Unchained - Treasury Puts DeFi On Notice as Roman Storm Trial Drags On

Episode Date: August 27, 2026

Roman Storm's retrial slides to April 2027. Peter Van Valkenburgh argues prosecuting Tornado Cash's developers cost real ground in zero knowledge cryptography. ======================================================== Thank you to our sponsors! Visit 1inch to swap tokenized securities, crypto and more. Simple. Secure. Self-custodial. Whatever asset you’re buying - swap it at ⁠http://unchainedcrypto.com/go/1inch-sn⁠ ======================================================== Treasury Secretary Scott Bessent has declared "economic D-Day" on Iran, leaving an open question over whether the sanctions crackdown reaches Uniswap and Ethereum or stops at Iranian exchanges, where humans are in the loop. Kain Warwick and Taylor Monahan take that gap to Peter Van Valkenburgh, executive director of Coin Center, whose defense of the Tornado Cash developers rests as much on zero knowledge cryptography as on sanctions law. They cover the GENIUS Act's freeze and seize rules for the stablecoin secondary market and Roman Storm's retrial, now pushed to April 2027, where speech protections clash with prosecutors' "frying pan" theory of money transmission. The SEC's proposed exemptions, the stalled Clarity Act, and Trump’s Hyperliquid all raise the same question: where does decentralization end and regulation begin? Hosts: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Kain Warwick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ - Host of Uneasy Money and Founder of Infinex and Synthetix ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Taylor Monahan⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ - Co-host of Uneasy Money and Security Expert Guest: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Peter Van Valkenburgh - Executive Director of Coin Center Timestamps 🎯 01:26 Bessent brands Iran sanctions 'economic D-Day', DeFi not exempt 🏦 11:15 Van Valkenburgh explains the freeze-and-seize rules coming for stablecoins 💰 15:18 Bessent claims a $1B Iranian crypto rug, but the receipts don't add up 🌊 25:08 1inch Aqua: back multiple liquidity positions with one wallet balance at http://unchainedcrypto.com/go/1inch-sn ⚖️ 25:50 Roman Storm's retrial slips to April as an acquittal motion looms 🔐 38:24 Why Van Valkenburgh calls Tornado Cash's developer a hero, not a villain 📜 47:22 SEC's 'Reg Crypto' plan opens two new paths to raise ICO-like capital 🏇 58:07 Trump name-drops Hyperliquid, raising hard questions for the CFTC Learn more about your ad choices. Visit megaphone.fm/adchoices

By prosecuting this guy, actually you're just villainizing this guy that created a great technology or battle tested a great technology. And I think should be treated as more of a hero than a villain, frankly, because we need to have bold people who try these technologies in novel places like the Ethereum blockchain. And once we stop doing that, we're going to stop innovative and stop building the systems that we actually want. Hey, everyone. I'm Kane-Wark and welcome to Uneasy Mind, because what happens on chain never stays on chain.

Before we begin, here is a word from the sponsors that make this 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 1inch.com slash aqua. All right. Hey guys. I'm here with my co-host, Taylor Monaghan, security expert, and we have a very special guest today, Peter Van Valkenberg, the executive director of of Coin Center. Welcome, Peter. Thanks for having me. Happy to be here. Yeah, thanks. I think, I think we've got a good show. We were lucky to get you this week because we got lots of

interesting things to talk about. I'm good every week, but I want to be fair about sanctions, you know, that's everyone's right. Absolutely, absolutely. All right, well, let's get into it with the first segment here. So Bessent, the Treasury Secretary, One of the best so far, he's been an exciting treasury secretary from my perspective. In, you know, all kinds of crazy stuff. It's funny, I was catching up on money stuff. Do you have like U.S. treasurer trading cards? Yeah, yeah.

I wish I did. And when you were buying him with a good Fed share. I want the hollow. I want the hollow version of Scott Besson. Or like Scott Besson, like, you know, like nuking Iran or whatever. So it's funny. I was catching up on money stuff because I'm like super behind. And so I'll like cherry pick like little ones.

And I was reading one from like a year ago around about the tariffs, right? And he's making this joke about how like someone was like, I can't believe that the Treasury Secretary is having these like secret meetings. And Matt Levine's like they always have secret meetings. It's just they don't usually. make the economy go up and down every 20 minutes. They're so market moving that you can train on it. Right?

Like usually you talk to the Treasury Secretary. It's like in two over the next two years things will happen. No, it's like this guy is like in 20 minutes, we are going to wipe out the Middle East. So yeah, it's pretty pretty good times, very entertaining. So the Treasury Secretary is threatening economic. D-Day on Iran, pushing sanctions on countries and entities that do business with them, basically trying to, you know, full court press on the actual bombs and economic bombs, and, you know, the straight of foremost blockade and all of that stuff.

But I think the most important thing is, as I think many of us in crypto know, Iran, had or has or still does have like a pretty big Bitcoin economy, you know, due to currency controls and and all kinds of stuff in the country. So there's, there's been, I think, like a number of of pretty big Iranian centralized exchanges that have like existed over time and, and, you know, had issues. So Besson is basically saying stop doing that. Anyone who's like buying Iranian gold or oil or Bitcoin is going to have some problems. And I think the interesting thing that I saw raised on X was like they left the door open for even defy. So, you know, is is Uniswap allowed to

interact with Iranian people is, is Ethereum allowed to interact with Iranian people? What are the implications of this? So, yeah, it was, it wasn't like they said, like, DFI's in trouble or anything like that. But they didn't say that DFI wasn't in trouble, which, you know, probably should be somewhat concerning. So, I don't know, Peter, what's your take? Yeah, to just start with the release itself, it's got a lot of heightened rhetoric. It's about economic T-Day. One doesn't normally announce D-Day before they have a P-Day, but I mean, I get it.

It's a new era, Peter. It's a new era. You want to say that this is going to be significant and uncompromising. I get it. So the release does not call out D-Fi. It does not call out any particular crypto project, does not mention, say, Unuswap or anything like that. You raise the question. It's a good question, but I want to be clear that the release is fairly neutral. It does say that digital assets and digital asset intermediaries are

part of the suite of entities that they're looking at potentially imposing secondary sanctions on. So, you know, probably what that's going to look like. The most obvious, the low-hanging fruit, the place for the administration, if you ask me, should focus its energies are things like Iranian exchanges, front companies, you know, money networks, brokers, the people who actually know exactly who they're dealing with are happy to deal with them, have agency and fiduciary sort of control over the money as it moves, and then, you know, help the arrangement, help the arrangement ultimately happen, help the money laundering or the sanctions evasion happening. So, like, that's the obvious target here. And, you know, sanctions is a

contentious subject in general, and I have trouble here because I believe we overuse sanctions generally. That said, sanctions is probably a great alternative to just going all out in war, right? You know, economic, economic effort. Why not both? But why not? That's the 21st country. We can do whatever we want. No. And so, you know, settings like whether you think this particular use of sanctions is good or bad, those kinds of targets to me are legally and sort of constitutionally reasonable targets for sanctions. Because there are people who really do have control over illicit funds or sanction funds and probably should feel the brunt of willfully and knowingly violating sanctions or helping someone else violate sanctions.

