See More HERE!
In this episode of Fintech Confidential, host Tedd Huff is joined by CI (Confidential Informant), Robert Musiala, co-leader of the Web3 and Digital Assets team at BakerHostetler, to discuss the significant developments in the crypto and fintech space during April 2025. Robert shares his expertise on blockchain law and compliance, providing insights into the evolving regulatory landscape and its impact on the industry.
The conversation covers the mainstream adoption of stablecoins, the implications of the Payment Stablecoin Act, and the integration of crypto with traditional financial systems. They also delve into the expansion of programmable money, the shifting regulatory environment, and the growing security threats in the crypto space.
Takeaways:
1️⃣ Stablecoins are becoming a viable solution for faster and more transparent payments.
2️⃣ The Payment Stablecoin Act is prompting companies to adjust their strategies in anticipation of new regulations.
3️⃣ Kraken’s expansion demonstrates the blending of crypto and traditional finance.
4️⃣ Programmable money is enabling automation in financial processes.
5️⃣ Security remains a top concern, with sophisticated attacks targeting the crypto infrastructure.
Links:
Guest:
Robert A. Musiala Jr. BakerHostetler Profile: https://www.bakerlaw.com/professionals/robert-a-musiala-jr/
LinkedIn: https://www.linkedin.com/in/robert-a-musiala-jr-esq-cfcs-b6534bb/
Company:
BakerHostetler: https://www.bakerlaw.com/
The Blockchain Monitor: https://www.theblockchainmonitor.com/
Fintech Confidential:
Podcast: https://fintechconfidential.com/listen
Notifications: https://fintechconfidential.com/access
LinkedIn: https://www.linkedin.com/company/fintechconfidential
X: https://x.com/FTconfidential
Instagram: https://www.instagram.com/fintechconfidential
Facebook: https://www.facebook.com/fintechconfidential
Supporters:
Bitcoin 2025 - Bringing together digital asset leaders in Las Vegas to explore Bitcoin’s role in capital markets, featuring speakers like Michael Saylor, Caitlin Long, and Elizabeth Stark - https://fintechconfidential.com/btc25
DFNS - Offering Wallets as a Service with military-grade security and enterprise-grade scalability - https://fintechconfidential.com/dfns
Skyflow - Helping FinTechs build secure experiences without managing customer data directly - https://skyflowsecure.com
Hawk AI - Providing real-time fraud prevention and AML compliance for FinTechs - https://getHawkai.com
About:
Guest: Robert Musiala has been working in the blockchain and digital assets market since 2012 and has led multiple digital asset investigations, including as the court-appointed receiver over cryptocurrency investment funds used in a major fraud. He advises on various regulatory compliance issues involving digital assets and has drafted/negotiated agreements for a wide range of transactions in the fintech, digital assets, Web3, and NFT markets. He is the inventor of two blockchain patents and co-leader of the Web3 and Digital Assets team at BakerHostetler.
Host: Tedd Huff is the Founder of Voalyre and Diamond D3, professional services consulting firms focused on global payments and marketing. He is also a video podcast host and executive producer on the Fintech Confidential network. Over the past 24 years, he has contributed to FinTech startups as an Advisory Board Member, Co-Founder, and Chief Experience Officer, providing strategic and tactical direction for global companies, focusing on growth...
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
Welcome to FinTech Confidential,bringing you the people, tech and
companies that change how you.
It is not surprising that they're startingto make that direction towards the us.
No one who was really making large highvolume international payments really
thought Bitcoin was a solution to thatbecause of all the price volatility,
(00:23):
most of the financial world has been batch
processed on a daily basis.
Each dollar unit backing every stablecoin is represented by US dollar
equivalent held in a US bank or
what are you hearing?
Far as the benefits ofwhy the stables are, are
picking up as a form of payment.
The Web3 and digital asset industryhas matured enough that some of the
(00:44):
risks that were there maybe a coupleof years ago are not as prominent.
The scrutiny that was there fromthe federal banking regulators
is not necessarily gonna be as.
Intense as it was.
Do you think it's gonna stillbe that, that really broad chasm
between hyper restrictive and hyperenablement, the Web3 landscape
seems to be on that tipping point?
(01:06):
The theory of what could be to starting tomove towards the execution of what can be.
Bitcoin 2025 lands in Las Vegas at theVenetian, May 27th through the 29th.
And FinTech Confidential is thereas an official media partner.
We're on site with fullaccess to over 200 speakers.
(01:26):
Breakthroughs in mining, lightningand scale, real world use cases,
institutional Bitcoin strategy, and you'llhear from folks like Michael Saylor.
Elizabeth Stark, Jack Mahler,and Senator Cynthia Loomis.
There's no fluff, no noise.
This is where Bitcoin anddigital assets get real.
(01:46):
Your pass iswaiting@fintechconfidential.com slash btc.
So prices are rising and seeds are moving.
So be there at Bitcoin2025 Las Vegas, Nevada.
Embrace the game theory.
Welcome to Web3 with FTC.
(02:08):
If you're asking how blockchain, cryptoai, even quantum computing fits into your
business strategy, this is built for you.
We talk with the builders and thedecision makers who are doing the work.
You'll hear smart conversations,straight insights, and no filling,
whether you're a founder, an executive,or just trying to stay ahead.
(02:29):
This is where Real talk meets real tech.
I'm your host, Tedd Huff andthrilled to welcome our newest
contributor, or as we like to callthem, confidential informants,
and his name is Robert Musiala.
Rob is the co-leader of the Web3 andDigital Assets team at Baker Hostetler,
(02:49):
a US law firm that is more than 1000attorneys recognized for helping clients
address complex business and regulatoryissues across digital assets, data
management, and emerging technologies.
Now, Rob brings to us decadesof experience in blockchain
law, regulatory compliance, anddigital asset investigations.
(03:13):
And he's the lead author of theBlockchain Monitor blog, where he
breaks down the latest trends andlegal developments in crypto each week.
Today's format, as you can imagine, isprobably gonna be a little bit different.
So we'll be talking about what happenedin the month of April, 2025, and I'll
be giving you some of the strategicsignals with absolutely no fluff.
(03:34):
And Robert's gonna be nice enoughto bring the structure, compliance,
and legal backdrop to all of this.
And today's topics we're gonna becovering payments, capital markets,
regulation, enforcement threats.
Close with strategic outlook.
So let's dive in.
Robert, thank you so much for joiningme as one of our first confidential
(03:56):
informants on Web3 with FTC.
Thanks for having me on the podcast, Tedd.
Happy to be here.
So, you know, you and I, we wereprepping going through all this stuff,
just trying to pick the good stuffout of, out of the, the blogs you all
do as well as some of the things thatare going on in the marketplace and.
