1 00:00:05,280 --> 00:00:08,160 Welcome back everyone. I am Cass PNC. 2 00:00:08,160 --> 00:00:10,720 I'm joined as usual by my partner in crime, Mr. Bennett 3 00:00:10,720 --> 00:00:11,880 Tomlin. How are you today? 4 00:00:11,880 --> 00:00:13,400 I'm doing well. How are you, Cass? 5 00:00:13,440 --> 00:00:15,720 I'm doing great. We have a special guest today, 6 00:00:15,720 --> 00:00:18,520 Sean Tuffy, regulatory consultant specialist. 7 00:00:18,560 --> 00:00:20,160 How are you, Sean? Doing good. 8 00:00:20,160 --> 00:00:22,200 Thanks for having me. It's awesome to have you on. 9 00:00:22,200 --> 00:00:28,560 We've, I, we've really only done one full episode about the SEC, 10 00:00:28,560 --> 00:00:31,800 the Securities and Exchange Commission, and we more or less 11 00:00:31,800 --> 00:00:34,800 said it, the, the title is provocative. 12 00:00:34,800 --> 00:00:37,400 The title is the talk of the SEC. 13 00:00:37,400 --> 00:00:41,480 All my friends hate the SEC. But in reality, our argument was 14 00:00:41,480 --> 00:00:44,080 that they're caught between a rock and a hard place, that 15 00:00:44,920 --> 00:00:47,560 either they're regulating too much and everyone hates them, or 16 00:00:47,560 --> 00:00:49,520 they're not regulating regulating at all and everyone 17 00:00:49,520 --> 00:00:51,640 hates them. But today we're we're going to 18 00:00:51,640 --> 00:00:57,800 talk about the idea of merging the SEC and the CFTC Commodities 19 00:00:57,800 --> 00:01:00,840 Futures Trading Commission. They were established 20 00:01:00,840 --> 00:01:03,120 significantly later than the SEC. 21 00:01:03,800 --> 00:01:05,600 Can you talk about the difference between the SEC and 22 00:01:05,600 --> 00:01:06,760 the CFTC? Yeah. 23 00:01:06,800 --> 00:01:07,960 Sure. So I think you're right. 24 00:01:07,960 --> 00:01:12,560 They everyone tends to think of most of the financial regulation 25 00:01:12,560 --> 00:01:15,160 in the US happened in the 30s until the early 40s. 26 00:01:15,160 --> 00:01:17,080 So everyone tends to think that's when everything was 27 00:01:17,080 --> 00:01:19,840 created. But the CFTC doesn't come along 28 00:01:19,840 --> 00:01:22,600 into the to the mid, early to mid 70s. 29 00:01:22,600 --> 00:01:27,520 And so the CFTC does separate from the SEC is it it regulates 30 00:01:27,520 --> 00:01:31,240 sort of commodities and Futures Trading, which in its original 31 00:01:31,240 --> 00:01:34,920 origin is all agriculture based. That's sort of really the CFT CS 32 00:01:35,560 --> 00:01:40,040 origin story, whereas the SEC doesn't, you know all securities 33 00:01:40,040 --> 00:01:42,400 markets, secondary markets that we know and love stocks, 34 00:01:42,400 --> 00:01:45,560 exchanges, mutual funds, asset managers and all and all that. 35 00:01:45,560 --> 00:01:48,640 Whereas CTC is was originally much more narrowly defined to 36 00:01:48,640 --> 00:01:52,560 certain commodities. Why to, to start off with the, I 37 00:01:52,560 --> 00:01:54,120 guess maybe a simpleton question here. 38 00:01:54,320 --> 00:02:00,240 Why would it take 40 years later for, for a Regulatory agency to 39 00:02:00,240 --> 00:02:04,880 start looking into, into these markets from the SEC being 40 00:02:04,880 --> 00:02:08,639 established to look to like to regular regulate second 41 00:02:08,759 --> 00:02:12,360 secondary markets and then the CFTC being established 40 years 42 00:02:12,360 --> 00:02:17,320 later to, to, to look at these, you know, more physical based 43 00:02:17,440 --> 00:02:18,680 agriculture markets? Like why? 44 00:02:18,760 --> 00:02:21,080 Why wouldn't the? IT almost is like counter 45 00:02:21,080 --> 00:02:22,920 intuitive. Like why wouldn't the CFTC be 46 00:02:22,920 --> 00:02:25,160 established much earlier than the SEC? 47 00:02:25,200 --> 00:02:26,480 Right. So I guess I'd, so that's a 48 00:02:26,480 --> 00:02:27,880 little misleading on my, my heart. 49 00:02:27,880 --> 00:02:30,240 So there was a Regulatory agency and the CFTC. 50 00:02:30,480 --> 00:02:33,560 So it was the CEA looked after commodities. 51 00:02:33,560 --> 00:02:37,600 And so why the CFTC came in, in the late 60s essentially as the 52 00:02:38,040 --> 00:02:40,880 the original CEA that overlooked commodities. 53 00:02:41,160 --> 00:02:44,000 So the CEA, the ACT and then the Commodities Exchange 54 00:02:44,000 --> 00:02:46,040 Administration. So there's the ACT. 55 00:02:46,040 --> 00:02:50,320 Well, CEA very confusing. So the ACT sort of designated 56 00:02:50,320 --> 00:02:53,280 that the agency overlooked commodities and part of the 57 00:02:53,280 --> 00:02:57,040 thing was that the the only look over what was enumerated in the 58 00:02:57,040 --> 00:02:59,640 text. So every time a new futures, a 59 00:02:59,640 --> 00:03:03,480 commodity came online, they had amend the ACT to add potatoes to 60 00:03:03,480 --> 00:03:06,880 add or in this case not add onions to add any sort of new 61 00:03:07,560 --> 00:03:11,120 commodity to the ACT to allow the CACEA to oversee it. 62 00:03:11,600 --> 00:03:15,840 And so that became tiresome. And then at the same time, as we 63 00:03:15,840 --> 00:03:20,280 move into the 60s, early 70s, financialization as we know in 64 00:03:20,280 --> 00:03:21,800 love it starts to really be born. 65 00:03:22,240 --> 00:03:26,400 And so there's the feeling that futures in general need to be 66 00:03:26,400 --> 00:03:30,720 regulated, not specifically just commodities futures. 67 00:03:30,760 --> 00:03:34,520 And so they decide they being the RSP, the Congress decides we 68 00:03:34,520 --> 00:03:38,600 need to sort of step up our regulation of commodities 69 00:03:38,600 --> 00:03:41,720 Futures Trading because it is now moving beyond, you know, 70 00:03:41,720 --> 00:03:43,560 commodities have been around forever. 71 00:03:43,560 --> 00:03:47,080 They've been traded, you know, for the US since the mid 1800s, 72 00:03:47,240 --> 00:03:49,080 globally traded much longer than that. 73 00:03:49,560 --> 00:03:52,800 But in their original sort of intention, the people trading 74 00:03:52,800 --> 00:03:55,720 the more essentially producers or users because essentially 75 00:03:55,720 --> 00:03:58,720 hedging farmers were trying to hedge their crops, Sherlock in 76 00:03:58,720 --> 00:04:03,000 prices, many, you know, milk bakers were trying to walk in 77 00:04:03,000 --> 00:04:04,640 flour. You know, everyone was it was 78 00:04:04,640 --> 00:04:07,920 essentially a fiscally based real economy hedging tool. 79 00:04:08,240 --> 00:04:11,040 And as you got to financialization, it's not being 80 00:04:11,040 --> 00:04:13,360 that for a lot of people. And it started becoming much 81 00:04:13,360 --> 00:04:16,560 more search trading inspectively orientated. 82 00:04:16,560 --> 00:04:20,680 And so the dealing was that the CEA was not up to the task and 83 00:04:20,680 --> 00:04:24,040 you need to sort of a more robust Regulatory agency with 84 00:04:24,040 --> 00:04:27,520 more strictly with more broadly defined powers. 85 00:04:27,520 --> 00:04:30,920 So one of the things when the CFTC comes in is rather than 86 00:04:30,920 --> 00:04:33,360 Congress having to say, you can, you now need to regulate this. 87 00:04:33,360 --> 00:04:36,120 They can regulate all Futures Trading, which is how we run 88 00:04:36,120 --> 00:04:39,080 into it and fun stuff like the election contracts, right? 89 00:04:39,080 --> 00:04:42,760 So that's on the CFTC claim jurisdiction over election 90 00:04:42,760 --> 00:04:45,040 contracts because those are options and futures. 91 00:04:45,040 --> 00:04:48,160 So that's in their, their broad remit. 92 00:04:49,000 --> 00:04:53,120 We can discuss how that's not how it should be in the later if 93 00:04:53,120 --> 00:04:55,480 we had to chat, but that's how it came to be. 94 00:04:55,480 --> 00:04:59,240 So that's so there was a regular agency. 95 00:04:59,640 --> 00:05:02,000 The decision was that as it became more sort of Wall Street 96 00:05:02,000 --> 00:05:05,320 orientated, but you needed a more robust regulator. 97 00:05:05,320 --> 00:05:09,600 And so in the 70s they moved forward to create the CFTC. 98 00:05:09,600 --> 00:05:14,760 And so that's for the origin now how it's it's fun that there was 99 00:05:14,760 --> 00:05:17,800 a move when it started not have it be on its own. 100 00:05:17,800 --> 00:05:20,880 So if you read Robin Wigglesworth's book Trillions, 101 00:05:21,360 --> 00:05:24,400 the CFTC was originally proposed just to be part of the SEC. 102 00:05:24,400 --> 00:05:27,200 So I think that's a good transition point to kind of get 103 00:05:27,200 --> 00:05:32,520 into how common is it globally historically whatever to kind of 104 00:05:32,960 --> 00:05:36,960 separate out the regulation of like securities product from 105 00:05:36,960 --> 00:05:39,800 these commodities based financial products? 106 00:05:39,800 --> 00:05:42,640 Like, is that typical for other countries? 107 00:05:42,640 --> 00:05:46,320 And like you were talking about, it almost didn't happen here 108 00:05:46,320 --> 00:05:47,200 either. Right. 109 00:05:47,200 --> 00:05:50,120 Yeah. So it's so it's very odd, I 110 00:05:50,120 --> 00:05:51,240 guess it's the best way to put it. 111 00:05:51,240 --> 00:05:53,880 So the US, like this is one of the things you live in the US, 112 00:05:53,880 --> 00:05:56,200 you kind of accept certain you, you live in any country, you 113 00:05:56,200 --> 00:05:58,200 accept the way things are done as normal. 114 00:05:58,200 --> 00:06:01,640 But the US is really an outlier here with the most notable other 115 00:06:01,640 --> 00:06:04,080 exception being, you know, America's neighbors to the 116 00:06:04,080 --> 00:06:07,200 north, Canada, which has an even crazier set up and has no 117 00:06:07,200 --> 00:06:10,480 federal securities oversight and assault on the provincial level. 118 00:06:10,480 --> 00:06:14,400 So that's that's an even more chaotic attempt. 119 00:06:14,400 --> 00:06:18,280 So the US and Canada are the only two sort of regulated 120 00:06:18,280 --> 00:06:21,440 countries globally that don't have a single securities and 121 00:06:21,440 --> 00:06:25,360 market regulator that would have all, you know, futures, stocks, 122 00:06:25,360 --> 00:06:27,600 everything under one regulatory roof. 123 00:06:27,720 --> 00:06:30,080 I bet it, like you said, you know, it almost didn't. 124 00:06:30,200 --> 00:06:31,840 That was almost the root the US went. 125 00:06:31,880 --> 00:06:36,240 And if you read the the book, Rob Riddlesworth's book, the 126 00:06:36,240 --> 00:06:38,680 anecdote is that the SEC is actually was snobby and they 127 00:06:38,680 --> 00:06:41,840 didn't want to be regulating pork futures and pork bellies. 