This is secondary sanctions. I'm helping somebody else get around the sanctions. Now, the release, however, doesn't, as you mentioned, give anyone a clear pass. Now, question whether anyone would be weird if they'd be like, by the way, you can use Manero. That would be fully insane. It'd be bullish. It'd be bullish for Manero, but. It's funny, it'll, depending on your worldview. But it didn't put any hard limit on who might bear the brunt of secondary sanctions.

and it did have some intentionally broad language. I think the line was effectively any source could be a target, any source of the regime's illicit revenue, and every economic lifeline that the regime has could be a target for these secondary sanctions. And, you know, we have to ask ourselves just a very obvious question, which is, you know, there have been reports of Iran trying to use the Bitcoin network, trying to use defy tools, all sorts of things in order to monetize oil reserves

that they have trapped in Iran or otherwise move funds in and out of Iran. So if that is one of whatever counts as every economic lifeline, then we will come to this difficult position where if the administration really wants to take apart that, are they going to go after the centralized institutions, which I would agree are the reasonable targets of sanctions, or are they going to actually try to shut these networks down by targeting non-pastodial infrastructure, you know, nodes, relays, minors, or even at the more extreme end, software developers who make these networks possible. So they haven't ruled that out, but again, who would put forward a press release saying, you know, we're not going to do the crazy

thing, right? Yeah. And that could be because they want to reserve the right to do the crazy thing, or it could be because they believe that that is a crazy thing. And so they don't even need to say they're not going to do it, right? Yeah. Yeah, fair. And I think, you know, the, the thing about Besson that I have, like, is, you know, he does come across as, like, very pragmatic. Yeah. And, like, results oriented, right? And so, you know, trying to shut down Ethereum is not very results oriented.

Like, even if you had no idea what you're doing, right? like, you know, that's probably not going to have a huge impact. Yeah, bang for your buck. It's not going to be the right strategy. And it's going to cause tons of collateral damage. So you can either say that, oh, well, they're aware of collateral damage and they're sensitive to that. That'd be great.

I hope that's true. But at the very least, you can say that they're efficiency maximizing. And they know that they're going to cut, you know, in a sort of Pareto's rule, you're going to take out 80% of the viable avenues by targeting the entities who are like human brokers rather than some sort of decentralized protocol. And I draw a parallel, and I think you want to get to some of the tornado cash stuff later in the show, but I would draw parallel generally to the administration's approach on quote unquote ending regulation by prosecution. There was a memo from the Department of Justice last year that said, look, we're going to stop some of the ongoing investigations and targeting of people for unlicensed money transmission if they otherwise seem to fit FinCEN's. guidance, which said that, you know, if you're not custod, you're not a money transmitter.

Which seems like totally non-controversial and reasonable, but it is true that the previous administration did actually... It was once controversial. It was bizarrely. Yeah. So this fits that pattern of, and that was right around the same time that the administration got really serious about cartel money brokers as well. And they were so, these are the people, and they're real people. They're not an autonomous robot on the Ethereum network. or something like that. These are the real people that we can exercise real jurisdiction over and put a stop to

their money laundering efforts. So I think pragmatic approach. Yeah. So, so, you know, speaking of pragmatism, like one of the vectors that you would imagine if you were going to try and, you know, use these decentralized networks would be stable points, right? And so, you know, stable coins are this interesting thing because they're, in many cases, both centralized and also this thing that, you know, moves freely through decentralized networks.

So, you know, you would imagine there'd have to be a conversation with Circle and Heather and, you know, various other issuers to be like, what can you do here? They're going to have to put some pressure on them. I think that's right. But I also, you know, I have no non-public information about the sanctions compliance programs at any of the big issuers like Tether or Circle. But, you know, I would be surprised if they didn't already have lots of these kinds of conversations, right? I mean, we're dealing with public blockchains by and large. I know there is a USDA that's moving onto ALEO, but even there, they have view keys, right? So we're dealing with public blockchains that are auditable, where we can watch in real time as money flows to known sanctioned addresses.

There can be certain amounts of information sharing that can be done. There are some, there's some red tape around that, but in general, you can, you can have information sharing. And on a public blockchain, you don't even need a lot of non, non-public information sharing. You have the public information. You can do chain al this. And so I think these entities, and you had mentioned Uniswap earlier as well, these entities, and Uniswap has a decentralized protocol, but it has a website, right? And uniswap on its front end that it controls has been doing sanctions compliance for a long time. And so does Berkle and so does tether.

Now, this is all also happening right at the same time that the administration is doing its genius rulemakings. So the Genius Act created a regulatory structure for stable coins and now Treasury and the OCC have to implement it. And one of the big things that's come up in the regulatory comment period for the OCC and for Treasury is you as an issuer have a lot of very specific obligations to know the people who are you issuing and redeeming from to do AML KYC in the traditional sense. What are your obligations on the secondary market? This is the term that's used, the secondary market, which would be, you know, like not someone who's coming to circle saying, hey, I want a dollar for my USDC, but rather a person with an Ethereum wallet who got a USDC from someone else with an Ethereum wallet. That truly, you know, off their balance sheet, off their centralized protocol,

part of their operations. What does it mean for the secondary market is the interesting question? And ingenious, in the law itself and in the regulations that are being developed right now in the rulemakings, there's this talk of freeze and seize capability, right? So the issuer has to be able to reach out into the secondary market and stop the flow of their funds wherever they exist on the blockchain. But they do not need to, and this has been reiterated in all the rulemakings, treat those people as their customers that they need to do full customer due diligence or like learn their full name, address, social security number, all that. And to me, that is probably the appropriate balance.

I think it would be inappropriate to treat Circle as somebody whose customers include anybody with an Ethereum address has USCC in there. It treats the whole purpose of stable coins, right? At that point, you might as well just be Benmo. And it also has some pretty nasty privacy implications. that a for-profit company that you have no relationship with but for holding a token that they issued a while ago has some legal obligation to collect a bunch of intrusive information about you. And not to you, right? They didn't issue it to you. They issued to some other person.

You're assigned to them. They're just a company to you. They shouldn't be holding your personal information because they don't owe you any duties, even if we think it would be good for AML or national security or something. Yeah, interesting, interesting. So one thing that came out of this, maybe it's been mentioned before, but Bessam was like, we rugged a billion dollars from Iranians. At least I knew that there was like some seized funds, but like what's the deal with that, like, were you opposed to that? I was surprised.

I was. I was. I do know of some freezes that have happened. the ones that you sort of generally know most about and kind of like backtrack and see yourself are the Tether freezes. Tether's very Tether does a lot more actions than than Circle does. They also

when they do actions, I find Tether to be much more they like, we're going to get you motherfuckers rather than rather than just like a gentle like blackamol. Just quietly like neutral. So, you know, and like it is a public blockchain and that has obviously like upsides and downsides for whenever you're freezing money, right? The freeze itself becomes public very quickly. And so, yeah, sometimes there's a bit of a chase that happens and, you know, there's things that can be done to make sure that you, you know, when you're going to take these actions, you do so like as effectively as possible.

