We Study Billionaires - The Investor’s Podcast Network - BTC082: The Senator Lummis & Gillibrand Digital Asset Bill w/ Jason Brett & Tyler Lindholm (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey everyone, welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. On today's show, I have two guests. First, we have Jason Brett, who's a returning guest, Bitcoin lobbyist and member of the BTC Policy.org. And second, we have Tyler Lindholm, who's part of Senator Lummis's staff. They're here to talk about the Lumas Gillibrand digital asset bill that they just put before Congress.

Starting point is 00:00:24 Senator Lumas is a Republican and Senator Gillibrand is a Democrat. And during this interview, I fire off a bunch of people. of questions about what's currently in the bill, how it's being initially received in Congress, and what it might mean moving forward for potential laws and government action. We cover a lot of important topics throughout the show, and I hope you guys enjoy the chat. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Hey, everyone, welcome to the show. Like I said in the introduction, I'm here with

Starting point is 00:01:08 Jason Brett, Tyler Lindelm, and gentlemen, this is exciting because there's a lot happening in the policy space. Jason, we just talked not too long ago, but it seems with Senator Lummison, Gillibrand's new bill that they're proposing here. I mean, it's thick. I have it printed off here. You guys can, you guys know I did a little bit of homework before we got into this. This is 69 pages long. And Tyler, welcome to the show. I've listened to quite a few of your interviews through the years back when you were a state representative, and now you're supporting Senator Lumas, and really appreciate you making time to come on the show today. I'm excited to have you here. Yeah, absolutely. No, it's a real pleasure.

Starting point is 00:01:56 I've been an admirer of yours from a distance, and I've known Jason, admirer of his, for quite a few years. I've known Jason for quite a while, and we keep bumping into each other at convention. and what have you. And yeah, it's good to be here. Well, Tyler, when you were, when you were in the state Senate, you guys. State House. I'm sorry. The state. Not the, not the penitentiary. I always got to correct my. So when I say State House, it sounds like I might be in jail. When you were at the state level and you guys were working to pass a lot of this legislation, you guys got this utility token act through. You got this digital asset, existing bill through. And these were, these were kind of landmark state, uh, legislative, or bills that went through, got approved, got

Starting point is 00:02:46 passed. Talk us, talk us through what like from an architecture standpoint, what you guys had in mind and what it was that you were trying to create there in Wyoming. I think this is a really important part for people to understand what you guys are now doing at a federal level, but give a little bit of that background. Yeah. So, and that's a super good question. I love this question because for me, it's about the why. And I'm a cattle rancher out of Northeast Wyoming.

Starting point is 00:03:13 So there's always a lot of people that see me with my big goofy hat and they're like, what the hell? What are you doing here? And I get it. I get it. I mean, that's Bitcoin, though. We come full walks of life. So for me, it was always, always about the why.

Starting point is 00:03:30 And for me, it was always economic development. Now, granted, I first learned about Bitcoin back in 2012 time period and became a little bit involved in 2013. But, I mean, right? If you've never been to Wyoming, take the opportunity to drive through. And you're going to see nothing but, you know, beautiful agriculture everywhere and tourism and, you know, some mining, some coal mining, some old school mining. things that we're proud of in Wyoming. We didn't really have a tech field. And we've got this budding one now.

Starting point is 00:04:08 And the big reason why that's important for us in the state of Wyoming and why it was such a goal of mine was because we had this great brain drain happening. We've got all these kids that we spent all of this money on in public education or what have you. It went on to community college or the University of Wyoming and we were pouring it on. equates over, I mean, if a kid goes K through 12 education in the state of Wyoming and then they go to University of Wyoming and pick a four-year degree there, that's a little over $300,000 invested per student. And then they leave. So that's a major bummer. That's our best natural resource. I mean, that's it. You've got kids that are growing up with the very foundational ideals that Wyoming is all about, you know, liberty, freedom, leave people alone, success.

Starting point is 00:05:00 respecting the outdoors, respecting each other, all those types of things. And then we got to say goodbye to them because we can't provide them a job or there's nothing, nothing that can latch on to them or that they find interesting. So for me, that's what it was all about. And I'm a father of four. So, you know, some of my kids might not want to be cowboys. And so what do I tell them? Are you going to move to Colorado?

Starting point is 00:05:23 No, I've been to Colorado. That's no. Nothing against my buddies down in Colorado. They're great down there. but no. So that was, that was a why for me. Yeah.

Starting point is 00:05:34 Jason, when you're looking at some of the things that have been done there and also at the federal level, what's your take on some of the, maybe some of the groundbreaking parts of it? Yeah. So it's so great to talk to Tyler, too,

Starting point is 00:05:50 by the way, at this point in terms of all the policy that's happening. And what I hope is it was meant to be that he was ending up supporting this bill, because what Wyoming did was really break through in terms of working with regulators around the world to help develop this technology. It wasn't just Wyoming doing it on its own. And I think finding a way to perfect the security interests, avoid re-hypothication, you know, taking stands with sort of setting up a speedy, you know, the special purpose depository institution that would not need, you know, an FDIC or insurance as a all back mechanism, which speaking as a former FDIC regulator, that was a little hard to take,

Starting point is 00:06:34 but I get it, you know. So designing a system where you could have an effective bank specifically for digital assets, it kind of created the railways so a crack in, a custodia, and others that come in can succeed at stake banking level. And it was really ingenious because I grew up from the regulator school at the FDIC where there are three kind of banks in America. You're either regulated by the OCC at the Federal Reserve, I mean, excuse me, regulated at the OCC at the federal level or the Federal Reserve or FDIC regulates you as a state chartered bank. So to have a state chartered bank where you provide that optionality to me was the real win there.

