Commissioner, SEC
SEC's Hester Peirce on Crypto Vaults & The Clarity Act
It was another big week for crypto policy in Washington. SEC Commissioner Hester Peirce joins us to break down her position on crypto vaults, why some DeFi products could fall under the federal securities laws, and what it means for builders and investors. Mysten Labs General Counsel Sylvia Favretto reacts to the guidance and explains why the ICE-OKX partnership could be a watershed moment for tokenization, what's still holding institutions back from moving onchain, and the next regulatory milestone that could unlock broader adoption. We also unpack the latest on the Clarity Act after Senate R...
About Hester Peirce
SEC Commissioner Hester Peirce has continued to advocate for clear regulatory frameworks for digital assets and tokenized securities. In recent appearances, she discussed the SEC's work on an "innovation exemption" for tokenized securities, which she described as "not even that big of a step" and "pretty traditional," clarifying that it would not cover synthetic securities held through special purpose vehicles. She also emphasized that the SEC and CFTC are conducting joint work to determine where products should be regulated, and that the SEC is preparing for potential rule-writing obligations if the CLARITY Act passes, which she said she expects to happen "this summer." Peirce noted that her term ended in June 2025 but she can remain until the end of 2026, and that she plans to leave before that time to teach securities regulation at a law school. Peirce stated that she is "not looking for ways to pull people into the regulatory regime that don't belong" and cautioned that "some of what's out there at least rhymes with what we see in some securities type arrangements," urging market participants to assess whether securities laws apply to their activities. She identified priorities including enabling token fundraising, updating transfer agent rules, and addressing custody issues. Peirce also stressed the importance of protecting self-custody, privacy in financial transactions, and developers' ability to write code without permission, while noting that the SEC continues to pursue enforcement against bad conduct. She encouraged builders to "build things that meet actual human needs" and to "come in and talk to us" about registration or relief.
Transcript (109 segments)
H
Host0:00
Hey, hey, hey. Hey, hey, um, we're about to start the show. Welcome to Crypto and America Live, the only show bringing you candid conversations on the biggest news stories, legal issues, and policy developments shaping the crypto world every Friday afternoon.
Happy Friday.
Happy Friday. Hey guys. Yeah, busy week. Busy week. Always a busy week.
Hopefully.
Good news, maybe. I'm not sure. I'm still optimistic. Are you guys optimistic? What's the pulse check here?
Optimistic on what?
Yeah.
And what's happening on that bill? That bill we're trying to pass. Yeah.
Oh, yeah.
That big. Yeah, it's an interesting one. We'll definitely talk about it.
I think I'm feeling pretty good, too.
Yeah.
Yeah, we'll talk about it. So, I guess we should start with the headlines, which is we're going to start with BitMX shutting down in September after nearly 12 years in operation. It's a big story.
E
Ellie2:46
Yeah. I mean, for BitMX itself, for context, you kind of think of the crypto world as before BitMX and then after BitMX. I don't know if Gerald agrees with that, but essentially the exchange invented the perpetual swap and changed how markets traded after that. But as more companies picked up perps, it lagged behind. They also allowed traders to borrow up to 100 times their collateral, which is just degen energy. So the technology survived but their business model did not. Also, there was a proposed class action lawsuit alleging forced liquidations of over 300 Bitcoin from BitMX. The plaintiffs want others to come forward, but a judge needs to rule on whether it can proceed as a class action. So TBD. Good night Bitmax.
G
Gerald4:00
Yeah, I think it was a good run. Frontier pioneering stuff. We're entering a brave new regulated world. I don't know if they were ready for that. Sad to see a pioneer go. I was talking to a friend yesterday. Maybe everyone doesn't need to be trading 100x margin. Maybe everyone doesn't need a grenade launcher in their garage. Good run for that company. We'll see the unwinding process. We've seen how long FTX takes to unwind. So unfortunate to see them go.
Yeah, I think that's a good segue into the next one. Speaking of FTX, right, Ellie?