(04:16):
I think it's important for peopleto understand that this has
become a competitive advantagefor a lot of fintechs when they
integrate into this technology.
Whether it's stable CoinCrypto as a service.
Uh.
Any other royal loyalty based items reallystart to, to make a big difference in it.
(04:37):
But of course, it always comes with somefun things like licensing and registration
and cross border things we have to thinkabout, which then of course, brings in
the compliance and the regulatory pieces.
I, I've been saying this for a longtime, this is a borrowed quote, but
you, you know, in financial servicesthese days, you're either protecting
the past or building the future.
(04:58):
And I, I think more and more buildingthe future means, uh, figuring out where
blockchain Web3 di and digital assetsfit, uh, into your business model.
And so, uh, you know, I, I thinkit's relevant anytime that we see
traditional financial servicescompany taking steps to integrate
(05:21):
with crypto, a crypto native company.
Then anytime we see the reverse, um,a crypto, a native crypto company
taking steps to integrate witha traditional financial services
company and more, and we're seeingthat more and more, uh, you know.
As you mentioned, uh, wepublish this blog every week.
We've been doing that for seven years now.
(05:42):
And one trend that I've observed overthe years is more and more often we are
reporting on, um, developments wherewe see this pattern occurring again in
both directions, both tradify uh, takingsteps to integrate with crypto and crypto
taking steps to integrate with trap fight.
(06:02):
You know, the recent developmentyou mentioned, uh, I think has a
lot to do with the continued, uh,that continued trend that we're
seeing in the marketplace, uh,and the expansion of that trend.
Really,
I think the piece that makes thisone stand out is, you know, Kraken
is using this enabled spending of.
(06:22):
Crypto at about 150 plus millionmerchants across Europe and the uk.
Um, and not only that, but they'resupporting over 300 currencies, whether
it's digital assets or traditional fiats.
They're supporting all of those.
So it, it's not surprisingthat they're starting to make
(06:45):
that direction towards the us.
Another trend that I'veobserved over the years.
Is, and, and, and this is something Isay often is that, you know, I don't, I,
I've never thought that crypto would everreplace the traditional financial system.
Instead, it's going to becomemore and more integrated with it.
Uh, in other words, you know, if youthink about it, we have a lot of different
methods through which we can pay people.
(07:06):
Today we have a CH, we have wiretransfer, we have credit card, we have
debit card, um, and other methods.
And crypto is just becoming onemore method to add to that list.
So I think, you know, the developmentyou mentioned is really targeted
at, uh, merchant payments,and that's one, uh, sort of.
(07:27):
Vector that is moving pretty quicklyin the, the FinTech space is how do
we make it easier to pay merchants?
Uh, and so, you know, we, I think thatproblem is something that is being
addressed is, and then similarly, there'sa parallel but related problem that has
always been out there, which is for.
Uh, crypto holders for those who preferto hold their money in crypto, how
(07:51):
do we make it easier for them, uh,to pay for things without having to
exchange their crypto for fiat first?
You know, and I think anytime wesee announcements related to, um,
uh, crypto debit cards, uh, orother sort of traditional FinTech
payment mechanisms that allow youto pay at traditional FinTech.
(08:14):
Point of sale systems or, or, uh,online portals, but spend under, but
behind the scenes spending your crypto,you know, we're seeing, uh, a race
to address that need, uh, where, youknow, crypto holders wanna spend their
crypto without having to go throughthe stuff with exchanging first.
And then merchants wanna just beable to accept different types of
(08:34):
payments and reach a larger audience.
Well, and, and the merchantsjust, they just want their money.
That's really, they just wanttheir money and, and, you know.
We've heard a lot of of things this lastApril related around stable coin that
seems to be picking up a lot of momentum.
(08:56):
Coinbase and PayPal, they, they'vedone a little deal together
that offers rewards, uh, for.
For using the, uh, P-I-U-S-D.
They're, they're waiving some fees.
There's a whole bunch of funstuff that's going on around that.
And I know we didn't talk about this,but I had to bring it up because it
(09:17):
came up on the last day of the month.
I thought it was very interesting also.
That Ripple decided to place an a bidon, on circle the last day of the month.
But you know, that to me just shows howfrothy the waters are getting around
stablecoin and how important they're gonnabe to be moving forward with those things.
(09:43):
Rob, what?
What are you.
That, is that just something that'sgoing on now or is there something
deeper that you're seeing as well?
A little bit more to it and, uh, youknow, for, for those who are working
in this space on a day-to-day basis,like me, I, I think this is more common
knowledge, some of this stuff, but for,um, you know, those who are working in
(10:03):
FinTech but not necessarily crypto orwho are not living and breathing this
industry every day, um, some of this stuffhasn't really come to the mainstream,
so I'm glad that we're talking about it.
Um, but you know, really behind thescenes driving a lot of this is,
um, the pending legislation that'sbeing discussed and circulated in
Congress, uh, that is broadly referredto as the Payment Stablecoin Act.
(10:27):
And that would be a law thatwould, uh, create a, a very
sophisticated, uh, and detailedregulatory framework for stablecoin
issuers here in the United States.
Um, that would, um, include.
Various very smart, uh,protections, things that a lot
of the US stablecoin issuers havebeen doing for a long time now.
(10:47):
But things like ensuring that, um, eachdollar unit, backing every stablecoin,
uh, is represented by US dollar equivalentheld in a US bank or, or qualified
custodian, and that those accounts areaudited, uh, on a monthly basis with auto,
you know, audited by US public accountingfirms, things that make, uh, sort of
(11:08):
the consumer a lot more comfortable.
Using stable coins and all that.
Uh, it has really underpinnedwhat some people are calling
the stable coin wars right now.
Uh, because you've got this in thebackground, pending legislation.
A a lot of people keep saying we will geta law, um, passed very likely in 2025.
(11:31):
Um, it could be sooner, couldbe later, but um, by all counts,
many people say that they expectthat for that to happen this year.
And so we're seeing companies preparingfor that, you know, so we're seeing
the current, uh, stable coin issuersthat have already been in the market
for a while are, um, starting toget a little bit more competitive.
(11:51):
Um, also starting to, in some instances,um, cooperate a little bit more to sort
of support each other in the market.
Uh, and then we see new playersgetting ready to enter the market.
And I think we'll talk a littlebit more about that with.
Things like, um, the state ofWyoming or, um, a, a Wyoming based
bank that has recently, um, testedand issued a stable, uh, you know,
(12:14):
a stable coin for themselves.
I'm
bringing us back to the,the payments piece of it.
What, what are you seeing or whatare you hearing as far as the
benefits of why the stables are,are picking up as a form of payment?
You know, there, there's a.There's many different kinds of
stables, and we're not gonna getinto the differences between them.
(12:37):
But, you know, the, the stable coin is, isalmost a equivalent to a digital dollar.
