60 - The SEC and DeFi | Hester Peirce

Bankless Fan and SEC Commissioner Hester Peirce comes on the podcast to discuss tokens, DeFi, 'self-driving banks,' and regulation. ------ 🎙️ Bankless Podcasts On Mondays 🌟Early Access with Premium! https://banklesshq.com/nation/ 🎖 If you're truly Bankless, CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge 🌟Rate the Bankless Podcast! https://podcasts.apple.com/us/podcast/bankless/id1499409058 https://podcasts.apple.com/us/podcast/bankless/id149940905 ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🦊 METAMASK | DEFI PASSPORT https://bankless.cc/metamask 🦄 UNISWAP | DECENTRALIZED EXCHANGE http://bankless.cc/uniswap 🔀 KWENTA | SYNTHETIC ASSET EXCHANGE https://bankless.cc/kwenta ------ Bankless Podcast #60 - SEC & DeFi Guest: Hester Peirce Hester Peirce is one of five SEC Commissioners and has been a knowledgable advocate for crypto as the world works out how to regulate the budding industry. The main goals of the Security & Exchange Commission are threefold – to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. The SEC governs far more than crypto, but increasing attention is coming to the space as capital gravitates into it. Regulating crypto begins with officially establishing the asset class, e.g. currencies, capital assets, commodities, equities, et al. The next step is giving these assets legitimacy in existing financial institutions through exchange-traded products like a Bitcoin ETF. Below the base money layer, there exists Layer 0, the social layer. Layer 0 must be willing to officially play ball with the cryptoeconomy, and that's what makes regulators like Hester so important. The net optimization of these layers makes for an unequivocally better society: a more inclusive, equitable, and efficient one. Hester believes in governing principles, not specific technologies. It's important here to remember the three main goals of the SEC. The value propositions of crypto – providing a permissionless, trustless, and verifiable means to transact – are in accord with the values of a free state. The role of government is to encourage and protect mutually beneficial, voluntary engagement among citizens. Although the harmony between crypto's core values and those of a free state are readily apparent to a seasoned Bankless listener, the rest of Layer 0 must still be convinced. Crypto is a frontier with infinite possibilities, and effectively regulating such an ecosystem is a massive task. However, based on this conversation, there seem to be many reasons to be optimistic about the future of Crypto & DeFi regulation. ------ Resources: 🚀 Atomic Trading 🚀 https://www.sec.gov/news/speech/peirce-atomic-trading-2021-02-22 Get Ready For Self-Driving Banks https://www.ft.com/content/c1caca5b-01f7-41be-85a4-3ecb883f2417 Gary Gensler MIT Crypto Course https://youtube.com/playlist?list=PLUl4u3cNGP63UUkfL0onkxF6MYgVa04Fn Hester on Twitter: https://twitter.com/HesterPeirce?s=20 ------ This Week on Bankless: 🧢 Weekly Action Recap (4/10): https://newsletter.banklesshq.com/p/the-coinbase-tsunami-weekly-recap 🗞️ Weekly Rollup (4/9): https://shows.banklesshq.com/p/-rollup-coinbase-ipo-fei-protocol 🏴 dYdX & StarkWare (4/6): https://shows.banklesshq.com/p/sotn-41-scaling-defi-with-dydx-and ⚒️ How to Crypto Tax (4/6): https://newsletter.banklesshq.com/p/how-to-do-crypto-taxes-for-the-lazy ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Do your own research. Disclaimer: The views expressed in the episode are those of Hester Peirce, not the SEC nor any of her fellow commissioners. Disclosure: From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:07Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, what an episode. First time we've had an SEC Commissioner on Bankless. And not only was she a guest, she's also a listener of the show.

• 0:33David Hoffman?

  Yeah, absolutely. Fantastic. Pretty cool that the the great words of Bankless are making all making their way all the way into the office of the SEC. Hester Pierce, more more endearingly known as Crypto Mom, has been one of, I think, crypto's biggest allies in the space. And she's careful about that word because she doesn't advocate for any specific industry. But why we call her Crypto Mom in the crypto world is because she understands the value and what can come out of crypto. And she wants to make sure that the power, the dormant power that is in crypto is able to manifest in ways that are good instead are instead of being bad. And it's very rare to have someone who is in a governmental

• 1:16David Hoffman?

  regulatory body that also understands the power that can be and is looking to help facilitate that. So Hester Pierce is a fantastic ally of the space. Really happy to have a very deep and thorough conversation with her about a whole range of subjects such as tokens, DeFi, quote unquote, self driving banks, and you know, regulatory clarity and what she's optimistic about and into the future.

• 1:41Ryan Sean Adams?

  Yeah, and I want folks to really appreciate what this takes is because as an SEC Commissioner, right, like, the crypto markets, that's just like a fraction of your brain space. I mean, you're not spending all of your time thinking about crypto. Hester is not like us. We spend all of our time thinking about crypto, right? So the fact that she can talk about DeFi the way she does, understands what DAOs are, understands kind of the nature of of NFTs and of protocols and the removal. Intermediaries and can speak in an educated way about this space is super impressive and honestly is it makes me bullish, makes me excited, makes me optimistic and something that you repeat so often, David, is

• 2:24Ryan Sean Adams?

  the most bullish thing for cryptos to be understood and that means understood by everyone. We want like financial people to understand it and Wall Street, we want Silicon Valley people to understand it. We want everyday citizens to understand it. We want regulators to understand it and in particular, those that align with the value, the value system of crypto, which is open access to a permissionless financial system. They'll just gravitate to it and they'll fight our fight for us in the places where we don't, we don't, we don't occupy and we don't exist. And so, you know, I just think that that was a very refreshing conversation with a regulator, someone that you might think is sort of like, you know, the cop trying to tell you like what you can't do.

• 3:07Ryan Sean Adams?

  But she really, she really gets it. She really understands it and she has a very nuanced perspective on DeFi. So just a fantastic episode.

• 3:15David Hoffman?

  The SEC is only one of many regulating bodies that is relevant to crypto. And so this, this conversation does not represent all regulating bodies, but if it did, I would be extremely optimistic about the future of crypto and DeFi regulation, which is inherently an almost impossible task to like perfectly regulate what is something that you know, DeFi moves at a speed that no one can comprehend, not even Ryan and I. And that's a question that we ask Hester, like, how do you even try and regulate something that moves 10 times faster than any human can keep up with? And her answers there, I thought were pretty compelling because she said, it's not about regulating the technology, it's about regulating the principles.

• 3:58David Hoffman?

  And how else are you going to regulate something that, you know, it has infinite possibilities with regards to what could be done on Ethereum? And Hester understands that and the fact that she understands that, I think is really important to what can be done here with crypto to make sure that we actually produce the ecosystem that we know crypto can be, yet it is not yet.

• 4:20Ryan Sean Adams?

  And I think Hester would want us to clarify that the views she expressed were her own personal opinions. They were not views of the SEC writ large. But this, of course, is goes back to something we often say, which the layer zero is people. That's true for crypto networks. It's also true for regulatory bodies. There are individual people making the decisions and advocating for positions in our places in government as well. So with that as an introduction, we want to get right to the interview with Hester Purse. But before we do, let's take a minute to tell you about the sponsors that made this episode possible. MetaMask is your go-to wallet for the bankless journey. If you're going bankless,

• 5:02Ryan Sean Adams?

  you need MetaMask, period. Browser and mobile, get them both. This is your tool to unlock the world of DeFi. Here's my favorite part. Now you can swap tokens directly in MetaMask with a single swipe. This has got to be the easiest way to trade Ethereum tokens. Choose a token you own, a token to exchange it with, and get your quotes. If you like what you see, you hit swap. That's it. What makes swaps so useful is what happens behind the scenes. It compares DEXs, aggregators, and market makers to find you the best price with the lowest network fees and the least slippage. This means you can swap a wider range of tokens, and swaps can even automatically split up your trade to give you access to better liquidity.

• 5:45Ryan Sean Adams?

  You don't even have to think about it. Try it out. Download MetaMask for desktop or mobile now at metamask.io and start swapping. Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants program is now accepting applications for grants. We have been saying this for a while and we'll

• 6:29David Hoffman?

  Say it again, DAOs have money and they are in need of labor. If you think that you have something to contribute to the Uniswap DAO, apply for a grant to Uniswap. Just look at the size of the Uniswap treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO? No matter how big or small your idea is, you can apply for a uni-grant at unigrants.org and help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless, and you can do the same for your project. Thank you, Uniswap, for sponsoring Bankless.

• 7:07Ryan Sean Adams?

  Bankless Nation, we are super excited about the conversation that is about to be had. We have Commissioner Hester Peirce. She is one of five commissioners on the SEC. For those not in the US, that is the Securities and Exchange Commission in the US. It's one of the most important regulatory bodies affecting this space. The SEC's stated mission, this is important because we'll get to this, is threefold. Protect investors, number one. Number two, maintain fair, orderly, and efficient markets. And number three, facilitate capital formation. Sounds like that mission has lots of intersection with crypto, which is what we're going to talk about with Commissioner Peirce today. Commissioner Peirce, welcome to Bankless. Thanks for joining us.

• 7:52Speaker 02

  Brian and David, it is great to be here. I love listening to your show. Whenever I'm feeling discouraged, I listen to your show. You're so optimistic about the future. So it's a nice, it's a nice way to bring my mood up. I do have to start out by saying that my views are my own views, not necessarily those of the SEC or my fellow commissioners. I think everyone in this space knows that, but I still have to say it.

