Unchained - Why Trump’s SEC Chair Pick, Paul Atkins, Is So Positive for Crypto - Ep. 745

Starting point is 00:00:00 Paul is a, he is deeply, deeply steeped in the industry. Again, he's not someone who's just talked about crypto a little bit. And it's something that he's been forced to talk about because he's been interested in this role. Paul has been one of us fighting for clarity, regulatory clarity, fighting for this technology to not only survive, but just to exist. Hi, everyone. Welcome to Unchained. You're no high resource for all things crypto. I'm your host, Laura Shin. This is the December 6th, 2024 episode of Unchained. We're starting a new tradition here.

Starting point is 00:00:35 We'll be including show comments on the recent episodes in every recording. To start, here's two about last Friday show featuring Kartik Patel on Anoncast, the Farcaster app that allows people to send completely anonymous posts using zero knowledge technology. Kelsey Ruiz said, quote, the lore behind this does not disappoint. And Maxime Veznov tweeted, So at Slot. which is Kartik, built a non-cast in a weekend with no prior experience in ZK. It is amazing to watch the noir-laying thesis play out in real time.

Starting point is 00:01:09 This is just the beginning. Remember, if you want your comment or review to be mentioned on the show, please comment on any of the recent episodes or social clips on X or on YouTube, or you can leave a review for the podcast on Apple or Spotify. Overwhelmed managing crypto investments? Meet Eyeield, a free financial planning tool for crypto natives with automatic defy yield tracking. Unlike portfolio trackers, iYield provides a complete financial view of assets, debts, income, and expenses in crypto and

Starting point is 00:01:40 fiat. ditch the spreadsheets and take control at iYield.com. Pocod is the original and leading layer zero blockchain with over 2,000 plus developers, and the Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem. Join the community at Pocodot.network slash ecosystem. system slash community. Today's guest is Cody Carbone, president at the digital chamber. Welcome, Cody. Thanks so much for having me. Great to be here, Laura. This week, President-elect Trump officially nominated Paul Atkins to be the next SEC chair. You're very familiar with Atkins, who has been co-chair of the Digital Chamber's token alliance. Assuming he is approved by the Senate, what would you say would be the significance of his potential tenure as chair of the SEC for the crypto industry?

Starting point is 00:02:30 It's a massive shift. I mean, getting someone who is not an outsider who knows the SEC inside and out has served as a commissioner before, but also is familiar with digital assets. And not only familiar with digital assets, but has led on it. You mentioned that he has been a co-chair of our token alliance, which is really our capital markets working group. He has been influential in the policies that we put forward representing the entire industry. It's not that he only understands this industry. He's been a part of it. He gets it.

Starting point is 00:02:58 He understands the problems. He understands the problems with the current SEC and this regulation by enforcement posture. It is a massive transformational shift for how the SEC will approach the digital asset industry going forward under a Paul Atkins chairmanship. So obviously because of how the SEC has influenced the crypto industry, especially over these last few years, I think the industry is especially especially excited. for the fact that he has been a part of it for quite some time. However, he also served as SEC Commissioner from 2002 to 2008 under President George Shuby Bush. And I wondered what he did during that time or anything about that period that gives a hint

Starting point is 00:03:41 as to what we could expect from him as chair, you know, both for traditional markets and crypto. I think there's two really important things from his previous tenure at the SEC. One is that he has familiarity and work directly with the Republican SEC commissioners that are there today. He worked directly with Commissioner Hester Purr. She was a staffer for him, as well as Commissioner Mark Uaida, was a staffer for Paul Atkins. So when we look at how the commission is going to work going forward and how they are going to work together to get things done, they have familiarity already.

Starting point is 00:04:13 They've done it. They've rolled up their sleeves together and they've been in the war together. And so that is hugely important. And that comes from his previous tenure at the SEC. The other thing is, let's look at what Paul Atkins is about in terms of regulation. And what did he do at the SEC? He was anti-regulation by enforcement. He was very clear.

Starting point is 00:04:30 He's anti-big government. He believes that there needs to be more conversations and roundtables and dialogue with the private sector, that a lot of the innovation should come directly from the capital markets. It shouldn't be all government-driven. There shouldn't be this large hand. And so we're going to see a lot of that public private sector collaboration, the anti-regulation by enforcement and just a more effective SEC because the commissioners will work so closely together and have already proven that they can work so well together. So as we mentioned earlier, since 2017, he's been co-chair of the token alliance.

Starting point is 00:05:05 And from his work there, I wondered what you could tell us about his views on crypto and what you think his top crypto-related priorities might be once he starts his tenure. Yeah, he's been really instrumental in all of our public comment letters to the SEC, to our amicus briefs and some of the enforcement actions. We've always leaned on Paul for his guidance. He knows how the commission works inside and out and how it should work. And that's the most important, how it should work in a perfect world. And so what I think, you know, what Paul knows about the industry is he's worked directly with all of all of the industry. I mean, we represent about 200 companies in the digital asset space. And Paul has been working alongside of them in their fight

Starting point is 00:05:45 against the SEC and this regulation by enforcement regime. So when I think Paul goes in day one, some of the things that will be critically important for him, I hope, is he will take a look at all the existing enforcement actions that are out there, all of the current cases, all of the Wells notices out there, all the investigations that are underway from the SEC enforcement regime. And he will have to decide whether that is something he wants to continue. And I know he has been very against enforcement in favor of guidance rulemaking. And so what I think he'll do day one, is saying, okay, let's look at where there's enforcement actions. Let's look at where there's gaps, that there aren't rules or regulations, that this industry just doesn't understand.

