The Top Presidential Crypto Priorities: Podcast Ep. 162

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Chainalysis
05-22

This is the second episode from our “Live from Links” series, where we take the hottest conversations that were recorded live from the Chainalysis Links conference in New York City. “We want to achieve our goal of making this the crypto capital of the world.”  These are huge aspirations coming from Bo Hines (Executive Director of the President’s Council of Advisors for Digital Assets, The White House). Bo explains to our former Head of North America Public Policy, Chainalysis, Jason Somensatto, how he and the Trump administration are on a mission to recover from the chaotic and lawfare regulatory regime under the Biden administration to foster innovation and fair digital asset regulation within the White House.

You can listen or subscribe now on Spotify, Apple, or Audible. Keep reading for a full preview of episode 162.

Public Key Episode 162: The First Crypto President: Unpacking the New Administration’s Digital Asset Strategy

“We want to achieve our goal of making this the crypto capital of the world.”

These are huge aspirations coming from Bo Hines (Executive Director of the President’s Council of Advisors for Digital Assets, The White House). Bo explains to our former Head of North America Public Policy, Chainalysis, Jason Somensatto, how he and the Trump administration are on a mission to recover from the chaotic and lawfare regulatory regime under the Biden administration to foster innovation and fair digital asset regulation within the White House.

Bo provides detailed insights into the current administration’s plans for promoting a pro-crypto environment including the introduction of legislation on stablecoins and market structures, the role of the Strategic Bitcoin Reserve and Digital Asset Stockpile and collaborative efforts across regulatory agencies.

His narrative is anchored by the administration’s ambition to ensure that the U.S. leads the charge in digital asset innovation, setting the stage for the move away from the archaic financial systems to instantaneous payments, greater transparency and self custody of assets.

This is an episode you don’t want to miss.

Quote of the episode

 ”I think it’s incredible what the space has been able to accomplish in the midst of chaos under the Biden regulatory regime, but more generally, just an unfair regulatory regime over the course of the last decade. And, you know, for us, with this new administration, it’s about reversing a lot of the lawfare, been handed down by actors that really don’t understand the digital asset space.” –  Bo Hines (Executive Director of the President’s Council of Advisors for Digital Assets, The White House)

Minute-by-minute episode breakdown

2 | From College Football to Crypto in the White House

4 | Paving the Way for the United States as Crypto Capital

6 | Bipartisan Efforts Propel Stablecoin and Market Structure Legislation

9 | Stablecoin Legislation and Market Structure Developments

11 | Pushing for Regulatory Clarity in Crypto

14 | The Government’s Strategic Embrace of Crypto and Blockchain Innovation

18 | Creating A Crypto-Friendly Regulatory Environment in the USA

Related resources

Check out more resources provided by Chainalysis that perfectly complement this episode of the Public Key.

Speakers on today’s episode

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Transcript

Jason 

I’m here with Bo. Hines, Bo, thank you so much. You just got off the stage at links with Sarah, and I know the room probably really appreciated your presentation. And so I’m hopeful you can be able to talk a little bit to the broader group of people who listen to what chainalysis puts out, because I think you have some great insights for this community and for the people who are connected with with chainalysis. But I thought I’d start at a little bit more basic level than you got up on stage, and just learn a little bit about you and your background. What was the path that led you here to being inside the White House and working specifically on crypto? Well, no.

Bo 

First of all, thank you so much for having me. It’s a pleasure to be here today, and obviously this is a phenomenal event with a great group of people. But no, you know, so I actually played in the Bitcoin bowl as a college football player my freshman year, when I was at North Carolina State. I played there for one year before I transferred to Yale. But that’s what actually sparked my interest in crypto, and so I bought my first Bitcoin shortly thereafter, and became a fairly avid trader with a good group of buddies that I knew from childhood and also in college, and you know, moreover, just from a retail perspective, watched the space evolve over the course of the last decade and a half, but ended up going to law school Wake Forest. I had the privilege of studying under Professor Hawk, who taught blockchain, internet law, and that was really what I made my focus my three all year. And just found the space fascinating, but ended up going the traditional finance route. Well, I should mention I ran for Congress during the midst of all this, but was a former general partner in a strategic growth equity firm. We did a lot in the data, tech and marketing space, but stayed in the active participant in this space, just from the retail side. You know, I think it’s incredible what the space has been able to accomplish in the midst of chaos under the Biden regulatory regime, but more generally, just an unfair regulatory regime over the course of the last decade. And you know, for us with this new administration, it’s about reversing a lot of the law fair, it’s been handed down by actors that really don’t understand the digital asset space. And so, as the President said, we’re here to welcome in the golden age for digital assets and make the United States the crypto capital of the world. And I think we’re well on our way of doing that.

