Pod Insights The Pomp Podcast Perianne Boring, President of the Chamber of Digital Commerce: The Current State of Crypto Regulation About this episode Perianne Boring is the Founder & President of the Chamber of Digital Commerce, the world’s leading blockchain trade association. In this conversation, Perianne and Anthony discuss the current state of crypto regulation, the roles of the SEC, CFTC, & FinCEN, the biggest potential concern in Washington, D. C. around crypto regulation, and what you at home can do to help organizations like the Chamber of Digital Commerce be more effective. ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way. PROOF OF TALENT-----A technical recruiting firm built for the blockchain and cryptocurrency industry. If you're looking to start a career in the blockchain industry, visit proofoftalent.co and get started today! -----If you enjoyed this episode and want to stay updated on everything Bitcoin, blockchain, and crypto. Check out Off The Chain newsletter by visiting offthechain.substack.com and join 35,000+ other investors currently subscribed to my daily investor letter.
Transcript 12,773 words · 2 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Anthony Pompliano? What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off. Perry Ann Boring is the founder and president of the Chamber of Digital Commerce, the world's leading blockchain trade association. In this conversation, we discuss the current state of crypto regulation, the roles of the SEC, CFTC, FinCEN, and others, the biggest potential concerns in Washington DC around crypto regulation, and what you at home can do to help organizations like the Chamber of Digital Commerce be more effective. I really enjoyed this conversation, and I hope you do as well. But before we get into the episode, I want to quickly cover the three advertisers for this podcast, made all this possible. The
0:44 Anthony Pompliano? first is the Off the Chain newsletter. I don't just record a podcast. Every morning, I wake up and I write a letter to our investors about Bitcoin, blockchain, and cryptocurrencies. I analyze the news, I give my opinion, and I tell you what you should be reading. If you want to subscribe to read the letter that I send to investors, you can go to offthechain.substack.com and get it in your inbox every single morning. Again, that's offthechain.substack.com. Now, on top of Off the Chain newsletter sponsoring, we've got Proof of Talent, my boy Crypto Bobby. Rob Payone has started a recruiting firm specifically focused on the
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2:05 Anthony Pompliano? These guys are a longtime sponsor of Off the Chain Podcast. They're probably the most under rated company in all of crypto got started in Israel built a massive business they finally came to the US last year and they launched cryptocurrency trading now if you don't just want a regular crypto exchange etor is for you they've got two concepts social trading and copy trading social trading is essentially the ability to have a conversation or a social network around an asset so you can navigate to the Bitcoin page where you can buy and sell Bitcoin and you can see a bunch of people talking about it they're providing charts graphs information predictions etc and then if you find somebody on the platform that you think is a great trader you wish that you could trade like they do then etoro will allow you to click a button that says
2:47 Anthony Pompliano? copy Trader that means that they'll mirror your portfolio to that traders portfolio they buy something you buy they sell something you sell it it allows you to essentially be that trader in an automated fashion all facilitated by etoro so it's pretty cool to see a crypto exchange have both social trading and copy trading all in one location they're now up and running in the United States and they continue to grow at incredible rate I'm really impressed by what they've built and we even invested over at Morgan Creek here's a little known secret etoro is larger than Robin Hood just don't tweet about it or tell anyone because they don't really like that spread around so head on over to etoro.com and sign up for an account again that's etoro.com
3:26 Anthony Pompliano? etoro.com etoro.com etoro.com you can't possibly forget off the chain.substack.com proof of talent.co or etoro.com if I keep saying them you'll always remember all right let's get into this episode with Perry and I hope you guys enjoy it 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
4:10 Anthony Pompliano? All right, guys. Bang, bang. I am here with Perry Anne. We've got a whole bunch of shit to talk about. You probably sit in one of the most interesting seats in the crypto industry because you deal with over 200 different companies and members at the Chamber of Digital Commerce. So thanks so much for coming and doing this.
4:30 Speaker 01 Yeah, thanks for having me. It's been an amazing year, and I think 2020 is going to be remarkable.
4:38 Anthony Pompliano? Can we say it's been an amazing year in 2020? If we're already, we're recording this on like the 6th or 7th of January, or do we have to say last year was an amazing year?
4:47 Speaker 01 I think this year has already been an amazing year. We're in crypto time, remember?
4:51 Anthony Pompliano? All right, fair, fair, fair. Let's start with your background. I think you come from a whole different world than most people in crypto. Just give us kind of an overview and then how you got into Bitcoin, blockchain, cryptocurrencies.
5:04 Speaker 01 Yeah, so my background is in public policy. My biggest passion is monetary policy, how money works and how it's regulated. I got into crypto when I was working on Capitol Hill, so I worked for a member of the Financial Services Committee. I went to DC to really fight for a better economic future for my generation and those that will come after me. I grew up in Florida, and the financial crisis was really devastating to really anybody in Florida in my community. And I was actually studying economics at the University of Florida during the financial crisis.
5:44 Speaker 01 So kind of a historic moment to really dig into what was happening all around me. And I was very frustrated because my professors could not explain what was happening in real time in our economy. And it's actually Ron Paul was running for president, and he was the only person who could make any sense of what was happening.
6:09 Speaker 01 What I learned through that was quite disturbing, just the amount of debt and the deficits and just the lack of transparency and basic ethics in our financial system was quite upsetting. And so at a young age, I just dedicated my career to economic policy and for fighting for something better. So that took me to the White House. I was an intern at the White House.
6:36 Anthony Pompliano? What's that like?
6:37 Speaker 01 That was really surreal. I
6:40 Anthony Pompliano? Which president?
6:41 Speaker 01 President Obama. I was there right after he was brought into office and right I was there during the bailouts. So I was in the National Economic Council when Larry Summers was running that. And part of my job as an intern was tracking all the stimulus funds, which I was adamantly against. So it was, it was interesting to be in the middle of that. But to come from, you know, a very small town in Florida and to say, you know, I want to work on economic policy and I want to fight for something better. And then within, you know, less than a year, find myself in the middle of the White House, you know, in the National Economic Council that's making these decisions had this huge impression
7:25 Speaker 01 on me. And really, what came out of that was that you can do anything you want. You can do anything you set your mind to. And, you know, the first African American president. It was just, you know, it was such an empowering thing for me to get to experience that as someone who didn't come from like a super wealthy family or, you know, a family that was well connected in politics. But to get to have that experience as a young person was just really amazing. So after the White House, went to Capitol Hill, worked for a member of Congress in the House of Representatives and, you know, was there. During Dodd-Frank and advising on all issues impacting economics and financial services. And then I learned about Bitcoin. So I was working on the Jobs Act and one of my friends was like,
8:10 Speaker 01 "Look, if you're excited about crowdfunding, you should really look into this thing called Bitcoin." And, you know,
8:16 Anthony Pompliano? Smart friend.
8:17 Speaker 01 Yeah, yeah. And yeah, I owe them my career at this point. But you know, the idea that there's a currency that's not controlled by a government or a group of people or a corporation, that it's, you know, it's open and it's transparent. That was just an unbelievably fascinating idea to me. So I quickly fell into a rabbit hole. I'm still in that rabbit hole. But what came out of that is, you know, I think this technology is the most important thing I'll see in my entire lifetime. And I really wanted to be a part of this space. So I spent some time really thinking about, "What do I have to offer? How can I help build this community?" And of course, my background is in public policy and
8:58 Anthony Pompliano? What exactly is public policy? Like, everyone hears that word, but if you don't come out of the government, Washington DC, like that whole kind of culture and industry, I don't think people really know. So like, when you think of public policy, like, what is that?
