DC Crypto Week Takeaways With Rebecca Rettig & Alexander Grieve

The fact that the administration and Congress is not embracing crypto in terms of, oh, we love it, and it's— but understanding that it's just going to be an important part of the American economy going forward, I think is a huge deal.

This episode is brought to you by SKALE, the next evolution in Layer 1 blockchains. Explore the gas-free ecosystem at scale.space/ecosystem and follow their journey on X, @ScaleNetwork. Thanks to Scale for making today's episode possible. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice, or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed.

All right, everyone, welcome back to Empire. Very excited to do this episode, we have Rebecca Redig, uh, now the Chief Legal Officer at Jito, um, back on the show for the umpteenth time, I think. Um, and also newcomer to Empire, Alex Grieve, who is the VP of Government Affairs. I've also heard behind the scenes that he is the most based, uh, government affairs, uh, person operating right now. So Rebecca, welcome back. Alex, welcome to the show.

Thanks so much.

Uh, great to be here, and thanks for the, the kind words. I can certainly not take credit for those.

Is, is that true, Alex?

It's true.

Yeah.

Thanks, Rebecca. All right.

Nice, nice. So the goal of this episode we had— so last week, we're recording this on Friday, episode goes out on Monday, so people will be hearing it on Monday. The last week was crypto week in D.C., and D.C. was voting on 3, 3 big bills, right? Genius Act, Clarity Act, Anti-CBDC Surveillance Act. I wanted to have you on because I see the headlines, right? I read Blockworks. I see the Crypto Twitter headlines, but I really don't know the behind the scenes. I don't know the second order impacts of this. I don't know what it means for founders and investors 6 months from now. So I would love for actually one of you to just kind of tee up this conversation. What was happening this week and why was it such a monumental week?

Yeah. So Jason, I first off wanted to introduce myself to our listeners. Rebecca is, I think, known and beloved by many.

Yes.

But I've worked in, in DC for the last 15-odd years. I worked on Capitol Hill for Speaker of the House John Boehner, and I've worked in financial policy for the better part of the past decade at DTCC in their government affairs unit, and then at a multi-client lobbying firm where I was fortunate enough to have Rebecca as one of my crypto clients. And now at Paradigm, where I lead our government affairs engagement. And I was just thinking this morning, Rebecca, back in 2022, you and I were going around the Hill and we, we, I think, literally demoed the Uniswap protocol to a Hill staffer. And just this past Friday, last week, that Hill staffer, that House staffer, is now over on the Senate side. And I was having a conversation with him about why it's important in market structure to protect DeFi, and he knew exactly what I was talking about. He knew the difference between a front end and a protocol. And, uh, I think yesterday's result in the House is the culmination of thousands of just those types of meetings. Um, huge kind of monumental milestone, huge bipartisan results, uh, 3 bills, one going to be law today at the White House, um, and, and 2 headed over to the Senate for, for further consideration. So the 3 bills, as you, as you mentioned, Jason, are the Genius Act, which creates a regime for the issuance of dollar-pegged stablecoins, the Clarity Act, which is a market structure bill which divvies up the jurisdictions of the SEC and the CFTC, and gives clarity, uh, hence the name, to founders on, on whether the tokens are, are securities or commodities, um, and how trading intermediaries like the big centralized exchanges should register and which regis— which regulator they should register with. And the third is the Anti-CBDC Act, which would ban the U.S. government from ever issuing a CBDC.

But, but before, I think we should break down where each of these bills— Alex gave a good overview, but sort of what happened this week and what everybody should expect and sort of how to work going forward. But I think we can't underscore underscore the importance of it being Crypto Week in DC enough. As we were sort of just talking about before we hopped on, like, this is on every major news outlet. I was listening to the news early this morning before we all got on bright and early, and like everybody is talking about these bills. New York Times, NPR, like everybody, uh, some more positively versus negatively. But, you know, I would say certainly 9 months ago, if not a year ago, we were kind of pariahs in DC, as Alex was talking about. Like, we were literally sitting in small staffer offices with computers, like, showing them the Uniswap protocol or the Uniswap front end and trying to explain it. And like, there was a lot of work over the last 4 to 6 years when we really were not welcome in DC, where people were pounding the pavement and taking a lot of arrows, not just on the regulatory side but even on the Hill. And so the fact that the administration and Congress is, um, not embracing crypto in terms of, oh, we love it, and it's— but understanding that it's just going to be an important part of the American economy going forward, I think is a huge deal. So thank you to everyone who put in the time, including Alex.

Yeah, definitely. So let's go bill by bill, I think. And my understanding is that there was actually an expectation that these bills would pass, um, or at least that Genius and Clarity would pass. I'm not sure if people knew what would happen with the anti-CBDC one, but Genius and Clarity would pass. But I don't think people understood how, how good it would go, I would say. So tell me, I don't know, Rebecca or Alex, either of you can take this. Genius passed, I think it was 308 to 122. I got those numbers correct. Overwhelmingly, you know, passed very supportive. Talk, talk to us about the Genius Act.

So the Genius Act, I think, is a slightly easier concept for members of Congress to wrap their heads around. I think as a baseline, digital dollars are pretty easy concept. You also have— I think taking a step back, the legislative process in DC is kind of like a big game of tug of war, and every different kind of interest, every different pocket of, of kind of members of Congress on the Hill, they all have these kind of competing interests and they're all pulling into one or different directions. And every, uh, bill crafting process, you see these kinds of trade-offs and some people are happy and some people are sad. And Genius is, I think, a pretty extraordinary product in that it seems like somehow everyone is happy, aside from possibly Elizabeth Warren. And, but by possibly, I mean definitely.

Uh, I did see a— yeah, you go ahead.

Yeah, the crypto native firms are happy, the, the banks are happy. I think that's something that we're going to have to, to look ahead to, is how, uh, traditional financial services actors entering into this ecosystem are going to— I think what's that— what that's going to mean for, for our industry. Um, but as a result, I mean, when, when it came over to the House, the House just needs a simple majority to pass something that the Senate's already cleared. And so this just needed a basic majority, and instead you had a supermajority and then some. So I think it was a very firm endorsement not only of upgrading our financial rails, upgrading our payment rails, but also of the dollar's role in the global economy, the importance of creating new debt demand for our treasuries. It's a huge endorsement of crypto, and it's, I think, disruptive, and I think pretty transformational impact.