128 00:06:42,120 --> 00:06:44,640 And so they said that stuff is for farmers, not for Wall 129 00:06:44,640 --> 00:06:46,760 Street. We don't want to be regulating 130 00:06:46,760 --> 00:06:48,640 it. And they sort of pushed back 131 00:06:48,640 --> 00:06:51,880 against the idea that should be under the SEC's remit and sort 132 00:06:51,880 --> 00:06:54,400 of pass the send to see dependency becomes what it is 133 00:06:54,400 --> 00:06:57,280 and it's spun out and we are where we are today. 134 00:06:57,400 --> 00:07:02,360 Are there any obvious benefits and drawbacks that arise from 135 00:07:02,360 --> 00:07:06,600 this division? Champions of the division would 136 00:07:06,600 --> 00:07:09,360 argue essentially, if you look at all of America's regulatory 137 00:07:09,360 --> 00:07:10,840 landscape, it's fractured everywhere. 138 00:07:11,360 --> 00:07:15,640 And so there is a belief that having competing regulatory. 139 00:07:15,920 --> 00:07:18,880 I don't believe this, but there is an argument that having 140 00:07:18,880 --> 00:07:23,200 competing regulatory agencies keeps them honest and allows for 141 00:07:23,200 --> 00:07:25,680 competition. I mean, that that's the best I 142 00:07:25,680 --> 00:07:27,640 can do. The other argument is that 143 00:07:27,640 --> 00:07:31,560 commodities are you. Yeah, is a specialized oversight 144 00:07:32,040 --> 00:07:34,240 in our distinct. But that makes less and less 145 00:07:34,240 --> 00:07:37,960 sense as we get to, you know, Dodd Frank putting swaps into 146 00:07:37,960 --> 00:07:40,840 the CFDC's remit and some other things. 147 00:07:40,840 --> 00:07:42,400 So those are the two argue there. 148 00:07:42,520 --> 00:07:45,240 There are really strong arguments for it beyond that's 149 00:07:45,240 --> 00:07:47,600 the way it's always been done. The arguments against it I think 150 00:07:47,600 --> 00:07:49,840 are pretty self-evident. But you know, it's that you 151 00:07:49,840 --> 00:07:54,880 have, you don't have where we are today where new people can 152 00:07:54,880 --> 00:07:59,040 look for crevices between the two agencies and try to sort of 153 00:07:59,040 --> 00:08:01,160 pick them off. And you don't have overlapping 154 00:08:01,600 --> 00:08:04,680 or conflicting jurisdictions. But in the case of, you know, 155 00:08:04,840 --> 00:08:08,680 obviously this podcast and the crypto, you don't really have an 156 00:08:09,080 --> 00:08:11,480 industry that can play mom against dad essentially. 157 00:08:11,480 --> 00:08:15,960 And so like having a single regulator, you know, what is 158 00:08:16,440 --> 00:08:20,000 preferable for efficiency, for oversight, for sort of market 159 00:08:20,000 --> 00:08:23,240 sanity, especially when you look at how it works now that you 160 00:08:23,240 --> 00:08:26,840 know, the CFTC approves suture, but then the SCCS approves their 161 00:08:26,840 --> 00:08:29,960 trading. Like it gets very messy around 162 00:08:29,960 --> 00:08:32,159 the edges. So like the argument against it 163 00:08:32,159 --> 00:08:36,320 is that it purely, it's not efficient and not, you know, not 164 00:08:36,320 --> 00:08:38,880 a good way to run a railroad. Well, you got it there. 165 00:08:38,880 --> 00:08:42,080 Illustrates why the division between the SEC and the CFTC has 166 00:08:42,080 --> 00:08:45,440 become so important for cryptocurrency in that it is 167 00:08:45,440 --> 00:08:50,720 trying to pit them against each other, choose regulations from 168 00:08:50,720 --> 00:08:53,680 one or the other. Trying to effectively remain in 169 00:08:53,680 --> 00:08:55,880 a Gray zone for kind of both of them. 170 00:08:55,880 --> 00:08:59,720 Or like to limit its overall like regulatory footprint by 171 00:08:59,720 --> 00:09:03,600 like specifically lobbying for certain pieces of policy that 172 00:09:03,600 --> 00:09:06,560 would explicitly put it in a certain thing using like 173 00:09:07,000 --> 00:09:09,480 advertisements and political giving to target certain 174 00:09:09,480 --> 00:09:12,880 regulators, like using the mouthpieces of certain crypto 175 00:09:12,880 --> 00:09:16,720 firms to specifically criticize certain regulators and things 176 00:09:16,720 --> 00:09:19,600 like that. And so looking at that like from 177 00:09:19,600 --> 00:09:24,440 crypto, it really seems like that division makes it harder to 178 00:09:24,440 --> 00:09:27,840 have consistent frameworks for financial products. 179 00:09:28,160 --> 00:09:32,000 And yeah, that just seems like the obvious consequence of all 180 00:09:32,000 --> 00:09:33,400 that. Oh, yeah, absolutely. 181 00:09:33,400 --> 00:09:36,520 And I think, you know, if we talked with the CFTC and so we 182 00:09:36,520 --> 00:09:40,160 talked about its origin and it was a largely like, I would say 183 00:09:40,560 --> 00:09:44,400 in the nicest way possible, a very sleepy regulator from its 184 00:09:44,400 --> 00:09:46,920 first 30 years. Like it was, you know, not a bad 185 00:09:46,920 --> 00:09:48,400 way. Like it had its market, it 186 00:09:48,480 --> 00:09:53,400 regulated it effectively when you get to the late 90s and the 187 00:09:54,320 --> 00:09:58,000 name Stacy, but the chair at the time in 98 pushes that the CFTC 188 00:09:58,480 --> 00:10:00,920 should regulate swaps and derivatives. 189 00:10:00,920 --> 00:10:02,880 You know, these are new instruments that are being 190 00:10:03,040 --> 00:10:05,680 create have been created by Wall Street that sort of it's 191 00:10:05,680 --> 00:10:08,920 actually slightly analogous to crypto and they're new when 192 00:10:08,920 --> 00:10:10,960 they're not. But through this come up, swaps 193 00:10:10,960 --> 00:10:13,480 come up and these are new financial instruments that 194 00:10:13,480 --> 00:10:15,960 aren't exclusively mentioned anywhere in legislative text. 195 00:10:16,520 --> 00:10:19,840 And the CFTC says we should be able to regulate these OTC 196 00:10:19,840 --> 00:10:22,840 derivatives like these are both these are essentially not that 197 00:10:22,840 --> 00:10:25,080 much functionally different than futures and options. 198 00:10:25,320 --> 00:10:28,920 Like why wouldn't wait? They released paper, all hell 199 00:10:28,920 --> 00:10:30,920 breaks loose. They get pushed back. 200 00:10:30,920 --> 00:10:33,560 Congress says explicitly you can't do that. 201 00:10:34,360 --> 00:10:38,640 Chair quits, long term Capital Management blows up. 10 years 202 00:10:38,640 --> 00:10:42,280 later, the financial crisis happens, giving the Kryptos 203 00:10:42,280 --> 00:10:44,560 version. And so then after after the 204 00:10:44,560 --> 00:10:47,320 financial crisis, Dodd Frank comes in and they gives the 205 00:10:47,320 --> 00:10:51,040 CFTCOTC derivative oversight that they'd asked for 206 00:10:51,040 --> 00:10:54,800 essentially a decade earlier. And sort of this makes the CFTC 207 00:10:54,800 --> 00:10:58,360 a much more consequential regulator because it is now 208 00:10:58,360 --> 00:11:00,920 really like, you know, it interacted with Wall Street on 209 00:11:00,920 --> 00:11:03,520 futures and options, but now it's really sort of in the in 210 00:11:03,520 --> 00:11:06,560 the meat of the debate. And so that's when it became a 211 00:11:06,560 --> 00:11:08,760 much more consequential regulator for Wall Street for 212 00:11:08,760 --> 00:11:11,440 the industry. And then flash forward to the 213 00:11:11,440 --> 00:11:14,520 mid 2000. And as you guys surely know and 214 00:11:14,520 --> 00:11:18,080 we're sure your listeners do, why it's in the crypto 215 00:11:18,080 --> 00:11:21,720 conversation is because the CFTC became much more, I would say 216 00:11:21,720 --> 00:11:26,960 crypto curious in the SEC and Bitcoin became designated a 217 00:11:26,960 --> 00:11:29,920 commodity. Whether we could argue whether 218 00:11:29,920 --> 00:11:33,080 that's right or not, I think everyone has their opinions on 219 00:11:33,080 --> 00:11:36,360 that, but that's essentially and they, and they actually went a 220 00:11:36,360 --> 00:11:38,720 step further and said all crypto are commodities. 221 00:11:38,880 --> 00:11:42,160 Commodities are what no one's yet to explain, but that's how 222 00:11:42,160 --> 00:11:45,440 the CPC, I would say interjected itself and became the first 223 00:11:45,440 --> 00:11:49,120 regulator to move to regulate crypto. 224 00:11:49,120 --> 00:11:52,640 Now you can argue and somehow that that is a better attempt 225 00:11:52,640 --> 00:11:56,160 than the SEC just sitting back and watching it unfold and not 226 00:11:56,160 --> 00:12:00,000 doing anything till the mid to that the early 2000 twenties. 227 00:12:00,280 --> 00:12:04,440 But that's a sort of essentially how the CFDC became into 228 00:12:04,440 --> 00:12:08,240 conflict with the SEC. And this goes back to the 229 00:12:08,240 --> 00:12:10,840 problem with the set up. You know, one one hand declared 230 00:12:10,840 --> 00:12:15,120 it a commodity. Even if the SEC disagrees, it's 231 00:12:15,120 --> 00:12:18,440 very hard once they've made the statement to disagree unless 232 00:12:18,440 --> 00:12:22,080 you're going to sue your fellow regulator instead of then all, 233 00:12:22,200 --> 00:12:25,160 you know, a really terrible public policy fight. 234 00:12:25,160 --> 00:12:28,120 So that's where you end up in a bad place. 235 00:12:28,120 --> 00:12:31,600 And that's sort of how we ended up in the CTC becoming in 236 00:12:31,600 --> 00:12:34,840 conversation. And now sort of, I would say 237 00:12:34,840 --> 00:12:37,200 it's fair. The CTC is the preferred 238 00:12:37,200 --> 00:12:39,440 regulator of the crypto industry. 239 00:12:39,680 --> 00:12:42,200 So I, I actually want to jump into that for a second because 240 00:12:42,200 --> 00:12:44,880 you're talking about, you're talking about the CFTC and the 241 00:12:44,880 --> 00:12:49,160 SEC kind of like they're on in a sense like equal footing that 242 00:12:49,160 --> 00:12:53,360 that the CFTC is taking on all these new markets and has been 243 00:12:53,360 --> 00:12:57,480 for several decades now. And that I mean there's, these 244 00:12:57,480 --> 00:13:00,400 are pretty large and growing markets, I would say. 245 00:13:00,480 --> 00:13:05,240 But when you look at the SEC budget and you look at the CFTC 246 00:13:05,240 --> 00:13:08,320 budget, one of them is 7 times bigger than the other one. 247 00:13:09,200 --> 00:13:13,720 And I would I would also, I haven't looked at the employee 248 00:13:13,720 --> 00:13:17,320 numbers, but I assume that the SEC has significantly more 249 00:13:17,320 --> 00:13:19,720 employees than the than the CFTC. 250 00:13:19,720 --> 00:13:23,840 So I wonder if the reason that they like they prefer the 251 00:13:23,840 --> 00:13:28,800 preferred regulator is the CFTC is mostly because they 252 00:13:28,800 --> 00:13:33,880 understand that the CFTCS abilities are really hamstrung. 