Bitcoin Infrastructure Bill and Legal Considerations w/ Joe Carlasare and Jason Brett (BTC038)

Preston Pysh (00:00:03):
Hey, everyone. Welcome to   this Wednesday’s release of the podcast, where 
I’m talking about Bitcoin. On today’s show.   I have two legal and policy experts, Jason 
Brett and Joe Carlasare. They’re going to be   talking to us about Bitcoin’s emergence into 
sovereign level game theory and regulation.   Recently the Senate has been working on passing an 
infrastructure bill that has a certain clause that   references crypto and it’s created an enormous 
buzz throughout the formation of the bill. Preston Pysh (00:00:28):
Since recording this discussion   last week, more amendments were proposed 
than what we talked about during the show,   and in the end, none of the amendments were 
added to the bill as it left the Senate.   Now it waits to proceed to the House of 
Representatives for their adjudication and   reviews, which won’t happen until the fall. 
Not only that, but during the conversation,   Jason and Joe talk about a much bigger bill that’s 
currently being drafted, that’s 58 pages in length   and what might be presented moving forward for 
much deeper regulatory guidance and policy.

Preston Pysh (00:00:58):
This was a fascinating conversation   that provides incredible context into the thinking 
and actions that are currently taking place with   respect to the future regulatory efforts. So with 
that, here’s my conversation with Jason and Joe. Preston Pysh (00:01:31):
Guys, I’ve been anticipating   this conversation all day long because, my, oh 
my, this topic is so hot right now. There’s so   much happening. There’s so much to talk about. 
So welcome to the show. Awesome to have you here. Joe Carlasare (00:01:51):
Thanks, Preston. Jason Brett (00:01:51):
Thanks for having us. Preston Pysh (00:01:52):
So the thing that everybody’s   talking about is this infrastructure bill. Can 
one of you guys just give us an overview of how   anything crypto-related worked its way into this 
infrastructure bill, give us a little bit of the   language that initially came out with it.

Now, I 
know there are amendments that are being proposed.   Talk all that to us and just give us a 
one over the world on what’s going on. Joe Carlasare (00:02:15):
I’ll let Jason speak to the   first part out, and then I’ll go over the 
language after we get that established. Jason Brett (00:02:21):
Yeah. So back in April, the Commissioner of the   IRS was testifying in the Senate Finance Committee 
and they were looking at gaps or ways to increase   the amount of taxes that are collected. And 
one of the identified areas by the commissioner   was better ways of reporting cryptocurrency taxes. 
And so the reason at the time, during that hearing   was actually just to help with the development of 
how to define cryptocurrency for a tax bill that   was going to be passed to help get better guidance 
to the way people file their taxes. However, that   bill never really came about. And what happened 
was with the development of this infrastructure   bill at the White House is, we haven’t had an 
infrastructure bill in this country, forever.   Roads, bridges, and the way they negotiated this 
to be bipartisan is to say that we need offsets.

Jason Brett (00:03:11):
So one of the offsets   that if you look at the White House 
fact sheet on what’s in this bill,   INVEST in America Act, is to actually collect 
more cryptocurrency taxes through the theory   that if there’s better reporting of what is 
actually happening in cryptocurrency. The IRS   commissioner and many in the White House feel 
like there’s no visibility into the taxes and that   there’s a lot of taxes that could be 
collected simply by better reporting.

Jason Brett (00:03:37):
So I think, and I’ll let   Joe then turn to the language and the fumbling 
of which really has gotten us to where I think   both of us are in disbelief that there’s 
this much attention being paid to this. Joe Carlasare (00:03:49):
Absolutely. So Joint Committee on Taxation,   correct me if I’m wrong, Jason, they had this 
figure, Preston, where they thought there’s   approximately $28 billion of under-reporting. 
How they came up with that figure, where that   comes from, who knows? We’re not really sure. 
But they said, “We’ve got this problem with   under-reporting. And what’s really terrible in the 
field is we basically say, “We’re not just going   to trust the self-reporting of all the consumers 
that are engaging in these taxable events,   we want to get the intermediaries involved. We 
want them to play a role in reporting and giving   information on a regular, mandatory basis 
to the IRS in some honeypot of information   that they can go cross-check against 
the individual returns that are filed.” Joe Carlasare (00:04:31):
So to do that, obviously,   they have to decide, who’s the brokers? Who 
are the people that are actually facilitating   or engaging or enabling the trade in 
digital assets? Is it going Coinbase,   is it AdEx, is it peer to peer, is it an ATM? 
Whatever it is, we need to find a definition   for this.

So the bill starts out with a 
definition of what is a digital asset.   It offers a very broad definition of a digital 
asset. It says any digital representation of   value. It’s your guess as good as mine what that 
means. That can mean NFTs, it can mean Bitcoin,   it can mean all these other tokens and ICOs 
and whatever. But that’s their definition. Joe Carlasare (00:05:06):
And then they further define it with brokers,   they say, “You’re a broker of a digital asset 
if you are,” and I’m just going to read it,   “any person who for consideration is 
responsible for regularly providing   any service, effectuating transfers of 
digital assets on behalf of another person.”   So that’s the original language and I’m 
sure you can guess that’s problematic.   What does it mean to effectuate the transfer 
of digital assets on behalf of another person?   They originally started out with language 
that said, facilitate. Facilitate obviously   miners, node operators, everybody that’s engaged 
in this decentralized distributed ledger.

They’re   going to be looped into that. They moved it to 
effectuate, which is still problematic. And this   is what really led the community to say, “Whoa, 
we need to pump the brakes. This is a problem.” Preston Pysh (00:05:53):
And that’s not even talking   the amendment language, effectuate. So help 
me with the definition. And any time you   start getting into the law, you quickly 
get into the definitions of terms here.

Joe Carlasare (00:06:03):
Yeah. Preston Pysh (00:06:03):
Help me understand the   difference between effectuate 
and what was the term, service? Joe Carlasare (00:06:07):
Facilitate. Preston Pysh (00:06:08):
Facilitate. What’s the delta between those two? Joe Carlasare (00:06:12):
See, this is one of those things where…   And I actually wrote a thread about this. I was 
basically explaining, I don’t believe miners and   node operators effectuate. Effectuate means, 
under law and typical dictionary definition,   means to bring about directly. And that’s not 
really what most miners are doing. They’re more   of a facilitating role. They’re directing 
their hash power. They’re routing it. But   effectuate, you think of, okay, if Coinbase is 
sending your Bitcoin to your hardware wallet,   that’s clearly effectuating transfer of digital 
asset. There’s no doubt there. But it becomes more   of a gray area when you get into, well, what about 
hardware wallet manufacturers? What about software   wallet manufacturers? Are they effectuating 
the transfer by developing this technology? Joe Carlasare (00:06:53):
And even though the language itself   gave us a lot of solid arguments to say, “That’s 
not effectuating the transfer of digital asset,   miners do not effectuate, noders do not effectuate 
the transfer of digital asset.” It’s always   cleaner from a legislative standpoint to have the 
specific language that says, “These things are   excluded.

They’re not part of what we’re talking 
about here.” So the problem, you point out is that   we don’t have a clear definition for what it means 
to be effectuating transfer of a digital asset. Preston Pysh (00:07:19):
Yeah. And it gets really tricky   because when you go from Lightning to Bitcoin 
at the base layer, the full node that I have,   the full node that you guys might be running, on 
that base layer, we’re all keeping a record of   every single affection that has occurred since 
the Genesis Block. But whenever you get into   the Lightning Network and you start thinking 
about, “Well, I’m now potentially collecting a   fee by just routing a data packet through my 
node, but not terminally ending up on my node,”   those are two completely different things, 
but we’re still talking about one piece of   hardware that’s sitting in my house, that’s 
onion wrapped and there’s no way to track.

Joe Carlasare (00:07:59):
Well, it’s clear from my perspective,   I think what they were trying to do is… Because 
the original language actually specifically   mentioned Dexis and they wanted to capture 
that activity. They didn’t want to say just   centralized exchanges that store Bitcoin. They 
wanted to capture activity broader than Bitcoin,   some of these other products and FPs and whatnot. 
That’s what led them to incorporate this broad   language. But then our people said, “Well, wait 
a second,” the Bitcoin people specifically, they   said, “wait a second.

This is going to potentially 
affect miners and affect node operators and all   these other groups.” So that’s why we’ve got 
the recent push to try to revise language. Preston Pysh (00:08:32):
So now you are hearing these   conversations on the Hill. Are you hearing various 
array of opinions on it? Or do you find that most   representatives are just open to learning 
and just trying to understand what it is that   they’re missing or are they more on the offense 
of like, “No, this is what’s going to happen.”   And I know it varies from person to person, 
but if you could just generalize some of the   different types of opinions and personalities 
that you’ve experienced what’s that look like. Jason Brett (00:09:02):
So I think if we start with Senator   Portman’s office, he’s the one that was bringing 
this language into the bill and he probably was   doing it with White House support. And it’s clear 
that his office was totally caught off guard.

And   you could tell from some of the statements he was 
making, he just wanted people to go away from his   office. And I talked to some people who said when 
they were asking for updates and things were going   back and forth, that there was this sense of 
exasperation, like are we really making this   big deal about it? And then sources in the White 
House commented off the record that they felt like   this was crypto’s attempt to try to water down the 
package. Because you have to remember the White   House said… They didn’t have a specific language, 
they just said, “Let’s collect as much taxes from   crypto as possible.” Seeing it as an attempt 
to water it down when really people are just   trying to define and explain how the system works. 
There wasn’t a lot of understanding around that.

Jason Brett (00:09:55):
What’s fascinating about this   dynamic is that the Republicans both, Toomey’s 
office, Pat Toomey who ended up introducing this,   is introducing it against another Republican. 
So the Senate’s 50-50, but it’s Democratically   controlled. So it’s very rare to have these top 
Republicans who are essentially the minority,   who are really fighting with each other over the 
language. And Toomey said that the language was   unworkable in a statement. So you had a little 
bit of a food fight.

And I think that there was   clearly education that had to happen, but what was 
scary and why you saw the industry get so involved   in these discussions so fast is because this is 
a bill that, it’s going right through. It’s going   through like a Mac truck. It’s a must-pass bill. 
This infrastructure bill is literally the crowning   achievement of Biden’s thing. And here we are 
with days. We don’t know how long to try to fix   this language. And again, remember this is a bill 
that’s like 2,700 pages. It’s 2,700 pages.

