SBF vs. Erik Voorhees: How Do We Regulate Crypto?

Transcript

guys we're super excited to host this live stream in conversation maybe we'll call it a debate I'm not sure I think it'll be very conversational between Sam begman freed that's SBF and Eric Voorhees the topic today is crypto regulation David I found myself playing a somewhat uh minor role in a conversation that happened on crypto over the last uh last week I guess all of this happened uh SPF was the originator of a post just his thoughts his Solutions on how crypto should be regulated and the crypto Community had a great deal of response to this post I think uh leading one corner of the internet was uh Eric Voorhees and kind of giving a uh an ethos-backed crypto OG

type take to what uh Sam bankman freed has said and I know David that the best place to have a long-form Discord discourse about this is not on Twitter not you know the the character limitations but in a a podcast form so that is what we are in for today we're having this conversation about Sam's thoughts on crypto regulation particularly areas like defy versus contrasting with Eric Voorhees thoughts and we might find that we land somewhere in the middle any other thoughts going to this episode I think the the two guests here Sam and Eric are are great two ends of different spectrums I think to to bring to the table here Sam of course is the founder CEO of this gargantuan exchange FTX which has rose

out of 2021 and into 2022 and is really just a huge just innovator and leader in this space and also Eric Voorhees this crypto also Builder been around since the get-go this kind of crypto philosopher Builder person who also has very strong principles around how crypto should be approached and regulated both internally as an industry as a community but also from external regulation as well so two different perspectives I think gonna come to the table and we're going to find what do we want as a as a community as an industry how do do we want to approach regulation how much do we want to go out and seek regulation versus how much we want to do some self-regulation and so I think these are the various perspectives that we're going to bring to the table here today

that's exactly the conversation I was hoping for you guys are in for a treat we'll be right back with sandbankment freed and Eric Voorhees but before we do we want to thank the sponsors that made this episode possible arbitrim1 is pioneering the world of secure ethereum scalability and is continuing to accelerate the web 3 landscape hundreds of projects have already deployed on arbitrum 1 producing flourishing defy and nft ecosystems with a recent edition of Arboretum Nova gaming and social adapts like Reddit are also now calling arbitrum home both arbitrim1 and Nova leverage the security and decentralization of ethereum and provide a builder experience that's intuitive familiar and fully evm compatible on arbitrum both Builders and

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with a fuel Network backless Nation we are super excited to introduce you to our next guest both of them have been on the bank list podcast before I want to introduce you to SBF he is the founder and CEO of FTX of course this is a behemoth crypto financial institution an exchange uh Rose to prominence in the last bull market but has been here for a while and he has thoughts on crypto regulation that we're going to discuss today SBF Sam welcome to bankless how you doing doing well how are you uh I'm doing fantastic I'm I've been waiting all week for this conversation I brought my glasses for the conversation I hope you'll forgive me for the elitist of Vibes I'm dropping I I'm gonna wait to see what Eric says and then then I'll

figure out my my glasses I'm gonna make sure to balance it out a little bit that's fair that's fair that's fair um also Eric Voorhees of course uh you've heard him on the bankless podcast before he's a crypto OG he's a what I'd call a crypto libertarian philosopher he's a builder and a thinker he's built and exchange himself as well via shapeshift and brings a ton of perspective to this conversation uh the reason we're having both of you on is because SBF wrote a fantastic open uh starter to the conversation what he thinks uh what he thinks crypto regulation should look like and Eric you had a fantastic response Eric thank you for coming on Bank list how you doing uh to be here don't mind the glasses but

what I really hate about you is that bookshelf in the background you hate the bookshelf do you not like books is this part of the Neanderthal coming out Eric no it just it just reeks of elitism okay gotcha okay okay we pause for a moment since we've needed our way into these references for the people that are understanding these glasses and the latest references what is going on you want me to do this okay I don't want to talk about it anymore okay so uh uh a YouTuber uh was going off against Ryan uh the YouTubers bit boy and Ryan called him out and saying bit boy doesn't represent us uh which triggered bit boy and bitboy made a very large rant uh about Ryan and his glasses and his overall elitist Vibes uh and so

that was the joke leading into the intro of the show it's kind of funny I actually think everyone watching has probably already seen that video on the internet have no I got relatives like texting like who is this guy what this dude with Alex Jones Vibes what is he talking about and I'm like uh just another week in crypto that's how it goes moving on hopefully we never have to uh invoke pipoi yet again on this on this live stream but now that that's passed us all right so um great to have you both on Bank list we're going to get into it a long-form discussion on this topic I think the crypto Community really wants it um we have some sections to this conversation but before we kind of get into the sections and the high level here I think the big meta question

is this that we have to answer for folks the question of should crypto be regulated should it be regulated I think this is important topic to start with an important question that will set the context for everything else uh Sam what do you think yeah so I think I have two answers to that question and the first is parts of it should and parts of it shouldn't um and and and and really you know they're sort of my core take is roughly speaking that one axis you can talk about is how regulated crypto should be and a second axis you can talk about is um is basically how thoughtful are we about which parts of it are more

regulated and which parts are less and that it's that second access that I think I care about the most and and and and maybe to drill into a little bit more you know if you're looking at a stable coin right and you're thinking should it be regulated I kind of think well it's important that there's like oversight of these Holdings if it's a one-to-one USD backed stablecoin or so it claims there should be something proving that it is one-to-one back and I'm sort of in favor of like really thorough regulation confirming that the number of dollars in the bank account is at least as many of the number of tokens there like you know maybe you have multiple Auditors who have to audit it it's not a hard thing to audit it's not that expensive like to

do and so like going kind of deep into like ensuring that from a regulatory point of view um I think makes a ton of sense it's like very regulated for like that piece of it um but then you can say like you're going to 7-Eleven to buy a bagel and like you know you want to pay with a stable coin like is there a broker dealer that has to be involved I think like absolutely not and it's like very important that we not require a dealer to buy a bagel um that would just completely kill Commerce and so you know I I I guess my core thought roughly is like um you know I I think that like I we should be really thoughtful about where the regulation comes in and what it does

the the second thing I'll say is that independent of what you think of this at least in some ways it will be regulated at least in in the United States and and so it's not a question I I think like practically of whether there will be any regulation at all there will be it's a question of what should that look like and which parts should and shouldn't have which types of Regulation so Sam your general position is that um regulations coming no matter what uh we should get ahead of it uh and if we get ahead of it we can kind of Define and steer it in ways that are uh where the ball's in our court where we have more say if we kind of get ahead of it and we can kind of like Focus that regulation into areas that are easy wins

easy things that we are are willing to compromise as an industry perhaps like on crypto dollars and the level of degree of audits in the bank and that can redirect away some regulation away from other parts of the industry where we want for full control over like our defy apps and our nodes is that a fair summary I think that that's mostly a fairy summary I I think I would bring it very slightly differently because I think some of this regulation is definitively good like personally I think that um and I think that it's not just a compromise but some pieces of this I think are just healthy but I think that even if you didn't think that then I would say the thing that that you that you said and and would you say that if we want to you know put the listeners

and ourselves into the shoes of SPF as he was writing this blog post which was the start of this whole conversation is that the motivation behind this blog post or is there other motivations as well oh I think that's basically right and I think that like unit you know maybe it's a little bit more context on that is that you know there's been a lot of discussion about a possible upcoming Bill coming out of the Senate AG committee you know stop no Bozeman Bill dccpa and um uh and and I think that like I you know I want to get some context behind my thoughts on it which is cautiously optimistic basically and depends on the exact language but like I'm optimistic that it will end up striking a balance where it will do a good job of like providing

like a large ratio of cost more protection to restriction of Commerce basically so guys um one thing I will say about um this conversation I think the scope of this conversation is probably mostly relating to um Sam your initial post and then Eric's reply and the conversation that ensued I would like to talk about this new piece of legislation a little bit towards the end the DCC PA but it's important for listeners to know we don't actually have a finalized draft version of this in the public and so we you know your PO your post is maybe uh tangentially tied to that Sam but that does not represent the position that we're going to find in a draft of the

dccpa is that correct well right hey I'm not writing the Bill and so who knows we'll be in it and it's you know it's not mine but also it doesn't necessarily represent my view of the dccpa it might it might not because we don't know exactly what it will end up saying and you know we're gonna have to wait to see um you know what finalized text if it looks like before I will have a confident position on it so we'll have to treat that as kind of a separate conversation that will maybe weave in at the end but Eric let's go back to this high level meta question same to you you've heard Sam's response to this should crypto be regulated uh what a question so I guess first let's let's um consider that like Sam's proposal

that a stable coin itself should be regulated at least such that a provider has to prove that it has reserves for the tokens would be a higher bar than the Federal Reserve itself already applies right the Federal Reserve does not prove anything inside it with any degree of auditability or attestability Banks do not need to approve anything about what they do um in any way that is cryptographically verifiable um Us in the crypto industry already have a higher standard of what constitutes knowledge what constitutes proof and so it is a little ironic for people from the traditional Financial World um imposing on us the need to be proving anything right we're the ones that prove

it cryptographically so on the point of like whether crypto should be regulated it's also important to consider that it already is crypto is heavily regulated I know Sam would agree with that it's been regulated ever since the very beginning it falls under all sorts of laws in all sorts of jurisdictions and we dispense with this myth that it's like some some void of Regulation I wish that were true that that would be my my Panacea but it's not it is encumbered already um third I guess I'll say that we have a highly regulated Financial system and we've seen where that status quo has

gone um I think we in the industry should step back and ask ourselves do we want the crypto Financial ecosystem to move closer to the traditional Financial world are we here because we love how that world looks and we want to make crypto resemble that world more or are we here because we're trying to build something better and if it's the latter I think we need to consider that the regulations uh are a huge part of why traditional Finance has gone where it is now so um I'll leave it there for now so Eric just uh you know I guess maybe a point of clarification do you agree what's up guys