Yeah, I think that genius was so— once the administration changed, you could see that everyone wanted stablecoins, right? Like, yes, traditional financial players, of course, all of us in the industry, but also you're seeing people like Walmart and Shopify and all of these other types of not even fintechs, like, but just traditional businesses recognizing how much this is going to change their business. I had a call with somebody earlier this week a huge player in the space, like very, very traditional, very consumer-oriented, who was basically like, being able to use stablecoins cuts all of our fees down. Like, we make more money if we start taking stablecoins. And so I think that just like the actual practical reality pushed this forward, and stablecoins is going to be the way that like my mom or, you know, your grandmother or whomever ends up touching crypto without even knowing it. I think the other piece that's really important is for lobbying about stablecoins on the Hill in the past few years, we sort of had to fight over this being important for national security. And there wasn't either an acceptance or recognition of it. I even had meetings with embassies abroad and national security folks in the government who were like, no, I think it's fine. And no, China's not a threat on the stablecoin side and things like that. And even that narrative is flipped around where people understand that dollar preeminence is really important. And so I think the vote really reflects that and how this is going to be not just transformational to the American economy, but the way markets and regulation have always worked. We're talking back in like the 1930s and the passage of the Securities Act is like the market was built and then the regulation was built around it and mostly put guardrails around it. This is the same thing. Stablecoins are out there, they are being used fine, maybe not as ubiquitously as they will be. But this is the same stablecoins are out there and the regulation has been built around it. So we're in, we're in that phase now.

Yeah, exactly. I mean, crypto data firms have used stablecoins for the past however many years they've been in existence, but Genius passing gives those traditional firms the confidence that they need in order to integrate this into their payment flows. I mean, Rebecca, to your retailer point, I think one of the unsung heroes of the Genius lobbying fight was a very plucky group of KFC franchisees who blanketed the Hill and talked about how stablecoins can drive down the cost of payments and interchange. And so I think ultimately the, the beneficiary here is going to be the American consumer who sees lower costs when they go to check out, because stablecoins are the backend that's underpinning all of their payment stack.

Can you, uh, can one of you walk me through the actual details? I'm reading this Blockworks article right now, and it says things like the bill requires stablecoin issuers to maintain fully backed reserves of US dollars or similarly liquid government issued assets. There's also— the law also affords more authority to state regulators. So can we get into some of the details of what Genius actually means?

Yeah. Alex, do you want to do details? And then I'll talk about like actually practically what people are doing to start complying with Genius, because that started even past— okay.

Yeah. So, so Genius basically creates a federal regime at the prudential regulator, specifically the OCC, for stablecoin issuers like your Circles of the world. To go and acquire a charter. So the OCC will have to create this chartering regime. They actually have 180 days to stand this thing up, which is super fast in DC timeframe, and it creates requirements around the types of liquid assets that you must have in your reserves, stuff around bankruptcy, and ultimately, it's just create a federal framework for issuance, where currently you have a couple states that have state issuance frameworks, but most stablecoin issuers are just regulated state by state as money transmitters. State regulators who also want to have issuance regimes will have to have that regime be substantially similar to the federal regime. And then any issuer who has $10 billion or less in assets and issuance can go for a state charter. If you, uh, clear that $10 billion assets and issuance threshold, you get kicked upstairs to the federal regulators.

And the interesting part of this, I think there was such, um, certainty that Genius would pass no matter the foot faults or whatever that happened this week, that there's already a line at the OCC for a charter. Um, people already started filing not just a week or two ago but a month or two ago. Um, and so And, and the frenzy around getting the OCC charter is probably at all-time highs. And, uh, you know, good luck to the SEC and to the OCC in terms of both standing this up, but also I think there is just a, a huge onslaught. I think in terms of what traditional retailers are thinking about doing is they are looking at white label solutions. So not— it's, it's very expensive to set up an OCC, um, Yeah, go ahead.

The only crypto company with an OCC charter right now is Anchorage. Is that right?

That's right.

Okay.

So Anchorage has had this kind of regulatory monopoly on the OCC, um, charter for the last 4 years, I think it is roughly 4 and a half. Um, but now that changes, right?

Yes, but they're a bank. This, you don't have to be a bank to be a stablecoin issuer. It's a special type of charter.

I see.

Interesting. Yeah. So they're creating an entirely new charter now because of Genius, where previously you have the OCC trust charter. Yeah. And so it also— the Genius Act also allows banks to issue their own stablecoins. And so while they will get their kind of permit from the OCC and will have kind of a separate subsidiary that is chartered there, the Federal Reserve is still going to be their primary regulator because that's the primary regulator for all G-SIBs. So you've seen a lot of conversations, I think, in earnings calls this week around Citi and Bank of America talking about how they might enter the chat or not.

Got it. I'm going to quote Marjorie Taylor Greene for hopefully the first and last time on Empire here. So there are a couple of concerns with Genius. One is around CBDC, one is around like anti-innovation, and one is around that it like gives the banks more power and whatever, whatever. So maybe we can walk through some of those. And so I'm, I'm reading Marjorie Taylor Greene's post right here. And she said, remember when Canada froze the truckers' bank accounts and crypto when they protested against vaccine mandates? Congress is passing a bill today, Genius Act, that opens the back door to a CBDC. The ultimate goal is to move us to a cashless society, etc., etc. Why are we passing bills to lay the groundwork for a CBDC that can be used against us in the future by another authoritarian regime? So anyways, I should have picked someone else to read their their tweet. But yeah, talk to me about how maybe why this is correct or incorrect.

I mean, I, I think that there are elements that could be correct, but are— it's, I would say, largely a mischaracterization of Genius. There's actually provision in Genius that, uh, allows the Fed, or basically prevents the Fed from expanding their authority further. And almost every single Fed chair who has been asked about a CBDC has said expressly that they think that they need congressional approval in order to issue one. I think the, the fundamental basis here is, um, our dollars are going to get upgraded into digital ones. And so the question is, do you want those to be privately issued ones, or do you want those to be issued by the central government and be subject to all sorts of nefarious whims? I do think that, that MTG, uh, hits on a few kind of key points though, in, in maybe not necessarily that tweet, but some of her others this week, where individual privacy and, and financial self-sovereignty are incredibly important and key cores of crypto. And when we talk about the Clarity Act, there's a self-custody provision in there that protects individuals' right to self-custody their own assets.

Yeah, the one thing about CBDCs, just so everybody understands what the problem is, right? A CBDC is a stablecoin issued by the government, and for long, long periods of time— and this has been explored, I would say, around the world. China has issued its own CBDC. The UK explored it for a really long time. Uh, Jim Himes actually put out a paper maybe a year or 18 months ago about Should there be a CBDC? Jim Himes, a Democrat rep from Connecticut. And the real reason— it's not just privacy is important in crypto, privacy is important in all our financial transactions, right? Like, we talk about it so much in crypto because of everything that goes on here and because there's so much transparency. But like, it is not a controversial topic to be able to have privacy around your personal finances, right? Like life, liberty, property, all of those types of things. And the reason we actually have the Bank Secrecy Act is so that there is a very clear regime over what to do with your personal private financial information. So a CBDC would blow that open, and that's why there is a lot of pushback on it. Also, you're never going to get it off the ground. But we should have something that— like, so many different countries have tried to get it off the ground. China is a special example, but like the UK has tried, France has tried, all of those types of things. You just can't do it. It's too hard. And to put the privacy protections in at the government level is way too hard from a practical perspective.

