#492: Chris Giancarlo and Jake Ryan on Crypto Regulation

Chris Giancarlo is a lawyer who served as the prior Chairman of the CFTC. He earned the nickname of Crypto Dad for his innovative thinking while serving in that role. Jake Ryan is the founder and CIO of Tradecraft Capital, a macro/thesis driven crypto fund. In this conversation, we discuss the current regulatory environment, long wave cycles of technology, and the intersection of markets, law, and technology. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= The Rodman Law Group is dedicated to helping entrepreneurs realize their vision by helping them operate defensibly in sectors where laws and regulations haven’t caught up to the realities of the industry. The Rodman Law Group’s legal expertise combined with its understanding of blockchain technology makes it the ideal legal service provider for the industry. http://www.therodmanlawgroup.com/pomp _______________________________________________________________________________________________________

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

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off.

• 0:09Anthony Pompliano?

  Chris Giancarlo is a lawyer who served as the prior chairman of the CFTC. He earned the nickname of Crypto Dad for his innovative thinking while serving in that role. Jake Ryan is the founder and CIO of Tradecraft Capital, a macro thesis-driven crypto fund. In this conversation, we discuss the current regulatory environment, long wave cycles of technology, and the intersection of markets, law, and technology. I really enjoyed this conversation with both Chris and Jake. Before we get into the episode, though, I want to quickly talk about our sponsors. First up is BlockFi. BlockFi provides financial products for crypto investors. Those products include a high-yield interest account where you can

• 0:50Anthony Pompliano?

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• 1:32Anthony Pompliano?

  listening to this, you are likely part of the 7.1 million Bitcoin owners who have retirement accounts with dollars in them, but not Bitcoin. I used to be in that situation too, but not anymore, thanks to Choice. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it, too. It's an absolute game changer. You can go to retirewithchoice.com/pomp. Again, retirewithchoice.com/pomp. Self-directed IRA product that allows you to buy Bitcoin in your retirement account with those tax-advantaged dollars and hold your private keys. Retirewithchoice.com/pomp.

• 2:11Anthony Pompliano?

  Lastly is the Rodman Law Group. They are dedicated to helping entrepreneurs realize their vision by helping them operate defensively in sectors where laws and regulations haven't caught up with the realities of the industry. If you heard my episode with Dave Rodman, you'll know these guys not only understand the law, but they also understand crypto, decentralization, intellectual property, and they can do a lot of help for you as an entrepreneur or as an investor. Head on over to therodmanlawgroup.com/pomp. Again, therodmanlawgroup.com/pomp. Dave Rodman and his team get it. Anyone who's been operating as an entrepreneur or an investor for any length of time knows having a great lawyer

• 2:52Anthony Pompliano?

  is the key to success. I think Dave and his team are doing a great job and they're standing by, ready to help you. So head on over to therodmanlawgroup.com/pomp and you'll get a discount on their services. Again, therodmanlawgroup.com/pomp. All right, let's get into this episode with Chris and Jake. I hope you enjoy it.

• 3:10Speaker 02

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 3:36Anthony Pompliano?

  All right, guys. Bang, bang. Got a very special treat for you today. I have Chris and Jake here. Thank you both so much for taking the time to record this.

• 3:46Anthony Pompliano?

  Glad to be with you.

• 3:47Speaker 03

  Absolutely.

• 3:49Anthony Pompliano?

  Let's just jump right into your backgrounds. We've got a whole bunch of stuff to go through today on the regulatory front, but maybe Jake, we'll start with you. Kind of talk through a little bit about your background, what you're doing now, and then Chris will go to you.

• 4:01Speaker 03

  Sure. I started, I got a degree in computer science and my first part of my career was in technology. I ran a software services firm for many years. And in about 2014, I started to do early-stage angel investing. I was a part of several accelerators out in Los Angeles.

• 4:20Speaker 03

  And uh and did and did a lot of seed stage equity investing. I started to invest in my first Bitcoin, I'm sorry, blockchain companies in about two thousand and fifteen. And I invested in Bitcoin in about two thousand and sixteen. I think my first few Bitcoin were four hundred and fifty-five dollars. So. Then in about two thousand and seventeen, I started to think about a real career shift. Um, I wanted to blend my background of technology and my passion for investing and I really just dove down the crypto rabbit hole. I started TradeCraft Capital. We're a crypto fund. And uh, we've been going strong and

• 5:03Speaker 03

  I think of last, I just, I have a lookout, crypto asset investing in the age of autonomy. And that's a little my history.

• 5:11Anthony Pompliano?

  Awesome. Chris?

