Intro:
[music plays]
Niki: I’m Niki Christoff and welcome to Tech’ed Up. In today’s episode, Dante Disparte was kind enough to come in the middle of a raging five-alarm fire and sit down to talk crypto. The news cycle remains grim, and that’s an understatement, but we’re both optimistic about the underlying future of the tech.
Also, in this episode, I totally blank on the name of the documentary called “Inside Job,” but I do recommend it! Also, this is a couple minutes longer than usual, but I think worth every minute.
Transcript:
Niki: Today in the studio, I'm delighted to have Dante Disparte, Chief Strategy Officer at Circle. Welcome.
Dante: Thank you, Niki. Great to be with you.
Niki: So we planned this, you coming in here, a couple of weeks ago, not realizing we'd be taping in the middle of a barrel fire of a news cycle in the crypto industry.
Dante: Yeah, well, barrel fire would be one way to describe it. Five alarm fire, crypto armageddon, crypto TARP. [chuckles] There's a lot of ways to describe it.
Niki: Crypto TARP! [both chuckling] I mean, but there is no TARP. Nobody's coming to save anybody.
[Dante: That's right] And, wait, now we've already gone into TARP, we're 90 seconds in.
Dante: What is TARP?
[both laughing]
Niki: Let's start. Let's back up a little bit. You can tell we're such DC nerds [Dante: still laughing] that immediately I'm like, “This reminds me….” Okay! We'll back up. Your background is in risk management and mitigation. You worked for FEMA, Department of Homeland Security and then found yourself in this digital assets world. [Dante: right]
Niki: Talk a little bit about that before we go back to current events.
Dante: Sure, sure. The origin story and it feels, I think, somewhat appropriate given risk is the topic du jour not only in the digital assets economy but in the real world. So the origin story for me is I, I'm an entrepreneur coming at the world of technology from the lens of cyber risks, cyber resilience, digital transformation. But from the lens of what can you and I not do, but for the fact that technology was, was a part of that sort of digital commons.
So that's my original foray into this space was also figuring out how to insure a lot of these early crypto companies. And even then, one of the reasons I consider myself a crypto pragmatist as opposed to an anarchist or a crypto utopian, is that, even then, trying to get past the vaporware part of the industry and to get to the kernel of what is insurable. It tells you a lot about whether they're fundamental business models or not.
Niki: Right. Could they be underwritten?
Dante: That's right. And, and so insurance is an industry in which to do it well implies that, you know the risks that you're looking at, at a, at an atomic level, at a particular level. And ultimately, the process of underwriting something is to transition a financial risk to somebody else's balance sheet and, and to know that the risk is, in fact, insurable. It’s like getting a, a, a Good Housekeeping seal of approval by a third party that they've gone and vetted certain aspects of your risks.
And so, as I looked at the industry, y’know, there are many parts of the technology that are novel and they could provide for outcomes that would not be possible with other technology solutions. But there were many parts of the industry that were just rife, and I think still are, rife with misdeeds, rife with fraud, rife with all kinds of risks. And this was at the height of the ICO bubble once upon a time, the initial coin offerings phase.
So, that's how I went down this foray, joined the Libra project at its outset, inspired by the idea that global payment systems and innovation and payments would complete unfinished work in the traditional banking environment.
Niki: And just to back up for a sec, Libra was the, was Facebook's [pause] crypto project, basically.
Dante: Yeah, that's right.
Niki: And, kind of, taken down, just if we're honest, because it was Facebook and people hate Facebook. Is that true? Do you think that’s fair?
Dante: I think, I think that's a little bit of an oversimplification but, but, not unfair. Right. In that, in that, y’know, generally speaking, if your project sponsor had a trust deficit that, that the burden of proof and the burden of trust would be higher than if you were in a stealth mode startup with no priors.
So I do think, I think, I think the trust deficit is real. The other piece that is, of course, real is global financial services and the financial system is a rules-based system. [Niki: A lot of rules] And so, as, as you think about not only reconciling the last several years of the evolution of digital assets but certainly the current news cycle. Terra, the FTX debacle, the speed with which a lot of these types of companies are unraveling at some level, it's because of a lack of healthy respect for those bright red lines that are deterministic about the, the long-range opportunity of companies in finance.
