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SEC HINTS NO SPOT BITCOIN ETF! #CryptoTownHall
Recorded: June 30, 2023 Duration: 1:19:31Space Recording
Short Summary
The transcript discusses the passage of a Bitcoin custody study bill in North Carolina, highlighting a trend towards state-level regulatory exploration. It also covers the SEC's ongoing technical scrutiny of Bitcoin ETF filings, indicating a shift from rejection to negotiation. Additionally, the involvement of major asset managers like BlackRock in the Bitcoin ETF space signifies significant growth and mainstream acceptance of digital assets.
Full Transcription
Hey, everyone. Just obviously getting everybody up on stage working through a few technical difficulties on my end.
But we should be ready to go momentarily. And obviously, you know, we have breaking news today with the, with the Wall Street Journal article and the SEC coming in hot as the SEC tends to do, saying that...
Well, let me get the exact headline before I say anything wrong.
SEC says spot Bitcoin ETF filings are inadequate.
We will get to that in a bit as we get all of our panelists up.
And obviously the market we will discuss because Bitcoin has been bouncing all over the place.
All coins had been moving kind of nicely and now spazzing to the downside as expected.
But maybe this headline is more of a nothing burger and yet again just some clickbaits.
and a very temporary impediment.
But we're going to dig into all of that momentarily.
But first, what we actually intended to talk about
and something I'm very excited about is what's happening in North Carolina
and in general at the state level for Bitcoin.
We had the announcement there, and we'll share Dan's tweet
Up above, another bipartisan victory in NC with passage of HB.
721, Bitcoin Digital Assets, Custody Study Bill.
Dan, I'm going to go to you.
First of all, I guess, give yourself the very quick introduction, and then we can dive in.
Thanks so much.
Dan Spuller here.
I'm co-chair of the North Carolina Blockchain Task Force.
I also serve as head of industry affairs for the Blockchain Association out of Washington, D.C., my day job.
Thanks again for having us.
Yeah, we've had a lot of progress in North Carolina over the years,
and particularly this summer.
I think a lot of this happened a lot faster than many of us expected,
but it's been an ongoing process.
Just quick background.
Yeah, I've been in Bitcoin personally since 2012, me, a couple friends, my brother,
we really started doing the meetups way back,
and then we put on a series of conferences in Raleigh and in Charlotte,
Cryptolina, Bitcoin Expo,
And that was 2014 when we launched that.
And we brought on really a lot of big names at the time.
Ed Moy, the former director of the U.S. Mint came.
We had Adam Draper come.
We brought in just a lot of folks that weren't normally coming to the meetups.
Early on, we really wanted to expand the scope of the space
and to really raise awareness beyond just the usual suspects.
And fast forward.
2019 rolls around and after some success with updating our state's many transmitters laws,
we got to work with the state's lieutenant governor, then Lieutenant Governor Dan Forrest.
He set up a task force called the North Carolina Blockchain Initiative.
We're a little bit different than some of the other state associations.
We're not a trade group ourselves.
We're a government appointed task force and it was put together by an executive order rather than a legislative committee.
And it's nonpartisan.
And the goal was to really serve as a primary resource on this emerging digital asset ecosystem.
And we launched right before the beginning of the pandemic.
So the first year, we were doing a lot of Zoom calls and a lot of webinars and a lot of just, we intended to do a roadshow, but we were put on the sidelines.
But we made the most of it.
And we put together a pretty comprehensive report on how the state could evaluate and leverage this technology, not just digital assets and Bitcoin, but lots of different use cases.
presented it to the state legislature. It didn't really go too far, but one of the recommendations we had was the development of a regulatory sandbox. And then more recently, we proposed this, it was a combination of a state's precious metals slash Bitcoin Depository Study Bill.
It started off, and I think Representative Mark Brody is joining us today.
I think he's having some technical difficulties, but he's the one who really has been spearheading this for us.
And it's kept us busy.
Again, this happened relatively quickly.
It was a rare collaborative effort between the precious metal gold crowd.
It's called the Sound Money Defense Funds Group.
that advocates for gold.
And we approached them.
And we said, well, hey, maybe we can collaborate on this bill.
And let's add in a little provision that would include the mention of virtual currency,
which is how Bitcoin is defined in state law, North Carolina.
That dates back to the money transmitted update.
So we got Bitcoin.
We added that term into the bill.
And I went down and I testified a few weeks ago to make sure that it was passed out of the Rules Committee and hit the floor and it passed about two days ago.
And since then, we've gotten a lot of inbound inquiries.
Is this a state can officially put Bitcoin on the balance sheets?
I mean, I certainly hope so.
I think right now.
That's what the headlines looked like, right, Dan?
Yeah.
The headlines looked like.
So even mine, you know, the initial headlines, it looked like a bill had been passed that was allowing the state to do that.
But this is obviously a bill that's passing to allow the state to do the study, correct?
And that's exactly. And I mean, I'm not here to curb anybody's enthusiasm because I think this is an amazing step. And I think this is the first, to my knowledge, in the country, where a bill actually passed advocating for this. I mean, things have been proposed over the years, but this actually passed one chamber. Now it's off to the state senate. But it is just that it's a study bill.
that's and I'll read it right here
is the act to study the holding of bullion and virtual currency
slash Bitcoin and their potential benefits
and whether to establish a state bullying
depository for such assets.
Now a depository for a physical depository for Bitcoin
you know that
That's not necessary.
We would just, the state would just use a, you know, custody provider.
But the study is what's important because it's finally an official study and there's money
been appropriated towards this that's going to allow our state to learn and explore
and research the benefits of this.
And it comes down in Representative Brody's case to sound money.
I mean, he's a big proponent of that.
And over the years, he's been a big gold advocate, but he's now very interested in Bitcoin.
So philosophically, they're aligned now.
And I think the education is important here that we can finally get this.
And I think this is the next natural phase that we've seen over the years on the trend cycle.
You know, we've seen first it starts with early adopters, experimental phase, then it goes to institutional like we've seen with micro strategy and other balance sheets of the private sector.
And in the long run, we're going to see governmental adoption.
Like it's already happening in El Salvador, but I think this is a good step in the United States.
Do you think that we're going to see most of the movement here at the state level?
I mean, obviously you're with the blockchain association right in D.C., so you happen to have a, you know, passion for Carolina because you started there, but this is probably something you're working on in multiple states.
Yeah, you know, I mean, I think this is going to be a domino effect.
I mean, obviously other states are doing fantastic work, you know, Florida, Texas, you know, a variety of states.
But I think the study is a great start.
And I think we will see more action in the states.
We're already seeing more action in the states.
And I think we, but to our credit at the federal level, we have seen a lot of development there,
particularly with the leadership of North Carolina's Patrick McKenry, financial services.
Yeah.
and a few other champions in the house.
Yeah, we were working on getting him here today, but hopefully next week, but he was tentatively going to join.
I'm working on that for him.
Yeah, we're going to try and get him.
I know he's super excited.
We're big fans of his at the state and federal level.
But, yeah, I think the action certainly is happening at the state level.
And it's just much more nimble.
And I think also, you know, you can factor in game theory.
I think there's a lot of states that are going to be competitive.
inherently competitive with one another.
So each state is going to want to try and be, you know, just that.
So we're North Carolina's front and center.
We're very pro-Bitcoin state for this technology, and I think we're going to see more companies come.
And I think we're going to see more legislation pop out too.
The other thing I didn't mention, which we can get into later, is the anti-CBDC bill that we did.
That was actually passed unanimously, and we could probably do an entire Twitter space is on that topic.
But we got that passed as well.
Yeah, I saw that. What I find most interesting here is that you, I was expecting you to say how challenging it was to do it bipartisan when you were talking about the bill and you were actually talking about how challenging it was to get the Bitcoiners and hard metal guys together.