• 5:13Speaker 04

  Jake, my entire career has been spent in the triangle of of markets, technology and law. I spent my first sixteen years as a lawyer in New York and London, uh, representing technology companies, selling their products and services in the United States and also raising uh, capital in the U. S. And actually, uh, began a, a, a, a legal series called E Securities, looking at some of the first trading of securities online. And then in the year two thousand, I left law, teamed up with a startup called GFI Group, and we built some of the first electronic trading systems in the world. Global networks for trading a type of product called credit default swaps and other derivatives

• 5:55Speaker 04

  on online. Uh, and we became the largest network, global network for trading these products. And then, uh, we took the, we raised private equity and then two thousand and five, we took the company public uh, on the NASDAQ and uh, it was a great success story. And then my third career after law and business was to go to the CFTC at the invitation of President Barack Obama, and then become chairman at the invitation of President Trump and to be uh, surprisingly unanimously confirmed twice, um, uh, which was a great honor to me. And to serve as chairman of the agency during a time when the agency really Took its first actions with regard to the creation of cryptocurrency derivatives.

• 6:36Speaker 04

  And we green lighted the very first Bitcoin futures products trade on the exchange, which really was the beginning of an institutional marketplace for crypto. Because only when you could actually short the price as well as go long, could institutional money come into the space. And I think the explosion we're seeing now is directly as a result of that. And now I left the agency in 2019 at the end of my five year term. And I'm engaged in a whole range of activities, both as a board and advisor to a number of crypto companies, and also as a senior counsel to Wilkie Far and Gallagher, a prominent US firm, law firm. And then finally, as the founding, one of the founders of the Digital Dollar Project,

• 7:19Speaker 04

  which is a think tank to examine the challenges and opportunities of a US central bank digital currency, what we call a digital dollar.

• 7:30Anthony Pompliano?

  Absolutely. And both of you have been around for a long time and been integral to a lot of progress. Chris, maybe let's start the regulatory conversation with just your evaluation. You were one of the top regulators and kind of heads of one of the most important agencies. Just where are we right now when it comes to crypto and kind of this age of autonomy that I think Jake refers to? But where are we from a regulation standpoint today and how do you view that?

• 7:58Speaker 04

  You know, regulation always follows innovation. And in fact, I think that's a good thing. You wouldn't want regulation getting out in front and actually laying down a framework that innovation has to innovate to. Much better that innovation follows, customer demand follows the natural course of innovation, and regulation follows up. And certainly that was the case with the early phase, the first phase of the internet, the Internet of Information. But that phase was different than this phase because that phase, because it was about information, because we have a First Amendment, making sure that that speech is private,

• 8:41Speaker 04

  that innovation basically came about in a regulatory light zone. We don't have federal bureaus of information, although we have a Federal Communication Commission that regulates entities, it doesn't regulate speech. And so, the first wave of the internet really evolved in a sort of a low resistance environment. But this wave of the internet, the internet of value, where things of value are becoming digitized and decentralized, is really running into a regulatory heavy zone. We have not one but two market regulators in Washington looking out for people's interests in marketplaces, the CFTC and the SEC. We have not one but

• 9:26Speaker 04

  three banking regulators in Washington, between the Fed, the OCC, and the FDIC, looking out for the regulation of banks and other financial intermediaries. And then, of course, you've got regulation at every state level. Our legal system has long presumed that the right and the authority of the state to regulate things of value for the protection of consumers of things of value. And so, this wave of innovation is running headlong into a regulatory structure that was many cases at the state level is centuries old. At the federal level goes back to the 1930s. It's an old regulatory framework that is being hit smack on by a

• 10:11Speaker 04

  new wave of technological innovation, digitization, and decentralization. And the clash is pretty extraordinary, and it's one that we're going to have to resolve as a society. And I'm hopeful that federal officials will recognize the antiquated nature of our regulatory system and both the challenges, but also the benefits of this new wave of innovation of things of value. And we will get some frameworks that will be much more holistic and suitable for this wave of innovation. A hope springs eternal, but I am hopeful we will get there.

• 10:53Anthony Pompliano?

  Absolutely. And Jake, I know that you've done a bunch of work on kind of these long wave cycles. And so Krista's did a great job articulating the current environment. Maybe help us get some historical context. Is this normal? How did we get here? And how do you think of it in context with those long wave cycles?

