1/ CRYPTO POLICY:
I’ve been quiet publicly, active privately on the DCCPA and US policy the past couple months.
tldr: DCCPA must be significantly amended or paused until next year. Measure twice, cut once. Let's get US crypto policy right.
👇🧵
I’ve been quiet publicly, active privately on the DCCPA and US policy the past couple months.
tldr: DCCPA must be significantly amended or paused until next year. Measure twice, cut once. Let's get US crypto policy right.
👇🧵
2/ CONTEXT:
Messari has a vested interest in seeing the crypto industry grow & succeed. Our aim is to reduce information asymmetries & promote transparency to level up the market.
Our customers include exchanges & DAOs. Balanced policy is critical to long-term success for both.
Messari has a vested interest in seeing the crypto industry grow & succeed. Our aim is to reduce information asymmetries & promote transparency to level up the market.
Our customers include exchanges & DAOs. Balanced policy is critical to long-term success for both.
3/ We've been working on crypto data analytics & disclosures standards for the past 5 years.
Our work helped inform parts of SEC Commissioner @HesterPeirce's "Safe Harbor" proposals for tokens, which Rep @PatrickMcHenry proposed to codify as law via a bill introduced last fall.
Our work helped inform parts of SEC Commissioner @HesterPeirce's "Safe Harbor" proposals for tokens, which Rep @PatrickMcHenry proposed to codify as law via a bill introduced last fall.
4/ Today, we do a version of quarterly reporting on behalf of 40+ token communities.
We aren’t just waiting for top down regulation to solve our industry’s problems. We’ve been actively building solutions that address the spirit of existing consumer protection laws.
We aren’t just waiting for top down regulation to solve our industry’s problems. We’ve been actively building solutions that address the spirit of existing consumer protection laws.
5/ Messari has no lobbyists. I am the only person at the company who spends much time in DC.
My goals are to "do no harm", and help where we can in educating policymakers.
As a US-based entrepreneur, I also want US policy to be the best crypto policy in the world.
My goals are to "do no harm", and help where we can in educating policymakers.
As a US-based entrepreneur, I also want US policy to be the best crypto policy in the world.
6/ WHAT’S NEW:
During DC Fintech Week, we hosted a meeting with some of our investors & policy partners who have been active in evaluating the DCCPA.
We've done thematic events in the past (policy & elsewhere). But the timing of this one drew interest.
theblock.co/post/182827/de…
During DC Fintech Week, we hosted a meeting with some of our investors & policy partners who have been active in evaluating the DCCPA.
We've done thematic events in the past (policy & elsewhere). But the timing of this one drew interest.
theblock.co/post/182827/de…
7/ We tried to help people exchange ideas in an off-the-record setting. I treat these discussions (whether I host or attend) as private.
Given the Block scoop, DCCPA redline leak, and the very online debate that’s happened last week, I’ll share my thoughts on the state of play.
Given the Block scoop, DCCPA redline leak, and the very online debate that’s happened last week, I’ll share my thoughts on the state of play.
8/ It’s time to SLOW. DOWN.
DCCPA is a good faith effort, but if it is to become law it needs serious and significant fixes.
DCCPA is a good faith effort, but if it is to become law it needs serious and significant fixes.
9/ ORIGINAL SIN:
The DCCPA was born with original sin.
It aimed to cover crypto intermediaries, but extended to DeFi. Intentionally? Inadvertently?
Doesn’t matter. DeFi’s inclusion is now a “thing” and the bill will be hard to fix this year as a result.
The DCCPA was born with original sin.
It aimed to cover crypto intermediaries, but extended to DeFi. Intentionally? Inadvertently?
Doesn’t matter. DeFi’s inclusion is now a “thing” and the bill will be hard to fix this year as a result.
10/ A DCCPA that is constrained to centralized intermediary oversight OR a more thoughtful, comprehensive bill (Lummis-Gillibrand?) OR something new entirely is what industry should be aiming for.
That’s unlikely to happen in the lame duck.
Most folks in DC agree with this, BUT
That’s unlikely to happen in the lame duck.
Most folks in DC agree with this, BUT
11/ There are fault lines:
a) Politics: Is it possible to get a "good bill" done next year, or is the choice Dec '22 or 2025?
b) DeFi Rulemaking: Is DCCPA a net positive? Can DeFi survive rulemaking?
c) Oversight: Is CFTC vs SEC oversight even solved with this bill?
a) Politics: Is it possible to get a "good bill" done next year, or is the choice Dec '22 or 2025?
b) DeFi Rulemaking: Is DCCPA a net positive? Can DeFi survive rulemaking?
c) Oversight: Is CFTC vs SEC oversight even solved with this bill?
12/ ON POLITICS:
Some (exchanges) don’t want to make “perfect” the enemy of the good, and think an imperfect bill is better than the status quo (roughly SBF’s view).
Others (VCs & DeFi) think the current bill could kill DeFi outright and prefer to wait (roughly my view).
Some (exchanges) don’t want to make “perfect” the enemy of the good, and think an imperfect bill is better than the status quo (roughly SBF’s view).
Others (VCs & DeFi) think the current bill could kill DeFi outright and prefer to wait (roughly my view).
13/ The primary political issue is that many view the probability of comprehensive legislation as low in the next Congress.
Now that DeFi is being considered, certain lawmakers won’t let it go “unregulated” as part of any new bill.
