WEBVTT 00:00:00.160 --> 00:00:04.157 stable coins or tokenized stocks or dollars on blockchains rivals the size 00:00:04.240 --> 00:00:07.837 of the Visa network. Trillions of dollars transacted. If you have a dollar 00:00:07.920 --> 00:00:11.037 of that stable coin, there is a dollar sitting in the bank. And that's why the 00:00:11.120 --> 00:00:13.437 Clarity Act working its way through the Senate is so important. 00:00:13.520 --> 00:00:16.877 >> One of the biggest opponents to the bill is Senator Elizabeth Warren. 00:00:16.960 --> 00:00:20.077 >> And why why are we working on this? 00:00:20.160 --> 00:00:22.877 >> She says that North Korea and terrorists 00:00:22.960 --> 00:00:27.037 and ransomware hackers, they're going to run wild if this bill passes. The 00:00:27.120 --> 00:00:30.157 national security people I talked to typically don't agree with that because 00:00:30.240 --> 00:00:33.517 there's a trail. >> Another debate that has been opened with 00:00:33.600 --> 00:00:37.117 respect to the clarity bill. Developers should be held more liable for the 00:00:37.200 --> 00:00:40.157 software that they write. >> If you saddle people who build products 00:00:40.240 --> 00:00:42.957 that get used by many people for many reasons. It's a kill shot to the 00:00:43.040 --> 00:00:44.317 industry which is clearly the goal. 00:00:44.400 --> 00:00:48.397 >> Volumes are now rivaling the Visa network which is insane. Lots of 00:00:48.480 --> 00:00:52.957 gigantic financial institutions have rushed in. Black Rockck, JP Morgan, Visa 00:00:53.040 --> 00:00:56.717 itself, Mastercard. What happens if clarity does not pass? 00:00:56.800 --> 00:01:00.970 >> Um, [music] 00:01:01.840 --> 00:01:05.437 >> welcome to the A16Z Crypto Show. I'm Robert Hackett and I'm here with Mark 00:01:05.520 --> 00:01:09.757 Andre and Chris Dixon who, if you watch the show, need no introduction. 00:01:09.840 --> 00:01:12.877 >> Great to be here. >> So, uh, today we're talking about 00:01:12.960 --> 00:01:18.157 regulation. Congress is currently hashing through some legislation, once 00:01:18.240 --> 00:01:22.477 in a generation market structure legislation that could determine where 00:01:22.560 --> 00:01:24.317 the future of the financial system and 00:01:24.400 --> 00:01:28.557 internet get built. Um, it passed in the 00:01:28.640 --> 00:01:31.357 House last year with bipartisan support 00:01:31.440 --> 00:01:35.757 and it has been making its way through the Senate ever since. Now, there's been 00:01:35.840 --> 00:01:40.397 lots of fights and obstacles over it which we'll get into. Um, but before we 00:01:40.480 --> 00:01:42.637 do, I want to zoom out and go big 00:01:42.720 --> 00:01:45.437 picture and talk about why regulatory 00:01:45.520 --> 00:01:48.957 clarity matters. Um, what the status quo 00:01:49.040 --> 00:01:51.117 costs us and what's at stake for the 00:01:51.200 --> 00:01:53.837 country and for anybody who may end up 00:01:53.920 --> 00:01:56.957 using this technology. So, uh, Mark, I'd 00:01:57.040 --> 00:01:59.677 like to start with you. Back in January 00:01:59.760 --> 00:02:02.157 2014, you wrote an op-ed for the New 00:02:02.240 --> 00:02:05.997 York Times called Why Bitcoin Matters. 00:02:06.080 --> 00:02:07.597 Things were a little bit different then. 00:02:07.680 --> 00:02:11.917 Um this was a pretty contrarian position to stake out. Uh the crypto industry 00:02:12.000 --> 00:02:13.997 which if you could even call it that 00:02:14.080 --> 00:02:17.517 back then looked very very different. 00:02:17.600 --> 00:02:20.077 How have things changed from then to 00:02:20.160 --> 00:02:24.557 now? >> Yeah sure. So 2014 so 2014 was so long 00:02:24.640 --> 00:02:26.397 ago um that the New York Times actually 00:02:26.480 --> 00:02:29.357 ran a positive piece on crypto um from 00:02:29.440 --> 00:02:33.277 you from right and from me with my name 00:02:33.360 --> 00:02:37.037 on it. Um and so yes this was in the distant past. This is for the kids 00:02:37.120 --> 00:02:40.877 watching this. This is when dinosaurs roam the earth uh 13 years ago. Um might 00:02:40.960 --> 00:02:45.197 as well have been in the 1500s. Um but yeah, I'm actually really proud of that 00:02:45.280 --> 00:02:48.237 piece. So if you read that piece today, I think it holds up really well. Um I 00:02:48.320 --> 00:02:52.317 think it holds up in in in a few respects. Um so you know, one is and I 00:02:52.400 --> 00:02:55.277 should say this, like it's actually fairly amazing. Uh you know, the Bitcoin 00:02:55.360 --> 00:02:58.717 white paper, you know, this piece is even 5 years into the you know, macro 00:02:58.800 --> 00:03:02.397 trend. Um and you know, it was still the kind of thing where it was still, you 00:03:02.480 --> 00:03:04.797 know, big news to even, you know, believe that this technology matter 00:03:04.880 --> 00:03:08.397 mattered at all. So I I think it was, you know, I I think I think I was preing 00:03:08.480 --> 00:03:10.637 not that Bitcoin was going to matter, but I think I was precious and kind of 00:03:10.720 --> 00:03:13.437 forecasting that we were still in the beginning of the adoption curve, like 00:03:13.520 --> 00:03:15.437 there was still there were still a lot of people that were going to have to, 00:03:15.520 --> 00:03:17.917 you know, they were going to have to learn about this, want want to learn 00:03:18.000 --> 00:03:21.677 about this, uh, and be part of it. And so I think that that holds up. Um I 00:03:21.760 --> 00:03:24.797 spent a lot of time you know in the piece and and around that time trying to 00:03:24.880 --> 00:03:29.837 really educate people on the nature of this technology um uh uh you know with 00:03:29.920 --> 00:03:32.557 with with Bitcoin with the blockchain because that you know that was new and 00:03:32.640 --> 00:03:35.677 you know for people who are not you know don't have computer science degrees or 00:03:35.760 --> 00:03:38.957 math degrees like that that it's kind of a well for people that do have computer 00:03:39.040 --> 00:03:41.117 science degrees it's kind of a weird idea. So for people who don't have 00:03:41.200 --> 00:03:44.077 computer science degrees like it's a genuinely new idea. So and I think the 00:03:44.160 --> 00:03:47.517 importance of that has held up really well. Um you know I think the thing that 00:03:47.600 --> 00:03:51.837 uh you know in retrospect um uh you know is needs to be changed about the piece 00:03:51.920 --> 00:03:55.997 is you know every time I said Bitcoin you just swap in crypto right um which 00:03:56.080 --> 00:03:59.437 is like at that time Bitcoin was crypto like it was you know was essentially the 00:03:59.520 --> 00:04:02.477 only game in town um you know Chris you can correct me on the timing if you want 00:04:02.560 --> 00:04:05.437 but I believe at that point there was the proposal for what were called 00:04:05.520 --> 00:04:10.717 colored coins um >> around then yeah >> around then so people don't remember 00:04:10.800 --> 00:04:13.117 there there was a proposal for this thing called colored coins which by the 00:04:13.200 --> 00:04:15.997 way is the single worst branded uh uh uh 00:04:16.080 --> 00:04:18.397 proposal of all time. Um you know, much 00:04:18.480 --> 00:04:21.677 much much worse than New Coke. Um uh but 00:04:21.760 --> 00:04:25.437 the concept of it was actually Bitcoin bitcoins bitcoins that were going to be 00:04:25.520 --> 00:04:28.397 tagged basically with properties that would let let them represent other 00:04:28.480 --> 00:04:32.317 things. Um and so the the that sort of idea was that bitcoin would be extended 00:04:32.400 --> 00:04:36.077 to basically enable both tokenization of real world assets and also uh you know 00:04:36.160 --> 00:04:39.677 virtual assets like NFTs. You know of course what happened was that didn't 00:04:39.760 --> 00:04:43.037 happen. uh and what happened instead was the creation of of new blockchains and 00:04:43.120 --> 00:04:45.997 and then and the creation of of new crypto platforms and and then 00:04:46.080 --> 00:04:48.717 ultimately, you know, Ethereum and then everything else that followed. And so, 00:04:48.800 --> 00:04:52.557 you know, what what started as a technology became an industry. Um and 00:04:52.640 --> 00:04:55.037 and so I think if if you read that piece, you'll see that I I projected 00:04:55.120 --> 00:04:57.917 many of the use cases and the the future development of the technology, but it it 00:04:58.000 --> 00:05:00.557 it it took a different path. Now, Bitcoin obviously has been very 00:05:00.640 --> 00:05:03.757 successful uh since then, but you know what we've really seen since then is 00:05:03.840 --> 00:05:07.757 this explosion of innovation. um say this explosion of innovation that has 00:05:07.840 --> 00:05:11.277 both happened and that wants to happen around all the other use cases that we 00:05:11.360 --> 00:05:13.597 uh that we talked about at the pieces. 00:05:13.680 --> 00:05:17.757 >> Yeah, it's actually remarkable how well that piece holds up. Um but there is one 00:05:17.840 --> 00:05:22.077 forecast in there that I want to cite in particular that stands out which is uh 00:05:22.160 --> 00:05:25.917 and I quote you say the uh the coming years will be a period of great drama 00:05:26.000 --> 00:05:29.837 and excitement revolving around this new technology. I think you were spot on 00:05:29.920 --> 00:05:33.437 there. >> Um >> Chris uh you've been there since the 00:05:33.520 --> 00:05:37.837 start as well. you were an early advocate and acolyte of crypto. 00:05:37.920 --> 00:05:40.797 >> How have things changed from the early days to now? 00:05:40.880 --> 00:05:43.677 >> Well, as Mark was saying at the time, so 00:05:43.760 --> 00:05:45.837 way back sort of 2014 in the early days, 00:05:45.920 --> 00:05:49.117 it was mostly kind of hobbyists and uh 00:05:49.200 --> 00:05:50.877 you know, super enthusiasts and kind of 00:05:50.960 --> 00:05:53.837 a kind of a subculture cultish thing. Um 00:05:53.920 --> 00:05:58.077 the technology was um bit you know Bitcoin was sophisticated but a lot of 00:05:58.160 --> 00:05:59.757 the things Mark alluded to like kind of 00:05:59.840 --> 00:06:03.277 the newer blockchains were early um had 00:06:03.360 --> 00:06:05.837 performance issues scaling issues other 00:06:05.920 --> 00:06:08.557 other kinds of things. Um fast forward 00:06:08.640 --> 00:06:11.437 today uh you know every day you'll see a 00:06:11.520 --> 00:06:16.077 new announcement from a major bank or fintech company announcing a platform 00:06:16.160 --> 00:06:17.997 involving stable coins or tokenized 00:06:18.080 --> 00:06:21.037 stocks or other kinds of digital assets. 00:06:21.120 --> 00:06:24.877 um the stable coin volume. So, you know, stable coins for those don't know are 00:06:24.960 --> 00:06:28.797 basically what Mark described with Bitcoin except they're dollars on blockchains. 00:06:28.880 --> 00:06:33.357 That that is now a you know rivals the the size of the Visa network. Trillions 00:06:33.440 --> 00:06:37.357 of dollars transacted. You can go into WhatsApp and send money anywhere in the 00:06:37.440 --> 00:06:39.997 world uh for almost free in the same way 00:06:40.080 --> 00:06:44.477 you'd send a text message um using stable coins. It's you know really the 00:06:44.560 --> 00:06:48.397 way money should work. It was was I think Mark Mark could speak to this as 00:06:48.480 --> 00:06:52.157 one of the pioneers of the internet, but I think was one of the kind of ideas 00:06:52.240 --> 00:06:54.877 that early internet pioneers expected to 00:06:54.960 --> 00:06:59.837 happen honestly much sooner um and for a variety of reasons took a lot longer. 00:06:59.920 --> 00:07:00.957 But we're now finally kind of seeing 00:07:01.040 --> 00:07:04.157 that dream um you know come alive with 00:07:04.240 --> 00:07:09.357 with money moving as easily as bits. Um so now it's a very mature industry. The 00:07:09.440 --> 00:07:12.717 technology the underlying infrastructure has gotten much much more sophisticated. 