E
Ellie5:14
Yes. The SEC is settling with Coinbase over Gensler's lost text. That happened a little while ago. I remember when Coinbase brought the FOIA lawsuit. The SEC agreed to settle for $150,000 and strengthen their record retention policies. For context, the text messages deleted were from October 2022 to September 2023. In July 2023, they reported the phone was not backed up for nearly 12 months. This period covers the FTX collapse and the Metamaterials market scandal. Not the best time to have your texts deleted. I'm not going to say too much, but you can read between the lines.
G
Gerald6:30
Yeah, I think so. Clearly nothing was going on in that period. I want to give the benefit of the doubt, but it would be ironic if the industry's document retention policies were stronger than the SEC's. $150k as a settlement for one of the most impactful regulatory periods is not ideal. I'm wondering how they came to that amount. It's not nothing, but not a lot in the grand scheme.
H
Host7:23
Yeah. So, the House narrowly passed the Stop Insider Trading Act this week, Brian Styles' legislation to restrict lawmakers from purchasing new stocks. Interesting to see who voted for and against, including Nancy Pelosi.
Yeah, saw that. Good initiative. We'll get into ethics throughout the show. Great to see Rep. Styles putting this forward. Progress, but you want to make sure people are not capitalizing on information. We've talked about insider trading definition before.
Nancy Pelosi also voted against this, right?
G
Gerald8:28
Yep. There we go. Checks out. I know Ellie wrote in the show notes that her staff says she doesn't trade personally, but her husband Paul does. That's under the 2012 act that allows spouses.
E
Ellie8:48
Well no, they don't disclose. Even though the Stock Act of 2020 requires disclosure of spouse transactions, she apparently does not.
H
Host9:01
Well, I know there are tickers you can trade alongside her. You can follow the portfolio. I think he'd be up significantly. I follow that guy on Twitter. He's up 20 to 40% on the year sometimes. It's wild because when they file, it's delayed and he's still up. Not financial advice, but go check it out.
Yeah. And finally, the Digital Chamber has become the first trade association to sue the state of Illinois over its digital asset tax. We've talked about this. They're filing a lawsuit to block it from going into effect in January. I believe Kalshi filed something related to prediction market tax, but this is the first legal action on the crypto tax front. It levies a 0.2% tax on businesses dealing in digital assets. They say it's not fair because there's no tax for traditional businesses using traditional assets. But when it comes to blockchain, Chicago has decided to levy taxes. So Digital Chamber suing Illinois.
G
Gerald10:34
Yeah. And so I know we have to move quickly because we're excited to have Commissioner Peirce on to talk about vaults. I'll just say, thank you to the Chamber for having folks at the Embassy of Japan earlier this week. I caught up with Jonathan, their counsel who filed this. One interesting thing that was lost is that it stacks. Every time you transfer assets to a brokerage or into USDC, you're talking about bips on trillions of dollars. Stack the percentage on every transaction with razor thin margins, you could have a serious tax outcome. I'm excited they put that forward. We'll see how it plays out in court. The way they filed it was problematic because there wasn't opportunity to re-legislate. So it was always going to be litigation. Good for the Chamber, shout out Jonathan.
H
Host12:40
Yes. Well, crypto vaults have become one of DeFi's fastest growing products, allowing users to pool crypto and automatically put it to work to earn rewards. SEC Commissioner Hester Peirce, who heads the agency's crypto task force, warns that some vaults and onchain lending strategies could trigger federal securities laws depending on how they are structured and managed. She joins us now. Commissioner Peirce, welcome back. Good to see you all. How are you?
H
Hester Peirce13:04
Good. Thanks for coming on.
H
Host13:06
Third time's the charm.
H
Hester Peirce13:08
Great.
H
Host13:10
Commissioner, there's lots of eyes on your statement from Wednesday. Commissioner, what are you seeing in the market right now that prompted you to issue that statement?
H
Hester Peirce13:18
Yeah, and I should start by telling you that my views are my own, not necessarily those of the SEC or my fellow commissioners. Vaults are not new and onchain lending is not new, but there's a lot of activity. I want people to grapple with the fact that some of what's out there rhymes with securities type arrangements. People need to assess what they're doing and think about whether there's any touch point for securities laws. I had hoped we would do this under Chairman Gensler. I thought there were moments we could have provided guidance. Now I see activity and thought it's worth telling people some things to think about. Let's talk about your facts and circumstances and hear your legal analysis. That's the point of the statement.
