← The Wolf Of All Streets
The Wolf Of All Streets
Bitcoin's Big Moment: Senator Gillibrand’s Plan To Lead The Crypto Industry Forward
00:31:22
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- [00:00]
A
You can expect an FTX if you don't regulate the market because there weren't rules of the road. And now FTX was unique because it was a Bahamian business. This is no different than selling baseball cards, and it could be worth something today and worth nothing tomorrow. So protect your money, because we don't want adversarial countries such as China issuing a stablecoin just to screw with our market and have rules of the road that don't apply to them because they've issued it in China.
- [00:30]
B
2025 should finally be the year that we get clear legislation on cryptocurrencies in the United States, with a particular focus on stablecoins and market structure. But this isn't a new story. I sat down with Senator Kirsten Gillibrand in 2022 to talk about her proposed legislation with Cynthia Lummis at the time, around stablecoins, market structure and everything else, cryptocurrency. Well, here we are three years later with the perfect political bipartisan environment to get legislation done, which she believes will happen in the coming months. I sat down with her once again to talk about everything Washington, crypto and legislation. This is a conversation you cannot miss. That's dope. So I have to give you quite a bit of credit. I looked back and it's been three years since we spoke, and it was in June of 2022, which to me seems like 100 years ago, that you had already proposed the finance the Responsible Financial Innovation act with Senator Lummis. Now we're finally starting to see legislation taken seriously. But you were arguably three years ahead of the curve and had remained an advocate for this industry since. Perhaps we should just start with why in the first place you decided that this was a cause worth taking up, why you proposed the legislation in the first place as long ago as 2022?
- [02:07]
A
Well, I think that cryptocurrency, digital assets and blockchain is technology that can address a lot of challenges and make a difference in the lives of a lot of Americans and a lot of New Yorkers. I think that digital assets and defi and cryptocurrency can be a game changer when it comes to access to capital. I think there's a great deal of people worldwide, people in the United States who are unbanked or underbanked, and to be able to have digital representation of value that can be traded or sent or used can change who has access to financial services, who has access to banking, who has access to sending resources in a frictionless way. So I think it democratizes finance in a very meaningful way. I think the blockchain technology can be utilized in myriad of ways, starting with healthcare, with identity, with any type of ownership, any type of data and information. It could ultimately be used for. OpenAI. There's so many uses that really just the technology needs to develop and entrepreneurs and innovators need to use it and see how it can be used to change things and make them better. So I've always been interested in this area. When I first was briefed by a bunch of lawyers and people in the space, I was just amazed at the use cases and the potential for it. And so when I heard that Cynthia Lummis was writing legislation, particularly on a market structure bill, I immediately signed up and said, let's work on this together. So we've been working on market structure and related issues for three years. We've done multiple drafts of bipartisan legislation. We are working today on a new draft to try to combine forces with House, the House as well. And we've done smaller bills, such as the stablecoin bill, that has been debated and marked up in the Senate already. So we feel very excited about the future and about the possibility of regulating this industry so we have more safety and soundness, more transparency, more accountability, and more consumer protection so that the United States can be a fair player in this space and people can know if they want to invest in digital assets, they can do so safely in the United States.
- [04:39]
B
We had this interesting political environment where when you first proposed the bill, I think it was generally viewed as bipartisan. Then, of course, FTX collapsed and it seemed that the Republicans took up the torch for cryptocurrencies and there was some antagonistic forces, potentially the Democratic Party. It seems now the pendulum has swung all the way back to where this is once again a bipartisan issue. You stayed on board the entire time. Right. You resubmitted this act in 2023, even after FTX has collapsed, and you've once again remained a champion for the industry. Do you feel somewhat vindicated that now we're in a period where you can pass some of this legislation? And how have you chosen which parts to take up initially? Obviously, stablecoin seems to be the lowest hanging fruit.