9:12 Speaker 01 Well, the policies overseeing, you know, laws and regulations, but the process on how laws are made, the legislative process, that's an incredibly important thing to understand because you can spend a lot of time running all over Capitol Hill and not get anything done. And, you know, how can you be effective in those roles? You know, working with the agencies, the regulators, and then also the courts affect policy as well. As someone who had worked on Capitol Hill, you know, my job was to meet with all the special interest groups, all the lobbyists, the lawyers, and was lobbied on all sorts of issues involving banking and finance. And you see a lot of very
9:56 Speaker 01 disturbing things, people who have all sorts of terrible motives, things that can be very destructive for the people who are going to be impacted by these laws and regulations. So I really wanted to build something that could, one, stand the test of time, but, two, could not be
10:14 Speaker 01 I manipulated or controlled by a group or an organization or people that may have motives that are not pro the growth of crypto and blockchain.
10:26 Anthony Pompliano? For sure.
10:26 Speaker 01 Um, so that's why we are a nonprofit organization.
10:29 Anthony Pompliano? So how did you come up with the idea for, uh, the chamber?
10:32 Speaker 01 So I, 2013 was the year that I was studying and trying to decide, you know, how, how, how do we want to do this? And how do we want to build it? And I really spent that year studying, um, nonprofit law. I knew I wanted to set up a nonprofit, but what kind of nonprofit? How do you do it?
10:50 Speaker 01 And that was also kind of the, the year of Bitcoin's first international, uh, coming out party, I guess. So, you know, uh, the first thing was Cypress was going through their bailout, um, in the European Union, and people started buying Bitcoin, um, because it was an uncertain economic environment. And, uh, that was pretty cool. And the price of Bitcoin went way up because it got these international headlines. And it was really the first time that Bitcoin as an alternative currency actually proved to work. Um, so that was pretty cool and exciting, but then there were some not so great things that happened that year. You had Silk Road, which was a massive black eye to the industry.
11:32 Speaker 01 And then of course, Mt. Gox, which, uh, you know, shouldn't have happened, but you know, also a huge PR nightmare for this community. And as someone who was living and working in DC and really, you know, had, you can see how regulators and lawmakers can read a headline. And that's kind of their first impression and their understanding, um, how that can be a problem for us. So in the early days of, of this space, you know, most people in Washington just thought Bitcoin was literally like the currency for drug dealers. Had like no idea these amazing companies were behind this. There, there were companies building this technology for positive things. Um, and that, that is a recipe for disaster.
12:13 Anthony Pompliano? So much to tell about the dollar.
12:19 Speaker 01 Yeah, I'm putting that into perspective. It's certainly can be a fun mental exercise to go through.
12:26 Anthony Pompliano? All right. So you say, hey, look, I want to start a nonprofit. You basically spent 2013 studying all the nonprofit law, trying to figure out what is the right structure? How do you want to do it, etc.? What were kind of the first steps when you got started? You just create the entity and then go out to a bunch of companies and say, hey, do you want to be a part of this? Like, how did it work originally?
12:44 Speaker 01 Yeah. And in those days, we launched in July of 2014. So we're about five and a half years old today. That was a really different era in crypto for those who were around back then. There's not that many who are in the five-year club. But it was, you know, no public companies were at least admitting. We know now there is lots and lots of companies that were investing all sorts of R and D in this space. But, you know, the banks hadn't come out yet. We weren't even using the word blockchain back then. You used Bitcoin with a big B to represent the protocol for those who may be experimenting with other things.
13:23 Speaker 01 But and also that community was very, you know, the early community was very libertarian, kind of, you know, anti-government, anti-regulation. And so then we came out and it's like, yo, we actually think we should be engaging with regulators. So I wasn't quite sure what kind of response we were going to get. And I'll never forget when we announced the chamber, I did it at a conference, a Bitcoin conference in Chicago. And I was like, either these people are going to try to like, kill me or like, maybe they'll think it's cool, but so far, so good. But we launched with about 15 founding members. And it was really those two scandals of Silk Road and Mt. Gox where you had legitimate businesses who said, look, this is not good for our business
14:08 Speaker 01 to have these types of things out there in the news. It is important that we have professionals and experts who can work with lawmakers to help them understand and.
14:19 Speaker 01 Clear up misconceptions that they may have seen or read, but also help guide them in their jobs as policymakers and make sure that the laws really do take into account the unique characteristics of this technology and that the laws are going to foster innovation, not prevent it.
14:34 Anthony Pompliano? Yeah. How much of what you guys do is education versus like, hey, you should create this law, right? So like the more like lobbying type stuff versus let us help you understand how the technology works and like why this is important, et cetera.
14:48 Speaker 01 Yeah. I mean, the first several years of the chamber, it was pretty much all education. And that's still a huge part of what we do and a big part of how we're spending our time is one, being that resource, making sure that we are talking to the right offices or you know, working with, with the, the agencies that have jurisdiction over this space and making sure the people who are in charge of this topic have the right information. So that, that's a huge, continues to be a big part of, of the job, which makes sense to do that through a trade association because it would be incredibly expensive for any one company to, you know, hire a handful of people in DC just to make sure all the relevant people in DC understand this space.
15:28 Anthony Pompliano? Yeah.
15:28 Speaker 01 But if we collectively, if all these companies can come together and share in the chamber's resources, we all get to benefit from that. And it's a much more effective way to educate the policy community.
15:37 Anthony Pompliano? Yeah. I've talked about on the podcast before, I went on my infamous trip to DC.
15:41 Speaker 01 Yeah.
15:41 Anthony Pompliano? I spent two days there and I walked away with my head spinning. I was like, what the hell is this place? Just in the sense of the way that things worked, the various types of people who work at the different organizations, the different kind of legislators, offices, how information gets shared across all of these different people, and then how things get done, right? Kind of by building consensus and really, I think, being patient, which is very different than most technologists or innovators are used to. And so what have you seen as like the positives, right? As you guys have done this work, do you see
16:24 Anthony Pompliano? a lot of these regulators and lawmakers being like, oh, you know what, like I now understand and they're actually changing their perspective? Or do you see them kind of fighting this? Like what's the response today after you guys have been at this for, you know, five years?
16:35 Speaker 01 It's, it's a funny question. And yeah, DC is definitely a complicated organism, but I, each agency has very different personalities.
16:48 Speaker 01 It wasn't that long ago that we did a briefing for the the SEC who, you know, the the industry's best friend at this point, spent a lot of time with the SEC.
16:59 Anthony Pompliano? I got no problem with the SEC. I think they're doing their job, right?
17:02 Speaker 01 They're doing their jobs.
17:03 Anthony Pompliano? All right. I'm cool with the SEC. They they haven't done anything like there's other countries where the regulators have stepped in and been complete, you know, just heavy handed, frankly, done things that have really, really hurt people trying to build, right? So they they've actively worked against it. I think what's happening here is the SEC is kind of saying, look, we're not going to change anything yet, right? Like, we're still trying to understand. And to me, like, that may slow people down, but it's not anti crypto regulations being passed. As far as I understand, you you may think differently of that.
17:37 Speaker 01 Yeah. So just even just the attitudes of of the people there are quite telling in terms of of where they are. And and we, as a resource to to to them, you know, we we we do a lot of education for them, but thought, hey, you should probably be aware of these things that are happening in other places in DC. So from other regulators and and in Congress and things that we're seeing in in the industry that you should be aware of. And we're here to be a resource to you to make sure you you are informed, but also we're forming our opinions on some of these things. So we would also like to understand your thoughts on this. And and and a lot of times, you know, those conversations can get like a lot of pushback.