• 11:13Speaker 03

  Yeah, I think, you know, my thesis is that we've begun a new long wave cycle. We know that the five to 10 year cycles, those short term cycles are driven by credit, but those long wave cycles, those 50 to 60 year cycles are driven by innovation or technological revolution. Carlotta Perez does a great job in her book, Technological Revolutions and Financial Capital, outlining the past 200 years and really going through the age of industry, cars and autos, electrification, and last, the age of information that we

• 11:55Speaker 03

  are in. And I think we've seen evidence that a new cycle has begun. About a decade ago, we started to see that AI, IOT, and robotics were delivering on automation. And that was powerful. It just wasn't transformational. It didn't change how businesses went about operating. Cryptocurrency really was the last piece of that puzzle because it allows us to process, store, and transfer economic value without human intervention. And so as these four technologies converge, we are seeing more and more autonomous operations.

• 12:41Speaker 03

  I can see in the not too distant future, all businesses building autonomous operations, simply because You know, those businesses that don't have autonomous operations simply won't be able to compete because autonomy really is the ultimate competitive advantage. And so all of these technologies are converging with blockchain and with crypto assets. And that new long wave cycle, I believe, is the age of autonomy. That's what I call it. So.

• 13:14Speaker 04

  Yeah, and we're, you know, that autonomy is already taking place as a social construct as a result of the COVID pandemic. You know, we've all left our office towers and we're all working in remote sites and yet coming together, you know, through the genius of the internet, through the force of the internet. But socially, we're all accustomed to this decentralization because it's happening in our own lives.

• 13:41Speaker 03

  Yeah, there's also, you know, one more thing is the autonomy and being autonomous is one piece of a longer trend. I think it was Buckminster Fuller who had this great line about ephemeralization. You know, it's the process of doing more and more with less and less until eventually you can do everything with nothing. And really autonomy is just one of cycle, one phase within that much longer cycle. And we're seeing evidence of that. Those that could adapt, be more ephemeral during the pandemic, survived. Those that couldn't, didn't as much.

• 14:23Anthony Pompliano?

  Yeah. And Chris, maybe we can move to you to talk a little bit about kind of the improvement to the regulatory environment in light of that historical context and these kind of long wave cycles. I've had lawyers come on before, specifically a gentleman named Dave Rodman, who's focused a lot on decentralization. And so, you know, if you kind of really highlight a specific kind of area where technology appears to be way ahead of the law would be something like these DAOs, right, the decentralized autonomous organization. And so for something as simple as, hey, if you want to create a DAO, there is no legal protection. Equivalent to an LLC. And so maybe there should be or there shouldn't be. And so if you kind of take that as a micro example,

• 15:07Anthony Pompliano?

  but you can look out at the macro and really see that there is a kind of difference or there is some sort of divergence between where the technology is and where the law is. How do we think through improving the regulatory environment? And what can regulators do today to kind of position themselves to be ready, but also not to get ahead of themselves and really force people to innovate towards regulation?

• 15:31Speaker 04

  So the regulatory phase that has taken place the last four or five years up to the present and continuing in the present is one of very sort of ad hoc,

• 15:50Speaker 04

  idiosyncratic response. It has really been driven by the particular approach of the leadership of the different agencies and their openness or resistance to this innovation that has driven their agency response without an overall game plan across agencies. You know, my experience in both the Obama and Trump administrations is that my agency, the CFTC, took on these issues pretty much on its own with information and transparency to our sister agencies in the federal government,

• 16:34Speaker 04

  but without any sense of coordination or overall game plan. And that continued right, I think, through the end of the Trump administration. And certainly what's going on at the state level as well. Between state and federal, there isn't a lot of coordination. It is really more idiosyncratic. Now, in the new incoming administration, there are some key appointments of people, Gary Gensler at the SEC, potentially Michael Barr at OCC, potentially Chris Brummer at the CFTC, of individuals who Who in their outside of government have really taken the time to drill down and understand crypto

• 17:16Speaker 04

  and the ecosystem in which it operates and the trends that are at play. And I think it brings the potential for a more coordinated approach. And certainly Gary Gensler, at his prior time during the Obama administration, had a large hand in crafting Dodd-Frank, but then implementing it at the CFTC. So I think the prospect for a more coordinated, comprehensive approach from the federal government to bringing regulation to the space is, is, is, the potential is there. But the current environment is still one of rather ad hoc. And I haven't heard anything from the Biden administration suggesting yet a comprehensive approach to this. There are certainly calls for it in Congress.

• 18:00Speaker 04

  There's a number of key committee leaders who, who recognize the need for this. But whether they will be able to advance legislation, whether the incoming administration will, will embrace that remains to be seen. So right now, in this phase, in the second decade of the, of the 21st century and the, the approach remains rather ad hoc. And so the choices for agency leadership are vitally important as to whether they are, you know, to use the old crossing the chasm analogy of early adopters, late adopters. You know, the earlier adopters can provide leadership, the late adopters can provide resistance.

• 18:42Speaker 04

  And it remains to be seen who, remains to be seen who Congress confirms for these positions and what leadership role the Biden administration may choose to take, if at all.

