 Hi everyone. It's Rachel Wolfson here at Consensus 2022. Today I'm interviewing a very special guest. I'm here with Melton Demirs. She is the Chief Strategy Officer of CoinShares. Now Melton, you gave a keynote and you are maybe on a panel as well. So what have you been speaking about at Consensus? Yeah. So one of the topics I've been really interested in and I think is really core to what's happening in the crypto space and has been since my early days in Bitcoin, which I started in Bitcoin in late 2012 and joined the industry professionally in 2015 when it was still only Bitcoin really. One of the things that I've been really interested in in exploring is how the crypto community is creating shared identity, shared belief system, shared sort of lifestyle rituals around these different projects and I think Bitcoin is an early example of almost a proto-religion. And so I had a really fun session yesterday with Alex Zeng from Friends with Benefits, FWB. It's not a sex thing. It is a DAO that's focused on bringing together builders, founders, entrepreneurs in the crypto space. And so we had this great session on cults basically. Cults have a negative connotation, but it's basically, you know, there's this massive crisis of meaning in our world. People no longer really focus on their nationality, what religion they are, even what their occupation is because so many people have so many different jobs and so many different passions. So crypto is really filling this interesting role. It brings together memes. It brings together capitalism and it brings together community and community values in a really interesting way. So we had a really fun conversation on stage about crypto cults and basically this crisis of meaning and how crypto is attracting so many people because I do think it gives people a sense of purpose. It's also a great industry to work in because there is capital in it. You can make a living and be quite successful financially, which is important because you need to pay for things and, you know, it's nice to have money. So I think there's this interesting convergence that's happening. I think it's a big reason why there are 40,000 people here in the summer heat of Austin all running around like crazy people. So it's been really fun. Right. Now you mentioned DAOs. It's obviously really interesting. So two questions. One is, do you, I didn't you start a DAO and also I want to know, do you think this is the year of DAOs? Yeah, so DAOs have been really interesting. A lot of what I do in my role at Coinshares, I focus on strategy, which means investing, but also looking at what's happening in the crypto industry and how it's relevant to the world of investing in capital markets. And so I experiment with a lot of what's happening in crypto. I love trying new products, experimenting with new technology, joining new nascent organizations. So I joined a few DAOs. I joined friends with Benefits last year, which was my first sort of DAO experience. And then I started two DAOs with friends. One is Hash's DAO, which is an art collecting focused DAO, which was built by the derivative X team. And the second is a DAO called DAO Jones, which is a little bit of a funny play, but it brings together DJs and DJs. And it's an investment DAO. We set it up using Syndicate, which is a platform that allows you to create investment clubs as DAOs, but still fit into sort of this legal framework around investments. And so it's been really fun, but also really interesting running these two DAOs. And I've learned a lot about DAO tooling, DAO infrastructure, some of the exciting opportunities around DAOs, but also some of the inherent limitations. And the biggest thing I've learned is all communities need leadership. And they need strong principled leadership to uphold community values and reinforce community values, but also push the community forward. And I think what we've seen is so many movements in crypto that start with strong leaders where the leader then leaves have had a lot of challenges sort of splintering in the community, even with Bitcoin, right? We saw this struggle for power, you know, five years after Satoshi left the Bitcoin community. So it's been interesting. I think DAOs are an exciting area of experimentation. But from an investment perspective, I think DAOs are still very early. I think a lot of people are building DAO tooling right now without really understanding what emergent behaviors we need. Governance is not a tech problem. It's not a crypto problem. Governance is a very human problem. It's a very complex problem that has existed since the earliest days of human civilization. And that's a lot of what we went through in the talk we did is it's not a new problem. And it's not one that crypto or open protocols or tokens can solve alone. So while I'm excited about the future of DAOs, I think there's still a lot of work to do before DAOs get to scale or become practical, useful, and actually implemented in ways that allow for good governance. Right. Yeah. Well, that's great because although we're seeing the emergence of DAOs, obviously there's still a lot of room to grow there and develop, which I think we'll start seeing more this year. Hopefully. Yeah. Hopefully. Right. Meltem, I want to get your thoughts on the crypto regulatory space right now because right now, you know, we just had the bipartisan crypto bill go through. And so what are your thoughts on that? Do you think it's good for the space, bad for the space? Yeah. Okay. So the regulation side, honestly, having been in this industry professionally for eight years, I'm kind of tired of talking about regulation, particularly in the United States. We've seen so much talk and so little cogent action. I do think the Lummis Gillibrand bill is a good attempt. I also think the bill that was introduced two years ago, the Token Taxonomy Act, was a great attempt to sort of try to categorize and classify. The challenge I have with so many of the crypto bills and so much of the crypto regulation is it's all focused on financial services and taxation. It's all focused on sort of wearing how we govern and tax and extract value for the government. I think the bigger issues that I'm excited about are issues around consumer privacy, around self-sovereignty, around freedom of speech that aren't being addressed in these bills. And so I'm actually part of the governor's commission in New Hampshire that is working on writing guidance to New Hampshire policymakers around crypto. And unlike so many bills that focus purely or only on the financial services side, I think we need to focus on crypto infrastructure. So connectivity, data centers, computations, semiconductors, the actual plumbing that makes crypto or really any type of technology function and making sure that the United States is a friendly jurisdiction for people to develop not only software but also hardware and deploy it at scale, which to date we have seen no cohesive action on that. We've seen a piecemeal approach with the state of New York taking a very sort of draconian approach. The state of Texas obviously wants to be a home for