Host: Well, at Money 2020, one of the biggest themes is how traditional banks are upgrading their infrastructure to handle everything from AI to digital assets. But with interest rates high and balance sheets tight, doing it alone is no longer a viable option. Well, joining us to make sense of how Wall Street, Capitol Hill, and crypto are converging is Cleve Massador, the executive director of the Blockchain Foundation. Good morning, Cleve. Always great to have you here as we kick off Money 2020.
Cleve Massador: Oh, good morning. Oh my, and what a Money 2020 it is.
Host: Yes, indeed, and we are on day two, and a lot has been happening so far on the ground, but you were on a panel talking about shared networks. So for our viewers out there who are trying to understand what's happening, give us a sense of how the different banks are working together.
Cleve Massador: Yeah, it's ironic. I'm a crypto native person, but yesterday I moderated a panel on banks. So we've seen the convergence of traditional finance getting into the space. Wall Street was the first, right? You have, you had BlackRock. You even had big, you know, entities like Fidelity in 2024. But banks were sitting on the sidelines largely as OCC and FDIC gave them more guidance, and yesterday's conversation was about regional banks like MMT. They've actually formed this Carry Network led by Gene Ludwig, and I spoke to them about how they're approaching tokenized deposits, why this network is important instead of competition. Banks are choosing the network effect. Right, they're, they're, and I asked Matt from MNC, you know, are you playing catch up, and they both said that banks want to be the architects of their infrastructure, right? And we know decentralized finance, one of the biggest transformations has been modernizing financial infrastructure. So for institutions like banks, whether you're a big bank or a small bank, it's really that opportunity to modernize your infrastructure, provide faster services, but also meet the digital needs. And so it's great to see banks coming in. I will say, who's missing, right? We, we're seeing banks here. We're seeing community banks. We're seeing credit unions. I spoke with you about credit unions last year, but where are the community-based institutions, right? The minority depositories, the CDFIs, the neobanks? In order to truly have a stablecoin market that is vibrant, we need an ecosystem for small finance, so I'm excited we'll get there.
Host: Yeah, and with each passing year it does seem as though we see an increased attendance of those traditional banks and financial institutions on the ground here at Money 2020. But when we're talking about infrastructure, of course we're talking about the technology. So give us a sense of what you're seeing on the tech front.
Cleve Massador: Yeah, on the technology front, especially getting ready for the stablecoin law GENIUS implementation, we know the rules are coming on January 18th. I think all regulators are putting in the rules, so I think the industries are thinking about what is that infrastructure, right? If we're going to tokenize what's on the balance sheet, how do you build that solution? And that was what Carry Network is doing. They've been building all year. It should be, their platform should be operational, but we've seen other stablecoin networks form with Chime and Wells Fargo, and we saw Stripe over the last years get into this piece. So it's not just stablecoin whales, it's also banks doing what they always do. Tokenizing assets on your balance sheet doesn't change the legal framework, but it does change the way money functions and the way money flows, and it's good to see institutions getting into this place and doing it from a network perspective and not a competitive perspective. But I do think the future of digital finance is yet to be realized because we have, I'm, I, I'm excited to see how Gen Z and even Gen Alpha people and teenagers will actually reimagine finance.
Host: Yeah, and speaking of which, I understand that you're gonna be on a panel later today talking about the convergence of TradFi as well as DeFi. So give us a sneak peek in terms of what you'll be talking about.
Cleve Massador: Yeah, I'm excited about this panel. So Money 2020 has had a bird's eye, bird's eye view over the last years to see how money was transforming, right, because they saw their programming transform. And so Scarlett, one of the leaders along with some of the other content folks, decided to write a book about this. What they've done is documented and tracked what's happened. What are some of the trends, everything from, we talked about tokenization, but also how the decentralized native space, right, the crypto native space really created a pathway for now to be layered on so we can look at tokenization, we can look at stablecoins, but we can also reimagine what comes next as well. So I'm excited to dive in and to get more in terms of what was the inspiration for the book, who this audience is, but what they're seeing coming on, right? Again, Money 2020 is such an interesting vantage point. They have to look ahead. So one of the things I will be asking them is, you know, the book came out earlier this year. What's the next chapter to be written? And we know that the, the, the story is still unfolding for crypto, for traditional finance, for fintech. So very exciting.