00:07:12.800 --> 00:07:16.717 even three years ago might cost what I just described might cost a couple of 00:07:16.800 --> 00:07:21.437 dollars if not tens of dollars to do that transaction. Um now you know on 00:07:21.520 --> 00:07:25.677 most of the popular blockchain Salana Ethereum and so forth it's sub one 00:07:25.760 --> 00:07:30.157 second to close to settle the transaction sub one penny to to send 00:07:30.240 --> 00:07:33.917 something right so and and that's due to kind of the equivalent of Moore's law on 00:07:34.000 --> 00:07:36.557 blockchains which is you've got you've gotten sort of more and more performant 00:07:36.640 --> 00:07:39.357 chains um you know you read about hacks 00:07:39.440 --> 00:07:43.837 and things in the newspaper um about uh crypto the reality is Bitcoin has never 00:07:43.920 --> 00:07:47.597 been hacked. Ethereum has never been hacked. uh organizations that use these 00:07:47.680 --> 00:07:49.677 things have had lack security and have 00:07:49.760 --> 00:07:51.997 been hacked, but the chains themselves 00:07:52.080 --> 00:07:55.037 highly secure, highly performant now. Um 00:07:55.120 --> 00:07:59.357 and you have, you know, big institutions and you know, trillions of dollars 00:07:59.440 --> 00:08:03.197 moving around on these things. Um which, you know, of course brings us to our 00:08:03.280 --> 00:08:06.877 topic, which is you need, you know, when you have that going on, you need 00:08:06.960 --> 00:08:10.477 regulatory clarity. You need you need a framework around that. 00:08:10.560 --> 00:08:15.277 >> Let's talk about that. Um because you know you cited that stable coin volumes 00:08:15.360 --> 00:08:19.517 are now rivaling the Visa network which is insane. You know this is trillions of 00:08:19.600 --> 00:08:21.917 dollars per quarter uh turning through 00:08:22.000 --> 00:08:25.037 this system. Um lots of gigantic 00:08:25.120 --> 00:08:26.797 financial institutions have rushed in. 00:08:26.880 --> 00:08:30.557 Black Rockck JP Morgan uh Visa itself, 00:08:30.640 --> 00:08:34.157 Fidelity, Mastercard. I mean you could rattle off just any number of names and 00:08:34.240 --> 00:08:35.757 they're all building on this technology 00:08:35.840 --> 00:08:38.637 right now. Um but we've gotten this far 00:08:38.720 --> 00:08:43.277 without rules. So there's been very little in the way of regulatory clarity 00:08:43.360 --> 00:08:47.597 or guidance. >> Um why do we need why do we need rules 00:08:47.680 --> 00:08:50.477 now? >> Well, so yeah, so good question. Um so 00:08:50.560 --> 00:08:55.117 for a variety of reasons, uh the kind of for political and policy reasons, uh the 00:08:55.200 --> 00:08:58.557 regulation around crypto was broken into two components, stable coins and the 00:08:58.640 --> 00:09:00.077 rest of the market. So stable coins are 00:09:00.160 --> 00:09:02.557 roughly 15% let's call it of the market. 00:09:02.640 --> 00:09:06.877 Uh 85% is is the rest. Um there was a bill >> and that's by market cap. 00:09:06.960 --> 00:09:10.477 >> That's by market cap. Um last year a bill passed Congress was signed by the 00:09:10.560 --> 00:09:14.477 president called the Genius Act which provides a comprehensive regulatory uh 00:09:14.560 --> 00:09:18.077 framework for stable coins. Um, and it's not a coincidence that stable coins are 00:09:18.160 --> 00:09:21.117 also the area that's taken off the most in the last year because once you have 00:09:21.200 --> 00:09:25.437 regulatory clarity, that means that you know builders have certainty, consumers 00:09:25.520 --> 00:09:27.117 can know if if you're a American 00:09:27.200 --> 00:09:29.677 consumer and you use USDC or another 00:09:29.760 --> 00:09:34.157 genius uh compliance stable coin, you know that if you have a dollar of that 00:09:34.240 --> 00:09:37.037 stable coin, there is a dollar sitting in the bank because that's the genius 00:09:37.120 --> 00:09:41.517 regulation that that bank is audited and that's sitting in short-term uh 00:09:41.600 --> 00:09:43.917 treasuries which is, you know, the basically the safest thing the financial 00:09:44.000 --> 00:09:47.677 system can offer. Um, and so you know that dollar, you can be assured that 00:09:47.760 --> 00:09:51.437 dollar is there. It's not an FTX, it's not a Luna Terra situation where it will 00:09:51.520 --> 00:09:55.597 disappear tomorrow. That gives you as a consumer confidence and protection. If 00:09:55.680 --> 00:09:59.117 you're an institution, if you're a bank, if you're Stripe, if you're PayPal, and 00:09:59.200 --> 00:10:02.237 you want to go and go and enter this market, you want to know there are 00:10:02.320 --> 00:10:04.797 predictable rules that there's a framework around it. There's not going 00:10:04.880 --> 00:10:07.677 to be an FTX, that what you build will, 00:10:07.760 --> 00:10:11.917 you know, be compliant, not just the next year, but next 10 years, right? And 00:10:12.000 --> 00:10:15.357 so the for and then if you're an entrepreneur, of course, it's similar 00:10:15.440 --> 00:10:18.317 kind of logic. You want to know their certainty. You want to know their their 00:10:18.400 --> 00:10:21.757 rules. You know, you're all our entrepreneurs are happy to hire lawyers 00:10:21.840 --> 00:10:23.437 and pay a lot of money to be compliant. 00:10:23.520 --> 00:10:27.277 They just need to know, you know, what they're aiming for. Um and so as a 00:10:27.360 --> 00:10:31.837 result of that bill, um we've seen a a takeoff in in particularly around stable 00:10:31.920 --> 00:10:34.797 coins. And then kind of the close cousin of stable coins is like once you put a 00:10:34.880 --> 00:10:37.437 dollar on a blockchain, you can put a stock, you can put a treasury bill. And 00:10:37.520 --> 00:10:41.437 so that's also um you know been there's been a lot of adoption there with people 00:10:41.520 --> 00:10:46.317 kind of you know relying on agency guidance and other not non-legislative 00:10:46.400 --> 00:10:50.317 uh regulatory levers to give them guidance on how to do that. But the big 00:10:50.400 --> 00:10:53.117 kind of hanging problem right now is that you've got sort of this this other 00:10:53.200 --> 00:10:55.997 section of the market including blockchains themselves which stable 00:10:56.080 --> 00:11:00.077 coins are built on uh which don't have a comprehensive federal regulatory 00:11:00.160 --> 00:11:03.357 framework and that's why the clarity act which is being working its way through 00:11:03.440 --> 00:11:06.877 the senate is so important because that provide that's sort of the other 85% of 00:11:06.960 --> 00:11:10.317 the market. So you can kind of imagine it's like as if we had a regulatory 00:11:10.400 --> 00:11:14.237 framework for cell phones but not for cell towers or something like half the 00:11:14.320 --> 00:11:17.757 half the half the technology is regulated. The other half has this sort 00:11:17.840 --> 00:11:21.837 of uncertainty around it. Um people are still building there. People are trying 00:11:21.920 --> 00:11:26.717 to do their best to kind of you know understand uh um what the rules are 00:11:26.800 --> 00:11:30.797 there. You know there's this other lever of policym which is the agencies such as 00:11:30.880 --> 00:11:35.517 the SEC and CFTC. They they've provided some guidance and things but ultimately 00:11:35.600 --> 00:11:39.997 you know what industries are built on as you alluded to in the beginning with the 00:11:40.080 --> 00:11:43.197 internet is they're built on legislation. Legislation is solid ground 00:11:43.280 --> 00:11:45.837 to build on. It's immutable. You know 00:11:45.920 --> 00:11:50.637 has the stamp of approval of the US Congress. It's you know the result 00:11:50.720 --> 00:11:54.557 importantly legislation is the result of a lot of smart people getting together 00:11:54.640 --> 00:11:58.797 people from different political parties compromising you know uh finding the 00:11:58.880 --> 00:12:00.317 right balance between industry and 00:12:00.400 --> 00:12:03.757 consumer protection and so forth um and 00:12:03.840 --> 00:12:07.917 um and you know so we think ultimately that's that's what is required and why 00:12:08.000 --> 00:12:12.557 the clarity act is so important. So, as you mentioned, we do have some rules. 00:12:12.640 --> 00:12:15.917 It's for stable coins that covers a sliver of the market, but there's this 00:12:16.000 --> 00:12:17.437 gigantic swath of the market that 00:12:17.520 --> 00:12:21.437 remains largely unregulated. Um, Mark, 00:12:21.520 --> 00:12:24.077 why why do we need rules for all of this 00:12:24.160 --> 00:12:29.277 and why do we need them now? >> Yeah. So, [laughter] so, you know, we've 00:12:29.360 --> 00:12:32.237 been in this just kind of bizarre twilight state for the last several 00:12:32.320 --> 00:12:35.357 years. um you know where sort of crypto was developing you know largely without 00:12:35.440 --> 00:12:37.837 rules you know for better or for worse in kind of you know what I would 00:12:37.920 --> 00:12:41.757 describe as sort of experimental ways um you know between uh between sort of 00:12:41.840 --> 00:12:43.997 inception through 2020 and then we had 00:12:44.080 --> 00:12:48.957 um you know between 2020 and 2024 we had a an administration you know in the 00:12:49.040 --> 00:12:51.837 white house that just like absolutely just decided to just kill the industry 00:12:51.920 --> 00:12:54.637 like just you know flat out you know declared war specifically by the way 00:12:54.720 --> 00:12:59.677 declined to regulate refused to regulate um and instead decided to prosecute um 00:12:59.760 --> 00:13:02.477 and you know this kind of really remarkable thing happened which the 00:13:02.560 --> 00:13:05.437 industry didn't die through that process. Like crypto is still standing. 00:13:05.520 --> 00:13:08.717 And the sort of most bizarre sort of aspect of that for me is I've had these 00:13:08.800 --> 00:13:12.237 conversations with some lawmakers in DC where they say, "Well, um, you know, I'm 00:13:12.320 --> 00:13:14.957 going to support crypto now because like if it didn't die during this whole 00:13:15.040 --> 00:13:18.397 period when we tried to kill it, then it must be good." Um, and you know, we 00:13:18.480 --> 00:13:21.277 should probably support it. Um, which, you know, is is sort of the most, you 00:13:21.360 --> 00:13:24.797 know, kind of reverse logic way I can think of to end up positive on 00:13:24.880 --> 00:13:29.277 something, but I guess I'll I guess I'll take it. Um and so and then that also 00:13:29.360 --> 00:13:31.837 led in this kind of bizarre situation where people said well you know crypto 00:13:31.920 --> 00:13:34.317 hasn't you know materialized in the way that you guys all said you know you 00:13:34.400 --> 00:13:37.197 don't have all these use cases that you know so where are all the use cases why 00:13:37.280 --> 00:13:40.157 you know why why isn't everybody using crypto and it's like well because there 00:13:40.240 --> 00:13:42.717 was like a 5year like regulatory 00:13:42.800 --> 00:13:44.637 prosecutorial assault you know that 00:13:44.720 --> 00:13:49.837 tried to kill it. Um and you know in most areas of tech you know most areas 00:13:49.920 --> 00:13:53.517 tech industry never go through that. Um um occasionally you get one that does 00:13:53.600 --> 00:13:56.237 and when they do you know they they they say they live a very different life 00:13:56.320 --> 00:13:59.677 under very different different kinds of pressures. Um and then you know along 00:13:59.760 --> 00:14:03.117 the way you know when that sort of assault was happening in America um you 00:14:03.200 --> 00:14:05.757 know against American companies primarily the you know overseas 00:14:05.840 --> 00:14:09.837 companies by and large you know ran in whatever way their local jurisdiction 00:14:09.920 --> 00:14:13.197 allowed and that culminated in the catastrophe of FTX right you know 00:14:13.280 --> 00:14:16.637 stealing you know just outright stealing customer funds. Um, and then that led to 00:14:16.720 --> 00:14:19.037 a catastrophic blowoff. And then people look at that and they're like, "Well, 00:14:19.120 --> 00:14:21.837 see that's, you know, you can't trust crypto." And the and of course the real 00:14:21.920 --> 00:14:24.477 answer is you can't trust like fully unregulated crypto. You like actually 00:14:24.560 --> 00:14:27.517 have to have a framework and you have to have life risk controls of these 00:14:27.600 --> 00:14:29.757 companies and you have to have compliance and you have to have auditing 00:14:29.840 --> 00:14:32.477 and you have to have all the things that a grownup, you know, financial services 00:14:32.560 --> 00:14:35.597 business has. >> Um, and so anyway, long-winded way of 00:14:35.680 --> 00:14:39.117 kind of getting to the point which is like we need a regulatory we need a 00:14:39.200 --> 00:14:42.077 stable permanent regulatory structure for crypto in the US the same way we 00:14:42.160 --> 00:14:46.157 have for stocks and bonds and everything else. Um and we need it both because we 00:14:46.240 --> 00:14:49.517 need this industry to succeed. Uh which we think, you know, and many people 00:14:49.600 --> 00:14:53.917 think is extremely important. Um we can talk about that. Um and then uh we also 00:14:54.000 --> 00:14:56.557 need it so that it doesn't lead to catastrophe. We need it so that it 00:14:56.640 --> 00:14:59.357 doesn't result in where FTX is. And so we and we need it so that people's 00:14:59.440 --> 00:15:01.997 money, you know, doesn't get stolen. And we need it so that, you know, the 00:15:02.080 --> 00:15:04.797 winners of the market aren't fly by night operations operating on, you know, 00:15:04.880 --> 00:15:08.317 yachts off some coast somewhere. Um and so so in a lot of ways, it's like the 00:15:08.400 --> 00:15:11.357 most obvious thing in the world. The US financial systems been through this many 00:15:11.440 --> 00:15:15.837 times before. The most famous case is the you know the the the securities acts 00:15:15.920 --> 00:15:19.677 that created the SEC regulated the stock market after which you know the US 00:15:19.760 --> 00:15:23.597 capital markets in the next uh you know 100 years you know 90 years became that 00:15:23.680 --> 00:15:27.357 you know the envy of the world you know we're not looking for a free lunch we're 00:15:27.440 --> 00:15:30.317 not looking for subsidies we're not looking for you know protectionism we're 00:15:30.400 --> 00:15:32.957 not looking for support in that way we're just looking for a basically a 00:15:33.040 --> 00:15:36.717 permanent framework that lets people do business in a responsible way um and you 00:15:36.800 --> 00:15:41.037 know I think it's in a lot of ways it's the most obvious thing in the world 00:15:41.120 --> 00:15:44.317 >> so you mentioned mentioned something in there which is FTX. I think everybody 00:15:44.400 --> 00:15:46.797 might remember that exchange and its big 00:15:46.880 --> 00:15:48.557 implosion and collapse and all the 00:15:48.640 --> 00:15:52.237 fallout from it. Um what what is inside 00:15:52.320 --> 00:15:56.237 of the Clarity bill that would prevent something like that from happening again? 00:15:56.320 --> 00:15:59.917 >> Yeah. So well right now there's there is no f federal regulator for crypto 00:16:00.000 --> 00:16:03.997 exchanges as an example. So the you know New York Stock Exchange, NASDAQ, they 00:16:04.080 --> 00:16:08.637 have federal regulators. Right now there is no the Coinbases, Krakens, FTX, you 00:16:08.720 --> 00:16:12.637 know that for every good company like Coinbase there are many offshore ones 00:16:12.720 --> 00:16:16.477 that are not good. There is simply no regulator. They there is no and this is 00:16:16.560 --> 00:16:19.357 one of the very important things. It's it's a it's a big chunk of the Clarity 00:16:19.440 --> 00:16:21.437 Act is to provide that. So that the SEC 00:16:21.520 --> 00:16:24.797 and the CFTC have uh oversight. They put 00:16:24.880 --> 00:16:29.997 in, you know, disclosure regimes, anti-fraud regimes, uh, insider trading, 00:16:30.080 --> 00:16:33.517 uh, rules, all the things that, you know, that you are, we are used to, as 00:16:33.600 --> 00:16:35.277 Mark was saying, with the with other 00:16:35.360 --> 00:16:38.237 financial markets. It's just the same 00:16:38.320 --> 00:16:40.797 kinds of rules with the same uh, 00:16:40.880 --> 00:16:45.437 agencies overseeing them. Um, that would, you know, so for example, FTX 00:16:45.520 --> 00:16:47.197 wasn't audited properly. Very simple. 00:16:47.280 --> 00:16:48.717 This is what ultimately happened, right? 00:16:48.800 --> 00:16:51.437 They were moving apparently moving money between different entities. They didn't 00:16:51.520 --> 00:16:53.677 have all the money there. um you know if 00:16:53.760 --> 00:16:56.637 you're a federally registered crypto 00:16:56.720 --> 00:17:00.717 exchange you are you have at an absolute minimum you're being audited you have 00:17:00.800 --> 00:17:03.677 all sorts of controls they have surveillance regimes they you know 00:17:03.760 --> 00:17:06.637 there's a whole you know suite of of 00:17:06.720 --> 00:17:09.117 things that are in the in the in the act 00:17:09.200 --> 00:17:14.797 that would um empower federal regulators to do their job and and if you're not 00:17:14.880 --> 00:17:17.517 compliant with these things you couldn't operate in the US is how it works right 00:17:17.600 --> 00:17:20.717 so um it would have prevented that you 00:17:20.800 --> 00:17:25.437 know um other big catastrophes. Terral Luna was a big one. It was a stable coin 00:17:25.520 --> 00:17:29.197 that wasn't stable. It didn't have dollars or or any other kind of stable 00:17:29.280 --> 00:17:33.837 currency behind it. It was essentially this kind of, you know, self-reerential 00:17:33.920 --> 00:17:38.157 thing where the token has valued by the token and would, you know, should never 00:17:38.240 --> 00:17:41.677 have been presented to the stable coin and would be illegal. It is illegal 00:17:41.760 --> 00:17:44.077 under, you know, the genius framework. 00:17:44.160 --> 00:17:45.837 Um, >> works well when things are going up. 00:17:45.920 --> 00:17:49.357 >> A lot of things work well when things are going up and then uh um don't work 00:17:49.440 --> 00:17:52.637 otherwise. So, um, yeah, these are these 00:17:52.720 --> 00:17:56.877 are not I mean, it's not, um, look, the details are hard, which is why it's been 00:17:56.960 --> 00:18:00.157 seven years or so that some of us have been working on the Clarity Act, and 00:18:00.240 --> 00:18:04.157 it's now been a year, I think over a year since the House passed its version 00:18:04.240 --> 00:18:06.877 of it, and, you know, a year the Senate's been working on it. There's a 00:18:06.960 --> 00:18:11.437 lot of hard details. Um, it takes a lot of kind of working across the aisles. 00:18:11.520 --> 00:18:13.677 This has been a very bipartisan effort. 00:18:13.760 --> 00:18:17.517 Um, so I'm not to say the details, but you know, this is has been done before, 00:18:17.600 --> 00:18:21.677 right? financial industries have been regulated and the principles that that 00:18:21.760 --> 00:18:25.757 are used in other industries are applied here and it's a very robust what's in 00:18:25.840 --> 00:18:30.557 the clarity act now the text that was released um you know it's frustrating to 00:18:30.640 --> 00:18:34.077 read some of the news coverage which apparently just doesn't they you know 00:18:34.160 --> 00:18:36.797 they don't read the bill as far as I can tell because they say things like there 00:18:36.880 --> 00:18:39.837 aren't um you know sort of safeguards 00:18:39.920 --> 00:18:44.077 for example AML and you know uh sanctions regimes and all this is simply 00:18:44.160 --> 00:18:46.557 not true there's a very it it there's 00:18:46.640 --> 00:18:48.397 very you know it has strict definitions 00:18:48.480 --> 00:18:51.517 of who is who who is subject to to you 00:18:51.600 --> 00:18:54.237 know these requirements. Um it applies 00:18:54.320 --> 00:18:56.477 all the same kind of money laundering 00:18:56.560 --> 00:18:59.277 and um you know treasury other kind of 00:18:59.360 --> 00:19:04.237 treasury rules to crypto intermediaries that are applied in other markets. Um 00:19:04.320 --> 00:19:07.997 the Fraternal Order Police just came out with their endorsement of the Clarity 00:19:08.080 --> 00:19:12.877 Act. um the largest law enforcement organization in the country. Um you 00:19:12.960 --> 00:19:16.237 know, so people are sort of opponents are saying it doesn't have proper law 00:19:16.320 --> 00:19:22.157 enforcement uh uh you know, clauses and and and uh rules, but this is simply not 00:19:22.240 --> 00:19:24.477 true. >> Yeah, let's let's talk about that. Well, 00:19:24.560 --> 00:19:27.597 let let's go over the fights that are going on with this bill. By the way, 00:19:27.680 --> 00:19:31.277 it's like 600 something pages, I think, at this point. But um 00:19:31.360 --> 00:19:34.157 >> so drag it into chat GBT and ask is 00:19:34.240 --> 00:19:36.317 there money? It's not that hard. If you 00:19:36.400 --> 00:19:39.277 know we if uh if people want to actually 00:19:39.360 --> 00:19:41.677 learn about this, you can do that. 00:19:41.760 --> 00:19:45.677 >> Um but uh so so let's let's go over each 00:19:45.760 --> 00:19:48.477 of these fights, each of these debates that's going on. You you talked about 00:19:48.560 --> 00:19:50.797 illicit finance. That's one of the big ones. 00:19:50.880 --> 00:19:54.317 >> And in fact, one of the biggest opponents to the bill uh is Senator 00:19:54.400 --> 00:19:59.277 Elizabeth Warren. Uh her and her camp, she's called it a ticket to sanctions 00:19:59.360 --> 00:20:02.077 evasion. Yeah. >> Uh that's a quote from her. uh you know, 00:20:02.160 --> 00:20:06.877 she if you hear her describe it, she says that North Korea and terrorists and 00:20:06.960 --> 00:20:11.037 ransomware hackers, they're going to run wild if this bill passes. What do you 00:20:11.120 --> 00:20:15.037 what do you say to that? >> Uh I mean, right now there it's 00:20:15.120 --> 00:20:18.797 extremely unclear, for example, which entities 00:20:18.880 --> 00:20:22.797 um are subject to what rules. And so what you have is, you know, essentially 00:20:22.880 --> 00:20:25.997 a dynamic. What what what I've learned is when you have gray areas in 00:20:26.080 --> 00:20:29.437 regulation, you have essentially a race to the bottom, right? because you'll 00:20:29.520 --> 00:20:32.317 have, you know, look, I was on the board of Coinbase for a long time. Mark's on 00:20:32.400 --> 00:20:36.157 the board. Coinbase is a USbased company. They're, you know, they take 00:20:36.240 --> 00:20:39.757 regulation and compliance extremely seriously. But for every Coinbase, look, 00:20:39.840 --> 00:20:43.117 it's it costs a lot of money and it slows down your product development. And 00:20:43.200 --> 00:20:46.077 so, you know, every year a new offshore 00:20:46.160 --> 00:20:50.157 competitor will pop up that doesn't do those things and becomes popular because 00:20:50.240 --> 00:20:54.717 they can offer lower fees or, you know, whatever f better if you iterate their 00:20:54.800 --> 00:20:57.597 product faster because they're not doing all the kind of compliant things, right? 00:20:57.680 --> 00:21:00.397 And so over and over again we've had this phenomenon where there's sort of 00:21:00.480 --> 00:21:03.197 the good actor that that you know this is one of the things that frustrated us 00:21:03.280 --> 00:21:06.797 frankly is that we try to bet on the good actor, the compliant actor and then 00:21:06.880 --> 00:21:10.877 for every one there's kind of this evil twin you know the doppelganger offshore 00:21:10.960 --> 00:21:14.397 that sort of copies all the features but doesn't do the compliance 00:21:14.480 --> 00:21:17.917 >> um and and gets Yes. and and gains popularity and so what you end up having 00:21:18.000 --> 00:21:21.117 is just you end up the the the ambiguity 00:21:21.200 --> 00:21:23.357 ends up favoring the bad actors, right? 