Unchained - White House Crypto Summit: Two Attendees Share Why It Matters - Ep. 797

Episode Date: March 11, 2025

The election of Donald Trump marked a sea change for U.S. crypto policy. The symbolism of that transformation was on full display at the White House’s first-ever Crypto Summit, at which President Trump met with several crypto business leaders. But what was actually said behind closed doors? And does this mark the beginning of a truly pro-crypto shift—or just another short-lived political move? In this episode, BitGo CEO Mike Belshe and former CFTC Chairman Chris Giancarlo break down what really happened at the summit, whether the proposed Bitcoin reserve is a smart idea or a political gimmick, and why some believe the U.S. dollar could one day be backed by BTC. Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! Bitwise Guests: Mike Belshe, CEO at BitGo Chris Giancarlo, Senior counsel at Willkie Farr & Gallagher and former CFTC chairman Links Recent coverage of Unchained on the Bitcoin Reserve and the White House Crypto Summit : Trump Says He Is Ending Operation Choke Point 2.0 Trump Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile Trump's Surprise Crypto Reserve Announcement Iced Out D.C. Insiders How Did Ripple Sell Trump on XRP in a Crypto Reserve? By Pushing for Solana Why Trump May Have Chosen This Week to Announce a Strategic Crypto Reserve Which Crypto Assets Belong in a Reserve? This VC Says Not XRP and ADA Chris’s article: Crypto neo-privateers could be the solution to hacks Nic Carter’s tweet on Trump’s crypto endeavours Omid Malekan’s analogy of the SBR with buying a shirt Learn more about your ad choices. Visit megaphone.fm/adchoices

The possibility for Bitcoin to be a backing and or a direct asset used by major nations to conduct commerce is real. That's not true for anything else that I'm aware of. And just based on size, I think Bitcoin stands alone. Hi, everyone. Welcome to Unchained, your no hype resource for all things crypto. I'm your host, Laura Shin. We are now featuring quotes from listeners on the show. Today we have a comment responding to my interview with VC David Nage, in which we discussed which assets belong in a crypto reserve. On YouTube, Lou Mira 7183 said,

quote, defined decentralized, please. Is it being a whale or is the consensus slash validation method the blockchain uses? To have your comment featured, write a review of the podcast overall, or leave a comment on our video on YouTube or X. This is the March 11th, 2025 episode of Unchained. Crypto moves fast. It's why Bitwise launched the weekly CIO memo, A jargon-free summary of what's moving crypto markets written by one of the best in the business, CIO Matt Hogan. Get up to speed in five minutes or less. Check it out at bitwiseinvestments.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing.

Today's topic is the White House Crypto Summit and new strategic Bitcoin Reserve. Here to discuss are Mike Belchie, CEO of Bitco, and Chris John Carlo, Senior Counsel at Wilkie Far and Gallagher and former CFTC Chairman. Welcome, Mike and Chris. Thank you, with you, Laura. Good to see you again. Last week, I think everyone in crypto got multiple instances of whiplash. On Sunday, March 2nd, President Trump posted on Truth Social, quote,

My Executive Order on Digital Assets directed the Presidential Working Group to move forward on a crypto strategic reserve that includes XRP, Sol, and Ada. end quote. That's kind of funny because he had actually not ordered that in the executive order. Regardless, the prices of those assets did spike upwards. But two hours later, he posted, and obviously, BTC and ETH, as other valuable cryptocurrencies, will be the heart of the reserve. I also love Bitcoin and Ethereum. Then we saw the two top cryptos join in the price action, although the next day most everything dropped back down again to roughly the same prices and then some. then on Thursday, President Trump signed an executive order that established a strategic reserve,

but not for XRP ATA and Seoul, as he had tweeted, but instead for only Bitcoin, as well as a digital asset stockpile for any other digital asset that is seized by the government and forfeited. Finally, on Friday, there was the first White House Crypto Summit, which you both attended, during which it had been hinted there would be one or two additional crypto-related executive orders. But at least on the live stream, we did not see anything like that. come to pass. Trump did say he was ending Operation 2.0, but there were no additional details. And also, someone from FIFA presented a trophy, which was quite funny. So can you tell us what else happened at the first White House crypto summit?

Mike, you wish to go first? Sure. Well, look, it was a good meaning. I mean, I think in most respects, it's really a culmination of a lot of work that's been going on over the last few years and then finally having an administration that's like ready to start discussing these things. So, you know, they've just assembled a new team. They moved incredibly fast. Actually, one of the things that multiple people there noted is they're moving at a speed, which is really surprising everybody, which is great. And then the initial pieces are like, okay, which directions are we going in? And then following that, of course, is the actual mechanics that they go around with it. With regard to the tweets and the various coins for the reserve, look, there's so much

speculation. And I think it's all going to sort out actually as people expect in a very reasonable and strong way. I've known David Sacks for, gosh, I don't know, nearly 20 years at this point. He's an incredibly smart guy. He will help make sure that it gets right. And then, you know, ultimately the president signs off on that. So I think everybody there was just super grateful to finally have the ability to move forward. And even if there's some little jankiness in terms of what exactly is happening and when. That's the small stuff that people get concerned about a lot, although that's not what they should really be focusing on. It's really the bigger picture. You know, Laura, I think the way people need to view the summit, it was really

a statement meeting by the White House. It wasn't a meeting to actually formulate policy or dwell into, say, some new policy announcements. That's not what its intention. When those meetings take place, they're often in the West Wing in some of the Covey Hall meeting rooms there or if one's fortunate enough to take place in the Oval Office. This was quite different. We met in the residence in the official state dining room. The guests hosted were treated to all of the pomp and circumstance that goes with basically a state visit to the White House. This meeting was designed for the administration to say, you've been persecuted for the last four years. That's all over with now. You're now here to be celebrated. It was clear that that's the statement that was being made, that there's been a seat. change in the U.S. government's official position on crypto from one of hostility to one in welcome and acceptance. It was clear from that by the attendance by important members of the cabinet from the Commerce Secretary to the Treasury Secretary, even the Secretary of State

Marco Rubio listened in for a while. We had the administrator of the Small Business Administration, some leading members of Congress, Tom Emmer. And the president came and the FIFA a trophy, was there really as a courtesy. He had earlier accepted the appearance of the trophy in the Oval Office and had signed the paperwork for the U.S. to host the World Cup. And then just sort of on a whim said, why don't you take it over to the state dining room so we can show the crypto members there? And that was really just an impromptu action by the president. But when the president came in, he spent 30 minutes with us, which is quite remarkable to give that type of airtime. And I I would say, Mike, what do you think? The Commerce Secretary probably was there 90 minutes and

the Secretary of Treasury maybe 60 minutes. I mean, that's a long time. And they asked the people at the table to go ahead and speak about some of the areas of concern and race and perhaps new issues that the administration needs to be focused on. But it really was, it was, the meeting was as a statement in my view to tell the industry in the world that the president tends to make the United States the crypto capital of the world. And this industry is no longer to be dedicated and attacked, but to be celebrated and encouraged to bring this innovation here to the United States and to do it successfully. And when you said that, people did raise some issues that they would like the administration to focus on what was named and who said what? Well, I would never

say who said what since it was Chatham House rules. But there were a lot of ideas kicked around, some of which are ones in the administration that's already fully engaged in, focusing on debanking, focusing on getting stable coin legislation done, focused on getting crypto legislation done, and some of the nuances around that. I threw out a new idea, and I don't mind sharing, because despite Chathamouse rule since I was the one who said it, I'm entitled to disclose it, following up on an article that I did with Chris Perkins two weeks ago, that it's time for, in my view, for the United States to stop playing defense against cyber hacking on our entire technology stack, but also our crypto, by state-sponsored hostile organizations like the Lazarus Group that are

sponsored by North Korea. And it's time for us to move from defense to offense and marshal the awesome technological prowess that we have in the United States to attack them back. And the Constitution actually authorizes that. It's called Letters of Mark. the president has the authority. President James Madison used that authority to authorize John Paul Jones to fight back against the British Navy that at that point in 1812 was attacking American merchant shipping and taking their cargoes and even taking their American semen off our ships. And the American government authorized John Paul Jones to fight back. And what I'm proposing is that in the 21st century, it's time to fight back. when I say I'm proposing, I alone with Chris Perkins of Coin Fund, who authored that article,

are proposing it's time for the United States to fight back and use our private sector power to fight against these overseas hackers. Wow. It's sponsored hackers. That is so interesting. So can you just flesh out what that would look like exactly? You're saying that we would employ white hat hackers, what, to steal back crypto from North Korea? Or what exactly do you mean?