• 8:18Ryan Sean Adams?

  Well, thanks for saying that. We appreciate it. And we're glad that you are a listener. That was, I mean, we're honored to hear that. And certainly, we are avid readers of your speeches, because those speeches make us equally optimistic about what regulators are doing in crypto. And in addition to all of the things you say about crypto, so it's an honor to have you.

• 8:39David Hoffman?

  Purse, I want to start with this question because this is this is kind of a fun one. But the the crypto industry has given you the moniker Crypto Mom. And I think that's because you understand this space at a level that others don't. But what's the history of that moniker? I haven't really like, what, why does the industry refer to you under that moniker?

• 9:01Speaker 02

  Well, I want to start out by saying I do, I do love your show and I listen to it. But sometimes I feel like it's a bit of a foreign language. So I don't want to oversell my my knowledge of the space. I'm learning, I'm still learning and I'm definitely open to learning and you guys are helping me on that journey. But in terms of the the moniker, it came after I wrote a dissent on Bitcoin ETP. And after that, someone came up with the title and it's kind of stuck since then.

• 9:31David Hoffman?

  What was that dissent? I'm just curious about the history around that.

• 9:35Speaker 02

  Well, when I got to the SEC, it was I got there in January of 2018. And so that was just about the time people were thinking about doing a Bitcoin exchange traded products. There had been some efforts before I arrived, but then after I arrived, there was a, there was a denial of one. And I wrote a dissent saying, hey, you know, I think Bitcoin is ready for an exchange traded product. You're applying different standards than you apply to different kinds of products. So what's the story here? Why don't we move forward? And you know, that was three years ago and look where we are today. Same place.

• 10:12David Hoffman?

  Same place. That's right. I think the the Crypto Mom name came out of, it's kind of a, it's very endearing term. And it's, it's something I think out of the crypto space, we are really lacking in good representation in our, in our governing bodies, in our, in people that represent what crypto can bring to the world. And you know, it's crypto often has, you know, a very tainted brand. There's just generally negative connotations and it takes someone who can come in with an open mind and see what what me and Ryan see and be optimistic about the future of crypto. And so before we get this conversation started, just thank you for for being that representative person

• 10:56David Hoffman?

  that that our industry truly needs to to help facilitate what can be good crypto innovation.

• 11:03Speaker 02

  Well, I mean, that's nice of you to say. I will say that, you know, I don't advocate for any particular technology or any particular industry, but what I do think is important and something that we've kind of lost as a nation is to remember that the government is there to serve the people. It isn't the other way around. And so, you know, there are people who are trying to do things and build new things and try new things, and some of those experiments are going to fail. I mean, we know, we know that when innovation is happening, a lot of failure has to happen along the way. But this notion that it's that you have to get permission before you can try things, I think, is really detrimental to our society.

• 11:42Ryan Sean Adams?

  I think that's really what David was referring to, Commissioner Purse, when he mentioned that. Not so much an advocate representing an industry, but an advocate representing some values that we in crypto hold dear. And I want to ask you about this because we very much think the values of crypto, open, permissionless, you know, basically self-sovereign, for the people sort of financial system aligns very well with American values. Some of the bankless community recently referred me to this article from someone that was written in 1999, a gentleman by the name

• 12:23Ryan Sean Adams?

  of Ira Magaziner, and apparently he was advisor to the Clinton administration. The article is called "Creating a Framework for Global Electronic Commerce." And he kind of goes through how they navigated the regulatory waters and sort of the government waters when it came to the internet. Because when the internet arose, there were all of these questions like, what about encryption? What about privacy? You know, what happens if we get this communication technology to the people? And he talked about the internet as a force for progress, how it aligned and identified with American values, education, open internet, freedom of speech, democratization.

• 13:04Ryan Sean Adams?

  Curious, crypto, does crypto, does open permissionless blockchains, is that in alignment with the values embedded in the US Constitution?

• 13:16Speaker 02

  Yeah, I mean, I think it's certainly in line with what we are as a country and the fundamentals of what this country are, which is that we want people to be able to engage with one another in mutually beneficial transactions that are voluntary. And really, the government should be stepping in only when there's an issue of someone harming someone else. And I think the whole crypto peer-to-peer model is one in which you've got people voluntarily engaging with one another in ways that they find to be beneficial to, you know, each party finds beneficial. And why should we stand in the way of that as a government?

• 13:59Speaker 02

  I think we should try to encourage that kind of thing because it's better for society when you have people cooperating with one another.

• 14:06Ryan Sean Adams?

  So I'm curious, maybe this comes from a recent speech where you articulated this well that you made in February. It was called Atomic Trading, and I'll note, it had Rocket emojis in the title of the speech, at least as it was published in the SAC. So maybe some crypto culture leaking out here. But you made this comment, you said, "Technology does not change our regulatory objectives of protecting investors, facilitating capital formation, and fostering market integrity. But for technology to have its maximum benefit, we will need to change our attitude. Specifically, we tend to look at technological innovation in the markets with deep suspicion, and that mindset has to change."

• 14:50Ryan Sean Adams?

  I felt like in the speech, you were making kind of this dual argument that, hey, like first, our mandate at the SEC as regulators hasn't really changed. You know, people are still, as we call it on Bankless, the base layer of this entire system, and people really haven't changed across the centuries. But at the same time, regulators, government specifically, has to look at technological innovation with an open mindset rather than suspicion. Can you get into that and, you know, why you made those comments?

• 15:26Speaker 02

  Well, I think one of the issues with regulators is that we, you know, we're people too, right? And that was, that was part of the theme of the speech. We have our own concerns about if something goes wrong, people are going to come back and they're going to say, hey, why did you let this happen? You know, you could have, you could have shut this down before it became a problem. And so we have to fight against that natural reserve on our part, that national, natural conservatism, and say, look, we're willing to take a risk as regulators to allow people to, and I hate to use the term allow people, but to not stand in the way of people trying new things, because those new things could be good for society.

• 16:08Speaker 02

  And so we have to constantly push against that. And of course, we have our mandate, so we're always going to be thinking about protecting investors. We're always going to be thinking about the integrity of the markets. But if you don't, if you don't open the doors and allow for technology to come in, people are going to lose out, and we're seeing that. So in our sector, everything, we're, we're very much about getting disclosure to investors. That's a very important part of our mission. But we're very much rooted in this paper-based approach. And so if you compare what things are like in non-financial sectors versus financial sectors, they tend to be much more backwards, much more old

• 16:50Speaker 02

  school in the financial sector than in other sectors. And, and people come to the financial sector and they already don't really want to spend a lot of time thinking about finance. I mean, it's, it's boring, it's intimidating. And then you tell them, and we want you just to look at this thick layer of, of documents and read through them. And, and people say, no, I'd rather be doing my online shopping on my phone. And so if we can try to marry those and allow financial firms to use technology to communicate with investors, I think that's a good thing. Now, you all are saying, well, we want to just jettison the old financial system altogether and go for this new, this new model over here. And my point to that

• 17:33Speaker 02

  is, you know, hey, why not let people try those things too? Peer-to-peer systems are very good for for other reasons. And so we should, as regulators, we should kind of like the fact that people are trying peer-to-peer because it has certain qualities of resilience that that a centralized financial system doesn't have. But again, we tend to to, you know, be very slow to allow that, to embrace that.

• 17:59David Hoffman?

  Commissioner Perso, I want to get your opinion on what the what the potential that lies dormant in the crypto world has to to offer the world. And I think going back to to why this crypto industry has bestowed the title of crypto mom to you is we we think that you see that potential in there. And with that potential that crypto has to offer, what do we have at stake with good regulation versus bad regulation? Like, what what do we have to lose if bad regulation happens? And what do we have to gain if we can create good regulation?

• 18:31Speaker 02

  Well, on the bad regulation front, I think we're seeing a little bit of this now because a lot of things in crypto move so quickly, regulators move so slowly. Other regulators in other places tend to be moving faster. Many of them are moving faster than than we are in the US. And so what happens is you have people trying to avoid the US altogether. Not only not building stuff here, but they're they're trying to avoid even dealing with US persons. And that's a very dangerous thing because then we'll miss out on a lot of that growth. I think good regulation is is difficult to do because the technology is changing quickly.

• 19:10Speaker 02

  What we've learned from the past is that it's really bad to bake old technology or any particular technology into the regulations. So I would say on a sort of on a a general point, you want to have regulation be as technology neutral as possible to allow for experimentation. That said, I think in the crypto space,

• 19:33Speaker 02

  we may need to do some specific crypto-specific regulation to allow the freedom for some of these things to to work. And it's it's a big job because I think, you know, I've I've suggested we need to do something to allow token distribution events to happen, but I think there's stuff we need to do on the custody side. And then there's, if you want to look further down the road, if you want to have a regulatory structure that envisions DAOs, I think you have to think about that as well. But in general, I would say that the hope that I see and the the good things I see coming out of crypto is this ability to bring more people into the financial

• 20:16Speaker 02

  system to allow them to come in on their own terms. You know, doing away, and again, I don't think we're going to do away with the centralized financial system. I don't think we're going to do away with financial institutions. You guys might disagree with me on that, but I think having this other option of really self-serve, you know, just do it, do it yourself, do it with peers, do it on an anonymous basis so that no one is deciding to shut you out of the system because they don't agree with you. There's real, there's real promise to incorporating more of the American population and the world population into the financial system by using, by using these technologies.