253 00:13:33,920 --> 00:13:38,160 Yeah, I mean, we can all try to. I mean, I would assume that is 254 00:13:38,160 --> 00:13:40,160 part of it with hell. Like I don't see any point not 255 00:13:40,160 --> 00:13:43,120 dancing around this. I would assume the CFTC is 256 00:13:43,120 --> 00:13:46,280 viewed as an easier regulator, regulator and a wider touch 257 00:13:46,280 --> 00:13:48,440 regulator. And I think, and I don't, I 258 00:13:48,440 --> 00:13:51,120 mean, I'm trying to be fair here because I'm not a huge fan of 259 00:13:51,160 --> 00:13:54,360 the SEC either. So I think, I think for years, 260 00:13:54,440 --> 00:13:58,360 you know, so I my career, at least since the financial crisis 261 00:13:58,360 --> 00:14:01,720 has been tracking and you know, really following financial 262 00:14:01,720 --> 00:14:03,560 regulation. And for years the CFTC had a 263 00:14:03,560 --> 00:14:07,200 much intend rate circles a stronger reputation. 264 00:14:07,200 --> 00:14:10,080 The SEC in terms of like turn promulgating the rules that 265 00:14:10,080 --> 00:14:13,600 needed to and focusing on the the issues that it was supposed 266 00:14:13,600 --> 00:14:16,800 to and being essentially a less political organization like the 267 00:14:16,800 --> 00:14:20,560 SEC the last 10-15 years, they come in a highly, highly more 268 00:14:20,560 --> 00:14:23,600 politicized. So I think the SEC, the CFTC is 269 00:14:23,600 --> 00:14:26,640 good at what certain elements will they do, but the expansion 270 00:14:27,560 --> 00:14:31,560 sort of into crypto into the election betting sort of moves 271 00:14:31,560 --> 00:14:34,800 it beyond its comfort zone. And I think you are right, it's 272 00:14:34,840 --> 00:14:37,720 in compared with two aren't funded then on equal funding at 273 00:14:37,720 --> 00:14:42,840 all, the CFTC is well below and that's because now this is an 274 00:14:42,840 --> 00:14:45,520 important point as you talk about sort of who regulates 275 00:14:45,520 --> 00:14:47,400 what. The CFTC is an industry 276 00:14:47,400 --> 00:14:52,760 regulator, not a retail regulator, you know, so that's 277 00:14:52,760 --> 00:14:54,320 a, that's a really important distinction. 278 00:14:54,360 --> 00:14:57,000 And I think it's important when you think about who regulates 279 00:14:57,000 --> 00:14:59,640 crypto or how we, you know, how that gets done in the future. 280 00:15:00,000 --> 00:15:05,640 The CFTC has essentially no expertise in investor level 281 00:15:05,640 --> 00:15:07,920 protection regulation. Like they are a markets 282 00:15:07,920 --> 00:15:10,320 regulator, they are an industry regulator. 283 00:15:10,720 --> 00:15:13,720 They make sure you know that markets function appropriately, 284 00:15:13,720 --> 00:15:17,640 but they don't have retail investor protection expertise. 285 00:15:17,640 --> 00:15:20,840 And as you look at sort of but you know, the two examples I 286 00:15:20,840 --> 00:15:24,160 brought up the you know, the general crypto, the the widest 287 00:15:24,160 --> 00:15:29,680 sense and the election betting, those are far more retail 288 00:15:29,680 --> 00:15:32,360 orientated. So I think that becomes to me 289 00:15:32,360 --> 00:15:35,600 one of the biggest challenges which could all be washed away 290 00:15:35,600 --> 00:15:38,680 to just put these two organizations together is by 291 00:15:38,680 --> 00:15:41,080 having, you know, when you have an organization that's all of a 292 00:15:41,080 --> 00:15:45,200 sudden bookie after retail investor level protection that 293 00:15:45,400 --> 00:15:48,520 has no tradition of that, it's challenging. 294 00:15:48,760 --> 00:15:54,000 When I think even Ruston Benham who leads the CFTC has said in 295 00:15:54,000 --> 00:15:58,000 like some of the cryptocurrency focused hearings that like the 296 00:15:58,000 --> 00:16:02,880 CFTC would need a change to its funding if Congress is 297 00:16:02,880 --> 00:16:05,120 interested in expanding its mandate. 298 00:16:05,560 --> 00:16:08,720 Because like we've talked about here, they are the less 299 00:16:08,720 --> 00:16:11,240 resourced of these two regulators. 300 00:16:11,280 --> 00:16:12,720 Yeah. And so, and that's why I like 301 00:16:12,800 --> 00:16:15,400 now I've been, you know, for those who follow me on social or 302 00:16:15,400 --> 00:16:18,160 whatever, like I I have been ranting about merging the 303 00:16:18,160 --> 00:16:21,120 CFTCNSI totally that windball for like over a decade. 304 00:16:21,240 --> 00:16:24,920 And I will say like it comes up all not all the time, frequently 305 00:16:25,600 --> 00:16:28,240 in conversation. So post post GFC with Dodd Frank 306 00:16:28,240 --> 00:16:28,840 has been. Dropped. 307 00:16:28,840 --> 00:16:32,080 Didn't Paulson bring this up in like 2009 or something like. 308 00:16:32,080 --> 00:16:35,040 That it did come up and it was my feeling is if it didn't 309 00:16:35,040 --> 00:16:38,080 happen, that it's hard for me to see it ever happening. 310 00:16:38,080 --> 00:16:41,640 But so after the GFC, there was a very legitimate push that 311 00:16:41,640 --> 00:16:46,440 these two wars need to be put together, but institutional 312 00:16:46,440 --> 00:16:51,200 resistance sort of stopped it. And so now, you know, when you 313 00:16:51,200 --> 00:16:55,080 think about why it doesn't happen, pack that dependency. 314 00:16:55,080 --> 00:16:58,120 And then if you're cynical, the Senate Agriculture Committee 315 00:16:58,120 --> 00:16:59,880 really likes Wall Street donations. 316 00:17:00,000 --> 00:17:02,440 I mean, they, so they have different congressional 317 00:17:02,440 --> 00:17:05,040 oversight. And so Senate AG Committee 318 00:17:05,040 --> 00:17:10,520 overseas, the CFDC and I, I'm not the only one to suggest 319 00:17:10,520 --> 00:17:11,960 this. So, I mean, I think that there's 320 00:17:11,960 --> 00:17:15,720 a feeling that they'd rather enjoy the attention and bombing 321 00:17:15,720 --> 00:17:18,960 money they get from Wall Street, the Congress overseeing the 322 00:17:18,960 --> 00:17:21,800 CFTC. I will say as like a reporter, 323 00:17:21,800 --> 00:17:24,800 as someone who covers this, it's a little bit hilarious to me 324 00:17:24,800 --> 00:17:27,560 that I that like half the crypto hearings and stuff, I have to 325 00:17:27,560 --> 00:17:30,960 hit listen in on our agricultural committee meetings. 326 00:17:31,240 --> 00:17:32,160 They're talking. About. 327 00:17:32,480 --> 00:17:36,000 How best to regulate Bitcoin in the same hearing they're talking 328 00:17:36,000 --> 00:17:38,640 about corn. That feels ridiculous. 329 00:17:38,680 --> 00:17:39,400 Absolutely. Yeah. 330 00:17:39,480 --> 00:17:42,120 Like it's yeah. I mean, it's a very, it's a 331 00:17:42,120 --> 00:17:45,840 weird place we're in now. And I think, I mean, who knows, 332 00:17:45,840 --> 00:17:48,080 who knows what happens with crypto regulation in the US? 333 00:17:48,080 --> 00:17:50,760 If it, it could, it should spark. 334 00:17:50,800 --> 00:17:52,960 Why are we doing this separate? Because any of the bills you've 335 00:17:52,960 --> 00:17:56,480 seen so far from the, you know, the bad faith ones, the good 336 00:17:56,480 --> 00:17:59,480 faith ones have this weird split when they still need both 337 00:17:59,480 --> 00:18:03,080 agencies and their pieces. And it's just to like who's 338 00:18:03,120 --> 00:18:05,160 who's riding shotgun and who's in the driver's seat when it 339 00:18:05,160 --> 00:18:06,880 comes to it. But they still need both 340 00:18:06,880 --> 00:18:09,680 agencies and it's just still a really weird setup. 341 00:18:09,680 --> 00:18:12,760 And I mean it the industry, it doesn't do industry any good 342 00:18:12,760 --> 00:18:14,120 that had to do with multiple regulators. 343 00:18:14,120 --> 00:18:16,280 Some put it that way. So most most people in industry 344 00:18:16,280 --> 00:18:18,920 would prefer to deal with a single regulator than two. 345 00:18:19,040 --> 00:18:22,320 Are there parts of the industry that benefit from having two 346 00:18:22,320 --> 00:18:24,480 regulators besides cryptocurrency, which we kind of 347 00:18:24,480 --> 00:18:27,000 talked about, which benefits from like pitting them against 348 00:18:27,000 --> 00:18:29,000 each other? Outside of that, are there 349 00:18:29,000 --> 00:18:30,520 people who benefit from having 2? 350 00:18:31,160 --> 00:18:33,720 So I mean, generally speaking, I would say no. 351 00:18:33,720 --> 00:18:35,800 I mean I would say like it. So if you look at what like 352 00:18:35,800 --> 00:18:38,920 let's leave crypto, which will be I know your readers and 353 00:18:38,920 --> 00:18:41,800 listeners are crypto people, but like or anti crypto, they're 354 00:18:41,960 --> 00:18:45,880 crypto adjacent, but like put that aside for a moment and just 355 00:18:45,880 --> 00:18:48,640 go back to futures and auctions. So obviously most buy side 356 00:18:48,640 --> 00:18:52,000 firms, most banks deal with futures options and they deal 357 00:18:52,000 --> 00:18:56,000 with sort of securities until they those more, I would say 358 00:18:56,000 --> 00:19:01,480 established regulatory regulated industries beyond plain 359 00:19:01,480 --> 00:19:03,800 occasionally coming up with a new instrument, trying to get it 360 00:19:03,800 --> 00:19:07,480 on one side of the fence or the other, don't really benefit for 361 00:19:07,480 --> 00:19:10,720 having to regulatory agencies. And I think if you were to ask, 362 00:19:11,440 --> 00:19:14,080 you know, investment bankers, if you were to ask, you know, bank 363 00:19:14,080 --> 00:19:18,080 trading company, you know, trading floors, asset managers, 364 00:19:18,080 --> 00:19:21,960 what their preference would be, they would prefer 1 / 2 because 365 00:19:21,960 --> 00:19:26,120 it's, it's ultimately, especially as you know, stuff 366 00:19:26,120 --> 00:19:29,320 like swaps and derivatives, which is really what bring these 367 00:19:29,320 --> 00:19:32,400 into conflict. And the track 5, having to have 368 00:19:32,400 --> 00:19:35,360 multiple reporting to different agencies, as you know, on the 369 00:19:35,440 --> 00:19:36,960 real back of stuff is a nightmare. 370 00:19:36,960 --> 00:19:40,040 And so it would be easier to have one set of rules to to 371 00:19:40,040 --> 00:19:43,120 navigate. You mentioned that if it, if the 372 00:19:43,120 --> 00:19:46,120 merge didn't happen during the great financial crisis, like 373 00:19:46,840 --> 00:19:50,320 it's never going to happen, kind of feeling that you, you have. 374 00:19:50,400 --> 00:19:54,080 But I'm curious just 'cause I, I'm, I'm reflecting on the 375 00:19:54,080 --> 00:20:00,280 Silicon Valley Bank situation and I, I definitely, Bennett and 376 00:20:00,280 --> 00:20:04,600 I have done reported some reporting on, on the banking 377 00:20:04,640 --> 00:20:10,040 sector and how it's regulated, which is also totally broken and 378 00:20:10,040 --> 00:20:14,000 weird. CCFDIC, Federal Reserve. 379 00:20:14,000 --> 00:20:16,040 Exactly. State level regulators. 380 00:20:16,960 --> 00:20:18,600 And state level regulators. Exactly. 