H
Host14:40
Yeah. For context, vaults pool user assets and put them to work to generate yields. So what specific features could trigger federal securities laws and how important is human management?
H
Hester Peirce14:54
Yeah. Vault is a term that can describe many things. There's a spectrum of vaults and lending. You could run into problems under the Howey test, the Reves analysis, the Investment Advisers Act, and the Investment Company Act. Different potential places where people could trip up.
H
Host15:44
So, Commissioner, elaborating on that point, one challenge the industry has is the 'not my problem' attitude. When you're talking about registering as an RIA or dealing with FINRA or the SEC, are you most concerned about the activity of curators designing investment strategies, or the permissionless software? Who should be responsible for disclosure and decision-making?
H
Hester Peirce16:52
Again, it depends. The title 'curator' can mean different things. I'm not trying to make code writers register. But if someone is managing other people's assets, allocating to strategies, taking an active role, there's potential. You could have an onchain fund. Funds typically have to register or have an exemption. Each area of law is complicated but has history. You need to see where you fit. Investment companies, unit investment trusts. It requires looking at what services you provide, how actively you manage. Custody is a touch point, but often it's not custody, it's active management or issuing a note under Reves.
H
Host18:52
Yeah, it sounds like facts and circumstances. But does the SEC expect to issue more formal guidance on vaults and onchain lending?
H
Hester Peirce19:03
We've had great meetings. I encourage people to come in and actively engage with us. Think about where they fit in the securities laws. It's not a good strategy to point to others and say 'we're different'. Have a serious conversation with your lawyers. We welcome the discussion. I'm not looking to pull people into the regulatory regime who don't belong, or to expand jurisdiction beyond where it should be. I'm not looking to put developers in a position where they fear writing code. But the securities laws are what they are. We are willing to work with people using flexibility in the statute for exemptions. It's better to do that at the front end. We don't want a world where doing something on chain gets different rules. That could lead to bad regulatory arbitrage.
H
Host20:58
Following up, the Clarity Act is facing more hurdles in the Senate. We got the text on Wednesday. Many in the industry say they'll look to the SEC and CFTC for guidance. How quickly can the SEC provide formal guidance? At what point do you move forward without Congress?
H
Hester Peirce21:35
I remain confident Clarity will pass. It's difficult to write regulations. Stakes are high. Congress work is hard. We are prepared to use our existing authority. We've been using it. We'll continue. You'll see activity even if Clarity doesn't pass. If it passes, we have a ton of rulemaking. We plan to use our existing authority. Time is of the essence. I'll work quickly. My time is short, but colleagues are well positioned.
H
Host22:52
Yeah. Maybe to wrap up. Commissioner Peirce, I know you're leaving the SEC to take on a new role at Regent University this fall. When will your last day be?
H
Hester Peirce23:06
Oh, I haven't determined that yet. Still figuring it out. The issues are exciting and interesting. I love working with the people here and on the outside. It's a job I'll miss, so I'm not racing out the door.
H
Host23:27
I was going to say I don't think anybody wants to see you leave. So you probably have a... Believe me, there are people who tell me every day they can't wait to see me go. So there'll be people applauding my departure.
Commissioner, we're incredibly grateful for your time. If I could ask one more question about vaults. How does the agency view the difference between a traditional DeFi liquidity pool and a curated vault strategy? Can you explain for our audience?
H
Hester Peirce24:25
Yeah. I'm very enthusiastic about the potential for this technology to be the basis for cheaper, more bespoke, flexible products. There's a lot of promise. With a traditional DeFi pool, it's a smart contract mediating a transaction. No intermediary. The smart contract is what it is. Everyone can see it. It's open source. But with vault activities, you add a third party. That's where regulation may apply. When a third party decides how assets are allocated and invested, you have to ask if securities laws apply.
H
Host25:58
Commissioner, before we let you go, I wanted to ask you, given that you have been at the SEC for over eight years, has everything panned out the way you wanted?
H
Hester Peirce26:14
Absolutely not.
