{ "episodeId": "SLP638", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "harsha_goli": { "name": "Harsha Goli", "role": "guest", "tag": "HARSHA" } }, "segments": [ { "speaker": "stephan", "time": "00:00", "start": 0.26, "text": "So we care a lot about privacy here, but, like KYC, AML, all this stuff is really expensive and is really cost prohibitive for a lot of businesses. And so toward that end, a lot of, a lot of firms, a lot of VC firms, you know, like exchanges, they've been lobbying for less KYC, less AML, less regulations as a whole, because, you know, they wanna see this industry grow. And, like, I think that's the, the real, like, you know, call to action, the" }, { "speaker": "stephan", "time": "00:30", "start": 30.06, "text": "'Cause this stuff is strangling, you know? it really is strangling the industry." }, { "speaker": "harsha_goli", "time": "00:47", "start": 46.65, "text": "Hi everyone, and welcome back to Stephan Livera podcast, brought to you by Bold. For American listeners, go to getbold.io, you can buy, sell, and store Bitcoin there. Now, joining me today is Harsha Goli. He is the founder and CEO of I presume of, Magnolia Financial. Now Harsha has experience in the Bitcoin industry for a while, various companies, Swan, Lightning Labs, Folds, BitPay, so a few of those things. but I, I noticed you wrote an interesting article and I wanted to get into that. But, yeah, first of all, welcome to the show. Thank you, thank you. Yeah, I feel, feel very welcome here. So, yeah, so- Let's get into a few things, I guess maybe just a quick overview, what are you doing at the moment with Magnolia, and then we can sort of dive into the article and kind of talk about what are some of the implications back and forth of that?" }, { "speaker": "stephan", "time": "01:36", "start": 95.72, "text": "Yeah, dude. So like, from my time at Fold and Swan, I realized like one of, like a huge problem in the space that no one really knows about or even talks about is that, when you're a Bitcoin business, you need to be regulated, and getting regulated is really difficult. And so, most people, instead of like getting licenses themselves, which are really expensive and there are like fifty of them, they end up going with, an off-the-shelf legal custodian. This is different from like a custodian who necessarily has your keys," }, { "speaker": "stephan", "time": "02:05", "start": 125.04, "text": "not your keys, not your cheese kind of approach is a different kind of custody than what we're talking about. This is more on the legal and financial side. And so, I also realized, like, you know, how few custodians there were and how kind of like, what's the word? How, non-trustworthy the existing custodians were, you know, how, how difficult it was to work with them and, how few the options were. So, I-- it also kind of like really kind of irked That doesn't work with us at all. so I wanted to build one that was geared for Bitcoiners and like kind of have our own ethos, ethos that we can project out into like the great, the, the greater world here. So yeah, we're Bitcoin first and, you know, built" }, { "speaker": "harsha_goli", "time": "02:47", "start": 167.09, "text": "by Bitcoiners. I see. And so, yeah, so getting into the article you wrote, basically it's called \"How Big Brother Can Attack Bitcoin Without Spending a Dime.\" So there's a few sort of things going into all this, but as, you know, as I read it, I would summarize it as you're basically talking about how there is this- It's summarized as \"quote unquote\" financial crime or KYC, AML, sanctions, in the US also known as BSA, Bank Secrecy Act. It's sort of, you're talking about this Kind of KYC AML noose that's kind of tightening around various Bitcoin companies and arguably the ecosystem. So do you wanna spell out a bit of your thoughts on this? Kind of KYC noose." }, { "speaker": "stephan", "time": "03:35", "start": 215.46, "text": "Yeah, basically, if you're the government and you wanna control the flow of money, which obviously you do, you know, like financial weapons are a soft power weapon, and, we've been using them for decades. But if you wanna control the flow of money, you don't need to control every dollar being transacted between here and there. You just need to control the major, the major points of movement, right? So the conversion points, for example, the points where, you know, you like go to store your Bitcoin, right, those are the points that you need to focus on as a government, right? With Bitcoin, where anyone can be their own bank, that was a little tough at first, right? It took them a little bit to ramp up here, but then they figured out, oh, it turns out everything in Bitcoin and crypto does end up coming back to fiat one way or another. So all we have to do is we've got to police all these like conversion points, and so as a result, that's exactly what we've seen. We've seen all these conversion points and even bridges get targeted by It looks like KYCAML, and most, I think a lot of folks know what KYC means. It, you know, means know your customer, but AML is a little bit more interesting. AML stands for anti-money laundering, and it basically means you have to prove that your funds are clean. it's normally, you know, when you're in the court of law, you have to prove that, you're guilty, or I'm sorry, like the, you know- The prosecutor has to prove that someone is guilty first, but in this setup, you have to prove that you're innocent, and you're kind of assumed guilty until you can prove that you're innocent, right? And so this is like a way for the government to kind of see where the money has been, right, a little bit in the past. This is why the government likes Bitcoin quite, quite a lot, because Bitcoin is very easy to identify, very easy to break anonymity on, and this is why they're pretty against currencies like Monero and Zcash." }, { "speaker": "harsha_goli", "time": "05:20", "start": 320.42, "text": "I see. So, yeah, so, and it's also fair-- There's a few thoughts and reactions, but I guess it's also fair to say that this so-called noose has been, you know, tightening over the years, right? Like I remember, and I'm sure you were around in earlier days as well, that there was a lot less KYC at some of these exchanges and companies where people were exchanging over, and sort of the, the holes are progressively getting plugged, and, you know, I, I remember, you know, Years and years ago, it was like a big deal when local Bitcoin started to add KYC, right? And so that was kind of-- that was seen as like, \"Oh, well, that, that used to be one of the ways to get Bitcoin without dealing with KYC.\" And it's sort of, both in the quote-unquote Bitcoin and crypto world, but also just in fiat world, there's just been more- More KYC, more compliance, more AML, more sanctions compliance, all these things have just been increasing, and that's just kind of on the AML side. Then there's also sort of the tax compliance side, and there's also in the world, you know, there's FATCA and CRS and, you know, other kinds of aspects of, compliance elements that are coming in, and so that's one aspect of it. And then the other aspect of it, and I'm sure you're, you're familiar, there's probably, there's this infamous, Antonopoulos, where he sort of talks about some of this, and he says, \"Well, well, they're, they're gonna try to shut off the on-ramps, but what, what are people gonna do? They're just gonna stay on the highways, right?