It's funny enough. Yeah, that was, it's funny because believe it or not, a lot of the younger guys that are into gold and Bitcoin is pretty easy.
Because philosophically, again, I think they agree on the sound money argument.
The Peter shifts of the world, that's a little bit tougher to sell.
Yeah, well, that makes sense. But Peter Schiff is now doing ordinals on the Bitcoin blockchain. So maybe not that challenge. I know we were trying to get Representative Brody up. I'm not sure if he was still having issues to discuss. I see Eric, you're here as well. Did you have anything to add before we move on to the Bitcoin ETF topics?
Yeah, I would just say that, you know, that key point that once one state adopts some legislation like this, we see the domino's fall.
We've seen it happen with a number of pieces of legislation that, whether it originated in our state or others.
So it's a great first step.
And, you know, it figures that the SEC would come in and poopoo a little bit of good Bitcoin news, but that's the way it goes these days.
Kind of their thing.
Yeah.
Yeah, that's their thing.
If we're being honest, guys.
Awesome.
Well, feel free to stick around.
I think we're going to move on, but we'll all be watching North Carolina.
And any updates that you guys have moving forward, please share.
And then if you can get Representative Brody up, we would love to have it.
I know he's having some trouble doing that.
Yeah.
We'll stick around.
We'll take questions too throughout the day.
That's perfectly fine.
Perfect. Awesome. So guys, just to reset a bit, you'll see that one of the co-hosts on stage right now is Crypto Town Hall. That's Crypto underscore Town Hall. As I've mentioned and been mentioning, please follow that account because that is eventually where we're going to be moving to host these Twitter spaces so that we have a dedicated channel and a dedicated Twitter account to do that from. It was actually used to be the Wolf of All Streets podcast account. I donated it to the Crypto Town Hall.
because I really obviously believe in what we're doing here.
And so just please, please, please follow that account
because we do not want you to miss these moving forward.
Obviously, guys, the big news right now.
SEC hints no spot Bitcoin ETF.
But the question is, is that really what's happening here?
As you dig in, this may just be another click-paid article
from the Wall Street Journal.
Their headline was SEC says spot Bitcoin ETF filings are inadequate.
But potentially this could just be one clause where they can just refile and basically name the exchange.
But listen, I know I saw Dave, maybe he left.
Not a good.
Okay, well, I got Matt Hogan here anyways.
So we've got all our ETF people.
Matt, I mean, what do you make of this news?
It rocked the market here, at least temporarily.
Yeah, it was pretty impressive news. Great to be back on what a service this space is.
You know, I read the Wall Street Journal article as well. I should say up front that Bitwise has a filing in with the SEC and I can't comment specifically on that filing or any other filing, but I can comment on the space in general.
Okay.
I think the answer to whether this is big news or a nothing burger is something in between.
And I actually take it as relatively positive news.
I do think for the large part, reading through what's written in the Wall Street Journal, it feels like, oh,
almost a technical rejection, right?
The filings on record that described the surveillance sharing agreement
didn't disclose the name of the exchange
and didn't disclose the details of that,
how those surveillance sharing agreements would work.
And what the Wall Street Journal article says is,
is that, quote, the SEC told the exchanges,
they returned the filings for those reasons
and that they need to provide enough information
about the details of those Trevement sharing agreements.
They can update the language and refile.
So I suspect that that is what you will see.
I suspect you'll see
All of these folks go back to the drawing board,
refile, and will be on their way.
I take this as more, honestly, more positive than negative.
It shows constructive engagement.
And it's not just sort of letting these filings run for 240 days and rejecting them at the end of that period, which has been the historical precedent to date.
So I don't think this is the end of Spot Bitcoin ETFs.
I think it's a delay, but maybe even a positive delay, or at least modestly positive, is my read from what the Wall Street Journal wrote.
Yeah, we're already seeing, though, you obviously mentioned 240 days.
We've seen news that Kathy Wood and Arc their decision expected, at least their first
decision expected, August 13th.
That was actually much sooner than I expected.
Yeah, you have to think of it the way my 16-year-old thinks of homework assignments,
which is that they're a series of deadlines that can be pushed back and pushed back and
pushed back.
The way it works technically, I believe they have 90 days.
to issue the initial response or they can ask for more time.
And there are these statutory links that they can ask for more time.
They can ask for 45 more days and then another period of days.
Eventually you get to the end of the point where they have to make a decision.
That point is 240 days from the initial filing of the 19B4.
So whenever the 19B4 was filed, they have to make a decision within 240 days.
All of the other deadlines in between can be pushed with a simple piece of paperwork.
And historically what we've seen is that all of the Bitcoin ETF applications have been pushed to that full 240 day period.
Now, I actually think, you know, if they go about approving...
a spot bitcoin etf there's no guarantee that they will wait all 240 days to do so um they may do it
before then but yeah you shouldn't look at that interim deadline that's getting trumpeted as anything
other than sort of a clickbait uh deadline that can be pushed literally with a single piece of paper
from the SEC and that's what they've done for the past 10 years in evaluating spot bitcoin
etf applications got it Dave go ahead Dave go ahead sorry yeah sorry I mean look
The fact of the matter is history is a guide, right, except for there's phases and relationships.
And having gone through multiple periods and multiple filings over the years of different broker dealers with the SEC,
Effectively, this is, I believe, extremely positive news.
And in fact, I was reading it as you were having your guest on your video on your YouTube channel this morning.
I think it marks a break in phase.
We went from the no, basically NFW, let's be politically correct, phase to, you know, we're going to deny it.
We have no interest.
Forget it.
To, okay, here we are.
Now we're in the negotiation phase.
And yes, they're going to negotiate and they're going to be sitting there.
There's going to be meetings with the staff and they're going to say, okay, how does this infant surveillance sharing works?
We want to be able to look and get things, you know, detailed things.
Like, let's be clear of what they're going to ask for.
They're going to ask for PII.
They're going to want to know, okay, you're going to want Coinbase to agree to filing SARS suspicious activity reports.
And then they're going to have to if the regulator says, okay, this does look suspicious, who is doing this trade.
That's this exact process that they have with every other asset class that they surveil.
And that's what they're going to want.
And in point of fact, there was never going to be an approval without that, without the ability to track down, okay, we think this looks manipulative, what's going on here.
And once they get that, then understand what that means politically.
It means politically they can then take a huge victory lap.
And this is clearly not what their intent was all along.
But at this point, they could say, listen, you know, we held out, we forced them, and now we finally have a much safer surveilled market.
that's, I think, what they want.
And, you know, frankly, unless he is an idiot, and I think he's quite smart, I don't think he's dumb.
He'll take the win when he can get people to give them that.
And I'm quite confident that they will because everyone has a huge vested interest in doing exactly what I just suggested.
Yeah, I don't disagree.
Anybody else have an opinion here?
Hey, Scott.
Listen, yeah, thanks.
I agree with David.
Some of us, like you, Scott, myself,
have been saying that
they're pushing the crypto markets down,
including Bitcoin, until the
traditional players get in place,
get a bigger slice. And what
What you see is the softening now, right?
Is it a coincidence that after BlackRock and all these others filing an ETF, we don't get a rejection.
We get a negotiation.
We get a softening phase.
And that's exactly what's happening.
And so I think Dave's 100% on the mark.
I think it's good news for a coin base because I think they'll be listed.
So not financial advice, but I bought some of that today.
That's really all I have.
Yeah, I mean, what's interesting here, obviously, is that maybe this is just a very small technicality, and the SEC is asking for a bit more clarity.
It shouldn't be a surprise if they're saying we're going to have a surveillance sharing agreement, and we're going to be working with an exchange that the SEC would say, okay, show us the agreement and name the exchange, right?