• 18:53Speaker 03

  Yeah. And even though, go ahead, sorry.

• 18:55Speaker 04

  No, go ahead, Jake.

• 18:57Speaker 03

  Oh, it's just that even though it was idiosyncratic, thank God we had some early adopters in those agencies, like Chris as crypto dad and Hester Purse at the SEC as crypto mom, to be, to see the vision and, and be those early adopters. Cause they really laid the groundwork for what's possible today. I just wanted to.

• 19:17Speaker 04

  Thank you, Jake. And we, and we did. And you know, and we we we advocated for that early adoption approach and made our points. And yet, other agencies, you know, may not have taken or followed our lead. Some of my fine colleagues, when I served as chairman, said, fine, we're we're fine with you allowing Bitcoin futures to go forward, but we're not going to do the same thing at our agency. We just don't have the comfort level with it. And so, you know, that that idiosyncratic approach resulted in a rather uneven and for for the ecosystem, a rather uncertain environment to operate in. You know, as someone who ran a business and took a business public,

• 20:03Speaker 04

  you know, the uncertainty is very, very, it's very hard to innovate business practices, customer services, new products in an uncertain regulatory environment. And that's what we have today. And during my time at the CFTC, we, within our own jurisdiction, we provide, we tried to provide more certainty. But until there's an overall federal embrace, and you know, we did have that in the first phase of the Internet, you know, Congress under Republican leadership, the White House under Democratic leadership came together and adopted a policy called do no harm for the very first phase of the Internet, which resulted in amazing American leadership in that first phase of the Internet in the 1990s and beyond. We just don't have that commonality of purpose today.

• 20:48Speaker 04

  And as a result, while America is certainly in the private sector doing some amazing innovation, United States just is not having that that overall prominence in this innovation that we had last time around. And maybe, you know, for for a global environment, it's good that development is taking place everywhere. But I would like to see the United States show more consistent leadership, provide a more comprehensive regulatory environment that's easier to navigate for innovators.

• 21:17Anthony Pompliano?

  Jake, if we kind of zoom out a little bit and we take the innovative forward-thinking approach that Chris is outlining here from a regulatory and legal standpoint, what does the future look like, right? I know that you've got some pretty aggressive, yet pretty rational thoughts in terms of where this is going. And so maybe let's look forward 20, 25 years. What does the world look like and how do you see it being different than it is today?

• 21:43Speaker 03

  Yeah, definitely. Well, I want to talk a little bit about what we have today and why. You know, we're seeing in the news with Michael Saylor buying Bitcoin or with Elon Musk putting significant, you know, corporate treasury management allocation, like, you know, one and a half billion dollars to Bitcoin. Why? Why are these investors coming to the mat and putting money in there? And I think ultimately, we're all seeing what's going on with US dollars and printing in bank reserves and a little bit unsure and uncertain about what that type of future will lead to.

• 22:23Speaker 03

  And so we're seeing a lot of headlines about sound money policy and being able to adopt into sound money policy by, you know, by the investment into Bitcoin. Kind of that wave is just starting with East Coast finance getting their feet wet with Bitcoin. West Coast tech in Asia is really focused on DeFi or decentralized finance. The purpose of that is obviously to create a decentralized approach in building financial services like the traditional financial system. And the killer app of that is yield, right? We're not seeing much yield in traditional finance.

• 23:07Speaker 03

  And so that's what's so appealing about decentralized finance. Those all are still financial capital. You know, this first decade or two, we're still talking about financial capital. One thing I want to bring into the picture is the idea of production capital. You can think of production capital like in the agrarian age would be farms and livestock or in the industrial age, factories and raw material or the age of information, intellectual property. And all of these rights really are the things that accrue value. In the age of autonomy, we're going to have new production capital,

• 23:50Speaker 03

  DAOs and DAX and autonomous protocols and several crypto primitives that are going to accrue value. I can easily see in the future that an autonomous protocol as production capital will accrue and be more valuable than any factory in the future ever. And so what is important is to think about both production capital and financial capital and how that's going to affect and transform the world. And be mindful of that as we look to innovate and then regulate.

• 24:27Speaker 04

  You know, Pop, what's so interesting, I think, right now, building on what Jake just said is it's not surprising that a time of enormous expansionary monetary policy that investors are looking to hedge their exposure to the dollar into a stable, non-expansionary instrument. It's happened every time, and most often they've gone to silver and gold. But what is amazing is that this is the first time, I think, in human history where the hedge is in a decentralized digital asset. And that's what is so, I think, remarkable is that

• 25:10Speaker 04

  the digitization of the economy has now provided the first sort of large-scale investment opportunity away from expansionary monetary policy into a new asset class that didn't exist before, a digital asset class, Bitcoin.