H
Host26:15
Think back over the years. Are you happy with the way things are ending? If not, what do you hope carries on and gets completed?
H
Hester Peirce26:30
Well, I'm happier now than a couple years ago. We're in a world where regulators and legislators are trying to work with the industry. I've seen how the industry developed in response to regulation. I think we would be in a better place with things built now. People responded to regulation by building flash in the pan things to avoid scrutiny. That's a shame. People haven't poured talent into things built onshore that last. That's partly a function of regulation. Now we're in a healthier place. I hope people seize this moment. I'd love to see regulatory issues settled so people can get down to building. I'll be cheering on the outside for people to build products and services people want and need.
H
Host28:13
Awesome. Well, damn, Commissioner Peirce, thank you so much for coming on. Hopefully we have you on again before you move on. Thank you.
H
Hester Peirce28:24
Well, thanks so much. Love your show. Have a good rest of the day.
H
Host28:28
Thank you.
Thank you, Commissioner.
All right. Next up, let's bring in Sylvia Ferrettto, the GC at Mysten Labs, which is the company behind the Sui Network. Sylvia, welcome to the show.
S
Sylvia Ferrettto28:43
Hey, thank you for having me. It's good to be here.
H
Host28:45
Thanks. Yeah, thanks for being here. I was sent the piece that you put out earlier this month on why the ICE and OKX deal matters. And I want to start with that and then we could ask you some follow-up questions maybe related to what Commissioner Peirce was talking about. But essentially, you argued that the ICE...
OKX partnership is different from prior tokenization announcements. So maybe at a high level, what makes this deal different and why do you see it as a meaningful milestone rather than just maybe another headline in the news?
G
Gerald29:14
Yeah, and there have been a lot of headlines in this space. You know, there have been a lot of projects and players dabbling in tokenized equities lately. But what I think makes this deal stand out is that, unlike some of the projects that we've seen in a lot of the headlines that you noted, is that ICE is not a scrappy fintech trying to prove a concept. It's the entity that owns the exchange that had to file the actual SEC rule change that makes any of this legally possible in the first place. And it's choosing to put that standing into a 50/50 co-owned entity with a crypto exchange that already has 120 million crypto users. So, I think that that pairing including the DTC plumbing underneath it is what's genuinely sort of the unusual part here. Regulators and traditional finance more broadly have to actually reckon with what it means when you have an incumbent itself deciding that a crypto-native platform is worth real joint ownership rather than just a licensing deal or a partnership which you're seeing a lot of as well. So I think what you have here is really one of the world's largest financial market operators saying that blockchain belongs in mainstream market infrastructure and they want to help drive that process which I think is very meaningful.
H
Host30:32
Yeah. Sylvia, there's a lot of bottlenecks today for tokenization before it kind of comes mainstream, right? Had someone on the show recently, Tom Sha, who was the former chief innovation officer at Swift, and he was saying that the biggest bottleneck, you know, it's not necessarily the infrastructure or sort of the regulations, which will likely become clear whether clarity passes or not. The SEC will take a big initiative on tokenization, but what do you see as sort of the biggest bottleneck to institutional adoption? Tom mentioned trust. That was probably one of the biggest ones, but from where you sit in your GC position, what are you seeing?
S
Sylvia Ferrettto31:10
Yeah, I think adoption is really the big issue and the article I wrote mentions that that's really the open question, right? I think that what you see with institutions though is that they're starting to dip their toe in the water. You know, DTC even just had their trial test trades that they released the results of in July. And there you saw institutions participating. And so I think that what they're trying to just sort of identify is how will this actually be useful for me? Like what is it that I'm doing today that requires blockchain technology or the efficiencies that the promises hold? And so, even with the test trades, you're seeing they were testing collateral pledges, security lendings, treasury repo, and obviously delivery versus payment atomic settlement. That can be very useful. But I think that institutions right now are trying to answer that same question too. They're saying, do I need to be participating in this? Like, where will those efficiencies be for me? And so I think institutions are probably going to be the ones that are more likely to find product market fit with tokenized equities or tokenized securities rather than probably your retail sort of day-to-day user.
