[00:02:45] Perianne Boring: Promoting Bitcoin and making sure that our policy makers are well informed as they’re navigating this space. We’ve had a very, very eventful summer. This has been one of the busiest summers ever at the Chamber of Digital Commerce. And for anybody working in Bitcoin policy, so precedent, as you noted, just right before the August recess, one of the very last task that the House Financial Services Committee and the house agriculture.

[00:03:13] Perianne Boring: Committee took on was marking up the market structure bill. The formal name of the bill is the Financial Innovation and Technology, or FIT for the 21st Century Act, HR 47 63. This bill, we previously were just calling it the market Structure bill, but they gave it a formal name just over the past couple of weeks.

[00:03:33] Perianne Boring: This creates the comprehensive regulatory framework for digital assets at the SEC and the CFTC. So there’s been a lot of legislation introduced over the past, you know, give it five years related to digital assets, cryptocurrencies, including Bitcoin. This one’s a little bit different because it’s a comprehensive regulatory framework.

[00:03:59] Perianne Boring: So for the entire digital asset space, including bitcoin, The big hurdle was getting it through committee. So you know, for those well-versed in legislative process, members can introduce a bill. It has to pass out of the committees of jurisdiction. This bill has two committees of jurisdiction. That’s the agriculture committee who oversees the CFTC and the Financial services committee that has jurisdiction over the CFTC.

[00:04:24] Perianne Boring: And it passed a markup out of both committees on a bipartisan basis. So now it is ready to go to the full house floor for vote. We have never had comprehensive legislation make it this far through the legislative process ever. So it’s very encouraging in the fact that it had strong bipartisan support was also really, really important.

[00:04:46] Perianne Boring: So we’ve been very, very busy this summer and this is really the culmination of many years of work from our team and many other people working in, in the policy domains in Washington DC to to, to get to this point.

[00:04:59] Preston Pysh: What’s the main takeaways in that bill that are different or that you think are just noteworthy highlights for people to understand?

[00:05:08] Perianne Boring: Some of the things that are really important to understand is just why is this bill necessary today? There’s a lot of confusion and there’s a lack of clarity in terms of how these assets are regulated today. That is the number one challenge. That is the number one complaint that we get when we talk to any type of institutions.

[00:05:25] Perianne Boring: Bigger companies, particularly public companies, have very, very different risk profiles than startups or young technology companies. It’s really important that we have a legal environment that’s welcoming to larger companies because they can invest very real resources and building very real infrastructure that can help bring more people into this community, which is the goal, right?

[00:05:45] Perianne Boring: To grow Bitcoin, get many people buying and operating and living within the Bitcoin community. We need as many on-ramps and off-ramps as possible to get all types of people involved in, in the Bitcoin space. And you know, I believe institutions will play a part of that, but they’re really sitting at the sidelines right now.

[00:06:01] Perianne Boring: And if you talk to them why, it’s because they feel like they’re, they don’t have the regulatory clarity that they need and, and they’re right. Today, the way that we’ve defined digital assets, Bitcoin and other cryptocurrencies is really through the speeches and statements of the people that work at these regulatory agencies.

[00:06:19] Perianne Boring: This bill really codifies that in law by creating a definition of a digital commodity. It also creates a definition of a restricted digital asset. Those are the cryptocurrencies that will be regulated by the SEC, and it also defines a payment stable coin. These are cryptocurrencies that can trade on both SEC and CFTC regulated exchanges.

[00:06:39] Perianne Boring: But the SEC and the CFTC will not have the authority to regulate the operations of stablecoin operations. That’s defined in a separate bill. So it defines digital commodities. It defines, you know, what tokens are going to be regulated by the FCC. It carves out those stable coins and makes sure that those are defined as well.

[00:06:58] Perianne Boring: But particularly, you know, one reason why I think this is good for Bitcoin, in addition to creating that legal framework that’s going to allow more companies to invest in building this space that meets a more conservative risk profile, is it also provides consumer protections, particularly for retail purchasers of digital assets.

[00:07:17] Perianne Boring: So the digital commodity exchanges, the exchanges that will be regulated under the CFTC for the trading of Bitcoin and other digital commodities, it will subject them to segregate customer funds. I think overall that’s, you know, I think something we can all attest is important given all of the catastrophes we have seen at exchanges over the past year.

[00:07:38] Perianne Boring: It also provides additional disclosures for retail customers. So it, it creates a lot more formal protections, consumer protections, particularly for retail investors. And again, I think from our perspective, we want to grow the Bitcoin community as fast as possible, and a lot of that is just maturing the infrastructure to bring more people into this space.

[00:07:58] Preston Pysh: I talked with Jason Brett, probably, I don’t know, a year ago about the alumnus Gillibrand bill or proposal that they were working through various committees. It seems like that, and I don’t know. I’m curious it seems like that died and maybe some of the language was reused. Was, is this the new push in DC to kind of really get approved and everybody’s kind of throwing their weight and their support behind this and that’s done?

[00:08:23] Preston Pysh: Or is there other efforts that are still taking place in tandem?

[00:08:27] Perianne Boring: Yeah, this is where legislative process is really important to understand. So the, the FIT for the 21st Century Act. This market structure bill, this was introduced by members of the House of Representatives. The Lummis Gillibrand bill, the Responsible Financial Innovation Act that was introduced in the Senate, it was introduced in the previous Congress.

[00:08:46] Perianne Boring: It did technically die because it didn’t make its way through the legislative process before the end of the session. So when that happens, technically all the bills die. But it was reintroduced just a couple of weeks ago that Bill, there’s a lot of overlap between the House version and the Senate version.