\" I, I'm sure you probably remember that, that was like an infamous kind of clip. what are your thoughts on that? Now, in the view, in the context of today, in twenty twenty-five, what does that actually look like in practice?" }, { "speaker": "stephan", "time": "07:00", "start": 419.59, "text": "Yeah, I mean, in practice, people don't stay on the highway, right? Like, I wish people did, you know, that that's certainly what my entire like career has been dedicated toward, but that's just not what happens, right? At the end of the day, most people end up converting to fiat one way or another, or if they're not converting to fiat, someone else is. At some point, this needs to, like, Bitcoin goes to fiat in order to pay someone at some point, because the entire supply chain doesn't live on Bitcoin, right? So even if you and" }, { "speaker": "stephan", "time": "07:29", "start": 449.01, "text": "How to convert to fiat, or a supplier converts to fiat or a merchant converts to fiat for you, and so as a result, the, the access points and the touch points are still there, they're still controlled, they're just maybe a little bit more obfuscated from you." }, { "speaker": "harsha_goli", "time": "07:42", "start": 462.26, "text": "Right. And I think it's important to point out here, just to add to the point you were making there, that as an example, you know, a listener, you might be an everyday retail, you know, just an everyday bitcoiner, and you might be thinking, \"Well, I've got The guy using, probably some, you know, various exchanges and things like that. So it's sort of, it's a complicated thing. I have long been against AML laws and KYC and sanctions laws, but at, at the government level in general, but there's also the aspect of they exist today and they are being used to sort of apply this compliance, Lance, and in the US context, as I understand it, FinCEN, and there's been guidance over the years. I believe there was like this infamous or this kind of well-known one from, I think, twenty fourteen. I think there was another one in twenty nineteen. I believe the twenty nineteen one is the one you call out in your article as well, and maybe you wanna comment a little bit on what was the implication of that, and then how has that- Changed over time. The FinCEN guidance. Yeah," }, { "speaker": "stephan", "time": "08:48", "start": 527.76, "text": "yeah, yeah. Fin, Fin 2019 was, was a whirlwind because, well, this is 2019, this is 2019, this is a while ago, right? like almost six years ago now. And at the time when that came out, everyone was kind of like blown away because it was actually very technically thorough, right? Like they, they were acknowledging multisig existed, they were acknowledging that in a multisig situation, there isn't really, a money transmitter so it was, it was pretty surprising for, for a lot of us really. and, you know, the rules seemed pretty reasonable. It, it wasn't the most clear thing in the world, but at the very least, it said you're definitely not a money transmitter if you do these things. So it was pretty easy for folks to kind of like find the, the happy path, right? And kind of be sure that what they were doing was, if not blessed, it's not gonna get them in trouble directly, right? And I think like, listen, anti, but there are a lot of situations where protections are needed, you know, and, either they're gonna come from the cryptographic level or they're gonna come from the legislative level, right? but, and a lot of these companies, honestly, most companies, if not all companies in the US, are happy to follow these regulations regardless what they say. but the problem is, no one's had any clarity on what these regulations look like. No one's had any idea what the happy path even is, you know? We just know that is clearly a bad path. We just Leon is happy, which is just all sorts of great, you know? so for a lot of folks in the industry, it's been kind of a conversation of, \"Look, we want our industry to grow, we don't want, there just to be a new class of banks now, like Coinbase and Gemini, that just own everything because they're the only ones who can afford an army of lawyers to figure this out. We, we need like a way here for any kind of crypto economy to bloom here. How do we go about this, right? \" And I'm, I'm The downstream effects of all the rulings that have happened since that have kind of struck FinCEN twenty-nineteen out, you know, the ones, the, the ones that have made FinCEN twenty-nineteen not super relevant anymore" }, { "speaker": "harsha_goli", "time": "10:56", "start": 656.03, "text": "I see. And so I guess one of the key points that came from that was this idea of non-custodial is, you know, the idea is if, if you, the company, aren't custodians the user's funds, you're not necessarily to be held Responsible for what happens, right? It would be like, you know, if you're Toyota, Toyota isn't responsible for a person who buys the Toyota car and like, you know, deliberately runs someone over. Toyota's not held responsible for that, obviously. You know, but it's sort of like in Bitcoin land, it's almost, it's a bit different, isn't it?" }, { "speaker": "stephan", "time": "11:33", "start": 693.45, "text": "Yeah, yeah, yeah, it, it is certainly different. it, it is certainly different. The, the regulations have definitely changed since then, right? And now they're like, \"We don't really care if you sign it, don't sign it. If you touch the transaction, dude, if you're even kinda involved in crafting a transaction, you're regulated, KYC, AML, you need to police transactions, you, you need to understand where it's going to, make sure you're not opac-compl- you make sure everything is opac-compliance, Which is pretty funny to me, because I feel like that was kind of one of the points of like broader crypto was let's, you know, put this abstract, like, you know, logic in a smart contract and how do you police a smart contract, right? the government basically said, well, we don't care about the smart contract, we care about people who interact with the smart contract, so those are the folks we're gonna go after." }, { "speaker": "harsha_goli", "time": "12:22", "start": 742.22, "text": "I see. And so I think part of what you're getting at here is around things like the Tornado Cash case and of course the Samurai Wallet" }, { "speaker": "harsha_goli", "time": "12:34", "start": 753.83, "text": "Maybe that-- it seemed that the, you know, the prosecutors behind those cases were trying to, trying to undermine the twenty nineteen guidance. I'm curious if you have a comment to add there, and whether you-- and also, do you think that that is a, like, a Biden administration thing that now that we're, it's, it's a Trump administration, does that change things?" }, { "speaker": "stephan", "time": "12:57", "start": 776.89, "text": "It does change things, but the way you gotta look at this is that, really what all these tools are, is they're just tools in a toolbox, right? All these rulings are just tools in a toolbox. Now, an administration and subsequent, like, you know, bureaucracies may say that they're not gonna reach for these tools anymore, but until they toss these tools out, these tools are still in the toolbox for maybe the next administration, you know? and some of these tools have been tossed, right? But most of them haven't. And honestly, I don Four years are going to be problematic. I think the next four years are going to be pretty great as far as like deregulation goes, but until there is formal legislation that says, \"This is how it is, these are what money transmitters are, these aren't, these, these are what money transmitters aren't,\" Bitcoin is definitely not a security, stable coins are definitely not a security, until there is congressional like laws that come out, frankly, there's nothing stopping the next vote, the next person, you know, just killing it all immediately. There, there really isn't, you That's what the last four years have been with Biden just doing this. Kind of, like, to be honest, and I think we all know this, to his own detriment, didn't make any sense to me. You know, I used to vote blue until all this stuff happened, you know, completely tr- like truthful, and I, I like despise that entire thing now, right? And I think a lot of people feel the same way, especially in our industry here. it didn't make any sense that they, that they would go after crypto, crypto ended up funding his," }, { "speaker": "harsha_goli", "time": "14:24", "start": 864.45, "text": "I see. and then I think, so I guess in a way, the risks that you're sort of calling out in this article Am I understanding you then that you don't believe it's a risk in the next three or four years, like the rest of Trump's administration? You think it's a risk beyond that?" }, { "speaker": "stephan", "time": "14:45", "start": 885.03, "text": "Yeah, significantly. I mean, like, I took a look at the Genius Act this morning, just like, you know, kind of review it, and, that's the stablecoin, bill, by the way. And the stablecoin bill is pretty good. I hope we get other bills like it, but it doesn't provide any actual protections for broader crypto, not in the slightest. in the same way that Bitcoin is regulated, kind of picking winners and losers by establishing, I believe what are called permitted payment, stablecoin issuers, which