Eleanor Terrett: Why CLARITY Is Likely To Happen This Year (Detailed Explanation)

Transcript

Just like the streets of Manhattan, I'm going to keep this quick. Over 70% of our viewers are not [music] subscribers. Yes, you. Every week, we interview some of the best entrepreneurs and investors in [music] the financial industry. The easiest way to support our channel is to hit the like and smash the subscribe button. Now, sit back, relax, and enjoy today's show. >> Welcome back to Crypto in America, live from Las Vegas. I'm your host, Eleanor Tourett. >> I was genuinely confused. [laughter] I was like, Robbie's lost it. All right, >> we've got Eleanor Tourett. This is the rollup. We are live from Las Vegas at the Rare Evo conference and we're going to be talking about clarity, clarity, and more clarity. Uh Eleanor is the woman in the know and uh she was a late

addition to the slate today. So, I don't have her on my running show, so we're just going to chop it up. Eleanor, how are you doing? >> Yeah, I'm great. Robbie, how are you? >> I'm good. I'm good. I'm uh I'm sort of oscillating between the nothing ever happens and so much is happening. Yeah. >> Because it feels like every day and night there is some new news around ethics language or yield or brca or whatever the acronism is. You're the clarity person. So are you in the nothing ever happens camp or the everything is happening all at once camp?

>> Yeah, it's everything that's happening all at once, but it feels like hurry up and wait, right? And there's this urgency to get it done. August recess starts next week, but there is very little to suggest that they have the votes to get it across the finish line at this point in time. But I keep saying it seems it is changing by the minute. It really is changing by the minute. It's a fluid situation. I feel like all I'm doing is, you know, checking my email, checking my text messages, checking Twitter to see what updates are coming through. Also, I'm sure you find this as well, but operating in Las Vegas, three hours behind the East Coast is very confusing when you're trying to keep up with real-time news, right? Um, >> but yeah, it is it is constantly changing and I think it is a case of

>> can they get to the 60 votes needed to invoke closure, which is, you know, something that may happen next week. I think there was some [snorts] hope originally that Senator Thun, leader Thun was going to perhaps uh call a vote this week. Doesn't look like that's going to happen now. They obviously had the Iran Russia sanctions bill that took priority and it looks like it's going to maybe go through maybe quicker than expected. It looks like they have the votes to to push that through. So, we could be looking at next week for So, we got to talk about Senate procedure, right? It's not just a quick, you know, let's vote on this and and it's kind of done, right? There's a lot of arcane Senate procedure that goes into this.

You know, you got to invoke Cloerure. Cloer requires 60 votes in order to uh go on to the next part of the process, which is the motion to proceed. After the motion to proceed, you start working on amendments and then you kind of got to start the process all over again. In between those, you've got 30 hours. So when you think about the timing, right? Next Friday, all the lawmakers go back to their constituencies and kind of go on summer recess, there's really very little time. So now we're talking about our lawmakers going to stay longer over recess and kind of try and get this done. I think there is a possibility there's a world in which if they get the votes to invoke Cloerure and they, you know, the Democrats are on board, the Republicans are on board, they could stay longer and get this bill done.

>> Is there a precedent for that extending past recess if they have something on the table? >> There is. I I can't off the top of my head give you an exact piece of legislation, but it has happened before for important pieces of legislation I believe like you know reconciliation, spending packages, that kind of thing. It's never happened for a crypto bill. We definitely can tell you that >> we're in a lot of first for everything. Exactly. Exactly. >> Okay. So, we've got to get first to this cloer vote and that is ultimately going to tell us whether or not we're going to proceed and then there's a couple steps from there. But it seems like vote would probably continue. There's this 30-hour timeline

and then there's things that happen afterwards. But if we can get some sort of movement in the next week, then we're on a much much greener pasture at even after recess. >> Yeah. So it's also going to be a bit of a forcing function. I think if leader Thun calls a vote and then it kind of it it forces those folks to come to the table on the issues that we keep hearing about, right? You know, you've got ethics going on. >> We saw the ethics proposal come out in the text last week. Go ahead. >> Let's take No, no, let please let's take these one by one, right? Because there's ethics, there's yield, there's several other provisions, but let's start with ethics. This is the thing that's been on everyone's mind. It's been the biggest holdup.