I mean, Matt, is that accurate since I've got you here?
Yeah, I think I think that's exactly right. I think that's exactly right. I do think as the other speaker said, this is a this is a positive right. It's the negotiation phase. They're going to want to see those details and that's a reasonable position for them to take. I think it would be unreasonable to take any other position to be honest. So I do think this is a yeah, a positive development and the market will come to realize that pretty shortly.
Okay, so is anyone here who thinks that this is a massive negative that there's something nefarious going on here?
Or is this just semantics?
Simon, what do you think?
Sorry, you called me eating at the same time.
I have a camera on you and I wanted to make it as awkward as possible.
Yeah, yeah, you're getting revenge.
I did that to you once.
Yeah, well, yeah, we haven't had things like this in any of the previous applications.
So to me, if all the other applications have led to the same result,
And this one we get a different thing.
Then I interpret that as bullish.
But when I saw the headline,
I've actually got an outstanding bet with Rob from Digital Asset News.
And I said the ETF will be approved because it's BlackRock.
And he said it wouldn't.
And the loser has to wear an I love Maczyki t-shirts.
So I was just getting ready for that one.
Yeah.
I do not want to see anybody in that t-shirt, literally ever.
I mean, Bruce, listen, you always, you went on a bit of a rampage about the SEC yesterday.
So what are you thinking here?
Yeah, I think it's, I mean, as much as I'd love to say, it's some big conspiracy or something.
I think it's fairly routine.
It does, it is sort of, I don't think it's a negative towards Black Rock.
I think it's, if anything, it shows, I wouldn't say favoritism, but it shows kind of some respect for the process.
And perhaps some of the, you know, public outcry about this, you know, because the SEC doesn't have to answer.
You know, we, when we became registered as a broker-dealer,
there was a FINRA thing that we needed approval on,
and they had six months.
They had 180 days to approve it.
So unlike the 170, we knew they were going to take a long time.
Like 175th day, we're like, oh, yeah, they should be getting back to us any minute now.
And then, you know, 177, 78, 79.
I'm like, really?
Are they going to really wait until the last day?
Waited at the last day.
Wake up in that morning.
Still nothing.
They waited until three, the markets close at four.
They waited until 345.
Right.
on the last day.
And I've talked to many people where that's a common thing.
They'll just wait till the last minute.
They want to delay these things and draw it out.
And that's common.
So it's actually kind of a, you know, maybe a tiny favor to Black Rock to say like, oh, hey, you didn't do this piece here.
From what I understand, it was fairly minor.
It was like they didn't name the spot exchange or something.
So, you know, overall, I think, you know, I think the assessment of the, you know, John and others is probably, you know, really correct that they're going to, you know, they need a victory.
Never. I've been registered under nine SEC chairs, and I've never, ever, ever seen anything close to this.
You know, maybe certain niche industries or something, but I've never seen it where like everybody seems to hate the chair and, you know, lack of respect for the whole agency.
It's just a, you know, they've got to be feeling this pressure.
So, you know, hopefully they'll, you know, come around.
We'll be in a new era of, you know, get some of these things approved.
you know, they have some concessions they want
and we, you know, move forward.
Because the bigger picture is that securities are important
and it's really, really, really harmful to America
to have this kind of behavior.
You know, we need to have free markets in America.
It's what our country is all about.
We have to allow entrepreneurs and capital formation
and they've just been like the frog in the boiling water
with all of these procedures.
You know, AMLKYC didn't even exist
when I started my career.
Like not in its current form.
It was very, very rudimentary.
You know, so this idea that, you know,
they have this birthright to know every single thing
about everybody and where you are.
And, you know, it's not moral.
It's not, you know, correct.
And, you know, shouldn't even be part of the United States.
You know, I don't feel like it's in line
with our constitution or anything else.
And it also doesn't work.
It grinds things to a haul.
You know, we'd have such a wonderful and vibrant.
If they wouldn't have had such a pain in the neck to make everything work,
we'd probably have 100,000 new securities, you know, trading.
We could have tokenized the world and have liquidity for people and all kinds of other great things.
BlackRock's going to tokenize the world for us, though, Bruce.
Don't worry.
And I'm right there to help.
They're coming.
So listen, we got three Davids on stage, three Daves and Davids.
But we were talking this morning on YouTube for 35 minutes about ETFs the minute you signed off.
Yeah.
Yeah, look, I mean, nothing like news when you're talking about news.
I, with all respect to our other friend, Dave, I actually don't believe this is a real phase change from denial to negotiation.
I think this is a continuation of denial, them simply leaning back to Cebo and NASDAQ and saying, nah.
Yeah.
isn't in negotiation.
It's a continuation of them saying,
hey, we need a surveillance agreement
with a regulated exchange,
which is what they've been of significant size,
which is what they've been saying,
I believe, for five years.
So I don't really see this as moving the needle on that.
And if anything,
I think that they'll probably just continue to kick this can down the road for at least another year.
I'm not somebody who believes that somehow we're in some final negotiation phase.
And I also think it's ridiculous to think that the SEC actually responds to pressure.
I just don't actually think that that's true.
And I think if they had responded to pressure, they would have done it a while ago.
I think this is basically an administration call to keep crypto out of the hands of the regulated markets.
for this administration. So I'm not a big believer that this is super bullish on approval. I agree. It should be. I'm not,
I'm not happy about this situation. I agree with the previous speakers comments about what would be better for this country. But I'm not sanguine about this.
I actually think that this will continue to get delayed well past the existing deadlines Hogan was talking about and probably well into the end of next year.
Hey, can I just throw in a quick question because I've got to take off soon.
Hey, guys.
So last year when the Grayscale ETF got rejected, one of the SEC's arguments for the rejection was that it didn't, the filing didn't demonstrate enough to protect investors against fraud and manipulation.
Specifically, their filing set, the SEC filing said,
rules of national security exchanges must be designed to prevent fraudulent and manipulative acts and practices and to protect investors in the public interests and ETPs of a certain size
must meet these regulations.
Although surveillance sharing, I'm just reading the filing right now,
although surveillance sharing agreements are not the exclusive means
by which a listing exchange of a commodity,
trust ETP can meet the obligations, blah, blah, blah.
Basically, it's saying that people can use the great scale of ETP
to manipulate the markets.
What has Bitcoin, what has BlackRock done
differently this time in light of this.
Has it learned from this and done anything differently?
Nothing.
Nothing. Nothing.
There's really, that's not true.
Not true.
That's absolutely not true.
I mean, we don't know all the conversations have gone on at the staff level.
But it's very clear from the gray scale judge and what's going on.
They're going to lose that argument, David.
They are going to lose that argument because there's literally no way.
You can't find one human being who has announced a credibility to say that the futures-backed ETFs are less subject to manipulation that spot.
There's literally not one human being that has any credibility because mathematically it's an absurd argument.
And the judge is basically said that's not the argument.
That's not the argument.
That is that is not that is categorically wrong.
That is not the argument in the gray scale case.
If you go look at the brief, the SEC concedes that their goal as regulators not to prevent manipulation.
They say that numerous times, their goal is to detect and they actually state in the brief that regardless of whether manipulation occurs in the spot market, futures market, that's beside the point.
The goal of the SEC is to assure that if someone were entering the spot market, it'd have to go on to markets of sufficient size.
And we want surveillance sharing agreements with those markets of sufficient size to be able to detect.
And during the oral argument, go back and listen to it, the counsel arguing for the SEC basically conceded.
Our job is not to protect or prevent manipulation as the SEC.
We want to be able to detect it so then we can go and forward and bring enforcement action.
So that's exactly what I said before.
So but but no, no it's not because you said to prevent manipulation.
You said there's no no.
No, no.
Well, okay.