[00:09:05] Perianne Boring: A little bit more comprehensive. There’s sections including an entire tax section that’s not in the house version. All eyes are on the Senate at this point. So the house has passed their bill. It’s kind of to be determined what the legislative process is for the Senate bill. If we’re able to get at both the House and a Senate bill passed, they’ll have to be reconciled.

[00:09:26] Perianne Boring: So they’ll have to kind of figure out what is the same and can they get one thing in to send that will pass both chambers before it can go to the president’s desk for signature? Now we have a lot more challenges on the Senate side, so the house is controlled by Republicans and there’s a lot of interest in passing, you know, getting a bill passed as fast as absolutely possible by Republicans.

[00:09:49] Perianne Boring: Democrats not as much. We’ve already heard from Sherrod Brown who chairs the Senate Banking Committee, who would have to put this on the agenda for a markup and pass it out a committee that he has no interest in bringing any bills. Particularly any digital asset bills through the legislative process in his committee.

[00:10:11] Perianne Boring: So he is particularly a big sticking point and standing in the way of getting legislation passed. So we are, at this point, we don’t –

[00:10:19] Preston Pysh: Perianne, where’s he at in the process? Just so people can kind of understand why he’s important in particular.

[00:10:26] Perianne Boring: Whoever chairs the committee sets the agenda.

[00:10:29] Perianne Boring: So they decide which bills get voted on. So if the chairman of the committee doesn’t want to bring a bill forward, he doesn’t have to. And that’s exactly what’s happening for Bitcoin in the Senate. We don’t. You know, we’re getting, you know, a blockade from very specific members without them, you know, changing their mind or having a change of heart.

[00:10:46] Perianne Boring: They’re really standing in the way of smart policy getting passed into law.

[00:10:50] Preston Pysh: When I look at the recent news, the one thing that’s been on everybody’s mind is just this SSEC engagement with Coinbase, and I know the news story that’s been shared CR like crazy in just the past week is that the SEC went in and specifically told Coinbase that Bitcoin is the only thing that you can be trading as a spot market.

[00:11:11] Preston Pysh: Everything else is a security. And that was the guidance basically, that Coinbase had received. And this is all through rumors. I I haven’t seen anything that this was an FT article that made its rounds here, basically. Yeah, I saw that. Yeah. So when you look at that and you reconcile against what they’re trying to do in Congress, how do you kind of make sense of this SEC grant strategy and the information that they’re putting out and how that integrates with what they’re trying to do on the Hill?

[00:11:38] Perianne Boring: I think the bigger issue that we’re seeing, like the bigger theme, the challenge that I think everybody is having with the SEC today is that it’s turned into a highly political organization, and it didn’t used to be like that. The commissioners really used to be experts in the markets and equities and understand, you know, how these companies operate, that they oversee and that they regulate.

[00:11:59] Perianne Boring: Today, you know, the commissioners are all placed by the president of the United States. They’re confirmed by Congress, of course. But they’re largely political appointees, and what we have seen is just a huge change in that you no longer really have market experts at the helm. You have people sitting at the helm who really don’t have a lot of experience in these markets, and they’re perpetuating a political agenda, not sound and safe oversight of the markets.

[00:12:27] Perianne Boring: That’s the bigger challenge. And so the SEC, and this goes for a lot of the agencies as well, not, I’m not just taking on the SSEC, but this one has really, you know, been very problematic for the digital asset space because it’s really subjected to very large political pressures. The agency feeds, you see very strong changes from administration to administration.

[00:12:48] Perianne Boring: So in the previous administration, which was a rep, a Republican administration. The SEC had said that Bitcoin and Ethereum were commodities. They had also put out, you know, the famous Hinman speech, which had said that a digital asset could, you know, first be introduced as a security, and it could over time turn into a commodity.

[00:13:08] Perianne Boring: The SEC has really changed its mind. They now have, you know, we’re now under a, a Democrat administration, a Democrat controlled SEC, and the speeches and the statements and the rules that came out in a previous administration no longer apply. So how does it, you know, this creates a lot of confusion and a, a very significant amount of risk for businesses.

[00:13:28] Perianne Boring: That’s why it’s really important that Congress passes the law, really clarifying client and defining the jurisdiction of these different agencies. So businesses just know what the rules of the road are so they can operate in a legally compliant way without being subject to the whims of these partisan politics that have really taken the regulatory process hostage, particularly for our industry.

[00:13:51] Preston Pysh: When I hear about this market structure Bill, and it’s now going through the house, You have this competing Gillibrand Lummi s bill over in the Senate, and I’m just looking at the time that it would take for all of this to get approved in each of those houses and then having to adjudicate the differences between them and then going to a vote.

[00:14:11] Preston Pysh: Like it just seems like it’s going to take forever for any of this to, to get through. So what are you looking at as far as a viable timeline for any of this?

[00:14:21] Perianne Boring: Well, again, because of the book blockade that currently exists in the Senate, unless we’re successfully able to break that down, it may be until the next Congress and the current Congress the session, every Congress goes for two a two year session.

[00:14:34] Perianne Boring: So this one goes to the end of 2024. So it, it is possible that we will not have the political climate until 2025 to actually pass something into law. But it’s really important. I mean, this is, this is why we exist at the Chamber of Digital Commerce, and that’s why we encourage everybody who is a user and operator, someone who supports Bitcoin and the digital asset market to be active in the political process.

[00:14:59] Perianne Boring: Things can change. If we are successful with putting enough pressure on the Senate to bring forward smart policy, it’s possible. Right now it’s not. There’s significant challenges to making that happen, but ultimately our Congress is a reflection of the will of the people, and that’s why it’s really, really, really important to be active in these conversations right now.