H
Host32:38
Yeah. Silia, I want to ask you about how this impacts other jurisdictions. So, one of the things that people who come on the show and talk about tokenized equities repeat is that a big unlock here is international access to American equity markets for international users. And we know OKX is a very global exchange. They have a presence in a lot of different countries. They're now, as you mentioned, partnering with ICE. How do you as somebody operating in the in-house legal space approach the sort of multi-jurisdiction or international scope of what we're seeing start to happen in tokenization and the broadening of liquidity in these markets?
S
Sylvia Ferrettto33:22
Yeah, I think that's one of the primary appeals of tokenization, right? It's allowing folks across borders to access financial products that they traditionally couldn't. And I would say though that it's sort of cautionary because a lot of times what you're seeing is access to US products being provided abroad but it's not really that direct access, right? It's structured so it's like a synthetic wrapper and so what you're holding isn't really representative of the share itself, it's really just a claim against whoever that issuer is. And I think you're seeing that a lot with these pre-IPO boom too where a lot of folks abroad are accessing pre-IPO shares of companies that'll be listed in the US but you're seeing that even issuers themselves are sometimes saying wait we had nothing to do with this and then the prices swing. So it's definitely something that could use some refining but it's something that is what makes tokenized equities very appealing.
H
Host34:27
Yeah, I also wanted to bring up something that we were talking about with Commissioner Pur on the front of like crypto vaults, on-chain lending products, etc. How some of them could fall under certain securities laws depending on how they're structured. Like what is your reaction there? And does that ultimately align with how legal teams have been thinking about these products maybe from a blockchain perspective and working with ecosystem projects.
S
Sylvia Ferrettto34:49
Absolutely. I mean, we even discussed this internally the other day where folks were saying, 'Oh, this new piece has come out from the SEC. Is this different from sort of how we had envisioned them to come out or where we thought this was going?' And I think absolutely not. I think that Commissioner Pur and the SEC have been very clear that just because you bring something on chain, it doesn't change sort of the fundamental nature of what it is. And so if you have a vault or a lending protocol that's really being controlled and run and managed by a single central party that's able to not only own the smart contracts and be able to pull the plug but really dictate the terms of the products that are offered, then you really have to think about whether that falls into the securities remit or is that truly a decentralized permissionless construct.
H
Host35:45
And then what do you think builders would take from this comment? It's not formal guidance, right, but Commissioner Pierce is obviously the head of the crypto task force, she matters a lot to the securities industry but also the crypto industry. Do they pause development until there's more clarity or they kind of continue to build in the way that they've been doing? I guess a lot of it hinges on this potential legislation that we're facing down right now, but what do you think that the reaction on the ground is from some of these builders that you're hearing from?
S
Sylvia Ferrettto36:19
Yeah. I mean, I don't think that this announcement really changes much in terms of, if you're a builder, how you're proceeding. And this is also why it's so important that there is legislation that passes and there is clear guidance because in the absence of that builders are going to build and especially in this sort of regulatory environment they're going to want to continue to innovate and build and grow their products with as much competence as they can that they are not doing something that runs afoul of the laws. But I think that their main goal at this point is probably build and refine. Refine when there is something clear that comes out and I think that is honestly what a lot of builders are waiting for.
H
Host37:11
Yeah. So, I want to ask you about just again going back to as in-house counsel, some of the issues that we think about when you talk about the permissionless DeFi space and what we've been doing in that space for the last two years. I know Myst has incubated a lot of interesting things in that space whether it was Walrus or anything else. There we had the DeFi summer last year, there's ETFs coming online. How do you think about the transition as somebody in your spot from the DeFi ethos, but more of what we've been doing for the last few years going into this traditional environment, right? Obviously you wrote about ICE and OKX and we're seeing a lot of institutional partnerships these days. How does that affect what you're doing day-to-day and how your team thinks about what we should do next? What's the future here that you see?
S
Sylvia Ferrettto38:07
Absolutely. Yeah. No, I love that the institutions are waking up to crypto and embracing it. And I think that it really does change how you think about, especially things like DeFi, right? I think what you're seeing a lot is this concept of permissioned DeFi or permission chains and venues where institutions are going to feel more comfortable that they're able to satisfy their existing compliance obligations while still being able to dabble in the blockchain space.
