stable coins or tokenized stocks or
dollars on blockchains rivals the size
of the Visa network. Trillions of
dollars transacted. If you have a dollar
of that stable coin, there is a dollar
sitting in the bank. And that's why the
Clarity Act working its way through the
Senate is so important.
>> One of the biggest opponents to the bill
is Senator Elizabeth Warren.
>> And why why are we working on this?
>> She says that North Korea and terrorists
and ransomware hackers, they're going to
run wild if this bill passes. The
national security people I talked to
typically don't agree with that because
there's a trail.
>> Another debate that has been opened with
respect to the clarity bill. Developers
should be held more liable for the
software that they write.
>> If you saddle people who build products
that get used by many people for many
reasons. It's a kill shot to the
industry which is clearly the goal.
>> Volumes are now rivaling the Visa
network which is insane. Lots of
gigantic financial institutions have
rushed in. Black Rockck, JP Morgan, Visa
itself, Mastercard. What happens if
clarity does not pass?
>> Um,
[music]
>> welcome to the A16Z Crypto Show. I'm
Robert Hackett and I'm here with Mark
Andre and Chris Dixon who, if you watch
the show, need no introduction.
>> Great to be here.
>> So, uh, today we're talking about
regulation. Congress is currently
hashing through some legislation, once
in a generation market structure
legislation that could determine where
the future of the financial system and
internet get built. Um, it passed in the
House last year with bipartisan support
and it has been making its way through
the Senate ever since. Now, there's been
lots of fights and obstacles over it
which we'll get into. Um, but before we
do, I want to zoom out and go big
picture and talk about why regulatory
clarity matters. Um, what the status quo
costs us and what's at stake for the
country and for anybody who may end up
using this technology. So, uh, Mark, I'd
like to start with you. Back in January
2014, you wrote an op-ed for the New
York Times called Why Bitcoin Matters.
Things were a little bit different then.
Um this was a pretty contrarian position
to stake out. Uh the crypto industry
which if you could even call it that
back then looked very very different.
How have things changed from then to
now?
>> Yeah sure. So 2014 so 2014 was so long
ago um that the New York Times actually
ran a positive piece on crypto um from
you from right and from me with my name
on it. Um and so yes this was in the
distant past. This is for the kids
watching this. This is when dinosaurs
roam the earth uh 13 years ago. Um might
as well have been in the 1500s. Um but
yeah, I'm actually really proud of that
piece. So if you read that piece today,
I think it holds up really well. Um I
think it holds up in in in a few
respects. Um so you know, one is and I
should say this, like it's actually
fairly amazing. Uh you know, the Bitcoin
white paper, you know, this piece is
even 5 years into the you know, macro
trend. Um and you know, it was still the
kind of thing where it was still, you
know, big news to even, you know,
believe that this technology matter
mattered at all. So I I think it was,
you know, I I think I think I was preing
not that Bitcoin was going to matter,
but I think I was precious and kind of
forecasting that we were still in the
beginning of the adoption curve, like
there was still there were still a lot
of people that were going to have to,
you know, they were going to have to
learn about this, want want to learn
about this, uh, and be part of it. And
so I think that that holds up. Um I
spent a lot of time you know in the
piece and and around that time trying to
really educate people on the nature of
this technology um uh uh you know with
with with Bitcoin with the blockchain
because that you know that was new and
you know for people who are not you know
don't have computer science degrees or
math degrees like that that it's kind of
a well for people that do have computer
science degrees it's kind of a weird
idea. So for people who don't have
computer science degrees like it's a
genuinely new idea. So and I think the
importance of that has held up really
well. Um you know I think the thing that
uh you know in retrospect um uh you know
is needs to be changed about the piece
is you know every time I said Bitcoin
you just swap in crypto right um which
is like at that time Bitcoin was crypto
like it was you know was essentially the
only game in town um you know Chris you
can correct me on the timing if you want
but I believe at that point there was
the proposal for what were called
colored coins
um
>> around then yeah
>> around then so people don't remember
there there was a proposal for this
thing called colored coins which by the
way is the single worst branded uh uh uh
proposal of all time. Um you know, much
much much worse than New Coke. Um uh but
the concept of it was actually Bitcoin
bitcoins bitcoins that were going to be
tagged basically with properties that
would let let them represent other
things. Um and so the the that sort of
idea was that bitcoin would be extended
to basically enable both tokenization of
real world assets and also uh you know
virtual assets like NFTs. You know of
course what happened was that didn't
happen. uh and what happened instead was
the creation of of new blockchains and
and then and the creation of of new
crypto platforms and and then
ultimately, you know, Ethereum and then
everything else that followed. And so,
you know, what what started as a
technology became an industry. Um and
and so I think if if you read that
piece, you'll see that I I projected
many of the use cases and the the future
development of the technology, but it it
it it took a different path. Now,
Bitcoin obviously has been very
successful uh since then, but you know
what we've really seen since then is
this explosion of innovation. um say
this explosion of innovation that has
both happened and that wants to happen
around all the other use cases that we
uh that we talked about at the pieces.
>> Yeah, it's actually remarkable how well
that piece holds up. Um but there is one
forecast in there that I want to cite in
particular that stands out which is uh
and I quote you say the uh the coming
years will be a period of great drama
and excitement revolving around this new
technology. I think you were spot on
there.
>> Um
>> Chris uh you've been there since the
start as well. you were an early
advocate and acolyte of crypto.
>> How have things changed from the early
days to now?
>> Well, as Mark was saying at the time, so
way back sort of 2014 in the early days,
it was mostly kind of hobbyists and uh
you know, super enthusiasts and kind of
a kind of a subculture cultish thing. Um
the technology was um bit you know
Bitcoin was sophisticated but a lot of
the things Mark alluded to like kind of
the newer blockchains were early um had
performance issues scaling issues other
other kinds of things. Um fast forward
today uh you know every day you'll see a
new announcement from a major bank or
fintech company announcing a platform
involving stable coins or tokenized
stocks or other kinds of digital assets.
um the stable coin volume. So, you know,
stable coins for those don't know are
basically what Mark described with
Bitcoin except they're dollars on
blockchains.
That that is now a you know rivals the
the size of the Visa network. Trillions
of dollars transacted. You can go into
WhatsApp and send money anywhere in the
world uh for almost free in the same way
you'd send a text message um using
stable coins. It's you know really the
way money should work. It was was I
think Mark Mark could speak to this as
one of the pioneers of the internet, but
I think was one of the kind of ideas
that early internet pioneers expected to
happen honestly much sooner um and for a
variety of reasons took a lot longer.