Host: Yeah, very exciting indeed, because every year we know that there are so many panels that are taking place on the ground. And I know that you are part of a lot of these panels. So, I do want to get your perspective on what we're seeing in the nation's capital. Of course, all of us are counting down to the midterm elections, but also the new year. So when it comes to the regulatory landscape, you just mentioned GENIUS Act, and we're all keeping an eye on that date you mentioned in mid-January, especially since we will be heading into a new year. But give us a sense of what is unfolding on the ground and what this actually means for digital assets.
Cleve Massador: Yeah, obviously CLARITY failing was a big loss, and I think the crypto native industry is still raw from that. Traditional finance is still raw from the battle, and Congress is figuring out how to actually get things back up and running. We need market structure legislation. That is the duty of Congress to actually create the laws that the regulators will then figure out how to implement. So where we don't have enough clarity in terms of how the election will shake, shake out, what's gonna be the makeup of the 120th Congress and who will lead us, right? The Senate, we've lost Lummis, right, on the regulatory basis. We've lost Hester Peirce going back to the Senate. We lost Tillis. Without Tillis, Senator Tillis and Senator Lummis reaching across the aisle, working with Senator Allbrook, working with Gallego, working with the Democrats, we wouldn't have been able to move CLARITY as far as we did, and it's not clear who some of the Republican, you know, Republicans on the Senate Banking or even Senate Finance that is now taking up crypto tax legislation. So we need a bipartisan framework, but so much of the players will change by come January. So it's really how do we get to a framework, but there's a, there's a commitment, I think, across the aisle to get market structure back up and running, focus on crypto tax legislation. The House Ways and Means has acted. We saw Senate Finance introduce a bill. We have so many other legislations. If, if you remember, we need a comprehensive regulatory framework. In the 1990s, that's what Congress, Washington provided to the internet and they were able to go back and build in Silicon Valley, so the crypto industry doesn't want to sit in Washington for the rest of our lives to try to figure out the framework, but we know that things are changing. We need to get clarity done quickly and that doesn't mean quickly at the expense of quality. We've been debating this bill for a long time, but again, FIT 21, even before FIT 21, and so now it's really to find compromise. Make sure we're building with the market participants first, looking at risk and balancing that with innovation, but the rules of the road are necessary and they're past due. But we also, I'm part of the crypto native industry. I'll say we have to be a less emotional industry. What we saw was, you know, a very emotional approach, and we're in Vegas. The house always wins. Washington is very much like Vegas. Between the three branches of government, they will always win. But you come to Vegas understanding what are the rules in Vegas, and you play, operate within those rules, and then you leave with what you need. So I do think that the failure of CLARITY was a big wake-up call for the crypto native industry, but it was also a learning opportunity, you know. Pat Witt is gone, which is so disappointing. At the White House, it's not even clear if, if there's anybody who will be leading the White crypto in the White House. Does that mean the White House is, is pivoting? I don't think so. But, but I do think we—
Host: Before I let you go, we have about 60 seconds here. So in terms of builders as well as innovations, those are key things that all of us are watching here at Money 2020. So what do you think about the role of regulatory bodies such as the SEC or the CFTC?
Cleve Massador: Well, we, I think their role is important, but we need to get commissioners there right now. They can't even, you know, quorum and actually do their fiduciary duty. So the CFTC and SEC are very important, but they lack the commissioners to do their business, and we need to tackle that in January because the ecosystem, the startups need that guidance, but the states will fill the gap.
Host: Well, Cleve, always great talking to you. Thank you so much for joining me so early in the morning in Vegas at Money 2020. Appreciate your time as well as all of your perspective.
Cleve Massador: Thank you. Thank you.