What I said in my first comment, which is very important here, is what they want is to be able to have suspicious activity reports.
Okay.
be the responsibility of the exchange to get filed, to then go to a regulator to look after.
And then when the regulator says, this is something we need to look into for the exchange to be willing to part with the PII, with the account information of who is doing those traits.
Correct.
So what they're going to ask for.
So with the few, well, they've already asked for it.
With the futures through a dozen orders.
So with the futures markets, okay, you have those robust CME-based surveillance sharing agreements,
which has set forth in detail.
And the SEC says, that's enough.
We want because it's upwards of 90% of the futures volume trades through the CME.
90%, right?
Contrast that with Coinbase, which is the main, you know, aspect of,
the i shares filing.
Coinbase has fewer than 20% of global spot volume,
and they're sharing,
surveillance sharing agreement with NASDAQ,
which will be found to be woefully deficient.
It doesn't capture 80% of the volume.
You would not need...
They have 70 plus percent of the volume of U.S. dollar-based...
It doesn't matter.
That's...
That's not the global market.
It's not the global market.
The futures market is not the global market either.
Correct.
The CBO's market share is way lower than Coinbase's market share as far as the global market.
100%, but they're not a proving spot.
They're approving futures.
It's a different product.
No, no.
CBO's market for futures, or when you include perpetual swaps and futures,
CBO's market share of the global market in Delta 1 derivatives is way less than Coinbase's
of the Bitcoin spot market.
period. Yeah. So, so I take the total opposite approach on what you think is going to happen in the
gray scale case. And I think I'm going to be proven right in this because if you actually look at
the standard for what it means to have an arbitrary and capricious ruling, it basically means that you
have to not necessarily be wrong in your analysis. You have to have made it with some sort of bias
or some sort of lack of clear understanding. And the case law actually tells you the regulators are allowed to be wrong.
That doesn't mean they're arbitrary and capricious.
Arbitrary and capricious means it's something that has no rational basis, zero rational basis for the approval.
It's one of the lowest standards in the law.
So there's just a ton of deference.
And even if the SEC were to lose in the grayscale case, okay,
it doesn't necessarily mean you greenlight approval of the spot ETF.
What it would do is it would require them to go back and issue an order that is not arbitrary and capricious.
That's the big mistake that people keep making that, you know,
the finding that order is arbitrary capricious means that it necessarily gets approval in the other direction.
That's not the type of agency deference that we have in terms of the decision.
Yeah, Joe.
Joe, yeah, and Dave, when we were discussing Noddic this morning on YouTube and something we've discussed in the past quite a bit, actually it could have an even worse consequence, which could be a basically removing the futures ETA.
100%. That's exactly right. That's my belief. I think that's actually what's going to happen.
The issue is politics. It really is. I mean, it's always been and it always will be politics.
The issue is this particular story gives them a chance.
It's a chance.
Gives them a chance to actually deflect some of the criticism that is being levied upon them by a cadre of voters that are absolutely critical for this administration to stay in power.
which is the young people.
And it is, you know, never forget we're dealing with political organizations.
And you say the SEC does respond to pressure.
That's hogwash.
The SEC, like every other agency in the federal government, responds to whatever the administration thinks is important.
And this administration, like the previous one, but this one may even be more, responds to polls.
And.
and politics. And so it really is a political question here. And my point, which is pretty straightforward, is they can undeniably claim to have done the right thing and deflect opponents' criticisms if they get the kind of sharing agreement that they want. Now, you're absolutely right. There's no question legally. They can stonewall this till this administration is gone. There's no doubt.
The issue is here's something else that's worth pointing out.
When the SEC wants the stone wallet, they don't go to the Wall Street Journal and leak things months before they need to say a word.
In this particular case, they leaked things for a reason.
Why?
It's because this is a PR war.
This particular SEC is engaging specifically in PR in a way that no previous SEC that I've
ever seen in 40 years has ever done.
And what would be the reason to leak this information, if not, to start currying that
political narrative that they want to draft?
You mean past SEC chairman didn't make cute cartoon videos about Kim Kardashian?
Yeah.
Among other things.
I mean, this is the extraordinary aspect of this.
You're exactly right, Dave.
On that point, I completely agree.
The fact that this story is even out there just shows you.
I think they view this particular space with animus.
That's my view.
I don't think there's any question about that, Joe.
I mean, they've basically said, and you know, we've spoken with people.
When an SEC commissioner like Gensler comes in, they basically say,
listen, these are the things that are important to me.
These are the things that are important to this administration.
This is where we need staff.
And by looking at how they've staffed up, where they've spent their money, the people they've hired, it's very clear that this is Gensler's fight.
Of all things, like the anti-crypto army coming down from Elizabeth Warren and such, I mean, this is what Gensler really believes is one of the most important mandates that he has in this space.
It's undeniable.
But what's the mandate?
Can I ask you a question?
Yeah, please.
Now, Joe, you were one of the few people I know out there when the Black Rock ETF was announced.
A lot of people said, oh, you know, it's a sure thing.
And I know that you spoke up and said otherwise.
Do you not see this as any softening or do you still believe it's going to be a strict denial?
Yeah, I think that the only thing that gives me pause is this ruling, because I do think a lot of the impetus behind the recent filings is the hope. It's a hedge, right, for potentially a favorable ruling from the grayscale case. And I, I, I,
That's what I think is the trigger for all this.
It's not some secret inside intel that BlackRock has on what it takes to get it approved or a softening or, et cetera.
I view it all.
All is basically responsive to the Grayscale case, and it's a very minimal hedge to get these statements on file, even if they're kicked or rejected against the...
Joe, I don't disagree with that at all, but still, this is BlackRock coming out publicly filing a Bitcoin ETF.
They have to care deeply or at least have an opinion here that this could happen.
Because even if they believe Grayscale is going to win, Black Rock wasn't even in the ring.
It's still big news.
Yeah, no.
I mean, decided to enter the ring.
deciding to enter the ring, I think, was inevitable.
I don't necessarily think that they were going to always stay on the sidelines with how fast moving and growing the industry is.
I just think that's kind of silly to make that expectation.
They were eventually, you know, I think many in the space have been calling for big money to enter and it increasingly trickles in.
It's not kind of the avalanche that people were talking back, even back in 2018 and in 2017.
It's more of a slow trickle.
And I think that's.
you know, in a lot of ways that's due to the regulatory environment and people being cautious.
But, you know, to the point is like, you know, I think the question was originally, is this a softening, okay?
I don't think there's any evidence that suggests that.
Maybe it's a softening when it comes to BlackRock in their approach and their willingness to sort of put their name out there.
Maybe they're willing to, you know, really be more exposed and as being open to this.
But, you know, in terms of the SEC, I don't see any evidence.
to that. I mean, if anything, I think that the recent filings against Coinbase and Binance
shows that the SEC is willing to get even more aggressive. And by the way, I will just tell you,
I'll go on record saying, I expect numerous additional suits to be filed in the next 90 days
against major players. So, you know, this is the beginning, not the end of the SEC's campaign.
Okay, Joe, let's talk about it. I don't disagree, but I think that there's a lot of people who
believe that the SEC has bid off. I won't say necessarily more that they can chew, but as much as
they can chew with their current staff with B.
going against ripple, Binance, and Coinbase.
So you say you expect a lot of enforcement action against major players.
It doesn't necessarily have to be SEC.
Okay, that I know that you're talking about DOJ and Binance, of course.
But if we're talking specifically about the SEC, I would make the argument.
We're going to see a whole lot of enforcement actions, but it's going to be mid to lower tier size companies are going to be forced to.
to basically just, you know, pay the fine and move on because then the SEC gets a ton of wins without actually having to fight any of these people.
So you don't expect an SEC suit against the prime trust?
