Crypto Regulation: Policy, Innovation, and Stablecoins Explained

Welcome everyone to the future of finance podcast here at the Wharton School. My name is Itai Goldstein. I'm a

School. My name is Itai Goldstein. I'm a

professor in the finance department and currently the chair of the finance department and we are focusing the second season of the future of finance

uh podcast on cryptocurrencies uh digital assets uh decentralized finance and everything related to that. These

are new innovations that are promising to change the world of finance, the way that we trade, the way that we pay uh and the financial system uh more

generally. And an important part of the

generally. And an important part of the story of uh cryptocurrencies and digital assets is certainly regulation. Some

people will say that we have too much uh regulation or regulatory uncertainty and that this is stifling innovation in this space and others will say that we need

regulation and maybe we need even more regulation because there are many threats potential fraud uh and potential risk for uh the system as a whole uh

what we think of as systemic risk. So

those are issues that we want to discuss here today in uh this uh episode of the second uh season. Uh and we have two

perfect guests uh to talk about uh these uh these issues. Uh one is uh Jessica Waktail who is the Dr. Bruce I Jacobs

Professor of Quantitative Finance here at the Wharton School. So I've been here with Jessica over the last 20 years or so. I think she arrived one year before

so. I think she arrived one year before me. uh and uh she uh thought a lot about

me. uh and uh she uh thought a lot about the regulatory aspects of uh digital assets and cryptocurrency because she just came back from serving

as the chief economist at the SEC, the Securities and Exchange uh Commission.

Uh welcome uh Jessica.

Thanks so much for having me. I'm happy

to be here. And then the second guest that we have is uh Tim Msad who is currently senior fellow at the Kennedy School of Government at Harvard

University. Uh he also has a vast

University. Uh he also has a vast experience in uh policy and thought a lot about uh crypto and digital assets among other things. He is the former

chairman of the US Commodity Futures Trading Commission, the CFTC and he has been participating in many of our events here at the Whartalon Initiative on Financial Policy and

Regulation uh Wiffer where we have been thinking quite a bit about the regulatory aspects of uh crypto and digital assets. Hello Tim.

digital assets. Hello Tim.

Hi, thank you for having me.

So with this introduction, let's uh dive right in. There's a lot uh to discuss

right in. There's a lot uh to discuss and I want to start from uh the basics.

Uh we talk a lot about regulation in the space of digital assets. Uh but this is not disconnected from broader financial regulation and regulation that we have

in other markets and other financial institutions. So I want to take a step

institutions. So I want to take a step back and understand a little better what is potentially special about uh digital

assets and why is regulation of digital assets potentially different uh than regulation in other areas of the financial system. Uh so Jessica maybe

financial system. Uh so Jessica maybe you can start with that.

Sure. Um happy to start. Uh so I think there's a couple things to be considered. One is that the original

considered. One is that the original vision of uh cryptocurrency uh going back to you know the white paper um uh the Bitcoin white paper is one of

decentralization and that's going to create a tension with our regulatory system and moving

more towards the present um this is a situation where securities and non-securities are inseparable

and just to put it in non um digital asset terms. We don't normally use gold to say buy Apple stock on the New York

Stock Exchange. We don't really know how

Stock Exchange. We don't really know how that might work and that's the situation that we have with crypto platforms.

I think another challenge is that the crypto ecosystem developed outside of the regulatory system and that's created a

bit of a chicken and egg problem. So in

the traditional financial system we have securities that trade on registered exchanges. That's a very important part.

exchanges. That's a very important part.

It's not the whole financial system by any means, but it's a very important part of how um institutions and retail interact with the financial system, but

what do you do when both the tokens, which are kind of like the equities here, and the platforms are unregistered? You don't you need one to

unregistered? You don't you need one to go first, but neither can operate while the other is still unregistered. So I so I think that those um decentralization

the intertwined notion of securities and non-securities and the chicken and egg problem are three challenges uh that would need to be overcome.

