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- [00:01]
A
Hey all, before we begin, I've got some exciting news to share. We've been working on something a little wild behind the scenes. It's called Unchained on Air, a revamped live stream series and podcast feed that takes you way beyond the headlines. It features sharp, maybe even controversial takes on major events and the kind of on chain intel that never makes it to your feed. It premieres this week and and it's packed way more shows way more often, each one laser focused on a different slice of crypto and finance. First up is Dex in the City where the wallets are cold and the takes are hot with Jesse Brooks, Katherine Kirkpatrick boss and V Lee, three powerhouse lawyers gathering to dish about the latest. From defi enforcement to token regulation and everything in between, it livestreams every Tuesday at 12pm ET. Second is uneasy money because what happens on Chain never stays on chain with Luca Netz, Kane Warwick and Taylor Monahan, three OG DeFi builders unpacking everything happening on Chain, from tokenomics to daos, from hacks to yields. It airs Wednesdays at 3pm ET. And finally, bits and the Interview in addition to our group chat show in which our Executive editor Stephen Ehrlich takes you deeper with one on one conversations, this streams on Thursdays at 12pm ET. To catch the live streams, follow Unchained on x, subscribe on YouTube or find us on your favorite streaming platform now. And don't forget to hit the bell icon so you never miss a show. And if you can't make the livestream, these episodes will show up in your podcast feed the very next day. Thanks as always for your support.
- [01:49]
B
The balancer exploit that recently happened right? This incident just like others that have come before it, right Reveal this really interesting tension. I think it's this idea that like decentralization is not binary because ultimately after.
- [02:02]
C
A hack or an exploit like I and I know institutions and users don't want to have to wait around and be like well is the project going to do anything to work for me? Is the community going to do anything to work for me? Is the government going to say that this is a crime even though it's unsure if this is a crime?
- [02:17]
D
For all those better on Polymarket as to crypto market structure passage, this is not investment advice. But I am I agree with V. I am very bearish that this is going to happen soon despite the President making this a mandate like get this done. Hi all, welcome to Dex in the City where the wallets are cold and the takes are hot. There are A lot of boss women in crypto, and we want to make sure you hear from some of them. We're going to get to intros in a second, but we first want to frame why we're doing this. There are a lot of crypto podcasts out there, and you could be listening to any of those. So why should you be listening to us? Well, between the three of us, we've worked in senior roles in DeFi, CEFI, crypto banking, venture capital infrastructure, and more. We have insights on tradfi and crypto. We're on the front lines of crypto policy, and we're pros at regulatory engagement. We are also very good at breaking down the more complicated concepts into English before we dive in. This is our very first edition, very exciting, and we're thrilled to bring Decks in the City to you as part of Unchained On Air, the new slate of shows expanding the incredible unchained network. Before we get going, remember, very important, we're lawyers, but we're not your lawyers. So nothing you hear on Decks in the City is legal or financial advice, and it doesn't create an attorney client relationship. For the fine print, as always, check unchained crypto.com. so let's dive in. First we have Jesse, Web3 prosecutor turned Web3 protector at Rivet Capital.
- [03:51]
C
Hi, everyone. I am so glad we are finally doing this. I want to do a quick shout out to Laura and the entire Unchained team. As you can probably tell, the technical infrastructure that goes into this is very, very complex. And they have been working on it for a long time, and we just get to join for the ride. So thank you guys so much. So I'm excited to do this pod because the three of us spend so much time talking about this space and really debating off mic and sometimes over drinks, which we'll maybe do sometimes on this pod as well. And now I can force the two of y' all to hang out with me every week. So KK Said. I'm Jesse Brooks. Hello. I've spent about a decade in crypto. It started in the national security world at the Department of Justice, where I was taking on North Korea terrorist networks that were engaging with crypto and. And hackers like the Bitfinex hackers and everyone else that was trying to make the same space less safe for all of us, especially at the beginning when it was building. Now I'm at Ribit Capital, which is an investment firm committed to backing rebels that are reinventing finance across crypto, AI and fintech.
- [04:58]
D
Awesome. Jesse and Everyone needs to listen because hopefully one day you'll get to hear the famous Jesse Brooks rant, which is my personal favorite in terms of engagement. Let's next move on to v from the SEC to Web3v.
