New Year, New Congress: Digital Asset Legislation? Joel Oswald, Principal at Williams and Jensen - E104

On this week’s episode of The Encrypted Economy, our guest is Joel Oswald, Principal at Williams and Jensen. We discuss lobbying and what legislation will come out of Capitol Hill this year regarding Web 3. Be sure to subscribe to The Encrypted Economy for more insights on the latest regulatory developments in web 3.0.  

Topics Covered:
· 2:20   Joel’s Background
· 5:20   Distinctions Between the Approach of Lobbyists and Interest Groups
· 14:00   FTX’s Impact on the Legislative Agenda
· 17:00   SEC’s Role in FTX Contagion 
· 21:40   Status of the DCCPA
· 29:40   Managing the Exit of Pat Toomey
· 34:40   Will Europe be an Inspiration to Congress?
· 44:00   Does Congress Understand How to Regulate Crypto? 
· 1:00:00   What is the Path to Composition? 
· 1:13:30   What Comes of the Responsible Financial Innovation Act?

Resource List:
·  Joel’s LinkedIn
·  Williams and Jensen
·  Blockchain Association
·  Congress accepts FTX donations
·  Stabenow Bill
·  Lummis-Gillibrand Bill 
·  Congress may be ‘ungovernable,’ but the US could see crypto legislation in 2023
·  US authorities to intensify scrutiny of the crypto industry in 2023
·  Biden Administration’s Roadmap to Mitigate Cryptocurrencies’ Risks
·  US senator behind efforts to pass major crypto bill won’t seek reelection
 
Follow The Encrypted Economy on your favorite platforms!
Twitter
LinkedIn
Instagram
Facebook

Transcript

Eric: [00:00:00] So on today's podcast we have Joel Oswald. He's a lobbyist at Williams and Jensen out of DC and counts Ripple as one of his clients. We're talking today about lobbying generally and what's likely to emerge out of the hill this year. Now with the Republicans taking control of the house, I think there's an expectation that there'll be more legislation relating to digital assets as a result, but it's far more nuanced than Republicans equals crypto.

And hopefully we are moving towards something more bipartisan anyway. And everything in DC, of course, has layers. So the TLDR on this episode is, there is no TLDR on this episode, so let's get right into it. Last before we do if you wanna support The Encrypted Economy, share it and do so within a week of listening to it.

Otherwise, you'll forget it. So, with that, I bring you Joel Oswald of Williams and Jensen. 

Welcome to The Encrypted Economy, a podcast exploring the business laws, regulation, security, and technologies relating to digital assets and data. I am Eric Hess, [00:01:00] founder of Hess Legal Counsel and your host, join me on this journey exploring the reach of these transformative technologies.

On the podcast today. Welcome, Joel.

Joel: Thank you, Eric. I appreciate you having me on. 

Eric: Joel and I had talked about doing this podcast last year in December, but Congress was in, was gonna be in, in recess and we thought, maybe a little more clarity. Of course, it's always an evolving an evolving dynamic in the digital asset space,

but we wanted to sort, we wanted to look at 2023 and discuss some of the policy initiatives and the potential bills moving up through Congress and all that jazz. Excited to have Joel, and Joel and I have known each other for many years. We won't discuss how many, but we worked together back in the day when I was an exchange General Counsel and Williams and Jensen and [00:02:00] the people there were phenomenal and so we've stayed in touch fortunately and oddly Joel is as part of it as his lobbying effort also is a lobbyist for Ripple.

So, he, due to that and obviously other intersections he's got is he's close to the hill on these - on these points. But with that said, a perfect opportunity for Joel. Please introduce yourself and, tell us a little bit about, your practice what other areas you focus on as well.

Joel: Yeah. Thanks Eric. And great to reconnect with you and also be a guest here. You've had some great guests in prior podcasts I feel an honor to, to be here. But yeah, just a brief background to give a little perspective. I work at Williams and Jensen, one of the partners there in the financial services [00:03:00] policy practice.

As you mentioned, Eric we've worked together many years prior on securities kind of equity market trading issues. So, I have a. Pretty big background in that and practice. Currently have a practice working on those issues to equity markets, trading, also asset management in the insurance and reinsurance space.

And of course you mentioned the digital asset space as well. I did in a prior career I was a congressional staff when my former boss was serving on the Senate banking Committee. This is many years back like we're getting 20 years ago. That portfolio included the banking and [00:04:00] financial services broadly.

For a while he was the subcommittee on securities chairman. So, I staffed him on those issues, but also got into a lot of other issues too including export controls, things like that, that are coming back again. And that's a brief history of my background and work on the Hill.

And now in a lobbying capacity with Williamson Jensen which by the way, is a, it's a law firm. I'm not one of the attorneys at the firm. But we of course our main business is the business of lobbying and government affairs and helping clients in those efforts on the regulatory and the legislative side.

Eric: Great. And so today we aren't having a [00:05:00] crypto focused policy group on the podcast. We're going to a lobbyist with the, who's working with particular companies and has, oftentimes your focus is going to be more specific. You don't have the same large core cohort of interest to represent.

But maybe just to hear you frame it, some of the critical distinctions like when you're going into, to lobby for a digital asset policy position, what have you, versus a blockchain association or digital chamber of commerce. , obviously there's differences. Perhaps there's differences in the way that the staff of the various Congress people receive you.

Maybe just draw a few just distinctions just to crystallize it for the listeners. 

Joel: That's a good question. When I talk with young professionals and they're interested in getting into the lobbying profession I talk about the three different lobbying [00:06:00] career paths. And so that's how I'll frame it.

You have your in-house lobbyists, meaning those who work for a particular company and really, it's, their job is lobbying for that one specific company. You have trade associations and other interest group lobbyists. And of course, that means you, you mentioned Blockchain Association and others you're working for that trade association or that.

Interest group. So, there's also the contractor outside lobbyists like myself. And I work with various clients. I mentioned the different areas. So I have clients in each of those types of areas. And with a trade association companies often wanna be part of a [00:07:00] trade association because there's usually public policy issues that impact all companies in a given industry.

