Crypto

Episode 34: Regulation of Cryptocurrencies with Dave Rodman

Ben Lakoff, CFA
March 1, 2021
46
 MIN
Listen to this episode on your favorite platform!

With Bitcoin and Cryptocurrencies reclaiming all time highs, “regulatory uncertainty” is still high in the cryptocurrency industry?

Don’t miss this episode with Dave Rodman going into detail on the state of regulations in the cryptocurrency industry – where we are now and what’s needed for the space to thrive and continue to grow.

Disclaimer: The content of this podcast is meant to be general in nature and does not constitute legal advice, and nothing contained in this podcast can be deemed to establish an attorney-client relationship. The opinions expressed on this podcast are solely those of the people giving them and should be considered to be informational only. The DLT and cryptocurrency landscape is extremely fluid and the content addressed today is subject to change with no notice. If you have specific legal questions or if you need more tailored guidance, please schedule a meeting with Mr. Rodman

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Show Notes

0:00:00   Welcome and context

0:02:27   What is your background?

0:04:46   What interests you the most about crypto in general?

0:08:05   What is the current regulation of crypto?

0:10:30   What are the regulators trying to do?

0:16:01   What regulation can propel the crypto space forward?

0:21:14   Are there other jurisdictions that have this thing figured out?

0:23:40   What could happen to force out cryptocurrencies out of the US?

0:26:33   What would be considered a regulatory risk?

0:29:21   What are the risks for the innovators in this space?

0:34:10   What would it look like if Bitcoin gets banned?

0:37:31   What are your thoughts on CBDCs?

0:44:50   What are the most interesting niches within crypto for you?

0:49:35   Where can people find out more about you?

Show Links

Rodman Law Group

Dave on Facebook

Rodman Law on Twitter


Episode Transcript

Ben: [00:00:00] Welcome to the alt asset allocation podcast, exploring alternative investment opportunities available to the everyday investor. Here’s your host Ben Lakoff.

Hello and welcome to the all to asset allocation podcast. Today’s interview is with Dave Rodman with Bitcoin and cryptocurrencies reclaiming all time highs.

Regulatory  uncertainty is still very high in the cryptocurrency industry. There’s certainly a lot of moving parts and lack of clarity in this new industry. And you won’t want to miss this episode with Dave Rodman, going to detail on the state of regulation where we are now what’s needed for this space to thrive and continue to grow.

Before we jump into the episode. I wanted to take a second to thank you for all the great questions and feedback I’ve been getting you guys really, really rock. It’s awesome. If you’re getting some sort of value from this podcast, please drop me a line or leave me a review on Apple podcasts. These things really mean a lot.

There we go. All things cryptocurrency regulation with Dave Rodman. Enjoy it. Welcome to the show, Dave, glad to have you today.

Good to be here.

we were talking before we recorded. You actually were podcast episode, number one about four or five, five months ago now. And some of the difficulties that come with being podcast, number one are somebody doesn’t understand how to make the sound sound.

Very good.  that episode got scrapped and here we are, again. Beginning of December, definitely not episode number one, but I will congratulate you for being episode number one on the podcast, regardless of when this is being published.

Dave: [00:01:47] Thank you, man. I mean that actually means a lot now because you have had some pretty awesome people on here since that very awkward and.

Technical glitchy day that we sat down to tear this.

Ben: [00:01:58] Absolutely. Yeah. It’s amazing how nerve racking it actually is in getting it going.  definitely grateful for you to, to work with me through those things now, you know, having people like Jim Rogers on the channel to it’s an absolute dream, But either way, it’s all about you today. I’m really excited to have you on I think my, my listeners will really enjoy a lot of your, your depth of experience within crypto and cannabis and securities law. But before we get into all those things, I just wanted to start off a little bit about you your background, what you do.

Dave: [00:02:28] Yeah. So I grew up in Colorado and. I I went to school, Tufts university worked in finance for a couple of years. In New York city for Merrill Lynch ended up not staying there because I saved Merrell about three and a half billion dollars of credit exposure and they gave me a $1,500 bonus and no raise.

So I quit, but I took three weeks vacation and then I quit. And then I went to law school. In between the two is actually where I met you when you were in my bar, back at a bar in Aspen, Colorado. And then I went to law school and started my own firm. Got, got started in the cannabis space kind of by accident and really grew to love it because it sort of fit my from my mindset, not, not from like a.

Pro cannabis standby, but just sort of a sort of illegal geek, kind of, where are the gray areas analysis really appealed to me and have been doing that ever since I have six attorneys working with me now. And in 2000. Six six, 17, 2000. Wait, it doesn’t 17 is when you actually got me interested back interested in crypto.

I bought my first Bitcoin in 2013 and forgot about it for a while. And then right before, like the ICO, boom you and I started talking about crypto and I have been hooked ever since. It’s all your fault.