But why, why do you feel, or,or what are you seeing that has
garnered the attention of it so much?
So outside of regulatory, outsideof those things, what, what
(12:58):
are some of the things that.
Are making it appealing to, tothe powers that be, let's say?
Sure.
Well, I mean, as you know, um, and anyonewho has, uh, observed or worked in the
FinTech industry has known, um, paymentsare clunky historically, had have been
relatively clunky, uh, for a long time.
(13:20):
And, you know, the technologyhas evolved over time.
Um, we still have instances where,you know, international wires have
trouble clearing on time, where, um,you know, companies feel like they're
paying way too much, uh, for payments.
Are there too many intermediariesinvolved in processing payments and,
(13:41):
um, stable coins Being powered byblockchain really do solve a lot of those
problems, you know, fundamentally, um.
Blockchain in, in many respectsis about removing intermediaries.
And so when we talk about payments, thatmeans removing all the corresponding
banks, uh, that are underlying and sitbehind any, any, any payment transaction,
(14:07):
any electronic payment transaction, uh,especially international, and streamlining
that so that you're having this, thosepayments, uh, cleared by a blockchain.
Now, of course.
When it was just, when we were justtalking about Bitcoin before the, the,
um, idea of stable coins came along,you know, no one was really, none of,
no one who was really making, um, largehigh volume international payments.
(14:32):
Uh, really thought Bitcoin itselfwas a solution to that because
of all the price volatility.
Uh, and then you enter, enterstable coins that attempt to
solve that problem by saying, Hey.
We're creating a, a digital asset thatfunctions just like Bitcoin in terms of
its transferability, uh, and its, um,accessibility on a blockchain network.
(14:54):
Uh, and each unit is gonna be backed bya real dollar and a real bank account
audited by a US public accounting firm.
Now, um, that, that to me, uh,that type of stable coin, a fiat
backed stable coin, so to speak.
Is, um, in my view, one of them, uh,the innovations in this industry that
really excites me the most becauseit solves a lot of these fundamental
(15:17):
problems and payments that you andI and others that have been working
in FinTech have been dealing with,you know, for our entire careers.
Um, by making them faster, um, nearinstant, you know, there's still
some issues with, uh, some of thenetworks, but really a lot faster
in most cases than existing methods.
(15:38):
Then, especially from an internationalstandpoint, uh, a lot less expensive.
Uh, and then fully transparent on ablockchain network so that everyone
knows, you know, when I'm payingyou, you know that you received it
and I know when you received it.
And, uh, we're both looking at thesame record of that transaction.
Uh, so those are some of the things,some of the things that I think
(15:58):
excite, uh, FinTech professionalsand, and businesses working in
the payment space or businesses.
Looking to accept paymentsabout stable coins.
And then we can also talk aboutsome of the advantages, uh, for
actually just the merchants.
Um, but I'll, I'll pause there.
You're building a FinTech product.
You want to offer digital assets,but wallets, that's the hard part.
(16:20):
Security, compliance, keyorchestration, blockchain integration.
That's why fintech's, paymentplatforms and custodians.
Choose defense.
They provide wallets as a service.
That's API first, multi chain bydesign and secured within NPC.
No single point of failure.
So you can launch across over50 Blockchains, automate policy
(16:41):
controls and stay audit readywithout managing private keys.
Stripes, bridge powers, crypto paymentsthrough Defense Moon, PAYE Scales.
Wallet securely with defense sphere.
Grew without compromisingon control or compliance.
Even major fis like Fidelity, ABand Amro, as well as custodians like
(17:02):
Zoia and Tungsten trust defense topower their on chain infrastructure,
developer ready, compliance approvedproduction grade from day one.
If you're building in payments.
Exchanges, OTC desks, marketmakers, or defi defense wallets.
Work the way you need them to requestyour demo at fintechconfidential.com/dfns
(17:28):
defense Secure wallets built around.
One of the things you left outthat is something that gets me most
excited is really the ability to.
Programmatically have things happenbased upon, uh, a trigger or based
upon a rule, or based upon someaction happening or a time period,
(17:51):
like all these different things.
So instead of having to have a personthere or waiting for the next cycle to
happen is, is most of the financial worldhas been batch processed on a daily basis.
A lot of that starts to go away.
And I think that is, that isreally interesting, um, that
we've been able to, to do that.
(18:13):
I agree.
And I think that will be the nextphase that we see, you know, once uh,
we get a stable coin, uh, act passedinto law and businesses become more
comfortable with stable coins, I thinkthe very, one of the next phases is
going to be a lot of experiments with,you know, what you mentioned, what
folks call program programmable money.
(18:34):
Where, um, you know, paymentsare made instantaneously upon the
occurrence of predefined events.
Uh, and that theoretically youcould unlock a lot of liquidity
in the financial system.
So as we talk about stable coins, youknow, it brings us back, and you even
mentioned it, you know, we reallydidn't look at Bitcoin is a, well, and
I shouldn't say we, but Bitcoin hasnot been very frequently looked at.
(18:58):
As a means to make a payment.
It's looked at more of an assetand, and we can go into all that fun
stuff, but it hasn't been a reallygood means to do a, a transaction.
And I think this is why, you know, thestable coins give you that nice bridge
between the crypto native and, and thetraditional finance side of the house.
(19:22):
But I, I would be remissto state that in April.
Bitcoin finally made it backup in the 95, 90 $6,000 area.
What are some of the other thingsthat, that you're looking at, that
you're seeing, especially when we startthinking capital markets type stuff?
(19:44):
Um, and we can, we can start withthe Bitcoin and then move from there.
Crypto and digital assets,uh, certainly over the last
month and also just over time.
Appear to have to be becoming more andmore intertwined with traditional finance.
And so we're seeing that samething theme play out in, in
(20:05):
the cap in capital markets.
Now, I, I always say I'm notan expert on the Bitcoin price,
so I'm not gonna opine on that.
But what I will say is that, you know,more on a lot of occasions it seems
to be tracking, um, what's happeningin, uh, the US equities markets.
And so that itself, you know, is apotential sign that the crypto markets
(20:29):
and the traditional capital marketsare becoming more and more intertwined.
Uh, and to your point, um, you know, someexamples of that have been some of the
traditional players launching crypto basedETFs, and that's absolutely been a theme
in April and over the past several months.
Well, yeah.
And, and so even in, in April, I know,I know we're talking a lot about Kraken,
(20:50):
but they did a lot this month, right?
So they decided to launchinto the traditional markets.
They're offering over a LA 11,000 plusUS listed stocks, ETFs, FX futures.
I mean, it just, it just keepsgoing and going with that one.
But us isn't the only placethat things are changing, right.
(21:12):
So, um, in Hong Kong and Canada,they both, uh, approved some
ETFs, um, Ethereum and Solana.
