The GENIUS Act Is One Year Old. Has It Worked? | Nathan McCauley, Dante Disparte & Rodney Hood

[00:00:18]Hey, hey, hey.

[00:01:20]Heat up here.

[00:01:54]Welcome to Crypto in America Live, the only show bringing you candid conversations on the biggest news stories, legal issues, and policy developments shaping the crypto world every Friday afternoon. Hey Gerald, >> how's it going? Happy Friday. What a what a week. What a week.

[00:02:12]>> What a week. I mean, it feels like a year ago we were at the World Cup.

[00:02:17]Really, in reality, it was only two days ago, but it's probably because I'm very upset and I'm wishing it was a different outcome. And I'm not at all looking forward to the final on Sunday.

[00:02:28]Although, it should be a good game. I guess >> it's it's okay. We're just the whole world can just be for Spain and anti- Argentina and you can be part of that crowd and that's fine. That's >> exactly >> that's how it goes. Yeah.

[00:02:40]>> I plan to be. So, I assume you're rooting for Spain.

[00:02:43]>> Yeah, Bamos.

[00:02:44]>> Yeah, >> it's it's So, I >> Yeah, >> I low key. So, I I I think I've talked I don't know if I've ever talked about on the show before, but so I lived in Spain for a year like a decade ago and when they were playing France, I was like, "Okay, well, like this is going to be a blowout." And uh, you know, they had a good run. Their best player is 19, so like the future is bright, but not this year. And here we are. So, >> here we are.

[00:03:12]>> Yeah. So, bomb us.

[00:03:14]>> Bomb us.

[00:03:15]>> All right. Well, we have a special show today because it is one year to the day since the Genius Act was passed by the House in a bipartisan vote. 308 to 122.

[00:03:26]Over 100 Democrats voted to pass that into law, which happened the very next day. Actually, President Trump had a signing ceremony at the White House. So to mark the milestone, we'll be doing a Genius Act theme show today and we'll be joined by three people who had a front row seat to the Genius Acts passage and are now helping shape its implementation. We've got Nathan McCauley. He's the co-founder and CEO of Anchorage Digital, which has become >> friend of the show. He's become a key infrastructure provider for stablecoin firms. And we have Dante Desparte, chief strategy officer and head of global policy at US stablecoin giant circle.

[00:04:03]Dante was actually our fourth person to come on Crypto in America after we launched. So, another friend of the show. And Rodney Hood, it'll be his first time coming on Crypto in America.

[00:04:13]He's the former acting controller of the currency who helped position the OC as the primary federal regulator for stable coin issuers under the Genius Act. and we're going to discuss with them really what this legislation has meant for the stable coin industry here in the US, also abroad, how the rulemaking process is playing out, and how stable coin companies are positioning themselves for this future where we're seeing pretty much everybody wanting to launch their own stable coin, right? I think with Dante, we mentioned a flavor of the week. Everyone's got a new stable coin they want to launch just depending on, you know, what company, what day of the week. It's uh it's been very interesting to see the rollouts this year. Side note, we did do a recording with Dante.

[00:04:53]So, we're not recording live with him today. We did it a little bit earlier in the week. So, uh we're wearing different outfits, different backdrop.

[00:05:00]>> Don't worry about it. Yeah. And we should we should mention our foreign correspondent is uh is out traveling this week. Uh you know, she she had to make a last minute trip. And so, yeah, we were excited to get that conversation with Dante together just to to make sure that that we could cover that with uh with the three of us. So, yeah, really really exciting. sort of one-y year anniversary, right, of of just major stable coin legislation. It's been rolled out and and uh yeah, really excited to to hop into all the discussions we have.

[00:05:30]>> Yeah. But first, let's get to another piece of legislation that's equally important. I think a lot of people call it the other side of the coin when it comes to genius, right? The Clarity Act.

[00:05:41]I mean, where to start, Gerald? We were at the Injective Summit yesterday and we talked to a lot of policy makers. is you sat down with Harry Jung of the White House Crypto Council. I sat down with Summer Mercing her CEO of the Blockchain Association and we really are coming down to the wire I think we can say when it comes to passing this legislation through the Senate. We've got three weeks now until Congress goes on its August recess. And what do we know uh at the moment? We know that President Trump met with senators Bernie Moreno and Cynthia Lumis at the White House yesterday and they discussed several options to break the ethics deadlock as it were. Ethics really is the lynch pin holding this whole thing together at this point. I mean, I think we both know that Democrats are only going to vote for this thing if there are strong ethics provisions involved. It's interesting because Democrats were not involved in those talks at the White House yesterday. So, we haven't seen text yet. Text is elusive at this point.

[00:06:39]I think last week we were expecting text to roll out any day this week. And there's been some reporting from uh our Capitol Hill colleagues, you know, who say text is imminent, text is coming tonight, text is coming tomorrow. Uh some industry folks who I've spoken to say they wouldn't be surprised if text gets rolled out next week, uh potentially maybe even over the weekend.

[00:06:58]They're on standby for lots of work this weekend. So, I mean, it's it's a work in progress and and the time is ticking.

[00:07:05]Um, but what was your what was the kind of the upshot from your conversation with Harry yesterday?

[00:07:10]>> Yeah, I mean, first of all, I just I I want to applaud Harry and Patrick and David Saxs and that whole team for pushing this thing forward. I know they're working 247. You know, Harry basically came straight out of meetings over to the summit to talk to us and then to sit down with uh Noah from from Injective. Um, the feeling that I get is there are so many smart people working on this and we're so close and I Harry obviously couldn't share a lot because it's it's moving in real time. But I I think if there was anyone who could could get this across the line like I I I have faith in that team to to make something happen there. I will say like uh obviously as you highlighted like Democrats are going to be, you know, the folks who are actually able to move this forward. We need those votes uh to get to 60. And so I think if if we're any step closer, I'm excited to to talk to Harry or maybe Patrick a little later on down the road and and see, you know, what exactly was happening as a sausage was made this week. But, you know, I think overall the vibe seemed high that we would have a solution there. And then I think everybody, like you said, whether you're waiting on text or you're waiting on the the details of those deals, that's that's where we're at.

[00:08:29]And, you know, it's it's got to get it's got to get across the finish line. So, we'll see. But, you know, just obviously I know the whole industry is grateful for the good work that that team has done and we'll see if we can get it across the line.