Niki: And there's sort of, I mean, we're in this space, I now, I'm in this space. I've been doing this for two years [Dante: Mm-hmm] and you've been in it longer than I have. And I think I said this, you and I were on a stage together, and I said something about how we're sort of both radicals and institutionalists, [Dante: chuckling] which I think we are!
Like, I don't mind operating on the edges [Dante: Mm-hmm] and figuring out what that legal system looks like. I worked at Uber [Dante: Mm-hmm] when we were banned in [Dante: Mm-hmm] Vancouver. Didn't even have Uber when I started, so I don't mind being in that space, but the current situation, which we should briefly break down, cuz this isn't actually a crypto podcast. But, like, what has happened with FTX, with Binance, with this meltdown. What didn't, what allowed that? What were the fault lines that allowed this to happen?
A lot of people are gonna lose a ton of money. [Dante: Yeah] Businesses are gonna fail over this. Not to mention, like, jobs. I have less sympathy for the venture capitalists who invested in exchanges without doing due diligence properly. [Dante: Yeah] But what are your thoughts on the current state of affairs?
Dante: Yeah, I, I mean, I think, first of all, it, it, it is a terrible indictment of here in DC, we have, I think, two testaments to finance meeting technology but with very little respect for boundaries. The first of those testaments to digital financial alchemy is the National Stadium and whatever remnants might be left there of the Terra Luna debacle and the fact that Terra was becoming a sponsor of this national sports team and that-
Niki: [interrupting] The Nat's baseball stadium, that’s what you are talking about.
Dante: Exactly] And that many of the seats may still have the Terra Luna logo emblazed on those seats. So, it's a testament. [Niki: It's embarrassing] It's a testament to hubris. It's a testament to financial alchemy. And frankly, it's a testament to this terrible reality, which is paycheck persuasion. That if you could have enough money to be a sponsor of a sport, something endemic across the industry then, then you would, you would clear all the checks and balances and all of the basic “show me the money” guardrails that would govern how you underwrite something.
And I think now, with this still unraveling, still very fluid demise of FTX in the span of, frankly, 24 hours, this is the second major digital asset failure that, that unraveled in the span of hours. Right? I think will; time will tell, but it will likely be emblematic of the same lack of checks and balances and the fact that this nearshore operator wasn't operating anything close to the types of standards that you would see for like-for-like exchanges and platforms. And that's the gap.
Niki: And just, one thing that you said that I wanna kind of highlight is nearshore. This is not a US based; this was not legal because partly, cuz we will talk about the regulatory failures, [Dante: Yeah] meaning the regulators’ failure [Dante: Yeah] to create some sort of framework here. But it wasn't really operating within the United States. So, Americans were investing in an overseas operation that would not have passed the smell test but had a lot of dough to throw around. [Dante: Yeah] So, looked like Terra Luna looked like-
Dante: Yeah. Well, and, and, and therein I think lies some of the comparison, frankly, is, and, and this is where you could argue that the period of time that we're in, in the digital assets economy, is the blend of the dot-com bubble bursting and the blend of the very bad properties of the 2008 financial crisis. [Niki: Wow!]
That, that, that, [Niki: chuckling] y’know, the dot-com bubble piece is, of course, the speed with which vaporware would, would be eradicated, and people would call into question business models. And the, the TARP example, or the Troubled Asset Release Program, [chuckles] [Niki: Thank you] which was how the, the US government responded to the failures on Wall Street, is that if you upload it, the same financial behaviors and misdeeds of the 2008 crisis onto the internet, that that leverage liquidity, the fundamentals of a business model would still be exposed.
And that's the problem. My, my, my indictment then, is that Crypto is neither good nor bad. It's a technology. Blockchain is neither good nor bad. It's a technology. And if you upload bad behaviors onto good technologies, you're gonna get bad outcomes. The difference, of course, is that the bad outcomes will happen with greater speed, and there's nobody picking up the buck, as it were. There's nobody. The public sector is not responding to the failure of FTX.
Niki: There's no, there is no bailout by design. [Dante: Exactly] You don't wanna be part of a sovereign financial system.
I, listen, I was working for Senator McCain during the financial collapse. I really was uncomfortable with the bailout, right? [Dante: uh-huh] You have people and yet there was no way they couldn't do it. We had to do it. [Dante: Yeah] Gosh, what was that movie? It's an amazing documentary and I just re-watched it, but I can't remember. [Dante: laughs] Anyway, it's about the whole thing. It's really good. [chuckling] I'll put it in the show notes.