If you   remember Obamacare Act, no one actually 
read the bill, they just voted on it. Jason Brett (00:10:56):
So it’s been really hard to   get people to pay attention, but as they’ve been 
doing it, it’s clear that they’ve been listening.   Because to get top senators to make comments 
about a specific amendment, shows that actually,   I feel like crypto and Bitcoin’s really come 
of age. What I found funny, and I think one of   the conversations that was most interesting was 
this idea of, for so long the government’s been   cracking down on Bitcoin saying it’s worthless, 
it’s made out of thin air, it’s just used by   money launderers and terrorists. But the minute 
that we can now say that it’s used to pay for   our bridges, our tunnels, our roads, maybe we 
finally hit the first real use case for Bitcoin.

Preston Pysh (00:11:31):
Do you- Joe Carlasare (00:11:31):
Absolutely. Preston Pysh (00:11:31):
… think that that’s opened up the eyes to a lot of   elected individuals to see just the response for 
such a small segment in this 2,700 page document,   all the calls and everything that are coming 
into the office over this very small portion   of this bill. Do you think it’s opening up 
some eyes and people saying, “Whoa, hold on.   Maybe there’s a lot of money here. And last 
time I checked how my incentive structure   works for reelection, it comes down to dollars and 
marketing and all that stuff.” So are we seeing   a moment in Congress where the 
eyes are opening up and saying,   “What is it that I’m missing about this 
particular community?” Is that happening? Joe Carlasare (00:12:13):
I think that’s absolutely happening, and Jason can   speak to that.

But one thing I wanted to point out 
is that when they released the original language,   they essentially, and Jason alluded to this, 
Rob Portman, the influential senator from Ohio,   his staff came out and said, “This doesn’t affect 
holders and this doesn’t affect nonbrokers or   software developers or miners.” They had to push 
that back, even though there were credible legal   arguments why it would affect those sorts of 
groups. So this just tells me, and I’ll let Jason   speak to this if he’s getting the same sense, 
but my impression is that the original language   is more driven by just maybe not comprehensive 
thought. They just didn’t really understand the   tech. They didn’t get it. And they threw in some 
clumsy language and didn’t realize the problem   they may have created by using this language. 
So I don’t know if Jason has thoughts on that. Jason Brett (00:12:59):
I’ve never seen anything like it. But   it’s the dawn of an actual advocacy group.

you think about NRA or where things come from,   they’re going to look back at these last few 
days. Because as the crypto industry and the   folks like Coin Center and Blockchain Association 
have been really on the frontlines battling this,   there’s been allies of established nonprofits 
that have come to the aid of the crypto industry,   almost like the revolution. Like 
we’ve got France coming in. And   one of the main one is, 
which has been around since 2011. And fights for   people’s privacy rights online. If you go all the 
way back to the beginning, they were dealing with   this whole thing with Justin Bieber and privacy 
about writing for things that were copyrighted.   So they really are very fiercely defensive when 
it comes to people’s rights and privacy rights. Jason Brett (00:13:43):
And so they have mobilized,   on behalf of the crypto industry, they got up 
to 5000 calls to senators and they still have   numbers and ways to contact senators and 
the industry really has come together.   And Joe and I were talking about this, because 
of course there’s Bitcoin and then there’s   everything else and all these other things like 

But there really has been this unification   and as much as it was that the decentralized 
exchanges got removed, it was very clear the peer   to peer marketplace from the initial language got 
removed. And then when you think about what’s now   in it, where it’s specifically excluding Bitcoin 
miners. It has been a team effort. I don’t think   we can think about the tribes in this instance. 
And I think it’s been helpful to Bitcoin. Joe. Joe Carlasare (00:14:25):
It’s an extraordinarily…   My takeaway, Preston, is that this is very 
bullish, just in terms of, I know this is an   investing show and just market structure show, 
if you think about the standpoint of that,   we went from having very little force and lobby 
around a lot of these issues, even though there   were people, fantastic people working on it for 
years, they went right to the forefront. And they   got influential senators to pay attention to them, 
and potentially, potentially, fingers crossed,   we might actually get the language 
modified to clear up some of these issues.

Joe Carlasare (00:14:54):
That is, from just an investor standpoint,   I think that’s really bullish. They could have 
just said, “Go pound sand, we don’t care if this   creates problems for you and your community, 
we’re not going to listen to your concerns,   deal with it.” If they were really being hostile, 
because you hear this refrain all the time that   they’re going to ban Bitcoin or they’re going to 
ban these currencies. The fact that they went,   or they seem to be going out 
of their way to try to help,   at least some of them, to help alleviate 
our concerns, I think that’s positive. Preston Pysh (00:15:20):
Even it originating, based on what you   guys have said, originating out of the White House 
as a revenue source to the top line of the nation,   they’re not trying to ban it, they’re 
trying to figure out ways that they can   add to the top line. And I’m not one to promote 
taxes to it, I just find it interesting that   having been in the space for years, at this point, 
the thing that I always heard for years was, oh,   the government’s just going to ban it, and 
that’s going to be the end of it.

And it’s   over. You’re going to lose everything. And we’re 
just not seeing anything like that, correct? Jason Brett (00:15:53):
No, it’s not even close to   that conversation. It’s really seen as a lobby 
on certain aspects of personal rights and also,   as you said, a revenue source now where the 
Republican Party is taking Bitcoin for their   campaigns. I mean, so it’s really… And that’s 
when you start to see the changes, right? When   they get the donations that way in the form of 
the type of currency that we’re talking about.   But what’s fascinating about this bill, Preston, 
is that this is an offset type of bill situation.   So this debate actually has gotten so important 
that it’s actually, it’s threatening that the   bill might not even work.

And they’ve said that. 
Because if they change the language, they’re   going to come back and say, “Well, then we can’t 
collect this amount of billion dollars from it.” Preston Pysh (00:16:35):
No. I got you. Jason Brett (00:16:36):
And there’s no offset. In other words, the idea   of this bipartisan package is the taxpayers aren’t 
going to pay for it. Now, the joke is, Schumer’s   ready with a $3.5 trillion package and were they 
just going to let the money printer go BRRR. But   in the meantime, we’re trying to be straight and 
narrow here, so just every satoshi counts, right? Preston Pysh (00:16:55):
The mirage of it being paid for is disappearing. Jason Brett (00:17:00):
Yeah. Preston Pysh (00:17:01):
I have a note here to ask   you guys about El Salvador and whether that 
has entered into any of the conversations   as this infrastructure bill is taking place? Are 
they saying, “Hey, well, I mean, this stuff is   now legal tender in other countries.” Are people 
saying that? Or is it much more focused towards   trying to make it work for this particular bill 
and to raise the revenue that they’re going after? Jason Brett (00:17:23):
Well, I have not, Preston, seen   anything really come up regarding El Salvador. 
I think those are two separate issues.

I think   that the administration is not necessarily 
that favorable to El Salvador. So it gets   tricky. Because, I mean, as I’m sure you know 
and I’m sure a lot of your listeners know,   there is this question about how much Chavez has 
influence over the current El Salvador regime.   So Chavez out of Venezuela, who we’ve had to do 
sanctions on, there’s questions about members that   surround the current president. And so it’s played 
very cautiously from a foreign affairs standpoint   as to how far to really follow the El Salvadorian 
model. And there’s also a bit of arm’s length,   what exactly is going to happen here? Is Chavez 
in the background, trying to get something out of   what El Salvador is doing with Bitcoin? So they’re 
really watching it very carefully from a sanctions   standpoint.

And I wouldn’t say it’s something that 
crosses over into what we’re doing here in the US. Joe Carlasare (00:18:19):
Yeah, I’d agree with that. I mean, from just a   general legal standpoint, I think one of the most 
interesting issues on that front with El Salvador   remains these statements and potentially some of 
this policy, I think, coming from the IMF. And   the IMF essentially saying… They issued a veiled 
warning against El Salvador’s adoption of Bitcoin,   nothing too explicit. But then there are 
these provisions that I’m not intimately   familiar with them, but my understanding is 
that the IMF and the World Bank institutions,   they do respect the sovereignty of certain 
states to select what is legal tender   and recognize that. So that’s going to 
be interesting to see if they now tweak   the language to weasel out of that issue and no 
longer accept what El Salvador has elected to do. Preston Pysh (00:19:02):  So Jason, you had said that there was 5000 
calls that were made. And I’m assuming that   was just in the last couple of days.

Is that 
a high number relative to other topics that   are going through with bills? Or is that normal? 
Give us a sense for what that number represents. Jason Brett (00:19:21):
That number’s actually pretty normal to   high for what you would expect from an advocacy 
standpoint. So if you think about it, it’s   actually trying to get somebody to pick up the 
phone and call or send an email. So it’s pretty,   again, it’s pretty significant when you look at 
it from the perspective of there wasn’t really   anybody even ready to make these calls.

a lot of the calls are just ready to go, script,   you get what you need to do and you call in as 
a grassroots. So it’s very, very successful to   reach that and still have more people calling. 
I mean, if you look at Twitter, you can see- Preston Pysh (00:19:54):
Oh, yeah. Jason Brett (00:19:55):
… Jack Dorsey. Jack Dorsey actually   retweeted and said, “Call these offices, encourage 
these senators, go for the Lummis, Toomey,   Wyden amendment.” And so it’s Senator Cynthia 
Lummis from Wyoming, Senator Pat Toomey from   Pennsylvania and Senator Ron Wyden from Oregon 
who is a Democrat. So it’s this bipartisan   leadership of three senators who are pushing 
for this amendment. And they’re encouraging   everybody to call all 50 senators’ offices, 100 
senators’ offices to help them with getting what   they’re going to need, which is 60 votes for the 

And you should see that vote tomorrow. Joe Carlasare (00:20:30):
Preston, so there’s actually… And I think it’s   important just to mention it, although it probably 
has very little chance of passing. Jason, correct   if I’m wrong. But there’s actually two amendments. 
There’s the first one, Ted Cruz, the senator of   Texans proposed, which basically said, let’s 
scrap this whole thing. Let’s just get it out of   the bill. And actually, some prominent advocacy 
groups have backed that. And Jason can probably   speak to that. But then there’s the amendment 
that was just referred to by Jason, the Lummis and   Wyden and Toomey one, and we can go through that 
if you want, to explain how the language changes. Preston Pysh (00:21:02):
Before we do that one, I’m curious, Jason, what   do you think of the one that, the Texas amendment, 
that’s just basically saying, scrap the whole   thing? Do you think that that has a probability 
of passing or is it pretty low probability? Jason Brett (00:21:15):
Well, it’s Senator Cruz, and he’s gone out on his   own here on the Republican side.