are basically banks, and, yeah, it just, like guides the SEC to say, you know, SEC, don't call stablecoins securities, right? But aside from that, I don't see any other protective legislation on the horizon, and until that comes about or until Bitcoin has some serious privacy upgrades All these tools are still in play," }, { "speaker": "harsha_goli", "time": "15:36", "start": 935.81, "text": "you know? Okay. And I guess one other question relating to some of those cases. So as an example, let's say the Samurai Wallet case goes down, quote unquote, in favor of Bitcoiners, right? Like, you know, if it comes our way, then would that change things here? Or, maybe you could just talk-- comment a little bit on if that comes down in, in favor of Bitcoiners or, quote unquote, against the, self-custody Bitcoin, what are the implications then at that point?" }, { "speaker": "stephan", "time": "16:04", "start": 963.79, "text": "Would be awesome, right? Because that basically, brings back the multi-sig is not a, or rather, no, actually, specifically, it brings back the if I interact with, if I interact with transactions, I am not, a money transmitter like Klars, right? Like just because you interact with a transaction doesn't make you a money transmitter. that's super valuable for a lot of reasons. It also takes away a good precedent for, going against, for prosecuting folks in Bitcoin for breaking money transmitter laws, there aren't a lot of precedent cases for that, so that it's great for all those reasons in particular. but I actually don't think it's gonna go away. I mean, I hope so, right? But, this is the DOJ, and a judge already ruled that the DOJ's arguments for, the Bank Secrecy Act applying here, overrules Vincent twenty nineteen. So, you know, that, that's pretty clear cut, and if- If they agreed with, with that interpretation, which I think is, you know, pretty ludicrous, then, well, i-it would be in violation of the Bank Secrecy Act. Like, that was kind of the point, right? And for, for the listeners who aren't familiar, the Bank Secrecy Act is basically this piece of incredible legislation that, allows the government to, understand, the financial flows of, like, businesses, through the banking system, right? It does a lot more than that actually, but it's pretty intense. It is like some surveillance state shit, if I'm being honest." }, { "speaker": "harsha_goli", "time": "17:33", "start": 1052.66, "text": "Back to the show in a moment. This show brought to you by CoinKites dot com, the creators of the best Bitcoin hardware security devices such as the Coldcard Mark IV and the new Coldcard Q. Now, we use Bitcoin hardware security devices to keep our keys offline, our private keys offline. Now, the way these work is you can do that setup, write down your twelve or twenty-four words on those, the seed word cards, and keep that secure. Now, you can use This device to interact with the Bitcoin network using software such as Sparrow Wallet, Electrum, or Becto Desktop or Nunchuk as a few examples. Now, you have a range of security features that you can use with these devices such as passphrases, you can use seed x or, or my favorite is multi-signature. Now, if you're starting in a basic way, just start with the device and the USB-C cable, plug it directly to the computer and use it that way, and then later improve your setup. But I believe these devices Are great at helping secure your coins, especially as you start to migrate up into multi-signature security. But don't be disheartened or don't be, scared away. They are accessible, and I think you actually do learn about Bitcoin in the process. So to get yours, go to coinkite dot com, use code livera to get a discount on your cold card. This episode brought to you by Galloy. They are building banking software for the Bitcoin age. So if you are with a bank, a fintech, or a startup looking to offer some kind of Bitcoin product Whether that is a Bitcoin collateralized loan, deposit accounts, or payments, Galloy can help you. Their latest product is called LANA. It is a loans management platform, and you can use this to come to market quickly and offer a loans or Bitcoin collateralized lending product for your customers. Now, Galloy have a lot of experience in the space. They started with Blink Wallet in twenty twenty, and they've since grown this to become a community favorite over time, and so they have a lot of experience making things work in a secure, reliable, and scalable way. available way. So if you need assistance coming to market quickly with a Bitcoin banking product such as lending or deposits or payments, talk to the team at Galloy. You can email them, the email is biz at galloy dot io, or go to the website galloy dot io. And now back to the show. I see. so I, I guess to summarize your view then, you are, let's say, not very bullish on the prospects there, and you think it's a, it's unlikely to go the way most of us would like in the Samrock Wallet case." }, { "speaker": "stephan", "time": "20:01", "start": 1200.59, "text": "Yeah, I, I hope to be proven wrong by" }, { "speaker": "harsha_goli", "time": "20:02", "start": 1202.09, "text": "the way, but yeah, I'm not super bullish. Okay, fair enough. yeah, and I guess the important implication there is because Samrock Wallet, they design-- the way they set that whole wallet up is, it's a non-custodial wallet, and It for to say, oh, you kind of participated in that transaction or you sort of helped facilitate, you know, I, yeah, that, that's gonna be an interesting one. I, obviously, you know, I'm hopeful that it, you know, It goes the way we want, but I, I, I'm not a lawyer, I'm not an expert, don't know enough about that. now, one other thing before we sort of get into some specific compliance aspects of it, I'm curious if you have any high level thought on whether- Stablecoins would be a way for people to stay on the highway, let's say, to sort of stay in the crypto world and just not touch the, the, the legacy fiat system, but only using, let's say, crypto fiat, What are your thoughts there on, so let me put that into a question just to make, make it clear. Does the existence of stablecoins help people stay away from the fiat system?" }, { "speaker": "stephan", "time": "21:14", "start": 1274.23, "text": "Stay away from the fiat system. I don't know about that. This is more like an extension of the fiat system into Bitcoin. like, you know, even if you are pro-stables, that's exactly what it is, you know? especially with this like upcoming legislation, they're pretty much saying that unless you're a bank or an entity that's regulated like a bank, you can't even issue a stablecoin, right? so that makes it very-- And, and the regulating bodies here, by the way, are the OCC, which regulates I mean, it's so they're gonna regulate it like a bank. yeah, it, this is basically banks in crypto. I think it's going to be used in a lot of ways. To that point, just," }, { "speaker": "harsha_goli", "time": "21:51", "start": 1310.56, "text": "just to clarify there, would the point there be though that- I, you know, the thing with stablecoins today is that it's sort of done at the kind of the end points, not the intermediary hops, right? It's sort of like the entities who, you know, like we're talking like high net worth or big companies who are doing like large, you know, issuance and redemption of stablecoins, but all these kind of everyday people who are just using stablecoins around the world, they don't necessarily have to be KYC'd, right? So yeah, no, you're right." }, { "speaker": "stephan", "time": "22:20", "start": 1339.76, "text": "Exactly. Can you explain to" }, { "speaker": "harsha_goli", "time": "22:21", "start": 1340.58, "text": "that point?" }, { "speaker": "stephan", "time": "22:22", "start": 1341.86, "text": "Yeah, yeah. So there's no regulation for, for-- and this, this is like a huge deal between banks and stablecoins. there isn't any regulation right now that regulates, like stablecoin wallets, right? So whereas with a bank, that's clearly highly regulated, if you have a credit card, that's clearly, you know, well regulated, and they know exactly where the money's going from A to B. With the stablecoin, once it's been issued, they don't necessarily know where the stablecoin has gone, right? They can track it" }, { "speaker": "stephan", "time": "22:52", "start": 1371.52, "text": "You never get your anonymization like