Yeah. What do you think to the people who say, um, uh, this bill is actually very anti-innovation, only Circle and Tether benefit from it?

I don't think it's anti-innovation, but I think what people are referring to there is that there was concerns over the Libra type of stablecoin, right? Like a Meta or, um, you know, these large Web2 giants issuing their own stablecoins and upending things. And so there is a provision in there that I think prevents that. I can't remember the exact language.

I go through— I remember people were talking about this, making it so if you're a non-financially regulated business, you can't— so Walmart can't actually issue a stablecoin, or Facebook or Meta can't issue a stablecoin. Is that correct?

Yeah, that's why there's so much white label.

But go ahead, Alex. Yeah, there's a provision that says if you're a public company where Um, yeah, financial services isn't the core to your business, then you cannot be an issuer. Um, and so I think if, if those types of companies want to do anything in this space, they're going to leverage stuff that others have already built. And so you'll still have that kind of segregation between the customer and, and the issuer themselves.

They can't be an issuer. There, you gotta, you gotta imagine there's a workaround here, right? Like you could work with a, like Agora could be the issuer or something, and then it could go to They're, they're, yeah, building out tons of white label solutions.

Like, that's, I mean, that is happening en masse. And you talk to all the VCs the last couple of weeks, they're like, we are only getting stablecoin pitches.

Yeah, interesting.

And the other thing that I would say is, to your anti-innovation point, I mean, earlier versions of stablecoin legislation over the course of the past few years, there were many that were just a federal charter. There was no state pathway whatsoever. And so one of the key things that I think a lot of us pushed for was to ensure that there is that state pathway, because, I mean, people talk about how states are the laboratories of democracy. Well, I think they're also in some ways the laboratories of financial innovation, just as crypto in many ways I think is kind of the test kitchen for the broader financial system. Um, and so you can go get a state charter, work with your state banking regulator if you're a startup, which is going to be way easier than going and getting an OCC charter, and so I may decide the OCC route is better for them, but ultimately there's choice and founders benefit from that.

Yeah. What about the last pushback, which is that the banks really benefit from this? Um, the banks will end up being the biggest beneficiaries.

I think it remains to be seen what the, what the banks end up doing. I think a lot of them have talked about tokenizing their deposit base, and obviously they have pretty, pretty significant distribution. They have huge customer bases already. But I think it really remains to be seen how much they choose to leverage this technology for their benefit.

Okay, but I'm going to be a lawyer for a minute and say tokenized deposits and stablecoins are very, very different and they operate very differently. So banks have been talking about tokenizing their deposits for a very long time. I was in like an innovation roundtable with a bunch of central bankers 2 years ago maybe, and Citi and JPMorgan and Goldman all were in there talking about tokenizing deposits. but that's not like dollars in the same way, right? With like a certain one-to-one backing the way that Genius requires it. This is truly like taking their deposits, right? And being able to move them bank to bank. I don't think it'll be able to move in the same way that stablecoins do.

So in, yeah, it'll be harder to move between stablecoins, but there, or easier to move. Yeah. But there is a provision in the backing reserve piece in Genius that says demand deposits are one of those backing items that they can use. So whether they decide to tokenize their deposits, whether they decide to issue stablecoins and create some sort of payments consortium the way that like a Zelle would, um, it, it really remains to be seen. And I think the other question will be, is company going to want to use the, the stablecoin products that has been battle-tested, that's already out there? Are they going to want to use something new with, uh, maybe a, an issuer who has, has less experience in the market? I think ultimately the market will decide.

Yeah. Why do they say you can't get interest on stablecoins?

So that was a very fun lobbying fight. Um, so the, the tug of war analogy that I made earlier, there was a very bitter tug of war over the, the interest piece. And ultimately, um, the banks don't win in this bill. Um, their, their kind of primary priority was to make sure that they also didn't lose. And so one thing that banks really closely guard is their ability to offer interest to customers who have deposits with them.

Which is funny because they really don't give much interest anymore.

They really don't.

But yeah, yeah.

Well, think about it this way. Like, would you rather go get 5% on your USDC? Would you rather go get a fraction of a cent at your high-yield savings account? If I'm a bank, I'm probably pretty scared about what crypto-native yields can offer. So there are ways to still pass those rewards on to customers. It's just you can't natively offer yield on the token itself.

Yeah, I think there will still be these third-party arrangements like what you see between Circle and Coinbase where you're holding your USDC at Coinbase and getting interest on that.

And you just can't have it native yield bearing inside of my, my wallet. It's just accruing or something like that.

Yeah.

Okay.

Yeah.

Yeah. Like if it was like rebasing or something like that, there, there's going to be a lot of, I think, very creative lawyering over the next few years.

Can you do pass-throughs though? So like in the coin, in your Coinbase account, if you hold USDC, you get 4 or 5% or whatever it is. And we know how that works. Could you see— could that happen? I think the dream was like if I'm holding a token, a yield-bearing stable in my MetaMask account or Phantom account or something like that, I could automatically get it. Um, but could you see the same type of Circle, uh, Coinbase relationships with the wallets?

Oh, oh, with the wallets? Yeah, I'm not sure.

I think that's, I think that's harder to say. Um, I think one of the other things here too is, um, this— the bill doesn't in any way, shape, or form limit your ability to, in your wallet, hold any asset no matter where that asset is issued. So whereas a US-registered centralized exchange might have limitations on the type of stablecoins that it can list, a DeFi platform is permissionless and borderless, and any, uh, user can deposit any asset pair, whether that is a US-issued stablecoin or, or something else. And, uh, your, your self-custody wallet, I mean, ultimately it's, it's everywhere and nowhere. If you're in, in DC or if you're, you're traveling to London, it doesn't really matter. And so ultimately you should be able to hold whatever type of, of token or unit of value in there that you want. And Genius protects your ability to do that.

Sorry, you just— you talking about moving and your wallet reminded me, I was on the Hill, I'd say last administration, but like maybe 9 months ago. And there was a very senior member who was asking me about bringing crypto into the US. And I was like, you don't bring it in and out. He's like, yeah, but like, what if you— once you bring it in, then you have to register it.

And I was like, when I take my bar of Bitcoin, what does it scan it through the metal machine?

And from there to this, we've come a very long way.