It’s a bipartisan 
bill, so it’s just really, when you only see one   senator, it might get some votes, but throwing 
it out is not really, to be honest the way that   the industry should be working with Congress right 
now. We should adjust the language and we should   realize it’s an offset. Because throwing it out 
puts the whole bill in jeopardy. And so there’s a   little bit of give and take here. I mean, I’m sure 
there are a lot of people hardcore, who will say,   “Throw it out, don’t do it.” But that would 
then mean it would have to be somewhere else. Jason Brett (00:21:49):
And if we’re talking about   legitimate taxes that need to be paid and we set 
it up in a way, in this bill where at least it’s   much, much better than where it was 
before, that’s to me the way we want   to be known. Because if you think about it, if 
we push so hard and then we get it thrown out,   the IRS is still going to be there tomorrow. 
And we don’t want to get the IRS and   government out to just get us.

So we want to 
just make things, in my mind that go with the   amendment. It’s a nice idea with Cruz, but there’s 
really, you’re then not offsetting anything and   it’s a bipartisan package. So there’s a little bit 
of compromise, I think here. And it’s perfectly   fine language that’s in there now from the 
amendment from Lummis, Toomey and Wyden. Preston Pysh (00:22:27):
Let’s talk the amendment. Joe Carlasare (00:22:29):
Okay. So again, just to recap,   we’re talking about broker. What does it mean to 
be a broker of digital assets? So what the new   amendment does, the bipartisan amendment we’ve 
talking about, it then excludes certain actors   from being a broker.

From number one, anybody 
who’s just validating digital ledger transactions,   they’re not a broker. Okay? Node operators, 
miners, those categories of people, not going   to happen. They’re not brokers, they don’t have 
to report, no heightened reporting obligations. Joe Carlasare (00:23:01):
Number two is those selling hardware or   software for which the sole function is to bring 
in a person to control private keys which are   used for accessing digital assets on a distributed 
ledger. That’s your treasurers, your nano ledgers,   those sort of things. They’re not going to be 
in this. And also software wallets, they are. Joe Carlasare (00:23:17):
And then the final one is the most broad.   It says, if you’re developing digital assets 
or their corresponding protocols for the use   of any person, provided that such person are not 
customers of the person developing the asset. So   that’s the broad one. That’s some of the elements 
of tokens and DeFi and some of these other things. Joe Carlasare (00:23:35):
The most interesting from a Bitcoin perspective   is that first one, because it says, we’re going 
to exclude folks that are validating distributed   ledger transactions.

However, they did not take 
the next step to deal with Lightning or in Layer 2   issues. Obviously, folks, like Jason you pointed 
out that are running Lightning nodes, they are   technically taking compensation. So that’s part 
of the standard of the bill. You can’t let the   perfect be the enemy of the good because this is 
obviously a big improvement, this amendment, but   there is some concern that this could potentially 
pose some problems for Lightning operators.

Preston Pysh (00:24:09):
So then, let’s say that gets pushed through and it   gets approved, can that be updated? Or can there 
be a follow on bill that specifically addresses   that, that could be in conjunction with some 
other major effort? How would that be addressed   or adjudicated in the future? Do you just have 
to allow the judicial system to figure that out? Joe Carlasare (00:24:30):  I can speak to the judicial system, but 
I’ll hand it over to Jason first for   the likelihood of being amended or conference 
committee or some other things legislatively. Jason Brett (00:24:39):
Part of it would be the interpretation. So   what originally happened with this bill, it’s not 
the best solution is to have a legislative record.   So that would mean we probably should ask those 
three senators if they would say on the floor,   this is not intended for Lightning node operators 
and then sometimes they’ll issue a conference   report and it specifies it’s not as strong as the 
actual wording being in it, but it’s clear.

And if   it ever does go to court or there’s a question, 
it’s clear what the intent of the bill was. I   think that’s… I mean, the good, trying to explain 
Lightning to US senators where the average age is   over… I mean, you try to talk about a node… I’ll 
never forget during the LIBOR hearings, there was   one congresswoman who was trying to explain what 
a node was or she was just trying to pronounce   it. She was like, “Is it a nod, is a… I don’t 
care. What are you doing with all these things?” Jason Brett (00:25:29):
So you have to recognize there’s   the amount of time that we’ve had, where people 
are literally working around the clock on this   and trying to explain some of these things, that 
would have been really tough reach to try to   build that in to this.

I don’t really think that 
Lightning node operators should worry about it,   I don’t think they’re in jeopardy. I think you 
want to think about it again, Preston, like   we’re collecting taxes here. So it is really that 
much revenue to get from Lightning node operators.   It could be addressed in the future 
and it could be clarification,   even from the IRS itself to say, “This is not 
what we’re looking to collect taxes from.” Joe Carlasare (00:26:03):
It is a mess. Even right now, absent this bill,   Preston, folks running a Lightning node, I don’t 
know if you run one. But if you’re receiving a   couple of sats for routing a transaction, 
that’s a taxable event, which is really   annoying. It’s just for the sake of simplicity, 
trying to foster innovation, this technology,   we need to clean it up. It’s a mess. And we 
need to fix it, obviously, pay your taxes. I’m   not saying don’t pay your taxes. But to pay a two 
satoshi routing fee just seems absurd in my view.

Preston Pysh (00:26:33):
I totally agree with you guys.   And when you just look at the sheer 
size of the Lightning Network today,   relative to the base layer, it’s very small, 
relatively speaking. And if you would think about   the revenues that are being generated through 
routing on Lightning, it’s not anything that I   think the IRS wants to spend its time trying 
to chase down either. But with that said,   in five years from now, I could see that as being 
a location where there is going to be, especially   for large businesses that conduct a lot of 
business to business type transactions, especially   in payment clearance.

So if you’re Visa or you’re 
MasterCard and you’re using these rails to reduce   your expense structure, because it immediately 
clears, those are the businesses that are going to   be huge beneficiaries of Lightning, in my humble 
opinion in the future. And they are going to have   substantial revenues that are kicking off 
of just that routing, I would suspect. So   they’re going to need something. I would imagine 
their lobbying game is on par. Correct, Jason? Jason Brett (00:27:33):
Yeah. And I think in that case, what   you’re talking about will probably be resolved 
at the IRS level. And that is where you can   still have Congress help influence maybe from what 
you’re saying, there might be a certain threshold.   If you get above a certain threshold on your 
node, then you’d have to do the reporting. And   so that’s something I think that can be worked out 
and should certainly not be forgotten, in fact,   could be tomorrow that we introduce a bill to 
direct IRS to do that or come up with rulemaking   around that.

So it’s something we want to stay on. 
We don’t want to wait five years to find out, oh,   it’s just all of them. So that might be something 
that when we actually have time and have slept,   can actually talk about maybe what this 
is going to look like down the road. Preston Pysh (00:28:11):
I’m curious if you’ve seen   traditional banks, because I mean, their lobbying 
effort has to be off the charts as far as   how long they’ve been doing it, just all 
that. Are you seeing them interject into   this particular piece of the bill to fight it? Or 
to make it worse? Or just in general, how are they   involved right now? And what’s their point 
of view because I mean, this thing is   basically going to disrupt that entire space? Jason Brett (00:28:42):
It’s funny, I’m   reminded a few years ago, in an Uber 
going into DC and someone was asking   just a little bit of what I do with 

Lobbying for Bitcoin. I was   explaining, “Well, the banks don’t really like 
us. And obviously, it’s the largest bank lobby.   The government really doesn’t like us and what 
we’re trying to lobby for.” And I remember the   guy turned around and said, “I wouldn’t take a 
job like that, someone be liable to knock you off.   You’re going up against really powerful forces. 
And the banking lobby is the powerful force.” Jason Brett (00:29:08):
I don’t think they got involved   in this one. And I think there’s a reason why. 
It’s just recently been a change where banks,   as you see in the news, like Wells Fargo 
and others are starting to look at how to   custody Bitcoin.

And the American Bankers 
Association actually, as of July 15th   put out an understanding cryptocurrency memo. 
It was the first one for their members. And   it’s actually quite interesting because they 
talk about trying to partner with crypto   companies because they’re making so much 
revenue to help banks with their revenue. Jason Brett (00:29:35):
So I think there’s this   now acceptance of crypto, it’s a fascinating read, 
actually, because it actually gives you use cases.   And I never thought there’d be a 
day when I’d be reading the American   Bankers Association guide to banks and 
they’re explaining things like DeFi,   how to do lending, how to do interest rate 
accounts and they equate everything in the crypto   system to the banking system.

So I don’t think 
that to them this was that much of a concern.   Now, when it comes to trying to do anything 
related to banking or get a bank charter,   that’s quite a different story. And obviously, 
the Caitlin Longs and others of the world have   seen there’s a lot of pushback on that to try 
to keep the players entrenched where they are. Preston Pysh (00:30:11):
I listened to an interview with Caitlin recently,   and when she got into the risk of immediate 
clearance or clearance happening in 10 minutes   and the rehypothecation risk when traditional 
banks are trying to or they’re just accustomed to   re-adjudicating their books on a daily basis 
at the end of every day is everybody looks to   make sure that things have cleared and they assess 
that risk at that pace and everybody’s on the same   frequency. Now you’re dealing with the custody 
is something that’s clearing every 10 minutes and   the risk structure is just 
totally different. And so   that piece, is there anything else that you 
guys would add, on the challenges that are   being faced there? Or how it’s being viewed 
optically from a policy standpoint? Is there   anything that you’ve heard that you think 
is worth exploring or talking about? Jason Brett (00:31:03):
Well, I think one thing that’s interesting is how   we’ve seen the SEC chairman come out and give a 
speech just yesterday, Gary Gensler, and basically   try to lobby his own version of what he wants 
to see happen in the cryptocurrency industry.   So it’s clear things have really been sparked 
from this crypto tax being discussed in such   a public way.

Because it’s very possible he had 
plans or certain things he wants to see happen.   And this was his chance now. He’s realizing, 
well, everyone’s talking about on the Hill.   And then there was a very large bill 
introduced by Representative Don Beyer,   was very comprehensive, almost 60 pages 
in length. It’s very evident that right   now everyone’s trying to stake out their 
turf. And it’s no longer an exercise. Jason Brett (00:31:49):
And so Gary Gensler coming out also   was very interesting. I don’t know if we’ll get 
to that. Because he really set up a system that’s   important to understand, again, just 
what’s happened in the week of exactly how   all of the tokens in the system are 
going to be treated, what his plans are,   the way he sees the platforms 
and really what he expects   of exchanges as far as coming to register with the 
SEC. So Joe, I don’t know if you feel that.

