Fungible Times | "Crypto Dad" Chris Giancarlo

Hi everyone. Welcome to Grey Matter, the podcast from Greylock, where we share stories from company builders and business leaders. I'm Heather Mack, head of editorial at Greylock. Today we're sharing the latest episode of Fungible Times, the Web3 focused podcast produced by Greylock crypto investors Sarah Goa, Christine Kim and Mike DeBeau. Sarah and Christine spoke with Chris Giancarlo, who is one of the most influential people in financial regulation. Giancarlo is a former chairman of the cftc, which oversees commodity futures trading. He was also a member of the US Financial Stability Oversight Committee, as well as the President's Working Group on Financial markets. Today, Giancarlo is widely known as Cryptodad for his father. Like advocacy of cryptocurrency, Cryptodad is also the title of his new book. You can also find this episode and all other Fungible Times episodes on their show website, fungibletimes XYZ and you can subscribe on SoundCloud, Spotify or wherever you get your podcasts.

Welcome back to Fungible Times. I'm Sarah Gore and here with Christine, we're really excited to welcome Chris Giancarlo, one of the most influential individuals in financial regulation today. He also has the best nickname of any regulator or former regulator, crypto dad for his father, like advocacy of cryptocurrency, as former chairman of the cftc, the governing body that oversees commodities futures trading, and member of the US Financial Stability Oversight Committee, as well as the President's Working Group on Financial Markets. He's currently an advisor, investor in crypto and technology businesses, author of a book, Crypto the Fight for the Future of Money, and senior counsel at Wilkie and of course a dad himself. So very excited to have you. Welcome Chris.

Great to be with you, Sarah and Christine, thanks for having me.

Yes, we're so excited for this. We haven't had former regulators or a person of your type come onto the podcast now. So we are excited to teach all our fungies, as we call our listener, about your world. For the first section, we like to call this Explain like I'm five. We're just going to do a quick section, just get into some of the more surface level things and kind of get into your background. So to kick things off, how did you become a senior regulator, become an advocate for digital currencies? Like how did you get started in blockchain technology? We'd love to know a little bit about you, your personal career and how this all got started.