um might be frozen recording in progress and then there is Us in the middle who are the people that use these systems which do respond to these things and we can all make decisions on to what degree we want to you know bring the bring the Clause of Regulation onto the crypto world or not um but I think first and foremost we need to be remembering the principles of why this stuff exists in the first place how about this uh this concept I want to run bio if to the extent what you're saying is true is like um you know cryptographically verified and does not require trust um maybe maybe people could accept Regulators themselves could accept that there's less degree of Regulation necessary because we have cryptographic

guarantees but to the extent that we have a centralizing actor in the middle so take the example um Sam was was mentioning earlier where we have a stable coin and that stable coin is not cryptographically verifying that the amount of assets that back that stable coin is inside of a bank account you actually have to do like Atomic meat Space level audits in order to get that where there is centralization there should be regulation where there's decentralization there is less need for regulation do you is that an access that this conversation turns on for you as well yeah I think that's a fair perspective if you want to argue for regulation I think um it's more reasonable that the

regulation should apply on people and centralized intermediaries which do not execute programmatically like the much of the fundamental rationale for regulation is to to try to ensure that humans behave in certain ways when it comes to D5 when it comes to code when it comes to these blockchains we don't need to ensure anything they just operate according to the code and I would love to hear any regulator um even acknowledge like what's been built here it's hard to take them seriously when they can't even look at these machines of immutable Finance and and like applaud what has been built um I I think they're they're completely

missing the virtues that we've already built the consumer protections that have already been created just through the market and um I would be able to take them a lot more seriously if they could at least acknowledge those things I so I I agree with some things that you said and I totally agreed that last um I I think that it would be really um really valuable I mean I think it's really valuable to have discourse where each side tries to argue the other side's point in general I think like if you can't successfully or at least plausibly argue for the other side then you don't understand the other side's arguments and there's a worry that you're

discounting them and so I would love to see a lot of crypto Libertarians or default regulation against Regulators who are arguing for the value of decentralized Finance I think that would be like really fascinating to watch and a cool exercise one thing that I will say which I do honestly believe is that and I want to make sure I don't overstate this comment but that some there do exist some Regulators who I do think appreciate what crypto has has fought and what crypto can provide I don't want to overstate that I don't want to claim that there are a very large number of them I don't want to claim that this is like most um but there are some I've had and frankly I think this is like I I don't

know I I I I think something maybe could say talk more publicly about this as well um I've had conversations with Regulators where they talk about what they're excited about crypto bringing to the world again I don't want to overstate this I I would be happy if there's a lot more of that and if a lot more of them did um but but I do think it's not none of them that do um and um but but to your point like I think it'd be really valuable if like um if we were in a world where um uh where there are more pushing you know for these advantages and frankly in other countries you see this more frequently right like I think we're sort of both implicitly talking about the United

States when we talk about Regulators or maybe the United States and Western Europe or something and um I definitely fall into that trap of sometimes just like just sort of like implying that and I've been like remembering to say that that is true but that that is often going to be true here that that like I will default to talking about Western regulators and definitely call me out on that if you know when there are situations where that's not relevant or we're we're like um or where there's like really important distinctions that that that should be made um uh but but anything's worth noting that that in other countries um you know we have seen I I'm in the Bahamas right now I'm sitting in Nassau um and

um we've heard a lot from The Regulators and the um you know politicians in the Bahamas about the potential values of crypto so um you know that that does happen in some places I wish it happened a lot more in the United States another thing I want to say is I completely agree with you as you uh suspected that the United that crypto is not unregulated um we actually looked recently we tried to figure out how regulated we are compared to other companies and I'm sure we missed a lot so I don't want to I won't have yet this was like don't take this as literal we missed a ton as far as we could tell we could find one other company in the world that was more regulated that had like more regulations like like you're not talking about just financing you're

talking about like across all Industries well yeah although like I'm sure we missed non-financial ones because I'm sure implicitly we did a good job of thinking of the financial ones and a really bad job like health care I'm I'm gonna be honest I like don't know that much about International Healthcare regulation so we just missed a lot of this big trees business mostly financially okay but not crypto specific like you know we looked at like I think I don't know we're we're really it's not just that we're really like 50 state regulators and also like five Federal Regulators in the United States we're also regulated by 200 countries and each basically independently so um so it's definitely not non-regulated industry it's um maybe an industry where the regulation has a really high ratio

of like sort of inhibiting Commerce to protecting customers relative to other Industries like I think just because it hasn't gotten to a thoughtful Point um uh and um and I agree this is just a dumb narrative that we hear sometimes and it's just wrong and it's frustrating to hear um and uh uh a sort of similar one I don't know we sometimes hear narratives around like um you know what like like the easy Regulators they're just there's drugs I don't know like it it's cftc is like the most one of the most thorough regulars I've ever seen and like you look at the enforcement actions they bring you can look like the diligence done on on applications it's it's sort of like an outlier in in the strong Direction um I it's your point Eric about the the

the fed and about thanks and about like hey like is this actually commensurate um recording in progress and I think that

like you know bringing some of that to other Industries like I I I I I'd kind of be in favor of that um I I do think that like they are though heavily regulated in some ways although there isn't necessarily public transparency around that um um can I can I jump in for a second yeah that last point you made is important the traditional Financial world is heavily regulated as everyone knows and how transparent do we feel they are right do we feel that the banking system is a Bastion of transparency no no one would ever say that with a straight face and from time to time that has actually caused like horrible Financial calamities so why is it that we as the crypto

industry are being burdened with additional requirements for transparency when we're already more transparent and when the entire stack of Trad five Financial regulations hasn't itself created anything that is transparent well I think we're more transparent in some ways and not in others and I think that that points where I would I would like to see more and less regulation now obviously there's a worry that that won't map on to where it is but as an example right um uh D5 or lending Protocols are in some meaningful ways already more transparent and trustworthy than um non-crypto related borrow lending is um because it's all on chain you can

transparently see exactly what's going on you know and and you you know you didn't get that in in traditional Finance anyway and so that I think like I I I I totally agree I think that you know you look at like um uh at you know comparing for instance Celsius um to a um broker dealer that has some borrow lighting activity and there I think you actually see Celsius being less regulated today or at least less effectively regulated there are many regulations under servants snaring it to some extent but but but not as much or effective oversight of what it's doing so I I think there's like some in each Direction um and and I guess part of my sense is

just like The Details Matter like I don't know I kind of feel differently in different areas here depending on like exactly what is happening exactly what is regulated exactly what isn't um and you know what the impacts of each would be Eric I got a comment for you I'd like to to get your uh to brain to spend spin some wheels on which is um I I totally as like a crypto believer understand the value of Regulation by the evm the evm is what regulates us that's the point that's why we're here that's the cool thing about that um I'll take Sam's Point that uh Regulators don't get that and getting them to understand that is going to be an uphill battle that's going to feel like pushing a boulder uphill over and over and over again and then there's

this other line that I've I've heard before that is like a common Trope that like in the world of politics if you're not at the table you're on the menu uh and so yes philosophically 100 agree like the evm is what regulates a smart contracts are cool that's why we're all here but I think Sam's Point is that like Regulators aren't just going to care and they're just going to eat Us Alive if we don't show up what would you say to this response yeah I don't think there's anything wrong with showing up um I think it's good that people in the industry are engaging at different levels with various government regulators uh how effective that has been historically I think is a matter of debate so we can highlight for example the bit license in New York which was

you know a couple crypto Generations ago that was the fight that everyone was having and these same arguments of to what degree should we engage with The Regulators we're coming up um back then all the major exchanges the big companies engaged fully with the New York Department of Financial Services um provided all sorts of useful feedback and what came out of that was this hideous monstrosity a 60-page application for anyone trying to do crypto business in New York um and it effectively made New York like an a Barren Wasteland per capita relative to many other cities in the world and I believe also the author is one example of the bit license also

became his job became a consultant for helping companies get around the bit license well let's uh yeah let's reflect a little bit on on Ben Lasky so after he spent a year or two um crafting this monstrous bill in New York you know for the protection of New Yorkers uh after it was done and launched he left that department went into his own private practice as a lawyer to help companies navigate the walls that he himself had put up um how that is ethical or legal is an interesting question but then like as if that wasn't embarrassing enough

as something that a human would do um maybe because he didn't have enough people paying him in that role he then ended up on the board of Ripple getting paid monstrous sums to help govern you know Ripple itself so his career has been great since the bit licensed it certainly was a good Catalyst for him to get everything he wanted and I'm sure he's made a ton of money from it how has the average New Yorker benefited from all those important consumer protection laws that he put out I don't I don't think they have what you can see here is there's a tremendous amount of distrust I think between kind of the the crypto community and and some regular Regulators based on

based on past experience uh We've burnt in the past and I do think this thing that Eric is echoing which is probably something that um you felt some of the pushback on uh Sam when you kind of put out some of your thoughts is hey we understand that regulation is coming but bad regulation is worse than no regulation you know and we don't even have no regulation we actually have regulation right so we can't afford to get this thing wrong we can't afford for it encompassing bit license type thing to sweep the the entire country and I'm sure you'd agree with that I'm wondering maybe Sam if you could respond to that and then also maybe uh your call for getting into the details let's start start to get into the details of what um

your original proposition uh was and so we can we can talk about them maybe uh piece by piece but yeah go ahead Sam yeah so I I guess I I feel a little confused I guess by the argument so I I I think part of these energy is like coming at it from a philosophically not not opposite direction but just like sort of like some slightly different direction which is like like you know I sort of like approach all this from some sort of like I don't know let's evaluate that specific case or something and I agree that the bit license has been a mess and it's been bad um I I completely agree with that and has been worse than they're not being a bad licensed absolutely true