[00:15:20] Preston Pysh: When I hear that, I’m thinking, okay, so maybe it goes to the next Congress. Maybe you run into a similar roadblock. I mean, it could be four years plus until you see something actually go through. So in the meantime, it’s case law. It’s the SEC versus. All these different companies that they’re suing right now, and that’s really kind of determining what is and what isn’t and, and that’s what’s making it so difficult for companies that are trying to either own Bitcoin and put it on their balance sheet or just getting an ETF passed or any of this type of stuff.

[00:15:56] Preston Pysh: It’s all just pent on case law. There’s nothing on the books that our legal policy, our elected officials are putting out there for, for guidance. So is that it or is there, is there more to it than, than what I’m describing?

[00:16:09] Perianne Boring: Well, the current situation is really untenable, and it’s also making the United States markets very uncompetitive.

[00:16:15] Perianne Boring: This is pushing innovation. It’s push, it’s pushing talent. It’s pushing investment overseas, and you’re absolutely right. This current environment of regulation through enforcement. It takes a very particular type of company and leadership team to be willing to operate with those types of pressures.

[00:16:32] Perianne Boring: Most companies, they want to follow the law. They want to make sure that they are following the law and they’re not going to go to market until they have that clarity and that certainty. I. We just don’t have that right now. And that’s why so many businesses, you know, American Bitcoin and digital asset companies are going overseas.

[00:16:49] Perianne Boring: And that’s a big part of our message is we want to strengthen the United States national security and its economic security and its technological advantages internationally. And a big part of that is, you know, having robust markets and you have to have sound legal framework for businesses to operate here if you want to accomplish that.

[00:17:08] Preston Pysh: So recently we had a presidential candidate, and I like to remain political agnostic on this show, but we, we recently had a, a presidential candidate announce a Bitcoin policy. This is RFK. So Kennedy’s running on the Democratic ticket and he made a couple, like really massive. I don’t know what, how I would say it.

[00:17:30] Preston Pysh: What’s the word I’m looking for, Perry?

[00:17:33] Perianne Boring: He, he announced new policies that he is, he’s running on.

[00:17:35] Preston Pysh: Yeah. I mean these are, these are huge though. So like the one- go through them for us if, if you could.

[00:17:41] Perianne Boring: Yeah. For those who are following RFK Junior’s campaign just a couple of weeks ago, I mean, when he was at the Bitcoin conference, that’s really when he came out as as supporting Bitcoin.

[00:17:50] Perianne Boring: He was running on a probe Bitcoin campaign. He, he updated his policies to some new, very bold policies for Bitcoin. One was related to tax where he vows to remove the capital gains tax on Bitcoin, and the other was to back the US dollar with Bitcoin. On the tax side, removing capital gains for Bitcoin would put the US on par, would make our landscape more competitive to other jurisdictions that allow Bitcoin to operate.

[00:18:20] Perianne Boring: Its a currency. This would be extremely bullish for for bitcoin. For those who have followed the tax policy in 2014, the IRS issued guidance saying that Bitcoin would be taxed as property. So that means if you want to buy anything including a cup of coffee, you have to calculate, you know, your gains from when you acquired that Bitcoin from when you sold it, and a gain or a loss, and, and you have to record that and file taxes on that.

[00:18:49] Perianne Boring: So it really makes it just logistically pretty much impossible to use it for payments. So removing capital gains would allow Bitcoin to circulate more freely, you know, in a free society and on backing the US dollars. With Bitcoin the way that he thought about this, I think. Really was smart, so it’s not just backing the US dollar, he said backing treasury bills and bonds with Bitcoin as well as other precious metals, so a basket of scarce assets.

[00:19:21] Perianne Boring: When he shared this, it was, you know, the goal is how do you strengthen the US dollar, you know, the dollar is dwindling in the international markets and, and how do we correct that? And if he was president, how would he go about doing that? So I thought he thought about this really interesting. You know, if you think about it, you know, a big challenge right now.

[00:19:38] Perianne Boring: It’s interest rates are so high and that doesn’t affect affect just the treasury markets. That impacts everybody. I just bought a house this year and I, you know, highest interest rates in a multi-year time period. You know, we all feel, feel that. So how do you bring those interest rates back down? Well, there’s an inverse relationship between interest rates and demand for bonds.

[00:20:02] Perianne Boring: So because demand for bonds is low, that’s why interest rates are high. So the problem you’re really solving for is how do we create more demand for bonds? You know, how do you make demand bonds? Treasury bills more attractive to investors, and his idea is to back them a very small amount with hard assets, including bitcoin.

[00:20:24] Perianne Boring: Other precious metals. So I think this idea has a lot of legs. I do think it can potentially strengthen the dollar as well as help bring interest rates back down. And I think it was smart to couple Bitcoin with other precious metals ’cause Bitcoin is still a relatively new and nascent asset class. Gold and silver have had, you know, decades of, you know, history trading in international markets.

[00:20:48] Perianne Boring: So bringing them, you know, you know, together and using that to strengthen the dollar is an idea that really should be considered further. And it also just shows, you know, I think his commitment to helping create a, a robust environment for Bitcoin to, to flourish in the United States.

[00:21:04] Preston Pysh: Yeah, I think the the amounts he was saying that it was going to get backed was like around 1% of the value of the bond.

[00:21:11] Preston Pysh: So if it was a hundred dollars bond, it was $1 worth of Bitcoin or like hard assets. Inside of that as far as once it matures, whoever owned it-

[00:21:20] Perianne Boring: It’s a, it’s a hundred year plan. So year one you back 1% year two, 2% over a hundred years. Oh, okay. You could be fully backed. Buy hard assets. Huh? So it’d be a very, very slow and smooth transition, which I think is important to think about too.