Yeah. So how I became a senior regulator and how became involved in crypto is almost two different stories, but just briefly. I spent 16 years as a practicing lawyer in New York and London, mostly with a technology based practice. And some of those technology clients in the year 2000 led me away from law practice to pitch in with them to build some of the first electronic trading platforms for a type of complex over the counter instrument called credit default swaps. And over the next several years we built the world's largest wide area network trading platform for over the counter swaps for institutions, bank to bank trading and and we grew to 18 offices around the world. We raised three rounds of private equity money and in 2005 we took that company public and eventually took it from the NASDAQ to the New York Stock Exchange. And it was a very well performing company with over 80% market share in trading those instruments. Well, you may be guessing where this is going. In 2008 the financial crisis hit and credit default swaps were the epicenter of that storm. Now we were not a trading house. We operated the platforms, we operated the exchanges on which these instruments traded. But nevertheless we understood the market and we understood the cascading range of potential defaults of one US financial institution to another that led to the financial crisis. And so as a result of that, I wound up giving testimony multiple times in front of Congress as it took up the Dodd Frank legislation in the year two, 2009 and 2010. When it passed in 2010, I put out a statement commending President Obama on its passage, at least as far as the swaps provisions are concerned. I believe then and believe today that Dodd Frank got it right. But over the next few years, as the Commodity Futures Trading Commission was implementing that law, I thought they got some of the implementation wrong and I was vocal about it. Well anyway, when a seat opened up on the commission, to my somewhat surprise, the Obama administration reached out and says, you sound like somebody who knows what he's talking about. We don't necessarily agree that we're implementing it wrong. But you support the law and we need somebody on the commission. Would you go and join? And even though I was a registered Republican, I was delighted to receive that overture from the administration and I was pleased to be unanimously confirmed by the US Senate. Anyway, I served during the commission and I think I played a constructive role in helping to steer the implementation. So the answer to your first question is how did I become a regulator? I became a regulator to focus on the swaps market. Well, during that time Bitcoin was working its way into the national consciousness and we at the CFTC were very focused on it. In 2015, that agency, the CFTC, declared Bitcoin to be a commodity subject to its jurisdiction. And I played a role in that decision. And it really got me studying hard, this new asset class. And I had I talk about it in my book, Crypto Debt Financial for the Future of Money. My meeting with the Winklevoss brothers in early 2015, which really started to open my eyes and ultimately led to a lot of my thinking on this. Well, anyway, in 2016, President Trump was elected and his first appointment was Gary Cohn to head up the National Economic Council. Gary had been the CEO of Goldman Sachs, and he was a friend and somebody I had worked with on Wall Street. Gary called me up and said, do you like what you're doing? I said, I do. He said, would you like me to recommend you become chairman to the President? I said I would. And the next thing I know, I was notified that I was being nominated to be chairman. And I took over as acting chairman. On day one in 2017, the very first thing I did at the CFTC was created Lab CFTC. And I charged that new bureau within the agency to bring in the best people and master everything they could do about cryptocurrency, blockchain and, and the underlying technologies, because I had a feeling that it was going to become much more important in the life of the CFTC. Well, sure enough, that summer 2017, the CFTC was approached by some of the world's biggest exchanges, the Chicago Mercantile Exchange and Chicago Board Options Exchange, about green lighting, the creation of bitcoin futures on the exchange. And again, I write about this in my book. It's a long story. There was a lot of pressure on us not to allow that new product to launch, but we resisted that pressure. At the end of 2017, the world's first regulated market for any type of crypto, in this case derivatives on crypto futures on bitcoin was launched on the cftc. And within weeks of green lighting that launch, I received a formal summons from the U.S. senate Banking Committee to appear before it and basically justify what we had done. And as if you've ever seen these hearings, you know, they've got a lot of lights and a lot of people in the room, and it's a fairly pressured environment. And I had prepared this long summary of every step we had taken in advance. But, you know, when the lights went on, I pushed that paper away from me and I just looked up at the dais of all these senators assembled there and I said, senators, I Know, I'm here as the head of a federal regulatory agency, but if you allow me, I just want to talk to you as a dad. And I explained to them that I had kids in their 20s that had no interest in Wall street in the stock market, but they sure had a lot of interest in crypto. And I said, you know, you've probably had some of the same conversations around your table, and I think as parents, I think we owe it to this new generation to get our regulatory response right and not just dismiss this as some, you know, fancy of youth. But there's something here that we need to really come up with a thoughtful regulatory policy response. And then I spent the next several hours talking about what Bitcoin was and what it wasn't and what the definition of HODL means and why it's important. It turned out to be a very fun hearing. And within hours, my 1,000 Twitter followers suddenly became, I don't know, 45,000 over the next three days. And amongst other nicknames, I got this name, Cryptodad.

That was clearly a pivotal moment for the entire ecosystem. So, you know, thank you for your. For your leadership here, and great to hear the story. We should go back to the book. Absolutely.

Well, thank you. But I've tried to continue in that vein. You know, part of. I think the role I play both at the Commission and today is explaining that there really is something quite fundamental here. This is not just some fancy new asset class that's competing with other asset classes for investment. This is truly a new architecture of finance. This is the Internet now doing to banking and finance and money what it's already done in our lifetimes, to online commerce, to retail shopping, to transportation, to entertainment. And to think that it won't have a similar impact on finance that it's had in those other areas is just naive. And so, because I was a regulator, because I'm considered to have been a successful regulator, I think part of my job today in the marketplace is helping explain these changes to the legacy system and the legacy regulatory system, which is as impervious to change in many ways as a lot of legacy industries. And yet change they must. Because technology is unstoppable, this change in the architecture of finance is going to happen. And regulators and policymakers need to keep pace with that change.

I love that you actually had those comments because, you know, that really kind of lays the case for why crypto and digital currency is just important for our economy, our society, for our nation, for the world. And, you know, assuming that most people that are listening to this podcast, are interested in Web3 and interested in crypto, and have sort of already red pilled, if you will. If you haven't, hopefully Sarah and I have been red pilling you with these episodes. But, you know, we assume that a lot of our listeners are already on board with crypto, but are not super familiar with regulation. And so from your perspective, what would you tell our listeners or the average consumer, what is the importance of regulation, specifically crypto regulation? And maybe you can give kind of an update or a background of just what's the state of the union right now when it comes to crypto and policy and regulation.