broken, but if you have just normal like wallets, you should be able to trade without anyone like looking at you, and your wallets aren't-- don't have any KYC obligations, so it should be completely good. and plus, and the real bet, like- The real benefit of like, stablecoins is that you can interact with greater, you know, like decentralized, you know, like platforms like DeFi as a whole or Bitcoin, DeFi or whatever it is you wanna interact with, pretty easily, right? Like this is like an entire ecosystem that I think people often forget exists, but like an ecosystem of bridges, ecosystem of, you know, like lending applications, all this stuff is still there, and you can interact with all that stuff pretty natively, pretty quickly with stablecoins, and it is pretty possible to do that in a relatively anonymous a lot of cool ones, but stablecoin issuers definitely regulated like banks." }, { "speaker": "harsha_goli", "time": "23:42", "start": 1422.31, "text": "I see, yeah. and so I, I think, yeah, I think for me, I, I've- I think it's, with stablecoins, it's interesting just to understand that there's-- obviously, people should be aware there is surveillance on stablecoins. Stablecoins can be frozen. Obviously, there's certain trade-offs that people should be aware of with that. But also, people should be aware that there's a ton of surveillance already being done at the fiat banks, like just on your legacy fiat bank. In order to sign up on any fiat bank Pretty much all around the world, you have to KYC, they have to kind of check things, they, they might need to check your name against like a sanctions database to see you're not a criminal. There's databases like WorldCheck and so on, things like this. They need to be running transaction monitoring on all your transactions. They, they might be looking at the description of your transactions. Whenever you do an international transfer, again, they're looking at, okay, that, there's like SWIFT messaging system and they're looking at those details. They need to be running things like You know, monitoring rules, right? Like if you send a transaction above ten thousand dollars, that needs to be, different countries have different, like, ac-ac-acronyms for that, but in some places it's called a significant cash transaction report or a, you know, basically the large transaction report. There's also suspicious matter reporting if you kind of do lots below that threshold. So I think there's just a lot of people who aren't familiar with how much surveillance is just already going on in the background. So maybe you could explain A little bit of that, you know, from your perspective." }, { "speaker": "stephan", "time": "25:15", "start": 1515.02, "text": "No, I mean, you're completely correct. like, if, if anyone listening is familiar with real estate, like, in order to like purchase real estate, I have a completely segregated bank account that doesn't interact with any of my other, like, you know, bank entities or anything that even remotely touches crypto or any international, bank accounts or, you know, relatives that I have in India, it doesn't touch any of that. It's just segregated, a direct deposit from, you know, Partially because, whenever we end up like purchasing a house, we have to prove that all the money is completely clean, and that is so difficult with a, an active, you know, banking system, right? Or like an active, like, banking footprint. So we just have a very simple bank account, and that's how we get around the surveillance there. but and, and lots of folks, if you, if you're, if you have like, you know, foreign relatives that you send money to, and you also buy real estate at least, you know" }, { "speaker": "harsha_goli", "time": "26:11", "start": 1571.22, "text": "No, I say, I, I don't know about this stuff, but I mean, ultimately, the kind of everybody is-- Most people in that ecosystem, they're sort of all having to tick these boxes, right? Like that bank frontline bank officer doesn't necessarily-- You know, it's not that he wants to know what your, what your internal business is a-- all about, but he's forced to by his compliance team, and there's like a compliance team inside that bank who has to run through and check things, and, and they're running like automated things, and something comes up and gets They need to do some manual review on that, like this is kind of, this is the world we're in, unfortunately. I've spoken a lot about kind of AML and FATF and these aspects of it, but, okay, so the point is, there's this whole fiat bank surveillance that exists. It, a lot of that is in the background, but in certain cases, it's very, it's very much brought to the foreground whenever you sign up for a service and they see things like, \"Hey, what's your source of income? What's your source of wealth? Where did this money come from? What is this money for?\" Like, they're kind of, they'll ask you all of those questions. Now, if we transpose into Bitcoin and crypto land, what exists today, and, you know, Can you explain a bit about the Bitcoin and crypto side of that?" }, { "speaker": "stephan", "time": "27:21", "start": 1640.98, "text": "Yeah, so that, that is basically the forefront of what's happening, right now, right? So from the Bitcoin point of view, Bitcoin is pretty well, like, shackled, to say the least, right? at least from a, like institution point of view. All institutions are already super well regulated. if you interact with Bitcoin, you should have what are called, mTLS. Most people don't have them, but you should have them if you interact with Bitcoin at any At scale, you definitely have, mTLS." }, { "speaker": "stephan", "time": "27:52", "start": 1672.26, "text": "Bitcoin to Bitcoin transactions aren't like a police thing, so that's totally fine. the IRS wants to police like, asset to asset conversion points, bridges, right? So if you wanna move from Bitcoin to Ethereum, the IRS wants to, like make sure that there's KYC and AML, on that point in particular. Like their, their rationale is they want to collect taxes on any kind of like, you know, gains that may occur But it's still the same thing at the end of the day, and yeah, there's a lot of downstream implications of, of that piece in particular, but, but yeah, and then in like the Ethereum land in partic- in Ethereum land, they also really want the police access to smart contracts, right? For, DeFi as a whole, they want to understand who's interacting with which financial, like, you know, like pieces of software and, you know, what, what are the outcomes of it, right? If you put in X tokens, at some Tokens at another price, they won't understand that, right? people kind of forget that there is a, like, the crypto and decentralized finance as a whole exists in parallel to the existing traditional finance world, which is, as you like to your point, incredibly regulated. They forget that, you know, they are actually parallels at the end of the day, and the government just wants to max that parallel. Kind of, people kind of forget just how under the boot we are in the tradfi world. The word we use here is compliance, right? But even compliance, you're just complying with the government, and the government has a gun pointed at you, which is why you comply. they just wanna bring that stuff over here, and when, in, in the process of doing so, are we kind of realizing, hey, this stuff isn't, it's not Because we have, we have a little bit of taste of freedom. So I think it's super important for us to, to fight for that and make sure that, you know, that taste of freedom stays, not really a taste, but here forever." }, { "speaker": "harsha_goli", "time": "29:45", "start": 1785.43, "text": "I see. and do you wanna touch on a little bit, so the travel rule stuff? So, yeah. Again, coming back to TradFi, legacy banking, TradFi world, there's this thing called the travel rule compliance, right? So again, FATF pushes this requirement out, a lot of the local regulators and governments around the world" }, { "speaker": "harsha_goli", "time": "30:07", "start": 1806.54, "text": "Clients, meaning when a transfer from one financial institution goes to another financial inst-institution, here are the details we want you to be sharing. now again, transferring into Bitcoin and crypto world, what's currently going on there?" }, { "speaker": "stephan", "time": "30:22", "start": 1821.87, "text": "the exact same