Is Common-Sense Crypto Policy Within Reach? | Tung Chan | Kara Calvert | Chris Hansen

so hot lost okay great um welcome everybody excited to be joined by this awesome panel as we talk Common Sense crypto policy uh I'm going to go through some quick introductions of the folks joining me and then we're going to get right into it we'll start with Cara Calbert on my right who is the head of US policy for coinbase um Cara has spent her career in various government regulations and lobbying positions and is originally from Wyoming so she is back in her home Western States um following Cara we have Senator Chris Hansen who represents the 31st District of Colorado and joins us with the focus on energy and tax for most of his uh political career and has been proposing legislation to further crypto and encourage the Innovation and support within the Colorado space and rounding us out uh last but not least is commissioner Tong Chan from the division of Securities for Colorado um and interesting fact about the commissioner she was the first general counsel for the ethereum foundation um so thank you all for joining me and let's get into it um I want to start at the federal level um we'll dive into the states shortly there after but following up on commissioner P's fireside chat I thought it would be good just to kind of get a lay of the land on some of the legislation that we know coinbase is very actively monitoring Cara's team leading the advocacy in DC so let's just set the stage tldr Cara what are you looking at what are the bills that are floating around the hill right now yeah absolutely well thank you all and I I think we uh need more Regulators like commissioner purse uh honestly in Washington and people who are really thoughtful who are thinking about these uh new technologies and new use cases it's really exciting um I always get really jazzed after I hear her speak because it makes me have faith again in in Regulators so what does it mean in Washington right now right now we've got a regulatory system that really isn't working for crypto as you all know and it's creating this downward pressure not just on companies like coinbase but on all of you on all the builders and all the innovators who are worried about having an SEC subpoena a day after they maybe create a new token so what we're really working for in Washington is to create a legislative a very clear legislative framework that helps us identify how how we actually put rules around Commodities something like Bitcoin ethereum you name the list we have 240 of them on our platform because we don't list Securities I have to put that out there uh but we need something for these commodities we need a framework at a federal level then we need something for stable coins mostly because The Regulators don't really understand them and they're kind of afraid of them but really they're the big killer app right now and so we really want to create this foundation for the the growth of stable coins and then third we really want to make sure that we can offer digital asset Securities what a great opportunity to actually raise Capital do some really unique things so the legislation we're pushing for would really do all three of those there's something called fit 21 that addresses the commodi side and the security side it puts it in the cftc and the SEC and creates very clear rules for both the people who distribute them for the people who issue them and then for companies like coinbase who are centralized intermediary so it's really exciting and then there's stable coin legislation out there both of them are bipartisan both of them have been passed through bipartisan committees and both of them have a shot at getting into law but it really takes the work of a lot of constituents a lot of really important members and a lot of regulators to bring that to fruition awesome that's a really helpful overview so as we are in this world of for now anyway legislative ambiguity when we don't really have any any of these bills uh signed into law yet we're in this state where the SEC continues to um act either through regulation by enforcement we've seen a significant amount of cases brought last year against the platforms the most recent of which is Kraken um and also continue to promulgate rules you know custody came out Hester Pur commented on the change to the definition of exchange and broker as we are still in this kind of limbo period should we continue to expect the SCC to focus on enforcement maybe some more Ru making what do we think 2024 looks like well I think we'll continue to see rules around the edges and that's kind of what we've seen with the with the Brokers um it's what we've seen with the IRS broker rules so we were seeing it in different places I think where where we don't expect to see it is truly in the nuts and bolts of digital assets in fact coinbase petitioned the SEC uh about a year and a half ago almost 2 years ago now to write rules and after a year and after taking them to court and filing our own lawsuit and saying hey we just want rules tell us yes or no they finally after a year came back and said no we are not going to write rules so we don't have any high hopes that the SEC is going to help resolve these issues under this chairman commissioner Chan I'm curious from your perspective is your job more difficult or maybe even potentially easier given the lack of Clarity from the SEC right now on digital assets well my job certainly is influenced by what the federal government does but we also have state laws and it hasn't been um you know it hasn't been that difficult because we are able to at least in Colorado we've seen a lot of uh actual clear fraud and we were able to enforce against that so I don't consider that regulation by enforcement I think you guys may have heard of the index coin case where it's just pure fraud and in those cases I don't think it's help I don't think it's healthy for the ecosystem or for any of the investors if uh we didn't take action so in in that way I don't think that we have actually um struggled with uh What uh people in the industry may be struggling with at the federal level great um one more question on uh more of a a f