- [05:26]
A
Yeah, stablecoin is very simple. Like you can describe a stablecoin as a digital version of a traveler's check to someone who's over 50, and they'll understand that it's something that's meant to be a full representation of a value. We pegged our bill to the US dollar so you had to have a one to one backing. We created very clear oversight accountability. Who can be issuers, what circumstances, who can issue. We really tried to make this as safe and as common sense and as transparent as possible. So if we did get some legislation done, it could show other legislators that this is not scary, that you can actually learn this industry, you can understand it and then you can have opin about how to make it more reliable, more consumer protection oriented and more stable. So yes, low hanging fruit, that's absolutely true. And so it made it very easy for us to try to get legislation. Even last Congress we were trying to push our stablecoin bill this Congress. The reason why I stay focused on this industry is because I'm a former securities lawyer and there's really nothing you can't regulate. You should be able to create a regulatory framework for any type of financial services. You know, people didn't understand credit default swaps during the financial collapse in 2008. I understood it very clearly. And this is what the securities industry is about. How you can take something of value, package it in a way that a purchaser wants to buy it and then you sell it. And that's what financial services is. And so doing a digital representation of value is not that different. If you're packaging real estate investments, you're packaging different types of investment contracts. I mean this is not new, it's quite old. And so regulating cryptocurrency and blockchain technologies isn't hard. But a lot of people thought it was strange and didn't want to get immersed in it, didn't want to understand it, thought it was not worth time or effort or regulation. And I think ahead in the sanded approach is the most dangerous approach you could have because then US based consumers don't have a protected market that they know there's oversight accountability by regulators who know what they're doing, who require firms to publish that information, to have oversight and accountability and to have rules of the road.
- [08:02]
B
It's interesting because we obviously had antagonistic regulation over the past few years, many pointing to, you know, Gary Gensler's attacks on the industry. Everything's a security. The lawsuits against everyone, seemingly that was in the United States, those have all now been dropped. But in his defense, perhaps it does require legislation for the regulators to actually be able to act. So I don't think it's quite fair to put all of the responsibility on the regulatory agencies until we have this legislative clarity. So it seems like there's a push pull here and that we just need clear rules of the road, which obviously is what you're trying to propose with markets.
- [08:37]
A
And that was my view the whole time. Like you can expect an FTX if you don't regulate the market because there weren't rules of the road. And now FTX was unique because it was a Bahamian business, it wasn't a US based business. And what he did, if he had done it in the United States was illegal. And the reason why he was held accountable by the US system is because there were US buyers then there wasn't supposed to be. So there's nothing you can't regulate. And anyone who says there's too much fraud or corruption or too much illicit usage or terrorism financing will then regulate it, don't ignore it. And so I never understood the reluctance to do the work. And that's why I stayed very fixated on it because I'm a former securities lawyer. We can regulate things. We can use the banking system, we can use the security system, we can use the commodity system. We have the cftc, we have the sec, we have the the occ, we have the Fed, we have regulators that do this work all day long. And there's no reason why you couldn't figure out how this industry should be best regulated.
- [09:46]
B
So stablecoins are the lowest hanging fruit. It seems like we've had a number of parties jump on attempts to legislate it. So you obviously have the Genius act, which I think is born of your previous efforts coming out of the Senate, passing committee, going to the Senate floor. Now we have the Stable act in the House coming out of committee and heading to the House floor. Why do we need multiple bills from multiple houses on the same ideas?
- [10:12]
A
Well, the point you bring up is a good one, which is why our team is now trying to work with the House in advance on a market structure bill. Because we don't know when we'll get votes on this legislation and we don't know how much time Thune's going to give to any type of cryptocurrency legislation. So we may ultimately put it all in one bill. So we're going to be ready for that. So we're going to work now on the market structure bill and we're going to try to work with the House in advance. So if we could have one piece of legislation that would be better because these things aren't easily conferenced, to be honest. You know, when you have a different regulatory structure for an issue of first impression, you either go one way or the other. Way. So why not make have those debates now, not after the House and Senate pass different things. So this market structure debate might be the place where we can talk about the differences in the stablecoin bills, maybe put a consensus version in the market structure bill. That might be a better way to go.