[00:21:35] Perianne Boring: I mean, if you think of the current fiat system, It’s a relatively volatile system, and it’s an experiment. The whole global Fiat experiment has only been around for a couple of decades, and there’s many other nations that are looking to transition out of the fiat system. And you know, one of the things that we need to think about is going from a fiat system back to hard assets.

[00:21:59] Perianne Boring: Could create a lot of volatility in the market. So you want that transition to be very, very smooth. You don’t want, you know, crazy changes happening overnight. You want that done very, very slowly. So, you know, I, I think that is a really interesting way to think about it, and I think we should be talking about this more.

[00:22:16] Perianne Boring: You know, I think what’s really exciting about all these presidential candidates running on, on Pro Bitcoin and pro blockchain policy platforms is that it’s finally pushing this technology. To a national platform where we can talk about these really important issues on a much bigger stage. So for me that’s, you know, really exciting as someone who’s been talking about Bitcoin policy for almost 10 years.

[00:22:41] Perianne Boring: To have people carrying that on these national platforms, you know, that’s important and we should engage in more thoughtful dialogue on, on these topics.

[00:22:51] Preston Pysh: It’s interesting because you’re not just seeing it on the democratic side with Kennedy, you’re also seeing it with DeSantis. ’cause I saw something on Twitter just this week where he came out and was saying that he is very pro Bitcoin and that he thinks that I, I forget what the announcement was, but he was, it was all about Bitcoin and making sure that Bitcoin is going to be legal in this country and that there’s going to be laws put in place that allow it to be used. I don’t think he’s taking as far as what Kennedy’s saying is that it’s no cap gains and things like that, but he’s still running on a very pro Bitcoin position, and I find it really fascinating that you have both political sides coming out and being so pro Bitcoin.

[00:23:34] Perianne Boring: And it’s not just DeSantis. You also have Vivek Ramaswamy and Tulsi Gabbard. So it’s, it’s pretty much almost all of the presidential candidates are talking about this issue except Trump and Biden, and I think that says a lot. Yeah.

[00:23:51] Preston Pysh: Yeah. It really does. One other thing on Kennedy that I think I saw was that he was equating this and hardcore Bitcoiners talk about this sometimes, but it’s really interesting to see a political candidate saying this, which is software code is free speech, and that’s why Bitcoin is, you know, a legal form of money is because it’s actually free speech.

[00:24:15] Preston Pysh: Have you seen this, are you aware of, of that talking point that he has?

[00:24:19] Perianne Boring: Yeah, so he and one of his recent speeches had noted the Bernstein case, Bernstein against the Department of Justice, where the case identifying software code and protecting it under the first amendment of free speech that went all the way to the Supreme Court.

[00:24:35] Perianne Boring: So he had recognized that because Bitcoin ultimately is software, that it is also protected as free speech under the First Amendment. And I, this is something we’ve talked about a lot in our legal work at the Chamber. We’ve referenced this case many, many times. We’ve really shut down a lot of like potential calls or ideas to try to ban Bitcoin.

[00:24:55] Perianne Boring: You can’t because it’s protected under free speech. Having our elected officials or policy makers and presidential candidates recognizing this, I think is incredibly important to continue to protect, to protect Bitcoin for what it is, which is, it’s not just free speech, it’s the freedom to communicate and transact.

[00:25:12] Preston Pysh: Perianne, this is the question I think a lot of people have that get frustrated with the, all these politicians is, so they say all these things, these political candidates are saying these various things, but when they get into office, let’s say Kennedy or DeSantis or whoever gets elected and they come in, what is truly their ability to implement this stuff without Congress?

[00:25:32] Preston Pysh: Because it seems like all of this stuff really requires Congress’s vote, correct?

[00:25:37] Perianne Boring: Well, I mean on the tax policy piece, there has been some, some debate about that. We’ve had conversations directly with the IRS about how do we change the designation because we think they, you know, they got it wrong. And taxing Bitcoin as property means it can’t operate as a currency.

[00:25:55] Perianne Boring: So it restricts it, its usage in the United States. And, you know, the IRS has said is, you know, this requires Congress to change the designation. Well, in RFK’s position, he was looking at the, the freedom, the ta, the Internet Tax Freedom Act. Sorry if I get the name wrong. I believe that’s what it was. But this was the bill that was passed during the advent of the internet, which made discriminating on any type of internet taxes, illegal.

[00:26:23] Perianne Boring: And VoIP is one. The voiceover internet protocol is is protected under that act. And that act, it was a three year moratorium, but it was made permanent. In recent years under the Obama administration so it is illegal to discriminate and add taxes specific to internet transactions. And the, this bill was enacted into law as a way to encourage the growth and innovation and development of the internet, which led to the United States leading and dominating and commercializing the internet, which created one of the biggest booms in our nation’s history.

[00:26:58] Perianne Boring: And a lot of those ideas and concepts really should be, and that’s one what has been one of our big messages to policymakers is we should be looking at Bitcoin the same way we looked at the internet several decades ago. We should be encouraging and incentivizing the private sector to develop this technology so the US leads and, and developing this under that act.

[00:27:19] Perianne Boring: His kind of, the way he was thinking of it is that Bitcoin has been taxed wrong this entire time. Because Bitcoin is, is very, can be looked at very similar to VoIP, which is protected under that act from federal taxes where you have voiceover ip. Some people talk about Bitcoin as money over internet protocol.