Federal level then we'll dive into the states again 2023 I'm going to bring back to something that happened then we had those two arguably conflicting opinions that came out in the second Circuit of New York on both Tera Luna and um Ripple is it are these tokens uh Securities they're currently an appeal we obviously don't have Clarity there we again as we said don't have Clarity um in terms of a federal rule thoughts from the panel on what these two conflicting opinions mean right now how should we think about operating until we get either the appeals done or maybe some rulle making or legislation well I think that what is interesting in these two op opinions besides the fact that they do seem to conflict in the in in the in the determination of whether something is a security in a secondary Market I think what's really interesting is that they both seem to focus on the fact that whether crypto is a security depends on how that crypto is transacted and they go back to howi so if you guys know howi that test was about orange groves now everybody in the audience if I said orange groves you don't think security but how that how that Orange Grove was sold to investors how that was promoted that's what the security is and I think both of the Rik off raikov and Taurus those are the judges in um the Ripple and Tarot case both came out and said yeah when we assess whether something's a security we're going to look at how it's transacted and I actually think that's a lot of clarity Clarity um coming from the courts and I think that's actually good because now we know uh even conflicting opinions agree that what we're going to look at is how it's transacted and frankly I think that goes back to the corner cor Stone of what securities is about which is if you're going to sell something to your mom or your uncle or your friends who are not Securities experts and you're going to Hype it and you're going to tell them a bunch of Lies that's not fair to them and so that's the Cornerstone of it so no matter what it is if it's sold like that you're going to have Securities problems generally yeah I I would just add that I I think we're obviously watching those cases closely we have our own case the SEC has sued us for uh transaction basically for offering Securities on our platform we do not believe those 12 assets are securities and so we are also going through our our own court case in New York and I think what what we are seeing is that um it's really important that these court cases move forward and we continue to get clarity from the courts in the absence because I think you kind of said what do we do while we're waiting for these court cases to resolve these appeals can last years I think what we are going to continue to push for is Clarity from legislators and so making sure that at the federal level we do move forward on a federal standard and in the states I think the states have a real opportunity to actually have some some Laboratories I keep using the saying of Laboratories of innovation that there are some opportunities I think for for different innovators Builders to go into these states and and hopefully innovate and and go to a state where they have really smart Commissioners who can work with them on what that looks like and so we're really excited even though we have court cases and we think we're going to win ours so we're also really excited that is a perfect segue into the states um thank you so let's dive into some of the things that are happening uh more locally and what better place to start than Colorado um I think Colorado has kind of been at the Forefront of supporting Innovation and Entrepreneurship in the blockchain and digital asset space uh which is great I mean you can pay your taxes with digital asset uh with uh digital assets you can pay your DMV with digital assets that's kind of I actually didn't realize that that's really wild to me um so that's great so let's start with uh you Senator Hansen what do you think what what do you think that Colorado is doing right and and how are you fostering this Innovation and how like what could other states learn like what is your secret sauce yeah I I really appreciate the invitation to to share a little bit about what we've been doing in Colorado uh the one thing you forgot to mention is you can also donate to your favorite state Sanic candidate using uh using secure token and crypto so not only can you pay your taxes but you can also do political donations so we we changed state law for that too um yeah the I guess the other thing that I think has been interesting in Colorado is we've been trying to think about how we can use uh secure token technology blockchain technology for State debt as well and there's been some examples of this on the municipal level but to my understanding not any other states that have done this yet and so I've been working closely with the state treasurer over the last couple of years to really transition Colorado uh in into being able to use this new technology and so we're not just stuck with kind of the vanilla Wall Street version of State debt which has tons of overhead lots of fees and why are we wasting taxpayer money paying uh a bunch of analysts on Wall Street when we could do this directly and and really democratize our debt instruments as a state so that was that was kind of the piece I really focused on a couple years ago we've done the enabling legislation on that the state treasurer uh was required to go and do a study and show that it would work guess what it works and so we're ready to move forward with starting to offer these types of instruments so that's that's kind of I think the next big thing in Colorado that's that's so wild um do you think that the continued ability to show consumptive use and real world cases for digital assets will have any influence on the SEC as they're thinking through their rule promulgation like security versus not I mean these things are very clearly usable and practical yeah well I would just add to that whole idea of theory of change I do a lot of work in the energy and environment space as well and if you think back to things like the Clean Air Act and the Clean Water Act those started