- [11:17]
B
What are the notable differences between the potential stablecoin legislations? It's interesting. We're in this sort of scenario where we're getting what we want, we have the environment to do it now we have to be careful that it's actually sensible legislation.
- [11:29]
A
Yes.
- [11:30]
B
And that the unwanted consequences that we can't see down the road aren't there. I mean, MICA obviously was passed in Europe. Everybody applauded the fact that they were getting regulatory clarity. But now we're seeing Binance have to delist Tether in Europe, for example, the CEO of Tether saying, well, our biggest risk now is that we have to use small fractionally reserved banks in Europe to back our assets. And look what happened with Silicon Valley.
- [11:54]
A
Right.
- [11:54]
B
So there could be unintended consequences to the way that stablecoins are regulated and legislated on in the United States.
- [12:00]
A
So they just finished their markup yesterday. So I need to look at what came out of committee and do a side by side and assess if there's parts of their bill that's better than ours or not. I really focused on making sure that if you sell or issue in the United States, you're going to have the same regulatory parameters. And so I need to make sure that language is cleaned up because we don't want adversarial countries such as China issuing a stablecoin just to screw with our market and have rules of the road that don't apply to them because they've issued it in China. And because it's issued in China, we're not going to get the benefit of any oversight or regulatory check on them. They're not going to permit it. So that's important that if you are selling to our consumers in the United States, you have the same rules. And I think we can do that. So that's one area. I'm going to look at both versions. So that's the one piece. And I want some language in addition to what's in the Genius Act. I think we could have cleaned it up just one level more. And I think there's a lot more clarity after these two markups about what we can do. So I was actually going to write an amendment anyway, so this might be able to be put in our market Structure bill, perfect version and do it that way.
- [13:20]
B
So stablecoin legislation could somewhat become subordinate to market structure.
- [13:24]
A
Legislation certainly can, which would be a big piece.
- [13:27]
B
And so having been a securities lawyer talking about the fact that these things can be sensibly regulated, right now we're still pointing to the Howey test from the 1930s on how to determine what is or is not a security. Of course, I think we all agree that digital assets don't necessarily fall inside that framework. When building a market structure bill, how in your head do you think about what might be a commodity, what might be a security, what might be a collectible, what might be deemed as something else?
- [13:54]
A
Yeah, some stuff is a collectible. Yes, correct. So you just need to be able to create a framework where people can identify who their regulator is and what rules they have to follow. And you can use pieces of the Howey test, you can use case law, but in general, people know what a commodity is. It's fully decentralized, it's 100% fungible, there's nothing unique about it. And there's no centralized company that's issuing it. And the value goes up and down based on the, the success or failure of that centralized company. Those things, you know, that, that it has to be fully decentralized and fungible to be a commodity. So those are just obvious things. Most people who've looked at this, they pretty much assume Bitcoin is a commodity. Even Gary Gensler thought it was a commodity. So, you know, and that's, that's a good portion of the market. That's about 60% of the market. The rest though, you're going to have to assess because people will issue a cryptocurrency from a centralized company and it will go up or down based on how this company's being managed. That might, at least on issuance, might well be a security. And over time, after, let's just say you have an issuance that goes out and is fully issued and it changes over time and that company is no longer needed, it can become a commodity. So you'll have to have an assessment process. In our bill, we had sort of like a self regulating organization that was staffed by someone from treasury, somebody from sec, somebody from cftc, somebody from occasional experts in the field to be able to do this analysis in real time. And whether that, that review board survives, they don't know. That's what we're looking at right now. So how do we initially categorize digital assets? And then who decides if they are indeed that kind of Digital asset. And you could go either way. The house from fit 21 had one version of it, we had a different version of it. That's what we're wrestling with right now.
- [16:01]
B
Monumental challenge when we're launching 6, 7 million currencies, cryptocurrencies or memes every two to three months in this industry to figure out what everything that is being launched is. So I. Yeah, and then you need to tell.