H
Host38:43
Yeah. Amazing. Well, Sylvia, thank you so much for coming on today and we will keep an eye on these developments and have you back on soon.
S
Sylvia Ferrettto38:52
Wonderful. Thanks for having me.
H
Host38:52
Well, it was obviously a busy week for news for the Clarity Act. The White House agreeing to what it described as historic ethics package. I don't think Democrats would agree with that, but Senate Republicans released 600 pages of long-awaited bill text as well. But while the industry seems broadly happy with what Senate Republicans have put out, Democrats are obviously not. And their votes are the ones that are going to matter when this bill gets its day on the Senate floor. Let's bring in Miller, White House Lavine, CEO of Salana Policy Institute. Miller, welcome back.
M
Miller39:24
Thank you. Thank you for having me.
H
Host39:26
Yeah, always great to have you on. We spoke with you a couple weeks ago at the Chicago SPI Summit. And you told us that this bill had to pass by the August recess or its chances of passing at all are pretty much going out the window. Have we missed Clarity's window?
M
Miller39:45
No, we haven't. Because it's not August recess yet, fortunately. It's not even August yet, so I'll take it. But I completely maintain the view that this needs to happen before August recess or at least the Senate needs to pass it and the House can come back to it after recess. But I think to the extent this bill does not pass out of the Senate by recess, it's going to be very difficult not impossible to get it done this year. And if it doesn't happen this year, I don't think it's happening this decade. So the time is now and we're on the brink.
H
Host40:20
Right. Well, if it doesn't get on the floor next week, then it's pretty much that's it. That's over after that point.
M
Miller40:29
Yeah, I think Thursday would be really the last possible day that they could, Senator Thune, the majority leader, could move a motion to proceed to the floor. Hopefully, he does it far sooner than that, but I think to the extent everything goes perfectly, which rarely happens, it would take about a week for the Senate to move this legislation across the floor. That's due to Senate procedural rules. There are delays between procedural votes and actual votes. And so to move a bill clean without any amendments or anything like that takes about a week of floor time. So it's definitely got to start moving next week and get done that week after.
H
Host41:10
And I soon told reporters that clarity likely would not pass before the Senate leaves for recess, but I know your very own Kristen Smith said this morning that that doesn't reflect the state of play. So what are you guys hearing behind the scenes that contradicts that and maybe gives us a fresher perspective?
M
Miller41:27
Yeah, I think that report was maybe a bit confusing in that I think the majority leader was referring to getting both of those items referenced done before August recess. So, our understanding as of this morning is the majority leader and the Republicans and Democrats who want to see this bill done are full speed ahead to get it done before August recess. And I think folks that do want to see this done share the view that it needs to happen before recess or the odds materially decline. So I am far more hopeful this morning. I think we're in an hour by hour, good hours bad hours state on the bill right now which I think is reflective of the fact that we are on the brink. We are subject to national politics, to crazy things happening outside of our control, and that's because we're right there on the one yard line in the Treasury Secretary's words.
H
Host42:24
So Miller, I have to ask you, clearly, you know, front of the show, we've had you on before. You're suited and booted today, which we appreciate. So you're clearly not busy. But I wanted to ask you like just in terms of what actually happens in this final push. I think our audience would be very curious and I'm curious about having been part of so many of those meetings and so many of those kind of close the gap conversations. What is your day-to-day like right now? What are you hoping to accomplish? Who are you having conversations with about getting this across the line?
M
Miller42:59
Yeah. So, I mean, right now it's about ensuring we have the votes to get on to a motion to proceed and then to pass the bill. So, we need unified Republican support or near unified Republican support and then at least 10 Democrats to make that happen. So, we're hitting every Senate office and have been doing that this week to try and address any of their questions, get them as much information about the bill as possible. For senators that have not been following this closely because for example they're not on the relevant committees of jurisdiction, this is somewhat of a fresh issue for them and they have a short amount of time to get up to speed so we've been spending our time essentially trying to secure senator support so that the majority leader can be confident to bring it to the floor. DC works on a deadline and the deadline is here so I think what is happening, Gerald, is when folks see a deadline, they get serious about negotiating and trying to reach a bipartisan compromise here. I think the Federal Order of Police endorsing the bill this morning is good evidence of that. They came out strongly opposed not just a few months ago and have worked out many new provisions in the bill to address their concerns and now they want to get it done. So I think that is the kind of negotiation and discussions that are going to be happening through the weekend and going into the motion to proceed as folks appreciate that this is going to be happening now and it's time to settle issues and get it done.