But we're now finally kind of seeing
that dream um you know come alive with
with money moving as easily as bits. Um
so now it's a very mature industry. The
technology the underlying infrastructure
has gotten much much more sophisticated.
even three years ago might cost what I
just described might cost a couple of
dollars if not tens of dollars to do
that transaction. Um now you know on
most of the popular blockchain Salana
Ethereum and so forth it's sub one
second to close to settle the
transaction sub one penny to to send
something right so and and that's due to
kind of the equivalent of Moore's law on
blockchains which is you've got you've
gotten sort of more and more performant
chains um you know you read about hacks
and things in the newspaper um about uh
crypto the reality is Bitcoin has never
been hacked. Ethereum has never been
hacked. uh organizations that use these
things have had lack security and have
been hacked, but the chains themselves
highly secure, highly performant now. Um
and you have, you know, big institutions
and you know, trillions of dollars
moving around on these things. Um which,
you know, of course brings us to our
topic, which is you need, you know, when
you have that going on, you need
regulatory clarity. You need you need a
framework around that.
>> Let's talk about that. Um because you
know you cited that stable coin volumes
are now rivaling the Visa network which
is insane. You know this is trillions of
dollars per quarter uh turning through
this system. Um lots of gigantic
financial institutions have rushed in.
Black Rockck JP Morgan uh Visa itself,
Fidelity, Mastercard. I mean you could
rattle off just any number of names and
they're all building on this technology
right now. Um but we've gotten this far
without rules. So there's been very
little in the way of regulatory clarity
or guidance.
>> Um why do we need why do we need rules
now?
>> Well, so yeah, so good question. Um so
for a variety of reasons, uh the kind of
for political and policy reasons, uh the
regulation around crypto was broken into
two components, stable coins and the
rest of the market. So stable coins are
roughly 15% let's call it of the market.
Uh 85% is is the rest. Um there was a
bill
>> and that's by market cap.
>> That's by market cap. Um last year a
bill passed Congress was signed by the
president called the Genius Act which
provides a comprehensive regulatory uh
framework for stable coins. Um, and it's
not a coincidence that stable coins are
also the area that's taken off the most
in the last year because once you have
regulatory clarity, that means that you
know builders have certainty, consumers
can know if if you're a American
consumer and you use USDC or another
genius uh compliance stable coin, you
know that if you have a dollar of that
stable coin, there is a dollar sitting
in the bank because that's the genius
regulation that that bank is audited and
that's sitting in short-term uh
treasuries which is, you know, the
basically the safest thing the financial
system can offer. Um, and so you know
that dollar, you can be assured that
dollar is there. It's not an FTX, it's
not a Luna Terra situation where it will
disappear tomorrow. That gives you as a
consumer confidence and protection. If
you're an institution, if you're a bank,
if you're Stripe, if you're PayPal, and
you want to go and go and enter this
market, you want to know there are
predictable rules that there's a
framework around it. There's not going
to be an FTX, that what you build will,
you know, be compliant, not just the
next year, but next 10 years, right? And
so the for and then if you're an
entrepreneur, of course, it's similar
kind of logic. You want to know their
certainty. You want to know their their
rules. You know, you're all our
entrepreneurs are happy to hire lawyers
and pay a lot of money to be compliant.
They just need to know, you know, what
they're aiming for. Um and so as a
result of that bill, um we've seen a a
takeoff in in particularly around stable
coins. And then kind of the close cousin
of stable coins is like once you put a
dollar on a blockchain, you can put a
stock, you can put a treasury bill. And
so that's also um you know been there's
been a lot of adoption there with people
kind of you know relying on agency
guidance and other not non-legislative
uh regulatory levers to give them
guidance on how to do that. But the big
kind of hanging problem right now is
that you've got sort of this this other
section of the market including
blockchains themselves which stable
coins are built on uh which don't have a
comprehensive federal regulatory
framework and that's why the clarity act
which is being working its way through
the senate is so important because that
provide that's sort of the other 85% of
the market. So you can kind of imagine
it's like as if we had a regulatory
framework for cell phones but not for
cell towers or something like half the
half the half the technology is
regulated. The other half has this sort
of uncertainty around it. Um people are
still building there. People are trying
to do their best to kind of you know
understand uh um what the rules are
there. You know there's this other lever
of policym which is the agencies such as
the SEC and CFTC. They they've provided
some guidance and things but ultimately
you know what industries are built on as
you alluded to in the beginning with the
internet is they're built on
legislation. Legislation is solid ground
to build on. It's immutable. You know
has the stamp of approval of the US
Congress. It's you know the result
importantly legislation is the result of
a lot of smart people getting together
people from different political parties
compromising you know uh finding the
right balance between industry and
consumer protection and so forth um and
um and you know so we think ultimately
that's that's what is required and why
the clarity act is so important. So, as
you mentioned, we do have some rules.
It's for stable coins that covers a
sliver of the market, but there's this
gigantic swath of the market that
remains largely unregulated. Um, Mark,
why why do we need rules for all of this
and why do we need them now?
>> Yeah. So, [laughter] so, you know, we've
been in this just kind of bizarre
twilight state for the last several
years. um you know where sort of crypto
was developing you know largely without
rules you know for better or for worse
in kind of you know what I would
describe as sort of experimental ways um
you know between uh between sort of
inception through 2020 and then we had
um you know between 2020 and 2024 we had
a an administration you know in the
white house that just like absolutely
just decided to just kill the industry
like just you know flat out you know
declared war specifically by the way
declined to regulate refused to regulate
um and instead decided to prosecute um
and you know this kind of really
remarkable thing happened which the
industry didn't die through that
process. Like crypto is still standing.
And the sort of most bizarre sort of
aspect of that for me is I've had these
conversations with some lawmakers in DC
where they say, "Well, um, you know, I'm
going to support crypto now because like
if it didn't die during this whole
period when we tried to kill it, then it
must be good." Um, and you know, we
should probably support it. Um, which,
you know, is is sort of the most, you
know, kind of reverse logic way I can
think of to end up positive on
something, but I guess I'll I guess I'll
take it. Um and so and then that also
led in this kind of bizarre situation
where people said well you know crypto
hasn't you know materialized in the way
that you guys all said you know you
don't have all these use cases that you
know so where are all the use cases why
you know why why isn't everybody using
crypto and it's like well because there
was like a 5year like regulatory
prosecutorial assault you know that
tried to kill it. Um and you know in
most areas of tech you know most areas
tech industry never go through that. Um
um occasionally you get one that does
and when they do you know they they they
say they live a very different life
under very different different kinds of
pressures. Um and then you know along
the way you know when that sort of
assault was happening in America um you
know against American companies
primarily the you know overseas
companies by and large you know ran in
whatever way their local jurisdiction
allowed and that culminated in the
catastrophe of FTX right you know
stealing you know just outright stealing
customer funds. Um, and then that led to
a catastrophic blowoff. And then people
look at that and they're like, "Well,
see that's, you know, you can't trust
crypto." And the and of course the real
answer is you can't trust like fully
unregulated crypto. You like actually
have to have a framework and you have to
have life risk controls of these
companies and you have to have
compliance and you have to have auditing
and you have to have all the things that
a grownup, you know, financial services
business has.