>> What is happening with ethics from the outside looking in? It seemed like they would prohibit people from participating in memecoins as fundraising mechanisms. Maybe you can just help articulate the ethics language and and tell us whether >> people on both sides of the aisle are satisfied with this language. >> Yeah. So, I'm going to pull up the exact text language so you know I can give your audience maximum value here. But what essentially is happening right now behind the scenes is that that text did come out last Wednesday. The Democrats perhaps not surprisingly came out against it because they say it's not satisfactory. They think it doesn't do enough to prevent President Trump from

profiting off of his crypto ventures. That really is sort of the the core issue here is President Trump has managed to make a lot of money while in office and you know the last 18 months he's made over a billion dollars >> and a lot of it has been from his memecoin from his involvement in World Liberty Financial which is his son's uh platform. >> Yep. All of this is very unprecedented as well. There's been no sort of um blueprint for this before. So, a lot of this ethics language that lawyers have been working on, you know, staffers, people with like law degrees, you know, a million law degrees have found very challenging because you're running into issues, you know, constitutional issues.

You're kind of like coming up with a bespoke framework here and then the the White House really has to be the one to sign off on it at the end of the day. The White House did send over a framework to Senate Republicans. Senate Republicans said, "This looks okay." And then when they presented to the Democrats, they said, "It does not go um as far as we want it to." Um the the headline, I suppose, I don't want to dig through my my Twitter to find the whole thing. >> Um is that, you know, it will prevent members of Congress, government officials, the president, the vice president, their spouses, members of Congress from issuing, sponsoring digital assets while in office. there is a sunset clause uh of 2029.

>> Yeah. >> So they cannot go beyond that. Basically they cannot enforce this beyond President Trump's presidency. Um it also uh it let me pull it up. >> I guess I guess [laughter] maybe the best question here is what is lacking from the ethics language to satisfy Democrats right? >> What is what is missing there? That that was probably the second thing I was going to say is that it requires government um it requires the DOJ to be able to sue to enforce ethics provision. What the Democrats really want here is state attorneys general. They want a role for these state AGs to be able to sue to enforce sue the DOJ to enforce lapses in ethics provisions. Right? The Republicans really don't want that.

President Trump, the White House really doesn't really don't want that. The the Democrats really do. And there's back and forth over like how that could look. Is it, you know, really feasible? That's sort of the the key tension point here. Senator Tom Tillis is leading those discussions with Senator Ruben Ggo from Arizona. There may be a breakthrough in the next couple days. We'll have to see. Um, they have to send that proposal though to the White House. Trump has to be okay with it. >> If he's not okay with it, there's no bill. Would you anticipate that, let's say Republicans compromise with the Democrats and they say, "Sure, we'll we'll let the Senate or excuse me, the the state attorney general sue the DOJ in order to enforce these rules." How many lawsuits are like, would you anticipate that as soon

as the rules go through, we would see this flurry of lawsuits from the state attorney generals given that if they are given that power? >> Potentially, yes. And you've seen a lot of state ages take it upon themselves to sue because they feel like they have that, you know, sort of like autonomous power, right? You look at Leticia James in in New York. Um she's sued a lot of crypto exchanges. She sued like individuals. Um she doesn't necessarily like crypto, it seems. She's come out with a letter in the last couple days saying that Clarity Act should not pass. Um, state AGs have, you know, taken on these, uh, lawsuits that the SEC dropped after the, uh, you know, with the advent of the Trump administration, uh, a state AG out, I forget which state it was, but, they took on the same lawsuit

against Coinbase that the SEC dropped. >> And, you know, so you see, um, you see initiatives like that and you have to kind of think, well, you know, if that if that doesn't, you know, that doesn't worry you, then this could potentially, you know, lead to lead to other things down the line. And I think Republican senators are worried that with the shoe on the other foot, you know, a Democrat administration potentially in the next couple years. How is that going to look for us? >> Yeah, absolutely. I mean, it kind of goes both ways cuz if there was a Democratic administration and now they start using this uh as a fundraising mechanism or start, you know, finding some loopholes, could be the Republican state attorney generals that go and sue.