Yeah, yeah, that's good. All right, let's round out this. Alex, I guess just a closing question on Genius. The house view at Paradigm, one being, oh my God, this was the worst this was horrible, 10 being like, we got every single thing that we wanted. Where do you guys fall?

I mean, look, I think Paradigm, as a general matter of practice, isn't in the business of endorsing any legislation. And no bill to that end is perfect. There's stuff that would have been really great to be in here, like native yields, like you mentioned before. That said, Genius is a pretty good bill and it defends DeFi in the process, which is one of our red lines. There should be in no way, shape, or form any infringement of the ability to permissionlessly list stablecoins on DeFi protocols or DeFi protocols having to register. And the fact that that isn't ingenious and DeFi is protected is to us a win.

This episode is brought to you by SKALE, the next evolution in Layer 1 blockchains with a gas-free, invisible user experience, instant finality, and robust security. SKALE allows for limitless scalability and has already saved its 50 million users over $11 billion in gas fees. SKALE's high throughput, zero transaction costs, and powerful Web3 infrastructure make it the ideal platform for gaming, AI, and other high-throughput apps. To explore the gas-free ecosystem, visit scale.space/ecosystem and follow their journey on X @skale_network. That's scale spelt with a K. Thanks to Skale for making today's episode possible. Katana isn't another new general purpose blockchain. It's purpose built for DeFi users to provide the best experience possible. It does this by sustainably generating deeper liquidity and higher yield than any other network. If your assets are sitting idle, then they're dead. Katana is built from the ground up with DeFi mechanics to bring your bags back to life. All you have to do is bridge over and Katana does the rest for you. Incubated by Polygon Labs and GSR, Katana launches with a notable ecosystem of primitives, assets, and partners like Morpho, Sushi, Vertex, Lombard, Chainlink, and Yearn. Be early to Katana. Join the pre-deposit campaign before mainnet opens ends at the end of this month. Deposit funds and open rewards filled with randomized amounts of KAT tokens. There's also a CryptoPunk and other exclusive NFTs hidden for the lucky ones. As always, investments in blockchain technology involve risk. Terms and conditions apply.

All right, pivot. Let's talk clarity. So another, another bill passed was the Crypto Market Structure Bill. The House on Thursday passed the Clarity Act, and this was the— yeah, the big market structure bill. So talk to us about— I think most importantly, like, what was in this? So Genius was the much— I put quotes around the simpler bill. I would say market structure gets a little hairier, a little more complex. I've heard a lot more lobbying, a lot more even infighting inside of the crypto industry.

Like, what—

maybe one of you could walk us through just what was What was being debated here?

Yeah, I'll let Alex do that. But one thing that we should talk about is like what happens next with Genius is that it goes to the president's desk this afternoon to get signed into law.

Yes.

And there are industry members that are coming. So like, this is a big deal. Like, by today, Genius will be law and there will be implementation. Crypto Clarity is in a different spot. It passed the House and now it moves to the Senate. But we'll talk about the procedure in a second. Alex, do you want to go through sort of what Clarity does and does not do?

Sure, and I'll be there at the White House, so it's going to be a pretty awesome capstone to many, many years of hard work and a pretty extraordinary event to have a president who will sign a piece of transformational crypto legislation into law. So Clarity, uh, divvies up the responsibilities between the two market regulators, the SEC and the CFTC. One of the kind of hallmarks of the last four years was the fact that not only were both of these agencies suing crypto companies, uh, constantly, but they couldn't decide the best way to do it, and they couldn't decide who had the jurisdiction to do it. So you had conflicting lawsuits that were saying that, like, an asset was a security or an asset was a commodity, and then you had poor founders stuck in between getting, like, absolutely hammered from, from both sides. So, uh, this Marcus Structure bill is not so much a deregulatory action, as I think some critics of it might, might say. It's— it is a regulatory clarity exercise that defines the lanes the regulators have to swim in, so effectively they can't make up their own rules in the future in the absence of any clarity.

I don't know if I actually think that's true. I think there is a huge set of rulemaking that comes in through clarity.

Let me clarify. They can't make up their own rules through enforcement in the same way they did the last 4 years. So this is supposed to constrain the kind of confines of their activity.

And there's— importantly, there's also a provision in the bill that allows for presales of tokens under the securities law. It creates a new exemption. So for all of these years, we've heard about like selling to— selling to accredited investors only, Reg D, Reg A, you know, 506. So you've heard all of those securities exemptions that people have used to do pre-sales of tokens and ICOs, whatever. This creates a whole new exemption under the securities laws to be able to, to do token pre-sales as well. So I think that's an important part for founders. It does have pretty— as in the draft that came out of the House, has pretty restrictive lockups for insiders for pre-sales of tokens. So for a lot of your listeners, that is probably the most important thing that they will care about. But it also impacts teams like it's not just like the VC who are restricted, but teams who get tokens will not be able to sell until what they call maturity and for a period of time after that. So it creates a lot of different parts of market structure for tokens.

Well, it's super important because you put quotes around maturity. What— there's a definition. Let's get into that word maturity. What does that mean?

So in Fit21, because I think you can rightfully view Clarity as the kind of next updated version of FIT21. FIT21, as your kind of project decentralizes, it moves from the SEC to the CFTC. Um, Clarity takes a more straightforward approach, which is the fundraising kind of contract is the SEC's purview, the token itself is the CFTC. And so everything that's happening with the token, unless it's literally like Apple stock on a blockchain, is going to be happening over at the CFTC. And so —now instead of a decentralization test, there's this kind of maturity test where over the course of 4 years, projects will decentralize, ownership thresholds will decrease, and ultimately you'll reach this point where you can be deemed to be a mature ecosystem or mature network or mature— maybe not ecosystem— or mature protocol. There are fewer disclosures required on the initial issuing entity or kind of related or associated persons. So after that 4-year threshold, those kind of restrictions relax. And the idea is that a project has reached a state of literal and regulatory maturity by that point.

Can I say it back to you and make sure I understand? So a token can transition from a security to a commodity No, that was the old bill.

The new bill, different. Yeah, yeah. So the idea is to make this as simple as possible. It's still pretty complicated, to be blunt. Um, and, and ultimately, like, the Senate is going to kind of do its thing and is going to decide whether this is too complicated, they want to simplify it even further. But the idea was that all secondary market trading of digital asset tokens should happen over at the CFTC and should be under their regulatory purview. Yeah.

So the sale, the presale of tokens, it's not that the tokens are securities, it's this concept of like the token and all of the promises and stuff around it, right? To just harken back to all the things we used to talk about. So that's a securities transaction because it's a presale. You're saying we don't have anything yet, we're going to build. And so what we've sold you is going to appreciate in value. So, okay, fine. Howie investment contract, stuff like that. But once the tokens are out into the market on the secondary market, then all of that is in the CFTC's purview. So the token does not—

the second you get the token live, it's a commodity.