Very good. Tim, do you want to weigh in?

Sure. Well, I would first say the the problem is that we speak of digital assets as if it's an asset class and it isn't. It's a technology. We're talking

isn't. It's a technology. We're talking

about blockchain and tokenization technologies which can be used in all sorts of ways. You can have tokenization of securities of stocks and bonds and

potentially other real world assets or other financial instruments. You can

have network tokens of blockchains which is what Bitcoin and ETH are. You can

have tokens that are really for consumption as in games. You can have meme coins. you're going to have

meme coins. you're going to have collectibles. So, we can't really

collectibles. So, we can't really regulate digital assets per se. What we

need to do in regulation is really three things. One is we have to address the

things. One is we have to address the gap we have in the United States with respect to regulation which is that in

so far as some tokens aren't securities but are financial instruments whether you want to call them commodities or something like commodities we don't have

a federal regulator for that spot market and that's been something that lots of people have recognized but we haven't done anything about it. Secondly, we do

need greater clarity in when is a token a security, when is it not a security.

And as Jessica said, that's, you know, there's um a lot of gray areas to that because tokens can change over time, if

you will. Um and the third thing we need

you will. Um and the third thing we need to do is make sure that the rules we have about how to use this technology

are neutral or that is the rules we have for things like recordkeeping, custody, clearance and settlement should be technologically neutral. They

shouldn't be inhibiting use of this technology but I don't think they should be promoting it per se either uh also let the market decide that.

So I think what both of you are saying is pointing to one friction that has been on the minds of many people who are observing this. uh I would say maybe

observing this. uh I would say maybe more generally with financial regulation but in particular when it comes to uh digital assets and this is the potential

uh fragmentation the fact that uh it is not clear who should regulate uh what and then you have some tensions you have different rules coming from different uh

uh agencies uh and that creates even uh greater uncertainty. So is that a a bug

greater uncertainty. So is that a a bug that we can uh overcome or is that just a feature of the system that we are dealing with?

It certainly has been a cause of some of the difficulty in addressing this. You

know, we have two market regulators, the Securities and Exchange Commission and the Commodity Futures Trading Commission. And when you have a

Commission. And when you have a technology that allows for the development of innovative products that

kind of cut across those agencies jurisdictional lines that becomes very challenging. If for example we had a

challenging. If for example we had a unitary regulator as some jurisdictions do it be it is easier to address financial innovations because you say

all right my my jurisdiction covers all financial instruments. I see kind of

financial instruments. I see kind of this new technology I'm going to address that. So we have been saddled with that.

that. So we have been saddled with that.

I do think that that's one of the reasons when we think about the solution about how to regulate we actually need to bring the agencies closer together. A

lot of people say well what we need is very clear lines of jurisdiction. What

the CFTC regulates and what the SEC regulates and that all sounds good but in fact there are gray areas here. You

can have tokens which kind of seem to be securities at first but then can become commodities effectively because they are decentralized. So and again you want

decentralized. So and again you want rules on how to use this technology which are reasonably consistent between the two agencies. So I think the

solution lies in bringing the agencies closer together in various ways. You don't have to merge

various ways. You don't have to merge them. uh that's been suggested many

them. uh that's been suggested many times before and we've never wanted to take that step, but we do have to create ways that they're going to work together on on these issues.

So Jessica, what is your take on fragmentation? Uh obviously you just

fragmentation? Uh obviously you just experienced some of it in DC. I don't

know how much you want to Sure. Well, I I'm I I'll I'll say a

Sure. Well, I I'm I I'll I'll say a couple things and I'll um I think uh um Tim uh said it well, which is um I I've

I don't believe that bringing that creating one financial regulator actually is the answer here, but this is clearly something that the CFTC and the

SEC uh would will have to and actually do currently work together on. Um and

that's something that both agencies know how to do. And it does it does you know at the margin create some frictions and perhaps slows them things down a little

bit. But I I believe in my experience

bit. But I I believe in my experience the extent to which that happens is somewhat overstated.