[00:27:39] Perianne Boring: It’s a peer-to-peer system to allow the transfer of digital assets and VoIP is a peer-to-peer system to allow communications across the internet. So the way his, his team has looked at it is you don’t need an act of Congress. ’cause actually they did it wrong to begin with. And so through an executive order or other executive functions and powers they should be able to change that on the backing of, of treasury bills with Bitcoin and other precious metals.

[00:28:05] Perianne Boring: That’s not something I’ve looked into in terms of how they would have to go about doing that. I would assume the Treasury has the authority to, I mean, they, they’re the ones that issue the treasury bills and bonds. So I would assume they would be able to do that and if he directs the treasury to do so, they would have the authority.

[00:28:19] Perianne Boring: But you know, I’m not sure if Congress would want to step in or not, but there’s a lot. There’s a significant amount of power that the executive office holds. So I do think if we had a pro Bitcoin president, they would be able to make a lot of very real changes in law that could create a more sustainable environment for people to build and invest and operate in the Bitcoin space that could allow the United States to be a lot more competitive jurisdiction for this important technology.

[00:28:49] Preston Pysh: Yeah, totally agree. You were heavily involved in this FASB update. Explain to people what this is, why it’s important, what it was like going through this to get this update changed. I’m kind of curious to hear everything you got.

[00:29:06] Perianne Boring: FASB for if we have any like CPAs or accounting nerds. This is the, this is the talk for you.

[00:29:12] Perianne Boring: This is it’s funny, this is, you know, when we started getting into, you know, what, what are all the policies that we can be involved in to help Bitcoin grow? I, I never really thought accounting would be such a front and center issue, but it really is. So FASB, that’s the Financial Accounting Standards Board.

[00:29:28] Perianne Boring: They’re required for setting the accounting standards for public and private companies in the United States. Unfortunately, the way that they have looked at Bitcoin and other digital assets is they require companies to treat it as an intangible, which means if, if your company puts Bitcoin on its balance sheet, If the value of the Bitcoin declines, you have to mark it down on your balance sheet, and then if it declines again, you have to keep marking it down.

[00:29:58] Perianne Boring: But if the value over time rises, you can’t mark it up. So it’s very punitive today to have Bitcoin on your balance sheet because Bitcoin is still quite volatile. This has been called the number one issue to the corporate adoption of Bitcoin by Michael Saylor. He has met and we have as well with a number of public companies that are very interested in putting Bitcoin on their balance sheet for treasury management purposes.

[00:30:27] Perianne Boring: Michael Saylor and MicroStrategy were really the pioneer of that concept. There’s a lot of other companies that are interested in following suit, but one of the reasons they have not is because it can be very impactful to the balance sheet. Into your financial statements. So we’ve petitioned the FASB to change the accounting treatment from an intangible to fair market value, which means you would mark the value of the Bitcoin of whatever value it is in the markets at that given time, which is a lot more accurate than treating it as an intangible.

[00:30:59] Perianne Boring: We started petitioning the FASB almost five years ago. It’s not just this particular issue of the intangible versus fair market value, but it’s also the lack of accounting standards. Today we do not have any accounting standards for digital assets, and that’s been a big problem for some companies, particularly public companies.

[00:31:20] Perianne Boring: This issue was first brought to us again five years ago. We had a company, it was a bitcoin mining company that wanted to go public in the United States, and they could not get an external auditor to audit their financial statements because there was no accounting standards. So we’ve been asking for these accounting standards for almost five years, and just this year, FASB announced that they are changing the jurisdiction.

[00:31:43] Perianne Boring: So they’re, they’re changing it to fair market value right now. That should be implemented within the next, before the end of the year. And they put on their agenda to develop the accounting standards for bitcoin. This does take time because the Financial Accounting Standards Board does not move very fast and they’re incredibly thorough, but they are in the process.

[00:32:04] Perianne Boring: And we’re hoping these will be done. The designation should be changed by the end of the year and the standards those could take up to a couple years, but hopefully it won’t take that long. We’ve really encouraged them to keep the scope as narrow as possible so we can just start getting standards out and we can expand the scope over time.

[00:32:20] Perianne Boring: This was really the result of a lot of engagement. So we were, we drove over 50 companies to contact the fass B and explain why this was a hindrance to their company. And it really wasn’t until we were able to get so many people to reach out directly and to express why this is a problem for their business, that we were able to get the treatment changed.

[00:32:42] Perianne Boring: So this is a really good win for Bitcoin that potentially can knock down a very big barrier for corporations to add Bitcoin to the balance sheet in a way that we can help grow the Bitcoin ecosystem in a whole new way.

[00:32:56] Preston Pysh: Just as an outsider as a person who likes to look at financial statements when I’m buying companies, like you’d look at MicroStrategy as an example.

[00:33:04] Preston Pysh: And when they’re making this mark every quarter, it’s not just on their balance sheet, it’s actually flowing over onto their income statement. And so for somebody who’s looking at a business and trying to value the the free cash flows of the business, they’re looking at that income statement and they’re like, holy moly, like this company’s got a negative $50 million loss, or whatever it might be, right?

[00:33:25] Preston Pysh: When you really dig in to understand what that quote unquote loss is, it’s just this thing that hasn’t even been sold that’s getting marked, and it’s presenting the company as if it’s losing money, when in fact, the company might have made 50 to a hundred million dollars on the last quarter or whatever it might be, right?

[00:33:42] Preston Pysh: And so it’s not representing reality, which is the whole point of accounting is trying to represent whether you got free cash flows or the the company’s making money. And yeah, I, it’s, it was so needed. It’s just, it’s insane.