Okay, so you're very sophisticated crypto listeners have heard me say to my generation and the legacy system, to think that crypto won't change everything is naive, right? Well, let me now turn that around and say to the crypto generation, to think that this space won't be regulated, that it won't become within the political control as every other activity has, is also naive. What we've got to do is meet in the middle. We've got to find the right balance between what's the right scope of regulation for this emerging new industry so that it can thrive. Regulation, if it's poorly designed, can be detrimental, but if it's properly designed, it can actually be conducive. US derivative markets, for example, are the world's largest and most successful, and yet they've been regulated for over 100 years. And so you can get regulation right. And what we need to do is not oppose it, but actually lean in and get it right. Because what is regulation, at the end of the day, it's just another algorithm, right? It's just another set of protocols. And if we get, just as we know in crypto, if we get the protocols right, it can be tremendously successful. And similarly in regulation, if we get the protocols right, we can be very successful. And often to get it right, we need to go back to basic principles of what is appropriate disclosure, who should be responsible for false disclosure, you know, what are appropriate consumer protections, while not taking risk out of a marketplace, because without risk, you can't have economic activity. So how do we find the right balance there? So what I would say is it can be done. We all need to lean in. You know, legacy folks need to lean in. New entrants need to lean in, and we need to use our democratic system to get this right. And I would say there's a lot of leadership coming out of the space. People like Sam Bankman, Fried and Others are really working hard to say we're not opposed to regulation, but we've got to get the details matter, we've got to get it right. And I think that's a really good development.

Yeah, I think embracing regulation and not trying to say we're going to operate outside the confines of regulation and acknowledging that these two sides need to meet is going to be incredibly important. And I think we have a lot to lose if we don't get this right. And so there's a lot at stake. And so in our next section, we'll definitely get into what are some of the biggest risks and some of the biggest policies that you are focused on. But I want to focus on and I want to ask about some of the initiatives that you've been working on lately. Can you explain the notion of a central bank digital currency or what we want might call a cbdc? What are the pros and cons around it? Is it meant to erase or evade the systems that we have today? You know, just maybe I'll pause there and you can give some color on, you know, your stance with that.

So very simply, central bank digital currency is basically a digital bearer instrument. It would still be blockchain based, although most like most. So let me back up for a second. First of all, let's start with the fact that virtually every major central bank in the world, over 90 of them, are at work on central bank digital currency. So there is something here, right? The way I think about it is the private sector has been experimenting with digital money for a dozen years. The legacy system that first ignored it and ridiculed it, has now woken up and realized it's not going away and they're a decade behind. And so they're either building furiously or likely buying furiously. Well, now the third community, that is regulators, central bankers, are waking up realizing they're a dozen years behind and they're now looking at central bank digital currency. I think. Well, certainly China has been way out in front of this and has not only launched a central bank digital currency, there's already over 100 million Chinese using that central bank digital currency. They have taken a leadership role in developing a lot of the protocols around sovereign digital money. And that's part of the reason why I've long advocated that the United States needs to stop following and start leading. And why is that? Because once you get beyond the technology, once you get beyond the network effect that currencies have, ultimately currencies are expressions of the value of a people. And the Chinese digital yuan, known as The ECNY is being developed. It's going to have a lot of technological capacity, but it's also going to reflect certain values of a, of a closed society, values of surveillance and censorship. We need to, I believe, in our free society, develop the anecdote to that, an alternative to that, that reflects the value of a free society, the values of transparency, of transparency of use of its capabilities, but also economic privacy and freedom from censorship. So ultimately, the digital future of money, I think, is a battle of values. And I think now is the time for free societies like the United States to experiment with central bank digital currency. It reflects those values. Now, some developers, some central banks see central bank digital currency in exclusion to non sovereign forms of money. I personally don't. While the Digital Dollar project, which I found, takes no view on that, I personally feel that the best protection of people's individual liberty and financial freedom is that they have choice of instrument to use, whether that be both sovereign and non sovereign. That's something I write about in my book. We'll have to see that develops. But it's very important, I believe, for a free society to work with groups like ours at the Digital Dollar project to start experimenting with a central bank digital currency. So if and when, and I think it's more likely when than if, the Federal Reserve would take up development of a central bank digital currency here in the United States, it would have the benefit of work done by the private sector experimenting with not only its use cases and wholesale use and retail use, but also in the value system that a free people must demand in money.