Starting point is 00:06:23 They don't understand how to list a token properly. They don't, exchanges don't understand how to list both a security and a commodity right now. If we're saying Bitcoin and ether commodities, and we're saying that there's probably some digital asset securities, there is no way right now for an exchange to list them. So I think he'll look at where there's gaps. He'll sit down, he'll talk to the industry to hear directly from them, from the things he doesn't already know, but he knows most of them already and try to find solutions through guidance, action letters, exempt of relief, rulemakings. And that's going to be a huge change right now.

Starting point is 00:06:53 I mean, as you know better than anyone, there is definitely not a come in and talk to us, posture from C despite what they say publicly. Coming in register has been a total farce. We've tried to go in. We've been hit with roadblocks left and right. Paul has been alongside of us and trying to go in. He has been the first to tell you that's not how the agency should work. the agency to try to work with the private sector to get clarity.

Starting point is 00:07:16 And so I think that will be a huge change from day one. And earlier when you talked about the different types of lawsuits and other enforcement actions, there's a range. You know, obviously we have all of these Wells notices and there's a large number of those, you know, Robin Hood, Minoswav, Mutable, Crypto.com, OpenCeat. There's probably others I'm forgetting. Then we have kind of things that are like in earlier stages of litigation. and frankly, actually, some of those are not just the SEC suing industry companies,

Starting point is 00:07:46 but then also vice versa where companies have been suing the SEC sort of preemptively. And then there's the cases that are much further on. I don't know where Coinbase quite falls in that, but obviously one of the oldest ones would be Ripple. So like when you're sort of looking at the lifeline of all these different enforcement actions, Does that play a role in how much power he or the commission would have in stopping them? Or is that a non-issue? I think it'll absolutely have a role. I think Paul going in and he's probably doing it right now, I wouldn't be surprised,

Starting point is 00:08:23 is looking at every single one of those cases to understand where they are in that lifeline. How far are they along? How much resources of the SEC put forward? What makes sense to possibly drop? I would hope that he would look at, especially those cases that are not fraud-related. that he would look to possibly drop those. I don't know for sure. And I'm sure he's trying to figure that out right now.

Starting point is 00:08:43 He has to go. Also, he's starting a new job. Like all of us start a new job. And he's going to go work with people who have been working on this for years. And so I'm sure it wouldn't make him the most popular person in the world to day one go in there and say, hey, SEC enforcement team. I know I have to work with you at least for the next four or five years. But I'm telling you that all of the work that you've been doing up the last few years, I'm throwing it out the window. That wouldn't make a great first impression.

Starting point is 00:09:04 But I'm sure he's going to look at it carefully. He's going to sit down probably with the current enforcement team and say, all right, how far are you along? How close are we to a resolution? Have you tried this? Have you tried talking to the company? What is the court saying? And look at each case individually and try to make decisions to see which cases can drop, which case is that, hey, you know, instead, if we put a rule forward, rulemaking proposal forward or guidance, I think this can solve a lot of these issues and maybe we can move on past this. Or, hey, this case is so close to the finish line, we're almost there.

Starting point is 00:09:34 maybe we should settle or maybe that the judge is going to real quickly. So let's let this live it out and see whatever the final resolution is without me getting involved. I think Paul's going to have to look at every single one of those cases individually. And that's going to take quite a bit of time. So I wouldn't expect decisions day one. Whenever he is confirmed, I wouldn't expect to see a whole host of decisions impacting the SEC enforcement cases. But I think over time we'll likely see a lot those decisions. And then earlier when you were talking about how probably one of the things that will be higher on his list is to actually come up with real guidance and rulemaking, obviously at the same time, there's a lot of talk about how now with the Republican sweep of

Starting point is 00:10:14 Congress and obviously Trump being the first pro-crypto president that we are likely to see some form of a regulation for crypto by Congress. I feel like I can't speak. we're more likely to see regulation for the crypto industry by Congress. But that would probably take somewhere in the ballpark of, I don't know, a year or so. I'm not really sure. But the point is, again, couldn't happen on day one. So I wondered, like, how much that calculus would also play into his decisions around these different enforcement actions. Yeah, I think it plays a huge factor.

Starting point is 00:10:53 And Paul knows that. Paul's been around D.C. for decades now. I mean, Paul served as a commissioner, as you mentioned, the top of the show, 16 years ago. And he's been in D.C. since with his own practice. He knows Congress very well. He knows this current administration very well. That even in the last Trump administration, Paul was influential in the transition in appointing a Jay Clayton and in working on appointing the financial regulatory folks who served in the Trump previous administration. So Paul knows D.C.

Starting point is 00:11:18 He's going to be very in tune into what Congress is doing and the limitations that Congress has. Congress moves very, very slow. even in unified Republican control, it's going to be very difficult to pass comprehensive market structure legislation that will draw new jurisdiction lines for how the SEC treats crypto, for how the CFTC treats crypto. So Paul knows those limitations and understands them. I think what Paul's goal is going to be day one is, how can I foster a regulatory environment at the SEC that allows these token projects to allow these exchanges to work with this industry to make sure it flourishes here where there's no longer these scare tactics and fear tactics coming out of the industry,

Starting point is 00:11:58 where I feel like I can provide them clarity, again, whether it's through guidance or it's rulemakings or it's no action letters or exempted relief. What can I do to make sure this industry feels like that they can come in and talk to me and operate without the fear of an enforcement action? So it'll be very interesting to see how he approaches that day one. What is going to be his first topic to turn to? Will it be the rescinding of SAB-121? Will it be a qualified custodian rule?