• 25:28Anthony Pompliano?

  And so when you guys think through kind of how this is evolving today, I want to bring it back to the kind of, you know, existing moment or right now. How do you look at various, you know, kind of efforts? And Chris, you've been very involved in, let's take like the digital dollar initiative. Maybe you can talk a little bit just about like, why choose that route to pursue as a way to kind of push the regulatory conversation? And then after you get done with that, Jake, maybe you can talk a little bit from a technology standpoint, how innovators are saying, look, we may not be able to create the laws or we may not be able to create the regulations, but here are some projects that people are doing to really push the pace of innovation

• 26:12Anthony Pompliano?

  and hopefully pull regulators in the right direction.

• 26:14Speaker 04

  So Pope, I mentioned earlier that, you know, regulation naturally and should naturally follow innovation and that our regulatory system is fairly old and in some places antiquated, certainly was built for an analog human world, not a digital automated world, and has to catch up. But there's another factor as well, is that, I don't know why, and I think it has something to do with some degree of, sort of, maybe cultural immaturity or something, but we've been pretty neglectful in the United States and in the West of our overall infrastructure, whether it's our physical infrastructure, our bridges and our tunnels,

• 26:54Speaker 04

  our airports, our railroads, which were once state of the art in the mid 20th centuries, are pretty antiquated in the 21st century, and we've been fairly relaxed about it for some reason. We keep talking about infrastructure improvements in Congress and elsewhere, but we haven't done much to update it. Well, the same is true a lot about our financial market infrastructure, you know, systems for payment and settlement that were once state of the art in the last century, you know, on a global relative basis are pretty antiquated and obsolete in the 21st century. And again, we haven't taken that seriously enough. And so, nothing is more central to financial market infrastructure than currency

• 27:35Speaker 04

  itself. You can consider it like the rails for a railroad. A currency, a national currency is what everything in the economy is built on. Here we are moving forward into a digital economy, and yet our currency is still an analog instrument, and we're not taking seriously the challenge to that instrument. Money has always competed in global markets. Once upon a time during the European exploration of the east coast of the western hemisphere, there were many European currencies in competition with one another. It was British pounds and French francs and Dutch guilders. But the currency that was in most demand was the dollar.

• 28:20Speaker 04

  But it wasn't the US dollar, it was the Spanish dollar. And the reason why the Spanish dollar was the currency to have was because it had technological superiority over the others. It was minted with new world silver, which was more consistently pure than old world silver, meaning it needed less alloy, making it lighter, but also more consistently pure. But it was minted in a way that can be broken up into eight pieces, known as pieces of eight, making it fractionable, requiring it more easy to use in commerce. So technological advantages of one currency over another are reasons why they get preferred in global commerce. Now, we assume the dollar, it's the world's reserve currency. It will be, you know, that way forever.

• 29:04Speaker 04

  But why should we assume that? China is rolling out a digital yuan that's going to be fractionable, that is going to be digital, that is going to be able to be used in peer-to-peer transactions. It's going to have technological superiority to analog instruments. We need to take seriously the modernization of the dollar for a digital future in the same way we need to take seriously the need to update our railroads, update our airports, update all of our physical infrastructure. We need to update our economic infrastructure as well. And nothing is more core to an economy than the currency upon which it's built. We need to digitize the dollar for a digital future. And I can go on and on and talk about

• 29:47Speaker 04

  the need to be able to make a programmable dollar so we can attach smart contracts to it so that we can use it in peer-to-peer transactions. So we can drive greater financial inclusion by a young society that's very accustomed using mobile devices, but less comfortable with walking into banks. So there's a lot of reasons to modernize the dollar. But at the end of the day, it's just that. It comes down to, do we have the courage to modernize our financial infrastructure? We've lacked the courage to modernize our physical infrastructure. It's time we took a more mature attitude. In a global competitive economy, we can't take anything for granted. We need to modernize our economy. We need to monetize our monetary system and we need to monetize our money.

• 30:32Anthony Pompliano?

  Jake, maybe talk a little bit about how you see the innovation playing out. So Chris talked a lot about kind of the global competition, if you will, right? Basically that there's different regulators in different geographic regions and they're all going to take different approaches, but the United States, the hope is that we can continue to be the leader on that global stage. How do you see this playing out from an innovation standpoint?

• 30:54Speaker 03

  Yeah, well, Pom, as you know, good innovators are either solving a problem or meeting a need. And really Bitcoin is solving a problem and meeting a need, right? We have, we don't have a real store of value right now. Bitcoin is solving that. We really don't have yield because we're manipulating, you know, the price of money. Decentralized finance allows to build and generate yield. What's really interesting about building a decentralized financial system on sound money principles is that you need collateral to initiate loans.