So, >> Exactly. >> Yeah. We'll we'll see. We'll see how that plays out, but obviously we're sort of playing the game as it stands right now with the Republican administration and sort of putting rules together with this in place. Um >> the Democrats are playing a key role here though because they are the ones that need to >> bring up the the vote count to 60, right about you've got about 53 Republicans right now. They've got the leverage. You need about 10 Democrats to really get those those 60 votes. So if you don't have those, you don't have a bill either. >> I spoke to Rebecca Retig of Reddig, she's fantastic. Um, she was explaining how the Clarity Act is a win for Democrats. They just don't realize it. We've been operating in this

unregulated environment, this wild west of crypto for so long. Um, Democrats are, you know, everyone wants consumer protections, these sorts of things. But for some reason, you know, Democrats are opposed to actually regulating this industry because it looks like it would legitimize the industry. And especially while the president, who's a Republican president, has benefited so much and made so much money from it, they don't want to be seen as legitimizing the industry. I also saw, I don't know if you saw this, this is a fascinating watch because we're so zoomed in on the industry.

>> You know, John Oliver, he's got like this Tonight Show. Yeah. Did you see the segment that he did yesterday? >> Okay. What did you think about this? I watched the whole thing. I thought it was fascinating, especially after hearing from Rebecca Reddig who said that this was a bill that was going to be a win for Democrats. But then the narrative that is explained and uh you know put in front of the the the mainstream media, if you will, is that um Trump has made so much money from this from this industry. uh we should regulate the industry but the clarity act is not the way to do it. That was ultimately the conclusion that I think John Oliver was drawing and so I think that is sort of indicative of the narrative at at large at the moment. Is that the consensus view right now from

the outside looking in and do you think that's a fair assessment of of the clarity act? >> So I didn't watch the whole segment. I did watch a clip of it that came up on my X feed and yeah I did see the part where he said you know the clarity act is not the way to do this. I do think there's a lot of PTSD I will say from FTX especially among Democrats who took money from Sam Bankman Freed >> gave time to Sam Bangman Freed who ended up being you know what he was and I think a lot of folks on the hill have not recovered from that and they see crypto as synonymous with FTX and with SPF and I think there's a world where they just can't see beyond that you know no matter what the industry does to maybe redeem itself to kind of you know

look beyond that time and grow and mature it's just not going to change a lot of these a lot of these folks minds. And I don't think it's just Democrats. I think there's some Republicans who also feel the same way. But to Rebecca's point, I think, you know, there are in this bill and as someone who's, you know, gone through the latest text, you know, there are things in there that would prevent another FTX. So, while Democrats can say, you know, we don't want this bill to enable crypto billionaires, right? That's a that's a common line. I think John Oliver might have even brought that up. And Ben McKenzie, the the OC actor, has been on the hill talking about this as well, saying, you know, do we really want to enable crypto billionaires to keep, you know, making more money than you. And then you know that there's that

but then there's also the world where you pass the Clarity Act and there are bankruptcy remoteness protections in there where if you know God forbid a crypto business or an exchange does fail and then customers actually get the same rights that they would if a traditional exchange or a traditional financial platform were to go into bankruptcy. So there are good things in the bill. There are things in the bill that people are not going to agree on. And you know it's unfortunately crypto has become a partisan issue. I think it is for all the for all the you know I won't say propaganda for all the messaging out there that crypto is a >> bipartisan issue >> I think it it parts of it are and I think it's gotten better but I think it will always be a partisan issue and I think FTX played a big role in that

>> yeah absolutely and it's indicative I mean it was totally unclaimed land uncharted territory it just so happened that Trump and by Trump doing it representing the Republicans kind of claimed doicile and dominion over this uncharted territory. It was totally fair game for so long. Democrats could have said, "Hey, there's a lot of things that we like about this industry. We like that it's fair market access. We like that it democratizes access over the entire world." There could have been a lot of things that the Democrats ended up, you know, supporting about this industry, but they decided to just sort of sit back on their heels. Elizabeth Warren was, you know, kind of the the the, you know, staunch, you know, opponent to crypto for so long. And that has now put us in the position where you know Republicans support the industry,

Democrats seem to not. But these things can easily change. Uh they are sort of path dependent, but they can easily change. Um the last thing I want to I want to chat with you about here is uh the the language that came out last night. >> Yeah. >> BCSA, >> BRCA, >> BRCA, >> the Blockchain Regulatory Certainty Act. >> Blockchain Regulatory Certainty Act. Um tell us about this. Why is it so important? We've sort of moved from the yield issue to the ethics issue now to the BRCA as like the highlight of what is holding this up. Where are we at on this? Can we reach consensus?