>> Um, and so anyway, long-winded way of
kind of getting to the point which is
like we need a regulatory we need a
stable permanent regulatory structure
for crypto in the US the same way we
have for stocks and bonds and everything
else. Um and we need it both because we
need this industry to succeed. Uh which
we think, you know, and many people
think is extremely important. Um we can
talk about that. Um and then uh we also
need it so that it doesn't lead to
catastrophe. We need it so that it
doesn't result in where FTX is. And so
we and we need it so that people's
money, you know, doesn't get stolen. And
we need it so that, you know, the
winners of the market aren't fly by
night operations operating on, you know,
yachts off some coast somewhere. Um and
so so in a lot of ways, it's like the
most obvious thing in the world. The US
financial systems been through this many
times before. The most famous case is
the you know the the the securities acts
that created the SEC regulated the stock
market after which you know the US
capital markets in the next uh you know
100 years you know 90 years became that
you know the envy of the world you know
we're not looking for a free lunch we're
not looking for subsidies we're not
looking for you know protectionism we're
not looking for support in that way
we're just looking for a basically a
permanent framework that lets people do
business in a responsible way um and you
know I think it's in a lot of ways it's
the most obvious thing in the world
>> so you mentioned mentioned something in
there which is FTX. I think everybody
might remember that exchange and its big
implosion and collapse and all the
fallout from it. Um what what is inside
of the Clarity bill that would prevent
something like that from happening
again?
>> Yeah. So well right now there's there is
no f federal regulator for crypto
exchanges as an example. So the you know
New York Stock Exchange, NASDAQ, they
have federal regulators. Right now there
is no the Coinbases, Krakens, FTX, you
know that for every good company like
Coinbase there are many offshore ones
that are not good. There is simply no
regulator. They there is no and this is
one of the very important things. It's
it's a it's a big chunk of the Clarity
Act is to provide that. So that the SEC
and the CFTC have uh oversight. They put
in, you know, disclosure regimes,
anti-fraud regimes, uh, insider trading,
uh, rules, all the things that, you
know, that you are, we are used to, as
Mark was saying, with the with other
financial markets. It's just the same
kinds of rules with the same uh,
agencies overseeing them. Um, that
would, you know, so for example, FTX
wasn't audited properly. Very simple.
This is what ultimately happened, right?
They were moving apparently moving money
between different entities. They didn't
have all the money there. um you know if
you're a federally registered crypto
exchange you are you have at an absolute
minimum you're being audited you have
all sorts of controls they have
surveillance regimes they you know
there's a whole you know suite of of
things that are in the in the in the act
that would um empower federal regulators
to do their job and and if you're not
compliant with these things you couldn't
operate in the US is how it works right
so um it would have prevented that you
know um other big catastrophes. Terral
Luna was a big one. It was a stable coin
that wasn't stable. It didn't have
dollars or or any other kind of stable
currency behind it. It was essentially
this kind of, you know, self-reerential
thing where the token has valued by the
token and would, you know, should never
have been presented to the stable coin
and would be illegal. It is illegal
under, you know, the genius framework.
Um,
>> works well when things are going up.
>> A lot of things work well when things
are going up and then uh um don't work
otherwise. So, um, yeah, these are these
are not I mean, it's not, um, look, the
details are hard, which is why it's been
seven years or so that some of us have
been working on the Clarity Act, and
it's now been a year, I think over a
year since the House passed its version
of it, and, you know, a year the
Senate's been working on it. There's a
lot of hard details. Um, it takes a lot
of kind of working across the aisles.
This has been a very bipartisan effort.
Um, so I'm not to say the details, but
you know, this is has been done before,
right? financial industries have been
regulated and the principles that that
are used in other industries are applied
here and it's a very robust what's in
the clarity act now the text that was
released um you know it's frustrating to
read some of the news coverage which
apparently just doesn't they you know
they don't read the bill as far as I can
tell because they say things like there
aren't um you know sort of safeguards
for example AML and you know uh
sanctions regimes and all this is simply
not true there's a very it it there's
very you know it has strict definitions
of who is who who is subject to to you
know these requirements. Um it applies
all the same kind of money laundering
and um you know treasury other kind of
treasury rules to crypto intermediaries
that are applied in other markets. Um
the Fraternal Order Police just came out
with their endorsement of the Clarity
Act. um the largest law enforcement
organization in the country. Um you
know, so people are sort of opponents
are saying it doesn't have proper law
enforcement uh uh you know, clauses and
and and uh rules, but this is simply not
true.
>> Yeah, let's let's talk about that. Well,
let let's go over the fights that are
going on with this bill. By the way,
it's like 600 something pages, I think,
at this point. But um
>> so drag it into chat GBT and ask is
there money? It's not that hard. If you
know we if uh if people want to actually
learn about this, you can do that.
>> Um but uh so so let's let's go over each
of these fights, each of these debates
that's going on. You you talked about
illicit finance. That's one of the big
ones.
>> And in fact, one of the biggest
opponents to the bill uh is Senator
Elizabeth Warren. Uh her and her camp,
she's called it a ticket to sanctions
evasion. Yeah.
>> Uh that's a quote from her. uh you know,
she if you hear her describe it, she
says that North Korea and terrorists and
ransomware hackers, they're going to run
wild if this bill passes. What do you
what do you say to that?
>> Uh I mean, right now there it's
extremely unclear, for example, which
entities
um are subject to what rules. And so
what you have is, you know, essentially
a dynamic. What what what I've learned
is when you have gray areas in
regulation, you have essentially a race
to the bottom, right? because you'll
have, you know, look, I was on the board
of Coinbase for a long time. Mark's on
the board. Coinbase is a USbased
company. They're, you know, they take
regulation and compliance extremely
seriously. But for every Coinbase, look,
it's it costs a lot of money and it
slows down your product development. And
so, you know, every year a new offshore
competitor will pop up that doesn't do
those things and becomes popular because
they can offer lower fees or, you know,
whatever f better if you iterate their
product faster because they're not doing
all the kind of compliant things, right?
And so over and over again we've had
this phenomenon where there's sort of
the good actor that that you know this
is one of the things that frustrated us
frankly is that we try to bet on the
good actor, the compliant actor and then
for every one there's kind of this evil
twin you know the doppelganger offshore
that sort of copies all the features but
doesn't do the compliance
>> um and and gets Yes. and and gains
popularity and so what you end up having
is just you end up the the the ambiguity
ends up favoring the bad actors, right?