So the way letters of Markware is called privateer. and was very common in the 18th century, 16th century, a number of well-known privateers authorized by many governments. We authorized privateers to fight back against the Barbary pirates as well. And yes, the privateers are, as part of their efforts, are authorized to take back valuable treasure. And they're required to split it with the government. So the U.S. government would be able to fill the recently announced various crypto stockpiles would seize Bitcoin, but the privateers would also split that bounty with the government to sort of compensate them for their work and effort.

So interesting. That raises the tricky issue of like, you know, I mean, we just had this hack. Unfortunately, there's a real victim, right? And while it's great to seize assets, the goal should be in general to get it back to the real victims, assuming that that's all bona fide people and stuff. Yeah. Yeah. Well, let's see. For the proposal as well, Mike, and that was also done back in the war of 1812 as well. Cool. I guess from my view, a lot of the discussion was about topics you've heard about before. Number one, I think was, you know, end the political persecution of our industry and Operation

Choke Point. And I think everybody's been clear that that's happening already. So that's kind of the easy layup. But then I think what most are worried about is like it's, it's eye always. opening to see that simply an administration change can cause 180 degree turn in the interpretation of the existing legislation. So over and over again, I heard multiple people saying, hey, we have to codify this somehow in a way that future proofs it so that, you know, we aren't at the place where it's just executive orders and, you know, regulatory interpretations that dictate whether entire industry is turned on or turned off. This should not be possible. So I think that message has been well received. And of course, to some degree,

it's obvious, but all of us are trying to run a business. If the written law hasn't changed and the written regulatory hasn't changed, how is it that you can be on a completely opposite side of a yes, you can do it or no, you can't do it. We can't have that much pressure power at the presidential level. And that's what we had over the last four years and that was changing. We like to see better. Yeah.

So were there like any kind of action items out of the summit going forward? or was it just, you know, meet and greet and chat with people and then and then you make connections and do the work after that? As Chris said, I think this was to some degree a ceremonial meeting and it's to tell everybody that like, yes, we're open for business. We care about this industry. We're going to make it work. There's a initial direction. I think they're really looking to learn. By the way, we all know this.

All of us have been in the crypto industry for a long time. Crypto assets on one hand are just like other types of assets. You don't usually regulate specific assets in a completely different way. But there are new properties that come with digital assets, which make them a little bit of a combination of everything. And so there's a lot of learning to be done by Treasury and by the politicians to figure out what they're going to do next. Yeah, hilariously.

I think it's Austin Campbell made some tweets. Or it might have been Jeff Dorman too, where they say things like, oh, you know, saying that all cryptos are securities is like, the same thing as saying any, any asset that's tracked on an Excel spreadsheet needs to be regulated the same way, which is, you know, point well taken. So one thing that I noted was that at this summit, there appeared to be a number of exchange operators as the attendees, Brian Armstrong of Coinbase, Lateneva of Robin Hood, Cameron and Tyler Winklevoss of Gemini, Arjunsathy, of Cracken, kind of in a related vein, security slash custody, people like yourself, Mike.

And then a few VCs, Chris Dixon of A16 Z, Kyle Samania, of Maltique Capital, Matt Wong, of Paradigm, there was only one protocol that was represented, at least as far as I know, which was chain link. And I wondered if you knew of kind of the reasoning behind the guests that they chose. Brad Garlinghouse was there from Ripple as well. So, look, I don't know what the exact decision-making process was. I'm guessing they were just way oversubscribed, and they probably had this horrible decision of trying to figure out how to bring in, you know, kind of the right people that have been in, in the space for a long time. I think it was a little bit more towards kind of the OG camp, companies that have been around for a long time. And then, of course, combining that with the

right policymakers and things like that. But I'm not sure exactly. I think it was probably a hard choice as to who they couldn't fit. Unfortunately, you can't get everybody into a single meeting. And was there anyone else who attended that you didn't see reported that you thought was notable? Well, I mean, you can see on TV who was there. I guess I don't want to disclose like, you know, who's there and who's not there. But a lot of people are off hitting on Twitter. I think, you know, you've got a pretty accurate list, even though you've already rattled off. Okay, yeah. I think I saw some report later saying that one of the people is Pete Bricker, but I don't know what he looks like. Was he there? Yeah, Pete was there. Yeah. Okay. Yeah,

from Fortress Capitol. You know, what was interesting, though, Laura, is the fact that also the acting chair of the CFTC Caroline Pham and Hester Purse were there as well. And I think it's an important signal in terms of the listening is not just coming from the administration, but is also coming from the market regulators. Now, it's interesting that there were not bank regulators there, and they need to be listening as well in many cases. The other thing I would say is the meeting, I had the privilege of attending one of the meetings that the Biden administration hosted in the final, in the fall of late summer, early fall of 24, when they were realizing that they had lost the support of this industry.

And what a contrast, yet Friday's meeting was from that meeting with the Biden administration where the Biden administration really sat tight-lipped through the meeting and said, well, we're in listening mode, we're not going to react to anything you say. And it took a lot of criticism from the industry participants that were there, including people like Mark Cuban, who were supportive of the administration, but really very critical. The tone of this one was entirely different was it was a group of listeners that were very high in the cabinet that were themselves very facile with the issues under discussion and the interaction between them and the participants was very positive.

Having sat through both of those, the contrast couldn't have been greater from my perspective. Yeah, yeah, for sure. This is a total 180. That meeting with the former administration, it's so much lines up on politics lines, too. This is probably one of the sad things, right? Digital assets, not supposed to be political, certainly not Bitcoin. And yet, you know, that meeting, you know, I remember there was discussion of that upcoming. And of course, everybody's talking like, geez, do you want to go to that or not? And, you know, we have Bickco concluded, like, no, we don't want to be anywhere knew that administration. We already knew at that time that administration was completely turned off

to digital assets. They made kind of a last minute, hey, oh, Mary attempt to say, oh, hey, maybe we support it through like, I don't know, a representative of Harris may be saying possibly they might do something positive on Bitcoin. Anyway, they invited, you know, only Democrats to go talk to that. And look, there's bias on the news side, too. And we need to figure out of the political trenches and back into just like, let's be practical, make great investments, make great products, for Americans. And, you know, we all want to make money regardless of what your political affiliation is. Mike, as you were saying that I was laughing because you might even say that the Trump team invited only Democrats or former Democrats because I would say most people around the

