Jito Chief Legal Officer: Inside The 600-Page Clarity Act (Full Breakdown)

**Robbie Klages** (0:00)
Rebecca, we've got you on stage now. Welcome to the show.

**Rebecca Rettig** (0:02)
Thanks for having me. Good to see you.

**Robbie Klages** (0:04)
Absolutely. Good to see you too. Thanks for waiting. We've been on a roll today, so it's been a good Monday. I'm curious. It is your first time on the show. Maybe you could just tell us a little bit about your day to day these days. I mean, Clarity Act ramping up. As someone who's COO, CLO of a Protocol Labs company, how much are you planning for Clarity Act to go through? You're reading through some of this language and you're thinking yourself, okay, if this goes through, we're going to need to do this, get this license, do that. Or is it like, hey, we're not really going to do much until this thing goes through and just kind of continue operating business as usual?
What are you seeing on the ground there at Jito Labs?

**Rebecca Rettig** (0:43)
Yeah, that's actually a great question because I circulated a copy of the updated, combined 600 page draft of the Clarity Act and actually got a lot of questions from people about what are we going to do about this? What are we going to do about that? And some of it is you have to plan, but some of it is wait and see. I think the other interesting part about Clarity is there are an unprecedented number of rulemaking. So what Clarity does is it lays out the framework for how things should work or how things will be treated. And then it gives a lot of authority to the SEC and the CFTC to create specific rules for compliance. So yes, you'll have to do a lot of disclosures for tokens. There's a big section on that. All the section numbers have changed since they merged the banking and ag pieces.
But so the first part of the bill talks about disclosures around tokens, and we're going to have to wait for the SEC to do rulemaking on that. So there's not a ton to do day to day yet, but you called out my AVE days early on. And when I was there, there were maybe two people doing policy on the DeFi side and everybody else was from centralized exchanges. So I got to do it then with Uniswap CLO. So you know that having been through six, seven rounds of market structure, that you can't plan until the bill actually passes. So obviously keeping in touch on calls every day about it, but otherwise, not changing our business strategy yet.

**Robbie Klages** (2:13)
Got it. That's actually very, very insightful, given that you guys are a big labs company here. And I think others are watching the show and they're looking at this. And trying to figure out how quickly should they move. So very helpful to hear how you guys are thinking about things.
I've got questions about where things are headed, where we're at now. But first, can you just give us a quick status update? Because you mentioned Senate and the Ag Committee.
Some of these things have just evolved. And I know the ethics language came out last week. Prediction markets are still putting this at like 38% to go through. And I found it surprising that even after some of that ethics language came out, they didn't really move. It seemed like there was some people that have been optimistic, they stayed optimistic, others have just stayed pessimistic. Feelings didn't really change even after that ethics language came out. Can you give us a bit of a status update? Where are we? What are some of the progress moves that have happened? Ag Committee, ethics language. How important are those and how much further forward does it put us closer to ultimately getting this thing through?

**Rebecca Rettig** (3:20)
So I actually think 38% is pretty high when it comes to thinking about passing a bill.
The other interesting note is that maybe a month or two months ago, congressional staffers were banned from using prediction markets. So you don't have people who really know what their bosses are thinking participating. Also, depending on the prediction market, maybe US persons are not supposed to be on there.
But you don't have the specific information that's necessarily flowing in from a day-to-day perspective. I also think that there's a line in DC that a bill dies, I don't know, seven times, nine times before it ever gets passed. I actually think that 38% is high. I've been at around 35% for the last six to nine months, honestly, because there are a ton of hurdles to jump through. It's not that if we get a vote on the Senate floor next week, it will even be a substantive vote. It may just be a procedural vote to move the bill forward to a substantive vote. So there are a lot of genius. I spoke to Senator Hagerty a couple of weeks ago and said, you made it look really easy to pass the Genius Act. He said, you can't imagine the work we did behind the scenes. But I think there was this critical mass of belief around stable coins, and so it was an easier bill to pass. That's a 60-page bill as compared to this 600-page bill for clarity. So there's that. As you noted, last week the combined text from banking and ag came out. It included very specialized language on ethics. No matter what people say about it, it is actually unprecedented to have this types of ethics language around very specific asset class come out. There are continuing discussions behind the scenes with a number of Democratic senators about getting to an even better place on the ethics language. And I think if we can get there, it will be a real shame and an enormous miss, and actually a miss on a win for Democrats to make clarity get across the line. I think one of the things that is missed a lot is that this is actually a really hard bill to comply with. It actually goes to your first question, like what are you doing to comply?