00:00What is the sticking point here for someone like Coinbase's Brian Armstrong?
00:04I think, as Lydia said, the question around yield for stable coins, so whether you can pay rewards on holding stable coins,
00:11which has been a big source and a big driver of revenue for Coinbase.
00:14You can see it in their earnings and even in circles disclosures as well.
00:18I think that's a big sticking point.
00:20There's also been a big sticking point, which is very recent, around something called tokenization of real-world assets.
00:25So taking things like securities and putting them on-chain onto a blockchain.
00:31And this bill had new language that really circumscribed the way that the SEC could regulate the tokenization of real-world assets,
00:39which I think when we're talking about super apps and how we're bringing everything on-chain,
00:43gave a lot of pause to players like Coinbase and others.
00:45And then there were a lot of questions around decentralized finance,
00:48this idea of an economic industry that is completely on-chain without any intermediaries and how that would be regulated, too.
00:56So I think those are three of the biggest questions that remain outstanding.
00:59This is a 200-something page bill, and a lot of the big players had to slow down and look through every piece of it
01:06before signing on or indicating their displeasure with it.
01:10How much of it had changed from what had been originally discussed?
01:13I think there were a lot of changes from the September draft that had come out.
01:18But, look, everybody was at the table and having a lot of discussions.
01:21We saw both Senate Democrats and Senate Republicans at the table and all sorts of different players,
01:27whether it be Coinbase or others who had been involved in the process and people in the DeFi industry as well.
01:32But I think there were surprises in the bill, and digesting it in 48 hours was a lot,
01:36as well as there were tons of amendments that were put up that were going to be considered in the markup that was going to be held today.
01:43And people didn't have a ton of time to digest those as well.
01:46And I think there was concern that some of those amendments may have materially changed the bill for the worse for industry.
01:52And so I think that's why there was a lot of hesitation yesterday.
01:55And were the amendments tied to the crypto market structure bill, or were they kind of off in their own world?
01:59They were tied to crypto market structure bill, but they looked to change things even more materially on things like surveillance in DeFi,
02:07privacy, as well as questions around Treasury's jurisdiction, and then, again, on the yield question for stablecoins.
02:13So Lydia was telling us how lawmakers want to appease both the crypto industry and the banks with this legislation.
02:20Is that possible in one big bill, or does it need to be broken apart and maybe tackled separately?
02:25So this bill, I would say, is the most comprehensive all-of-government type of regulation for any type of financial institutions or financial players since Dodd-Frank.
02:36And so that's a lot to digest, for sure.
02:38Appeasing many different parts of TradFi, crypto, whatever you want to call it, will be challenging.
02:44But I do think that there's a possibility, especially lawmakers are still at the table, as Lydia said,
02:49and industry is still really willing to be at the table.
02:51So I think or I'm hopeful that we can get there.
02:55You know, even if this looks like a setback, I think this may be a way to put forward a product that has even wider support than this last bill did.
03:04In terms of rewards, the yield that you were talking about for stablecoins, why is this such a non-starter for banks?
03:09Have they indicated any wiggle room on this?
03:13They haven't indicated much.
03:14And it's not just banks, but also community banks who are a really important player, both, you know, across the United States, but also in D.C., just given their historic role.
03:24And I think the banks are worried that if you're able to offer yield simply on stablecoins that are being held,
03:30it will change the makeup of their deposit base and may actually materially impact their business.
03:36And what can the crypto industry offer to community banks in particular to assuage their concerns?
03:41You know, I will say that's the harder part. And I think there are ongoing negotiations here.
03:46I think many people are willing to come to the table with these types of compromises.
03:52And hopefully we'll keep everyone at the table over the next few weeks and get to a good place on this.
03:56So keeping all this in mind and all these different things that need to be resolved, what is the timeline now for something like this to get passed?
04:03I mean, I know that given how large it is, how comprehensive it is, the fact that it's the biggest since the Dodds-Frank bill meant that it was always going to be challenging to get it done quickly.
04:12So the interesting part of the bill that was going to be marked up today is it's just on the SEC or the security side, also scoped in the Treasury Department.
04:19There's a corollary or a companion bill that's going through Senate Ag right now.
04:23And as we sit here today, it's at least scheduled to be marked up the last week in January.
04:27So there's a possibility that everybody can maybe take a few days, take a deep breath, come back to their desks and set this bill again for the same timeline.
04:36But, you know, it very much remains to be seen, I think, because the markup was pulled so late last night.
04:41People are regrouping this morning, both on the industry side and on the lawmakers side, to figure out what's next.
04:46OK, as we figure out what's next, what will you be watching for most critically?
04:49I'll be watching for what actually changes, both from the amendment perspective, but also there was a lot of dialogue over the last 48 hours between Senate staffers who have done a great job.
05:00And look, I think the other thing we have to step back and think about is there's a lot going on in the world right now, both in the financial markets, but also more globally.
05:06And that lawmakers on the Senate side have taken the last few months to try to put together this type of bill shows just how far the industry has come, even in the last few years.
05:16But I'll be looking for what changes, because I think there are a lot of productive changes, particularly on how to sell tokens into the market, which I think will be a big piece of this bill, as well as how to treat decentralized finance.
05:29There are a lot there's a lot to be done there.
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