 The path to integrating Bitcoin and other digital assets into the Federal Reserve Payment System is through Wyoming, not through Washington D.C. Bitcoin is not an asset that is designed to be leveraged unlike the occurrences. The punchline is that if you pay your taxes and you get regulated and you don't take shortcuts, you're going to be okay. It's Rachel here with Coin Telegraph and we are in Miami for Bitcoin 2021. Today I have a very special guest that we're interviewing. We are with Caitlin Long. Hi Caitlin, how's it going? Yeah, having fun in this crazy zoo here. It is, it's crazy and it is a zoo. I mean, it's like so many people are here. I wanted to ask you about the Bitcoin environment as of now. What are your thoughts on that? And then I want to talk a little bit about regulations that we may see in the future. Well, we've obviously had a correction in the last month or so. It's a bull market correction. The bull market trend has not been broken. And it's flushing out some excesses clearly that the industry, a lot of leverage had leaked into the industry. And that was never healthy. Bitcoin is not an asset that is designed to be leveraged unlike the occurrences, which are themselves leveraged and leverage is piled on top of leverage. So it's tough for those of us who really understand the Bitcoin ethos and recognize that solvency matters more than leverage and liquidity to watch these kinds of situations because you know, innocent people are being curbed. And, you know, I would just suggest if somebody has had that experience, you know, once you get into Bitcoin and you start losing money, I consider that in my personal experience, I consider that to be really valuable tuition for really learning what Bitcoin is. And we've got a lot of new people in this industry now who are going through those lessons and hopefully folks will learn from them. There's just, especially in this bull market, there's been so much leverage added to the system. And for those of us who've been around a long time, we learned that lesson a long time ago. You don't leverage Bitcoin. Do you have any advice for like newbies coming in that, you know, see that they saw the price of Bitcoin at over 60K and now they see it today? I mean, obviously I hodl and I'm sure, you know, we've been in it for a while, but advice for newbies that just got in. Well, I sat with my with losses on my Bitcoin in the in the 2000 after the 2013 bull market. I sat with losses on my Bitcoin for a long time, right? And again, you know, you learn that's when you learn that the really valuable lessons. Yeah. So just stick with it. This is an asset that it's a number go up technology over time. This is an asset that that is very likely to hold its value. And I personally don't trade it just like you. Right. I know a lot of people do, but the one thing that I certainly would caution against and hopefully folks have learned their lesson is just don't leverage it. Right. Yeah. Good advice. Can we talk a little bit about regulations that we may see coming up with Bitcoin? It's pretty clear as I've been tweeting and you've been writing about that there is regulation coming out of Washington, D.C. It also does appear to be that it was coordinated among some other governments that kind of all announced at the same time a bit of a regulatory push. This is not a surprise. I think it was Ray Dalio who said that Bitcoin's biggest threat is success because that means the regulators are going to be cracking down. And it's interesting. Governor Lail Brainard of the Fed at the Consensus Conference last week made reference to when she was talking about stable coins made reference to the free banking era. Or sometimes it's called the Wildcat banking era. And she laid out that that that was the the impetus for a lot of the regulation that is in the traditional financial services industry today. And there's a lot of disagreement among historians and economists over whether that era was good or bad. But she's right that we're repeating some of those same issues. We are seeing a lot of excess. We are seeing, you know, hundred to one leverage exchanges. We are seeing exchanges that no one knows if they're solvent and there's zero disclosure about the counterparty risk associated with them. Right. And this all of these lessons were learned in the in the US dollar system. And it's why we have the regulations we do in the US dollar system. And so she's right to have made that analogy. But also it's important to realize when a central banker refers to that, what she means is that that was a toxic era in monetary history. That's how that's how she would feel it. And that is just a warning shot to our industry that some regulations coming. I think the regulation that's coming clearly is not going to ban it. The punchline is that if you pay your taxes and you get regulated and you don't take shortcuts, right, you're going to be okay. Okay. Those that are trying to commit crimes or defraud consumers or not pay taxes, not comply with the law, those are not going to be okay. Yeah. So I mean, you basically answered my next question, which is can crypto coexist with the regulatory environment today? I mean, it sounds like the answer is yes, as long as you play along by the rules. Absolutely. It's pretty clear that the regulators understand that crypto is not going to be, it's not banable. And so at this point, it's just a question of how do the regulators make sure that the volatility of crypto does not infect the traditional financial services industry. And that's where they've been spending a lot of time on ensuring that there's not a run risk. We've got, for example, stable coins with now tens of billions of dollars that could, in theory, if something went wrong on one of the chains, the stable coins could be withdrawn in the span of minutes. And so the question is, would the traditional banks or custodians that are holding those US dollar assets be able to handle a sudden withdrawal within the span of minutes? Right, right. Those