Yep, that's great. And if you are listening to this podcast and you want to hear more about this work, definitely look up the Digital Dollar Project. That's the name of the organization that Chris is working with. And I'm glad that you mentioned your book as well. So the last question for this topic is you wrote the book, you published it late last year. It's called Crypto the Fight for Future Money. Why write it? What can readers expect to see in there? And yeah, maybe kind of COVID what's in the book.

Well, so a couple of things. One is I wanted to put down on paper the history of, of bitcoin futures because both it's an interesting story and we're a storytelling people and we like to hear stories, but also because it kind of was a close run thing, there was a lot of pressure to block bitcoin futures and had we done so, we wouldn't have the institutional interests that have brought a maturity to this asset class that we have. And I think it would have hindered development of the entire crypto space, which has so much promise for greater financial inclusion and greater direct control of people's things of value in the way they transfer it. So a, I wanted to tell that story, but I also wanted to look ahead to what the greater institutionalization of this asset class means going forward. You know, we all hold out the promise that Web 3.0 would solve the problems of Web 2.0, a big tech being able to basically take our, Take our data, use, commercialize it, use it, but also censor it in some cases. My what I talk about in the book is the promise of digital money is to give each of us much greater control over the things of value that we have, how we own them, who we share them with, how we exchange them. But I also worry, and I talk about this, my book, that the promise of Web 3.0 could be, could be thwarted by either Big tech or Big government surveilling our use of our financial activity and censoring that use in the same way that Big tech has done that with information. And so I wrote the book ultimately to put a free society on guard that we need to step up. Right now the future of money is coming, and there's a question of what it's going to look like. China has laid down one marker, one benchmark for it, and that's money as a surveillance tool. That is money as a means of control. What will the free societies of the world do? Will they just come up with something that's not as sensible, not as surveillable? They could say, well, by comparison to the other one, it's not as bad. I think that's a disaster. The right model has got to be one that actually affirmatively and assertively says your privacy is private if you use a type of liberty coin that I'm advocating for. So the fight for the future of money is at hand right now, and the jury's out what that's going to look like. And we all need to be in the game. And I would say that the private sector has laid down some pretty good markers for government to look at as it goes forwards and considers a central bank, digital currency.

That's a really good segue into our next section, Chris, and it sort of describes some of the, I think, larger mission that you're on. So let's go to doing our own research where we dive one level deeper. For the builders and crypto enthusiasts in our audience. One issue that you just described is that there's a huge policy difference between different geos right now. And I think there's a general perception among global crypto entrepreneurs that, that, you know, and there's many dimensions to this problem, but that the US has a more restrictive and less clear regulatory environment for private organizations in crypto than other GEOs. If we put the sort of surveillance capabilities around currencies that are centrally issued aside, why should the US care about our sort of comparative regulatory stance? And what are the threats and benefits from a national perspective?