thing, right? there have actually been, like, there are actually protocols that have been created to make it easier between institutions so that they can share the information, like, more readily. I think the most popular one that I'm aware of, anyway, is Coinbase's Trust, right? that's just another travel rule protocol, a TRP. And, yeah, like, this is just a way for institutions to, like you said, share information on who, a transaction, is actually originating from, and, Yeah, certain like vendors like Chainalysis really help, institutions understand, like, you know, who this money's coming from. And this is actually super valuable from a risk standpoint. So one, one part of this conversation that we haven't really talked about at all is risk, and how that kind of fits in here. So right, what is risk? We're talking about fraud, right? Fraud is a huge problem in this space, and, it is why a lot of companies like end up, really embracing, a lot of these regulations because a lot of The problem is, travel rule or TRPs, they also help combat fraud, right? By understanding like, hey, the, all this money is coming from this account, this account is from like some eighty-nine year old man who I think died last year, you know? why is all this money coming from him, right? Stuff like that gets flagged pretty quickly, et cetera, et cetera. Or if there's a flag for, you know, a woman who recently had their stuff hacked or whatever, you know, and you start seeing funds related to that, stuff like that ends up being like pretty pro-consumer, and, you know, I, I, I can understand like the impetus to support that stuff. but at the same time, like, there are other ways to combat fraud. Part of the problem with fraud, and, you know, Stephen, you're at Swan, you understand, fraud is a huge problem in this industry, huge, and a, a lot of people have been scammed. The, but part of the issue is, no one's going after the actual criminals and scammers. They're kind of just out there, making a ton of money, especially in crypto, and the, the US government and no other government is going for 'em. so I don't know, I've got a co-uh, I've got a lot of questions regarding why that is the case, because, Well, a lot of people have lost money." }, { "speaker": "harsha_goli", "time": "32:32", "start": 1952.36, "text": "Yeah, well, I mean, as I'm understanding, I, I, I do believe other governments and other law enforcement are trying to stop these scams or scammers, but, maybe limited success in that and What we have seen is maybe heavy-handed approaches, and maybe that's also why different countries, different around the world, I've seen, I've seen and heard of, let's say, banks who tell their customers or are very wary of, let's say, like elderly abuse scams using crypto and this kind of thing. So there's some awareness and some attempt to stop those things, but at the same time it also- You know, impinges on the freedom, private property, libertarian aspect of, you know, of Bitcoin and of your private property in general. So to me, l- you know, I, I prefer to sort of go the other way of not having government regulation on that and, you know, leave this, this is a role for the market. but nevertheless, this is, this is the world we're in, just so people understand a little bit about that. And so there's a lot of this, Coming to the point about how the, the chain surveillance companies of the world, are being leveraged here to sort of bless coins and say, \"Ah, these coins are, are clean and those coins are, quote unquote, dirty because they might have a higher probability of being related to the Mount Gox hack or the, the recent Bybit hack or whatever,\" they're being leveraged to sort of say, \"This is clean, that's not.\" and I think one of the critiques of that is it's a bit- Sort of a black box, people don't know what's going on, and it's, it's also, people might have heard the term like Kafka-esque, right? Like, you, you can be blocked or denied financial services without being told the reason why, because in some cases, there's this other thing called tipping off. So the, the bank or the institution isn't allowed to tell you why you were off-boarded. They might just sort of say something like, \"Oh, we're, you know, we're terminating our relationship with you. Here's your money back. See ya" }, { "speaker": "harsha_goli", "time": "34:36", "start": 2076.21, "text": "concerns, that can be raised about the way, you know, this, KYC, AML, sanctions, system exists and works, but nevertheless, anyway, the point is, there's all this chain surveillance and it's- It's sort of, in one sense you could argue, is it kind of like a regulatory capture, right? Because they sort of got in bed with the regulators and the lawmakers and sort of tried to make themselves, \"Quote unquote essential to-- now they would frame it like, \"Oh, see, we're cleaning up crypto,\" but I think another interpretation might just be like, \"Hey, you're just sort of getting in bed with the government to have them mandate your services here and in other financial services around the world.\" I'm curious any reaction you have on that." }, { "speaker": "stephan", "time": "35:23", "start": 2122.96, "text": "Tools exist to be used, right? we as developers create the tools, and we can't control people use them, right? We control, like, we create these tools so people can, you know, use free money, absolutely. Other people- Look at these tools, and they figure out a way to, like, you know, make some money by, like data mining the blockchain, understanding, like, you know, where does money go from A to B. That is their right, you know, i-in my opinion. But what this really highlights, more than anything else, is Bitcoin's specific need for more privacy, right? right now, Bitcoin is stable to this like broader crypto narrative, and it's not going to get decoupled from that anytime soon. If Bitcoin upgrades tomorrow to be- As fungible as something like Monero, right? Or at least like, you know, hide privacy, to some like relevant degree. No one's going to be able to stop Bitcoin, right? Like that's the thing people understand. Like, yes, the NGU people are out there. Yes, the banks are co-opting crypto. Yes, chain analysis, like, has completely broken Bitcoin's anonymity, especially with things like the travel rule. But the thing that everyone seems to forget is Bitcoin is still under the control of like all these like cypherpunk-esque people who care About this. Bitcoin still gets upgraded from these people. If these people, like myself included, get together and actually come up with, the right upgrades that preserve privacy or even like, you know, maybe even piss off the government in a specific kind of way, they, they won't be able to say no, right? Like if we integrate, like, an upgrade that makes it so you can't tell a black coin from a, from a clean coin, they won't be able to say no. Right now, you kind of see that happening, kind of with Lightning. Like a silver bullet here, bullet here at all, there's a lot of issues with Lightning. but with Lightning, it is possible to, like, you know, have some level of privacy with your transactions, and you see a lot of institutions being kind of okay with that, right? that's a big deal. So what do I think about, like, you know, The blacklist of coins, I think if the data's out there, then companies are going to do it, right? And you can't stop that. So build better tooling so that companies can't do that." }, { "speaker": "harsha_goli", "time": "37:37", "start": 2257.07, "text": "Yeah, I mean, I'm, I'm sort of yes and no, like a little bit I agree with you in the sense that, yeah, some of this data is just out there, but where I disagree though is where people sort of take some of this data Use information sharing and then go to the state to sort of tell them, \"Oh, hey, you should make a regulatory little, you know, cocoon around me, because I'm gonna be your...