- [05:15]
B
Hi everyone. I'm V. Li, the general counsel at Veda, where we're building infrastructure defi scale safely. Something we'll be talking about today. So I've been in crypto for over four years, first at a digital identity protocol, then at a crypto vc and most recently was the GC of the only federally regulated crypto bank, which is actually still the only federally regulated crypto company in the US Period. Which I think tells you a lot about how we still have to go on the policy front. One of the things that we'll be talking before crypto, I was your classic tradfi lawyer. Practice securities law at a big law firm. Spent almost six years at the sec. So suits, memos, windowless office, the whole thing. But the SEC is also where I first fell down the crypto rabbit hole working on crypto investigations. So I have government to for that. But I'm so excited to be doing this with two of my favorite people in crypto, Jesse and kk. So if you've ever wondered what it would be like to be a fly on the wall and three female crypto GCs get together, you'll get a taste of some of that on this show. Not everything, just so I think we all have drinks. We should cheers to that. Very cheers to coffee in case my team is watching.
- [06:39]
D
This is chamomile tea, but I like it. Fantastic. V and very important disclaimer with V. V was not with SEC enforcement during the Gary Gensler administration. So I needed to, you know, provide that disclaimer. And I'm your host, Katherine. Or KK or kkb. Any of the above. And I'm fluent in tradfi and conversant in deep tech over at Starkware. So I was a white shoe big law partner doing basically all tradfi investigations, defending big entities, asset managers in U.S. government investigations. And then I too fell down the crypto rabbit hole. Loved it. Saw the inherent inefficiencies in tradfi market structure and understand how crypto can solve those. So I completely went off the deep end and went to BGC of a DeFi protocol. Then I moved to be chief legal officer of a centralized exchange, both spot and derivatives and derivatives clearinghouse. So lots to say about the CFTC these days and I will just say, day to day, we're going to tackle a lot of the crypto happenings, but with some new takes. We're going to dive a little bit deeper and get into perspectives that you do not hear on crypto Twitter. We're also going to correct crypto Twitter and we're going to have fun while we're doing it because we're also real friends, not just crypto friends. So that's an important distinction. So let's get into the meat of today. So I have to say, in the theme of self promotion here, Jesse and I released an academic paper a couple weeks ago on programmable risk management. We were very excited about this, but it did create a little bit of spice amongst certain nerds in the population. And I think our take on it is that a lot of people didn't read the 20 plus paper, which I completely understand.
- [08:27]
B
But.
- [08:27]
D
But the thesis that we set forth in this paper was basically there are theoretically ways to improve upon defi. We love defi. I mean, my heart is with defi. It was my first GC role. Now one of the things that we were saying in the paper is we outlined a whole laundry list of tech based solutions that theoretically would not disrupt the ux, that would not re intermediate defi. And we said these should be optional solutions for discussion within defi. And maybe certain protocols in, you know, conversing with their community in achieving their goals, might want to consider these.
- [09:05]
C
And many already exist and are being considered too.
- [09:08]
D
Exactly. Many of them are already being used today. Exactly. I mean, blockchain analytics is one extreme side of things because most defi protocols are using blockchain analytics as the bare minimum. But there were a multitude of other solutions. To be very clear, we are not, and we're not arguing that defi should be regulated or re intermediated in any way. So I want to kick us off here because I know the three of us have a lot of thoughts about the safety of defi. What solutions exist. Why don't we go right into it? You know, V, let's get us started. Kick us off. What are your thoughts on all things programmable risk compliance? Programmable risk management.