Starting point is 00:12:25 Will it be a token safe Harvard proposal that Esther Purs has been out for years? I think they're probably trying to figure out those priorities right now. I wouldn't be surprised if Paul has already called Esther and Mark, Eweida, and likely even Caroline Crenshaw, who will be the Democratic commissioner there, and trying to figure out, right, where are we going to start so we can hit the ground running right out of the gate. All right. So in a moment, we're going to talk a little bit more about how changes that the SEC might come down in this new administration. But first, a quick word from the sponsors who make this show possible. Overwhelmed trying to manage your crypto investments? Introducing I-Yield, a free financial planning tool for crypto natives.

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Starting point is 00:13:40 Get started today at iYield.com. I'd also like to feature a couple comments about Tuesday's show, which was on the court victory that Coinbase had for the tornado cash case that it funded. Tim Peterson tweeted, Crazy how much the use of the word contract jeopardized the crypto industry. Poisoned to SEC's Every Token is a security and OFAC's tornado cash mind. Great podcast, Laura Shin. And Vito the Don tweeted, first they ignore you, then they laugh at you, then they fight you. Then they copy tornado cash and rebrand it as innovation. Remember, remember, if you want to your comment or review to be mentioned on the show, please comment on any of the episodes or

Starting point is 00:14:23 social clips on X or YouTube, or you can leave a review for the podcast on Apple or Spotify. Back to my conversation with Cody. So one thing I was also curious about is, and I don't even know if this is like a thing that happens in D.C., but because, you know, as we mentioned, this is sort of like a clean slate coming into the administration with, you know, Republicans in control of both houses of Congress and the presidency, I wondered if, you know, because there's this fact that the SEC has really delayed any sort of crypto rulemaking for probably at this point, I would say, like minimum five or six years. I wondered, would that be something where he would weigh in with any Congress people or I don't know how that would work? Oh, absolutely. I think Paul's going to have

Starting point is 00:15:15 conversations directly with the House Financial Services Committee and the Senate Banking Committee who has oversight over the SEC, trying to understand their calculation. All right, Republicans, you're in control. Where do digital asset issues fall on your priority list? All right, you don't think you can get to market structure hypothetically. In the first 100 days, it might be later 2025. What can I do in the near term to make that this industry can operate safely? Again, without those threats of enforcement actions. Does that need to be rulemaking? If so, what does that look like. Let me start talking to my fellow commissioners and the industry now. But those conversations between Paul and the members of Congress and those committees will likely happen every day. I mean,

Starting point is 00:15:55 we've seen I'm Gary Gensler's schedule, on Jake Clayton's schedule before that. And all commissioners and chair before that, they meet regularly with the members of Congress on those oversight committees. I've seen Gary Gensler meet with Elizabeth Warren probably far too many times for people who listen to this podcast would appreciate it or like. But I would expect Paul just given his relationships and how, you know, he's been in D.C. for so long, and not an outsider, that he would be talking to Chairman, incoming Chairman Tim Scott, Senate banking, members of the committee, whoever the incoming chairman at House Financial Services will be very regularly to make sure that he's not overstepping them, to make sure that he is able to provide that guidance while they are

Starting point is 00:16:31 continuing to work on legislation. All right. So he's also been a board member for Securitize, which is working on bringing real world assets to public blockchains, like the Biddle product that it has a Black Rock. And I wondered what you thought his presence on that board, or just generally from, you know, I'm sure you've had many conversations with him said about his interest in how the crypto and tradify worlds can connect and work together. It shows his expertise. I mean, Paul is a, he is deeply, deeply steeped in the industry. Again, he's not someone who's just talked about crypto a little bit. And it's something that he's been forced to talk about because he's been interested in this role. Paul has been one of us fighting.

Starting point is 00:17:12 for clarity, regulatory clarity, fighting for this technology to not only survive, but just to exist while there has been so many challenges in Washington. So I think it shows that Paul is a deep, deep expert on these issues. He cares about tokenization. He cares about how blockchain technology and digital assets can make the financial industry and the securities industry more transparent, how it can make trading easier, what kind of new settlement times we can have, all of the different options of how this industry can make things better for the existing financial economy, how we could probably find more transparency and sunlight from using blockchain. I think Paul is interested in.

Starting point is 00:17:51 He's explored for years, and he will try to bring those to the SEC to make sure that technology can impact our U.S. capital markets. Yeah, just what you're saying that reminds me of how when I first learned about this, people talked about how this technology would have been useful in preventing the great financial crisis. And here we are all these years later. And nobody's really using it that way, but it looks like, yeah, potentially we might have somebody who is interested in those benefits.

Starting point is 00:18:18 So going back to the enforcement conversation, I saw that John Reed Stark, who used to be at the SEC, tweeted, quote, current SEC chair Gary Gensler is quietly working behind the scenes to lead the SEC from the grave. Along these lines, Gensler just promoted three of the best, brightest, experienced, and most dedicated crypto enforcement lawyers in SEC ranks to senior executive positions, running the SEC's trial unit and running the SEC's crypto unit. Interestingly, the SEC has not publicly announced these promotions and seems to be keeping them quiet, which is unprecedented. And then he said, but these well-deserved promotions are a done deal. I wonder if you have any more information on this