Ben: [00:03:56] I don’t know if I should apologize or say you’re welcome either way. It’s probably the right one.

Yeah. you got your first Bitcoin in 2013. That’s crazy early, but then 2017, I mean, you and I started talking about crypto quite a bit, getting really interested and you ended up helping set up all things legal for one of my first companies within the crypto space. definitely can attest to your knowledge and depth of experience within the space.

That’s for sure. I’m curious though. I mean, obviously. You, started getting more involved in crypto in 2017, but what interests you most about crypto in the space in general?

Dave: [00:04:39] I think I could spend the entire podcast talking about what interests me in the space, but I think that money is the last great frontier for tech.

And I think that. The application of programmable money and programmable assets is truly something that we haven’t full. Even those of us who are deep in it, haven’t fully comprehended. I think that, you know, just as an easy example, I mean, I trained as a securities lawyer. I think that eventually there are components of this that could make securities law, basically at least secure securities lawyers.

Obsolete rather than needing an opinion letter about whether or not someone could hold a certain asset. In theory, these things could all be plugged right into the smart contract and you would be, I mean, there’s the, there’s the, there’s the, the light side of that. And then there’s the dark side of that.

On one side and one hand you could. Make it so that no one would ever, you would never, ever violate a securities law. On the other hand, you could drastically Mo monitor and restrict people from being able to do things. And so you get like you know, and I think we’ll probably talk about this a bunch because you and I have talked about it privately a lot, and there’s like, The clear-eyed and, and idealistic, you know, eat the programmer view on all this stuff.

And then there’s like the, the dystopian aspect of this that could really easily happen. So I didn’t really answer the question today. What, well, so I guess, yeah,

Ben: [00:06:13] Those are very interesting aspect. those are the most interesting apps aspect for you with crypto.

Dave: [00:06:18] I mean that, and like the democratization of, of finance.

I mean, the fact that you’ve got a whole generation of crypto geeks now who are talking about interest rates and yield and things that, that no one would have paid attention to those people, but mostly people wasn’t dependent pay attention to pre. Well pre defy, but in general, I think that there has been a lot of intellectual capital that’s being poured in this space.

And that is super exciting.

Ben: [00:06:48] Absolutely. I forget where it was, but long ago I heard Bitcoin explained as the mind virus, because as soon as you start thinking about Bitcoin, you start understanding the way that it works and then you start questioning money and you start kind of questioning everything else.

And it’s kind of unraveling sweater as you go through. And it leads you to reading books like the creature from Jekyll Island and. All of these things, that sovereign individual, all of these things that we’ve gone down. it’s certainly it is absolutely. Interesting as hell. That’s for sure. I love what’s your background in securities law.

I think it and then cannabis, I think it provides you a unique view and perspective within the crypto space, But, you know, from backing up for a bit, from a legal perspective, let’s talk about crypto, like paint me a picture of the current state of regulation within crypto, where do we stand from a regulatory standpoint?

Dave: [00:07:45] So I think if I were to say what I’m about to say to somebody in the, in the ICO, boom of 2017, they would, you know, Be shocked. But I think that the answer to that is that we haven’t seen then, or now crypto regulations yet. I think as of right now, you can think of it as the. Sleeping giant and of regulatory agencies is still asleep or maybe is just starting to wake up.

And has th we’ve mostly seen it ignore the space. Of course, the telegram and kick enforcement acts actions were big deals. I mean, they were, they were. Definitely chilling for the space, but at the end of the day, we’re talking about the sec and that’s it. We, we have not seen, I think that the the staple act is an, is a good example of what could be what could be coming down the pipe.

The example of people who may not kind of understand what they’re doing, trying to legislate. I think that right now there is sort of a live and let live sends within the, within the regulator business dichotomy. I don’t think that’s going to be the case too much longer. And and I think you’re right bigger bigger enforcement, more enforcement more cause more fights.

And it’ll be more than just the highway test and the sec, I think that’ll be small potatoes compared to what’s coming.

Ben: [00:09:12] And, and for me, obviously I follow regulation changes and these things within the space, but it, it seems like, I mean, there’s another, a number of different regulatory authorities that kind of have something to do with crypto.

at the sec, obviously the CF CFTC, there’s a, there’s a number of. Three letter for letter alphabet soup that has something to do. Can you, are you familiar enough to give me kind of a broad explanation of who does what and where the kids are?

Dave: [00:09:43] So I think the biggest one that you have to have that list is IRS.

That’s a whole nother kettle of fish. But that other one. Yeah. Yeah. So obviously sec regulates securities and. CFTC regulates current commodities and, and basically CFTC has set a theory. I mean, Bitcoin. We’re doing it as a commodity. It’s like currency trading. We’re going to take that here.

And then basically everything else seems to sort of fit the a sec is definition of a security in one way or another. But that leaves off the OCC the to just meet the straight up DHS department of Homeland security, that’s going to be a huge component to this. FinCEN is largely been ignored.