[00:08:40]>> Yeah. And interesting to note too that Harry is primed to take over for Patrick Wit who will be leaving. I believe his next his last day is next Friday. I broke that story earlier in the week. He will be heading off to JAG training for the uh for the Georgia um uh Army Reserves. Uh and yeah, he will be heading out coming back I believe at some point, but it is for this particular training it is expected to last several months. So, you know, you kind of think where we are with clarity right now. We are in this crucial period. Where will clarity be in a couple months when Patrick gets back?

[00:09:16]You know, it's kind of anyone's guess.

[00:09:18]Um, it'll be interesting to see if the Senate takes the, you know, the next couple weeks to to vote on clarity. If we get a vote maybe, you know, like the third week of July, I know Leader Thun has said that he was kind of tracking that timeline, you know, that that first uh the July 27th week to put it on the floor. That gives another week before lawmakers go on on recess, senators go on recess. And then if it does pass the Senate, then what does it what happens with the House, right? Does it sit in the House over uh over the August recess? When they come back, they're going to have to kind of hash that out.

[00:09:53]Where does it go from there? So, you know, Patrick could essentially be coming back to, you know, a bill that's, you know, deal >> completely. Yeah. Well, exactly. not been completely uh completely finished yet, but in the meantime, Harry is expected to kind of take over those executive director duties and I know he's been in a lot of those negotiations with Patrick in the last couple months.

[00:10:12]They both tackled the the stable coin yield issue with the banks together, the negotiations over the BRCA and and now ethics as well. So, it'll be interesting to see how that plays out. And I do just want to note that right now we are having a hearing. The House Financial Services Committee is in New York.

[00:10:28]Actually, it's a field hearing and these happen from time to time. There's a lot of questions as to why this hearing was in New York and not DC, but you know, it happens occasionally. Uh, chairman French Hill is leading it. Rep. Brian Style, head of the digital assets committee, is also there. They have a couple witnesses from the crypto industry as well. I do just want to note it's not anything kind of pertinent to the the Senate's proceedings on the Clarity Act. It is a completely kind of separate initiative. It's more of anformational hearing. Uh it was described to me as kind of like a you know kind of like a rah raw session like to get folks you know excited and kind of amped up for you know this potential be a potential passage of of the bill through the senate and then getting it back down to the house. Like I mentioned before we don't know if it's going to see any house time uh before they all go on August recess, but but we will see.

[00:11:15]Um but just want to make that note that that is going on in New York right now.

[00:11:19]So uh lots of action lots of action this week.

[00:11:23]>> Yeah. And I I will I'll say two quick things on that and I also want to know you know what you and Summer were able to discuss because obviously like the BA has their ear so close to the ground on on what's happening here. Yeah.

[00:11:33]>> Just one thing on on Harry. I know you know we initially met like Harry was with Bo you know pregenius. He's he's been a huge part of this process.

[00:11:43]Patrick obviously stepped in those shoes did a phenomenal job. I know there's a lot of speculation on the timing, but like as someone who has friends in military service, like this is this is just how this works. And uh you know, I think Harry is is in a great spot to to keep pushing that forward. And then I also think, you know, going back to when we sat down with Jessie Don Dusty Johnson uh at SPI, I know the House said that, hey, we're we're ready to move quick. Um and so I'm I'm excited to see that momentum even if it is kind of like an ancillary or just sort of a a rahrh session. Um, you know, I'm excited to see the house continue to be engaged here and and see if we can get this across the finish line. But I'm curious like what was the the conversation? What were the vibes like with Summer, you know, how how did that conversation go?

[00:12:26]>> Yeah. Well, you you mentioned Harri had just come from meetings on the hill as well. And so it's Summer. She had a conversation with with Jacqueline obviously in the morning and then she left and held a whole bunch of meetings on the hill and then came back to do the live stream with me. And I asked her how those meetings were going. She said they were positive, generally positive. She said that the feel as of yesterday was that, you know, still tracking for a vote, you know, potentially as soon as next week, but maybe the week after.

[00:12:54]Obviously, I asked her about text and she said that senators were saying as early as today, but obviously could be prepared for anything over the weekend and into next week. As far as, you know, I kind of said, you know, we really are on a, you know, accelerated timeline at this point. I mean, I think when we came back from the August recess, it was, you know, potentially tracking that this week that there will be text and could be on the floor as soon as the week of July 20th, right, which is obviously next week. And it just seems I just said, it just seems like we're running out of time here. And I said, you know, is it still possible? Are you still, you know, as confident as you were a couple weeks back? And she she really was. Um, you know, she said she was, you know, like a, you know, 80 90% that this bill was going to get on the floor. And so, you know, I I think they continue to be very positive over at the blockchain association. But in terms of like potential changes as well, I said, you know, kind of what are you tracking there? And she mentioned that she doesn't think that there's going to be too many changes on the BRCA front, you know, we've talked about a lot this on the show, the Blockchain Regulatory Certainty Act and the negotiations with lawmakers and how that may have contributed to some changes in the text that we could see. she said she doesn't think it's going to be you know to to use your word yesterday Gerald like gutted completely but it is going to be um you know we could see some um some smaller maybe targeted um technical changes around that. So really it all comes down to what we see when we get when we get the text uh either you know maybe even later today or or next week.

[00:14:23]Um but yeah generally positive and I think that's probably what you got from Harry as well. But I will say I think these you know they are leaders right in the space. She's the CEO of the blockchain association. Harry's leading the White House crypto council. They kind of have to be positive. So, I want to make that clear. I mean, there's a lot of folks who we spoke speak to as well who are not very positive who say, you know, I really don't think this bill has has a chance. So, we got to take that into account as well.

[00:14:47]>> Yeah. I think No, that's the the big Journalists in you. And I I appreciate that. I appreciate the the transparency, the context there. I will say also I sat down earlier in the day with Gabe Evans, Representative Gabe Evans from Colorado who sits on the energy committee and also the Homeland Security Committee I believe. And when I asked him about BRCA, he had a a particular focus on some of the definitions that they may be working with. And so I think we could see again, yeah, not gutted, but maybe some definitional changes that will leave the industry uh maybe wanting in some areas, but also like if that's what gets it done, I think um there's got to be a lot of alignment there. So, we'll see how that how that plays out and once we see the text, we'll we'll see the text.

[00:15:31]>> Yep. Well, let's get back to Genius because that is our theme of the day.