Starting point is 00:19:01 and if you agree with his assessment of how this might play out. And if so, then do you, you think that could hamstring a potential chair Atkinson any way? I think, unfortunately, it is unprecedented, but par for the course for a Gary Gensler-run organization. This has just been his MO, is to try to do things in darkness, you know, try to do things that could make it as difficult as possible for the private sector to thrive, whether it's in just the regular capital markets or it's in the broker-dealer space or it's in the digital asset markets. You know, he has tried to make things difficult. I don't understand why. I think that Gensler is going to go out with a bang. I think that there is a reason he hasn't

Starting point is 00:19:44 already resigned is that he wants to make sure that his name is remembered as, you know, enforcement cop in chief, you know, for going after digital assets. He does not like this industry. He's been very clear about that. He thinks that everything under the sun is a digital asset security. He believes that the entire industry is out of compliance. And so I think he wants to make it as difficult and painful as possible before he leaves. It's what he did at the CFTC before he left under the Obama administration is that he left with a ton of bad rulemakings. And the last, you know, at the 11th hour, a ton of enforcement actions. It's just part for the course for him, unfortunately. So I don't have any more information to share on specific appointments or

Starting point is 00:20:27 promotions, I should say. But it sounds part for the course for against the run SEC. And I wanted to also ask about some comments he made earlier. So, you know, as he mentioned, when assuming Atkins is approved, then he'll come in with both Commissioner Hester Perst, aka Crypto Mom, who the industry is a big fan of, and Mark Uyeda, who's also very pro-Crypto. Both of these are Republican-appointed commissioners. However, so on the Democratic side, one of the democratically nominated ones, Jamie Lizaraga's leaving. The other one, Carolyn Crenshaw, you definitely seemed to say would still be there. I thought she was up for renewal. So I just would like to hear kind of, you know, maybe I just missed that.

Starting point is 00:21:11 She has been reconfirmed. But, okay, yeah, can you explain that? Yeah, yeah. So she hasn't been, she's been appointed for to be reconfirmed or sorry, nominated to be reconfirmed. And she has not officially been reconfirmed by this Senate. I would imagine that the Senate in the next Congress will see. still take her up. It's just protocol that they will continue to confirm the Democratic or the opposite

Starting point is 00:21:34 position in party, opposite party in powers nominee. Now, what happens, I think, with the Lizaraga vacancy is going to be really, really fascinating. Historically, you know, President Trump would defer to Senator Schumer and the Democrats in the U.S. Senate to name that democratically, you know, appointed position and that he would just go along with it. It's what happened under President Biden. Mark U-A-Da came from President Biden and was nominated by President Biden and the Republicans in the Senate really picked Mark U-Ada as he was a former Senate Banking Committee staffer under that. But, you know, what could be done here for a Lizaraga replacement is President Trump could put someone that he wants. You know, maybe some of these other names that we saw of interest that were vying for the SEC

Starting point is 00:22:20 chairmanship like a Bob Stevens or Teresa Goody Geen or a Brad Bondi. maybe Trump would appoint them as the other commissioner and break protocol. I don't know for sure, but it wouldn't surprise me. But what soon to be Chair Atkins has going for him again and what Commissioner's purse and UAA will have going for them with, unfortunately, you know, Commissioner Lizaraga resigning due to family medical issues is that even in the near term before Chair Atkins is confirmed officially, there will be a 2-1 Republican majority at the SEC. So either Commissioner Purse or Commissioner Ueda will be named acting chair and then they'll be able to go forward with rulemakings, with guidance, which they typically couldn't do in a two-two split when it would have been Caroline Crenshaw and Lizaraga.

Starting point is 00:23:09 So it'll be really fascinating to see how Perce and Ua handle that, whether they'll want to be very proactive and start work right away as they wait for Paul Atkins to be confirmed or if they'll sit back, see what his priorities are, start working with him. and wait until he's confirmed to really get the ball moving. And so I guess Gensler was confirmed in April of 2021. So are you expecting roughly the same timeline, kind of like three months-ish? I would expect so, yeah. March or April. It really depends on how fast the committee's Senate Banking Committee can dispense with other nominees.

Starting point is 00:23:47 The cabinet will start first and then they'll move to the independent agencies. So the Senate Banking Committee can move quickly with the cabinet appointees under its jurisdiction, that we'll likely see the SEC nomination hearings happen in late February, early March, and hopefully we'll get confirmation soon after that. Okay. And then I guess the thing about having two Republican appointed commissioners and two Democratic ones is that is just protocol, but it's not actually like any kind of rule. So that's why you're saying, okay, got it. Yeah, he could potentially name an independent, which is maybe be more an ally in that democratically controlled seat. But it is it is not a rule that they'd

Starting point is 00:24:27 specifically have to be of the other party. So we could see, you know, three Republicans and then Trump names an independent. And then we have Caroline Crenshaw as the one Democrat. So we could see, you know, it'd be pretty unique, but we could see four, you know, really Trump prioritized appointees in that position where he could break protocol and not delegate to Senator Schumer and the Democrats in the Senate. And then one thing is I am. I'm curious for your thoughts on this. So if he does keep the protocol and defer to Schumer, because of kind of like what seemed like

Starting point is 00:25:00 a shift from the Democrats starting in kind of like May, June-ish period around both the vote to repeal SAB-121 and the Fit 21 vote, if Schumer were to pick, like, who do you think he would pick? Or, you know, it could be multiple people that you think he might have his eye on. It's a fascinating question. I know, usually it's a name we haven't heard from before. It's usually a name that is a current Senate staffer that has worked in either with the Senator's office or has worked with the Senate Banking Committee or one of the Senate Banking Committee members.