To me,   that was the biggest jump in that he came 
out with that while this is happening. Joe Carlasare (00:32:17):
Yeah. And to directly answer your question,   Preston, my view is that you just need more 
certainty in the form of legislation. I think   you’ve got various bodies on a regulatory basis, 
trying to cobble something together to make it   work. But there’s really, with respect to custody, 
with respect to record keeping, with respect to   how you deal with some of these things 
internally at an institution that’s holding   Bitcoin or other digital assets.

guessing, doing their best guesstimate, at this   point as to what is legally sufficient. But really 
the Beyer Bill that Jason referred, provides real   comprehensive definitions of what these things are 
under the Bank Secrecy Act and gives them clarity   that they need to do the custodial services 
that are going to help this industry grow. Preston Pysh (00:33:02):
We’ll cover that last, the   Don Beyer Bill, that’s the 60 pages. It sounds 
like it’s the real legislative diss that’s going   to be introduced in what we’re doing. What we’re 
dealing with right now with the infrastructure   bill is just a small sample of what’s to come 
through that. But before we go there, let’s talk   about the Gensler speech.

So he had a huge speech, 
I found it a little hilarious. I didn’t know if   you guys saw the tweet from the CFTC commissioner 
today, talk to… Yeah, I see Jason nodding his   head. Let’s talk about the Gensler speech and 
then that response between the commodity side,   the regulatory body for the commodities 
side and all these responding to it as well. Jason Brett (00:33:43):
I think it’s important. I mean,   so I’m an ex regulator from the FDIC, and I was 
there during the financial crisis in ’08, ’09,   so I saw the bank collapses and working in all 
the different scenarios with AIG. It’s important   to understand where Gary Gensler is coming 
from. So he’s the regulator at the CFTC during   the financial crisis, and after the crisis, 
he’s the one whose crowning achievement was   expanding the authority of the CFTC to actually 
regulate derivatives. And that there was no   ability to see what were in the derivative. 
So that was a huge accomplishment for him.

Jason Brett (00:34:13):
So he left that, he did a lot of   teaching and classes to learn about this industry. 
And here he is back, and it’s like, I’m laughing   because this is such a Gary Gensler thing to do, 
is, “All right. Now we’re going to expand the   powers of the SEC, let’s bring all the crypto 
exchanges in and this is my master plan.” And   it was actually very well thought out in terms 
of, you heard him talk about the concept of   Bitcoin and everything else and the tokens.

he’s talking about an exchange. What he’s trying   to say is, “Can you really sit here and tell 
me that if you have 50 tokens on your exchange,   they’re all not securities? There’s 
got to be some securities in there.” Jason Brett (00:34:49):
And so it’s a very subtle thing,   what he’s talking about because when 
he talks about coming and register,   you’re hearing about coming in and register. It 
isn’t necessarily just the token company that,   oh, we have to go register with the SEC, what 
he’s actually alluding to is that the exchanges   themselves might come in and the exchanges would 
have to register. Because what he’s saying is,   if you have one security token on your exchange, 
you need to come register with the SEC. They are   the Securities and Exchange Commission. So 
it would make sense to eventually see all   the exchanges and maybe having to register 
with the SEC. And that’s essentially what   he’s looking to create.

And that’s what 
he’s fighting for with all this money. Jason Brett (00:35:27):
And what I think is really   interesting about that, and Joe can get to the 
tweet on the CFTC and that interaction about   how Bitcoin is treated, is if you think 
about it, then, Preston, that means that   then the SEC has… So let’s say I’m Bryan Armstrong 
and I walk in and I sit down with Gary Gensler,   we’ve got 100 tokens to my platform, 
then Gensler can just be like, “Okay,   security, not a security, security,” it’s a very 
subtle thing. And it’s a [crosstalk 00:35:50]. Preston Pysh (00:35:49):
This sounds painful.

Jason Brett (00:35:50):
Yeah. And so that’s going   to have a lot of effect, if that comes to 
fruition, obviously, where the SEC really is in   the controlling seat of deciding what tokens get 
listed on exchange, just like we dealt with the   New York bit night license from years ago that 
I’m sure you remember, was a disaster. But yeah,   no, Joe’s much better on the Bitcoin 
definition. And yeah, let him go to that.

Joe Carlasare (00:36:12):
So to lay the groundwork for this,   and I saw a tweet by Nick Carter basically 
attesting to the fact that this is an   influential speech, that it’s something that 
we’re going to look back historically on,   it’s going to have its moment in time. This is 
a speech that he’s giving to the Aspen Security   Forum. It’s a nonprofit, it’s mostly focused on 
security issues, international security issues.   So there’s an overarching theme that he 
brings up several times in this speech   about national security and doing what is 
necessary to protect national security. Joe Carlasare (00:36:43):
The interesting thing I thought the takeaway was   that he really wants to lay the groundwork from 
the beginning.

In the speech, he starts out going   all the way back to Halloween in 2008, the depths 
of the financial crisis and Satoshi Nakamoto and   these messaging boards. And then he works his 
way all the way up through the ICO bubble,   through the tenure of Chair Clayton, then gets to 
where we’re at right now. So it’s a great history. Joe Carlasare (00:37:10):
I think what a lot of observers   took away from this, at least legal 
observers that I’ve spoken with,   is that we expect a little more, because of what 
Jason was talking about, a clear and regulatory   regime.

We’re getting some of that at the margins. 
But the big takeaway is that he thinks the   definitions of security as applicable to tokens 
are clear as day. He said that, “They’re clear,   they’ve been clear since the 1930s. They’ve been 
clear through decades of case law. And regardless   of what anybody wants to couch it as a different 
technology or a new innovation, if it looks   like a duck quacks like a duck, it’s a duck.” 
That’s basically the takeaway from this thing. Joe Carlasare (00:37:47):
So he draws a dividing line.   He says, “Here’s Bitcoin, and here’s what it 
is and how it’s different. It’s a commodity,   it’s not under my jurisdiction,” the only thing 
that would fall under his jurisdiction really   is the market structure aspect of it. “But 
the actual commodity itself is not under my   jurisdiction.” But then there’s all these 
other things. And he says, basically that,   “I don’t care if it’s a stable coin, stock token, 
stable value token, if it’s a security, if it’s   backed like security, if it falls under the 
Howey Test, that’s what it is.” And he says, this   comment echoing former Chair Clayton, basically 
saying, “In all these things I’ve seen,   I haven’t seen one of them that doesn’t look 
like a security.” All these other tokens.

Preston Pysh (00:38:28):
So I mean, he’s effectively   saying it’s Bitcoin and everything else. Joe Carlasare (00:38:32):
Exactly. He wouldn’t even answer   the Ethereum question. A couple of 
times he actually said something like,   “You can ask me three or four times I’m 
not going to comment on any other thing   besides Bitcoin.” There was a funny back and 
forth between the moderator and him, at different   points. So that’s interesting to me. Obviously, 
we’ll watch that carefully. But I think what   people were hoping for is a comprehensive 
framework to analyze all these things,   and really what they’ve stuck to, both in their 
public comments and in the SEC versus Ripple case,   they’ve taken this position that you have to 
look at each individual token, you have to   assess them on a case by case basis to determine 
whether they qualify as investment contract. Preston Pysh (00:39:12):
So talk to us about the CFTC’s commissioner today,   he came out and basically said, 
“Well, if cryptocurrencies,” and   he used the word cryptocurrencies 
he didn’t specifically say Bitcoin,   which is interesting, because you would think 
that maybe he would, based on Gensler’s take,   some of them are considered commodities, 
well then the SEC has no jurisdiction   making comments or pontificating about it.

what was your read on that tweet today from him? Jason Brett (00:39:42):
A really interesting point. And the former chair,   Chris Giancarlo, of the CFTC, or crypto dad, he 
came out and he made a very good point, which is,   “We’ve realized, there’s no head of the CFTC 
right now. So Gensler is doing this power grab,   and there really isn’t anybody running the ship at 
the CFTC, we’re still waiting for an appointment   from the White House.” The CFTC has spent a lot 
of time and they’re also fighting for their own   budget, where they want to one day be able to 
regulate crypto commodities.

And they see that as   a world where if Bitcoin’s a commodity, then 
there’s nothing the SEC needs to do in terms   of investor protection. If I’m going to buy 
some cattle, do I go to the SEC and complain   if there’s something wrong with them? No, it’s a 
commodity. If it’s orange juice, it’s whatever.   And then there’s even in this Beyer Bill, 
they’re talking about changing the CFTC   language to actually incorporate Bitcoin as 
an actual commodity after cattle and stuff,   because just to make it clear, just to 
stop all this back and forth nonsense. Jason Brett (00:40:44):
But that was a very smart   comment by Giancarlo because he’s pointing out 
what’s the obvious, which is, it’s like you have   a captain of a team who’s already very aggressive. 
That’s why the CFTC commissioners are like, “Hey,   we don’t have anybody in charge here, but 
back off, buddy.” And they have put a lot   of resources into thinking about, particularly 
with as they come over to the Bitcoin futures.   And if you noticed, Gensler was talking about 
a lot of these things.

And that’s why I think   the CFTC finally just tweeted it out. Because 
it’s like, he’s talking about futures. Is he   just going to take over the CFTC here? It was 
very oversized, and it’s not… For those who   saw Gensler with the way he dealt with the CFTC 
back then, I mean, the expression was a bulldog. Jason Brett (00:41:26):
So there’s nothing to   be surprised about it. And I think it was 
smart for the CFTC to speak up a little bit,   and you might very well see some push now to 
actually get a chair at the CFTC.

So things can   actually be a little bit more on even ground. And 
I think the crypto community is going to need that   too, as far as protecting Bitcoin and everything 
else and keeping it in that realm. Because if you   had a strong chair at the CFTC, he’d just come 
out and be like, “Bitcoin’s mine. Just go away.” Joe Carlasare (00:41:54):  They’re very territorial. I 
mean, they’re very territorial. Jason Brett (00:41:57):
Yeah. So that’s one thing   that’s important to know. Again, from being with 
the FDIC is there is a little bit of calculus   because there’s so many different regulators as 
to what your turf is, even in times of crisis,   you’re always looking at maybe, oh, this 
is an area you want to regulate.

And again,   the CFTC has done a great job, they need a 
lot more money. But they’ve done a great job   laying out what it might look like as far as the 
regulation of commodities. They have the options,   the futures now. So they’re doing just fine. This 
idea that Gensler is promoting, is this concept of   he cares about investor protection. And he put out 
that cute little tweet, where he’s like, “Well,   I’m neutral. I’m technology neutral, but I’m not 
neutral about protecting investors, particularly   investors in Bitcoin.” And that’s maybe just 
a general question, back to you, Preston, is   what are the expectations when we buy Bitcoin? 
I mean, are there any assurances? Do we need   protections? I mean, I don’t think that’s what 
this community or this new invention is all about. Joe Carlasare (00:42:54):
So there’s really not any credible argument that   Bitcoin would be a security.