room if you'd asked them four years ago probably would have lined up more on the Democrat side. Look, for sure. I'm in California, right? Everybody's a Democrat in California until this year. I mean, it's just rare that you see a case where the politics is so extreme. extreme, that they're coming after your business. All I want to do is make Bitcoin great. And like, you're going to persecute me for that? It's horrible. So it's caused a lot of people to switch. During the latter years of Obama, the first Trump administration, crypto wasn't political. The divide was more generational than it was political. It only became political, really, in the last two or three years. One of the thing that was mentioned at the meeting, I'll share this,

because I think it's been in the press. One of the participants said, look, you know, six months ago, we didn't know whether we were going to wind up in jail or here at the White House. And the president found that very funny because he said, you know, six months ago, I didn't know whether I was going to wind up in jail or in the White House. So he said, look, I'm aligned with you on that. Yeah, I agree with everything. You both said there. And I don't know if you recall that I did write an op-ed in time where I spoke as a Democrat

saying the Democrats were being stupid about crypto. But anyway. Okay, so I did want to hearken back to, I think it was Chris. No, no, no. Sorry, it was Mike who was talking about how, you know, it doesn't make sense for a topic that is this important. And especially a topic that's, you know, really about building the future that it should swing so wildly between administrations. So I did see a number of people on crypto Twitter expressing concern that this was done by executive order establishing the strategic. strategic Bitcoin Reserve, I mean, because that could be undone by the next president as opposed to a law,

which, of course, would ensure some level of permanence. So, you know, why do you think they chose to do it that way? And even though it is an executive order, can Congress now make it a law? And if so, do you think that's likely? I have no idea if it's likely. I'm sure that they can legislate something that requires some amount of strategic reserve to exist. I think the executive order, the first thing it does and just kind of make sure that like, hey, there's not going to be some weird selling pressure dynamic from the existing coins that are held by the administration of David Sacks pointed out. And I think he was quoting James and Lopp, by the way, all of the opportunity costs lost due to having sold so much Bitcoin from the government in the last four years.

But moreover, look, the point you're making is exactly right. And it's my biggest fear, right? So the point of digital assets is actually to get away from having any single influence, in particular around Bitcoin, right? So to have the government be the new particular influence, I mean, there's a dual-edged sword here. I think that the Bitcoin Strategic Reserve needs to be thought about very carefully. The government should not be picking winners and losers.

And, you know, there's a lot of people out there that are like, hey, pick my chain. So this is a tough process. I do think they need to get something legislated. Otherwise, this could just be like, you know, the biggest rugpole with the next administration. So work needs to be done. And this needs to be done very carefully. The last thing is, like, what is a reserve for? I think, you know, in the case of Bitcoin, you look around the globe and you think about

what are we going to use to stabilize value, it's got a real shot at doing that at a global scale. The other various assets are not in the same ballpark at all. They're used for many different things, sometimes utility, et cetera, and those are going to come and go over time. The notion of a reserve, we have a gold reserve, we don't really need it at this point. time, it's really a safety net in case we have big changes that come in the future. And it indicates the signal strength to the world. So Bitcoin and gold have that in common. That one makes some sense.

The others make a lot less sense. And if we get into a place where the government is picking winners and losers, that's going to be a problem. So there's a lot of work to be done here. I do think it needs to be legislated. Otherwise, we're going to find ourselves maybe in a worse place, decently, than where we begin. Yeah. You know, I spent a lot of time in the commodity markets and commodity markets are often the sources of both reserves and stockpiles. Governments throughout history have stockpiled important commodities for many reasons. One is often political. Governance will stockpile in history wheat and corn because if the people don't have bread,

they often will rebel and it presents a risk to the political class. And so commodities have both been stockpile. China today stockpiles many things from rebar to ham and pork to wheat and others because they fear social unrest and having the necessary tools to build housing or to feed people are important reasons to stockpile. Then there's the notion of a reserve. When you think about a reserve, you think about something that has monetary policy consequences. The reason we stockpile gold is because gold historically is the basis for currency, and it has a monetary, it's a monetary tool, both offensive and defensive. You can buy or sell for the impact it will have on your currency.

And since the dollar went off the gold standard, many commentators would say it's actually remain on an oil standard. The global petroleum price is priced in dollars. And that's one of the reasons why we also have a petroleum reserve. It serves both a stockpile need if we need a petroleum, also serves a monetary policy. We can buy and sell petroleum to affect the global market price and therefore the conversion into dollars. And so Mike is absolutely right. Cryptocurrency, the different ones have the different chains, have different properties, whether as a stockpile or a reserve. It's, I think, easily argued that Bitcoin is different than the rest because of a monetary policy. Certainly when we have a period of time when BRICS countries are talking about,

stabilizing their currency using Bitcoin, then the United States can use a Bitcoin reserve, both offensively and defensively, against a rival currency group. So there's a lot of logic for a Bitcoin reserve, and many have argued that there's logic for a crypto stockpile for other purposes other than monetary. And I'll leave those champions to argue for themselves. I think Mike is absolutely right. We really want to avoid a situation where government's picking winners and losers. Yeah, for sure. One thing I did want to ask about is you probably have seen that there is a number of people in crypto, including Bitcoiners, who think that is strategic Bitcoin Reserve is actually a bad idea. And I was just curious what your take was on, on the concept generally.

I think there are both good reasons and bad reasons. I think there are positives and negatives. And we could probably fill a whole show with going into what they are. However, having said that, I think we may be past that point, candidate Trump promised a Bitcoin reserve and is Nashville Bitcoin speech, and they're going forward with it. I think there are lots of reasons to argue whether other blocks should be put in.

And there's champions all around on that. I think Mike's absolutely right. We do need to be careful where government is picking winners, especially not. fully enshrined in law. The one thing about the Petroleum Reserve is that was created by an act of Congress in the 1970s in response to the boycott, the cartel boycott or the cartel controlling American prices. And it's served through administration after administration both parties ever since,

as does our Fort Knox supply of gold. And so I do think we need to be careful about things that might be seen as short-termism protecting, you know, one L-1 or another, as opposed to something that's more lasting and really more part of national policy. My view on this is that it depends how you define reserve here. So when you just say, should there be a reserve without more clarification? So what that means, I guess I would lean towards no, there shouldn't because I'm very afraid you'd end up in just a buying and selling spree based on, you know, what the administration might might think. So if it can get codified in law with good logic, I think that makes sense. Also remember, like, Bitcoin is well over half of like the market cap of all of crypto.

So it stands alone in its size, both, you know, in the U.S. and globally. It stands alone in terms of its impact to affect global markets. The other coins are not even close. And that's just being objective based on size. So I think if you're going to have a reserve, there's no room for anything other than Bitcoin. I feel pretty strongly about that. And then if you're going to have a reserve, we need to be very careful that we don't end up with something that can be used actually to fight Bitcoin. And I am worried about that. As for stockpiles, I don't think these are resources that have achieved like the wheat or corn or oil type of level either.