as state laws and as soon as we got to five six a dozen states who move forward then Washington DC finally got in gear and so that's kind of been my theory of change on a lot of different policy fronts as a state legislator is let me work in Colorado get some Cutting Edge legislation in place and then reach out to my colleagues around the country and say hey let's work on this together because that's how we force the kind of create a a forcing function for DC to to catch up um so taking a step out of Colorado on the point you just made California just came out with their own digital asset framework and they mirrored it largely off of New York with the bit license out there so to your point of multiple States kind of getting in some sort of Conformity some sort of uniform approach to anything maybe influences the federal government um you know thoughts on whether or not California New York are kind of taking the right approach is is one part of the question the other part is do you think there's actually a chance that the states could get some sort of mass framework or at least some sort of material amount of movement in that regard that would actually influence the federal government well first of all I I think I meant to say this right at the beginning but I'm really speaking on behalf of myself and not of the division and Dora um I think that the states have a real opportunity to be laboratory for Innovation and I don't know if the bit license and uh one that New York has is and the one that Colorado uh California has ad op ing is the way to go I mean many of you probably have tried to interact with those licenses and I don't know that it has proven to be uh successful F first mover so I don't know if that's what's going to uh catch but I think that uh we have an opportunity to be innovating in the space and I hope that if we have some good ideas they will catch because um we do need to be thinking more out of the box than I think we have been and and I I wouldn't knock The Regulators because you know what they're trying to do is they are they are the stop signs you guys are the fast cars you're the innovators and uh they are the stop signs to make sure little dogs and old ladies don't get run over so they are thinking from a different space and I understand that cautiousness um but I think that there's still space for Innovations and on how to keep people safe but also allow for Innovation and I hope that the states will be able to play a significant role in in that kind of innovation I just quickly add on to that we have tons of examples in other policy areas of multi-state compacts and Regulators working together across state lines I mean I mean if we can have a doctor opt in to Colorado we can probably figure this out um so yeah I I I think Colorado will continue to push and look for ways to cooperate uh with other states yeah and I think what what we're seeing because we have 45 money transmission licenses we've got a bit license we're working on California uh we are literally um we're now you know Hawaii is is now contemplating it they're going through their samb box and that is now going to a situation where people can operate there again so we'll be everywhere and what we have found is that um harmonization is really important absent of federal law but there are other things that can be done that I think are really unique like that is an awesome idea that you were just discussing about the the state debt and I think that there are things that can be exported these awesome ideas I heard one in Boston a couple of weeks ago about all uh future recordkeeping being done on the blockchain because you can't you can't do 300 years of record keeping on the blockchain you can do it going forward so any new recordkeeping needs to be required on the blockchain so there are different ideas that are just going to help promote the use does it get us to a federal framework does it get us to a framework that's identical in every state no that's just the reality it's very hard we've seen this in money transmission licenses we've had model laws and the model laws just don't stick so ultimately I think there are other areas where we can be Innovative in the states um I'm going to bring it back to Colorado uh one more time so again tons of history or tons of um president to look at in terms of the Innovative support here you have the digital token Act of 2019 which um addresses a little bit of registration exemption for things that might be Securities depending on the consumptive use that's super supportive on the other side Colorado is very clearly focused on consumer protection the recently announced uh index coin case that commissioner Chan's Department brought which I know we can't go into too much detail with you but um it's kind of interesting that Colorado has found a way to thread the needle with both seemingly rate sized regulation and enforcement which we all need and we agree we need the stop signs we want the stop signs I mean there's a reason that that exists but at the same time creating these Frameworks that allow for the Innovation and the development and has continued to bring business in here so um we love to hear from both of you on how Colorado has like I said thread that needle with with both sides of it well I think that I've been in the space in since about late 2014 2015 and I started when the ethereum Genesis block was launched so way back and I think the space itself has changed and so I think the secret sauce to how it works has changed as well with FTX and Celsius and voyagers uh collapse among many um there's been a a change I think in the atmosphere and understanding more that you don't want to be defrauded either right you're build building but you're also part of the ecosystem and so part of that is that we do enforce we enforce fraud but we don't do regulation by enforcement that is to say if there's some confusion as to whether it's fraud and that confusion is uh legitimate and it's really ambiguous you're probably not in our crosshairs but if you're like in the index coin case um the regaladas uh didn't actually have a platform the cryptocurrency was essentially worthless and they told them they