Yeah, but that doesn't take away your disclosure obligations. It's— so this is— the SEC is really a disclosure regulator in many ways because it's the—

oh, the disclosure regulations go away once it becomes a mature status or they're reduced. They reduce and mature status is like no single entity holds 20% and open source code or some of these things.

I mean, other things. Okay. Okay. Yeah, it's kind of— they're security or control tests, but honestly, it's the flip side of decentralization. Like they just have rebranded it because many people in the industry were like, we cannot codify decentralization in law. That doesn't even make sense. Like we can't talk about like GitHub commits in a bill, which they did. And fit and things like that. So, um, what about app tokens?

Or yeah, what about app tokens that trade on mature blockchains? So I could see how things like ETH would benefit and other mature L1s and L2s and stuff like that. What about AAVE and Uni?

Um, I don't know how, so we'd have to go through it. AAVE might, I don't know of anything, any, I don't even think the DAO holds 20% of the AAVE tokens. Um, So I think maybe, um, so they can become mature too.

It's, uh, like the, the app token.

Okay. Yeah, it's for, it's for project.

Yeah, the, the idea is it's not just for, for L1s and L2s, it's also for protocols, for app tokens. I do think that one thing the Senate's going to have to think through is whether those hard-coded percentages, like that 20% threshold, make sense as kind of a one-size-fits-all. So like, for instance, infrastructure projects or DePIN, generally speaking, in DePIN, you do have some sort of central entity that is controlling a large number of tokens or is, I don't know, putting out hotspots or whatever it is that the DePIN project is doing. And the kind of token holders are less involved in the same way that they might be, or less decentralized than they might be with like an L1. And so creating more flexibility, whether that is kicking that to the regulators for notice and comments, they can have bespoke kind of regimes for different styles tiles of projects is something the Senate's going to have to contemplate.

Yeah, but if you think even about like general foundations, foundations upon launch frequently have 20, maybe 25% of the total token supply. So I agree with you there. So just so Genius goes to the White House, now Clarity goes to the Senate. And in full disclosure, for the behind the scenes stuff, this is not— it's not that Clarity is going to the Senate and they're going to consider it as it is. There are a lot of efforts in the Senate now in terms of either taking clarity and, as Alex suggested, simplifying it, bringing back in Lummis-Gillibrand elements and thinking about— which was an old draft that came out of the Senate also dealing with market structure. So they're trying to reconcile all the different approaches that people have taken to crypto market structure legislation now in the Senate before. So it'll have to go back to the Senate and then maybe back through the House before it ever gets to the president's desk. So whereas Genius is going and everyone should be off and running to the OCC, we are not close to getting crypto market structure passed in the next, I'd say, month or so. Yeah, yeah.

Rebecca makes a very good point. In the same way that, uh, Clarity was kind of a derivation of FIT-21 and had similar authors, in, in the Senate you have, uh, a lot of efforts like the Responsible Financial Innovation Act, which was commonly known as Lummis-Gillibrand. It has this construct called ancillary assets where, kind of similar, if you, um, have an investment contract, the object of the investment contract is not in itself a security, it's an ancillary asset or a digital commodity. Uh, they they have opinions. The, the Senate is its own body. It likes to do its own work, um, and we're expecting them to release their— the Senate Banking's discussion draft, I think, in, in the next couple of weeks. The Senate Agriculture Committee is going to do their own work as well. You have to run these kind of parallel tracks just like you did in the House because the SEC is under Senate Banking and the CFTC is under Senate Ag. And so it's, it's going to be a similarly complex kind of orchestration with a lot of folks that have worked just as long on these issues and have very, I think, concrete and well-thought-out approaches to how they want to deal with them.

So there's this kind of revival of ICOs happening right now. Um, there's these platforms like, you know, Echo and Legion and things like that. And then, you know, obviously Pump.fund just did their big one, which we've been talking about a lot here. What does this do for the I've, you know, I'm not alone. I'm mostly tracking what you guys are saying, I think. And my, one of my thoughts is this could kind of legitimize ICO-style fundraising again. But I'm curious to get your take.

I mean, it will. I don't know if we'll call them ICOs. But I mean, at least what is in clarity now is you can sell 75 million of tokens presale and It has a number of different pieces to it, but it will allow for that. Yeah. I mean, ICOs, right back in the day, sort of have this odd historical negative connotation, but there's nothing wrong with them as long as you do it correctly and then actually build something, right? ICOs were just so bad back in the day on the scam side of it, but like, there's nothing wrong with presale of tokens.

Yeah, yeah. I think it's honestly been pretty incredible to watch just the pace and how efficient some of these sales are. I mean, crypto is an extraordinary capital formation tool. And, um, back in the day when crowdfunding first came out, that's like a very rudimentary version of what crypto has made extremely efficient. So, um, a lot of tools, not just for crypto companies, but I think for traditional companies to find ways to raise capital. Again, you need regulatory kind of guardrails around that. You can't just be willy-nilly raising money and then not abiding by the terms under which you raised it. But, um, it shows just how efficient crypto capital markets can be.

Yeah, we just put out this dashboard on the Pumped Up Fund ICO, actually, and you can see here, this is, um, minutes po— uh, how much money was raised each minute. $275 million raised in minute number 1 of the Pumped Up Fund ICO. And, you know, you know, Minute number 2, $53 million, $35 million, $19 million. So it seems like this is where capital markets are trending towards.

It also, I think, is a great endorsement of just why stablecoins are important. I mean, that's all in USDC and USDT. And to the same thing that we said to all these members of Congress, you can send stable dollar denominated value instantaneously anywhere in the world with immediate finality.

And that's awesome. Yeah. And not a $40 fee off of whatever you're paying. Right. And then the bank saying, oh, we don't know this person, we're not going to send it to you. You having to call your bank, all of that stuff. Obviously, there are things that can go wrong when you're transferring stablecoins if you don't have the wallet and stuff like that. But if you know how to do it, it is the easiest thing. I just did an angel investment. It took me, I don't know, 5 minutes to send it across, you know, in USDC from my Coinbase account, and it was amazing. The one thing I'll say about the Pump ICO, I don't know if you guys talked about it too, it's a little different than what we think of as old ICOs. Like, they build a product that people like and use, and then they did their— yeah, right, crazy. What are we doing? Um, and I think that may be why it was so successful too, because you already showed product-market fit. And I think, I think that's hopefully what we will see going forward a lot of too, which is people actually trying to build something useful.

Will this, uh, will this cause more, more people to launch chain, their own chains, like more app, basically more apps to launch chains, or, or no impact?