- [09:52]
B
I read it before it was published. I read a manuscript of it. So I was so honored to be able to do that. So if you guys haven't read this paper, it's groundbreaking and I really think you should. We will link it in the show notes. I also wrote a paper last week or an article for Law360. For those of you who don't know, Law360 is a legal publication that at least was my daily reading when I was a law firm associate in clerking and in government. But in the paper, I talk specifically about chain capital markets and how issuers and users aren't going to participate unless they feel like they can trust these markets to be fair and pretty. And I look at some of the solutions that, you know, like Jesse just said, some of the solutions that the industry is already, you know, developing and using to build safeguards directly into things like tokens and smart contracts with respect to order execution, quality mitigation tools, that sort of thing. So along the same lines as KK and Jesse's paper of, you know, instead of regulatory mandates, what are some ways that the industry can leverage the technology itself to keep users safe and combat things like illicit finance? So I think, like you guys said, I think the feedback on both of these pieces has been really interesting. First, I'll say, and I think you guys agree with this, right? We welcome and encourage debate and disagreement. Like, these are really hard issues that we're all trying to figure out together. And I think all of us are committed to crypto's core values of decentralization and inclusion and transparency and censorship resistance, right? So, you know, but I do think the debates raise some really, like, hard questions about defi that are worth discussing in a nuanced way, which social media doesn't always lend itself to. So I'll kick things off for us, right? So for me, I think a lot of the defi debate comes down to two fundamental questions, right? One is, what responsibility do we have to keep users safe? And relatedly, what responsibility do we have to offer users recourse when things go wrong? So I think it's really easy to say, yes, we're in favor of, you know, pure defi or true defi. But then how do you answer those questions? And how do we see defi protocols actually answering those questions in real life? Right? So I think, you know, there are two recent events that to me, really illustrated this tension. First was the Balancer exploit that recently happened, right? So Balancer is a defi exchange. It recently suffered an exploit where the attacker drained $128 million for liquidity pools, manipulating the pricing function and the pool balances to basically trick the protocol into miscalculating the value of the tokens. And then they repeatedly performed swaps to deflate the price, and then either minted or bought the undervalued tokens, immediately redeemed them in a way that allowed them to drain the pools. So how did Balancer Respond to this. I think most of their pools do not have an admin key or like a, a kill switch. But there were some pools that were able to be paused and they did that. They paused them, they alerted users, and then they worked with white hat recover the funds. And what was also really interesting about this incident is that the different chains that were affected responded in really different ways. Right. So Ethereum largely stuck to the Coda's law ethos. So they didn't do any rollbacks, no forks. The losses remained on chain, but there were a bunch of smaller sidechains and L2s that did intervene. Validators or sequencers temporarily halted block production or they coordinated soft forks to freeze the hackers and others actually did perform a hard fork reverse or isolate the impact of the attack. Right. So for me, this incident, just like others that have come before it, right. Reveal this really interesting tension. I think it's this idea that decentralization is not binary, meaning even chains that claim to be or aspire to be immutable or permissionless sometimes do need feel the need to intervene when users are or lose funds. So I think this really puts the idea of pure defi to the test. Right. So I think we need to ask ourselves, like, when a network can be forked to recover used funds, does that create some sort of like de facto fiduciary duty or something like that among validators?
- [14:38]
D
100%. And before we move to Jesse, I just want to clarify one thing. A white hat hacker, a lot of people, I realized, didn't understand what that was. If they're not in crypto. A white hat hacker is kind of a good guy. And what you often see with exploits in crypto, or not often, but occasionally, is there's a hacker who facilitates an exploit, and whatever entity is in charge or a community member will then go to them and say, we'll pay you if you turn into a white hat, like if you give the money back. So this was not the case here. But white hats help the ecosystem. But Jesse, please jump it.
- [15:15]
C
Yeah, let me just give you a little insider knowledge on white hat hackers as well. These predated crypto for many people who have been in the cybersecurity national security world for quite some time. And actually the government relies on them for a lot of sort of early cybersecurity national security issues. So it's just sort of something to think about how it's also been incorporated in crypto a variety of ways. But I actually think that these two questions sort of level setting are very, very thoughtful. And I'll just add a third one which is who should give the recourse? Should it be the protocol, should be the community, should it be the government, the corporate courts, which we're going to talk about some of the stuff that's happening there, particularly with the MIT brothers case that we'll cover in a little bit. But also I just want to put forward, like what kind of world do we want to live in where users have to think about how do I get recourse for something bad happening instead of having the choice from the start of being much, much more comfortable of where they put their finances before something bad happens? And I think that's sort of the debate here is how much can we embed in the native aspect of crypto and defi and all the projects that are built in it to make users less worried about any sort of hack and who they'll need to go for to for recourse later on. Because to me, like decentralization is not about having no rules or standards, but it's rather about a bottom up choice of how to embed rules and standards if you want or not, and a choice by the users, a choice by the projects, a choice by the protocols, the choice to opt into more security and safety when they want it, or more risk and maybe more upside if they don't want it. Because isn't that like really what we're building here? In my mind, like the crypto ecosystem is about giving people, in my mind at least, more power over their finances, whether it be self custody, whether it be how they want to engage with DeFi, and it should also be the opportunity to engage in a more risk forward or risk conservative manner. Because ultimately after a hack or an exploit, like I and I know institutions and users don't want to have to wait around and be like, well, is the project going to do anything to work for me? Is the community going to do anything to work for me? Is the government going to say that this is a crime even though it's unsure if this is a crime? Instead, why don't we allow users to say, okay, here are all the options out there and let's go from there. And on that point, like, isn't it better that we work from the ground up than have sort of this regulatory oversight coming afterwards, or trying to figure out how to fit things within crimes in order to give recourses to users.