um I I think that and obviously like I I wasn't active in the industry at the time so I I can't say honestly um that like you know I can uh tell you 100 what I would have thought at the time but I think at the time I would reacted very differently to that than I am to the you know for instance stop now Bozeman legislation and um I and and I mean the reason for that basically is that I think the biggest problem with the bit license is it's a state level license that only works in that state and so what you have is a licensing regime that would be much more

covered the entire United States um I think in that case you would see a lot of crypto companies like totally reasonable and healthy but I think it's a enormous involved process you have to go through just to unlock a single state it is uh not reasonable and and so I I think that like that that sort of is a fundamental design fly thing with um with the bit license um and but but for me I guess I I hear that and I'm like that's why it's important for us to be engaging um on the details of these because um you know it's important for us to be you know to see something like that and say hey guys like

like we should I either do this at the federal level or have a passport from state to state um um and I you know instead of like um I making it just a one state thing so that that seems like one thought there um I I and you know I I think that like in the end like the details just matter a lot and and the problems were weren't some of the details so I think um uh that you know when you look at uh I I don't know actually the details to exactly how the crypto industry lobbied um on the bit license it'd be interesting to me to hear um I think that like there's also you know some extent to which you know you could say look like I don't know

um I you know I don't know exactly what you know uh what was happening then but like to the extent there was going to be a bit like it's one way or another it could have been appropriate to try and work to make it better rather than worse um uh and and that's sort of like a you know somewhat independent or separate thing from um you know thinking about like uh you know whether you should be lobbying or or against its existence um uh the can I jump in real quick yeah totally so I think importantly the the lesson from the bit license wasn't that we need to engage more that was an example of heavy engagement there are

videos of Industry leaders testifying in front of the New York Department of Financial Services and there was huge amounts of discussion discourse comments submitted through all the official channels that was not an example of the industry abstaining from Comet it was an example of the industry's best comments and the suggestions from the entire crypto community uh basically falling into the gears of New York politics and I doubt that Federal politics are much cleaner than a single state no I I hear you I'm gonna be honest I'm more optimistic about this time than I would have been

about that time um mostly I think frankly the industry's lobbying was not very sophisticated and the introduced engagement even if it was Heavy it was not sophisticated at the time and so it actually frankly wouldn't shock me if it was the case that like um you know we were going to be able to do it much better this time and I will say that like I strongly suspect that you know some feedback the industry has had has already had significant impact on what I expect this bill to look like like I I think it's just straightforwardly is having impact this time I I don't know the details at that time um uh I agree that on prior is it doesn't seem like Federal will be easier than State I can't think maybe it's just like this being done in a more sophisticated and sort of like emerging

I I but I don't really kills yeah I'm sure that's true like it's definitely more sophisticated now but the consequences are also much bigger now this is a federal matter and it will govern and influence how policy is set around the entire world whereas New York never would oh I totally hear you although it's not there the lobby was bad last time like it may have been ineffective um but it's not like oh sorry I don't know the details but I think the industry is lobbying in favor of the bit license happening or that they're lobbying to have edits put into it they were they were lobbying to influence How It Was Written and what good or bad things would be included in it yep and so yeah I would say though and this is I

think really the core thing that I think um is that like when you look at like dccpa like again we don't know what the details of what it would say um but there is going to be oversight of centralized exchanges like that's going to happen one way or another so at least that piece of it and I totally hear that like it's um that there are other parts of it that that that you maybe objecting to at least that piece of it like that's gonna happen one way or another and it's a matter of how it happens um whereas having a separate New York State framework for crypto that is separate from all the other states and the federal government was not an inevitability and I I think that that like that's a pretty big asymmetry in

these situations um and so like you know killing dccpa doesn't mean that like centralized exchanges with spot commodity markets will forever be unregulated like that's not going to happen and foreign let's get into the details and why there was this um this kerfuffle because so so you know Sam is talking about you know kind of getting into the details and um he actually he does uh think that there's a chance for the dccpa to to actually pass and you know some version of of um some of the thoughts from the crypto industry to be embedded certainly on centralized exchanges now Eric I'm going to throw it to you okay so

um Sam uh I put forward a proposal um called uh and I'll share my screen here possible digital asset industry standards and this is not the dccpa let's be clear on that this these are Sam's personal thoughts I think it uh it this is written by uh Sam packman free but neither FTX it has all of those qualifiers all right disclaimers um but he goes through and he talks about hacks and accountability he goes through and he talks about asset listing token equities he talks about consumer protections um sanctions allow list and block lists uh defy as well I as I went through this and I read the this I was like oh this is what Regulators really want to hear about right like they wanna these are the subjects that they're most concerned

with and Eric um you took issue with some of the the positions that SBF had in his original article and he wrote a very thoughtful response which I think was definitely the best response um I read and much better than kind of a you know a two-minute rant on on crypto YouTube um won't name any names here but um what were some of the issues that you had with some of sbf's suggestions uh because again if if there is a shot at getting some regulation in we sure as hell want to get it right don't we and um it seemed like you were very concerned that this is not the right path to go down what most concerned you in Sam's post so yeah again importantly we don't know

the text of this dccpa bill yet so we're all kind of talking about it blindly in that regard um I'd say there are mainly two two big issues that I had with with the post and I want to give Sam credit for how open he's been to feedback and how engaged he's been subsequent to that post I appreciate that very much um the first one was when Sam said that we should that everyone amen thus they must follow a fact but to use that word respect I think was a little

bit um revealing and I wanted to counter that because ofax should not be respected and it it perhaps Bears discussion on on why so um ofax stands for the office of foreign assets control it's a depart it's part of the Department of the treasury and they maintain sanctions lists and any people companies organizations and entire countries are on this list uh it is illegal under current law for any American person or any American Business to do business with anyone on these sanctions lists um so why is it unethical well

it includes entire countries so in my post I talked about Iran it is illegal for any American to do business with an Iranian this is patently unethical and is the kind of thing which we in the industry should be highlighting as emblematic of the status quo Financial system and something that we vehemently opposed it is not okay that an American cannot send money to a brave Iranian woman who is standing up for her freedom in that country just because she was born in that country we should be reflecting on this as a as a people and like what kind of financial system do we want to be designing in the future I don't think we want to be designing one or 80 million

innocent people are excluded from the financial system so yes as Americans do we have to follow ofac as law yes should we respect it absolutely not and I my request here is for someone as preeminent as Sam to make that distinction and say even if it must be followed right now it is not an ethical body of law the reason this is important is because the moral premises under which these regulations get imposed on us are are important they're always cast down as if we have these these morally um prescient individuals in the government that know what's right and wrong and they keep us the wild west crypto industry from acting badly

that needs to be challenged we are building actually more virtuous Financial systems than what exists today and ofac was a good example of that um so I'll pause there for a second yeah so first of all um I uh I did be respect as in follow and and I hear your point about uh that being a at least a lazy choice of of wording um you know uh perhaps um and what I had intended to say was follow it and of course I've received a few other things there too uh some of which you called me out on uh various points but like I you know I said everyone is related about whatever I want obviously meant obviously if you're an Iranian trying to

buy a bagel um but it's an Iranian selling it to you because you're in Iran um like that's not a fact doesn't make sense in eye contact so um uh you know I acknowledge on that um uh I will say that I think that you're 40 and slip Point um I I think in general showing respect even if you strongly disagree has a lot of Merit and I don't think everyone agrees with me on this and I don't think it's 100 clear that I'm right about it but it is what I believe that in general um uh even if you want to strongly disagree with something

with some exceptions by doing it while showing respect is the right way to do it um and that that just creates better discourse and it creates um I you know better um better engagement on both sides and that if you come in openly and sort of like preemptively acknowledging the strengths of the other person's point um that will make them more open to engage as well and make them feel more hurt and feel like when you disagree with other parts of it you're doing so having understood why they did what they did rather than like well as for instance doesn't even know why it's here in the

first place um and so I think that like um I that that's sort of like one thing I would say um you know on no fact like first of all I I have a lot of Sympathy for the concern about just disenfranchising and de-platforming um and it's in civilians that sucks like it sucks it's not fair to them they didn't choose that they they have been increased you know or even suspected um of any you know wrongdoing and um I that that whether or not the policy is right that sucks um and uh and I also think I would be like excited to see bilateral engagement

around you know what are ways um that you know we can sort of you know I minimize the amount of collateral damage dealt while uh while making sure to uh you know sanction terrorist activity and um I'm giving me honest I haven't done a deep enough dive um in some cases here to feel confident um that I I know the right answer or a policy perspective um in terms of what the great trade-offs are here um uh and I totally totally respect that like um I like I I least have a lot of sympathy um

if nothing else for it um uh if you're you know your perspective on on effect I I think that like um it's I think the wrong case is the one where there are the most innocent people create caught up in it by far um I I think you can look at sort of like on the other side North Korea as an example where um I I I think there's a lot to be said for i i for being really careful who I make sure that that we're not um uh at all facilitating financing you know of terrorism there and that that is just like a large fraction of what's going on um you know in in North Korea and so like I I think it varies Case by case

and you know I know exactly what the right answer is in all of them um but uh but yeah I I I I I I hear you on that and um and really my point is just like uh and and whatever you think about it is a lot and and we should follow it and and I also think strategically that just like it's um uh I think to think that it was the right fight to choose you would have to think that it wasn't one you carried the most about by far I think that's sort of how how the how the game is set up here so to speak that like this is the one that policy makers generally care about the most um um which is not something to keep in mind um and I do think I will say that is very important

um to enforce sanctions um as a general matter I I think that like there are a lot of cases where these are like important for the world remaining safe um I that doesn't mean they're all perfect and that doesn't mean I'll have a concern about something and I also don't know enough to be confident in what I think about something like there are a lot of cases where I don't know maybe maybe if I knew everything that the United States knew I would feel differently that seems totally plausible um you know I will say that like you know when it comes to Russia for instance I uh I think that there is um a lot to be said for the core sanctions I am it's not entirely clear to me why every person who got sanctioned to get sanctioned and that might just because I don't know things