Okay, well, let's start with the real basics and then work to the specifics. The reason why the US should care, I think the reason why the US has a national interest in leadership is because the US has derived so much benefit from its leadership in the old legacy financial system that it ought to know how important it is to lead. Right. And this is an entirely new architecture. Right. This is not proprietary Rails that banks and other exchanges operate to determine who owns what, who's transferred what to whom. But this is a new architect that draws on the Internet and draws on the ability to not be wedded to double entry bookkeeping, but to use a blockchain distributed ledger basis for determining immutably who owns what and whom, and gives much greater control to people. It's an entirely new relationship between, between people and their things of value and things of money. It's an entirely new architecture. And if the US just sits it out and says it doesn't matter, it's the same way the US unfortunately sat out 5G technology. Even more broadly, the development of the semiconductor allowed us to take the computing power of large mainstream computers and put it into personal computers and, and distribute them all over the world. But it was the development of networking language HTML and others that allowed those computers to talk to each other that brought us that first Internet of information computers talking to each other. And it freed information from proprietary Rails. The reason you can make a phone call any in the world on FaceTime at no cost at all is because you're outside of the phone company's Rails and you're using, you're drawing on that network of computers. So it freed us up and created a new relationship with information. The second Internet wave was basically let's come up with protocols to allow devices to talk to each other. Well, that protocol is 5G technology. And the United States somehow sat out the development of that is not a player. This third wave of the Internet is going to allow us to take things of value and draw upon the computing power of that world. Wide web to connect things of value and allow people to direct it. And when we're talking about different blockchains, what we're effectively talking about is competition to see which one of those blockchains are going to perform that funk, that networking function. And they all have different features. You know, some are greater as stores of value, some are greater as payment systems, some are greater as program, you know, good for use in smart contracts. That's a healthy commercial kind of competition for what's going to emerge. But if the US sits it out or worse, blocks it by heavy handed regulation, all we're going to assure ourselves is that other economies are going to lead in the development about that new architecture of value and reap the benefits of it. So I really believe that we do have a bit of a crazy quilt of U.S. regulators in the United States. Often that's actually not been a bad thing. I think that competing regulators sometimes is both good for protecting our liberty but also spurring each other to do better and better. And I think at the CFTC we often challenged our sister agency at the SEC to up its game. Right? We created Lab, CFTC, then they created FinHub. You know, it often works that way and if you combine them, I'm not sure you'd get a better result. But it is a difficult landscape to navigate for neophytes in this industry and navigate yet we must. And yet having said that, I think the time has come for Congress, it's Congress as the tribune of the people to really declare a national interest in leadership in this new architecture. Congress has done it before. In the 1960s, Congress decided, declared that it was their national interest to land a person on the moon. It was Congress that actually created the CFTC because it knew we needed to lead in the development of financial futures which allowed the world to go off the gold standard. And it's Congress in the 1990s that said the United States has a national interest in leading in the first wave of the Internet with a do no harm approach. And I think once again the time has come for Congress to stand up and say there is a national need for leadership in this new technology. And remember, agencies like the CFTC and the sec, they're not administration agencies, they're independent agencies with an equal reporting line to Congress as well as to the White House. Congress has a role to play to make the agencies understand that they've got a further innovation. Of course there's an appropriate role for regulation, law enforcement, stable and orderly markets, full disclosure. But at the end of the Day we have to seize this moment and be a leader in this innovation consistent with free society, values of privacy, freedom from censorship, rule of law, free enterprise, etc.

Can you actually parse that out? So I realize that this may sound like a more explain to me like I'm five question but many, many entrepreneurs coming from a technology engineering product background, you know, have a low level of understanding of the regulatory environment, right? So you know, how should people understand the difference between the responsibilities of the CFTC and the SEC and you know, other, other players that they should be aware of.

So the way to think about it is, you know, at the end of the day, regulation is a series of protocols, right? And it's, and it's a series of protocols that was written for a different world. Most of our regulatory bodies and agencies in the United States came out of the 20 the 1929 stock market crash. The SEC was created in the early 1930s. The CFTC was created first as department of an agency of the Department of agriculture in the 1930s. The securities laws are passed in 1930s. They were a series of protocols that applied to a very different world. A world of really face to face relationships of physical trading floors, of printed documents and printed disclosure statements. And in many ways the regulatory protocols were written for that. Now just brief overview of the landscape in the United States. We have market regulators and we have what we call prudential regulators, which are basically bank and insurance company regulators. There are two market regulators, that's the CFTC and then there's the SEC and real simply the securities Exchange Commission. The SEC oversees markets for capital formation. Capital transfer. Capital formation can be a stock, it can be a bond. But basically somebody with capital is looking for an opportunity to put that capital to work. Somebody with an opportunity is looking for that capital and they meet in the middle on our US Stock exchanges. So capital formation is what the SEC does, that's not what the CFTC does. The CFTC is on the job of risk pricing and risk formation. Risk transfer. So that is an enterprise with a risk of say a moving commodity price, gasoline prices go up or the price of commodities falling. A farm enterprise is worried about its fertilizer cost is one thing, but it's if the crops fall below a certain point in the fall when they sell it at market, that may be the difference between profit and loss. But energy companies have commodity pricing risk. Big companies have interest rate movement risks or have foreign exchange movement risk. They may sell overseas and have the risk of moving exchange rates. So the risk transfer is what The CFTC does so those overseas markets. And then there are not one, not two, but three bank regulators in Washington. There's the Federal Reserve is the Office of the Controller of the Currency, and there's the Federal Deposit Insurance Company, the fdic, and they all oversee the banking sector. So it is a complex landscape. But what I would say is we have the world's largest economy, we have the world's most sophisticated and complex economy. And in many cases, historically, the multiplicity of agencies has roughly served us well. However, here comes along crypto. It's an entirely new technology, right? And it goes into this regulatory landscape that was built for a different world, and suddenly the protocols don't match the new technology. Now, my former colleague, SEC Chairman Gary Gensler, who, who was once the chairman of the CFTC and I have a long history of working with, says, well, look, same activity, same regulation. Well, if that's true, then why did we not use railroad transportation regulation to regulate the airlines? Right, it's transportation, but it's entirely different technology. And so we have different regulatory standards and for airlines than we do for railroads. And I would say so I'm not sure we need a new agency, but I do think we need a new body of regulatory law. I think, you know, the last thing we probably need is a new regulator in Washington. And. But we could assign the existing regulatory space with the right, with the right new protocols with some additional funding and give them the opportunity to oversee this new market. And if in fact it doesn't work out, then we can consider a new agency. But I wouldn't rush to create a new agency, but we do need Congress to step in and write new protocols. Now, the first step, though, has got to be, I believe, for Congress to say there is a national imperative to get this and get this right. That's step number one. I think that that will solve a lot of issues. If Congress says the United States needs to lead, not follow flowing from, that should be, then I think, a set of regulations, protocols, if you will, that are appropriately designed for this new asset class. Again, when I was on Wall street, we traded many different products on our trading floors at GFI Group, my former firm. And yet sometimes vendors would come in and say, well, I've got some new compliance software that works for great in credit default swaps, it'll work in equity swaps. And it never worked that way. You know, software has to be written for the asset class, not adapted from some other asset class. And I think the same thing applies to regulation. We need bespoke we need customized regulation written for crypto and it's for Congress to do. So.