18:21 Speaker 01 And it's like, hey, we're here to help you. Like, we this is not like, we don't have to do this. Like, we're here to make sure you have the right information and you're fully informed and and help guide you in your thinking in that. And and just just the the just the the attitude, again, is quite telling into where where they are in this space. And then you juxtapose that with that same week, we did a similar briefing for Fensen. Uh, you know, their, their job is to protect the financial system and, and they are, it's a completely different attitude there. You know, you know, we go in, you know, want to educate them. Hey, we, we think you guys made a mistake here, but we want to point this out to you and show you how to correct it. Uh, and they were like so grateful. Thank you for this information. This is super helpful. We really
19:03 Speaker 01 appreciate it. So it's, uh, it's, you kind of never know like where, where, where the pushback's going to come from. But then when you do have a, a group or a rights where agency who, uh, really wants to, to work together and really wants to create that bridge between the, the, the policymaking community and the industry. It's really fulfilling. And when you can do, you know, get meaningful policy done in a way that's going to support this industry, um, it's worth it.
19:30 Anthony Pompliano? So, uh, I'll give a shout out to Cameron and Tyler, uh, over at Gemini. Uh, does crypto need regulation? Does it need rules? Or can this thing hold? Can this whole thing happen without rules and without the regulators, uh, participating?
19:44 Speaker 01 Uh, I mean, that's an interesting philosophical debate. I, I would say, look, the government does exist and they have guns and they can put you in jail. So
19:51 Anthony Pompliano? Those are all facts.
19:52 Speaker 01 So it's better to help shape that process than for it to be shaped around you. This is going to happen. And that's, you know, a big thing we tell our members is, is that there's regulators, law enforcement, Congress, they're, they're looking at this, they're scrutinizing this. They are going to impact the future of your business and this industry. And it's imperative that we are at the table and that we have a say in, in, in the direction that, that, that that's going to look like for the future.
20:16 Anthony Pompliano? I generally think that that makes sense, right? It's like, look, whether you want it or not, it just naturally they're going to do something, right? It's almost like they feel the need to do something, whether that's, uh, do a bunch of work and say, hey, the rules we have currently are good enough, or they come up with new rules, um, et cetera.
20:32 Speaker 01 A lot of it's defense too. A lot of times you have groups trying to change the laws and it's like, wait, no, the laws work. We don't need to change them. Let's Block this from moving forward and there's a lot of things that people never know that we do because we're actually preventing things from happening. So you don't see it, but it's.
20:51 Anthony Pompliano? So this gets into one of my favorite topics and I don't think I've actually ever talked about this publicly, but I'm really interested in the propaganda wars that go on in DC, specifically if you think of Bitcoin and crypto as like a financial technology. There's a lot of big financial services firms, a lot of payment processors, credit card companies, etc. They probably don't want to see this happen. Do you get any kind of sense that like there's definitely the what I call anti-education, right? Or kind of the nefarious education of them pushing a narrative that is hurtful to Bitcoin and crypto in DC? Or have we not got to that level yet where they they're so scared of it or threatened by it that they're starting to kind of do the anti lobbying?
21:36 Speaker 01 It's very possible. It's very, it's very possible. I'll, there are some very disingenuous things that we see.
21:44 Anthony Pompliano? What's the most disingenuous?
21:46 Speaker 01 The one thing that really, really just gets under my skin is these anti-money laundering arguments where you have, you know, the Treasury Secretary Mnuchin gave, you know, a speech from the White House saying, you know, we take, you know, anti-money laundering seriously and terrorist financing seriously and these virtual currencies and Bitcoin, you know, there are issues with, with AML. If that's really what you're concerned about, you should be so excited about Bitcoin because it is a completely transparent, radically transparent system. And if your job is to follow the money, we have actually given you the best tool ever possible to do that. So it really, that type of pushback is, it's just kind
22:31 Speaker 01 of weird. It's like, do you not, did you?
22:33 Anthony Pompliano? But let's break down what he's saying, right? So do they take anti-money laundering and terrorist financing seriously? I actually think that they do, right? Like it's something they talk about, it's something that they definitely want to be on top of and be the best in the world at. I think the question becomes, that's your intention. It's Really, really hard with especially physical cash, right? I think that's where the big issues come in in the US dollar system. If you're using the banking system, as long as the bank is not being nefarious, it's pretty easy to identify money laundering or nefarious activity, right? Where I think the issues show up is the thing like the Don't Bank in, I think it was Estonia or wherever, where they're just laundering money because there's bad employees, right? They're empowering people to do this.
23:16 Anthony Pompliano? What should be, and I think what you're hinting at is like Bitcoin is a transparent, immutable ledger of transactions, like literally here is all the transactions. You don't have to subpoena the bank, you know, and you just get all the transactions. The hard part to me, if I'm sitting in their seat, is if you don't understand how Bitcoin works very well, then you just look at it as, oh, we can't tell what, you know, who's who. But actually, it works the same way, right? There's still going to be fiat on and off ramps. There's still going to be identifiers and etc. And so it becomes this cat and mouse game between criminals and law enforcement. But to your point, I think law enforcement just got a big step up in their abilities because that transparent ledger is out there for anyone to see, right?
24:00 Speaker 01 Yeah, no, I think the AML as a, you know, as a risk for cryptocurrencies is not a legitimate reason to not embrace this technology because we have tools to address that. But yeah, that also requires the, you know, law enforcement to do their jobs and to learn a new technology. And they have, and it's been a boon to law enforcement.
24:19 Anthony Pompliano? Somebody said to me the other day, that was a great example. They said, it's like a car, right? If somebody said, hey, criminals can use a car to get away from bank robberies.
24:27 Speaker 01 They can breathe air. Should we ban the air?
24:30 Anthony Pompliano? Well, and on top of that, they can run somebody over in the crosswalk, right? And then they can use their cars.
24:35 Speaker 01 They use the internet, they use computers. All technologies are going to be abused by bad actors.
24:41 Anthony Pompliano? Of course. And so it doesn't mean that you get rid of it. It's just that you make sure you understand how they're going to use it and you try to use it against them, right, in order to capture them. So that makes sense. All right, let's talk about membership. You guys have, what, 220 members or so, give or take?
24:55 Speaker 01 Over 200 companies. So we are the first blockchain trade association and the largest. About 40% of our members are public companies. We represent a number of banks and financial institutions, JP Morgan, Wells Fargo.
25:12 Anthony Pompliano? JP Morgan's in the blockchain trade association.
25:15 Speaker 01 A member of the Chamber of.
25:17 Anthony Pompliano? Jamie, man, what's going on, dude?
25:20 Speaker 01 And then we also represent a number of technology companies like IBM, Microsoft, Cisco, consultancies like Accenture, KPMG, Deloitte, you know, big companies that have, you know, big practices exploring and investing.
25:37 Anthony Pompliano? Would it be fair to say that the big companies are the blockchain, not Bitcoin crowd?
25:42 Speaker 01 Uh, some of them, not all, some of them. I mean, to their, and these are the people, you know, that we work with, a lot of them are very pro crypto, but there's a lot of hurdles to using and touching crypto in a highly regulated environment. So, you know, one of the reasons why they're members of the chamber is so they can understand how the regulations apply to them and make sure they have the tools that they need to be able to innovate in this space. And then about 60% of our members are crypto companies and private companies and startups. So we represent a number of the crypto exchanges, custody providers, companies innovating with smart contracts that really runs.