Oh, well, but Prime Trust is down to being almost a company of insignificant size.
And listen, I literally, we've been on top of Prime Trust since day one.
I was holding the information about them losing private keys for weeks because we didn't want to share that until that was somewhat public knowledge.
So I think that Prime Trust is a massive, massive black eye on this industry that hopefully...
Just doesn't get talked about as much as does that.
Yes, when you have a trusted, regulated custodian that not only loses private keys but then commits fraud to cover it up, yes, that's a huge problem.
And I think we will see action there, but I think prime trust has nothing left to even fight it.
I mean, they're done.
I'll just state this, okay, because I got to jump in a second for a call.
But ultimately, okay, there are portions of both the Coinbase and Binance complaint,
and also the CFTC complaint against Binance, which people forget about.
You can copy those allegations verbatim and state them against every major crypto exchange
that operates in the United States.
So the notion that some folks that are big, bigger players, okay, are just going to not face those
types of claims brought against them about being unregistered broker dealers and
unregistered clearing houses and not proper registered exchanges.
I think that's fiction.
I think it will come for everyone.
And I think it's just a question of strategically, and manpower is always concerned, right,
but strategically what is the rollout?
And the SEC sent a message by going after the,
a big player, a major player in Coinbase.
And I think that does not necessarily mean other players underneath them won't face the exact same allegations in the near future.
And I assume the implication.
I put words in your mouth, but when you said not necessarily the SEC, I think you were talking about potential DOJ action correct, or even CFDC.
Yes, and state regulators.
So, you know, there's a whole apparatus, regulatory apparatus.
They can go at you many different ways.
It moves slow and it grinds as people like John and others know.
But, you know, they make tactical decisions based on limited command power.
And it was not a mistake that they went off after the big gorilla first.
And I think there are other smaller guerrillas that will face similar claims almost verbatim.
Right. I think they're going to end up set. My point was, I think you're right in that they're going to all end up settling, which will be just win after win after win for the SEC, probably at least from perspective.
And what is one thing real quick? What does a settlement look like when one of the claims that you're seeking is to bar them from engaging in exchange related activities?
Yeah, they pay a fine and then they go out of business or they just offer Bitcoin trading services and go out of business anyways. I know what you're saying.
Listen, Joe, I don't disagree with the more enforcement actions coming.
I was predicting that they were suing Coinbase 10 months ago.
So I agree with you.
However, I don't think there's anyone bigger, more significant than Coinbase,
unless you're talking about Circle or Tether.
And I don't know if you're hinting at any of that.
DCG is large as well, not as large, but DCG is the other large player, I would say, in the United States.
Thanks, Scott. Thanks, Mario. We've got to jump. Take care, everybody.
All right, Joe. Have a good one. Go ahead, Dave Weisberger.
So, I mean, Scott, I just, I just, um, DM'd you a link that you should post, which is Coinbase's answer to the SEC complaint. It's, it is an incredibly easy read.
I need it in the form of a, Dave, to be able to post it, we need it in the form of a tweet.
I saw you sent the document, but I'll look for something.
Okay, I'll do that after.
But the point that I want to make is because of what John said, Coinbase said, basically, they're basically saying before we can even think about settling, they're asking the judge to dismiss.
And they're asking it on very interesting grounds and grounds that.
Frankly, I would love to hear John's point, John's point of view, because to my non-legal brain
that just kind of is legal adjacent, having, you know, reading pleadings and stuff, it feels like
between West Virginia versus EPA and today's case, throwing out the student loans, et cetera,
that this Supreme Court is extremely clear and overbroad executive actions.
And Coinbase is going right to the heart of the accusation saying that the SEC does not even
have jurisdiction to bring this suit.
And that is extremely important because effectively this is a, this is not
We think we can settle.
This is we are going directly at it.
And it's a very big deal, I think.
And it's also another reason why the SEC is probably more likely to want to get a win in this case
because it's going to be very difficult for them.
But it's a really interesting read.
I will tweet it now.
Yeah, let's go to our lawyers, John and David, who hopefully are not billing us for the time that they speak.
Go ahead.
David.
I'll give a deference to John.
John, you want to go first?
Go ahead, David. I've been speaking. Go, brother.
Okay. I'm just going to jump on what Dave just said, because I think when we were talking about pressure, I think we have to remember sometimes we all talk to each other in a vacuum on crypto Twitter.
the pressure of the outside world is not the pressure that the SEC feels, especially in these crypto cases.
They are not feeling pressure to do anything.
This is still actions that are wildly enthusiastically supported by the old guard of the political parties.
So it's very important to remember that Gensler is, this isn't like a, I guess we're playing baseball right now.
This isn't a manager on the hot seat who's losing.
Gensler has the support of all of the people he needs in government to continue the path he's going on.
I think that's really important that just because we are all bashing on what's going on here, the people he reports to are not bashing him for the same thing.
In fact, they are enthusiastically supporting the path that he's on.
That's number one.
Number two, the Coinbase, you know, first of all, everyone keeps calling the motion to dismiss.
Coinbase filed an answer.
That means this case is going forward.
They filed what is amounts to a press release.
It is beyond brilliant.
It is beyond well-ridden.
It was put together probably before this case was even filed.
They filed it, I think, about six weeks early.
The All-Star team representing Coinbase knows exactly what they're doing.
The case was never going to be dismissed.
So what they do?
They wrote a motion and said, we like a judgment on the pleadings as a matter of law.
I think Meta Lawman and I, Tom, were going over this yesterday on Twitter.
I offered him my firstborn child.
If Coinbase wins on that argument, they're not going to win on that argument either.
Why would you want your firstborn child, though?
It's my easier of my two children.
Oh, thank you.
So, I mean, at the end of the day...
I'm not in the market for more children, is what I'm saying.
Go ahead.
So at the end of the day, what we're talking about here is...
You know, public posturing on Coinbase is fantastic what they're doing.
They're building an army, just like John has built an army of people who are supporting him.
And that is incredibly helpful moving forward.
But what the SEC does not care about what crypto Twitter thinks, believes, or cares about.
out. As long as the administration fully supports what's going on, and I think John is right. I mean, I get quoted all the time. There's the DOJ investigation going on into Binance. They're going to announce that shortly. And the more that that unfolds, we have to separate the Binance lawsuit and the Coinbase lawsuit.
What everyone here wants is for Coinbase to win on the law and saying they've done nothing wrong.
And if they have done something wrong, it's because it's ambiguity in the law.
And Congress needs to fix that.
But for the moment that they've done nothing wrong.
Finance is a whole different story.
And it's a...
It has nothing to do with what we're all talking about because we all want to be talking about the legitimate side of crypto.
We don't want to get snarred up in the prime trust conversation where someone screwed up and then did criminal actions as a trust and stealing client funds.
That is not the defense here. The defense here is what Coinbase and Gemini have been doing for years, which is saying, we are doing this legitimately. We are doing this and we are giving you our plans. And everything we have done is right. And that's the support that we should all be giving. And I think ultimately, that's going to be the winning argument here, even if Coinbase pays a fine. SEC takes a fine. They'll say whether it's a million, 100 million, a billion.
billion dollars. It doesn't matter to me. They'll post that they won. But ultimately, we need
Coinbase to win on the law. And we have to make sure that we all support positive actors in the
space who are doing it right. John, go ahead. Yeah. Well, I agree with all of that. And here's the thing
to know. The Supreme Court, when the EPA West Virginia case came out with the major questions,
doctrine, I made a tweet that said, I don't guarantee a lot of things, but I guarantee it this gets to the Supreme Court
the SEC loses. And that, I would encourage everyone to read the Coinbase pleadings because I
described it as a work of art. I didn't think you could get much better than the Ripple legal team
and then the Coinbase team came out and went with this. But the bottom line is we may see
an interlocutory appeal. What you have for everybody to understand is you have, Congress has
already, in the Senate and in the House, has initiated legislation demonstrating it's in
intent to legislate this area.