Um, and so what the important thing to
do with good regulation, I think the
Clarity Act does this is you very
clearly define the regulatory perimeter
like who's subject to this and who isn't
and and if you're not subject to it, you
can't do business in the US. So like if
you're in the US and doing business, you
have to be subject to it. you give clear
definitions and then you have clear
rules and and and so as an example in in
the Clarity Act, if you're a financial
intermediary, if you're a, you know,
somebody like a Coinbase or like a
company that's holding customer funds,
you're subject to all of the same
regulatory same rules that a you know,
fintech, a company like Stripe or PayPal
or anyone else and it's simp it's black
and white in the bill. So I don't know
how to argue with people that just
simply are saying things that aren't
that factually untrue like that. Um uh
it's just uh you know and and as I
mentioned, you know, the endorsement of
the various law enforcement agencies um
a bunch of very you know look it's not
just there's there's a lot of Republican
senators who are very strong on national
security sanctions North Korea who who
support the bill including a number of
Democrats who we think will end up
supporting it who similarly are. Um so I
I don't think it's it's it's neither
true nor is it shown by the kind of the
range of support for the bill.
Mark, what do you think about this
criticism that the bill enables
sanctions evasion?
>> Yeah, so it's really so, you know, spent
a bit, you know, spent quite a lot of
time, you know, kind of in in in in
national security world, and I would say
the national security people I talked to
typically don't agree with that. Um, and
in fact, they they typically say
something quite different, which is
ironically they're hoping that more ter
criminals and terrorists use use crypto
and use blockchains because there's a
there's a there's a trail uh there's a
blockchain um and there's a trail and
that is contrasted specifically um with
how a lot of for example terror
financing happens today. And so I'll
just give you an example of this.
There's a thing in kind of middle the
Middle Eastern kind of terror worlds
these terror organizations there there
there is an existing legacy payment
system that by the way is is is not the
banks. It's not any any any piece of
technology. Uh it's a system called the
Hala system. Um and it's a it's an
ancient, you know, centuries old uh
system. It's basically sort of in
informal peer-to-peer peer-to-peer uh
payments. Um and it operates flu fluidly
across borders. And the way that it
works is you'll have like two cousins,
one in one country and one in the other
country. And you go give money to the
cousin in one country and then it and
then that the money never actually
moves, but like that cousin tells the
other cousin that the family now has
that amount of money. Um and then as a
result, the money, you know, effectively
becomes unlocked in the other location.
And so you you literally have peer-to-p
peer payments happening around the world
with actually no no no no no actual
transfer no actual transfer of physical
cash. So you you can't like catch it at
the border. Um no digital trail
whatsoever because nothing is nothing
has happened digitally. No paper trail.
No nothing. And and and and that's I
think for example that's actually how uh
a lot of terror plots are are are
financed. And so it would be there was
actually a term a while ago that
national security people were kicking
around. they called uh they called
crypto they called it prosecution
futures uh which is if we could just get
the bad guys to use crypto uh instead of
using the other methods like we would
actually be able to then mine the
blockchain to be able to prosecute down
the road and so this is one where it's
just the whole thing has just been
incredibly confusing the whole time
because it's kind of this upside down
backwards you know kind of thing and you
know quite frankly you know not not
talking about anybody in office but
there have been even people in industry
who have said things like well you know
crypto is inherently anonymous and you
know tra you know you can't trace
anything you know which is just like you
it's just like you know just like upside
down bizarre world you know kind of
claims
um which which I think frankly just
stands for people you know not
understanding the technology. Um and so
I I think just the actual reality of it
is if if if more bad guys were running
more money through crypto I think more
more bad guys would get caught not
fewer.
>> Right on. Yeah. And uh you know there's
this thing that happens on TV shows. I'm
sure you watch them. Crime procedurals,
cop procedurals where they're like I'm
the criminal, you know, wire me the
money in in Bitcoin. Nobody's going to
know about it. Is that totally crazy?
>> Yeah. So, there's a couple things. So,
yeah. So, one, so one is so, so the
traditional thing that they do in TV
shows, traditional thing they do is they
say, "Well, you need to put a gun to
somebody's head. They say do a wire
transfer, like wire transfer the money,
right?" Um, and then they'll literally
show a digital display and it'll show
digital display and it'll literally like
have one of these things where it's like
zero to 100% as the money moves and the
whole thing happens within like 2
minutes, right? And then in the real
world, it's like, okay, try to try to
move money through the banking system
across borders, you know? It good luck,
right? like days and days and days, you
know, cuz the systems are shut down and
they don't work on weekends and the
paperwork and the this and the that it's
just like it's just like you completely
flat out and blow. So, so you're exactly
right. What's happened is they've
extrapolated that straight to crypto.
Um, and it's all in and yeah, so you
know, it's like any of these things
which is like yes, it works it's we're
straight on TV. Um, you know,
contra contra maybe what what what a lot
of people think. You know, television is
not actually real life. Um, uh, and uh,
yes, it it very much does not work that
way. both existing payment system does
not work that way um in real life and
and crypto does not work that way in
real life.
>> [snorts]
>> It's it's actually a it's actually a
non-trivial kind of research problem
that's going on today. Research and
product development um to to build
blockchains that do have privacy because
they are so they are so public. Uh and
in fact one of the funny things that
happened was you know we we think that's
important just not for nefarious reasons
because if you want to like pay you know
whatever I want to pay you for some
service maybe it's a private you know
maybe it's a medical thing or a
financial thing you don't want everyone
to know about it just like we do in the
regular financial system you'd want to
have some privacy and that send someone
a digital dollar you want some privacy
right it seems like a natural thing it's
funny because you know uh for for a long
time everyone said well why would you
want to build privacy it's only for
criminals since genius has passed and
now dollar denominated stable coins have
gotten more popular. We've actually
heard in DC now people are saying,
"Well, what about privacy? You need to
have privacy." I'm like, "Yes, we agree.
We agree. It's not always, it actually
is very reminiscent of the early um
internet, you know, when Mark when you
guys added didn't wasn't Netscape at you
guys invented SSL, right?" Or you did
>> and so yeah, for the kids don't know
this that HTTPS, that was Nescape. That
was an invention. [clears throat] And at
the time it was like, well, who would
need that? Why would you need to send
secret stuff? And and at the time
probably some bad guys did use it maybe.
But of course over time we all realized
that was an important and and 99.9% of
it is like good behavior right it's just
people interacting with their bank or
something right but you guys had to go
you got did to go in front of Congress
and didn't you have some
>> it was a four-year fight it was actually
quite analogous to this and so when when
we started so when we started so
Netscape was the first uh uh Ncape was
the first piece of consumer software
that got w that got widely used that
that incorporated u public key public
key encryption modern encryption uh with
public keys um and at the time we
shipped Um we actually had to ship two
different versions. We had to ship the
strong encry we could ship a strong
encryption version inside the US. Uh but
we uh we were we were classifi
encryption was classified as ammunition
um under what called ITAR export control
rules at the time. So encryption was
encryption was classified in the same
category as a tomahawk missile. Um which
meant that the Netscape browser was
classified in the same category as a
tomahawk missile. Um and so we had to
ship deliberately deliberately insecure
versions of of the product um overseas.