But I think that that's part of it is nobody's coming to the rescue. But one thing that seems interesting, and again, we don't publish this immediately, so it's a rapidly evolving [long pause] dynamic situation, so I don't know where we'll be in a few days. But the difference, I think, between Terra Luna and FTX is the, the charismatic leaders. [Dante: Sure] First of all, the idea that decentralized systems should be dependent on a charismatic leader sort of seems counterintuitive.
Dante: What is true though, and this is, I think the opportunity candidly, and the urgency with which Congress must act, regulators must act and policymakers must act, is that on the one hand, the work and the reporting coming from, for example, the President's Working Group on Financial Markets, the Financial Stability Board, over the last five years, regulators all over the world have flagged the idea that there's urgent, real-world risks in the digital assets economy.
How many times do they need to be vindicated [Niki: Right] before there's actual action?
Niki: It was a little bit like the financial crisis, which is, “Well, as long as things kind of keep going up, we can take riskier and riskier movements behind the scenes,” [Dante: Sure] which isn't necessarily evil. It's what happens, it happens all the time on Wall Street, but it needs to be examined.
Dante: Candidly, and, and, of course, hindsight is always 20/20.
Everybody post-Terra Luna saw it coming, [Niki: laughing: That’s true!], everybody post-the collapse of FTX saw it coming. And what, what no one did do, in the interim, however, was to establish rules of the road. The highest-order priority regulators and policymakers talk about is risk-based, activity-based, technology-neutral regulation.
So like-for-like, if you're in exchange and you're trading in digital assets or commodities, then you should be regulated to a common standard. If you're operating a payment system, you should be regulated to a common standard. If the risk is bank-like, you should be regulated to a common standard.
And I, I think therein lies the gap.Is that, you know, if a company like FTX was a darling, why was it domiciled in the Bahamas as opposed to being able to domicile itself in the United States?
And the best cure we have is transparency. Sunlight is the greatest disinfectant. Any, any semblance of greater transparency on Terra Luna, and had Terra Luna conformed with even basic US money transmission laws, there would still be principle to have protected token holders [Niki: Mm-hmm], and there would've been some semblance of disclosure, and some semblance of consumer protection.
That's where I'm calling bluff on the idea that everybody's gonna ex post facto litigate the failure but have done very little on the front end to normalize these companies operating inside the United States.
Niki: Your point is, had regulators moved more quickly so that these, an American entrepreneur, could have actually located his company here. [Dante: Mm-hmm] and, and accessed on U.S. soil pursuant to our laws it would have been mitigating for Americans [Dante:Totally] who decided they wanted to participate because they would've at least had some sort of, our rule of law managing it. [Dante: Totally ] That's your point. [Dante: Totally]
Dante: Well, and, and therein lies, for example, you know, relating it to Circle. Many a stablecoin issuer, prior to us, ignored to their peril the preexistence of money transmission laws [Niki: Mm-hmm] or the European equivalence of electronic money. Any of the current generation of stablecoins or stable and name-only coins that have faltered but, had they abided by those rules and norms, they would still be in operation left.
So that, that's the point is it just because you can upload something onto the internet and there's a new-fangled magic technology that can make everything frictionless and trustless and empower people in a peerless economy, doesn't mean that the risks of the traditional market or the risks candidly inherent in our species greed and fear of missing out and this propensity to, to commit fraud would go away.
The technology, however, worked, which is that there's greater discoverability when you're, you're operating in anything close to a blockchain. There will always be greater discoverability of misdeeds and candidly greater speed of reckoning when, when you have problems in your operation.
Niki: Yeah, and that's actually one thing that I have found is really cool and interesting is, literally, you have people sleuthing looking on chain. [Dante: Mm-hmm] to kind of, even as they're figuring out what went wrong, where did it happen? Because you can see it in a way, where's, [Dante: That’s right] it's not like we're never really gonna get the full stories on banks.
Dante:That's, that's exactly right. And I think therein lies the real breakthrough, exponential gains of open financial markets infrastructure, public blockchains. Is that despite the fact that there's a checkered scorecard in the 14-year history of this technology stack, nonetheless, we're making exponential gains in transparency, exponential gains in financial integrity, and candidly, in the operation of a company like Circle, starting to see the, the important bridges being built between the digital assets economy and the use cases of crypto trading, which are very exacting and the demands of real-world consumption.