And I think that fragmentation itself is not really the problem that we have. Um

I mean I think the the issue is that some of these problems are difficult problems and it's not obvious what the

solutions are. uh but I think that the

solutions are. uh but I think that the many issues actually are similar to the types of questions that the SEC has worked on for many decades. Um so I I

generally think both here and in other settings that the you know fragmentation of the US financial market story is a little overstated. I think that there's

little overstated. I think that there's strengths to our system visav other jurisdictions. You know, for one thing,

jurisdictions. You know, for one thing, we have a strong and experienced market regulator and not all jurisdictions have that. Um, and I think that's been very

that. Um, and I think that's been very helpful for the development of financial markets. And I think having the CFTC and

markets. And I think having the CFTC and the SEC separate has allowed for experimentation also. So in some cases

experimentation also. So in some cases um you know for some sets of rules and this is outside of crypto uh the CFTC has gone first and the SEC has been able to see how things have worked out and

learn from that and vice versa. So so I think that there's actually some real benefits to our system.

Yeah, I you know I I would agree with a lot of that. I don't mean to suggest that fragmentation is the main problem here. Um and you know I do think there

here. Um and you know I do think there are benefits to the fact that we've had two regulators. Um,

two regulators. Um, but I do think when Congress thinks about what to do here, um, it's not just going to be a simple process of writing

legislation that says, "Okay, this is a digital commodity. Uh, CFTC go regulate

digital commodity. Uh, CFTC go regulate that because um those are, you know, those are difficult questions and I just think we want the two agencies working together and I agree they're they're

capable of that um particularly when they're led by chairs who have that mentality. So one of the biggest

mentality. So one of the biggest questions when it comes to regulation and it's not directly what we talked about but follows up on that is uh the idea that because of regulation and

because of regulatory uncertainty we don't see uh as much innovation in the space of digital assets and decentralized finance as we would have

hoped. And uh proponents of this theory

hoped. And uh proponents of this theory would say that here we have a set of new technologies that uh promise to revolutionize the the way we do finance

and monetary economics. Um but then because of all these uh uh regulations and regulatory uncertainty and all

potential political issues um there is just not enough uh innovation and we are uh falling behind. Uh so what what is your take on that? I think it's

overblown. Uh I, you know, the industry

overblown. Uh I, you know, the industry loves to say this. Uh and sure, you know, you could certainly make the argument that gee, if we had regulatory

clarity, uh people could, you know, more easily launch products, raise money, they wouldn't even consider doing something abroad and so forth. But in

the grand scheme of things, I think it's an overblown argument. Um I don't think uh you know that's what's preventing um this technology from displacing JP

Morgan or something like that you know which sometimes uh crypto enthusiasts love to say oh this is really going to transform finance. I think it's an

transform finance. I think it's an important technology. I think we will

important technology. I think we will see it used in a lot of ways. I think

we're getting there. I don't think we're as far behind other jurisdictions as uh some would have.

Jessica, do you agree with that? Uh yes,

I do. Um I I'll add a couple points. One

is that um the sort of broad crypto space developed for years uh really without this it developed to be actually quite

large and significant I would say um relative to where it started without the regulatory certainty. Um I I think it's

regulatory certainty. Um I I think it's possible that the regulatory uncertainty has impeded some of the traditional

financial players from having as large a role in crypto as they might otherwise.

But the fact is crypto has generally been a retail and sort of decentralized driven business anyways. So um I I do

agree that this is a overblown argument.

That said, I mean, I think regulatory clarity would be quite helpful.