Starting point is 00:07:15 And I also remember Tyler's associate from Lomas's office, Christopher Lan, when he was going with Al Forkner and they were visiting D.C. to talk to all the politicians. So they're reaching out, explaining what they're doing so people could, you know, handle any concerns. So I really think the whole package was there, both on the PR side, you know, setting them up to succeed, embedding it within the law, which, of course, we can't go through this conversation without mentioning Caitlin Long and a lot of her policy to it as well. And kind of having now this opportunity where banks, you know, neo kind of banks have a home here in the United States. speaking from a state competitive level, there's no other state that can really compete with that at this point. And so they found the right recipe. And again, and in terms of sort of the way they figured out digital assets is either tokens like securities or utilities, that was a framework that correct me if I'm wrong, Tyler, came, I think, from the Swiss originally. And so that you sort of

Starting point is 00:08:17 were coordinating with an international body that was sort of on the front lines of this. So you just sort of to me, you surrounded yourself with all the best and the brightest, all the people are doing things, but then you made it kind of your own. Yeah, kind of. And actually, kind of a fun story about how the whole utility token bill came about. We call them consumptive or consumer tokens at this point, because they're a little bit of a bastard child that live between two different worlds between a commodity or a security. And they're not a neat step into an existing regulatory structure. The fun story behind that is the first bill that we had drafted, we've done it over the phone in coordination between me and Caitlin Long and like Lewis Cohen. And I specifically remember this

Starting point is 00:09:04 moment because it was, it was funny. And I was on the road for work and I was standing at a hotel and actually insured in where I am right now. And we're just finishing up and boy, there we got that first bill done, guys, great. And, uh, Everybody said, well, good job. This is October. We got lots of time. I said, well, hell, we got time. I mean, what's, you know, what's another wild one we could do? And I think it was Caitlin. Caitlin brought up, she goes, well, we can always, we can always tackle this utility token thing. And I don't know if it was Lewis or who else it was on the phone and other attorney. So that's crazy. That's not, that's too far. And I said, well, hell, that sounds like what we need to do then. Because if it's crazy, it's going to get people's attention, right? And we want to do it in a manner that does catch their attention. But to Jason's point of what he spoke about earlier, everything that was done was done in a very precise manner,

Starting point is 00:10:03 whether it was the 100% reserve requirement or the capital requirements or the ability to check yourself out of the FDIC or the qualified custodianship requirements, all of those were poured over. And we brought in a lot of experts. And we really went through it. And I look at that, look back at that time now on those hours and hours and hours spent drilling down on this issue and making kind of weird decisions that a lot of people looked at us funny for at the time. But they're not looking at us funny now considering some of the recent news. And I think that's that's a telling aspect is we do need to think outside of the box when it comes to.

Starting point is 00:10:49 finance, especially in this space, due to the existing problems that you see in existing finance and how they're bleeding off into Bitcoin or digital assets now where we've got these kind of, we've got some real issues cropping up. And it's because of existing players, in my opinion. So, Tyler, are you saying that if Celsius was registered in the state of Wyoming, this would have never happened? Would you go that far? I am not going to enter I'm not going to go down that I can't I can't entertain that but what I can say is that Caitlin Long put it the very best and I saw a recent post I am sure you guys saw it too where she pointed out there is a huge difference between licensed and regulated and consumer protection is there for a very very solid reason and I've got a very wide libertarian street and government should only be there to protect citizens

Starting point is 00:11:48 in their pursuit of life liberties and pursuit of happiness when they cannot do so for themselves. And in this case, I think there's a lot of stuff pointing, I'm not speaking specifically of Celsius, but there's a lot of stuff pointing, pointing in multiple directions that perhaps government has been lax on their job and has been laxed in regards to properly protecting, they're putting consumer protections in place. And that's, you know, when we're looking at Senator Alamos's legislation, I mean, that's what it's all about. Do you think that it's that they're, that they're lax or they just don't have the bandwidth to handle the sheer speed at which all of this is unfolding? And the education gap.

Starting point is 00:12:31 I mean, there's a massive education gap here. Yeah, no, but boy, I mean, and I will, I will shout this from the rooftops. I'm a cattle rancher from northeast Wyoming. If I can debate rehypification and I can go to the mat with people on FinC, yeah, damn the lawyers at the SEC ought to be able to get her done. The Federal Reserve should have already been there. I like that. Years ago.

Starting point is 00:13:00 I like that, sir. It's tough, right? I mean, how do we get these guys? What's holding them back? What's holding them back from getting on the button and saying, you know what? there's some folks at risk here. Let's move the ball forward. And so I guess I've always struggled with the Washington environment.

Starting point is 00:13:23 That's why I work for Senator Alamos and why I respect her so much is because she gets it and she can handle these folks in a manner that is far more respectful than I can be. He does a good job. All three of us. Well, maybe not Jason. Go ahead, Jason. But, you know, Preston, what's amazing about this in Tyler, I think was so key of what you're saying is where the markets are and what we've seen with the recent price action and some of the companies and what they've been doing, whether whatever the

Starting point is 00:13:53 regulatory regime existed or not, like to me, it's your, what was it, the libertarian, state legislature, you're voted by the libertarian party is like the leading libertarian. And so here you are as a libertarian saying, hey, a little bit of regulation might be what we need. I think that kind of hits the point of like, we're not saying we need massive government. And I don't think this bill is about it. But if ever there was screaming from the rooftops that now at the time that we do need some sort of bipartisan leadership bill, whether it's perfect or not, is you need to have that. You need to have that. And I'm an ex-regulator.