00:21:23.440 --> 00:21:28.157 Um, and so what the important thing to do with good regulation, I think the 00:21:28.240 --> 00:21:31.677 Clarity Act does this is you very clearly define the regulatory perimeter 00:21:31.760 --> 00:21:35.357 like who's subject to this and who isn't and and if you're not subject to it, you 00:21:35.440 --> 00:21:37.677 can't do business in the US. So like if you're in the US and doing business, you 00:21:37.760 --> 00:21:40.397 have to be subject to it. you give clear definitions and then you have clear 00:21:40.480 --> 00:21:43.517 rules and and and so as an example in in 00:21:43.600 --> 00:21:45.677 the Clarity Act, if you're a financial 00:21:45.760 --> 00:21:50.557 intermediary, if you're a, you know, somebody like a Coinbase or like a 00:21:50.640 --> 00:21:53.917 company that's holding customer funds, you're subject to all of the same 00:21:54.000 --> 00:21:57.437 regulatory same rules that a you know, 00:21:57.520 --> 00:22:01.597 fintech, a company like Stripe or PayPal or anyone else and it's simp it's black 00:22:01.680 --> 00:22:03.757 and white in the bill. So I don't know how to argue with people that just 00:22:03.840 --> 00:22:05.437 simply are saying things that aren't 00:22:05.520 --> 00:22:08.637 that factually untrue like that. Um uh 00:22:08.720 --> 00:22:11.117 it's just uh you know and and as I 00:22:11.200 --> 00:22:15.677 mentioned, you know, the endorsement of the various law enforcement agencies um 00:22:15.760 --> 00:22:19.757 a bunch of very you know look it's not just there's there's a lot of Republican 00:22:19.840 --> 00:22:24.557 senators who are very strong on national security sanctions North Korea who who 00:22:24.640 --> 00:22:27.037 support the bill including a number of Democrats who we think will end up 00:22:27.120 --> 00:22:31.677 supporting it who similarly are. Um so I I don't think it's it's it's neither 00:22:31.760 --> 00:22:36.077 true nor is it shown by the kind of the range of support for the bill. 00:22:36.160 --> 00:22:39.517 Mark, what do you think about this criticism that the bill enables 00:22:39.600 --> 00:22:42.717 sanctions evasion? >> Yeah, so it's really so, you know, spent 00:22:42.800 --> 00:22:45.677 a bit, you know, spent quite a lot of time, you know, kind of in in in in 00:22:45.760 --> 00:22:48.637 national security world, and I would say the national security people I talked to 00:22:48.720 --> 00:22:51.677 typically don't agree with that. Um, and in fact, they they typically say 00:22:51.760 --> 00:22:55.757 something quite different, which is ironically they're hoping that more ter 00:22:55.840 --> 00:22:59.037 criminals and terrorists use use crypto and use blockchains because there's a 00:22:59.120 --> 00:23:02.957 there's a there's a trail uh there's a blockchain um and there's a trail and 00:23:03.040 --> 00:23:06.797 that is contrasted specifically um with how a lot of for example terror 00:23:06.880 --> 00:23:08.957 financing happens today. And so I'll just give you an example of this. 00:23:09.040 --> 00:23:11.997 There's a thing in kind of middle the Middle Eastern kind of terror worlds 00:23:12.080 --> 00:23:15.117 these terror organizations there there there is an existing legacy payment 00:23:15.200 --> 00:23:18.717 system that by the way is is is not the banks. It's not any any any piece of 00:23:18.800 --> 00:23:22.637 technology. Uh it's a system called the Hala system. Um and it's a it's an 00:23:22.720 --> 00:23:26.237 ancient, you know, centuries old uh system. It's basically sort of in 00:23:26.320 --> 00:23:30.397 informal peer-to-peer peer-to-peer uh payments. Um and it operates flu fluidly 00:23:30.480 --> 00:23:33.437 across borders. And the way that it works is you'll have like two cousins, 00:23:33.520 --> 00:23:36.637 one in one country and one in the other country. And you go give money to the 00:23:36.720 --> 00:23:39.917 cousin in one country and then it and then that the money never actually 00:23:40.000 --> 00:23:43.357 moves, but like that cousin tells the other cousin that the family now has 00:23:43.440 --> 00:23:46.237 that amount of money. Um and then as a result, the money, you know, effectively 00:23:46.320 --> 00:23:47.997 becomes unlocked in the other location. 00:23:48.080 --> 00:23:51.117 And so you you literally have peer-to-p peer payments happening around the world 00:23:51.200 --> 00:23:54.877 with actually no no no no no actual transfer no actual transfer of physical 00:23:54.960 --> 00:23:58.477 cash. So you you can't like catch it at the border. Um no digital trail 00:23:58.560 --> 00:24:01.357 whatsoever because nothing is nothing has happened digitally. No paper trail. 00:24:01.440 --> 00:24:05.117 No nothing. And and and and that's I think for example that's actually how uh 00:24:05.200 --> 00:24:08.637 a lot of terror plots are are are financed. And so it would be there was 00:24:08.720 --> 00:24:10.957 actually a term a while ago that national security people were kicking 00:24:11.040 --> 00:24:13.117 around. they called uh they called crypto they called it prosecution 00:24:13.200 --> 00:24:17.277 futures uh which is if we could just get the bad guys to use crypto uh instead of 00:24:17.360 --> 00:24:19.517 using the other methods like we would actually be able to then mine the 00:24:19.600 --> 00:24:22.877 blockchain to be able to prosecute down the road and so this is one where it's 00:24:22.960 --> 00:24:25.037 just the whole thing has just been incredibly confusing the whole time 00:24:25.120 --> 00:24:28.077 because it's kind of this upside down backwards you know kind of thing and you 00:24:28.160 --> 00:24:30.877 know quite frankly you know not not talking about anybody in office but 00:24:30.960 --> 00:24:33.517 there have been even people in industry who have said things like well you know 00:24:33.600 --> 00:24:35.997 crypto is inherently anonymous and you know tra you know you can't trace 00:24:36.080 --> 00:24:38.797 anything you know which is just like you it's just like you know just like upside 00:24:38.880 --> 00:24:42.637 down bizarre world you know kind of claims um which which I think frankly just 00:24:42.720 --> 00:24:46.717 stands for people you know not understanding the technology. Um and so 00:24:46.800 --> 00:24:51.037 I I think just the actual reality of it is if if if more bad guys were running 00:24:51.120 --> 00:24:54.717 more money through crypto I think more more bad guys would get caught not fewer. 00:24:54.800 --> 00:24:57.437 >> Right on. Yeah. And uh you know there's 00:24:57.520 --> 00:25:01.837 this thing that happens on TV shows. I'm sure you watch them. Crime procedurals, 00:25:01.920 --> 00:25:05.357 cop procedurals where they're like I'm the criminal, you know, wire me the 00:25:05.440 --> 00:25:10.077 money in in Bitcoin. Nobody's going to know about it. Is that totally crazy? 00:25:10.160 --> 00:25:12.797 >> Yeah. So, there's a couple things. So, yeah. So, one, so one is so, so the 00:25:12.880 --> 00:25:15.117 traditional thing that they do in TV shows, traditional thing they do is they 00:25:15.200 --> 00:25:17.677 say, "Well, you need to put a gun to somebody's head. They say do a wire 00:25:17.760 --> 00:25:20.717 transfer, like wire transfer the money, right?" Um, and then they'll literally 00:25:20.800 --> 00:25:23.517 show a digital display and it'll show digital display and it'll literally like 00:25:23.600 --> 00:25:26.717 have one of these things where it's like zero to 100% as the money moves and the 00:25:26.800 --> 00:25:29.037 whole thing happens within like 2 minutes, right? And then in the real 00:25:29.120 --> 00:25:31.677 world, it's like, okay, try to try to move money through the banking system 00:25:31.760 --> 00:25:36.877 across borders, you know? It good luck, right? like days and days and days, you 00:25:36.960 --> 00:25:39.437 know, cuz the systems are shut down and they don't work on weekends and the 00:25:39.520 --> 00:25:42.477 paperwork and the this and the that it's just like it's just like you completely 00:25:42.560 --> 00:25:45.197 flat out and blow. So, so you're exactly right. What's happened is they've 00:25:45.280 --> 00:25:46.957 extrapolated that straight to crypto. 00:25:47.040 --> 00:25:50.157 Um, and it's all in and yeah, so you know, it's like any of these things 00:25:50.240 --> 00:25:51.677 which is like yes, it works it's we're 00:25:51.760 --> 00:25:55.277 straight on TV. Um, you know, 00:25:55.360 --> 00:25:58.957 contra contra maybe what what what a lot of people think. You know, television is 00:25:59.040 --> 00:26:02.797 not actually real life. Um, uh, and uh, yes, it it very much does not work that 00:26:02.880 --> 00:26:05.997 way. both existing payment system does not work that way um in real life and 00:26:06.080 --> 00:26:08.007 and crypto does not work that way in real life. 00:26:08.090 --> 00:26:10.157 >> [snorts] >> It's it's actually a it's actually a 00:26:10.240 --> 00:26:13.197 non-trivial kind of research problem that's going on today. Research and 00:26:13.280 --> 00:26:17.517 product development um to to build blockchains that do have privacy because 00:26:17.600 --> 00:26:20.957 they are so they are so public. Uh and in fact one of the funny things that 00:26:21.040 --> 00:26:24.397 happened was you know we we think that's important just not for nefarious reasons 00:26:24.480 --> 00:26:28.157 because if you want to like pay you know whatever I want to pay you for some 00:26:28.240 --> 00:26:31.277 service maybe it's a private you know maybe it's a medical thing or a 00:26:31.360 --> 00:26:33.917 financial thing you don't want everyone to know about it just like we do in the 00:26:34.000 --> 00:26:36.637 regular financial system you'd want to have some privacy and that send someone 00:26:36.720 --> 00:26:39.917 a digital dollar you want some privacy right it seems like a natural thing it's 00:26:40.000 --> 00:26:43.437 funny because you know uh for for a long time everyone said well why would you 00:26:43.520 --> 00:26:46.717 want to build privacy it's only for criminals since genius has passed and 00:26:46.800 --> 00:26:50.077 now dollar denominated stable coins have gotten more popular. We've actually 00:26:50.160 --> 00:26:52.797 heard in DC now people are saying, "Well, what about privacy? You need to 00:26:52.880 --> 00:26:55.117 have privacy." I'm like, "Yes, we agree. 00:26:55.200 --> 00:26:59.117 We agree. It's not always, it actually is very reminiscent of the early um 00:26:59.200 --> 00:27:00.797 internet, you know, when Mark when you 00:27:00.880 --> 00:27:02.877 guys added didn't wasn't Netscape at you 00:27:02.960 --> 00:27:06.397 guys invented SSL, right?" Or you did 00:27:06.480 --> 00:27:10.477 >> and so yeah, for the kids don't know this that HTTPS, that was Nescape. That 00:27:10.560 --> 00:27:13.117 was an invention. [clears throat] And at the time it was like, well, who would 00:27:13.200 --> 00:27:16.477 need that? Why would you need to send secret stuff? And and at the time 00:27:16.560 --> 00:27:18.637 probably some bad guys did use it maybe. 00:27:18.720 --> 00:27:20.717 But of course over time we all realized 00:27:20.800 --> 00:27:23.997 that was an important and and 99.9% of 00:27:24.080 --> 00:27:27.837 it is like good behavior right it's just people interacting with their bank or 00:27:27.920 --> 00:27:30.557 something right but you guys had to go you got did to go in front of Congress 00:27:30.640 --> 00:27:33.997 and didn't you have some >> it was a four-year fight it was actually 00:27:34.080 --> 00:27:36.957 quite analogous to this and so when when we started so when we started so 00:27:37.040 --> 00:27:40.637 Netscape was the first uh uh Ncape was the first piece of consumer software 00:27:40.720 --> 00:27:44.317 that got w that got widely used that that incorporated u public key public 00:27:44.400 --> 00:27:48.157 key encryption modern encryption uh with public keys um and at the time we 00:27:48.240 --> 00:27:50.717 shipped Um we actually had to ship two different versions. We had to ship the 00:27:50.800 --> 00:27:54.157 strong encry we could ship a strong encryption version inside the US. Uh but 00:27:54.240 --> 00:27:57.437 we uh we were we were classifi encryption was classified as ammunition 00:27:57.520 --> 00:28:01.357 um under what called ITAR export control rules at the time. So encryption was 00:28:01.440 --> 00:28:04.717 encryption was classified in the same category as a tomahawk missile. Um which 00:28:04.800 --> 00:28:07.117 meant that the Netscape browser was classified in the same category as a 00:28:07.200 --> 00:28:11.357 tomahawk missile. Um and so we had to ship deliberately deliberately insecure 00:28:11.440 --> 00:28:13.277 versions of of the product um overseas. 