• 21:01Ryan Sean Adams?

  I gotta say, it's so refreshing to hear you articulate it in that way because that is definitely the language that we preach and it makes me optimistic even to hear you use terms like DAOs in like a correct context. So glad you're diving deep on this. Can you make the case, so David asked about sort of the costs if regulation is not done right, but I don't think the crypto industry writ large sees the other side of this, which is, what are the benefits if regulation is done correctly? Can you make that case to Bankless listeners?

• 21:37Speaker 02

  Well, I think getting it right means that then you give people the freedom to stop thinking so much about regulation. You know, I, it kind of disheartens me to listen to these podcasts and half the time people are talking about regulation instead of what's being built. So one is just removing this distraction from people so that they can concentrate on what they're best at. But second is, I mean, the United States has a history of being a place where people from all over the world come to work together and build things. Now, you know, I guess one could argue in, in, in this new world, we don't all need to be in the same place. Have you guys even met each other yet? Because I know at one point-

• 22:14Ryan Sean Adams?

  Not yet. So- I think, David, I think that's becoming a meme. Like, are we ever going to meet? We may never meet at this point, Commissioner Pierce. We're not sure.

• 22:24Speaker 02

  But I mean, I feel like you don't, you don't even, you know, you've got this really natural interaction with one another without even having met. And so maybe we don't, we're not going to be as geographic centric. But I still like the notion of having the United States be the place where people want to come because it's a free place. It's a place where they can build things and try things and, and work with other people who are equally creative and enthusiastic. And so I think if we don't want to lose our place, I, our capital markets are the best in the world. And I, you know, I stand by that. But we have to remain nimble to do that. So I think I would say, you know, to people who are asking, why does regulation matter? It really does matter to allow people that freedom to, to be their best at doing what

• 23:09Speaker 02

  they're best at.

• 23:11Ryan Sean Adams?

  Well, this is what's interesting is because David and I, and I think listeners of the Bankless Show, really believe that this parallel financial system that we're building, this thing called DeFi, is going to play a massive role in the future of finance, in the future of money, in the future of how banking continues, you know, on the internet, basically. But you also articulated in, in your speech, which I'm going to refer to once again, that this kind of presents, can present a challenge to regulators. And maybe DeFi is one of the bigger challenges that they've seen. We've had waves of- Of challenges with like, what is this Bitcoin thing? And then what is this Ethereum thing? And then like, what are ICOs? And now we have this DeFi thing cropping up.

• 23:54Ryan Sean Adams?

  And it doesn't just touch areas of the SEC or CFTC. It touches FinCEN. It touches the entire banking financial apparatus in the US. I'm going to read a quote out to you from your speech. Decentralized finance will provide a very good test for our ability to regulate with an eye toward protecting the interests of investors, markets, and this is key, not incumbents. Can you talk about the challenges of DeFi as regulators are looking at this now and trying to to figure out what's going on?

• 24:27Speaker 02

  Well, the regulatory model, especially, you know, a model like the SEC is really reliant upon looking at particular institutions as a center point, right? So if we, if there's an issue, if there's a problem, we know who to go to. It's that, it's that financial institution at in the middle that's intermediating between two people. With DeFi, you don't necessarily, I mean, you don't have a central entity to go to. And you might not even know who wrote a smart contract, right? And if you do, is it even appropriate to go to that person? I would argue not. So you really don't have anyone to hold accountable.

• 25:11Speaker 02

  And I think that that's, that's kind of the, the challenge. It's also the beauty of this because I think when, when you, when you're dealing with something like DeFi, where it's really up to the people involved to make their own decisions, the responsibility is clearly on them. And so we have to, that's the message, right? Because when something goes wrong, people want to come to us and say, we'll do something about it. And in DeFi, I'm not sure what we could do about it if there's a problem. So it's, it is, you know, if you think of a decentralized exchange, for example, or an automated market maker, who do, who do we go to when something goes wrong? I don't know who to go to. So that's, that's the big challenge for the regulator.

• 25:54Ryan Sean Adams?

  The interesting thing is there's, there's really no one to go to. To your point, this is all, this is all code. This is also why we end every episode by, by talking about cryptos. This is the frontier. It's not for everyone. This is sort of the, the Wild West. And if you're playing in this space, you have to take personal accountability, a new level of personal accountability. But what you just said.

• 26:17Speaker 02

  Well, that's why I actually do appreciate that disclaimer that you have at the end of your episodes, because I think that's an important message. It's exciting to be part of this, but being part of it means that you are taking a risk. And if, if you're not comfortable with that risk, you shouldn't walk down that road. So that's why I think there's going to be, um, you know, even as DeFi grows, I think there, there's going to be a, a way for people who aren't comfortable with that to be served. So I think there will be some element of centralization that people can opt into or opt out of. And that's probably the, the, the best solution, right? That people can choose their level of comfort and their level of willingness to take risks.

• 27:01Ryan Sean Adams?

  Completely agree. This is, we, we sort of hearken this to, to the Oregon Trail, right? You could get dysentery. You could, you know, break an axle wheel. You could starve on the road. Lots of bad things can happen to you when you're on this other side, but I want to ask a question about regulators' current understanding of this. Cause I think you articulated it very well, like in DeFi, there aren't intermediaries. But we're like looking from the outside, not actually sure how many regulators understand DeFi at that level yet. Like some of the conversations, some of the, the, the verbiage, some of the, the tone coming out sometimes makes us think that they think DeFi might just be another kind of banking sort of thing.

• 27:46Ryan Sean Adams?

  Where there are intermediaries, there are custodians at all times. How close are regulators to understanding that we're, we're talking about code? We're talking about no intermediaries. We're talking about a, a different level of, of self-sovereignty when it comes to, to this financial system?

• 28:04Speaker 02

  I mean, I think people haven't spent that much time thinking about it yet. Honestly, I think it's it's still as much as DeFi has has been having its moment and growing, or maybe its preliminary moment and growing really fast. I just think there's not a lot of attention on it. I mean, you've got to keep in mind that regulators are just now coming around to the idea that well, maybe Bitcoin is is is going to be around for a little while.

• 28:29Speaker 02

  So I DeFi is is is really not on people's radar. But I mean, I think we need to be having these conversations before it it really grasps people's attention, because what I'm concerned about, and I think it's better just to have this conversation out in the open. What I'm concerned about is that when people see things move peer to peer, people who are regulatorily minded, their initial inclination is to say, let's figure out a way to grab those peer to peer transactions, figure out a way to monitor them, and let's figure out a way to regulate them.

• 29:11Speaker 02

  And tho- that raises, those kinds of inclinations raise really profound questions for us as an American people. There are obviously reasons why we would want to monitor those things. You know, we AML, KYC, you want it, you don't want the financial system, whether it's the decentralized one or the centralized one, to be used to fund or other illegal activity. So we get that. And and you, I I mean, I guess there there are other types of things that you would, you know, I think about investor protection, you want investors to be protected. But at the same time, the value of privacy, the value of people's ability to transact

• 29:54Speaker 02

  without having government watch what you're doing in your in your individual financial life, those are really important principles. And I think if we don't put that out there and say we care about these things, and you can't just plow over personal privacy and the ability of people to live their lives without being monitored, we're going to end up in a really bad situation really quickly. It's very interesting to me in my in the in the more traditional securities land that I occupy and spend most of my time in. We're just now starting this massive surveillance program for every trade in the markets, every in the stock and options markets.

• 30:37Speaker 02

  Every retail trade is going to be tracked in those markets now. And I don't think that's okay. And people say, well, why, why don't you think it's okay? If you have nothing to hide, why do you care? And my response to that is you don't have to have something to hide. You just don't necessarily want some regulator seeing every stock you buy and every stock you sell, because there's something personal about that. Now, if you're doing something wrong, of course, we as regulators are going to go in and look at what you're doing. Totally fine. But for, for the average person just going about her day to day business to have, to, to, to have to think about being monitored all the time. I find that really problematic, and I think that's going to be a real challenge in the DeFi space.

• 31:22Speaker 02

  And it's one where we really need to confront head on.

• 31:25Ryan Sean Adams?

  I completely agree. It's been sort of a trend on Bankless or a theme, I should say, on Bankless that as we enter this new digital world, as American citizens or as people in their respective jurisdictions all over the world, enter the digital world, we have to be very careful we don't erode and lose all of the freedoms we fought for in the analog world. Because this data, to your point, is just so easy to track. And if we don't have that conversation and set up that value system now and even embed those values into our protocols, the people are going to lose. I couldn't agree with you more. How important is it for regulators and, and, and government in general to get sort of good narratives?

• 32:09Ryan Sean Adams?

  I was, I was struck by an article that I think Brian Brooks wrote from the OCC, this article about, you know, DeFi being sort of like a self-driving car and the regulators' response to that. How was an article like that received? And is that sort of thing helpful to help those in government understand what's happening in DeFi?