But the part that I thought that wasreally interesting is that we started to
see the, the staking and, and the lendingof digital assets starting to roar back.
(21:37):
And so I. What do you think is, isreally driving that desire to on,
on those return side of the house?
Does it have anything to do with thestablecoin stuff that we talked about?
I, I think it's mostlyseparate in my view.
I, I, I think that, um, you, thesimilarity again is the continued.
(22:00):
Inter meshing of thetraditional and Web3 markets.
Um, I think the staking pointthat you raise is to me the
mo the most interesting.
Uh, and that's, um, arelatively new development.
And you know, as you mentioned, wesaw, um, some developments in Hong Kong
where there was some regulation passed.
(22:23):
Uh, to provide the market with someclear rules as to how to do this in a
way that was going to be, um, met withapproval by the financial regulators.
If your provider doesn't allow youto manage all your assets in one
place, we're already starting tosee that, that people are behind.
So that's gonna be a big piece of it.
And of course, you gottahave the trust and, and.
(22:46):
We're gonna move into the next segment,which is the regulatory side of the house.
And of course, if you don't, if youhave all that stuff in one place, that
means you have to make sure you've gotall your ducks in a row and are being re
in the regulatory sites in a good way.
I, I think I. It's been really good,and I'm gonna come back to the US again.
(23:06):
Uh, we're just, we'll just land backin the us Heck, let's go to DC and, and
talk, you know, uh, all of the, the,the acronym agencies have, have really
decided to, to roll back or to simplifyor to make, make it a little bit easier
for these digital assets to move forward.
(23:29):
I, I really like thedirections it's gonna go.
At least my perspective.
I'm liking it.
But, you know, you started to talkabout it earlier and I'd love to go a
little bit deeper into, uh, the SEC'sguidance on stable coins and, you know,
it being us backed one-to-one redeemable.
Requiring liquid reserves,not securities, like, help us
(23:53):
uncover that a little bit more
in April.
Um, the SEC published itsown, uh, set of guidance.
Uh, and this is from the SEC's division ofTrading Markets, I believe, uh, addressing
what they call covered stable coins,
it makes me start to to wonder, are theyalready expecting to provide returns on.
(24:18):
On stables, like, like are they, it'snot like they're preparing for that
type of a, a position to be placed in?
Well, that, that's an interesting comment.
I hadn't thought about it that way.
Um, you know, from my perspective,um, you know, and just to give a
little bit more context, a coveredstablecoin, according to the guidance,
(24:40):
if it meets that definition, generallywould not be considered a security.
And that's the whole pointof the guidance is to give.
Market some confidence that if you'redoing stable coins the right way,
you're, you're not going to get anenforcement action or a subpoena by the
SEC. Um, and, you know, we talked aboutthe payment Stable Coin Act before.
(25:02):
I think another, um, smart thing thathas been done by the SEC here is that
they're getting ahead of the, the paymentstablecoin Act a little bit and giving
the market a little bit more comfort.
Wow.
Some of the similar definitions are workedout in what will eventually become a
law, um, and maybe giving, you know, insome respects, giving the legislators.
(25:23):
Um, you know, some advice as towhat that definition, you know,
might look like in the law.
Um,
just, just kind of giving alittle bit of guidance, you know,
trying to shepherd it along.
I mean, that there's, there, there couldbe worse things that go on with that.
Uh, but the other thing that alsohappened, again, just keeping in
alignment with some of our, uh,our federal, federal agencies.
(25:46):
I mean, federal Reserve, uh.
Rolled back their restrictiveguidance and really got it
really aligned with OCC and FDIC.
And, and you know, this, this monthI've had a, had the opportunity to,
to participate, um, at, at the NACHAconference in, in New Orleans, Louisiana.
(26:06):
And this seemed to be a really bigthing that they were talking about.
There is the, the guidance that hasbeen adjusted by the OCC and the
FDIC around these types of things.
Really seems to be opening up anumber of opportunities and making
these financial institutions feela little bit more comfortable
with bringing on digital assets.
(26:29):
Now, again, I said a littlebit more comfortable.
Not a lot.
It's not like they're gonna openthe floodgates, but they're,
they're feeling that way.
Uh, what, what other things are youseeing with all of these rollbacks
and, and the perspectives that,that others are having from this?
Well, I, I think the develop thedevelopment you mentioned where we
now, as of the month of April, haveall of the major US banking, right?
(26:53):
Federal regulators, essentially, um, inalignment in saying that, um, the, the
former process of a bank, uh, needing.
Notice or a letter of non objection,in other words, permission, um, to
engage in crypto related activities.
That guidance is gone and bankscan now engage in crypto related
(27:14):
activities at their own discretion.
Mm-hmm.
But also subject to the normalsupervisory review process.
So a bank will get reviewed and they'llget reviewed for a lot of different things
and crypto will be one of those things.
You know, and I think, um, part ofthe, um, press releases that announced
these developments noted that.
Um, the Web3 and digital asset industryhas matured enough that some of the
(27:39):
risks that were there maybe a coupleyears ago, um, are not as prominent.
And so, you know, theserisks can be addressed in the
normal supervisory process.
Now,
if the.
Systems and the market itself hasmatured a lot, though I believe that the
understanding from those who regulate itprobably has matured more so than, than
(28:00):
the actual products and and technologies.
So that, that one, I, I seewhere you're headed with that.
Um, but you know, the thing I wannatalk about next is really, you
know, we look at this, we're talkingabout federal regulators, right?
And federal regulation.
But in the US the states can do all sortsof fun stuff, um, all by themselves.
(28:24):
And you know, the one that thatmakes, that has come to light,
especially this month, was Wyoming.
Um, they've decided, uh,to, to launch the YST.
It's in testing, they'rerunning with that.
And then on top of that, you've gotCustodial and Vantage that launched
(28:46):
their first bank stable coin.
I mean, there's just, there'sso much stuff that's going on
at the state level right now.
Um, I, I, I'm starting to feel, andyou and I kind of talked about this
as we were prepping over the last fewweeks, because I'm starting to feel
like, I wonder if we're gonna startlooking at digital assets the same way
(29:07):
we look at money transmitter licenses.
How it, it's, it's astate by state variation.
Uh, what, what are your.
Perspectives and what are, whatare the things that I left out
that's going on at the state level?
Sure.
Well, I, I think first, you know,at, I think the states now are gonna
become a lot more comfortable, um,taking actions that maybe, uh, they
(29:31):
wouldn't necessarily have taken in,in the absence of, um, the recent
guidance from the federal regulators.
So companies and then evenstate-based agencies now have a
little bit more comfort, um, that.
The, um, the scrutiny that was therefrom the federal banking regulators
is not necessarily gonna be, um, asintense as it was a couple years ago.
