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New Podcast Episode 🎙️ + EthCap On The Road! ✈️

Ether Capital Newsletter
Ether Capital Newsletter
“We have an opportunity to create a much more democratic, open, less exclusive financial system that better serves our people — if we harness it.” - Chris Giancarlo, Former Chair, U.S. CFTC.

TGIF 🥂
There has been a lot of buzz this week around pending crypto regulation in the United States, so it couldn’t be more timely that we had the OG crypto regulator — Chris Giancarlo, former chair of the U.S. Commodity Futures Trading Commission (CFTC) — join our podcast! 🥳🎙️
You can listen to the episode on both Spotify and Apple. We also published a transcript of our conversation.
Talking Crypto with 'CryptoDad'
For those who might not be familiar with Giancarlo’s impact on the crypto industry, he was one of the first policymakers who embraced blockchain technology and financial innovation. In 2017, he helped greenlight the world’s first regulated marketplace for crypto derivatives. 🚦 In this case, it was Bitcoin futures.
We spoke with him about his new book, how he got his unusual nickname, his secret life as a musician 🎸, and of course, the need for a more open and inclusive financial system. 🏦💰
Here’s the TLDR version of our conversation 😉
Life is a (Financial) Highway 🛣️
A visual way to think about how financial systems should operate is to compare them to highways, according to Giancarlo. 🚗
“We don’t tell people before you get on the highway [that] you’ve got to give up where you live, what bank you use, your social security number at some toll booth and then get on the highway in case you do something wrong. People get on the highway freely and then their activity is monitored,” he said.
One of the main concerns with entity-based regulation, like how commercial banks operate, is that consumers need to give up copious amounts of personal data in case they partake in illegal activities. Giancarlo’s argument is that banks and other centralized counterparties should rely on activity-based regulation, where they would monitor for unusual behaviour and then seek to censure the activity and obtain identity. 🕵️
Regulators need to accept that the financial world is undergoing a digital transformation — with or without — their support. The idea of financial liberty is driving millions of people to embrace emerging technologies like decentralized finance (DeFi), which allows people to operate in an environment that doesn’t require permission to conduct financial transactions. Giancarlo said it would be wise if those monitoring for suspicious activity use the very same tools that support DeFi to their advantage.
“The same technologies that enable DeFi also allow regulators to move from entity-based regulation to activity-based regulation. Rather than simply deputizing entities to provide services to regulators, we can use an approach to quantitative data analysis based upon blockchain-based transactions to analyze transactions, look for bad activities and then attack the activities without needing to so much deputize all these entities,” he said.
Creating a Fair Financial System
Giancarlo explains that U.S. banks are not just gathering “way too much” personal data, but exclude many individuals from using their services. ❌🔐
“The institutions, and our banking system, is horribly exclusive because if you don’t have identity, you can’t engage the full range of financial transaction activity.”
The accredited investor rules in America also prevent those who are less wealthy from accessing the market. In most cases, this excludes younger generations and limits activity to other people who have accumulated wealth overtime.
These outdated rules make it easier to comprehend why so many individuals are flocking to crypto and blockchain technology as it’s a system built on trust, openness and inclusivity.
Moving From Analog to Digital
Treating finance like a highway and permitting open-source banking might seem like radical concepts considering we’ve operated under a centralized regulatory financial system for centuries. But what regulators need to be thinking about is how the next generation interprets the existing model and where they will take their business.
“My kids had a relationship — long before they set foot in a branch bank — they knew a social media platform; they knew an online retailer and they knew a mobile phone provider as institutional relationships. And so, it’s no surprise that the notion of a means of payment provided by a social media company is not a foreign idea. There’s no surprise that an online world is comfortable with that. And if they were gamers, they grew up trading things on a peer-to-peer basis,” said Giancarlo.
When you look at the big picture, it’s clear that legacy banking systems have been slow to adapt, whereas emerging technology like blockchain has been quick to evolve. The digital innovation addresses a lot of pain points that exist in the traditional system and enables society to conduct financial transactions in a faster and more efficient manner.
The takeaway from our conversation with Giancarlo is that he would like to see lawmakers in Washington stand united and accept the financial world is changing. He encourages regulators to acknowledge that crypto and blockchain technology are here to stay and figure out how to channel the innovation, instead of fighting it.
“You harness motion, you don’t try to stop it and stop motion will just run you over. This innovation will run over those who try to deny it, but will reward those, I think, who try to harness it for good.”
EthCap in the News
EthCap’s CEO Brian Mosoff caught up with Saijal Patel from Strictly Money earlier this week. He explained that despite the recent pullback in the crypto market, there are reasons why investors should be paying attention to Ethereum right now. Hint: Staking is one of them. 🥩
The episode will air on Sunday, January 30th at 9:30am EThere’s a list of channels where you’ll be able to watch. We’ll also be sure to Tweet a link to the episode and post it our LinkedIn page.
Brian was also quoted in an article published by The Logic this week about Cosmos’ co-founder Ethan Buchman and how he’s attempting to solve one of the biggest challenges in the industry.
Back to the Community! 🚀
✈️ In February, we’ll be heading south of the border to attend ETHDenver 2022 — one of the most innovative crypto festivals in the world — to show our support for Ethereum and the talented community of developers, influencers and creators. 🐱‍💻
It’ll be a busy week of building, hacking and collaborating, so be sure to keep an eye on our Twitter and YouTube channels where we’ll post daily updates.
Our CTO Shayan Eskandari will also be mentoring aspiring developers at this year’s conference.
To help event-goers prepare, he’ll be hosting a few lunch and learn virtual sessions over the next couple of weeks. Check out his latest video where he helps viewers brush up on ETH slang alongside members of the Certified Ethereum Professional Committee.
Newsworthy Links & Highlights
Mike Katchen, CEO of Wealthsimple, spoke with Bloomberg this week about why Canada should step up it’s crypto game and make the country a leading destination for the industry. From our perspective, this would be a great way to draw crypto talent back to Canada based on China’s outright ban and policymakers being divided over regulation in the U.S.
Chicago-based crypto exchange FTX US is quickly growing and reached a valuation of US$8 billion this week after a US$400 million funding round led by SoftBank Group Corp and other big names. Sam Bankman-Fried, the 29-year-old billionaire and CEO of FTX, has an impressive entrepreneurial track record and now he’s teaming up with The Mooch to launch a crypto conference in The Bahamas.
Not even gargantuan tech companies like Meta can compete with open-source blockchain technology. The company is selling its cryptocurrency venture Diem to a small Californian bank for approximately US$200 million, according to media reports.
Earlier this week, U.S. regulators proposed changes to the way it defines exchanges, which could have an massive impact on DeFi and new trading venues. The new alternate trading system (ATS) proposal has prompted concerns by some of those in the crypto community who view this as a “radical paradigm shift” that was not contemplated before by the SEC. It has the potential to fuel the argument of ambiguity when it comes to how structures and assets are viewed and defined. U.S. SEC Commissioner Hester Peirce filed a dissenting statement on the proposal and highlighted the concerns that it doesn’t give the public enough time to respond to the amendment. ICYMI, Peirce joined our podcast last December to share her views on regulating crypto and the challenges she faces as someone who embraces new technology.
Have Questions About Crypto?
The industry is constantly evolving and there’s a lot of information to get your head around, especially if you’re new to the space. That’s why we want to help! 🦸
Email your questions to info@ethcap.co and we’ll respond to a couple in next week’s newsletter. Don’t worry, we’ll protect your identity. 🔒
Thank you for subscribing to our weekly newsletter! We’d love to hear your feedback so please don’t hesitate to reach out 😎🚀
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