One thing I'd love for entrepreneurs listening to hear is like perhaps like the success case of like getting it right from a regulation perspective. And I don't know if you could speak to the impact, that'd be wonderful because one thing that even Christine and I have heard is we, we spent a good amount of time talking to, for example, large market participants from the existing traditional finance system that are actually coming into crypto now because they have more regulatory visibility. And I think that just like speaks to benefits the ecosystem could actually see.

So I'll give you a great one. So up until the 1970s, the world's really only marketplaces for hedging risk were to hedge the risk of things that came out of the ground. Aristotle talks about in ancient Greek there actually you could buy options on olive production to hedge your risk of, of olive oil and other important. But all throughout history it's hedging markets for hedging risk, of crop prices, for energy prices. The notion of hedging financial risk did not exist until the 1970s when a couple of brilliant people out of Chicago, Dr. Richard Sandor, Leo Malamit at the CME, came up with the notion of financial futures. And it was such a brilliant idea. The notion that you could hedge the risk of moving international interest rates or moving currency rates that, believe it or not, the Washington political class realized this is so important, it'll allow us to go off the gold standard and the world to move away from a gold as a standard of money and use the dollar could truly become the benchmark pricing instrument for virtually everything in this world. They were so concerned that if that product went under SEC jurisdiction, it would be strangled at birth. It would never take off. And so the CFTC was taken out as a department of the Department of Agriculture and created as a standalone agency with a mandate for product innovation and oversight over financial futures. That product has worked brilliantly. It's allowed the dollar to be the world's reserve currency and it's allowed all the world's major prices for anything that is of value, of significant value, are priced in dollars, because the risk of dollars can be hedged in very successful liquid markets overseen by the world's premier risk regulator, the cftc. It's worked brilliantly. It's very much worked in the national interest, but I think it's worked in the global interest. I think that the period we've just been through, 30 years of globalization, is not a coincidence of the dollar's rise as a reserve currency, but a consequence of it. And more people have moved out of poverty in the last three years around the world as a result of that. So I actually think the dollar's dominance has been a net good for the world. It's not without its flaws. It's worthy of criticism in a number of areas, but I think it's been a net good and I think the CFTC's oversight of those markets has a big role to play. And so I think this is a great instance of where Congress recognized that the right type of regulation could lead to the explosion in market activity, explosion of economic activity. And I think that same here is true. The right type of regulation for crypto could be a net positive for crypto, if we get it right.

It's great, great historical context. There, you know, one thing like clearly there are risks around digital currency as well. Crime and fraud, money laundering, tax evasion, system stability, privacy, the values that come with these different instruments. What concerns do you think the general public or even Congress are over focused on or under focused on?