- [16:16]
A
And you have to tell consumers like a meme coin when. When Trump issues his meme coin, like it's an absurdity and it's a collectible and people throw money at President Trump because it's his inaugural and they want to show that they love him. And the value goes up to I don't know how many billions.
- [16:36]
B
It went up 70 billion in market.
- [16:37]
A
Cap and then it collapsed to 1 billion.
- [16:39]
B
Sub $10. Yeah, it's sub $10. It was at 75, I think, at the peak.
- [16:43]
A
Exactly. So people need to know. Consumers need to know. This is no different than selling baseball cards. And it could be worth something today and worth nothing tomorrow. So protect your money. Like, there's no. There's no even ecosystem from a regulatory perspective to tell people what they're actually participating in. And so think about the value that was lost just of people who followed and bought millions of dollars of a meme coin and then lost all that money. And it's disgraceful. So there has to be a framework for buyer beware. This is just a non substantive, non serious thing. It's like you're buying the T shirt of the candidate you like and it may have zero value in the future, but we have to be able to tell people that. And right now, we have no mechanism to tell them that a meme coin is no more than a joke, no less than a joke. It's just a joke. And you can buy it because you like it or not buy it because it's stupid. It's really up to you. But it's not something that has or carries value.
- [17:49]
B
It's a big challenge.
- [17:51]
A
It's a big challenge. And something like a meme coin makes a mockery of what people are trying to do from a very serious perspective in issuing stablecoins or issuing cryptocurrency that they want to be a worldwide currency and a worldwide placeholder of value. So it makes something that is very serious confusing to people. And then they don't know what's serious and what's foolish.
- [18:16]
B
Yeah, we had this unfortunate moment there where you could just launch a meme Coin and say it was a collectible and then you didn't have to worry about being a security. So everything that actually did have utility was unfortunately being completely left out. You had to fear that you would, you know, be prosecuted by the sec. So everything with utility that should have value basically was thrown outside the United States and you can launch complete jokes promoted by the President and seemingly totally fine.
- [18:45]
A
Yeah. And that's the absurdity of where we are right now. So back to your original point. That's why we need regulation and we need really clear regulation and we need very strong consumer protections. So, like, let's say you are issuing a meme coin. You know how when you buy a pack of cigarettes, it says, this will kill you. You need to have a warning label that says this has no value and you may lose all your money. Like, you have to tell people that this is not real.
- [19:11]
B
But as long as you do, then they should be free to do whatever they want.
- [19:13]
A
Then they can do whatever they want. Exactly. Like, think about our kids. They're on every computer game and they will spend all of your money buying the best sword for that game. They will buy the best outfit for that game. I mean, this is what the ecosystem is about. People want to buy things that have no value in this world. But to the kids online or the participants online or the person who wants that collectible, they believe it has value. That is their right, that is their choice. But you just need to tell them, and like we tell our children, you're just spending a lot of money and someone's getting very wealthy off your money. And, and, and that instead of spending that money, you're not going to be able to get that new pair of sneakers that is your birthday money. And you're spending it on the kit that your avatar is wearing. Like, it's just people are spending money and people are getting very rich off their money. President Trump got rich off his money. And that's why I want to know, did he breach the emoluments clause? He may well have. I don't know. We need a judiciary and lawsuits filed and we need the court to decide. But, like, this was a very easy way to make a president super rich by anybody who wanted to throw money at him.
- [20:24]
B
Yeah. Threaded the needle well for the emoluments clause, potentially by getting it in there right before he was inaugurated.
- [20:30]
A
Maybe. Yep. I don't know. Again, let's let the judge decide because we don't know.
- [20:35]
B
And it seems like convenient timing if that's what he was. Yeah.
