welcome to Money reimagined. I'm Sheila Warren, a reminder to listen to Us Weekly on the CoinDesk Podcast Network or wherever you get your podcasts. And we'd love to hear from you. Tell us what you think. Email us at podcast@coindesk.com subject line, money reimagined. This week you've got Michael and I are doing one of our riffs on the weekend review and what's happening in the crypto ecosystem. It's been a wild week with tremendous activity coming out of Congress United States, we also had the launch of Fed now, we also have movement on some of the cases that had been making their way through the courts. Michael, where should we start?
Well, I'll tell you big they're all sort of a federal match this in a way they all get to this question about policy and regulation and government involvement in those Boseman fed now being, obviously, the project for Faster Payments launched by the Federal Reserve. Look, I mean, go to your wheelhouse. Let's look at this. Look at those those bills that have kind of come making some progress now, a couple of them in in the house.
What I don't know that it feels like the very fact that it's happening is good. There is some degree of consensus. It's people are sort of happy. I think that I think it was the broad crypto bill, that the ones got into two committees that had six Democrats vote for it, people seem very celebrated that there was this, that the six of them were, you know, gave it this bipartisan feel, you know, this, maybe it speaks to our times, it speaks to our times that that's that's considered a win. Right. Wow, six people right now? Well, here's my,
here's my take to your point. Here's my take on the thread that connects fed now and these bills, right. So in the context of United States, these are huge things like I don't want to in any way discount that the fact that you know, comprehensive legislation on regulation of an entire asset class coming out of the House Ag and finance services committee together. It's just a gigantic deal. And and yes, six votes is six votes. But I mean, six votes by Democrats in a time when politics United States is so partisan is a big deal. And I think we should recognize exactly, but it's a big deal on context. Oh, yeah. Yeah, exactly. That's right. And then similarly, fed now is a big deal. United States, it is huge, that we're going to have real time settlement. But when you zoom out even a little bit in the context of the world, you know, so we can talk at length, I'm sure. The point being, you know, it's not the innovation that us thinks it is if you talk to most other countries in the world,
anywhere else in the world, and you can pretty easily move your money from somebody else's bank and pay with your current pay with your phone and whatever. And it's all done through a faster payment system that integrates you know, banks in a year and a now. And then
similarly, the comprehensive digital assets regime. I mean, well, we already have that in other places, we have mica, we have the MES and their rules, right. So yay, the US yay, you know, kind of like, you know, just taking on the conversation.
Yeah. Well, the Fed now, one is the one that's really I mean, that took about that take a long time, I suppose I'd want to know, why it why that in particular has taken so long like that, because this isn't even a particularly contentious issue.
Right? I mean, it tell you I have no idea. You know, it's
it's just it's a plumbing issue. It's it means that the Fed had to, you know, upgrade its own fed wire technology, I presume. But ultimately, this is just something that that that meant that you had to upgrade systems amongst a bunch of banks, and obviously, at the Federal Reserve, itself, whereas the crypto stuff is all about, you know, politics and division. Right. So, so I don't know, like, I often wonder whether one of the biggest issues with the United States generally in the world of money, and I think it's, it's, it manifests as both political and as technical. Is that just, it's been so entrenched, like it just, I think of the dollar and the dominance of the dollar, almost as sort of the curse of the incumbent in the sense that big, lumbering monopolies do not make change quickly, because they're sitting on this cash cow. And in a way, being the world's reserve currency manager is the equivalent of that in the world of money. So the sort of like the motive, the driving need to innovate, the competitive pressure is not there, if you're just Standard Oil, and you just sit in the middle of, of every oil deal. Right. And I think that that's, I just think there's a parallel there. And it may be one way to draw comparisons to both sort of legislative you know, inertia or just simply slowness and, and these sorts of technical technological changes in concept without of course, is the fact that we are Is this the deep political divide and the fact that it's like quite a dysfunctional political system. So. So I think these two factors probably come into play a little bit. But I don't know if I'm maybe making a leap with my monopoly comparison there.