\" 'Cause, 'cause in that sense, it's not just kind of freely consenting individuals, it's people going to the state or sort of, pushing the state to do more s-- compliance, i.e., impinging on people's private property rights. So in that sense, I disagree because it's government regulation that was not- From the market, it's just people sort of using the state to pre-preserve their own business interests, right? No, one hundred" }, { "speaker": "stephan", "time": "38:29", "start": 2308.97, "text": "percent. Yeah, and I, I don't disagree with that take in the slightest. But if it's possible, someone's gonna do it, especially if there's money to be made," }, { "speaker": "harsha_goli", "time": "38:37", "start": 2317.4, "text": "you know? And in that sense, yeah. And so in that point, I agree with you there. So yeah, like we can't stop that, and so now, I think it is also-- I mean, there's a few things we can go into here, But even like at the non soft fork change level, like just things that can be done, you know, like Payjoin and silent payments and things like this. So as an example, I know, Bull Bitcoin wallet, Francis Pouliot and the team at Bull Bitcoin, they've integrated Payjoin. And so from what I understand, that wallet every time it does a transaction with Bull Bitcoin, it uses Payjoin. And so that's an interesting thing that if enough people used Payjoin, it would start to actually break some of the change surveillance heuristics, at least One of the important ones, which is the common input ownership heuristic. so that's one example, and then silent payments is another one. I've done episodes on both of these things for listeners who are interested, but, I'm curious your thoughts there. What are some of the- Possible privacy improvements on offer or on the horizon." }, { "speaker": "stephan", "time": "39:41", "start": 2381.15, "text": "So, I mean, yeah, by the way, Stellar Payments, phenomenal, Payjoin, incredible, plan on supporting Payjoin from Magnolia as well. but they're not bulletproof, right? They're still orchestrated events, right? So with a Payjoin, because someone is still like, you know, making sure and matching all the different, like, you know, people involved, that's still something that can be targeted by the government, right? By saying like, \"Hey, mister coordinator, you gotta make sure, you know, Clients or we're gonna come after you. This is basically what happened to Sam's my wallet, by the way, right? so the, the, it's not really like a, a silver bullet by any means, it just, you know, keeps things more anon on-chain, better than nothing. and Salo payments are super cool too, but, Salo payments, you can cut, you can tell where like transactions ended up after the fact, you know? So it, it's, it's something that, you know, loses fungibility long term, right?" }, { "speaker": "stephan", "time": "40:36", "start": 2435.73, "text": "I think those are all awesome. As far as like, actual upgrades like, that we want, I, I have my eyes on a couple, but I, I'm not prepared to like make, make a big pitch on one because I think when, when that day comes where I pitch one, like, with intent, it'll, it'll be with significant intent. because it'll, it'll be one that I think actually has a chance of, of, of getting merged. I've been in Bitcoin for a long time and I've seen like" }, { "speaker": "stephan", "time": "41:06", "start": 2465.73, "text": "Drastic is a huge privacy" }, { "speaker": "harsha_goli", "time": "41:08", "start": 2467.63, "text": "upgrade. I see. Right now we're, we're working on upgrades. Right. Yeah. And I think, probably the historical example here is, you know, from the early days, there was this idea of confidential transactions, right? And so this would blind the amount of transactions, but not necessarily, you know, which, you know, addresses are involved. But, and actually, in fairness, confidential transactions did come to Liquid, so it is available right now on Liquid blockchain, which is a side chain of Bitcoin. For listeners, obviously, I'm You know, but the, there, obviously there are trade-offs with that, like you could either have, I think, larger sized transactions or have some risk of hidden inflation, depending on which trade-off you took, and there might be some more verification requirements and a bunch of things. So I think for various reasons it was sort of seen like, okay, it's not the right choice for Bitcoin overall, at least right now or at least at that time, and who knows in the future, maybe there'll be some other improvement, some other idea, but that's just one example" }, { "speaker": "harsha_goli", "time": "42:04", "start": 2524.12, "text": "Yeah, I think the other thing, like while we're on this topic of could Bitcoin be upgraded with more privacy at the protocol level or at the base layer, at the default, in a default sense? Could it be upgraded under their noses? Is that actually a possible thing? Like, or would, would that sort of make the government treat Bitcoin more like a Monero and sort of force a delisting at exchanges? Or do you think it's sort of, there's just so much inertia, or let's say in three or four years' time, there'll be so much inertia that they just, they just can't- Stop it at that point." }, { "speaker": "stephan", "time": "42:41", "start": 2561.22, "text": "I think there already is a lot of inertia, and I think a lot of the folks who are willing to put a lot of, like, money into this have no idea what the privacy implications are, and, they frankly couldn't care less, right? So right now it is a good time to, to get something like that in. Let's see if the narrative changes and there's a lot more fraud happening in Bitcoin. Well, the thing is, there's already a lot of fraud happening in Bitcoin. It is a common tool for fraudsters. All the, Like ransomware attacks, they all use Bitcoin for payouts, right? and so things are already being used even this recent" }, { "speaker": "harsha_goli", "time": "43:11", "start": 2590.77, "text": "Bybit hack, I think they swapped a bunch of it from-- out of ETH into BTC. So" }, { "speaker": "stephan", "time": "43:15", "start": 2595.4, "text": "yeah, exactly. So I think, I think so, to be honest with you, I, I don't think-- I think most people have no idea. I mean, go, go on the street and ask like the, the next like Bitcoin person, like, \"Hey, do you know what Taproot is?\" You know? Like, I, I" }, { "speaker": "harsha_goli", "time": "43:30", "start": 2610.0, "text": "The lead sponsor of this show is Bold, the best place to buy, sell, and save Bitcoin. For listeners in the US, Bold lets you secure your financial future with complete peace of mind by integrating a low fee Bitcoin only brokerage with next gen multisig vaults. 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I see, yeah. and so- It, yeah, but I, I guess the other thing is, as Bitcoin becomes more prominent, maybe it starts to become more of a concern, like that, that there would be, maybe the average guy on the street wouldn't care, but the The deep state, US government would start to care. Maybe they would start to sort of have an interest and be like, \"Wait a second, you guys wanna do this like privacy upgrade? Would they block...\" I mean, I, I personally, I think it's I think we're more likely to get like a scalability sort of upgrade and maybe using kind of L2s and things like this, that maybe there'll be some additional privacy, and I think that those are I mean, none of us knows, but I would say it's unlikely that it gets blocked if there's like a genuine scalability improvement, or security improvement, like let's say something like an op vault or something that gets more people to be able to self-custody Bitcoin, like it's not necessarily in the government's interest that people get- Are forced into custodial situations. So I, I don't know, I guess it's an open question. curious, any thoughts you have there?" }, { "speaker": "stephan", "time": "45:36", "start": 2735.56, "text": "Yeah, no, I-if there's one thing the government hates, it's, it's AML rules getting broken, like truth be told, right? And let's not underestimate that. They, they wanna know where money is going, and they wanna know if, American money is being, like funneled toward their enemies, right? Like they, they don't like state actors getting, getting money, money that" }, { "speaker": "stephan", "time": "45:59", "start": 2758.54, "text": "Like especially now with a lot of funds getting into Bitcoin, give it four years, right, where Bitcoin is like, you know, like on the cap table of pretty much any, any firm, any hedge fund, yeah, we'll be at a point where you can't just outlaw ban it, okay? If it gets an upgrade, now what? What do you do? You know? how do you handle this, right? Do you regulate the exchanges harder? Well, what if the, the exchanges can't like stop this at all? What if," }, { "speaker": "stephan", "time": "46:26", "start": 