So, going a little deeper into why we need regulation to begin with, I would say one issue that is general in in finance uh but seems to be particularly

prevalent when it comes to uh digital assets is fraud. And we have seen uh I would say a fair share of of fraud uh

probably more than uh was anticipated uh initially and and this has uh caused a lot of concern and and led to a call for more uh regulation. Um what what do you

think about that? So why do we see so much fraud in this uh space and is there a clear way forward when we can uh avoid it or is that just going to be part of

the system? Well, I think we've seen a

the system? Well, I think we've seen a lot of fraud and manipulation for and other problems for two reasons. Um, one

is it is an unregulated sector largely at least the um what we what we often call the spot market in tokens that are not securities and of course the crypto

industry is has argued that basically most security most tokens are not securities. Um that's unregulated number

securities. Um that's unregulated number one and it's also um easy to enter. uh

you can be you know 18 or 20 year years old and in college and create a token or create an app and launch that and who knows you know you might make a lot of

money at it. Um but you also therefore have a lot of people uh as you do in any kind of um area of financial activity

who are looking to make a quick buck and often not through the most uh ethical means. And so you have pump and dump

means. And so you have pump and dump schemes. You have a lot of wash trading

schemes. You have a lot of wash trading on platforms. Wash trading is where people essentially trade with themselves to push up the price uh of something or

to make it appear there's more interest than there is. We saw with the whole ICO phenomenon of people selling tokens without good disclosure. Um so you know

it's not surprising uh that we've had all this. Um and again it's the reason

all this. Um and again it's the reason why we need a comprehensive sort of regulatory approach to it.

Yeah, I would say that it's surprising from the point of view of you know our current markets some of the most visible parts do not appear to be

rife with with fraud. Now, that's I think in part, you know, we've never done the experiment, but I think in large part because of our um securities

regime going back to the 30s. Um but the point is people forget that we've got that. It becomes in the background. It's

that. It becomes in the background. It's

like, you know, part of the air we breathe. It's like, you know, the fish

breathe. It's like, you know, the fish in the water. And so we forget that that's protecting us from what would otherwise be probably rampant fraud in

traditional securities as well. So

crypto developed and it didn't really have this this backing. Um so I'm actually not sure it's more prevalent.

Um maybe it is. We don't have the data.

Um part of the data is that we don't have the part of the issue is that we don't have the regulations. Um but you know there's plenty of fraud in the um sort of dark corners of the equity

markets too with very small um equity securities that don't trade on exchanges.

And the other side of uh regulation, the other reason why we have regulation in financial markets more generally is the concern about systemic risk. Uh and the

idea that if there is a problem in one type of asset, one type of institution, this is going to spill over affecting the rest of the financial system and uh ultimately also the real economy. uh

this has been mentioned uh in the context of uh cryptocurrencies and digital assets but it's not clear that this is at this point big enough uh to

worry us. Uh what is your take on that?

worry us. Uh what is your take on that?

I'll just quickly jump in and say I I don't think crypto at the present time is large enough to to pose a systemic risk. I tend to think that the nature of

risk. I tend to think that the nature of some of these contracts is not such that it would normally tend itself to systemic risk because they're more

equity type contracts. Um but of course stable coins which perhaps we'll talk about are big exception because those are demand deposit contracts like like a

deposit in a bank account and so um in some sense you could say are asking for trouble.

Yeah, I I I would agree with that. Um

the only thing I would add though is that you know when we talk about systemic risk it's um it's hard to identify where that's going to come

from. Uh you know and and you can

from. Uh you know and and you can imagine scenarios where because of the overall context something happens in crypto it's gotten a little bigger and

maybe the overall environment uh has some other factors that are contributing to to anxiety or to to uh concern you know. So it's it's the proverbial uh

you know. So it's it's the proverbial uh you know thing of the butterfly flapping its wings in Brazil or whatever. Um but

I would agree that today the sector is is not so large that it would be my top concern for systemic risk. That's for

sure.

Right. But you did mention uh stable coin uh Jessica and uh I would say this is potentially an area where we might see it because the whole point of stable

coin is to offer stability and then you have the usual problem where uh you commit to certain payments but uh the underlying assets might not support it and this might generate a run. I should

say we have another episode where we talk in detail about uh stable coin and go into some of these uh issues. Uh so

that that might be one place where we might uh fear about uh systemic risk and and that is a good segment to thinking a bit more about uh stable coin because if

we are focusing on regulation I would say stable coin is one area where uh there is a clearer path for uh regulation and as we speak the there is

a bill that is making its way through uh congress. Um so what is your take on uh

congress. Um so what is your take on uh stable coin uh the the regulatory aspects of it where we are and are we headed in the right direction?