Jason 

No, that’s great. And I mean, also just a great testament to the marketing spend on the Bitcoin bowl, right? Like I remember those times I’ve been in the industry for a while, and so thinking back and getting questions as to like, why is Bitcoin sponsoring a bull? And it’s clearly to get smart people involved in the industry, and that obviously playing off dividends. Now, going to your comments on kind of the administration’s goals here. One of the things you mentioned was kind of like reversing course from where things were. But also, you know, it seems like you guys are very proactively moving forward. It’s not just about, like, getting rid of lawsuits, but it’s also like, let’s put new regulatory structures in place. Let’s do projects like the Bitcoin reserve. I’m wondering if you can give us a sense as to what the big priorities are on your list. Like, where do you get your direction from? Of like, these are the policies that I want to see taken on and encrypted a space for the President?

Bo 

Well, I think we have to point to the first digital assets CEO executive order the President signed, and in this order, it basically established an internal, interagency working group which fooled all the relevant actors together in the space in terms of what that regulatory regime actually looked like and who touched digital assets with that, we’ve been able to come together and really have comprehensive and meaningful conversations about what we need to do to make this the most pro crypto friendly environment that exists. And then, moreover, we have these landmarks in the executive order. We had the 30 day landmark, which required the interagency actors to do an internal reviewing or audit of any regulatory rule they had that related to the space more generally. And then we just hit the 60 day landmark on March 24 in which they were supposed to provide recommendations to the working group on what they could do to usher in really an environment that could allow industry actors to thrive. And so now we’re working towards 120 day landmark which permits us to build a comprehensive report and which will provide that to the President say, This is what the landscape should look like if we want to achieve our goal of making this the crypto capital of the world. And I think that we’re well on pace. You know, we have phenomenal actors at each of these agencies right now, with Hester at the SEC, with Paul incoming there, with Brent in coming at the CFTC, with Secretary lunick, Secretary Besant. These are all phenomenal leaders that really understand how important it is for the United States to lead the charge with digital asset technological innovation. They understand this can change the way the financial marketplaces look forever. We know that we need to lead the globe in that effort. So I think this runs really well alongside the legislative priorities the President’s outlined at the first digital assets White House summit, or crypto summit. The President said that he wanted to see stable coin legislation and market structure legislation on his desk before August recess. And this goes back to what the chambers did at the beginning of this Congress, where they came together and formed their own bicameral working group where they stood up there with our AI and cryptos, our David Sacks is just a brilliant human being, by the way, and understands the space inside and out, a phenomenal person to work with. And we’re privileged to have him in that role. He stood up there with both Chairman Scott and Chairman Hill, and they pledged they were going to get this stuff done quickly. And I think that’s unique to Congress, more generally, to move quickly on anything. But it shows you know how important this is, not only to the leaders on the Hill, and obviously we’re showing how important it is to us and the administration, but you know, we’re just excited. We truly believe this can revolutionize the way that consumers interact with their finances and their everyday lives, in terms of what payments look like, in terms of how expeditious it is, in terms of just how open source it is and transparent it is.It’s a lot of fun, and we’re having just a blast, you know, ushering in this change.

Jason 

Yeah, that’s good, because you mentioned a lot of stuff there, right? There’s a lot going on. And so to your point, and some of those deadlines that you’re talking about, particularly working with regulatory agencies, are very, very short deadlines, right? I want to pull on a few different of those pieces. Let me start maybe with the legislation piece, because, as you mentioned, you know, the goal seems to be stable coin legislation, market structure legislation. I think there’s a markup tomorrow, right in the house there is the stable coin side. We’ve gotten stable coin bill out of Senate Committee last week

Bo 

in a bipartisan way. 18 to six vote out of Senate Banking is pretty monumental.

Jason 

Yeah. And so talk to me like, what is that process been like in terms of how much touch points has the administration had to have with Congress, how much has that already been in the works over years, and you guys are able to just kind of let that process flow. What do you see as the big issues that are still remaining to get that legislation across the line?