However, I was shocked to hear him just come out with this billion dollar. number. Yeah, because like there hasn't been a billion dollars worth of tether freezes in recent times for the best of my knowledge, right? Like, I don't think we've gotten to a billion. There have been some big freeze days, very big freeze days, but in like the hundreds of millions of dollars. But right, I was not under, I was not aware that they were Iranian either.

Because there's been a lot of like the Chinese money laundering, Chazupan, Chenzi, these, you know, there's, there's, there's a lot of different money laundering networks. I was not aware without like any of the super bigs where I ran, but I don't know, maybe they were, maybe I just missed it.

It's, yeah, it'll be interesting. I think Iran in general, their crypto has been sort of really top of mind for a lot of people in the last, say, six months to a year. We've been hearing a lot more lately than we have probably ever before. And like Wall Street Journal and people did all this

this huge breakdown on finance and those networks. So, you know, people obviously have opinions on, there's a lot of people that like to play the blame game. You know, I think at the end of the day, after doing this for so long, my impression is that it sort of, you have to have the intelligence, the base intelligence there, and it has to be shared between all of the different providers, right?

I think people believe that like chain analysis, for example, is like just magic and has perfect intelligence and all the answers to everything. They don't. Like, it's a collective effort to sort of get a good feedback loop going between the people that have like the human intelligence on the ground, the cryptocurrency companies, the stable coin guys that can freeze, you know, some of the bridges can freeze, the custodians can freeze, right? There's a lot of different actors at play.

But you have to get. a good cooperation across those entities, right? Right. And again, like, we don't have to

dive into it right now, but a lot of people have this impression that, like, chain analysis just magically knows who, which addresses are I ran.

At the time that the address, that's... Yeah. I wish. That would make everyone's life so much. Good marketing, I guess, right? Yeah.

So, and I certainly don't have any ability to independently verify those numbers, but if they're accurate or semi-accurate, it would be a good portrait of how the system probably should be working, right? Right.

The best approach for America and American power globally is to embrace that these new technologies exist, except that they can't be regulated out of existence, and instead find as many paths to legitimize the business is building on top of these networks as possible so that you can then have oversight over them when there's a human in the loop, which more often than not, there still will be, like, DFI is not going to eat the whole world. And then you combine all that intelligence because as Tay said, chain analysis on its own is not enough, but you take it and you combine it with a lot of other information.

And you can actually then get a lot of leverage over the money brokers and the bad actors who are using just networks for them. And that's just a good approach. And it's much better than trying to outlaw this stuff or drive it underground because you'll just lose visibility and people will continue to use it. Yeah. I mean, you know, the less gray that tether has gotten over the years, right? like the better the better relationship the U.S. has with tether, like the more useful an instrument

tether is for like, you know, the dollarization of the world and, you know, sections and all of that stuff, right? If you force tether into, you know, a position where they're like avoiding the U.S. government instead of going to D.C., like that just seems worse, right? But I guess that was what we were doing for a while. We were trying that one. Yeah. There's a fine line. You don't especially in crypto, I think there's a fine line between thriving legitimate people who are doing legitimate things to be just basically blackballed in every way, shape, and form, right? Like that generally gets worse outcomes. However, based on history and the crypto industry's attitudes, it's also you have to be

careful not to let everyone off their leash, so to speak, because we tend to. We tend to like sprint all the way with any, give us an inch and we're like 10 miles down the road. You have some constraints. Yeah, fair. So it's definitely a balance. And obviously I think this administration has taken a very different approach. We've seen, I would say, I don't know, some improvements or some, there's some optimism here. But yeah, I think it's the biggest question for me is like, yeah, how are we going to, how is this industry going to

evolve over the next few years on its own, not necessarily working with the admin or like the future admin or rebelling against them. Like ultimately, I think the industry needs to step up and find solutions that work and actually be reactive to whatever, you know. Yeah. Yeah, fair. Fair. I think one interesting thing about this though is, you know, talking about like, okay,

we've already seized a billion dollars. presumably that's like the equivalent of you know a team coming out like on their series C and putting the cumulative raises that they've done you know the last five years as like the the raise amount right like they didn't you know seize this billion dollars yesterday right like this is probably even accumulated over over some amount of time you you have to assume right but like just putting that you're talking about pragmatism putting that against the scale of like the cost of, you know, keeping the straight of America, I think that's what we're calling it now, closed, right, per day must be in like, I guess so, I don't know. So, so, you know, it's, it's,

must be in the hundreds of millions of dollars, right, to like maintain this blockade. And it must be in the, like, single digit billions in terms of like the, the amount of money that it's stopping from flowing or you know constraining flowing you know into and out of Iran right so um you know on a daily basis right so the cumulative amount of like crypto that they they've seized from from uh is probably like eight hours worth of like the oil money movements right so i don't know yeah i think this like tail is important to keep in mind yeah well and laura just put in our chat that there was i did forget about this. It was 344 million worth of

USCC frozen USD-T on Tron frozen back in April. They're saying that that's all the Iranian. There's 344 I totally I didn't remember that yeah I remember that big because there was a bunch of wallets it wasn't like one one wallet

they froze like 20 wallets or something right yes and I can't I won't speak on it but I think there was a couple freezes that than some some then some guys got unfrozen the rest of mistakes made uh i don't know if that's this one though um but yeah i mean freezing is tricky business sometimes uh and that's why like again like when we hear uh we see the pressure being put on all the different entities and you know

that intel sharing is going on behind the scenes like that's what gives me hope that the industry and the public private sector can actually get their hands around it and and, you know, make a difference without arresting developers and things like this. But yeah, when... We'll talk about that in a second, right? So, yeah. Any final thought on this one before we go to ads? Peter, anything.

All right, let's take a quick ad break. And then we will come back and talk about Roman and Tornado Cash. $540 million. That's how much concentrated liquidity sat idle in a given week in the first half of this year. About 30% of the Defi TVL, if you're wondering. That's according to Dune Research commissioned by 1-inch. But there's a solution. One-inch Aqua is the new shared liquidity platform. It lets LPs back multiple positions with the same token balance and keep their tokens in their wallet till the swap comes. Why does that help? Because the LPs don't have to split their tokens across positions. They can cover. more market conditions and pairs with their full balance. That means more activity across deeper liquidity.

See how it works at 1inch.com slash aqua. Remember that providing liquidity carries risk and fees aren't guaranteed. All right. We're back. Let's talk tornado cash. So acquittal or delay the retrial of Roman Storm on sanctions violations and money laundering charges has been rescheduled to April 27 from October

because the judge is now considering his motion for acquittal. So what's the latest on this one? Peter, you want to take it? He must slow down. It's sort of like a hurry up and wait situation. And this trial's gone on for a long time. We're going to have a whole second one. In April now, Roman's waiting for his Rule 29 motion. which calls for a mistrial for the whole thing to be ruled on. That's still resolved after I think about four months.