And that’s, that’s one that we’ve got a lot of experience with from, from cannabis work. Inset is scary. You gotta be careful with this.

Ben: [00:10:32] So offense and I’m not familiar with what that acronym stands for just for my listeners. What does it stand for?

Dave: [00:10:38] So it stands for the financial crimes enforcement network as the department is a, it’s a Bureau in the treasury.

And it basically. Regulates the, the actual pipelines of currency. So when you go to the bank and you deposit 10,000, more than $10,000 of cash in a day or 12,000 and change in a year you. Have the bank slashed, you fills out a CTR, which stands for a currency transaction report which basically logs that.

So this idea of cash being truly untraceable is, is not the case. If these financial institutions follow the rules and you know, a little bit of a segue or an aside here, I mean, people are, are kind of, Oh, Bitcoin is how terrorists finance. Bad deeds and stuff. It’s no, it’s, it’s us dollars. And the correspondent banks in the Swift system, clearly aren’t doing their job because we’ve seen that Deutsche bank got had that FinCEN leak of the billions and billions of dollars of not reported dollar transactions.

And that’s just dollars. I mean, forget euros, you get one that’s just dollars, which as the reserve currency, we kind of variable to. Keep a hold of right now, but that’s not gonna stay that way. So, so anyway, so if you don’t have, if you’re trying to avoid the CTR reports, then the banks they’re supposed to file SAR stands for a suspicious activity and that, that can, that can lead to trouble.

If you’re, if you’re basically leads to allegations of money laundering I’m kind of hopping a little bit, but

Ben: [00:12:11] that’s, that’s fine. But like that’s only if this cash touches the banking system, right. If I give you a big bag bag full of cash and you give that bag full of cash to somebody else, like those transactions are pretty untraceable, right?

Dave: [00:12:25] That’s correct. But like, so. If it truly does stay outside the system. Yes. But at some point someone’s gives that bag of cash for not just giving it to another person, like whether that’s buying a vehicle or a piece of property or paying a contractor who then wants to go and do those things.

Eventually that’s sort of like the, the, the accordion effect on this is eventually it gets into the banking system and then it’s like, well, how’d you get it? And you’re supposed to have been, even if, even if you didn’t actually put it into the banking system, if you are a non individual, if you are a business you’re supposed to be keeping track of that, even if you were all cash, you’re supposed to hope and doing all that stuff as this as if you were in the system.

So the minute somebody goes off and fails to and, and triggers that sort of like. Touch with the regulatory world. There is absolutely a way in which people are trying to figure out where that money came from. And I mean, that’s how, that’s how money lend laundering.  Schemes are always ended up failing is that there’s some, somebody cracks.

Somebody makes a mistake and the whole thing, balloons.

Ben: [00:13:36] A perfect segue into CBD CS, but we’re not going to go there yet, but rest assured we will because there are a number of issues with the current system and the way that it’s set up and, and all roads kind of point to Cassius archaic, and doesn’t make any sense.

But we’ll lead into that a little bit later. with the different regulatory bodies, the different regulations that do exist, the ones that are slated to come out. Like, where are the massive holes I constantly working in the cryptocurrencies industry. I can just constantly here, we need regulatory clarity, or we need some sort of, some sort of clarity on regulations to help the space go forward.

And I listened to a good podcast with the CFTC chairman talking about, you know, you don’t want to squander innovation and kind of let things go. it sounds like they’re always playing this delicate balance, but. In your opinion, your legal opinion, like what sort of regulation would, if, if, if enacted or if given would, would provide a lot of clarity that would really help propel this space go forward.

Dave: [00:14:41] So there’s a couple of answers to that. I think first of all chairman target is definitely on this forest on the side of good, as far as I’m concerned in this industry And I, I wish that Jeremy Clayton had followed his, his example. And hopefully when Clayton retires we’ll get crypto mom in his place, that’s kind of our, you know, that would be, that’d be fantastic for the industry.

But I think broadly I, because zero in on some stuff in a second, but broadly, what we need is a regulatory sandbox. Where it’s like, okay, Hey, this, we, we, that the U S government have recognized that, like, we haven’t figured everything out for this. And if you, if you, if we put some broad parameters in here, you can basically do anything short of fraud, you know, you’re on, you’re never gonna be able to you never would want to, or be able to contract around fraud, but.

If you were to be able to put some, some borders in it and kind of let everybody play around. I think that that would be the best possible result for every aspect of this industry. Now, whether or not that happens, I’m not convinced that failing to do that is going to. Stop the industry as a whole. What I think it could do is it could severely challenged United States, citizens from participating and from contributing and from reaping the benefits of this technology.