[00:15:36]Obviously, it is a year to the day since the Genius Act passed the House. Let's bring in Anchorage Digital CEO and co-founder Nathan McCauley. He is leading a company that is helping build the infrastructure for the Postgenius Act stable coin ecosystem. Had a lot of announcements over the past year. We've had Nathan on the show a couple of times as well. So, let's welcome Nathan back.

[00:16:00]>> Hey everyone, how's how's it going? Glad to be here.

[00:16:02]>> Doing well. Doing well. Happy Friday.

[00:16:04]>> Thank you. Thank you. Happy Friday.

[00:16:06]>> Good to see you.

[00:16:07]>> Nathan, you've been on the Hill this week. You've been talking to lawmakers.

[00:16:10]Let's maybe start there. I mean, you're obviously celebrating a year since Genius passed. You're also pushing for the passage of the Clarity Act. What are those conversations? What have they been like for you in the last couple of days as we really get down to the wire here?

[00:16:24]>> Yeah. Uh yeah, I spent um I spent a a day on the hill this week uh just kind of talking with uh uh people across the aisle about how basically Genius has been I think huge for crypto has been huge for the the stable coin movement and that I think really the next unlock for uh both for genius and for crypto at large actually is for the clarity act to pass. uh you know one of the things I analogized it to is that we have a wonderful product uh but we don't have the infrastructure yet to uh get it to uh all the Americans and all the um uh folks worldwide that want it. Uh so stable coins are are wonderful. Genius Act has uh standardized what uh stable coins need to look like. Uh but now we need the roads and we need the infrastructure. And in order for that infrastructure to get built across um banks, broker dealers, fintexs, uh remittance players, all these other kinds of places, they need to know that they have 10 20 year time horizons where they can have this technology uh be useful. And what they what they need from that is as the clarity act uh to make sure they can move forward. And I think that message really resonated uh across both sides of the aisle.

[00:17:29]>> Yeah, you mentioned genius act as an unlock, right? I mean, I think we look at some of these stable coin businesses that really were stable coin companies a year ago, right? We have Dante coming on a little bit later in the show. They've expanded a lot. Anchorage, I think a year ago, was primarily known as a custodian, but today you're helping companies launch stable coins. How has the Genius Act changed your business?

[00:17:52]>> Yeah, it's been pretty transformational for us, I think, on AC across a bunch of different dimensions. Um, you're right, we have started issuing uh stable coins for people. We're using our uh OC charter which we've had since 2021 in order to allow um a whole host of different kinds of players to start issuing stable coins. Uh whether that's um something like uh Tether with creating their their USAT for the American market, Western Union looking to go out and uh start to integrate stable coins into their remittance flows. Um uh Athena themselves looking to uh create their USDTB and make it make that regulated here within the United States. um just a whole host of use cases that we've seen and we have um as much as we have a a wonderful start with uh some of those that we're working with. There's also a uh very nice next step where I think there's a there's a pipeline of about a dozen other uh stable coin issuers that are going to come in and and want to want to build in that space. Um but like I was mentioning earlier um pure issuance isn't enough.

[00:18:52]You also need infrastructure and so we have been uh working on integrating a a whole stable coin stack for banks uh so they can hold stable coins so they can settle stable coins so they can convert stable coins to dollars um and so that um that full stack solutions of issuance plus infrastructure is really where we've been focused. So, Nathan, as you mentioned, you kind of you seem to have this uh ability to see the future a little bit. Um, just getting that that OC charter back in 2021. You know, you mentioned some of the partnerships you guys have been able to to launch in the last year, especially Postgenius. Was that always kind of the plan or or like how how has this changed, you know, what what you guys uh are potentially accelerating in the space? like obviously going back to the the OC charter I'm sure you couldn't see I don't know if you had on the road map you know genius you know 2025 but what what's that been like for you guys from a strategy perspective >> yeah so the strategy actually from the from the very beginning of the company were basically twofold um there will be institutions that want to participate in digital assets and they will want highly regulated infrastructure uh and so that's always been the bet um the earlier instantiations of that were you know investment advisor ers want us to follow the qualified custody rule. Now the manifestation of that is banks want to work with another bank in order to move and settle uh stable coins. Uh and so that that core strategy uh has played out and it just has a has a lot of manifestations and I think we're only going to see more manifestations of that moving forward. Uh so back then we were talking about um registered investment advisor advisers needing qualified custodian. Uh next we're going to be talking about like hey how do we build market utilities for tokenization uh that allow tokenized assets to uh settle across the various financial institutions and asset managers that want to hold them. Um but that those those core pieces are always going to be necessary and we're we're going to continue to kind of operate at that at that sweet spot of incredible technology combined with incredible regulatory clarity.

[00:20:55]>> You've also launched a a white label platform for institutions. Nathan, I'm curious what kind of demand that you're seeing from from those institutions. Uh for is it is it great? Is it kind of uh snailing along? I mean, what kind of banks are interested? Just and I asked that purely because we've seen some push back from some of the larger banks uh on, you know, stable coin yield specifically, but also kind of a hesitance into, you know, potentially launching their own stable coins. We've seen a couple of announcements about potential consortiums around tokenized um deposits, but what kind of conversations are you having with banks uh about launching their own stable coins and what kind of banks are are they are they community? Are they bigger? Are they regional?

[00:21:39]>> Yeah, it's a it's a whole mix. I would say there's everything from your large GIS that are looking to integrate uh stable coins, tokenized deposits, Bitcoin buy and sell for their wealth clients. Um there are even some of the large financial institutions that are saying, "Hey, we want to start allowing our large prime clients to borrow against their Bitcoin positions." Um and so think of that as like the the gamut of kind of use cases that we're looking at. Everything from stables to tokenization to decentralized assets and and integrating those into their into their platforms. Um but it's not only the big guys, too. We've got uh regional banks. I talked to one in uh in Texas uh that has a lot of remittance flows. uh to uh subsaharan Africa. Uh they have a bunch of um immigrant workers that have come in there have to do remittances out there and they want to integrate stable coins in order to uh help those flows as well. Uh so the applicability here uh couldn't be more profound across the stack and I think you know many many of the banks are looking to be first movers uh but clarity will be really be that unlock that will allow everybody to confidently invest in the space. So, Nathan, as as we approach or we are at the the one-year anniversary of Genius, um obviously we've seen a ton of commercial traction, you know, you just mentioned some of the partners that you guys are working with. It sounds like stable coin adoption is real and it's happening at the institutional level, but we're also at the rule making and implementation phase, right? It's now now we have to get this done. You have so many three-letter agencies involved in having to roll out their own regulations or rules around the space.