So I'm pretty skeptical on those, although I'll say I could be convinced in some way, but I'm afraid that with a stockpile, you could end up with another similar type of thing. But I don't know, you know, the government's held onto a lot of gold for a long time. We haven't had presidents buying and selling it just on a whim. There's been a couple of points in history that have been clear. So those have been managed reasonably well without getting into politics. I do think this is a little bit of a different era, though. So, yeah, cautiously optimistic. Let me make one argument in favor of Bitcoin's reserve,

and that is just looking at history. Throughout history, most reserve currencies, throughout almost from the start of time, have been anchored into a precious commodity. We've been for probably the longest period, and I'd have to compare this, but one of the longest periods in history where the world's reserve currency is actually not anchored

into a precious commodity since we went off the gold standard. However, many would argue it still remains argued to a petroleum standard. But as the world now has shift, perhaps away from such demanding petroleum use and the dollar really becomes true fiat and unanchored to anything, we've seen, because of government profligacy, an amazing amount of debasement of the American dollar. I mean, I believe one out of

every four dollars has been created just in the last four or five years. So we're in a period of wholesale debasement. How much imagination does it take? And I don't think it takes a lot to imagine as we go into the 21st century, the currencies may once again be anchored to commodities, but this time to a digital commodity. As Bitcoin is the world's first digital commodity, demonstrating its enduring value, it's never been hacked, its hash rate continues to grow, its usership continues to expand. You know, it's not that far-fetched to think sometime in the future the dollar may become re-anchored to a commodity, but this time to a digital commodity, or certainly other currencies might be anchored to this commodity.

And therefore, actually getting ahead of that by creating a Bitcoin reserve now so that it's available should we decide to stop the debasement of the currency by re-pegging it, re-pegging it to a fixed supply commodity. You know, gold in a sense is sort of a fixed supply commodity in that you can only take so much gold out of the ground at any given time. That's why it serves so well as a anchor to currency. throughout history. Well, maybe a better anchor might be a digital one. And so I think it's not that far-fetched to think about a reserve currency for Bitcoin primarily because it's the most likely

source of currency pegging in the future, whether it's the dollar or another currency that might become pegged to it. So well articulated, Chris. There is going to be currency wars. And Ray Dalio talks about cycles that, you know, he's absolutely right. You know, sooner or later, the dollar will falter. What happens as a result of that? We don't know. I still think it's going to be the best out there. But of course, China, Russia would love to figure out ways to trade without using dollars. And there's a real possibility they could move onto something with Bitcoin because the Russians don't trust the Chinese and the Chinese don't trust the Russians. So they might be looking for something to do. And it's now estimated that actually China may have a larger stockpile

of Bitcoin than the U.S. does. All right. So imagine this starts to just falter, right? Brick starts to move more on towards a Bitcoin type of standard. It's not clear that the U.S. political affiliation in the Middle East is as strong as it was in the 60s and 70s. Those guys are going to go and do what business is going to be best for them. And they're in a very different position than they were back in the 60. So, you know, the idea of them following the petrodollary model, maybe they will follow more towards a Bitcoin model. So for this, it does argue very much that the U.S. would be well advised to have a a backup system in case, you know, something does change in terms of how payments are made around the

globe. Yeah. Yeah, that makes a lot of sense. But it definitely takes a certain kind of person who can like play the chess out that many moves to understand that. Whereas, yeah, I feel like so so many people in the world can only see like the next chess move. But anyway, so in a moment, we'll talk a little bit about how a strategic Bitcoin Reserve aligns with crypto principles. But first quick word from the sponsors who make this show possible. Hi, I'm Matt Hogan, CIO of Crypto Asset Manager Bitwise. Look, crypto can be confusing. There's so much noise and the space changes so quickly.

That's why, every week, I write a five-minute memo on the biggest stories impacting crypto in plain English. Why is Bitcoin up or down? What are people missing? Where should investors look next? Get the lowdown every week. Sign up to get the weekly CIO memo delivered straight to your inbox. Go to bitwiseinvestments.com slash CIO memo. That's bitwiseinvestments.com slash CIO memo.

Carefully consider the extreme risks associated with crypto before investing. We have another listener comment. This one responding to David Nage's questioning of why Cardano was initially named to President Trump's Crypto Reserve list on X unhappy. Ben said such a polite way of calling Cardano worthless. Again, if you want to hear your comment featured on the show, please read a review or leave a comment on an episode on YouTube or X. Back to my conversation with Mike and Chris. So there was an interesting topic that came up on a recent episode we did here of the chopping block. And I wondered what you thought of whether or not as strategic Bitcoin Reserve being owned and, you know, I guess grown or increased by the, in my opinion, only remaining superpower in North, at least at this moment.

Do you think that that is against the principles of decentralization to have like a really big owner of some chunk of Bitcoin? Well, sort of. But we already have that problem. And look, as as Bitcoin distributes more globally, it will it will level out. But I think actually if the U.S. starts to formally say we're going to have a reserve, which we now have done, it also signals to every other country around the planet that they better start taking the same thing. And by the way, I think some of them may already be ahead of the U.S. So we might be the ones playing ketchup here in this clandestine war that's out there. But I think every government actually is going to do this. One other thing, remember, the U.S. has, if there's one country that doesn't need a reason, if you want to make an argument the other way, the U.S. is the current, you know, with the U.S.

dollar is the current reserve currency. The only guy that doesn't need a secondary reserve if you think the dollar is going to always work is the U.S. Now, anybody else that's at the whim of the U.S., like if you're down in El Salvador, which completely uses dollars, you know, they have no control over what happens with their currency. It's completely decided by the U.S. They might be a lot more interested in having some other path forward. And then, of course, those that want to trade away from the dollar like the Chinese, like the Russians was mentioned, you know, they may as well.

Anyway, I think what's going to happen is every country is going to need to do some of this and it'll end up being that there's enough large pools out there that are balanced. It'll work out all right. But yes, you know, there's a great experiment, which is Bitcoin and how does it distribute, how does it work over time? How do the fees continue to cover for all the miners and increased as rate and all that? But these things have a tendency of sorting themselves out when there's real value behind it. And there's $2 trillion a $2,000 a half of value behind Bitcoin today.

So there's a lot of interest in parties in figuring this out. And I think that won't be a problem. And actually, what if I ask the question just slightly differently, which is I've seen a lot of chatter about how this represents a divergence from cypherpunk values. there's been like some funny memes going around about how Bitcoin's, sorry, CyberPunks used to be against the government and not have any, not want to have anything to do with it. And now the Bitcoiners want the government to own a lot of Bitcoin. And I wondered what you made of those comments. Yeah, you know, there's a lot of people that say crazy stuff out there. I think it's, it's perfectly viable to have people that are excited to stockpile gold in their backyard and be either pro or against. I just, I don't credit all voices. I would say that, you know, as an asset class matures from its early adopters and their ethos to realizing its potential that those cyberpunks advocated, well, then actually the policy

sets become much broader. And cyberpunk values have to yield to some extent to even, you know, broader issue sets of national sovereignty, of national policy, and other things. I think it's both a testament to the success of Bitcoin that we can be thinking about it in broader issue sets than just perhaps its original ethos. There's no question that Bitcoin now is on the minds of major government and geopolitical powers much broader than its initial authors. And that's both a sign of its success, but it also means we're in a new phase of thinking about it. You know, one of the other disappointments I had from the previous administration was, and this is, this, this, that's continued from prior administrations on both sides,

of wielding the dollar as a reserve currency for its power in terms of its ability to sanction and, and influence behavior around the globe. But that is a sword that if you use too often eventually becomes dimmed and less sharp. and what it's time now to start thinking about, if we really want to preserve the dollar's reserve currency status, then we need to be more judicious in its usage. But more importantly, we need to continue to make the dollar the world's most attractive instrument. And there's two elements to that. One is we need to modernize it. You know, the dollar network is the world's greatest network perhaps ever than been created. It goes into more corners of the globe

in society than ever before. But it's like a network where we're running old steam engines on it, the dollar in its analog state. And in many ways, what stablecoins are, it's a new type of high-speed train on that old network that's going to be able to meet dollar demand around the globe like never before. And it is time to get stable coin legislation done and allow American private industry to meet that demand. But there's another element to it.