00:28:13.360 --> 00:28:15.917 And you can imagine how much our overseas customers enjoyed that right 00:28:16.000 --> 00:28:18.717 they get this and you know by the way we simply label in the box right which is 00:28:18.800 --> 00:28:21.597 like weak encryption you know basically do not trust this and you can imagine 00:28:21.680 --> 00:28:25.357 how that how that went for sales and of course immediately what happened was of 00:28:25.440 --> 00:28:27.757 course foreign competitors immediately then stepped in and you know started 00:28:27.840 --> 00:28:30.397 cloning it and started making strong encryption you know so people outside 00:28:30.480 --> 00:28:33.037 the US just didn't use our product they used products that were made outside the 00:28:33.120 --> 00:28:37.037 US um and so you know we went to Washington you know as as as as you do 00:28:37.120 --> 00:28:39.597 when you're a kid you go to Washington you kind of explain things logically and 00:28:39.680 --> 00:28:42.877 they and they and they you know they kind of you know they tend to stare at 00:28:42.960 --> 00:28:45.757 like you've grown a third eye and so you you start to you know really kind of get 00:28:45.840 --> 00:28:48.157 into the you know specifics and details of it. 00:28:48.240 --> 00:28:51.517 >> Um but then you you you get into this like fundamental dichotomy which is as 00:28:51.600 --> 00:28:56.157 you said which is like okay is encryption >> bad because you know bad guys are going 00:28:56.240 --> 00:28:58.397 to you know do do bad things with it. Um 00:28:58.480 --> 00:29:03.277 uh or is it good because it is the key to establishing trust and being able to 00:29:03.360 --> 00:29:07.197 do business and for law-abiding you know citizens um you both here and overseas 00:29:07.280 --> 00:29:09.437 to be able to you know cooperate together and be able to conduct 00:29:09.520 --> 00:29:12.557 business. Um, and so, you know, it's like, do do you want to completely 00:29:12.640 --> 00:29:16.077 eliminate the risk of of, you know, any sort of ever cyber criminality or do you 00:29:16.160 --> 00:29:20.237 want to um or do you want to make like Amazon.com possible, right? And and and 00:29:20.320 --> 00:29:23.997 and those questions are kind of deep deeply intertwined. Um, and so anyway, 00:29:24.080 --> 00:29:27.277 it was this it was this very long, you know, kind of education process. Um, it 00:29:27.360 --> 00:29:30.877 it took took four years. It took a very very long time to unwind. Um, you know, 00:29:30.960 --> 00:29:32.637 they did ultimately make that change. 00:29:32.720 --> 00:29:36.077 Um, you know, by the way, the world did not end. Um, and and the world did not 00:29:36.160 --> 00:29:37.677 end for, you know, for several reasons. 00:29:37.760 --> 00:29:40.077 you know, one is as you said, the overwhelmingly the use cases were 00:29:40.160 --> 00:29:44.317 positive. Um um and then you know the the the sort of intelligence services uh 00:29:44.400 --> 00:29:47.597 uh you know adapted in many ways and then and then then the other just 00:29:47.680 --> 00:29:51.597 incredibly positive thing that happened was American industry won right and and 00:29:51.680 --> 00:29:55.357 by the way not just state but like you know many other you know the the the 00:29:55.440 --> 00:29:59.997 global internet economy is dominated by American companies and by the way if if 00:30:00.080 --> 00:30:02.877 you're in the national security state and you ask them the question of would 00:30:02.960 --> 00:30:05.917 you rather have this giant industry be dominated by American companies or 00:30:06.000 --> 00:30:09.117 non-American companies 100% of the time they'll tell you they want dominated by 00:30:09.200 --> 00:30:12.077 American companies because they can deal with American companies, right? Whereas, 00:30:12.160 --> 00:30:14.637 you know, some, you know, they can't deal with some company that's running in 00:30:14.720 --> 00:30:17.677 some other jurisdiction. Um, you know, they a lot of times they can't even talk 00:30:17.760 --> 00:30:21.997 to them. Um, and so anyway, so it was this it was this classic case study. Uh, 00:30:22.080 --> 00:30:25.037 you know, that one took four years. You know, this one, Chris, this is like a 00:30:25.120 --> 00:30:27.117 you know, we're now in what, year seven. 00:30:27.200 --> 00:30:30.557 Um, and so for people who think the modern world is speeding up, it's at 00:30:30.640 --> 00:30:34.717 least in this respect, it's not. It's slowing down. Um but I yeah I and this 00:30:34.800 --> 00:30:36.797 is why by the way there's so much pressure right now on clarity to get 00:30:36.880 --> 00:30:39.357 clarity pass is because you know se seven years to work these through these 00:30:39.440 --> 00:30:40.797 issues I think is clearly enough. 00:30:40.880 --> 00:30:44.557 >> So let's talk about some of the other objections to the bill. Another big one 00:30:44.640 --> 00:30:49.517 is ethics reform. So the president his family members they have interests in 00:30:49.600 --> 00:30:51.437 crypto businesses. This will come as a 00:30:51.520 --> 00:30:53.517 surprise to nobody who's been reading 00:30:53.600 --> 00:30:58.877 the news. Um h how do you uh and so the 00:30:58.960 --> 00:31:02.637 critics say that this bill will enrich the people who are most vocally 00:31:02.720 --> 00:31:06.717 supportive of it? >> How do you address that? 00:31:06.800 --> 00:31:10.717 >> Yeah. I mean I would say first of all like like it's not my area of expertise 00:31:10.800 --> 00:31:14.397 but like I'll say as a citizen I think there should be ethics rules for 00:31:14.480 --> 00:31:17.757 government officials. I don't think those should be exclusive to crypto. I 00:31:17.840 --> 00:31:21.837 think there should be ethics rules around trading stocks and other crypto 00:31:21.920 --> 00:31:23.917 for sure other financial assets. That 00:31:24.000 --> 00:31:27.517 seems reasonable to me. Um, number one. 00:31:27.600 --> 00:31:31.517 Um, number two, um, the Clarity Act, 00:31:31.600 --> 00:31:35.757 even without specific ethics provisions, will add significant restrictions to 00:31:35.840 --> 00:31:38.317 anyone in crypto, including requirements 00:31:38.400 --> 00:31:40.957 to, uh, for disclosures around, you 00:31:41.040 --> 00:31:45.517 know, the risks and holdings of a crypto asset. It will add lockup requirements. 00:31:45.600 --> 00:31:49.357 So, it's only an increase in the restrictions that would be applied to 00:31:49.440 --> 00:31:53.117 anybody, including government officials is point number two. And then point 00:31:53.200 --> 00:31:55.517 number three, I think what's been frustrating from a political point of 00:31:55.600 --> 00:31:58.557 view is that is that the you know the 00:31:58.640 --> 00:32:01.837 the specific ethics kind of provision 00:32:01.920 --> 00:32:04.477 around crypto has been coupled with the 00:32:04.560 --> 00:32:06.157 topic we've been discussing which is 00:32:06.240 --> 00:32:09.357 regulating this industry. Um this bill 00:32:09.440 --> 00:32:11.597 as proposed right now would be the first 00:32:11.680 --> 00:32:14.717 bill in US history I'm told that 00:32:14.800 --> 00:32:18.797 regulates an industry and also add specific ethics provisions for 00:32:18.880 --> 00:32:22.157 government officials in it. Right. This is very exceptional. Normally government 00:32:22.240 --> 00:32:25.517 ethics rules are done separately and an 00:32:25.600 --> 00:32:29.597 industry is regulated separately. Um so 00:32:29.680 --> 00:32:33.437 you know so I you know I think that we're being held to this industry is 00:32:33.520 --> 00:32:35.917 being held to a completely different standard than other industries. That 00:32:36.000 --> 00:32:39.757 said, I look I think that a very reasonable debate for people to have and 00:32:39.840 --> 00:32:41.757 for and for politicians and policy 00:32:41.840 --> 00:32:43.757 makers to figure out is what what ethics 00:32:43.840 --> 00:32:47.597 rule should there be um for you know all 00:32:47.680 --> 00:32:51.197 financial assets including crypto. Uh specifically on the you know right now 00:32:51.280 --> 00:32:54.717 there is an active negotiation. I hope obviously I hope there's a resolution. 00:32:54.800 --> 00:32:59.277 It's not you know it's between the various politicians not not sort of 00:32:59.360 --> 00:33:03.037 industry. Um, obviously I hope they can come figure something out so that we can 00:33:03.120 --> 00:33:05.517 move forward because we want to regulate this industry. 00:33:05.600 --> 00:33:09.437 >> By the way, this bill puts controls on government officials um use of crypto 00:33:09.520 --> 00:33:13.037 that do not that are stronger than apply to government uh officials stock 00:33:13.120 --> 00:33:17.677 trading. [snorts] Um and so uh if you if you don't like how uh government 00:33:17.760 --> 00:33:20.957 officials trade stocks, uh this bill puts in place uh something that is much 00:33:21.040 --> 00:33:23.917 stronger than that uh for for crypto. 00:33:24.000 --> 00:33:28.077 >> Yeah. And and one other point I would add is right now we think of crypto most 00:33:28.160 --> 00:33:31.517 people think of crypto as a thing you can trade. You know I I think what 00:33:31.600 --> 00:33:34.877 they're missing in that is that increasingly like the stable coins we've 00:33:34.960 --> 00:33:38.957 been discussing it's a thing you can use. Um and if the industry is 00:33:39.040 --> 00:33:42.557 successful it will get more you'll have more and more use cases and more and 00:33:42.640 --> 00:33:45.357 more ways in which it's sort of embedded into our financial life. It'll be a 00:33:45.440 --> 00:33:47.597 normal thing for a kid to buy tokenized 00:33:47.680 --> 00:33:52.397 stocks instead of going to some you know traditional stock broker. Um and so I 00:33:52.480 --> 00:33:56.397 also think it's important with these rules to make sure you separate that 00:33:56.480 --> 00:34:00.397 kind of trading behavior from the use behavior because you know I think it's 00:34:00.480 --> 00:34:04.317 important for you know for government officials to be have access to modern 00:34:04.400 --> 00:34:08.317 technology and I think this is the future of finance. So 00:34:08.400 --> 00:34:12.877 >> okay so there are government ethics rules in the bill and also it's a 00:34:12.960 --> 00:34:16.637 separate issue from uh creating market structure rules for 00:34:16.720 --> 00:34:19.917 crypto. Maybe these are separable issues >> like like the reality of where the 00:34:20.000 --> 00:34:22.797 politics are right now is that this is that there are ethics provisions in the 00:34:22.880 --> 00:34:25.677 current bill. They're still being kind of negotiated. I hope they come to 00:34:25.760 --> 00:34:28.877 resolution. But I think from our perspective, the important thing is that 00:34:28.960 --> 00:34:32.237 after this many years of kind of regulatory gray area and an environment 00:34:32.320 --> 00:34:36.157 that favors, as I was describing before, kind of a race to the bottom. The 00:34:36.240 --> 00:34:40.237 important thing from our perspective is we get a regul regulatory framework 00:34:40.320 --> 00:34:44.477 passed. And you know, we think the clarity act while not perfect is is 00:34:44.560 --> 00:34:47.917 significantly better than the status quo. And so I hope that those issues are 00:34:48.000 --> 00:34:52.477 resolved. >> Got it. You mentioned you mentioned 00:34:52.560 --> 00:34:56.477 stable coins again just now. Um and one of the big fights has been over the 00:34:56.560 --> 00:34:58.317 treatment of stable coins in this bill. 00:34:58.400 --> 00:35:00.957 In particular, the banking lobby. Um 00:35:01.040 --> 00:35:03.677 most notably uh JP Morgan Chase has been 00:35:03.760 --> 00:35:06.157 very vocal about this. Uh they are 00:35:06.240 --> 00:35:09.117 unhappy with the idea that you could 00:35:09.200 --> 00:35:12.557 earn interest on stable coin holdings. 00:35:12.640 --> 00:35:17.117 Now, the the fear, the concern, the worry is that uh if consumers can earn 00:35:17.200 --> 00:35:20.317 interest on stable coins that they're going to pull their money out of banks 00:35:20.400 --> 00:35:24.717 and keep them in these other accounts that's going to cause deposit flight. 00:35:24.800 --> 00:35:26.877 >> Um and they don't want that to happen. 00:35:26.960 --> 00:35:30.157 So, what's the state of that debate right now? 00:35:30.240 --> 00:35:33.997 >> Yeah. In the bill, >> I would Yeah, in the bill essentially, I 00:35:34.080 --> 00:35:37.917 would say the banks got mostly what they wanted, which is that in the bill, you 00:35:38.000 --> 00:35:40.317 cannot pay uh you you cannot pay 00:35:40.400 --> 00:35:43.437 interest on balances. um you you can pay 00:35:43.520 --> 00:35:48.157 there's it's I think the exact language is anything that's functionally or 00:35:48.240 --> 00:35:50.237 economically similar to a bank account 00:35:50.320 --> 00:35:53.517 and there's further legal clauses. Um uh 00:35:53.600 --> 00:35:57.197 what you can do is uh sort of more 00:35:57.280 --> 00:36:01.117 complicated things like if somebody did multiple transactions and if they did 00:36:01.200 --> 00:36:04.877 sort of a formula that's not functionally or economically similar to 00:36:04.960 --> 00:36:06.237 paying out on a balance like you can 00:36:06.320 --> 00:36:08.637 give them rewards for you know using 00:36:08.720 --> 00:36:12.877 their uh stable coin wallet twice a 00:36:12.960 --> 00:36:17.197 month at Walmart. Walmart could give them some kind of reward back. So it's 00:36:17.280 --> 00:36:20.317 more like a credit card kind of >> which is what they'd asked for the banks 00:36:20.400 --> 00:36:24.157 that's basically asked for and the industry uh you know there was there was 00:36:24.240 --> 00:36:25.597 a it's all been sort of in the press. 