(29:56):
That opens up, you know, gives confidenceto state-based agencies as well as banks
within states that are operating our statecharters, um, to take some actions that
maybe they were kicking around from, likean rn, you know, research and development
and new product perspective that.
They were afraid to launch a coupleyears ago and now, you know, I think
some of that fear has been lifted.
(30:17):
Um, and so I think in large partthat has triggered some of these
developments, uh, like the ones youmentioned in the state of Wyoming.
Um, so when I look at
Wyoming is, has been very, um, digitalasset forward for a really long time.
And then you look at a statelike New York that has been
(30:40):
very, very super restrictive.
And the other state that I'm stilltrying to figure out why the, where
they're going and what they're doingwith, with digital assets is Illinois.
But what, where do you, do youthink it's gonna still be that,
that really broad chasm betweenlike hyper restrictive and hyper uh.
(31:05):
Enablement, like, are, is that,is that something you're seeing?
And as you look through all of this stuff,
I, I think we're gonna see a,a, a real mix across the board.
I, you know, I think we're gonna see,um, you know, on one end, like the state
of New York, very restrictive licensingregime on another end, like the state
(31:25):
of Wyoming, uh, very open to innovation.
We couldn't picked anytwo further opposites.
And, and we'll see everything in between.
We'll see.
We're gonna see everything in between.
Um, and I think over time it may be,it may be that some of the states that,
um, are slower to act may sort of, uh,observe what the results are in, you
(31:47):
know, the more restrictive categories,less restrictive categories, and
then sort of follow suit, you know.
Um, and so just as a couplemore recent examples, um, you
know, some states have been.
Discussing their own state-basedstrategic Bitcoin reserves.
You know, um, Arizona apparently is,is pretty far along in that process.
(32:10):
Yeah.
From what I understand.
But it's been really interesting tosee how, how those types of things.
I think Texas is another onethat has it on the books as well.
Um, I think we're gonna see alot more, more folks do that.
And,
you know, this market is growing.
It's very big.
It's not just a one size fit all market.
(32:30):
So, uh, you know, as some more examples,you know, strategic Bitcoin reserve could
be one area where state focuses on anothercould be stable coins like Wyoming.
Another could be licensingfor exchanges, think New York.
Oh yeah.
Um, another area couldbe the mining sector.
And Texas has been very receptiveto the, the mining sector.
Uh, and there are, you know, I'm surewe could come up with many more, and
(32:51):
I think different states, maybe evenbased on their own sort of economies.
May pick and choose which areasin this market that they want to
regulate more heavily versus, um,take more of a light touch approach.
A lot of these states, and a lotof the players in this space aren't
waiting for an act of Congress, right?
They're, they're looking at theframeworks that are already there
(33:14):
that have already been working.
They're taking guidance fromthe enforcements that have
happened over the years and.
Really allowing people to, to findtheir way, whether they're, they're
navigating just based on the regulatorytone shifts, uh, the enforcements kind
of managing through that because it.
(33:35):
It doesn't mean that it's lessresponsibility when you have,
uh, everybody on the same page.
It just means that everybody is startingto look at it from the perspective of,
okay, so we know it's going to be here.
We know that we're gonna have to protectconsumers and businesses and, and keep,
make sure that our economy keeps moving.
(33:56):
Um, and I, I think a lot of themare, are really starting to.
To, to see it from that perspective.
But,
but coming back to kind of your originalpoint about Wyoming, you know, the concept
of a state getting ready to launch itsown stable coin, that's groundbreaking.
You know, that that is really somethingthat is, we haven't seen anything
(34:16):
like this before, you know, andthat's, that's, that's fascinating.
And then also hosting, beingthe home state for what will
very likely be the first.
Bank, you know, charteredbank to issue a stable coin.
And I, I am, uh, pretty sure we're gonnasee many more chartered banks issue their
own stable coins in the coming years.
You know, it's funny and I appreciateyou bringing us back to that because
(34:37):
I've, I've been watching custodian andI've been watching Wyoming for so long,
and as probably many in the, in theindustry have been that that big change
sometimes just is kind of like the.
The obvious next step, right?
So it doesn't feel as climactic as whenyou step back and you look at where it
(35:01):
started and where it's at today, thatthat really sets the, the stage and really
gives us a good perspective to look from.
I don't like to talk aboutall the negative stuff, but
I've got to bring it up.
And of course, because we have youfrom Baker here, um, I, I, I, I do
gotta, I, I do have to talk about the.
(35:23):
The legal regulatory enforcementwhirlwind that we've had.
But I thought it was really interestingthat in April alone, um, SEC either
dropped or settled with Ripple andCoinbase and Kraken and Immutable
and Yugo Labs and Gemini, andConsensus and Robinhood and open seat.
(35:44):
Uh, I could probably go on for anotherfive minutes of listing all of the
enforcements that were in flight.
Have just been resolved.
I've got to imagine that you'reseeing and you're hearing a
huge, huge sigh of relief.
(36:07):
What, what is your perspective onthis enforcement environment now?
Well, you know, look, being a, um,a payments professional and FinTech.
Web3 attorney for, you know, over 12years now and working my entire career
in compliance and investigations.
(36:28):
I think what I could say big pictureis that, you know, the regulations
are always changing, so, you know,you've gotta be nimble, especially
in FinTech and Web3 because they'rechanging, they always change rapidly.
And, um, you've gotta keep up on thosechanges so that you can understand the
current environment plan for the future.
(36:48):
And we're seeing, we, we have seen areal sea change, uh, no doubt about it.
I think that is, at this point, youknow, based on all, a lot of those, um,
actions you just mentioned, it's, itis 110% clear to everyone that there
has absolutely been a sea change,um, in the enforcement environment.
And that obviously opens up a lot ofopportunities and, uh, you know, allows
(37:12):
businesses to pivot from, you know,sort of, uh, what may have been a more
defensive stance, uh, to more of anoffensive stance, you know, to, to
try to capture or be more aggressive,try to capture some of those market
opportunities, uh, that maybe theywere discussing in years past, but
were, um, you know, a little bit,bit too, uh, Tim had just pull the
(37:32):
trigger on for, for very good reasons.
Um, and so I think that, you know,that change in the marketplace
has at this point become.
Absolutely 110% clear to everybody.
There's no doubt thatthere has been that pivot.
And I think that is, you know, oneof the things we can absolutely say
coming out of the month of April, uh,with all of the actions you mentioned,
(37:54):
um, be being dropped, uh, over thecourse of really March and April, I.
Support provided by Sky Flow.
What if you could buildfast but not break privacy?
What if you could ensure dataprivacy, governance, and compliance
with just a few API calls?
What if you could worry less aboutPCI requirements while actually
improving privacy and security?