It's more the soft power of the dollar. We need to make sure that in a digital. future of digital dollars that we preserve the values that got us here. The dollar, you know, is probably not only the greatest network, the greatest brand the world has ever known. It's a greater brand than Nike or McDonald's or, but with it comes values, values of free enterprise, free financial expression, free of government censorship and government control, at least for lawful activities. getting the balance right between law enforcement and individual, not only autonomy, but privacy in one's transactions, is critically important. So as we think about stable coin legislation, we need to think

about it, not just in authorizing stable coins, but also making sure we get the values right. We don't want a stable coin operator to become like Apple with a walled garden where in their walled garden, you can use certain apps, but you can't easily transact with other dollar instruments, because we want to make sure a dollar is a dollar is a dollar, no matter if it's operated by this operator or another. So interoperability is critically important. As is privacy. One of my biggest disappointments is stable coin legislation is the word privacy doesn't even appear. There is really no privacy protections in the current legislative proposals. So with that in mind, the digital dollar project, which I've been involved with for five years, will be releasing a paper in the

next week. And we're going to be focused on some of these issues of how do we innovate the dollar into a digital future, but do so in a way that is as ultimately modernized as possible and digitized, but also retains the values that has made the dollar so popular around the world for people that aspire to financial freedom and financial autonomy. By the way, I think, Chris, I think I might have been the only person last Friday. I put privacy at the top of my list of things for the legislators to consider. I also share that concern. Going back to the reserves real quick, actually, I think the cyphorunks are getting what they want with the government starting to move towards a Bitcoin reserve, although this is only step one. This is not like a gold-backed currency

yet. But if you're going to get back to a currency that is backed by something rather than fiat, the first thing you have to do is you have to have the governments have ability to have it. So I think it's perfectly compatible. I think the cyphepunk should sell it. deliberate. There's been a lot of complaints about what happens since 1971. And that's the cyphorpunk value around having having a backing to it. I did think about your privacy comment, but in the spirit of Chathamouse rules, I didn't want to give it up. So I'm glad you were, you brought it up. Well, I just want to talk a little bit about the other aspect, which is this digital asset stockpile, but also refer back to, I think it was Mike's comments earlier, where, you know,

you said you wouldn't be supportive of a strategic reserve of anything other than Bitcoin. And, you know, obviously we saw the reaction people were very upset at the notion that XRP and Ata in particular would be part of a reserve. But, you know, a lot of people, even Ethereum people are saying, yeah, I don't even think ETH should be part of it. So just talk a little bit about why it is that, you know, you, I think both of you are not supportive of that and why you think others are not as well. I think Chris stated it pretty eloquently. you know, the possibility for Bitcoin to be a backing and or a direct asset used by major nations to conduct commerce is real. That's not true for anything else that I'm aware of. And just based

on size, I think Bitcoin stands alone. So if you wanted to have a Bitcoin reserve policy, which was still open to maybe having other assets in the future, I think you could divine this other criteria, which would mostly end up looking like what Bitcoin is and why it's uniquely suited for anybody else that would be in any other coin that be included in the in the reserve. Let's talk a little bit about the mechanics of these reserves and stockpiles. One of the things that candidate Trump talked about and complained about with the private administration was the fact that they were selling off crypto that they had seized as part of law enforcement operations. Law enforcement seizes crypto all the time. In fact, they don't even know how much seized

crypto may exist on smartphones taken by local town law enforcement for DWI arrests and other things that may be sitting in, you know, local sheriff's offices. And when the Fed, when the Fed sees crypto, under the Biden administration, they sold it pretty promptly. They were selling Bitcoin at $3,000, $10,000, $20,000, $30,000. And candidate Trump said, that's crazy. You know, had we held on to this, we might be able to retire some national debt with it. And so the first step in this administration's mind is just stop the selling. Then if you create a reserve as we're talking about here, and I think the administration is talking about for Bitcoin,

you may then actually add to it through other means. And I think they are looking for other means. And one of the means that we talked about was my idea about a modern day private pioneering program. With regard to the other cryptos, I think the idea is just stop the selling. So inadvertently, or not inadvertently, but you build a stockpile, not because you're out buying, but because you stop the selling. You know, they can continue to sell the yachts and the laborings of criminals that they catch, but just hang on to the crypto and see what happens.

I don't think that's a bad strategy. I'm not opposed to that. I do, as I acknowledged before, I think there is a difference between Bitcoin. It's monetary impact. both on the dollar and other foreign currencies and other cryptos that I don't think have that same monetary impact. But I'm not opposed to an administration policy of not releasing seized cryptos, certainly not immediately and regularly, as was done before. They may want to wait and see and see what happens if for no other reason that the price may appreciate

that may actually serve to help us with our national deficit issue. So let's just, I think the ideas, let's see how it plays out. Yeah. And one other thing I wanted to mention is that the government will actually be keeping forfeited funds or forfeited assets. So I think actually the amount of Bitcoin that the government currently holds is not what they'll be keeping because they, as far as I understand, still have the BitFinex hacked funds in their possession.

And I think that's going back to BitFinex. And it's a substantial amount right there. But one other thing I wanted to ask about was the executive order committed to finding some budget-neutral ways to accumulate more Bitcoin for the strategic Bitcoin Reserve. Do you have any particular ideas on how they might do that? Well, I've mentioned one before. Let's go hack back from the Lazarus Group, the hack crypto they've got. And Mike's point is absolutely well taken. Much of that should go back to the people for whom it was stolen.

But, you know, there should be a share for the privateers who get it to make sure they are adequately compensated. for their losses, and I wouldn't be opposed to the U.S. government compensating itself for whatever assistance they provide, intelligence or otherwise. So it could be a net win for everybody, and it doesn't require a single dime of expenditure of taxpayer money. Yeah, by the way, if the government does that, I have some people in mind. They should hire Zach XPT, Taylor Monty. Somebody named John T, who was on my show, but he didn't give his last name. But anyway, we have the talent here. Actually, there's talent worldwide. You know, John Paul Jones was non-American citizen when he was commissioned to raid British shipping. He was an Irishman.

I'm sure there's some pretty savvy groups in Asia and Far East and other places that could assist us with this project as well for appropriate share of the reward. Well, another one that I heard, which I like, is allow Americans to pay their taxes in Bitcoin, potentially not having to pay capital gains as they do so. It kind of makes sense if it's being held in kind. that value is already being accrued back to the government. So I don't know. I think that could cause a pretty, pretty easy one. Obviously, if the government's looking to spend the cash, they've got to use the cash, but they would now have the reserve and that reserve will continue to grow. So I think it would

be super easy. People just pay their taxes in Bitcoin. Done. I had another one, or it wasn't my idea. I saw this and I thought it made a lot of sense, which was mining because obviously you had the initial capital expenditure, but then you would break even at a certain point. So anyway, Very interesting. Okay, so here's one counter opinion that I wanted to hear you guys discuss, which is Oman Malikin, a Columbia business school professor, tweeted this little parable on Sunday, or maybe it was an actual story. I don't know. He said that he lent a friend money who didn't pay him back but bought expensive clothing. And the friend would, when he would protest, the friend would say, you should be happy for me. This shirt is going to help me land a killer job. I'll get a fat paycheck

and pay you back. And Omed then said, I was upset because instead of buying the shirt, he could have just used the money to pay me back. Why am I telling you all of this? Because this is an allegory of America's new Bitcoin strategic reserve. Adding to it might be revenue neutral, but it's certainly not debt neutral. Every new dollar that goes to buy more BTC could also be used to pay down the debt. So what's your take on what he's saying here? I think it's silly. So I mean, you can attack Bitcoin with that. You can attack any other expense with that. I mean, it's like, okay, yes, they should spend less, all right. And yes, we have a massive debt, which is going to take years to address.