Um happy to take that one first. I think

we're headed in the right direction. Uh

as you mentioned while the at the time we're recording this the Genius Act is uh coming up uh soon for a vote in the

House. it may very well uh have gone to

House. it may very well uh have gone to the president by the time this is aired.

The Genius Act creates a basic framework for the regulation of stable coins and I think it gets um some things right. Uh

it's good on uh some of the basic credential requirements that we would want to see. I mean a stable coin is a token whose value is pegged uh to the

dollar to another fiat currency or or to another sort of asset. Of course, there can be stable coins that are tied to other crypto tokens. I'm just talking about the ones that are tied to uh fiat

currencies.

And so, the legislation that is currently being considered, a stable coin issuer, you know, would be required to have full reserves backing the stable coins that it's issued, meaning for

every token, you have to hold that dollar. You have to conservatively

dollar. You have to conservatively invest it. There are limitations on the

invest it. There are limitations on the activities of stable coin issuers, and that's all good. Um, I do think there are some weaknesses in the legislation.

We can get into those if you want. Um,

but you know, the real question is will this market grow significantly and we'll have to see. Um, there are a lot of elements to payments and why people

choose certain payment instruments and the big volume of payments of course is not retail, it's businessto business.

And will we see uh large use of stable coins among businesses? Um that's not clear. We can get into that uh if you

clear. We can get into that uh if you like.

Yeah. So Jessica, I I'll give you an opportunity to uh weigh in.

Sure. And I I would agree. I think this is directionally right. Um I think anything and uh it you described it well. anything with a structure like a

well. anything with a structure like a stable coin is uh is going to have some kind of run risk and I I think that can be mitigated by the certain safeguards

that um you know Congress is putting in about restrictions about what they can hold and the the requirements for audits. I'll add that there is this

audits. I'll add that there is this question here about how stable coins relate to the vast money market fund

industry. Um, there's this question

industry. Um, there's this question about whether stable coins pay interest.

Um, I'm not an attorney. My

understanding is that this this is still a little bit of a gray area. Um,

people might want a stable coin that pays interest. Um, but currently it's,

pays interest. Um, but currently it's, you know, money market funds. This is

how they differentiate themselves. And

the more stable coins come to look like money market funds, the more we might start to see the tendency for regulatory arbitrage versus the money market fund regime. And that's probably an area

regime. And that's probably an area where we don't want a race to the bottom.

Yeah. And we're already seeing tokenized money market funds. And I agree there are going to be a lot of um participants

who want an interestbearing um tokenized instrument. I think, you know, for where

instrument. I think, you know, for where we are, I think it made sense to stay in the legislation as it currently does that stable coins can't pay interest, but there's clearly going to be the

development of tokenized products that pay interest. Now, whether those are

pay interest. Now, whether those are more accountbased in some way, you know, tokenized deposits or deposit tokens um by banks, uh that's another uh

innovation that we may very well see and not in in the not too distant future.

So, how big do you think this sector is going to be going forward? You started

talking about that.

I'll let Jessica make the prediction.

I I really think this is just this is just impossible to say. Um I I really think it just depends on on too many

things. um and in part on whether some

things. um and in part on whether some of the more optimistic claims for the crypto sector as a whole bear out because that's obviously one of the

possible uses for stable coins.