Bo 

We know for us, we, especially in my office, I view myself as a most like an administrator and or Sherpa between White House, policy, industry, interagency activity, and what’s happening on the hill. And I think that’s, you know, part of a crucial component that’s been missing in the space for a while is just having an actor that can make sure that everyone’s singing from the same sheet of music. And so David and I have really made that our focus from our perch inside the administration. But I think that things are moving along very expeditiously, and we’re very optimistic about where we are in terms of timelines, so on the Hill right now, obviously you mentioned, you know, the big bipartisan vote out of Senate Banking and the house is going through their procedural process as well, as it relates to stables. We’ll see how this moves forward, just procedurally. And we’ll, we’ll, you know, we’ll be deferential to leaders in both chambers and how they want to move there. But you know, I think that what folks should really recognize is, you know, how exciting it is to have people on both sides of the aisle coming together that understand how important this space is. It’s a complete sea change from what it used to be. And it’s a testament to President Trump’s leadership, really, in the space being the first, let’s call him crypto President, to stand up there and recognize, you know, how powerful this industry can be for United States, global dominance more generally. And whether you’re a Democrat or Republican, you know, it’s something that you have to recognize, and I think that our leaders do, and so I’m very confident that we’ll be able to see stables and market structure on the President’s desk before August.

Jason 

Yeah, that’s great. As somebody who has worked inside the government and worked with Congress quite a bit over the last decade or so, I think I’m always one who probably comes with a little bit of a cynical eye towards like that ability to get something across the line. But I would agree with you that one, the momentum is there, but also the conversations feel constructive on some of these particular topics, in a way that I’m asked to, like, read the tea leaves a lot as part of my job. And I’m like, oh, there’s a real chance that you’re gonna see these legislative initiatives get over the line, considering some of that, like bipartisan support and seemingly agreement on a lot of major points. And maybe that’s a good transition over to the market structure, part of this because that is where there have been legislative efforts in the past. And so it’s not like we’re starting from ground zero, but we’re not at the same place yet where you’ve got, you know, bills coming out of committee and kind of know what that looks like. Kind of what’s your expectation on that process? Is that something that you’re hoping is lined up right after stable coins, or do you think they’re going to they’re going to overlap a little bit, and do you expect that to be kind of as constructive as the current stable coin discussion? Or is that going to be more complicated in your mind?

Bo 

I don’t think it’s going to be more complicated. I think that what we’re seeing is the chambers are working very effectively together to produce legislation that’s very similar. So if you look at the stable clinical legislation both the House and the Senate right now, there are very minute differences between those two drafts, and that makes it easier in conference to figure out what the best outcome should be. I think that we’ll we’ll see something very similar with market structure. I think it’s right around the corner, whether they’re overlap or not, will be a decision that the chairman have to make, but at the end of the day, you know, they understand that we need to achieve this over the course of the summer, and so I think you’re going to start seeing those drafts in March. Drafts and market structure become public very quickly. And what you know, we’ll keep our eye on the ball of what’s happening on Capitol Hill and do our best to usher it along. I won’t go as far as to call us a referee yet, but if we have to be, then we’ll certainly step in and do our best to make sure that we can come to the right resolutions on any differences that might exist, whether it be from feedback from interagency industry and obviously the President’s policies as well.

Jason 

No, I think that’s important insight. I think some people probably don’t understand sometimes the role that the White House can play in the legislative process and in the regulatory process, as to, like, When do you come in? When do you show this opinion? When do you let the process kind of run by itself? So that context is important as to, let’s see how this develops, see where there now need to be to push this along, because obviously you guys have very aggressive goals to get all of this done. I guess in that context, maybe we can switch over to the regulatory piece one. I was just kind of interested the timelines you were talking about, and kind of the Council of regulatory agencies advising on that. How’s that process been like? I know from personal experience, it can be difficult to get a bunch of regulators on the same page on complex issues like crypto. Has that been pretty constructive? And let’s just start there. Then I have a couple other questions regulatory front.

Bo 

I mean, it’s been amazingly constructive, the way that folks have have moved to hit the deadlines, especially amongst like, the core actors from.Start thinking about the SEC CFTC Treasury folks that are dealing with these issues on a day to day basis, and or have the rule making authority that impacts the way that the space moves. You know, with that, I just think that the President’s done an amazing job of pulling the right people together and putting them in a room where we can say, Guys, what do we need to get done here? What do we need to rescind? What do we need to implement? And then, obviously, the strategy outlined in the first digital assets executive order is crucial because it really parallels what’s happening with like, the legislative priorities, and that way, you know, we’re all moving at the same speed. So I think that, you know, you can see what Hester’s done at the SEC over the course of the last, you know, two months. I mean, she’s just ripping right through a lot of the bad regulatory practices that existed over there in the past, specifically under the Biden regulatory regime, but I think you’ll start to see things happen quickly at the CFTC, obviously, once Brian’s in there, you know, it’s just, it’s a really exciting time, but we can’t just, you know, rest on our laurels with interagency activity, and that’s part of the reason we’re so focused on what’s happening on Capitol Hill, because we have to enshrine these things into law. I mean, the regulatory clarity has to exist forever. Well past this administration. We’re serious about becoming the leader in the world as it relates to this space, and I think that, you know, we’ll do our part and make sure that, you know, from regulatory side, everyone has what they need to operate and continue to innovate. And I’m confident our leaders in both chambers will do the same.