00:36:25.680 --> 00:36:30.157 There was a you know sort of a prolonged discussion and they kind of got what 00:36:30.240 --> 00:36:33.437 they it seemed like they got what they had 00:36:33.520 --> 00:36:36.317 asked for but then remained I don't know 00:36:36.400 --> 00:36:39.837 seem to then want more. So, um I think 00:36:39.920 --> 00:36:45.277 going any farther you start to ban, for example, I think in you know you start 00:36:45.360 --> 00:36:48.317 to ban things like Starbucks rewards points and things, right? So, I mean 00:36:48.400 --> 00:36:52.877 it's uh um I think it's kind of gotten to the as far as it can go and 00:36:52.960 --> 00:36:56.957 essentially, you know, was a compromise that was some somewhat painful for the 00:36:57.040 --> 00:37:01.357 crypto industry, but you know, in the context of the broader bill, uh we think 00:37:01.440 --> 00:37:04.637 it nets out, you know, still very we're still very supportive of the overall 00:37:04.720 --> 00:37:08.317 bill. The thing that I find so interesting is, you know, uh, this 00:37:08.400 --> 00:37:12.237 debate has been embodied by Brian Armstrong versus Jaime Diamond. They're 00:37:12.320 --> 00:37:17.597 kind of the two leading >> voices on this. Um, but JP Morgan has a 00:37:17.680 --> 00:37:20.077 big blockchain unit. They're working on this stuff. Yeah. 00:37:20.160 --> 00:37:23.917 >> They they have tokenized deposits that are live onchain. 00:37:24.000 --> 00:37:27.117 >> Yeah. >> Um, so it's just interesting that, you 00:37:27.200 --> 00:37:29.517 know, they're trying to slow roll clarity, but also 00:37:29.600 --> 00:37:32.557 >> I mean, these are Yeah. These are massive organizations I guess with many 00:37:32.640 --> 00:37:35.597 there you know like this they're almost like countries or something with JP 00:37:35.680 --> 00:37:39.117 Morgan so there many different factions and things but yes every as far as I 00:37:39.200 --> 00:37:41.197 know every big bank including JP Morgan 00:37:41.280 --> 00:37:43.117 have significant blockchain efforts and 00:37:43.200 --> 00:37:46.717 I think um if clarity passes you'll see 00:37:46.800 --> 00:37:51.197 a lot of those efforts um are are will roll out in a in a significant way. 00:37:51.280 --> 00:37:55.037 We're way past the kind of the way enterprises kind of use new technology 00:37:55.120 --> 00:37:59.197 sometimes they kind of dip their toe in and do experimental stuff. We're way 00:37:59.280 --> 00:38:02.797 past that now. We speak to a lot of these organizations on a regular basis. 00:38:02.880 --> 00:38:06.157 Like they have real significant deployments that are going to go live. 00:38:06.240 --> 00:38:09.117 Some of them are live, some of them are going to go live with greater regulatory 00:38:09.200 --> 00:38:12.957 clarity. Um they, you know, I think they see significant opportunity. I mean, you 00:38:13.040 --> 00:38:17.197 have to remember the banking system is um for a bunch of reasons. I'm not, you 00:38:17.280 --> 00:38:19.997 know, not necessarily their fault. It's just that they're very, these systems 00:38:20.080 --> 00:38:22.877 are very complex and very intertwined with each other. But a lot of the 00:38:22.960 --> 00:38:26.477 technology is very antiquated. I mean, it's not it's sort of a joke in Silicon 00:38:26.560 --> 00:38:29.757 Valley that they still have cobalt programmers at banks, but it's actually 00:38:29.840 --> 00:38:33.437 true because they a lot of them have very old code bases. Um, and in their 00:38:33.520 --> 00:38:36.957 defense, it's because it's a very hard, you know, these they're so intertwined 00:38:37.040 --> 00:38:40.557 that you you can't just sort of um upgrade your software by yourself. You 00:38:40.640 --> 00:38:43.277 have to do it all together. And so, one of the things that blockchains have done 00:38:43.360 --> 00:38:47.437 for the financial industry is it sort of given them a unified framework where 00:38:47.520 --> 00:38:51.277 they can all kind of say, "Hey, together, let's move into the 21st 00:38:51.360 --> 00:38:55.277 century." And um it's so it's kind of solved not just a technology problem but 00:38:55.360 --> 00:38:58.317 a coordination problem. And I think if you speak to them and I but as we have 00:38:58.400 --> 00:39:01.597 they they're all very excited about that. [gasps] Um and so you'll see I 00:39:01.680 --> 00:39:03.997 think as a result the the other thing I'll say is just like the simple way to 00:39:04.080 --> 00:39:07.917 think about blockchains is they just remove layers of mediation sort of you 00:39:08.000 --> 00:39:09.517 know they're disintermediation machines. 00:39:09.600 --> 00:39:13.277 They remove you know many of these things now like Mark was saying you send 00:39:13.360 --> 00:39:16.237 money through a wire. We had a case where we funded a portfolio company. It 00:39:16.320 --> 00:39:19.597 was international. Literally two weeks later we couldn't find the money. like 00:39:19.680 --> 00:39:21.597 this is a significant financing, right? 00:39:21.680 --> 00:39:25.837 And it turns out if you if you actually dig into it, there is no international 00:39:25.920 --> 00:39:29.357 wire system. Like it's basically you wire to a bank, the bank has some piece 00:39:29.440 --> 00:39:33.117 of paper that gets moved somewhere else, they wire another bank. Like there there 00:39:33.200 --> 00:39:37.277 is no financial like global network the way there is a global internet or a 00:39:37.360 --> 00:39:42.157 global WhatsApp network. It's it's a patchwork of systems. Um, and so one of 00:39:42.240 --> 00:39:44.957 the beautiful things with say stable coins is you're just sort of you're 00:39:45.040 --> 00:39:47.117 building something just the way you would build it on the internet, which is 00:39:47.200 --> 00:39:48.797 this one big thing that kind of goes an 00:39:48.880 --> 00:39:53.197 over-the-top network. Um, and so um, the 00:39:53.280 --> 00:39:56.877 banks see that opportunity. They say, "Wow, this is this is um, you know, we 00:39:56.960 --> 00:40:01.357 can save a lot of money. We can provide better products. Um, you know, we can, 00:40:01.440 --> 00:40:04.877 you know, modernize a whole bunch of things." And so we see that across the 00:40:04.960 --> 00:40:07.917 board that all that that a lot of these organizations are very excited about 00:40:08.000 --> 00:40:12.077 this, including JP Morgan. So this is an opportunity for a big technological 00:40:12.160 --> 00:40:14.877 upgrade. Uh all these systems you mentioned 00:40:14.960 --> 00:40:18.317 >> they have parts of it that are still running on cobalt many decades old. Uh 00:40:18.400 --> 00:40:20.797 and this is a chance to >> and and don't take it from me. I mean 00:40:20.880 --> 00:40:23.197 Goldman just came out you know CEO David 00:40:23.280 --> 00:40:28.557 Solomon Goldman Sachs endorsing Clarity Bill Fidelity Black Rockck um a bunch of 00:40:28.640 --> 00:40:32.077 other kind of major financial organizations. They all have major 00:40:32.160 --> 00:40:35.597 efforts. Many of this is public. You know the most innovative fintech 00:40:35.680 --> 00:40:39.597 companies like Stripe have gone in a big way. Um, so you don't have to listen to 00:40:39.680 --> 00:40:42.397 me. Just look at the look at the news. I mean, it's we're at the beginning we 00:40:42.480 --> 00:40:45.517 were talking about the early Bitcoin days. It's we're very far away from that 00:40:45.600 --> 00:40:50.717 now. These are very big organizations and the technology is, you know, on the 00:40:50.800 --> 00:40:53.677 verge of going very mainstream with the regulation. 00:40:53.760 --> 00:40:56.797 >> There are a lot of endorsements, a lot of support. Uh, the one that sticks out 00:40:56.880 --> 00:40:59.677 for me you mentioned earlier is a lot of the biggest law enforcement 00:40:59.760 --> 00:41:03.277 organizations are for it, which I think is a major tell. 00:41:03.360 --> 00:41:06.157 Um I want to shift over to another 00:41:06.240 --> 00:41:08.237 debate that has been opened uh with 00:41:08.320 --> 00:41:10.557 respect to the clarity bill which is 00:41:10.640 --> 00:41:14.637 over liability for developers. Um 00:41:14.720 --> 00:41:17.597 there's a former White House cyber security official Carol House. She's 00:41:17.680 --> 00:41:19.757 raised this concern that developers 00:41:19.840 --> 00:41:24.717 should be held more liable for the software that they write. Um she argues 00:41:24.800 --> 00:41:27.677 that this if you don't hold them liable that this could set a dangerous 00:41:27.760 --> 00:41:29.837 precedent for other areas of technology 00:41:29.920 --> 00:41:32.717 like AI. So Mark, I know you spend a lot 00:41:32.800 --> 00:41:35.757 of your time in the AI world working on 00:41:35.840 --> 00:41:40.157 this stuff. What do you think about this argument? 00:41:40.240 --> 00:41:42.877 >> Yeah, I mean it's a kill shot to the industry. Like it's just like it's 00:41:42.960 --> 00:41:45.037 impossible. It makes software development impossible because how can 00:41:45.120 --> 00:41:48.717 any software developer anticipate the use of the software down the road? And 00:41:48.800 --> 00:41:51.197 you don't even need to think about this in terms of software. Just think in 00:41:51.280 --> 00:41:54.397 terms of anything. You know, if I run a hotel and a criminal stays at the hotel, 00:41:54.480 --> 00:41:57.357 they use the hotel, you know, and they they plan their operation. Does that 00:41:57.440 --> 00:42:00.957 make me part of their conspiracy? um you know if I'm an engineer in a car and the 00:42:01.040 --> 00:42:04.157 car is used in a bank robbery does that make me you know accessory to bank 00:42:04.240 --> 00:42:08.477 robbery like it's completely insane you cannot if you if you saddle people who 00:42:08.560 --> 00:42:11.837 build products that get used by many people for many reasons uh if you saddle 00:42:11.920 --> 00:42:14.797 them with downstream liability for the uh for the uses it just kills the 00:42:14.880 --> 00:42:17.517 industry which is clearly the goal 00:42:17.600 --> 00:42:22.077 >> and just to add to that that it's important not to conflate like in some 00:42:22.160 --> 00:42:25.437 of these like core cases I think there's been some conflation of if you go if 00:42:25.520 --> 00:42:29.677 you're to use Mark's analogy if you make build a car and then you actually like 00:42:29.760 --> 00:42:34.157 knowingly help a criminal do it like then you then you are in trouble. Okay. 00:42:34.240 --> 00:42:37.117 And no one's debating that. Okay. And so if you build a piece of software and 00:42:37.200 --> 00:42:39.197 you're like hey criminals come use it and they send you an email and you're 00:42:39.280 --> 00:42:41.597 like how do I do a crime? And you're like here's how you do a crime. And 00:42:41.680 --> 00:42:45.117 there have been cases like that in the software world like that is a crime and 00:42:45.200 --> 00:42:48.237 no one's debating that. Okay? like no one like what we're talking about here 00:42:48.320 --> 00:42:51.757 is you're making software like open source software whether it's AI or 00:42:51.840 --> 00:42:54.237 crypto and you're making it for a you 00:42:54.320 --> 00:42:58.637 know like a a constructive use case um 00:42:58.720 --> 00:43:01.277 you're making a car you're making a hammer whatever you're making an AI 00:43:01.360 --> 00:43:06.077 model you're making a blockchain um and you know and then you for example make 00:43:06.160 --> 00:43:08.237 it open source if you add unlimited 00:43:08.320 --> 00:43:10.077 downstream liability or criminal 00:43:10.160 --> 00:43:13.757 liability or civil liability or any kind 00:43:13.840 --> 00:43:17.437 it's as Mark said you just you simply like how could you ever make the calc 00:43:17.520 --> 00:43:20.877 how could you ever decide to do that as an open source developer with that kind 00:43:20.960 --> 00:43:23.677 of risk? you couldn't they almost I think and Mark you know better but in 00:43:23.760 --> 00:43:27.357 the AI world I think there have been a few bills including California um that 00:43:27.440 --> 00:43:30.477 almost passed that would have imposed that kind of basically unlimited 00:43:30.560 --> 00:43:34.957 downstream liability on AI models which I mean how the these people aren't they 00:43:35.040 --> 00:43:39.597 aren't big companies that can afford defending themselves like some five guys 00:43:39.680 --> 00:43:42.637 in a garage are going to take unlimited liability like it's going to kill it 00:43:42.720 --> 00:43:44.957 it's going to kill the whole it's going to kill open source 00:43:45.040 --> 00:43:47.757 >> yeah this is the thing so that's the thing so the first thing and this is a 00:43:47.840 --> 00:43:50.397 very live issue in AI policy also and people are trying to trying to do this 00:43:50.480 --> 00:43:54.717 in AI I think very clearly shows what they're what they're trying to do. Um so 00:43:54.800 --> 00:43:57.597 first is open source dies right so just like right out of the gate open source 00:43:57.680 --> 00:44:00.557 dies because like open source developers aren't getting paid to start with. Um 00:44:00.640 --> 00:44:03.597 you know they certainly can't take on you know enormous negative liability. 