>> Yeah. So, I've been told that BRCA is one of about three verticals that Democrats really care about and really have been the core of the issues that we've been reporting on, talking about for months now, right? You got ethics, you got BRCA, and you got sort of um conflicts of interest with exchange verticals, that kind of thing. with the BRCA, blockchain regulatory certainty act. Tom Emmer, uh the House Majority Whip, came up with it. It's his bill technically. Um it basically assures blockchain developers, software developers that they will not have to be criminally liable if they publish code.

So if you know you you create a platform, a protocol and you know someone from North Korea comes in and uses it and launderers money, then the writers of that code are not going to be hauled up in front of court and sent to jail. >> Similar to what's going on with Roman storm, what happened to the uh the Bitcoin the Samurai wallet developers. >> A lot of uh activity, a lot of uh businesses have gone offshore because of that. That's what Tom Emmer says and that's why he created the blockchain regulatory certainty act. It is contentious because crypto really wants those protections in there. It's sort of a non-negotiable for the crypto industry. Law enforcement has been very vocal that they want to see changes to it because they think it it uh rolls back some of those um abilities for

prosecutors to be able to go after bad actors and law enforcement to really be able to kind of go after um onchain crime. You've seen a lot of the police groups come out in recent days supporting the bill as a whole. Even with the BRCA uh in there, [clears throat] it is now mostly the the prosecutors um who have issue with it. And what you saw last night was Katherryn Cortez Masto. She's a Democratic senator from Nevada. >> She's been kind of key to this whole negotiation uh with BRCA put out proposed changes that that she said in the statement was sort of the culmination of talks with the White House, with the Treasury Department, with the uh the attorneys groups. Um and actually you saw White House and Treasury come out and say, you know, this is nothing to do with us. We did

not agree to this language. what we are trying to achieve on BRCA is not what you proposed. It's far from it in fact. And you know what you proposed is is not negotiable. It's uh it's going to damage um software developers futures here. It's going to you know they came out strongly against it. >> Yeah. >> And so what you now have is you know Katherine Cortez Masto has been a key um sort of get for um you know she's a key vote. Um she you know it's going to be interesting to see like how this plays out really. Um, and you know, as as much as ethics is a big issue, BRCA is is also a very big issue. So, it's it's still in flux. We'll see what happens.

But that that happened last night. It was kind of a big uh big drama. >> Yeah. Yeah. [laughter] This is now taking the spotlight as the most contentious issue. Um, and it seems >> staking and um staking uh stable coins is also, you know, in there as well. Uh the compromise banks are coming out against it. They always they have been uh credit unions as well. They are mounting that uh that front against it. Cody Carbone told me on stage today you could see technical changes around the Tisalo bricks compromise. >> Cody Carbone is going to join us in about an hour. So we're going to hear directly from Cody. >> Yeah.

>> Eleanor, what is the probability here just >> Oh, I hate giving probabilities. >> That's just what the people want. I'll tell you here. I'll give you an anchor a little uh over under here. Uh the prediction markets which don't have a ton of volume here um are putting this at a 30% chance. It was at 37% most of this week and last week but >> passing in 2026. >> Passing in 2026. >> Yeah. >> At a 30% chance. Over under. You don't have to give specific predictions, but over under 30% chance of this thing going through this year.

>> Can you explain over under to me? [laughter] >> Do you think it's over 30% chance or under 30% chance >> of passing this year? >> Yeah, >> I think over. >> Oh. All right, guys. You heard it here first. That's a bullish word on the probability of the Clarity Act happening this year. >> Very low. And then because you're hearing, you know, maybe there's some strategy to to get it done in September. I mean, for all the, you know, for all the the deadlines that have been missed. And >> I >> there's always the situations and the expectations, they always sort of seem to be in flux and they always change.

And uh, you know, we'll just have to see. It's never done until it's done, I feel like. and someone who's been covering this uh you know from the beginning. Um you know I I like I said it's not over till it's over. >> Yeah. Awesome. Eleanor, thanks so much. Absolute pleasure. You're doing incredible work in DC reporting uh on the most important developments in crypto.