381 00:20:18,600 --> 00:20:22,720 And then and then when something does happen, they always end up 382 00:20:22,760 --> 00:20:27,000 blaming each other and saying like, well, you know, the 383 00:20:27,000 --> 00:20:29,480 Federal Reserve was supposed to be looking out for this. 384 00:20:29,480 --> 00:20:32,080 And then they're like, well, no, the OCC was supposed to be, you 385 00:20:32,080 --> 00:20:34,920 know, it's, it's everybody pointing fingers at each other. 386 00:20:35,280 --> 00:20:38,120 And so they all get off the hook because they say like, well, 387 00:20:38,120 --> 00:20:41,360 wasn't my responsibility. And then ultimately, like the 388 00:20:41,360 --> 00:20:44,720 banks and they're like, I, I don't know, as far as I know, 389 00:20:44,720 --> 00:20:47,120 there's no criminal charges in regard to Silicon Valley Bank. 390 00:20:47,120 --> 00:20:50,040 Like nobody has gotten in trouble about like, right. 391 00:20:50,040 --> 00:20:52,960 So it's like these massive failures can happen. 392 00:20:53,120 --> 00:20:55,640 Everybody points fingers at everyone else and then 393 00:20:55,640 --> 00:20:57,920 ultimately, like, no one faces responsibility. 394 00:20:57,920 --> 00:20:59,760 So while I hear what you're saying where you're like, oh, 395 00:20:59,760 --> 00:21:03,280 investment bankers might want this, I look at everyone else 396 00:21:03,280 --> 00:21:06,000 and I'm like, they don't want it though, You know what I mean? 397 00:21:06,200 --> 00:21:07,000 Yeah, that's fair. I know. 398 00:21:07,000 --> 00:21:09,240 I mean, I think, yeah, banking is far more broken than 399 00:21:09,240 --> 00:21:12,680 securities regulation in the US And I think a lot of it I heard 400 00:21:12,760 --> 00:21:16,080 somewhere a lot of it comes down to sort of the federalist versus 401 00:21:16,080 --> 00:21:17,920 anti federalist breakdown in the US. 402 00:21:17,920 --> 00:21:22,000 And that said most of the US regulatory oversight on almost 403 00:21:22,000 --> 00:21:24,560 everything was largely state level forever. 404 00:21:24,640 --> 00:21:31,880 And so you, what you have is so the SEC created 1933 or 3433 and 405 00:21:31,960 --> 00:21:35,360 34 to to acts. It was the first federal 406 00:21:35,360 --> 00:21:36,960 securities law. You know, prior to that 407 00:21:36,960 --> 00:21:38,600 securities law is all a state level thing. 408 00:21:38,600 --> 00:21:41,960 So, and all of these agencies are trying to sort of stitch 409 00:21:41,960 --> 00:21:46,680 together federal oversight where legal tradition doesn't have it. 410 00:21:46,680 --> 00:21:49,120 But you're right that, you know, we don't, you know, when you 411 00:21:49,120 --> 00:21:53,320 look at SCBI will say I've been reasonable about attention. 412 00:21:53,320 --> 00:21:54,960 I actually don't think there was any criminality. 413 00:21:54,960 --> 00:21:59,000 I just think there was a ton of stupidity running through SUV 414 00:21:59,000 --> 00:22:02,320 from the customer base and you know, just running your hedges 415 00:22:03,200 --> 00:22:05,160 isn't criminal. It's just dumb. 416 00:22:05,160 --> 00:22:08,520 And then having a few billion dollars in a checking account as 417 00:22:08,520 --> 00:22:10,680 a criminal. It's just ridiculous. 418 00:22:10,680 --> 00:22:14,480 Like so I, I I think I don't think criminal, yeah, there 419 00:22:14,480 --> 00:22:17,840 might have been like banking mob banking regulations versus 420 00:22:17,840 --> 00:22:19,440 criminality. I think it's a it's a stuff 421 00:22:19,480 --> 00:22:20,960 you'll try to get sort of parked out. 422 00:22:20,960 --> 00:22:24,640 But I think your point. But I will say when these things 423 00:22:24,640 --> 00:22:27,680 do break down and they always do, you are 100% right in the 424 00:22:27,680 --> 00:22:29,640 banking world. They all pointy each other and 425 00:22:29,640 --> 00:22:32,560 never nothing gets fixed. And the banking world, another 426 00:22:32,560 --> 00:22:36,400 place where you should really rewire things and, and in 427 00:22:36,400 --> 00:22:40,760 fairness, the upper, the trust, the threat, the thrift 428 00:22:40,760 --> 00:22:44,440 supervision guys got shut down after the GFC. 429 00:22:44,440 --> 00:22:46,400 So we didn't lose 1 banking regulator. 430 00:22:46,400 --> 00:22:48,840 We should I guess something. The reason I say we all see it, 431 00:22:48,840 --> 00:22:51,840 what one thing I think, you know, many people might know, 432 00:22:51,960 --> 00:22:56,320 you look at, So what happened to US, those GFC versus the UK, 433 00:22:56,440 --> 00:22:59,720 Ireland and Europe is they did a lot more root and branch on 434 00:22:59,720 --> 00:23:03,720 regulatory oversight in the US. So the US sort of, you know, got 435 00:23:03,760 --> 00:23:06,320 rid of the Office of Thrift Supervision and that was 436 00:23:06,320 --> 00:23:09,440 essentially it and tapered over the cracks and said we're fine. 437 00:23:09,800 --> 00:23:14,760 You know, the UK buried the old FSA, started the FCA, put 438 00:23:14,760 --> 00:23:18,160 Prudential Regulation and then, you know, created PRA Europe, 439 00:23:18,160 --> 00:23:22,320 essentially created 3 now for European level regulators. 440 00:23:22,320 --> 00:23:25,000 So there was a much more acknowledgement of framework 441 00:23:25,000 --> 00:23:28,240 failure, regulatory failure, failure outside the US than 442 00:23:28,240 --> 00:23:30,880 inside the US. And so, but if an event that 443 00:23:30,880 --> 00:23:33,680 almost brings the world to a halt and brings, you know, sets 444 00:23:33,680 --> 00:23:36,520 us up for a decade of low growth, doesn't say why do we 445 00:23:36,520 --> 00:23:39,600 have two securities regulators? I find it hard to believe we're 446 00:23:39,600 --> 00:23:41,160 ever going to get to the place with emerge. 447 00:23:41,160 --> 00:23:43,480 So you're just going to always have this place where I'm 448 00:23:43,840 --> 00:23:49,120 posting dumb beams and jokes until I'm 80, demanding these, 449 00:23:49,400 --> 00:23:51,600 demanding these things get merged, but they probably never 450 00:23:51,600 --> 00:23:53,880 do? I mean, I guess I'm being by 451 00:23:53,880 --> 00:23:57,920 more honest moments. So I mean, is that part of the 452 00:23:57,920 --> 00:24:01,120 take away kind of for the United States here, like real 453 00:24:01,120 --> 00:24:05,560 structural reform of regulators seems unlikely to happen in the 454 00:24:05,560 --> 00:24:09,240 foreseeable future If we were unable to pull it together after 455 00:24:09,240 --> 00:24:12,800 the great financial crisis, it seems unlikely to ever happen. 456 00:24:13,000 --> 00:24:16,080 I mean, the event that would trigger real root and grant 457 00:24:16,080 --> 00:24:18,560 reform is so horrible. I don't think I definitely don't 458 00:24:18,560 --> 00:24:20,800 want to see it. So like, I think it's our, I 459 00:24:20,800 --> 00:24:23,360 think you will see ticking around the edges and you 460 00:24:23,360 --> 00:24:27,000 probably end up seeing you're more likely to see a Regulatory 461 00:24:27,000 --> 00:24:30,040 agency created than you are C1 version destroyed, which is, you 462 00:24:30,040 --> 00:24:32,520 know, like honestly, you could say and I, I think they're doing 463 00:24:32,520 --> 00:24:35,120 good work, but I you know this. CFPB. 464 00:24:35,280 --> 00:24:38,960 Is you know that's you could I now and I did argue and I sort 465 00:24:38,960 --> 00:24:40,640 of changed my tune on this a little bit. 466 00:24:40,960 --> 00:24:43,080 We couldn't that could have been created this division of any 467 00:24:43,080 --> 00:24:45,200 number of the existing regulators already like it did 468 00:24:45,200 --> 00:24:49,080 it now it's fine to stand alone. I don't want to re litigate, you 469 00:24:49,080 --> 00:24:52,400 know, that to the end of days, but like, so there's a world 470 00:24:52,400 --> 00:24:55,120 where you just say maybe that's the SE CS job too, or the 471 00:24:55,120 --> 00:24:57,640 banking job too. But hey, you know, you're not 472 00:24:57,720 --> 00:24:59,400 like it's hard. It's easier to set up a new 473 00:24:59,400 --> 00:25:02,880 regulator than it is to rationalize existing regulators. 474 00:25:03,000 --> 00:25:04,840 And the other take away. I think it's important. 475 00:25:04,920 --> 00:25:08,560 This is something that again, America's tradition of, you 476 00:25:08,560 --> 00:25:12,000 know, and we're in that period now and you look what the the 477 00:25:12,160 --> 00:25:15,680 Supreme Court saying about what is federally allowed and what's 478 00:25:15,680 --> 00:25:21,200 a state's, you know, is unique, but a lot of ways to the 479 00:25:21,200 --> 00:25:23,960 American experience. So we don't you know, that isn't 480 00:25:23,960 --> 00:25:27,760 something that like as you have, you know, when they tore down 481 00:25:27,760 --> 00:25:32,040 the FSA and UK and set up the FCA and the PRA, you didn't have 482 00:25:32,040 --> 00:25:34,360 like the county saying, no, we should be doing that. 483 00:25:34,360 --> 00:25:38,160 People accept federal oversight of securities markets much and 484 00:25:38,160 --> 00:25:42,400 banking everywhere else without much of a second thought, you 485 00:25:42,400 --> 00:25:44,480 know, and so we're talking about the federal level. 486 00:25:44,480 --> 00:25:46,960 But you know, you have like the arguably one of the most 487 00:25:47,600 --> 00:25:52,320 powerful regulators in the US is the NYFDS, you know, New York 488 00:25:52,320 --> 00:25:53,920 Department of Financial Services. 489 00:25:53,920 --> 00:25:57,120 And there I mean, that's a state level regulator that has because 490 00:25:57,120 --> 00:26:00,640 of, you know, you know, Wall Street being in and out and has 491 00:26:00,720 --> 00:26:03,680 an unprecedented global reach and is essentially a state 492 00:26:03,680 --> 00:26:06,880 regulator run out of, you know, Albany Like it's it's, you know, 493 00:26:06,880 --> 00:26:09,120 it's just a very weird situation. 494 00:26:09,160 --> 00:26:13,440 I wonder with the incoming administration, if you think not 495 00:26:13,440 --> 00:26:17,840 that I'm asking you to predict this, but I do I but I am I am 496 00:26:17,840 --> 00:26:21,640 curious if you know you're talk you're you're talking about the 497 00:26:21,640 --> 00:26:26,360 likelihood of a merge of these being near zero and maybe more 498 00:26:26,360 --> 00:26:30,600 regulators coming into place. But I wonder if we're going to 499 00:26:30,600 --> 00:26:36,320 see more erosion of the ability to regulate from the SEC and 500 00:26:36,320 --> 00:26:39,880 CFTC federal regulators. And I don't know if our, our 501 00:26:39,880 --> 00:26:42,720 viewers and listeners are familiar with blue sky laws, but 502 00:26:42,720 --> 00:26:47,280 blue sky laws were far more commonplace before the SEC was 503 00:26:47,280 --> 00:26:49,320 established. And, and they're basically this. 504 00:26:50,200 --> 00:26:52,560 It was like anti fraud legislation, but it was done 505 00:26:52,560 --> 00:26:54,920 state by state. So you just had to like, do 506 00:26:54,920 --> 00:26:57,680 things in a different state and mail things and do like if they 507 00:26:57,680 --> 00:27:00,120 were just weird loopholes that allowed people to get away with 508 00:27:00,400 --> 00:27:03,320 all kinds of crazy financial shenanigans. 