I actually prepared a digital assets taxonomy that I presented at the White House summit about a year and a half ago, and I think that is still relevant if we think about the opportunity for digital assets. The industry right now is about a three-trillion-dollar space. It could become a 10-trillion, 20-trillion, even 100-trillion-dollar space. The opportunities are fairly straightforward. One of them is around digital tokens and capital formation. Right now, it is too expensive. There is too much friction in raising capital or financing new businesses. If we think about the impact of AI and digital intelligence, one thing we are doing is we are going to automate out a lot of jobs, and we are going to eliminate a lot of jobs and a lot of business models and a lot of traditional products. If we want to ensure full employment and prosperity, we need to create a lot of new jobs and a lot of new corporations, a lot of new products.
That means that you would like to see a world where 10 million companies can be launched with capital. Right now, even though the US has the most advanced capital markets in the world, our markets and our structures for raising capital for small and mid-sized businesses are still fairly antiquated. Like, for example, what the crypto industry showed is during the ICO boom, you could raise capital in 48 hours, and there are 10 million businesses in the United States that could raise money in four days with 40 bucks if we had the right regulations. Instead, we have a set of rules where people are paralyzed in fear to raise money. If you are a podcaster, there are literally rules that say that you are not allowed to mention to the people that want to give you the money that you are raising the money. If you think about how insane that is, we have constructed rules that cripple capital formation. The opportunity is to modernize those rules and allow the creation of digital tokens. I think one of the great travesties is there are 40 million businesses in the United States, and there is maybe 400 million well-known—sorry, there are maybe 400 well-known seasoned issuers. So 400 out of 40 million can actually raise money, low friction in the public markets. That is how difficult it is. There are a lot of companies that went public via SPACs, BSTR, 21, et cetera, in the digital asset space 18 months ago, and after 18 months, even with $4 billion of capital and an army of lawyers, 18 months later, they still can't raise money. I think one opportunity is to modernize that.
The second is digital currency, right? Everybody wants to move US dollars at the speed of light. We made some progress with Genius, but if we look at Clarity, one of the things about Clarity was it wasn't a bill of rights. It was a bill of restrictions. It was 630 pages, of which 600 pages are like restrictions, and maybe there is a couple of pages of rights that are kind of hidden there. But this is freedom tech, right? And one point I will make is that freedom starts with the bill of rights. It starts with the ability to do things. You have the right, for example, the right to pay interest on your digital currency. Most of the lobbying in this town has been about taking away the right to make the asset useful. I think what we've got is we've got a world where you would like to be able to issue 10 million different digital tokens. You would like to be able to issue digital currencies, and if there was a competitive free market in digital currency and all the currency issuers were able to offer various yields, then you would have a hundred or a thousand competitors, and you would have a very vigorous market there. There's no reason why. We actually have policy in this town to keep companies like Meta from doing that. I think we actually put at some point we're putting in rules to prevent Apple or Google or Microsoft or Meta from actually creating a digital currency. But of course, if you were pro-dollar and pro-United States, wouldn't you want Apple and Google to build the stablecoin into the iPhone and Android phone and give it to 6 billion people? You would think, right? If you wanted to actually cripple the dollar and cripple innovation, you would prohibit these companies from doing that. So a lot of our policy is about prohibition as opposed to allowance.
I think that if we look at the various assets after digital token and digital currency, the question is digital commodities, right? And Bitcoin is the greatest of the digital commodities. And if we want Bitcoin to reach its full potential as a digital commodity or as digital capital, the key there is a set of rules that allow banks to custody it and extend credit on it, and to eliminate hostile or prejudicial accounting rules or regulatory rules that would prevent a bank from handling the asset. Banks and insurance companies are two special types of entities, and they both have licenses from the government. Insurance companies get a tax benefit. They don't have to actually pay tax on fixed income for regulated assets. That's a huge entitlement to an insurance company. And then banks have similar entitlements. The banks have the entitlement to create dollars out of thin air. Okay. So right now there are certain regulatory restrictions or there are rules that discourage an insurance company or a bank from handling an asset like Bitcoin. And so that's an example of policy that tips the balance against the asset and against digital capital. But of course, if you want to have the world's most competitive insurance businesses and the most competitive banking sector, you would want to allow digital capital to permeate both of those businesses. Insurance companies backed by digital capital will offer twice the payout and charge half the fee. Right? That would be good for the industry and good for the customers. A bank that is able to handle digital capital can offer better money, better investment products at lower cost.