26:25 Anthony Pompliano? So I saw, and I don't know if this is something you guys touch on, but I saw an article, I think it was today or yesterday, that was talking about Kraken. So Jesse over at Kraken's been super transparent and very vocal about the regulators are being, I won't use, disruptive is probably too strong of a word, but it's very costly to deal with a lot of the subpoenas and the, you know, probes and things where they're trying to get information.
26:51 Speaker 01 We have to have all these licenses and of course the exchanges have to have licenses on a state by state basis.
26:58 Anthony Pompliano? Yeah.
26:58 Speaker 01 So you're maintaining that.
26:59 Anthony Pompliano? Well, he says that they spent over a million dollars, right, last year.
27:03 Speaker 01 Yeah.
27:04 Anthony Pompliano? The other one is Blockstack. When they went through their filing to do the regulated token offering, I think they said they spent like two or three million bucks, right? I mean, these are like legitimate costs for a business, especially a young business.
27:18 Speaker 01 Yeah.
27:19 Anthony Pompliano? How much of the work you guys are doing is trying to not even change the law or keep the law the same, but just share the information, right? To me, like if you're a regulator and you're sitting there and you're realizing, hey, we're putting a pretty pricey, a pretty high price and a pretty high burden on these companies. I don't know if I necessarily changed my behavior, but it's a good data point to understand, like this is what the company's going through. It's almost kind of like walk, you know, a little bit in their shoes to understand if you're a young entrepreneur, young meaning the company is young. It's hard to build a business if you're spending millions of dollars dealing with regulations and things like that.
27:56 Speaker 01 Yeah, absolutely. Absolutely. I certainly feel for, for small companies who want to innovate in this space, but then are up against massive regulatory hurdles and barriers. You know, a big part of what we're doing at the Chamber is sharing those resources. So, you know, again, it would be incredibly expensive for a startup to hire a team in DC just to understand the regulatory landscape, let alone try to impact it. So if we can come together and share those resources and all have everyone benefit from the resources that we have at the Chamber, the membership will pay for itself 10 times over by just having access to that, that information. Some of the, the, there are a couple of different types of
28:40 Speaker 01 businesses in this space that have higher regulatory costs and the exchanges are absolutely at the top of that list. So if you want to be a crypto exchange today, you one have to register with Fensin at the federal level for your, your anti-money laundering regulatory requirements. And then you have to receive a license in every single state that you have customers in. And that's the one thing Jesse has been very vocal about is the state by state regime is it's costly and all the states are doing it differently. New York being the most different. And of course, he went on a very vocal tangent, calling New York like the crazy ex-girlfriend that won't leave you alone, and decided to just leave New York altogether.
29:25 Speaker 01 And I would argue that you you probably can't be a startup and operate in that space because of how expensive it is. And so there's not, there's not this huge community of crypto exchanges. And that's really how innovation and economies grow is by having lots of different options. So, you know,
29:48 Anthony Pompliano? It's competition.
29:49 Speaker 01 You need competition. That's how, you know, two horses run faster than one on the race. We make each other better by having that. And so these huge barriers to entry are impacting market formation, which is very anti the principles that this country was founded on.
30:08 Anthony Pompliano? Yeah, I want to get into some of the regulatory issues before we start recording. We kind of outlined four of them that I think are really big and important going into 2020 and beyond. And I'll kind of throw them out there. And then you just give me a here's where we are, here's why it's important, and kind of what you guys are doing, or the message that you really want regulators and legislators to hear. The first is one of everyone's favorite topics KYC and AML. We touched on it a little bit, but this one is very broad, I think, because it has application to pretty much every business that's touching any sort of transactions. What are you guys seeing around the KYC AML issues? And kind of what are you trying to accomplish there?
30:51 Speaker 01 A lot of things. So we have an AML task force. There's an incredible amount of activity in the AML space. Just last year, there were 27 bills that were introduced in the US Congress that would all call for a study, a different study, to look at the AML risk of virtual currencies.
31:10 Anthony Pompliano? 27 different bills calling for 27 different studies?
31:15 Speaker 01 Yes.
31:16 Anthony Pompliano? That's a lot of studying.
31:17 Speaker 01 Yeah, so part of what So a part of what we've done for our AML work involves working with Congress, helping coordinate those efforts and also to bring balance to the conversation. So again, yes, there are AML risk and we should understand the risk, but we also need to understand the benefits. So anytime you put together a pro and a con list, you don't just list cons, you always list the pros. So it's amazing how much you have to remind people to do that. But ensuring that Congress has those types of tools and impacting those conversations and then helping steer legislative language that's going to impact AML programs for this space. Over at FinCEN, they issued guidance in May of 2019,
32:02 Speaker 01 saying that the funds transfer and travel rules apply to convertible virtual currencies. And this is something that is going to impact what's called VAS, virtual asset service providers.
32:13 Anthony Pompliano? All right, well, hold on, let's back up for a second. So KYC AML is one component of it. And I think that that's probably the top of mind for most of the legislators and regulators just because it's really easy to wrap your head around, right? It's just, hey, there's money laundering. We want to stop money laundering. Like, this is all bad stuff, right? I think your point is, okay, yes, there is definitely concerns and risks there. We should understand what those are. But virtual currencies, Bitcoin, Libra, you know, central bank digital currencies, whatever, they also provide some benefits. Let's look at this holistically and then make decisions. How do we create rules around the pros and cons?
32:49 Speaker 01 Right, and not only that, so FinCEN was actually the first government organization to issue any guidance around virtual currency in 2013.
32:57 Anthony Pompliano? It's pretty early.
32:58 Speaker 01 And so they actually have provided a great degree of clarity on how these laws impact this space. But Congress is a separate policymaking body and they want to make sure that we're addressing these risks. And part of what we've even done is gone to Congress and say, look, we don't actually need... New laws because Fensen has the jurisdiction they need and it works. And companies for many years have been building their AML compliance programs based on the existing law. So changing them today would be very costly and expensive and disruptive. And by the way, I don't know if that's actually going to help Fensen. So part of that is also making sure that Treasury understands what Congress is wanting to do. And making sure that what they're trying to do is coordinated is actually helpful.
33:41 Anthony Pompliano? Yeah, make sure they're communicating with each other, right? Okay, so that's the AML and KYC world. Then there's this travel rule. Explain like what exactly that is?
33:49 Speaker 01 So the funds travel and the funds transfer rules. Fensen this year came out and said that it applies to convertible virtual currency transactions. So what that essentially what it means is it's requiring identity at both sides of the transaction.
34:06 Anthony Pompliano? Okay, so if I want to transact Bitcoin or any other virtual currency, kind of in air quotes. They're saying that a business needs to know who I am and who you are. If I'm going to transfer you anything. Okay, that would require them to then conduct the KYC or AML at some point.
34:24 Speaker 01 On both sides of the transaction.
34:25 Anthony Pompliano? So they know.
34:27 Speaker 01 Which is not exactly how it works.
34:29 Anthony Pompliano? Okay, why not?
34:31 Speaker 01 Because you don't need identity to send crypto. You just need a public and the private key.
34:38 Anthony Pompliano? Can the public key be the identity?
34:41 Speaker 01 Oh, no, no, they want PII, personal identifiable information.
34:46 Anthony Pompliano? And so there was, ah, man, I'm going to forget who came on. It'll come to me in a second, but they were talking a lot about how we have essentially through things like the Patriot Act and other legislation in the past, we've essentially empowered the banking service to become surveillance. Right? And they are very, very in tune with who you are, what you're doing with your money, who you're transacting with, where you go, what you buy, right?
35:16 Speaker 01 They're very much the first line of defense for law enforcement, absolutely.