But it's just an oversimplification of the problem. So, I don't know, it doesn't sound becoming for a alleged Columbia professor to be making such silly statements. I give you the perfect example of what he's saying. When government funds pure research at universities, that may someday lead to cures for diseases, but we don't know. It's just... Too shay. I'm going to pay down debt.

Okay. Okay. Yeah. I mean, that's the intention of Senator Lummis's bill. I don't remember. Did she put a year on it? There was a rumor that there's something like $400 million went to Columbia from the government last year. So why is this private and just private college getting all this money?

And then they turn around and attack the U.S. is terrible. Well, yeah. Maybe we can tell that professor that he should petition Colombia to turn its 400 million back to pay off U.S. debt. Yeah, I mean, obviously, he wasn't speaking on behalf of the university. He was just tweeting. So now let's take a step back and talk about this administration's activity and crypto overall. So I understand this tweet came out the same day that, or it was in response to, I think, Trump tweeting about the, the Ada and XRP reserve. Nick Carter, who's known to be a Bitcoiner, tweeted, quote,

rating Trump's crypto schemes according to how crazy they are in chronological order. Trump NFT, 3 of 10. Low stakes was kind of cool at the time. World Liberty Financial. Seven out of 10, kind of an insane thing to do ahead of the election, started as vaporware, now an extremely questionable slush fund thing that Justin owns a lot of bad vibes on this. Trump coin, 9 of 10, completely unhinged, just a crazy move overall. Blandia going, 6 of 10, kind of sat at this point. Crypto Reserve featuring Aiden, SRP, 10 of 10. I don't even know what to say about this.

Government bailout for your buddy who gets crypto news from TikTok. What's your take on what he said here? Look, I've been around politics. I was originally pointed by President Obama and was there during Trump 45 and then have watched the Biden thing. You know, with politicians and governments, you get various different ethos. So much value destruction happened under Biden. Unfortunately, this is a different crew of people in the White House.

This is, I think if there's one common denominator, they're all entrepreneurs. These are people that they're not going to stop being entrepreneurs because they've got into politics. They look for ways to create things and sell things and market things. and you get, you know, if that's not to one's taste, well, you get the good with the bad whenever you get, you know, any group of, with government, with politics. So I would much rather the focus of policy be on crypto as a new financial architecture, but there's no question. And it's not, by the way, it's not just a Trump team. This whole industry focuses on crypto as speculation. Number go up is the most common question I'm asked.

whenever I do an interview, I come in and say, let's talk about this new architecture of finance, and it always seems to be his number going to go up. And so, you know, I hate to say it, but the speculative side of crypto is just the opposite side of the coin of its utility. You know, I like to make the analogy that crypto is as transformative to the American economy as the railroad was back in the 19th century transformed a series of regional economies into the mightiest economy the world has ever known. And that was because of the railroad. But the way railroad stocks were sold was completely speculative, was completely out of control. And some of the biggest builders were themselves some of the biggest speculators.

And so with crypto, you can't get far away from the speculative side, even though it's a massive technological transformation. And so, you know, I don't care for a focus on that speculation side, but we're all guilty of that's our focus when we look at crypto. and it's not surprised that some of the architecture's biggest champions themselves are also focused on the speculative side. Yeah, I guess I think Nick's statement's funny, right? And it's a bit of a trap, which is it's hard to justify the actions of individuals necessarily across your principled approach for what you think should happen with market and policy, etc.

So it's certainly true that, you know, Trump has had a number of initiatives that sometimes you're kind of surprised at heck, he sells Bibles as well, which is something that I find unusual, but certainly no one would argue that he should not be allowed to do so. So the good news here, like really is that we actually have an administration that wants to figure out how to use these things. My own personal opinions, I think meme coins are going to probably be around forever, and they're going to come and go and sometimes something interesting happens, and a lot of times, you know, not very interesting happens.

The former, you know, administration made it so that government employees can't even hold any crypto. So how is it that you're going to learn about this, use this, figure out how to regulate it, if you're not even allowed to touch it and see what it looks like. So I'm glad that we have the new policy in. From what people do in their private side, look, it's what they do. I don't care. Of course, the president should be able to engage in it, just like everybody else should be able to.

With regard to the reserves, I think we've talked about that. And I think it kind of depends on what you mean when you say reserve and where we go. And I think that's still unfolding. I think it's probably going to unfold fine. And do you see conflicts of interest or other issues around the Trump meme coin or activities with World Liberty Financial. I think you probably heard this BlockWorks report that World Liberty Financial has been approaching different crypto teams, but then offer that if they buy $10 million worth of unlaunched WLFI tokens with a 10% fee, then World Liberty Financial will buy the same amount

of that blockchain's tokens. What do you think of those kinds of activities? I mean, look, private industry does what private industry does. I think it's perfectly fine. You can always argue that there's conflicts of interest. I think an interesting example for our political situation right now is do you want leaders in your country that are already independently wealthy, or do you want ones that aren't? Elon Musk tweeted recently, you know, maybe we'd be better off, you know, paying all Congress people a lot more money so that they would be less subject to, you know, bribery and corruption types of possibilities. Of course, there's been recent events, not related to the presidential level, but of convictions here. I forgot the guy that had gold.

old bar stuff, right? One thing that you get when you have business people is they have businesses. And then everyone always says, oh, well, look, his business is tied to his is being present or whatnot. But even if they don't have businesses, you know, the amount of money that they go on to make right after they finish in office is massive because there's tremendous demand for them to speak, write books, do all sorts of things. So if you have a business person in the office, they will always have conflicts. It could be hotel chains. It could be something else. They will always have it. The alternative is to have people that don't have anything. They don't know anything about business.

They don't know how money works. They don't know what market structure is. They don't know how to make jobs for people because they've never done it. And then because they don't have much money, they're actually a lot more subject to the temptations that go on with corruption. So anyway, I think it's a yet and a yang a little bit. If you have someone that doesn't have business ties, you've got one set of arguments and rejections against them of you.

Another one that does have business ties, you're going to say it's conflict of interest. And, of course, you can't deny that there are potentials for conflict of So I'm not denying that. I'm just saying that isn't that inherent with having great business leaders get into politics? Yeah, I mean, the only thing is I wouldn't automatically assume that just because somebody is already wealthy doesn't mean that they wouldn't do something sort of grifty. I think, you know, Trump being potentially a billionaire and then doing the Trump meme coin is probably a good example. But you probably do believe in just basic free markets, right? And everybody is here individually working to figure out how to butter their own bread. And so what is it grift, right? I mean, if you're doing a legal token and other people buy it, one person calls it a grift, you're ripping everybody else off.

The other one person says, well, look, I'm doing what I can to see how these baseball cards trade. And baseball cards, by the way, are definitely securities. It's just we've never treated them as such, but they certainly meet all the properties. Yeah, I mean, I do think, like just going back to the Justin's something, which I think Nick tweeted about in reference to, what was it? Oh, yeah, I think it was the meme coin. or no, it was the World Liberty Financial, but just like people were pointing out. And I didn't like do research on this. So please correct me if anything I'm saying here is wrong. But

apparently he owns some significant chunk of the Trump mean coin, which I think, if I recall correctly, was like $75 million worth. And then his case was dismissed by the SEC. I did not write a question. I didn't do any research to write about that. I'm just saying something that I heard. So I don't know if you guys. Well, Brian Armstrong got front and center the other day. his case was dismissed by the SEC. So is he also, you know, doing this? I mean, you can make this argument in a lot of different ways. Okay. Well, yeah, but that's, I think, more like a registration violation. I don't know, Chris, what, what's your opinion on all that?