Starting point is 00:25:33 So I'm not sure, but what I would hope from Senator Schumer, as you mentioned, because, you know, this has become more bipartisan than we ever could have expected with the Sab 121 nullification and the, you know, market structure bill passing the House, I would hope that they would pick someone who is pro-crypto. Senator Schumer himself, if they are going to delegate this authority to him and keep with protocol, he's pro-crypto. He voted to repeal SAB-121. He has been interested in market structure.

Starting point is 00:26:00 He's been trying to find a deal for stable coin legislation. He comes from New York that has been, you know, leading regulation on this issue, as you know, better than anyone for so long. So I would hope that that would be a requirement. Hey, we need to get someone in here to show that this is nonpartisan, that we are on board with regulation and clarity coming out at the SEC. the regulation by enforcement regime didn't work for anyone. No one's happy with it.

Starting point is 00:26:23 I don't think Gary Gensler is popular. I know he's not popular with Republicans in the industry. I don't think he's very popular with Democrats right now either. So I would hope that that would be a requirement for this Senate Democrats. We'll name someone who is pro-crypto. And out of curiosity, does anybody either at the digital chamber or yourself have your eye on any particular Democrat that you think would be good for that role? No one's specific right now, but come back to me in, I think, a few,

Starting point is 00:26:49 weeks and I think we'll have a little short list. Okay, well, we will do that. So I did want to also, as you mentioned Commissioner Persis' Safe Harbor proposal, which, gosh, I think that's from 2018, if I remember correctly. And I wonder, do you think that a potential chair Atkins would be open to that going forward? And if so, like, how long would that take to actually get up and running? I hope that's one of the first priorities for a Paul Atkins chairmanship. I think that is something that, you know, without speaking for him, but I think that is something he would be very supportive of. We need that clarity for how token projects can issue tokens and raise capital without violating the securities laws. We don't have that. Other jurisdictions have that,

Starting point is 00:27:33 and we've been falling behind. And so I think that would be something that Paul is very supportive of. I think that's something that the SEC could take up very, very quickly. Once he's confirmed, I think they'll want to see what they can do again, two, one first. And maybe that's something Esther Purse prioritizes if she's acting chair. But I think it's something that they can do very quickly. And I'm very hopeful that they can do it at the SEC. And we don't have to wait for legislation to do that. I know it's been something that legislatively has been proposed where Patrick McHenry, who's now retiring, you know, essentially put the token save our proposal, put it in legislative form and has put it forward. That would be in a perfect world. But as we've talked about on this

Starting point is 00:28:12 this show already, you know, that moves, Congress moves very slowly. So I'm hoping it's something the SEC can do right out of the gate. So another really big question mark is that obviously this administration still has to name who they would like to see for CFTC chair. And it has been reported that this administration might want to lean on the CFTC more than the Biden administration did when it comes to regulating crypto. And I wondered, you know, how you thought this administration was thinking about that kind of division of duties between the two eight. agencies. And just while we're on this topic, I should mention Fox News already reported that the Digital Chambers Perry and Boring is a contender for that CFTC chair role. But, you know, what could

Starting point is 00:28:59 you tell us about how the Trump administration is thinking about how these two agencies should cover crypto together? I think you said it right. I mean, they're looking at a division of labor, but they really believe that the CFTC should be the primary regulator of digital assets. They're looking at, you know, they're looking at the industry as a whole and saying, all right, if most of this market cap and most of these assets are commodities, then the CFTC needs to have a role. But there also needs to just be better communication between the two agencies. I think in a perfect world, if you step back and you look at what Trump is doing with the Doge and the Department of Government Efficiency, in a perfect world, they would look at the other jurisdictions that have

Starting point is 00:29:35 merged these two market regulators and said, do we really need the SEC and CFTC to be separate regulators? That could probably be a whole other podcast, and I think probably how they're looking at it. But I think they want the CFTC to be the primary regulator. I think that's been very clear in listening to the transition team and listening to the folks who are very close to this. And so I think that pick is going to be critically important, but I don't think it's close. I don't think they're close to making that pick. If you look back and how the Trump administration looked at the CFTC back in 2017, Chris Junk Carlo, who was the CFTC chairman of Trump, wasn't even nominated until March.

Starting point is 00:30:12 So two months after Trump was inaugurated, he was nominated. then. So I think they wanted to get the SEC done. They still have a lot of issues with the cabinet, as we're seeing, the Department of Defense Secretary might, you know, take some, take some, he is taking some he. And so I think they're trying to figure out what's next. So I wouldn't be surprised that the CFTC comes in the next few weeks, or it could even be a few months. I think they're still trying to figure out. And, you know, you mentioned Perri-Anne, I think there's a ton of qualified nominee or potential nominees out there. I obviously work very closely with Perian, and I think she would be fantastic, but it seems very early. And so I'm looking forward to see who's going

Starting point is 00:30:50 to be that person because I think they will be the primary regulator and work very, very closely with Paul. I think that's something Paul wants to do and is really important to him, is that there needs to be more cohesion between the two market regulators and the CFTC and SEC. I'm sure we'll see more joint work and collaboration, MOUs, joint guidance coming out of those, especially as it relates to crypto. Yeah, you know, to that point, I do remember that I saw an interview where I think the journalist was trying to kind of press Coinbase, O'Brien, I'm trying a little bit on whether or not they're trying to skirt securities laws or something.