You know, I think I think it comes back in my mind, fundamentally to the role that the US government sees itself playing in the world economy. And I think that is, well, I think we all know what that what that role is, you know, and I frankly, don't think that most would dispute that some don't like it, but I don't think people would dispute that the US is, to some extent monopolistic in the US dollar, rather, when it comes to its role and function in the global economy. And again, you know, opinions about this, and feelings about this are going to differ widely, as we know, but this kind of remains, in my mind, pretty self evident. Now, part of what I think you're trying to, you're seeing with a lot of movements, you know, digital Yuan leaps to mind, even digital euro is an attempt to chip away at that dominance. I think now, whether the how deliberate that is depends on who you're talking to. But I think there is a pretty, pretty strong understanding that doing that politically is not really the path. But maybe, maybe to your maybe I think this is the point you're making. Maybe Technically, there is some surface area there. Right. And we've talked a lot on the show about digital Yuan, and how it isn't so much that we think people are going to want to use the quote, you know, Chinese surveillance money, as people call it, right? Tend to hilarious if other money is not surveilled. But regardless, there is that, right. However, it's really about the form factor. And my view, you know, which is pretty well documented at this point is, once people really understand what programmable money can do for them, there's going to be tremendous demand signal. And further to the point, I think you're making, you know, the fact that fed now took so long this thing that other countries have already had in place for, you know, a decade that it took so long to get that across the line here does not necessarily bode well for the US has ability to roll out some kind of programmable money that would be competitive with other offerings in terms of form factor. Now leaning into that even harder is the reality that these two are these two big historic bills that went through committee vote, they passed out of committee last week to just frame that very quickly what that means they're not ready to go to the floor of the house for a vote, when that happens is a open question when there's no dates put on it, that I'm pretty certain they will go to a floor vote. It depends. The timing on that is TBD. We do think that both of these bills have the votes to pass the House and they go to the Senate, they may go to the Senate today. We don't know right remains to be seen. Now, that seems the more likely option to be very, to be fair, but you know, we have to see what happens how it plays out. The bills were not similarly passed, however. Right? So you had the market structure bill, the Fit bill sponsored by French Hill, which went through committee pretty cleanly had the six votes from the six folks that you mentioned, got a voice vote, which means the Ag Committee basically gave it the nod, moved it through very quickly, you know, and onward. Okay, that's not to discount the tremendous effort by a lot of folks, including folks on my team to kind of get that moving and explain it and whatnot. Stable coin, a stable coin Bill was meant to be similar. And then kind of the 11th hour, there was a massive blow up, okay. And that thing, between the Democrats and Republicans, and that thing really took a lot of doing to get it across the line, right. And to connect that to my last thought to connect that to my last thought, you would think that the US recognizing how technically complicated it was procedurally otherwise, to get something like fed now out there would want to support responsible, stable coin responsible, you know, asset back Reserve Bank put rules around stable coins, so that the technical aspects of dollar dominance would not result in an erosion of dollar dominance. And I think that because the politics around dollar dominance are so entrenched, people just discount the form factor think the technology underlying how you can use $1 won't matter. And I find that a bit frightening and I find it a bit naive. So I was very concerned watching the stablecoin process build process, as it were, such as it was, because I think there's a fundamental lack of understanding about just how viral this kind of form factor is going to go once it really picks up. And if I may, I think that all we're doing by not passing robust, stable coin legislation, which I think should be the US is almost number one priority in this in this space is really allowing, you know, stable coins that are not necessarily quote stable or that aren't necessarily you know, backed by assets that are healthy for the global digital economy, shall I say, to progress and proceed a pace I
haven't followed it closely enough. But I know that McHenry was upset that the White House had sort of derailed the negotiations around the stable coin. And so there was clearly a push on that side to undermine it. What's your understanding? Is that a fair characterization? And what is your understanding of exactly what the nub of the issue was that that?