509 00:27:04,000 --> 00:27:07,280 But I wonder if that that's more along the lines of what you 510 00:27:07,280 --> 00:27:11,200 expect us to see it like a an erosion of federal regulation 511 00:27:11,520 --> 00:27:15,400 and a cropping up of these state regulators being far more 512 00:27:15,400 --> 00:27:17,920 important. I mean, certainly you know, the 513 00:27:17,920 --> 00:27:21,360 Chevron decision striking of Chevron last year and a couple 514 00:27:21,360 --> 00:27:26,280 of the other Supreme Court decisions make it and this is 515 00:27:26,280 --> 00:27:29,880 really interesting and make it basically impossible for a 516 00:27:29,880 --> 00:27:31,520 regulator to promulgate new rules. 517 00:27:31,520 --> 00:27:34,760 So that's explicitly laid out in their mandate. 518 00:27:34,760 --> 00:27:40,640 So the idea, so you know, the the last, the battle cry of 519 00:27:40,640 --> 00:27:43,880 crypto in the last two years, which has been the SECSEC is 520 00:27:43,880 --> 00:27:46,560 doing regulation 5 for us going we should just give us the 521 00:27:46,560 --> 00:27:48,600 rules. But now it can't give their 522 00:27:48,600 --> 00:27:50,320 rules. So like, like honestly, you so 523 00:27:50,360 --> 00:27:55,880 even if you know, Trump appoints a pro crypto SEC chair and they 524 00:27:55,880 --> 00:28:00,840 produce guidance or rules on crypto, a well financed anti 525 00:28:00,840 --> 00:28:03,200 crypto lobby is going to sue them because they don't have the 526 00:28:03,200 --> 00:28:05,640 right under opposed Chevron to do that. 527 00:28:05,640 --> 00:28:09,000 So it for any meaningful crypto legislation is going to have to 528 00:28:09,000 --> 00:28:12,360 come to the legislator. And that's I mean, I don't see 529 00:28:12,360 --> 00:28:16,640 that happening soon. So I think what you will see, I 530 00:28:16,640 --> 00:28:20,280 think you're right that federal regulators between a Republican, 531 00:28:20,280 --> 00:28:23,640 the Trump administration and the Supreme Court are greatly 532 00:28:23,640 --> 00:28:25,520 constrained. What they can do for regulation, 533 00:28:25,840 --> 00:28:29,320 which leads to two outcomes. The first is actually regulation 534 00:28:29,320 --> 00:28:32,440 by enforcement. I'm using air quotes now because 535 00:28:32,440 --> 00:28:34,480 more prominent because they can't do regulation by 536 00:28:34,480 --> 00:28:37,760 regulation anymore. All they can do now the focus of 537 00:28:37,760 --> 00:28:42,080 said enforcement might diminish or change targets, but that's 538 00:28:42,080 --> 00:28:43,840 all they can do. They can't produce the rules 539 00:28:44,160 --> 00:28:47,840 unless it's expressively and and dare we met, which brings us to 540 00:28:47,840 --> 00:28:49,640 the states. And I think what actually 541 00:28:49,640 --> 00:28:55,400 happens at the state level is I mentioned the NYFDS, they become 542 00:28:55,400 --> 00:29:00,640 much more important, but not in a like Texas could say if it's 543 00:29:00,640 --> 00:29:04,080 stock exchanges and doing whatever they want kind of way 544 00:29:04,080 --> 00:29:07,160 in a Spitzer kind of way and cracking down on research. 545 00:29:07,400 --> 00:29:10,960 So, you know, if you've got to remember that like Spitzer, I 546 00:29:10,960 --> 00:29:14,080 mean, he rose to fade because the SEC of the kind stepped back 547 00:29:14,080 --> 00:29:18,040 from something and the state and you know, ambitious state AGS 548 00:29:18,080 --> 00:29:21,280 stepped in to pursue investor protection regulation. 549 00:29:21,280 --> 00:29:24,480 So I think what you're going to end up with probably for crypto, 550 00:29:24,480 --> 00:29:28,120 but probably for a lot of stuff is a GS, it's state level 551 00:29:28,120 --> 00:29:31,200 regulators in California, New York, to lesser degree 552 00:29:31,200 --> 00:29:35,360 Massachusetts, because it's to a lesser degree these states 553 00:29:36,040 --> 00:29:40,840 pursuing aggressive cases. And so I think, you know, be 554 00:29:40,840 --> 00:29:44,680 careful you wish for, but like state level regulation is only 555 00:29:44,680 --> 00:29:47,320 good if they're on your side. Otherwise you'd have to fight. 556 00:29:48,240 --> 00:29:50,800 You know, it's sort of like would you rather fight one 557 00:29:50,800 --> 00:29:52,240 regulator or 50 regulators, right? 558 00:29:52,280 --> 00:29:54,560 Like I mean, so it becomes like a lot more challenging. 559 00:29:54,560 --> 00:29:57,840 So I think you will see a lot more action at the state level. 560 00:29:58,280 --> 00:30:01,680 I think you will see, but I think you will see the federal 561 00:30:01,680 --> 00:30:04,640 regulators, security regulators, I don't want to touch anybody 562 00:30:04,640 --> 00:30:08,560 else, but I think that you will see them deliberately pull back 563 00:30:08,560 --> 00:30:10,720 in some areas and be and they're restrained anyway. 564 00:30:10,720 --> 00:30:13,960 They do. The current judiciary mood 565 00:30:13,960 --> 00:30:17,960 doesn't give them a lot of leeway to pursue new 566 00:30:18,160 --> 00:30:20,200 regulations. So it sounds like we're not 567 00:30:20,240 --> 00:30:22,920 going to get a federal money transmitter statue. 568 00:30:23,120 --> 00:30:26,360 Well, yeah, I mean, that's it seems. 569 00:30:26,360 --> 00:30:29,200 I mean, I know the the CFPB actually, it's trying their 570 00:30:29,200 --> 00:30:30,880 hardest to sort of row in. Yeah. 571 00:30:30,880 --> 00:30:33,520 I mean, I think I don't like trying to figure out what, you 572 00:30:33,520 --> 00:30:36,360 know, IA Trump administration. I had to do this eight years ago 573 00:30:36,400 --> 00:30:38,960 and it was awful that trying to figure out what they're going to 574 00:30:38,960 --> 00:30:41,080 do now. It's somewhat guesswork, but 575 00:30:41,080 --> 00:30:46,520 like I think in a purest sense, the legislator is not everyone. 576 00:30:46,520 --> 00:30:50,200 You know, you all mine red way, all three houses, but it's a 577 00:30:50,200 --> 00:30:53,760 Republican House by like 2 votes, if not a not votes in the 578 00:30:53,760 --> 00:30:56,560 Senate to push anything through. So you're still in like a 579 00:30:56,560 --> 00:31:00,080 deadlock situation that you know, I don't see a federal 580 00:31:00,080 --> 00:31:01,560 money transmitter coming through. 581 00:31:01,600 --> 00:31:05,200 I don't see, let's say I don't see federal crypto legislation 582 00:31:05,200 --> 00:31:08,240 coming through unless I mean, unless they can really stable 583 00:31:08,240 --> 00:31:10,200 coins is the easiest 1. So they could get their act 584 00:31:10,200 --> 00:31:13,120 together as stable coins. You might be able to thread that 585 00:31:13,120 --> 00:31:16,520 needle through because there is some more slightly more 586 00:31:16,520 --> 00:31:19,840 receptive nature to that. But the problem I think with, 587 00:31:19,960 --> 00:31:23,920 you know, even with stable coin, both sides overplay their hand 588 00:31:23,920 --> 00:31:26,040 constantly. So, you know, like if they could 589 00:31:26,040 --> 00:31:29,000 get to go and say, look, stable coins, for better or worse, 590 00:31:29,000 --> 00:31:31,480 aren't going away, but they're pretty easy to regulate if you 591 00:31:31,480 --> 00:31:34,640 want to, you know, isn't policy decisions about who's allowed to 592 00:31:34,640 --> 00:31:38,720 do them and how we oversee them, but not the hardest thing to 593 00:31:38,720 --> 00:31:40,640 really regulate. But you know, the pro crypto 594 00:31:40,640 --> 00:31:42,920 side will then put a bunch of other stuff on it that is 595 00:31:42,920 --> 00:31:44,720 unacceptable. And then, you know, the Warren 596 00:31:44,720 --> 00:31:48,720 wing will pour in like crazy AML requirements that are like, I 597 00:31:48,720 --> 00:31:53,280 mean, IAM LS useful, but like, you know, secrecy, bank secrecy 598 00:31:53,840 --> 00:31:56,040 needs to be tempered and individual liberty needs to be 599 00:31:56,040 --> 00:31:58,840 tempered. So I think I I think it's hard 600 00:31:58,840 --> 00:32:01,360 in the current environment to see what happens. 601 00:32:01,360 --> 00:32:04,080 And I actually I tweeted the other day or ski did whatever 602 00:32:04,080 --> 00:32:07,720 we're calling it these days that Brown losing in Ohio, though 603 00:32:07,720 --> 00:32:11,360 nominally to a crypto favorite. It's actually probably bad for 604 00:32:11,360 --> 00:32:15,160 the future hopes of the crypto bill because he was not as 605 00:32:15,160 --> 00:32:19,000 ideologically opposed and was willing more so than Warren to 606 00:32:19,000 --> 00:32:21,800 compromise and could have probably shepherded through the 607 00:32:21,800 --> 00:32:24,040 more skeptical votes he did that, you know, you needed to 608 00:32:24,040 --> 00:32:27,040 get it stable going go through. So I just think it's it's hard 609 00:32:27,040 --> 00:32:29,120 to see anything happening. So we're recording this, what, 610 00:32:29,120 --> 00:32:34,600 maybe a week after Marc Andreessen of A16Z went to went 611 00:32:34,600 --> 00:32:39,400 on to Joe Rogan and complained about all of the de banking that 612 00:32:39,400 --> 00:32:43,960 has happened in in crypto and how, I don't know, he was trying 613 00:32:43,960 --> 00:32:47,600 to pretend like he was champion championing the people and how 614 00:32:47,600 --> 00:32:49,640 hard it is for those getting debanked. 615 00:32:49,640 --> 00:32:51,720 I don't think he's mentioning that the people getting debanked 616 00:32:51,720 --> 00:32:55,760 are like multimillionaire venture capitalists and people 617 00:32:55,760 --> 00:32:58,360 spinning up whatever, you know, whatever. 618 00:32:58,440 --> 00:33:01,200 All agree Marc Andreessen has the hardest life. 619 00:33:01,800 --> 00:33:04,360 Yeah, yeah. Well, so, but my, my point here 620 00:33:04,360 --> 00:33:09,240 being isn't that I, I, I kind of feel like this is exactly what 621 00:33:09,680 --> 00:33:11,240 people like Marc Andreessen want. 622 00:33:11,440 --> 00:33:14,840 Like what we're talking about right now, this stepping back 623 00:33:14,840 --> 00:33:18,880 of, of any federal regulation and then this broken kind of 624 00:33:19,320 --> 00:33:23,160 weird system of state regulations that you never even 625 00:33:23,160 --> 00:33:26,800 know if, if what they take it to the Supreme Court and who knows 626 00:33:26,800 --> 00:33:28,280 what they're going to say about it, Right, right. 