- [18:00]
D
Power to the people? Jesse, I love it and it's no, but it's true. You make a Great point in that. I think the fear in with respect to some of the radical pure defi advocacy that we've seen lately is that there's a fear that if we even open up the discussion as to so called protections to put in place, that regulators or legislators are going to seize on that as a way of regulating defi or mandating such checks. And I completely understand and acknowledge that fear because there should be a scenario where pure defi exists without checks. Eyes wide open. There's a beauty of transparency with defi that we all understand and acknowledge. I would always explain that to people that didn't understand crypto vis a vis Maple. My first defi project, that it's midnight. The payment for the loan is due at midnight 1201. Everyone can see it's not paid. Which is a beautiful thing about on chain activity. Defi lending doesn't exist in tradfi. Right, But I think your point is really important. Like shouldn't we also empower builders that maybe they want to go more conservative? Maybe they want to serve a population, regulated entities, institutional participants, one day pension funds, and they want to, you know, ensure that they're taking a more conservative route without being penalized in the defi community by not being pure defi. Because I don't view a lot of this as re. Intermediate, re intermediating defi. A lot of it can be inserted without disrupting the peer to peer UX.
- [19:38]
C
Can I ask you guys as like DeFi project GCS? Don't you think about this kind of thing on day to Day? Like what comes up when you sort of make the considerations of how you're going to build? Is it all or nothing? Like how do you guys think about pure defi and building in the space?
- [19:54]
B
Oh my gosh, so many things I want to follow up on. So Jesse, I wanted to follow up on one point that you made that I think is really important, which is like one of the benefits of defi and these defi protocols is that you know ahead of time what's going to happen, right? Like everyone can see the code, everyone knows how the protocol is going to behave. But when, when these hacks and these exploits and attacks happen, the response is always so ad hoc, like you said, right? Like no one knows what is going to happen. Like is anyone going to intervene to like help return the funds? Like what is going to happen? No one knows. So I think for that reason alone we should probably, you know, at least be able to talk about should there be some standards in place? Like are there tools that people can use, like what are best practices here? And that is something that is missing I think right now. And obviously these events are going to keep happening. Right. I think it's only fair to users to be able to know ahead of time what they're getting themselves into.
- [20:53]
D
And that's the scary part to people though is those standards, you know, I think that's the scary part because they don't want to, we don't want to mandate standards that would basically harm defi holistically. However, it's really interesting. I think everyone occasionally forgets that you know, what defi protocol exists without a smart contract audit. Like that's an, a self imposed industry standard for safety. Right? Because it's common sense. You want your smart, you know, you don't want to engage with a protocol that hasn't had, you know, an audited smart contract. So I would love to see the industry growing in a way where, and again I said this before but blockchain analytics, a lot of general counsels of devcos etc, we always think through risk. Like I like to sleep at night, you know, we don't want to facilitate wrongdoing in any form, even invert inadvertently or you know, not knowingly. Of course I know there's a cross criminal threshold. You need to have intent to be convicted of a crime. However, that gets very sticky with things like civil liability for sanctions which we'll get into at another time because it's kind of complicated. But I think that's the role of the GC and especially in crypto it's not to eliminate risk, like absolutely not. It's to educate the company about the risk. It's the issue spot. So then they're armed with that information and can make informed decisions.
- [22:17]
B
You know, to your question about like are we thinking about it like percha but GSC working at a defi company or defi protocol. I guarantee you every single defi project out there is constantly like on a daily basis to balance decentralization and the principles of decentralization against user safety, like keeping their user safe. This is something we think about constantly and it's, and it's a struggle. I mean it's something that I have to deal with with respect to like new features that the team wants to add or you know, a new design mechanism. Right. Every, every defi project out there thinking about this. So I think the other reason I, I hope we can sort of move beyond the, you know, like pure defi or like the all or nothing debate is that I just don't think that that just the reality of what most DEFI projects and companies are dealing with as DEFI goes more mainstream. I think the other dynamic we're starting to see, and we certainly think about it in these terms too, the other dynamic you're going to start seeing is if you're able to create protocols markets where users feel safe, that is going to be like a competitive business advantage for you. So that's the other thing. Right. I think this isn't just like it's not a philosophical or academic debate anymore like DEFI is gaining adoption, it is going mainstream now we have to think about what are the market opportunities.