Yeah, there are a couple of things that there's there's a lot of speculation still about it. But the things that seem pretty clear are there's a couple of issues that have been contentious for a while. One is the relationship between the federal government and the states when it comes to regulation. Okay, so as a general matter, that has been an issue, particularly for the New York Democrats for some time, just what is the role of some of the state regulators gonna be in this? And how do they preserve, you know, their, their surface area in terms of their ability to, to engage? That's kind of one thing that, you
know, Democrats are coming out in support of this, the state regulators in that case? Well, I
think there's just there's just a lot of feelings from various people. And it's all mixed about what should happen and what the role should be. And I think those are really healthy conversations. It's a little frustrating. It's like, there's the same issues that plagued the bill last year. So there's been a lot of time to presumably address some of those. And yet, you know, kind of here we are. So, which is not, I don't need to put that on the fault of any party. I think it's really complicated. Okay, so there's that. Another one is this issue of the role of certain federal regulators? So the Prudential regulators, and what is their role in all of this? Should the OCC have a role? Some of those things, I think, are complicated as well. And some of them speak to them here, the multifaceted
regulatory jurisdictional structure of the United States. It's right, but yeah, carry? Well, I
think that's that's the point. That's exactly right. So we, you know, to go back to my earlier comment, as much as we're like, oh, the MIS got this done so quickly. I mean, I'll be great. Like, one regulator makes the rules no need for, like, they have to collaborate with themselves to argue with each other, you know, split personality is
was people who don't know is the Monetary Authority of Singapore, which speaks volumes about what what the issue is, yeah. Okay. There, it was.
Right. Whereas here, I mean, you have multiple, the whole issue here has been a bit of a turf war, as we know, it's like, who gets to regulate this? What does that mean? What does it mean for their budget? How are they gonna get funded? You know, the DEA CCPA, which was the bill that came out last year, out of the Ag or the Senate Ag Committee, that one part of what made that so unique and exciting to the CFTC was that it had a funding mechanism for the CFTC. So keep in mind, the SEC has has funding that comes through the ways that it's able to assign user fees, it's able to get a fee. Off of part, it's ordinary activity. So it has a somewhat of a self funding mechanism. The CFC does not the CFTC has to get budget allocated every year by Congress. And that isn't fun. You know. So a lot of this is about the fundamental power dynamic between our agencies, which again, with the MS, it's just the MS. There was no power protest a turf war, there is I'm sure internally, you know that there's always there any organization. But apart from that ordinary sort of politic, there's not anything going on. It's at a macro level. That's the opposite of our experience here. Right. So I also think the passage of Fed now the timing of that did cause a kerfuffle in terms of, shouldn't we let fed now settle a bit before we do something with stable coins? And shouldn't we see real time settlement? Do this mechanism meets all of our needs? And above? Which I think okay, great. But that is not the point. That's just the point of what's needed here. Right. It's totally orthogonal question, an interesting one, but an orthogonal one. So, again, I think there's just a fundamental the conversations that various folks are having are just completely different conversations. almost never the twain shall meet situation.
But those actually sound like yes, deeply entrenched problems to solve, and a manifestation of a unique, you know, problems in the United States. It doesn't sound quite as sort of politically divisive a problem, as we've seen, like, you know, is the fact that this has been derailed by conversations around states rights, as opposed to I don't know, the sort of classic insertions of privacy issues and money laundering concerns and the stuff that is the the go to topics for the likes of Elizabeth Warren and others who sort of have this very anti crypto take. I don't know, what does that mean, like is or was all those issues? Also, there was they, you know, is the White House obstructing this a function of that sort of more politicized anti cryptos thing? Or was it just as you say there was just all these different issues?