35:19 Anthony Pompliano? Absolutely. And so in order for you to retain your privacy, you essentially can't use the financial system, right? Because of these rules and laws. So how do you think about the balance between? Law enforcement needs to be able to get information at certain times, right? And do and do their job, but also at the same time, there are individual rights and privacy as a default, etc., that an individual should enjoy based on what America's been built on. So how do we balance that?
35:54 Speaker 01 It's a very, very delicate balance and it's something we spend a lot of time thinking about. First and foremost, we don't want to regulate the technology. You want to regulate the the applications, you know, companies that are building applications on the technology. We don't want to impact the the growth and the innovation of this technology. But also, we want rules and regulations to take into account the unique characteristics of this technology. So it works. So businesses can grow and be successful. With this particular issue, AML issue, it's very much looks like the the laws that and the rules that have been applied to to banks. And that's what they're used to. So the script of stuff is
36:35 Speaker 01 very different. And and our argument is, is well, the industry should work together with the regulator to create a a rule that reflects how the technology works. And only through that process will we be able to meet the spirit of what you're trying to accomplish. So together, as an industry and and the regulators, being able to to to make sure that it takes into account how this technology works, you'll actually get better rules and regulations and how it's currently written is is concerning.
37:10 Anthony Pompliano? What is the impact if it kind of stays how it is now, right? Like, what is the negative impact to either companies or or the industry?
37:19 Speaker 01 So, well, companies could be out of compliance.
37:25 Anthony Pompliano? So if a company takes a stand, hey, I'm not going to invade the privacy of my users and get this information, they then would be out of compliance and open themselves up to a lot of risk.
37:35 Speaker 01 Enforcement actions.
37:36 Anthony Pompliano? Yeah.
37:36 Speaker 01 Which would destroy the business.
37:38 Anthony Pompliano? Yep. And so it's a pretty precarious position to be put in as a company, right? Invade the privacy of your users or deal with the US government.
37:49 Speaker 01 And it's not just the US government. This is actually a requirement from FATF, which is the internat who sets the standards for AML internationally. So all governments are around the world are having to implement their own version of the funds travel and the funds transfer rules. So this is not actually well talked about in this space. There's a lot of people that don't, that probably don't know that one, these rules have already been issued. And the way that that companies are able to send and receive transactions is going to be fundamentally changed by this. And the industry has been given a year to implement it and we're within that, we're still within that year timeframe. So AML is one of the top issues that we are working on at the Chamber. First and foremost, we want to make sure
38:35 Speaker 01 our members, really all companies in this space have the tools and the resources to be in compliance with these laws because an enforcement action would be incredibly damaging, not only to that business, but it'd be a big black eye to this entire industry. And then work with the regulators to make sure that as we are putting together anti-money laundering protections in the crypto space that we're doing so in a way that is not hindering the innovation, the growth of blockchain networks.
38:59 Anthony Pompliano? Got it. That makes sense. Tokens, there's a whole rabbit hole of this tokens.
39:05 Speaker 01 So much to do.
39:07 Anthony Pompliano? So some of the issues around tokens, first and foremost is just how do you define the tokens, right? And this is, I think, where like the Token Taxonomy Act and some of this stuff comes in. How are you guys thinking about that right now?
39:21 Speaker 01 So in the token space, we have a group called the Token Alliance. It's a working group that we established over two years ago now.
39:31 Anthony Pompliano? Token Alliance?
39:32 Speaker 01 The Token Alliance.
39:33 Anthony Pompliano? Sounds like Power Rangers, like all come together. All right.
39:38 Speaker 01 We have a couple of former regulators who are co-chairs of that. We have Paul Atkins, who's a former SEC Commissioner, and Jim Newsom, who's a former CFTC Chairman. And then we just recently brought Chris Giancarlo. The most recent CFDC chairman on to our advisory board as well, but the Token Alliance was brought together in a moment where we have a lot of regulatory uncertainty. We have over 400 individuals that participate in this group and they've issued a series of guidelines and considerations while we have regulatory uncertainty. So it's our way of self-regulation, it's a step towards self-regulation, and it's the industry coming forward and putting together what they think the considerations should
40:20 Speaker 01 be without having the clarity from the SEC and from regulators. It is quite amazing that several years into this, we still don't have commission and binding guidance from the SEC on how to apply the how we test to digital assets. And you have, essentially, they're picking winners and losers where they have said in public speeches and statements that Bitcoin and ETH are not securities, but basically everything else, like, we're not really, we don't have binding guidance, so that 100% legal clarity. And so for regulated companies to get into this space, they can't take a non-binding
41:03 Speaker 01 speech, it's not going to pass the legal team's checkmarks to be able to do really meaningful stuff in this space. So it's holding back innovation in a big way. The easiest thing would be if the SEC issued actual guidance on this, and they're not going to, at least not under the current leadership. So that's why you now have all these efforts happening in Congress. Someone who worked in Congress, I will tell you, you go to Congress as an absolute last resort. Only about 2% of legislation that's ever introduced will become law. It is a very hard process to get through the legal process, but that's where we are. And it's great that we have a number of members of Congress that are weighing in and that are trying to provide solutions to make sure the industry has the clarity they need in
41:47 Speaker 01 the securities laws and to clarify the jurisdiction of digital assets. That's one part of it, but also other issues around tokens. That we're seeing since Facebook's launch of the the Libra Association. The House Financial Services Committee has made it one of their biggest priorities to oversee that process. And so they've brought in Mark Zuckerberg and David Marcus. They've had a number of hearings. And what came out of that is a couple of pieces of legislation. They introduced the Managed Stable Coins or Securities Act, the an associated listing prohibition bill, and then this wonderful work of art called Keep Big Tech Out of Finance
42:29 Speaker 01 Act. The one we're really focused on is this managed stablecoin bill, which would consider certain types of stablecoins as securities. And we call that a ban because if they are treated as securities, they would not be able to be used as their intended purpose as a payment mechanism. At the Chamber, we have over 11 companies that have issued "stablecoins" and putting that in quotes. So we probably are the largest stablecoin stakeholder in the world because we represent so many of these companies. So
42:58 Anthony Pompliano? Are you putting it in quotes because they're not so stable sometimes?
43:00 Speaker 01 Well, how do we define? No, I'm actually putting it in quote. Well, they, yeah, they're not always stable, even just they can go up and down by a few basis points. But we what is the definite? We've been arguing the definition of a stablecoin and a managed stablecoin. And what exactly does that mean? And which ones are going to be in this bill? And which ones are not within the definitions of this bill? Either way, it's a bad piece of legislation for this ecosystem. And we don't want to see it go forward. But at the very end of the year last year, we got some information that it was moving forward for a markup. And it was going to be added to the calendar. And that means it's actually moving through the legislative process. And it was really the first time in the history of the crypto space that we had a bill that we were against that was moving in such a
43:43 Speaker 01 way and would really destroy certain business models and applications for our space. So we had a lot of fun that the last couple of weeks of the year, we brought a bunch of those companies to DC. We met with these different offices. And ultimately, it got pulled and it didn't go forward for the markup. So we played a role in preventing that from moving forward. But we are expecting to see it on a calendar later this year. But
44:15 Speaker 01 Congress's oversight in response to Facebook is something that needs to be taken incredibly seriously because they do have concerns and I would say these are legitimate concerns. But again, we want to make sure that the industry's voice is taken into consideration to make sure that these laws are helping support innovation and not just banning it for all the wrong reasons because we're afraid of it or because we don't understand it.