confessed in a YouTube video that's now viral about how they did steal $1.3 million yes we're going to prosecute that we're going to protect coloradans from that and I think a combination of making this work is that part of it with the idea that we want you to innovate we want you to move forward and we want to find ways to allow that to happen and a lot of that is through the legislature and also the fact that we as the division do not enforce by reg uh do not do regulation by enforcement so I think it's some combination of that yeah I'll just emphasize that point like I I think we have a great tradition of of great consumer protection in this state U I think we've been ahead of the curve and in some of our cons consumer protection laws uh working on some right now uh in this session that are trying to put in better protections um on on uh with relation to some of the social media platforms um but that said we do want to be a state where we can grow new things things and try new things and fast fail and uh explore new options and you know the state government is a $42 billion Enterprise uh we've got tons of financial transactions tons of recordkeeping uh lots happening in the healthcare space uh there's just massive number of new opportunities here and I think as a state government we want to send that signal that we want you to come to Colorado and and try new things and we've got a legislature uh you know about a half dozen of us that pay a lot of attention to this area and we want to put in legislation that's going to open up those doors so hopefully uh yeah very very open atmosphere here um to to help improve operations the state government our finances our our recordkeeping and super great consumer protection y I would add that part of it is also that we have a really smart forward Tech thinking governor and we have Senators that are so smart in uh the tech space and that really makes a big difference I think in uh Colorado's progress I would just add I actually think um this is from an outsider looking in I'm not a neighbor anymore in Wyoming now I'm actually an true Outsider living in DC um but but what I find fascinating is we we we launched something called Stand with crypto that has become this this Nationwide effort and where we see the most activity is where you have the states that are most forward leaning so I think e Denver is a big part of this right you have people you have you have people who are excited you have people who are willing to have conversations with people like you I think that that's really important and if you want states to continue to be forward leaning you have to come out of the woodwork and you have to make your voice heard so that that leads into another really good question this audience is obviously very invested in what's happening at the legislative level both state and federal what are things people can be doing either from an advocacy perspective education perspective how can we get our voices heard and try to continue to push um protective yet um Innovative supportive legislation at both the state and federal level what would you Advocate people to do well I I would answer this question as I would with almost any advocacy Group which is um I often joke that you pass bills in September not April so our legislative session in Colorado January to may we are working hard on bills for those 120 days but you pass hard bills by working on them the year before so get to know your State Rep get to know your state senator go have coffee I guarantee you if you reach out to them directly they'd be happy to set up time with you um let them hear directly from you from your company from uh you know the group of Advocates you're working with on whatever topic it might be and that certainly applies to crypto and blockchain um as it would to anything else that we work on um the Colorado legislature looks at 800 bills a year um couple dozen are related to to this area and uh work hard on those over the summer and fall so that you can be successful the next session and I would say join stand with crypto uh it's it's my like super selfish plug here um but but ultimately it gives you the tools they're they're onchain tools if you're interested in being onchain using a wallet to do a lot of these different activities um show show up at the different events so we'll have some activities tomorrow here that we're talking about stand with crypto we have a big event in La if any of you are from La we have a big event on Monday with nas to be clear I was telling my my children and my husband about this I'm sorry for the the side note here and my kids were super excited they're like little Nas my husband's like no no no no no see it's the original it's Nas and he went out and he got his first album that he bought it was Nas so it was very exciting so he is going to speak because he's a true he's he's actually a crypto advocate he cares deeply he released two songs as nfts so he's going to be there and then he's going to do a performance Brian Armstrong will also be there so if you're in La show up at The Bourbon Room at 400 p.m. on Monday I think I just figured out what I'm doing on Monday please come please come um okay so 20124 big political year for us we've got presidency I mean big OB State the obvious there and many congressional elections um would love to get the thoughts from all of you on what you think could happen from a crypto regulatory Outlook in 2024 um depending on how these elections end up going all right uh yeah as the politician on the stage I guess I can start with that one uh well let me start with Colorado uh Colorado is going to remain in Democrat control so this is the first cycle in a very long time where the control of the senate or the house is not in question I mean it's decades since that has happened but we now have super majority in the house 46 out of 65 in the Senate we're 23 out of 35 uh and have a very good shot at having a super majority after this next election so that is going to remain stable it means uh reach out to me and my colleagues if you have ideas for legislation for next year uh because uh this it it means that we have a lot of um time to focus on