[00:23:16]We had uh Fed Chair Kevin Worsh uh say that he wants to put out rules by this weekend at the at the Fed. Um what is the most important or some of the most visible aspects of of rolling out rule making and implementation that that you guys are focused on?

[00:23:33]>> Yeah, we are we are deeply engaged in that process across I'd say the the banking regulators, the um BSL treasury kind of use cases. Uh and then also looking at um you know beyond rulemaking looking at uh actually how the government themselves will start to utilize stable coins whether this is for payment flows there whether it's for um uh crime fighting these kinds of use cases really kind of across the board we're we're seeing broad applicability specifically to rulemaking. Uh we want to make sure that um we don't accidentally undo genius through the rulem. uh you know, if you uh if you go too far on some of the specific implementations of rulemaking, then you might as well repeal Genius uh on some of these things. And so that's the the message we've been giving that like, hey, there's a there's a goal of the Genius Act that is extremely important.

[00:24:28]I think is extremely positive for America. uh let's make sure that as we look at uh policy implementation uh we keep in mind what the overall meta level goal here is both from the um the Congress the um the White House and the people themselves. So uh that's that's really where we've been focused and we're engaged with all the the rulemaking processes there.

[00:24:52]Has the Genius Act really changed how overseas companies are viewing the United States? And maybe how companies there want to work with companies here in the United States who are doing white label issuance for stable coins or you know doing custody and things like that.

[00:25:07]Have you noticed an uptick in in the interest from from overseas firms?

[00:25:12]>> So this is an interesting one. I think the I think overseas firms are looking at this saying hey there are there are flows that are already happening. you know, for example, um, Tether has been very popular in a lot of these markets.

[00:25:25]And so, there was already kind of a mandate to say, hey, let's let's start to look at how do we integrate um, USDT and then now that UST is out, they want to integrate that as well. When you look more broadly speaking, uh, say in markets where there isn't already, say, a st a popular stable coin, that's where you start to see, hey, this is this is something that's going to grow. This is something that's going to expand. And I would say as much as it is overseas companies they're looking at it is also overseas regulators uh now the US looks like a u very much a leader in this space a leader in regulatory clarity leader in regulatory infrastructure and so we're also seeing other um even central banks start to look at hey how do we do something like genius how do we integrate this how do we make sure that the u funds flows for our currency or for international currencies get built up and looking at modernizing their countries infrastructure.

[00:26:20]>> So, Nathan, before we let you go, I know you mentioned clarity. It's it's obviously kind of the the topic of the day and and we want to make sure obviously, as you said, that genius doesn't get undone. That that was a big part of the stable coin yield conversation earlier on this year, but now we're kind of in the the sort of last days of of getting clarity across the line here. I I'm curious how you think about your business, whether it's just genius in place and then obviously you highlighted some of the rulemaking that's going to be involved there and wanting to make sure the law stays intact as intended. What are you looking for in terms of we get clarity done?

[00:26:53]This is this brave new world that we're we're in uh versus just kind of staying with clarity and and the implementation with the regulators.

[00:27:01]Well, I think uh in in many ways um you could look at clarity as a as a starting gun in a sense. Uh it's a a starting gun for the next phase of crypto adoption.

[00:27:14]Uh which some of that is going to be um predicated on you I suppose the clarity rulem. Uh but I think the even more profound effect there is going to be the the market actually getting built. Uh how do different players decide to align with each other? What are the settlement networks? what are the best practices that start to get developed? Um, and so I think that's really going to be like a a kickoff to a bunch of this and uh it's across a bunch of different dimensions.

[00:27:39]How do banks do this? How do brokers deal broker dealers do this? What is the answer for tokenized deposits? What is the answer for stable coins? What is the answer for tokenized assets? Um, and so you're going to get to see a lot of a lot of innovation, a lot of alliances built there. Uh, and I think that's a really exciting uh thing to get kicked off.

[00:27:58]>> Absolutely. Great. Nathan, thanks so much for joining us today. Happy genius anniversary.

[00:28:03]>> Happy genius anniversary. Thanks.

[00:28:05]>> Thanks, Nathan.

[00:28:06]>> Bye.

[00:28:11]>> Let's bring in Dante Desparte, chief strategy officer and head of global policy and operations at Circle. Dante, welcome back.

[00:28:19]>> Thank you. It's great to be back on.

[00:28:21]>> Great to have you back. You were our fourth guest ever on Crypto in America when we launched last year and that was right before Circle announced its IPO plans. It was just a couple months before the Genius Act became law.

[00:28:34]Looking back now, where do you think the legislation has had the biggest impact?

[00:28:38]>> Yeah. Well, we're we're facing this uh really important one-year anniversary milestone. Um it is really hard to um fully describe all the ways genius even as a law that that still has the rulemaking process under full full um development by the US Treasury and other banking agencies in the US. But it's been nothing short of transformational.

[00:29:00]Um, I'll try to do a quick summary of the domestic developments, but I also think it's notable this week especially uh that there are some uh pretty important transatlantic developments as well that I think are in no small measure um accelerated due to the Genius Act. Domestically uh the law as one would have expected has corresponded with a wave of institutional interest in stable coins and tokenization.

[00:29:24]um we have gone from an extinction level event of banking and banking interest in America to a Cambrian explosion in new banking applications and banking charters under the OC which is of course a requirement of the Genius Act and so I think in the long range in the long range it's more important to think of it as a a payments innovation a bill that promotes broad-based payments innovation in the US as opposed to a law that's cryptospecific uh but but um great developments domestically the transit Atlantic point is um during the state visit, the UK US state visit some time ago um Chancellor Reeves uh the chancellor of the excheer and our US Treasury Secretary Scott Bessant announced a task force on the future of markets. a task force just produced a series of recommendations yesterday and and in those recommendations the prevalence of stable coins and the prevalence of of the idea of harmonizing UK US rules for digital assets broadly I think is incredibly encouraging and one of the things that makes the Genius Act a unique financial law is that I I like to describe it as it's America first but it's not America alone there's specific provisions in that law that empower the pre the Treasury Department to seek out regulatory reciprocity And that UK US task force is perhaps the world's first example of what I think could be possible in other countries.