44:42 Anthony Pompliano? Yeah. Speaking of kind of innovation and governments, the central bank digital currencies. It seems like there are central bankers around the world and we'll get to one of the most infamous ones in a second, but they saw, oh, this Bitcoin thing, eh, who cares? Like, these random people on the internet have no chance of creating money that would ever threaten our world or our kingdom. Then Mark Zuckerberg, Facebook, and about 30 other companies come out with Libra and then it shook them awake and they said, whoa, whoa, whoa, hold on a second, these people have 2 billion people, they actually have more people than we usually have using our currencies. If they create a digital currency
45:26 Anthony Pompliano? and give it to 2 billion people, that is a massive threat to what we have done as a central bank over, you know, a lot of years. Where are they now and how do you guys think about them creating competing digital currencies at the central bank level, them trying to regulate out competition from private companies, right? Like, there's a bunch of different paths that they could pursue here. How do you guys kind of evaluate the landscape and then what are you guys doing there or what would you like to see be done around these central bank digital currencies?
45:56 Speaker 01 So, according to the Bank of International Settlements, over 70% of central banks that are members of the BIS are Either interested exploring or building central bank digital currency. So that's, that's pretty amazing to think that the most powerful financial institutions in the world are exploring blockchain technology. On one side, that's pretty exciting. On the other side, like, how are they gonna do that? And how is that gonna impact the crypto space? So it's, we're, we're following those trends. And I, I think the one that's probably the most furthest along is China.
46:36 Speaker 01 And the People's Bank of China has been looking at blockchain and central bank digital currency for over five, maybe six years. And they have built a massive platform.
46:52 Speaker 01 You've talked about it on, on this podcast before. But what's really unbelievable is they have filed over 80 patent applications on their central bank digital currency project. It is massive. It is a huge investment. It is a big strategic move for the country as a whole. And I think that's gonna be a very important thing for everyone to understand because that can impact monetary policy and the financial system globally. So it was actually Dovi Wayne, who you've had on here, who wrote an op-ed talking about the, the magnitude of this project. And she mentioned these patents. So I, I sent that article to our patent attorneys, our outside counsel that we use and said, hey, have you looked at these? And they're like, no, we can't find them.
47:34 Speaker 01 And Dovi had to actually show us how to go find them in the system because they were obscured under all of these separate names. But we found them. We found 84. We have translated them into English and we've been studying them over the past couple of months. And we'll be publishing this cache. We'll be making it available. One, so everybody can, can, can learn what, what we've learned. But two, we think it's important that the Fed understands that too. And we think the United-
48:02 Anthony Pompliano? And these are patents in China?
48:04 Speaker 01 That the People's Bank of China for just their central bank digital currency project. So we'll be releasing that in the next couple of weeks. We'll share our findings and our thoughts on it. And making them available in the English language. But one thing that we have been advocating at the Chamber of Digital Commerce, specific to the United States, is having a national action plan for blockchain. We think the United States should be taking this technology incredibly serious, as serious as we've taken other advanced technologies like the Internet and 5G and AI. And we think, you know, whatever countries are at the forefront of this are going to benefit greatly. And we selfishly want the US to benefit from that. But also from a regulatory perspective, these efforts need to be better coordinated.
48:49 Speaker 01 But one of the bigger challenges that we have is you have so many different regulatory agencies with different types of jurisdiction. You know, the SEC, you know, wants, you know, everything to be a security. The CFTC are considering these tokens commodities. You have the IRS that taxes them as property, FENCE and that's regulating them as currency. There's, there's really no holistic view or a lot of reason or sense to, to how the regulatory frameworks are moving forward. So having a coordinated strategy, I think, is going to be incredibly important, especially for small businesses that don't have unlimited resources to figure this out and have teams of people, you know, going to all these different regulatory authorities, to making sure they're in compliance with all these different offices. There should be a central coordinator.
49:34 Speaker 01 And that's a big part of our national action plan for blockchain, but also making sure our government is at the forefront of this technology because it's going to be important for our economy and international security.
49:46 Anthony Pompliano? Should the dollar get digitized?
49:49 Speaker 01 It already is.
49:50 Anthony Pompliano? Is it?
49:51 Speaker 01 Yeah, I mean, what, digital, I mean, there are digital banking services and we use money digitally already. Should the Fed issue a, a dollar on a blockchain? That's something that Chris Giancarlo has called for, AKA Crypto Dad. He's recently joined our Board of Advisors. That's a big passion project for him. And if you talk to him, he thinks it's the most important thing to ensure the United States dollar remains the world reserve currency for another generation. This is a, an issue of our.
50:37 Speaker 01 Our dominance worldwide and by having the Fed issue a central bank digital currency is the way to preserve that over time.
50:44 Anthony Pompliano? I completely agree with them. If you're trying to optimize for the dollar to be the global reserve currency for the foreseeable future, if you do not tokenize it or digitize it on a blockchain, you will, in essence, shoot yourself in the foot.
50:58 Speaker 01 You have to be a technical leader to be a leader in anything else.
51:02 Anthony Pompliano? Yeah. There's this interview from June 2018 with Mr. Augustine Carstens, who's at the Bank of International Settlement. And there's four specific quotes that I want to pull from this interview.
51:18 Speaker 01 It's a gem of a speech. If you have not looked at this speech, it's titled, "My Message to Young People: Stop Trying to Create Money Is Everything You Could Ever Wish and Hope For from a Central Banker."
51:30 Anthony Pompliano? And the reason why I want to pull these four quotes is I think it gives a great understanding and insight into how some of these people think. And so when I say the quote, I just want you to give me your kind of immediate thoughts and reactions. The first is, quote, "It is therefore the duty of central bankers to ensure that purchasing power is maintained. Moreover, there has to be a guarantee that money is able to fulfill the important role in the economic system and that monetary policy can help growth and income distribution."
52:02 Speaker 01 So, ensure purchasing power is maintained. What does that mean? It means inflation is not happening. So your purchasing power is declining every time you print more money, and that's literally what these banks are doing. So if that's really the priority, it's a little counterintuitive.
52:21 Anthony Pompliano? Well, if their duty is to ensure that purchasing power is maintained, they failed.
52:25 Speaker 01 Absolutely.
52:27 Anthony Pompliano? It's one of my favorite things to explain to institutional investors, right? Because they don't think about kind of inflation and monetary supply and all this stuff. I say, "The US dollar has lost value every single year for the last 100 years." Every single year.
52:44 Speaker 01 And it's actually, it's quite, it's a hidden tax and it's quite sad because a lot of people don't understand it. And it, and it is, it's literally robbing people of, of their, their savings and from the people who need it the most. You know, the, the, it's really the poor people, it's the middle class, the lower middle class that are mostly impacted by this. And it's one of the reasons why I got into this space is to fight for those people that we really do deserve something better and we deserve sound money.
53:11 Anthony Pompliano? For sure. I completely agree. And then in terms of income distribution, right? So it says, there has to be a guarantee that money is able to fulfill its important role in the economic system and that monetary policy can help growth and income distribution. Agree, disagree?
53:27 Speaker 01 So the income distribution piece is, is interesting. I, as a free market capitalist, that really does not resonate with my economic principles. And I, I don't, you know, I see that more as a, as a socialist view to economics, which is certainly not one that I, I think represents the values of the United States, which is interesting because he's representing the global central banks. And I'm not sure if that really is the right approach for every single member of the Bank of International Settlements.
54:02 Anthony Pompliano? Well, that, that's a theoretical argument, right? I would just go to the practical argument that says if that is the goal, it obviously hasn't worked again because there's the highest level of income inequality we've ever seen.
54:13 Speaker 01 That's true.