Starting point is 00:31:27 And he pointed out, he's like, look, this isn't even a question. So many jurisdictions because people in, or these other countries just don't have two regulators for this thing. I agree that there's a lack of efficiency there. Hey everyone, just interrupting this episode briefly to say that this next question is about the Crypto-Zar. And on late Thursday, hours after Cody and I wrapped, Trump announced his pick for the AIN Crypto-Zar, who will be David Sachs, a partner at Kraft Ventures and a host on the All In podcast. I'm leaving my question and Cody's answer here, just because it might be interesting for you to listen to what people were thinking about this role before Sacks was appointed.

Starting point is 00:32:06 One thing that I have to mention is so many people are talking about this crypto czar that is a potential role that could exist in this coming administration. There's really three different questions here. First of all, whether or not you think this is definitely going to happen. If it does, apparently, I guess the way things are set up now is the rule would be that this person would not be able to own crypto. But there is a possibility that that rule might be changed specifically because it is making it hard to build a role. And then the last would be, you know, like, who do you think might be good candidates? So I know it's a three-part question, but I think you got it. I'll do my best.

Starting point is 00:32:43 And how cool is it that we're talking about a crypto zone? Look, if you brought this up six months ago, I'd be like, that's right. And there's no shot. But here we are talking about a Cryptozar in the United States. It just shows how far we've come. And it's really thrilling. And it makes me very optimistic. So I think it is going to happen.

Starting point is 00:32:57 I do think it's going to happen. I think there will be a dedicated, whether it's called Cryptozar or some other title, but a dedicated person at the White House who is leading on digital asset cryptocurrency issues. You know, the Biden administration should have had that person. Technically under the Chips and Science Act from 2022, under the White House Office of Science and Technology Policy, there was supposed to be a blockchain and cryptocurrency specialist that the Biden administration named. They failed to do so, unsurprisingly.

Starting point is 00:33:26 So I'm very, very hopeful. I think there will be a crypto czar. Who I think it will be? I'm not really sure. I think there's a lot of names out there and there's a lot of people buying for it and I've only heard good candidates right now, which is exciting. But I think the biggest hindrance to what you mentioned is under the legal advisory from the Office of Government Ethics, that person would not be able to hold and possess crypto assets, which would probably prohibit a lot of folks that we would want in industry leaders and those folks who have rolled up their sleeves, they understand the technology, whether they've been a developer or they've worked at an exchange or they've worked at a token project or you name it, you know, somewhere involved in the industry, they likely would be prohibited from having that role. So I have been advocating and the digital chamber has been advocating for a while that that legal advisory from the Office of Government Ethics should be rescinded. There is a de minimis amount for equities for federal government employees.

Starting point is 00:34:22 And so why isn't they the same thing for cryptocurrencies? It just seems that unfair that, hey, if you have any cryptocurrency, you're not allowed to work on any cryptocurrency policy. And you have to divest and sell it all if you're going to work in the executive branch. That's nonsensical to me. So I'm hoping that legal advisory will be rescinded immediately. Trump can appoint a director of the office in government ethics to do that. And I hope he would. And then hopefully we see that crypto czar and hopefully we see someone named very quickly.

Starting point is 00:34:50 And it's someone who can still hold crypto, understands the industry and can work with the SEC, the CFTC, treasury, the prudential regulators in moving sound policy and making sure the U.S. is the leader on digital assets. Okay. Last quick question. I know I've kept you plenty long. We have, you know, the situation, as we discussed, where the SEC will want to probably make its own rules. And then we have, like, Congress that, you know, has a number of different types of legislation that they could go after. But the two main ones people tend to talk about are stealable coins and market structure. What do you expect to, but, you know, at the same time, D.C., generally, like, there's a lot of kind of just procedural things and whatever.

Starting point is 00:35:33 So if you were to, like, put your money on it, you know, what do you think, would be accomplished by the end of 2025 when it comes to any or all of those things, whether it's something agency led or something in Congress. Well, lucky for you, I am a betting man. So I like making these predictions. I think in 2025, you know, what Congress is going to be so focused on right out of the gate is tax reform, spending reform, budget reconciliation. So I think the million dollar question is where can we fit digital asset legislation?

Starting point is 00:36:03 Where can we fit stable points market structure? I think stable coins is a very, very, very. good shot of being done by 2025 and by the end of 2020 and early in the year. Stable coins is low hanging through. I think that we are 95% there. But unfortunately, we've been 95% there for several years. But Democrats are starting to come around. The holdup has been whether there should be a state pathway or just only a federal

Starting point is 00:36:27 pathway for regulation and oversight. I think we're getting there and we'll see stable coin legislation move quickly. Market structure is a lot harder. And I wouldn't be surprised. and that we don't have market structure legislation in 2025. I think it's very difficult. And I think that is where Paul and the SEC and the CFTC really need to step up and start working together.

Starting point is 00:36:49 And so I wouldn't be surprised if we don't see a legislative fix, but we start to see some guidance out of those two agencies, some joint guidance. We start to see the recreation of a joint advisory committee that we had back in 2014 between the SEC and CFTC. And they start to promote rules that create the market structure framework we've all been looking for, and that has been such a headache for Congress. I think it's too difficult for Congress to move. They don't have enough time in the legislative calendar. There's too many issues with it. They're trying to solve all the world's problems in one fell swoop. So long story short,

Starting point is 00:37:20 I think stable coins moves, and I think market structure is going to be delegated to the agencies, and hopefully personnel can fix the problems we've had for so long. All right, Cody, this has been an information pack session. Thank you so much. Thank you so much for having me. It was great. Don't forget, next up is the weekly news recap today presented by Wondercraft AI. Stick around for this week in crypto after this short break. Pocodot is the original and largest layer zero blockchain with over 2,000 plus developers. The anticipated Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem. Upgrading the infrastructure with 8 times higher transaction throughput and twice as fast block times,