Starting point is 00:14:33 Regulators get a bad rap sometimes. But like, you can be inventive. You can be creative. but if you're able to have that prudential regulator relationship with the institution, you actually are almost a consultant to that institution, helping them steer away themselves where they might blow themselves up. They always said to me when I went to banks and examined them at the FDIC that they were happy to see me there,

Starting point is 00:14:55 but then they were happy to see me leave, you know, because it might be doing business, but then get out of their hair, you know. But I think that's so interesting to me because, you know, with that libertarian mindset, you'd think, well, why would you want any kind of laws around this stuff? just let the free market. Libertarianism is not anarchist. And there's the deal.

Starting point is 00:15:13 I think everybody recognizes the fact that theft is wrong. Stealing is wrong. And that's what government should be protecting from is ensuring that the average U.S. citizen consumer protection. That's making sure they're not being stolen from. It's a framework, right? And as I went through this bill, the thing that I liked about this is there's a lot. of just definitions of what is this. And going through a lot of terminology and technology

Starting point is 00:15:46 speak that's out there and trying to frame it in a way that provides a left and right limit for people to understand what it is that they even own. And from the exchange level, how they're being defined and viewed from a governmental body. And then there's a few spots in here that really kind of call out, which you were saying earlier that you did in Wyoming, which is if you're a stable coin, you have to have 100% backing. There's no rehypothication allowed. I was I was kind of surprised at the total lack of government, like you're not calling for new bodies of government to be stood up. There is a little bit there. Yeah, at all. There is a little bit in here about,

Starting point is 00:16:36 various studies, but not a whole lot. Surprising, I didn't think that there was a whole lot relative to a lot of the other things that you see come through. And it was a lot of definitions. It was a lot of defining things and maybe kind of tweaking the way previous definitions are to include a lot of this. I was surprised, Tyler, going through it. There's no call out to any of the validation where in a previous bill, Jason,

Starting point is 00:17:03 helped me with the name of the representative that, was proposing something earlier. On buyer maybe? Yes, buyers. He got into a lot on the validation of a difference between proof of work, proof of stake. You guys don't have any of that in here. I was kind of surprised by that. Well, I think, so I guess as far as first explaining Senator Alamos's mindset when she

Starting point is 00:17:28 put her staff to work on putting this together, I obviously worked with Senator Lemmas' general counsel, Chris Land, who's just a genius at drafting. He really is. He got his start in the state of Wyoming, working at our legislative service office. He's the one that I turn to to draft all of my crazy ideas. And so Senator Lemus swooped him up. And so we worked on this, among multiple other people. Jason, we called you. We called everybody under the sun that had worked with us in the past. And it was all built on the principle of Senator Lamas's guiding kind of star. And that is this this has to be an enabling legislation. It cannot be disabling. So for instance, you brought up the stable coin piece. The stable coin piece specifically calls out for 100% reserve

Starting point is 00:18:20 and banking charters and those types of things. It does not mandate that you go through that. It does not mandate that you become a 100% reserved body. It just provides a regulated path that says, this is safe, this is cozy. And the reason why Senator Lemus did that is she doesn't want to, first of all, there are good actors in that space. And she doesn't want to cut, you know, she doesn't want to have to force them into a box that they might not want to go to. She wants to provide that opportunity,

Starting point is 00:18:50 go down a road that she believes is safe and sound for that type of asset. and see if they join the party. And if they don't join the party, well, then that's fine too. But it is enabling only. And this is so important for, in my humble opinion, for regulators to understand from an international lens that if you don't approach it that way, you're just shooting yourself in the foot. Like you are not going to compete on an international stage. It's just not going to happen. Right.

Starting point is 00:19:21 That's absolutely right. Well, on top of that, I mean, what government is ever going to keep up with technology? I mean, who knows what five or ten years from now looks like. And of course, the legislation will be out of date by that point. But by creating that enabling scope or lane to go through, we have opportunities that we didn't have before. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer.

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Starting point is 00:23:44 That's Shopify.com slash WSB. All right. Back to the show. So here at the beginning, this is page five on the definitions. There's a term here called person who provides digital asset services. And I read this label and I immediately thought about myself running a full node and having lightning channels. And I'm thinking, am I one of these people? And so then I read what constitutes it.

Starting point is 00:24:13 there's three things here. And I'm not one of those three things. And I'm just kind of thinking to myself, where do I fit here for anybody who's running a node and has, let's just say they have one Bitcoin's worth of channels opened? Are they considered a financial service provider? No, absolutely not. And there's a reason why you can't find yourself in that bill. I like that. Yeah, no, no, absolutely not. I mean, you're not. You're not. You're not. You're not, you know, interacting in regards to being a financial institution under yourself. There's no reason that you should ever. I mean, you're operating as a note. You're a network participant. Yeah. I've got really nothing for you in that legislation besides the de minimis tax exemption,

Starting point is 00:25:01 which is super nice, unless you wanted to. I do want to talk about this. So I had this listed in my notes as, what did I refer to this as? Something like the Hoddle Clause. Yeah. here it is. This is under the responsible taxation of digital assets section, and I referred to this as the Hodler Clause, and I have this in red. Let me flip to it here. Deferral of income recognition for digital asset activities in the case of the taxpayer who conducts digital asset mining or staking activities, the amount of income relating to such activities shall not be included in the gross income of the taxpayer until the taxable year of the disposition of the assets produced to receive in connection with the mining or staking activities.