That's a great question, actually. I don't, I wouldn't want to have to hit maturity because at least as it's written today, because it is to use. It's a little confusing. It's a little complex, and it doesn't even fully reduce your disclosure regimes. But I don't know if it'll launch your own change. If you're launching an app and you have a token, it doesn't really matter if you have a, you know, you'll still have the same obligations.

This episode is brought to you by SKALE, the next evolution in Layer 1 blockchains with a gas-free, invisible user experience, instant finality, and robust security. SKALE allows for limitless scalability and has already saved its 50 million users over $11 billion in gas fees. SKALE's high throughput, zero transaction costs, and powerful Web3 infrastructure make it the ideal platform for gaming, AI, and other high-throughput apps. To explore the gas-free ecosystem, visit scale.space/ecosystem. System and follow their journey on X @skale_network. That's Skale spelled with a K. Thanks to Skale for making today's episode possible. Katana isn't another new general-purpose blockchain. It's purpose-built for DeFi users to provide the best experience possible. It does this by sustainably generating deeper liquidity and higher yield than any other network. If your assets are sitting idle, then they're dead. Dead. Katana is built from the ground up with DeFi mechanics to bring your bags back to life. All you have to do is bridge over and Katana does the rest for you. Incubated by Polygon Labs and GSR, Katana launches with a notable ecosystem of primitives, assets, and partners like Morpho, Sushi, Vertex, Lombard, Chainlink, and Yearn. Be early to Katana. Join the pre-deposit campaign before mainnet opens at the end of this month, deposit funds and open rewards filled with randomized amounts of KAT tokens. There's also a CryptoPunk and other exclusive NFTs hidden for the lucky ones. As always, investments in blockchain technology involve risk. Terms and conditions apply.

Alex, maybe I can pick on you for this question. Can you take us into the room? Like, I understand, I read, I was reading like Emmer's comments on it and French Hill and kind of the classic people who I'm like, yeah, you're very pro-DeFi and very pro-peer-to-peer digital economy, and kind of getting your classic great statements from them. But why are so many other people— how did we get other House members on board with this?

Like, why are they pro this? With Clarity or with DeFi? I do think it's actually important to touch on the DeFi piece. Emmer particularly deserves a lot of credit. So right now, Roman Storm is— his court case is happening this week. And, and he's being, uh, prosecuted by the federal government for basically just publishing code. And so one of the things the Blockchain Regulatory Certainty Act that, that, uh, Whip Emmer, uh, incorporated into Clarity, and we're optimistic will get incorporated into any Senate product, is it ensures that developers are not required to register as money transmitters and aren't held liable for the actions of unrelated third parties on platforms they develop. So it's super important to, to I think, uh, rightfully recognize that developers publishing non-custodial platforms that don't take custody or control of user assets are very different than centralized custodial entities. And we're, we're very, I think, focused at Paradigm particularly on making sure that any market structure legislation recognizes that.

Yeah, I saw French Hill's quote was decentralized finance or DeFi developers do not take custody of user assets, nor do they control user assets. Therefore, we should not treat them the same way that we treat centralized actors who do have custody and who do have control over the assets.

I think that's well said. Yeah. And J.T. Thompson, who is the chair of House Ag, who oversees the CFTC on the House level, also went to the floor and started off a statement saying DeFi is different, which is like, yeah, we've all been saying that for a long time. So to see the chairs of both. Yeah, exactly. It's pretty amazing. I think the thing we have to watch out for in the Senate, and I know Alex has some things to say about this, is the traditional financial actors are very, I would say, afraid of DeFi, but let's just say wary of DeFi. They don't want to see anybody cutting into their market share. And so we are seeing lots of new players coming out against DeFi because they think— I still don't understand it because DeFi is still such a small part of even the crypto economy, let alone the larger economy. But there is this real fascination or obsession with what DeFi can do to traditional finance. I don't know if I'll take that love and do something with it. Yeah.

If anyone's been paying attention to my Twitter profile the last 2 weeks, they've seen some very spicy opinions on this. If you look at the SEC Crypto Task Force meeting log, SIFMA, which is the trade association that represents basically the entire securities industry, had a very pointed comment letter that basically said on-chain securities are bad and original securities are better, and we don't like anyone kind of honing in on our action. To Rebecca's point, and this was I think what, what was so important about G.T. Thompson, uh, the chair of the Ag Committee, which oversees the CFTC and commodity derivatives market, saying is right now the, um, the Clarity Act just protects spot DeFi. And, uh, whether it's spot DeFi, whether there are derivatives, there are all sorts of permissionless non-custodial protocols out there whose developers deserve protection. And there are plenty of more traditional market actors. CME is, I think, probably the, the biggest culprit here. CME, the Chicago Mercantile Exchange, has something like 90% of global futures volume on its platform. So if I had that type of flow, I would also not want to share it. Um, so it'll be hyper liquid, by the way. Yeah, so it, it will be, I think, a big fight in, in the Senate to make sure that these traditional actors don't get involved in— they're already involved in these conversations, but don't do so in such a way that it purposefully disadvantages crypto companies. Because I think crypto provides the first real competition to a lot of these really entrenched market actors in, in a very long time, if ever. And competition ultimately is, is good for the market. I think we also think that DeFi is kind of this grand unifying superstructure across all of global finance. And so keeping that open and permissionless means that it's going to be able to reach its potential. And ultimately, all of these, these kind of disparate, uh, disjointed markets in every nationality will benefit from greater global liquidity and interoperability. Um, so we're optimistic that, uh, I think Ranking Member Klobuchar has, has been, uh, I think a fierce antitrust warrior over the years and I will be very interested to see whether she picks up on these incumbents who aren't taking kindly to new market entrants challenging their long-seated, I think, territories.

That was some deep DC stuff. To break it down for everybody who is not deep in DC, we're talking about Amy Klobuchar, who ran for president previously. She is now chairwoman—

she is chair of AG now, ranking member of Senate Ag. She's the, the top Democrat on Senate Ag, and so her staff is in charge of, of the ag part of the, the Senate market structure bill.

Yeah, so she'll get a lot of say in whatever draft of market structure that Ag's putting out. And antitrust, for everybody on the legal side, is where you can't have these huge, huge conglomerates coming together and taking over a full share of the market. And it's actually what people have sort of for a long time were were so surprised why Elizabeth Warren didn't like crypto because she was so anti these huge financial services companies taking over everything. And so we were like, oh, she'll love this because crypto is, you know, undercutting that.

No, Alex, we need more.

We need more DCT. A little more gossip out of you.

He knows there's so much.