Fast, trustless, permissionless payments on the other-
Niki: [interrupting] I wince every time you say trustless. I know. [Dante: laughing] Okay! Just so people listening, again [Dante: Yeah] who are not crypto folks. [saracastically] “Trustless” to crypto people is a positive because it means you don't have to rely on trusting someone. [Dante: Or on intermediaries] Or an intermediary. [Dante: Exactly] But I just wince because it sounds, just on it's face, negative.
Dante: I'm not even gonna debate that [Niki: No!] because you're, like, a master communicator. So, I will abandon [laughing] the term of art.
Niki: You, you guys gotta stop saying trustless! This system's trustless. [Dante: laughing] It's like, “No, shit! Seems terrible.” Like, that's bad. Um, well, [Dante: but, but it] but what it means is you don't have to rely on an intermediary.
Dante: Well, and this is, so the crux of this to me is something I think really critical.
Niki: Sorry, I just swore on my podcast.
Dante: No, no. It's, it's your podcast. [Niki: chuckles] You're entitled! The point that I think is really important though,is then to relate the innovation that I care about most, which is the payments innovation to what you can and cannot do in the brick-and-mortar banking system. [Niki: Yes!]
That's, so for example, is it really your money if you have to ask someone to spend it and pay someone to hold it for you? So, so there is, so in therein lies the, the gap that I'm trying to remedy and Circle’s trying to remedy, which is that a medium of exchange that is trusted, right, that imports the fundamentals of the US dollar and the fundamentals of American monetary policy and value systems, but enables point-to-point device-centric payments powered by very low-cost internet-connected devices is a gap in the global economy.
And, and that financial system is the one Circle's trying to build. And it just so happens that the, the, the killer first use case for digital currencies, like USDC, is to support crypto capital markets and crypto trading. But the real breakthrough innovation is about persistent real-world economic activity and payments.
Niki: Absolutely. It's about utility.
So, let's back up. You've been trying to talk about Circle for two minutes.
[Both laugh]
Circle, you mentioned something about stablecoins. Let's go to what they are and then by adding, and actually this is another messaging thing, by adding the word stable, people think it's stable.
Dante: But notice that I didn't use that term [Niki: Right] stablecoin,
Niki: Right! So, break that down a little bit [Dante: Yeah] for people who may not know.
Dante: Yeah. First of all, I think it's a terrible term. And, and I think this is an industry rife with jargon. It's an industry that is conflating technologies with activities. And, and I think it's very, it's beyond time that we start to really disassociate technology jargon from financial market activities from generalizable human expectations and outcomes.
And so, unfortunately, the term stablecoin is a term of art that was coined, no pun intended, [Niki:Mm-hmm] in solving for crypto's original sin, which was the price volatility of bitcoin.
Dante: So the stablecoin is then born. And as the name suggests, it's designed to have a stable value so that there's no buyer and spender remorse, and it's a more efficient medium of exchange on the internet.
Niki: Meaning, and by stable it could be tied to a fiat currency like the dollar. [Dante: That's right] It could be tied to some [chuckling] gobbledygook algorithm.
Dante: Yeah, or it could be tied to promissory statements on Twitter [Niki: Interesting] made by charismatic people. [Niki:] And, and, therein I think, lies the very basic “trust but verify” set of questions and the questions coming from the insurance market as if you can't underwrite it and you don't understand it, it's probably too complex to be exposed to.
Niki: This is such a, I love that you're from, coming from that place of risk management.
Also, by the way, today, a hurricane named Nicole, which is my name, is about to hit a condo I used to own that was uninsurable and I sold. [Dante: Yeah] ‘Cause I was like, “Well, it's uninsurable.” [Dante: chuckling] “So, to me, seems like somebody who's better at math thinks this is not a good investment.”
Dante: Right. And well, and therein lies, again, an example of like this concept of having skin in the game, and y’know,
Niki: [interrupting] And, by the way, I don't think it's funny that a hurricane's hitting a condo.
Dante: No, no, no! And, and nor do I think it's totally ironic that the condo-
[cross-talk]
Dante: Or that the hurricane is named after you.