- [23:51]
D
That's the other way we think that's absolutely right. And I think that's something a lot of us like we've discussed before. If the trad and crypto markets are converging pure defi without even discussion of this, I mean I am skeptical that it will ever scale. I'm also sympathetic however because there's also the balance between kind of paternalistic measures. So that's, this is not an easy conversation by any stretch. So I want to move to Jesse to talk about the MIT Bros case. This is a fascinating case because I feel like it got no attention from anyone. And you know, it's, it's so random to me what gets a lot of attention and discussion and what doesn't. This was an important one.
- [24:31]
B
So.
- [24:31]
D
So Jesse, please educate everyone.
- [24:33]
C
I think people must have just been exhausted of like tracking day to day crypto trials that they needed a break. But I am similarly surprised that this didn't get a lot of attention because it presents a really interesting aspect of the law that hasn't fully been touched on point in prior criminal cases. But you know, just back to level setting, like to me the big question of this pod today is like who's going to enforce the rules when code alone isn't enough? And this is a case when the courts tried to enforce it and it didn't really go so great. And we maybe have less clarity than we did before. But just to give like a two sentence overview on what this case was about, essentially these very technically savvy brothers exploited a vulnerability in Ethereum's MeV Boost relay code. And in so expect exploiting this, they extracted $25 million from bots that were engaged in sandwich attacks. And the argument that they made is that they simply found a bug in code and they targeted bots that were already manipulating the markets. Like not the most sympathetic victims. Right. They say they didn't lie to anybody. So there's no fraud. They didn't directly interact with the victims, no contractual relationship, and they didn't violate any of the rules or standards. The two words we've been using a lot today of the decentralized Ethereum network. And I slowly say decentralized Ethereum network because obviously it might work differently on other networks and might have been charged differently. But the government said, like, pish posh, no, we disagree. This is wire fraud and conspiracy and money laundering. But focusing on the wire fraud because that was the real issue at trial. And the question was, what was the fraud? So the government argued that it was the bait transactions and the false signatures. And, you know, the technical aspects of that were really interesting in the, in the trial and the specific details of this are really important. But I think what's even more interesting is that after a few weeks of a very technical trial, and for anyone here that has been in trial or, you know, had any sort of component of a trial, you know, how hard it is to explain, explain these complicated concepts to people off the street. But after days of deliberation, the jury could not come to an agreement. So they say that the jury was hung. Let me just take a quick sidebar to explain what that means. So essentially, in a criminal trial, the jury has to unanimously decide the defendant is guilty of this charge or unanimously decide they are not guilty. Those are really the options. And it happens for each charge. And if they can't come to an agreement, they come and tell the judge, hey, we can't come to an agreement. Usually the judge says, go back and keep arguing. The prosecutor says, go back and keep arguing. The defense usually says they're not going to come to an agreement. And if it gets to a point where it's pretty clear they won't, which happened in this case. After some very emotional jury notes, which are somewhat odd in these circumstances, the judge decided that they weren't ever going to agree, and so they declare a mistrial. What happens with the mistrial is that the prosecution gets to decide whether it wants to bring the case again. What happens behind the scenes is that the prosecution decides, do we want to drop the case, do we want to offer a plea, or do we just want to go to trial again? So we don't know what's going to happen, and they have a few weeks to come back and decide. But I think, like, the bigger question that sort of fits in here is we have an exploit. Maybe it hurt not so sympathetic victims this time. But thinking about the bigger Picture for users that might have been hurt in some sort of vulnerability attack. Why are we leaving it to 12 random people off the street to decide after a few weeks of trying to learn about these technical issues that this is or isn't a crime? Like, is that the best way for us to move forward in this space? Space? And it rhymes a lot with what happened in the Mango Markets case, where a guy named Avi Eisenberg didn't exploit a vulnerability or bug, but he rather manipulated the platform's own oracle, according to the government's allegation. And then a jury found him guilty and then an appellate judge overturned the convictions. So in both of them, the court system tried, but I don't want to say failed, but sort of seemingly failed to come to a decision that gives the space any clarity. And this is why it comes back to my argument before of like, we should give choice in protocols for users and institutions to build what they want, what kind of risk they want, because in the world that we live in right now, you don't know where to go for recourse. So that's sort of the framework we're living in right now.
