What Happens If The CLARITY Act Fails? | Chris Giancarlo

**Scott Melker** (0:00)
The crypto industry believes it needs the Clarity Act to move forward. But what if it doesn't? Today, I'm talking with ex-CFTC chairman, Chris Giancarlo, about crypto regulation.

**Chris Giancarlo** (0:11)
This is a change that is going to happen whether the Clarity Bill passes or not. It may change where it gets built and what gets built.

**Scott Melker** (0:19)
Financial privacy.

**Chris Giancarlo** (0:20)
The Bank Secrecy Act has a lot less to do with secrecy than it has to do with government surveillance. It's about surveillance of our financial transactions.

**Scott Melker** (0:27)
Prediction markets.

**Chris Giancarlo** (0:28)
People like predictability. And they don't want a poll of 800 people. By the way, that's the size of the average poll. They want information derived from tens of thousands of informed participants with skin in the game that are penalized if they're wrong.

**Scott Melker** (0:42)
And why innovation may continue, regardless of what happens in Washington.

**Chris Giancarlo** (0:46)
Innovation is going to come anyway. It's a question of whether we control it or we let others control it.

**Scott Melker** (0:51)
We also discussed the unintended consequences of new crypto laws and the battle over who controls the future of digital finance. Does crypto really need permission from the government to succeed? Watch and find out.
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What better place to start right now as we kind of come to the finish line of it potentially or not potentially passing and it seems that there's a highly predictable ethics fight that will be going on. I'm sure by the time this comes out, maybe that will be starting to settle. But I think this is exactly the only way it was ever going to go.

**Chris Giancarlo** (2:38)
First of all, I think ethics, it's an important issue. If I think it's a little bit of an own goal on the White House's side.
When I was in government, even though I discovered Bitcoin early on and was a proponent of it, I didn't invest in it because my agency was making rules for it. I still think that's the right course if you serve in government. When you serve in government, you accept the certain restrictions.
I would have liked to have seen not this issue be the reason why clarity doesn't pass, if it doesn't pass for this reason. But however, I would say, I actually think it may be a little bit of an excuse.
I'm not sure Democrats can pass this bill, even if the ethics issue were resolved. I think there suddenly may be another issue because they need a reason to justify what's really going on, which is their hard left doesn't want them to pass this because this democratizes the control of value and the hard left wants control of value in the hands of the government. And every Democrat that is up for re-election is worried about a primary fight from the left. And so I think, and I don't mean to be harsh on either side of the aisle. I just think that the anti-crypto army is there because there's a Luddite side of the left and there's now an even stronger side that's primarying a lot of these Democrat candidates. So I worry that clarity doesn't pass. Now, what I'd say to the industry is, perhaps it's time to stop making such a big deal out of clarity. I mean, the industry is running around saying, we need clarity, we need clarity. Yeah, we do. But the internet is still happening and there's never been an authorizing statute 30 years later. If we don't get clarity, innovation goes on. And so, yeah, I'd like to see clarity pass. I think it's got a lot of value in it. It's got, you know, amongst the many good provisions, it reauthorizes Lab CFTC, which I started when I was at the CFTC. I'd like to see not just the CFTC, but every financial regulator in Washington. In fact, every regulator in Washington have an innovation center in their own house with expertise there, which is what Lab CFTC did for the CFTC. I'd like to see clarity pass, but I think we need to brace ourselves that it might not, and the world is going to go on.