H
Host44:46
The FOP in their statement, Miller mentioned that they are happy with clarity because of revised BRCA language and that addresses previous concerns that they had, but from what we saw in the Wednesday text drop, there was no changes to the BRCA or the Lummis-Grassley amendment. So, do you know what they're talking about there?
M
Miller45:07
Yes. So, based on my read of the letter, they are talking about the specific intent addition from Markup. So I think perhaps they got far more comfortable with that clarification around specific intent between markup and today and in addition all of title 9 in the bill has been added to support law enforcement's ability to police crime in the space and I think that has also gone a long way to secure law enforcement's support for this bill.
H
Host45:38
There's also been a lot of discussion maybe Ellie if you want to take it. I saw you starting to go on that front about whether
E
Ellie45:45
No, no, go ahead. Go.
G
Gerald45:46
No, no, no, you go. You go.
E
Ellie45:48
No, you go. [laughter]
H
Host45:49
Okay. Discussion around whether the White House is willing to spend political capital to get this across the finish line. Kind of being direct here, but from your conversations that you're having, how engaged is the administration behind the scenes on this front? And like what role can they realistically play in getting enough Democrat votes?
M
Miller46:09
Well, I think the White House has a massive role to play here and President Trump also has a huge role to play here. I think last week was the beginning of them playing that role. I would say that last week is the first time the president has personally been involved in playing that role because the administration has been trying to get this bill done for the last 18 months as have the rest of us. So, I think the issue has been elevated to the president and I don't think that he would have agreed to anything last week if he were not inclined to get this bill done. It's a priority for him and he's been saying that since day one. I think the role that the White House really needs to play here as far as the Dems are concerned is securing a deal on ethics that both sides can live with because the Dems have been quite clear for the last 18 months that that is going to be necessary for them to support this legislation. We need to secure some sort of deal on ethics that both the White House, the president and Democrats in the Senate can support to see this legislation move. So we need the president to be at the table negotiating on that in order to see this bill done.
H
Host47:21
Miller, I want to follow up on that a little more specifically. So, obviously we talked to Harry Jung over at the White House crypto task force at the Injective Summit. Then we also saw Patrick Whitehead defer his service who's been so instrumental in moving this forward and this conversation forward. I know Kristen has spoken about this publicly a little bit, but I'm just curious in terms of the other kind of role players here, like how impactful has it been to see folks be dedicated to this, whether it's from the White House front or other stakeholders like staying in the game and trying to get this across the finish line. Like what does that mean to you guys and the conversation more broadly?
M
Miller48:07
Yeah, I think it's extremely hopeful. I cannot imagine the tens of thousands, if not hundreds of thousands of hours that have gone into this bill from consumer groups to Hill staffers, both Republican and Democrats, to industry folks and people at the White House. Everyone wants to get this done because I think they think it's important, number one, but at this point in late July 2026, everyone's sick of talking about it and has put in enough time that they're ready to get it done. So I think that is reflected for example in the Dem statement from Wednesday or was that yesterday? On Twitter, it seemed like folks took that to be quite bearish but I thought it was quite bullish because it was in my mind quite a productive statement and literally concluded with the statement that the Democrats are hoping to get this done and over the finish line. And I think this is how negotiations work and senators are quite good at negotiating. So I think this week for the bill and where things are headed is going as about as well as we could have hoped. Obviously more time and having done this a few months ago might have been prudent but where we are we are. Like I said, DC needs nothing like they need a deadline and we've got a good deadline here now.
H
Host49:36
Right. What would you say are the odds right now of clarity going through? I know I spoke with Summer Mercer last week at the Injective Summit and she was telling me she felt confident at about 8 to 9.5. But obviously a lot has transpired since then.