Couple that with Gensler's confirmation testimony
where he says there is no regulatory framework
for digital assets in the United States
basically conceding by admission that it falls with in this this regulatory gap,
which is the third thing, the Hymann email showed that the SEC has acknowledged
that there is this regulatory gap in between the CFTC, SEC,
where do these digital assets fall into?
Then you couple that with, there's not a single case in US history,
where a investment contract in the secondary market was also determined an investment contract.
The only case to address it said that it wasn't.
And that was in a full circuit of the Ninth Circuit.
And then there's never a case where there's been no privity between a buyer and a promoter.
Take an XRP holder or a Cardinal holder.
or an eth holder who has no knowledge of vitalic, no knowledge of ripple or anything,
and they buy this commodity, this digital commodity.
They have no privity between this issue and promoter.
And then you couple all that with the EPA and then the decision yesterday,
and this Supreme Court is screaming, screaming that they will kick the SEC out and say,
this is for Congress.
Congress didn't give you the authority to do this.
You've admitted it before.
Before you went on this political agenda, you admit it that there wasn't a framework for these digital assets, and you can't just change your mind like that.
And so, you know, my real issue is how this judge addresses this motion.
I'm not saying the judge is going to agree with Coinbase, despite it being a legal work of art.
But the question then is, do we see an inlocutory appeal directly up after that?
John, so I mean, invoking this major question's doctrine, right, and we've been hearing a lot about that, you kind of just mentioned it. I mean, is that something that?
They're going to be mentioning immediately as an effort to get this thrown out, or is this something that we'll be hearing about for the next three or four years as sort of this court case grinds on?
No, that's what I'm talking about, potential interlocutory appeal.
Unlike in the Ripple case, you know, which preceded the EPA, West Virginia Supreme Court case, you know, the FCC has invoked the major doctrine.
They allude to the Hinman emails.
where it says regulatory gap, they cite Gensler's testimony, where he admitted that there was no regulatory framework.
And so what everyone needs to understand is the Supreme Court has said, unless Congress has specifically designated you –
and delegated the authority to a federal agency,
when there is an issue that's a major question
that affects economics and financial markets,
great significance, to put it just like that,
then that agency, unless they've been specifically authorized,
can't do what they're doing, basically.
And so with the EPA, they couldn't just unilaterally start requiring these, you know, emissions, requirements.
The same thing the SEC is trying to do with the ESG disclosures.
And they shot that down with the EPA.
And this court is very conservative.
If it reviews Howie...
the lower courts watered down the solely of language of the Howie case where it said that you have to rely solely on the efforts of the promoter.
lower courts have watered that down.
It's never went back before the Supreme Court.
And so this conservative Supreme Court is the writings on the wall.
And so...
Yeah, but it has to get there, right?
I mean, so that we're talking about years down the road that we'd even be seeing them challenging Howie or any of...
Well, that's true, but the question is the second circuit is going to be faster,
and does the second circuit, you know, see the writing on the wall and apply that EPA decision?
So I'm not saying it's great news this is going to happen tomorrow,
but I'm just saying is that what the coin base has done is an additional legal wrinkle
where the whole case could be stayed for a while as we go up on an expedited format.
what's called an interlocutory appeal.
Yeah, I mean, listen, I might be in this echo chamber or bubble,
but it doesn't seem like the SEC is doing particularly well in court in any of these cases, right?
Endless pushback in the Voyager bankruptcy, gray scale, now people saying 70% chance that gray scale wins,
whatever that means for an ETF is up to, you know, is up for interpretation.
Ripple, I mean, it doesn't seem like the SEC is getting very many favorable opinions from the courts.
No, they're not. In every single court, they have actually gotten smacked down, starting with the judge in the ripple case saying they lacked faithful allegiance to the law and that basically said they were being complete hypocrites.
And then you've seen every single other court basically take them to task. Even in the library case, I mean, the judge views his role as very limited, but I encourage everyone to read the transcript that's on my site of the hearings, and he's...
basically take you know arguing with the SEC why don't you do something about the
secondary issues you admit that there's all these holders out there that are
users of a technology that are not investors that are actually using as utility
tokens like clarify it and the SEC says we don't do that I mean that's like a
direct quote we don't do that yeah go ahead Simon
Yeah, I was just going to give an update on the court,
because it directly relates to this exact conversation on the Celsius case.
So within the Celsius case, there was massive manipulation on the short side
and the long side of the cell token.
And those that were victims of the cell token,
the price of the cell token during the time that it actually filed for bankruptcy
Excuse me, sorry.
Was actually going to determine the recovery that they were going to get.
Now, the judge actually called the SEC to make a determination
whether cell token is a security in this case.
The reason being is because in the reorganization plan that was submitted to,
or is due to be submitted to the court,
they wanted to give a lower price for those that held sell token due to the market manipulation.
And so the judge is actually calling upon the SEC.
Now, the SEC hasn't said anything in the case right now.
I speculate there's reasons for that because I believe that there's an impending indictment for Alex Mijinsky
and they're waiting for the moment, the correct moment in order to do that.
But now the judge is calling in the SEC.
So they've got to make a determination.
Now, in Voyager, it was interesting because they did determine that it was a security.
But the difference in this case is that the UCC, who are representing creditors, they're saying that the token should actually be subordinated if it is a security.
So they're using the Howie test in order to make that determination.
So we're going to get another one in the Celsius case, but it might move to settlement before that determination is actually made.
But just wanted to update people.
Now, another interesting turn of events is that those that were representing the cell token were saying, well, if cell token is a security and should be subordinated...
then we're making the claim the actual earn program and every claim of every earned creditor
should also be subordinated because obviously the equity holders get wiped out in this case.
But I just thought it would be worth bringing up because we're going to get another one of those,
is it a security, isn't it security?
And the SEC is going to have to come and step in and then there's going to have to be put in front of the judge.
Yeah, thanks for that update. Dan, since we have you here and you're in Washington, you're sitting here thinking about all of these things. I don't know how political you get, obviously, but, you know, for anyone who missed the beginning, we were talking about what's happening in North Carolina. I mean, Dan, what do you think of the general sort of attacks here by the SEC and where do you stand on everything we've heard here? Well, if you get a chance, our...
Marissa, who's our policy council and Jake Chivinsky, who's our chief policy officer, put out a statement yesterday.
We have a pretty strong opinion on Gary Gensler.
Yeah, I need to pin that.
I'm going to go find it.
Jake, that was incredible, his thread.
I re-tweeted it yesterday, but I'm going to go find that and pin it, yeah.
Yeah, I think we just hit Fortune actually yesterday, too.
I mean, listen, he's got to recuse himself in our opinion from a lot of these cases.
Anything to do?
I was never a fan.
I was actually always skeptical of him despite even, you know, the work he did at up at MIT.
And I know a lot of people didn't like Jay Clayton either,
but I think Jayton Clayton didn't really have any interest in learning more about the industry.
You know, but he wasn't, Gensler is particularly dangerous, though, I think, because he actually has...
he knows the stuff and he knows the industry pretty well.
And I think he's tweeted it pretty unfairly.
But I'm not on the policy side of the shop.
But I will say, though, that we have strong opinions on them.
And we think there needs to be some serious changes made.
Yeah, you guys can see that tweet.
I pinned it above from Jake Chorbos.
I'm a huge fan.
Sorry, Dad.
I thought you lifted your mind to speak again.
I mean, David, you just heard everything that John said that being David Silver.
I mean, your opinion clearly is that the SEC is doing these things for a reason.