So basically the, you know, if we try to stamp it out, it’s just going to go somewhere else and it’s no longer gonna, we’re never gonna, we’re not gonna be at the forefront of that. And I think that at the beginning of the internet I think regular, I just really understood that and took that sort of approach, which allowed us, I mean, look at the last 30 years of tech growth it’s a direct outgrowth of the the way the communications decency act was, was sort of. Hands-off I mean, they call it the 26 words that founded the internet which basically says that service providers and, and network providers, aren’t publishers. And that, that we would probably loop back around to that when we get to define, I mean, to NFTs, but so yeah, the sandbox would be really good for the space.

But I guess the way I would look at it is. Our lack of regulation is going to be bad for the space. And yes, there’ll be bad for the American space. But it’ll just go somewhere else. And at this point, Bitcoin, isn’t going anywhere. And if all of a sudden it was illegal in United States, that will Bitcoin, all the institutional interests would just spin up subsidiaries and other countries and still get exposure to it.

I think that we’ll probably see. Dev teams continue to push the envelope and to innovate until the point. And I, and I, and I hope this doesn’t happen, but I have a feeling that I will, some dev some US-based dev team is going to. Do something wrong or, or run a foul of some regulation and they are going to get hammered.

And I don’t know what that’s going to be on them and they’ll be civil or there’ll be criminal, but that is where you will see a change in. In action, because I mean, think about it. The, the copyright and trademark laws have been around forever and that didn’t deter Napster, that didn’t deter Casa. You know, these guys went up against the might of the recording industry and basically totally reshaped that entire market.

So it’s, you’re never going to stifle that innovation, but, but I think. Adding more money to this adding the actual subject to this basically being money and the power of the Patriot act. I think that if we don’t take some steps to promote sort of a, a safe Haven here someone’s going to some, some port dev is going to get just railroaded and it will have chilling effects on, on the whole industry.

Ben: [00:18:41] Yeah. And talking about that whole progression of the internet, a really good book is how the internet happened from Netscape to the iPhone, by Brian McCall. Also really, really good one about that, but I’m curious, are there any other jurisdictions globally that are doing things right with regulations or you think just hands-off let innovation flourish and step in?

If people kind of cross the line at some point, is this the proper response?

Dave: [00:19:10] I can tell you who’s doing it wrong. Switzerland’s doing it wrong. But the way they’re there, they’re implementing the equivalent of the travel, the travel rule, which basically says that every, every wallet has to have AML KYC.

I mean, I’m bastardizing it a little bit there. I mean, as of right now, You could argue the U S is doing it right by ignoring it. I just think that isn’t by design. I mean, that’s sort of just what’s happening. It’s not, Oh, we’re going to foster innovation. It’s not big enough to worry about and Oh, by the way, it’s starting to be enough to worry about it.

Yeah. Does that answer your question? I mean, I feel like I’m dodging it. I don’t think there’s any, w th th this stuff touches so much. From a legal sense. It touches so many aspects that it would be hard to say, okay, just to do this one thing. And people will be free to innovate or, or do those two things.

It’s going to be a well, right. How do we handle trademarks? How do we handle intellectual property? How do we handle money-laundering? How do we want, how do we handle taxes? How do we handle bank secrecy? You know, those things are, are, are, are. Totally basically totally separate in the re in the real world.

Right. But this, this unique little area brings all of them to bear very, very, very tightly, and they’re all interwoven. And so without a true just blanket sandboxes, I’m not convinced it’s going to actually happen. I don’t think you can, you can really eliminate that structural regulatory risk.

Ben: [00:20:41] Yeah, no, that makes a lot of sense.

And this is what people that aren’t really following the crypto industry as closely as we are. Aren’t really aware of how many different industries and niches that it actually does touch. You know, it’s Bitcoin it’s that there I am. But it’s, it’s so much more I’m curious, what sort of regulations could come out that would just totally torpedo the industry, set it back, you know, push it out from the U S and just say, you know what?

I can’t deal with it anymore. I’m going to go to another jurisdiction. No Americans can use it. I’m going to block all IPS, et cetera, et cetera. What could you see that would happen? That would force that.

Dave: [00:21:20] I think I don’t even have to your eyes here. I think the staple act is a perfect example of that which was put out by I forget one of the squad.

I can’t remember which one to lip and a couple of other people, it was sponsored it and, you know, talk about a piece of, have not thought through, I just lation basically. Requires anybody issuing? Well, there’s two ways of looking at it, but broadly to anybody issuing a stable coin would have to have a banking license.

And for those of you just doing in banking licenses are really difficult to get, and it takes companies. You have to get government state to get a state charter, and then to go from a state charter to a national charter, I mean, millions of dollars. Tons of lawyers just it’s, it’s there’s a reason why there’s only, you know, there’s not that many national banks.

And then to force that on something like maker Dao or even USB-C, which probably has the best chance of actually satisfying that is mind boggling. And it’s clear to me, it’s clearly people don’t understand what, what they’re talking about. And so like the more specific reading of this. Is, and there’s been a bunch of think pieces on this, that even running an Ethereum node, because it has the ability to process di transactions is illegal, and then you get the people on the, on the side of this, they have a lag and say, well, they’d never would enforce the rules that way.