So, you know, it's difficult because there's really hard legal issues at play here. A lot of people in the space would like to understand better how those legal issues are going to shuffle out, right? I mean, it's pretty fundamental this question of whether you're a money transmitter or not, and whether you can have a simple answer for that. I'm like, can you control customer funds? Yes, you're a money transmitter. If you can't, no, you're not.

Or is the answer going to be much more complex, something along the lines of what the Southern District of New York has argued in Roman's case? And he was found ultimately guilty of a jury on that count, which is something like, I think they argued that a frying pan doesn't hold the heat, but it transmits the heat. What does that mean? How do I know? Based on that kind of.

legal reasoning. For us, it's a struggle as well on the sanctions count and the money laundering count because, again, for those who haven't followed this closely, during the first trial, the jury just couldn't reach a deliberation on either of those counts, which doesn't mean he's innocent, doesn't mean he's guilty. It means it's a mistrial. Those counts are difficult as well as the money transmitting count. for sanctions evasion, conspiracy to evade sanctions, you know, there's no clearly presented

evidence that Roman as a software developer and someone who was involved with, say, paying for servers and things like that to run the system, but didn't have control over funds. There's no evidence that he ever made a transaction with a sanction party, right? Which would be the typical way that you'd end up on the wrong side of sanctions. You have to have a very complex sort of, I think, overbroad interpretation of, conspiracy to commit sanctions to think that by building these tools and knowing that others would use them to evade sanctions, he's ultimately actually a part of knowingly. Yeah, yeah, yeah, yeah.

And the other thing that we talk about a lot at Coin Center that I don't hear a lot of people talking about is that our sanctions laws actually have a pretty clear carve out. It says that the president in his sanctions powers doesn't have the authority to sanction transactions and information that carve out the statutory. it's called the Berman amendments because it came from Congressman Berman, who thought that the sanctions laws were good and important, but that we shouldn't use them as a blunt instrument to restrict free speech. So he wanted a statutory protection for speech as well as a constitutional protection. And transactions and information, you know, back when that stuff was new in the sanctions laws was about like Cuban art dealers in Miami who were selling paintings in violation of our embargo of Cuba. And you'd think, well, that doesn't really apply here. But actually, you know, the courts have repeatedly slapped the administration down for treating that information exemption too narrowly by saying that, even like rebroadcasting a soccer game and making a ton of money off of it or publishing a novel written by the Ayatollah. There isn't actually a case like that.

But there's a similar case. Publishing a novel by an Iranian official and making a bunch of money off it in the U.S. would not be a sanctionable offense. And so there's not a direct analogy here, again, because Roman. didn't actually make any transaction with a sanction person. But to the extent he transacted in anything, it was publishing software and information on the blockchain, right? That's what the smart contracts did.

And that's all information. And I'm not saying that in the sort of naive way, like, oh, you can't regulate Bitcoin because a Bitcoin transaction is just information. I mean it in a real way. Like, you can't regulate the guy who wrote software that other people use to move Ethereum, because that is information, even if the Ethereum movements are transactions. Is money, right? Yeah.

Like the thing was moving money, it's just a question of like, was he holding a sack, you know, carrying it to Iran? No, right? Like, nor was he even courting, you know, like if you had, you know, and they do, right? Like they've got like a bunch of, you know, kind of logs of transactions and conversations and stuff like, you know, it wasn't like they're out there being like, Wouldn't this be great if Iran started using it and we'd make a bunch of money? Nothing.

Some centralized players that we know about, right? Who are like, how do we get more Iranian dollars through this thing? To draw a different compromise. I mean, you can look at the samurai wallet developers. And that is also a hard case. I don't want to suggest that wasn't a hard case because there people are running a coin join server that matches people who want to mix their Bitcoin transactions. that's not custodial.

It is maybe closer to the metal of like connecting people to make transactions. But of course, the really bad fact in that case were tweets about we welcome our new Russian oligarch users, right? Yeah. This funny, but not. Guys, I had to, I literally had to go on Twitter yesterday and call someone out for in response to the Iran news. someone tweeted something about another favorite service of money launderers everywhere. And basically with like, hey, new business use case, yeah, yeah, trying to pump that protocol coin thing.

Like, come on, man. I am begging you. I am begging you guys. But, but yeah. Stop creating content for the fucking US government. I am begging you. Like, just don't say it, okay? And in Roman's case, there isn't even.

such like either bad jokes or or actual inducement or acetyl it's just no there's nothing so yeah yeah yeah i don't know peter i want to ask yeah why won't they just let this one go like they've spent so much energy on this they've spent so much money on this they got the mistrial like they got the guilty verdict on money transmission too right you know yeah um you know, I wish I was better at psychoanalyzing folks. I'm not going to do it. I'll say the things that people, that a lot of people already know, and you might have heard,

but, you know, the Department of Justice is siloed. Different offices, different offices of prosecutors have different perspectives on things. And that can be bad and that can be good. I mean, we would, we would not want, like, tight, unified executive control over the entire Department of Justice, because the Department of Justice is supposed to police and investigate the executive. You know, so having some decentralization here is good. But at the same time... You say we, the executive might.

My back to differ. That's the royal we of the peasantry, right? Who wouldn't? Who wouldn't? But the 7th District of New York has this reputation for being the global financial cop on the block. It goes all the way back to when finance really meant every dollar that goes across international trade and borders goes through Wall Street at some point. So it's a great place to interdict and stop transnational crime. And so that's the SD&Y's that's the chip on their shoulder.

And they've got some good reason to have that chip on their shoulder. and they see something like Tornado Cash being this tool that's dealing with large quantities of illicit funds from a hacking organization that's probably in North Korea and money that might end up financing nuclear weapons. You think, that's my bread and butter. I'm going to go get that. And I feel for them up until the point that they encounter what is this thing, how is it work, will our prosecuting a developer who built it actually stopped that bad criminal financing?

And if the answer is no, because it's an immutable smart contract that if you throw Roman in jail for 30 years is still running, then what are you doing? Do something else, you know? I don't know. Yeah. No, that's my, that's always been my since day one. So the news broke on the sanctions and then when the news broke that he had been arrested, it's my question has always been why, because it actually. And now we know, right? The volumes were impacted by the sanctions. they were not actually really impacted by the arrests in the prosecution of Roman but also they weren't that impacted no a DPRK's use of tornado cash let's call it it it is not really they've never really used it as an actual off-view skitter

they've used it as a just another thing to do because when you launder money you have to do things, otherwise it's not laundering. All kinds of tools in your tool bag. But losing this one, if it was even possible to take this one away, and I'd argue it's actually not, isn't fair and change the battle, isn't going to move the front lines one way or the other. And, you know, this kind of goes to what we were saying before the break about pragmatism. Like, to me, I think this is a misallocation of scarce government resources

that could be much better spent going after actual. human money laundering networks. Or things that have a direct impact on North Korea, right? Like we've seen actions or frankly any actor, right? When we're talking about incentives, I think there is value in if someone hacks something, if someone steals the money, there is value in immediately whacking that down and saying, no, no, you don't get the money, right? because it actually changes the incentives very quickly.