• 32:28Speaker 02

  I think it is important narrative matters. I mean, we've seen the negative narrative has really carried a lot of weight for a lot of many years. The negative narrative around Bitcoin, which has then sort of shifted to all of crypto and then you had all the ICO fraud going on in 2017. That negative narrative has really held on to. So I think countering that with positive narratives is really important. And there are positive narratives to tell. I mean, this is not, you know, this, this, this is not just one-off stories. There really are positive narratives of people being empowered to make their own decisions, of, of, of people being able to get paid, whereas before they wouldn't get, be able

• 33:12Speaker 02

  to get paid and get paid in something that's of value to them. You know, so there are, there are really are positive freedom-affirming values that I think, and, and stories that can be told. But I think people need to do a better job of, of telling those. And they do matter to regulators. Because that's what, you know, regulators think about when they, when they approach an issue. If they have in their mind, oh, Bitcoin is all about, you know, Silk Road, or crypto is all about ICO fraud, or whatever, whatever the, the, the current negative thing is, you know, people will grab hold of that. It's pretty remarkable.

• 33:53Ryan Sean Adams?

  And I think you were articulating something that is also a theme on, on Bankless. And that's this idea that while DeFi and cryptocurrency and blockchain, open permissionless blockchains, we think is going to disrupt finance and disrupt banking, they're also going to coexist and coexist in some pretty cool ways. So we, we have this idea on Bankless, we refer to as the DeFi mullet, where you've got like, you know, fintech in the front, but you've got DeFi in the back. And I've, I've heard rumor as Commissioner Purse, that, that you've described, you've used the DeFi, the DeFi mullet.

• 34:28Speaker 02

  Yeah, I feel a little bit bad because I stole that from you and I used it in a panel that I was on. And then people thought I had come up with it. And I was like, no, it's the Bankless.

• 34:38Ryan Sean Adams?

  No, we very much want these sorts of narratives to spread because education is so important. But can we talk about that? So the idea of the DeFi mullet is just a funny way of saying that fintech and DeFi crypto systems are going to coexist. And in fact, crypto, open permissionless blockchain systems will make banking and fintech so much more efficient, right? We're literally building things on legacy financial rails now and we can rebuild on these crypto rails. I'm wondering if you see the wins there in general for the US banking system and if regulators see those wins?

• 35:18Speaker 02

  Yeah, I mean, I think there certainly are lots of opportunities for that to happen. We have a financial system. I mean, I spend most of my time thinking about the securities world, but you know, our payments, our payment system is pretty antiquated. I think people would say antiquated might be too strong of a word, but there's definitely room for modernization. And so I think people will be looking to crypto as a way to modernize the underlying infrastructure.

• 35:50Speaker 02

  And you know, whether that's with stable coins or you know, potentially down the road, we're going to have a CBDC. But I think, you know, DeFi, I think that's why I do like this DeFi mullet imagery because you can imagine DeFi. And as I said, I think some people are still going to want to have that centralized interface. And so I think you'll do as you can set it up so as much as possible is done through crypto and DeFi. And then in the front, you do have a way for people to interact with people or with institutions. So I doubt that this is, again, you guys might disagree, but I doubt that this is going to be a world where we just flip immediately from centralized to decentralized.

• 36:35Speaker 02

  I think centralized parties in the financial system are looking for ways that they can incorporate crypto into what they do and how they serve their customers.

• 36:46Ryan Sean Adams?

  Absolutely. Long live the DeFi mullet.

• 36:48David Hoffman?

  Hey guys, I hope you're enjoying the interview so far. In the second half of this interview with Hester, we get into Gary Gensler and Hester's optimism about Gary's strong level of understanding of the crypto space, but also where her and Gary don't yet see eye to eye. I also bring up the conversation of the role of tokens and how the SEC can ensure the maximum potential of tokens is unleashed while still mitigating their potential for abuse. And then we also ask Hester about how the SEC intends to make sure that regulation can keep up with a world that always seems to be perpetually accelerating. And then, of course, we get into the conversation of a Bitcoin ETF and even an Ether ETF, and some of the nuances and intricacies and difficulties

• 37:33David Hoffman?

  that has arisen as a result of the slow response to this ETF. Really enjoyed having Hester on the Bankless Podcast, but before we go any further, we need to talk about some of these fantastic sponsors that make this show possible. Gemini is the world's most trusted cryptocurrency exchange. I've been a customer of Gemini since I first got into crypto in 2017, and it's been my main exchange of choice to make my crypto buys and sells. Gemini is available in all 50 states and in over 50 countries worldwide, and on Gemini there are markets for over 30 various different crypto assets, including many of the hot DeFi tokens. And it's one of the few exchanges that has liquid die markets. Gemini just launched their Earn program, where you can earn up to 7.4% interest on 26 various crypto assets.

• 38:18David Hoffman?

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• 39:03David Hoffman?

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• 39:46David Hoffman?

  which are synthetic assets that move inversely to their target asset. Synthetix isn't just for traders. Developers can build on Synthetix to access the infinite liquidity offered by synthetic assets. Or investors can stake collateral to the protocol and earn fees that the protocol collects. If you're a trader and you're looking for a trading platform and not found in the legacy world, check out quanta.io. If you're a developer or you just want to earn yield on your collateral, go to www.synthetix.io, where you can stake your SNX or ETH and earn fees from Synthetix.

• 40:21Ryan Sean Adams?

  Let's talk a little bit about the SEC. So we've talked about broadly government regulation, government regulators and the cost of getting it wrong and the benefits of getting it right. Before we talk about the SEC and maybe some of the things it's gotten right, some of the things maybe you feel like it needs improvement off track. Can you do a quick recap for the audience on the SEC? So the purpose of the SEC, I said in my introduction, I think that's a very clean mission statement and actually a pretty inspiring mission statement. Maybe you could reflect on that. And then my understanding is there are five SEC commissioners, of which you are one. And there's a chairperson. That chairperson has now changed from Jay Clayton,

• 41:05Ryan Sean Adams?

  whom some might know in crypto. I believe, is Gary Gensler now confirmed? Or is he in the process of being confirmed? Can you give us some background on SEC and everything that's going on?

• 41:17Speaker 02

  So the SEC is about 90 years old and it is showing its age a little bit.

• 41:25Speaker 02

  It is one of the federal financial regulators. The US is pretty unusual in the number of financial regulators it has, both at the federal level and the state level, and so it can be quite a complicated ticket to work through if you're trying to do something in this space. We are one of two regulators, federal regulators, for the capital markets, which is basically, those are the markets where investors come and they put capital in and businesses come and they take capital out, distinguishing it from the lending sector, which is, you know, the bank regulators handle that.

• 42:04Speaker 02

  So we oversee the stock exchanges, the options exchanges, we oversee broker dealers and investment advisors. We are not a merit regulator, which means that if someone comes to us with an investment product, our job is to get the disclosures in shape so that an investor can understand what he or she is buying, but not tell them, "Don't buy this product." So we definitely write lots of rules, but our mission really, as you said, I think that mission statement is a nice, clean mission statement, protecting investors. And on that, on that aspect, I always try to emphasize that protecting investors means

• 42:48Speaker 02

  not only trying to prevent them from, from getting hurt by pointing out to them that they're, they're red flags they should be looking for when they invest, things they should be thinking about by getting them disclosure so they can really make a good, informed decision, but also making sure that investors have the opportunities they want to invest in the things they want to invest in. Then on the, on the market integrity point, we think a lot about market integrity. We want to make sure that our markets are places where people feel comfortable coming and, and transacting. So that's one of the things we think about, for example, with the recent game. Stop and other meme stock events where people were were saying, well, the markets, they had concerns about the markets.

• 43:33Speaker 02

  Um, or they were concerned with the volatility and and those kinds of things. We care about that because market integrity does matter. And then on um, the capital formation side. It's really important for people in the United States to be able to come to our capital markets, no matter the size of their business, from the very smallest to the very largest, to be able to raise capital to build something that they that they um, believe that, you know, that where where their their talents are going to be used. So they're trying to build a business. We want to make sure that we're that our markets are there to allow them to do that. Uh, we are, and as you said, there are five of us. We're unusual in that some agencies are headed by just one person.

• 44:17Speaker 02

  We're headed by five. We're an independent regulatory agency, which means that we're a creation of Congress and we are responsible to Congress. We're not um, we're not part of the executive branch, meaning that we're not directly responsible to whoever the president is. We're a politically balanced commission. Um, by law, we were politically balanced. Um, so right now we're at four because uh, Gary Gensler is waiting in the wings to be confirmed. He is um, what I think likely to um, have a confirmation vote sometime this month. Um, and so we could see him coming in sometime relatively quickly.

• 45:00Speaker 02

  Um, but we deal with lots of things. And so I think one thing to always emphasize when I talk to a to a crypto crowd is that crypto is one piece of what we do, but it's a pretty small piece of the whole picture.

• 45:13Ryan Sean Adams?

  Yeah, to- totally understood. You know, I'm I'm curious. So uh, assuming uh, Gary Gensler does get confirmed, how much does the chairperson's kind of posture or understanding of of crypto sort of change the trajectory? I think that the narrative around uh, Gary Gensler coming in is that um, I mean, this is somebody who understands blockchains, understands cryptocurrency. And so there's some enthusiasm from the crypto community about um, his ability to bring this understanding into into regulatory policy. Do you share some of that enthusiasm?