627 00:33:28,280 --> 00:33:32,320 Like you, you start doing these getting into this weird dynamic 628 00:33:32,560 --> 00:33:36,360 where it's like, oh, isn't like, I think that that's what these 629 00:33:36,360 --> 00:33:41,600 guys actually do want is just complete regulatory failure, I 630 00:33:41,600 --> 00:33:43,560 guess would be the way I would term it. 631 00:33:43,560 --> 00:33:45,960 But maybe, if maybe I'm too pessimistic, I don't know. 632 00:33:45,960 --> 00:33:48,520 No, I mean, I'm a pretty cynical person, so I would I would tend 633 00:33:48,520 --> 00:33:50,120 to agree. And I think if you look at that 634 00:33:50,120 --> 00:33:55,400 sort of the like the CFTB becoming all of a sudden, like 635 00:33:55,400 --> 00:33:58,600 in between Elon and the Joe Rogan thing, like, I, I mean, 636 00:33:58,720 --> 00:34:01,440 you could look at it pretty cynically and say, you know, 637 00:34:01,440 --> 00:34:06,920 like the fintech guy had a bunch of Ding by the CFPB. 638 00:34:06,920 --> 00:34:10,120 It once shut down and you all must once X to get a money 639 00:34:10,120 --> 00:34:12,440 transmitter thing without having to have federal oversight. 640 00:34:12,440 --> 00:34:15,360 I mean, like, it's not like they don't play 8 mental chests over 641 00:34:15,360 --> 00:34:16,520 there. They just, I think you're right. 642 00:34:16,520 --> 00:34:19,199 They just selfishly want to be able to like one of the things 643 00:34:19,199 --> 00:34:21,920 with fintech. Dylan's not even a fan of 644 00:34:21,920 --> 00:34:23,400 two-dimensional chess. Yeah. 645 00:34:24,360 --> 00:34:26,840 So I mean, one of the things you're right that a lot of like 646 00:34:26,880 --> 00:34:30,199 the last decade of fintech has been about getting as close to 647 00:34:30,199 --> 00:34:32,920 doing regulated financial services without being regulated 648 00:34:32,920 --> 00:34:35,639 as possible. And so they absolutely benefit 649 00:34:35,639 --> 00:34:40,280 from world where gridlock rains and nothing get pushed through 650 00:34:40,280 --> 00:34:43,920 because they continue to push through the cracks and allowed 651 00:34:43,920 --> 00:34:47,040 to do as much as they can without sort of oversight. 652 00:34:47,199 --> 00:34:51,239 I think we've entered this period of time where regulators, 653 00:34:51,440 --> 00:34:53,960 and there's not to say there's no reason for this, but where 654 00:34:53,960 --> 00:34:58,400 regulators are are looked at as inefficient, useless, that 655 00:34:58,400 --> 00:35:01,160 they're on the wrong side of a lot of these battles. 656 00:35:01,320 --> 00:35:05,240 And now people would rather trust these billionaires who are 657 00:35:05,240 --> 00:35:07,880 talking their book and they'll be like, yeah, yeah, these 658 00:35:07,880 --> 00:35:09,680 regulators, I hate them. I hate these regulators. 659 00:35:09,680 --> 00:35:11,960 We should get rid of them. Whereas they don't understand 660 00:35:11,960 --> 00:35:15,560 that maybe like, I'm not, I'm not a fan of the way that I'm. 661 00:35:15,600 --> 00:35:17,600 That's why I like the idea of merging these two. 662 00:35:17,600 --> 00:35:21,680 I like the idea of, of enhancing it so that, OK, we merge these 663 00:35:21,680 --> 00:35:24,520 two and then we have clear restrictions on what's gonna 664 00:35:24,520 --> 00:35:27,800 happen and who's allowed to play in these markets. 665 00:35:27,800 --> 00:35:32,520 And, you know, but I, I, yeah, I guess I, I fear now that because 666 00:35:32,520 --> 00:35:37,560 the pop, the popular side of this is actually what the 667 00:35:37,560 --> 00:35:40,560 billionaires want. That again, Yeah, the cynical 668 00:35:41,080 --> 00:35:45,400 feeling of the people don't even realize that the regulators are 669 00:35:45,400 --> 00:35:50,000 supposed to be there for their benefit, that we've already gone 670 00:35:50,000 --> 00:35:52,280 past that, and now people are like, yeah, the regulators are 671 00:35:52,280 --> 00:35:54,800 there to hurt me personally. They're not even there to 672 00:35:54,800 --> 00:35:55,920 protect me. Yeah. 673 00:35:55,920 --> 00:36:00,560 So I think that's probably true. I would say that's particularly 674 00:36:00,560 --> 00:36:03,960 true from what I see online, sort of like from the the 675 00:36:03,960 --> 00:36:06,080 broadest Gen. Z stereotype, but sort of from 676 00:36:06,080 --> 00:36:09,800 the certainly from people who are more interested in crypto or 677 00:36:09,800 --> 00:36:12,360 Bitcoin or whatever. They certainly are definitely 678 00:36:12,360 --> 00:36:16,040 feel the regulator is preventing them from making money and they 679 00:36:16,040 --> 00:36:17,800 feel like, you know, like that's what they see. 680 00:36:18,160 --> 00:36:21,640 You know, the FCC primary function is to prevent me from 681 00:36:22,000 --> 00:36:24,080 making money. And I think that's a match 682 00:36:24,080 --> 00:36:26,240 space. Certainly they, they, they look 683 00:36:26,240 --> 00:36:29,760 past, you know, whatever merits the SEC has and definitely see 684 00:36:29,760 --> 00:36:32,400 them as an inhibitor and they're they're stopping me from getting 685 00:36:32,400 --> 00:36:33,640 mine. And I think that's certainly a 686 00:36:33,640 --> 00:36:36,200 dangerous place. And I think some of that's 687 00:36:36,200 --> 00:36:38,840 earned, some of that's unearned. But I think if you look at sort 688 00:36:38,840 --> 00:36:42,840 of, but I think when you need to look at sort of the, the feeling 689 00:36:42,840 --> 00:36:45,040 of the general industry and the participants and then sort of 690 00:36:45,040 --> 00:36:49,000 the, the rich people and the people, you know, the people who 691 00:36:49,000 --> 00:36:51,720 run the companies. I mean, I think they also sort 692 00:36:51,720 --> 00:36:55,400 of generally prefer the status quo for crypto regs in the US 693 00:36:55,400 --> 00:36:57,480 because there is none. And they can continue to sort of 694 00:36:57,960 --> 00:37:00,480 play in the Gray area because if you look at, you know, Europe 695 00:37:01,160 --> 00:37:03,880 past crypto regulation a couple of years ago came in live, you 696 00:37:03,880 --> 00:37:07,840 know, it's like a, it's tremendously boring and like no 697 00:37:07,840 --> 00:37:09,880 one really likes it or hates it. But like crypto is a very 698 00:37:09,880 --> 00:37:12,640 different thing over here because they put in enough basic 699 00:37:12,640 --> 00:37:16,280 framework that you don't have the sort of the same drive. 700 00:37:16,280 --> 00:37:19,160 So I think a lot of it is very specific to the sort of culture 701 00:37:19,160 --> 00:37:21,640 in the US at the moment and this sort of feeling. 702 00:37:21,640 --> 00:37:24,480 And you know, I don't want to dive too deep into pop 703 00:37:24,480 --> 00:37:28,760 psychology of sort of the system being rigged against you. 704 00:37:28,760 --> 00:37:34,280 And then, you know, let's be honest, like the the crypto 705 00:37:34,320 --> 00:37:38,400 industry was in lobbying industry was handed a gift with 706 00:37:38,400 --> 00:37:42,400 Gary Gensler becoming the SEC chief because he is even when 707 00:37:42,400 --> 00:37:44,840 he's right, he's unlikeable. I mean, he's just not like he is 708 00:37:44,840 --> 00:37:48,920 a very unlikeable character and a perfect boogeyman for an 709 00:37:48,920 --> 00:37:51,400 industry. And so like the simple fact that 710 00:37:51,400 --> 00:37:55,000 like who is the chair of the SEC raised itself to a talking point 711 00:37:55,000 --> 00:37:58,080 during presidential election. It's something's gone wrong. 712 00:37:58,080 --> 00:38:00,800 Like if you're the chair of a securities regulator, like the 713 00:38:00,800 --> 00:38:02,680 average person should not know who you are. 714 00:38:02,680 --> 00:38:05,440 I mean, like, I'd say it's really not a job that like 715 00:38:05,440 --> 00:38:07,560 people should know your name, like they should just know the 716 00:38:07,560 --> 00:38:10,320 regulators doing stuff, but like you should not know who's in 717 00:38:10,320 --> 00:38:12,960 charge of it. And so I think that's sort of 718 00:38:13,240 --> 00:38:17,200 the whole, you know, the the firmament around it. 719 00:38:17,200 --> 00:38:21,040 It's really sort of personality driven and they sort of found 720 00:38:21,040 --> 00:38:25,480 the perfect, perfect bad guy from their perspective because, 721 00:38:25,520 --> 00:38:28,000 you know, like my background is far more treadfy and like I can 722 00:38:28,000 --> 00:38:31,520 say, yes, he's scary. Gunstars raining at the SEC was 723 00:38:31,520 --> 00:38:33,280 not loved by the tribe side either. 724 00:38:33,280 --> 00:38:36,080 I mean, it was sort of like he was an equal opportunity 725 00:38:36,200 --> 00:38:39,480 antagonist when it comes to sort of tribe and. 726 00:38:39,480 --> 00:38:41,440 Crypto. What's kind of hilarious to me 727 00:38:41,440 --> 00:38:45,160 about that is there was a brief window when Gary Gensler was 728 00:38:45,160 --> 00:38:48,480 initially nominated where the cryptocurrency industry was 729 00:38:48,480 --> 00:38:52,200 excited about him because he had lectured on cryptocurrency, 730 00:38:52,400 --> 00:38:55,360 because he had shown some like openness and familiarity with 731 00:38:55,360 --> 00:38:57,280 the industry. And then they very quickly 732 00:38:57,280 --> 00:39:00,160 changed their tune. Yeah, like I told a joke the 733 00:39:00,160 --> 00:39:03,400 other day, you know, 20 that crypto industry was briefly very 734 00:39:03,400 --> 00:39:06,480 excited because they said Gary got crypto, but also like Gary 735 00:39:06,480 --> 00:39:08,440 got crypto. So it's a real monkey problem 736 00:39:08,640 --> 00:39:11,040 monkey situation. Like you want a securities 737 00:39:11,040 --> 00:39:14,320 regulator who understands crypto, like be careful of that 738 00:39:14,320 --> 00:39:15,800 because it also means he understands it. 739 00:39:15,800 --> 00:39:20,000 So like like notwithstanding his approach to enforcement, like he 740 00:39:20,000 --> 00:39:23,720 like I think I will say this like I have had my issues. 