Yeah. And when you when you think about the use cases, I mean, clearly people who are in countries with weak currencies or high inflation, who want

access to the dollar and who can't get a US dollar bank account might turn to stable coins, and they are um clearly to the extent we're talking about trading

tokenized assets on chain, you need onchain cash. That's what a stable coin

onchain cash. That's what a stable coin is. Though again you might see tokenized

is. Though again you might see tokenized money market funds used for that as well. So if you see tokenization of

well. So if you see tokenization of other products and trading on chain that use case could grow. But again when you look at sort of businessto business

payments that now use you know chips or the fed wire are they going to suddenly move to stable coins? There's a lot of issues there and uh that's why it's so

hard to predict this market.

Right. So going back to the uh topic of uh regulation uh I think we had a good discussion on what are the reasons for regulation what's good about the current

framework what's not so good what could be improved uh one argument that often comes up is that the US is falling behind other jurisdictions and Europe is

often mentioned as uh you know a system where uh they acted uh faster and they have a more uniform approach there is

uh Mika uh framework uh that that is uh supposed to uh capture the the whole system of uh digital assets and stable

coins and so on. Um so what what is your take on uh the issue of uh the US versus other places and what might explain why

the US has not done so well on this? I

don't think we're as far behind as uh some crypto enthusiasts might uh lead you to believe. Yes, Europe has imple has passed ma but they still have to

implement ma and implementation of ma involves the 27 member countries in many cases writing rules. Uh that is a

challenging process. I just held a 4-day

challenging process. I just held a 4-day training session at Harvard for regulators around the world on digital assets and a lot of them were saying no we still face a lot of the challenges

that the US faces and even with Mika for example it regulates things that aren't financial instruments. Uh so they actually have

instruments. Uh so they actually have even in their law the similar challenges that we have on when is something a security, when is it not a security, if

it's not a security, what is it? Um so

you know we're getting there. Um it may not be as fast as uh as we'd like. Uh

clearly the Trump administration wants to move forward. Uh Congress uh wants to move forward. Um so I don't think this

move forward. Um so I don't think this is uh you know as big a problem as the industry might like you to believe but I do want to see us you know develop a

regulatory framework so that we can see how this tech how this technology can be used.

Uh Jessica I mean I'll I'll say that the the commission has indicated um that people should come in and discuss their

product. So I I I think that the case

product. So I I I think that the case that we are currently impeding innovation is is pretty weak. Um and the

US just has an enormous financial market just in absolute as well as in relative terms. So I don't I don't see evidence that we've fallen behind here. Um though

I do think that it's going to be valuable to solve some of the problems that we've been discussing. uh that's

that's going to be helpful but um I I think that there's there's a commitment to doing so and so that's that's really I think what people need in terms of you

know putting these ideas forward again I don't think that the barrier at this point is not a regulatory one okay so as we are coming close to the

end of this episode I would like to maybe offer you a chance to kind of summarize your uh view on future regulation and what you would like to to

see going forward. So maybe in in you know 30 seconds or so uh if you were to envision a regulatory framework that uh

will uh take care of this uh space of digital assets and have us go into a world of innovation and the future of finance if you want. Uh what do you

think it should include and how do you think it should look like?

Tim maybe you can start.

Sure. Well, um, the first thing I would say is while this is a very important technology, might be used in lots of ways,

we want to be sure that the regulation we develop does not undermine our existing markets. The securities and

existing markets. The securities and derivatives markets that we have and and the uh equity and debt markets that we have are so important to the to the

world, not just to the US economy.

They're very very large $120 trillion market cap uh securities alone. Um and

when I say undermine, what I mean is we don't want to rewrite the securities laws in ways that undermine a framework that's been developed very thoughtfully and

carefully over a hundred years. Uh we

don't need to create, you know, a lot of exceptions uh to promote the technology.

We want techn technologically neutral rules but you know again uh we need to be careful. So the three things we need

be careful. So the three things we need to do are I think one create a framework for regulation for what we typically

call the spot market in digital tokens that are not securities to the extent they're financial instruments. Number

two, provide greater clarity as to how we regulate tokens, whether they should be regulated as securities or not. And

you know, the SEC is working on that today. And that's not a something that

today. And that's not a something that can be easily defined in a statute in a couple of paragraphs because it depends on does the token represent an interest

in the business, is there a capital raising going on, how might the token change over time, things like that. And

the third thing we need to do is again make sure our rules on things like how you tokenize assets and how you keep

records and how you custody uh tokens and how clearance and settlement works.