Of course, any particular thing might impact one company more than others, but it helps amplify their voice or position to be part of a larger association or group. The in terms of getting to your question sometimes I'll of course be looking out for my clients and often working with in their in-house lobbyists.

Sometimes their general counsels, but it's, and by the way, I can, I do have some clients who are trade associations as well, so sometimes I do work on behalf of a trade association. So, a lot of times we're extending, we're just an [00:08:00] extension of their existing lobby lobbyists. So, like another arm extend their reach a little bit more.

Also being able to help them examine proposals as they come up, whether it's legislation, regulation. We of course are in off congressional offices, for example, on a number of different issues. We might have Worked with the offices before that, now with a new client you might also be working with.

There's in terms of how you're how you work, obviously the in-house, you're working hand in hand and coordinating with your client, the in-house lobbyist or the trade association or whoever that [00:09:00] is to advance their cause with the trade association. Sometimes though because they have such diverse membership, typically there are some instances where they might not always see eye to eye because of their business models might change

so therefore the priorities public policy priorities of that each member might be a little bit different. So sometimes we are to help with, as the outside lobbyists, help them work through and advocate on their specific behalf. If that makes sense. It's sometimes a trade association might be limited because of the differences in their membership.

When it comes to the big issues, a lot of times they're really good at having [00:10:00] an industry voice and an industry position. But there are often those especially when legislation is being drafted some changes where or some differences I should say., a lot of times it was very nuanced.

But different, nonetheless. 

Eric: And you don't want you, 

Joel: so the priorities can change a bit. 

Eric: Right. And I think even, it's not all that different from when my exchange, we decided to start a lobbying effort. Couple things happened in a hearing. We didn't get particularly favorable treatment or reference and we didn't feel like the bigger exchanges were representing our interests.

We didn't feel like there was an industry group that was also doing it. And things were happening continuously that was right directly relevant to our business model. I think most organizations that have an outside lobbyist are probably. also a member of a trade association to the extent that their [00:11:00] interests are somewhat aligned, for where they have a very specific interest or there's legislation that's really gonna impact them, it may make sense to get a specific lobbyist so that you can ensure that your narrow interest is getting represented appropriately.

And then, and that's what we found at the exchange. It was I, without going too far in depth on it, we got results. There was no question that instituting a lobbying effort, which you and Dave Franasiak had led got the results, we weren't able to change views as much as we were able to bring information and assist staff members to help formulate views or to provide, I guess we were able to influence, but not in the sense that we made a contribution and you're changing. What we did is we tried to identify what is any particular congressional person's constituency and what are they trying to advance [00:12:00] and how do our interests align with that and shaping it.

You're there as a resource, you're there to shape, but it wasn't that I was able to, I, it wasn't, I wasn't able to dictate, I was just able to present the facts from our perspective and maybe use some persuasion. It was like basically saying, please consider this interest when you're contemplating the larger one.

And that's what you're looking for. We were just trying to be part of the conversation. 

Joel: Yeah. 

It's part of that education process because a lot of times it, there's this is a, it's a great country where we have, where people have an idea. And they can start a business and run with it.

But sometimes, because it's a complicated economy at times and people might have a little different just because of maybe how they're structured or li in your case, you were a new [00:13:00] entrant. So, there are other considerations. So part of it is the education process for policymakers, whether it's on the regulatory side, that's why they seek comments.

That's why they welcome meetings. The regulators often welcome you coming in. Members of Congress and staff they sometimes issue a discussion draft legislation because they want that feedback. They wanna be like, are we missing something? Or there's some intended or unintended consequences as a result.

So it is, IM important because the details matter in these issues. 

Eric: With that backdrop and obviously Williams and Jetson has a great lobbying practice, so there you go. There's a promo, but that's, we didn't discuss that in advance. 

Joel: Thanks sir. 

Eric: They're not promoting the show.

There was a report that like one in three members of Congress [00:14:00] accepted FTX donation. Some have called for an examination of the role of money from ftx in Congress. How do you think this impacts a legislative agenda for digital assets this year?

Joel: I. I don't think a lot obviously if members took some have already said I believe that they'd return the money. It's, I guess the notable thing with FTX is just, is the amount of money, especially coming from a, a newer company and their executives.

So I don't see it impacting things a lot. The donations themselves other than. [00:15:00] I think now there's certainly a different view, what you highlighted about FTX now versus, several months ago before the collapse. So I think, and the money was given to both Republicans and Democrats at least from different executives in ftx.

So I'm not sure it really has a lot in terms of what Congress will do in the actual legislation of in this space, the crypto space. But people obviously always need to be careful about the campaign contributions. There are laws around it in terms of how much can be given to any particular candidate, things like that.[00:16:00] 

Eric: And I think you can probably assume that the, that at least it seems on its face that the laws were adhered to. Like meaning the again, we haven't heard of anything despite the one in three, right? It seems like it was a campaign to figure out, what can I do? Cuz obviously you don't win points if you say, okay, I'm gonna try to violate campaign finance laws and here's the money.

They're gonna be like okay, we, we can't touch this. And guess what, running for Congress take costs money. So, they're you're not gonna refuse somebody who's willing to lend a hand. Then if that means listening to them to facilitate that then that's part of it too. I'm, maybe some would disagree because it's FTX, but I'm sympathetic to, to it.

And so to shift gears a little bit as while we're talking about a congressional examination, another thing that has taken steam [00:17:00] particularly since the Republicans have taken the house is the examination of s SEC's role in the FTX contagion. Question for you is, did, it's not the first time that, that Gary has been put on the hot seat by the Republicans, more so in the house than I'd say in the Senate, but although not also in the Senate.

What do you see as the ramifications? Does it change because the house took over? Does it start to stick because of ftx? They had the IX meetings, which a lot of people may hay over. What do you think is gonna be the outcome of that? Is that going anywhere? 

Joel: I don't think there's going to be like a hearing specifically on that particular [00:18:00] issue.

I do certainly expect in the house. A hearing early on this year with chair Gensler but not focused only on this issue. It'd be just a broader oversight hearing on a lot of things that Republicans will want the chance to raise a lot of questions because they don't like the direction in a number of rulemaking areas that he's doing.