And when you create risk for the threat actors, right, you create a risk of, say, arrest or social ostracization or sanctions or whatever, right? When you do those things, that also changes the incentives. None of these things are bad. They're actually quite good. But again, when we talk about tornado cash specifically, did that do that? If the goal is to have North Korea not, like not double up their efforts. efforts to hack people, right, and double up the amount of money that they're stealing, double up their nuclear program.

What's the most effective action? And, you know, there's a lot of answers, but like one little service that they've been using has never been that answer, right? Especially when taking down that service doesn't actually result in more funds being taken from them or getting to them. And you're right, Taya. And the other thing I'd add is little service. as far as stopping it

and if you could stop at what its impact on the list of finance would be, small. On the other end of the ledger for me, Grenadocash was the first proof of concept of zero knowledge cryptography that saw like truly large volumes. Zcash, of course, and I've been involved at the Zcash project on and off

in informal capacity. I was at the foundation for a little while was the first like scientific test of this stuff. Like can we use zero knowledge, to actually have a verifiable blockchain without revealing everybody's transactions to everybody, which if you believe in this technological arc we're on is probably what everybody wants. You know, like we're not going to want to do global finance on a fully public ledger for all eternity. And, you know, Roman and his co-developers were sort of bold enough to say like, oh, that Z-Cache stuff is cool,

but it's kind of isolated in the Zcash Island right now. let's see if it works on Ethereum. Let's run it live and battle test it. And they did it at great personal risk for themselves. And so to me, it's doubly offensive that, you know, the small anti-money laundering benefit you think you might get or anti-sanctions or sanctions evasion benefit you might get by prosecuting this guy, actually you're just villainizing this guy

that created a great technology or battle tested a great technology. And I think should be treated as more of a hero than a villain, frankly, because we need to have bold people who try these technologies in novel, novel places like the Ethereum blockchain. And once we stop doing that, we're going to stop innovative, innovating and stop building the systems that we actually want. I mean, the chilling effect, like the reason why this feels so weird, the longer it goes, right? In April of next year, I think it will feel even stranger as, you know, more clarity or whatever is, you know, put to bear. But at the time that this,

this was announced in in you know that era of crypto it was unsurprising to anyone i i feel like you know people people were like of course this is the escalate you know there was this escalation of just like going after everything and it's like now they're going after like people actually writing the software like they genuinely are trying to you know uh have this chilling effect to shut everything down right now in the cold light of day you look at it you know two years later and you're like that was crazy. Like it, it, it was like, of course this is happening. It doesn't feel fair, but. And people back then didn't even know all the facts. I'll be the first to admit that I didn't even know all the facts. I was at a Zcash conference in Las Vegas when the, when the arrest was, when the sanctions were

first announced, not, not Roman's arrest, although Alexi was arrested in the Netherlands the next day. And I didn't know enough about tornado cash. I had to like rush to find a guy Michael Llewell and he's a developer at Open Zeppelin at the time, smart contract, security. Esper and be like, can you help me look at the actual tornado cats full contracts and like, are they immutable? Are they? Or is this just like some other crappy money like Tumblr? And so at the time I understand like the prosecutors probably didn't have good information as to what they were.

They definitely did. In fact, we know that later. They ended up citing our own explainers for how tornado cash works before they realized that we were going to be some of the people. suing the government invalidate the sanctions. And you think, well, now that we've learned so much, why are you going to double down here?

The facts just keep, to me, getting clearer and more obviously works for the prosecution, that this old adrift was built in a very robust way to be immutable, to be just a privacy tool for anybody to use, not something that you'd have to, like, call up Roman and be like, hey, Roman, I'd like to move some money from Iran. Like, that's obviously not how it works. Exactly.

And that's not a secret now. so why? Yeah. Why? Yeah. You know, it's interesting because when, like, I met all of the guys, like, pre-t tornado cache, right? Like, before it was even launched.

And, you know, they weren't, they were like maybe looking to raise, but they weren't really sure what to do. But, you know, there were these, like, super cracked guys that had, like, solved this thing, had, like, figured out how to do it. And, you know, there was the, the only vibe you got from them was that, like, they were just, like, in love with the technology, right? Yeah. And, you know, I remember. That's the most dangerous vibe, though.

I know. I know. But they were not. People. They were not unaware of, like, the risks of this, right? Like, everyone in crypto, you know, you couldn't be in crypto and not know that, like, you know, something that was going to obviously. skates, you know, there,

yeah, there were, so, because I, I mean, I've known them for, I've known them all forever. And I also remember like,

Vitalik and like, Amin and stuff talking about this way before tornado gosh launched. I would say like they didn't, they like, there was like a vague awareness of the risk. But even that is not the same as like what we know now and today. No.

The 2018, 2019 conversations. From a regulatory standpoint at that point, FinCEN had just come out with its clearest guidance yet, saying that an anonymizing software provider is not a money transmitter. It's like, Jesus. And that's why big white shoe law firms like Cravath have written on the tornado cash prosecution,

at least the money transmission charge. And then like, this is insane. The regulator at the time says it wasn't money transmission. Who were they supposed to license with? Yeah. Yeah. And I think it was just, we just, I mean, part of it was, was being naive on, on just the depths of, say, like, the hacks and what was to come, right?

But I think also there was just a lot of, I think the whole world didn't know what was going to come, right? Like the hacks and the money laundering, that happened like, that happened on Bitcoin. Like, no one came to Ethereum. I mean, it was just like this ICO land. Yeah, exactly. You know, like every once in a while. It wasn't on the radar. I'm trying to think like the big Ethereum hacks.

Well, it would be like the centralized exchanges would get hacked or like everyone's while like an ICO wallet would get hacked. Some of those we now know were North Korea, but at the time, we actually didn't know. Right? There was there was huge swaths of activity that we did not know until much later, like who was behind it and sort of, yeah, how these, how the like the networks work. I think that's one thing I try to remind developers today is like, it's, It's, you have to be aware of what you're building, not because you're scared of the government,

but because, like, if you want to build something valuable for this world, like, let's, let's be real about what the risks are. Then it'll change. It'll change as you build it. You'll get used because you didn't know you were going to have. You'll have vulnerabilities and other things you didn't know. Yeah. And so I don't tell people not to build things, but I certainly tell them that when they're building things, they're like and I still by the way the number one risk is you getting hacked whenever you're building

something right it's your protocol being hacked that is the number one risk you're at the target yeah um but you know there's there's a million other things and if you have uh I think today is just a lot different too like tornado cash just it's so hard to reason about because it is actually immutable it is actually like yeah it's one of the few most people do not choose to build like that today and therefore the conversation is completely different. But yeah, it's... But that was the brilliance of it is that, like, you know, you would have said... You would have said this would not be possible to do it an immutable way, right?

