00:00I want to get our conversation started with the crypto market structure bill the Clarity Act. You've talked about getting it done by year end.
00:08What's the path forward from here to passage of that bill. Right now we're working at the staff level every single day to get the votes necessary in committee to get it out of committee.
00:24So these are bipartisan discussions. They are down at the granular level. We're making tremendous progress at that level to try to get a bill ready before the banking committee votes on it, making sure that incorporates both parties changes and has been vetted by industry.
00:46So they'll understand what they're being asked to do from a regulatory point of view.
00:52Yeah, I think about how far it's stunning. The crypto industry has come to being fully embraced by government now this election day versus a year ago.
01:00There is, however, one hurdle, and that is Senate Democrats. How do you get them on board with this crypto market structure bill?
01:06Well, we have been working with them since July and lately intensely to make sure that they're comfortable with the draft, that they understand its ramifications, that they have an opportunity to weigh in with language that they want.
01:26These conversations at this point are very successful. Yes, they're slower than we hoped, but unlike the Genius Act, where we had to renegotiate the bill after it came out of committee, we want to have all those negotiations occur before the banking committee votes on it.
01:47Did President Trump's pardon of the Binance CEO have any kind of impact on the talks, maybe slow things down a little bit?
01:55Not to my knowledge. Market structure is very different, of course, from that issue, the issue of the pardon.
02:04And so we're trying to stay focused on market structure moving forward rather than looking in the rearview mirror.
02:12Overall, when it comes to regulation, SEC Chairman Paul Atkins has said that there's a lot the agency can do without Congress to regulate crypto using exemptions as well as other tools.
02:23Should the agency move forward on its own in this way or should it wait for congressional action, do you think?
02:29I think it should do both. Part of the problem, Scarlett, in the last administration was there were no clear rules of the road.
02:38And so you had companies getting heavy fines through enforcement action and fined for rules that didn't exist.
02:50And so the industry is very interested in seeing long-term solutions, clear rules of the road that can only come through legislation.
02:59That said, I'm very pleased that Paul Atkins is taking the approach at the SEC that there are things they can do now so companies, while they're waiting for legislation, can move forward with their plans.
03:15This is a fast-moving industry. It's a very large industry now.
03:19And the sooner they have clear rules of the road, be they at the SEC or through law, the better.
03:26I want to get your take on the fight over stablecoins between the banking industry and the crypto industry.
03:32The Genius Act, as you know, prevents stablecoin issuers from paying yield, but nothing prevents exchanges like Coinbase, for instance, from paying yield in the form of rewards to those who hold stablecoins.
03:43And the banks are upset about this and want to see this fixed in the next bill.
03:47So how do Republican lawmakers choose between the banks who are kind of the stalwarts of TradFi and the crypto industry?
03:56Well, personally, it was so difficult to get Genius passed that I kind of hate to reopen Genius.
04:06I can understand the frustration of the community banks, but I want them to know that they're going to have access to custody and include and incorporate digital assets into their offerings as banks.
04:21Three states already allow for community banks to custody digital assets.
04:29Those states are Louisiana, Virginia and Wyoming.
04:33And I expect when this bill passes that other states will also allow for banks to bank digital assets.
04:44This is the future.
04:45This is the 21st century economy.
04:48And we need to make sure that community banks embrace the opportunities that are presented to them by being able to bank both fiat currency and digital assets.
05:00Well, speaking of the banking industry in Wyoming, I want to get your thoughts on Custodio Bank, which is based in Wyoming.
05:05A federal appeals court ruled that the bank, which provides custody services for crypto companies, is not entitled to access the Fed's payment system.
05:15What do you make of that?
05:15Well, I was disappointed with the decision.
05:19It was a two to one decision at the Tenth Circuit.
05:22But the Fed, through its bank supervision, has created a skinny master account that can be made available to digital asset industries.
05:37It strips a few of the full master account functions from being available to special purpose depository institutions.
05:46But it does allow people to have access to a skinny master account if they custody digital assets.
05:55So I'm very pleased that the Fed moved forward with this and recognizes what's happening in our global economy and is responsive to it.
06:07Also, when it comes to the U.S. Strategic Bitcoin Reserve, which, of course, was established by President Trump in an executive order, I know you've said that funding can start any time.
06:17There's been some discussion about converting some of the U.S. government's gold holdings into Bitcoin.
06:23Have you seen any traction on that?
06:25I have not.
06:26I think the administration is looking at ideas other than using our gold certificates, marking them to market and then converting them to Bitcoin.
06:40There are other ways to have a strategic Bitcoin reserve other than converting our gold certificates.
06:46And so Secretary Besant, Treasury Secretary, is looking at those matters as well as the folks at the White House.
06:54I'm glad they're embracing the notion of a Bitcoin strategic reserve.
07:01It's an asset that will grow over time and help offset the burgeoning growth in our national debt.
07:09And, Senator, I know crypto gets most of the attention.
07:12It hogs the spotlight, but we're also seeing an explosion in prediction markets this year.
07:17Is sports betting on federally regulated derivatives markets a good thing?
07:22I want to get your take on that and also political prediction markets.
07:26Yeah, it's a great question, especially since now we've seen in the NBA concern about players and coaches being engaged in illicit activities,
07:42involving betting.
07:43It's not my area of expertise, but I think it's very important that we rein in betting on sports in a way that protects the integrity of the game
07:56and prevents players and coaches from being incentivized to cheat.
08:01It's going forward, but I think you'll do.
08:02I think it's very important that we're going to do with you.
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