While I think this issue could come up in that context it certainly won't be the sole focus of it in my view, at least, that I'm hearing at this point. There's certainly some members who are focused on that. I don't wanna say there's no focus on the S E C and what then what happened to ftx.

But I would also [00:19:00] say, there are. Lots of entities that have meetings with the s e c. It doesn't mean, yeah, maybe there's more there than I've seen, but it doesn't mean really anything other than the meeting happened. Discussions were around a number of issues.

And so I'm just not sure that there's much more that would come out of it than that. But again, these questions will come, maybe more information will come out because certainly more questions will be raised about this. But I think Republicans, as a general matter, We'll focus a lot on the climate disclosure regulation [00:20:00] that's possibly going to be final in the coming months.

Certainly the goal is this year earlier rather than later. I think. Anything E S G related. There's the equity market structure stuff, the thing the issues you had followed a lot. Though there's several huge proposals there where there's a would result in a big change in the equity markets.

So those, I think would also be raised. So sorry if that's a long answer, but there's a long list of Yeah. issues I think that Republicans will want to raise. And I would expect Chair Gensler to be there in front of the House Financial Services Committee within the next couple months.

I think it'll be one of the first hearings. Not the first, but 

one of the first 

Eric: [00:21:00] next topic, next topic. The statement out Bill, the DCCPA looks like it's dead. I don't know if you want to comment, maybe dead's my word, not yours, but it doesn't seem I'll offer this up for correction.

It doesn't seem like the ftx, the CFTC is untapped to be the primary regulator of crypto. There was recent a comment from the chair basically acknowledging that B T C was like a spot commodity, but like nothing else., it was almost like, B TC is a commodity, but do they, I don't even think, e you know, ether was mentioned.

So do you share the view that DCCPA is dead? Or do you wanna take a contrary view on [00:22:00] that? , 

Joel: I think I'd take a different view in that both of the ag committees still seem interested in advancing a bill that would give the CFTC some authority over those digital commodities spot markets.

And yes, the question is always gonna be what is included in what is a digital commodity? What is that? That's really what one of the big issues will be because that kind of determines, which markets are overseen by the cftc and then which ones would be overseen by the S E C.

Kind of how it is. So, I think the Ag Committees will still have a role. CFTC [00:23:00] had a great deal of involvement in the D C P A, that's the Senate bill. And I think you also have chair Benham, chairman Benham at the cftc testified at that FTX hearing. They had I believe it was in November about, the need for some legislation in currently.

The bill says, a digital commodity is in includes Bitcoin and Ether of course leaves it open, whether it could be any other digital assets. But. Yeah I think there will be, at the end of the day, both the CFTC and the S E C get [00:24:00] will have oversight over different digital 

assets.

Do you think that's overly optimistic then? ?

Eric: I,

 so everything so I obviously follow the space from my perspective. I think BTC and Ether, like the ether thing is just it's. almost annoying that it, it's raised it shouldn't be a line item. It's, like of all things to start to go after.

Now the notion of suddenly calling Ethereum, I, I think what really opened it up is the proof of stake. Switching over to proof of stake and that sort of opened up a whole new potential challenge area, that hopefully legislation will clarify. And I also think that if the S E C hasn't elected to go [00:25:00] after, and I'm not suggesting that they should, but if they haven't elected to go after Kraken or Coinbase because of the disruption that would create at this point, to go after that kind of size market participant, I don't think there's much of an appetite, even if a lot of people are negative right now to go after those two, just wouldn't.

It would be shocking, like in the face of what happened with ftx. It's almost like these are the reasons why, these are the players you want to encourage. And I know I sound like I'm stumping, they represent the future. They don't represent a problem that we're trying to stamp out necessary, necessarily depending on what they do, but in the future.

But, certainly based on what they've done to date everything that they've shown, it's just that working with them to achieve an outcome seems much more intelligent than trying to fight them and to try to take them down given how pervasive. And again, if you shut that down, forget the whole digital asset business in the US and you're basically signing that [00:26:00] off for a very long period of time cuz nobody's gonna touch us soil.

And but I would say I would put, eth in the same category. I don't think. This is a perspective, but wow, you would really have to get to an extreme state of hostility if you're gonna be going after, in any way, like eth as a security. Cuz like, how the heck would they comply? Like they'd have to, it's just, it's not very, and the whole staking that would be very significant.

Yeah. Maybe they want to sway them to, encourage them to do it. But I don't think them, I'm not even sure who them is. That's the whole point of Right. There's no them. Yeah. And so yeah, so I, I think those are off limits. But having said that, other than like a, ripple, and I know we're not talking about Ripple, but like a sizable coin with a sizable market cap, I don't think [00:27:00] other than BTC and that anything else is really. That's certainly what Gensler has. Sherman Gensler has indicated that even, and he's I often wonder whether he's by Lennie. He, even though he speaks in talks around eth, I think, what he's communicated is he recognizes ETH as a very hot topic, but yet he doesn't have that same sense.

He figures if I can talk grayer as it relates to eth, that sends a strong message that everything else is a security, which is what he's going for. Avoiding the fact, of course, that ETH is based, is a network that's based on other coins operating on it. So if you stamp all those out, then you're killing E anyway, effectively.

But, there's only so much you can do in the us It could be damaging, but it certainly can't, it's not gonna cause a complete rollback. So anyway, that's my view. But, I'm not the one being, I'm not the one on the podcast [00:28:00] today. . 

Joel: And 

speaking of, I, I did forget to give a disclaimer about the views being my own kind of an s e c disclaimer, speaking of

So not necessarily of any of those in my firm or clients, but I should have said that at the beginning of the podcast. 

Apologies. 

Eric: Yes. And if anybody at any moment thought that he was speaking for anyone else, you need to pour alcohol in your ears and scrub them with a wire brush. Okay.

Just to be clear, and to not do so is that your own peril? Okay. So, switching gears, there's a couple of items before we start to get into the, some of the current bills that are in committee or what have you. Senator Pat Toomey. What is the impact of his exit from the, and I don't even know if he's exited the political arena because, but so we'll [00:29:00] say, what is the impact of him no longer being in the Senate?