• 31:36Speaker 03

  And so one thing I want people to get is, yes, Bitcoin is, you know, digital gold and an inflation hedge or a hedge against monetary expansion, but it also is a really pristine, probably the most pristine, you know, reserve asset. Bitcoin and Ether can be used as reserve assets to really be the foundation of this new decentralized financial system. Any new financial system starts with being able to do collateralized loans. That's the first thing in capitalism that you need to be able to do. And we're already seeing that now in DeFi.

• 32:21Speaker 03

  Innovators are building insurance companies and exchanges and derivative projects.

• 32:28Speaker 03

  Just all kinds of innovation that you're seeing so that people can take advantage and use crypto assets in novel ways. Innovation will continue into the business operations, as I was talking about. Businesses will be able to be more and more competitive the more and more they become autonomous or build autonomous operations. I mean, you can think about if, you know, when Uber has autonomous cars, you know, how much more capable they're going to be to meet the needs of their market. They're going to be more

• 33:10Speaker 03

  competitive. That's going to continue, and the innovation cycle is going to continue. It really is competition that is the dispersment and debt and distribution mechanism of that long wave technological cycle. And so competition is going to drive out this new technology around the world. And so the focus really is on innovation, meeting a need, solving a problem.

• 33:37Speaker 04

  You know, and Pomp, when I talked about the importance of modernizing the dollar, I don't propose to do that exclusive or an exclusion to the development of private stable coins, private units of value, or even to the existing account-based system. You know, whenever you roll out a new technology, you leave the old technology in place, if nothing else, for redundancy purposes, but also because it serves well. What we view is choice in the marketplace is the best way to advance the future. And our view of a digital dollar is to, it's about modernizing the dollar itself without actually replacing elements that will continue to serve for some time to come.

• 34:16Anthony Pompliano?

  When you guys think about kind of the single most important regulation that we should focus on, whether it's in the future or it's today, is there one thing that sticks out head and shoulders above everything else as, hey, this is the thing that everyone should be aware of, this is the thing that everyone should be paying attention to? Or is it just a more of a kind of diverse bag of so many different pieces of regulation that we should be paying attention to?

• 34:42Speaker 04

  So a lot of the overall approach and language of regulation that we've done in the United States is based upon a brick-and-mortar mindset.

• 34:56Speaker 04

  And tends to regulate entities as opposed to activities. You know, traditionally, when when regulation comes to an ecosystem, it could be finance, it could be healthcare, it could be any other ecosystem. Regulators traditionally look at the ecosystem and say, okay, where are the intermediaries? Where are the key collection points? Once we identify them, we're going to regulate them, we're going to license them, we're going to co-opt them to a certain degree and give them responsibilities for data collection, for regulatory purposes, reporting obligations, et cetera. Regulation traditionally identifies the brick and mortar intermediaries and subjects

• 35:41Speaker 04

  them to licensure. It's an entity-based approach. But as we go to a more decentralized model, that approach really falls down and becomes incapable of bringing a sensible regulatory infrastructure framework to bear. And what we need to do is is is is change our mindset from a brick and mortar mindset, an entity-based mindset, and start thinking about activities. And how do we bring the right public policy to bear on activities in a decentralized world? And I think that's going to be the biggest challenge for Congress and regulatory agencies.

• 36:22Speaker 04

  If we're going to bring a sensible framework to bear on this new digitization of finance, we're going to need to move beyond an entity-based approach and look at an activities-based approach, go beyond a a regulation of centralizers toward a overall approach to a decentralized environment. I think it's going to take a sea change in thinking, but if we get that right, it could be enormously powerfully boost forward for this wave of innovation.

• 36:53Anthony Pompliano?

  My, my, oh, go ahead.

• 36:55Speaker 03

  Sorry.

• 36:56Anthony Pompliano?

  No, I was gonna ask you specifically, go ahead.