policy quite frankly in previous years we had to we would spend big chunks of our year working on politics and trying to win the next cycle and the next election and we have a little bit of a luxury because where things have shifted in Colorado to have a have more time on policy would love love to talk to anybody in the room uh over the summer and the fall uh to get ready for for next year quickly on the national front um I have come to the conclusion at this point anything can change that this is going to come down to about 75,000 people in three or four states Colorado I can tell you where our electoral votes are going at this point I mean again anything can change but there's four states that are in question um you know so if if you want to have an impact on the national election this time around contact your friends in Wisconsin Michigan uh you know Pennsylvania I'll let you decide what the fourth state is because that's that looks like where where all the action's going to happen well last year I was asked this question about this year and I was like I think I think Ripple's going to get decided so I think that's true uh but I didn't understand that Terror was going to come kind of sideline so um I I think legally on that side we should be looking at that space and seeing if the second Circuit of court of appeals takes up that issue watching um how Ripple and tourus uh uh how Ripple and Terror uh turn out watching the coinbase case I think there's a lot of really pivotal legislation uh I mean sorry uh really pivotal court cases coming out if you guys remember Howie um the case that you used to Det determine if uh uh crypto is a uh security that case came out of the you Supreme Court and has been holding for for 60 years so you know our system is supposed to be part legislation part courts um and part executive and so I think there's a lot to watch also on the judicial legislation side I would keep that space and keep your eye on that yeah and I think politically that 2024 is going to be the biggest election ever for for crypto hands down full stop and I think it it's at the presidential level it is at your federal level with your legislators with members of congress with the Senate at the state legislature level it's actually a really interesting issue because it's bipartisan and you've got different legislators coming at it it's particularly think acute at the at the state level where you see different people coming to the issue for different reasons but at the federal level it's bipartisan and what we've done um From coinbase perspective is obviously we launch Dam with crypto and that's now its own independent organization and they're engaging in Races they are talking about races you can go to the website and you can see scorecards for every single race out there you can see where your incumbent is you can see where the candidat candidates are if they've come and if they've made a statement on crypto or if they're active and then at the presidential level it's the same thing you can see all the information about the presidential candidates and and where they stand on crypto so I think it's going to be a very important year because Regulators matter Hester Pur commissioner Pur matters right who chairs the the agencies matter and so the presidential matters a lot and then um again all of there 435 house races 33 Senate races and then hundreds and hundreds and hundreds across the different states so get involved well I just quickly on that there's really only 30 Congressional races I mean if we're honest about it right there are 435 on the ballot there's less than 10% that are actually competitive for a whole bunch of of reasons Jerry mandering at the top of that list for me um but I I just to be realistic it's a very small number that are actually competitive they're all running they're all running for reelection they all care about who shows up at The Ballot Box especially with especially with the presidential that's unclear so you're totally right and something that's R plus 36 probably not a big a big I would just say as an administrator and a regulatory side I would say that you know one thing I would hope that doesn't happen is that crypto ends up being a bipartisan issue 100% um what we have seen in certain States is that somehow it has become with the UCC and I'm not going to get to In The Weeds because nobody wants to talk about the UCC except me um but uh what we saw with the UCC which is normally just everybody agrees because it's only about commercial transactions um for the first time in decades it became a political issue and certain Governors just said oh this is a political issue we're not going to take it um you know that I don't think think that's help healthy for the ecosystem I hope that both sides see its economic value and can keep it out of that particular you know once it gets there then you don't have conversations anymore people just say it's red or blue right and I don't think that's the way uh crypto is crypto is everybody right we really don't want this to be a wedge issue I think that's a really important piece right it's a bipartisan issue we don't want it to be a wedge issue we want everybody to come to the table all right final we count it down final round Robbin question biggest headline of 2024 when we're sitting here a year from now it's got to be the presidential election I mean I don't know what that's going to say but I imagine that will be the biggest headline yeah oh wow I hope that's the biggest headline I mean I for the globe for this industry for everything we're talking about yeah I mean that's that's that's the big biggest headline I think we're going to hit my two and a half trillion I don't know I think we're gonna I think the market cap is going to go back up I think there's going to be a lot of stable coins in circulation I can't make predictions but I I think that the big headline is going to be that crypto is back that crypto has we go through cycles and it's an exciting year 2025 is 2024 is is spring 2025 is summer I like it we'll end with that thank you so much this was a great conversation really appreciate it thanks thank you so much that was amazing thank you