00:44:03.680 --> 00:44:07.917 You know they certainly can't you know even if there were insurance available 00:44:08.000 --> 00:44:11.357 to cover unlimited downstream liability for product used by millions of people 00:44:11.440 --> 00:44:13.757 you know you still couldn't you know open source people can't afford to do So 00:44:13.840 --> 00:44:17.117 open source dies because open source dies, academic research dies, right? Uh 00:44:17.200 --> 00:44:20.077 because without open source there is no there is no computer science research in 00:44:20.160 --> 00:44:22.877 any of these fields. It's entirely dependent on open source. So it kill it 00:44:22.960 --> 00:44:26.397 kills computer science as a field. And that's just a start. Then it kills uh 00:44:26.480 --> 00:44:29.837 venture investing, right? Because like we we can't we obviously can't invest in 00:44:29.920 --> 00:44:33.037 a company if they have you know a million times the level of exposure uh 00:44:33.120 --> 00:44:35.757 because somebody does something that they didn't even know about. Um and then 00:44:35.840 --> 00:44:38.637 it kills all the companies, right? all the startups and then and then it kills 00:44:38.720 --> 00:44:41.037 the big companies and it just kind of you know because they they also can't 00:44:41.120 --> 00:44:44.397 they also can't take that on and so it rips right through and so and so this is 00:44:44.480 --> 00:44:48.237 the thing where it's just like the the level of misunderstanding of what it 00:44:48.320 --> 00:44:52.077 takes to actually like run a business or do anything productive is is is either 00:44:52.160 --> 00:44:54.637 like just completely absent when people make that argument or they are 00:44:54.720 --> 00:44:58.157 deliberately trying to kill the industry which by the way I think they're trying 00:44:58.240 --> 00:45:00.477 to deliberately kill the industry 00:45:00.560 --> 00:45:06.477 >> maybe maybe um let's move on to one of the last objections that I've heard most 00:45:06.560 --> 00:45:10.477 often um which is that this bill would punch a 00:45:10.560 --> 00:45:14.797 hole in securities laws. Uh you know, Marky mentioned that securities laws 00:45:14.880 --> 00:45:19.437 have allowed US capital markets to thrive over the past 90 some odd years, 00:45:19.520 --> 00:45:24.397 uh and have made the US the envy of the world. Um so some people say that if 00:45:24.480 --> 00:45:27.917 this bill gets through, a company will just go, hey, I'm going to just tokenize 00:45:28.000 --> 00:45:31.437 whatever. I'm going to tokenize some asset. I'm going to, you know, put it on 00:45:31.520 --> 00:45:33.277 a blockchain and that is going to exempt 00:45:33.360 --> 00:45:38.877 me from SEC oversight and securities law in general. What do you um what's your 00:45:38.960 --> 00:45:41.037 response to that? >> So, if you take a stock and you to this 00:45:41.120 --> 00:45:43.997 is in the bill, if you take a stock and you tokenize it, that's a security and 00:45:44.080 --> 00:45:45.677 it's and it's regulated by the SEC like 00:45:45.760 --> 00:45:47.677 a security is. It's very black and white 00:45:47.760 --> 00:45:53.037 and clear. Um the the only thing that is 00:45:53.120 --> 00:45:55.277 different in with respect to blockchain 00:45:55.360 --> 00:45:59.917 regulation is um that there it it 00:46:00.000 --> 00:46:04.317 delineates in certain situations that uh 00:46:04.400 --> 00:46:09.357 blockchains like like a token like Bitcoin or Ethereum um in the Clarity 00:46:09.440 --> 00:46:12.557 bill it delineates in some cases it'll be regulated by the SEC in other cases 00:46:12.640 --> 00:46:14.797 it'll be regulated by the CFTC. In all 00:46:14.880 --> 00:46:19.677 cases they have a federal regulator. Um and now this by the way this is even the 00:46:19.760 --> 00:46:23.757 sort of the uh the last administration that was opposed to crypto implicitly 00:46:23.840 --> 00:46:25.037 agreed with this framework. Okay? 00:46:25.120 --> 00:46:28.557 Because let's just let me just walk you through it. So um Bitcoin when it 00:46:28.640 --> 00:46:31.197 started was presumably one or some set 00:46:31.280 --> 00:46:36.317 of people whoever Satoshi was um and by definition when something starts it's 00:46:36.400 --> 00:46:37.917 centralized. There's a person behind it. 00:46:38.000 --> 00:46:41.597 They have sort of inside information and control and the way that the Clarity Act 00:46:41.680 --> 00:46:45.357 works at that point you are regulated by the that token is regulated by the SEC 00:46:45.440 --> 00:46:47.917 right? Um, so a new someone creates a 00:46:48.000 --> 00:46:49.837 new blockchain, you know, they have 00:46:49.920 --> 00:46:55.117 control over it. Um, and you know, they have rules like if they, you know, they 00:46:55.200 --> 00:46:57.837 have lockups, for example, they have disclosure rules, they have all the 00:46:57.920 --> 00:46:59.277 kinds of things you expect in securities 00:46:59.360 --> 00:47:03.117 lost. Um over time when you hit certain 00:47:03.200 --> 00:47:06.797 thresholds of decentralization and start to look more like a Bitcoin of today or 00:47:06.880 --> 00:47:10.717 an Ethereum of today where there is no central actor that controls it has 00:47:10.800 --> 00:47:15.197 inside information and so forth the Clarity Act designates that the CFTC 00:47:15.280 --> 00:47:18.877 oversees that token. So it's regulated as a commodity and not a security 00:47:18.960 --> 00:47:21.837 because at that point you still need regulation to make sure that people 00:47:21.920 --> 00:47:25.357 aren't you know dumping on the market or cornering the market and all the other 00:47:25.440 --> 00:47:28.957 things that sec that commodities laws regulate. Um but it's a different 00:47:29.040 --> 00:47:32.797 regulatory regime depending on sort of the the nature of the asset. Um 00:47:32.880 --> 00:47:35.837 >> so it becomes more like things like uh like gold precious metals. 00:47:35.920 --> 00:47:37.597 >> That's right. Yes. It's like Bitcoin and 00:47:37.680 --> 00:47:40.797 and even the last administration who was anti-crypto 00:47:40.880 --> 00:47:45.037 they said at some point that Bitcoin and Ethereum were sufficiently decentralized 00:47:45.120 --> 00:47:46.557 to be regulated as commodities. Right. 00:47:46.640 --> 00:47:51.597 So this has been implicit in court cases and in uh agency decisions from both 00:47:51.680 --> 00:47:56.317 parties for the last 10 years. All clarity does is uh enshrine it in law 00:47:56.400 --> 00:47:59.997 and and make the definitions really specific so that people know exactly 00:48:00.080 --> 00:48:02.557 where they are so you don't have to go to court to figure it out. Right? So 00:48:02.640 --> 00:48:06.077 it's really just kind of taking what's been consensus across the courts and the 00:48:06.160 --> 00:48:11.357 regulators and making it sort of hard coding it and making it specific. But at 00:48:11.440 --> 00:48:14.077 every moment, so first of all, all existing assets by putting on the 00:48:14.160 --> 00:48:16.957 blockchain, they're still have they still are securities, number one. And 00:48:17.040 --> 00:48:19.757 number two, all assets, digital assets 00:48:19.840 --> 00:48:22.397 are have a federal regulator, right? And 00:48:22.480 --> 00:48:27.597 have a framework. And today, today, if I create a token and you know, and this is 00:48:27.680 --> 00:48:30.637 the biggest issue you'll have with like a lot of these things is there's no 00:48:30.720 --> 00:48:34.957 rules for disclosure. There's no rules for insider trading lockups. Um if the 00:48:35.040 --> 00:48:38.877 Clarity Act passes like our investments will we our effective lock up period 00:48:38.960 --> 00:48:40.237 meaning that the period in which we can 00:48:40.320 --> 00:48:43.357 sell will will increase significantly 00:48:43.440 --> 00:48:47.517 um because a product we'll invest in someone they'll launch a product it'll 00:48:47.600 --> 00:48:51.597 have a token and until there these criteria are met for sort of hitting 00:48:51.680 --> 00:48:55.357 sufficient decentralization there are lockups on venture capitalists and 00:48:55.440 --> 00:48:58.317 founders and so forth right which is how it should be. I mean, it should, you 00:48:58.400 --> 00:49:00.077 know, it's a it's a it's a smart 00:49:00.160 --> 00:49:03.037 riskbased regulatory framework and um we 00:49:03.120 --> 00:49:08.397 think will allow for people to build products that are long-term products and 00:49:08.480 --> 00:49:12.237 build trust in the market. Consumers will, you know, consumers, investors, 00:49:12.320 --> 00:49:14.637 and so forth, all the market participants will have trust in the 00:49:14.720 --> 00:49:19.197 market because it's regulated because there's a framework around it. Um and um 00:49:19.280 --> 00:49:22.637 and that's how you build a real industry long term. 00:49:22.720 --> 00:49:25.997 >> All right, so we've walked through a number of the live fights. All of these 00:49:26.080 --> 00:49:30.317 things are being debated right now. Um, any one of them could potentially tank 00:49:30.400 --> 00:49:34.557 this bill. What happens if clarity does not pass? 00:49:34.640 --> 00:49:39.037 >> Yeah. Um, [gasps and sighs] well, well, one is we'll keep working on 00:49:39.120 --> 00:49:41.037 it and someday it will pass. Number one, 00:49:41.120 --> 00:49:44.717 it will pass. Um, uh, number two, um, a 00:49:44.800 --> 00:49:48.637 lot of these things can and and are being done by at the agency level, 00:49:48.720 --> 00:49:50.317 meaning the the, you know, the agencies, 00:49:50.400 --> 00:49:53.437 the SEC, CFTC, Treasury, and so forth. 