Niki: I know!
Dante: But that, that's just unfortunate.
Niki: I, I could go down this rabbit hole [Dante: laughing] for [interrupts self] Yesterday, I found out storms were only named after women until 1979. [Dante: Yeah] Wild!
Dante: Somebody needs to call NOAA.
[both laughing]
Niki: No, no, no. They changed it! Now it's, they alternate one by one. [Dante: Yeah] So, let's go back to underwriting.
If it can't be underwritten, then people who are really looking under the hood of it are saying it's, it's not, it's not safe.
Dante: Well, and therein lies, again, back to Circle, right? The, the, I, I joked, I kind of did the inverse of the Batman movie when, you know, some companies and some stablecoins in the crypto market are now embracing transparency and sunlight. We were born in it.
The government, and the regulators, and the rules-based financial system does not care about the technology stack that's powering your company. What they care about is like-for-like or exponentially better outcomes.
Niki: Back up to USDC, so people understand what it is. [Dante: Yeah] So really just to really back up, what Circle's focused on right now is remittances and payments. And your point is, and I've said this many times on this podcast, people are paying fees [Dante: mm-hmm] to move their own money. And they're paying fees to store their own money. [Dante: Right] And they're paying major fees if they're sending it overseas. [Dante: Right] And so, Circle is using, kind of, the blockchain technologies and those innovations to reduce the fees and give people more options, but within a rules-based framework. Am I getting that right?
Dante: That is exactly right.
And so, the best way to understand how Circle is positioned and what we do is we are the issuer of a dollar digital currency known as USDC, currently over 40 billion dollars in total circulation. Over the course of this innovation, we have redeemed more than a hundred billion dollars worth of USDC, which means that the bank-like operations of the treasury management, the reserve management of this business function exceedingly well,
Liquidity matters, right? The, the loss of confidence in Terra, now, the, the, the demise of FTX are functional down to the liquidity in these platforms and what type of leverage and transparency they were living under. That's one piece of the puzzle.
The next piece of the puzzle is what I call the four S's of payments. How do you send, spend, save, and secure denominated in this digital, digital currency environment?
But we're doing that in a pro-competition manner. So, again, if you care about payments and you don't wanna have monetary airline miles, which is what many stablecoins look like, then you have to promote the utility value of these payments innovations across multiple public blockchains and multiple different networks, including traditional household names like Visa, MasterCard, MoneyGram, and so on are all integrating USDC as a part of this always-on global financial.
Niki: I wanna talk about MoneyGram because I think they've done some really interesting work in this space. So, MoneyGram, there are people in the United States who are not just unbanked but actually operating with cash. [Dante: Yeah] Like dollar bills, right? And so if they have earned money, and then they're using this, and they need to send it overseas, they go into MoneyGram, and might end up paying a big fee to do it. And MoneyGram has been sort of quite, I think, innovative in saying like,”This is a need for people [Dante: That’s right] who are underserved by the current banking system to come in and be able to do something with the money they've earned.” [Dante: That's right] To just send it.
Dante: Well, and ,and therein lies the, the, the real breakthrough opportunity. Is that rather than crypto and blockchain totally disintermediating banking and traditional financial services, what we're actually seeing is a convergence between the two. The lines are, I think, permanently blurred between where brick-and-mortar bank ends and where technology begins.
And, and so what we've seen with the MoneyGram example is using the Stellar blockchain. MoneyGram has enabled USDC-denominated payments and settlement, which solves a couple of very big issues. One, the, the fiat on and off-ramp. Right?
So, if you don't wanna stay in crypto but you want crypto to be a medium of exchange for better, faster, cheaper settlement, then the MoneyGram network globally has enabled cash-in and cash-out points for USDC to be converted into a local currency. And for someone who receives a USDC payment on their internet device to be able to go to a MoneyGram location and take out cash. It’s a powerful example of interoperability and a powerful example of powering remittances in better, faster, cheaper ways
.
Niki: So, I'm gonna tell, tell me if I'm getting this right, just total basics.
There's a MoneyGram, people know what MoneyGram is. [Dante: Mm-hmm] You come in and you're using Stellar which is a kind of blockchain. [interrupts self] By the way, I love Stellar. That's not financial advice. [Dante: chuckles], I just like that company; they've got a woman CEO who's in DC who seems very sharp to me. [Dante: Yes]. Using those rails to send USDC, which is a Circle stablecoin, and then they can get it directly on their phone [Dante: That's right] They don't have to mess around with a bank in the country where they're getting it.