The thing I feel like the thing people don't realize who haven't been in DC is more than like any other, you know, even New York or S.F. or anything like that. D.C. is a gossip-run city. It is. And it's small.

Like, New York is like— you have these, like, lots of little things going on. Yeah. Yeah. So small. Everyone knows everyone in D.C. Everyone knows everybody.

Yeah, yeah, yeah. Yeah. It's— I think not just politics is kind of this small, insular kind of ecosystem in D.C., but also the financial policy sector, and then even a smaller concentric circle than that is the crypto policy sector. So, I mean, for years I would go to fundraisers with Nadia Mir, a member of Congress on the Financial Services Committee, and see the same 15 lobbyists from CME, CBOE, Goldman Sachs, and so on sitting around the table and be like, hello, I'm going to have the same conversation with you that I had yesterday when I saw you at lunch. And crypto is even an even smaller community than that, which is also, I think, one of the things that makes it really awesome because you've been fighting side by side with this same group of friends in the trenches and some of the darkest days over the past decade. And these are the people that you get to celebrate with when things go right. So it's a pretty special thing to be a part of.

But I do think from an industry perspective, look, how to regulate the big centralized actors is pretty clear. Like, I just don't think there's a lot of stuff to fight over except for maybe some jurisdictional turf wars over like, can ATSs, which are typically, you know, overseen by the SEC, also just do like a notice registration to the CFTC and undercut all the CFTC registrants? But the thing everybody should really pay attention to is what these bills do about DeFi, because it is not regulation ready yet. Like, it's just not. We don't know exactly all the ways it works. We have all these strange mechanisms holding admin keys. Sometimes they do a lot, sometimes they do a little. We have security councils, like, right? DeFi is still emerging. And so my, my plug on this for the industry would be really pay attention there. Like, we should want market structure regulation in many ways for these large players. It's important for the Coinbases and the Robinhoods and stuff like that. But how we are going to regulate people who hold admin keys, or software developers, to Alex's point, which like writing code should not be regulated at all. Like that is really the most important thing that's going to happen in any of these bills.

Yeah. The, the last question on clarity that I didn't fully follow was I was trying to read this. It looks like Clarity Act applies the Bank Secrecy Act and other like KYC AML rules to intermediaries. But I'm not— but I'm unsure what an intermediary is in this—

a normal financial institution. Like the Bank Secrecy Act already applies to Coinbase, like an onboard, like, yeah, an exchange or something on and off ramps.

Okay. Yeah. So, so this, this is a really key point, making sure that we apply these types of, uh, controls that already exist. Like Coinbase, for instance, is registered as like a money transmitter in like all 50 states. They're registered with FinCEN. And so they have to take identity information and validate their, their customers. They have to know their customer. That is something that a centralized actor, a bank, Coinbase, can do. A decentralized actor that is just self-executing code obviously cannot do that, and they don't have the same type of customer relationship or even any customer relationship because they're not taking control of their assets. So requiring those intermediaries, those on and off ramps, to be subject to these anti-money laundering provisions, and then also safety and soundness provisions. Those are the types of things that Clarity is supposed to do, focused on the centralized intermediaries and the trading platforms.

Yeah. And this is why, just to go back to the DeFi question, there's been so much pushback about doing KYC on DeFi front ends and stuff like that, because it's just a very different type of relationship with the user.

Hey everyone, Jason Yanowitz here. Wanted to just take a quick break and highlight everything that's been going on in the Mantle ecosystem. System. In just one year, Mantle has seen its TVL surge by over 1,100%, now reaching $1.69 billion. That's just such a crazy amount to think about. More than 225 protocols have made Mantle their home, while the platform's Eco Fund has invested $38.5 million in 51 pioneering projects through strategic partnerships with Bybit, including MNT as collateral, supporting Athena to scale, and the first Ethereum L2 to integrate Ondo Finance. They just continue to be on the bleeding edge of L2s. Be sure to stay up to date with what's going on by giving them a follow on X @0xmantle. Special thanks to the incredible Mantle team for sponsoring today's episode. I wanted to take a moment to tell you about today's sponsor, ZenRock, the permissionless decentralized custody network backed by 1 roundtable partners, 10T, Maven11, and Spartan. Now available on Jupiter, ROCK is the native token for transactions within the ZenRock ecosystem and secures ZenRock's decentralized custody network. The first application launching on ZenRock is ZenBTC, yield-bearing Bitcoin on Solana. ZenBTC will be live in April 2025. To find out more, you can follow ZenRock on X or click the link in the show notes. Ever wish you could access cash without selling your Bitcoin? Ledn, the global leader in Bitcoin-backed lending, makes that possible. Since 2018, they've issued over $9 billion in loans, and not a single satoshi of client funds has ever been lost. Here's what makes a Ledn loan different. With custody loans, collateral is not lent out to generate interest. No credit checks, Funds in less than 12 hours and no monthly payments. Repay whenever you want with zero penalties. And they don't just talk security, they prove it. Ledn offers proof of reserves reports verified by a top accounting firm every 6 months. Ledn is 100% focused on doing one thing better than anyone else: giving Bitcoin holders a secure, transparent way to unlock liquidity without selling. Click the link in the show notes to find out more. As always, investments in blockchain technology involve risk. Terms and conditions apply.

Let's talk about the Anti-CBDC Surveillance Act, which is definitely the act I know least about and is the one that I feel like is least discussed. So this passed by the lowest margin. I think it was 220 or 219 to 210. I actually don't really know what this bill does. I mean, it's kind of in the name and I don't know if it's an anti-CBDC or anti-CBDC surveillance. Um, but maybe, yeah, yeah, yeah. Can you walk us through what, what this bill actually says?

Sure. So I, I think that the name kind of says it all, and admittedly I've spent less time on, on this than the other two, which I've spent hours if not days if not weeks or years of my life. Um, this one basically says full stop, the central bank of the U.S. government cannot issue a, a bank-issued stablecoin or a central bank-issued stablecoin, a central bank digital currency. And the The idea is that, like Rebecca said earlier, places like China have decided this is a really great thing that they want to do for their own purposes because they also like to collect information about their citizens and keep tabs on them. That's not what we do here in the US. And so this isn't something that anyone has really been on board with, particularly folks who are particularly focused on privacy. I think where this gets tricky is in how the language is crafted. Um, generally speaking, uh, Republicans say CBC bad, uh, I think. And so that's where, where you saw almost every single Republican voted for this. With Democrats, I think there's a broader, um, kind of range of, of opinions. You've seen some, like, uh, I think you had two Democrats vote for this, uh, uh, Golden in Maine and Tanadar in, in Michigan. Um, you've seen folks like Jake Auchincloss in Massachusetts who's young and pretty tech savvy, who says, I don't like CBDCs. I don't think they're great, but I don't like this bill because it goes too far or it's not the right implementation of this. And then there are some, I think, Democrats who think that there are good that can come from CBDCs. Maybe you can get, I don't know, government aid to individuals who are the more needy in a faster way. This was something that really picked up speed during COVID But ultimately, if you get a bunch of Americans all with accounts at the Federal Reserve and receiving money from the Federal Reserve, then the sends can always be the control. And so I think for the most part, folks in crypto who are focused on individual financial liberty and self-sovereignty, aren't particularly wild about CBDCs.