He was not only, he was, obviously he was on the, on the on the key committee what's it, the urban, what's it? Urban Affairs and 

Joel: Banking, housing, and Urban Affairs. 

Eric: Yes. Banking, housing, urban affairs. It just it kept my mind for a second. Banking, housing and urban affairs. He was on, he's on the ranking member of that committee.

Very educated, just stunning in his ability to cut through the issues and his intelligence and his familiarity with the issues. And now he left for what happened? We loved you. What is the impact is, are there others that can fill that same those same shoes?

What does it mean for that kind of thought leadership in the senate? 

Joel: Yeah, no you're right. He certainly was a thought leader looked [00:30:00] to on a lot of issues. You mentioned he was on the banking committee, but also finance committee. So, he which is the tax writing committee in the Senate.

So he had a big role and a lot of senators on the Republican side at least looked to him and on a lot of these complicated issues. I will note that I did see a letter today, not on a crypto issue, but an equity market structure issue. It was led by Senator Tillis.

So, I think he's one that certainly. Has been very engaged on a lot of financial or banking committee issues. I think we'll continue that. He hasn't been maybe as involved in some of the [00:31:00] digital asset issues. Like a Senator Lummis who is on the banking committee. And so, I think she'll obviously be taken active role, continue to do on the committee and is one on the Republican side that is looked to on the banking committee.

So yeah, he, anytime you lose somebody like Senator Toomey when they leave their elected capacity, it's it is a big deal. But there are others. I guess my point is there are others who are stepping up to be leaders in their own right on these issues 

as well. 

Eric: And obviously the teams that support them too also play a big role, give Chris land and Senator Lummis, team [00:32:00] it's more than just one individual necessarily. For sure. Yep. And we're gonna make one brief stop in, into Europe before diving back into the us. In the, in Europe the, they're going to publish the current markets in crypto assets regulations.

They were set to be initially in February, I heard today, now it's gonna be April, but effectively by 2024 next year they're gonna be an implement. and it's a very comprehensive legislation, much the kind that the US doesn't have with regards to its framework. I've noted on a different pod on that podcast, I'm actually doing an extensive series four panels, Joel between an hour and 45 and two hours each that delved through that.

Just [00:33:00] cut through MiCA, with a yeah. So roughly eight hours in total programming devoted to going through with the same panelists who have volunteered like to, to week after week, from various countries in Europe. What I find so intriguing about the process is that it wasn't dependent on.

singular names, right? Nobody knows MiCA as like the Lummis-Gillibrand or the Stabenow bill. I'm sure that maybe if you're in Europe, you might have a closer association with certain people than others. But truthfully, it is something where, the various, the delegates of the various countries were tasked with working on this pursuant to a, almost like a sheep, a shepherd herding is sheep.

To make sure that they created a unified set of regulations that could apply across the union. They all agreed to it. They agreed to with the results of what they would do. And in many [00:34:00] ways it's un, it can always be modified later, but the current version is not stoppable. It's gonna happen. And it's such a, to juxtapose it against what we're, what is occurring in the US is stunning. because in the US like we have all these different competing visions that are influenced by the politic, sometimes the politics of the moment that could, but also really just what pushes it aside and, so there's, it's much more political and I'm sure it's political in Europe as well.

What's not political when it comes to regulation, but it's, it's a framework that's advancing, that's thoughtful. And I just, I guess the, so my question, the is this movement by Europe in this direction [00:35:00] going to be a substantive force on the current Congress, are they gonna look to Europe?

Because again, if you think about the US you think about what legislative bodies could be the most impactful on it. I guess Canada to some extent, just because they're our neighbors. I don't want to do diminish any particular say. But I would say Canada probably not as influential.

But it could be cuz it's a neighbor as part of the, it's obviously not gonna be China. What happens in China or Russia could cause us to take an action that would depose it. Oh my God, they're gonna put, they're gonna have their own centric, their own stablecoin.

So, we have to do ours. But you would think like of any jurisdiction that would be the most influential in terms of like when you juxtapose a student and say, oh, they're doing it so they're gonna be a significant trading partner. We need to think in terms [00:36:00] of how our actions interact with theirs.

Cause it's a big market. You would think that the EU would be it. Maybe everything I just said, you didn't even need to say it. Of course, Eric, it's like EU in the US that us are gonna look to eu. I like, duh, but is it gonna make a difference for digital assets or are they just two different universes that, you know?

And there's a few people will say, what about Mike? And they'll be like yeah. And just, so you know, move onto the next thing. 

Joel: Yeah, no, that, that's a, it's a very good question. I think maybe looking at, on the Republican side, since. Republicans do control at least one chamber now in the house.

They tend not to look to what Europe is doing. To your point, maybe not this [00:37:00] stark of a difference, but obviously we're not looking to your point, to China on how to regulate things. I'm not equating EU with China at all, 

Eric: but Joe's being very safe. Again. 

Joel: There are differences.

Yes, and there are differences though in regulatory philosophy between, at least on the Republican side and what's the predominant political view in the eu. Now, that being said I think there are some who are looking at what other countries are doing in the digital asset space.

But we certainly have a different, we start from a different regulatory setup. We have different [00:38:00] we have an s e c looking after security, so it's a more fragmented regulatory setup than in many other countries. We have the CFTC on commodity futures and other futures products.

We have our bank regulators, our prudential regulators. So, we have a lot of different regulate. And so, I think that's part of what makes this a little different and a little more challenging. And part of it as well is we have different committees who oversee different regulators. We talked about the Ag committee and their legislation.

Both ag committees, they oversee the cftc financial Services Committee and Senate Banking Committee oversee the S E C and the Prudential regulators. [00:39:00] So I guess the one thing though I would also say is I think to your point it does, Micah does illustrate how the US is being left behind on the digital asset front in terms of getting the regulation that framework, the micro framework would apply across the eu. It does raise the questions, why would a business subject itself to regulatory uncertainty in the us That's just inherent here in the US at the moment. If they can establish somewhere else where the rules are clear.