Dante: That's right! That is an example of not disintermediating the traditional financial system but powering new levels of integration with it. That I don't think, again, because all of these activities are underwritten, Visa underwrites us a MoneyGram would underwrite us. The types of counterparties that we work with would underwrite us. It's about trust, transparency, auditability, and being able to withstand basic scrutiny.
Niki: Right. And better rails! Like, the rails themselves are better.
Dante: Exactly! And so therein, therein, Niki, I think, lies the single most important part of the conversation, right? At, at the global macro level, people are analogizing what is happening with digital currencies to a digital currency space race. And so, if you really care about winning it, just like the West won the actual space,
Niki: [interrupting excitedly] Yeah, we gotta win it! You guys [Dante: chuckles] I, I'm always in favor of a space race. I'd like another one.
Dante: Well, here's how you win it. [Niki: Do it!] Dante: You win it. [Niki: Yes, tell us!] You win it when your political and policy leaders give us a destination. Right now, hurry up and wait. Is not a great strategy [Niki: Agreed] to advance national security and economic competitiveness.
But the real competition is not around the economic quality nor properties of a digital currency, but rather the competition is in the rails. And if you care about who dominates those rails, then you ought to care deeply about regulating the innovation inside the United States. And promoting an operating model for these types of innovations to plug in not only domestically but as a part of a global, always-on money movement system.
Niki: And people don't really wanna think about, like, nobody wants to think about the series of tubes that make the internet work. And, but, and yet, in crypto, we always have to kind of explain [Dante: That's right], the blockchain technology, but the current, when we say “rails,” currently you're using incredibly outdated technology, settlement tech, like the way settlements happen is Byzantine. [Dante: mmmmh] It makes absolutely no sense, and it's closed on federal holidays.
Dante: Well, and look in here in, so this is where I will refer back to my time on the FEMA National Advisory Council. During the course of my tenure on the National Advisory Council, now domestically, the void of real-time, instant device-centric payments is a national security vulnerability. Globally, If you don't want to have sanction-resistant money flows for the Ukrainian conflict and you wanna exact a functional price on, bad actors globally, then you need a global payment system that is uploaded onto the internet, but responsive to Western values and responsive to Western sanctions.
Those are the stakes of the digital currency space race. It's easy to describe the tokens and the stablecoins, but that's like talking about the train engine but not caring about the train network and the station stops.
Niki: And that network is never gonna be built by the government.
Dante: No! In fact, if you really care and you wanna understand the future of money and payments past is prologue. And so, the checkbook is not an innovation that displaced physical dollars. It's an innovation that allowed people to set the use by date and the denomination but otherwise, the checkbook had all kinds of novel innovations, like a routing number and an account number that allowed for greater transmissibility.
MoneyGram, Western Union, ACH, Swift, all of the global payment networks are a great example of public-private partnership, public-private innovation, that respect the boundaries of the rules-based system but promote the extensibility of the dollar.
Niki: Right. And so, what you're doing in Washington, we’ll end on this. What your job is, well globally, right, but also in Washington is we need to get regulators to understand all of this, and it's highly distracting when you have a wildfire [Dante: Yeah] happening in the industry.
It's distracting to them cuz they are getting up to speed on the technology. They have a lot of other things happening. They just had an election. [Dante: Yeah] Right.? So, there's so many things happening in their world, and as they were learning the technology, they're starting to see recklessness. And we need to refocus their attention onto, again, the potential of the underlying tech. Because it's here, it’s not gonna be uninvented.
[Dante: Yeah] And making sure that we're players in it and that Americans who wanna start companies can operate in the United States.
Dante: Well, look, I, I would be remiss not to end on a somewhat optimistic note. [Niki: Let's do it. No, do it!]
Despite I think the, the complex dark times, not only in the real economy but in the digital assets economy, I have every reason to believe that the work from the White House Executive Order on Digital Assets is not in vain. And that the intent and the bipartisanship exhibited in Congress and in the Senate despite midterm elections, as y’know, ballots are being cast and counted that, that we should be very optimistic that their companies, investors, and the time, talent, and treasure of really, really great people are arrayed against problems that you cannot solve if banking and to be banked is just about brick and mortar.