They said they were selling illegal securities. Now they don't. I actually really, Mike, I articulated so well. I'm not sure I can add more. Our country was founded by entrepreneurs. whereas our country was, our original leaders themselves were people of finance and commerce. And there was no permanent bureaucracy. We've created this permanent bureaucracy. And I'll tell you what, I tangle with those ethics rules when I was in government. There's not a lot of logic to them. They're mostly just a compilation of past scandals that then result in some rule to prevent

that from reoccurring. But there's no overall logic to how they work. And Congress is exempt from most of it. some of the biggest insider traders in the world are congressmen and women. There's now a new program that you can match Nancy Pelosi's trading to build your own portfolio because it turns out she's the greatest stock picker the world has ever known. And these are people whose permanent job is in government. The difference with the Trump administration is these are people that are just here for a short while.

They've built massive amounts of value and wealth in the private sector. Look, I'm proud of my service in government, but at heart, I'm a big believer. What makes America so successful is our entrepreneurship, is our aspirational society. The rest of the world comes here to build businesses and dare say it, to get rich. And that's why we put men on the moon, and that's why we've pioneered this new innovation, and that's why we've created the internet. that, you know, with achievement comes moneymaking. So, you know, I think we've got to be careful not to get up on our high horses too much.

We're definitely going for a lot of changes. But the value destruction that took place in the last four years is a travesty. And it needs to be called for what it is. And so I'm willing to have this creative juices of this new administration also reflect in some crazy, you know, merchandising campaigns, I'm not terribly bothered by it. As long as the policy stays neutral, the policy stays positive, the policy stays conducive to economic growth and a return to prosperity. So I'll call it as I see it as we go along, but I haven't seen anything so far that it's got me terribly upset. Yeah. I mean, I get what you're saying, both of you. I do think, though,

that there is also merit to my question because that's probably the reason why David Sachs divested of his different investments in the crypto sector. So I do think, you know, people have different lines. And David, David Sachs definitely chose the one where he would make sure that there was no even appearance of a conflict of interest. And, you know, we could say, at least in my opinion, Trump has gone further than that line, which is definitely a question for a good debate, which, you know, that's why we are seeing a range of opinions on this. All right. So I definitely want to end on stable coins, which we kind of started a year into. And I think that it is an area that kind of blends what we've been talking about, about like the U.S.'s power and how crypto can be a

part of that. And we started to talk a little bit about, you know, different elements you'd like to see in a stable point bill. But do you want to just expound on that, like what you're hoping for and what you think is already kind of in the works? I'll start. Yeah. I mean, first off, my excitement about stable coins is just so high. I think stable coins are the bank. you wish you had, but you never had. It's not fractional reserve. It's, you get the risk-free rate instead of 0.1% and it's usable 24 hours a day, seven days, as good as PayPal and cash up and Venmo and all that stuff combined. So this is actually what you wanted from a bank but never had before. And the good news is there's lots of people excited about this and I think we're going to

see tremendous innovation. This is the path I think the U.S. uses to seal its power and its statuses a reserve currency of the world forever. I see a couple of things happening at the macro level. I think ultimately, all coins, I'm sorry, all currencies other than the U.S. dollar, more or less fold into the U.S. dollar. And I know that the Chinese won't be excited about that for a while. It's going to be a long multi-decade process. But I think if we play our cards, right, there's only one fiat currency left and it's the U.S. dollar. By the way, staple coins already exist in the old world. You may know the Hong Kong dollar is pegged. It's a one-to-one reserve against the dollar.

The United Aramis also has the AED. That's a algorithmic stable coin. It's partially reserved against the dollar and partially reserved against oil and other things. So the idea of stablecoins has been around for a long time. This is just an electronic form of it. Codifying that in a way that we can make business help back up to that and take it to the rest of the world is going to be huge.

By the way, the Federal Reserve system is sort of like this. It's a combination of public and private sector entities coming together to deliver to the U.S. I kind of rambled a little bit there. I didn't hit specific points on the legislation. I'm a stronger believer in the one-to-one backup for stable coins. I think algorithmic has a lot of problems that, that unfortunately may not be found until it's too late a la Tara Luna.

And I think we know how to deal with this thing, like audit it and run it by reputable people, even if you do share accounts, you know, the regular stuff. I think Mike's absolutely right. I mean, what stable coins have already shown us in their. new digital format is the global demand for dollars has here to for not being fully adequately satisfied with the dollar in an analog state. And I think that they've proven that out. And now what we need is good grounding legislation here in the United States. Now, my concern a little bit is that a lot of the driving for the legislation is simply to create more demand for treasuries,

a demand for treasuries that Dodd-Frank somewhat hindered. The banks don't have the capacity that they used to do to buy and hold. And so with stablecoin legislation, stable coin operators will be large buyers of treasuries, and that will be good for servicing, creating demand for U.S. debt. But we've got to go beyond that. That can't be the only driver. I think that for stable coins really to fully blossom as if expressions of America's economic strength and America's values, we've got to get the values right in the stable coin legislation. And I think there's more work to be done to make sure that stable coins are protective of privacy, that they're not subject to government telling the stable coin operator, we want to see all your

data on these transactions, send it over to us. And remember, unlike a central bank digital currency, which would be governed by our Fourth Amendment in the United States and right to privacy, Stablecoin operators are not subject to Fourth Amendment, there are no inherent privacy rights in a commercial stable coin other than what Congress may impose. If the current legislation stands, it imposes no privacy restrictions on stable coin operators. And so it could actually be a backdoor. You might actually say, government, we don't want CBDC because we can get all the data we want directly from a stable coin operator that we couldn't get directly from a central bank digital currency here in the United States. So the privacy issue is very important. We've got to get that right.

We've got to get other issues like interoperability right. I'd hate to see a prominent stable coin become a walled garden for only its users where applications or smart contracts couldn't be used on it unless that stable coin operator got a piece of the action. You can imagine different because we've seen it in earlier versions of the internet, internet 1.0 and especially 2.0 where that happens. We don't want stable coins to become actually a barrier to the Web 3 economy that we'd really like to see. So there's more work to be done. I hope the Stapcoigne legislation advances.

I certainly hope it passes, but I hope we can get some enhancements in before it does. One of the things I've been pushing for, Chris, that you'll like the travel rule, which has been around, I think, since like the early 90s. Actually, today is a privacy issue that, you know, it slips by most legislators and regulators. So when you didn't have the technology of the blockchain, okay, so there's some goodness with exchange. And for those who don't know what the travel rule is, it's basically institutions when we're sending money over certain sizes. We share information about who the sender and the receiver is so that you can kind of make sure that it's going to bona fide actors from bona fide actors. And it's personal, like identifying information. So stuff you don't want stolen.

But the law was written so long ago. It's your snail mail address, right? and it doesn't even really relate to like modern things at all. But it is there. But when you combine that with blockchains, all of a sudden, the receiving bank now knows not only that it received this money from Bob, but also all of Bob's previous transactions that he ever did. So we actually don't need the travel rule when it comes to digital assets, which is the argument. I was just a treasury.

