Please welcome Kristen Smith, president at Salana Policy Institute, and Bo Hines, CEO at USAT.
Hello, Kristen. How are you?
I'm pretty good. I don't know if you just heard, but Greg gave a fantastic overview of all the work you achieved in the first half of the year before your new job. So I'm excited about the conversation today. Before we get started with Bo, I do want to point out one thing. I do believe this is crypto's most consequential year. And this was not a given. There was no guarantee that this consequential year was going to happen. I really want to give credit to Kyle. About 18 months ago, David Sacks, who obviously went on to the White House to be the AI and crypto czar, was hosting a fundraiser in San Francisco for Donald Trump. I wanted to go because Trump had said pro-crypto stuff, and for four years in my prior role as CEO of the Blockchain Association, I'd been trying to get a phone call with the White House and they would not get back to us. It was really quite terrible the way we were treated. So I thought, 'Wow, this guy's open to crypto. I would like to go.' I told a few people in my orbit and on my board, and they said absolutely not, Kristen, you cannot go to both sides, you have to work with both sides of the aisle. There was huge pressure not to go, and as a result I didn't. But Kyle did, and I think that's a really brave thing to do, to have conviction like that and to take a bet like that. Because Trump through that event and many others that followed really started to learn about the problems the crypto industry had and made a big difference. So kudos to him. I don't think even a year ago after the election I could have imagined that we would have had somebody like Bo Hines in the White House working day in and day out on crypto policy. So really excited to have him here today. My hope this morning is that we can talk a little bit about your time at the White House, Bo, but also talk about your new role as the CEO of Tether here in the United States. Very exciting. Going to the White House, I think there were a couple of major things that you achieved. The first and most important one was to stop the harm that had been put into place via litigation and regulation. Can you talk a little bit about when you showed up at the White House, what the roadmap was, what you set out to achieve, and how quickly you were able to stop some of the bad things that had happened?
Sure. Well, you know, I think you described it well and Greg did a phenomenal job. It had to be a sea change. Basically everything that happened in the space over the last decade had been policymaking through prosecution. The president said it best at the first White House crypto summit: he looked at the Winklevoss twins from Gemini and said you had a better chance of sitting in a jail cell last year than sitting in the White House. We have to recognize how far we've come. David and I connected on transition and discussed how to deliver on the president's promises. We had to sort through many ideas and flesh out the roadmap to make the US the crypto capital of the world. We had options: move market structure first, stablecoin legislation first, or move them together. That was the crux of the debate for the first few months. We also had to eradicate all the Biden-era regulations that prevented digital asset firms from interacting with traditional financial institutions, known as Operation Choke Point 2.0. So we set parallel paths: knock out bad rules and start building the architecture for the next generation of the financial system. Ultimately we focused on GENIUS. With GENIUS we could create new payment rails in the US and lay the foundation for a brave new world of finance, with 24/7 markets and tokenized public securities. It wasn't an easy effort, but thanks to Kyle, the other founders, and people like you, Kristen, we were able to get changes done. Now I look at this as a spectator from the outside. I'm very encouraged by what I see with the market structure legislation, Clarity. I have full faith in David and Patrick White, my replacement in the White House, to deliver the next piece. I think we're on the precipice of a very exciting time.
I do want to get deeper into the Genius Act, but before that, I think one remarkable product from your time there was the report that resulted from the executive order that Trump signed relatively early on. It's a blueprint. It shows the issues, the agency to solve them, and the authority needed from Congress. I think it also empowered the SEC's Project Crypto with Chair Atkins' speech. Can you talk about the significance of this report and the work that went into getting it out the door?
Yes. The president set up the crypto council and the president's working group on digital assets, comprised of internal actors from SEC, CFTC, Treasury, Commerce, DOJ, all relevant players. The president was extremely proactive in ensuring we were working on a comprehensive regulatory framework. We started week one. I give credit to Tyler Williams at Treasury, Taylor at the SEC, Harry Shung from the CFTC who came over to the White House, and all contributors. I firmly believe it's one of the most comprehensive regulatory guideposts ever created for this space. The rest of the world will look at this 180-page document and see it as the standard to implement. If you want to be competitive, you'll have to mirror what we do in the US. Congress is now working through clarity on market structure, and I hope this document served as a guide. When we land the plane on market structure, we will have delivered on the vast majority of the president's promises and position the US as the crypto capital of the world, attracting builders and founders who may have been hesitant to come back.
I want to get into the Genius Act a little bit. One of my colleagues just got back from Korea a couple months ago and he said everyone there was speaking Korean, and he'd hear 'Genius Act' repeatedly. Everyone in the international world was talking about the Genius Act. What do you think are the geopolitical implications of the Genius Act and the role that stablecoins are going to play in the system going forward?
We have to look at this as the future. We have the opportunity to use products with more cost-effective transactions, instant settlement, more security and transparency. Institutions and consumers should be eager to take advantage. Post-GENIUS, through preemption with the OCC, you can have a product that banks treat as a dollar with stablecoin technology. US consumers have a different approach to these products than the rest of the world. Stablecoin adoption has been driven by consumers hedging against volatility in their domestic currencies. In the US, our payment rails are about 90% efficient; GENIUS takes us to maybe 95%, and then L1s and other rails will compete for further efficiency. It's created a fintech race. US consumers will need to be trained on how to use these products. From a B2B perspective, large banks already see the importance for internal settlements, cross-border payments, and wealth management. That process will streamline over the next 6 to 12 months. But the more interesting part is how consumers will interact. To encourage that, we need to participate in verticals where banks would use a normal US dollar and treasury reserves, like commercialized lending products. We need to build infrastructure that provides on and off ramps and encourages US consumers to engage. There is a macro scale for institutions, and slowly we'll see consumer adoption as well.
Before we switch over to your new role in Tether, are there any fun facts or stories from the White House that you hold dear that you'd like to share with the group?
Oh man, there are plenty, but for the sake of time I'll refrain. One memorable moment was sprinting across the White House lawn from Treasury to get a brief ready for our boss who was dealing with some actors who eventually came back on side. I had so much fun working with the team. I miss being in the thick of it. I don't envy the stress that Patrick and Harry are under now with Clarity. But the friendships and relationships built out of trying to do something herculean were tremendous. Now in the private sector, I'm having fun building new relationships and establishing our team. Being in the thick of it every day is a different level of energy and stress. We had a lot of fun engaging with the boss, who was so encouraging and present, and David Sacks as well. Having the president's buy-in made our lives easier. I'm confident that Patrick will be able to get clarity past and build the regulatory framework.
Let's talk about Tether. Tether is a fascinating company. For a long time, it seemed to be a strategic decision to not come anywhere near the United States. The people from Tether didn't come to the US, they did not serve the US. They were very much trying to stay out of the borders here. Quite frankly, that may have been a smart move given the earlier eras of crypto policy. But how did the conversation come up and how did you end up in the role that you're in today?