There’s never been 
anything advanced. I don’t think anyone disagrees   with that. He made that abundantly clear. But if 
you’re thinking from a territorial perspective   of what these guys are trying to accomplish to 
get the funds for their particular agency, if   you draw a dividing line and say, Bitcoin’s over 
here, that’s clearly not a security, that’s CFTC,   but everything else, NFTs, all these other assets, 
they’re mine.

I get to deal with them, I get to   lay out the groundwork. It makes sense why he 
would drive that narrative home in this speech. Jason Brett (00:43:28):
And by the way, when he did his question and   answer, Preston, it was very telling. And if you 
remember when Coinbase filed its direct listing   on NASDAQ, they said one of the risks was 
if we find out who Satoshi Nakamoto was.   So in terms of regulator speak, whenever they 
say something, they’re saying it to make a point.   So when he asked he said, “Oh, Paul Vigna, 
are you going to tell me who Satoshi is? Does   anyone in the 1000 people in this audience want to 
stand up and say they’re Satoshi Nakamoto?” Which   he’s joking, but he’s also saying if someone 
actually, if we find out who that person is,   does that change the conversation? Which 
is why Coinbase I think put that risk in   when they did their S-1.

[crosstalk 00:44:06]. Preston Pysh (00:44:05):
That’s really, really interesting.   I’ve never heard that take. I mean, when 
you guys are talking, I’m just thinking,   holy game theory Batman. You’re watching two 
regulatory bodies fighting over Bitcoin. I mean,   these are things that have been talked about for 
years, is just the game theory that happens at an   individual level where people wanting to get their 
hands on this then happens at a very small local   governmental level and then goes to a state level, 
goes to a federal level, then it goes to this   nation state competition. Never did 
I think you’d see infighting for it   to be under their regulatory jurisdiction 
because it can suck more revenues into their   political or their governmental organization. 
I mean, it’s just, this is wild.

Joe Carlasare (00:44:56):
For legacy, Preston.   Also legacy. Some of these guys 
they all want to leave their mark. Preston Pysh (00:45:00):
Yeah. Joe Carlasare (00:45:01):
Like Jason said, I fixed Bitcoin,   I fixed this market, I fixed whatever.   That’s a big part of it. The legacy they want 
to leave when they retire and say, “I did this.” Preston Pysh (00:45:09):
Wow. Jason Brett (00:45:11):  It is really the arrival of Bitcoin, 
Preston, in terms of being taken seriously.   I always say when you start to see something 
regulated and people fighting over it,   that means it’s really something of value.

So when 
I was at the FDIC, the joke would be, you’d go to   examine a bank on a Monday, leave on a Friday, and 
when you show up, they’re like, “Oh, we’re really   happy to see you here. But we’ll be even happier 
when you go.” The fact that you’re actually   showing up means you’re in existence, you’re doing 
well financially, but then you can just leave   because we don’t want you to shut us down. So 
there is that element now of, that the regulators   see the market, they understand where this is 
going. And I mean, it’s incredibly bullish when   you think about it, because it’s not only reliant 
on a tech source now with Bitcoin, but it’s being,   we’re seeing this fight takeout in real 
time over who’s going to get to regulate it. Preston Pysh (00:45:59):
So based on your comment   about the Satoshi Nakamoto piece, does that 
put Ethereum at risk based on the question,   and the way that he was responding to the 
people in that audience that were framing their   questions. The fact that Coinbase was writing this 
into their language.

Are the regulatory bodies and   the people at the helm of these organizations, 
are they signaling that that is the critical   element that makes something a security or not? Is 
that the founders and the creators are knowable? Joe Carlasare (00:46:31):
I think that’s part of it. Even going   back to Director Hinman’s speech, he talks about 
this concept of being sufficiently decentralized.   And he takes this approach where the 
asset can actually transition over time,   it could start out as perhaps an unregistered 
security offering or an investment contract,   and over time, it can become sufficiently 

And I think that that’s a   big part of their analysis. They also want to 
look at the expectations like Chairman Gensler   talked about this in his speech. He said, 
“Most of these investors, they come to this,   they buy these tokens, because they want to 
sell them 10 months later and have a 10X.”   That’s purely the expectations of profit 
from the work, entrepreneurial work of the   small teams that put these things into the 
market. That falls squarely under Howey.

Joe Carlasare (00:47:16):
So I think the invocation   of Satoshi Nakamoto is, if you have a big thing 
here that could potentially control this market or   influence the value of this thing, that 
is the risk. That then maybe it’s not   sufficiently decentralized. But obviously, 
technically, I think Bitcoin’s evolved quite   a bit where even he, she or they, Satoshi 
came about, they’d be able to influence   it. It’s just too distributed and diverse 
at this point. That’s my view, personally. Preston Pysh (00:47:43):
If they go to the exchanges   and they go to the Coinbase, they go 
to the crack-ins, and they say, “Hey,   all of these tokens, pretty much every 
token, but Bitcoin is a security now,   we’ve determined that.” What are the requirements 
for now… What does that change, if anything? Joe Carlasare (00:48:01):  So again, the way they’ve been shaping 
policy from Clayton to Gensler now,   is that they shape the policy through enforcement. 
That’s the key thing. They bring an action against   the Kittoken or the Telegram or against XRP. 
That’s how they’re laying the groundwork   on a case-by-case basis.

That’s frustrating, 
from a lot of lawyers and people working in   the field because we want to have this certainty. 
And that actually, we’ll get to in a little bit,   they don’t have the legislative ability at this 
point. They can issue action letters, of course,   but they don’t have the legislative ability to 
go and issue these 25 assets, these 20 assets are   securities, commodities, give that firm direction. 
That’s part of what is included in the Beyer Bill   we talked about, they actually are going to be 
able to issue I think it’s the top 25 assets by   market cap. They’re going to be able to give 
clear direction for these and classifications. Joe Carlasare (00:48:52):
But that’s a legislative   fix. And I think their position 
at this point we have to continue   to analyze these things on a case by case 
basis. We can’t publish a list one day on   our website at least right now under the 
law that says these tokens are X, Y, Z.

Preston Pysh (00:49:07):
Okay. So let’s talk about the Don   Beyer 60 page today size bill that is all about 
the regulations for Bitcoin, crypto, everything. Jason Brett (00:49:20):
There are bills that are introduced and talked   about pretty regularly. In fact, remember Congress 
with, at least on the House side, you have 435   members. So it’s like having 435 small businesses, 
they’re all trying to introduce bills. Not all the   bills make it.

A very small fraction of the bills 
actually make it to the finish line. But this   particular bill, what was striking is that he has 
not spoken at all with any of the regular Congress   people who actually are involved in this space 
and are working on things and talking about   Congressman Warren Davidson and Congressman Tom 
Emmer, who’s the co-chair of the Congressional   Blockchain Caucus on the Republican side. And 
then on the Democratic side, you have congressman   Darren Soto. And then there’s a bunch of others 
on both Republican side, mainly Republicans and   also some Democrats who’ve been really involved 
in helping to create legislation.

There’s even   a working group that they have, where they’re 
trying to figure out what legislation will look   like. And we’re talking years in the making. I 
mean, I’m thinking all the way back to 2016, 2017. Jason Brett (00:50:20):
So when a congressman just   comes along and drops a bill and says, 
“Here’s how the space is going to work.”   And he’s never had any conversations with 
his colleagues, there’s some skepticism.   And even Congressman Tom Emmer was talking earlier 
on this with CoinDesk and he was saying, “Bills   like this usually means it probably was generated 
by Yellen’s office.” So believe it or not, I mean,   legislation, whether it’s Federal Reserve 
or US Treasury, sometimes they want to   influence things in Congress and they’ll pass 
on what they think is really good legislation. Jason Brett (00:50:52):
I’m never comfortable with   that. I think it’s much better if 
it’s Congress acting on its own,   to figure out what legislation. They’re supposed 
to be the representatives of the people.   There does not seem to be… He’s never talked 
about the bill.

There’s no real explanation.   So it does look like just someone put together 
a really fancy 60-page bill, handed it to him.   And all he had to do was introduce it 
in Congress, which happens all the time. Joe Carlasare (00:51:17):
The takeaway is,   I’ve talked to some pretty well-respected lawyers 
in the field that they think this bill, out of   all the things, as Jason was alluded, all the 
bills that have been introduced over the years,   they think this one, this is the first one they’ve 
seen that’s comprehensive enough, thorough enough,   where it might actually become law. I don’t know 
if that’s the case. But in terms of just the depth   of the bill, and how it goes, divides every single 
agency and every single rulemaking authority,   it’s pretty, pretty thick. And somebody’s 
put a lot of thought into it. So it seems   unlikely that a congressman that doesn’t 
have a history with the space would have   that depth and that research behind him to put 
forward this.

So take that for what you will. Joe Carlasare (00:51:56):
But the bill’s title, the Digital Asset   Market Structure and Investor Protection Act. And 
they’re really focused on consumer protections,   a ton of new requirements on disclaimers, and 
basically new information on consumers for   what you’re buying when you’re acquiring 
these different things. But the clear   thing it provides is that it provides a 
statutory definition for digital assets,   which are going to be regulated by the 
CFTC. So it puts that in that bucket,   that’s their jurisdiction, they’re going to take 
care of that. And then another bucket for digital   security asset or digital asset securities, 
I think the term they used. And that’s SEC. Joe Carlasare (00:52:31):
So each one of them get a   little bucket that they’re in charge of.

gives you regulatory certainty for the top 90%   of digital asset market space. So if you go to 
probably the top 20 to 30 coins on CoinMarketCap,   they’re going to be issuing clear language as to 
what these things are. It has penalties built for   listing unregistered securities or assets that 
shouldn’t be on exchanges. So it gives you some   rulemaking authority to go after exchanges for 
just listing any X, Y, Z token without doing any   diligence or going through the proper protocols. 
It gets stable coins, it basically says that,   to the extent it’s a digital asset securities 
stable coin, in other words, a stable coin that   has underlying securities, that’s going to be 
SEC. But otherwise, it says Treasury has the   authority to prohibit dollar-based stable 
coins that are not approved stable coins.