and that you know that absolutely could be but I definitely would say that I'm concerned um you know if it is the case that there are some you know people who got sanctioned there who didn't really deserve it um for whom there wasn't much cause um because I think that that starts to undermine a lot of the world's confidence in their uh safety with the US dollar um and so but but again I don't know enough to to feel confident that that there was a mistake there they're just things that like don't necessarily seem clear to me and I would find it very concerning if there weren't any further reasons um they didn't know about for it yeah I and to be clear I'm not advocating that in this discussion over

dccpa that we try to take the fight of um abolish ofac right like that's going to be a non-starter that's a on a battle for a different time a different day what I am saying is that like when discussing something like ofac pointing out its moral deficiencies at least in a blog post is is worth doing um so yeah I also think like just as a matter of principle if the US government wants to block payments or de-platform or censor someone from Global Finance let them bring an allegation of wrongdoing like how is that a radical position today right like if it's a if

the government believes someone has acted wrongly or done something illegal let them show the allegation before forcing people to block payments to them right you know even an allegation let alone a conviction but in terms of ofac there is no allegation there's no allegation against 80 million Iranians that they're they've done something bad obviously the vast majority have not um and I don't think it's any different for for North Korea I mean talk about any group of people that could use an open money system and break free of tyranny it would be the North Korean people like we should Advocate more crypto usage in North Korea because we understand the danger and tyranny of the North Korean government right and so to

associate or to try to draw some comparison between the North Korean government and and all the millions of innocent people that are literally suffering and dying there I think is a big mistake character articulating a point that um I really like and and I I really want to double down on this as a Libertarian I remember hearing some content from you on on some other podcasts and talking about just the Catch-22 that it comes with being a Libertarian while like no no libertarian goes into politics to fight for libertarian ideals it's almost antithetical right so you almost never really get what you want out of politics because if you're a Libertarian minded person you don't really go like going to Congress and fighting for your ideals

doesn't really seem uh interesting to you and I think kind of what you're saying with this whole approach to regulation where don't let where the uh I'll paraphrase let's not go to Capitol Hill and like work with Regulators when we finally have this crypto platform to stand on and support us and actually embody some of our ideals for one of the first times like the the more libertarian free market-minded people have this infrastructure smart contract tax decentralized protocols defy Dows to actually like stand up and prop up and so support some of our deals with actual true like social coordination infrastructure and I think what you're saying is let's not go and shoot ourselves in the foot by giving up

giving up what we have to stand on and what we have to stand on is a permissionless financial system that can integrate the Iranians and integrate the North American or the North Koreans and I think what you're saying is like let's not give that up and let's make the Regulators come take that from us with court battles and fights rather than going to them and you know doing some deals and handshakes where we actually end up throwing the baby out with the bath water is this a fair articulation not quite again I'm not my ask of Sam and my my plea here is not that we don't engage um I I think there's nothing wrong with

what Sam's doing in terms of engaging with the government and I support various people and groups that do this um I I I'm sympathetic to those who have the view that any engagement is bad like I'm sympathetic to that but I think the Hydra approach of everything from the most radical crypto Anarchy to people in suits going to meet with those in uh in Mordor or I mean in DC that they would all be effective in some ways right um so yeah I want to be super clear that that's not my ask here what I what my ask is is that people like Sam who are engaging be very careful about what they ask for and what they where they draw the lines and those specifics are

critical and I think Sam agrees with that point so Eric what other specifics did you take issue with in Sam's original post I mean there's a lot of places we could take this we could talk about defy we could talk about kind of code I know there are some points that you do agree with but let's focus on maybe the the Deltas here and the disagreements um aside from the overarching kind of like concept of respect for ofact for instance uh there are some other like practical things that that Sam proposed what would you point out what are things that you don't agree with yeah um and I'll start this by also saying something that I did agree with and like you know Sam has had a very creative

suggestion for how exchanges should handle hacks and like trying to create a standard or a protocol for that um the specifics aren't super important but that he was trying to do that I think was was great and that being done as a set of Industry standards is uh is laudable so well done there um certainly the biggest area of contention both with my own response to Sam's post and with the crypto community at Large is what Sam was saying about defy and I'll try to characterize Sam's position correctly here um he was clear that at a protocol level things need to remain open and immutable um so that's good

what where he where he made the big mistake is in suggesting that interfaces for decentralized protocols such as the front-end website of something like Ave or uniswap um should perhaps be regulated as a financial institution that that line cannot be crossed that line should not be crossed and and if we spend the rest of this discussion on this point alone I think that would be valuable um my my main ask of Sam in these discussions is that however important it is to regulate centralized custodians or intermediaries correctly that the current bill the dccpa trying to do that and doing that well is

understandable if regulations in this same bill get attached to how decentralized products I.E non-financial intermediaries are handled that is going to be a big mistake it's going to be done incorrectly it's going to be done poorly and it's going to harm America more than it harms the actual protocols themselves so if I if I have if I can make any requests it's simply to not include any concept of decentralized Finance into a bill which is essentially trying to govern well Central controlling intermediaries Sam what would you say and Eric um are we talking just about the protocol or are we talking about the user interface

I know um Sam had some propositions around that the user interface that connects to D5 applications is that sort of one and the same to you um yeah so Sam was clear that the protocol shouldn't be regulated so that's good but he was suggesting that interfaces to these protocols should be and should be regulated similarly to how a centralized intermediary under the bank secrecy act would be regulated that is the big line that we need to say no on so Sam did I characterize that correctly and what are your thoughts currently I think that's basically characterized right and I think I like one thing I did take a little bit and by the way I like I'm not sure you're wrong to be clear on this like I I I I use it complicated

question I I don't [ __ ] know what the right answer is I I'm and um I I think that like uh I think you did characterize I think basically right um and I really appreciate that you sort of have put the thought into to to make sure that you do that I don't think everyone does that on either side one thing that they do just want to note is like and I think you're not your first or third but in your second description of what I think you you sort of said that um that you think is important that decentralized applications I'll be rightly and I think that they should be or something roughly like that and I think that your first and third versions did clarify probably correctly what I

think but I think the second version sort of blurred a little bit the lines between like a decentralized protocol and and well at the very least in parentheses centrally who said GUI and um uh and so you just want to Clarity like make it clear that like I do draw a distinction there um and and then I think a lot of the discussion on Twitter failed to remember that distinction even if it was pointed out periodically and so I want to make sure that we keep that pretty clear and that we not sort of like drift back and forth about you know what whatever um I so I don't know for sure what the right thing to do with here um one thing I will say is well first of all again we don't know what dccpa will say don't have the final text yet

um I uh do not think that we should be trying to hash out uh a lot D5 regulation in gccpa I think for you know most of the reasons you said this is like first of all a lot of this is just permission to this code um and second of all um it's just a tricky area in general and and those are two recipes for disaster on trying to quickly couple together a comprehensive receiving for defy um uh and I don't think although we'll see that the dccpa is going to be aimed at trying to put together a regulatory framework for D5 I think and hope that it will be quite light touch on that side um uh and that to the extent that it does reference defy at least in Prior

draft set that have been released most of that was actually centered around something else which was if there is a broker dealer if you have like Schwab or something and it wants to access D5 for its customers what should the principles around that be I will say that that thing I actually feel like pretty good about I mean sorry they're mixed parts of this but I think like overall like you know trying to create ways for highly regulated centralized Financial intermediaries to interface with permissionless Defy is like probably good and healthy and like will open up a lot um to to defy and that like um so that part like the devil's in the details there and I don't know exactly

what it's going to say what I think is potentially exciting and healthy um uh but putting dccpa aside for a second because it's like I think in particular on the D5 part it's not clear exactly what it will say and so it's gonna be hard to hash out thoughts on it exactly um maybe he's drilling into the place where I think we probably at least somewhat disagree um uh which is on the the guise maybe I'll make it a few points here the first is um uh that there are some Blurred Lines here like and and and and and I'll acknowledge that like some things I've said about I think it's sort of like

forgotten about those Blurred Lines and treated as if there was like Crystal Clear differentiation between different parts of this which doesn't exist but um I but that like um I think that the most important thing by far and I could be I'm interested if you disagree with this but my instinct is that by far the most important thing is or set of things is the following that um protocols can be permissions that on-chain code can be permissionless um sorry the only reason I'm saying can be here is that is permissionless to write it and obviously you could write

on chain code and put permissions in it I don't we shouldn't make that illegal um but you know that that like you know um that that should be permissionless to write coding and and you know it that could be permissionless um and that uh uh that like peer-to-peer transfers and payments um can be permissionless like those are things that I think are like incredibly important and fundamental here and I think that like if those are violated um like I think those are sort of the Sacred things because if those get violated I think it just breaks the whole thing like I I it's like and by the way I think it's true by the way for centralized for try to fight too if you try to say everything is permissioned no

one could go to a shopping mall anymore like you could not buy food like the world would just starve the next day so um and I think that like the result of that would be to like effectively ban digital Commerce and say that like the only unregulated Commerce can be okay so but anyway I want to check it if you agree not with my statement that I think that they should be permissionless but with my claim that that's the most important thing by far yes I think I agree with that um it's I take a little issue with your point about uh the current payment system not being permissionless like or being permissioned like today it is absolutely permissioned that you can go with your

credit card and buy something at the store is only because several intermediaries have your box ticked as approved right that is permissioned and that can be taken away from people for wrong think or for anything that you know some orwellian government wants to do to them oh sorry I think why it says parts of it or permission and parts of Art and I think it's totally arbitrary which parts are an aren't and I think that I agree with you on the president like sorry you can go to a store you can pay a credit card or it's a dollar bill and one of those is intermediating Cash yeah cash is is permissionless right that's the last Bastion there that that's right and I think that like and and I do think that by the way I think you're making a good point here which is like when you go to a store and