They're generally winning.
It doesn't feel that way.
It's not.
It's all pretty devil's advocate for a moment.
You know, if what, if.
If John is right, which, by the way, I think ultimately John's going to be right.
But ultimately, the second circuit, you know, for Coinbase to do this, to do the interlocutory route,
do all these legal maneuvers for them to win.
They can only win in a conservative court.
They first have to go through a liberal second circuit court.
It's just going to take time.
What Coinbase is doing is a targeted press maneuver.
They know that the, and I think everyone's talking about this,
they know who's following this and who they are,
they are preaching to the choir.
They are not preaching to the older, uh,
institutional DC legacy lobbyists.
Yeah, they're playing to us, and it works well.
Exactly.
And it's brilliant because what they're doing is brilliant.
I mean, like, I'm not arguing what they have written.
What they have written is it's poetry.
Right.
But you govern in prose, not in poetry.
And the pros here is that the legacy institutions are spending a ton of money.
And dance group and Jake Chavinsky, they're spending money to battle what the legacy institutions are fighting for right now.
Okay.
It needs to be very clear.
If you had said that three weeks ago, I would have been inclined to agree with you.
But we have two of the top.
asset managers in the world who are on the opposite side now. We have internal, I've talked to
Democrat lobbyists, not just Republican lobbyists, but Democrat lobbyists who are fed up, and they're
telling us that there is a significant undercurrent of this guy talking about the SEC as we don't
want this to be an issue to let that Republicans can bludgeon us with. You know,
You know, obviously, the Democrats are focused mostly on trying to get Trump nominated because he's the easiest to run against.
But there are still Congress people who are going to be in difficult elections.
And the absolute reality is they don't want a political issue.
And so, yes, there are definitely some, certainly in the banks who would love to make Bitcoin go away.
But I think that they're coming to the conclusion that they can't.
And it's really important to understand that BlackRock and Fidelity joining the fight politically,
remember, this administration regulates or rules by poll, opinion polls.
If the various people involved on this call and everyone else ends up getting influenced and you start
seeing real clear politics polls talking about this as an issue.
And Scott, you've talked about that.
It will matter.
I suspect that.
that people in the administration understand
that they really need to defang it.
And this may very well end up going that way.
That's really the issue because you're 100% right, David.
There's no question about it.
The SEC can 100% stonewall this
until the administration.
But can't the SEC, both David,
can't the SEC actually defang this
by approving a Bitcoin spot ETF
throwing the red meat into the water
and calling it today?
Well, that's my theory.
And I may very well be wrong,
but that's been my working theory.
I totally...
I mean, I think that everyone is under the impression.
You can't stop this.
You know, the ball's rolling down the hill.
It can't be stopped.
It's how is the SEC going to pivot to take the win?
I think we've heard a lot of different ways today of people saying how things are going to pivot for the SEC to take the win.
I think the way, and probably Bruce is going to jump up and down and say, that's the problem with what David Silver is about to say.
the way that the SEC is going to pivot here is people are going to lose their privacy rights
and there's going to be a lot more government regulation in crypto.
And personally, I'm okay with that.
But now you can have all the OG.
Now, I've been around since 2013 and I consider myself not OG, maybe like second or third generation.
But you're going to have all the OG who say, oh, my God, we won, but we lost what we believe in.
And what's the win there?
So, of course, I agree that that's where we're moving towards.
We're moving towards what I would consider a healthy KYC AML.
But a lot of people on this call are going to be like, oh, my God, that's horrible.
Do we throw the baby out with the bathwater?
Well, that's definitely where we're heading.
Yeah, there's a lot of cognitive dissonance, whether...
We should be cheering Black Rock or Wall Street in general if you believe in the original ethos there.
And I agree with you.
But that still, you know, we have to be pragmatic and live in the world where we do.
And right now the world we're living in is this fight for the SEC and whether they're going to approve these or not.
Scott, I agree.
Well, I was going to say, I agree with both Dave's.
What both have said, there's no doubt that Coinbase is engaged in a public opinion.
And I do believe BlackRock and fidelity and the 27 trillion of assets trying to get in cumulatively is a change.
But you've got to understand the dilemma we have is that Elizabeth Warren has chosen an anti-crypto platform for re-election.
Joe Biden, the president, is talking about...
gaps stopping crypto traders from taking advantage of tax loopholes or whatever he said.
And so I think, fortunately for the Democratic Party, they went with the anti-crypto 2024 platform.
The question is, do they pivot from that?
And how do they pivot from that in an election year?
And I think-
You pivot by approving the ETF and firing Gary Gensler.
Done.
Yeah.
No, no, no, no. They pivot by approving the ETF and claim the win that they have, by their steadfast.
I know, Dave, I was just clicking.
That's what they're going to say. The rhetoric, look, we all know I've talked about it. I was a communications rhetoric major and a debater.
Their easy win here is to say, listen, we have fought for years and we have successfully gotten the ability to understand and surveil for manipulation. Look how great we are.
And that is, I think, what the smart move would do.
Now, whether they're smart or not, we'll find out.
As far as, you know, Biden's thing on taxes, I mean, look, he points to everybody, you know, for it.
I mean, watch trade.
I don't think there's a person listening to this call who thinks that crypto trades shouldn't be subject to the same 30 day out of the position before being able to declare.
100%.
I doubt there's anybody who thinks who disagrees with the actual policy.
It would be great if that happened because at the end of the day, it's the rhetoric, though.
It's the way that they're positioning that.
They're not saying, hey, guys, the wash sale rule doesn't apply to crypto.
We should quickly close that loophole because people are, you know, avoiding a bit of capital gains.
They're saying on the one side of this chart, we have wealthy crypto traders who are breaking tax laws.
On the other side, we have Republican starving children.
Right. And that's literally what the graphic was. And do we care more about starving children or rich, wealthy crypto investors? By the way, I don't know anyone who made money in crypto last year and we have a tax problem anyways. But that it's the positioning that's the issue, not the actual issue.
Oh, 100%. And that's exactly what I think happens here.
Look, if I were advising this administration, which I can't imagine why I would do that,
but if I were, I would basically say, listen, here's how you position it.
We have fought for years to force the crypto industry.
We brought them to their knees where now they are willing to allow us to surveil and stop manipulation,
and we are therefore protecting investors in these products.
It almost writes itself.
I also, I agree with that 100%, and then if we're going to slide further down to that theory,
they can give the Bitcoin win and still crush everything they view as crypto or attempt to.
Well, that's the other point here.
That's really a very important point, Scott.
It's the Bitcoin ETF thing.
It's literally nothing to do with them going after the Bitcoin use case.
And we haven't talked about Prometheum and all that nonsense.
But, you know, the truth of the matter is that's a separate issue.
And you can still be anti-crypto.
and at least allow people to invest in Bitcoin.
Now, that probably would give Elizabeth Warren dyspepsia
even thinking about that because she's really worried about Bitcoin more than anything else.
But the reality is, is a lot of people look at them separately.
John, I see you throwing up a lot of hundreds over there.
No, I really don't have anything to add except that.
But, you know, here's the thing that I would say.
I thought by now that Gensler would have taken a big win
by negotiating some kind of settlement in the Ripple case.
And that hasn't happened.
And from people I've talked to him that have been inside the room with him,
I mean, this guy is a megalomaniac like no other.
And so I think he is a bit unpredictable.
He will succumb when, you know, when the White House, you know,
comes calling and asked him to step down or to back off or whatever.
That will happen, especially in the election year.
The real issue we need to get is we need to reach Democrats.
that are more reasonable, more moderate, who need to start speaking up.
When that happens, because this is all political, what everybody's been saying,
David's been saying it's 100% right, this is a political agenda.
And that's what's being implemented here.