So I, I do think that is an issue and I think at least those who are in, [00:40:00] dig into the digital asset issues, they certainly, I think most of them understand that and will even look at what other jurisdictions are doing, including Europe. But it’s partly because of our regulatory differences.

That I explained about how fragmented it is. It's harder to, for people to get their hands around how you do something like that here, even if you wanted to. And also, does that make sense? 

Eric: Yeah. And I guess then get your reaction to this because it is more politicized. You're dealing with policy makers that are less educated on crypto.

They can have staffs that are educated, if they're if you're not charging people who are knowledgeable [00:41:00] on crypto like they did in the eu, when maybe some people would dispute the level of knowledge. But I would still fashion to say that it's more than most senators or certainly the house as well.

If they're not knowledgeable, and again, I'm not talking for everybody cuz there's a clear exceptions, but I'd say the vast majority. , they're not gonna have that, to ask them to also overlay Micah is probably too much of an ask, like Lummis and her team and Tillis and others who are, unfortunately those who probably would be the most knowledgeable both on the negative or positive side.

Because, to get, while everybody would, like in digital assets, everybody has a perspective of what should be the regulation, but it really should be, it should take in a number of different considerations. And they're not just all positive, it should be fair and balanced.

But anyway, I'm not getting elected at any time soon. But when I think about for example, and. , this sounds like I'm slamming, [00:42:00] but it's, to me, it's more indicative of a, of another problem. You had Senator Marshall from Kansas at a hearing with Benham, and he made the statement that just resonated with me.

Just, listen, in every cycle you get people who say ridiculous things on the floor. And I, I know there's one with electronic trading, it's every day you have billions of orders. And I'm just like, what? , like your statement just off, like from, you should have just stopped there.

But it's people can say anything. They're not perfect. But anyway, he made a statement that was that said that do you think that we should put a pause on this whole crypto world until we can get our arms around it? Which that statement. And he actually went on to, to propose at the end of the year with Warren.

I think this very over the top. Nobody ever [00:43:00] expected it to pass, but it was bipartisan cuz he is republican, Warren's Democrat. We all know Warren doesn't love anything financial, unless it's like a deep constituency that she represents but which I guess is appropriate, but just she's hostile to the most financial, big banks or even things that report to be de democratized assets.

Doesn't matter. It's all, she comes in, she makes her statement, she leaves a room, whatever. But she's a known sum and actually apparently her staff is pretty educated on the issue. So, it's weird. Some people say that when they hear what she says and what her staff says, it's odd.

So, I'm sure there's a calculus in there. Go, who knows. But the center of. First of all, for him to support any kind of legislation going into the end of the year after making a statement, do you think we should put a pause on the whole crypto world until we can put our arms around it?

First of all, I'm sorry, but we are not the whole crypto world . You can't put a pause on it. So hit that pause button all you want. It's not [00:44:00] stopping, so you can pause it cuz you don't understand it, but nobody's waiting for you to say, I understand it now, or to get your arms around it. But that's, that's a little opinionated.

But my, my, my point more generally is like, how does digital legislation advance when there, I don't know to what extent he represents a larger group of senators or house members. I guess maybe framing the question, to what extent do you think he, that level of knowledge, and again, we'll it could be, we could just say it's a statement, but to what extent do you think that kind of perspective is representative.

Joel: There's always be some that have that. You have a lot of members of Congress, you have if they're all in place, 535, 4 35 in the house. I [00:45:00] think we're one shy of that right now. And then a hundred and the Senate. You pick any 535 people in America and guess how many different viewpoints you're gonna have there?

There're gonna be a lot of different viewpoints. And, working in the Senate years ago, it's, I think another thing that makes America an amazing country where you have elected representatives who can then have an impact on the public policy decisions for people that impact people every day.

But all that said there, there are some members who are gonna hold that view. There are a lot of members especially [00:46:00] more as, more and more get educated and really dig into these issues. Now Chairman McHenry and they're a number of others on the committee and some off the committees as well that really care about these issues and do want to have a good regulatory system over in the di digital asset space, but want it to still promote innovation.

So I, I don't see that now. Now I'd say the FTX collapse and how it happened and just how big it was. It did cause some members, I think, to assess what other issues might need to be addressed in legislation. That's part of what the Senate Ag [00:47:00] Committees, I think going through that process, commissioner cftc, commissioner Romero outlined some things that she thought need to be addressed in light of the ftx spectacular collapse.

I think there's some good to that and that it makes policymakers think, okay, what have we missed? Is there anything we've missed? I wouldn't say that there's a that it means nothing is going to happen or we're gonna start, Congress is gonna pass something that's gonna ban trading of digital assets and cryptocurrencies.

I don't think that's gonna happen. 

Eric: And I guess even in to, to go back to the committee, it is when you think about it, it's the fact that the [00:48:00] ag, the Senate Agriculture Committee is the one contemplating digital assets as potentially within the jurisdiction it's really just an outgrowth of just something else.

In other words, for financial services a lot of times these digital assets, they may more align with the way you would view financial services or securities. Whether or not they do, it's you have electronic trading, you have a lot of the piping that facilitates this.

Certainly the CFTC has it from a derivative perspective, but the mindset of the representatives on the ag committee, they have a very different set of priorities, I think, than like a financial services committee or a banking committee. And those are more aligned with the commodities or the known that the historically agricultural commodities.

Senator Marshall from Kansas and [00:49:00] he's being thrust into it and he's making a comment probably, maybe reflexively or maybe his constituency saying, I don't want you talking about cryptocurrency. I don't even like cryptocurrency. I don't think Kansas is known as the crypto capital of the us.

So, the fact that he like, it’s not even clear why he would ultimately become a proponent of it. What would, why would his constituency probably more conservative farmers who probably don't own crypto themselves. And that's a broad brush. It's I'm not saying Kansas doesn't do any crypto trading.

I'm just saying it's a very, it's a state that probably doesn't have a very high adoption of these kinds of technologies. And it's odd that you have an agricultural, a member on the agriculture committee who's representing that constituency of farmers from Kansas, a more conservative place, ultimately a pining on something that relates to technological innovation and [00:50:00] blockchain, it's just and again, I, and the fact that he ultimately puts forth a bill to directly address that is just if you think about it, it's again, another ring, a mic again, but Wow.