M
Miller49:52
Oh, I think it's 50/50 which is the highest my odds have ever been. I think we're closer than ever and, you know, getting legislation done takes a series of miracles, so the odds are never in our favor. But I think we're on the brink here and the odds have never been better.
H
Host50:11
Yeah. Right. We got I believe this is a polymarket one at a 38. It was at 40 last week, so it's down 2%.
M
Miller50:18
Yeah. I will say, you know, I thought polymarket has been way too bullish for the last 18 months and now I think it's too bearish. So, we'll see if the markets are efficient or not.
H
Host50:31
Are people following Palshy or are they following polymarket odds on this? Because I feel like there are two.
M
Miller50:34
Yeah, I don't really know. I think one thing that's confusing to me is what volumes we're talking about here because like if you look at the order book, you could move the odds 20% with like 5K of contracts. So, I would take the polymarket odds with a few grains of salt.
H
Host50:57
Miller, I was just going to say I want to ask you kind of like a tangential question which has come up in a lot of the chats. We're all in the same chats, we're all having the same conversations. There's been this notion that clarity would be good for price action and I don't know that I necessarily think that's the case. Like obviously legislative clarity is great but it's not going to be reflected in it's not the same as a stimulus check or something like that. So like what do you see kind of happening whether we do get it done? And I'm not asking for financial advice, no market intel here, but like how do you guys think about how clarity whether it passes or doesn't pass would impact where we are right now with the market? Because I think that's come up a lot recently that there's this polymarket crowd or Koshi crowd thinks that there's going to be some kind of massive price action on the other types of assets that are out there in crypto versus what we're actually talking about is a path forward to institutional adoption and regulatory clarity for the industry. Like how do you weigh those factors and the way you guys approach it at SPI?
M
Miller51:11
Yeah, I would say we got to think about it. I mean, of course, I see that on Twitter and I suppose hope springs eternal, which is the most overused phrase of the last two weeks, so I apologize for using it here, but yeah, I have no idea in the short term. I think there's certainly an expectation it would be bullish for the markets in the short term, which might mean it's bullish for the markets in the short term, but whether that's based on anything or not one never knows. I think long term it's incredibly bullish for the space because to your point Gerald it's about creating a path of certainty for not just builders and innovators in the space but also investors and consumers that are trying to use it. So I think the sanity that a legislative framework would bring, meaning bringing irrelevance to the policy people in DC, would be quite healthy for the space and the markets long term.
H
Host53:03
Last thing, Miller, obviously you are the CEO of Salana Policy Institute. Got to ask you a Salana related question, but ultimately how do you see this impacting the Salana ecosystem, the US capital markets narrative and building on chain? If it goes through, obviously it'll probably be a big win and accelerant, but then if it doesn't, like what does it ultimately mean for Salana? Both sides of the coin.
M
Miller53:25
Yeah, I think that the benefit of being a global decentralized platform is that you're insulated from the happenings either positive or negative in any one jurisdiction. I think to the extent the bill doesn't pass it'll be fine. I think the agencies here in the US have got a lot of rulemakings that they're sitting on crypto-related out of deference to Congress's efforts here. For example, you can see on OIRA, the White House's website that a rule from the SEC has been sitting on a shelf at the White House for at least three to four months. I think that's one of many rulemakings that have been prepared and are waiting for the starting gun of either clarity, success, or failure over the next few months. And that rule making will be extraordinarily helpful in accomplishing many of the goals that the legislation is seeking to as well. It of course can't do anywhere near as much as legislation can do and the durability of rules is much lower than legislation itself, but crypto has survived and I think will continue to survive and the same is true for Salana.
H
Host54:39
Yeah. The show will go on. Amazing.
The show will go on. [laughter] Thank you so much for coming on today. It's great to see you.
M
Miller54:46
Good to see you. Thanks for having me.
H
Host54:48
Thanks, Miller.
All right, guys.
Happy Friday.
We'll see. Happy Friday. Thanks for listening in. Have a good one.
M
Miller54:55
Happy Friday.
U
Unknown55:29
Hey, hey, hey.