Starting point is 00:38:00 tailored core time for the needs of every protocol, trustless bridges to multiple chains, and revise tokenomics with a token burn to reduce inflation. Perfect for GameFi and DeFi to build, grow, and scale. Get your Web3 ideas to market fast. Think big, build bigger with Pocod. Join the community at Pocodot.network slash ecosystem slash community. Welcome to this week's Crypto Roundup. In today's recap, we cover Bitcoin's historic 100,000 milestone,

Starting point is 00:38:31 South Korea's martial law-driven crypto chaos, and the controversy surrounding a giga meme coin influencer. We'll also dive into Alex Mashinsky's guilty plea, Mark Andreson's warnings about Operation Choke Point 2.0, and Grayscale's latest Solana ETF filing. Plus, Ripple's XRP rockets past Solana and Tether, a parody Enron Crypto project raises eyebrows, and Michael Saylor urges Microsoft to go big on Bitcoin.

Starting point is 00:38:58 And in our fun bits, a U.S. congressman gets bitten by the meme coin bug. Thanks for tuning in to the Wormin'n'nug. weekly news recap. Let's begin. Bitcoin hits historic $100,000 mark. Bitcoin surged past the $100,000 milestone on Wednesday, a historic achievement that cements its role in the financial landscape. The cryptocurrency has soared over 40% since Election Day, driven by institutional adoption, regulatory clarity, and growing enthusiasm amongst global leaders. The landmark price was reached shortly after significant comments from influential figures. Federal Reserve Chair Jerome Powell called Bitcoin Digital Gold, underscoring its value as a store of wealth.

Starting point is 00:39:41 Russian President Vladimir Putin praised Bitcoin's resistance to sanctions, calling it a viable alternative in the global economy. Meanwhile, New York City Mayor Eric Adams highlighted his personal gains from Bitcoin's rise, reiterating his pro-crypto stance to all those who've been hoddling. Congratulations! A martial law declaration triggers crypto-market chaos in South Korea, and flips kimchi premium. Despite Bitcoin's market rally, in South Korea, Bitcoin and other crypto assets plummeted on South Korean exchanges after President Yun Sukyo declared martial law during a political crisis.

Starting point is 00:40:17 Bitcoin briefly traded at 60 on $200 on South Korean crypto exchange upbit, a 33% drop compared to its $95,000 price on global exchanges, Coinbase, and finance. XRP and Ether also suffered significant declines, with XRP losing more than half its value, the market upheaval created a rare arbitrage opportunity. Historically, South Korea's Kimchi Premium saw crypto prices higher locally due to strong demand and capital controls. On Tuesday, this reversed as investors dumped local assets. By late afternoon, the gap narrowed, with Bitcoin, Ether, and XRP trading at a modest 2-3% discount. The crisis subsided quickly,

Starting point is 00:41:01 with the National Assembly nullifying the martial law declaration. SEC charged influencer. Behind the gigameme coin sparks controversy. Joshua Goultrie, a self-proclaimed whale of the giga meme coin, has drawn scrutiny after unchained revealed his history of defrauding investors. Goltry, known online as not Chase Coleman, settled a $3 million fraud case with the SEC in 2024, which led to his ban from the securities industry.

Starting point is 00:41:30 Despite this, he has become a prominent voice in the Giga community, promoting the token to his 50,000 followers on X. Giga surged 50% after Coinbase added it to its listings roadmap, reaching a $477 million market cap. However, unchained reported signs of token concentration among top wallets, raising concerns about market manipulation. Goldtree dismissed connections between his SEC case and Giga, stating, I started a new beginning in a project I really believe in. Yet skepticism persists as questions about his influence and Giga's transparency mount. Former Celsius CEO pleads guilty. Alex Mishinsky, the former CEO of defunct crypto lender Celsius,

Starting point is 00:42:13 has pleaded guilty to two criminal charges, commodities fraud and securities fraud, in a New York court. The maximum prison sentence he faces for these two counts is 30 years, and his sentencing is scheduled for April next year. The seven charges brought against Machinsky included fraud, conspiracy, and orchestrating a scheme to manipulate the price of Celsius's native token, CEL. Machinsky, 59, was arrested in 2023 following allegations that he misled customers about Celsius's financial health and profitability. The crypto lending platform, which allowed users to earn interest and take out loans against digital assets, filed for bankruptcy in 2022, amid financial turmoil within the crypto industry. Prosecutors from the Southern District of New York accused Mishinsky of making false public statements to entice customers to deposit funds into Celsius.

Starting point is 00:43:06 The SEC has also charged him with conducting fraudulent and unregistered sales of crypto securities, further intensifying legal scrutiny. Mark Andresen Spotlights Operation Choke Point 2.0. Appearing on the Joe Rogan experience, Mark Andresen, co-founder of venture capital firm Andresen Horowitz, also known as, as A16Z, accused the Biden administration of reviving a 2013 initiative known as Operation Choke Point to target crypto startups, something the crypto community has been calling out for years. Andresen claimed over 30 tech founders were debanked in the last four years, a practice he described as a deliberate effort to financially isolate crypto entrepreneurs. There's no due

Starting point is 00:43:50 process, no appeal, he said, echoing concerns about systemic exclusion, Elon Musk amplified the issue, sparking widespread discussion. Crypto leaders such as Coinbase's CEO Brian Armstrong labeled it unethical, while Custodia Banks' Caitlin Long and Gemini's Tyler Winklevoss shared their own debanking experiences, underscoring the industry's struggles with maintaining basic financial services. The controversy draws parallels to Libra, Facebook's ill-fated stablecoin project, later rebranded as DM. David Marcus, its former leader, recently called