It's just if you raise this, you’re who explained this in the eu yeah. So we have people who are primarily focused on agricultural commodities proposing like, how you have to have regulating wallets for cryptocurrency. So they're, that they all have to be registered, which is effectively what was done, I think at the year end.

It was like, it was a reg. They would've it was Warren and Marshall and they proposed that it was a very comprehensive K Y C A M L across, for wallet holders. Even for p2p, from what I recall it was just you look at it, like covered every single level without con, without even contemplating the consequence.

And again it was good political showmanship particularly when it was done, but it [00:51:00] is an oddity that, that it came from., this member, this senate on the agriculture committee who wanted to put a pause on it because he couldn't get his arms around it, . 

Joel: Yeah. I know it's obviously we've talked a little bit about the history of why AG has some jurisdiction, why the, some of the committee members are interested in the, in this with the cftc oversight, they have and their view that at least some digital assets would be digital commodities and therefore more conducive to the cftc.

But yeah, there have been calls. Over many years by at least those who would serve on the senate banking [00:52:00] committee for instance. If they don't also serve on Senate ag, they might be like, yeah, maybe we should have jurisdiction over the cftc. That's not happening. If the Dodd-Frank Act didn't do that, I don't see where the next opportunity is anyway.

And it would be highly controversial and should be controversial. 

Eric: Maybe we put that on the list of three, three things. You can't change death taxes and the ag committee releasing control. no, no longer have an oversight over the cftc. I think. I think those are the three things., okay.

So, let's but I would, 

Joel: but to quickly just add one thing that I really didn't mention before to your point that the Ag Committee. Does deal with a lot of other issues. One of the big ones coming up this year is a [00:53:00] farm bill. That'll take up I think, a lot of bandwidth on the committee.

Obviously they can walk and chew gum at the same time. But it's an always a big effort when there's a farm bill up and which they will be starting to work on as well. So just keep that in mind in terms of competing for time. With those members. 

Eric: But I, yeah, and I also think, like last year the CFTC went after UIE Dow and basically questioned, it was like the, the DAO report that the s e c had that moment where they entered the stage in force.

On this they basically took a position that sort of hit some pretty sink views in the, in the digital asset space. [00:54:00] Going after this notion of a de, of a DAO that was not only going after the DAO for certain actions that had taken, again, it was a marginal lending platform.

Ultimately so there's that to keep in mind. But also, the way that they pursued, they could, they even went so far as to pursue service of process and endeavored a whole, the various members of the DAO libel. And it's to many it seemed like, that they hadn't expected it.

They it suggested that, maybe the CFTC is not better than the s e c. Like, show me who I can dance with. I don't know who I can dance with. And ultimately I think it's really just a lack of clarity that's driving it, and it's really hard to, yeah. It, I don't think it's any easier.

I'm sure the S E C and the CFTC are large organizations there. I'm sure there are many within who probably also would prefer different results or [00:55:00] different ME methodology to get there. But, because it is like when you go after it, when you regulate by enforcement, you also tend to chill a lot of legitimate projects.

And I'm not saying that you only enforce against, that's a different question, but by enforcement, you're not providing the clarity for the projects that are trying to do it the right way. Or at least not in a way that's, that truly, builds confidence. Yeah. Yeah. So let's talk about Patrick McKen incoming chairman of the House committee on Financial Services.

Toward the end of last year, it, I was actually, I liked the way that him and Maxine Waters, who, I think early on I wasn't particularly fond of the way that she had approached it. A lot of these questions, but interestingly as they [00:56:00] continued to work together, it was, I'm sure people could find criticisms, but I actually thought that it seemed like a productive relationship.

And that's, any type of bipartisan relationship, particularly as it relates to, the house committee on financial services and how they're dealing with digital assets. That's something to be I give obviously props to both of them for the way they handle their relationship.

But having said that, do you, how do you see that relationship and, progressing in, in the direction of the House Committee on financial services for relating to digital assets? 

Joel: Yeah, relating to I do agree that, they tried to make that bipartisan, both of them wanted to make it bipartisan on the stablecoin legislation in particular.

I don't see that changing. I think they, I still have a sense they have a [00:57:00] strong desire to keep it bipartisan. Part of it is, if you don't, it doesn't happen. , it can't get across the goal line is what I mean. But also, I think through a lot of these things, trust gets built.

As you work with people more I think that's how they want it to be, and that's how I expect it to be going forward, especially on that stablecoin bill. Cuz they, they got pretty close now. They're always gonna be some issues where they're gonna disagree with something, and that's where real legislating comes in.

Okay, how do we address that concern? Is there a creative way we can deal with that issue or some other issue? I mean I [00:58:00] I worked on, when I was on the hill years ago several bipartisan bills and some very big bills where there were, four or five of us that worked on it in not a bipartisan manner.

And it's actually a great experience when you can sit down, try to work things out, knowing you might come from a little different political lens. But that's okay. A lot of times those different viewpoints can make it a better product at the end of the day. So I do think that will continue and they can come up with some bipartisan product at the end of the day on Stablecoin.

And I think they wanna do the same when it comes to broader legislation. What some are calling kind of the market structure [00:59:00] legislation for digital assets. So I think they would like that to be bipartisan as well. We'll see. But I know that's the goal. 

Eric: And on that point do you see we're gonna stay on the committee and then I got, I'm gonna follow up on, on the Yeah.

But the, there is a subcommittee on digital assets, I guess with a fair number of freshmen on it, if I'm correct. Maybe I'm incorrect, but yeah. Yeah. What do you think the import of the subcommittee on digital assets? I don't think it was, when was it initially created? I'm not sure. But 

Joel: It was talked about for a number of months that it would be created in this new Congress.

So, January 3rd started the new Congress hundred 18th Congress. So in a new Congress, everything [01:00:00] starts over. And you can change the. Jurisdictions of some subcommittees within a committee, for instance. This is a new one that was that's being created on the Financial services committee in the house that we talked about for your, our listeners.