Joe Carlasare (00:53:21):
So it’s really comprehensive. And it also   incorporates some of the things we were talking 
about earlier with respect to monetary instruments   under the Bank Secrecy Act. It formalizes 
exactly what you’re talking about, Preston,   about what do you need to do from a record keeping 
perspective, from a money laundering perspective,   from reporting requirements at the banking 
side? Really thickly, brief, comprehensive   language about what a bank would need to do to 
hold digital assets on their book and a client.   So from that standpoint, I think it’s really 
something that there was a lot of thought into it.

Preston Pysh (00:53:52):
Well, the one piece there that really   stood out to me on the stable coin part that it 
allows, did you say the Fed or the Treasury to- Joe Carlasare (00:54:00):
Treasury. Preston Pysh (00:54:00):
The Treasury. Joe Carlasare (00:54:01):
Treasury. Yeah. Preston Pysh (00:54:02):
So Janet Yellen will then have the   ability to say, “Hey, that’s not an approved 
stable coin effectively,” is what you said. Joe Carlasare (00:54:10):
Absolutely. The Fed has the authority to permit or   prohibit any US dollar or not just US dollar, 
any fiat-based stable coin, they can permit- Preston Pysh (00:54:18):
Any fiat-based stable coin.   When I think about this, the 
thing that pops into my head is,   I would suspect, and I might be dead 
wrong about this, I would suspect   that the US would want the private entities 
to run these stable coins, opposed to standing   up a central bank digital currency, simply 
because of the risk of having a technological   failure.

If they started transitioning to 
a central bank digital currency to replace   the existing dollar based digital system that 
currently exists with the Fedwire clearing every   four hours and ACH clearing every day to three 
days, that system has not demonstrated a failure. Preston Pysh (00:55:01):
And I suspect that policymakers   would be really concerned about replacing that, 
technologically and stepping into a new system   that could have these really broad macro 
implications if there was a technological   failure.

So how do they try to circumnavigate 
that? Well, just allow the private sector to   have these stable coins, and then we 
just provide a lot of oversight as to   how they’re doing it and how they’re actually 
backing it with actual US dollars out of the   system that currently exists today. Would you 
agree with that? And if you wouldn’t, why not? Joe Carlasare (00:55:39):
Well, one thing I forgot to mention,   I probably should have brought up is 
that this bill, the Beyer Bill actually   provides the Federal Reserve explicit 
legislative authority to create a digital   version of the US dollar. So the CBDC from 
the Fed is in the Beyer Bill, that’s there   as well. And I’ll let Jason comment further on 
a separate issue of their view on stable coins. Jason Brett (00:56:01):
So it’s really interesting,   since the beginning of the administration, 
believe it or not, stable coins are actually   seen as the biggest threat to the US dollar.

so it’s not really seen, especially remember,   it’s a Democratic administration. So it’s not so 
much big on what private sector might do. They   want to see the Federal Reserve be in charge of a 
central bank digital currency. And if you heard,   Powell, recently testify saying he thinks 
that the introduction of a CBDC would make   Bitcoin, stable coins, everything go away. Jason Brett (00:56:29):
The threat of the stable coin or the idea is you   have this thing moving 24/7 and it is sidestepping 
some policy goals that they have about the way   again, and this is what this whole space is about 
a lot, which is how the Federal Reserve governs us   from a behavioral economic standpoint. The central 
bank digital currency, there are forms like in the   Bank of England has explored this where the Fed 
might introduce it, but it is still going to be   private companies that are distributing it. So 
we might see that hybrid model. But what’s really   interesting is they’re talking about how the CBDC 
is also going to help them with the lower bound.

Jason Brett (00:57:04):
So here we are stuck with   these low interest rates, well, you could 
always just make a charge. If I have 500   central bank digital currencies, you could 
just say or in dollars, you could just say,   “I’m going to charge you $5 of that amount 
unless you spend it.” To get me to spend it.   So it increases the lower bound. And they’ve 
even talked about giving people interest rates,   like a bond like six or 7% to encourage people 
to get it. So where I think we’re going is you’re   going to see, because you’ve seen that a few times 
said by Yellen and you’ve seen that from the Fed,   is I think you’re going to see basically the 
Federal Reserve try to create a currency and   make it as attractive as possible so people will 
use that versus a stable coins to continue to   administer Fed economic policy the way 
they already do now through the banks.

Joe Carlasare (00:57:49):
And by formalizing the Beyer legislation   or a language that’s taken from the legislation, 
they clearly want to crowd out the competition,   I think. Because they’re going to be the 
exclusive gatekeeper for these. I mean,   no person is going to be able to transport 
or issue stable coin under this bill without   stamp of approval from Treasury. And as we know, 
even stable coins like USDC and USD, they have   underlying securities, they’re not just one to 
one peg with the dollar.

So that brings the SEC   back into the mix there, are they going to find 
that really, these stable coins are securities or   at least make that allegation. So it’s clear to 
me that they want to crowd out the competition. Preston Pysh (00:58:35):
Well, yeah. And if they’re interest bearing,   I guess they would be considered a security at 
that point. To Jason’s point, if they’re saying,   “Hey, we’re going to offer this much interest 
rate, if you basically don’t use it for   this period of time,” at the end of that period, 
you’ll receive this 1% coupon that would be   associated with not using it for whatever 
duration that would be associated with it.

Preston Pysh (00:58:57):
Now the other part, what was interesting about   what you said, Jason, is you’re talking about 
something that has a positive yield and something   that has a negative yield at the same time. And 
we’re also just glossing over the fact that the   government, the global government’s track record 
of spending, exceeding tax revenues, doesn’t   appear to be on a trend line that would reverse 
itself anytime soon.

So it’s interesting that   that’s… Do they just not understand that piece? 
Or do you think they actually truly do understand   that piece and they understand that Bitcoin’s 
really the only thing that’s not going to be   the base because of the decentralized nature of it 
having a fixed unit like 21 million coins. Do they   understand that? Or do they actually believe that 
this would make Bitcoin not a high demand asset? Jason Brett (00:59:50):
I think it would actually   make Bitcoin more valuable. Preston Pysh (00:59:52):
Yes. Jason Brett (00:59:52):
And so I think that perhaps there’s some political   gamesmanship happening when you heard the Fed 
say that. Because what’s so interesting to me   about this, in terms of the stable coins 
is, if you think about it, with Facebook,   when they came out in 2019 with Libra, everyone 
was criticizing Facebook because they were telling   people, you couldn’t do crypto ads on Facebook 
and then they introduced their own cryptocurrency.   And then the government comes really hard down on 
Facebook, which is really like saying, “No, no,   no, you don’t get to make money.” And now here the 
government is ready to introduce a white paper and   they’re going to introduce their own money, while 
not letting anyone really.

So I think if anything,   the goal is, the policy goal is to slow 
down the Bitcoin market as much as possible,   just to make it slog through so they can have 
the time that they need to build out this CBDC. Jason Brett (01:00:39):
And there’s also a lack of trust,   a little bit in the private sector. When 
you talk on the Hill, there are Democrats   that still see a lot of these products and they 
don’t differentiate a lot of this DeFi stuff from   credit default swaps.

They just think, “How are 
we really helping the unbanked with some of these   products?” So there’s still a lot of education 
needs to be done, both from the White House side,   I look forward to continuing to do in the 
administration, as well as in Congress,   helping Democrats understand, we have a lot of 
unbanked people in the country. And there’s a lot   of ways that stable coins could help. Even one of 
the Fed deputy directors, Quarles, actually came   out, who’s director of supervision and said, “I 
think there could be some use in stable coins.” Jason Brett (01:01:16):
So what you’ve raised is actually really,   it’s a big debate right now. We have 
two heavyweights in the Federal Reserve,   Quarles and then Federal Reserve Governor Lael 
Brainard. Brainard’s like the CBDC person, she’s   pounding that CBDC home, she’s driving the whole 
ship on it. And all of a sudden, Quarles speaks   up like, “Oh, maybe we just use stable coins.” I 
wouldn’t want to be by the water cooler with both   of them right now.

Because that’s a little bit of 
an infight in the Fed over which direction to go. Joe Carlasare (01:01:45):
Yeah. And just to echo the point made by   Chair Gensler in his Aspen Institute speech, he 
talked about Nakamoto creating this private form   of money and other actors creating private form of 
money. That’s not a new concept. That goes back in   our history for a long time. And he dismisses it 
with the notion that what really happens with a   lot of these private money is that eventually they 
just disappear and go bust. They’re not valid. Joe Carlasare (01:02:09):
So I think that from my view,   he’s dismissing the notion that private money 
has a long-term staying power. And I guess,   I understand [inaudible 01:02:17] has to take that 
position. But it’s fascinating because you read   that with some of the efforts to control stable 
coins and why they’re so focused on stable coins,   that really would be a serious issue.

right now, one of the main reasons why Bitcoin is   not used more as a medium of exchange is because, 
it’s primarily the tax code. The tax code makes it   completely untenable as a current medium of 
exchange, where every $5 coffee, having to   record that just becomes too cumbersome in large 
degrees. So I think it’s very self-serving to have   a tax code that inhibits Bitcoin from becoming, 
at least right now, a medium of exchange.

Jason Brett (01:02:53):
One final point on this too,   Preston, is we have our beliefs about what 
Bitcoin can do, but the Federal Reserve,   and just the government, has almost a 200 year 
history of being able to stamp out currencies   that they don’t want to deal with. Whether it’s 
state currencies, Wildcat banking era with private   digital notes. Government can come in and they 
feel like if they need to get rid of some stuff,   and they want people to use a certain thing, it’s… 
So there could be really just an under estimation   of how Bitcoin is going to just remain part 
of it. And that might catch them by surprise. Joe Carlasare (01:03:24):
Absolutely. Preston Pysh (01:03:26):
For a person who’s hearing this, that’s a hardcore   Bitcoiner, I think the whole stable coin, central 
bank digital currency, the real concern is on the   privacy side.

And if I have a digital wallet on my 
phone, and I have a central bank digital currency,   and the government doesn’t like me or they want 
to peer into all the transactions I’ve had over   the last 10 days, they can do some crazy things 
once you start talking about that. So does the   Beyer Bill address the privacy constraints of a 
central bank digital currency so that it aligns   with the founding principles of this country? Or 
are we starting to get a little dystopian here   and a little bit scarier in the direction that 
this is all going as far as privacy concerns go? Joe Carlasare (01:04:13):
No. At least not as far as the   Fed’s authority to issue this digital version 
of the US dollar. We don’t really get into too   much of the terms of that. They give them this 
explicit authority. They say, “Go do it and you’re   charged with regulations or issuing directives 
and guidance and how that works.” Where that,   repository of all that private sensitive drops 
of data is going to be, that is something I think   they just don’t have in the bill right now.

in the event we get movement on a digital dollar,   I think that’s something that’s going to be a 
huge push, because people don’t… I think privacy,   it resonates with common people. I mean, 
even this issue right now that we’re   dealing with, with the infrastructure bill, 
I think, folks, the notion that transactions,   every single movement of a coin is going to 
be sent off to some honeypot of information,   I think that bothers a lot of people.