Starting point is 00:44:26 its demise, a political kill. Despite adapting to regulatory demands, Marcus alleged that pressure from Treasury Secretary Janet Yellen and other officials crushed Libra's ambitions, demonstrating the political hurdles faced by crypto innovators. Grayscale joins the Solana ETF race. Grayscale has filed to convert its Solana Trust into an exchange-traded fund, becoming the fifth asset manager to pursue a Solana ETF this year. Initially launched in 2021 as a closed end fund, the Solana Trust currently manages $134 million in assets. The move aligns with Grayscale's successful conversions of its Bitcoin and Ethereum trusts into ETIFs earlier this year. The filing, submitted via NYSE-Arca, signals Grayscale's intention to list the ETF pending regulatory approval.

Starting point is 00:45:16 Solana's token saw a 3% price jump following the filing, reflecting heightened investor enthusiasm. If approved, Grayscale will compete with asset managers like Bitwise, Vaneck, and Canary Capital in offering Solana ETFs. XRP's market cap surges past Solana. It wasn't only Bitcoin that rose significantly this week. Ripple's XRP soared over 40% on Monday, hitting a high of $2.86 on Monday. Its highest price since January 2018, this meteoric rise pushed XRP's market capitalization to $158 billion, overtaking Solana and briefly overtaking Tether.

Starting point is 00:45:55 USDT. Once battered by a 2020 SEC lawsuit and subsequent exchange delistings, XRP is now experiencing renewed momentum. A key driver is growing interest in XRP's. Wisdom Tree has filed for an XRP ETF despite the ongoing legal uncertainty surrounding XRP's classification as a security, while Bitwise, 21 shares, Canary Capital, and Greyscale have also expressed similar ambitions. Meanwhile, decentralized finance enthusiasts are experimenting with XRP's blockchain, known as XRP ledger, despite criticisms of its centralized consensus mechanism. On an episode of the Bits Plus Bips podcast, Alex Thorn, a researcher at Investment Firm Galaxy, noted the rally's divisive nature, saying, this might be the most hated rally in crypto.

Starting point is 00:46:46 Oge Bitcoins and institutional investors all hate XRP, but here it is, tripling in just four days. A parody project revives the Enron name. A Delaware-based crypto project, calling itself Enron, is parodying the infamous energy company that collapsed in Tremone after a massive fraud scandal. Unlike the original Houston-based Enron, which collapsed in scandal, the new Delaware-registered venture openly embraces its satirical identity, even explicitly labeling itself as a parody in its official terms of use. Led by CEO Charles Gatos, the project offers Enron-branded merchant.

Starting point is 00:47:22 merchandise, NFTs, and an exchange. Trademark filings also reveal plans for an Enron Web 4 initiative. In a tongue-in-cheek move, its job board even lists a search for a nuclear systems engineer. Michael Saylor urges Microsoft to adopt Bitcoin for $5 trillion opportunity. MicroStrategy co-founder Michael Saylor pitched a bold Bitcoin adoption strategy to Microsoft's board, suggesting the company could generate up to $5 trillion in shareholder value by $2,04. Speaking at Microsoft's annual shareholder meeting, Saylor proposed converting $200 billion in capital distributions into Bitcoin holdings. He claimed this could boost annual returns from 10.4% to 15.8% and reduce Microsoft's enterprise value at risk from 95% to 59%. Bitcoin is the universal,

Starting point is 00:48:13 perpetual, profitable merger partner. Sailor argued emphasizing its lack of counterparty risk and its potential to outperform traditional mergers and acquisitions. Despite Sailor's push, Microsoft previously asked shareholders to vote against a Bitcoin investment in a December SEC filing. Meanwhile, Micro Strategy continues its Bitcoin acquisition spree, recently buying $1.5 billion worth of Bitcoin, bringing its holdings to over $402,000 BTC, which is valued at over $40 billion fund bits. Is Repulist Michael Collins the new meme coin whisperer?

Starting point is 00:48:49 move over crypto whales, there's a new player in town, and he's got a seat in Congress. Georgia Representative Michael Collins revealed in his latest financial disclosure that he's dipped his toes into the world of meme coins, including ski mask dog, Ski. Yes, you read that right, a token inspired by a ski mask wearing dog, ski which boasts a $135 million market cap, has been making waves since April, and it seems Collins couldn't resist the allure. Alongside Esky, he snagged some arrow, the currency for aerodrome decks, proving he's not just about doggos, he's got a strategy, maybe. Crypto Twitter loved it, with base blockchain creator Jesse Pollock joking, cool to see Repynel Collins being based on chain.

Starting point is 00:49:34 Collins even chimed in with a peppy meme, Congress just got a whole lot more on trend. And that's all. Thanks so much for joining us today. If you enjoyed this recap, go to unchained crypto.substack.com. That is unchained crypto.com. Substack.com and sign up for our free newsletter so that you can stay up to date with the latest in crypto. Unchained is produced by Laura Shin with help from Matt Pilchard, Juan Aranovich, Megan Gavis, Pam Majimdar, and Margaret Correa. The weekly recap was written by Juan Aranovich and edited by Carrie McMahon. Thanks for listening.

Unchained - Why Trump’s SEC Chair Pick, Paul Atkins, Is So Positive for Crypto - Ep. 745

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