Well, again, I mean, the White House is not monolithic. And I just wanted to be clear, Elizabeth, when we say the White House, we're not talking about President Biden. Okay, President Biden's views on crypto where we're talking about senior staffers at the White House across various agencies have differing views on some of this stuff. There is no question there are folks in This administration who are very anti crypto, they don't see the point. They think it's dangerous. They think it's just used for illicit, you know, finance, all this kind of stuff. Okay? There are folks who I think are neutral on crypto, they just don't really care about crypto, it's not that they have a problem with crypto, it's just not a priority, it is not a priority. What are their priority is establishing the Fed US dollar dominance, all those kinds of things. That's a priority. I will say at this moment in time. I don't know that there's anybody left the administration who is pro crypto, who thinks crypto is you know, the, the be all end all, you know, kind of thing, and that is certainly a challenge for industry, I should say. Um, so I think they ranges from quite negative and hostile to neutral, but just not a priority. And fair enough. I mean, there are a lot of things on people's plates right now. Okay. So I think that's where things stand. Now, you know, who has influenced where and this and that and all that kind of thing, and who had issues with what and who's talking to whom. And all of this is really complicated. It's really complicated. But I think also, we have to recognize that we're a little bit upside down when it comes to politics and United States right now. And I'll go back again, and just remind folks, you know, the fact that we had this bipartisan legislation move out of the house, this is a house that took 15 votes to get a speaker elected something that normally just floats through with kind of a perfunctory vote right, with a lot of cheering accompanying it. So the fact that we had a bill of this magnitude 200 pages long, the fact that this bill moved through in a bipartisan way, it's a really big deal. It's a really big deal. And that should not be discounted.
Okay, good. Yeah. So I mean, it is in the context of everything. It Yeah, it may speak to the fact and what do you what do you think is there for this, put the positive spin on it? What do you think is getting people over the line into that bipartisan world to say, hey, we need to do something on this? Is there a growing awareness of the competitive challenge from the rest of the world? Is there a view that this tech actually is something that should be viewed outside of politics that it has, you know, something in it for everybody?
Yeah, that's a great question. I think it's a number of things. So I think I think I do think there are some people that are concerned that the US is giving up a competitive advantage and offshoring technology. I think that's, frankly, a more minor concern than it should be, but it is present. I think there are some folks who are not pleased with how Gary Gensler is approaching all of this. And I think the judge Torres order actually came down. And I think, even if people agreed or didn't agree, it was clear like, oh, it's not just we take whatever Gary Gensler says, and he is automatically de facto, right. Something has to be done here. And then frankly, I think there are people who are just fatigued, you can count me in that bucket, Michael, at this point, right? Like, can we just get this done and move on with our lives, like everybody else in the world has, for the love of, you know, come on, you know, so I think there's some of that too, like, can we just get on with it, and do something and do something that's, that is historic, and that is a big deal? And can we just kind of like agree that this is complicated, at least get it moving. So I think it's a variety of things that are bringing people to the table. But I also think, lastly, to no means discount this. I do think there are people that are like, this is a really critical opportunity for and states, some of those folks named Warren Davidson, a passionate, you know, passionate speech on the floor. Sorry about the committee, you've got a number of people that that truly, Ritchie Torres gave a passionate, you know, speech about this. So I think there are people that truly believe and understand this. They are few and far between the folks who really have taken the time to understand this technology, but those who do I mean, they are just as committed to it as the rest of us. So I do think those folks exist. They're a minority the same way some of the other groups are a minority. And I do think just kind of wanting to do something is a big driver, which, hey, you know, I think that's I think that's right.