Jason 

Yeah, you kind of predicted where my next question was going to go. I think with Commissioner perse, it’s funny. As somebody working I am also used to calling him by their first name. I’ll try to be more formal here. But with Esther, some of her, you know, some of her tasks. I mean, she’s taking on the tongue, right? There’s so much forward momentum. There’s a new announcement out of the SEC every day. I think with Brian quintenz potentially coming in at the CFTC, he’s somebody who’s been at the agency while knows how it works, I’m sure we’ll be able to move things along in a pretty efficient manner as well. In that context, I could imagine a world where like, oh, it looks like these people have this under control, right? They’re addressing the kind of key issues that are key to the industry. They’re putting out guidance. They’re, you know, reversing policies that people didn’t like. And so I could see, from a perspective, some people saying, You know what, actually, we don’t need, like a market structure legislation to to address this market, if you know the industry is going to feel comfortable with where the regulators are at. But it sounds like, from your guys perspective, no, that market structure piece is really still important for kind of enshrining what you think the structure should be for this market.

Bo 

Oh, it’s crucial. I think it has to get done. And, you know, we have a very unique opportunity in time to make monumental changes that relates to the space. And you pointed this out just about having the tailwinds at our back capitalize on that. Now, you know, I would be remiss. I think it would be just a derelict of duty for us not to get both stables and market structure done before August. It’s too important for our country. It’s too important for establishing the clarity that the space needs, and ultimately establishing the US as a dominant player in the space. And so that’s going to be our driving focus over the course of the next few months, is just to ensure that the President’s wishes are met, that we can achieve all of these things. But we’re just excited about all the folks that we get to work with and the folks that are included here, even with DOJ being a part of this working group, it allows us to really work on things to protect the consumer and ensure that everything is happening above board in this space. And obviously you guys do a lot of work in that, in that way, and thankful for that as well.

Jason 

Yeah, we do. And maybe that’s a good segue into another topic, which is one of the goals of this administration is obviously efficiency at the agencies, and how they you know, how they’re implementing regulations, and how do we do this in the most kind of tech forward way that we possibly can do? You see crypto as kind of a good test bed for changing how some of these regulators and government agencies address a new and novel issue. Because I think from my perspective, I’ll give you the context of how I’m asking this question, which is chain analysis comes from the perspective of building something pretty new. Blockchain analytics wasn’t really a concept before we created that. And now we’ve seen a good amount of adoption inside the government for our data and tools as to how to best leverage them, but we obviously think there’s still a lot more you can do is using commercial tools to be tech forward, to be efficient and get the results that you want. And I’m wondering if, like, that’s kind of how you guys see this as well, because in a lot of cases, like the SEC starting at a new ground zero as to how they’re going to regulate these industries, and so there’s a lot of opportunity to do things different.

Bo 

Well, I think the way that our financial systems have worked, really, over the course last few decades is pretty much archaic, and this is why this revolution is so important, and if we don’t do it, someone else will. And so I think our regulators understand that, and you can see that by their actions over the course of the last two months. I think that those actions will only increase in speed. We attempt to really catch up here, just in terms of technological advancement, but under the President’s leadership, under David’s leadership, I’m absolutely confident that we’ll do that. But look, we talked about this on stage as well, just the transparency that blockchain technology provides. I mean, you know, I was asked whether my son, who’s a six and a half month old, will deal with the same things that I did growing up. And I think that this space will be one of the most drastic changes. If you talk about, like, dial up in the stages of the internet and how you interacted with those devices in terms of financial interactions, I think it’s going to be, you know, pretty much the same over the course the next couple decades, payments will be instantaneous. The transparency will be there. You’ll actually be able to see where asset origination is. You’ll be able to, you know, self custody a lot of your assets, and basically participate in environment that has much less friction. These are things that we’ve all just become accustomed to in our daily lives. But if you’re in this space and understand this industry, you realize that that’s not the only way that that’s not the way that things have to be, right. And so I think that we’re trying to, just to answer your question more broadly, lift the veil on what can be done as it relates to financial technology. And I think that the innovators here are doing a great job of that,