are the kinds of things that the traditional regulators are looking at in terms of dealing with the risks that could be coming into the traditional financial system from crypto because crypto moves very fast. Bitcoin is not banable. I like that. You mentioned stable coins. You recently said something about a crackdown on stable coins. Can you discuss a little bit about what you meant by that? Well, don't shoot the messenger. I'm just reporting what I'm seeing, which is when you get the chairman of the Federal Reserve and the Federal Reserve governor who sits over payment systems both talking about stable coins within the span of a few days of each other. It tells you something's up, and it tells you that stable coins are on the agenda of the people at the very top of the regulatory pyramid in Washington, DC. So what comes of that? We don't know. But again, they're very focused on making sure that stable coins don't infect the US dollar payment system with run risk, with liquidity risk. And rightfully so, because like we just talked about, there are scenarios, like for example, the accidental fork that happened for a few hours in Ethereum in, I believe it was November of last year. I was watching that at the time thinking what will happen if all of the Ethereum ERC-20 stable coins had to be redeemed within the span of minutes because they had to be burned on one fork and reissued on another. Holy cow, that is not a risk that the traditional financial system has been thinking about. And back then in November, what were we about 15 billion of stable coins outstanding? And now we're approaching 90. Yeah, it's crazy. And it's starting to become material. So it should not surprise anyone that traditional financial services regulators are thinking about these very issues. What will happen is a very interesting question. Governor Brainerd has spoken very consistently over the last several years and she's spoken at a lot of crypto conferences. I've been on a couple of panels with her over the last few years. So she's very familiar with this industry. She's doing the homework on this industry. And she's spoken several times about getting it inside the banking system that historically has not been an option because the banks in the United States have not been able to, there hasn't been an ability to get bank charters for crypto-native companies. But that door is opening now, I believe. So that's interesting that you say that. That door is opening now. Can you talk a little bit about that, maybe some other innovation that we can expect to see from? I mean, Wyoming is obviously innovating, like leading the way. Can you talk a little bit just about the innovation of what we can expect to see? Well, obviously the Wyoming SPDI, the Special Purpose Depository Institutions, or SPDI banks are coming as well. Not open yet, but towards the end of the regulatory approval process. So stay tuned. There are more SPDI banks coming. That is, I had always said that the path to integrating Bitcoin and other digital assets into the Federal Reserve Payment System is through Wyoming, not through Washington, D.C. And it does indeed appear that that is coming true. Stay tuned, it's not there yet, though. And that is why a number of companies are circling Wyoming. And once this door opens, I think there will be others that walk through it. In terms of other interesting innovations coming out of Wyoming, the one that's seen the most interest recently is the Dow Bill. Wyoming recognizes decentralized autonomous organizations as a specialized type of limited liability company. And it's not truly decentralized. The purists are right, because in order to get the limited liability protection of registering a Dow in Wyoming, there has to be a person involved with it, which means it's not truly decentralized. But the benefit of doing so is that you can actually have your governance be in the form of code, as opposed to in a operating agreement written down on paper in words. And you can also have nodes become members. So this is definitely a step forward for experimentation with code-based governance and code-based systems. And it also gives the benefit of limited liability, which you get for registering a corporation or an LLC. So it's a big step forward in sort of post-industrial revolution, forms of human organization and forms of business organization. That has seen an enormous amount of interest. And the Wyoming Blockchain Select Committee is working on some refinements to the law that already was enacted in the last legislative session. We knew there were some challenges with it, and so the proposed fix is already out. So everyone who's looking to set one up when it takes effect July 1st knows what the likely fixes in the statute are going to be so they can plan accordingly. I'm just curious, what is your ultimate goal with... I mean, obviously there's so much innovation coming from Wyoming. As you can see, this conference is huge. The innovation is so extreme. But I want to know your ultimate goal here. I mean, what would you like to see moving forward in this space? Oh my gosh, I'm a big believer in Bitcoin as fundamentally empowering technology to individuals, and Michael Saylor today at the conference made reference to the fact that we now have a technology that can give property rights to 8 billion people in the world. And it is all about property rights. And so ultimately what we're trying to do is build up that ecosystem. It is all about evolving power away from centralized structures and into decentralized structures. That is not something that will happen overnight. And so building bridges between the two is critical, which is in the next decade or so what I'm working on with Avanti. But ultimately I'm working towards, like most long-time bitcoiners, working towards something much bigger that outlasts all of us, which is the fundamental acceptance of this technology as ultimately empowering the individual. And we're going to get there. It's just a question of how soon?