I don’t 
think that’s the regulatory regime you want. Jason Brett (01:05:04):
And there’s been a couple of   hearings on this. And there’s also what’s called 
the Central Bank Digital Currency Study Act   in the House that would look to explore 
this. But what’s been raised by a lot,   and actually the Electronic Frontier 
Foundation, that talks about digital privacy,   is saying, do we really want to go this route? 
Preston. Because when you start talking about   this dystopian situation, I mean, that’s 
China. That’s the way they’re creating theirs   to follow everything their citizens are doing, 
continuing to control people in that country. Jason Brett (01:05:34):
And so there’s a lot of people and   you hear some who are strong Bitcoin advocates, 
rightly say, “Maybe we don’t need to go down   this route. Maybe we don’t want to.” Or, “Maybe 
it’s there’s no compromise.” The way it’s been   explained to me, and again, forgive the people 
who are running our country for not being that   technologically understanding of it, but they say 
to me, “Why can’t you just give me a currency but   not on a blockchain? Just give it to me and I’ll 
put it in my pocket and I’ll walk away.

And it   doesn’t have to be my identity associated with 
it.” That could be a very interesting concept. Jason Brett (01:06:09):
What I laugh about with that is, I think one day   maybe the government’s going to come down and say, 
“Wow, maybe we need Lightning. Maybe Lightning   should be the way we transact because we don’t 
have to get into this, who I am. And anonymity   is actually a good thing.” Right now everyone’s 
freaking out over Taproot.

How Taproot is going   to make things less visible on the blockchain. 
And does this mean it’s going to be more private?   Maybe that’s actually what the government’s 
going to need at some point to satisfy. Because   America is not a culture that is happy when 
people are just surveilling them all the time. Joe Carlasare (01:06:37):
Absolutely. Preston Pysh (01:06:39):
I think I would get a lot of crap from   listeners if I didn’t bring this one up, the ETFs. 
Talk to us about the timeline on this, I know   Gensler has just recently come out, he’s talking 
about it being cash settled and not spot settled,   which is an eye roll for me, because of 
just how I look at the gold market, and   the cash settled gold market on a 
derivative side. And I know, Jason,   you have a lot of experience on the commodities 
and derivatives market.

So I’m sure you’re   well-versed on the differences between cash 
settled and physically settled markets. So   why is he saying that? Why isn’t he saying that an 
ETF will be approved, that would be spot settled? Jason Brett (01:07:17):
Well, I think because he doesn’t fully   want to believe the way Bitcoin should work. I 
think there’s an element of with it being spot   settled or as you say cash settled, the fact 
is that you’re going to really have people who   are going to look at this and say, and to 
him it’s more of a way of tracking it. And   there’s a distinction between the type of 
ETF that he introduced. And Joe knows that,   right? Joe, the aspect of the type of ETF. 
But I think it has to do with the ability of   just the way he thinks the market should 
function. But yeah, let me turn it to Joe. Joe Carlasare (01:07:54):
Going back, and I think   anyone who’s interested in ETF should always 
start, actually start with Commissioner Hester   Peirce’s [inaudible 01:08:03] and how she lays 
out the issue. And really, she does a very   comprehensive, thorough analysis of the Section 
6(b) of the Exchange Act to basically say,   they’re reading this heightened requirement 
into the act.

They’re basically treating   this commodity market different from every 
other commodity market that gets approved,   because they’re basically, they want this 
standard where there’s almost no fraud or   manipulation of the underlying spot market. 
That’s really the key focus that they’ve had. Joe Carlasare (01:08:31):
So the problem is that, and they’ve   identified this in the denials is that they can’t 
get enough information about the, primarily these   offshore leverage derivative exchange and the spot 
markets abroad, and if there’s volume being faked.   And because we have this whole global ecosystem, 
and a lot of it lies outside the United States,   we can’t ensure the integrity of the underlying 
market. The problem is that that is not,   in Commissioner Peirce’s view, 
that is not within their role.   They’re not supposed to ensure perfect 
stability of the underlying fraud market. Joe Carlasare (01:09:00):
So if you take that and you take   the denials of the registration statements 
that have been issued over the years,   there clearly has to be something that 
changes within the market structure,   to give them the ability to pivot.

There has to 
be something, even if it’s a political solution,   they can come forward and they can put in some 
regulatory regime for these exchanges, or at   least the US based exchanges, then they can say 
now, the market is sufficiently mature, we’re   confident enough in the US regulated exchanges 
that the volume’s not being faked and there’s no   problem with the spot. And that opens the door 
for us to pivot and say we’re finally going to   give the green light to the ETF. That’s my view 
of it personally, just assessing the groundwork. Joe Carlasare (01:09:39):
Right now, I think the consistent issue is we   don’t really have any movement or new regulatory 
regime on the exchanges. I think that comes and   I think that gives the eventual green light. 
Two things in terms of the timeline, which you   asked about Preston, number one, and as many have 
pointed out on the official agenda for the SEC,   there’s nothing on there about crypto, despite 
the fact that we’ve been talking about and they’ve   been making public statements.

Some have read 
that to be an indication that an ETF is not close.   It’s really unfortunate on that front, that they 
haven’t fast-tracked this. But I think personally,   that if we get some regulatory guidance on 
exchanges or some legislation on the exchanges,   that is going to open the door to 
them pivoting on this ETF issue. Jason Brett (01:10:24):
And just to clarify,   it’s about investor protection at the end of 
the day and how he feels. And that’s why he’s   looking for these stricter rules. Because again, 
remember, whether it’s Bitcoin or Bitcoin ETF,   he’s looking at everything from, 
“How do I protect the investor?”   So he obviously sees some risk in not doing it 
in a way that would make the most sense.

He wants   to do it in a way that’s just going to protect 
investors. And I think that’s because he’s not   fully comfortable yet with the Bitcoin market 
and he wants to see some of these regulations. Joe Carlasare (01:10:55):
Yeah. And the question is, when is he going   to be comfortable? Because no matter what they 
do, a lot of the trading in Bitcoin is overseas,   outside of their jurisdiction.

And it’s all 
interrelated. The trades going between Binance and   Coinbase. And if that portion of the 
market is outside your jurisdiction,   what has to occur, Mr. Gensler, Chairman 
Gensler, to get this through? What do we   have to have when you’re never going to be able 
to regulate a lot of these institutions overseas? Preston Pysh (01:11:21):
My concern is more on a   systematic front.

So if you go to 
a person today, and you say, “Hey,   buy some Bitcoin,” and they just don’t want 
to have to open another account of exchange,   how are they buying? They’re going on to their 
fidelity account or whatever exchange that they   are using for their traditional stocks 
that they own and they’re buying GBTC.   All of that capital, all that money is flowing 
into this trust, this one trust, because there’s   no optionality for people to do it in their 
traditional stock investing brokerage accounts. Preston Pysh (01:11:52):
And so I guess I would make the   counter argument of the failure to approve 
an ETF is funneling all of this money into   this one thing that could potentially 
have, maybe they have custody issues,   maybe they’ve run into whatever 
problem with the GBTC vehicle that is   working and is listed on all these exchanges. 
I don’t know. It doesn’t make any sense to me.

Joe Carlasare (01:12:15):
That’s exactly Commissioner Peirce’s comment.   Hester Peirce said the almost verbatim thing, that 
the fact you’re driving these people to unsafe   markets, markets that would be refined if we had 
an ETF. And it’s also unfortunate now that we’ve   got the Canadian ETFs which are in place and they 
have no issues with those [crosstalk 01:12:34]. Preston Pysh (01:12:33):
Yeah. Jason Brett (01:12:35):
And I hate to disappoint you,   Preston, but the government doesn’t do a 
lot of things that make sense and that’s   why we have these kinds of conversations. And this 
is where at least just from a political angle, we   have to realize is Gensler just got a letter from 
Senator Elizabeth Warren.

And the whole narrative   has been cracking down on Bitcoin, too much 
energy, all these other things. So if Gensler,   maybe he actually wants to do what you’re talking 
about. Maybe he thinks it’s the right thing to do.   But if he comes out and does that right now, and 
they’re talking about money launderers using it   and all this stuff, it’s like, oh, why don’t 
you just let the terrorists into the country   kind of thing by him approving a Bitcoin ETF. 
So unfortunately, I think it’s being delayed   for political reasons. And I’d like to see 
this sooner than later. Because to be honest,   it’s almost getting to the point where it’s 
criminal, because it’s been a 12 year marketplace,   there’s others that get ETFs, there’s just 
absolutely no reason why it can’t just get an ETF. Preston Pysh (01:13:32):
Trillion market cap. Jason Brett (01:13:34):
And it’d be easier and   safer for a lot of consumers who, like 
you say, go to a 401k and everything.   It’s creating unnecessary risk by having 
it all be in one trust.

So unfortunately,   I’m not optimistic, but maybe by early 
next year, we might start to see it. Preston Pysh (01:13:48):
And you know what? I could   totally see that happening. I could totally see 
that playing out. Hey, the BlockFi news. Are   you guys well versed on any of that? The 
New Jersey, I know it was in New Jersey,   and it was in a couple of other states where they 
put a stop order on them taking on new clients   and it’s a concern with them paying 
interest. What do you guys know on that? Joe Carlasare (01:14:08):  I’m most familiar… The cease and desist order 
in New Jersey, I think it’s Alabama, Jersey- Jason Brett (01:14:15):

Joe Carlasare (01:14:16):
Yeah. So again, this is actions by the states,   because each state has their Bureau of 
Securities in New Jersey. And essentially,   the argument that they have is that the 
BIA, BlockFi Interest Account, constitutes   an investment contract. And let’s go through the 
Howey analysis, okay? You’re putting your Bitcoin,   so you’re giving something of value to 
BlockFi, they’re then taking those funds,   they’re rehypothecating it, they’re investing in 
unregistered securities or investing in tokens.   We don’t know what they’re investing in, to be 
honest. And then they’re giving you a yield. So   you as an investor are giving something of value, 
and then you have a reasonable expectation of   profit from the management and entrepreneurial 
skills of BlockFi. That’s Howey, right there. Joe Carlasare (01:15:01):
This is state law. So it’s   not federal. So it’s a little bit of 
distinction, because New Jersey’s law   and defining a security is broader, arguably 
than the federal law. But that’s the framework,   the fact that they are advertising their website, 
we’re going to give you X amount of yield on   your tokens.