This will likely remain a sticking point.
Now that DeFi is being considered, certain lawmakers won’t let it go “unregulated” as part of any new bill.
This will likely remain a sticking point.
14/ There’s no “selling out” of DeFi.
It’s just that the Ag Staff’s proposed “fixes” aren’t great, and exchanges (FTX in particular) have little to lose, and much to gain if DCCPA is enacted...even with subpar DeFi language.
Protecting DeFi is not their priority. Survival is!
It’s just that the Ag Staff’s proposed “fixes” aren’t great, and exchanges (FTX in particular) have little to lose, and much to gain if DCCPA is enacted...even with subpar DeFi language.
Protecting DeFi is not their priority. Survival is!
15/ SBF is more right than not about the state of play in DC. I agree with him on most of his political points.
And he unequivocally won the debate with Erik Voorhees where it matters right now: in DC circles.
Why am I on the other side of him on DCCPA then?
And he unequivocally won the debate with Erik Voorhees where it matters right now: in DC circles.
Why am I on the other side of him on DCCPA then?
16/ ON DEFI RULEMAKING.
SBF is always very careful with his words.
A specific, important phrasing he uses frequently is “I wouldn’t push this bill if *I thought* it would hurt DeFi.”
Spoiler! He trusts the regulators and the rulemaking process more than others do.
SBF is always very careful with his words.
A specific, important phrasing he uses frequently is “I wouldn’t push this bill if *I thought* it would hurt DeFi.”
Spoiler! He trusts the regulators and the rulemaking process more than others do.
17/ One argument is that the state of token / DeFi regulation is already bad. (True.) Even the worst outcomes of rulemaking under DCCPA would only be marginally worse than status quo. (Likely true.)
But when choosing between a bullet to the head or chest, you fight for the gun.
But when choosing between a bullet to the head or chest, you fight for the gun.
18/ The choice for DeFi…and the broader token ecosystem is not a choice right now.
The right move is to delay DCCPA this Congress, work extremely hard and constructively on policy in the new year, and prepare to retrench and fight in court if gridlock ensues (ugh).
The right move is to delay DCCPA this Congress, work extremely hard and constructively on policy in the new year, and prepare to retrench and fight in court if gridlock ensues (ugh).
19/ No one wants options 1 or 3!
But given the choice, exchanges will choose 1 and DeFi / investors will choose 3.
That’s what’s driving the tension right now. It’s a clean split with well-intentioned, earnest people on both sides.
But given the choice, exchanges will choose 1 and DeFi / investors will choose 3.
That’s what’s driving the tension right now. It’s a clean split with well-intentioned, earnest people on both sides.
20/ ON OVERSIGHT AUTHORITY.
I think reasonable people can disagree about where to set defaults on policy, and how to game out the political probabilities of DCCPA passage.
But the final question is “what does DCCPA actually solve?”
I think reasonable people can disagree about where to set defaults on policy, and how to game out the political probabilities of DCCPA passage.
But the final question is “what does DCCPA actually solve?”
21/ Is CFTC oversight good for crypto?
There’s a good argument that exchanges would benefit from the clarity and default oversight of the CFTC when it comes to crypto’s two largest markets: BTC and ETH.
Spot ETFs would be more likely. Institutions could join the fun.
There’s a good argument that exchanges would benefit from the clarity and default oversight of the CFTC when it comes to crypto’s two largest markets: BTC and ETH.
Spot ETFs would be more likely. Institutions could join the fun.
22/ But then, we’ll run into issues with assets #3 to 10,000...indefinitely.
The current DCCPA language essentially provides the SEC with veto power over whether assets beyond BTC & ETH should be considered digital commodities or securities.
We give up a LOT to get very little.
The current DCCPA language essentially provides the SEC with veto power over whether assets beyond BTC & ETH should be considered digital commodities or securities.
We give up a LOT to get very little.
23/ Keep in mind, we also have the avenue of litigation if there is a medium-term stalemate.
Ripple has mounted a gutsy defense against the SEC. Grayscale is suing the SEC. Coinbase is suing the SEC. There’s a pattern of overreach!
Crypto is not to blame. 90 year old laws are!
Ripple has mounted a gutsy defense against the SEC. Grayscale is suing the SEC. Coinbase is suing the SEC. There’s a pattern of overreach!
Crypto is not to blame. 90 year old laws are!
24/ This is a quick reaction.
I’ll have more to say in long-form in my end of year report, and as this legislation develops.
For now, let me say, I appreciate SBF, the trade associations, the DeFi policy leads, and the staffers who are trying to wrestle with these issues.
I’ll have more to say in long-form in my end of year report, and as this legislation develops.
For now, let me say, I appreciate SBF, the trade associations, the DeFi policy leads, and the staffers who are trying to wrestle with these issues.
FIN/ Regulate crypto intermediaries & custodians!
Regulate stablecoins!
Create safe harbors, disclosure norms, and fit-for-purpose rules that allow innovation to flourish while safeguarding users.
Stop overly broad, stifling laws!
If it comes down to it:
"No DeFi. No Deal."
Regulate stablecoins!
Create safe harbors, disclosure norms, and fit-for-purpose rules that allow innovation to flourish while safeguarding users.
Stop overly broad, stifling laws!
If it comes down to it:
"No DeFi. No Deal."
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