So I think that if we want to see the United States prosper and if we want to see the world prosper, then you want to embrace the digital transformation of assets, and that would mean, you know, tweak a few regulations that keep insurance companies from beginning to put digital capital on their balance sheet. Eliminate some of the prejudicial rules like the Basel haircut, the 1250% risk weighting that discourages banks or actually just kind of cripples banks from being able to use Bitcoin in that way. I think we have much more progressive guidance coming out of the Treasury, the OCC, the FDIC that allows for crypto custody and the formation of crypto credit. And I think that will be a big deal. I think there's about 1.6 trillion dollars of capital in Bitcoin right now, and for the most part, it's unbanked. Like the only way to bank it is to convert it, is to wrap it into an ETF, and then it's sort of banked as IBIT or the FBTC or something. But of course, if the major banks in the US, Citi and JP Morgan and Morgan Stanley, if they start to custody BTC, then they can start to create credit on BTC. And of course, if they do that, the primary driver of the growth of the industry will be the price of BTC. If you create $10 billion of bank credit on BTC, you buy the entire organic supply for a year. So JP Morgan could create $10 billion of credit in a heartbeat, in a month. You could create $100 billion of credit between two or three of those banks in a matter of 12 months, and you would buy 10-year supply. The price of BTC would double, triple. The industry would expand to be a $10 trillion industry. The largest holders and the largest investors of BTC in the world are all American companies and American investors and Western-based, right? So bank adoption will be really important, and they will get their signals from Treasury.
On the other hand, the other driver is the tokenization of securities, digital securities and the like. And so the issue is, can I tokenize the $100 trillion of equity capital in the capital markets? If I tokenize it, then I can move it 24/7, 365 globally. I can vibrate it. And of course, what is the real big opportunity of tokenized securities? It's not that one bank can settle with another bank on Saturday. The real value will come when you create a free competitive market in custody and credit. So, for example, if I wanted to create a tokenization that had no real economic value, I would allow you to tokenize the security but limit custody to broker-dealers that are already in existence, and I would deny self-custody. And I would, back to the Bill of Rights, do you have the right to custody your own digital asset? Do you have the right to transfer your own digital asset to another custodian? What happens when I can self-custody a million dollars worth of Apple stock? I could transfer a million dollars of Apple stock to an exchange in Singapore that paid me 4% yield on the Apple stock. I could transfer it to another exchange that gave me a loan for 3% cost of capital with an 80% advance ratio. It turns out right now the traditional finance establishment gives you 0% yield on your asset, and maybe it would charge you 10% interest to borrow up to a 20% advance ratio. By the way, what is 0% yield on your digital asset? It sounds like 0% yield on your dollars. The most low-volatile, most tangible digital asset you could possibly have is a stablecoin, like a digital dollar, and right now there's a debate on whether or not I should be able to get paid 3.5% yield on it. But the bigger debate is why is it you're not getting paid 3.5% yield on your S&P index? Why don't you get paid 3.5% yield on your Microsoft stock? You know why? Because we don't have a competitive market in custody. Like if you have a really competitive market in custody, the custodian would pay you 4% yield to custody your assets and give you an advanced 70 or 80% advance rate and charge you so far plus 50 basis points, right? That's what happens when you have a competitive market. We don't have competitive markets in equity, and we don't have a competitive market in currency.
So a lot of people are lamenting the failure of Clarity, but the point I would make is Clarity was mostly a bill of restrictions. It was not a bill of rights. And in fact, the interesting question now is, does an individual investor or corporation have a right to self-custody their own digital assets? Will there be a competitive market in credit? Will there be a competitive market in custody? The reason you want to self-custody is not because you want to self-custody. The reason you need the right to self-custody is because someone's willing to pay you 4% yield and someone else is willing to pay you 0%. And if you don't have the right to transfer from 0 to collect 4, it's like I create a banking system where no one has the right to transfer their money from a 0% yielding savings account to a 4% yielding money market. And this entire debate took place 30 or 40 years ago with money markets. And so if we want to grow the industry, what do you want? You want digital currency with a lot of rights. The rights of the issuer, the issuer should be able to pay yield, and the holder should be able to take custody and to transfer it. And not to mention, the de minimis exemption, it used to be you could take $10,000 out of a bank without reporting, and then it became a $200 thing. And last I heard, someone was working on a $20 de minimis exemption. I got down to $10. It's like so you get to spend up to 20. It's digital currency as long as you don't buy something for more than $200 with it. And so the problem with most of the legislation is lawyers and lobbyists think very hard about how to cripple the assets. You can't transfer it. You can't spend it. You can't make the asset. You can't create the asset. You can't give it good features.