Starting point is 00:25:46 So if I mine a bunch of Bitcoin, I pay my electrical bills by selling some of that. I would realize that as an income, but for anything else that I didn't turn into, let's call it, US dollars to pay my electrical expenses, I won't pay any tax on that until I would use it in the future. Yeah. That's unbelievable. Yeah, absolutely right. that's the way it ought to be though, right?

Starting point is 00:26:09 I mean, I mean, so I, I, I titled this myself here, the huddle clause, because think about that, you are totally incentivizing businesses. Now, where I'm, I'm interested in knowing how does this work for, like if I was a gold miner in the United States, how does that work right now? I would imagine. So, so right now, so this is an important aspect that it, that does need to be taken into consideration. mineral excise and how that works is not taking any consideration whatsoever. But as far as the sale of those assets, take away mineral excise whatsoever, as far as the sale of those assets, this just mirrors that. It's the same as any other type of asset. You're not tax until you dispose of that asset.

Starting point is 00:26:56 And so it's really just to make sense to play. Yeah. Yeah, it seems so logical. and it seems like you guys are leaving enough room for the, for the whole space to really kind of breathe and become its own, but also making it important like the 100% on the stable coins and in the lending and just the rehypothecation in general. And I know this has been Caitlin. I mean, Caitlin has been beating this drum for years on how important this is. And it's almost like nobody even wants to listen. And I don't understand why. Why does, why? Honestly, what do you think? think it is. I think it's because Caitlin's worked on Wall Street. She knows where the bodies are buried. No, no, no. I got that. I'm saying, why does nobody want to listen to it, though? Oh, yeah, because it's so much easier to ignore the monster in her closet, pretend that it's not there. But the reality of this monster in your closet is it's going to wreck you. It's not only going to

Starting point is 00:27:54 wreck you. It's going to wreck your neighbors. It's going to wreck your mother. It's going to wreck your kids. And that goes back to the whole, I mean, the whole start of the to the Satoshi White Paper. This is why we're here. Yeah. And if we don't follow those, if we don't follow that through and actually keep that in mind while we're, while we're participating. And we're doing it for the wrong reasons, in my opinion. I was going to say, I think people sometimes don't listen because it's such an impact on their entrenched interests. Like, they hear it. It's just, you know, it's funny. Part of the bill it toward the end speaks to that, you know, state banks should be able to have access to the

Starting point is 00:28:41 Federal Reserve, like use the ACH and use the wires, right? Yeah. And I mean, I don't know what that's about. What's that? Yeah, what could that have to do with it? Now, obviously, we know, you know, I mean, Caitlin Long went ahead and sued the Federal Reserve Bank of Kansas City. And federal. I didn't know that, did she? Board of Governors. Yeah, I know. It's shocking. Yeah, just, you know, why not? You know, the creature from Jekyll Island, take them on. But like, if you think about it, to me, it's when the Federal Reserve couldn't make up their mind for over almost two years with deciding whether to give this really important thing of having access simply to a payment

Starting point is 00:29:21 mechanism, right? And that they took almost two years to do it, it's clearly sort of a a stonewall situation. And so there's these parts of these that, I mean, think about how the opposite that is of the Bitcoin network, right? Like anyone who has access to it, whereas here we have, this is sort of defines the problem of when we have a body that's over us that makes all these decisions that can affect and pick winners and losers, you know? Right. So, did you see the the routing number piece in there also, Jason? The routing number came right after and that was crack. It got its routing number. I saw that. But I mean, yeah, it's, you know, like, what do you have to do to get a routing number if you're at the bank. These are, we think of like basic rights,

Starting point is 00:30:02 but all of this overall is fascinating. And Preston, I told you I had a surprise for you and Tyler on the show. So I want to take this moment to announce to you. Let's hear it. It's really, really cool thing for me that I'm super pumped about. So I'm proud to announce on the show for the first time that I am now the policy director of Bitcoin at the Bitcoin Policy Institute. That's BPI. It's going to be, it's, you know, David Zell and Grant McCarthy are there, but they have a website, BTC Policy.org. Michael Saylor was one of the initial donors that's got this project off the people. There's like 12 different fellows. I haven't met everybody yet. Like I just started, but, you know, the four main things we're going to be focused on is going to be, you know, national security and

Starting point is 00:30:52 geo-economics, how open monetary networks affect the U.S. interest at home, financial inclusion and human rights, how these technologies impact that level. Future of money, you know, just sort of questioning how to various forms of digital money interact and compare, kind of like with this bill looking at all different things, stable coins, and then mining and energy. You know, how does proof of work mining impact the environment, power grids, energy, independence, and renewables. And what I love about this opportunity and the people I'm working with is not just that they're also a lot younger than me, but they're so excited. And they're building themselves into that traditional think tank. So there's lots of like, you know, critical thinking that they all go through that I think

Starting point is 00:31:31 could lead them to be like maybe the next Brookings institution. But are, you know, really questioning all sides of it, looking at the proof of state question and all of that and looking to have, we want to have debates, you know, in D.C. to take on some of the naysayers about Bitcoin, too. So I just feel like Bitcoin really hasn't had its own think tank until now. And so when I was offered the opportunity, I took it. And I'm overwhelmed by it. But yeah, it's an exciting moment for me to be, you know, direct your policy. Jason, that's awesome.

