CLARITY Act Faces New Setbacks in Senate

selling the bootleg cigarettes out the back of the truck." Anyway, let's move. Let's move off a truck. >> Yeah. Uh we got to talk about the Clarity Act. It's facing another big setback. Senate Republicans. This is of course the crypto regulation uh legislation that we've been working on for forever. Senate Republicans did not take up the bill before leaving for their August recess. That means it's not going to get debated until September at the earliest, which is going to put the debate about it right ahead of November midterms. And there is a sense among Republicans, for whatever reason, we can discuss way maybe why we think this, they don't want to dig into this right before everybody goes to the polls in November to vote. Here's North Carolina Republican Senator Tom Tillis. I do think the odds drop precipitously of this getting passed. He means we leave for a month, we come back, we've got an election ahead of us. I think it gets difficult to get it done. So, the bill, just to go over quick overview, backed by the majority of the crypto industry, Coinbase was sort of not sure they were in. They're back in now. They're supporting it. It provides a legal framework and jurisdictional certainty for crypto companies. Basically, decentralized digital communities go to the CFTC and fundraising and investment contracts go to the SEC. And it resolves some basic things about, you know, like can a digital asset can digital asset service providers offer interest or yields or rewards for your stable coin balance and and those kinds of debates would get discussed. The one real sticking point back and forth that they're still arguing Dems want to include an ethics provision addressing government officials with ties to the crypto industry. You can sort of imagine why Republicans are not as enthusiastic about doing that. So I mean in your from >> Melaniacoin. >> Yeah. Yeah. I think I think that >> how's your Melaniacoin holding up? >> That's obviously what Dems want to do is they want to use this as an opportunity to point out Trump and all of his various connections and how much money he's been making from all of these crypto projects and Republicans feel like especially ahead of the midterms that's not maybe the conversation they want to be having. So what do you think looking at the facts on the ground? I mean is is this legislation probably dead and and what impact would that have? I mean, this was kind of a signature Trump effort. You know, we're going to we're going to pass all these crypto regulations. >> I think it's going to pass right after uh the elections probably if this is getting blocked because there's so many donors in the crypto space. So, you know, there's money in politics. I um hate to let people know, but there's gambling at this establishment. >> What's that line from Kasablanca? I'm shocked that there's gambling in this. >> Shocked to find that there is gambling in this establishment. Yeah. And they're like, "Sir, your winnings." He's like, "Thank you." He puts it in his pocket. Um, you know, they're just they all of our government uh officials have been bought and paid for for years over this legislation. Uh, one of the big donors to both Republicans and Democrats uh has been the crypto industry. They have used their influence and their uh balance sheets to buy this legislation. And by it, they shall. Uh they will get it right after the midterms. It's probably just a bump in the road. The thing I care about is um how does this work in terms of raising money? Now, the SEC is going to keep jurisdiction over >> fundraising. Yeah. >> Over the fundraising like initial token fundraising, investment contracts, while the CFTC is going to take over once the network is mature and decentralized enough to trade as a digital commodity. I don't understand that part of this. >> Um, and you know, how does it work for a startup? So, if I start a company and I say I'm going to sell a,000 membership NFTTS to it for $100 each and then you're going to get you're each going to get 1% of the revenue for the first year or whatever, you know, like what am I allowed to do here? And um there's going to be some new offering uh exemption and it's going to have a dollar cap. So it's going to cap sales at 75 million over a 12-month period and require issuers to file an offering statement. And then some other update to it was let issuers raise the greater of 50 mill million dollars a year for four years or 10% of outstanding ancillary assets capped at 200 million aggregate with tailored disclosures and full registration. So you're going to have to register with the SEC. Anyway, this seems like chaos and I am very interested in the impact it will have on startups. Like what will startups be able to do in terms of fundraising? because we did have a number of our startups decide I'm gonna do an ICO >> and we were like uh is that legal and they're like we don't know. >> Yeah. >> And but we're going to do it in Panama with a foundation and it's a million dollars to set up the legal entity and we're raising 10 million. And I'm like, I've never heard of a starting an LLC or a Ccorporation costing a million dollars and I've never heard of doiciling it in Panama with a hidden board of directors because the board of directors doesn't has security concerns. Like when I heard this pitch, I was like, you know what? I can't be on the board of this company. I need you to buy me. I literally told the founder like once you go to Panama and start an organization with an anonymous board of directors in an organization that I'm an investor in, time for me to go. >> I am not go I got three daughters. I got a family. Like I can't go to jail. I can't I can't go to like prison. >> It's not worth it. It's not worth it. >> What are we doing here? Like why are we and like ask the woman who is the attorney pitching us on this foundation like why does it cost a million dollars when you could go on to like you know any website if you know and sign up to get your incorporation for under $1,000 and she's like oh well it's very complicated and not many people have done it and I'm like got it. >> Yeah, there you go. >> Why haven't a lot of people done this? >> H because it's illegal or sketchy and it was just pure sketch. Um, but that's something I would like to have somebody uh who's in this explain to us. So, if we can put that on our Jake, producer Jacob, our list of >> potential topics in a future episode, if there's an attorney >> who understands how this will affect fundraising for startups, I'd love to hear it. >> Claude gave me a little bit of a tip. If you're day one of your crypto startup, you're presumably under the SEC. So, if you're launching a token where your team still controls upgrades, treasury, a large chunk of the supply, you're an investment contract, asset issuer, all of the usual securities and fundraising rules of the SEC apply. So, that's >> okay. So, no change. >> Yeah. So, no change there. Uh I we could certainly go deeper with more of an expert than me. >> But what if I we launch a token? You know, your startup launches a token, >> right? So, >> after it raises its $50,000 startup fee, >> secondary trading changes the picture fast. Once your token is resold by someone other than you or your agent, it stops counting as a security for that transaction. So, exchange listings and liquidity events matter a lot more to your regulatory posture. >> So, if I get listed on Coinbase or Kraken and somebody else is selling it, then I'm out of the woods. >> Correct. >> But that requires those people to be the gatekeepers then. And >> yeah, >> Claude even says, "Real uncertainty remains. [laughter] It still requires >> like I don't want to touch this producer." Claude's like, "Sorry, bro. Can't give you any advice. Leave me off the pod." >> Talk to talk to the Panama [clears throat] legal lady. She'll help you out. She'll set you up. Good. >> Yeah. Even Claude, I've never seen that before. Even Claude is like, "Listen, don't don't I don't know. I don't want to deal with this." >> Yeah. >> Claude went like this. >> Yeah. I [laughter] >> It's true. So, good job, Claude. Thanks. You did that meme. >> Yeah, >> that's the hands up, tilt your head. >> I I I I don't know what that meme is called, but I can picture the guy doing it. >> It's the guy who is the black guy who does like his own talk show where he rates people. They come in and they like he's sitting in a king chair. >> Wait, is it is it Duski? Is that the guy in that movie? >> I think it's Duski. Yes, that's I think it's a Drewuski. Like >> you're right. You're right. It is. I never I did not make that formal connection, but you're right. It is Duski in that meme now that I'm >> What's that meme called? >> Let me let me look up the the Duski Duski shrug meme. >> I mean, it could be just the Duski shrug. >> Uh, let's see. Drew Yeah, Duski shrug, I don't know. Or the Drewski hands up meme seems to be what people are. >> There it is. That's it. When you see that, that was just what Claude did. >> Claw's like, "You're on your own. I don't know, son. You're on your own. You