And you can imagine how much our
overseas customers enjoyed that right
they get this and you know by the way we
simply label in the box right which is
like weak encryption you know basically
do not trust this and you can imagine
how that how that went for sales and of
course immediately what happened was of
course foreign competitors immediately
then stepped in and you know started
cloning it and started making strong
encryption you know so people outside
the US just didn't use our product they
used products that were made outside the
US um and so you know we went to
Washington you know as as as as you do
when you're a kid you go to Washington
you kind of explain things logically and
they and they and they you know they
kind of you know they tend to stare at
like you've grown a third eye and so you
you start to you know really kind of get
into the you know specifics and details
of it.
>> Um but then you you you get into this
like fundamental dichotomy which is as
you said which is like okay is
encryption
>> bad because you know bad guys are going
to you know do do bad things with it. Um
uh or is it good because it is the key
to establishing trust and being able to
do business and for law-abiding you know
citizens um you both here and overseas
to be able to you know cooperate
together and be able to conduct
business. Um, and so, you know, it's
like, do do you want to completely
eliminate the risk of of, you know, any
sort of ever cyber criminality or do you
want to um or do you want to make like
Amazon.com possible, right? And and and
and those questions are kind of deep
deeply intertwined. Um, and so anyway,
it was this it was this very long, you
know, kind of education process. Um, it
it took took four years. It took a very
very long time to unwind. Um, you know,
they did ultimately make that change.
Um, you know, by the way, the world did
not end. Um, and and the world did not
end for, you know, for several reasons.
you know, one is as you said, the
overwhelmingly the use cases were
positive. Um um and then you know the
the the sort of intelligence services uh
uh you know adapted in many ways and
then and then then the other just
incredibly positive thing that happened
was American industry won right and and
by the way not just state but like you
know many other you know the the the
global internet economy is dominated by
American companies and by the way if if
you're in the national security state
and you ask them the question of would
you rather have this giant industry be
dominated by American companies or
non-American companies 100% of the time
they'll tell you they want dominated by
American companies because they can deal
with American companies, right? Whereas,
you know, some, you know, they can't
deal with some company that's running in
some other jurisdiction. Um, you know,
they a lot of times they can't even talk
to them. Um, and so anyway, so it was
this it was this classic case study. Uh,
you know, that one took four years. You
know, this one, Chris, this is like a
you know, we're now in what, year seven.
Um, and so for people who think the
modern world is speeding up, it's at
least in this respect, it's not. It's
slowing down. Um but I yeah I and this
is why by the way there's so much
pressure right now on clarity to get
clarity pass is because you know se
seven years to work these through these
issues I think is clearly enough.
>> So let's talk about some of the other
objections to the bill. Another big one
is ethics reform. So the president his
family members they have interests in
crypto businesses. This will come as a
surprise to nobody who's been reading
the news. Um h how do you uh and so the
critics say that this bill will enrich
the people who are most vocally
supportive of it?
>> How do you address that?
>> Yeah. I mean I would say first of all
like like it's not my area of expertise
but like I'll say as a citizen I think
there should be ethics rules for
government officials. I don't think
those should be exclusive to crypto. I
think there should be ethics rules
around trading stocks and other crypto
for sure other financial assets. That
seems reasonable to me. Um, number one.
Um, number two, um, the Clarity Act,
even without specific ethics provisions,
will add significant restrictions to
anyone in crypto, including requirements
to, uh, for disclosures around, you
know, the risks and holdings of a crypto
asset. It will add lockup requirements.
So, it's only an increase in the
restrictions that would be applied to
anybody, including government officials
is point number two. And then point
number three, I think what's been
frustrating from a political point of
view is that is that the you know the
the specific ethics kind of provision
around crypto has been coupled with the
topic we've been discussing which is
regulating this industry. Um this bill
as proposed right now would be the first
bill in US history I'm told that
regulates an industry and also add
specific ethics provisions for
government officials in it. Right. This
is very exceptional. Normally government
ethics rules are done separately and an
industry is regulated separately. Um so
you know so I you know I think that
we're being held to this industry is
being held to a completely different
standard than other industries. That
said, I look I think that a very
reasonable debate for people to have and
for and for politicians and policy
makers to figure out is what what ethics
rule should there be um for you know all
financial assets including crypto. Uh
specifically on the you know right now
there is an active negotiation. I hope
obviously I hope there's a resolution.
It's not you know it's between the
various politicians not not sort of
industry. Um, obviously I hope they can
come figure something out so that we can
move forward because we want to regulate
this industry.
>> By the way, this bill puts controls on
government officials um use of crypto
that do not that are stronger than apply
to government uh officials stock
trading. [snorts] Um and so uh if you if
you don't like how uh government
officials trade stocks, uh this bill
puts in place uh something that is much
stronger than that uh for for crypto.
>> Yeah. And and one other point I would
add is right now we think of crypto most
people think of crypto as a thing you
can trade. You know I I think what
they're missing in that is that
increasingly like the stable coins we've
been discussing it's a thing you can
use. Um and if the industry is
successful it will get more you'll have
more and more use cases and more and
more ways in which it's sort of embedded
into our financial life. It'll be a
normal thing for a kid to buy tokenized
stocks instead of going to some you know
traditional stock broker. Um and so I
also think it's important with these
rules to make sure you separate that
kind of trading behavior from the use
behavior because you know I think it's
important for you know for government
officials to be have access to modern
technology and I think this is the
future of finance. So
>> okay so there are government ethics
rules in the bill and also it's a
separate issue from
uh creating market structure rules for
crypto. Maybe these are separable issues
>> like like the reality of where the
politics are right now is that this is
that there are ethics provisions in the
current bill. They're still being kind
of negotiated. I hope they come to
resolution. But I think from our
perspective, the important thing is that
after this many years of kind of
regulatory gray area and an environment
that favors, as I was describing before,
kind of a race to the bottom. The
important thing from our perspective is
we get a regul regulatory framework
passed. And you know, we think the
clarity act while not perfect is is
significantly better than the status
quo. And so I hope that those issues are
resolved.
>> Got it. You mentioned you mentioned
stable coins again just now. Um and one
of the big fights has been over the
treatment of stable coins in this bill.
In particular, the banking lobby. Um
most notably uh JP Morgan Chase has been
very vocal about this. Uh they are
unhappy with the idea that you could
earn interest on stable coin holdings.
Now, the the fear, the concern, the
worry is that uh if consumers can earn
interest on stable coins that they're
going to pull their money out of banks
and keep them in these other accounts
that's going to cause deposit flight.
>> Um and they don't want that to happen.
So, what's the state of that debate
right now?