Jason 

yeah, no. I think one of the observations that I’ve always had with respect to the crypto industry is to, like, fully understand some of the technical proposals and the innovation is to also understand the cultural push towards like, rethinking that financial infrastructure, right? In some ways, it can be generational, right, people who are used to the way things have always worked, versus a category of folks involved in this industry who are really coming from a perspective of fundamentally rethinking things. I guess one entity that seems to also be rethinking its kind of involvement directly with the technology, is the government itself. In the announcement of the crypto strategic reserve, I was wondering, maybe take us through what that looks like. I know there was a lot of expectations and discussions about what that could be. And then there was the summit, where the specifics got to announce, but talk to me a little bit about like, where you guys are at with that and what you see the future of the strategic reserve looking like,

Bo 

I mean, I think that was truly just a monumental step in terms of recognizing the space for what it is. You know, Bitcoin is the grandfather of the space. And, you know, with that, we wanted to recognize it for its uniqueness, which, you know, it’s a commodity, not a security, as our AI and cryptos are, likes to say it has the Immaculate Conception, meaning that there’s no issuer that has intrinsic toward value. These are things that everyone in this space understands. But with that, we also want to encourage innovation across other ecosystems as well, which is why we have the strategic Bitcoin reserve along with the digital assets national stockpile. They’re treated differently, but we recognize the importance of both, and we think that these assets are worth holding on to for the American people, we as a country have prematurely sold to roughly half of our Bitcoin for about $370 million if we would have held on to it, it’d be worth close to $17 billion today. So really, what we’re doing is just capturing the value of these assets for the American people. And one thing I like to point out that’s unique about this administration is that we have a presence actually acquiring assets for the American people rather than taking them away. And it’s no different here as it relates to digital assets, we want to continue to really pound on that drum and make sure that we’re fostering the innovation there and showing that we’ll take the next step forward and propelling innovation here, and the government’s going to be supportive of that. So, you know, look, we also have said that we believe bitcoin is digital gold, and, you know, we want to acquire as much as we can possibly get, so long as it’s done in budget neutral ways that don’t cost a taxpayer a dime. But the President likes to say we have a lot of high IQ people in the room now, especially over at Treasury and Commerce. So there will be endless ideas of how we can accumulate more, I can promise you. And I’m sure as a working group, we’ll flush that out in short order.

Jason 

Yeah. And I’m sure the industry have tons of ideas. I know even us, right. We’ve talked a lot about how much we help the government seize from illicit actors is playing into this role. Yeah, with all that’s going on, I have a good sense of what the next few months look like, obviously, busy with Capitol Hill efforts, regulatory efforts, or maybe look for it even more for me, in like a year or two, like, what is your hope that this industry and the government’s approach to this industry looks like, and where are you like working on these issues, and what’s maybe the next issue that nobody’s thinking about right now?  Well,

Bo 

Well, to be honest, I’d like to work myself out of a job as a small government guy. You know, I think that we should go into government to fix things, find solutions, and then allow the industry to thrive and innovate, right? And I think that’s our main objective. But whether that can be done in the next few months remains to be seen. I think that it can, in a sense of establishing the clear regulatory frameworks, getting rid of everything that undergirds operation. Two point 2.0 you know, mending the gap between institutional adoption digital asset space, allowing banks and institutional players to actually interact with digital asset firms and the technology that’s happening here. I think all of that is instrumental, so we can get these big, beautiful pieces of legislation signed, and then I think really the goal after that becomes implementation on the regulatory side, within those regulatory frameworks are passed on the hill with the actors in the working group, and then also just ensuring that institutional adoption actually occurs, because it’s absolutely imperative that it does.

Jason 

Yeah, one of the things I always say is that crypto is an industry that overlaps with so many different parts of both markets and with the government. Right? You talked about banking, you talked about financial regulators, you’ve talked about criminal activity and and so I’m sure there’s a lot to be done. I’m sure there’s a lot coming across your desk in terms of new issues every day. As it relates to the crypto ecosystem, we like to keep the government folks on their toes in this industry. But yeah, this has been a great discussion. I don’t know if you have any kind of parting words for our crowd, but I really appreciate the time talking.

Bo 

No, I would just say one, thank you guys for having me. And two, you know, to the actors that have left the United States due to law fair, unfair regulatory practices, I just say, Welcome home. We’re going to create the most crypto friendly environment that could possibly exist, and we look forward to ushering in the innovation right here at home. Awesome. Thank you so much, Bo. Thank you. Yep.

The post The Top Presidential Crypto Priorities: Podcast Ep. 162 appeared first on Chainalysis.

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