I can see why regulators have an 
issue with that. I’m not going to get into my   prediction as to where I think this goes. But 
you can see why this presents concern. You’re   falling squarely under contributing something 
of value, handing it to others to get a profit,   to get some sort of gain. So you have to really 
justify why isn’t that an investment contract. Jason Brett (01:15:38):
It reminds me a lot of 2017   with the ICOs, because you did have a lot of 
states that would stop certain ICOs. And so   the states are starting to look carefully at 
all these new marketplaces. And the problematic   thing about attorney generals getting involved 
in this is to me that they’re now also another,   it’s not just the SEC.

It can be the states that 
can say, “You’re a security.” And BlockFi had its   lending license. You can get that consumer 
lending license in the state. So it really   puts anyone who has an interest bearing account 
in a little bit of jeopardy. The fix on this,   and to me, the policy goal should be for our 
community to think about… So like CDs, right?   CDs are actually securities. But when they’re 
in a bank, no one cares. Because it’s time   deposit 90 days. So there’s your benefit. And 
banks are allowed to do that. Now, if you have   a brokered CD, you buy it from your broker, 
that’s why then it’s considered a security. Jason Brett (01:16:34):
So I think we have to give   it that context of within a bank, yes. Is it 
a security? Absolutely. But it’s giving us   interest and this is what people are buying. 
I mean, it’ll be driven by consumer demand.   I don’t think, and especially if you look at 
other jurisdictions, these kinds of interest   bearing accounts are very attractive 
and not going away.

So again, it’s this…   Sometimes, I mean, even being a former regulator, 
it’s just frustrating. Because if it’s not the   federal government, it’s the state. And it does 
concern me that it’s three different ones. So   I’m hoping either the states work together 
or the federal government’s able to give some   resolution to this. And I think they’ll have to. 
To me, those have been very popular products.

Joe Carlasare (01:17:14):
Yeah, I think they’ll have to, too. And   the interesting thing is, I think we’re going 
to figure out how they’re getting this yield,   where it’s coming from. Obviously, the BlockFi’s, 
over time their yield’s been decreasing. So   there’s a lot of different reasons and supposition 
about why that’s occurring. But if they’re   taking consumer funds and investing them in 
illiquid tokens to get some sort of yield,   that can be problematic. They’re going to be 
in the SEC’s crosshair, potentially there. Preston Pysh (01:17:43):
Fascinating stuff. By the   time this airs next week, we’re going to know 
the outcome of whether the amendment on the   current infrastructure bill was approved or 
not. I’m curious, what do you guys think,   if you had to put on your prediction hat? Do you 
think that the amendment’s going to get accepted? Jason Brett (01:18:00):
I think it is going to get accepted.   I think at this point, there’s been enough noise 
and with the efforts we’re going to see tomorrow,   by the way, by the time the states will already 
know about it, but we’ll see the Washington Post   is going to have banner ads, telling people 
to continuing to call their senator offices.   If you look at Twitter, you can see nothing 
but this is how you call your senators.   There’s been enough pushback on this where 
I think that ultimately they’re going to… Jason Brett (01:18:27):
They wouldn’t have gone   through the changes of all this language, 
if it probably wasn’t going to be accepted,   it also has three senators supporting it, which is 
a pretty big deal.

So I think we’ll be living in   a world where it’ll be passed. The joke will 
be for all your listeners that by that time,   all the senators will be on break and the House 
is going to pick this up. And because the House   doesn’t actually come back till September 20th, 
it’s just going to sit there for 70 days, and then   the House will get to it. But in the meantime, I 
do think we’ll see it at least move to the House. Joe Carlasare (01:18:54):
Yeah, I generally concur with Jason   there. I think the fact that Portman’s office, 
the main architect of the original language,   seems to suggest that miners and node 
operators and wallet manufacturers,   they’re not included. It strikes me as well, 
what’s the argument for not changing this?   You got an amendment here, it clarifies 
it, pulls this out. Why not fix it? And I   haven’t heard anyone, even folks that are very 
hostile towards crypto-like Elizabeth Warren,   no one’s come out and said, “We need to keep 
this language in there,” for any good reasons.   So absent some justification for not making 
the change, I think that we’ll get the changes.

Preston Pysh (01:19:29):
Say it doesn’t go through   and then it goes over to the House at 
a later date. And the House introduces   the amendment. Could that happen? And if 
it would, would it then have to come back   to the Senate for adjudication that they 
added the amendment and the Senate didn’t? Jason Brett (01:19:43):
I don’t know that they would   actually do it, because at that point, 
they know the Senate’s rejected it. So   usually when you go to conference, it 
just might not be on the table anymore.   You might see it introduced but 
then when it goes to the House,   the next step is that it’s going to the president. 
They’ve worked out a lot of that in conference. Preston Pysh (01:20:02):

I got you. My final   question for you guys or highlight 
that you guys can put out there,   it seems like the Beyer Bill is really the big 
talking point, the thing to really focus on out   there, that’s going to happen in the future. Are 
there any professional congressional staffers that   people that are listening to this should reach out 
to or representatives themselves that they should   reach out to, to try to influence and try to 
educate? Or how can a person who’s listening   to this, who has an extensive amount of knowledge 
of the power that this is going to bring, have an   impact? How can they do something? What would 
be your recommendation? And if there are names   of people that can be contacted or influenced 
or whatever, what would be your recommendation? Joe Carlasare (01:20:47):
I actually penned a piece with a friend,   Amanda Cavaleri for Bitcoin Magazine about 
this, that I ultimately think that this is   a new era we’re moving into, where we’ve got 
40 plus million people that have some exposure   to Bitcoin in this country.

And I think Bitcoin 
related activism, single issue voters that are   passionate about Bitcoin and the hope it brings 
for a lot of people, are going to get involved   and they should stay involved. Obviously, this was 
a galvanizing force over this infrastructure bill.   But there will be many other skirmishes 
and discussions along the way. Joe Carlasare (01:21:18):
We’re not going to get to a   10 trillion or a $50 trillion market cap 
on Bitcoin unless we engage with these   policymakers on a regular basis and let them 
know that Bitcoin matters and they shouldn’t   just push us to the kids’ table. We’re going 
to increasingly be a force. And I would say,   regardless of where you’re at, you can be in 
a blue state, red state in the United States,   even locally, you should be having this 
dialogue, making sure policymakers are informed   that they understand how important this is, that 
they gain awareness of how the technology works.   And all it can be sometimes is just a simple call 
with your congressman, call with your senator say,   “Bitcoin matters to me, have you thought about 
Bitcoin legislation that can be positive? Have   you thought about reforming how Bitcoin is taxed?” 
These issues require a consistent dialogue and   not just a one-off where, we’re out of the woods 
here and it’s not going to be a problem anymore.

Jason Brett (01:22:11):
I would say definitely think   about reaching out to Blockchain Association 
and Coin Center and the associations that are   working on this legislation as a good 
first step and there’s a lot they’ve…   They’ve actually gathered 100 organizations 
together to help support this initiative of   trying to get this one particular thing 
changed. So that’s really remarkable.   He’ll probably kill me for saying it, but 
Landon Zinda’s a really good friend of mine,   and has been amazing since 2016.

So he started 
out as a staffer for Congressman Tom Emmer, he was   there at the birth of the Congressional Blockchain 
Caucus. I remember when he was so excited when he   first bought Ethereum. He’s really done a 
masterful job of understanding the space,   of understanding the technology and he actually 
moved over to the Senate Banking Committee. Jason Brett (01:22:55):
So if you approach Senate   Banking and you have ideas there probably isn’t 
a lot that goes out about cryptocurrency simply   because it’s such a niche subject. But Landon 
would be an excellent resource. And is someone   we have to thank a lot. I remember talking 
to him a few years ago when we first met,   and his vision of how he tried to want 
to bring clarity so this industry could   flourish. He didn’t want to see 
it happen in other countries. Jason Brett (01:23:18):
Chris Land is also good. He used to work   with Caitlin Long in Wyoming and he’s the rep for 
Senator Lummis. And he’s also who’s created what’s   called the Innovation Caucus, Financial Innovation 

So caucuses are these clubs, are great   ways to come and you can do show and tell, they 
have different topics. You can look at it on their   website. I think they want to discuss things the 
use of Bitcoin mining, is one of the subjects,   they want to talk about central bank digital 
currency. So there’s lots of those caucuses. Jason Brett (01:23:47):
And by the way, and I do this   for Bitcoiners all the time and I’m doing 
it for somebody tomorrow, anytime, for free,   I’m happy to help anyone just if you reach out 
to me.

Happy to give you some pointers and guides   if you try to figure out what to say or how to do 
things, and hopefully we can create a resource for   Bitcoiners everywhere with not feeling intimidated 
by the process. I always encourage people it’s a   democratic country, you don’t have to know 
everything about DC. Don’t be afraid of it.   If you have an idea and you want it done, it 
could be your local town, it could be your state,   Washington DC, you can still walk in there 
and give your idea. You’re paying citizens. Preston Pysh (01:24:25):
All right, gentlemen,   this has been just so enjoyable for me. We have 
got to do this on a quarterly basis where we   just re-cage and talk about everything that’s 
changing, is about to happen. If you guys are   willing to do that, I would love to have you back 
to do that. That’d be awesome. Jason and Joe,   in that order, give people a hand-off 
to maybe your Twitter account or   where people can learn more about you or 
anything that you guys want to highlight.

Joe Carlasare (01:24:50):
I’m at @JoeCarlasare, really easy one. It’s   my name. Hard last name, but if you search 
for @JoeCarlasare you’ll find me on Twitter.   You can also find me on my firm’s 
website at SmithAmundsen LLC. Jason Brett (01:25:02):
And I’m @jason_vtf. VTF is for Value   Technology Foundation. It’s a nonprofit 501(C)(3) 
that actually does education on this subject   for some of the agencies in the government. 
Not a lobbying organization, but definitely   helping with education and always looking for 
thought leaders to help build out the space. Preston Pysh (01:25:25):
Gentlemen, thank you so much for making time.   I’ll have links to all of that in the show notes. 
And yeah, I look forward to doing this again.

Joe Carlasare (01:25:32):
Absolutely. Thanks Preston. Jason Brett (01:25:34):
Thanks. Preston Pysh (01:25:36):
Hey, so thanks for everybody   listening in to the show. If you enjoyed the 
conversation, be sure to subscribe to the show   on whatever podcast app you’re using. We 
really appreciate that. And if you have time,   leave us a review. So thanks for joining us 
this week and we’ll catch you next Wednesday..

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