Like, it's too complex. I would have said that, right? Like, it's too complex. You're going to need to have some, you know, ability to constrain things. And they found a way to solve that problem. And it was the same thing with the token design, right? Like, you know, I said, you know, I said, And by the way, they're one of the few that actually did an immutable and actually didn't get hacked. Yeah.

Like, there's only like three things that have like successfully, well, there's probably only like three things that have, are meetable, have not been hacked and like actually got a lot of usage. A lot of usage. Yeah, exactly. Most of the times they, you know, yeah, most of the times it's, well, yeah, I mean, because they're still being hatched. So that number could go down. but yeah I just I hate I hate this case I hate I hate what's happening to Roman and all the guys and

I don't know I wish there is a better path forward that's all yeah all right let's let's move on to the next topic here so SEC is ICO season let's let's go

I missed this one catch me up dude what the hell so yeah the SEC is proposing two exemptions for certain crypto companies looking to raise capital. And it would allow a one-time offering of up to 5 mil over four years. And a second path that would allow companies raise up to 75 mil in any 12-month period. So, yeah, what's your take on this one, Peter? This feels right up your lane.

I mean, it's good. It's good. It's at an awkward time in Washington, D.C., because if you've been watching the debates in the Senate over clarity, the clarity act, which would give clear new legislative authorities to both the SEC and the CFTC and in some cases to Treasury to regulate crypto in a more, I think, straightforward way. to allow for like reasonable things like an ICO of sorts that has guardrails around it, that has some like claims to decentralization, that has some claims to real work and running code and all that. You want these kinds of like, again, the pragmatic approach is not to deny that this stuff is happening and try to arrest a handful of people you can get your hands on to discourage it because it won't work. the programmatic approach is to put guardrails around it and actually, you know, celebrate these innovations and find a ways to make, make sure that they're done in a safe way.

So, you know, the SEC's been playing with these ideas, if you will, for a long time, or specifically Commissioner Hester Purse has been playing with these ideas for a long time. So you can go all the way back to Esther's original safe harbor. When she was the sole voice of reason in the world. I'll at least say she drew a sharp contrast with some other folks at the SEC at that. Fair, fair, fair, yes. This is the Gensler error when there was a lot of very aggressive prosecution, and there weren't a lot of people sticking their head out and saying,

hey, maybe we can we can just put some guardrails around this activity and call it a day rather than prosecuted into the ground. And so, Red Crypto, which is sort of the shorthand for these two exemptions, is now going to be a notice of proposed rulemaking. So there's a 60-day comment period. It's got a lot of good stuff. And some of it goes all the way back to Hester's original Safe Harbor, which is there should be a way for a project that has legitimate designs on being

decentralized to raise some money to build that network with some disclosures and some other things that will make sure that they don't just, you know, take the ICO money and then deliver nothing or that it's not just some garbage thing like a banana coin, like you're buying a share of a plantation. something like that. And so it's good. We'll see. I say it's kind of an awkward place in DC right now because clarity stalled in the Senate.

So clarity. Yeah. So this is the, this is the interesting point, right? Like this is the SEC rulemaking, which, you know, is more ephemeral, I guess, than, you know. Yeah. I, I, you don't need to be delicate with that. Unfortunately, if it's a good rule, and fortunately, if it's a bad rule, you know, these rules can change.

A future commission could come in and say, we're scrapping reg crypto and we're going to have a very different regulatory regime where like all ICOs are fully illegal and proceed you to the ends and we hang the criminals to do them. Yeah, exactly. Whereas if Congress passed the Clarity Act and gave explicit legislative authority and actually ordered the agency effectively to do things a certain way. then you would have to have a future Congress rewrite that law, which is a much bigger proposition than a future regulatory body, rewrite their own rules set. That said, it's not hopeless because, you know, once the SBC puts out a rule, they do it in hopefully a very, like, buttoned up way.

They dot all the eyes and they cross all the T's. They might get sued. I could see them being sued by Tradfai, which would be interesting. You know, especially on things like tokenized securities or some other things that they might want to do. If they survive those lawsuits, though, they say actually the original securities laws give us a lot of breath to do this kind of thing. And I think the original securities laws do give them a lot of breath. And this is an arbitrary and capricious thing, which is the Administrative Procedure Act standard for whether the regulators sort of like operating within the bounds of their statute and following the rulemaking process correctly. if they pass those hurdles, this thing gets pretty permanent at that point.

And then a future SEC comes in and they mercilessly scrap it while there's a lot of actual U.S. investor money wrapped up in some of these things. Makes it a lot harder. It makes it economically harder from an inertia standpoint because you'd actually be hurting U.S. investors probably. And it makes it legally harder because then you really would have that arbitrary and capricious claim for the future action that tries to remove the past rule. You'd say like, what do you do?

Like on what basis are you, are you, you know, basically nuking all of these tokens that you previously allowed to raise money? So it's good. Like if you ask me, like, would I prefer at Chair Atkins and Commissioner Persis reg crypto to the Clarity Act as it's currently drafted but hasn't yet passed the Senate? No, I'd prefer the Clarity Act because of its permanence. And I think it's mostly well balanced. But if we can't get the Senate to pass legislation because we can't compromise. on certain things or things like the presidential ethics concerns about the Trump family raising money in crypto become an insurmountable barrier, which I'm sorry to say might be true,

then I'm very happy that this SEC is going forward with a reasonable safe harbor and a way for as a hedge effectively, right? As a hedge and it's just good policy. Yeah. Nice. All right. So, I mean, you know, the, I guess the final thing. about this is, you know, assuming these rules go through whatever,

and now there are these two paths, you know, the challenge that I think that we've had for a while now in trying to like raise money at a decentralized way, you know, to bootstrap a network, has been that the hangover from that is like so, you know, problematic for teams that that want to try and do it that like you have to be very bold to be willing to try it right um and you know it has created this uh this environment where you know it's better to not try and do anything right like still launch a token because you want to sell tokens right um but you know you're better off uh having you know some meme coin that you've launched that's just a joke right then actually trying to build a thing, which is like the worst perverse, like, like, you know, outcome that

you could have possibly imagined. And, you know, I think you said this earlier, right? Like, you're not going to stop people from doing a thing. You may. It just gets dumber and more at least. It's a dumber and worse, right? Like, and it's like, man, like, I don't know. It's so, so, so, so, so right. I think back to like, 2017, 2018, 2018. when there were a lot of folks, this was before Gensler got really aggressive, and there were a lot of folks taking advice from big law firms. I won't name any names, but you might have heard of some of them, about like doing a SAF,

a simple agreement for future tokens or doing some sort of reg D offering, right? And this was the, we're still going to try and comply with the securities laws, but you will be able to do this massive ICO. And, like, Telegram did a huge ICO or was there actually about to? And the SEC, like, stepped in on that one. So that one got interesting. but there were a bunch that raised tons of money, far more than something like Ethereum raised.