- [29:23]
D
And fun fact, I was once on a jury for a check fraud case. And it's highly unusual for a lawyer, like, especially with what we've done historically. No, you never get picked because there's this process called voir dire where they vet the jury members. And so there's peremptory challenges where the lawyers can strike juries for cause, like, oh, you're biased or so usually I would have been struck through a peremptory challenge because I knew too much about criminal law because I was a white collar defense attorney, but I somehow ended up on the jury. And afterward the judge was like, the defense blew through all their peremptory challenges. So he was stuck with you. And of course I was.
- [30:01]
C
I do want to tell you, see, you have to keep lawyers on because there are so many lawyers. So, yeah, go by what kind of.
- [30:09]
D
So statistically you have no choice. But it was a fascinating experience. So there we go. I'm just going to put that out there. So we're. We only have 12 minutes left. So I want to shift topics really quick to market structure because it's important to know, like, we weren't originally going to touch this, but hot news, the House Agriculture Committee had advanced and then passed the Clarity act back in July. This, the crypto market structure bill that we're all really excited about. And to explain to people, I'm constantly explaining to People that aren't lawyers. Why we're excited. There is a fear that all of the good work that the regulators are doing right now in the United States vis a vis crypto, the SEC is a great example. Their transparency, their engagement, etc could be completely reversed if we have a different administration with a different mandate in a few years, the only thing that will determinatively prevent that is legislation. So that's why you see a lot of crypto people desperate for crypto market structure legislation, even if it's not perfect. So a draft dropped yesterday from the Senate Agriculture Committee because we need the House, we need the Senate and then we need the President. Okay, so we got the House, the Senate's version is different. And this is why there's a big uphill battle here because there's basically efforts from the Senate Banking Committee, efforts from the Senate Agriculture Committee, those need to be reconciled and cleared by both committees and then get passed in the Senate. So we have a lot of work to do. But this draft dropped yesterday from the Senate Ag Committee and it was very different than the Banking Committee. And in keeping with our theme today, like first, a lot of emphasis on the CFTC's mandate versus the SEC's, a good protection of self custody, a direction for joint rulemaking with SEC and the cftc, aml, anti money laundering. Specifics are very vague and the scope of CFTC exemption powers are unclear. I, I call that out because it's really important that regulators have the power to grant exemptions. But we've been talking about this a lot on this pod. There is a section on defi with nothing in it. Like defi oversight is completely left completely open, which is a little scary to people because we were all desperate and really hoping for explicit developer protections in legislation. So Jesse, it looks like you want.
- [32:46]
C
To say something before we jump it over to V. I want to play moderator for a second and just do one extra level of explanation because you know, unless you're on the Hill all the time, it's hard to understand all these different committees, what the heck's going on up there. And so in Congress, committee jurisdiction drives everything. So CFTC is under ag and then banking and financial banking takes over SEC and all financial regulation. So the AG is committee in the Senate they have a bipartisan draft that came out yesterday, the Senate Banking Committee, the Republicans have only really come out with an agreement. So there's this interesting strategic game playing right now where the Dems in the Ag Committee are trying to figure out how do we put forward a bipartisan proposal that doesn't go against what all the Dems on the Banking Committee are going point saying. And that also competes with the fact that the Ag Committee can't really regulate the kind of stuff that the Banking Committee should do, which sometimes might be the ML stuff or the defi stuff. And you're going to see lots of brackets throughout this new draft. So it's Congress's version of like a sticky note saying hey, we got to come back to that because we haven't agreed yet. And so that's sort of where like who knows with Defi, who knows with aml, who knows what the definition. So I guess like I'll just turn it back to you guys like what, what the heck should people get from this?
- [34:12]
D
And brackets are scary to people because it's hard to make progress if you don't have the fundamentals agreed upon. So I'm also scared of the defi brackets. But the, the other thing I also explain to people is people are often like to me, especially non US persons are like why is the Agriculture Committee involved in this? That's because you have to think of the definition of the OG commodity in the United States. It's often things like cows and corn and wheat. So like that's why the Ag Committee is such a big part of the crypto debate. Because crypto is a commodity. But the classic commodity like as a Chicago in like it was all of the farm animals. Like there's a futures market for a reason. Like we'll get into that another time. So V jump in because I know you are also very sophisticated on the policy. Yeah.