Starting point is 00:32:01 That's awesome. Good for you, man. Thanks. And of course, now that I say that, nothing that I'm going to comment on as Tyler continues about the bill is on behalf of the Bitcoin Policy Institute. Because it's the hell it is now. Hey, so, guys, walk us through the timeline of events here because for a lot of people that aren't familiar with the activities on the hill, they might see something like this hit and say, oh, so when are they voting on that, like next week? But there's a big, giant process that's going to pop out of this. So talk to us about that timeline.

Starting point is 00:32:36 Yeah, so the timeline's tough because Senator Lemus is, of course, a Republican. She's from the great state of Wyoming, the first woman elected by the state of Wyoming. as a US senator and we're in the minority. The Republicans are in the minority. So we do not set the schedule. But that's also, that is not why, and I do want to talk about this, because I think it's such an important piece.

Starting point is 00:33:00 It's definitely not why Senator Lemus saw a bipartisan co-sponsor, co-leader right off the bat out of Senator Gillibrand. She sought that because she was terrified that digital assets unto themselves would become hyper, hyper-partisan. And that would be the absolute worst thing that could happen in this space is it became a partisan-only issue. And it would just, it's not a partisan issue. It's not a political

Starting point is 00:33:25 issue. It's, it's, you know, I mean, we're all, we're all true believers here. So it's, it's one of those things that she really, um, really hunkered down on that fact and found a, found a champ in, uh, Senator Jolibrand. Uh, but as we, as we go for it, I mean, the bill's out there now, there's certain folks on the hill that would love to do a markup tomorrow. There's certain folks on the hill that would like to never see a markup on that bill. So there's going to be a little bit of push and pull that happens. I mean, we're still hopeful that we can get it in committee for a markup before the end of the year and maybe even see some action as far as individual components of the legislation.

Starting point is 00:34:05 But chances are, if I was a bet in man, I'd say Senator Lummus is refiling in January. But there's always a chance. She's got some great friends on the hills. So let's just play devil's advocate and say that that's what happens. Walk us through what that path would lead to, assuming that that would play out. Sure. Well, so this is kind of an interesting aspect is because the legislation does have so many different components to it that land in different committees. So the commodities portion would go to the agricultural committee.

Starting point is 00:34:38 Senator Gillibrand sits on that, which is handy. The securities portion would go to. the banking committee. Fortunately, Senator Lemmes sits on that. The taxation piece would go to the finance committee. And that finance committee, she's got a great friend and Chairman Wyden.

Starting point is 00:34:55 But either way. So that portion would necessarily, I mean, not mandatorily, but should go there. And then the commerce portion of the legislation would be essentially everything else. The cybersecurity portion,

Starting point is 00:35:10 those types of things, would have to get picked up. over there. So a lot of different moving pieces as it moves forward. If it makes it through, whatever committee it's assigned to, whether it's all four of those or what have you, at that point, it would go to the floor. And there's lots of different opportunities as far as motions that could be made from the floor. So there's some fun that can be had before the end of the year. So Jason, on behalf of BTC policy.org, I want to hear your... That's right.

Starting point is 00:35:45 I love it. I was thinking about the fact that, like, you know, all the ways the bill might get to be reviewed. And I agree, really, with the assessment, we're not, we're going to have to wait until January. And while we never want anything to be, like, one partisan way or the other, I do think we're going to see a Republican Senate have a majority after this election and probably in the House, too. And that's going to help it a little bit along as far as, you know, maybe that's not perfect. But I don't know that you're necessarily going to have the champions you need of who's running the show right now versus in six months. That being said, you know, you'd like to think that like what, Celsius, Terraluna, like how much pain do we all need to go through for someone to say, hey, why don't we get some kind of bill out there that's going to at least lay a framework? Maybe it's not perfect.

Starting point is 00:36:42 And I mean, really, God bless you, Tyler, because I mean, you picked up writing this bill right after the infrastructure package when suddenly it wasn't just me and maybe six other lobbyists that cared about this space. But everybody. To be fair, we were actually writing the bill before the infrastructure package. Fair enough. Senator Lamas was ready to ride her on this thing for day one. And the infrastructure package was a double-edged sword.

Starting point is 00:37:10 obviously we don't like the text that eventually went into law. And there's a piece in this Senator Loemus's bill that fixes that from one of our colleagues over on the House side. But ultimately, it got a lot of people looking at that policy matters. Well, yeah. And I just meant, Tyler, that like the, now that it's introduced, at least from the papers, there's so much lobbying attention in the space that, of course, everybody wants their own little piece or wants to change it. now and that that's i mean there's a lot of lobbying pressure i think in general in the space yeah yeah how would you say that it's been received so far i'd say largely um pretty pretty good

Starting point is 00:37:55 you know we we honestly we didn't know um as much as we talked to everybody and their dog i mean like honestly senator lomas she made sure we were scouring um but we've talked to a lot of folks And there might be some folks that are watching this right now. And they're like, well, you didn't call me. Well, phones work both ways. But honestly, it was really, it was great. You know, I mean, there's a couple of naysayers out there. But I also think that they're naysayers based on not completely understanding what the bill does.