How much more time would yourteam have to truly innovate?
(38:16):
How much faster could youbuild and ship new features?
How much more powerful could your app be?
Sky Flow is a zero.
Trust data privacy vaultdelivered as an API.
Sky flow's radically Simple design.
Choose to collect, secure, andtokenize personal information like
card data and payment details.
And with built-in features likeencrypted data analysis and sharing
(38:36):
anonymization and advanced governance,your days of choosing between data
security and data usability are over.
Whether you're just concernedwith PCI compliance.
Or need to go further to includeCCPA, GDPR, SOC two and beyond.
Sky Flow has you covered.
What if you could build fast but notbreak privacy with Sky Flow, you can visit
(38:56):
https://skyflowsecure.com today to learnhow, so that, that makes a lot of sense.
And you know, New York hasalways been very, uh, regulatory
or, or enforcement heavy.
I mean, just this April.
Um, they find block, uh, $40million for some a ML violations.
(39:19):
I don't know that's quite a bit.
But if you look at the totalassets that block has in digital
assets, it's not really that
much.
You know, part of the messagewith that action is that the
state of New York, as we would'veexpected, is going to continue.
To police this industry and is goingto continue to find companies that it
thinks, uh, are violating its New YorkBit license regime and is gonna continue
(39:44):
to take, uh, in particular anti-moneylaundering violations very seriously
In the early days and evensome conversations today, you
still have people saying thatcryptocurrency is, is for criminals,
cryptocurrency is for the scammers.
Um, I think we're, we're.
We've moved past that, but this is justanother area where the, the providers
(40:08):
and the technology and the fintechsin the middle can, can get a little
bit over their skis and, and maybenot meet the criteria that is there
and perpetuate a little bit of that.
Hopefully it doesn't keep going,but you have the hacks and you
have the social engineering.
You have all these other different thingsthat, that the losses and the fraud
(40:30):
and the scams that go along with it.
Are are crazy.
Um, but one of the things thatyou wrote about in the blog
is that crypto theft totals.
Um, right about 1.63 billion ish.
I'm using a ish area.
(40:51):
Um, I thought that was really interestingbecause if you look at it, that's
about 1% of the total market cap.
For Bitcoin itself.
So that's a lot, a lot ofvalue that's been stolen.
Yeah, it, it, it's, it's, it'sreally a staggering number.
(41:14):
And, you know, as you know, Ted,like one of the things I, I say all
the time is that, um, in my view,the biggest threat to the crypto
industry, uh, becoming adopted bythe mainstream is not regulation.
It's actually hacks and scams.
And other related threats.
And I think, um, a lot of the datathat we saw published in the month of
(41:36):
April, um, really underscores that.
So 1.3 billion worth ofcrypto lost in Q1 2025 alone.
So just the first quarter of this year.
And as you mentioned, that representing1% of the entire, what is it,
the entire Bitcoin market cap.
Uh, yeah, so that's a,that's a very big number.
(41:57):
Um, that's a, it's a very bigvulnerability, frankly, um,
of this growing, um, digitalasset based financial system.
I mean, these things arehappening on, on defi platforms.
They're happening through,you know, social engineering
where someone says, Hey.
Take a picture of the, the QR codefor your wallet and like, there's
(42:21):
so many different things on doyou are, what are some of the.
The ones that, that you came across indoing the research that just, you're like,
wow, I would've never thought about that.
Generally, um, take acouple different forms.
So, um, hacks of exchanges,that's always been a threat.
And, you know, we, um, had therecent buy that hack, I believe
(42:42):
that was in March on April.
But, um, that was the, at that timethe biggest, became the biggest
hack, uh, of an exchange ever.
Happening happening in 2025.
Uh, we've got scams.
To your point, that'sbeen a growing concern.
Uh, um, and you know, there are even.
Um, by, by many accounts, um, largeoperations overseas that are all fully
(43:08):
with like the lots of people dedicatedto proliferating these scams where
they're just looking to trick people, uh,into sending them their cryptocurrency
or trick people into giving themcredentials that allow them to hack
someone's cryptocurrency accounts, um,or company's cryptocurrency accounts.
Um, and then we've got Defi Hacks.
So just a couple datapoints, um, from April alone.
(43:30):
Uh, in April, $90 million worth ofcrypto was stolen from Defi platforms.
Um, some of those, some examples, uh.
We had hacks of the Aber Cadabra MoneyDefi platform, the ZO platform, and more
recently the the Luke Scale platform.
(43:51):
These are all popular Defi platformsthat were hacked for 13 million,
8.4 million, 5.8 million in crypto.
Um, not enormous, but enoughto really, uh, it adds up.
Yeah.
And, and diminishes trust, you know,and I think that's another big factor.
Yeah.
From my perspective, it makes sense.
(44:11):
Like the, the folks who are moretechnologically or technical savvy
would be less prone, uh, to, tosome sort of malicious attack
or hack or something like that.
But it seems to be, at least forright now, and maybe it's vibe
coding that's causing this to happen.
(44:31):
But you know, they're coming through,uh, API hacks, they're coming through,
uh, Python packages, like all thesedifferent things that are coming on
that you would think that someone whounderstands the technology at that layer
would, would know what to look for.
(44:53):
It, it like.
That's surprising to me.
Yeah.
And that's an example of a newa, a growing attack vector.
And I think a sign that some ofthese attacks are becoming more
sophisticated and looking to targetmore sophisticated victims, people
that are likely to use crypto or maybelikely a whole large amounts of crypto.
Um, but to your point, you know,in April we, we reported on, um,
(45:15):
two pretty sophisticated hackswhere the hackers didn't attempt
to hack the victim directly.
Instead, the hackers.
Um, altered and inserted malware,uh, crypto malware into popular,
uh, programs that are, um, popularamong crypto users to download and
(45:37):
deploy in various applications.
So, you know, that's a sign that you seehackers targeting, um, more sophisticated
users, whether those might be companiesthat are building their own crypto
infrastructure like we talked about.
The proprietary staking services earlier,uh, or maybe, uh, they're targeting
more sophisticated users who are morelikely to hold crypto on their own rather
(45:59):
than on, on a third party exchange.
Uh, and likely to hold, frankly, morecrypto, you know, higher volumes.
Um, and obviously the hackersare interested in that.
Oh yeah.
The, the bigger the honey pot,the, the more bears will come,
come trying to get to that honey.
So, totally.
Got it.
You know, we've covereda bunch of stuff today.
(46:19):
Obviously we can't cover everything thathappened in April, but these are the
ones that, that we really identifiedand thought were important to bring up.
One of the things that's important tonote is what we've noticed in April is
that the Web3 landscape, um, seems to beon that tipping point from the theory of
(46:41):
what could be to starting to move towardsthe execution of what can be and really
is giving us the next steps of what to doand how to get there and how to enable it.