[00:30:44]>> Yeah. I mean, one of the biggest arguments for the Genius Act was that it was strengthening the dollar's role in the global financial system. And not for nothing, stable coins have been one of the hottest topics, if not the hottest topic over the past year to 18 months.

[00:30:58]So, even fast forwarding, let's say, where we are today, a year later after Genius, do you really think we're starting to see that play out? Um, is this just the beginning or do we feel like we're like in it right now?

[00:31:09]>> Yeah. Well, no, I think it I think it's absolutely starting to play out and of course people are still asking what flavor of stable coin they would like to offer. Um, the the perennial build buyer partner question I think continues to uh re and what people no longer have to ask is what is the basis for legal clarity and what is the basis for regulatory clarity at least for the stable coin activity. And so um you know there's a proliferation of projects that are out there. Some are taking the consortium pathway. Some are of course are going it uh with existing stable coin constructs.

[00:31:41]Um but very broadly it just a very very encouraging uh market environment. Um and what I think we must celebrate the most as I see the crypto in America bus uh you know rolling through the streets of DC. Um what we must celebrate the most though is how uniquely bipartisan this was. You know marking obviously 250. Yesterday I marked um the French national holiday with the ambassador and the embassy staff. Um there's a lot to be said about uh new laws coming together that bring not only the country together but also espouse this notion of um harmonization, partnership and proximity with other countries around the world.

[00:32:19]>> Dante, one of the hardest parts about rolling out a new law is getting the implementation done right. And we've seen with such scale that that Genius put forth on a bunch of agencies. we still start to roll out some of their rule making some guidance. What are some of the areas as this becomes you know real implemented law across the agencies that you guys are looking for and is there anything you've seen so far that concerns you or makes you enthusiastic as we move towards this implementation phase?

[00:32:49]>> Yeah, well first I I've uh you know had to warn an international audience including at the bank for international settlements. I was invited uh to the 96th annual general meeting of the central bank of central banks recently and and in that audience with central bank governors in the room I had to make an important hopefully public service announcement which was that it would be a big mistake to think of the Genius Act as a crypto industry political land grab. The law was bipartisan. 108 Democrats voted for it. And all of our federal agencies, um, remember that this enables a a bank, a credit union, and a non-bank actor to be regulated under the same rules. Um, are wasting no time in number one, getting the rule book set for the Genius Act, and number two, ensuring that it's really robust and it'll age well. After all, dollar stable coins um are effectively enshrining our most trusted asset in this novel form on these open global networks. And so getting it right um I think is really important. Um and so to to date, I'm not seeing anything that alarms me or or circle. As you saw earlier this week, we actually made an announcement what by our understanding is a pretty important pioneering announcement around receiving a denovo trust license. um that in first instance is uh you know a step towards our own compliance for the Genius Act.

[00:34:13]As you know um large stable coin issuers in the United States need to have an OC charter if you're above 10 10 billion in circulation. So Circle obviously is is at that scale and we are doing in the US exactly what we did in Europe which is when the rule book requires walking through the front door and requires leveling up will be the very first company in line. We did it in New York with the bit license. We did it in Europe with Mika. We aim to do it of course here in the United States with the Genius Act and that OC announcement that we made earlier this week is a step in that direction.

[00:34:45]>> Where do you go from here Dante? Cuz you have the approval now. There's a couple of companies in crypto who are looking to go further than the OCC trust charter and perhaps apply to the Fed for a master account.

[00:34:56]>> I think a year ago you could say Circle was a stable coin issue. I think maybe now it's more of like a financial platform. Um, yeah, as you look at the, you know, the chain with ARM, look at the AI that you guys are, you know, increasingly building towards, what would you describe Circle as now and kind of what's the long-term vision for you guys?

[00:35:14]>> Well, it's nice to be seen. Um, and I wouldn't doubt that that the three of you would sort of deeply understand the company's strategic positioning. Um, think of Circle in some respects as really two families of very interrelated efforts and products and services. Today we're widely known as the world leader in regulated digital money or tokenized money. Um USDC obviously is table stakes in terms of liquidity, banking integration, regulatory transparency and clarity. It's the world's largest regulated digital dollar. Um and the operative word there is regulated and as we enjoy the impremature of clarity under the Genius Act, uh we would of course be the first in line there. We also run and operate the world's largest regulated euro denominated stable coin out of a structure in Europe um that is mika compliant and then we have the world's largest regulated tokenized money market fund um TMMF. And so those those three families of products are circle for the digital money in motion and the digital money at rest. The rest of the business in some ways has um built a a a technology offering from a multi-chain innovation for stable coins across more than 34 blockchains.

[00:36:22]Obviously, ARC is an initiative from Circle that is coming online um soon that will effectively enable programmability, divisibility and um composability of different forms of digital money and different forms of of assets on the internet. And then there's a whole wide range of other innovations, the agentic stack, uh the circle payments network and beyond. So we want to avail all of these technology offerings to developers, institutions, cryptonnative firms and many others because we want this notion of open-source financial services sharewware to be available to everyone everywhere and to convey trust. Um the legal basis for that I think is clear and one way genius is novel is that it's techneutral. uh Genius does not penalize the use of open source blockchains um which we think is a really really important milestone to advance accessibility to the dollar but also to promote this type of comp competition and interoperability across the global financial system.

[00:37:18]>> Yeah, I mean it's very obvious that the Genius Act has opened the door to a flood of new stable coin issuers from big banks to fintech coalitions like OSD to uh I don't know the corpo chains maybe. uh how is Circle kind of thinking about this new wave of competition? I know you brought up the tech stack and everything uh within kind of the the entity of it all, but is there a certain strategy now that it's like so many of them in the market that has kind of changed the perspective for you guys?

[00:37:47]flavor of the week.

[00:37:48]>> Well, you know, listen, um um I I I joke I joke that twice in my career, I've united Washington, once in uh 2019 in their collective dislike and hatred of the Libra project, which is teachable in in the sort of risks and the potential gravity and and uh and complexities of a consortium-based model. So I find it ironic that people are returning to a consortium based model notwithstanding all of the real political regulatory and other risks that consortia created. Um and the other time of course was in in the bipartisan support and passage of the Genius Act.