• 45:51Speaker 02

  I do, absolutely. I mean, I think having someone like him who really has that that base layer of knowledge coming in so that then he can really think about, okay, how does this interact with the regulatory structure? You don't have to have the initial conversation. You don't have to tell the narrative of there's something positive here because he already knows that. He's been at MIT. He's been engaged with students who are really smart, who are working on these issues. He's passionate about that. I can tell just by talking to him. I I've had, I I've known him for quite some time and and had a chance to go up to MIT actually and do an event with him a couple of years ago. And so I think he'll come in with that really strong base and that will be helpful

• 46:37Speaker 02

  in figuring out where where he thinks we need to move forward. The chairman of the agency is important in the sense that he not only manages the staff, that's the chairman's job, but he also sets the agenda. So clearly he'll take input from from others, but ultimately he sets the agenda. And so this is an opportunity for us to get some of these crypto issues that have been really not moving to to move forward. I think I think it will be helpful.

• 47:07Speaker 02

  So it's a good confluence of events. I think the industry has really matured, but we're also getting sort of a fresh start with a new chairman. And so I'm hopeful.

• 47:18Ryan Sean Adams?

  So what will be some of your initial asks? Is it good with someone like Gary? You don't have to have the the initial conversation about like, what is crypto? What is blockchain? What is even DeFi? Maybe, you know, we can even talk in terms of DAOs to to Mr. Gensler. That would certainly be exciting. But what will some of your key asks be for the agenda moving forward as it pertains to crypto?

• 47:42Speaker 02

  Well, so I think one of the things I'm going to ask for is that I put out a safe harbor for for token distribution events, basically that would allow people to do those in a way that they would they would know is compliant with the securities laws. I'm not wedded to my particular safe harbor, but I would like him to take that and say, if you're not going to do that, let's think of something else we can do in this space, because right now there's such tremendous uncertainty and people really do not feel comfortable, from from my understanding and talking to people, they don't feel comfortable involving US people in any kind of token distribution event, because there's a potential of an enforcement action down the road.

• 48:24Speaker 02

  So we need to get some kind of regulatory safe harbor out there for that. Second, I would say that we need to allow traditional financial institutions to engage with crypto, which means addressing issues like custody. Because right now, people just don't feel comfortable doing that. There there are lots of questions. I mean, some traditional financial institutions have jumped right in, but many are standing on the sidelines, kind of waiting for guidance there. And then, third, I would say, you know, a Bitcoin exchange traded product and potentially an ETH-based exchange traded product is, is, you know, one of those is likely to come down the road at some point here.

• 49:07Speaker 02

  And and we we always look at these things on based on their facts and circumstances. So there's no guarantee, but but I think the fact that we haven't moved one of those forward yet is something that I will definitely have a conversation with the new chairman about.

• 49:22Ryan Sean Adams?

  Can we talk about the safe harbor for a minute? Because I think that's important. So what specifically are what was your original proposal in the safe harbor? Is it basically that there would be? So here's my high level, like, non researched understanding of it, but somebody someone launches a token, a team of project launches a token, they would have a three year period of time to cross this line of being sufficiently decentralized. And during that three year period of time,

• 49:51David Hoffman?

  The token wouldn't be subject to traditional securities regulations and that sort of thing. But after that three-year period of time, if there is clarity on the token,

• 50:04David Hoffman?

  you know, crossing that line of being sufficiently decentralized, then it would not be a security at that point in time, be treated maybe as Bitcoin or something like that. That's a really fuzzy understanding of it, but.

• 50:16Speaker 02

  No, that's a, that's a good description. Yeah, that's, that's kind of the overview. I mean, during that period, you've got to make certain disclosures and you are subject to the anti-fraud laws. So you can't just lie as you're making those disclosures. And I think that the rationale behind doing the safe harbor was, look, there's, there is real concern that people who are buying tokens aren't getting good information. So let's try to address that legitimate concern.

• 50:44Speaker 02

  But let's also try to give people the freedom to build out the networks. Because I continue to not understand how you can build a network if you're not allowed to give your tokens out. It seems like it's not that easy to do. So that's the problem I'm trying to solve with, with the safe harbor.

• 51:02David Hoffman?

  With the onboarding of Gary Gensler into the, as a commissioner, how does that make, how optimistic are you that you, that the SEC is going to get done what it wants to get done? Do you think that he's going to help move the needle? And also, we could also talk about just the progress that the SEC has made with regards to crypto regulation so far. How would you rate the, what the SEC has gotten done? And how do you think that might change now that Gary Gensler is coming on board?

• 51:35Speaker 02

  Well, I am optimistic. Look, I don't think we've done a good job so far. And this is not, this is not a condemnation of the staff at the SEC. As I say, there are really natural reasons that regulators tend to be very conservative because they don't want people to get hurt and they don't want to upset the integrity of markets either. And so there's, there's, there's this concern. But I think what you need from the top of an agency is you need to, someone to say. And in our case, it's the commissioners to say, we get that there's a risk to allowing new things to allow. Again, I don't like to use that term in connection with regulation because I don't think that we should operate from a baseline of things not being allowed.

• 52:19Speaker 02

  I think we should operate from a baseline of things are allowed unless there's a reason not to allow them. But the world we live in is one where, you know, you have to get permission to move forward. Um, so, so I, we need from the top of the agency to be saying, we get there's a risk, but we think there's some, there's some really important rewards at the end of the day. So let's move this forward. And that's why I'm optimistic that with a new chairman coming in, um, we can have a little bit of a reset, a chance to rethink things. Um, you know, I think that Chairman Clayton, much to, you know, a lot of people in this space are not happy with, with the approach that has been taken in the, over the last, um, number of years with respect to crypto.

• 53:03Speaker 02

  Chairman Clayton was a very good chairman and worked on lots of issues, but I think we could have been moving faster on the crypto stuff. Um, in fact, he, I think one of his new, one of his new, uh, jobs is, is, is crypto related. Um, so I think it is an opportunity for us as institutions are expressing more interest to just take this new turn, to take a, a new look, um, and to, to move forward. So I'm, I'm hopeful. Um, and, and I think, I don't think it's only, uh, Chairman Gensler either. I think my colleagues see the growth in this space. They see the interest in this space. Um, and so I'm, I'm hopeful that we'll all just be able to sit down together, take a fresh look, do some of these things,

• 53:47Speaker 02

  revisit some of the positions that we've had in the past. But that said, on something like an exchange traded product where you've laid out an analysis and you've said, hey, this is what we're looking for when it comes to a Bitcoin exchange traded product. And presumably the same, the same comments would be given with an ETH based exchange traded product. Then to say, okay, well, no, we're gonna, we're gonna look at it in a different way. We're gonna look at it the way we've looked at other types of exchange traded products. It's hard to go back and change the course that you're on. So that's why I have said in other contexts, I think we have dug ourselves into a little bit of a hole by taking these positions in the past, which are very crypto specific positions.

• 54:32Speaker 02

  Instead of applying the standards that we applied to other types of products that we regulate.

• 54:38David Hoffman?

  What would you say are some regulatory failures that the SEC has had? What are some good examples of good regulation that you're proud of that's come out of the SEC?

• 54:48Speaker 02

  With respect to crypto or just in general?

• 54:50David Hoffman?

  Yeah, with respect to crypto, yeah.

• 54:53Speaker 02

  Um, okay, you're gonna really challenge me here.

• 54:55David Hoffman?

  Oh, wow.

• 54:57Speaker 02

  Okay, so I would say one good thing that we've done is right before the end of the year, we put out a

• 55:06Speaker 02

  it was, it was a sort of a pilot program that gave, gave broker dealers five years within which they could experiment with digital asset securities. Now, that begs the question of what's a digital asset security and what isn't? So that's a difficult question. But I think that was an important first step to saying, we get that this is gonna happen. We're trying to set up a framework within which this can happen. Now, we can quibble, as I have, about how limited that was, that, you know, for example, you can't hold any non-digital, non-security digital assets, which means that if you wanna get, you know, paid in ETH or Bitcoin and you wanna exchange,

• 55:49Speaker 02

  you wanna have people pay in that to get digital asset securities, you couldn't do that. And there are other restrictions that I think are too restrictive. But I think that is a positive start. Now, the other thing that we've done is we have established a FINHUB, which is our, our Office of Financial Innovation, basically. Financial technology, and I think having a group of people at the SEC who are thinking about these kinds of things on a regular basis, who are more technologically adept than the rest of us at the SEC. Those are positive things as well, and they've had a lot of interaction with the community. They have these peer-to-peer meetups, which they now do virtually.

• 56:32Speaker 02

  So that, I think, is a great interface to have.

• 56:37Speaker 02

  We've also issued some no action letters. I've been in a no action letter is essentially, it's a letter that you get, you describe what it is you're trying to do. You go into the SEC, they give you a letter back that says, if you do it exactly the way you said you did it and maybe apply some conditions on it, then we're not going to recommend an enforcement action against you. So it effectively gives you comfort that you can move forward. We've used a couple of those in the crypto space. I think it's not a bad, a bad thing to do, although they've been very limited in scope. And I mean, I think in some of the circumstances, I would even argue, I'm not sure why these people even had to come in to get permission to do this because

• 57:23Speaker 02

  doesn't seem in our bailiwick at all. But I think having that mechanism there and available for people is a positive thing.

• 57:31Ryan Sean Adams?