That Congressman McKendry is chairman of the full committee, the House Financial Services Committee. And this subcommittee will be chaired by Congressman French Hill from Arkansas. And he has in the past, talk been involved in some of these digital asset issues the jurisdiction of the subcommittee.

It will talk about, how do you providing what they call clear [01:01:00] rules of the road. For fed federal regulators in this digital marketplace. And also developing policies to promote financial technology to what they say, reaching underserved communities. And it also has a diversity and inclusion aspect to it as well, D and I aspect to the subcommittee and in their jurisdiction.

So, what are some of the best practices and policies to strengthen D and I in this digital ac asset ecosystems? That's really the jurisdiction. Question is, will they be the ones drafting legislation? I'm not expecting legislation to go through the subcommittee and be voted on at the subcommittee level.

That used to be a pro a [01:02:00] process that was used on the house side in the Financial services committee a number of years back where a bill, they'd mark it up, we call Market Up, meaning you people would have the opportunity to offer amendments and then vote on it. Vote on the amendments, vote on the bill, and then it would be reported to the full committee.

And then once the full committee does the same process, but obviously it's a bigger, more members than it goes. And then if it's approved by the committee, then it would be reported to the house. And if you're fortunate enough, the house takes it up and passes it. I, so I don't expect it to.

Be a subcommittee where they actually mark up and vote on legislation, but they certainly will feed into that legislative process. Chairman McHenry and his staff are certainly we [01:03:00] talked about their involvement in the stablecoin legislation. They're very in the weeds on, a broader market structure for digital assets legislation.

And like I said before, they wanna make that bipartisan effort with ranking member waters. I think that they'll still have a big role. This subcommittee will still have a big role in. Holding hearings and things like that remains to be seen. What's their first hearing?

We'll see what that is. I don't know at this point, hopefully learn more. In the near future though, 

Eric: do you think that a bill that stands a chance of being adopted by both chambers will come from the house or do you [01:04:00] think it's gonna come from the Senate and, by that whether it's a, the, CBD C or stablecoin or we'll we will go down the list of various things.

Table coins of CBD C seem to be top of mind. There may be market structure ones as well. But where do you think it, its ones that, cuz you know, there's, it's a bigger question because there's a lot of bills. Not only in digital assets, that just end up in committee and they never see the light of day.

Yeah. And it's something we should probably talk about. As far as those that do, what do you think is the likely path with the current composition? 

Joel: Yeah, and it, that's a very good question. And there are also times where a committee might report a bill. [01:05:00] So they have the votes in the committee, but then it doesn't go anywhere else.

Or maybe it gets to the house floor, they vote on it, and then it's, house members notoriously complain about the senate not being able to pass their bills. First of all, the bodies. Set up differently, different rules and how they advance or not legislation, but with the close the narrow majority that the Republicans have, it will certainly have to be a bipartisan bill to make it through the whole legislative process.

And really even through the house, the Republicans have such a narrow margin. So, another reason why I think Chairman McHenry and his team want to make things [01:06:00] bipartisan. So, it's, I would say in terms of does the house or. Past legislation, typically it's a little bit easier for the house to do that, but again, with such a narrow margin, I'm not sure it's a whole lot easier.

But the Senate does have other things, other responsibilities that the house doesn't have, such as nominations and confirming nominations. So that eats up some floor time, Senate floor time. The House doesn't have to worry about those things. They can call up the nominees once they're confirmed and, grill them on X, Y, and Z, but they have no role in the actual confirmation and it actually takes some time.

Typically, you'd say the house is the first to pass a bill. It's not always the case. But that's often the case. [01:07:00] There are some senate bills that make it over and then the house takes 'em up. But. With the, with Chairman Brown I understand he's working with Treasury Department on a market structure.

Bill financial services committee on the house side, working with House Ag. They're also looking at other bills, whether they're house bills, senate bills, they're trying to get, they're taking a lot of time to try to get it right in their minds and politically doable and achievable at the same time.

So, I'd say it remains to be seen, but typically with. The house and how they're set up, how much work they've done already. I could see some things moving there. [01:08:00] Obviously you have some senators who've done an awful lot of work as well. We've mentioned Senator Columbus. We've mentioned the Ag committees with chair chairwoman Stabenow and ranking member Bozeman working on their bill.

So there's a lot of members who are working on something and I can see either, either starting the process, whether it's through committee, but typically I would probably say there's a better chance that the house could move something first. 

Eric: And your bet would be, would your bet be on Stablecoin?

Just because Maxine Waters and McKendry. I'll pick up where they, that one's 

Joel: probably closest. Yeah, that one's probably closest. Yes. You start getting into the market structure, one [01:09:00] for the broader digital asset marketplace. I, then you start getting into some of these jurisdictional issues. And it really comes down to definitions.

Not to minimize some of the other issues, legitimate issues that arise, but can the AG Committee and Financial Services committee agree on, some of those definitional issues? What kind of falls into the S e c? What falls for cftc? There might be some more of a gray area where Congress is.

Not sure. Okay. If that's the case how can that be sorted out amongst regulators or otherwise? So those are some of the I'd say the harder things when it comes to like [01:10:00] a digital asset market structure bill. There's less of that issue with a stablecoin bill. So yes, they're much further along on stable coins.

Eric: And do we, do you think it's likely that we get to legislation by breaking the elephant up in pieces? Or do you think there is an elephant bill and by an elephant bill? I, and also elephant's probably the wrong word because elephant has political connotations, but I just mean like break breaking up the, breaking up it into multiple.

bills. Or, is it gonna be like an omnibus type or do you think it's, there's not gonna be the will desire flexibility to do that? Yeah. 

Joel: That's an another really good question. I, if you mean some of [01:11:00] the tax issues as well, that's probably not. Would, probably would not be included.

Yeah. In a larger bill, cuz you're talking, two more committees that are involved at that point. That being house ways and memes and senate finance dealing with tax issues. So probably not those types of issues. And like the Lummis Gillibrand bill does include a lot of the different issues, but I can see some pieces, and maybe some of 'em are modified, but some pieces of that bill being included.