And. You know, that’s not something you want, that’s a thing you want to bank on.

Ben: [00:22:57] Okay. Yeah, I get it for me though. A lot of people I talked to in the space, I mean, I run the crypto Mondays meetup here in LA, so we get a lot of new people and. There’s always these misconceptions and worries, but one of them is always regulatory risk.

I don’t want to buy crypto crypto because of regulatory risk, but. From your perspective, do you see regulations as a real risk or does it just kind of move to a reg a jurisdiction that’s more favorable in this global age that we live in or what would be considered a regulatory risk for a crypto investor that they should worry about?

Dave: [00:23:40] So I am so an investor it’s different questions than from from like an actual owner. Great international participant. So for an investor, obviously the idea of making Bitcoin illegal, making crypto illegal, I think that can have that can definitely have some, some negative effects. But as I said earlier, I think that the overall trajectory of something like Bitcoin is no longer really going to be.

That would cause, you know, a sell off of a certain degree, but it wouldn’t destroy it because the rest of the world was using it and institutional guys already have exposure to it and they’re going to continue to want that exposure. So they’ll just, we’ll buy it through their, their, their, to Seychelles subsidiary.

Does that impact, like, you know, the, the little guy, the private citizen, I mean, yeah, I think so. So I think it could seriously you know, people put money into this stuff and then eventually we to pay for something in the real world and that they can pay in a stable coin and they can’t make their take their crypto and go back through a feet Fiat on ramp or off ramp in that case and get whatever, you know, dollars to pay.

That that’ll be a significant risk, but So I think, and I think you could, I think that the U S absolutely could completely block off the on-ramps and off-ramps, I think that’s a real risk. And for those of us who have any degree of investment in this sort of asset, that that should give you pause And I don’t think that we’ve even seen the beginning of what this could look like from a, from a negative standpoint.

So that, that I would say is a real risk that, but if you were able to live entirely within the digital world which some people I think are able to do then. Yeah, no, but you know, they, they can’t take their, they can’t get a go on, you take a fee out, offering them to you as a D, but there are digital nomads so they could get into euros or they could just live on USD T without having to really have much in the real world.

You know, you’ve got someone like me, who’s got a mortgage who has to pay that in us dollars. Eventually I have a need and I have to participate in this system. And I, I think that that could seriously slow mass adoption. From an investor standpoint. But it won’t stop it, it might delay it slightly.

And at this point with the big institutional investors involved, I don’t think that that really is going to have that kind of impact.

Ben: [00:25:56] Yeah. that’s from the investor standpoint, but what about from the innovator or the, the company owner, entrepreneur? What would be these, these risks to innovating in this space creating one of these decentralized protocols is used by a lot of people.

Yeah.

Dave: [00:26:15] So There was a company recently. And I think I just probably make sense not to necessarily name them, but they decided to go quote, Dow first and they decided to create they they’re like, we’re not going to have a corporate form. We’re going to do everything. Fancy fancy in, in, in the distributed, distributed at, in, in, in the ether webs.

And because of that, we’re not going to form a C Carbonite analyse blah, blah, blah, blah. And it’s really cool. I mean, it, it, it takes guts and The problem is that law doesn’t, doesn’t move that fast. So if someone sues that company, let’s say they, they, they actually let’s say they do something by accident, but, but definitely causes some damage.

It hurts somebody, something loses money, whatever. This is not a criminal. This is not a criminal thing. This is, this is straight civil. If someone. Let’s use them. They are probably not going to be able to avoid being treated as a general partnership. So anytime two, two more people get together to conduct business.

You don’t have to put anything in writing. You don’t have to do anything more than say, Hey, we’re partners. And if you do that, you are general partners in a partnership and you have unlimited liability for the actions of that business and for the actions of your partner. So If I, if my law firm was a general ownership and we did something incorrect and we got sued, then my entire net worth all of my assets are at risk because that’s that’s there’s no, there’s no Vail, there’s no corporate veil.

And. People could recover against my, I lose my house. And so with a simple LLC or a C Corp, I protect my assets from my business. You know, there’s a dichotomy there for those people in that, that, that Dow force first organization. If something goes wrong. The majority of the people who were involved, all the active developers, everybody who would be within the corporate corporate silo, if it was actually a company, they are going to be deemed by the courts unless something were to happen, which I guarantee you is not going to.

They’re all going to be general partners and all of their assets are up for grabs. And that’s a real world. Non-regulatory tangible. Cause it’s, you know, when you’re, when you’re fighting against the government in a defense like that, I mean, you’ve got constitutional rights. You’ve got things that they can and can’t do.