  It does sound like maybe some infrastructure is there that could be useful that that wasn't there previously. But, but I'm also wondering about this. I'm kind of putting myself maybe in like your shoes or the people who are advocating for regulators and those in government to take another look at crypto. It's got to be hard to do it when in 2017, you've got, you've got a lot of shenanigans going on, right? There, there are many empty promises and empty tokens. We, we all know that that era didn't have, didn't have the strongest projects coming out of it. So I imagine 2017, 2018 is probably very hard to, to make the case.

• 58:16Ryan Sean Adams?

  You know, among regulators that that crypto is an industry with some staying power and doing some good in the world and doing some good for the US. But now I feel like things are different. So we're 2021. DeFi is here. It's actually being used. There are protocols like, like Uniswap that are doing billions in, in trading volume. There are decentralized protocols like Compound and Ave that are allowing individuals to, to essentially take out loans collateral.

• 58:47Ryan Sean Adams?

  sterilized backed loans on this open transparent financial system. We actually have the promise of DeFi and crypto kind of like growing up. So there's some real stuff that's happening here. I I'm just curious, does that make the case that you're trying to make easier? Is it easier in 2021 versus 2017 when there's some actual real stuff? That's built here, is it just as hard as ever?

• 59:12Speaker 02

  Well, I mean, I think you're right to point out that 27. So I, when I got to the the SEC in 2018, the Dow report, we had just issued the Dow report to say, hey, people. You know, if you're doing some of this stuff, it could end up being a securities offering, so you better be careful. And and then we brought a series of cases. And I think, I mean, I I should have included that in the thing, the list of positive things we've done. I think the cases involving fraud are particularly important to say to people. If you're doing a fraudulent securities offering and you're draping it in a crypto cloak. You know, too bad, we're going to come after you because you're just defrauding people. And, you know, people are people and they will find ways to defraud people.

• 59:57Speaker 02

  So I think that that was important for us to lay that marker down. The unfortunate thing, and this isn't true only with respect to crypto. But a big part of my job every week is to look at enforcement cases. And to vote on them. And so we're getting this constant stream of really bad fact patterns. Where people are stealing from their mothers, their brothers, their friends. And they're, you know, running off and, you know, using it for all kinds of nefarious purpose. Using the money for all kinds of, well, I mean, they think it's positive, but it's pretty se- pretty seedy stuff that they're they're using the money for.

• 1:00:40Speaker 02

  And so you see this and you're getting this constant flow and you think, wow, everyone out there is trying to rip someone off. Because you're seeing so many bad things. And so it can be really hard to move past that, even with respect to the traditional financial system. You're suspicious because you do see and and everyone does need to be skeptical, no matter who you're interacting with. If someone is doing something that looks odd to you or they're not answering your questions, you should run the other way. So that's, it's healthy to have that skepticism, but I think from a regulator's perspective. The negative stuff can really overshadow the positive stuff. And so with respect to DeFi specifically and everything that's going on in the DeFi space.

• 1:01:24Speaker 02

  I mean, from my perspective, it's really fascinating to see this, right? It's this, it's this financial system that's growing up outside of the traditional financial system to meet the needs that people have to enable them to, to, to enter into financial transactions in new ways. And I think, wow, this is really interesting that these people have kind of come up with this

• 1:01:50Speaker 02

  from scratch. I mean, you know, they, they learn the lessons from the traditional system, but they're coming up with it on their own. They're figuring out how to collateralize these loans. You know, sometimes things work better than others, right? And there have been some pretty, pretty big instances of people saying, whoa, I didn't expect that was going to happen. But it's still this trial and error stuff. And I find it really exciting, but I will tell you that the average regulator does not find dynamic, dynamic growth like that exciting. They find it to be very intimidating because

• 1:02:24Speaker 02

  if it's happening, we need to be regulating it. So I would say that the growth, I don't, I don't know that you're, you're getting a uniform, wow, this is really kind of cool that this stuff is happening. I think you're getting more of, ooh, as this grows bigger, we better figure out how to, how to, how to regulate it. And we do have to be thinking about those things. I mean, we do have to be thinking about

• 1:02:48Speaker 02

  do these things interact with the securities laws? So I've asked that question. Where does DeFi interact with the securities laws? Because I want people in the DeFi world to be thinking about that too, because I don't want to end up in a situation like 2018, 2017, 2018, where people are doing things and then several years later.

• 1:03:10Speaker 02

  We're coming in with an enforcement action and saying, you shouldn't have done that. I'd rather have us be clear upfront. Here's where there might be an intersection with the securities laws. Or maybe it's not the securities laws, maybe it's the banking laws. So that people know and can make decisions and we then we can think about whether we need to change the rules. And maybe we do, maybe we don't.

• 1:03:32Ryan Sean Adams?

  I think that clarity is definitely what the crypto industry is craving as well. And do you think at least in the near run, we'll see some of that clarity with this sort of reset? As you call it, kind of this blank slate, is that in one that you mentioned, Safe Harbor addressed, you know, custody Bitcoin ETF. But like clarity is really what the crypto industry is hoping for. Is that going to happen anytime soon?

• 1:03:59Speaker 02

  Well, and I think that's, that's the thing that I found pretty refreshing about dealing with people in crypto. You know, they're not coming to me and saying, Hester, please don't regulate us. They're coming and saying, just tell us what you, what the regulations are and we'll figure out a way to work around that. I mean, not work around them in a nefarious way, but we'll figure out a way to build our businesses, build the projects that we're building within the regulatory structure, but you can't not tell us what the regulatory structure is. And then come in after the fact and say, ha, you violated the rules that we didn't tell you. So, so I do think that that's, that's why I'm optimistic. Gary Gensler and I don't necessarily see eye to eye. You know, I tend to be a pretty deregulatory person by nature.

• 1:04:43Speaker 02

  He tends to be based on, based on his, his prior job, running the CFTC, the other capital markets regulator. He tends to take a more regulatory approach than I do. But I think he appreciates the value of regulatory clarity. And so I do think that we can come to an agreement about laying out some, some regulatory clarity for people so that they know what they're dealing with. And that's why I'm really optimistic because I, I think we can, we can take that challenge on and he'll appreciate the importance of that challenge. And, and so I am optimistic.

• 1:05:20David Hoffman?

  Commissioner Pers, I'd like to dive right into the lion's den here and get to the subject of tokens specifically. And as we know, tokens on Ethereum have had a sketchy past, and I think this fits in the model of how technology improves. Bitcoin, one of the first use cases of Bitcoin was buying drugs on the Silk Road. That is no longer the primary use of Bitcoin. And like in 2017, the primary use of tokens were these largely vapor ICOs, but now the Ethereum ecosystem is innovating at large, and they've turned into DeFi tokens, which represent capital assets. That's something new. But extending this into the future, and something that we get really optimistic about on Bankless,

• 1:06:03David Hoffman?

  is the coordinating power of tokens as community coordination tools. And we recently saw the power of a recent NFT being sold for half a million dollars that got a bunch of people to coordinate their capital because they wanted that using the power of Ethereum. And it was just purchasing a token that was a piece of art. And there are many other tokens that represent just the coordinating power of a community at large to come together among shared cultural values and ethos to produce something as a community. And I think in the era of this very digital world that COVID has helped accelerate, and like how we were talking about between me and Ryan, how we coordinated on the internet with, and now Ryan's one of my best friends, and I haven't met him yet, it's the power of

• 1:06:48David Hoffman?

  these communities that are built on Ethereum that makes me optimistic about the future. And so with that framing in mind, how do you see the dormant power in tokens and what could be expressed? And then how can the SEC help express that power versus stifling it?

• 1:07:08Speaker 02

  I mean, that's a big question, right? So my first response to that is, what is the SEC's role? The SEC's role is not to be the visionaries who are thinking about how these things can be used. It's to set that framework within which this can happen. And I think it's exciting to see, I will candidly tell you, I don't fully understand everything that's happening in the DeFi space, and I certainly don't fully understand everything that's happening around NFTs. I think I have a lot of learning to do on that. But I think what we should be doing is allowing that

• 1:07:46Speaker 02

  Experimentation to be happening in figuring out ways that we can, again, provide that clarity so that people can feel free to enter into those transactions. I think we have to stop being so skittish about peer-to-peer engagements. So I think we're going to have to figure out a way to grapple with the peer-to-peer element. That's something that really is quite new for us. And then we also have to just figure out where our authority lies and where the jurisdictional lines are. That can be something that's pretty tricky, and we haven't really talked about that today.

• 1:08:30Speaker 02

  But I think the SEC has a mandate, but the CFTC has its mandate, and then the FTC has its mandate. So whatever we can do to provide clarity on that, I think Congress has some interest in nudging us along that path of dividing jurisdiction, explaining whose jurisdiction something is. So that's, I think, a piece that, if we were to do, could be helpful. But there's a lot of legal work that needs to be done, too, to think about what the legal rights associated with a lot of these things are. And that's a little bit beyond, I think, our ambit. That just has to happen in the private sphere as people work these things out.

• 1:09:15David Hoffman?

  One of my personal favorite things about this space is how fast it moves. And how fast it moves is extremely intimidating. Me and Ryan are full-time trying to keep up with this space, and even we don't even keep up with it. So I can't imagine what it must be like to be at the SEC, where things just tend to move a little bit slower in the world of regulation. And this acceleration of innovation in Ethereum, it only seems to be accelerating even more. So how do you think about how governmental bodies in the SEC is going to be able to keep up with something that is perpetually always moving faster and faster?