And they were only in the United States, if they had any U.S. investors selling to accredited investors, right? And it was sort of a sad state of affairs because you ended up with the venture capitalists having huge token bequests, if you will, or purchases, and a bunch of foreign people having some. And then, like, no retail could access it really. Which maybe is the point.

You could argue that is the point of security laws. that these investments are too risky for retail to have access. But then I think of Ethereum, which is like the paradigmatic early ICO, wasn't the first. I think it was like MasterPoint or something like that. But it was, they raised $30 million,

actually kind of like small potatoes compared to the ICOs that followed in that reg D era in that quasi-regulated era. And to me, it's like so wildly decentralized actually the way the token ownership ended up. Like, yeah, like a bunch of random people were on Ethereum. Yeah.

And then, of course, Bitcoin is the prime example. Like, oh, God, if we could just do fair starts again, but mining is a whole other technological issue. But like, those are the token launch events or token distribution strategies that actually did achieve sort of like a reasonable distribution and a nice way to start a network, not just handing something to a bunch of venture capitalists and strange foreign investors.

If we can get back to that, that would be great. And I think the one back to that is to be. put reasonable rules in place and not try and bend the old rules or fully outlaw the thing, right? Well, this is kind of the funny thing. You know, I remember being like, oh, man, this, like, what Gensler has done, right, has created this environment where, you know, token concentration is so high. It's concentrated in BCs.

People can't get access. And I was like, this is the end state. No, the end state is meme coin. Mean coin launch pads, right? Like it's far worse the actual end state than we thought. You know, multi-coin owning 30% of every Solana project seemed really bad at the time. But like every Salada project is a meme coin. It's a far worse end state to land in.

So, all right. Let's move on to next topic here. So I was pretty surprised by this. The hyperliquid, you know, being discussed by. President Trump wasn't on my bingo card that that would happen in a in a press conference. You know, obviously hyperliquid is, you know, the most successful project of lost cycle, right? So, you know, if there's going to be a, this is a new thing and we should embrace it and, you know, make sure it's available in the U.S. and it's built by U.S. people and, you know, they have to live in, you know, Panama or whatever.

in order to do it, right? It kind of makes sense that this would be the thing that would be used as the example. But, I mean, a no KYC purpose exchange, you know, the path to making that fully compliant and, you know, available in a legal fashion in the U.S. Seems interesting. like there wasn't much detail about how to how to kind of you know land this but if they do it's obviously going to be very very interesting so yeah like what's what's the take on how does this happen like is this just oh yeah we're just saying words or like we actually think that there's a pathway

to allow purpose dexes that are you know sufficiently decentralized to just operate I mean, that's a loaded question, right? That's what we do here, Pete. And so a lot of it comes down to like what we think of as sufficiently decentralized and what we think of as hyperledger. And just straight up, I'm just not going to have an opinion on those two questions for this purpose. It is challenging just from a legal standpoint because, you know, Perps local, a lot like derivatives, right? And the CFTC has planetary authority over derivatives markets in

the United States. And it's in some ways even less forgiving than the SEC in that, you know, you think of the accredited investor rule for unregistered securities. It's like a million dollars. The authorized contract participant or eligible contract participant, rather, rule, which is sort of equivalent in the derivative space is a much higher threshold. I think it's like five. million. It's like big, it's like real institutional money. You will lose, I mean, you will lose all your money. You need to know what you're doing is essentially the theory behind that. And, you know, the CFTC has this authority for derivatives. It doesn't, unlike the SEC, doesn't have authority over spot markets for the underlying, right? So the SEC, you know,

handles securities and securities derivatives in conjunction with the CFTC. The CFTC only handles commodities derivatives. It doesn't handle commodities markets. Part of the purpose of clarity was to fix this in the digital commodity space to say like, yeah, well, digital commodities aren't exactly like corn. There's a lot of retail investors who are participating at a high frequency and a high rate. And so market supervision makes sense for manipulation for other purposes. I thought clarity was a reasonable approach. And it would also give the CFTC sort of like a good perch to sit on and say like crack in, coin base, whoever else. you have spot markets.

You might also want to trade derivatives. You might want to trade perks and things like that. And we just sort of are a one-stop regulator for you, unless you have some securities on your platform and then we'll have to work with the SEC, right? Without clarity, the CFTC has, continues to have what it's had for a long time, this sort of like hard question of where its jurisdiction lies,

which is we definitely have authority over margin and derivatives. We don't have a lot of visibility into the spot markets that can influence the prices and can be manipulated for those derivative products. And we don't have a tradition of sort of regulating retail type investors. Like we normally regulate CBOE or whoever, a bunch of like, you know, strangely, pork belly obsessed people in Chicago, right, who are throwing a literature paper around, not your mom and pop speculator. So I don't know.

I've sort of thrown a lot at you here, and maybe I'm dodging the question, but I don't know exactly what to expect as far as how the CFTC ultimately deals with things like Hyperledger. And that's going to be hard, especially given the political climate, especially given the fact that CFTC still doesn't have a bipartisan set of commissioners at it. I think, you know, the thing, not that this will make it any easier for you to answer the question, but, but like, you know, we now live in a regime where something like Uniswop, which is, you know, immutable, you know, let's call Uniswm V1, right? Doesn't require KYC. Anyone with a wallet can turn up. Like, that is kind of grandfathered in. Like, there were periods of time where different people at different points were like, maybe we should try to. oppose KYC on, you know, things like this. And we seem to have gone beyond that. People understand enough about, you know, how these things work, right? So. And it's interesting you bring up KYC because the main job of the CFTC is not to do KYC on commodities markets. That's historically they're there for market manipulation, supervision, data collection.

Sufficient markets and fair market. And historically, it's the Treasury that handles things like anti-money laundering at financial institutions. And it would be some combination of authority between the SEC and Treasury, if we're talking about knowing your customers and having anti-money laundering controls with securities, broker-dealers, and some combination with the CFTC. And so the question of whether you need to identify people on a network, is it really a fully and fundamentally different public policy question than whether you should be doing some sort of market supervision and way to address manipulation concerns. And you also have a very different regulatory framework.

You have Treasury, you have the CETC, you have interagency coordination, but that always is more difficult than you hope that it would be. So it's just a whole, yeah. So like I think the interesting kind of intersection there is like, can you, in the current regime of everything must have K. YC. You must know your customers. You must. That's not the current regime.