And you don't need a CBDC to do a lot of the things Alex said. The US government has already been using USDC for years to actually send aid out to Venezuela and things like that. So I— they— we don't need a CBDC. And you don't even need that. So what Alex is talking about is a retail CBDC, which is like, oh, we'd be using cash. That people have even thought about what are called wholesale CBDCs, which are for central banks to transfer money to each other. And even those haven't been able to get off the ground. It's just not an effort that's gonna work, but it is important to, I think, make sure that we, we tamp it down. And as I said earlier in the pod, like, the only country that really has gotten a CBDC off the ground is China.

Yeah, so makes sense, makes sense. Um, these three bills, what are the maybe second-order impacts of these three that folks should be— both founders and investors should be thinking about?

I mean, for Genius, like, go to it, uh, start building, keep building. There are a million different, um, business ideas even that I have heard swirling about, even between white labeling or building clearinghouses or whatever. Everybody is building something around stablecoins. So good to go. Make sure you know the provisions of the bill. Make sure you find a lawyer who can tell you how to do this practically and really understands all of this and has been working on it for years. So I would say that from a practical founder perspective, for clarity, sit tight. We still have a ways to go. Yeah.

If clarity does pass, though, I guess there's so many changes that could come to it.

I think there will be a lot of changes. And so think about what you care about. And if you do have things you care about, call your representatives and tell them. I think that's really important. Or reach out to people in the space who can tell you how to, you know, make the biggest impact for things that you care about. Anti-CBDC, I don't think there's anything necessarily to do. Alex, different take?

Uh, I totally agree on clarity. Uh, spend some time with the bill. Uh, find a good— either use ChatGPT to, to give you a good rundown of it, or find a good, um, a good podcast perhaps like this one, um, or, or a good summary, and get comfortable with, I think, all of the different terms, how it's constructed, and so on. Decide if that's something that works for your company or your projects. And if it isn't, there's still time to have your voice be heard and make sure that Congress takes the time to get this right. Because ultimately, the more information they receive, the better policy they're going to be able to make. And members of Congress love stories. If you're a founder who says this bill is great for me because XYZ, they want to hear that. If you say this bill doesn't work for me because XYZ, they want to hear that too. On Genius, I'm actually really excited for what this does to, I think, the cost structures of a lot of, I think, existing companies that will start to integrate stablecoins as their backend. So you've seen a lot of costs driven down by the adoption of AI where entry-level roles, maybe you can just use ChatGPT again. In the case of stablecoins, we're starting to see countless fintechs adopting stablecoins as their backend. You're running global payroll, you're going to use stablecoins. You're doing cross-border payments, you're going to use stablecoins. I think Stripe's been a really early adopter here. Uh, Privy, which was one of our portfolio companies, they just acquired, um, has been working with a lot of these fintechs to do just that. So starting to see some of these companies that have traditional cost structures have those cost structures compressed in, in a really positive way. By the adoption of stablecoins into their backend and their operations, I think is going to be a really exciting trend to watch. Nice.

Alex, what was the biggest debate between the, between the crypto incumbent, the crypto folks about these three bills?

I think the changes to the DeFi provisions, maybe in clarity at the very last week week before it came to the House floor were probably some of the bigger debates. I don't know, maybe Alex has other DCT.

Yeah, um, yeah, honestly, a lot of stuff around getting DeFi definitions correct. Um, I think that's been the biggest thing. Like, there's, I think, broad agreement generally, uh, with maybe some wording tweaks about what you should do with centralized exchanges. Like, that's, that's less hard, but defining the undefined in the case of DeFi is extremely difficult. And so not only in clarity, but if you look at the Genius digital asset service provider definition, which is I think in like Title II, that was painstaking work to make sure that that was targeted just at centralized intermediaries that are listing tokens or offering them on a platform, as opposed to decentralized non-custodial ones. So that is the one thing that every single bill that comes out, you parse it and you make sure that it it defines things correctly and it doesn't inadvertently scope in things that shouldn't be scoped in.

And I'm guessing on that, on that line, it's like the centralized exchanges might have been fine with it, but folks who are investing in DeFi or building in DeFi are— were gung-ho that this had to change. Yeah. Yeah. Yeah. Interesting. Alex, thanks for coming on Empire. Rebecca, thanks for coming back. Anything, anything that we should be talking about that we've not talked about? Anything that we missed?

No, I think it was a pretty big week. I think crypto week lived up to the hype. Yeah. And I think it'll be really interesting to see what happens with Clarity in the next month or so. But I don't think anybody's losing steam and I think everybody wants to capitalize on the momentum from Genius.

Do you think Clarity will change much? You— it sounds like you both think it will change a decent bit.

I, I think it probably will. I mean, I think some would say that the, the huge bipartisan vote means that it shouldn't change at all. I think others say that when there's a huge bipartisan margin, it means that you gave up too much. Uh, so I, I think this— the Senate has its own opinions. Uh, we just saw this with one big beautiful bill. The House had one package, the Senate did something entirely differently with it, and they sent it back. But I think the one thing that I would also have folks pay attention to is the ongoing conversations around crypto tax. This has not gotten the same attention that Clarity and Genius obviously have, but ultimately, say we pass this market structure bill, we've already passed Genius, ensuring that digital assets are given correct or clarified tax treatment is going to be one of the really key unlocks to ensure that they can be integrated into our financial system, into kind of our day-to-day life and payments. So House Ways and Means and Senate Finance are going to be working on this over the coming months. Senator Lummis just introduced a tax title. So this is going to be a big item that I think many are going to be working on too.

Yeah. And I will say, just coming from the Judo side of things, I think tax around staking is really, really important to get clear. And both on the direct staking and the liquid staking side and how staking rewards get treated. And there's also a big push behind the scenes to make sure that there can be staking in ETFs because yes, you need it to be cleared through the SEC. But the other big hurdle is to get how the tax treatment will be in the grantor trust structure. So that's the structure around the ETF and how you'll be able to do staking within that and also via LSTs, which there may be some exciting news on that on the Judo front next week too. Oh, all right. Little alpha.

Cool. Rebecca, thank you. Alex, thank you.

Thanks, guys. Great to see you.

Thanks for having us. Bye.