- [20:38]
A
And it's. And again, back to the point of we need regulation so we can take this industry seriously. For those who think ignore it, it'll go away. Why would you give it the light of day? That's an absurdity. Because it's worldwide already, it's in the trillions of dollars of value. People want to participate, participate in this, in this financial services system. And if they have to participate in Europe or Asia, they will. But why not allow the United States, particularly New York, which is the center of the world financial markets, to be a major player? Our banks want to participate, our financial services institutions want to participate. Our regulator wants to participate. We have dfs and they're among the most sophisticated regulator when it comes to cryptocurrency and blockchain technologies. So we are ready to do the work. We have the smartest lawyers in the country focused on how do you regulate this properly? It's necessary, it's timely and I'm committed to getting it done.
- [21:35]
B
With all of these bills coming out of committee hitting the floor, when do you think it's reasonable to expect that we might get our first clear legislation on something crypto related this year?
- [21:46]
A
Well, yes, I think we can get something done by this year. I really do. There's so much momentum, there's so many thoughtful participants doing legislation now. Like before, as you remember, nobody wanted to mark up a bill, nobody wanted to put their ideas in. I was begging Gary Gensler, please give me line edits, just go through the bill, tell us what you like and don't. And I couldn't even get that from him. Cftc, different story. They gave us line edits. It's why we were able to get a hearing and a markup in the AG Committee. Debbie Stabenow led that effort with John Boseman. That's why we were able to move forward because that regulator was willing to help us write again legislation of first impression. We're trying very hard to get to get it right. And you do have to think of every version of what could create a collapse. What happens if there's a run on a stable coin? What happens if there's cybersecurity challenges? How do you make sure the back.
- [22:41]
B
That the pay gets fully.
- [22:42]
A
It's not back office, but you know what I mean? Like the architecture of it can't be violated or undermined. Like this is the work that has to be done by the smartest minds. And that's what we've been trying to ask for, the support from the smartest minds across the country. To make sure we are troubleshooting. It's why I've urged the Trump administration do not water this down. Do not try to just do fly by night. This has to be done well. The worst thing that could happen to the US based digital asset space is another collapse, another algorithmic stablecoin that blows up, another charlatan offering something that can easily be stolen or gets, you know, collapses in the next day. We don't want that. We want stability. And the innovation that comes from this could be groundbreaking, life changing, so valuable. So we want to get it right.
- [23:39]
B
I can tell you that there's many of us who live in the states who are very hopeful that we will see sensible legislation moving forward and can't thank you enough for sticking with it for the last three years through FTX and beyond because I know that it must have been a major political challenge for you for some of those years.
- [23:55]
A
Yeah, well I'm a New Yorker. I'm not afraid of much. And I also know when I'm right. I know I'm right. I know many other people do not either understand the issue or want to learn about the issue or see the vision, but over time I can present it over and over again as simply as possible so people can learn it, have opinions and then make it better. What I was so happy about the process in the Banking Committee is how many amendments there were and that each of those amendments that passed made the bill better because all those senators said I'm going to learn this enough to write an amendment to have an opinion about how to protect the industry better so that doesn't collapse so there's not unforeseen consequences so that consumers are protected first and foremost. And so that there's a, you know, what do we do in a bankruptcy? What do we do if there is fraud? What do we do? All those instances we had really good amendments and that made me so happy because I don't know all the answers. I only have a certain amount of background and understanding. There's, there's many other people who can contribute to making things better and that's why I'm excited that there's more interest now. So when Cynthia and I re introduce our market structure bill, hopefully in the next several weeks it will have reflection of more and more edits, more and more contributions. Some issues we couldn't get very far along like we were like cybersecurity. We wrote provisions that said NIST has to give us actual requirements because they arguably are smarter, more knowledgeable and would know how to troubleshoot that. Through this process, we'll get more and more ideas on paper, so less has to go out to someone else to figure out. And that's how we've made the bill better for three straight years.
- [25:46]
B
Well, it seems endlessly challenging, and maybe those three years were required in that process just to get it done.