And I can only imagine.
The number of announcements thatcome out in May are just going to
(47:02):
continue to come, especially with thesehistoric changes that we've had so far.
Rob, what?
What are some of the thingsthat, that you think we might.
Might see happen in May that were justsignals being sent to us in April.
Well, I certainly think we're going tosee this continuation of, um, developments
(47:26):
in stable coins, and I think we'regonna see more people enter that market.
Uh, the players that are already in thatmarket looking to launch new products.
Maybe there's products that are.
Getting ready to be launchedbehind the scenes, uh, that
could make a, a large impact.
Um, but I absolutely think stablepoint applications, integration
between traditional crypto firms,Web3 firms with traditional financial
(47:47):
services firms will absolutely foryou, uh, continue to be a trend.
I think it'll be interesting to see, um.
How the regulatory environmentin the US continues to evolve.
You know, as we talked about,we've seen a clear 180 degree
shift, a, a clear sea change.
And then, um, you know, will we see moredevelopments along those lines in may?
(48:10):
Probably, uh, what form will they take?
It's hard to say.
And so that, that will be interesting.
And then at some point we're gonnasort of, the regulatory environment
should shift focused from sort of.
Dismantling the policies of theprior administration to then building
kind of the foundational policiesof the current administration.
(48:31):
We're seeing some of that withthe SEC statements that we talked
about today, but I think we'regonna see more and more of that.
Um, the SEC is gonna continueits roundtables where it's
receiving input from the public,um, on, um, oh, you know what?
That round.
So the, the last round tableof, of, of April, um, I, I did,
(48:54):
I did, uh, watch it, uh, live.
Uh, it was very informative.
Um, if you watch it on YouTube, um,go ahead and bump it up to like five
x. Um, that, that'll get you there.
Or, or just copy the transcript.
Throw it in the chat,GPT and read through it.
It'll, it'll help you out and it'll saveyourself at least four and a half hours.
(49:20):
And, well, folks, I. That's itfor this episode of Web3 with FTC.
If this discussion about Web3 got yourattention today, that's great because
there's more from where this came from.
So go ahead, head over toYouTube, Spotify, apple Podcasts,
or wherever you listen, I.
Hit that follow button, and if youwant to stay plugged into everything
(49:41):
we're doing and everything we'retracking here, go over to FinTech
confidential.com and sign up becausethat's where all the deep dives live.
As well as the future episodes, you'll beable to learn more and be sure to share
this with someone who's serious aboutwhere FinTech is going, and as always.
Keep moving forward as wewrap up today's episode.
(50:02):
I've got one last thing for you.
If you are in the trenches fightingfraud and financial crime, you
know it's a complex battlefield.
That's where Hawks AI toolsfor real-time payment screening
a ML transaction monitoring.
And dynamic customer riskrating come into play.
These aren't just buzzwords.
They're game changers.
(50:23):
Designed to make your compliance moreeffective and less of a headache.
Imagine slashing through falsepositives with precision and giving your
compliance strategy the edge it needs.
Head on over to https://getHawkai.comto sign up for a demo and discover how
their platform can revolutionize howyou fight fraud and financial crime.
(50:47):
This has been a production of DDthree Media with all rights reserved.
This is provided forinformational purposes only.
It is not offered or intended tobe used as legal, tax, investment,
financial, or other advice.
We strive to provide accurate andup-to-date information, but will
not be responsible for any missingfacts or inaccurate information.
You comply and understand thatyou should use any of this
(51:09):
information at your own risk.
Cryptocurrencies are highly volatilefinancial assets, so research and
make your own financial decisions.
Welcome to FinTech Confidential,bringing you the people, tech and
companies that change how you.
It is not surprising that they're startingto make that direction towards the us.
No one who was really making large highvolume international payments really
thought Bitcoin was a solution to thatbecause of all the price volatility,
(00:23):
most of the financial world has been batch
processed on a daily basis.
Each dollar unit backing every stablecoin is represented by US dollar
equivalent held in a US bank or
what are you hearing?
Far as the benefits ofwhy the stables are, are
picking up as a form of payment.
The Web3 and digital asset industryhas matured enough that some of the
(00:44):
risks that were there maybe a coupleof years ago are not as prominent.
The scrutiny that was there fromthe federal banking regulators
is not necessarily gonna be as.
Intense as it was.
Do you think it's gonna stillbe that, that really broad chasm
between hyper restrictive and hyperenablement, the Web3 landscape
seems to be on that tipping point?
(01:06):
The theory of what could be to starting tomove towards the execution of what can be.
Bitcoin 2025 lands in Las Vegas at theVenetian, May 27th through the 29th.
And FinTech Confidential is thereas an official media partner.
We're on site with fullaccess to over 200 speakers.
(01:26):
Breakthroughs in mining, lightningand scale, real world use cases,
institutional Bitcoin strategy, and you'llhear from folks like Michael Saylor.
Elizabeth Stark, Jack Mahler,and Senator Cynthia Loomis.
There's no fluff, no noise.
This is where Bitcoin anddigital assets get real.
(01:46):
Your pass iswaiting@fintechconfidential.com slash btc.
So prices are rising and seeds are moving.
So be there at Bitcoin2025 Las Vegas, Nevada.
Embrace the game theory.
Welcome to Web3 with FTC.
(02:08):
If you're asking how blockchain, cryptoai, even quantum computing fits into your
business strategy, this is built for you.
We talk with the builders and thedecision makers who are doing the work.
You'll hear smart conversations,straight insights, and no filling,
whether you're a founder, an executive,or just trying to stay ahead.
(02:29):
This is where Real talk meets real tech.
I'm your host, Tedd Huff andthrilled to welcome our newest
contributor, or as we like to callthem, confidential informants,
and his name is Robert Musiala.
Rob is the co-leader of the Web3 andDigital Assets team at Baker Hostetler,
(02:49):
a US law firm that is more than 1000attorneys recognized for helping clients
address complex business and regulatoryissues across digital assets, data
management, and emerging technologies.
Now, Rob brings to us decadesof experience in blockchain
law, regulatory compliance, anddigital asset investigations.
(03:13):
And he's the lead author of theBlockchain Monitor blog, where he
breaks down the latest trends andlegal developments in crypto each week.
Today's format, as you can imagine, isprobably gonna be a little bit different.
So we'll be talking about what happenedin the month of April, 2025, and I'll
be giving you some of the strategicsignals with absolutely no fluff.
(03:34):
And Robert's gonna be nice enoughto bring the structure, compliance,
and legal backdrop to all of this.
And today's topics we're gonna becovering payments, capital markets,
regulation, enforcement threats.
Close with strategic outlook.
So let's dive in.