[00:38:25]Now obviously the law creates a basis in which people can compete but the last I checked the purpose of the Genius Act was to create competition not concentration. And so I think there are a couple things about that law that are really interesting and teachable about what the market really wants. The first is that if a bank wanted to launch a stable coin under the Genius Act, it would have to do so from a balance sheet that has no risk, no lending, no rehypothecation, and looks more like Circle and less like a bank. Begging the strategic question, if you're a bank leader, do you want capital held in this manner inside your balance sheet to participate in a payments innovation or like BNY and standard charter to banks that recently enabled USDC much more in you know strategically in their operations would you rather cater to the growth of the market where the market already is so that's just one question visav competition and new entrance the second of course is I think it should be encouraging that 140 companies in the OSD consortium um are stable coin enabling themselves.

[00:39:26]That's great. It could it could signal the pie is getting bigger for everyone.

[00:39:30]There's more funggeability and interoperability. So in my view, we look at competition with the humility it deserves, but we stay hyperfocused on executing circle's long range business model and strategy.

[00:39:41]Dante, I have to ask about, you know, when you talk about working with Europe and the work you're doing internationally, that idea that doesn't seem to be able to die, which is the CBDC.

[00:39:52]>> How do you guys see, you know, whether Europe is considering it? I I think in the states that's, you know, it's it's largely been put on hold. How do you guys see where Serbo fits into whether it is governments starting to issue or, you know, something that ends up being centrally backed or we we end up in this much more like private issuance sort of permissionless environment like how how do you see that developing?

[00:40:15]>> Yeah. Well, it's uh I have to be well I I'll never be careful on your air, but I'll always be diplomatic. Um the the you know my analogy on CBDC's is the Federal Aviation Authority doesn't fly planes and build jet engines, but planes that fly over our skies are subject to rules. And so we would be better better served uh in the long run and the Western world would be better served in the long run by promoting rules. space free market competition. Um, obviously the CBDC experiment hasn't quite ended yet for a lot of central banks. Um, and candidly, the Genius Act uh was as much a referendum on wanting uh an air gap between the central bank, our wallet, and how we spend our money as it was a referendum on what type of operating model should our central bank play uh here in the United States, the Fed, in terms of its rights or or or lack of rights to issue a central bank digital currency at any point in time. Um, the proof is in the pudding. Uh hundreds of billions of dollars are circulating today in these new digital forms. That's just counting the stable coin market, not counting tokenized money market funds that have anchored to the US dollar. And the dollar enjoys this historical what we call an exorbitant privilege in no small measure because of its liquidity and trust, but also because private sector actors like Circle and many others can count on um the rules-based system that makes the dollar work, but also can count on um how to innovate on the new rails that support the dollar. But then the olive branch is this one. Uh the bank of England and its deputy governor Sarah Breeden I think have come forward with what what I think of as the most enlightened posture amongst central banks which is that we might be pushing towards this multi-money system. A multi-money system might include publicly issued digital money, privately issued digital money, electronic money tokens and whatever the flavor may be.

[00:42:04]And if we want a world in which our financial needs don't take bank holidays and the innovations that we work with uh work for us uh then we might want to prepare for that very world. And so I'm I'm of the view and circles of the view that the rails and the open infrastructure for this multi-money system needs to be thought of as public private. Um and so I would welcome you know a world in which if CBDC did exist it ought to be fungeable uh with with regulated stable coins. Dante, you mentioned in the OD consortium, there's some banks that have signed on, BNY, Standard Chartered among them, but we have not seen major players yet like JP Morgan, Wells Fargo, some of those other banks, right? And they have been pretty >> adverse to stable coin yield. We've seen a lot of drama around the Clarity Act.

[00:42:53]>> From where you sit, Clarity Act, it's coming to a head now. Um, you know, should be seeing a vote on the floor in a couple weeks time. you know, do these banks generally want to participate in the stable coin market or is it mostly about, you know, trying to slow down competition? How do you see it from where you're sitting?

[00:43:08]>> Yeah, look, I I think it's a it's, you know, banks have a somewhat unique operating model obviously and I think they have unique functions in an economy, credit creation, lending, they enjoy this public taxpayer born back stop in the form of bank guarantee insurance, which is which is again a feature of the broad banking system. The banks, I think, like so many of us have also faced this technophobia in Washington in which anything to do with innovation and anything to do with tech innovation was met with um almost an allergic reaction. And the banks then also have a number of international bodies, the Basel Committee on Banking Supervision, for example, that are putting an imposition on the banks for something so simple as banking the cash leg of a crypto transaction. And so I want a world and I think the Genius Act creates that world in which all parties can compete subject to a rules-based level playing field. Now the fact that the yield argument is being wagered so vigorously despite the fact that again banks ought to also be able to leverage stable coin constructs to pay greater rates of return for the deposit base that they already custody. I I think I think it may be uh it may be masquerading other issues. Uh those other issues could be political in nature, could be conflicts of interest issues, it could be ethics issues, and frankly, it could just be um the political processes giving crypto its win with the Genius Act. And and there's waning interest the closer we get to midterm elections. All of those dynamics are real. It took seven years to get Genius. You remember you may remember the very first and very fateful hearings on stable coins, of which I was a dubious uh participant um on the screen at C-SPAN. um crypto in America didn't exist, but the fight back then started the debate and seven years later we now have a law and that law enjoyed 108 Democrats that locked arms with Republicans and very principled, very very robust law. Clarity deserves the same outcome and I think we'll get there. Uh you know, the United States will will do the right thing when we've exhausted all other alternatives and I suspect uh despite the protestations from the banks and many others, we will get there with the Clarity Act.

[00:45:21]So does a ban on stable coin yields ultimately put US regulated issuers at a disadvantage compared to what's available overseas or in DeFi for that matter? And then also what about consumers? Are they at a disadvantage to them?

[00:45:36]>> Well, this is a fundamental question. So you know you know rarely do I argue that we ought to look to Europe to get a flavor for what the future might look like. But in this case, I will briefly because Circle, you know, is a leading operator on both sides of the Atlantic.

[00:45:51]And obviously, we care very deeply about the outcomes on both sides of the Atlantic, including in the United Kingdom. Uh, but in Europe, yield is banned across the entire crypto value chain. The issuer cannot pay yield and the exchanges can't pay yield, and they want stable coins in Europe to effectively be a payment innovation or a store of value innovation.