• 36:59Speaker 03

  Okay, the, the structure of my concept are, is really exactly like Chris's, just the different dimensions. So, we talk about digital assets or crypto assets as, as a, a set of one thing, but, but really, we have crypto asset classes within that, and we really start, we need to start, um, interacting and operating with them as such. Governance tokens, uh, cryptocurrencies, um, different, uh, classes of these digital assets. They have different risks, they have different people using them, they have different, uh, capabilities, some accrue values, some

• 37:39Speaker 03

  generate cash flows. So, we really need to think, uh, broader than just the digital, digital assets as one class and look at crypto asset classes. Um, there's amazing things happening with governance tokens, where you can think that the, the blockchain is generating value. Well, if the blockchain's generating value, the governance of rights, the governance rights of that blockchain are also accruing value. The ability to be able to vote, we're going into a world that we're gonna participate more with our assets, right? We're gonna be able to vote, we're gonna be able to change, we're gonna upgrade, and we're gonna be in more communities that are aligned on objectives, and we're gonna be able to coalesce as, as,

• 38:23Speaker 03

  uh, groups of people within DAOs, decentralized, you know, autonomous organizations and corporations. Um, and so, uh, I think we really need to look at, uh, crypto asset classes. I outline eight or 10 in my book, but how they operate differently, how each of them accrue or create value differently, and I suspect regulation will, uh, will wanna have a distinct approach for each.

• 38:52Anthony Pompliano?

  When you guys think through kind of the way that regulators and innovators can work together, this conversation is fascinating to me because we have somebody who spent a number of years running one of the most important regulatory agencies. We have somebody who spent a bunch of time building and investing on the kind of private sector side. How do you see folks like yourselves working together for the kind of benefit of the industry and really just progress across the global technology landscape?

• 39:24Speaker 04

  You know, Pomp, when I started the CFTC in 2014, after about a year or two there, I became very frustrated because innovators would call me up and say that they had just conducted a visit to the agency and they weren't sure that what they were talking about was really appreciated. And I said, well, who did you meet with? And they said, well, after a couple of phone calls, we eventually got shuffled off to the Office of Chief Economist. And I said, well, what were you doing with the chief economist? And they said, well, it's the only one the agency actually had that could kind of speak our language about

• 40:03Speaker 04

  technology innovation. And that was a very unsettling realization. So within a month of my being named as chairman, I called for the creation of something we eventually named Lab CFTC. And what the purpose of it was to create an office where innovators could go and speak to regulators who spoke their language, understood technology, understood what they were trying to do, and had authority across the agency to then work with them to bring them to the right division or department in the agency where their innovation might come into conflict with some of our regulation, and to have a two-way dialogue, both so that

• 40:47Speaker 04

  the innovators could find a way forward, but so that the agency itself can understand where its old analog rule sets were not actually allowing innovation to take place. And so Lab CFTC became sort of an ombudsman, not just for the innovation community, but also for the regulatory community, to understand what was going on. And since then, Lab CFTC has grown and expanded and really become the leader, the stakeholder within the agency to champion innovation.

• 41:17Speaker 04

  And it's a model that was the first of its kind in the United States, but that other regulatory agencies have since adopted. And I think it's one that I strongly recommend for all regulators. You know, if you think about our agencies as big limestone buildings, our goal was to take a sledgehammer and smash an opening in the wall that says, "Innovators, enter here, and please come on, and you're very welcome to come in and talk to us." And that was, that was really one of the most important steps, I think, we took amongst many at the CFTC to give us a more forward-looking approach to digital innovation.

• 41:56Anthony Pompliano?

  Jake, anything to add to that?

• 41:58Speaker 03

  Yeah, I mean, I think as innovators and leaders in the community, our job is education, whether it's through writing articles and/or books, or really being out there and being a voice. Our job is to communicate what we need, right? We can't just sit back and act as victims. We have to be in action and participate. You know, it's going to take a dialogue, it's going to take partnership and participation. And so I think it's just important for us to be out, to educate, to speak what we need, and for us to work together and think about it as

• 42:37Speaker 03

  partnership. We're all committed to the same types of ideas and values. You know, we want to generate and have a better US and world. And so that happens through dialogue.

• 42:52Anthony Pompliano?

  Got it. Before I finish up, I always ask everyone the same three questions, and these are a little bit fun. And then I want to close out with you guys kind of both highlighting the books that you've either written or are going to write. But the first question is, what's the most important book that you've ever read? You cannot answer with your own. So maybe, Jake, we'll start with you. What's the most important book you've read? And then Chris, we'll go to you.

• 43:14Speaker 03

  I think The Catalyst. I mean, it's a simple book, but yeah, I think Rich Dad, Poor Dad really was the catalyst for me in whatever that was, the late 90s or 2000s. So simple, simple, good ideas about being an entrepreneur. So Rich Dad, Poor Dad.

• 43:32Speaker 04

  Well, thanks for making Jake go first on that and to give me a chance to think about what's probably the most important book. But I think probably any of the books by Neil Ferguson have really influenced my thinking about the importance of currency and the importance of modernization of currency as key to any economic infrastructure, which forms a lot of my thinking about the importance of a US central bank digital currency.

• 43:58Anthony Pompliano?