- [35:02]
B
So I mean I, I just wanted to touch on like you know, I'm sure everyone's wondering like what is the process from here? Like you know you mentioned that the, the two committees bills eventually hopefully will be merged into some like Senate edge that will reconcile D.C. and CFTC, CFTC jurisdiction. So if both committees vote their versions out, Senate leadership has to agree to bring it to the floor, which is like always a hurdle. Right. Just given limited floor time and competing PR parties. The fact that you need 60 votes to overcome a filibuster, which means they're going to need some Democrat support, the Republicans. And then if it passes, the Senate bill would then be reconciled with the version that passed the House a while back, it seems like ages ago. But so you know, negotiations or conference committee like that would have to happen before being sent to the President. So I mean I think in terms of timing, like realistically I don't think the process is going to wrap until 2026, probably not until late 2026, maybe even early 2027. And then we also have, you know, the elections next fall. So that could also throw a wrench in things. But, you know, I. I remain optimistic that something will eventually pass. Like both Republicans and Dems have an interest in this passing. I think both sides are working really hard towards that. The momentum from the industry is as strong as it's ever been. Stablecoin legislation, of course, passed earlier this year, which I think, you know, only improves market structures, chances of passing, even though it's a much more complicated undertaking. And then also the sec, the cftc, Treasury, I think they're also really pressuring Congress to act and are working closely with them on the bills. Right. So that really matters too. So, yeah, my prediction is late 2026, early 2027.
- [37:07]
D
You know what, guys like, you know.
- [37:09]
B
That that sounds so far off. But like I will say, in the meantime, DeFi will keep shipping. And I would also remind people that neither the SEC nor the CFTC is waiting around for Congress. Right. There is plenty they can do and are doing under their existing authority as we speak. So don't worry. That will give us plenty to talk about on this podcast, even if things don't move along in Congress 100%.
- [37:37]
D
Like I have been so heartened by the SEC. I mean, the transparency. I mean, I'm obsessed with Hester Purse in a purely academic way. She's been making so much great progress as head of the Crypto Asset Task Force. The transparency that we're seeing, seeing and the engagement, it's what we all dreamed up for so long. The scary part is a lot of this work can be undone. And Chair Atkins of the SEC has said that they are working to try to avoid a scenario where the progress they're making can be undone. But the thing that will really let me sleep at night is crypto market structure legislation. And of course, once the legislation is passed, it's going to take years to actually create rules, and that's really a basis for what's to come. But for all those betting on polymarket as to crypto market structure passage, this is not investment advice. But I agree with V. I am very bearish that this is going to happen soon, despite the President making this a mandate, like, get this done. There are just significant headwinds. And let's get out of our crypto bubble for a second. We all need to remember that for many legislators, there's still a real education gap. They don't feel comfortable with this industry and this is just not a priority for them, especially with the, you know, nonsense that we've been dealing with lately. Like the other parts of dysfunction of our government on day. What is it like 32 of the.
- [39:04]
C
Shutdown, by the way, baby.
- [39:07]
D
Oh my God. It's just all a blur to me. All a sad blur. But Jesse, do you want to wrap us up with any final thoughts?
- [39:14]
C
I think I should just say it was so lovely to do this, our first time together and I am really excited to keep debating with you guys throughout the next few months.
- [39:24]
D
Any final thoughts from uv? No.
- [39:27]
B
This was so fun. Thanks guys and cheers.
- [39:31]
D
So I think, what's to come from us? So the beauty of this is you'll hear our insights on the CFTC and the SEC and legislation. Oh, this is sounding so sexy I can't even help myself. I think you'll get to hear our thoughts on the legal policy, a strategy oriented environment for crypto. You know, hopefully we'll be able to give everyone insight on all of the good, bad and ugly within this ecosystem and we'll be able to correct a lot of things that you read on crypto Twitter. I'm just going to reiterate that because that is the theme of my life. Like, that's wrong. That's wrong.
- [40:09]
C
That's wrong.
- [40:11]
D
Yeah, a lot of debate. That's it for this episode, the very first episode of Ducks in the City. If you like the show, make sure to follow us on your favorite podcast app and on X slash, Twitter will always be Twitter in my heart, even though I understand and recognize that it has a new name for live streams, updates and clips. Thank you so much for listening and we will. We'll see you next week.