Regulatory agencies have to follow the, the administrative procedures act when you’re fighting against somebody else in civil court. I mean, it’s a matter of who can pay the most, you know, you mean. Gross simplification, but civil lawsuits. I mean, we routinely tell people who have lost, you know, 15, 20 grand to think really hard about their case.

If we’re going to take it to court for them, because they’ll probably spend more money. Just trying to recover and it’s not because we’re gouging them or, you know, we, we charge regular fees. It’s just, that’s how much it costs to litigate. So if they’re, they’ve lost an, and this is, and this isn’t a case with good facts, like clear Johnny was wrong and he’s got a great case against bill and it’s like, well, Johnny, was it more than, was it 30 grand or more?

Cause that’s what, that’s the only way this is going to be profitable for you. It’s the only way you’re not going to spend money to get that money back. So I think that’s a, that’s an example of the law, not catching, not, not, not being anywhere near where the tech is, and that could really, really have some massively negative effects for people because they’re not going to be able to afford to, there’s going to have to settle and they’re going to lose a ton of money.

And yeah, so that sort of thing, while very cool in theory is a kind of a transactional lawyers nightmare,

Ben: [00:30:18] right? And well, these, this is why these legal entities, even though they’re from the old system exist, right. To limit your liability. And without them, you don’t have that limited liability. And even though it’s this decentralized autonomous organization or Dao it doesn’t protect you legally, which is a very big issue.

If things go wrong wanted to go off on a bit of a tangent. We talked about, you know, making Bitcoin illegal, cutting out the, on an offer off-ramps and defeat. But what would it look like in it most likely for the government, the U S government to ban Bitcoin? I know we said it wasn’t likely, but.

You know looking back 1933 gold was banned like the physical ownership of gold, except for certain types. And that lasted until 1975, 40 years of just, you couldn’t own gold unless it was some surface specific type of coin.  what would a government band look like?

Dave: [00:31:11] I mean, I think we look like the great firewall of China.

I think that it would be. You know, you’d have embargoes on treasures and ledgers, so you physically couldn’t get into the country. I think though that, and you know, the goal to has the storage component, right? So if, if really I, you know, you, if you were violating that act and the government really thought you were, they could come search your home or structure your safety deposit box with a warrant.

What does that look like in the digital world? You know, I think that people who, the kind of people who would be breaking that law, or the kind of people who are already into this space are the kind of people who are gonna make it difficult for that lot to be enforced. You know, these are the people who know how to use VPNs.

Is it the people who are gonna. You know, right down there to have a paper wallet somewhere that’s stuck in a book. I don’t think that you hear those a lot about people specifically with golden and that it was, it was illegal given the, the, the medium, you know, bits versus pieces of metal and given the day and age and the technology.

I don’t think it can have the same effect chilling. Sure. But, but. You know that limiting. I don’t think so.

Ben: [00:32:29] Yeah. Yeah. That makes sense. I mean it’s just something that people are constantly talking about and it’s like,

Dave: [00:32:35] my mom and dad had asked me the question like three or four times now. And you know, I think that for the individual, for, for, for me answering that question to mom and dad, it’s like, Well, but me as a son and me as a lawyer, it’s like, I can’t tell them there’s no risk because they could be that one person.

Ben: [00:32:53] Well, it’s also, I mean, like bank accounts get frozen too. Right. do you have, do you have a pile of gold bars in your house just in case all of your financial accounts gets frozen? Like. I mean, how many levels of risks? I talked with somebody and he said, well, what if they shut down the internet? What are you going to do with your Bitcoin then?

And said, if they shut down the internet, like the last thing I’m worried about is the Bitcoin on my ledger. And I’m more worried about the pitchforks and torches that are flying around the city and coming to kill us all.

Dave: [00:33:25] Yeah. At that point, it’s not a question of Bitcoin and gold. It’s a question of how much ammunition do you have

Ben: [00:33:29] exactly. I’m coming to your house. another one we, we talked about some of the inefficiencies and shortcomings of something like cash. So CBD CDCs is a big topic right now. that stands for central bank digital currencies. a bit of what we’ve talked about, all of the wonderful benefits of transparency and permanency that come with something like the blockchain could also be used for.

Insane loss of privacy and financial surveillance, but extreme efficiency from a government standpoint, in terms of sending out payments you know, using smart contracts. it’s  an expiring stimulus payment, things like that. I’d like to get your view on CBD CS in general, where you see them now, where you see them potentially going.

Dave: [00:34:16] So I think anybody who says that CBD seeds are not inevitable well is not informed. I think they are absolutely inevitable. I think that every government will be incentivized to there are the efficiencies, like you sat there underneath they, they will be used. And it’s just a matter of when. And I guess how the, how is the scary part One would hope that the, the fourth amendment would apply to the youth in the U us to the use of these things.