[00:46:09]Notwithstanding other issues that I think the European market has today, Mika arguably has been an incredible regulatory success for the region. Uh it's promoted inward investment. It has created competition. There's even consorcia. Uh there's a network of banks called Kalis. Uh I call it quoadis, but um there's a network of banks nonetheless that are competing. And so it's promoting competition. Rarely have you seen European rules create competition. Um and yield doesn't exist throughout. And it is notable that a regulated international player like Circle operates the largest compliant dollar and the large largest compliant euro in the European market notwithstanding this ban on yield. Flash forward or fast forward to this side of the Atlantic. uh the outcome I think it's up to the trusted hands of Congress and candidly in the absence of the clarity act our leaders of the critical regulatory agencies the CFTC the SEC and others have the ability to work within their powers to create market confidence and market clarity even in the void of getting the law passed um it's already clear under Genius that a stable coin issuer cannot pay yield directly to the coin holders we think protecting yield in secondary markets including in DeFi as you rightly asked is is important. Uh no different than a than a cash equivalent of a dollar can be used for credit and lending. We think it's really important to protect secondary market uses of fully reserved stable coins even if the issuer can't pay yield.

[00:47:35]>> Well, Dante, final question. As we look back on this last year since Genius was passed into law, what do you hope people say about what it actually accomplished or what do you think it's the biggest thing that it actually accomplished?

[00:47:49]Yeah, I mean it, you know, my my sincere hope is that we will look back several years from today and and say that number one, we have unequivocally revived with this law uh rules-based competition for banking and payments in the United States of America. We have a payment system uh that is a hurry up and wait proposition. Even something so simple as basic domestic wire transfers and payments are at the mercy of antiquated pipes. And it's a national security issue first and foremost. domestically moving money quickly uh the pandemic proved was near impossible and the country resorted to sending checks to people which was a liability not an asset if you were told to quarantine globally. I think this is utter transformation of dollar availability, of dollar access and of open market infrastructure that could enable access to um our most trusted um asset which is the US dollar to everyone everywhere for little more than a basic internet connected device. That should have always been an export product of the United States. It is today and the Genius Act in in the next few years will make that a reality and so for that we should all be uh very happy about the outcome.

[00:48:57]>> Great. Amazing. Well, Dante, thank you so much for coming on and happy one year anniversary to Genius. Hopefully you guys pop some champagne in the office. I don't know.

[00:49:06]>> Indeed. Thank you so much.

[00:49:09]>> Thank you all.

[00:49:16]>> All right, Elanor is muted. We love Dante.

[00:49:20]I am muted. Oops. Sorry about that, guys. Uh, we do love Dante. We've had some great guests on today. And to wrap up the hour, we're going to have another great guest on. Rodney Hood is a former acting controller of the currency and former chairman of the National Credit Union Associ administration. During his time at the OC, he helped prepare the agency for its expanded role over stable coins. Chairman Hood, welcome to the show.

[00:49:45]>> Great. Thank you. Good morning. And it's wonderful to be with you today.

[00:49:48]>> Morning. Good to see you.

[00:49:51]>> Happy Yes. Happy oney-ear anniversary of the Genius Act passing chairman Hood.

[00:49:55]Just during your time at the OCC, you issued two interpretive letters that made it a lot easier for national banks to participate in crypto. For people who weren't as familiar with the letters at the time and were not bank regulators, what did those letters actually change?

[00:50:10]Well, >> first and foremost, let me begin by thanking you for allowing me to join you today on Crypto America. your show, your podcast is so important because it gives opportunities for regulators and bankers and fintexs alike to all have a wonderful dialogue and discuss the issues of the day. So, I'm delighted to be here. When I was acting controller, it was quite simple. I wanted our banking system to have access to 21st century banking tools and products. And as you may know, many banks were not able to engage in crypto activities. And I wanted to basically change that. If we wanted to have a competitive banking system, if the system I was responsible for stewarding were not able to engage in 21st century tools, what industry was I regulating? So that is why I wanted to remove the sword of damicles from the heads of our banks and give them opportunities first and foremost through the interpretive letter U 1183. I wanted to provide that non-objection requirements, which means that banks that come in and ask for permission, but they were never given a yes or no. How do you run a business line if you're not really given clear rules and lines for engagement? So, I wanted to one provide that through interpretive letter 1183.

[00:51:25]And then a few weeks later, we were able to issue interpretive letter 1184, which means that banks can buy, sell, and custody crypto assets for their customers and also outsourced to subcustodians. So again, the permission was granted. It position our American banking system for global strength. And I think now you're finding other countries uh looking to us as an example. I would be remiss though if I didn't thank uh my colleagues at the OCC for working diligently to bring the letters to fruition. Again uh for many years uh those crypto companies that you work with daily have been debanked or certainly discouraged uh from pursuing relationships. So one we moved the the goalpost we pro we provided that approval. And I also would be remiss though if I didn't thank um the current controller Jonathan Ghoul for the work he's done and and really bringing a lot of the work that we did at Genius Act to work with stakeholders. So I was fortunate uh all of you to spend time with Senator Scott and Chairman Hill. We were able to talk with them daily and in real time about the guiding and establishing national innovation for US stable coins act. I sometimes like reminding people what genius stands for because they sometimes think that we just arbitrarily decided that Congress were all geniuses, but it really does mean something. But I want to thank uh both the House and Senate for those leaders for work with us, our staff, and again Jonathan Ghoul because he was the first federal regulator to now issue some of the rulemakings that will soon be coming to fruition. So happy to know that the pathway that I laid led is now still continuing to evolve. Yeah, chairman, as you mentioned, there were obviously like so many stakeholders and kind of chefs in the kitchen in terms of of getting us to to where we are now.

[00:53:15]And we were talking a little bit earlier in the show with Nathan, the the CEO of Anchorage Digital about kind of this notion of like seeing the future. When you were writing those letters, did you anticipate sort of the level of traction and interest that we would have now?

[00:53:28]like was this inevitable or do you think maybe the industry because of all the good work that that has been done on the hill is maybe ahead of schedule in terms of where you saw this digital adoption going like what what do you think of you know that and where we are now >> well you know that's a really good question when I issued the letters it was one wanted to make sure that we had a competitive banking framework for the United States I think that when we issued the letters as well we knew that there was going to be traction because stakeholders were reaching out to me I was quite unique in my time either in overseeing the credit union system or the bank system outreach. I met with the stakeholders all over the country hearing in real time what were their needs. The needs were around faster payments. Their needs were around having opportunities to have 21st century solutions. So I knew that when we acted that it would be wellreceived, but the elacrity in which it was wellreceived was just mind-numbing. I love the fact that hundreds of folks were writing in to say that they wanted to either have a charter, they wanted to to really participate and it was through those outreach sessions and again I am very proud of the fact that to go from letters 1183 1184 to today seeing that we have trust company charters that are being granted uh we've also seen the OC approved the first national bank charter in some five years. Um, again the excitement is there and who would have thought it would have happened so quickly and you raised a good point about my prediction. I thought that when Congress was doing the outreach sessions a genius I knew that this was a little different everyone because of the elacrity. I have never seen Congress in both chambers really get together uh to move uh with such due speed to get this.