[00:33:57] Perianne Boring: I, I think that was ultimately one of the strongest advocacy points that was made to the FASB of that.

[00:34:04] Perianne Boring: The financial statements no longer fully represent. Yes. And give the full picture of the company that you’re investing in. So companies like MicroStrategy were also publishing additional documents for investors to better understand their financials. Because the official financial statements didn’t tell the whole picture.

[00:34:23] Perianne Boring: And of course, FASB has an incentive to make sure that the financial statements are the main and the key documents that investors use as they’re reviewing the financials of companies. So I, that, that ended up being, I think, a really important part of the conversation. That really resonated with the board of saying, okay, if we’re, you know, if, if the integrity of the statements is now declining because we’re not taking action, that is a problem.

[00:34:48] Perianne Boring: And, and that, that definitely helped in getting them to move forward.

[00:34:52] Preston Pysh: You talk to a lot of representatives and elected officials, and I’m kind of curious your overall, not any individual person, but your overall impression of their understanding of any of this stuff, particularly on the mining side and the energy side.

[00:35:09] Preston Pysh: In that we’ve covered it extensively on this show for multiple years now that Bitcoin is actually very conducive to the, the environmental impacts in that it makes things better, that it’s this buyer of last resort they turn off when energy prices go high. It helps build new infrastructure and areas that you might not have.

[00:35:30] Preston Pysh: People that are willing to risk capital in order to put a power plant into whatever domain, right? So like all of these things, especially on the flaring side, I mean, we could go on and on. What is the general impression that you get from elected officials on the Hill as to understanding any of this technology and in particular the, the energy piece.

[00:35:51] Perianne Boring: The energy conversation is one that’s very important to us at the Chamber of Digital Commerce, we started a mining initiative just over two years ago with a specific energy policy focus to address the energy conversations related to Bitcoin, and that group has grown considerably just in two years.

[00:36:09] Perianne Boring: Today we represent over 20 Bitcoin mining companies, and those companies are generating over 50% of the hash rate on the Bitcoin network in the United States. So we have a huge interest in this topic, and it’s something we’ve invested in heavily and we’re investing more in every day. When we really started, we felt like Bitcoin was in this, you know, very contentious defensive posture where you have seen all these crazy kind of environmentalist arguments come out saying Bitcoin is bad for the environment.

[00:36:37] Perianne Boring: We really wanted to approach that from a policy perspective with more facts and data about how Bitcoin works and what are the energy policy considerations related, specific to Bitcoin. We’ve had tremendous success with this. I’ll tell you a story in the state of New York. So New York was the first state to pass an anti Bitcoin mining bill that happened last year.

[00:36:59] Perianne Boring: This bill is not technology neutral. It specifically targets proof of work mining and it restricts a certain type of Bitcoin mining in the state of New York. We opposed that bill because we felt like it was pushing the policy conversation in the wrong direction and we, it ultimately became law. So we did lose the, we lost the battle, but the, the war is still ongoing.

[00:37:26] Perianne Boring: We had put a whole team on the ground in the state of New York. That team is still there, and the whole goal was just educating every member that was going to vote on this bill and making sure that they were fully informed. There were a couple of offices that their minds were kind of made up and they were just going to be anti Bitcoin, and there was really no conversation or information or education that you could provide to change them.

[00:37:51] Perianne Boring: That group of people was maybe three people. It was not the majority. There were a handful of people that were big champions for Bitcoin, like Clyde Minne, who really did understand how Bitcoin worked, who really did understand why Bitcoin mining is important and how it can lead the transition to renewables.

[00:38:07] Perianne Boring: And they, they were champions for us and really making sure that the community got, you know, fair debate as this bill was being pushed through the legislative process. But the majority of the people are in the middle. These are people that they just haven’t had an opportunity to understand it, to look into it, and they’re not sure they’re undecided.

[00:38:26] Perianne Boring: And that’s really been the focus of our advocacy and our education work, is focus on the people in the middle and take the time to give them resources to inform them so they can make the best decision for their community. And we saw unbelievable support from that group of people. The people who were willing to sit down and have a conversation, who were willing to take the time to learn.

[00:38:51] Perianne Boring: So many of those people ended up moving to the champion side. We didn’t have anyone that we sat down ever sat down and go through the education series where they came out and went to the other side as. Full on critics and skeptics. So my analysis is that the critics and the skeptics are purely political in nature.

[00:39:11] Perianne Boring: ‘Because if you debate them, which a lot of times they will not debate their position, they can’t win them because their positions are not rooted in data or facts. They’re rooted in a political motive. But most policy makers, the mass majority of them, are there for the right reasons. They pride themselves in getting to the right answers and doing what’s best for their community.

[00:39:35] Perianne Boring: So we saw a, just a tremendous amount of people who ultimately became supporters. So when that bill came for a vote it was brought to the assembly floor in the state of New York. The assembly is the equivalent of the house. We had created such, you know, so much awareness and it both with educating people on the ground in Albany, but also we had thousands of people across the country call and write the state of New York and tell them, this is not good.

[00:40:03] Perianne Boring: This is why Bitcoin’s important, and urging them not to support the bill. It led to the largest debate or the, I’m sorry, the longest debate in the New York legislature in decades. And so every single member of the New York legislation, and it was all over the news because the phones were going off.

[00:40:22] Perianne Boring: We did a whole press campaign where we made sure every member of the press knew what was going on and was reporting on this. Every single member, while not all of them were fully informed, a lot of them had been through the education, but not everybody. All of them felt and walked away of like, I may not understand Bitcoin and Bitcoin mining, but I know it’s important because it was such a big event and I need to understand it.