But it’s sort of inherently hard, even if the government is. Perfectly well-intentioned and takes all the right steps. The fact that this stuff is all on a ledger and there for everybody. See it’s gonna be, it’s gonna, the reason I’m kind of negative on this point is that it will take more effort on the government side and more flawless execution to make a CBDC that isn’t this.

Incredible tracking tool. Then it would look far more orders of magnitude more than it will to implement it. And so that is a terrible combination. That’s a, that’s a recipe for disaster that the government has to execute and I’m not like a libertarian small government guy. Like I definitely skew liberal.

I believe in social safety nets. So I don’t want to seem like this fringe guy who was like, Oh, the government’s bad, but like the government is not known for executing. Flawlessly or on time or you know, that they were sending checks to dead people for the stimulus package. They’re not known for this.

And so this tool in their hands and, and that’s, and that’s without them. Without the government actively trying to erode public the private privacy standards. And so when you realize that we already kind of skewed given the Patriot act and bank secrecy act, we already kind of skew that direction.

And it’s very clear that the government has been wanting to go this way of, you know, monitoring his transactions. I, I, there’s no doubt in my mind that we are going to get this crazy Dystopian big brother ask CBDC and it’s it’s, you know, maybe it won’t be fully adopted in our lifetimes. Maybe there’ll be enough gas, but by the time kids are 30 I got to imagine that that cash is going to not, not really be the real thing anymore, and this will be what people use when the government can see that you’re spending extra money on.

Big Macs, you know, what, what are they going

Ben: [00:36:48] to increases in your health insurance premium right away automatically? No, I, I mean, I think I too believe that it’s inevitable, it’s this dystopian big brother nightmare. But there’s a lot of potential, well, not a lot, but there are. Also potential benefits.

You can cut out a lot of the men middlemen be a lot more efficient and lean system, but ultimately it’s still the government calling shops. it will still have some issues.

Dave: [00:37:15] No, I agree. A hundred percent like those efficiencies will be there and they will cut down on, on needless waste, but just the, the, the, the, just the nature of what it is, the, the, this, this, this, this.

Perfect ledger of everything that’s ever happened. I don’t know how they get around, even with the best intentions. I don’t know how we get around, not tracking every move, every dollar that you’ve ever spent. Yeah.

Ben: [00:37:42] Yeah. And it’s going that way. It is what it is.

Dave: [00:37:45] I want to be clear for your listeners. I am very bullish on this space and I love this space.

I don’t want to sound negative.

Ben: [00:37:51] Oh, I mean, I, this is, this is the antithesis of everything that crypto it’s taking the technology and using it for surveillance. I’d be curious what your thoughts are on how that impacts. Bitcoin and crypto, and these other, like outside of the system, cryptocurrencies is, does it pose a risk because there’s no fee yet off-ramp because that would be easily cut off.

Like how do you think through that?

Dave: [00:38:15] Well, I mean, like I said earlier, I think that deep for the, for the individual person. Who may have holdings in Bitcoin? I think that not being able to put it into a Fiat currency is going to be, have very negative effects. I think we’re past the point of no return with let’s say Bitcoin and ether.

I don’t think that it. I don’t think it stops it. I don’t think that it, you know, maybe, maybe it, I think it could hammer the price down 50% easily for a year or two, maybe three. But the fact that you have institutional guys and I, and I, you have got gray scale buying up and PayPal banning of a hundred percent of the new minted coins.

I mean, I think that at this point, Even if you and I had to get out, because we knew we needed to have money in our bank accounts to pay to live in the United States. When we sell, it’s just going to go to those big guys. And so I think the overall value proposition for Bitcoin itself stays valid. I think it stays.

It’s going to have, it’s no longer what we designed for this, this global anonymous payment pro. Payment system. It’s, it’s an investment. It’s, it’s a store of value and it will stay that way. It certainly becomes harder to transact and it certainly maybe scares off some of the people who should be benefiting from this people who, who couldn’t get access to aren’t accredited investors.

We don’t get to participate in the private markets who could get an excellent investment, where they literally will never see that anywhere else in their life. Those are the people who should, should be getting experienced budget. It’s not hedge funds that already have this stuff. Anyway, you know, they, they, they do get to participate in the private markets.

They get to see regular companies, 10 X before they even hit the public markets. But they’re the ones who will be able to continue to participate if. Even if the little guy can. So yeah. And I hope that doesn’t happen.

Ben: [00:40:03] Yeah. That makes sense. Within crypto, we talked about it. It’s a very broad, what are the most interesting little niches or corners that that are fascinating you right now?

Dave: [00:40:14] Oh, man. I’ve been obsessed with DFI since, before it was like really defined. I mean, I remember I sent you screenshots every morning of, of what was that like early 2019? Like, like July, January, 2019. And I was like the only person in our little crypto chat who was actually like, Hey, look, I didn’t get you.