We want to make sure our rules work for this technology. Again, they shouldn't

this technology. Again, they shouldn't be promoting it excessively, but they shouldn't be inhibiting it either.

Jessica.

Um yeah, I I agree that is a that is a great vision and that that is absolutely where where we want to get. Um uh I will just bring up the um the case of the

exchange traded fund. So that was a case where there was an innovation and it it solved a very real problem and now these are very a very important part of our financial system and this is a

completely different situation but I think it's it is similar in the sense that we've seen an innovation and it exists to solve problems that actually people have and they like it for that

reason. So a path towards bringing this

reason. So a path towards bringing this into the regulatory system I think is key and um I think that the the three

elements which probably will involve some kind of temporary relief as is what's happened with ETFs um that that will probably be part of it. Um also you

know the the sort of chicken and egg problem. Um and I think if if these

problem. Um and I think if if these three elements are solved I think we'll be on our way. One of them is decentralization. Um, one is uh the the

decentralization. Um, one is uh the the the fact that non-securities and securities are going to be traded together. That ties very intimately into

together. That ties very intimately into this question of the fact that um the CFTC currently does not have the authority to act as a regulator in the

same sense as the SEC over um nonsecurity markets. Um and uh lastly,

nonsecurity markets. Um and uh lastly, you know, what do you do about the fact that these are um you know, the unregistered trading on nonregistered

ex platforms? Um so I think solving

ex platforms? Um so I think solving those three pieces which will involve some tricky line drawing at least in the short run. Um that's what I would like

short run. Um that's what I would like to see.

Yeah. Yeah, and if I could just add maybe a word on the decentralization point um because I agree that is one of the aspects of the technology that is

quite novel quite interesting and the question though is what do we really mean by decentralization and what is truly decentralized finance? Um clearly

if you have software protocol that operates autonomously that people can use on their own without going through an intermediary you would call that decentralized.

But what we actually see in the world is a lot of what even commissioner Hester Pur who's quite sympathetic to the crypto industry recently called Dino decentralized and name only. uh because

you have that protocol but then you have a business that's facilitating how people use it or a business that's administering or maintaining that and

and that's where it's important to I think take the position that look decentralization doesn't equate to a regulatory pass. We have to think about

regulatory pass. We have to think about what is the activity that's taking place and how do we achieve the same regulatory objectives. Now, maybe some

regulatory objectives. Now, maybe some of those objectives we don't worry about. If I'm custodying my own assets,

about. If I'm custodying my own assets, then maybe I don't worry about, you know, what someone might do with them because I'm holding on to them. But, you

know, we still want market integrity. We

still want to prevent fraud and manipulation. And it's not the case that

manipulation. And it's not the case that just because it involves some kind of autonomous software that we should say, okay, no regulation. We just have to

figure out who are the actors who are in a position to meet some of our regulatory objectives and how do we meet those.

Yeah, those are great points and uh certainly the issue of decentralization is central uh to this uh fintech revolution and digital assets uh more

generally. Uh and this is certainly

generally. Uh and this is certainly something to to think about how the financial system is going to look like going forward and how decentralized it's going to be. But yeah, I think we have to to stop here. So, thank you very much

Tim and Jessica for this very thoughtful conversation on regulation and decentralized finance, digital assets, how regulation is affecting the innovation and what we should expect

from regulation uh going forward. As I

mentioned, we have been discussing these issues in the Walton initiative on financial policy and regulation whiffer and we have a few white papers that have been commissioned to talk about

regulation uh in this uh space and there's certainly a lot uh to think about here and we will continue the discussion of uh digital assets in uh

other episodes uh of this uh future finance uh podcast. So uh thank you everyone for listening.

Thank you. Thank you.