Starting point is 00:38:32 For instance, there's a lot of folks there are saying, you know, how dare you define any asset as a security? Well, listen, if you walk like a duck and talk like a duck, you're a duck. I'm sorry. There it is. But also, on that point, that's not a bad, that's not, that's not the end to the world. It's actually a good thing because the reality of the situation is you'll now have the ability to move your project forward and actually get a response from the SEC and actually be able to file your reg A or your reg B or whatever. I mean, you can't do that right now. You can move your project forward.

Starting point is 00:39:11 There's no more grace space. And so, yeah. So I guess I went down a different road, and I apologize for that. No, not at all. I think that it fits with what Sailor is recommending. He thinks that some type of regulatory clarity is going to help everything move forward. Yes. But Jason, did you have something you wanted to add on that last one?

Starting point is 00:39:35 It looked like you might say something. No, just to me, I mean, I'd love to hear Tyler sort of where Lummis came from. She first said she kind of wanted to do this and then what it turned into and her leadership because Preston, you know, kind of kicking myself because I think we have to remind ourselves, did we ever think we'd have a U.S. senator who was like a bitcoiner who believed in it who's actually introducing bipartisan legislation, like leaving the space? It's pretty, it's pretty historic, you know. Well, so for Senator Lomas, I mean, she's old school.

Starting point is 00:40:10 I mean, she first got involved in Bitcoin back in 2013. Her son-in-law, Will Cole, who's kind of a legend in space unto himself, got his mother-in-law involved and explained the economics behind it. But for Senator Lomas, she's not your average, not your average cat, or neither is she your average mother-in-law. So she had a prior history of being the state treasurer for the state of Wyoming for eight. She did that for eight years. And before that, she was in the state legislature, both the state house and the state Senate.

Starting point is 00:40:42 And so in 2013, she was in the U.S. House. And so she's got all this vast experience of dealing with budgets. And she was on the appropriations committee when she was in the U.S. House and did all these things. But the most important experience, the way she tells it, is when she was a state treasurer. and she was always looking for that good store of value for Wyoming's investments. And so when she was introduced to Bitcoin, that really was the hook. And then, fast forward a couple of years later, there was this weird northeastern Wyoming rancher that was starting to run these types of bills.

Starting point is 00:41:17 And so for her, when she went into the U.S. Senate, it was a natural hook to be able to continue riding for the brand, riding for Wyoming, which is what, you know, I mean, that's, that, lady lives and breathes it. But also on top of that to protect state interest, because this is clearly a state interest at this point. Hey, what has been the scuttle butt on the hill with respect to the Luna implosion? I think, you know, the biggest thing that folks are talking about and watching on this, on this whole scenario is the consumer protection angle. Is there, are there funds being moved in a manner that is essentially theft? And I don't know.

Starting point is 00:42:02 I'm not saying that they are. But that's where everybody's watching right now. And it's kind of a terrifying aspect. I mean, as we as we explore these different technologies, just like the dot-com era, there's going to be winners and there's going to be losers. There's going to be stuff that works and there's going to be stuff that fails. And in this situation, it's, well, it is fascinating to watch. also really pushing the envelope on why this needs to be moved forward quickly. Why the

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Starting point is 00:46:01 This is a paid advertisement. All right. Back to the show. So, kind of in this general topic area, page 27 in the bill under the responsible consumer protection section, it's talking about trading and it says in general, a registered digital asset exchange may make available for trading any digital asset that is not readily accessible to manipulation subject to its subsections. And when I read this, I immediately thought of NFTs. And you've seen,

Starting point is 00:46:36 I think, just in the past month where there's been a couple of people that have been rolled up with respect to how they were listing NFT pictures on their exchange. And when you're dealing with something that has such low volume and so much marketing in order to kind of spin the price in a direction, I mean, you could list this on one of these big pages on the front page and totally frontrun some of this stuff. So when I'm thinking about this in this terminology with digital asset, which I suspect an NFT fits in that in that category is not readily readably accessible to manipulation. How are they going to get around something like that as an exchange? I'm looking at these big exchanges and I'm saying,

Starting point is 00:47:25 how are they going to continue to be able to list NFTs based on how that's phrased in this bill? I think it's got a lot to do with decentralization, whether that's NFTs or any old digital asset, it's got a lot to do with the fact that can this, can this asset be manipulated? Could somebody nose dive it onto themselves? Can somebody flip a quarter of it or even an eighth of it onto themselves and either crash or pump the market? And that's, that's really, we're going to see some, you know, it's going to take some flushing out to be certain, but I would suspect that people should look at the centralization of assets long before they invest unto themselves as an individual and or if they are in exchange. I think a lot of the bigger ones do necessitate that.

Starting point is 00:48:22 Some of those bigger guys are definitely more, you know, they're a little bit safer. They have, and I'm not saying the bigger ones are always better, but they also do do a pretty good job of digging down on these new assets as they come about and figuring out where they are and how they been issued. Jason, any of your thoughts on that one? Well, I think that I agree with the notion that like we could have avoid this if an agency at like the CFTC wasn't actually had the leadership and the authority within it by this bill to actually start regulating. You know, not readily susceptible to manipulation is the whole point. I think of why we want regulation of the spot markets.

