Is the Stablecoin Yield Ban Good? with Frax founder Sam Kazemian

**Robbie** (0:00)
Welcome back to Stabled Up, episode number 25, powered by our friends over at Frax, with their genius compatible Stablecoin FRXUSD. We've got none other than the Frax founder himself, Sam, here with us. A lot to talk about, this entire clarity, structure, coinbase, we were just in DC. There's a lot going on, Rob. Sam, it's great to have you back. How you doing, man?

**Sam Kazemian** (0:22)
I'm doing great, thanks. It's been a while, so you guys are doing the DC circuit this time, huh?

**Robbie** (0:27)
Yeah, we did last week.

**Andy** (0:29)
We were in DC last week, DAS this week, so I got a suit on, Andy's got a button down on. We miss you, man.

**Sam Kazemian** (0:35)
Yeah, yeah, I know.
You guys get the baton hand off. I was just thinking the other day that for Genius, I basically lived in DC in March last year, and now there's a lot of exciting stuff in Frax that we're building in stealth and just in the lab, so to speak. And eventually the baton will get handed off to me too, but you guys are holding on the fort.

**Andy** (1:04)
Well, Sam, you laid the groundwork so that we could go there and we had plenty of material to cover. Obviously, the latest is that we had the latest resolution or debacle. I was saying just before you joined that, it feels almost like the politicians sold it. And I'm curious how you're seeing this. To me, it feels like the politicians sold us out. They said, hey, we have this great resolution on yield as it pertains to clarity. The great resolution is that there's no yield on stable coins. Don't you guys love that? But this doesn't feel like resolution. It just feels like the banks won and no crypto founders are going to sign off on this. Is that the right way to think about it? How are you reacting to the latest resolution air quotes coming out of DC?

**Sam Kazemian** (1:49)
Yeah, so I'm following it pretty closely. But one thing to put in context, honestly though, for people that aren't really thinking about it, is this is pure politics, right? So this is not going to stop with this yield thing or even after Clarity. And what I mean by that is like, I don't know if most people watching this are Americans or not, but there's the Second Amendment in America, the right to bear arms. And for example, the right to bear arms thing is always going back and forth between people on the side. It's not like, oh, this one act passed, and now everyone's done talking about it, right? That's why there's like these lobbying groups on both sides. No matter what you think about the Second Amendment and stuff like that, I'm myself slightly pro for it and things like that. But regardless, whatever you think, right? So one thing is like, they pass it that says, oh, you can't have magazines for guns that are above this, right? And then if it's passed the next one, they'll be like, oh, you can't have guns that are this long, right? And then it's like, then you can't have guns that look like this. And so it slightly goes forward and forward. And so that's just how politics is.
It's not about Stablecoin yield and all this stuff. The main thing with this is it follows the same pattern. So with Genius, it was almost a resounding victory, thankfully, last year, where the only compromise was the issuer could not give a certain legal claim or expectation that you holding this Genius compliance Stablecoin, like hours, circles eventually gonna be in all these, like PYUSD and stuff. The issuer could not say that holding this thing gives you some kind of legal rider expectation, which is fine. Like very few issuers were going to straight up say that, but you could give it to a distributor, like a centralized exchange partner stuff, and have them give and distribute yields. Now, this is actually, that's essentially, if this is the current wording, right? That's essentially kind of banned. You'll have like certain things where it's like activity based kind of things, where Coinbase will have to think about, they can't say USDC like earn, but just by holding, they'll have to say like, but if you log in and make a trade or something like that, and the architecture of it is important to realize, after this, let's say this does pass like this, which is not good, I hope it doesn't pass, but if it does, then in a different administration or like a different SEC like thing, right? If it's not like pro crypto, then they'll be like, by the way, by activity, we're releasing guidance where activity means that you can't do an unsubstantive economic reality. They'll basically say, you can't do like, logging in to the thing, or you can't do like this or that or whatever. And so I think people need to understand. That's why I was saying you guys can pass me the baton hopefully later. It's like this is not going to end in some kind of, I think the crypto industry is kind of, you know, they're not politicians or they're not like used to, you know, the fact that this stuff is part of, you know, politics is an ongoing process, not a one and done thing.