one, especially if you've seen Zootopia, is Sloss. And you could probably guess they don't have the best ability to protect themselves at high speeds. Luckily, they move really in case people, they move really slowly. And if you've seen Zootopia, the Slots move, the slots work at the DMV, which is my favorite part of that movie. That's a great movie. So robots were built to look like slaws and live among the slaws.

And because they move so slowly, the sloth robots don't really take that much energy. They just need to have like a solar panel or two on them to run. And so it's a perfect example of AI being used for good while taking pretty much no resources from the planet. And they are being used to track sloth movements and health. et cetera to keep them safe. I mean, I just think it keeps coming back to like, we live in this bubble where it's easy to hear about the chaos and the stress and the horrible things happening around us. But if you can just pause and be like, technology can be used for good too, it brings us

back to center and like why we're all here. I love that so much. That's such a good reminder. It's such a good reminder. I just feel like I'm giving the two of you a hug right now and looking. I mean, like just air hug. But no, it's so important. Like working in crypto, you really do constantly have to remind yourself, like, why you're

here and why you're doing this. Yeah. Right. It's important. And we're doing this because the technology is incredible. And the technology exists for a reason. It's to create efficiencies. It's to help the underbank.

It's, we could go on and on and on. And you're right. Technology and an umbrella level in and out of crypto can be used for beautiful things like protecting sloths. So cheers to that. Okay. We're on a role, guys. Matt Damon, American sweetheart, America's sweetheart and his crypto donation plus robot slots.

Like, what will we have next week? And on that note, stay tuned. Actually, not next week. Or I think we're having an episode next week with Jesse and one other one I already out. Stay tuned. And we'll see you next time on Dex in the City.