Well, the fact that the fact that this bills have been around that this particular bills, but some form of legislation has been around for a long time. You know, if you've been dealing with this and had any involvement at a committee level, you probably like that icon, let's just do something right. Like, it's just must be incredibly frustrating to be behind it. But I do I do now that you know, have you you've laid it out, I do take a positive take away from the fact that you know, you got six in a committee to do it. I think that's a very interesting statement, because it may be a way of measuring, you know, progressive awareness, progressive mindsets, right. It's just bit by bit. And yeah, there's folks coming along, as opposed to like, we, I think we walked away from, you know, in this crypto winter with all of the angst associated with it, and particularly, of course, the, you know, the actions taken against by Gensler and CRO that, oh, God, the US is really divided on this issue that this is a highly politicized everything else and I've written articles like this. I did do think that There has been a politicization of the issue and that there was that one particular review from the White House that was extremely, he had gone from being that tremendously forward looking EO, you know, two years or a year and a half ago to being this hardline thing. So it struck me that politicizing crypto was a legitimate thing to say. But maybe underneath that, right, we see we see the noise at the top, but actually bit by bit people are becoming educated, becoming aware, less divided, asking the right questions doing sort of making sure that that legitimate concerns are being addressed, and not bucketing all this into some sort of high level, you know, noisy attack on what it's all about. So, you know, that's, that's, I think, a positive takeaway from from it, that it's maybe it's actually the lesson of all democracies as well, like, just look at how people vote. And that's a you can walk away from it. And, you know, it's actions speak louder than words sort of thing. Unfortunately, you know, voting patterns have have become, you know, examples, you're showing entirely politicized as well. So, if in this case that bucked the trend, then it is a very interesting development in that sense. So yeah, yeah, I'm with you.
Yeah, it's it's all context, right? It's context and time we laws get made in the political environment in which they are brought forth. And some laws only get brought forth in certain political environments. And some laws, you know, don't write, but you have to kind of play the hand you're dealt, and this is a extremely, it's not the most complicated time we've ever had in American politics. But you got to go pretty far back. Divided, right?
Yeah. No, it is like, it's just a, you know, and you know, me, I put this down a lot to social media, like, I just think that we've created a, an information system, everywhere in the world, for that matter. But clearly, in the United States, it's played out in the most extreme way that has just created these entrenched sites, you know, it just is just my little platform will go on a lot here. But you really just need to look at where the biggest Twitter followers are amongst, you know, political figures in the United States. You know, let's not forget AOC is is just a representative from from from New York, and she's smart. She also she just knows how to get a rise, you know, how to really say, and she's got 13 million followers, right. And, you know, Marjorie Taylor Greene has got somewhere like 3 million, right? You find a moderate like Liz Cheney, and they've got, I don't know, 400 or 500,000. Or, you know, you know, these other guy is this middle of the road, people who are really smart. I bet Warren Davidson doesn't have too many, too many Twitter followers, right. So, you know, this is this is the reality we live in, we've polarized our conversation. And but in here, it does get back to crypto because these are centralized platforms that are have developed a system that Hugh's towards these instincts. Unfortunately, our political system goes along with it.
That's what I want to pivot us to is I am here in San Francisco, I did get to see the giant X that Eli Oh, yes. Down is that come down? What do you think happens to crypto Twitter now that Twitter is asked Twitter forever and forevermore because there's
so many like exchanges and one infamous one, of course with had the eggs in it. Every second exchange in crypto has or had extract. So crypto X sounds just like in another exchange?
What happens? What happens to crypto Twitter now that you've got Elon making my feet? I don't know how your feet is these days, but I can't find Yeah, well, I usually I just kept it's right.
Yeah, this is I got it. I've got no idea why Elon has blown this thing up? Because it's just
you find I don't know, it seems like it's just
I get that they might think there's a there's a value proposition in signing up and creating this sort of false scarcity premium and therefore driving people into scribing for the blue checks. But and they're the theory I suppose being that if you could have that subscription income, then you don't need to be beholden to these advertising driven algorithms. But you know, it's a they're just doing it seems to me everything they can to just throw cheap promotional ads that me I mean, I the number of unwanted stuff that's coming my way and how on earth is this person in my feed? It does feel like it's just the algorithm itself is just being absolutely distorted by all these changes that have happened to it and so it is much further away from being an open it already was, had gone away from being the open sort of follow a based feed. Now I just it's, it's I'm just getting a bunch of promos thrown at me all the time. Whether they are literally promotions or some other tweet that I never signed up for. So I think that's a, it's something just to recognize. And I think, like the battle that Elon is having, I do hope that he actually literally does have a physical battle with Mark Zuckerberg, I do think I would actually watch that. The martial arts, the mixed martial arts fight in the cage that would be worth watching, I must say. But there's sort of the Economic and Business battle over threads is pretty interesting. Because, you know, Musk is talking about having their data stolen. It's Twitter's data. And any of us that care about this stuff is like, Okay, thanks for
best advertisement for web three, social, possibly.