That's not the current regime. As you said, that's not the current regime for something like Uniswap. That's not the current regime for a protocol for sure. Yeah. Yeah. So, so, but,

you know, arguably Uniswap is not regulated because it's not a derivatives platform in the world. way that, you know, say, so like it's kind of this interesting thing where like, how can you regulate a platform that doesn't have KYC in the way that you would regulate a platform that does if KYC is one of the like baseline assumptions that a venue must have, right? And and, you know, Uniswap doesn't have KYC and it's okay. But no one's really trying to regulate Uniswap. It's sort of assumed that it doesn't need market, you know, it is its own efficient.

market and we've kind of accepted that in a way that like a derivatives venue needs more oversight maybe you might say or that people would say like you can't have a venue like hyper liquid or bitmex that you know is prone to manipulation or could be manipulated without having you know some oversight or washdog but then if you're going to allow if you're going to step in and be that watchdog for BitMex, right? Table stakes is you guys got to add KYC. You can't have a no KYC thing that we're overseeing. And now, I don't think that's like legally required.

Again, because these things are actually fragmented across different regulators and different ages when particular rules were written and what the concerns were, I mean, like an SEC broker dealer doesn't have like bank grade KYC obligations. Right. Yeah. They have very different obligations as far as like knowing who their customers are and controlling for AML risk. So you could imagine a hybrid regime actually. And that's probably the right way to approach the problem because when we we shouldn't be thinking like, oh, we need to regulate crypto.

That's a disaster. You don't want to regulate a technology. You want to regulate to prevent money laundering. You have a public policy problem. You want to address it. And that's going to have a very different solution. to like, oh, we have to police market manipulation. You might need to have some customer information to affect

the police market manipulation, but maybe not. There's a lot of like really cool stuff that you might be able to do with pseudonyms or zero knowledge proofs or any number of other things, right? And so I don't know. If you just come out from first principles, these things don't necessarily, oh, it's follow. The reason why we have state money transmission licensing rules is because people used to run away with money orders, right? You'd be like, oh, money, ma'am, please pay my YouTube.

bill and then they take your money and they don't pay your utility bill like you that's why you need to get license with Texas because you're claiming to be a state money transmission and now point basis regulated as a state money transmitter you know in most states in addition to having federal obligations for AML I don't know like the briculage of the way the US does financial regulation is profoundly weird and we don't have like we don't have for Majesty's Treasury which just handles everything and that's sometimes for better and sometimes for worse. I actually think the UK's gotten a lot of things wrong over the last few years

and our weird inertia caused by our fragmented approach. We have like seven different federal prudential financial regulators has had some advantages and had some pitfalls. But it does make the specific question you're asking as to like, where does hyperledger fit in really hard to answer? Irrespective. Yeah, agree. And, you know, I mean, to your point, right, like the loss,

thing you want is a very concentrated power center of a bad regime, right? Yeah. The diffusion of power throughout the U.S., like even when we had our worst regime ever from, you know, Gary Gensler, there was only so much pain. They inflicted a lot of pain, but like they still had limits to, you know, they got in fights with the CFTC about like, what are you doing? Yeah, this is that, like, you can't come and shoot people in the head who are doing stuff that has something to do with you, right?

And they're like, watch me, let's see what we do. So, so, you know, like the checks and balances of power in the U.S., you know,

as much as it's hard to navigate is, is one of its features, I would argue, as opposed to the UK where they can just do dumb shit continuously and there's no one to stop them. I agree, but I also have a certain, like,

I like the Wild West situation. Yeah. I want a bunch of sheriff. Yeah. Yeah. Well, so that's, so my question is this, with this,

with this, the the I guess this story specifically right they're specifically calling out the CFTC as like we're going to bring this thing and make it compliant or whatever what what is the CFTC's job then like what is that like what does a regulated legal entity look like under the C oh like solely the CFTC because it's not AML money laundering law this is not KYC no it's it's it's it's like you're a DCM or you're a CF a swap exclusion facility like there's very there's a lot of this the CEA is as much of a Bible as the securities laws. In fact, it might even be law.

We don't write short laws. And the underlying statute or authority is pretty broad. And, you know, we could, we probably don't have time. And this isn't the show about predictive markets. But we can get into a whole discussion about how this CFTC is sort of claiming authority overall gaming now because a derivative is. Everything is a prediction. Everything is a, yeah.

Everything is a, is a, is a, is a, is a, is a, out or not pay out based on a future event. And so like that, yeah, that's everything. Everything's a culture. Yeah. What we're really, so the best I could tell you is like, CFTC probably has the statutory authority to craft a much more flexible rule. It may or may not have a times of traditional AML requirements that we would expect from

a financial institution if it can be justified to not have those requirements or it may. And then there'd be hard questions as to how to implement them. And then there will be multiple rounds of lawsuits because there will be those. who are in the more traditional derivative space or who are in more traditional finance in general, who think that the CFTC has misused its broad legislative discretion to craft rules that are friendly to a particular. Referential to the original. And that what they're doing is actually outside their statutory scope.

And then we'll have to read in the statute and be like, what did Congress really mean when they said, you know, swap or derivative or things like this? And then it'll just get long and drawn out and messy. and sometimes it's a war of attrition too because like keep the markets open and once your regs are in place you regulate and then people start using it and then ripping it away again

would have economic consic comes for real Americans so that's the game okay that's actually helpful even though that's that's I mean it was helpful context for me to understand like the landscape and what this actually is

The DC swap person finally came up with something that was actually. You know, it is funny, though, right? Like, there's a world you can imagine where, like, a new technology emerges. And, you know, the regulator goes, oh, this is a much more efficient, you know, mechanism for doing the thing, which is our job, making markets, making markets efficient, right? let's craft rules that are preferential to it because it is a much better tool and you should be using it, right? And then the guys who are like throwing pork belly papers around in Chicago are like, whoa, whoa, whoa. Like, we don't have time for this stuff, right?

Like it's, it is, it's an interesting, you know, whereas it tends to be the inverse, right? Go back real briefly to what you said about UNISWOP. I kind of realized the UNISOP thing wasn't just, oh, we've built a very efficient mechanism and therefore There's no need for our normal efficiency maximizing or anti-manipulation mechanisms. It's also that the immutable, the uniswap pools are immutable. We talked for a long time about how Tornayvick has won a few projects to do it right and make it immutable. Uniswap did too. And I think there you just have a good, you have such a golden claim there that's legitimate to saying,

we build some infrastructure. We built pipes. And, you know, you'd be crazy to think that we should, you know, regulate pot. the same way we regulate a delivery van service, right? Or a fry pan. Or a frying pan that conveys heat. I guess some people do think you should. So, you'd...

Oh, man. Yeah. Yeah. Yeah, awesome. I think that is it for this week. Thank you very much, Peter, for joining us. We had a very good lot of topics to cover that. That was amazing.

We'll have to get you back on next time the FBI comes off to Shane. To, I don't want to be a pleasure. No, no, I don't want to be on that episode. We're not prediction markets, then. We're not prediction markets. Yeah, fair, fair, fair. All right, thank you very much for joining us on this episode of Uneasy Money. Remember what happens on Chain never stays on Chain.

We will be back next week. Until then, do your own research before aping in. See you guys. Nothing you hear on Uneasy Money is financial advice. We're just three builders talking about what's happening on chain, and we want you to always do your own research before aping in. You can find all our disclosures at Unchaincrypto.com slash uneasymoney.