>> Yeah. In the bill,
>> I would Yeah, in the bill essentially, I
would say the banks got mostly what they
wanted, which is that in the bill, you
cannot pay uh you you cannot pay
interest on balances. um you you can pay
there's it's I think the exact language
is anything that's functionally or
economically similar to a bank account
and there's further legal clauses. Um uh
what you can do is uh sort of more
complicated things like if somebody did
multiple transactions and if they did
sort of a formula that's not
functionally or economically similar to
paying out on a balance like you can
give them rewards for you know using
their uh stable coin wallet twice a
month at Walmart. Walmart could give
them some kind of reward back. So it's
more like a credit card kind of
>> which is what they'd asked for the banks
that's basically asked for and the
industry uh you know there was there was
a it's all been sort of in the press.
There was a you know sort of a prolonged
discussion and they kind of got what
they
it seemed like they got what they had
asked for but then remained I don't know
seem to then want more. So, um I think
going any farther you start to ban, for
example, I think in you know you start
to ban things like Starbucks rewards
points and things, right? So, I mean
it's uh um I think it's kind of gotten
to the as far as it can go and
essentially, you know, was a compromise
that was some somewhat painful for the
crypto industry, but you know, in the
context of the broader bill, uh we think
it nets out, you know, still very we're
still very supportive of the overall
bill. The thing that I find so
interesting is, you know, uh, this
debate has been embodied by Brian
Armstrong versus Jaime Diamond. They're
kind of the two leading
>> voices on this. Um, but JP Morgan has a
big blockchain unit. They're working on
this stuff. Yeah.
>> They they have tokenized deposits that
are live onchain.
>> Yeah.
>> Um, so it's just interesting that, you
know, they're trying to slow roll
clarity, but also
>> I mean, these are Yeah. These are
massive organizations I guess with many
there you know like this they're almost
like countries or something with JP
Morgan so there many different factions
and things but yes every as far as I
know every big bank including JP Morgan
have significant blockchain efforts and
I think um if clarity passes you'll see
a lot of those efforts um are are will
roll out in a in a significant way.
We're way past the kind of the way
enterprises kind of use new technology
sometimes they kind of dip their toe in
and do experimental stuff. We're way
past that now. We speak to a lot of
these organizations on a regular basis.
Like they have real significant
deployments that are going to go live.
Some of them are live, some of them are
going to go live with greater regulatory
clarity. Um they, you know, I think they
see significant opportunity. I mean, you
have to remember the banking system is
um for a bunch of reasons. I'm not, you
know, not necessarily their fault. It's
just that they're very, these systems
are very complex and very intertwined
with each other. But a lot of the
technology is very antiquated. I mean,
it's not it's sort of a joke in Silicon
Valley that they still have cobalt
programmers at banks, but it's actually
true because they a lot of them have
very old code bases. Um, and in their
defense, it's because it's a very hard,
you know, these they're so intertwined
that you you can't just sort of um
upgrade your software by yourself. You
have to do it all together. And so, one
of the things that blockchains have done
for the financial industry is it sort of
given them a unified framework where
they can all kind of say, "Hey,
together, let's move into the 21st
century." And um it's so it's kind of
solved not just a technology problem but
a coordination problem. And I think if
you speak to them and I but as we have
they they're all very excited about
that. [gasps] Um and so you'll see I
think as a result the the other thing
I'll say is just like the simple way to
think about blockchains is they just
remove layers of mediation sort of you
know they're disintermediation machines.
They remove you know many of these
things now like Mark was saying you send
money through a wire. We had a case
where we funded a portfolio company. It
was international. Literally two weeks
later we couldn't find the money. like
this is a significant financing, right?
And it turns out if you if you actually
dig into it, there is no international
wire system. Like it's basically you
wire to a bank, the bank has some piece
of paper that gets moved somewhere else,
they wire another bank. Like there there
is no financial like global network the
way there is a global internet or a
global WhatsApp network. It's it's a
patchwork of systems. Um, and so one of
the beautiful things with say stable
coins is you're just sort of you're
building something just the way you
would build it on the internet, which is
this one big thing that kind of goes an
over-the-top network. Um, and so um, the
banks see that opportunity. They say,
"Wow, this is this is um, you know, we
can save a lot of money. We can provide
better products. Um, you know, we can,
you know, modernize a whole bunch of
things." And so we see that across the
board that all that that a lot of these
organizations are very excited about
this, including JP Morgan. So this is an
opportunity for a big technological
upgrade. Uh all these systems you
mentioned
>> they have parts of it that are still
running on cobalt many decades old. Uh
and this is a chance to
>> and and don't take it from me. I mean
Goldman just came out you know CEO David
Solomon Goldman Sachs endorsing Clarity
Bill Fidelity Black Rockck um a bunch of
other kind of major financial
organizations. They all have major
efforts. Many of this is public. You
know the most innovative fintech
companies like Stripe have gone in a big
way. Um, so you don't have to listen to
me. Just look at the look at the news. I
mean, it's we're at the beginning we
were talking about the early Bitcoin
days. It's we're very far away from that
now. These are very big organizations
and the technology is, you know, on the
verge of going very mainstream with the
regulation.
>> There are a lot of endorsements, a lot
of support. Uh, the one that sticks out
for me you mentioned earlier is a lot of
the biggest law enforcement
organizations are for it, which I think
is a major tell.
Um I want to shift over to another
debate that has been opened uh with
respect to the clarity bill which is
over liability for developers. Um
there's a former White House cyber
security official Carol House. She's
raised this concern that developers
should be held more liable for the
software that they write. Um she argues
that this if you don't hold them liable
that this could set a dangerous
precedent for other areas of technology
like AI. So Mark, I know you spend a lot
of your time in the AI world working on
this stuff. What do you think about this
argument?
>> Yeah, I mean it's a kill shot to the
industry. Like it's just like it's
impossible. It makes software
development impossible because how can
any software developer anticipate the
use of the software down the road? And
you don't even need to think about this
in terms of software. Just think in
terms of anything. You know, if I run a
hotel and a criminal stays at the hotel,
they use the hotel, you know, and they
they plan their operation. Does that
make me part of their conspiracy? um you
know if I'm an engineer in a car and the
car is used in a bank robbery does that
make me you know accessory to bank
robbery like it's completely insane you
cannot if you if you saddle people who
build products that get used by many
people for many reasons uh if you saddle
them with downstream liability for the
uh for the uses it just kills the
industry which is clearly the goal
>> and just to add to that that it's
important not to conflate like in some
of these like core cases I think there's
been some conflation of if you go if
you're to use Mark's analogy if you make
build a car and then you actually like
knowingly help a criminal do it like
then you then you are in trouble. Okay.