00:49:53.520 --> 00:49:56.157 Um and so you know I think that the big 00:49:56.240 --> 00:49:59.437 difference is legislation is you know de 00:49:59.520 --> 00:50:02.237 facto permanent in a way that agency 00:50:02.320 --> 00:50:06.877 rule making is less so. Um and that's important both to you know make sure the 00:50:06.960 --> 00:50:08.877 rules are there and you know for the 00:50:08.960 --> 00:50:14.077 long term for protecting consumers um but also for industry to have uh 00:50:14.160 --> 00:50:16.717 confidence is you know you you want to make an investment you want to build 00:50:16.800 --> 00:50:20.397 something those things can take many years to build and so you know if you 00:50:20.480 --> 00:50:24.237 have to try to build that on like shifting sands um you're [clears throat] 00:50:24.320 --> 00:50:27.837 you're much less likely to make that investment of time and money um and it's 00:50:27.920 --> 00:50:30.957 just much harder to kind of um you know 00:50:31.040 --> 00:50:35.757 you've got enough to worry about as an entrepreneur already without having um 00:50:35.840 --> 00:50:40.397 you know kind of a shifting maze of regulatory changes. So um so that would 00:50:40.480 --> 00:50:43.597 be the downside. It would be just it would just sort of prolong that. But but 00:50:43.680 --> 00:50:47.517 also look we're going to I think I'm optimistic it will get passed in the 00:50:47.600 --> 00:50:50.397 near future but if it doesn't we will keep working on it. 00:50:50.480 --> 00:50:53.837 >> Some people have this idea that regulation and innovation are just 00:50:53.920 --> 00:50:57.917 opposites. They're at odds with one another. They're opposed. Um, Mark, you 00:50:58.000 --> 00:51:02.557 spend a lot of your time on what you call the little tech agenda, advocating 00:51:02.640 --> 00:51:04.557 for startups, for builders, for 00:51:04.640 --> 00:51:07.357 developers. How does all of this fit 00:51:07.440 --> 00:51:11.197 into that regime? Uh, and and why why is 00:51:11.280 --> 00:51:15.277 regulation good in this case? >> Yeah. So, I would say the political 00:51:15.360 --> 00:51:17.997 political theorists talk about all the different forms of government. And the 00:51:18.080 --> 00:51:20.477 thing that they you know different debates about the different forms of 00:51:20.560 --> 00:51:22.957 government, how well they work and the one that I think everybody agrees on is 00:51:23.040 --> 00:51:24.717 there's a specific degenerate form of 00:51:24.800 --> 00:51:27.837 government um called anarot tyranny. Um 00:51:27.920 --> 00:51:31.837 so anarco from anarchy and then and then and then and then tyranny and the naroty 00:51:31.920 --> 00:51:35.117 is a system of government by which you regulate the law-abiding people to 00:51:35.200 --> 00:51:39.837 death. The anarco part of it is you let the rule breakers uh go absolutely nuts. 00:51:39.920 --> 00:51:42.957 Um and then the tyranny part of it is you regulate or prosecute the the the 00:51:43.040 --> 00:51:45.997 good actors to death. And so you basically encouraged the criminals. Um 00:51:46.080 --> 00:51:50.397 and you uh you you you condemn the uh you know the law abiding. Um and and so 00:51:50.480 --> 00:51:53.437 that you know that that was the the governance regime under the under the 00:51:53.520 --> 00:51:56.397 prior administration. Um you know that you know that that was the system and 00:51:56.480 --> 00:52:00.477 and you know to your question like startups selfact like very directly. Um 00:52:00.560 --> 00:52:03.357 and and by the way in in two segments which is startups outside the US just 00:52:03.440 --> 00:52:04.877 went wild and did whatever they wanted. 00:52:04.960 --> 00:52:08.957 Um you know which as we as we discussed led to FTX. uh startups inside the US 00:52:09.040 --> 00:52:13.277 got brutal punished um with with no route to safety with no route to a way 00:52:13.360 --> 00:52:17.117 to actually safely conduct business. Um and so like if you were designing from 00:52:17.200 --> 00:52:20.477 scratch and saying like what's the worst possible policy um what's the worst 00:52:20.560 --> 00:52:24.237 possible approach like it would be a naroty uh which is what we had you know 00:52:24.320 --> 00:52:26.717 what do you actually want you want you want predictability you want 00:52:26.800 --> 00:52:31.037 predictability you want stability um you want prudence uh you want reasonableness 00:52:31.120 --> 00:52:34.797 um you want you know protections at the right level of protection you know you 00:52:34.880 --> 00:52:38.237 know you want consumer protections you want investor protections um you know 00:52:38.320 --> 00:52:41.597 you you want things to be happening in a in a in a in a in a fair way but you 00:52:41.680 --> 00:52:44.877 also you also want innovation you want freedom you want the ability to 00:52:44.960 --> 00:52:49.357 innovate. You want the ability to u deploy high quality products um that 00:52:49.440 --> 00:52:52.797 work in the way that that that that they say they do. Um you want to be able to 00:52:52.880 --> 00:52:55.837 have customers be able to trust you and and you want to be able to know that 00:52:55.920 --> 00:52:59.357 you're going to be in business in a year um and not being sort of wantedly 00:52:59.440 --> 00:53:03.037 attacked and and and destroyed by a system that gives you no way to to to to 00:53:03.120 --> 00:53:07.277 do it legally. Um and so it it you know like a lot of things in life it it turns 00:53:07.360 --> 00:53:09.037 out there there is a middle ground. 00:53:09.120 --> 00:53:11.197 There is a there is a centrist position. 00:53:11.280 --> 00:53:15.597 uh you know the cent's position involves the correct level of regulation. Um you 00:53:15.680 --> 00:53:19.437 know without that uh you know e either side of that is is is just you know 00:53:19.520 --> 00:53:23.197 absolutely devastating. Um you know none is devastating too much is devastating. 00:53:23.280 --> 00:53:25.597 And so you want to you want to kind of folily locks it right in the middle 00:53:25.680 --> 00:53:26.957 which is what we think this which is 00:53:27.040 --> 00:53:29.597 very much what we think clarity does. 00:53:29.680 --> 00:53:33.517 Let's zoom out to and talk about what 00:53:33.600 --> 00:53:36.557 what's at stake for the country and for 00:53:36.640 --> 00:53:40.717 American leadership passing the Clarity Act. Why is it why is it so important 00:53:40.800 --> 00:53:43.597 for the country to do this? What will it lead to? 00:53:43.680 --> 00:53:46.957 >> Oh, I mean, so this is in the long we would argue this is in the long 00:53:47.040 --> 00:53:49.997 tradition of American technological leadership and I would say American 00:53:50.080 --> 00:53:53.837 technological supremacy. Um, which is, you know, do you want to be the country 00:53:53.920 --> 00:53:57.357 that leads the world in technology or not? Um and and by the way there's two 00:53:57.440 --> 00:54:00.397 parts of that which is one is do you want the technology to exist when you 00:54:00.480 --> 00:54:03.357 know some people argue that you know you better off without certain technologies 00:54:03.440 --> 00:54:06.717 but then there's another part of it which is technologies do tend to exist 00:54:06.800 --> 00:54:09.197 uh you know once they get invented and then you know do you want that to happen 00:54:09.280 --> 00:54:11.117 inside your own country or do you want do you want to have that happen 00:54:11.200 --> 00:54:14.157 somewhere else and you know we we we always make a very strong argument on 00:54:14.240 --> 00:54:18.317 this which is you 100% uh every American citizen should want America you know 00:54:18.400 --> 00:54:21.677 regardless of political position or whatever uh should want America to be 00:54:21.760 --> 00:54:25.997 the technology leader in the world um that has many benefits it has you direct 00:54:26.080 --> 00:54:28.877 economic benefits in terms of the wealth of the country and the ability to you 00:54:28.960 --> 00:54:33.037 know pay for all the things we want to pay for. Um it has enormous uh benefits 00:54:33.120 --> 00:54:37.437 um in terms of um also our security um our ability like let's put it this way 00:54:37.520 --> 00:54:41.197 like for the crypto industry to be based in the US is overwhelming good for 00:54:41.280 --> 00:54:43.517 United States security like and overwhelmingly good for United States 00:54:43.600 --> 00:54:46.797 law enforcement overwhelmingly good for United States uh national security uh 00:54:46.880 --> 00:54:49.597 because then you know if you're the FBI or if you're the you know if you're any 00:54:49.680 --> 00:54:52.477 any agency of government you're dealing with American companies which is which 00:54:52.560 --> 00:54:55.837 is a much more straightforward thing to do uh when you when you need something. 00:54:55.920 --> 00:54:59.517 Um and so it's it's good from a security uh perspective. Um I by the way I think 00:54:59.600 --> 00:55:03.197 it's also good for you know opportunities for kids you know are are 00:55:03.280 --> 00:55:05.677 your kids able to get educated in state-of-the-art uh you know 00:55:05.760 --> 00:55:08.237 technologies to have lots of career opportunities and are they able to work 00:55:08.320 --> 00:55:12.237 in those fields um and you know American kids for 100 years have had that edge 00:55:12.320 --> 00:55:16.637 kids uh you know all over the planet and and and hopefully that continues. Um, 00:55:16.720 --> 00:55:19.597 and so like, you know, it's just one of these fairly amazing things where in 00:55:19.680 --> 00:55:23.197 some ways this is like like we're so used to America being the technology 00:55:23.280 --> 00:55:26.157 leader that it almost feels embarrassing to make this argument because it's such 00:55:26.240 --> 00:55:29.757 an obvious argument like America has so clearly benefited from this for, you 00:55:29.840 --> 00:55:33.037 know, for the for the last hundred years. Um, and and and in my view, we 00:55:33.120 --> 00:55:36.077 should all want that to continue for hundreds of years to come. 00:55:36.160 --> 00:55:39.677 >> Chris, you literally wrote the book on this stuff on blockchains, read, write, 00:55:39.760 --> 00:55:40.797 own. 00:55:40.880 --> 00:55:43.997 Tell us what does clarity unlock if it 00:55:44.080 --> 00:55:49.357 passes in a year, two years indeterminate future. 00:55:49.440 --> 00:55:51.757 >> Yeah. Well, as I mentioned before, I think of a a simple way to think of a 00:55:51.840 --> 00:55:54.317 blockchain is is a dis disintermediation 00:55:54.400 --> 00:55:56.237 machine. It lets you build internet 00:55:56.320 --> 00:55:58.797 services where instead of having kind of 00:55:58.880 --> 00:56:01.837 a bunch of, you know, uh, organizations 00:56:01.920 --> 00:56:04.157 in the middle, taking pieces of the sort 00:56:04.240 --> 00:56:09.117 of the take the money along the way, you can build advanced internet services 00:56:09.200 --> 00:56:11.117 where it's, think of it as peer-to-peer. 00:56:11.200 --> 00:56:14.237 I can send you a dollar. Stable coin is a simple example. I can send you a 00:56:14.320 --> 00:56:18.957 dollar. There's no intermediary taking, you know, if you send to Mexico right 00:56:19.040 --> 00:56:22.157 now using a traditional financial service provider, they'll take 8% to 00:56:22.240 --> 00:56:25.837 10%. stable coin, it's almost zero because there's not someone sitting in 00:56:25.920 --> 00:56:29.197 the middle, right? So, that's the simplest uh case. What's worked so far 00:56:29.280 --> 00:56:32.557 has been financial use cases. Um, stable 00:56:32.640 --> 00:56:36.637 coins, we're seeing now uh people, you know, stocks and bonds and treasury 00:56:36.720 --> 00:56:40.797 bills and other kinds of financial assets, lending. Um, I think that will 00:56:40.880 --> 00:56:44.157 in the next couple of years be the dominant use case. So, I think we'll see 00:56:44.240 --> 00:56:49.437 what I hope is a significant upgrade of the financial system. Um uh by the way a 00:56:49.520 --> 00:56:52.317 lot of the benefits are global but you know I think we take for granted here 00:56:52.400 --> 00:56:57.197 that we have a very high functioning currency and financial system. This 00:56:57.280 --> 00:57:01.837 makes us accessible um you know globally. um longer term and what I kind 00:57:01.920 --> 00:57:04.877 of talk about in my book, I think that that you could take this technology and 00:57:04.960 --> 00:57:08.717 apply it beyond that. And you can you could imagine for example a world where 00:57:08.800 --> 00:57:13.437 um you know if if AI agents uh proliferate the way that that you know 00:57:13.520 --> 00:57:16.077 we hope they will and I think a lot of people in the AI industry think they 00:57:16.160 --> 00:57:18.237 will, you can imagine internet of you 00:57:18.320 --> 00:57:23.117 know billions and trillions of AI agents um conducting economic transactions and 00:57:23.200 --> 00:57:27.437 the natural way they would do that would be through crypto assets. Um you can 00:57:27.520 --> 00:57:31.037 also imagine just you know all sorts and I talk I kind of you know allude to this 00:57:31.120 --> 00:57:34.237 at the end of my book where I speculate about future use cases other you know 00:57:34.320 --> 00:57:37.197 other kinds of things from um you know 00:57:37.280 --> 00:57:41.517 uh ser services for creative people social networks games all sorts of 00:57:41.600 --> 00:57:45.277 things I think you can you know um but but I think for the next couple of years 00:57:45.360 --> 00:57:47.117 mostly what we'll be focused on is is 00:57:47.200 --> 00:57:50.637 this sort of finance 2.0 upgrade um that 00:57:50.720 --> 00:57:55.437 we talked about. All right. Well, time will tell whether policy makers uh 00:57:55.520 --> 00:57:57.437 listen to you guys, heed your advice, 00:57:57.520 --> 00:57:59.757 and uh realize that rules are better 00:57:59.840 --> 00:58:02.557 than no rules, that the time is urgent, 00:58:02.640 --> 00:58:07.757 and that the benefits will acrue to whoever sets the standards first. Um, 00:58:07.840 --> 00:58:09.437 thank you both for coming on the show. 00:58:09.520 --> 00:58:13.800 >> Thank you. Good. Good. Thanks, Robert.