So I remain very optimistic and, and I do think you need these big market corrections as teachable examples to lend urgency on the regulatory call to action. And I just hope Congress frankly acts, cuz that's the missing link.
Niki: Right. And I think Congress, I also remain optimistic. I think Congress will act. And in some ways this will, this will sort of sharpen their focus on something that has not been, I've said this for weeks, for months [interrupts self] I'm always tweeting things that I then delete [Dante: laughs] and they're not even controversial things. Like they're just sort of basic stuff like “This is not a must-pass bill,” but it might become a must-pass bill if there's too much instability [Dante: Yeah] and too much contagion in which, and not just one bill there are a few things sitting in Congress. But if they suddenly have their attention really sharpened on, “We have to make this safe, but we also have to just create a space where Americans can be in this industry.” [Dante: Yeah] And you're right, there are really good, really smart people. I have a couple clients who are in that group who are gonna help get this right. And I think maybe sooner than we, maybe even sooner than before, this might be a, a. cleansing fire.
Dante: The two big crypto losses that we've spoken about thus far, FTX and Terra before it, were all largely contained to the crypto economy. But you cannot say as a representative of the people that you care about protecting consumers and markets and do nothing about sensible legislation and sensible regulation for the industry in the United States. So we should not wait for a real blow-up, something like a large global stablecoin de-pegging that could have spillover effects in the real economy before Congress acts. [Niki: Yes] And so the White House, the PWG, the President's Working Group, have called for Congress to act. A failure to act, I think, would be a failure of imagination. It would deeply blunt American competitiveness, hurt consumers and hurt markets.
And so, I remain optimistic. I also hope that there's a teachable lesson in monuments to hubris, such as the Nationals Stadium here in the United States and in monuments to paycheck persuasion and skipping your underwriting. As people consider how to reconcile, y’ know, having bought the hype as opposed to bought the substance.
Niki: Yep. I, I agree with all of this and I know we cross paths a lot. You more on the regulatory policy side, me more on tsk-tsking about how people talk about things,
[both laugh]
But also trying to tell the story in a way that captivates. I mean, there are millions of Americans already participating in the crypto economy. [Dante: Yeah] But really helps people understand; I mean, I can't tell you how many people listen to this podcast and are like, “Niki, Ugh, stop talking about crypto!” [Dante: laughs]
And I just really wanna communicate the potential because there is genuine potential that I'm super excited about, and I genuinely believe in, and wanna make sure that we can get there.
Dante: If you want these companies to go through a maturation cycle, just like the dot-com bubble, once upon a time, you need the handover of responsible long-range actors, to, to start evolving the entire industry. So, we remain committed. The hard road is a long road and, and there are no shortcuts, and I think that, if anything else, is another teachable example of, of if it's too good to be true. It's likely too good to be true.
Niki: I think we need a lot of adults showing up and telling their story.
Dante: That's right. Well, and the, the other thing I would say, yeah, Niki, just for the benefit of your listeners who are sick and tired of the jargon. Is that when was the last time you went to an internet conference or had an internet conversation where you discussed the protocol, the hardware, and the software that makes the internet work? [Niki: chuckles]
I think we will arrive with the blockchain conversation when the tech fades to the background and what remains are the outcomes that people care about.
Crypto comes from cryptography, which is a core technology in promoting the idea of privacy, segregating systems, having an inherent risk-proofing, and disaster resistance. And we need to stop treating technologies as bad words, especially in Washington, cuz there's a very deep anti-innovation streak that I think we need to get away from and start promoting outcomes.
Good, responsible, long-range outcomes and innovation. That's the only way we're gonna innovate our way through Covid 19, through a recession, through a crisis, and the idea of economic revival. It's essential that we allow innovation to take place.
Niki: Essential! [Dante: Absolutely] Well, I'm rooting you guys on! [Dante: chuckles] Thank you so much for taking the time.
This is an unbelievably busy week, so I really appreciate you coming in, in person to the studio.
Dante: Thank you, Niki. Great to see you.
Outro:
Niki: In our next episode, Karen Kornbluh joins me in the studio to talk a smorgasbord of current events- from Elon Musk to the gamification of facts. I know. It’s rollicking.
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