- [25:51]
A
I think so. And also, Scott, you know, the industry is a new industry. People are fairly novice. They don't know the purpose of Congress. They don't know what writing legislation actually means. They just want to do what they do well and don't know why people are saying no. But they have to function under regulation, because when there's no regulation, you do get the FTX is the world. You do get these collapses. We saw what insufficient regulation resulted in, the SVB bank collapse. You know, that was because they had so much of their value in Treasuries that had hold requirements. And so when there was a run on that bank, they couldn't cash people out, they couldn't get the money out. And so it collapsed. We don't want to have the same thing in our legislation. So that's why you have to regulate, because you have to think about all the problems that happen. And I feel like this process, it took time. And again, the digital assets industry, the Silicon Valley innovation innovators, they're used to collapses today, start a new business tomorrow, move fast and break things. Move fast and break things, and that's fine, but not for regular people, because when they give you the only $20,000 they have in their savings and it's gone the next day, that's not sustainable, it's not appropriate. And so that's why this regulation is important. And I think the industry didn't understand, like, writing laws takes time. And it takes time to get people to understand what you have a vision for. And they've been anxious about the process, but I think they're learning now. Come to Washington, talk to staff. Even if you don't meet with that senator, meet with their staff, make sure there's someone on their staff who understand your industry so you can explain what you're doing, explain your use cases, explain your business plan so they can learn it, and then have contributions when we do get amendments and markups in committees. And that's what the industry is now doing. And that's working because they're engaged and not just frustrated that the thing doesn't happen tomorrow. And frankly, the legislation, as it was three years ago, isn't nearly as good as it is today because Other things have happened along the way. Yes, Sometimes things take time. Social Security, one of the greatest safety nets of all time. It took 10 years of writing legislation and improving it and revising it to get it to where it is today. The first day they proposed, it was just for widows and orphans. It wasn't for older people.
- [28:19]
B
That's incredible. I know you have to go. You said what the industry can do. How can the average American help push this forward? Just any advice to anybody listening who might want to contribute or support the legislation as it moves forward.
- [28:32]
A
I think just get involved. This is a fairly complex industry and people who don't understand it. Buyer beware. It's not ready yet for you necessarily, because you don't know what's good and what's not good. You don't know what's a scam. Did you read the article about the bank in. Was it Oklahoma? Kansas?
- [28:56]
B
Kansas, I think, yeah.
- [28:57]
A
CEO of the bank. Totally scammed by partners from abroad who kept saying, this cryptocurrency is a way for you to make much higher returns. Invest with us. Let's move your money to our cryptocurrency. And our holders, like literally stole, I think, $40 million from that bank. And they got some back because some of our exchanges were able to trace it, track it and get it back. So one of the benefits of digital assets ultimately is the transparency of it. It's very hard to disappear your transactions. It really is. It's there forever.
- [29:34]
B
Yeah, cash is a lot better than crypto for criminals. People don't.
- [29:37]
A
Cash disappears.
- [29:39]
B
There's a bag of cash, public blockchain goes over there.
- [29:42]
A
But so what's going to be developed through regulation is the transparency of this. And so through anti money laundering, through know your customer, through anti illicit financing and through protections, eventually we will get to a place where we have so much in, you know, insight into how these transactions take place. We'll be able to get sophisticated criminals quicker than we can today. But that just, just this, the scam of that Kansas story was just so upsetting to me because this was a standup guy who all he ever did was help his community to make sure there was lending and make sure people could start their businesses and get mortgages. And he was scammed like this and he was sophisticated. So we need the regulation so that more Americans could participate without having their money stolen by scammers from Asia or from Europe or from Eastern Europe or from around the globe who see us as soft targets.
- [30:43]
B
Well, thank you so much for your efforts and for your time, truly appreciate it and can't wait to see what comes of it in the coming months, hopefully.
- [30:51]
A
Well, thanks, Scott, and thanks for being at the forefront. I feel like we're trying.
- [30:54]
B
It's been a rough few years.
- [30:55]
A
Small but robust group of people who.
- [30:58]
B
Are trying hard, doing our best. Hopefully that army grows a bit over the next few years. Thank you once again.
- [31:04]
A
Well, thanks, Scott. Take care.
- [31:07]
B
That's dope.