  The second question is a little bit more personal. It's about sleep routine. It's brought to you by our friends over at Eight Sleep. I've been sleeping on their thermoregulated bed, which basically means they just make it super, super cold and allows you to get a deeper sleep. But this was all after I used to be like a five, six hour sleep person. Now I'm more of like an eight or nine hours. What is both of your sleep routines and how has that changed over the years?

• 44:23Speaker 04

  You know, I do some of my, I do some of my best thinking as I'm laying in bed sometimes at two or three in the morning and find myself running up to my home office to jot down notes or sometimes even write some things. I don't sleep as much as I used to. I don't sleep as soundly as I used to, unfortunately, but I've turned that into an opportunity to collect those thinking. And probably the book manuscript that I'm working on about this challenge of regulation in a digital future, some of the probably the best, at least to me, most satisfied passages I've written between the hours of three and five in the morning.

• 45:00Speaker 03

  I don't get a lot of sleep. I do have a sleep problem. I think the idea of cool is really important. I have had to get a routine to slow the body and mind. It's really for me that the mind will not, just will not shut up, will not stop. So I have a routine. I try to then listen to some music, do some breath work and meditation. And then a friend of mine makes some like from plants medicines that help kind of, you know, dream. And so sleep's so important and I've been just trying to get more of a practice around it so I can get better sleep.

• 45:45Speaker 04

  I will tell you, Pop, that my early morning waking up served me very well as chairman of the CFTC because I'd use the time to check on Asian markets and when I arrived for my 8 a.m. staff meeting, I would also be telling the staff, have you looked at this or look at what's going on here in Japan and others. It helped us actually prepare for what we can expect when the New York markets and the Chicago markets opened up later in the day.

• 46:10Anthony Pompliano?

  I love it. The last question I have, and then we'll talk about the books, is aliens. Are each of you a believer in aliens or not a believer?

• 46:21Speaker 04

  I just think it would be amazing if we're the only life form in the universe. So where they are and what they're doing, I don't know, but there's got to be other life out in space. And I hope I'm alive when we actually come into contact with them someday in the future. I think that would be amazing.

• 46:41Speaker 03

  I absolutely do believe in aliens, for sure.

• 46:47Anthony Pompliano?

  It's just, Jake, your kind of delivery of that is just like, yes, I absolutely believe is incredible. Before I let you guys go, I want each of you to talk about the books that you've either written or you're in the process of writing now and then where people can go find those. Maybe Jake will start with you and then I think Chris, you can take us home.

• 47:08Speaker 03

  Sure. I wrote a book called Crypto Asset Investing in the Age of Autonomy. It's published by Wiley. It came out in December. You can get that at your favorite independent bookstore or on Amazon. And yeah, it's out in the public and ready to read.

• 47:26Speaker 04

  So Pop, I've been working on both a narrative of the experience we had at the CFTC and overseeing the launch of Bitcoin futures and how that really was a pretty close run thing. At some point, we did that despite full-page ads in the Wall Street Journal from some market makers telling us that if Bitcoin futures launched, the world would come to an end and phone calls and pleas from overseas regulators begging us not to validate Bitcoin that they saw the launch of Bitcoin futures would be. And so it was really a sort of a profile in courage, I think, for a number of my colleagues at the agency for that that that launch. And I think that launch is critical, critical now

• 48:07Speaker 04

  for the maturation of this asset class and in the drawing of investment grade players into the space, but also really focusing on where we go from here, that the regulatory framework needs to mature and take a more comprehensive approach. And that we really do need to modernize our core national money, money infrastructure, and that is by creating a digital dollar alongside with our existing infrastructure. So I look forward to getting that book out later this year. And, and I hope it'll be a good read for many people that following this program.

• 48:47Anthony Pompliano?

  Absolutely. You guys are absolutely fantastic. I really enjoyed this conversation. This is an incredibly important topic. Maybe just to finish this up, explain where people can get in touch with either one of you, if it's on social media or somewhere else, if they've got any questions following this conversation.

• 49:02Speaker 04

  Great. I tweet at Giancarlo Markets, Giancarlo M K T S on Twitter, and you can reach me through Wilkie Farren Gallagher at Chris Giancarlo at Wilkie.com. Sorry, J C Giancarlo at Wilkie.com.

• 49:20Speaker 03

  Yes, you can learn more about my book at age of autonomy.com. You can find me on Twitter at Trey Craft Jake. And if you want to know more about my crypto fund, you can go to Trey Craft dot capital.

• 49:33Anthony Pompliano?

  Awesome, guys. Listen, thank you so much. I think people are really going to enjoy this one. I did and will do it again in the future.

• 49:38Speaker 04

  Thanks, Bob.

• 49:39Speaker 03

  Thanks, Mike. It was great.