And no one's debating that. Okay. And so
if you build a piece of software and
you're like hey criminals come use it
and they send you an email and you're
like how do I do a crime? And you're
like here's how you do a crime. And
there have been cases like that in the
software world like that is a crime and
no one's debating that. Okay? like no
one like what we're talking about here
is you're making software like open
source software whether it's AI or
crypto and you're making it for a you
know like a a constructive use case um
you're making a car you're making a
hammer whatever you're making an AI
model you're making a blockchain um and
you know and then you for example make
it open source if you add unlimited
downstream liability or criminal
liability or civil liability or any kind
it's as Mark said you just you simply
like how could you ever make the calc
how could you ever decide to do that as
an open source developer with that kind
of risk? you couldn't they almost I
think and Mark you know better but in
the AI world I think there have been a
few bills including California um that
almost passed that would have imposed
that kind of basically unlimited
downstream liability on AI models which
I mean how the these people aren't they
aren't big companies that can afford
defending themselves like some five guys
in a garage are going to take unlimited
liability like it's going to kill it
it's going to kill the whole it's going
to kill open source
>> yeah this is the thing so that's the
thing so the first thing and this is a
very live issue in AI policy also and
people are trying to trying to do this
in AI I think very clearly shows what
they're what they're trying to do. Um so
first is open source dies right so just
like right out of the gate open source
dies because like open source developers
aren't getting paid to start with. Um
you know they certainly can't take on
you know enormous negative liability.
You know they certainly can't you know
even if there were insurance available
to cover unlimited downstream liability
for product used by millions of people
you know you still couldn't you know
open source people can't afford to do So
open source dies because open source
dies, academic research dies, right? Uh
because without open source there is no
there is no computer science research in
any of these fields. It's entirely
dependent on open source. So it kill it
kills computer science as a field. And
that's just a start. Then it kills uh
venture investing, right? Because like
we we can't we obviously can't invest in
a company if they have you know a
million times the level of exposure uh
because somebody does something that
they didn't even know about. Um and then
it kills all the companies, right? all
the startups and then and then it kills
the big companies and it just kind of
you know because they they also can't
they also can't take that on and so it
rips right through and so and so this is
the thing where it's just like the the
level of misunderstanding of what it
takes to actually like run a business or
do anything productive is is is either
like just completely absent when people
make that argument or they are
deliberately trying to kill the industry
which by the way I think they're trying
to deliberately kill the industry
>> maybe maybe um let's move on to one of
the last objections that I've heard most
often
um which is that this bill would punch a
hole in securities laws. Uh you know,
Marky mentioned that securities laws
have allowed US capital markets to
thrive over the past 90 some odd years,
uh and have made the US the envy of the
world. Um so some people say that if
this bill gets through, a company will
just go, hey, I'm going to just tokenize
whatever. I'm going to tokenize some
asset. I'm going to, you know, put it on
a blockchain and that is going to exempt
me from SEC oversight and securities law
in general. What do you um what's your
response to that?
>> So, if you take a stock and you to this
is in the bill, if you take a stock and
you tokenize it, that's a security and
it's and it's regulated by the SEC like
a security is. It's very black and white
and clear. Um the the only thing that is
different in with respect to blockchain
regulation is um that there it it
delineates in certain situations that uh
blockchains like like a token like
Bitcoin or Ethereum um in the Clarity
bill it delineates in some cases it'll
be regulated by the SEC in other cases
it'll be regulated by the CFTC. In all
cases they have a federal regulator. Um
and now this by the way this is even the
sort of the uh the last administration
that was opposed to crypto implicitly
agreed with this framework. Okay?
Because let's just let me just walk you
through it. So um Bitcoin when it
started was presumably one or some set
of people whoever Satoshi was um and by
definition when something starts it's
centralized. There's a person behind it.
They have sort of inside information and
control and the way that the Clarity Act
works at that point you are regulated by
the that token is regulated by the SEC
right? Um, so a new someone creates a
new blockchain, you know, they have
control over it. Um, and you know, they
have rules like if they, you know, they
have lockups, for example, they have
disclosure rules, they have all the
kinds of things you expect in securities
lost. Um over time when you hit certain
thresholds of decentralization and start
to look more like a Bitcoin of today or
an Ethereum of today where there is no
central actor that controls it has
inside information and so forth the
Clarity Act designates that the CFTC
oversees that token. So it's regulated
as a commodity and not a security
because at that point you still need
regulation to make sure that people
aren't you know dumping on the market or
cornering the market and all the other
things that sec that commodities laws
regulate. Um but it's a different
regulatory regime depending on sort of
the the nature of the asset. Um
>> so it becomes more like things like uh
like gold precious metals.
>> That's right. Yes. It's like Bitcoin and
and even the last administration who was
anti-crypto
they said at some point that Bitcoin and
Ethereum were sufficiently decentralized
to be regulated as commodities. Right.
So this has been implicit in court cases
and in uh agency decisions from both
parties for the last 10 years. All
clarity does is uh enshrine it in law
and and make the definitions really
specific so that people know exactly
where they are so you don't have to go
to court to figure it out. Right? So
it's really just kind of taking what's
been consensus across the courts and the
regulators and making it sort of hard
coding it and making it specific. But at
every moment, so first of all, all
existing assets by putting on the
blockchain, they're still have they
still are securities, number one. And
number two, all assets, digital assets
are have a federal regulator, right? And
have a framework. And today, today, if I
create a token and you know, and this is
the biggest issue you'll have with like
a lot of these things is there's no
rules for disclosure. There's no rules
for insider trading lockups. Um if the
Clarity Act passes like our investments
will we our effective lock up period
meaning that the period in which we can
sell will will increase significantly
um because a product we'll invest in
someone they'll launch a product it'll
have a token and until there these
criteria are met for sort of hitting
sufficient decentralization there are
lockups on venture capitalists and
founders and so forth right which is how
it should be. I mean, it should, you
know, it's a it's a it's a smart
riskbased regulatory framework and um we
think will allow for people to build
products that are long-term products and
build trust in the market. Consumers
will, you know, consumers, investors,
and so forth, all the market
participants will have trust in the
market because it's regulated because
there's a framework around it. Um and um
and that's how you build a real industry
long term.
>> All right, so we've walked through a
number of the live fights. All of these
things are being debated right now. Um,
any one of them could potentially tank
this bill. What happens if clarity does
not pass?
>> Yeah. Um, [gasps and sighs]
well, well, one is we'll keep working on
it and someday it will pass. Number one,
it will pass. Um, uh, number two, um, a
lot of these things can and and are
being done by at the agency level,
meaning the the, you know, the agencies,
the SEC, CFTC, Treasury, and so forth.
Um and so you know I think that the big
difference is legislation is you know de
facto permanent in a way that agency
rule making is less so. Um and that's
important both to you know make sure the
rules are there and you know for the
long term for protecting consumers um
but also for industry to have uh
confidence is you know you you want to
make an investment you want to build
something those things can take many
years to build and so you know if you
have to try to build that on like
shifting sands um you're [clears throat]
you're much less likely to make that
investment of time and money um and it's
just much harder to kind of um you know
you've got enough to worry about as an
entrepreneur already without having um
you know kind of a shifting maze of
regulatory changes. So um so that would
be the downside. It would be just it
would just sort of prolong that. But but
also look we're going to I think I'm
optimistic it will get passed in the
near future but if it doesn't we will
keep working on it.