[00:40:43] Perianne Boring: So even that, that bill was passed, we still have a team doing education in New York and that team has gotten considerable inquiries from all sorts of numbers coming out of the woodworks saying, yes, we want to learn. Because we don’t want to be caught flatfooted where we have to vote on something and we’re in the middle of a big fight and we don’t understand how to make the right decision.

[00:41:02] Perianne Boring: ‘Because we don’t understand what we’re working, you know, what we’re voting on. So education is our biggest tool. And you know, we’ve, we’ve seen big battles for Bitcoin mining in New York. We haven’t seen those on the federal level yet. There hasn’t been any big effort, real effort to pass a bill that would hurt Bitcoin mining in the United States.

[00:41:20] Perianne Boring: We hope that never happens, and that’s why we are on the ground every day with our policy, our energy policy experts educating everybody about Bitcoin mining. So it never gets to that point. And so far we’ve been able to hold that ground. And we’ve actually been able to turn the dialogue. We have multiple pieces of legislation that have been introduced that promote proof of work mining in the United States.

[00:41:45] Perianne Boring: The Blockchain Regulatory Clarity Act, which was introduced by Congressman Tom Emer that just passed out of a markup last week as well. We have made as a community very, very real progress on this anti-environmental kind of narrative towards Bitcoin, just through education and the narrative has really changed from Bitcoin’s bad to the environment, to Bitcoin can play a role in enhancing our energy security.

[00:42:13] Perianne Boring: And we need to study and understand that better, and that’s the conversation we’re having in Washington today.

[00:42:19] Preston Pysh: I think it’s huge that Larry Fink has changed his position from really kind of becoming a Bitcoin bull, and he was one of the biggest ESG people pumping the whole ESG thing. And now that he is a Bitcoin bull, I think it’s just sending a major message to the whole financial sector and anybody who’s like, well, hold on, that doesn’t, that doesn’t add up.

[00:42:43] Preston Pysh: I think that incongruency, that that’s taking place between him being an ESG person and him also being a Bitcoin bull is, is causing some people to ask more questions, I guess is where I’m going with that. But speaking of Larry Fink and the SEC and ETFs, what are your thoughts on where that’s potentially going?

[00:43:04] Preston Pysh: Have you heard anything? Do you have a, a bet one way or the other, whether this thing’s going to get approved? What, what’s your opinion, Perianne?

[00:43:12] Perianne Boring: So it’s a when not if there will be a spot Bitcoin ETF in the United States, it will happen. Unfortunately, this process is now being handled by the courts and the reason why is because the SEC has unjustifiably blocked every single attempt to bring a spot, Bitcoin ETF to market.

[00:43:32] Perianne Boring: The first time anyone tried to bring one was in 2013. The Winklevoss twins filed the very first bought Bitcoin, ETF. There’s been dozens of attempts over the past 10 years. Last year we did a big study. We looked at every single application and denial and we analyzed those in detail. And then we also interviewed over 30 market participants.

[00:43:55] Perianne Boring: That was the issuers plus other infrastructure providers in the ETF markets to really understand from a comprehensive perspective, like how has just what’s happened and why are we in in the place we are now. We documented in our paper, it’s called the Crypto Conundrum, and it’s available on our website.

[00:44:12] Perianne Boring: Anybody can review it. We documented how the SEC continues to move the goalpost of what the industry needs to provide in order to bring a spot, Bitcoin, ETF, to market. We also document how the SEC is holding Bitcoin to a completely different standard than other commodity ETF markets. We make the case that the SEC’s approach has been arbitrary and capricious because they teach, they treat other commodities differently to Bitcoin.

[00:44:43] Perianne Boring: So I would say this would, this is discriminating against Bitcoin. We didn’t say that in the paper. That’s just my personal opinion. This is arbitrary and capricious, and ultimately it’s because of political motives. Of course. Chairman Gensler admitted that himself when he testified in the Senate banking.

[00:45:02] Perianne Boring: He was asked by then, Senator Toomey, what is it going to take to bring a spot, Bitcoin, ETF, to market? He said, not until I have jurisdiction over the Bitcoin exchanges. Which really makes no sense because the SEC does not have jurisdiction over Bitcoin, in which he has also noted. So this is caught up unfortunately into, you know, really he’s holding Bitcoin hostage so he can get his way in getting as much jurisdiction as possible under the SEC, and that’s why that’s gone to the courts.

[00:45:32] Perianne Boring: We supported an amicus brief in the Grayscale’s case against the SEC. We agree. They’ve been arbitrary and capricious. And eventually one is going to get through and we hope it’s a, it’s soon because a spot Bitcoin ETF, will be a tremendous tool to bring more people, particularly retail investors into the Bitcoin community.

[00:45:55] Preston Pysh: What doesn’t make any sense to me is if you’re looking at Bitcoin as a commodity and you’re looking at maybe the oil market in contrast, it’s not like Ginsler has control over all the spot oil market in the world, or you name it, commodity market in the world. So the rationale or that response just truly doesn’t make any, any sense whatsoever that he has to have control of all spot.

[00:46:18] Preston Pysh: Like what? What was he meaning by that?

[00:46:21] Perianne Boring: Yeah, that’s absolutely right. So the 1934 Act is really what, how Congress designated, you know, how the SEC should operate and the SSEC is very clearly a disclosure regulator, meaning companies are required to make specific disclosures with respect to regulated products they’re going to bring to market.

[00:46:39] Perianne Boring: The SEC, you know, has authority over that process, but they are not supposed to pick the winners and the losers. That’s what merit regulators do. SEC is is very clearly defined as a disclosure regulator and by picking the winners and losers by saying, you know, this commodity ETF is okay, but that one is not.