And now on deck, the question really is, what is the SEC going to allow the industry to do? What kind of digital assets can you create? What kind of value can you add to a tokenized security? If we can tokenize security, can a company hold it? Can you transfer it? What can a digital exchange do? So in my opinion, the four most important actors in the next 24 months are going to be the head of the CFTC, the head of the SEC, the head of Treasury, and the head of the government, the president. Those four have the ability to control the freedom trajectory or the growth trajectory of the industry. If they opt for more freedoms, the assets will be more valuable. They will move faster with higher velocity, with more utility, and the industry will grow faster. If they opt for fewer freedoms, the industry will grow slower. But there's every indication based upon the guidance that came out of the SEC last week, the innovation exemption, and the actions and the words of the CFTC and the actions and the words of Bessent at Treasury, that the existing administration is far more progressive and more enlightened than the text of the Clarity bill was. And so the reason the industry and the reason the market is actually turning bullish is because I think there's a realization that the digital assets industry is going to be better and going to be advantaged by rules coming out of the administration for the next two years.
We know the president wants digital assets to work, and he wants us to be the crypto capital of the world. We know that Bessent believes that if you sell trillions of dollars of stablecoin backed by US dollars, that's good for the dollar. We know that Atkins wants to improve the utility of securities in the US market. And we know that that's selling is very progressive with regard to creating derivatives and commodities and once the US capital markets elite. So you have four leaders there that are very bullish. You have about two years. And I think right now the best thing that the policymakers can do is provide the most enlightened, most flexible rules they can. And instead of thinking about protecting the 20th century industry, you can protect non-competitive banks and you can protect non-competitive finance companies. But you're sacrificing the interest of 20 million American businesses and every American worker and your children. You're sacrificing the interest of the nation, the economy, and the world in order to, in order to create a business where 5,000 regional banks can pay no interest on your assets. And so if you have that vision, which you would like to stop progress, well, what you would do is you would prohibit digital assets from having any utility. And you would do something similar. You would basically prohibit people from using AI in school systems because the thing might actually give the kids the answer to the question. Yeah, like what happens if the 12-year-old child can actually do the work of a person with five PhDs from Harvard, and they can do it for free in the garage? That would be awful for the nation, right? Yeah. There's a lot of people, they're like, well, we have to like dumb down the AI so it doesn't actually give the kids the answer. Yeah, oh, absolutely. We got to stop it because it might actually solve the problem. So I think clearly I err on the side of freedom good. And ultimately, what we'd like to do is unleash the power of digital intelligence so that 40 million businesses can create 40 million new things. And we'd like to unleash the power of digital assets so that we can make money move at the speed of light, smarter, faster, stronger. And ultimately, there are 10 million interesting digital assets that could be created if we have a supportive regulatory environment.
My last point is conventional wisdom is you need a law to protect the industry from future administrations would be hostile. But if the existing law cripples 90 or 95% of the potential innovations out of the gate, you're not better off with the law. And if we had actually created a Clarity bill to support the use of iPhones, the law would have said you can't discuss business on an iPhone. And you can't use any word more than two syllables on the iPhone. Yeah. And you can't discuss stocks on the iPhone. Yeah. You can't do anything financial on the iPhone. And if the value of anything you create is more than $200, you have to report it to the IRS, the iPhone. And you would have privacy on the iPhone unless you used a number more than 99. And then you would have to disclose that. Yeah, absolutely. To the NSA and the like. So, you know, for that reason, Steve Jobs did not go to DC to ask for a law to support the mobile phone business. And we're lucky. Right? Because here's the issue. Nobody in this town is going to fight for a product that doesn't exist used by non-existent customers. This town is not very good at fighting for theoretical optionality. It's better at defending the entrenched interest of existing, but we have to protect the existing. And so, the best thing the industry can do is create a bunch of very, very good products, release them to the public, get 50 million or 100 million users, create 10 or 20 trillion dollars of value just like what Airbnb did, just like what Uber did, just like what Apple did. Right? People are still fighting over whether or not you can have privacy on your iPhone, right? We're fighting over that. But the United States, you know, did end up shipping 6 billion people smartphones, and we dominated the industry. It will be better for us to create a successful industry or create the most successful product in the world, right? That's maybe the iPhone right now. Maybe it'll be a robot that does everything you want. Maybe it'll be a digital asset that pays you 6% or 7% yield with zero volatility pegged to the dollar. Create the product, sell 10 trillion dollars of it, then sell 100 trillion dollars of it. And then we can debate the edges in this case.