I do think you probably, it's hard to see how senate Ag or House Ag can move their CFTC jurisdiction bill without [01:12:00] kind of house financial services committee. Weighing in Senate banking committee weighing in and having their, addressing their issues as well, really from a jurisdictional standpoint at the very least.

Eric: And 

Joel: But there's also at the end of the day, how do you, how does it cross the finish line? A lot of times you have some item, provisions thrown in an end of year must pass bill, like a spending bill for instance. That might be a little harder now with some of the changes that some of your more conservative house members, Republican members have called on, they don't like everything thrown in at the end of the year.

And I understand why, there's. Even though maybe I have [01:13:00] benefited from that in the past, like even just last year, some provisions included that we were advocated for advocating for, and I'm not talking digital assets, but just other provisions that was included in the end of your bill.

But it can sometimes, if those bills haven't gone through the committee process some of them did by the way. But if they haven't I can understand why some members might not like things. Lots of different things thrown into one bill where you have one vote on it. essentially one vote, 

Eric: right.

So, the Responsible Financial Innovation Act, the Lummis Gillibrand bill what do you. Maybe I challenge you with a prediction, but what do you think comes of that [01:14:00] bill? Because that it, am I correct to say that, once you move past stablecoin and the D C P A, we can I'm not, I think it's safe to say that certainly a lot of the wind in its sails have has been removed with the collapse of ftx, perhaps even by association.

I think it would be fair to say that the Lummis Gillibrand bill is probably the one that's probably it. It's large in its scope and what it endeavors to do, but it's bipartisan, it's in the Senate. What's not clear is what its likely path is. 

Joel: Yeah. Yeah, no, another good question. I would say DC c I 

Eric: have all good questions so far.

Everybody just clarifying all my questions. I've been good spot on. 

Joel: A plus. [01:15:00] But D C CPA is also bipartisan just to, yeah. Reminder., Senator Stabenow, and Bozeman. Bozeman. And maybe it's been a little unfairly tainted with ftx. Cause I know, CFTC itself worked pretty closely as my understanding with the committee on that bill.

Obviously it's much more narrow than Lumas Gillibrand as we talked before, it gets into a lot of different areas. The interesting thing here you have Senator Lummis on Senate Banking Committee, as I've mentioned. And Senator Gillibrand on Senate ag. If a bill in either committee is if they move to try to move and vote on a bill in either of those committees, either of those senators will have a [01:16:00] role in that, what we call a markup in, in that vote.

So, some provisions could be, there could be at least attempts to modify whatever underlying bill it is and amendment amend with some of the lumas, giber and pro provisions. That's certainly could happen. I do think they are not averse. They being Lummis Gillibrand averse to breaking it up into smaller bills, largely because of the jurisdictional differences.

There's some tax provisions, some banking provisions, some ag jurisdiction provisions. They certainly will continue to push the bill and its provisions and I think probably in any opportunity that arises [01:17:00] will continue to do that. So still be, I think, very relevant in the discussion.

The broader discussion, 

Eric: I think we're in agreement that the stable claim bill is coming out the house is probably gonna be first up. Yeah. And that probably has the highest likelihood of passage. The D C P A, we talked about wind out of its sails. Who the heck knows may or may not resurrect.

I'd say too early to tell maybe, but it doesn't seem particularly great. It seems the sort of that loss of momentum, but who knows. Next up is the Lummus Gillibrand bill that may or may not be the next source of a bill that can pass both chambers. Are there others that you think could come after the stablecoin bill [01:18:00] excluding tax where what do you put the probabilities as?

Joel: Yeah, and I'd say kinda going back to earlier conversation about Chairman McHenry and his effort there's not a bill. that's been released yet on kind of market structure for digital assets. But certainly, they're putting a lot of energy and effort into that. So that's the one I would look for.

Okay. And of course House, house Ag as well. I think both chairman, both new chairman in house ag. It's chairman GT Thompson from Pennsylvania. And he and his staff have really dug into these issues as well. And [01:19:00] them working and talking with Chairman McHenry and his staff, I'd say that is the most likely in terms of bills that have a realistic chance.

Those would be the efforts I would look to. And of course, I mentioned Chairman Brown as well, and him working with the Treasury Department, so watch that development as well in the coming weeks or months. So, all those would be the ones to really look at. I think in addition I mentioned Senate Ag and their effort as well.

I still think they are trying. Work on something and move it. I know you're more skeptical than I on that. 

Eric: Do you think we sail see a market structured bill beyond stablecoin in 2023? Oh 

Yeah. 

Joel: I [01:20:00] think we'll see. Bills probably more than one bill past and I think there will be a big, yeah, I, there will be a huge effort to pass it.

You also look at chairman McHenry has two years to be chairman. Whether house Republicans keep the majority or not. He's basically having two years. And it's because he's served as ranking member for four years. So he'll be term limited essentially, unless the house Republicans change those rules.

But anyway. That's motivating for him to get this done. And he has other priorities as well. But this is one of the big priorities as it should be. When you have this [01:21:00] uncertainty in the ins and there lack of clarity in the marketplace, they're, there should be action taken. Those would be the main areas and players to look at and watch.

Eric: Excellent. Alright again we're nearing the end of our time. Thanks so much for coming on the podcast. Before we break anything that you felt that maybe I didn't ask that, that you think would be particularly relevant for the listeners? 

Joel: Thanks. That's a dangerous question, Eric, but I'll keep it at

there are always surprises in the legislative process. Sometimes its market driven. You I think, have experienced that in your prior life on kind of the equity market structure issues where just market [01:22:00] developments happen. In the case of last year FTX happened. So, there will always be market developments, other political developments that we can't necessarily predict.

So, it should be entertaining and a lot of work. 

Eric: For sure. So if anybody is interested in learning more about you or reaching out, where can they find you? 

Joel: Williams and Jensen. So, you can go to our website. You could also email me. It's not the easiest email address, JG Oswald, that's oswald@wms-jen.com.

And yeah, love to hear feedback and be introduced to more people. 

Eric: Excellent. Thanks so much for coming on. 

Joel: No, thank you [01:23:00] Eric. Always great talking with you. Appreciate it.