• 1:09:52Speaker 02

  I mean, that's a big challenge for us, but I think that that helps us think about how we need to regulate, which is going back to this idea of technology neutrality and and and really setting some broad principles within which this growth experimentation within which that can happen. So that's that's the best thing we can do. I mean, we do need to have more people at the agency who know this space better. And that is difficult for a lot of reasons, you know, I don't think most people in this space really think, oh, I'd love to work at a regulator. And so so how do we how do we draw on the knowledge from outside?

• 1:10:37Speaker 02

  I mean, I think if people who are listening have ideas about what what I can do to to get better educated myself or to better, you know, to how we can better educate the SEC and other regulators, I'm certainly open to those ideas. But it's it will be a challenge going forward.

• 1:11:00Ryan Sean Adams?

  Keep listening to Bankless, Commissioner Pierce.

• 1:11:03Speaker 02

  By the way, you can just call me Hester.

• 1:11:06Ryan Sean Adams?

  Thanks. We're at that point in the conversation now.

• 1:11:12Ryan Sean Adams?

  Well, since we're at that point in the conversation, so I'm curious to get just your your take. You might not have a take on some of these specific things, but as we're in the section of talking about tokens, and you throw out NFTs, what's your take on NFTs? Does the SEC have any jurisdiction here? Do you have any like ideas in terms of what how the SEC might play a role? Or is it just too early?

• 1:11:37Speaker 02

  Well, I think partly too early, but but there is a possibility that if we are talking about an NFT that you're fractionalizing, that's one example of where I think the securities laws might might intersect. Another example, I think, is if you're dealing, you you could imagine NFTs being actual securities, like so taking equity securities and turning them into NFTs. And it's a little too early for me to see how exactly that would work, but that would certainly mean that the NFTs would be within our within our remit. So I think we all, what I always tell people is if you're doing something where you're going

• 1:12:18Speaker 02

  out and you're raising money to build something, or you're taking something and you're slicing it up and you're saying, I'm going to manage this for you, this sliced up thing and, and, and you'll get profits based on it, you've got to be thinking in terms of the securities laws, because those things sound like very securities like. Now, again, I can't give financial advice, I have to give that disclaimer, but I do want people to be thinking, okay, what is the purpose of the securities laws? The securities laws are there to make sure that people who are buying into something where it's the efforts of other people who are going to make that thing rise in value

• 1:12:58Speaker 02

  and the person buying it just has to sit there and wait for the, the price to go up. You might be that, you know, that sounds a lot very securities like, so you might want to be thinking about going and talking to a securities lawyer.

• 1:13:12Ryan Sean Adams?

  So here's something weird, and this is like, you know, kind of DeFi weird. I'm, I'm going to throw it at you and get kind of your response. And again, that the response might be like, hey, it's too, it's too soon, we don't know enough yet, but there are these things, right, that this self-driving bank, self-driving code, basically, DeFi protocols, right? And some of these DeFi protocols actually generate cash flows, right? So, and there's this, you know, notion that's become a bit more popular of a governance token that essentially allows individuals who own that token to sort of manage decisions within the protocol. And the protocol distributes the cash flow.

• 1:13:55Ryan Sean Adams?

  So it's actually the code, again, back to that theme of it's not a central intermediary, it's the code that's doing the distribution of some of these cash flows. What's your take on these governance tokens? Does, you know, is this going to be part of the, the clarity that we're, we're, we're hopefully going to see from the SEC? Or do you have any takes now?

• 1:14:15Speaker 02

  Well, I think that's a great example of like the kind of question that I would love for people. I'm always trying to get people to tell me, where do you need clarity? And I think that's a great example of we need to sit down and wrestle with that. Is that, is what you're describing to me essentially what the DAO was that we did the DAO report on? Is that really sort of the same type of thing?

• 1:14:37Speaker 02

  Are you creating this kind of investment company that's, that's decentrally managed? It's a really interesting idea.

• 1:14:47Speaker 02

  And I don't know, you know, I don't know how we think about that in terms of the securities laws. I really, I really think that's, that's exactly the kind of issue I want us to wrestle with at the SEC. And maybe there, there are securities lawyers at the SEC I can talk to and they'll say, well, this is clearly, this is clearly the answer on that. But I think it's important for us to think about those things because that is kind of the trend that things are going. And, and I think it shows up in lots of different areas now where you get this, you know, where before you had these decisions that were being made by a central person or a central entity. And now those decisions are dispersed. How does that intersect with our, our laws?

• 1:15:31Speaker 02

  I don't think they're easy answers.

• 1:15:34David Hoffman?

  Hester, something that concerns me is that with the suite of tools that is available on Ethereum, for every rule or regulation that, that comes out of some governmental agency, there is a way around that. And not only is there one way around that, there's perhaps infinite ways around that. And perhaps you regulate the ERC 20 token that comes from a DAO that's issuing cash flows. And then somebody puts that into an Ethereum address that wraps it up and puts it into an NFT to escape some sort of rules. One thing, and this kind of goes back to the, the question of accelerating innovation. I don't, the, the free market, in my opinion, because of what Ethereum enables, will always be able to route around regulation.

• 1:16:19David Hoffman?

  Does this, does this concern you? Because does the experimental just power of Ethereum concern you as a regulator?

• 1:16:28Speaker 02

  Well, I what I would say is that's why we need principles based rules, not technology specific rules because principles based rules are harder to engineer around. But I think another point that regulators haven't really, you know, embraced is that the market can be quite effective at regulating itself. And I'm not, you know, I'm not saying, well, there's, there's no role for regulators. There is a role for regulators, but we shouldn't, we, we should be happy when we see the market regulating itself. And so I've seen that in crypto where, you know, during 2017, there was this, this, this ICO. Everyone was pouring money into whatever, but then over time, people started to say, wait a minute,

• 1:17:11Speaker 02

  I'm not going to give my money to a project unless I actually, unless there's something behind that white paper. And so that kind of regulation, so even if people are trying to get around an existing government regulation, the people who are interacting with that are going to try to push back. Not necessarily saying you have to do it. You have to do it in a way that, that, that is the old way, but to say you have to do it in a way so that I, I'm comfortable interacting with that. So it is a challenge for us regulators. I, I, you know, it certainly is a challenge how quickly things are moving and how easy it is to engineer around.

• 1:17:54Speaker 02

  But at the same time, we should also view it as an opportunity to incorporate some of that natural market discipline into the way we regulate the markets.

• 1:18:05Ryan Sean Adams?

  I agree. I agree. Completely. Completely. Like the crypto market. Crypto market. Very painful lesson on the back of the, the ICO boom. When, like many tokens, people invested in, lost 99% of their value. And I see in this cycle, investors are much more careful. But I like to say that, but not in all cases. At least the veterans are much more careful. Those who stuck, stuck around are now telling people and, you know, talking about sort of. So the market sort of, you know, learns these lessons the hard way. And that's been good for the industry. I must wish, Hester, we could like, put just some caution tape around the whole crypto experiment.

• 1:18:45Ryan Sean Adams?

  And just say like, hey, we're running this whole financial experiment over here. We've got this caution tape. If you choose to cross that tape, then it's on you. Like, this is the Wild West. It gets crazy when you cross that line. And we can't, you know, we're not protecting you in every incident across, you know, across that line. It feels to me like, if we could take that sort of approach, and when you choose of your own volition to to go into this cryptos, and you know, entirely what you're getting into, that would be super healthy. Because to be honest, crypto is just trying to figure this stuff out as we go to. Like, what's valuable, what's not?

• 1:19:25Ryan Sean Adams?

  You know, what's what's going to stick, what's not, where the product market fit is, all of these things, we're trying to figure it out as we go to. Is there any idea like that, that has passed by government or regulators? We just caution tape the whole thing and just let the experiment run?

• 1:19:40Speaker 02

  Well, I mean, that's, that's a model that I think is a good model. You think of our private markets in the United States where

• 1:19:48Speaker 02

  the public markets are governed by our strict disclosure rules. You have to, public companies have to provide, you know, required disclosures. In the private markets, we let investors and companies work that out. Now, what we've said, historically, is we've said, but the only people who can be investors in the private markets are really rich people because we think that they can take care of themselves and afford to lose money if they do. And my view has always been, that's very un-American. We should allow anyone to participate, but we should do, take this caution tape approach and say, but if you participate in those markets, there's no guarantee that you're going to get the information that you need. And there's certainly no guarantee that you're going to get the return that someone

• 1:20:33Speaker 02

  told you you're going to get. So please exercise great caution when when entering into that space. But that typically hasn't been how we've worked as as regulators. That said, we're not a merit regulator either. And so that is kind of more along the lines of Telling people, "Look, here's the information. You make your decision, but you're making the decision and you're taking the risk." So to some extent, that is that kind of approach. So the only other thing I would say in response to that is that if we were to take that kind of approach, here's what would happen. Okay, caution tape, big letters, you enter at your own risk.

• 1:21:18Speaker 02

  You know, it's not for everyone. Make sure you know what you're doing.

• 1:21:22David Hoffman?

  No lifeguards, no technical support.

