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00:00 Josh
another topic, Patrick, I would think my friend would be crypto legislation. Uh we’re trying to get it across the finish line, right? regulatory framework, uh Patrick for the digital asset sector. We seem Patrick to have hit a bit of disagreement here between crypto exchanges and banks. The Journal had a great write up. I’m sure you saw it, great reporting. The Journal Patrick kind of framed the central issue as, listen, crypto exchanges, they want to offer consumers payouts on the digital tokens they hold, a kind of a recurring fee. And the issue would be the fee, Patrick, it’s going to be more it looks like than what banks could offer in terms of interest on your bank account. And so the worry from banks would be like, okay, I, you know, does Josh and all his friends do they make a a move right out and into crypto. What what do you just make Patrick of this debate and how do you think it plays out?
01:03 Patrick
Ah, this is a great question because uh, you know, stablecoin legislation with the genius Act was passed uh in the summer of last year, signed into law and there’s been a flood of innovation in traditional finance players uh getting into the space on on stable coins. Uh, in that bill, there was permissibility for stable coins to issue rewards of some sort. yields is uh the common parlance here. Um, now, what the banking industry and especially the banking lobby in Washington, uh they were uh they were surprised. Uh they they they weren’t able to block the genius act and so now they’re taking on market structure, which is really about 95 to 97% of the value of crypto. Uh, you know, 3 to 5% is is in stable coins uh and uh and the the main part of uh of legislating is around the the larger market structure for crypto. Uh that market structure bill is held up because the banks have activated and they want to ban rewards or undo uh the policy game crypto made uh in the genius act.
02:30 Patrick
And so, cooler heads will eventually prevail here, uh but it is certainly slowing down the market structure bill. Uh and this is largely a debate by uh large banks and the banking lobby in Washington and the primary player uh with with the category right now which is Coinbase. Uh they offer yield through holding USDC on their platform. So that is the big debate right now. That’s the big coverage and the big fight uh in Washington. We had on the Ondo Summit yesterday, we had the the president’s uh executive director of the crypto council, uh and that’s a man named Patrick Whet, very sharp, uh who sits at the interplay between uh traditional finance and crypto and is helping the White House drive policy on Capitol Hill. Uh we interviewed him and he is uh focused on getting this resolved so the president can get a bill signed uh before early summer. And that was the news made uh yesterday in in our interview of him at the Ondo Summit.
03:45 Josh
Can I ask you Patrick though, when you say cooler heads prevail, um this sounds so tense at this point, Patrick. I you saw this. I mean, per the journal of Davos, Jamie Diamond, he tells Coinbase CEO Brian Armstrong, you are full of blank. It’s a family-friendly show, but viewers can fill in the blank. horse excrement. We would say horse excrement. Right. Yes, yes, yes. Uh City’s Jane Fraser gave him less than a minute of her time. So Jane doesn’t sound happy. Bank of America’s CEO Brian Monehan tells him, this is blunt. If you want to be a bank, just be a bank, he said. If you want to be a money market fund, just be a money market fund. I mean, this sounds so acrimonious. In a prior life, Patrick, you were a congressman. You had to herd cats, you had to bring people together who disagreed. How would you do it here?
04:47 Patrick
Uh look, uh what has to happen is a law change uh to take away the advantage that Coinbase was able to get in the genius act, which enabled them to give rewards on their platform. Uh so the current law is actually disadvantaging banks. Banks want to use the market structure bill to uh gain an to gain what they lost in the genius Act. So if nothing happens, the banks are not better off. And so you eventually will grind them down and say, look, you have to split the difference between what the banks hope to gain, which is to completely undo the crypto gain in genius on rewards, uh versus what uh Coinbase wants and uh I would say largely uh crypto wants, which is to be able to uh incentivize the use of stable coins uh in the payment system. Um and so there will be eventually an outcome because the president will demand a bill. And the banks think that they have the advantage right now, but the president will demand a bill and will demand movement by both uh crypto and the banking industry. That is a real advantage right now. And when I was chair of the Financial Services Committee I had Biden as president. Uh now my successor has the advantage of Donald Trump who’s pro crypto uh in driving policy. That enables a lot of movement and eventually gets Capitol Hill to to take action.