54:14 Anthony Pompliano? And so, yeah, theoretically, they can want income distribution or equal income distribution, but they're not getting it.
54:22 Speaker 01 Yeah, but by printing more money through quantitative easing or, you know, other programs, you, you are distributing income, you're injecting money into the system. They're controlling where those, those injections are going. So it, it is impacting the, the financial system. It is impacting who has access to that money first, which is not really the people who need it. Which is where the kind of funny thing with, you know, Ben Bernanke as the helicopter money, just jumping money out of helicopters.
54:51 Speaker 01 I'll steal a quote from somebody. I can't remember who said it, but the original airdrop. I think it was Don Wilson that said that, which is kind of hilarious. But yeah, it's the Fed does have, and central banks have an incredible power in terms of who has access to that money first. And if we're really trying to empower the economy, you know, how do you effectively do that? And we can certainly spend a lot of time criticizing these programs.
55:17 Anthony Pompliano? Second quote from Mr. Carson's, "I am concerned by the pace of technological progress. In principle, it's a positive thing, but when innovation hurtles ahead, it can be destructive for workers in particular. The challenge lies in using innovation to our advantage while containing the damage it causes. Here I'm thinking, for example, of the impact of information technology in finance, fintech, on say, the business models and ultimately the stability of banks and other financial institutions." He's essentially talking about disruption, right? And he's concerned that disruption can occur by applying, quote, "information technology in finance," or this fintech. It's kind of the point of disruption, right?
56:02 Speaker 01 Well, the, it's the whole point of innovate. Why do people innovate? Why does innovate, why does innovation happen? If, if people see a more effective, a better way to do something, they see a problem with the system, you're going to have people who step forward and propose something different to fix those issues. Innovation is how we improve ourselves. So to take such a negative step on innovation is, it really baffles me because you would think that people at the very top of that hierarchy would say, "Yes, please give us all your best ideas. How can we be better? How can we improve?" And they're discouraging that, which is, I think will ultimately not play well for them.
56:45 Anthony Pompliano? Yeah. Well, we'll see. The third quote, quote, "It is important to draw a clear distinction between the underlying technology, such as blockchain and cryptocurrencies per se. The technology may have useful applications, but producing money is not one of them," end quote.
57:02 Speaker 01 So it was Aristotle who first defined the characteristics of money. He said money has to be divisible, portable, divisible, and have intrinsic value. Central banks later redefined what money is to be a unit of account, a means of payment, or a store of value. So there is a lot of debate about what is money, and I think that's one of the most exciting things that's happening on the global stage where people are really starting to question, how does this work? And the more people educate themselves on the monetary system, I think we'll actually get to better outcomes because I do think there's a lot of challenges with these systems.
57:47 Speaker 01 I don't think the system works for everybody, and I do think blockchain technology is going to play a huge role in improving our financial and our monetary system in a very positive way. So I think it's important to talk about what money is. Bitcoin does have challenges in terms of being a method of payment. People aren't really using it as a method of payment. I would argue it's actually the government's fault because we tax it as property, therefore it cannot behave as money. They did the same thing with gold and silver. So, you know, gold and silver was actually what was outlined in the Constitution to be used as money. And because they tax it as property and as a commodity, you have a capital gains or
58:29 Speaker 01 a loss on every single transaction, which just makes it completely unfeasible for people to use in their daily lives. So I think the government has actually driven that behavior. And it's possible virtual currencies and cryptocurrencies would potentially operate as a method of payment if we had the proper rules and regulations that allowed for that use case.
58:51 Anthony Pompliano? It's funny how Aristotle was way ahead of his time.
58:54 Speaker 01 Yeah.
58:56 Anthony Pompliano? For sure.
58:56 Speaker 01 And he was right. And for thousands and thousands of years, civilizations have flocked.
59:02 Speaker 01 To gold and silver, mostly gold. And even just seventy five years ago, the United States was on a gold standard. That was, you know, the Bretton Woods agreement. You think about it, at Bretton Woods, the world came together to redefine how the global monetary system would work. They said gold was going to be priced at thirty five dollars an ounce. The US dollar would be the world reserve currency. All other nations would peg their money to the dollar and they could legally demand gold from the US Treasury. That was seventy five years ago. That was not that long ago. And it was just a couple of years after that, it was impossible to maintain the peg. The entire system completely broke down by the eighties and we all moved to these floating exchange rates to what fiat currency is today.
59:45 Speaker 01 So, and it is really quite amazing just to think about how much the monetary system has evolved in just a few short years. And now with all these advanced technologies, whether it's AI or blockchain, the internet, think about how much more money is going to evolve in the future. So I think innovation is exciting and I think it's really important that central banks, including the Federal Reserve, really understand this because they do play such a huge role in the way our economies function. And we want to see, we don't want to see massive disruptions. That's going to be bad for the people. And in order to stay ahead of that, you have to be ahead of these technological advancements. And blockchain being probably the most meaningful.
1:00:29 Anthony Pompliano? Most important, absolutely. The last quote, quote, "Central banks are trusted and that trust is something they have built up over decades and for which there is no substitute right now. Trust is a valuable commodity. It is easily destroyed, but winning it takes time. Money has become established. Young people should use their many talents and skills for innovation, not reinventing money. It's a fallacy to think money can be created from nothing."
1:00:55 Speaker 01 Literally like a spit take right there.
1:00:59 Speaker 01 Um, so it's a fallacy to think money can be created from nothing. I mean, that's literally what central banks do. So I'm just, I'm even just confused as to what he's trying to prove here, but to tell young people that they should not use their many talents to innovate with money is just, I
1:01:22 Anthony Pompliano? Well, so let's take this step by step, right? So first of all, he says central banks are trusted, which I would argue that's not even true in some cases.
1:01:29 Speaker 01 Well, then the very next, the very next part of the speech, he says, well, there was this well, well-respected book that talks about all the secrecy at the Bank of International Settlements. And of course, you know, there, there are a lot of the activities at central banks are not known to the public. And, and so the interest, you know, what's so cool about, about blockchain is you don't have to trust it. It's just math. It's algorithms, the software just works. Like you can, you can audit it. You can verify it for yourself. You don't need trust. So even this idea of trust is, is completely being radically transformed through innovation. And I think these roles of these central banks and the, the economic powers that be is, is
1:02:13 Speaker 01 going to change a lot. And, and what the idea of trust is and how it works, we're really pushing that as a community onto what those limits are.
1:02:21 Anthony Pompliano? For sure. My favorite part is when he says, young people should use their many talents and skills for innovation, not reinventing money. And the two things I think about is one, that would insinuate that he believes Satoshi Nakamoto is a young person, which maybe they're older than him, right? Who, who knows? And then two is, I cannot think of a bigger innovation than reinventing money if it was an improvement on that money.
1:02:46 Speaker 01 Yeah.
1:02:47 Anthony Pompliano? Right? And so
1:02:49 Speaker 01 Yeah. Can you imagine if Tim Cook? Just said, "Hey, you know, young people, we figured out personal computers. Personal computers are established. There is no need to innovate. We got it." Like, we would still be stuck using...
1:03:02 Anthony Pompliano? Yeah, it's crazy. It's crazy.
1:03:04 Speaker 01 Like, this logic, you would not use this in anything, in any other industry.
1:03:10 Anthony Pompliano? I personally want to go back to the Apple computers that had the clear...
1:03:15 Speaker 01 The colorful designs on them.
1:03:16 Anthony Pompliano? On the back. We had one of those growing up.
1:03:18 Speaker 01 Put one of those in your backpack.