you buy Bagel it costs two percent to a payment processor and that that's if you're allowed to buy the baby right that that's if you have connectivity to financial services now you can buy with cash either way I guess but cash is a pain um and why does it cost two percent I think a lot of that is because like you're trying to get like gigantic companies to zoom in and say like Alice wants to buy an everything bagel with cucumber what do we think about that and it's like that's [ __ ] like that that that and like that's where that two percents go effectively right that two percent is going because you're trying to mediate like that transaction and and and as you said like not everyone has a

credit card and credit cards don't always work and so that that two percent fees the good case that's the case where the payment does work so um I agree that like a lot of the the fact that payments are are disrupted is because of this um uh and so anyway um I in in terms of the so so it seems like we agree on what the most important things are and bring on the on what to do about those most important things hey for where we get three here's my argument and my agreement might be wrong like it's I don't feel 100 sold by my argument here I I on balance currently think it's correct um but basically what it is is that like um I I he's like look like you know

given she's taken as a given that that is the most important thing that that smart contracts that code that oh validator is another thing I should have thrown at that which I assume you agree with that it's very important to validators um can be permissionless or else again you have like 10 000 random people running code to validate mathematical transactions and also think about everything bagels with onions at 7-Eleven and Alice which is insane um I but um uh but anyway so on and maybe I'll say just just to clarify I'm making explicit A um website hosted in a centralized hosted on a centralized service by an American

that targets Financial products at American retail back ending on to D5 but is non-custodian and so it's not it's not costing which I'm guessing is is maybe where you would be drawing this line here um custodial so let's use a specific example like a U.S hosted U.S owned front end for Ave yep which is to be cleared in this case you associate us owned and offered to Americans and sorry office Americans is a vague word but like I sort of want to say like isn't IP blocking the us or something like that and like I don't know we there's lots of interesting details here about that but like the

question is should should an American need a license to offer a front end for a back-end D5 protocol like Ave yeah and your blog said yes and sorry just want to clarify and it offered to Americans um correct yeah two Americans yeah yeah um so um I I want to sidestep for a second so we can get back to it the question of whether I think if I were dictator that should be required um uh and rather answer a question of what policy should we be proposing and arguing for and

um Mike or thought here is the following which is that I claim that the most important thing here at the end of the day the most important thing um is that smart contracts validators payments remain open and free and that the most important thing is that that gets protected at all costs and that because of that like I am relatively willing to accept compromises if they Preserve the things that I believe have the vast majority of the value for E5

um and I uh and and that that plays a non-trivial part in my thinking here which is that first of all like if I my best guess my projection is let's just expand out 10 years from now um and say you know what will empirically in expected value terms regulation look like um for uh defy in the United States for with all these caveats again Americans offering to Americans blah blah blah um if I had yes I would guess inexpected value terms that looks worse than it does in a world in which it's like Solitaire small contracts game is

totally free um uh but in which the centralized American hosted targeting Americans um of a GUI um requires a burger dealer license or something like that like my projection is that that world is better than the expected value of what the world will be um maybe I'll just pause for a second there and ask you do you agree with that statement about the relative expected values I think the tendency of The Regulators is to make the world a darker place no matter what now it's up to non-regulators it's up to you Sam it's up to people in the industry to highlight the reasons whether ethical moral legal why those

people should not be imposing the controls that they want to impose and I agree that the protocol being immutable is the most important thing but I kind of feel like you're starting to compromise far too early just as in the same way that like if we agree that the heart or the brain is the most important part of the body we would not so readily surrender our arms and our legs to be chopped off just because the heart may be arguably more important right like let's let's keep the whole being here let's not invite in let's not invite in this kind of restriction and if they force the Restriction then they'll force it and history will be the judge of that but let's not be the ones who invite that in upon ourselves so

so I totally hear you I want to make it empirical way which it might be wrong and if this claim is wrong then I change my position on some of this but my empirical claim is the following big old sort of like lay out my logic here step one most important thing validators Etc step two I predict that in expected value terms that compromise is better than what we will get maybe it'll be better maybe we'll be worse but like it's better than what we're expected to get because it preserves the most important thing and I'm not 100 sure that that will be preserved um I really hope it will be um step three I I think we have to fight to make sure it gets preserved I think that's the most important fight um and and then step four and I think this is an important and non-trivial

stuff that I might be wrong about but but which is very relevant for my thinking on this is my sense is that it is much more effective at getting what you want the most um if you come to the table um with any with a stance which is immediately recognized as willing to compromise and reasonable and that that's I'm not you're making a statement about what matters are the right thing to do is but that like my my belief is that like if you come to the table in DC and ask

for exactly everything that you want as you're first ask in a very forceful way you'll not get what you want and that you will not be taken as seriously and that the way to maximize the odds of getting what you want the most is to express a willingness to compromise on the things that are less important that is my belief in principle that's that's absolutely right you're not wrong on that principle but you're sacrificing far too much right from our position here um let's be pragmatical pragmatic for a second forget all principles and everything if D5 front ends catering to Americans need to be licensed

defy in America dies it dies people will not use defy through licensed front ends because it will simply look like C5 there will be no meaningful distinction so that can't be sacrificed well I think I disagree with that but I more strongly disagree with at least one of the things you said even if I don't know which one like in other words I don't know that you can simultaneously think what you just said and also think that by far the most important thing is that validator is ETC remain permissionless like because what you're saying right now is you lose the whole thing if you give up permissionless front ends and

um but then you also said that you get most of the value if you have like permissionless back ends and so I think I'm now confused about which of those you think if you gate the way that people use defy 99 of people use defy which is through a GUI if you gate that as a licensed financial institution you have turned defy into tradfi and and so just to clarify then like this enzyme game now is basically that that you think that like the front end is just about as important as a value that like you know if yes if you for instance had to like like if you got like 70 30 odds on like which was

permission to which was permission list you'd be kind of like I'll just take whichever gives me the 70 like I kind of think about equally important like is that kind of how you're thinking about this I'm thinking of this from the perspective of actually wanting the entire world to be able to use an open immutable Financial system and 99 of those people use guise so if you if you gait the access to permissionless blockchains with guise that need Financial regulation on them um we we've failed like that's we we end up with tradify I I feel confused about whether you agree with my statements sorry I think we're I'm not trying to

I know what you think the best case is here I know what you think the worst case is here that's what I'm trying to say is like is an intermediate case closer to the worst case or the best case like if this is the intermediate case my my best case is that governments leave free Sovereign individuals alone to interact economically as they will like the country was supposed to be founded on but that is a radical notion that no one in Washington accepts anymore granted sure so sorry so if you take sorry of the following three cases uh granted that there are many cases Beyond these three um but of the following cases case one um I all of defy and things related to defy are unregulated case two

back-end unregulated front-end centralized front end regulated he's three back end regulated centralized front-end regulated um do you think K2 is closer to case one or case three I think it's closer to case three got it so you think that basically like if anything here requires oversight that um that that you've lost most of the value I think we need to move the conversation up a level and acknowledge that the oversight in defy already exists and it's done by immutable code that operates perfectly as written uh it is it has oversight sorry I I I agree

oversight from a human-based financial regulator in the government why do we want to invite that I'm not making an argument about whether I think it's good or bad what I'm saying is and maybe you dispute that we have to choose because maybe you think that like it is fairly likely that we end up in a world in which there is no regular no human regulatory oversight of anything related to defy and if you think that that's an interesting belief which is not my belief which like would be very interesting if you thought it was true there's already there's already human oversight over these things fraud is already illegal theft is already illegal right it doesn't matter if I do it through a D5

smart contract if I steal from someone that's regulated already sorry I I I sorry I hear you okay I feel like we're being a bit pedantic here but I I will go with the flow and I will like add a lot of words to this sentence but I think you know what I'm trying to ask and I'd appreciate if you ask the question you know I'm trying to ask so is your belief that if any part of the Flow by which many people currently access defy in which you go to a huge American human hosted website aimed at Americans hosted on AWS paid for with a credit card that then back ends onto of a in a um uh non-custodial way that

if any part of that requires an explicit license from a government financial from a government financial regulator that that already means we're close to the worst case in absolute value and that like it's not worth that much to um talk about which parts of it doing don't require a license because if any of them do it's already like uh sort of like you've already lost the the basically the whole word is that roughly what you think yes I think if that is the outcome then none of us should be proud of anything that we've been doing to build this whole industry the entire point the entire point of this is open

permissionless finance and when we say that it is not just a slogan it is the entire point and if you exclude 99 of people from open permissionless finance then all you've done is make a more complicated more expensive tradfi system right so that's that's not acceptable to me and I think to most of the people that that care about why we're doing this in the first place I think I disagree with your last statement about exactly how it suits except for two or not although maybe I also think I maybe it would be if it was phrase the way you phrased it um but but um I like okay I think I think I Now understand

your view here um and and your view here tell me if this is right or wrong but my understanding now of your view here roughly speaking is that um and I think I understand why my previous question didn't get at this and it's sorry for that I now think your view is roughly speaking um uh that if anything in this process requires a financial license um then that means that the people so to speak won't be able to access it as that means we've already lost and that yes just just as just as if we were having this discussion 25 years ago when the web was being created and we were taking these same positions

and you were asking me if any part of the web stack that lets someone log onto a web browser and access something as powerful as the entire home of human knowledge like Wikipedia if any part of that required a license would we have lost the battle yes yes the web would not be the beautiful thing that it is today the reason that it is so special the reason that it is so Innovative the reason it's so Dynamic is because people do not need permission to access the web to read to it to write to it and it's amazing that that has has lasted and anyone who researches the history of the web knows that these very same battles and discussions and debates happened back in the 90s