4% yield on something and people are like, what? It’s not 10 X, I don’t care. I’m like, this is fun. And then when it exploded this year, I felt like a little preceded. I wish I’d had more money in it. Cause I was just messing around with small amounts, but a man coming from finance and seeing TFI like slowly kind of eat traditional finance verticals has been so cool.

I mean, when, when When, when opens options for started to come out? I was so, so fucking jazzed. It was, it was like, yeah, we’re going to start seeing real financial models here. And I don’t think we’re there yet, but I had to see this stuff because I worked on the backend in, in finance. I saw you were talking about inefficiencies and just insanity.

I mean, we would lose 20. So my first week I lost a $26 million T bill. And I, it took me a month. Part of that was because I didn’t know exactly what I was doing yet, but took me a month to find it. And it was just sitting in some other account within Merrill Lynch hadn’t even gone anywhere, but no one knew where it was.

So to see all that stuff get eaten up by this permissionless immutable system in the hands of like, Some of the smartest people out there, the computer science guys, man. That’s cool. And I have it, it really gets me like such a nerd out. As you I’m clearly already doing because you know, the people who handle that stuff, traditionally, I, I worked there, I could see the level of brain power that was going into it.

And, and it. It’s now it’s, it’s now looking like it’s in the right hands if we can kind of foster that. So I think defy is by far the, the most interesting area. I am, I am dipping my toes into the whole NFT space and I’m slowly trying to wrap my head around it. I got a couple of clients who have you know, paid me to start thinking about it and that it’s fascinating.

I don’t know how much I want to go down that road. Cause I’m still, there’s still some, some serious legal concerns that I have. But from a, from from a you know, an actual user for, well from a crypto space fan, not a take my lawyer hat off. I think NFTE, Dina T space is really cool. My wife, my wife, who had not been able to really interest in in crypto when I.

Explain to her NFT is, and then showed her a picture of one. We bought a digital display like the next day and put it put up picture of an, we bought up, like that was an immediate reaction happened. You know, my, my wife can quote stuff on, on Bitcoin and crypto in general, better than, than most of the people in this country.

But she hasn’t learned it willingly it’s because she tolerates me putting on podcasts. When we drive places, she tolerates me go up, you know, spending time talking with you about it. She, she knows when I’m, when she, she calls it my chats. Cause I’m sitting here scrolling through telegram, like trying to figure out what the newest thing on lobster Dow is.

So she knows a lot, but I think the first thing that grabbed her was like this. This image at the NFC that she could buy and, you know, it was hers. And so I think there’s some real upside

Ben: [00:43:46] there.

Absolutely. And I’ve, I’ve done a number of podcasts on NFTs in general link. I wrote an article on why digital art will be.

Infinitely larger than traditional art. I think it’s, it’s really, really cool space indeed. Well, Dave really appreciate having you on round two, this was much better and more seamless than the first one. So I’m glad, glad we got the re the do-over, but you shared a lot of great knowledge on regulations within the crypto space.

I know you did a ton of stuff on cannabis as well. We’ve been working in the, in that industry for a long time, and I know we didn’t go into much detail there, but if my listeners find interest in that sort of thing, I’ll, I’ll definitely dive down that rabbit hole with you on the next one. But just in, in partying, where can my listeners find out more about you about your former firm?

Where would you like to send them?

Dave: [00:44:38] I mean the best place to find out about us is the Robin law group.com. And I’m happy. I’m proud to say that we have a sort of a spinoff site that is sort of just a tiny little nub in the decentralized web. So you can go to Robin law dot ether, and it’s a very bones a site that will link you back to our actual real-world site.

But we’re also on Twitter at Rodman law and you know, Facebook kind of wish I wasn’t on Facebook, but. It’s got enough of a following that I can relate, not be on Facebook anymore. You can hit us up on LinkedIn too. But law firms are traditional. So the best way to get in touch with us is just call us.

That’s, that’s legitimately the best way to get ahold of us, which is, I know it sounds so lovely, but yeah,

Ben: [00:45:21] I don’t even think my iPhone can make calls. Just kidding. Awesome. Dave, it’s been a pleasure. Great to see you. Glad to have you on I’ll link. All those things in the show notes.

Dave: [00:45:32] Awesome. Thanks for having me, man.

Ben: [00:45:34] There you go first. Thank you very much for listening all the way through. I hope you got a lot of value out of that conversation. As always. You can find show notes, links, and [email protected] Please share this with anyone you think might be interested and derive any value from this conversation.

And as always, you can reach out to me for any feedback or questions. Please give the video a like, or even better subscribe on YouTube or your podcast player of choice. This really helps others find the podcast or the video as well. Thanks a lot. Hope everybody has a fantastic day and stay safe out there and invest wisely.

Cheers.


Ben Lakoff is an entrepreneur and finance professional. He has developed strong global finance experience through 10 years of international assignments in the US, Brazil, Afghanistan, Southeast Asia, Czech Republic and through the award of his Chartered Financial Analyst (CFA) certification.