So you'll be shocked to know that those same issues you mentioned, money laundering, fraud, manipulation, others are all present in the dollar every day. But we don't scrap the dollar as a result of it. We double down on our efforts at policing those activities. Right. And so for those people that criticize crypto on the fact that there's some fraud, manipulation and money laundering, and I'm not naive about it at all, I prosecute a lot of it, the cftc, the answer is that doesn't undermine the asset class. What it means is that we need the right scope of regulation to police that activity. So I don't think it undermines the value. And I'll say another thing, another criticism of Bitcoin is it's volatile. And so somehow that undermines its value. Well, it's not volatile as a design flaw, it's volatile as a design feature. Why is that? Because it has a fixed supply. Any asset, any commodity has a fixed supply. If demand goes up or down, only one thing can happen, and that's price movement. It's not a design flaw, it's a, it's a design feature. And you know, smart investors that do their research will understand that and take that into account. But it certainly doesn't undermine the value proposition, nor does fraud manipulation. And I'll give you one other historical point. When the Internet, when we first started surfing the Web back in the 1990s, the criticism of the Internet was it was Only good for pornography. Well, we've discovered that it's fabulous for transportation. It's fabulous for information gathering. It's fabulous. And, and perhaps for some people, it's still good for pornography. In other words, that use case hasn't undermined its value proposition. It's a tool. It's morally neutral. Crypto is a tool. It's morally neutral. What we need to do is put the right framework around it and then. And then enhance its value proposition.

Yes, and I think the, I think the realization or the conclusion that I come to given the criticisms around volatility of different crypto assets is, well, we're either missing risk transfer or instruments that we need to have. Not that Bitcoin itself is useless.

Exactly right. And look, take some commodities we use every day, like oil. Two years ago it was trading below zero. Now it's trading over $100. That's a lot of volatility for a commodity that you can adjust supply or demand. Bitcoin, you cannot change supply.

So last substantive question for you. There's a lot that's been going on recently that matters for crypto regulation. The war in Ukraine and, you know, discussions around censorship and control of funds in, in a case like that, and also the use of the US dollar as a weapon in sanctions, the SEC's continued charges of organizations, Biden's executive order, which you wrote about, Treasury Secretary, Secretary Yellen's speech. I'm sure a huge number of big events I'm missing, but help our listeners sort of parse where we are or do you have any predictions for the next year?

You're absolutely right. There's so much going on right now, and different of those instances reflect different trends. Let's take the war in Ukraine. We are seeing the maximum amount of weaponization of the dollar and global payments that we've ever seen in history of any currency. I'm not critical of that because the alternative to economic sanctions as a matter of statecraft is warfare. And I'm not necessarily sure the United States population would prefer to see troops in combat as opposed to the weaponization of the dollar. Having said that, however, there will be ramifications for this degree of weaponization of the dollar. There are countries around the world that are not taking sides in this conflict, but are observing that and saying, well, we could be subject to those same types of sanctions in the future. Maybe because of military action we take or other action we take, we may fall afoul of Western rules and regs or sensitivities around ESG or other things, and suddenly be subject to this type of sanctions. So I think, sadly, this weaponization of the dollar will lead to a lot of interest in central bank digital currencies, perhaps on the Chinese model or other models around the world, as a way of sanctions avoidance in the future. I think it will accelerate work on central bank digital currency around the world here in the United States. I think a number of the statements that you've cited here, Senator Yellen's statement, the president's executive order, signal that after, what are we now, 2022? After 14 years of ignoring a crypto, the official federal government is now really getting into gear. And I think their first instinct is to bring it within political control. And that's why you see every major agency stepping up now, some of that, they're expressing that political control by trying to shut things down or slow things down, which I think is unfortunate. It's why I said several times I think Congress needs to step in and declare a national imperative. I've been critical of the president's working group, a body I served on a statement it put out last fall, which I said was quite reactionary and resistant to this innovation. I think some of the tone has been tempered, and I think Treasury Secretary Yellen's reaching speech certainly expressed far more optimism for the potential of this new revolution. But I still think there's far too much, perhaps I don't want to say cautiousness, because cautiousness is well placed, but I think there's too much, still too much skepticism. And I think there are some segments of the legacy financial system that are voicing skepticism or resistance. It may be because they really do want to be resistant or they want to buy time to catch up to this innovation. But look, you can't stop technology. I do think that the legacy financial systems response to this innovation is unfortunately more resistant than we saw in the first wave of the Internet, where the Clinton White House and the new Green Ridge Congress actually came together to further the first wave of the Internet. And that's what I would prefer to see more this time around.