it would be the height of irony if crypto entrepreneurs then gave up that very same argument 25 years later and allowed Finance itself which is no more dangerous than information to become a permissioned system um so uh okay I hear you um I I hear your point here and um I have a lot of empathy for it I think it's like um uh I I I think that there is a totally plausible argument to be made here which you're making

that that yeah that like any amount of um uh if anywhere in this process we're requiring a license then in practice the worry is basically in practice No One's Gonna Be able to access it and uh practice it's no longer an open Financial system You've Lost That so if you're okay with losing that if you're okay with having a closed permission Financial system then then we see things very differently so I guess I don't see things in binary like I guess what I would that felt like a very binary statement the statement of a line it's a statement

that if we cross this line we've lost permissionlessness which is the entire point but I don't think permissionlessness is binary like I I think that there are Shades of Gray here and that you're sort of sweeping that a little bit under the rug and that like the real answer is that like I think there are costs to to losing this line um but I also think that like that doesn't mean that you've lost everything like like I I think that like in particular sorry maybe maybe even more explicit here I think that if you end up in position where um I like like where like um

like if you end up in a position where it's licensed to deploy a smart contract or to interact with a smart contract with code that puts a gear in the works that is very difficult to overcome like I think then you just get like like on-chain stuff just doesn't support like it's just like yeah so we agree on that statement um and so so on that side I think I think I feel maybe someone similarly to your your sense of like you know that sort of like like like I it's very difficult to find ways to mess with that that don't um that don't break the whole thing I think I don't feel nearly as strongly

about the thing I said so I I think that like if what you're saying said an American hosted GUI even in American retail posted a centralized way on a centralized Cloud Server requires some sort of financial licature I don't think that that basically breaks D5 like and and I think there are a lot of reasons that I don't think it does um I think that like um I look like I I think that like you know thinking through like like okay like what impact is that actually have like well you know I I guess like I mean I I can I can make this very practical if a

company if a company needs to be licensed and do kyc to operate its American front end for that company now has a compliance program that company has registered in a certain jurisdiction that company is now taking personally identifiable information from millions of users and storing it there is nothing decentralized about that model that is a centralized model that is endangering people with custodianship that is tradfi that is not defy so I think sorry that model meaning that company but some other parts of this stack are still definitely decentralized um not everyone's gonna be accessing it through that protocol so if nothing else I think like it you know it's um I like other smart contracts aren't

going to be accessing it through that portal for instance like that's a big deal I think that like you can still have things just building on each other in every direction which is super cool I think other countries can have different regimes which is super important I think that like American can still freely contribute IP and end products um and on top of all of that I I don't even agree that that company is definitely taking Pi on like I I think that like many of them will be but like I think I could just drive a system to you that I think would probably get there on a regular phone contacts without that company taking any pii which I think is a little bit of a side point except to say that like I I think there's a lot more want for this then

what you're saying right like let's say that you had an on-chain um you know you you you had some people kyc for other purposes with some company that company wrote out on chain this person's address is kyc not saying anything else about them other than that I've kyc them and giving them a check mark and then this front end only let addresses in that list interact with it then this GUI is not taking any pii while doing so right and and again that's like a little bit of an in the weeds point but like I think that's just like true of a lot of the things relevant to this gooey thing and um and so I I guess I just like think this is um in practice has a lot fewer of the downsides than than you do although we

think it sells downsides like I'm still concerned about like I'm not so Sam is it just to take a higher level point because you do think it still has downsides and you would prefer a system that didn't make this compromise one question I think um I would have for you and maybe like Eric or the cryptic Community is also asking the same thing is like um so why are we being forced into this um choice now like so to use Eric's example from the 1990s why not come back when our Regulators understand a little bit better when our market share and education around the US populace or different jurisdictions Around The World Is A Little Bit Stronger people have seen the Practical use cases why can't we sort of strive for the best and have regulation that goes into effect remain

silence on why isn't it enough to just do the C5 regulation why do we have to why are we forced into this position of terrible compromise if what we want is the outcome where we don't have to make this user interface compromise so I I don't think I'm arguing for us to try to make that happen like like I I think that's misrepresenting pretty grossly what my position is and I feel like I've never said that and I feel like that I I don't know like what I've said is that like empirically it might turn out to be the case that this is true and I have implied that it that that might be a compromise that we could live with but I'm not saying that we

should make that happen and I I think that like I'm not saying that that's something I think pccpa does um you know I I think that like I um I'm not saying that we go and make it our priorities to make that happen I like those I think would be probably not the right tactics um I think what I am saying is that you know when asked by a regulator would I think that that was appropriate I think what I would say is that the most important thing was to keep um I smart contract validators payments decentralized and that like if that if

that did mean that like you know potentially I've seen front Trends by Americans targeting American retail had to be licensed um I think that could be reasonable I I think that that's like a little bit of a different statement which is sorry I I don't mean to cut you off here but if the question was let's let's acknowledge that the email protocol will be permissionless as a protocol but every email front end requires licensure and kyc so that we can make sure no one's sending Communications with terrorists where would your position on that question be so okay so first of all um I think that's not quite the right

uh comparable I think that sounds more like payments to me than well like we're just talking about emails here right like the sending of messages across the web if the protocol was going to be immutable and no one would have to put any sort of censorship in the protocol of email yep but it was the law of the land in America that every email front-end provider required kyc from its users yeah because under the justification that we do not want people sending information back and forth to terrorists yep where would you stand on that position oh I'd be strongly against that position why why would I be against it because I think that it I think it'd be like

against freedom of speech I think it'd be disenfranchising a lot of people I think I would not trust in practice that it would do a good job of starting people I think that's like that's just the gains from it are relatively small and the risks of it are massive and I think it would also just introduce a ton of friction everywhere so I agree with you on all of that um um I think that like and sorry this is so I don't know how compelling you're gonna find this one thing I will say is that like I'm making a distinction here between for instance payments versus like derivatives contracts and that like it's email feels to be more like payments so I I think that like you know

well it's weird because I'm not sure exactly what the equivalent of derivatives contracts is in the email Paradigm um or there's the like you know messaging Paradigm or something um but like you know I I think that like that that is one of the reasons that I I do think that I'd be very worried um about a world in which we ended up with like you know every payment ever being permissioned I think that would be crazy and untenable um uh and that feels to me like the closest comparable to the email thing um hi why why is Ave somehow different than email

so um why is it different than email um you argued so well and so passionately to not block email with licensing and kyc I loved hearing that yep that filled my soul with joy such arguments why does that not apply to financial transactions so um why does it not apply to financial transactions um I think there are a few things here so first of all okay to some extent it does right obviously some of the answers here is that I think there are a lot of ways in which it doesn't and which I have similar feelings like

so I'm I'm not going to say that there is no similarities there all I'm gonna try and argue is that I think that we that I feel like that like the very least feel significantly more strongly about um payments than I do about uh about of a foreign so here's why and again I I I you know um so um first of all I just looking at the trade-off of benefits right just looking like what is that trade-off in practice um when you look at you know payments

um or look you know when you look at at least let's say when you look at like email um that's something where it's used constantly by everyone in lots of crucial ways day to day um and uh it's sort of like a really central part of how we communicate yeah it is 1994 it was not and I wonder what it would look like if all of that was licensed it's an interesting question and so okay I think that from a payment's perspective that feels similar to me in some respect that like that's a really fundamental everyone's doing day to day and like filming up the gears on that is real bad and like really disenfranchises

people and so why why do you see that for payments but if I'm trying to pay Ave the logic changes why so first of all I think that like borrow lending protocols um I think they're awesome I think they have a lot of utility and I really sorry I really want to make this clear I like on an absolute scale I'm a huge um fan of them and I think they're super cool um I don't think that there is as important to the world as the ability to pay for things like anything that's just like on a relative scale like um you know if I had to choose like which one of those has is like more Central to like important things going on in the world is clearly payments I

think it's by like an enormous Factor like I I think it's not like a factor of like 1.2 or something I think I I think it's more like you know like one of them grinds Commerce to a halt the other one is sad is how I feel about it roughly speaking and so like you know I just like quantitatively think that that like um yeah I thought one of them is more important second thing um um is that I when you look at like you know what are the so so in terms of like the costs you know of gumming up the gears on them I think just like

massively high in one case in the other second of all is that like especially when you look at more complex products and and I unders like there's a range of things here and and and I understand that like one could be worried about lots of things being swapped up into this but especially when you look at more complex products um I think that first of all but to the extent that they're going to be used by many fewer people the costs of for instance kyc in aggregate goes down um you know and that like those people are using it much more each um means that that again the cost of a one-time friction cost goes down now to be clear I feel very differently about a one-time friction cost and then every time friction cost if what you were

saying was that like in order to use Ave every single time anyone used it they had to go initiate a new annoying permissioned process that would be very bad like that would kill it and I'd be very sad about that now most of these things ideally optimally and and query whether you think this would actually be true in practice um but but ideally would be one off per user things a type of thing where like um you know the first time that you registered um for Ave I you know you would spend 10 minutes going through this process and

then never again and I think that that while sad um is just like a a much lower cost than if you had to do this um every time that that how about when the Iranian woman tries to do that the first time and it's not 10 minutes it's never yep oh I totally hear you on that and it's so firstly why are you okay with that what you mean okay with that there are lots of bad things that happen in the world every day and I don't grind to a halt because of that I try to do the best I can and I try and move things on the margin in constructive Direction without sort of like giving up because some bad thing happens and like I'm not

saying I'm happy about that I'm not happy about that but also like it's not infinitely bad right like like it's I mean it's somewhat quantifiable right you you know it's it's about one percent that that's about how bad it is and that sucks and like but also you know I I don't want to throw the baby out with the bathwater here and you know I I think that like you know obviously also there's only you know Iranian Commerce in Iran with Iranians um but I you know I understand that that is not the same thing as real Global Financial access is very different thing um but just to say that like I think

that the like you know the scope here does matter to me because we are in a world where like we are always making trade-offs and like we are always trying to decide given all the factors before us realistically speaking what we can do and what we should do and so like you know I think that these things while bad or not not infinitely so and um so that's another piece of this um I think that like I you know when you look at like um uh at sort of like the reasons to permission them uh I think at the very least having like a knowledge based test on complex Financial products is not an

insane thing to do especially um when you look at you know websites that are marketing and targeting these at retail users um I think that that is a kind of thing that could help reduce fraud reduce scams um while still making it the case that anyone who did actually understand um these products I could use them and by the way I will make it clear I will fight against um monetary threshold tests to Access Financial products I think those are bad I think they're discriminatory discriminatory I think they're classist I think they're racist