So you're now gonna go to you're gonna go and fight mark on your right to keep stealing our data and using it
is the best advert for for web three social that I could possibly have jumped up. I mean, you can make this
you do love it when your enemies, you know, start. It is really good. But you one last thing, because we shouldn't have to wrap this up. But you'd mentioned the courts as well playing a role in here. And like, you know, I mean, you mentioned judge Torres, but like, what do you what do you see happening? I mean, how, what's the
Yeah, you know, it's it's so funny, I was asked today, earlier today, you know, who's gonna go first who's gonna move first Congress or the courts? And I said, Well, normally, I would have said Congress, but with this Congress going into an election year, and with this Senate, like, I don't know, right, the courts were looking at a year and a minimum before ripple, the ripple cases at a place where the trial is completed, and people could appeal and you know, are they going to appeal? And we'll get against or even be the person there anymore? Who knows? Right? So you just can't really predict any of that I don't think and went the way it's going to play. But I do think it would Congress same I mean, there's not super positive signs from the Senate, this is a priority by any means. In fact, some, you know, killing it as a priority. Right? So I don't know, I don't know that either of these things, ultimately, is going to be kind of a depressing note to end on. But I'm not sure that either of these current pathways that we have leads us to the clarity that we need, I don't know. Because I think there's too much that could happen in the ripple, the set of cases, but ripple being sort of the one that's moving the fastest. And then Congress. So what is clear to me is that there is no clarity. And I think that it is, I think it is impossible with a straight face to look at this environment, everything that's happening, and say, Yes, it is extremely obvious how these assets are regulated, how they should be regulated, and you know, how people should conduct themselves in the industry. And that is, I think that is just an absolute ridiculous thing at this point to say, whereas I think a year ago, that wasn't necessarily a ridiculous claim to make, right? I knew that it was silly, but you had to know a lot more to be able to, you know, understand why that was silly. Now, it's just abundantly obvious. It's silly. So something must be done. And I wish I knew, but I wish would go first and all of that. So I think for those in industry, the answer is, you know, just keep educating, keep, you know, driving and driving use cases. And really, I mean, my view on this always, which I'll end with a close out with today is, you know, builder should focus on building people and policies to focus on policy, right? This is not, I do not think it's the time for everyone to flood the halls of Congress or to get crazy, and that's just not you, it's really, it's really not useful and never useful. I do think there are times when calling your congress person is valuable. And those are things that are important when there is a vote coming, etc. But for the most part, you know, recognition and all these things, our jobs building in this industry, it's very tough. It's tough, not just because of the regulatory climate, it's tough because the technology being built upon and with is complicated. You know, building something that is revolutionary is hard at policy is also an exceptionally challenging job, that it's always challenging. But at this current moment, there's so much detail and nuance that if you're not in it on a day to day basis, you couldn't possibly know where the minefields are, you couldn't know and you shouldn't be expected to. So leaving everyone I think to their strengths is really important with the hope that over time, whatever that timeframe winds up being, we'll be able to demonstrate the value and it'll become that will become equally silly. It'll become equally silly to say, this industry and this innovation is you know, has no value. And it's just fanciful and ridiculous when we come as silly as the statement that there is regulatory clarity in the US and everyone knows and knows what to do. And it's just choosing not to do it, those that'll become equally silly. And that is certainly my hope.
Okay, well, that's there you go. You took a negative to an optimistic because that's my message of hope from Sheila,
there it is. Turn it around.
Thank you very much, Sheila for that I appreciate all right. Well,
thank you also to all of our listeners for joining us this week. And stay tuned and join us next week for another episode of money reimagined.