Starting point is 00:49:08 It's been pointed out, even by one of the previous commissioners of the CFTC, the CFTC is not walking the beat right now. They're not like the cop on the beat. Their main focus is on the derivatives, and they're more like the house inspector, you know, that comes by once every few months. And if they are doing some sort of, you know, action against like tether or Coinbase, it means there's something really bad happen, right? So what this is going to enable is, and there'll have to be that reconciliation, right? It won't be perfect necessarily. But what you have to understand is by actually having somebody there on the day-to-day basis, the way you sort of have the bank regulators, you know, reviewing what's happening,

Starting point is 00:49:53 that's where I do really agree. And I think this will help stop these types of issues. And if it's readily susceptible to manipulation, you know, changing transaction history and everything, that's sort of what we live in now. Right. You're going to need to have the products are going to need to adapt for those that choose this CFTC regulatory environment. And what I think you'll find is once we get this authority over to the CFTC, you're then going to see people who are just honest. You know, they want to trade.

Starting point is 00:50:25 They want to buy some NFTs. They want to buy some digital assets. They're going to gravitate toward what they know is a regulated exchange because they're going to know that they're going to be treated fairly and it's going to be safe. similar to the way we have the stock exchange today. I think a huge language and definition in this bill comes in the responsibility payment innovation section that we were talking about earlier on page 44. There's a section 4810 called issuance of payment stable coins. And here's what it says.

Starting point is 00:51:00 A depository institution may, it goes to the language, the phraseology you were using earlier there, Tyler. A depository institution may issue, redeem, and conduct all incidental activities relating to payment stable coins. So this is basically saying J.P. Morgan, Fidelity, you name it, these entities can now create their own stable coins without any type of fear or retribution from the federal government. And they can use these to clear and conduct transactions. And it also goes into the next section B where they say, those big boys. would have to change their model a little bit, though. If they were to go down this route and decide to issue a stable coin, they would have to change their existing model on how they handle assets

Starting point is 00:51:47 comparatively. From a risk standpoint, because it clears immediately. Is that where you're going? Well, no, I mean, not only as a risk standpoint, but also, I mean, they would be held under the same scrutiny as anybody else issuing a stable coin in that regulated path, which would be they would have to be 100% reserved. Yes. And that's what you get into in the second part B here, required payments, stable coin assets. And then it says 100% of the face amount of the liabilities of the institution on payment, stable coins issued by the institution.

Starting point is 00:52:19 So because right now they're all fractional reserve is I think where you're going with this. But as far as what would be partitioned, that would be issued as a stable coin, if that's got 100% backing and then you still have the other part that's fractional reserve is with they still fit the description here, or do you think that that is something that it would have to almost be like an operational subsidiary underneath of the bank that just handles the stable points? I think it would have to be. And then also on, you know, undoing that a little bit as far as their risk management moving

Starting point is 00:52:57 forward. It would require some of these bigger dogs to really have to hunker down with their books and figure out if it is even feasible for them. I think probably enough push they could get there. So they just buy U.S. D.C. And they buy Tether. Is that really the play? I mean, they certainly could, but they would have to be 100% reserved.

Starting point is 00:53:25 And I mean, USC and to itself, I believe, is 35 billion. Wow. This is getting fascinating. This whole space, I mean, the speed. at which this is moving, but this is, this terminology here is so important for them to know and to realize kind of where they stand and where they can operate from a legal framework. Well, there's also, there's also a really good piece in there that speaks to MTF's money transmitter licenses. And basically, Senator Lemma is saying, hey, that's cool too. Because what

Starting point is 00:54:00 these MTF operators have done, circle, for example, they've gone state by state. and become regulated in each and every state. Now, 49 out of 50 states have an MTF. Montana does not. The District of Columbia does. So they've essentially got 50 out of 51 licenses in place where they've got to put down capital, where they've got to bond themselves, where they've got to report back. And so that's a definite different route to go.

Starting point is 00:54:33 I wouldn't say that it's easier. but it's a different route. And that's something that Senator Alamos recognizes in the bill also. I had trouble finding a lot of the discussions around decentralized exchanges. What's the general take with decentralized exchanges? General take. Yeah, general take on D-E-Fi is there's really, I mean, that's peer-to-peer. So there's not a lot, there's not a lot essentially known at this point as far as what that would even look like.

Starting point is 00:55:05 Does it need to be? I think there's cases where you can make that point. And so there's actually a study piece in there. And I hate to point out studies because studies are non-actionable items, but at least we can learn some more. So there's a study piece in there as far as really, I mean, we obviously make the case for self-custody and how it's none of the government's business in the legislation. but we also point out in that DFI study piece about the importance of and why that might be a route to look at as far as supporting in the future, that self-custody piece under DFI. How do you see taxes evolving 10 years from now, in your humble opinion, are we just going further downstream to the to the transactional level instead of being able to peer into the rails where the larger, balancing is taking place. And if you spend a lot of money, then you're going to be paying a lot

Starting point is 00:56:05 of taxes on whatever luxury goods or whatever. And that's kind of where we have to, to push the taxation piece is down to the, to the transaction. But I guess as far as a federalist standpoint, I would certainly appreciate more, not more taxes, but more of a focus on on the sales aspect because that only goes to states and I'm I'm here for that starve the beast starve the Fed no that's horrible but I mean the reality of the situation is when it comes down to capital gains and income in the United States and how we look at those different things I mean boy did we ever boy did we ever get this deal wrong I mean even look at the accounting screw up that is that

Starting point is 00:56:51 Senator Lamas is fixing this bill also so that accounting piece in there, IRS. On the capital gains piece and how it's getting. It's depreciative. Yeah. They're essentially saying Bitcoin's a pickup truck. Yeah. But you're always going to lose money on it.