crypto mining, so much friendlier approach, Wyoming as well. And then I think the other piece that really isn't addressed in any of these bills and frankly I'm disappointed to see hasn't gotten as much attention is the right to financial privacy and the right to consumer privacy. In fact most of these bills want more financial surveillance and I think as an industry it's really important for us to continue to push back on that particularly in a world where central bank digital currencies are being explored. Now fortunately in the U.S. I think there's been a lot of pushback on government-controlled central bank digital currencies. I think cash is really important in our society as a means for preserving free speech and open democracy, so I've been encouraged to see that all of the bills we've seen and a lot of the wonderful people we have in Congress are working to try to push back against that, but I do think there's a lot more we can do around privacy and personal freedoms. Right and with that in mind Meltem, because there is more that we can do for privacy and freedom. Do you have any suggestions in that area that you know projects we can look at are just how we can ensure that moving forward? Yeah I mean I think the biggest movement we've seen is the crypto wars and when I say crypto I'm talking about cryptography. So I think again in the early 90s there was this massive debate around encryption and the use of encryption in a variety of different consumer focused applications. Encryption is truly the backbone of the internet and transactions and communication on the internet and so we see a number of bills in Congress right now that are attempting to minimize consumer use of encryption and attempting to create backdoors. Once we create backdoors to encryption they're not just going to be used to surveil consumers they're going to be used against our government so it's a matter of national security and frankly it's like shooting yourself in the face in order to avoid shooting yourself in the foot like it makes absolutely no sense. So I think the war on encryption in general is still very alive and well so I think there's more we can do to preserve encryption and to actually promote encryption instead of spending taxpayer dollars running challenges to try to crack encryption algorithms like SHA256 which is the backbone of Bitcoin. So I think that's number one. I think number two preserving you know code as speech is really important so open source code is something that's a big part of the crypto community. Anonymous developers are a big part of the crypto community so there are a number of efforts underway to attempt to hold open source developers criminally liable for how their software is used which is sort of antithetical to the entire open source movement so I think it's very important to delineate there and then lastly I think it's the treatment of Vasps or virtual asset service providers. If someone's running a node or if someone's validating transactions or if two people are transacting or interacting peer-to-peer on an open blockchain protocol classifying them as Vasps and forcing them to comply with onerous regulation like the one there's a bill right now that attempts to make people report the social security number of anyone they're sending crypto to over an amount of ten thousand dollars it's preposterous we don't have that rule for cash so I think again those are all things that are owed privacy they make it easier for the government to target individuals who are in the crypto space so I think it's it's very very important to push back and again we saw this with the IRS issuing a John Doe summons to Coinbase to get an entire download of their entire user base so again individual companies in the space are pushing back coin center just sued treasury around this new rule they're proposing so we are pushing back but we need more of it we need to be louder and people just are not paying enough attention to what's happening on the encryption and privacy front and by the way the EFF the Electronic Frontier Foundation is a great great place to go so EFF.org non-profit has been working tirelessly since the 90s to defend free speech and open source code um on the internet so highly encourage people to also look at those efforts awesome well thanks Melton last question um what are you excited about for the I mean obviously we've talked a lot about things that you know we think are going to happen moving forward and you hope to see but what are you most excited about in the crypto space and just moving forward forward yeah I'm really excited about community owned infrastructure so actual physical infrastructure today crypto is so dependent on centralized service providers like AWS on utilities to continue powering high performance compute data centers on even telecommunications right so we're still fully reliant on ISPs there are a number of efforts underway to build peer to peer networks to enable us to perform computation to enable us to have better telecommunication broadband connectivity and to decentralize and make the energy grid more resilient so I'm really excited about taking crypto and combining it with energy computation and connectivity in new ways I come from the oil and gas industry and infrastructure investing so for me it's fun to sort of go full circle but to embed crypto economics and some of these principles of decentralization into infrastructure investing which has historically been quite a boring and unsexy category but hopefully you can make it sexy again but also make our global systems more resilient which I think is incredibly important and resilience typically comes from more decentralization smaller scale so that's something I'm really excited about the other area I'm really excited about which is really not so sexy is more developer tooling developer infrastructure I think right now the surface area of crypto is just so large and it's so difficult for people to come into the space and build things so standardization modularization convergence around a few core consensus algorithms really important experimentation has been fun but I think we're starting to learn what designs do and don't work so starting to converge on kind of standardization and open standards in space really exciting and then the last area got not that sexy but thinking about decentralized identifiers verifiable credentials and using bitcoin in particular as communication protocol is also really exciting to me so a lot of really boring stuff but I think incredibly important to what we're doing we've been so focused on tokens and money and web three I think it's time to refocus on the underlying infrastructure layers that make all of that possible and really think about how we make crypto more resilient to attack and more resilient to all of these vulnerabilities that come from the fact that bits and bytes require atoms to function yeah well I agree 100% and the best part is now is the time to build we're in crypto winter and it's time to innovate and build and we are here doing it at consensus it's great thanks for having me Rachel thank you