• 1:21:25Speaker 02

  Yep, you're on your own. There's no one to call when something goes wrong. Then something goes wrong. Twitter, I open up my Twitter. "Hester, I lost my money in this, you know, DeFi protocol. What are you going to do about it?" And my response is, "I'm going to do nothing about it because I told you that you were on your own there, and we don't have any insight. We don't have anyone to grab hold of there." But I think that it then, you know, people are really angry at the regulator for not doing anything. So it really is a responsibility thing. If you want to enter into that space, you've got to take the responsibility when things go wrong. And you've got to take that as a learning experience and then move on from that and decide,

• 1:22:07Speaker 02

  "You know what? Maybe the DeFi world isn't for me. Maybe I'm back into C5." But don't come calling the regulator who you told to stay out of it in the first place.

• 1:22:18David Hoffman?

  Well said.

• 1:22:19Speaker 02

  People are people, though, and you always want to have someone to call when something goes wrong, and I get it. I do, too.

• 1:22:26David Hoffman?

  As we come to a close here, Hester, and again, thank you for coming on and being so generous with your time. We have to get to the conversation of ETFs. And so my question to you is, when Bitcoin ETF and when the Bitcoin ETF does come, if it does come, is there going to be one ETF or many ETFs?

• 1:22:46Speaker 02

  Well, I think that's a big, that's a, that's a big question that we all have. And, and again, I don't, I don't have a good answer to that because I thought there should have been a Bitcoin exchange traded product approved based on the documents we got, based on the applications we got. I thought it should have happened a long time ago. So I don't really understand what it is we're looking for. The Bitcoin market is quite mature now in the sense that there's a mature finance, a futures market. Um, there are a lot of very large uh, players in those markets now that are arbitraging and, you know, bringing price consistency across different markets. So I don't really know that there are other countries that have exchange traded products.

• 1:23:31Speaker 02

  We saw Canada just introduce some. I don't really know what we're waiting for. I, I, I, I've not understood that again, facts and circumstances of each application, how the product is going to be designed. I, those things, yeah, bottom line is I don't know when, when an exchange traded product is going to get approved. But again, I think it is a natural chance for us to rethink our approach, given that, that Gensler is coming, likely coming in very soon. Um, but even, even so, these product approval type things, and I, approval is not the right word, but allowing these products to move forward can take a long time. And you raised the important question of is it going to be one?

• 1:24:13Speaker 02

  Because the first one is likely to get quite a bit of attention and investor funds. Or is it going to be multiple at the same time? And I think that's, that's a difficult question. And another example of why it does matter when regulators wait too long to do something, it makes it much harder to do it. Um, and I think that is a cautionary tale for us regulators more generally. And that's something that you saw with Brian Brooks at OCC. You know, he said, look, I can see that this is going to be a bigger, not exchange traded products, but that crypto is going to be a bigger thing in the future. And so I'm going to lay down the rails already for it to be integrated into the banking system.

• 1:24:58Speaker 02

  Um, that's a really good approach. You do it before it becomes such a big thing that it's such a big deal. And then you allow Financial institutions to experiment with it. I would love us to be doing the same, taking that same kind of approach.

• 1:25:11David Hoffman?

  The crypto space tends to be pretty good at putting on a conspiracy hat. And I've got a little bit of that in me myself. And so I want to pose this question to you. In my opinion, the longer and longer that we don't have a Bitcoin ETF, the more and more of a political statement it is to protect the brand of the dollar as the world's reserve currency. Because there's something to say about like, perhaps not helping facilitate Bitcoin growth if it comes at the cost of the US dollar, which comes at the cost of US sovereignty. And perhaps every single day that there's not a Bitcoin ETF is an attempt to protect the dollar. How does that sort of conspiracy land with you?

• 1:25:54Speaker 02

  I mean, I think you should probably take that conspiracy hat off. But what I do think that the American approach, the American government's approach to crypto, to Bitcoin, to DeFi, one needs to recognize, as we talked about at the beginning, that there's a value to these, to these, these stores of value, exchanges of value to people. And in both in the US and outside the US. And because of that, we as regulators shouldn't approach it with the idea of, oh, this is bad, but oh, how can we build the regulatory system within which this stuff can function? But the second point I would make is that I think it's really short sighted on DeFi,

• 1:26:39Speaker 02

  because so much of DeFi is really, it's, it's, it's in dollars. I mean, it's in stable coins, but they're dollar stable coins. And so I guess my question to people who push back and say, oh, this is a threat to the dollar, would be to say, well, actually, we're dollarizing more of the world because it's being done through private stable coins. And so that should be something that you actually like if you like the, if you want the dollar to have more value. And it's, you know, it's really a positive in people's lives. So that's something that we have to take into account, too. So people need to stop being so concerned about standing in the way of non-sovereign

• 1:27:24Speaker 02

  stores of value and exchanges of value. I think that they can coexist with the sovereign ones. And so I don't find that to be a challenge. And I think it's, it's again, a really important reminder that regulators need to remember that we serve the people. Our job is to serve the people. That does mean protecting them, but it also means enabling them to engage in the voluntary transactions that they find to be personally beneficial. And that, I think, will be, in the end, societally beneficial.

• 1:27:56David Hoffman?

  Hester, do you have an opinion as to the market structure behind Ether, the asset? And perhaps if a Bitcoin ETF becomes approved, do you think that an Ether ETF would be not far along behind it?

• 1:28:09Speaker 02

  Well, again, I think if we look at the way that the Commission has approached Bitcoin, it's a very confusing approach to me because it does try to impose the market structure that we know, which is the equity market structure on this underlying, on the underlying Bitcoin market. And if that same thing were attempted with respect to ETH, I just, I don't know how that would play out because I don't, I don't understand imposing it on Bitcoin and I don't know how it would play out in ETH. So I think it remains to be seen whether someone will try that. And if so, how we approach that one.

• 1:28:52Ryan Sean Adams?

  Maybe we try the national pride angle. We can't let Canada beat us at the ETF game, can we? Maybe that'll work. Hester, you've been very generous with your time. You know, thanks, thanks so much for spending it with us. And we appreciate your role as a regulator and you kind of educating others about this. Can you tell us, I guess, maybe a message to crypto, those in crypto, the crypto community who maybe think of regulators or government in a bad light? Give us some optimism, right? So, so tell us the good stuff. And maybe you entered this conversation saying you're optimistic. Why are you optimistic for 2021 and beyond?

• 1:29:37Speaker 02

  I'm optimistic because we do live in a place where people are supposed to interact with regulators, provide input to regulators, inform us, help us to think through these difficult philosophical, legal, technical issues. And so what a wonderful opportunity it is to be in a society where we can have these conversations, we can have them publicly, we can wrestle with these things together. And so I think that's the source of my optimism. It's that people have been willing to engage with me. They've been willing to get over that big regulatory label that I wear on my hat and, you know, tell me what they're trying to build, tell me what the challenges they're facing,

• 1:30:19Speaker 02

  help me to think through these issues. And so I'm optimistic because this is a world in which crowd involvement, you know, that's what DeFi is about. It's about decentralized talent and decentralized contributions to something that people are building together. We can do that in regulation, too. We can take all of the wisdom from people who are building, from people like me who come from a regulatory background, from lawyers, and we can meld that all together and we can build a better regulatory framework. Why not apply that same decentralized ethos to regulation? So that's why I'm optimistic.

• 1:31:01Ryan Sean Adams?

  People forget, regulation is just another protocol and we are in the protocol space. Hester, how can people help? Like those listening, how can people help? You asked for some feedback earlier. Do you want feedback on this sort of thing? How can they get plugged into this?

• 1:31:18Speaker 02

  Yeah, I mean, you know, bring to me issues where you think clarity is needed. Bring to me solutions about what you think that clarity would look like. But even just knowing what the questions are that you have would be helpful. So you can contact me at [email protected]. I'm on Twitter, but I don't always see individual tweets. So if you want to reach out, you can also, you know, call my office. The number's on the website. I'm happy to talk to you, happy to get emails from people.

• 1:31:54Ryan Sean Adams?

  Commissioner Hester Purst, thanks so much for joining us on this episode of Bankless.

• 1:31:59Speaker 02

  Thanks for having me. Have a good afternoon, morning, whatever it is where you are.

• 1:32:03Ryan Sean Adams?

  Absolutely, you too. Action items, guys. Make sure you read Atomic Trading, which is a speech Commissioner Purst gave in February. It's absolutely fantastic. We will include that in the show notes. Also, David, Bull Market, we need some five-star reviews. How are we doing on those reviews?

• 1:32:22Ryan Sean Adams?

  Oh, you're muted, friend.

• 1:32:24David Hoffman?

  Always looking for a few more five-star reviews. If we want to get the Bankless world to the top of the iTunes charts, we need those five-star reviews. There is important conversations being had here, like the one that we just had. And if you think that these conversations are valuable and need to be heard by more people, give us those five-star reviews wherever you listen to podcasts.

• 1:32:43Ryan Sean Adams?

  And I think this conversation was valuable because David said he's my best friend in this episode. First time ever. I'm gonna treasure that. Risks and disclaimers, guys. Of course, you've got to talk about risks and disclaimers when it comes to crypto. Bitcoin is risky, ETH is risky, all of crypto is risky, so is DeFi. You could lose what you put in, but we're headed west. This is the frontier. It's not for everyone, but thanks for joining us on Bankless.

• 1:33:09David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcasts, and community as a Bankless premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks, and exclusive content, and even the Bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and weekly rollups where

• 1:33:52David Hoffman?

  we summarize the week in crypto and other fantastic content. Thanks, everyone, for watching and being on the journey as we build out the Bankless nation.