I think they're just like real bad I think that like being in a world where you say that only the rich can Access Financial products is [ __ ] up like and and so like I'm not saying that like I will support every type of Regulation one could imagine for them either so I think that some types are are just bad and I think that we as a society have messed up on that in a lot of cases and had unduanced takes and um but I think that if you're saying that like you know you have to demonstrate that you understand the products that you're using that at least feels all more reasonable to me um I especially again oh I do see it's a little bit paternalistic and I'm not saying that I feel unreservedly good about it

um but on the other hand if you say like should people be able to Market really scammy things pretty aggressively with no barriers to anyone using it like that's a stronger statement scams are illegal we don't need new regulations to make scams illegal so scams are illegal but um if you only do that in a retrospective sense if you never look proactively at them then for what it's worth and it isn't the worst possible thing but it does mean that like you know you only catch scams after um I you know like after they've already scammed people and and like there's at least an argument to having a

proactive check on is this a scam before allowing it to go forward note there are costs to doing that as well so I don't want to say that like it is clearly pure good um to have that check but but there are some advantages to doing so so I think that's like you know a factor here as well and um and I think it's not crazy to want to have that check in place and I think that like you know when you have I you know a site that might be like really deceptive in how it describes what the decentralized on-chain protocol that it was marketing to its users does right very heavily implying that it does

something very different than what it actually does um uh you know maybe you say okay well that's a scam they should go after it um maybe they're popping up all over the place maybe um it's complicated to figure out I I I think it's complicated and that like there I feel like at least more on a relative scale I feel like the costs are lower and the advantages are higher I think costs are way lower at the advantages are moderately higher to um putting permissions on centralized front ends for uh derivatives trading protocols than they are for payments or centralized front ends for peer peer payments so

to bring this back a little bit um we're debating right now like how should D5 be regulated right and this is a big open conversation and you and I have two views among many yep in terms of the DC CPA as you've acknowledged it's very hard to get defy regulation right you're not even sure where you stand on it yep and you're one of the smartest people in the industry can we acknowledge at least that the political class The Regulators themselves are nowhere near ready to be regulating defy and whatever the appropriate regulations are for defy this bill is not where they should be contemplated we are not ready and thus

the dccpa should not include any conception of defy because if it does it's going off the track do you agree with that um I sorry sort of um so uh there's no part I strongly disagree with there are a lot of parts that I would put differently and feel conflicted about so first of all I'll just say briefly I I think the smartest most knowledgeable people tend to be the least certain in general and in fact that I'm uncertain doesn't mean like I think that I'm no I don't think anyone should be certain I think it's [ __ ] that some people are um but I think it will always be uncertain and that doesn't mean that like you know we have to give up on ever

acting because I will always be uncertain I'm not advocating to give up on ever acting I hear you I hear you do you want to exclude D5 from DC CPA first of all most right in general I would argue that it would be ideal to basically exclude D5 from dccpa I think that would be the ideal approach to say look we're going to figure out D5 later this is not D5 build this is a C5 build that is what I think roughly speaking would make sense here and I think that would be appropriate for all the reasons you said I want to give one caveat to this which is and I'm interested in taking on this one thing that has been in some drafts at least I think CPA I'm interested in your thought on is um uh is

what if there was do some studies to have some discussions about eventually developing a framework for how an already regulated centralized custodial broker dealer could access liquidity from a on-chain smart contract that feels good to me because the status quo is that it's effectively illegal to do so and that like so so that's an example of a D5 provision that I think is good that would be that's reasonable under the condition that is that it is that the scope is narrowed to precisely that kind

of party right the scope is how does a business for example interact with D5 that means that any person's LLC now has to fall under the licensure right that's a very different question I totally hear you so anyway some of what the gccpa says about D5 in fact most of what it is is about the thing I said I think that thing's at least reachable and probably good but I acknowledge your concerns here um the um I I outside of that I basically think that like hunting on device the right thing to do because I think it's complicated and I think that like you know it's not gonna be easy to get right I will give a few reasons that I would make a weaker statement than the one you

made in addition to the thing I've already said first of all I think um it's well I believe that the people working on dccpa are unusually thoughtful and knowledgeable and I share your prior about what happens when you know a bunch of bureaucrats get together and try and like write down how people should use a product they don't know like that that generally produces nonsense um I will say that like in this particular case like maybe it's just dumb luck I think in part it is um but I do think it happens to be the case that like there are just like unusually good thoughtful public servants who are

working on this who are unusually knowledgeable about crypto and about defy and in part because I believe they viewed it as their Duty before you even writing a bill before even figuring out how like whether any version of a bill would be scoping defy in or out that they had to understand the subject matter and I don't think that's always the case I think often people act without understanding it I've seen that happen countless times yeah I will grant let's assume for the sake of the discussion that everyone working on it is very knowledgeable yeah and arguing that one and maybe they're not but like that's what at least my belief is premised on that um so okay so um that again it doesn't it shift me a

little bit in the direction of being and again I don't see these as binary things I see it as all as a spectrum and it shifts a little bit what I'm comfortable with I'm not all the way but a little bit um so that's one thing that I would say in this particular case um another thing that I would say is you know what are the provisions well we don't know what's going to be in the bill but what are in various drafts that have been circulated what are Provisions that exist here um first of all I think that like one thing that I've seen is like commissioning a study to determine um what might be a productive direction to go in with respect to well really it's with respect to

regulated entities accessing D5 so not only is it in the end I think targeting a healthy thing which is how do regulate entities access permissionless smart contracts but it is in fact taking the approach of let's not try to write the answer down right now let's like acknowledge that we should think about this and talk about this now I acknowledge that like you may have concerns about how this study will go and and and and I I hear those but I do think that that shifts me a little bit more I think like in general I don't plan to study yep so the study is you know that that's a fine and appropriate thing and I think it's a study again about a pretty healthy direction here now I think that one could totally reasonably have concerns that this will bleed over that like that that that like

this would bleed over into not just like how does a currently regulated broker dealer um uh interface with D5 and into like um you know why should we ever allow Commerce to happen um and and and and that sounds facetious but but that is a warrior like like I am seriously worried about like extreme anti-commerce and anti-freedom things happening um so comment on that really quickly yep if that kind of nightmare gets proposed let them propose it and then let us talk about it and show the world what they're proposing and even if we lose let history judge it oh I agree I agree we should not be proposing something that we really don't like and I claim I think well sorry again we don't we don't know

what dccpa says as of the last draft at least I claim that at least my reading of the intention of it was that it was not trying to regulate defy it was trying to have studies about how C5 should be able to interact with D5 um so I've I've heard some very worrying things that in more recent language the target is shifting from just regulated institutions to defy and D5 users if that's not true in the language that we see then great but I do not feel like it's going in a comfortable direction

right when you say that just to clarify are you saying that that is true as of after the most recently leaked version I don't know what's the most recently leaked version but the people that I know that are dealing with this are not happy with the recent movement of it here and say can you read the most recently read write version and then we continue this podcast I don't actually want to say that but I actually am a little shocked that you haven't like that's what started this whole thing like this whole dispute on Twitter started with a a leak of a version of dccpa like the whole text was there posted like I'm a little surprised that you would have written this blog post and like done all this without having

read it I I'm I wrong my concern isn't my concern isn't with how drafts are written my concern is with how the bill is written and I wanted to comment on your thoughts about it because you're influencing how that bill is written right so so I I totally hear you I I'm sorry I'm not even saying with respect like this uh podcast but but like um like I think that sorry I I haven't heard the things that you're alerting sorry I have not heard from a source I trust the things that the things you're alluding to are happening I I've heard vague rumors of some people being worried that maybe they would

happen um I see how it turns out here all I want to establish here and I think you agree with this is that the target of whatever rules are proposed are intermediaries that those are the affected targets whether or not that means how those targets interact with D5 or not that's understandable but if the target moves from intermediaries to normal unregulated or non-financial businesses operators of websites people who are interacting with defy that that is a line that should not be crossed at this juncture do you agree with that statement um I certainly agreed most of it um I certainly agree with users I certainly agree with developers I

certainly agree um with validators um I agree with operators of websites I do agree with that I'm gonna be honest like I I'm sorry I might be off on this read but like I don't like um I'm not feeling super optimistic about like uh like like uh like my read here which again might be wrong but my read theory is that like um I is that is that again like I think that like um at the end of the day um that might be the trade-off that we

have to make and I think that would be I think and it could be wrong that some versions of that if very carefully scoped would be the right one um and um and so I think I would have to see the details of it to know on some things there um exactly what I would think in how bad I think it would be and how much it would change my view of than that thing here um I think that like um uh but but like I don't I don't feel confident that I'm thinking about that part right like that's just like that is my current like on net I guess sort of thinking about how to surf match these things together um I think that like um it's

hi I I I don't know I I think that like some versions of that would be more free than the status quo like I think some versions of that would be frankly deregulating relative to how things are realistically speaking today because I think realistically speaking today um I there is effectively some amount of regulation on uh those uh on on some of these front ends like I think that is how some regulations are treating it today and so I think that's like worth acknowledging and I think that changes my mind a little bit about like exactly where I think the lines to draw are here but