And these people who are going by the polls in an election year, when this anti-crypto platform
becomes a political liability, then things will change.
You know, it's astounding to me, John, though, when you zoom out and think about it.
I mean, I've been here much later.
I came in much later than most people here.
I started in 2016, really got passionate about it in 2017.
But if you had told me in 2017 with conviction that we would be a platform
for parties in the United States government
that the president would be talking about this,
that we'd be arguing about the SEC,
it would have absolutely blown my mind,
and I would have told you that you were nuts.
So, I mean, the fact that we're big enough at Bruce,
I wouldn't know your feet,
Bruce and Simon, you guys have been here the longest probably,
but Bruce, like, I mean,
Is it at least bullish or a positive development that we're on the grand stage and have become a part of the most important conversations in the world?
Yeah.
I think it's, you know, I remember when it was the weekend, there was a really interesting weekend in 2013.
It was the same weekend, Overstock announced that they were going to accept Big.
Bitcoin, no, it actually was Tiger Direct was the first major retail announcing that they were
going to accept Bitcoin.
And it was the same weekend that Charlie Shrem got arrested and that Vitalik announced
Ethereum.
And it all happened right down in Miami.
And Bruce, HSBC got done for a truckload of money for the illegal drug cartels.
That's right.
$400 million, I think it was or something.
And.
And so that was the biggest news then.
I mean, to think about how far we've come since Tiger Direct,
you know, many, many times, especially early on,
I used to say Bitcoin is a binary play.
It's either going to work or not work.
And I said that less and less as time went on because the odds of it just not working, you know, going down to zero and just like, oh, you know, because if you're if you're really, really early, I mean, there was a lot of, that was all anybody talked about in 2011, 12, 13, you know, like is this real or not? You know, is this just a silly stupid hobby that's going to fade away and fizzle to nothing or is it real? And is it actually real and people will view this as money.
well what's cool about this narrative now is that we're we're past that you know there's very even
even peter shift has softened there's not major voices that are just you know there's people who don't
like it there's enemies but there's not a lot of major voices who are like oh this is going to fizzle like it's
It's kind of here.
You know, every newspaper in the world has a Bitcoin price feed, usually on the cover, right?
You know, interesting.
It's more common than the stock exchange.
You know, not every, not every newspaper in the world covers the S&P 500, you know, the American ones do.
But Bitcoin, you know, I've been all over the world and I see the Bitcoin price right at the top, you know, usually top upper right corner or something like that.
Yeah.
You know, it's accepted all over the world.
Everybody knows about it.
It's a real asset that's here to stay.
And I think that's what this narrative is.
It's, you know, I used to joke back in 2013.
I should find the tape that I said, I said, if the government really realized how this is going to work,
they'd kill everybody in this room right now because it's the only time you could have stopped it.
It's too big to stop now.
There's nothing they can do in the U.S.
And this is the interesting game theory that these tyrants at the top,
are going to have some cognitive dissonance dealing with.
It's the first time that there's been a real global asset like this,
that they can't stop it.
There's nothing the United States can do to stop Bitcoin.
They could declare it a felony.
And even I'd stop or leave the country.
You know, I mean, nobody smart is going to openly commit a felony.
I'm not that much of an activist.
But, you know,
Even that wouldn't kill Bitcoin.
It might even cause a rally because of the game theory.
China would probably put the gas on even further if the U.S. did that.
And then three years later, we'd be eating crow and coming back and say,
okay, we're going to un-ban it.
It would be like prohibition or something.
That's a really interesting narrative that's,
to me that's come out of this to have, you know, black rock, you know, which you can barely conceive.
I remember how big the finale news was when Ellie was first getting their tiptoes.
They did it actually sort of a little secret.
You know, they had, I went out to one lunch and Talek and Garzik and Peter Todd, you know,
host these folks for lunch and then they, you know, didn't talk about it much or they just kind of, you know,
a couple people would post here and there.
Yeah.
You know, they were almost doing it on the quiet because it was so unusual for a big company, a serious company. Same with overstock, you know, being very, you know, proactive and early in this. But now it's a thing, you know, thanks to Sailor and Nidig and, you know, the size and the scope of Coinbase and, you know, 50 million users in America and all this stuff. It's, you know,
You know, it's a really big deal. And I think it's not, not 50 million in America, but, you know, the point is it's a big deal. It's, you know, it's a different narrative than we've ever had before. I think it's exciting. So that's the positive of it. I'll take it. Go ahead, Simon.
Yeah, yeah. Thanks for bringing that up, Scott, because it is really, sometimes you really need to have perspective when you're going through these turbulence emotions.
But, you know, to think that, you know, in 2011, when I spoke at that first Bitcoin conference, there was about 50 people in a room.
It was a bunch of coders, hackers, and activists.
It was us versus the banks.
And we were never going to succeed.
It was just never going to be what it happened.
But there was just a bunch of people under a delusion that it could actually work.
And after that one day conference, this is what it used to be like.
We had to go around Prague.
And there was, you had to go around and pick up these secret codes around Prague.
And eventually you arrive at what can only be described as a crack den in Prague.
And you have to go around all these different places and you did a special knock on the door.
You knock on the door and if you knocked in the right way after getting this SMS, we walked into a bunch of people coding wearing their anonymous masks and there was a Bitcoin ATM.
And I purchased my first Bitcoin there at $3.
And I actually used one of them in a hacked up vending machine to buy one mask bar that I bought for one Bitcoin.
Oh, I'm sorry.
Yeah.
Yeah.
I know you've spent a lot of,
I know you've spent a lot of Bitcoin in the past that would be very expensive now.
Yeah.
But to think that, you know, we came from that.
And I remember when it was like one article every two weeks about,
you know,
one little cafe or something was except in Bitcoin and they suddenly get a rush
your customers.
And just everything we've been through is throughout all these cycles to be here.
Now, what is it?
13, yeah, that was 12, 12 years ago.
where BlackRock is applying for that ETF and we're really
You know, every single person in the world, there's not a person in the world that hasn't heard of Bitcoin wherever you go, which is just incredible.
And just a big thank you to everyone that's contributed to getting us here because it really is the ability to own your own money, spend your own money, and have an exit from the traditional financial system.
I cannot think of anything more important to fight for in terms of its impact on life, liberty, people and freedom.
Go ahead, Dan. I love that, Simon. Go ahead, Dan.
Totally agree with what Simon and Bruce were saying.
One of the things that really stands out to me and my co-chair Eric Porper down there
was the fact that now there's presidential candidates that are fully embracing this publicly.
And all the way down the ballot, too, you know, governor, Senate, state.
The Congressional Blockchain Caucus has completely blown up since its inception way back in 2014
when it was essentially just a few Mick Mulvaney and a handful of others.
But.
But, you know, RFK Jr. He's all in.
You know, used to just be, I think, Rand Paul, if I'm not mistaken, was the first presidential candidate, I think, to accept Bitcoin as a campaign contributions or would have been his father.
But now it's just become more mainstream.
And I think that's a pretty big testament to how far we've come.
Yeah, I mean, it's a part of the conversation of the presidential race.
I mean, it just literally doesn't get bigger than that.
And we already know the opinion of every single presidential candidate on the asset class a year and a half in advance.
Stounding.
It's astounding.
I can't think of a better way for us to wrap up than actually some positive words.
Obviously, guys, the title here, SEC Hints, No Spot Bitcoin, ETF.
We kind of litigated this here live before.
It seems like it was a pretty clickbady article by the Wall Street Journal that this might
just be technical.
the SEC asking for more information, we can debate what that means, but I don't think that
this puts any sort of kibosh on the idea that the ETF could be approved.
Anyone who thought it was likely to be approved still thinks so, and anyone who thinks
it was unlikely to be approved, shockingly still think so.
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