[00:55:13]So I think it is a response to the demand that's there and I'm pleased was talking about demand chairman Hood.

[00:55:21]I mean, you were the first person to lead both the OC and the NCUA as well, but everyone's, you know, we're talking about crypto companies launching stable coins, banks, fintex, you heard Dante say pretty much flavor of the week for stable coins, right? But if we talk about the NCUA, the credit unions, right? What role do you think that they should play uh in this kind of new age financial system? Because we talk about the banks a lot, but what about the credit unions?

[00:55:44]>> Well, you know what? I'm in sort of a unique vantage point, Eleanor, to have been blessed to oversee both the NCUA and and also uh the the credit union system. Uh I think one I've been able to oversee all of our insured deposiitories. The credit unions are also going to play a vital role. Uh the Genius Act does give them opportunities to play a role. Now, do we need 4,500 credit unions all issuing their own stable coin? I dare say no.

[00:56:10]But I think there is a a role for the credit union system to play. In fact, the one thing that has long been my sort of ethos of sorts and that is financial access and financial inclusion. How do we ensure that all members of our community have access to products safely, affordably uh undergurtded by sound consumer protection? And I think the credit unions are going to play a role in this. I'm very proud of the fact that current chairman NCUA Cal Haltman uh has also issued guidance and he also is doing a rule making around genius act participation. So the credit unions with the 146 million members that it serves today there is a role for them to play.

[00:56:51]Credit unions uh created what really almost 100 years ago. They like our banks must evolve to embrace 21st century solutions. So we certainly don't want there to be any asymmetry between what bank customers and credit union members have access to. So there is a level playing field. The rules for engagement are there. And I would go further to say I'm very proud of the fact that also I had a temporary seat on the FDIC board. So FDIC, OC and NCA are all working together in alignment around ensuring that the role the rules of the road are there and that people can have active engagement. So I'm pleased. I'd also you all be remissed if I didn't bring to bear some other folks I'd like to recognize and that is the SEC and the CFTC. While stable coins has definitely been the province of the insured depositories. I do think though that the SEC and CFTC are working together around cryptoreated matters and I know with clarity act that's going to play a role and I just want to compliment uh current chair Paul Atkins and CFTC chair Mike Celick and the fact that they are working together harmoniously and I think that that is something that is going to bear great dividends as well.

[00:58:04]So you have a regulatory regime that's working in alignment. I think and it's kudos to Secretary of the Church Scott Bessant for really assembling folks that have that ideology that change is not bad. Change is really going to be necessary for strengthening our American financial system. It's going to be important for giving us the dominant role that we want to have in terms of being uh really strong with crypto in this field.

[00:58:32]>> Yeah. Chairman Hood, I want to ask you about that in terms of clarity versus Genius. You pointed out like all the coordination that had to happen for Genius and then we've seen such interest from the banks and other traditional financial players now that they have that regulatory clarity. What do you think the sort of upshot or downside is if we don't get clarity for the rest of the industry now that we've seen how Genius has rolled out and seen so much adoption from the industry?

[00:58:57]>> You know what? That's a really good question and fingers are crossed that we can get clarity over the finish line and I go back to the elacrity. Did any of you sitting here with us today think that in just a matter of months you would see clarity I mean you would see genius passed uh with the overwhelming results in both chambers. Um clarity act you know house has passed it 294 to 134 but it's still a bit delayed in the senate. Um, Genius will work fine on its own for all the reasons that all of your other speakers have spoken about, but the rest of the market is what I'm concerned about. The rest of the market is going to be stuck in this enforcement limbo. And lamentably, I think that without a jurisdiction, it's going to be decided by whoever sues first >> and who's ever in the White House. And if it's not statutory, if it's not codified in the law, it just creates a lot of ambiguity, which is not something that we want, especially if we really want to have a very strong and fortified American banking and financial system.

[00:59:59]One where people trust us, one where people know that when they're working with any of our regulated entities, uh, that they're going to endure and do so with the fidelity to consumer protection and consumer compliance. So clarity, I'm hoping that we get over the finish line, but as we all have heard, I think Dante even talked about some of this. There are still some sticking points, whether it be some of the ethics considerations, uh concerns about law enforcement disputes, uh the bank yield loophole that's there and things of that nature.

[01:00:29]So there are a few things that need to be addressed. uh but I being glass half full I'm hoping that stakeholders can really get these issues met because again I just don't want us to have uh one group of genius act and stable coins operating perfectly than to have again this sort of damocles hanging over the heads of other market participants >> chairman Hood thank you so much for joining us today >> thank you all for having me happy one-year anniversary of the passage of the Genius Act and I look forward to continuing to uh see great things come from the banking regulators with whom I worked recently, but more importantly look forward to hearing about the insights that you all provide from Crypto America. You really are that guiding force and source of information for all of us that want to stay up to date. So kudos to you all as well for the role that you play.

[01:01:21]>> Thank you so much.

[01:01:22]>> Thank you so much. We'll talk to you soon.

[01:01:24]>> Yes. See you soon. Bye.

[01:01:25]>> Thanks, Sherman.

[01:01:28]Oh, we got to have him on for a full Wednesday episode one of these days. For sure.

[01:01:32]>> Absolutely. And we were talking about we saw uh his successor uh chairman uh chairman Kyle Hampton uh yesterday. I know we we got to we got to talk more about the credit unions. We got to we got to get that. Yeah.

[01:01:43]>> Yes, we absolutely do. And maybe his successor as well, Jonathan Gold. He's also >> someone we'd love to get on the show at some point as well. But for now, we're going to sign off and end this busy week. We'll be back same time, same place next week hopefully with more news on clarity. And uh for now, happy genius anniversary one year. And Gerald, I'll see you next week.

[01:02:03]>> Vamaspa. Yeah, >> can't believe I'm saying that.

[01:02:07]>> Thanks, guys.