um but but anyway you know all of that being said like um I would certainly be really cautious and nervous about language around that and like would really want to be calm like would be very nervous about it unless it was like really carefully done but I don't think for what it's worth that I would be comfortable giving a sort of blanket statement of like um anything that touches any front end in any way unless it's an already licensed institution um is a deal breaker like I don't think I would go that far understood guys um this has been at exactly the

conversation I think the crypto Community wanted and I just want to thank both of you for participating so openly um this is uh this has been hugely productive I think I I just have like two quick questions and keep these as uh as brief as you'd like to be but I want to go back to the challenge SBF you made at the beginning of this conversation to steal man uh the other's case can you just give a steel man for for Eric's case here and then Eric I'm going to ask you to do the same for Sam's yeah totally um I I think I'll sort of give two different types of Steel mans of it um caffeine engine used to be absolutely explicit to anyone listening to this this does not represent My All Things Considered violo I do agree with some

parts of it this is me attempting to see him and argue for a different person's case here put that copyright somewhere around this do not we won't create a gotcha clip here Sam don't worry oh this is not for you this is for I I sort of a friend who doesn't like glasses okay you might be in the chat right now by the way who knows who it's possible any Anything Could Happen um but you know first of all what I would say is um that I that in general like deciding what someone is and isn't allowed um to do with their own money you should have a presumptive concern of um of paternalism and it should have a

presumptive concern that um I that you know are you um uh going to end up doing something that is a um hurting the people you are claiming to protect be not what those people would ask you to do in fact they would tell you to stop trying to protect them um c um heavily discriminatory in exactly the ways that you would be concerned it would be discriminatory um against the underbanked against minorities against rural populations against the poor against people in really difficult situations um uh would it persist uh class disparities

um that's one concern that I would have about um uh and again this is different if there's regulation claiming that something is going to harm an unconsenting third party um but if this is just someone acting on their own behalf then um I think there should be a presumptive deep concern about whether it is really helping the person you are claiming to be helping if it is paternalistic um uh and then second of all what I would say um is that um uh that in order for that's right way to put this like

um in order There's Something Magic that happens um when you have permissionlessness There's Something Magic that happens when you have um pure on chain actions and in particular what you see um which I do think is just an incredibly powerful um I is you can end up in this situation where you can just build where you can build on what's been built where you get exponential growth um in Innovation and as soon as one step here

um is permissioned instead of the whole system being able to innovate at the level of computer code and human Innovation and action and cooperation it goes at exactly how slow and bureaucratic um the single most slow and bureaucratic uh permissioning agent is and the more permissioning agents you have um the worse that gets but even one even one of them right with a weak turnaround time might take you from 10 seconds to a week in an innovation time scale and when you that is a serious serious risk for throwing permissioning into an authorized permissionless system similarly um when you do something like what we

see with um charge facts on current transfers ACH um you know and credit card transfers where there is a system whereby it might rarely is but might be the case in some cases that if a payment happens it might be reversed two months later right that there is some and that you can't compute whether or not that will be the case that is a sort of bespoke Human Action deciding what would happen there um when you have a system like that um you end up in a world where if you get paid something um there's nothing you can do to become

absolutely confident that you actually got paid there's nothing you can do to know for sure that that money will ever be yours um it might all be fake and because of that um you end up in a world where any money that you have you kind of can't spend for two months because if you turned out to not get it maybe everything breaks and if you have a malicious actor here then maybe you have to keep it in custody and have to freeze every transaction for two months so they can't deem this by maliciously doing a transaction and charging back and as soon as you even let this in a little bit to a financial system

there is a serious worry that you end up in a world in which literally every commercial transaction takes two months even though it's only a tenth of a percent of payments that you're saying might be charged back two months later that is actually enough to make it commercially the case that you might not be able to sustain a business model where you don't hold up everything for two months on that um because of abuse because of uncertainty and and and and so there's a real worry that small amounts of friction and non-determinism in the system um especially exploitable non-termism can ruin the fundamental behavior of an entire system and we see that today we

see today that two years ago tens of millions of retail Traders got frozen or liquidated all at once trading stocks on retail platforms because they made so much money that those platforms worried that maybe one of the 10 intermediaries might two days from now turn out to not settle a transaction that they already claimed to settle and because of that worry they all had to shut off all trading for over retail um and that's a terrifying place to end up in we don't want our lives to end up like that I think both of those factors create a really strong presumption um

that I I that of worry that um paternalistic relation can cause massive unfair harm um to people for under upside all of that sorry all that I actually believe that wasn't steel man I believe all of that um the Steel Man varic side which I don't think I believe is that set of things is so strong that I think it just outweighs all benefits of regulatory oversight um Eric a few layers to the steel man that uh Sam Gave You Can you steal men Sam's argument yeah

Sam is in the trenches with Regulators on a new bill and he has some principles on how these protocols should work he believes that the protocols should be immutable and that nothing should be gated or permissioned at the protocol layer he's very worried that if that isn't defended at all costs um that'll be lost and he is willing to sacrifice things which he believes aren't too important like a US front end being licensed to allow people to interact with defy smart contracts he doesn't want that to occur but he would be willing to offer that up as a

compromise to make sure that the protocols themselves are not permissioned and I think he sees this as a pragmatic stand of where that compromise should or could get to Sam last question for you then could you just uh wrap this up closing Arguments for your case and your position we'll throw to Eric to close out yeah so um I think that like I think it all comes down to the details I think Nuance is always in the details here um and I think that today we are potentially in a massively better place than they were than we were a year ago I think that a year ago we were in a place where there's nothing but acrimony

between crypto and regulators and many products were empirically not being offered in the United States because of regulatory uh problems so I think it was a really big problem and huge acrimony over the last year I think constructive engagement give and take push and pull being willing to um uh to have nuanced positions and being willing to um entertain compromised um and and being really open about acknowledging the benefits um of other people's positions over the last year has led us to a world where as of today things are mostly the same

in terms of what is actually doable and crypto but where award swath of DC is much more open um to moving in a positive rather than negative Direction on the regulatory front and I think we're very close to seeing changes that I hope will be very positive and I don't know for sure that they will be um I don't know for sure that they will happen but I believe that we are better off today than they were we were a year ago I believe that is by a significant amount and I believe empirically that that has come through nuanced engagement um and I think that like you know if that doesn't mean always compromise on everything that doesn't mean always um take the most extreme standard it depends piece by case on the details on the benefits on on the costs

um but uh that's at its core that is my belief that I think is evidence that um uh we're making progress um and uh and if you see this reflected in the attitudes and beliefs of regulators and policy makers uh in DC I think that they have become substantially um more constructive close this out Eric what's your closing position here argument okay uh we those of us in this ecosystem this industry have created essentially a new Financial foundation for the whole world this is a huge responsibility

and the entire purpose of this financial Foundation is that all of humanity can use an open immutable Financial layer we are separating money from politics we are separating money from the state and in the same way that the church was separated from the state and everyone now hails that as one of the greatest things that Humanity ever did we now too it comes to us to do the same for money is as or more important to people than religion is we interact with it every day in all sorts of manners and just as mathematics or language are immutable and open to the entire human race so too should the exchange and management of money

that is the principle that makes this entire ecosystem important that is the principle that justifies everything that we do and if we lose that it will be something that we regret for the rest of our lives because we have that opportunity we can't protect that principle when it comes to centralized custodians granted but we can protect that principle when it comes to decentralized immutable Finance which we call defy that line exists to the degree that we all defend it so that's what I'm trying to do and my my request to Sam and anyone else working on this bill is to exclude D5 from its conception not because D5 shouldn't ever be regulated

but because it is too important to screw that up and it should not be included in a bill that contemplates how normal custodians should operate so it's a very pragmatic request and hopefully we can have more of these discussions in the future as uh as this bill comes out indeed I hope we can Sam Eric I want to thank you guys again uh this is exactly what we needed in order to have this discussion bring it to the light and much more uh a a much better back and forth than on Twitter uh you can't contain these types of conversations so we appreciate being willing to come on very much thank you thank you and you guys thank you so much for engaging instructively I know that I cheat on you a little bit here and

that's probably too negative and a little bit unwarranted um and you know let Keys within without sin past the uh the stone here but um but I really do appreciate um you you engaging care I appreciate um you doing so constructively and that you have done that the whole time and I I I hear you I really respect you know your arguments and I'm I'm gonna push for for a number of them okay thank you Sam I appreciate that I am uh I'm not the man in the shall we say FTX Arena here and it's always easy to criticize what other people are trying to do um I think you're a good actor and uh I hope you hear these points and help Express them in a productive way thank you for the discussion

this sounds way too friendly for a crypto contentious crypto conversation this is this is not what I'm used to on crypto Twitter damn it um action items for you bankless Nation hope you enjoyed this uh extra long episode we didn't mean to go that long but I think it was uh important that we did some action items why don't you go and read the Tweet thread that started it all off we'll include a link to that tweet thread from Sam in the show notes it's pretty entertaining I gotta say so make sure you go check that out and some of the discourse that has fallen out from it also uh read Sam's original thoughts that is posted at ftxpolicy.com we'll include a link and read Eric's response as always gotta let you know none of this has been Financial advice

risks and disclaimers it always it never is uh eth is risky so is crypto so is D5 you could definitely lose what you put in but we are headed west on the frontier 5 fighting for a better future this Journey's not for everyone but we're glad you're with us on Bank list thanks a lot sequence is the all-in-one developer platform you need to build web 3 games and applications for your users sequence is a smart wallet and it's the easiest most intuitive onboarding your users will ever experience and comes with all the features users need to feel empowered in the web 3 world multi-chain support nft display and users can buy sfts nfts and crypto directly with a credit or debit card for developers sequence is the Plug and Play platform for web 3 games and apps their apis let

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