>> Some people have this idea that
regulation and innovation are just
opposites. They're at odds with one
another. They're opposed. Um, Mark, you
spend a lot of your time on what you
call the little tech agenda, advocating
for startups, for builders, for
developers. How does all of this fit
into that regime? Uh, and and why why is
regulation good in this case?
>> Yeah. So, I would say the political
political theorists talk about all the
different forms of government. And the
thing that they you know different
debates about the different forms of
government, how well they work and the
one that I think everybody agrees on is
there's a specific degenerate form of
government um called anarot tyranny. Um
so anarco from anarchy and then and then
and then and then tyranny and the naroty
is a system of government by which you
regulate the law-abiding people to
death. The anarco part of it is you let
the rule breakers uh go absolutely nuts.
Um and then the tyranny part of it is
you regulate or prosecute the the the
good actors to death. And so you
basically encouraged the criminals. Um
and you uh you you you condemn the uh
you know the law abiding. Um and and so
that you know that that was the the
governance regime under the under the
prior administration. Um you know that
you know that that was the system and
and you know to your question like
startups selfact like very directly. Um
and and by the way in in two segments
which is startups outside the US just
went wild and did whatever they wanted.
Um you know which as we as we discussed
led to FTX. uh startups inside the US
got brutal punished um with with no
route to safety with no route to a way
to actually safely conduct business. Um
and so like if you were designing from
scratch and saying like what's the worst
possible policy um what's the worst
possible approach like it would be a
naroty uh which is what we had you know
what do you actually want you want you
want predictability you want
predictability you want stability um you
want prudence uh you want reasonableness
um you want you know protections at the
right level of protection you know you
know you want consumer protections you
want investor protections um you know
you you want things to be happening in a
in a in a in a in a fair way but you
also you also want innovation you want
freedom you want the ability to
innovate. You want the ability to u
deploy high quality products um that
work in the way that that that that they
say they do. Um you want to be able to
have customers be able to trust you and
and you want to be able to know that
you're going to be in business in a year
um and not being sort of wantedly
attacked and and and destroyed by a
system that gives you no way to to to to
do it legally. Um and so it it you know
like a lot of things in life it it turns
out there there is a middle ground.
There is a there is a centrist position.
uh you know the cent's position involves
the correct level of regulation. Um you
know without that uh you know e either
side of that is is is just you know
absolutely devastating. Um you know none
is devastating too much is devastating.
And so you want to you want to kind of
folily locks it right in the middle
which is what we think this which is
very much what we think clarity does.
Let's zoom out to and talk about what
what's at stake for the country and for
American leadership passing the Clarity
Act. Why is it why is it so important
for the country to do this? What will it
lead to?
>> Oh, I mean, so this is in the long we
would argue this is in the long
tradition of American technological
leadership and I would say American
technological supremacy. Um, which is,
you know, do you want to be the country
that leads the world in technology or
not? Um and and by the way there's two
parts of that which is one is do you
want the technology to exist when you
know some people argue that you know you
better off without certain technologies
but then there's another part of it
which is technologies do tend to exist
uh you know once they get invented and
then you know do you want that to happen
inside your own country or do you want
do you want to have that happen
somewhere else and you know we we we
always make a very strong argument on
this which is you 100% uh every American
citizen should want America you know
regardless of political position or
whatever uh should want America to be
the technology leader in the world um
that has many benefits it has you direct
economic benefits in terms of the wealth
of the country and the ability to you
know pay for all the things we want to
pay for. Um it has enormous uh benefits
um in terms of um also our security um
our ability like let's put it this way
like for the crypto industry to be based
in the US is overwhelming good for
United States security like and
overwhelmingly good for United States
law enforcement overwhelmingly good for
United States uh national security uh
because then you know if you're the FBI
or if you're the you know if you're any
any agency of government you're dealing
with American companies which is which
is a much more straightforward thing to
do uh when you when you need something.
Um and so it's it's good from a security
uh perspective. Um I by the way I think
it's also good for you know
opportunities for kids you know are are
your kids able to get educated in
state-of-the-art uh you know
technologies to have lots of career
opportunities and are they able to work
in those fields um and you know American
kids for 100 years have had that edge
kids uh you know all over the planet and
and and hopefully that continues. Um,
and so like, you know, it's just one of
these fairly amazing things where in
some ways this is like like we're so
used to America being the technology
leader that it almost feels embarrassing
to make this argument because it's such
an obvious argument like America has so
clearly benefited from this for, you
know, for the for the last hundred
years. Um, and and and in my view, we
should all want that to continue for
hundreds of years to come.
>> Chris, you literally wrote the book on
this stuff on blockchains, read, write,
own.
Tell us what does clarity unlock if it
passes in a year, two years
indeterminate future.
>> Yeah. Well, as I mentioned before, I
think of a a simple way to think of a
blockchain is is a dis disintermediation
machine. It lets you build internet
services where instead of having kind of
a bunch of, you know, uh, organizations
in the middle, taking pieces of the sort
of the take the money along the way, you
can build advanced internet services
where it's, think of it as peer-to-peer.
I can send you a dollar. Stable coin is
a simple example. I can send you a
dollar. There's no intermediary taking,
you know, if you send to Mexico right
now using a traditional financial
service provider, they'll take 8% to
10%. stable coin, it's almost zero
because there's not someone sitting in
the middle, right? So, that's the
simplest uh case. What's worked so far
has been financial use cases. Um, stable
coins, we're seeing now uh people, you
know, stocks and bonds and treasury
bills and other kinds of financial
assets, lending. Um, I think that will
in the next couple of years be the
dominant use case. So, I think we'll see
what I hope is a significant upgrade of
the financial system. Um uh by the way a
lot of the benefits are global but you
know I think we take for granted here
that we have a very high functioning
currency and financial system. This
makes us accessible um you know
globally. um longer term and what I kind
of talk about in my book, I think that
that you could take this technology and
apply it beyond that. And you can you
could imagine for example a world where
um you know if if AI agents uh
proliferate the way that that you know
we hope they will and I think a lot of
people in the AI industry think they
will, you can imagine internet of you
know billions and trillions of AI agents
um conducting economic transactions and
the natural way they would do that would
be through crypto assets. Um you can
also imagine just you know all sorts and
I talk I kind of you know allude to this
at the end of my book where I speculate
about future use cases other you know
other kinds of things from um you know
uh ser services for creative people
social networks games all sorts of
things I think you can you know um but
but I think for the next couple of years
mostly what we'll be focused on is is
this sort of finance 2.0 upgrade um that
we talked about. All right. Well, time
will tell whether policy makers uh
listen to you guys, heed your advice,
and uh realize that rules are better
than no rules, that the time is urgent,
and that the benefits will acrue to
whoever sets the standards first. Um,
thank you both for coming on the show.
>> Thank you. Good. Good. Thanks, Robert.