[00:46:59] Perianne Boring: You are being a merit regulator, which means the SEC is operating outside of its statutory jurisdiction. And so we have made Congress aware of this. We have delivered our report to every single member office on Capitol Hill. We’ve given briefings to the financial services committee and the banking committee, and we have spurred an oversight response.

[00:47:17] Perianne Boring: You may have seen there’s been multiple members of Congress that have sent letters to Chairman Gary Gensler asking for more information about how they’ve come to these decisions because it’s Congress’s job to hold the SEC account and make sure they’re operating within their jurisdiction and they’re not.

[00:47:32] Perianne Boring: And so we’re helping Congress get to the bottom of that and to support bringing a spot Bitcoin ETF to market as soon as possible.

[00:47:39] Preston Pysh: When I look at traditional bankers and how well they lobby on the hill and how they are able to influence elected officials, and I compare and contrast that to the Bitcoin space, whether that’s exchanges or miners or whatever, I hope, I hope my impression is wrong, but it seems like they, the traditional finance has their act together and they are way more effective in working with elected officials than people from the Bitcoin space. A, do you agree with that? And B, if you do agree with that, like what can these companies and individuals and people do to get better at this?

[00:48:18] Perianne Boring: Well, the traditional financial services lobby is very sophisticated. These are companies that have been regulated for a very, very long time, so they’ve just had a lot more time to build these types of operations, and they invest heavily in their government affairs and, and, and lobby efforts. While you have, you know, all the banks and the financial services companies, they compete heavily in the market.

[00:48:40] Perianne Boring: One thing that, when it comes to dc, when it comes to talking, communicating with their regulators, they get on the same page. They coordinate very, very well, and they have a unified message. For Bitcoin. I mean, this is the whole reason why we started the Chamber of Digital Commerce. When we started in 2014 Bitcoin, the whole market was just Bitcoin.

[00:49:01] Perianne Boring: You had a couple different cryptocurrencies that were out there, but I. We were founded by very early Bitcoin pioneers, and those people are still a part of our organization today, and we’ve managed to bring in 200 other companies to be a part of our work, and we have built incredible consensus across the community.

[00:49:20] Perianne Boring: We have been incredibly effective in our policy work, not just from bringing oversight to the SEC and how it’s handling spot bitcoin ETFs, or getting the, the accounting issues fixed. We’ve gone head to head with the Treasury Department on self-hosted wallet rules. I dunno if you remember a couple of years ago, but there was a huge scare that treasury was going to require KYC of self-hosted wallet rules.

[00:49:43] Perianne Boring: We’ve threatened to sue the US Treasury for violations of the admitted Procedures Act, and they ultimately walked away from that. So, That was a very interesting time for us because we saw so many people come together and get organized as a community to address very, very real threats facing our community in doing so on the Chamber’s platform.

[00:50:07] Perianne Boring: So I think the bigger challenge, like when it comes to public policy and the Bitcoin space is that so many people in this space are just individuals. Where in the, like in the financial services space and the banking space, you know, the real stakeholders are companies, so you have this very real dichotomy between the users of the technology and some of them are very big investors versus the companies that are building infrastructure for this space.

[00:50:34] Perianne Boring: And, and we really strive to represent everybody. Every year we host an education day for the whole community. We invite anybody in the space to come to DC and go meet with their elective representatives and tell them about why they support this technology and why they should too. So we try to work everybody in, and we definitely encourage anybody who cares about the future of this technology to make sure you meet with your elective representatives.

[00:50:59] Perianne Boring: This could be your mayor, your state representative, your US representatives. Make sure they know who you are and they understand why Bitcoin is important to you. That way when you have these very real battles, at least you have some kind of touch point and they have some, you know, hopefully they start that education now.

[00:51:16] Perianne Boring: I do think this community has been very effective over the past 10 years. We have a lot more work to do, but you know, thanks to a lot of the amazing people who have supported us and who are a part of our work, we’ve been able to bring very real resources to the public policy process to make sure that Bitcoin’s voice is a part of the conversation in Washington.

[00:51:37] Preston Pysh: Perianne, fantastic conversation. I’ve really enjoyed learning all this. You are just a wealth of information. If people want to support the Chamber of Digital Commerce, if they want to learn more about you and what you’re doing give them a handoff to, to where they can find you.

[00:51:54] Perianne Boring: Thank you.

[00:51:55] Perianne Boring: Everything’s on our website. We’re very, very transparent. We publish all of our policy positions. All of our members are listed on our website. Our whole team is listed on our website. So we believe in operating in a, in a space of transparency. So there’s a ton of information on our website, digitalchamber.org.

[00:52:12] Perianne Boring: And if you want to support our efforts and make it either become a member of the chamber or just make a donation to support the work of our team, you can go to digital chamber.org/support. And then we’re also very active on Twitter, so you can get real time updates on Twitter at @DigitalChamber.

[00:52:28] Preston Pysh: Awesome.

[00:52:29] Preston Pysh: We’ll have links to all of that in the show notes, so if you guys want to find it easily, quickly, just go into the show notes, click the links. Perianne, thank you so much for making time today.

[00:52:39] Perianne Boring: Absolutely. Thank you so much, Preston. It’s great to be here.

[00:52:42] Preston Pysh: If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for, We Study Billionaires. The Bitcoin specific shows come out every Wednesday, and I’d love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. And it’s something that helps others find the interview in the search algorithm.

[00:53:06] Preston Pysh: So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening and I’ll catch you again next week.

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