741 00:39:23,840 --> 00:39:27,800 I think he was more right than wrong on crypto, but I think 742 00:39:27,800 --> 00:39:31,120 also, as I've been told at various points in my career, 743 00:39:31,120 --> 00:39:32,600 being right isn't a bulletproof vest. 744 00:39:32,600 --> 00:39:36,280 And so I think he his approach made his life a lot more 745 00:39:36,280 --> 00:39:40,160 difficult than I needed to be. Yeah, I think it's proven that 746 00:39:40,680 --> 00:39:45,400 at least under his reign, enforcement, like enforcing 747 00:39:45,520 --> 00:39:50,000 regulation has not worked. And that might just be because 748 00:39:50,520 --> 00:39:54,400 the arguments they made in courts were poorly done or like, 749 00:39:54,480 --> 00:39:58,360 I, I don't know why it hasn't appropriately worked, but like, 750 00:39:58,560 --> 00:40:02,600 I think the Ripple case was really a turning point where it 751 00:40:02,600 --> 00:40:07,760 was like, oh wow, this has been incredibly ineffectual and 752 00:40:07,760 --> 00:40:09,200 inefficient. And. 753 00:40:09,720 --> 00:40:11,680 Wasted everyone's time and money, yeah. 754 00:40:11,920 --> 00:40:15,280 And now, like you guys talked about it on your SEC episode, so 755 00:40:15,280 --> 00:40:18,120 I don't want to sort of rehash it, but I mean, he was whatever 756 00:40:18,120 --> 00:40:20,840 my criticisms of Gary Ganser, he was also between a rock and a 757 00:40:20,840 --> 00:40:24,040 hard place because, you know, the the same industry that 758 00:40:24,040 --> 00:40:26,800 attacked him, you know, and same politicians that attacked him 759 00:40:26,800 --> 00:40:31,840 for regulation by enforcement also attacked him for trying to 760 00:40:31,840 --> 00:40:34,600 regulate FTX and then attack him from out regulating FTX not 761 00:40:34,600 --> 00:40:37,560 before blew up. So, and in a lot of ways, being 762 00:40:37,640 --> 00:40:41,240 a regulator is really thankless if you happen to be there when 763 00:40:41,240 --> 00:40:44,320 something goes spectatically wrong, because you almost never 764 00:40:44,320 --> 00:40:46,080 can catch it before it really blows up. 765 00:40:46,080 --> 00:40:48,920 You just hope to catch it before it like becomes, you know, a 766 00:40:48,920 --> 00:40:52,320 world breaking event. So I, I, I don't think he was in 767 00:40:52,320 --> 00:40:55,040 a particularly winnable situation. 768 00:40:55,120 --> 00:40:57,600 Now. I think he, his approach and his 769 00:40:57,720 --> 00:41:00,920 political ambitions probably made it even less winnable. 770 00:41:00,960 --> 00:41:03,840 But like, it's like, I just think he was in AI. 771 00:41:03,840 --> 00:41:06,440 Think the other thing to think about when he launched is really 772 00:41:06,520 --> 00:41:11,880 this he launched it's real sort of crypto attack. 773 00:41:11,880 --> 00:41:15,000 It was in the crypto winter was happening, you know, like there 774 00:41:15,000 --> 00:41:16,720 were a lot of people and I would say I was one of them that said, 775 00:41:16,720 --> 00:41:18,320 look, this thing's going to burn out anyway. 776 00:41:18,720 --> 00:41:20,720 So he, you know, he's going to come in with all these actions, 777 00:41:20,720 --> 00:41:23,720 mop up the mess. You know, FTX has blown up. 778 00:41:23,720 --> 00:41:26,520 All these things are blowing up. It'll be gone anyway by the time 779 00:41:26,520 --> 00:41:29,240 he's done and that obviously it's proved far more resilient 780 00:41:29,240 --> 00:41:32,480 than certainly I thought it was and I think far more resilient 781 00:41:32,480 --> 00:41:33,800 than the policymakers thought it was. 782 00:41:33,800 --> 00:41:36,480 So then they were places started, numbers started going 783 00:41:36,480 --> 00:41:39,520 up again, and all of a sudden he became bad guy again. 784 00:41:39,720 --> 00:41:43,240 I think there are places you can criticize Gary Gensler, but like 785 00:41:43,240 --> 00:41:48,760 even a lot of his crypto focused enforcement was reasonably 786 00:41:48,760 --> 00:41:50,440 successful. And even the cases that are 787 00:41:50,440 --> 00:41:54,000 still ongoing, most of the ones that are coming to my mind seem 788 00:41:54,000 --> 00:41:58,360 like justified by at least some amount of legitimate concern 789 00:41:58,360 --> 00:42:00,200 about like rule breaking and things like that. 790 00:42:00,600 --> 00:42:05,600 Like they're there was never really a possibility of there 791 00:42:05,600 --> 00:42:09,640 being new crypto legislation coming through Congress in the 792 00:42:09,640 --> 00:42:10,960 last several years. Yeah. 793 00:42:11,000 --> 00:42:14,440 There's never been like enough of a majority or a bipartisan 794 00:42:14,440 --> 00:42:17,320 coalition that was ever actually going to make that happen. 795 00:42:17,560 --> 00:42:20,400 I will say that part of the issue that I, that part of the 796 00:42:20,400 --> 00:42:25,120 criticism for a lot of people is that he was going after, you 797 00:42:25,120 --> 00:42:29,280 know, like famous people doing NFT projects where you're like, 798 00:42:29,280 --> 00:42:30,200 yeah, good, great. Yeah. 799 00:42:30,200 --> 00:42:34,520 Like I'm not saying it's not a worthy case to go after, but 800 00:42:34,520 --> 00:42:38,960 it's it also feels like an A super easy slam dunk and as as 801 00:42:38,960 --> 00:42:40,720 opposed to. That's the thing. 802 00:42:40,720 --> 00:42:44,000 Well, and like, The thing is, if you don't go after those cases, 803 00:42:44,040 --> 00:42:46,680 right, if you don't go after Jake Paul or Logan Paul or 804 00:42:46,680 --> 00:42:50,680 whatever promoting Tron, yeah, that becomes permissible, right? 805 00:42:50,680 --> 00:42:52,960 You need to go after the people who are going to immediately 806 00:42:52,960 --> 00:42:56,240 settle, and in so doing, discourage everyone else from 807 00:42:56,240 --> 00:42:59,240 beginning that type of behavior. I'm not I'm not arguing against 808 00:42:59,240 --> 00:43:01,880 that. I'm saying that it if if that's 809 00:43:01,880 --> 00:43:04,000 the only thing that you're but. It's not right. 810 00:43:04,040 --> 00:43:07,000 He went after like the top crypto firms in the United 811 00:43:07,000 --> 00:43:10,040 States, Coinbase, Gemini's like circle. 812 00:43:10,880 --> 00:43:13,400 He went after Polonie X and Justin's son. 813 00:43:13,440 --> 00:43:18,080 So I think we've been talking about stable coins like the, the 814 00:43:18,080 --> 00:43:21,960 idea that there's no legislation and no actions taking taken 815 00:43:21,960 --> 00:43:24,920 against any of these coins, whether they've done 816 00:43:24,920 --> 00:43:27,880 spectacularly well or they've spectacularly failed. 817 00:43:28,160 --> 00:43:30,840 Like the idea that no one has ever come after them for 818 00:43:30,840 --> 00:43:35,200 anything or tried to be like, hey, here's I, I, you know, even 819 00:43:35,200 --> 00:43:39,080 when Tether got in trouble, the amount of trouble that they got 820 00:43:39,080 --> 00:43:43,760 in was so minimal. And the, the deal that they made 821 00:43:43,760 --> 00:43:48,440 with New York was so easy to just be like, yeah, here's 822 00:43:48,520 --> 00:43:51,120 whatever the information you want and, and we'll pay our $30 823 00:43:51,120 --> 00:43:54,320 million fine or whatever it was and move on like that. 824 00:43:54,320 --> 00:43:59,680 Those, the inability to do real legislation and ensure real 825 00:43:59,680 --> 00:44:02,800 regulation is occurring so that everyone knows what's going on, 826 00:44:03,200 --> 00:44:06,880 I think has been the the real criticism as opposed to like, 827 00:44:07,360 --> 00:44:11,640 yeah, I know he's gotten a few of these people for, I don't 828 00:44:11,640 --> 00:44:13,480 know, like Gemini Earn or whatever. 829 00:44:13,480 --> 00:44:15,160 Like how many people use that Bennett? 830 00:44:15,200 --> 00:44:17,440 You know what I mean? I mean, very few, but that's 831 00:44:17,440 --> 00:44:20,560 kind of broadly a crypto adoption problem. 832 00:44:20,600 --> 00:44:24,480 You know, like the amount of money and attention that goes 833 00:44:24,480 --> 00:44:27,480 into crypto is still somewhat disconnected from the number of 834 00:44:27,480 --> 00:44:29,400 like, people who actually use crypto. 835 00:44:29,400 --> 00:44:32,680 The celebrity thing, I mean that is a standard playbook, like you 836 00:44:32,680 --> 00:44:35,080 go out to the most samuest people because you hope set 837 00:44:35,080 --> 00:44:37,560 example. You know, they did with IC O 838 00:44:37,560 --> 00:44:41,200 clay did with IC OS. It's a pretty standard approach. 839 00:44:41,200 --> 00:44:44,320 I think, you know, just there's so much money in a small number 840 00:44:44,320 --> 00:44:48,360 of people's hands that it's and see, it's you know, SEC doesn't 841 00:44:48,360 --> 00:44:50,560 have the right to fine people for like a trillion dollars. 842 00:44:50,560 --> 00:44:52,520 I mean, ultimately, like there are certain like there's sort of 843 00:44:52,520 --> 00:44:56,880 limits to how much they can do. And so I think the problem, if 844 00:44:56,880 --> 00:45:00,240 there is to be, I think Bennett's point, like SEC is 845 00:45:00,240 --> 00:45:04,920 still won far more than they've lost on crypto cases under I'm 846 00:45:04,960 --> 00:45:06,800 against her. So I think it's, you know, when 847 00:45:06,800 --> 00:45:09,160 you're in the social media sphere and it's very easy to get 848 00:45:09,160 --> 00:45:11,000 like it's stupid. It's very easy to get sucked in 849 00:45:11,000 --> 00:45:14,960 that this is a a bigger industry than it is, but not, you know, 850 00:45:14,960 --> 00:45:18,120 it's big and lots of people have lots of money, but you know, 851 00:45:18,120 --> 00:45:21,320 it's not it's relatively larger financial industry. 852 00:45:21,320 --> 00:45:24,320 It's not that it's not that big and it's easy. 853 00:45:24,400 --> 00:45:28,760 You know, every time FC has a set back in court, you hear 854 00:45:28,760 --> 00:45:31,600 about that ceaselessly for months, whereas when you know 855 00:45:31,600 --> 00:45:34,640 they they win, it just sort of gets brushed aside. 856 00:45:34,640 --> 00:45:38,040 So I think we should say like they've had more success than 857 00:45:38,040 --> 00:45:40,400 not. I think the challenge is he 858 00:45:40,400 --> 00:45:43,800 never the SEC never went the extra step when they could have 859 00:45:43,800 --> 00:45:45,800 and introduced certain guidelines or regulations. 860 00:45:45,800 --> 00:45:48,520 But you know, sort of for these, you know whether. 861 00:45:48,880 --> 00:45:51,160 You know. Gensler, I believe, is sincere 862 00:45:51,160 --> 00:45:54,000 belief that the existing rules come right, that they didn't 863 00:45:54,000 --> 00:45:58,000 need to do the rules, notwithstanding the crypto 864 00:45:58,000 --> 00:46:00,640 custody rule, which sort of contradicts that position. 865 00:46:00,640 --> 00:46:04,360 But so I just think it's sort of it's sort of just been a it's a 866 00:46:05,480 --> 00:46:08,840 they've been in a weird place. They were led by probably not 867 00:46:08,840 --> 00:46:13,200 the person, the best person to lead the crusade because you 868 00:46:13,240 --> 00:46:17,200 need to get public opinion and policy makers on your side and 869 00:46:17,200 --> 00:46:19,720 you can't sort of burn the boats on your way out. 870 00:46:19,720 --> 00:46:23,040 So I mean, if you look at and anyone familiar with Gensler's 871 00:46:23,240 --> 00:46:25,840 terms, I had to be his term at the CFTC. 872 00:46:26,440 --> 00:46:28,080 I mean, it ended largely the same way. 873 00:46:28,080 --> 00:46:31,200 Like it didn't end with like, you know, like high fives on the 874 00:46:31,200 --> 00:46:33,720 way out the door. A lot of people and especially 875 00:46:33,800 --> 00:46:36,640 international regulators were very happy to see him no longer 876 00:46:37,560 --> 00:46:40,880 at the CFTC. So he it part of it is a sort of 877 00:46:40,880 --> 00:46:42,800 a singular management for salad style. 