Starting point is 00:57:07 Even though we've got a solid 10 years, over 10 years of history proving it otherwise. And so that was a little bit of a screw up. And I don't think the IRS is going to be too squeaky about fixing that. But on the taxation piece, evolving down the line over the next 10 years, I actually think that cap portraying. I think you're going to grow. I think you're going to see that grow. I hope we don't see an annual cat put in. Senator Lomas was pretty excited about not having an annual cap put in place. That way, if you wanted to transact solely in digital assets, why should you pay capital gains? That's silly. If you're utilizing it as a currency. Yeah. Hey, the last question I got for you relates to competition between states. So whenever I think of which states are kind of leading the charge in this entire space, obviously Wyoming, Texas, Florida. How do you think about this, Tyler?

Starting point is 00:58:08 I think it's a this is one of the few times in my life I felt like the nerdy kid in class that some jock is looking over his shoulder during a test. I feel like Texas is looking over Wyoming's shoulder. Actually, competition is fantastic. I think competition, in fact, the entire digital asset space, Bitcoiners, everybody should be fist pumping over the fact that states are competing for their business. Because that's essentially what they're doing, right? And when states come out with bad policy, vote with your feet. Take your business to states that support you.

Starting point is 00:58:50 God help us, guys. If you want to see, I mean, so this would be the plea for industry. If you want to see continued action and supporting your industry and seeing your industry grow, you've got to pick up your bags, man. Yeah. You got to go. You got to get out of there. When bad policy comes about, exit, exit stage left and go to go to a jurisdiction that supports you, whether that's Texas or an even better place, Wyoming. you know, those guys will welcome you with open arms.

Starting point is 00:59:22 And on top of that, our power is pretty cheap. So that's good, too. Jason, you got any closing thoughts or things that you want to highlight? Yeah, I just say, you know, it's interesting. We go back to the idea of sort of what the Federal Reserve could have access to accounts and the banking. And sort of like the juxtaposition of all the options in, you could opt into the stable coin. and you can opt into the CFTC. But the one thing that we're seeing is sort of a challenge now

Starting point is 00:59:51 where the federal regulators are starting to throw things out, like SEC put out an accounting bulletin 121. It's a question of whether banks might start to adopt this concept that just because custody is really complicated, you start to custody a billion dollars of Bitcoin. That means you have to have a billion dollars of a liability, you know, on your balance sheet. And then what's good about this bill is it starts to talk about creating the standards

Starting point is 01:00:14 for digital asset custody. And that's really what's needed. And I think at the end of the day, the net positive of a bill like this is we have something to work with. And I think everyone agrees that things may change along the way. But if we at least have a place to say, yes, let's for once really promote the economy of the Bitcoin miners. Don't make them just sell it right away. They can sell it when they want to. The $200 is something I think for a long time has been said.

Starting point is 01:00:44 any kind of just very small de minimis amount just to allow people to start using, you know, Bitcoin in a way where it's just not always a taxable event. You know, we have to make some reasonable choices here. And I think the bill starts that discussion. And a big bill like this doesn't necessarily have to pass this session to be successful. This is the start of what I hope becomes eventually the law of the land. Fantastic. Tyler, Jason, guys, Thank you so much for making time and coming on the show today. I'm going to throw it over to each of you guys to kind of give a hand off to maybe your Twitter feed or anything else you guys want to highlight on the way out. So, Tyler, go ahead.

Starting point is 01:01:25 Yeah, so I've obviously worked for Senator Lummus. So everybody go check out Lummus. com. You pronounce it Lummus, not Lummus. It's Lummus like hummus. So check that out. And obviously check out Senator Lummus's Twitter. You can follow my Twitter also, although I will note on my Twitter that retweets and et cetera are my own non-Sener Lemmises.

Starting point is 01:01:51 So please don't take anything I say as coming from Senator Lemmiss, especially when I'm shit-talking Jason on Twitter. I wouldn't do that. No, that's it for me. Thank you. Jason. Well, yes, so you know, at Regulatory Jason on Twitter is where you can follow me and the thoughts I have. And, you know, I told you the last show, Preston, I was working on a place or a web. website where I could put a list of all the different bills and their impact on Bitcoin and

Starting point is 01:02:19 regulations. So now we have that where I actually now work at BTC Policy.org. But I'm again, really excited about the Bitcoin Policy Institute, BPI, and I'll be their director of policy. You can follow me on their website as well. So again, that's bTC policy.org. And looking forward to just continuing to engage a lot of thought leaders in the space and discuss this fascinating world. Guys, thank you so much. That was a blast talking some of this stuff. So thank you for your time. Yeah, thanks for doing it, Prest. I really appreciate you. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for We Study Billionaires. The Bitcoin specific shows come out every Wednesday,

Starting point is 01:03:09 and I'd love to have you as a regular listener. If you enjoyed the show or you'd learn something new or you found it valuable, if you can leave a review, we would really appreciate that. And it's something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening, and I'll catch you again next week. Thank you for listening to TIP. To access our show notes, courses, or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decisions, consult a professional. This show is copyrighted by the Investors Podcast Network. Written permissions must be granted before syndication or

Starting point is 01:03:50 rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - BTC082: The Senator Lummis & Gillibrand Digital Asset Bill w/ Jason Brett & Tyler Lindholm (Bitcoin Podcast)

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