Well, thank you. Thank you so much for sharing all of that, Chris. We've been completely schooled on some of the history of financial regulation and also a much more. I don't spend that much time with regulators, but it is rare to be inspired by speaking to a, you know, builder and former regulator. And I would say I believe you characterized it as sort of the next space race. And, you know, I am hopeful that we'll see more political bodies and agencies recognize that for what it is. I'll leave it to Christine to wrap up here.

Yeah. And I just want to thank you again. This has been an amazing conversation. One of my favorite podcasts. I think the importance of these issues and understand, understanding what is at stake and what the work is to do and comparing it to former waves of the Internet or the space race, or just thinking about these huge leaps that we can make in human innovation or in our lifetime, it's just kind of really puts things into a massive perspective. So thank you so much for sharing your thoughts there. For our last, very last section, just a quick wrap up. This is the quite easy part. So this is a new question that we're going to ask the. We are incorporating this from one of our former episodes with Doe at Tara. The audience loved his apartment tour. So you look like actually you're at a beautiful office. We love to break the fourth wall. Give our watchers at least those on YouTube and plug. If you're listening to this podcast, watch on YouTube, give us a tour of your office and maybe point out a couple fun things that you have there.

Okay. So my wife and I live in a 1897 Queen Anne Victorian house in northern New Jersey that we bought 30 years ago when we started our family and have been working on room by room ever since. So I'm actually in the third floor of the house where it's this great old wood panel library. So I'm going to. And I'm also a musician and actually I put my laptop on a music stand in order to do a podcast like this. I'm going to actually swivel it and give you a little tour around the house. So over in the corner there you can see a cabinet with a electric guitar in it. And see, I don't know how this is going to work. Anyway, those are the stairs that come up. Let me come around this way. And let's see, the light's not good, but this is our third floor guest room here. And if you've ever seen these Queen Anne Victorians, they have turrets. So the ceiling and that goes all the way up. And in this library here, the ceiling goes all the way up as well. And so there. So that's my library. That's the great Italian poet Dante there. And that guitar was signed by my former staff at the CFTC on my departure from the agency. So it's a great prized possession. And I don't know if you can see here on the wall is a sword. When I left the cftc, I was honored in A ceremony in London with the freedom of the city, which is sort of like the key to the city in the United States. And one of the privileges for having the freedom of the city of London, which goes back to the 13th century, is the freedom to carry a sword around London. And so an English friend of mine actually had that sword made at a sword factory in the UK and gave it to me as a gift. So that's a prized possession there.

So, Chris, we are taking a walk around London at some point with this sword.

Yeah. And nobody can arrest me. So the other. The other privilege you get is that if you are committed of a felony and are hung at the gallows, you get to wear a silk ribbon around the rope. So that's one privilege I hope never to use. So it's a fun little British tradition.

These unique privileges you have. I love that one might look at your room and question, if you read books, that's maybe one of the tallest libraries I've seen with that ceiling. That's awesome. Which, for the very, very last question to kind of full send off this podcast, is there a favorite book? Maybe it's a movie or a song. You're a musician. Any piece of media that's made an impression on you recently or you would count as your favorite.

So, as I said, I'm a musician. I'm actually performing with the Crypto Kings band, Saturday, April 30, at the 76 House in Japan, New York. So if anybody's around, please drop in and I'll be. It's a great band. Everybody sings, everybody performs. But I'll be doing a great tune in that one, a Neil Young song called Long May you run. And so I've. Every night after I finish my work, I've been in my little studio downstairs rehearsing. So I'll be doing another. Other numbers. But that's such a great song. It's got such a great message. And so anybody's around. April 30th, the Crypto Kings Band 76 House, Tapan, New York. Come on down. Check us out.

With your chrome heart shining in the song La May youy Run.

Oh, you got it. There you go. That's it.

That's amazing. We're gonna have to play one of your songs as the outro for the intro or outro for this episode. I did not know. You're a musician or in a band and you're gonna be playing live. What a treat.

Thank you again. Thanks so much, Chris.

Great being with you. All right, bye, guys. It's five, 50 something. And I feel something inside. The sun is going down, the sky is turning red.