2785.53, "text": "as I don't, like, it might be one of those situations where they don't really know what to do. I mean, like, Lightning is kind of in that ballpark, although it is entirely possible to regulate Lightning, because regu-- like, Lightning is decentralized in routing, but it's not like, the most decentralized thing in the world. You can regulate these individual servers pretty easily, you know, and you can identify them relatively easily." }, { "speaker": "harsha_goli", "time": "46:49", "start": 2809.45, "text": "I see, yeah. And one element that comes in there is that it's the same kind of idea that they'll go for the on and off ramps, right? That they would go for, you know, the, the bigger exchanges and the bigger Lightning, you know, the hubs, and go to them and, and try to force them into the compliance, you know, longhouse and say, hey, yeah, you're not allowed to receive these funds unless it's from a known Lightning pub key or something like this, or you've KYC'd that person, or you have a relationship with that other, you know, from exchange, from Binance to Coinbase or to Kraken to Gemini or whatever, something like that." }, { "speaker": "stephan", "time": "47:31", "start": 2850.86, "text": "That's absolutely how, like, one way to, to break, some level of, anonymity on Bitcoin, right? Like if we do, I don't know, something crazy like make Bitcoin, like Monero, where everything is a coinjoin, one way they could break it is by saying like, you know, we only accept Right? between us and the last, like regulated institution that submitted to TRP, right? That, that is absolutely one way to break it. it'd be terrible UX for everyone involved, but that's never stopped any, anything so" }, { "speaker": "harsha_goli", "time": "48:02", "start": 2881.95, "text": "Yeah, but then in that case, you could actually see like a world of sort of white market coins and so-called black market coins, and maybe there would be Well, it's hard to sort of predict how things would go, but would there be ways to sort of cross over those two worlds, or would it just be like there's these two segregated worlds of coins? You've got the black market Bitcoin and the white market Bitcoin. So that, that world exists right now already, by the way," }, { "speaker": "stephan", "time": "48:28", "start": 2907.52, "text": "right? Like that, that world already is a very real thing. you, like what, what, what the black market Bitcoin person is just trying to do is they're just trying to find a bag holder, right?" }, { "speaker": "harsha_goli", "time": "48:39", "start": 2919.09, "text": "and there" }, { "speaker": "stephan", "time": "48:44", "start": 2923.61, "text": "So fun fact, a lot of, a lot, I'm not gonna name any names, but a lot of businesses, s-like, they use a kind of enterprise wallet system that segregates the incoming funds from the outgoing funds. If, that system doesn't use AML, right, doesn't look out for any OFAC, non-compliant coins, what you could do is you could send money to, this system and then withdraw money from that system and it would effectively act as a mixer, right? This is, this is a problem for a lot of Because if they're not OFAC compliant, then they're opening themselves up to this, right? but like, yeah, that's one example, right? That's a little bit more, a little bit more devious and insidious. But, if I was, if I was, you know, the buy bet people, what I'd be trying to right now, is I'd be trying to go to like Asia, because in Asia, there's a ton of poorly regulated exchanges or even ATMs that, offer relatively, relatively decent prices, and I'd be" }, { "speaker": "harsha_goli", "time": "49:38", "start": 2977.93, "text": "trying Kind of break it down and do smaller amounts, of course, not endorsing or kind of advocating, but just trying to logically analyze the situation and understand, okay, what's the incentive, what is the way things are gonna play out. But as I zoom out a little bit, I think- Look, in the early days of VoIP, there were some governments were against VoIP, Voice over IP, but nowadays governments use VoIP, right? And I think it's kind of like, it's like the internet, you know, how do you stop this thing? Like, and, and then even on the blacklist question, on the whitelist and blacklist question, there'll be different governments with different whitelist and blacklist, no? Right? Like, if, if you, if one government maybe likes this individual and maybe some other government dislikes that individual, maybe there'll be different lists." }, { "speaker": "stephan", "time": "50:26", "start": 3025.68, "text": "Yeah. I," }, { "speaker": "harsha_goli", "time": "50:27", "start": 3027.41, "text": "man," }, { "speaker": "stephan", "time": "50:28", "start": 3027.91, "text": "I, I can't even imagine how that'll work. right now a lot of entities, rely exclusively on the OFAC list from the US government." }, { "speaker": "harsha_goli", "time": "50:35", "start": 3035.17, "text": "Right. But there's, and don't forget, there's, there's US sanctions and European sanctions and other government sanctions. So it's the same kind of thing, just different lists. Yeah, yeah. So I don't know that they're necessarily all gonna agree on, \"This is the true list of quote-unquote terrorists or bad people who aren't allowed to use this system or transact with fiat We'll see exactly how that plays out." }, { "speaker": "stephan", "time": "50:57", "start": 3056.93, "text": "Yeah, no, yeah, it, it'll be baked into something like, the travel rule, right, where you can kind of like tell, like, okay, is this person, someone I can accept money from, is this person I can send money to? It's gonna be set up like that. These institutions are just gonna end up like collaborating quite a lot, realistically. I mean, that's exactly what's already happening." }, { "speaker": "harsha_goli", "time": "51:15", "start": 3075.02, "text": "Yeah, but at the same time, I think over time, on one side, you could see more peer-to-peer sort of, you know, people set up a BTC pay server and just not care about any list, and they're just doing, you know, quote-unquote, free market commerce, not caring about who, what the source or the origin of any of the coins are. but then on the other hand, yeah, of course, there'll be this very regulated world. I- Also, I mean, I think it's also we may not end up in a world where Bitcoin is private as, as what we want, you know? That, that, it just, that might be an un- Comfortable truth or reality that we all have to deal with, right? I'm not saying I like it. I would like for Bitcoin to be private, but I don't, I don't know whether it ends up that way. And so maybe people just have to sort of make their peace with that and say, \"Well, at least we took the cenerage away from the state.\" But There's still an element of, you know, low privacy." }, { "speaker": "stephan", "time": "52:21", "start": 3140.52, "text": "Yeah? I mean, Bitcoin isn't private today at all. That, that battle has long been lost. I mean, I hear ya. I just, it's one of those like I can't agree kind of things, you know? like that, that's, that's what ideals are, right? They're not really the most like, baked in what the ground looks like. They're, they're, I want-- This is how I want the world to look like, you know? And I want the Completely free of state influence as well, as much as possible anyway. and so toward that end, like that's why I choose to work on this stuff instead of, like, you know, just try to fight or something else, it's because this stuff aligns with my ideals. but I do agree that, like, that is, that is a potential reality. It's, it's, it's the one we're in right now, and, from my point of view, as long as there are people fighting for, like, more privacy, there's still This is, this is people, this is us, this is our own protocol, we can do whatever we want with them. We just have to get each other to agree. And that's simple enough." }, { "speaker": "harsha_goli", "time": "53:23", "start": 3203.02, "text": "Yeah. Well, I think it's probably-- I'll also make this point. Around the time of World War II, I think there were- Something like sixty or seventy nation states. And now, in twenty twenty-five, you know, you look on like the UN number, it's like a hundred and ninety-three, a hundred and ninety-four nation states. There's a lot more nation states now It could also be that we might start to see more, more and more, secession or