878 00:46:42,920 --> 00:46:45,360 Yeah, I, I just wanted to highlight like I think 879 00:46:45,800 --> 00:46:48,120 sometimes, especially in the crypto information bubble, 880 00:46:48,120 --> 00:46:52,920 there's certain people who like except as true the crypto 881 00:46:52,920 --> 00:46:55,280 industries framing of Gensler's term. 882 00:46:55,760 --> 00:46:58,280 And I think there's a significant gap in certain 883 00:46:58,280 --> 00:47:03,040 places between reality and like the cryptocurrency freezing 884 00:47:03,040 --> 00:47:05,320 there or cryptocurrency industry framing on it. 885 00:47:05,840 --> 00:47:09,600 Especially since like biggest, most prominent loss I can come 886 00:47:09,600 --> 00:47:12,920 up with like for the SEC when it comes to crypto is XRP. 887 00:47:12,920 --> 00:47:14,400 And that's a Clayton suit, right? 888 00:47:14,400 --> 00:47:17,440 Not a Gensler suit? Yes, I mean, I, I think it my 889 00:47:17,480 --> 00:47:21,160 biggest criticism of Gensler, it's not so much like I said, 890 00:47:21,160 --> 00:47:24,000 like he was mostly right. I think it was just his approach 891 00:47:24,720 --> 00:47:27,800 and knowing you were heading into a hostile judiciary and 892 00:47:27,800 --> 00:47:29,880 knowing that like Chevron was going to get killed at some 893 00:47:29,880 --> 00:47:31,560 point. Like that was the writing was on 894 00:47:31,560 --> 00:47:34,080 the wall that at some point they were going to run out of the 895 00:47:34,080 --> 00:47:39,040 road for agency discretion to not come up with some sort of 896 00:47:40,000 --> 00:47:42,960 guideline on how you could register a coin, for example. 897 00:47:43,320 --> 00:47:44,480 You know, I think it's a fair criticism. 898 00:47:44,720 --> 00:47:47,760 It says you can register a coin security and then you go to them 899 00:47:47,760 --> 00:47:49,440 and you say, how do you do that? And they say, I don't know. 900 00:47:49,440 --> 00:47:51,600 I mean, that's a fair, but that is a fair criticism. 901 00:47:51,800 --> 00:47:53,800 I don't relation by enforcement. I don't think it's a fair 902 00:47:53,800 --> 00:47:55,920 criticism. That's how regulation and 903 00:47:55,920 --> 00:47:58,880 enforcement both work. So I just think, and I and I'm 904 00:47:58,880 --> 00:48:03,000 also, I will say like I as a sort of more track by person, 905 00:48:03,000 --> 00:48:06,480 like I think, as I mentioned a little while ago, like his 906 00:48:06,480 --> 00:48:11,960 tenure and his on the track by side has been equally as poorly 907 00:48:12,120 --> 00:48:13,640 received. And I would say as much as he 908 00:48:13,640 --> 00:48:18,240 was mostly right in crypto, he was mostly wrong on trap fry and 909 00:48:18,240 --> 00:48:20,200 I and I. So I think like that is sort of 910 00:48:20,200 --> 00:48:22,200 a double whammy for a sitting core commissioner. 911 00:48:22,200 --> 00:48:24,480 So I I think it just leads us in a weird. 912 00:48:24,920 --> 00:48:27,240 We should be in a better place because I think Ben and Henry 913 00:48:27,240 --> 00:48:31,680 have pointed a lot of these cases weren't bad on the face of 914 00:48:31,680 --> 00:48:33,520 it. You know, you could argue or 915 00:48:33,520 --> 00:48:34,960 certain coin securities, yes or no. 916 00:48:34,960 --> 00:48:37,120 I mean, that's a that's a perfectly fine thing to argue, 917 00:48:37,120 --> 00:48:42,280 but I don't think it was as disastrous as it it now seems, I 918 00:48:42,280 --> 00:48:44,000 guess. Another thing that I forgot to 919 00:48:44,000 --> 00:48:46,720 say, though, is that the other flip side of this criticism is 920 00:48:46,720 --> 00:48:52,280 that FTX happened like that FTX was allowed to have an FT, an 921 00:48:52,280 --> 00:48:56,640 FTXUS, that they were allowed to SPF and others were allowed to 922 00:48:56,640 --> 00:48:59,400 get the ear of politicians that they were allowed to have 923 00:48:59,400 --> 00:49:02,680 meetings with the SEC. That that I, I hear, I hear the 924 00:49:02,680 --> 00:49:05,040 idea of like, well, yeah, why? Why wouldn't they? 925 00:49:05,320 --> 00:49:07,120 But. But like, we need to be clear 926 00:49:07,120 --> 00:49:11,320 that like the critics of the SEC would never permit an SEC see 927 00:49:11,320 --> 00:49:15,320 that would have been taking aggressive action against FTX in 928 00:49:15,320 --> 00:49:16,920 July of 2022. That's true. 929 00:49:16,920 --> 00:49:18,400 I mean, they said all that's true. 930 00:49:18,560 --> 00:49:21,800 There were politicians that sent my letter said back off FTX. 931 00:49:22,040 --> 00:49:24,280 Like somehow that's been like memorial. 932 00:49:24,280 --> 00:49:27,080 So like. And those same politicians, come 933 00:49:27,160 --> 00:49:30,880 November 15th or whatever, a couple days after they declared 934 00:49:30,880 --> 00:49:34,000 bankruptcy, sent another letter saying, oh, you were meeting 935 00:49:34,000 --> 00:49:35,840 with this guy but didn't sue him. 936 00:49:36,040 --> 00:49:38,400 Are you in on this, Gary Gensler? 937 00:49:38,720 --> 00:49:42,080 Like. There was no and there was no 938 00:49:42,080 --> 00:49:44,640 enforcement that the cryptocurrency industry was 939 00:49:44,640 --> 00:49:46,240 going to accept from Gary Gensler. 940 00:49:46,240 --> 00:49:48,680 A single case was too many cases for them. 941 00:49:48,680 --> 00:49:50,400 Yeah. Sure, I agree, I think, but I 942 00:49:50,400 --> 00:49:55,000 think that there is a it's this it's similar to like the I think 943 00:49:55,000 --> 00:49:59,560 the anger people felt after Enron or after Bernie, right 944 00:49:59,560 --> 00:50:03,000 where like I mean, Bernie is the best example probably where you 945 00:50:03,000 --> 00:50:06,520 where you know, the SEC literally investigated him 946 00:50:06,720 --> 00:50:09,480 multiple times and was like everything's fine. 947 00:50:09,480 --> 00:50:12,720 I guess where you're just like, what are you guys doing? 948 00:50:13,440 --> 00:50:17,440 And I think that if you if you want a regulator to behave like 949 00:50:17,440 --> 00:50:21,720 a regulator and actually stop fraud, then that is a valid 950 00:50:21,720 --> 00:50:23,520 criticism. Like, yeah, you should have been 951 00:50:23,760 --> 00:50:27,200 looking into FTX in This American and his weird arbitrage 952 00:50:27,200 --> 00:50:29,920 practices, and you should have been looking at that for sure. 953 00:50:30,400 --> 00:50:34,800 But alternatively, you're right, the crypto industry, anyone in 954 00:50:34,840 --> 00:50:37,200 the in the cryptocurrency industry saying, yeah, why 955 00:50:37,200 --> 00:50:40,120 didn't he catch FTX is blowing smoke up your ass because they 956 00:50:40,360 --> 00:50:42,040 they wouldn't have wanted him to anyway. 957 00:50:42,080 --> 00:50:45,360 So I that's fair, but I think anyone who wants prop good 958 00:50:45,360 --> 00:50:48,200 regulation, that's a valid criticism because it's like, 959 00:50:48,200 --> 00:50:50,160 why, why didn't you catch something like that? 960 00:50:50,160 --> 00:50:54,080 Like why, why not? You know, what are you guys 961 00:50:54,080 --> 00:50:54,400 doing? I. 962 00:50:54,560 --> 00:50:57,080 Don't want to go too far down the FTX rabbit hole, but I will 963 00:50:57,080 --> 00:51:01,560 just say that FTXUS still hasn't really been charged with 964 00:51:01,560 --> 00:51:05,400 anything, which I find by blowing like I don't understand 965 00:51:05,400 --> 00:51:12,200 how FTX Bermuda is honestly criminal and but FTXUS has no no 966 00:51:12,200 --> 00:51:16,600 members of FTXUS have ever faced any serious charges are as far 967 00:51:16,600 --> 00:51:18,520 as I know. But I think part of it. 968 00:51:18,520 --> 00:51:21,200 I think your point about, you know, you did see the same anger 969 00:51:21,200 --> 00:51:25,120 at the SEC, but not blew up. Like when big frauds happen, the 970 00:51:25,120 --> 00:51:27,160 regulators always give them a knack because there's always 971 00:51:27,240 --> 00:51:28,840 everything always looks better in hindsight. 972 00:51:28,920 --> 00:51:30,600 I mean, everything looks obvious in hindsight. 973 00:51:30,600 --> 00:51:33,320 So in hindsight, yeah, of course this was criminal. 974 00:51:33,520 --> 00:51:35,840 Manos facts. The SEC didn't investigate, but 975 00:51:35,840 --> 00:51:38,320 didn't actually bother to check the DTC codes. 976 00:51:38,320 --> 00:51:41,720 You know, like so there are some like really simple oversights, 977 00:51:41,720 --> 00:51:44,800 but I think if you go to bring a sort of full circle ish, you 978 00:51:44,800 --> 00:51:47,880 know what, you bring this FTX into the CFTCSCC part. 979 00:51:47,880 --> 00:51:52,520 Like, you know, you remember like the CFTC was within like a 980 00:51:52,560 --> 00:51:57,320 hair's breadth of approving FDF self clearing for FTX, which 981 00:51:57,320 --> 00:52:00,080 would have been a major shift in policy because a lot of the 982 00:52:00,080 --> 00:52:02,600 frictions we have in the financial infrastructure, 983 00:52:02,880 --> 00:52:04,880 they're intentionally there's a certified brick. 984 00:52:04,880 --> 00:52:08,040 So you can't, you know, do fraud as easily. 985 00:52:08,040 --> 00:52:11,000 And you know, that was dangerously close to being was 986 00:52:11,000 --> 00:52:13,760 through because the CFTC was easier to lobby than the SEC at 987 00:52:13,760 --> 00:52:15,800 the time. And this was back to where we, 988 00:52:15,800 --> 00:52:19,920 you know, opened up here. One of the reasons having a 989 00:52:19,920 --> 00:52:23,680 single market securities market regulator would make that sort 990 00:52:23,680 --> 00:52:27,280 of regulatory arbitrage a lot harder to pull off. 991 00:52:27,480 --> 00:52:30,800 You know, and I think that's really ultimately the case. 992 00:52:31,080 --> 00:52:32,920 It's still the case. The mergence will excess. 993 00:52:32,920 --> 00:52:36,360 And you know, we can look at the FDX thing and say, how does CFTC 994 00:52:36,360 --> 00:52:39,920 and FCC be more aligned? I'm not sure they would have 995 00:52:39,920 --> 00:52:41,800 caught it quicker. But, you know, SDF might not 996 00:52:41,800 --> 00:52:45,440 have been as pervasive and persuasive in his sort of 997 00:52:45,440 --> 00:52:49,200 lobbying efforts with the CFTC. That's a great way to round that 998 00:52:49,200 --> 00:52:51,040 out. Sean, Thank you for joining us. 999 00:52:51,160 --> 00:52:57,760 That was a fun conversation and I'm I'm looking forward to no 1000 00:52:57,760 --> 00:53:02,040 more regulation anymore. Well, thanks for having me. 1001 00:53:02,040 --> 00:53:03,560 It was a good time. It's fine, you know, so it's you 1002 00:53:03,560 --> 00:53:07,120 know, you interact with people online in text based format 1003 00:53:07,120 --> 00:53:09,240 forever. It's nice to finally see and 1004 00:53:09,240 --> 00:53:10,800 talk to people. So thanks for having me.