1:03:20 Anthony Pompliano? And I remember just being like, "What the hell is this thing?" Awesome. Where can people find out more about the Chamber? And kind of what's your pitch to them in terms of why it's important to support you guys and become a member?
1:03:33 Speaker 01 So, if you want to be a part of growing this ecosystem, regulation and policy is one of the biggest barriers to the adoption of digital assets and blockchain technology. And the Chamber of Digital Commerce is a dedicated organization to provide professional resources to impact positive public policy, a smart public policy for this space. As a nonprofit, we do not sell any products or services. Companies are invited to be a member of the organization. As a member, you have access to the resources and the benefits that we provide, but you're also contributing to the important policy work of the organization. You can check us out at digitalchamber.org.
1:04:17 Speaker 01 And we also host an annual conference. So, we'll be holding the DC Blockchain Summit, the fifth annual summit, on March 11th and 12th at Georgetown University. So, most of our members come in from all over the world to be a part of that conversation. We have a really nice academic setting to have conversations about some of the most important issues impacting this space. We'll have different regulators, members of Congress, who'll come out and participate in the conversations. And it's a great opportunity to learn, but to also be a part of the network at the Chamber of Digital Commerce.
1:04:49 Anthony Pompliano? Pretty compelling. I got three questions for you before I let you go. What's the most important book you've ever read?
1:04:57 Speaker 01 So the Libertarian Bible Atlas Shrugged would be my, one of my favorites.
1:05:03 Anthony Pompliano? Why?
1:05:04 Speaker 01 It, it really just kind of takes the, the, the ideas of, of capitalism and puts it into, to everyday life and it really challenged a thought process back then and it, it's turned, it's, it's played a huge role in impacting the way businesses and policymakers think about free economics.
1:05:30 Anthony Pompliano? Aliens, believer, non-believer?
1:05:32 Speaker 01 Yeah, absolutely. So, so when I worked on Capitol Hill, I had the opportunity to meet a lot of astronauts.
1:05:38 Anthony Pompliano? I think it's an alien.
1:05:40 Speaker 01 I've met a lot of aliens.
1:05:41 Anthony Pompliano? Joe, you think that's funny? You guys can't see him, but he's laughing his ass off in the corner.
1:05:46 Speaker 01 I've met a lot of weird people working in government.
1:05:50 Speaker 01 Yeah, but every time I've had the opportunity to meet anyone who's actually been to space, I always, I actually always ask them that question and every single one of them have always said yes.
1:05:59 Anthony Pompliano? The astronauts always say yes?
1:06:00 Speaker 01 Yeah.
1:06:01 Anthony Pompliano? Yeah. So my latest research in the alien quest is, there are, let me, if I remember this correctly, there are 10,000 planets for every one grain of sand.
1:06:15 Speaker 01 Oh my gosh, that's unbelievable.
1:06:17 Anthony Pompliano? That's the latest estimate.
1:06:19 Speaker 01 So cool.
1:06:19 Anthony Pompliano? 10,000 planets for every grain of sand. And I think it's like 10 to the 20 second power or something, which is way above my head in the mathematics world. But when you think about that, like they gotta exist.
1:06:31 Speaker 01 Absolutely.
1:06:32 Anthony Pompliano? Sorry. We're gonna get a, we're gonna get a meter in here and then we're gonna put it on the podcast, on the video, as to how funny Joe thinks things are. We're just gonna have like a, like a dial that goes up and down. Cause he's just sitting over there in the corner just dying laughing. All right. You could ask me one question to end this thing. What, what do you got for me?
1:06:49 Speaker 01 So my question for you, I'm the Bitcoin halving. What, what are you expecting to see and how are you preparing for that?
1:07:01 Anthony Pompliano? Well, I always answer this question now in a very matter of fact way. I'm expecting that the monetary supply of Bitcoin is going to go in half.
1:07:10 Speaker 01 Yeah, yes, we know that.
1:07:13 Anthony Pompliano? So like, there's a lot of people who, well, there's a lot of people who like, forget like, that's an important thing, right? Like, that has to happen. If for some reason, there was a bug or something, like, if that does not happen, there are major red flags. But my expectation is that the code is going to execute how it should execute, and there will be having in the supply. Now, the question that you're getting at is like, what are the ramifications of that happening? And for me, I don't think there's gonna be a lot of change, right? In terms of what's happened in the past. And mainly, it's because supply and demand economics haven't changed either. And so, if you think about how supply and demand works, is if you change the incoming supply of an asset, right?
1:07:57 Anthony Pompliano? And all of a sudden, it becomes harder or more expensive to get that asset, and demand stays constant, there should be a gradual rise in price. Now, if you couple that change with incoming supply with a drastic increase in demand at some period of time, then there's a massive increase in price in a very short period of time. I tend to think the latter is more likely than the former. But either way, when you change something so fundamental in a very basic economic principle of supply and demand, like, there is going to be a movement. What I always call out as well, though, is like, there are some things that are different now, right? So there's derivative products that allow people to go short. There's a lot more scrutiny on this thing, etc. And so, it doesn't have to play out exactly,
1:08:42 Anthony Pompliano? but from a framework standpoint or systematic standpoint, supply and demand economics still apply, right? And so, this whole idea of like, is it priced in, is it not priced in? Like, who cares? All I know is that supply and demand economics are valid, and there is no one on the planet that's gonna convince me that if you change the supply of something, whether that is total supply or also incoming supply, that there is not a change in the price. And of course, there is. And so, look, we're gonna go through this in five months. There's gonna be a bunch of debate over the next five months. I'm not gonna participate in any of it. And we'll see about 18 months afterwards. So, gonna end of 2021, we'll see who's right.
1:09:23 Speaker 01 Yeah.
1:09:24 Anthony Pompliano? Right? But to me, it's pretty clear, so we'll see.
1:09:27 Speaker 01 Yeah, it's gonna be a big year.
1:09:28 Anthony Pompliano? What do you think's gonna happen?
1:09:31 Speaker 01 Well, I think on the demand side, we've seen a ton of scrutiny over this space. And you're now seeing, you know, heads of state, heads of central banks, they're actively coming out and saying all sorts of negative things about Bitcoin. So is that going to impact demand? Is that going to change the dynamics of this halving versus the ones that have happened previously?
1:10:00 Speaker 01 You know, I think we'll likely see an increase in price, but the price of Bitcoin is so irrational. Anyone who says they understand the price of Bitcoin, I think is just lying because there's so many things that go into it.
1:10:11 Anthony Pompliano? Can we get a price prediction from the Chamber of Digital Commerce?
1:10:14 Speaker 01 Oh, no, no, we don't do that. Yeah.
1:10:17 Anthony Pompliano? All right, guys, I tried. I asked.
1:10:21 Speaker 01 Stick to policy.
1:10:22 Anthony Pompliano? Remind us of the URL one more time where people can go find you guys.
1:10:25 Speaker 01 Digitalchamber.org.
1:10:27 Anthony Pompliano? All right, where can people find you on the internet, on Twitter, etc.?
1:10:30 Speaker 01 I'm at @periandc on Twitter.
1:10:33 Anthony Pompliano? You threw the DC in there. All right.
1:10:35 Speaker 01 Perian was just taken, so @periandc.
1:10:38 Anthony Pompliano? That's fair. Thank you so much for coming to do this. We'll have to do it again later in the year, kind of as things progress. But I think a lot of people really see, you know, the important work you guys are doing. So just from all of us, thank you so much for doing this last five years. And you guys, you got a lot of support from us and other people in the industry.
1:10:55 Speaker 01 Awesome, thank you.
1:10:57 Anthony Pompliano? Hey, everyone, Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.
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