breakaway, of some of these different states, and maybe then this kind of whole concept of whitelist and blacklist kind of breaks down if there are Other zones that are just kind of more free market. W-w- I mean, we don't know exactly what the future holds, maybe twenty or thirty years from now, maybe there'll be more nation states and some of those will- You know, hopefully some of them are kind of more principled, free market-ish. I don't know. but I, let, let me bring it back to, I guess, today. On the legislative and regulatory side, is there much that can be done there? Is there lobbying? Is there-- what do you see as the is there an element of pushing on those angles that Bitcoiners can or should be doing?" }, { "speaker": "stephan", "time": "54:36", "start": 3275.57, "text": "So we care a lot about privacy here, but, like KYC, AML, all this stuff is really expensive and is really cost prohibitive for a lot of businesses. And so toward that end, a lot of, a lot of firms, a lot of VC firms, you know, like exchanges, they've been lobbying for less KYC, less AML, less regulations as a whole, because, you know, they wanna see this industry grow. And, Like, I think that's the, the real like, you know, call to action, the real banner here is like less regulations, not because we want more privacy, but because this stuff is strangling, you know? it really is strangling the industry. And I think, like that's, that's enough of a, of a message or that's enough of a reason for most people to say, like, hey, maybe we should take it easy, you know, a little bit here. Maybe we should, you know, not try and restrict this stuff so hard because, y Like going for this, they were gearing up to like regulate every single like, you know, BTC pay server, right, type thing, right? which is would be ludicrous and put most, BTC pay servers like out of commission, not just out of like principle, but, because, you know, who can, who can pay for OFAC compliance when you're running a small little shop, you know? like that's bananas. so yeah, I, I think there's a lot of hope in that regard, in particular, there's a Make this ecosystem flourish." }, { "speaker": "harsha_goli", "time": "56:01", "start": 3360.77, "text": "I see. Yeah, and I do think-- and I definitely wanna echo your comment about the ineffectiveness of this stuff. I did an interview a couple years ago with- Ron Paul, not Ron Paul, so P O L, Ron Paul. He was a researcher who was talking about the ineffectiveness of this AML stuff, like how much money goes into it versus something like point o five percent is actually relating to illegal funds. So you just sort of see the massive disparity. And also there are various arguments about the constitutionality or unconstitutionality of some of these laws, like the Bank Secrecy Act in the US. So I'm-- so we might see that if, you know, if there's enough- People speaking about this kind of thing that maybe some of the laws could be repealed in terms of taking away some of this ridiculous AML and so on. I-- and actually, if I recall correctly, now I'm not an American, but I recall, in the election campaign, I think Vivek, although he-- I know he's no longer kind of in the Trump, close in the Trump administration, but he was talking about going against AML at some point too, wasn't he? Yeah, he was. I" }, { "speaker": "stephan", "time": "57:06", "start": 3425.91, "text": "mean, like, to your point, right? Like, like it, these compliance costs are ludicrous. They're so high, and we still have so much fraud, right? Like, it is still such a huge problem. The entire banking sector, like, al-alone, is paying so much money in this space. The entire crypto sector. Oh, did I lose you? Yeah, now go on. Okay, the entire crypto sector as a whole is going, is paying immense amounts of money for this stuff, and we still have like fraud issues up, up the wazoo, like risk issues up the wazoo. It is ludicrous to me, you know? and, and honestly, like that's part of the reason why I call this stuff kind of a scam, you know? And definitely more just to, as an excuse to, like, put the boot on crypto or, like, you know, make sure that this stuff plays game, because it just, it's not effective at the You know, so what other reason is there?" }, { "speaker": "harsha_goli", "time": "57:59", "start": 3478.92, "text": "Yeah, I think part of the case has to just be made that if you really wanna stop actual crime with victims, it-- you shouldn't be doing this really ineffective stuff that just pushes all this compliance cost and creates all these crazy, you know, this, you know, every-- you know, that you need an army of lawyers and accountants and compliance staff, and that the way to stop crime is to sort of- Find other ways to actually stop real crime, whether that's scamming and fraud and other aspects of it, and to not treat money moving as the crime. and so I think that's probably one kind of broader culture shift. But in terms of the more concrete sense of whatever lobbying, and whatever other efforts can be made to change the laws, where do you, do you, do you have an angle or a, a, a, a specific way to approach that for people who are interested? Want to do something?" }, { "speaker": "stephan", "time": "58:53", "start": 3533.37, "text": "Yeah, a lot of folks, like there are some actors who are right now working on some really interesting laws. like the Satoshi Fund folks are working on, like, you know, at least really related to the Genius Bill, right? And there's a lot, a lot of other folks who are kind of like working with, with the Kryptosar, on, you know, like some new legislation here. On David Sacks, yeah. Yeah, David Sacks, on, here. I, I hope this stuff works out, but right now, as far as I'm concerned, really, it's the, the kings on the hill who are making the rules for the rest of us, you know? And I, I think, like, as far as like lobbying goes, it's going to be them, right? They just got rid of the, the crypto council, so now it's gonna be a rotating, a rotating, like kind of conference kind of thing, I think they're gonna get like a lot of their decisions directly from like industry leaders and, you know, the, the largest folks in the space, right? And they're the ones who're gonna define it for the rest of us, right? So we're kind of just like, a-all in their like good graces, and I, I hope that it works out, but if I were them, right? I, I, I would be pretty interested in, a regulatory moat of some kind," }, { "speaker": "harsha_goli", "time": "01:00:00", "start": 3600.4, "text": "you know? Right. Setting it up that where they can comply but the smaller players can Yeah. but overall, Trump-- you, you would say Trump has been much, you know, pro, more pro-crypto, obviously. hopefully moves aga-more, more moves against Operation Chokepoint two point o, the appointments at SEC, Treasury, Commerce, CFTC, That hopefully those are at least positive, positive signs to, look forward to." }, { "speaker": "stephan", "time": "01:00:33", "start": 3633.01, "text": "Yeah. No, absolutely. The, the regulation of all these, agencies, absolutely. But the only thing that matters, as far as like the government's concerned here, is protective legislation, right? Something that specifically says, \"No SEC, you can't do this,\" and \"OCC, you don't have any ability to do this,\" right? That's, that's what we need. The stablecoin bill is a small step in that direction, but not really. you know, Regulating is just a reprieve that ends the next administration. Remember, this is gonna be Trump's last appointment, right? so this is temporary and keep that in mind, like it isn't changed forever. Crypto's a long game. I know, like a lot of times, because we go-- we live in cycles, it doesn't feel like that, but this is a long game, and right now, this is a short reprieve." }, { "speaker": "harsha_goli", "time": "01:01:15", "start": 3675.42, "text": "I see, yeah, interesting. Well, look, I think that's all we've got time for. So just where can people find you online if they, you know, wanna find you or Magnolia?" }, { "speaker": "stephan", "time": "01:01:23", "start": 3683.31, "text": "Dude, find me online on X, I am underscore arshbot, A R S H B O T. If you wanna hear more about Magnolia, go to our website, Magnolia dot financial. happy to hang out with you guys. Great, well, thank you for joining me, Harsha. Thank you so much for having me, Stephen. You take it easy. Bye now." } ] }