I was making this argument again. The reason we don't need it is because we already have the blockchain, which is way better than the travel rule ever was for tracing transactions. Now, so that's one aspect of privacy. Like just if you combine the analog rules of the past with the digital rules of today, even though it's the same rules, you know, not against kind of either one, the combination of the two when working together all of a sudden creates privacy problem that didn't exist when everything was analog. So that's one issue where you just kind of have to make sure that like the new world

is actually able to get some changes to the old world because it's already got improvements built into it. The other part of privacy though, I think, To be honest, there's very few blockchains that are focused on privacy. And in fact, our regulators have taken a negative view on those that do and just assume that anybody wants to enforce privacy must be doing drugs. And so, you know, Man Arrow is out. Zcash is here.

Now, Zcatch did a kind of a little, I guess, a layup. They made it so you can write it either in shielded mode or not shielded mode. So we're allowed to use it in non-shielded mode, but DFS won't let us use it in shielded mode for basically just preded. declaring that anybody that's using shielded mode must be doing something bad. Anyway, these things are real issues. Unfortunately, Chris, I think privacy is unlikely to get there as much as you and I might like it. It makes me think back to what happened with Facebook, right?

And Laura, you probably remember this too. Like 2005, 2006, 2007, everybody's getting excited about Facebook. They're meeting all their old high school buddies, et cetera. Like, oh, my God, Facebook's getting so much. Oh, my God, they have so much information about us. Ha, ha, ha. And then 10 years later, like, what? They have so much information about us.

So, you know, we knew exactly what Facebook was getting. And we did it voluntarily. And then after the fact, we complained about it when we didn't like certain aspects that accompanied that, which we knew was going to happen. Anyway, we definitely need privacy built into the base layers. The problem is I think people don't get upset until it's too late. And what I fear is what Chris is fearing, I think, which is that we're going to end up with stable coins that don't have any privacy protections in them. And then by the time we wish we had it, it'll be impossible to come. the cap back in the back. Right. You're absolutely right, Mike. And there's another reason why,

sadly, I think we're not going to get it in the stable coin legislation is big bank interest don't want stable coins to meet more private than bank accounts. They don't want there to be an incentive to use stable coins that's more private than your bank account where you really enjoy very little privacy other than whatever the bank promises you, but there's nothing in statute. The Bank Privacy, Bank Secrecy Act actually doesn't provide for bank secrecy. It provides for banks to disclose information to the government and elsewhere. So they'd be very worried. They're worried about stable coins might be a place to house money,

which is why I don't expect the legislation to allow for interest payments on dollar-based stable coins either, because it would compete with bank accounts. And I think some of those bank lobbyists wouldn't want to see privacy in a stable coin as well. Wow, this is so interesting because I remember for a while there was an argument that this wouldn't take off with TrotFi until there was more public. as he baked in, but maybe that's exactly the reason they don't want. Oh, this is hilarious. No, we should talk about that law.

So, you know, there's institutional grade and then there's retail grade. And the institutions like, they have a habit of, you know, getting what they need, even though retail may not get it. For instance, on trading, when it does come trading, there's a lot of permissions of blockchain ledgers being built. And the reason is, is because the institutions that have been doing trading for years, they know they don't want their, they don't want their competitors to see what trades are going under the chain. So you've of course, we've all heard of MEV, minor extractable value,

et cetera, it happens on defy all the time. You know, you think you're about to make some transaction that's smart and somebody snipes you right in the front of it because they, in front run you basically, on the blockchain. This is an artifact of not having privacy on the chain. All right. So in institutional money, the banks, et cetera, you know, they're working on their own private permissions ledgers. And why do they want that? Because they want to control exactly who can see this information. So they're staying off of the open ledgers in order to make sure that they can have this feature. What would be better? What would be better is, well, why don't we figure out how to make that feature available to everyone so that actually also retail people

are not subject to MEP and front running and all this type of stuff by putting privacy on chain up front? Anyway, what I think the banks are trying to do is they will try to do their own private ledgers and they'll be able to get some of the advantage of the blockchain. Like, ultimately, they'll lose open, always wins. History shows us this. I don't think it'll be any different here, but it would be, we would all be very smart to get privacy built on the layer ones a lot better than we have right now. And I would argue that if we get privacy right in a digital dollar, that would be another reason for the dollar to remain the world's reserve currency, because not necessarily because it is value, but because of its values. If your alternative

is a digital yuan, which is a surveillance tool, or a digital euro where they tend to track where every euro goes, or a dollar where we get the balance between law enforcement and privacy right, the dollar will be the world's aspirational instrument in a time when everything else, quite frankly, has gone to the lowest common denominator of government and in some cases commercial surveillance. But Chris, we might be able to get stable coins, you know, push through today that don't have privacy. And like, stable coins are going to be able to move on many chains. And you could imagine a world where we get stable coins going, there's no privacy built in. And then as the technology gets ready and sort it out, there's some point where actually people are like, you must use it.

Or maybe we'll just end up with competing ones where some are running on chains with privacy and others are not. And then, you know, the market gets to decide which one they like best. That's probably where we're going to end up. I start from a different point of view that the dollar as a brand, the dollar as a concept belongs to the American people. And just like if you want to license the Nike brand, it comes with a set of parameters and restrictions. I think there'd be nothing wrong with the U.S. Congress saying on behalf of the American people, if you want to build a dollar-based instrument, it comes with certain values that you need to protect, and one of those would be privacy.

But if our government's not going to basically lay claim to its own intellectual property and put down those restrictions, and it may have to be the private sector that comes up with those standards. You know, that's a good point, Chris. Just the trademarking of the USDA could be enforced by the government. So there are algorithmic stable coins that call themselves, you know, know, certain something USD, everybody wants to call it, USD, USDA, USD. But, you know, what barrier, what bar do you have to hit in order to call yourself a dollar?

You know, does it have to be one-to-one backed or not? That's one question. Does it have to have privacy features? Does it have to have audits? Like, when do you get bad moniker? Exactly. And right so far, there's not a lot of restrictions placed or not of conditions being placed on stable coin operators.

And that may be where we're going up, but that's all right. we'll get there some other way. And as you say, I did it. Yeah. I did a Twitter poll, actually, I think about four or five months ago asking this exact question. I said, should non-one-to-one-back stable coins be allowed to call themselves U.S.D. If I recall correctly, it was about 75% to 25, saying you shall only call it U.S.D if it's

one-to-one back. Right. Yeah, I do remember, I think the last time, Chris, you were on the show, you talked about trademarking the U.S. dollar if people want to reference that, all right, you guys, this has been such a great conversation. Can people learn more about each of you and your work? Mike? Super easy. Bitco.com.

Mike at Bitco.com. Happy to hear from everybody, honored and privileged to have been in this industry. As long as we have been, so much more good stuff to come. Best, most fun industry ever. Seriously. People can look me up at my website, Cryptodad.org. I'm also senior counsel at Wilkie Far and Gallagher and also chair of the Digital Dollar Project at Digital Dollar Project.org.

and we've got a major working paper coming out in a few days that perhaps Laura, we can even post on your blog. I think people would find it very interesting. It encapsulates a lot of things we've just been talking about. Perfect. Well, it's been a pleasure having you both on Unchained. Thank you, Laura, for having me. Really appreciate it. Thanks so much for joining us today.

To learn more about the White House Crypto Summit and a strategic Bitcoin Reserve, check out the show notes for this episode. Unchained is produced by me, Laura Shin, with all from Matt Piltered, Juanir Ranovich, Beck and Gavis, and Marka Coria. Thanks for listening.