Robert, thank you so much for joiningme as one of our first confidential
(03:56):
informants on Web3 with FTC.
Thanks for having me on the podcast, Tedd.
Happy to be here.
So, you know, you and I, we wereprepping going through all this stuff,
just trying to pick the good stuffout of, out of the, the blogs you all
do as well as some of the things thatare going on in the marketplace and.
(04:16):
I think it's important for peopleto understand that this has
become a competitive advantagefor a lot of fintechs when they
integrate into this technology.
Whether it's stable CoinCrypto as a service.
Uh.
Any other royal loyalty based items reallystart to, to make a big difference in it.
(04:37):
But of course, it always comes with somefun things like licensing and registration
and cross border things we have to thinkabout, which then of course, brings in
the compliance and the regulatory pieces.
I, I've been saying this for a longtime, this is a borrowed quote, but
you, you know, in financial servicesthese days, you're either protecting
the past or building the future.
(04:58):
And I, I think more and more buildingthe future means, uh, figuring out where
blockchain Web3 di and digital assetsfit, uh, into your business model.
And so, uh, you know, I, I thinkit's relevant anytime that we see
traditional financial servicescompany taking steps to integrate
(05:21):
with crypto, a crypto native company.
Then anytime we see the reverse, um,a crypto, a native crypto company
taking steps to integrate witha traditional financial services
company and more, and we're seeingthat more and more, uh, you know.
As you mentioned, uh, wepublish this blog every week.
We've been doing that for seven years now.
(05:42):
And one trend that I've observed overthe years is more and more often we are
reporting on, um, developments wherewe see this pattern occurring again in
both directions, both tradify uh, takingsteps to integrate with crypto and crypto
taking steps to integrate with trap fight.
(06:02):
You know, the recent developmentyou mentioned, uh, I think has a
lot to do with the continued, uh,that continued trend that we're
seeing in the marketplace, uh,and the expansion of that trend.
Really,
I think the piece that makes thisone stand out is, you know, Kraken
is using this enabled spending of.
(06:22):
Crypto at about 150 plus millionmerchants across Europe and the uk.
Um, and not only that, but they'resupporting over 300 currencies, whether
it's digital assets or traditional fiats.
They're supporting all of those.
So it, it's not surprisingthat they're starting to make
(06:45):
that direction towards the us.
Another trend that I'veobserved over the years.
Is, and, and, and this is something Isay often is that, you know, I don't, I,
I've never thought that crypto would everreplace the traditional financial system.
Instead, it's going to becomemore and more integrated with it.
Uh, in other words, you know, if youthink about it, we have a lot of different
methods through which we can pay people.
(07:06):
Today we have a CH, we have wiretransfer, we have credit card, we have
debit card, um, and other methods.
And crypto is just becoming onemore method to add to that list.
So I think, you know, the developmentyou mentioned is really targeted
at, uh, merchant payments,and that's one, uh, sort of.
(07:27):
Vector that is moving pretty quicklyin the, the FinTech space is how do
we make it easier to pay merchants?
Uh, and so, you know, we, I think thatproblem is something that is being
addressed is, and then similarly, there'sa parallel but related problem that has
always been out there, which is for.
Uh, crypto holders for those who preferto hold their money in crypto, how
(07:51):
do we make it easier for them, uh,to pay for things without having to
exchange their crypto for fiat first?
You know, and I think anytime wesee announcements related to, um,
uh, crypto debit cards, uh, orother sort of traditional FinTech
payment mechanisms that allow youto pay at traditional FinTech.
(08:14):
Point of sale systems or, or, uh,online portals, but spend under, but
behind the scenes spending your crypto,you know, we're seeing, uh, a race
to address that need, uh, where, youknow, crypto holders wanna spend their
crypto without having to go throughthe stuff with exchanging first.
And then merchants wanna just beable to accept different types of
(08:34):
payments and reach a larger audience.
Well, and, and the merchantsjust, they just want their money.
That's really, they just wanttheir money and, and, you know.
We've heard a lot of of things this lastApril related around stable coin that
seems to be picking up a lot of momentum.
(08:56):
Coinbase and PayPal, they, they'vedone a little deal together
that offers rewards, uh, for.
For using the, uh, P-I-U-S-D.
They're, they're waiving some fees.
There's a whole bunch of funstuff that's going on around that.
And I know we didn't talk about this,but I had to bring it up because it
(09:17):
came up on the last day of the month.
I thought it was very interesting also.
That Ripple decided to place an a bidon, on circle the last day of the month.
But you know, that to me just shows howfrothy the waters are getting around
stablecoin and how important they're gonnabe to be moving forward with those things.
(09:43):
Rob, what?
What are you.
That, is that just something that'sgoing on now or is there something
deeper that you're seeing as well?
A little bit more to it and, uh, youknow, for, for those who are working
in this space on a day-to-day basis,like me, I, I think this is more common
knowledge, some of this stuff, but for,um, you know, those who are working in
(10:03):
FinTech but not necessarily crypto orwho are not living and breathing this
industry every day, um, some of this stuffhasn't really come to the mainstream,
so I'm glad that we're talking about it.
Um, but you know, really behind thescenes driving a lot of this is,
um, the pending legislation that'sbeing discussed and circulated in
Congress, uh, that is broadly referredto as the Payment Stablecoin Act.
(10:27):
And that would be a law thatwould, uh, create a, a very
sophisticated, uh, and detailedregulatory framework for stablecoin
issuers here in the United States.
Um, that would, um, include.
Various very smart, uh,protections, things that a lot
of the US stablecoin issuers havebeen doing for a long time now.
(10:47):
But things like ensuring that, um, eachdollar unit, backing every stablecoin,
uh, is represented by US dollar equivalentheld in a US bank or, or qualified
custodian, and that those accounts areaudited, uh, on a monthly basis with auto,
you know, audited by US public accountingfirms, things that make, uh, sort of
(11:08):
the consumer a lot more comfortable.
Using stable coins and all that.
Uh, it has really underpinnedwhat some people are calling
the stable coin wars right now.
Uh, because you've got this in thebackground, pending legislation.
A a lot of people keep saying we will geta law, um, passed very likely in 2025.
(11:31):
Um, it could be sooner, couldbe later, but um, by all counts,
many people say that they expectthat for that to happen this year.
And so we're seeing companies preparingfor that, you know, so we're seeing
the current, uh, stable coin issuersthat have already been in the market
for a while are, um, starting toget a little bit more competitive.
(11:51):
Um, also starting to, in some instances,um, cooperate a little bit more to sort
of support each other in the market.
Uh, and then we see new playersgetting ready to enter the market.
And I think we'll talk a littlebit more about that with.
Things like, um, the state ofWyoming or, um, a, a Wyoming based
bank that has recently, um, testedand issued a stable, uh, you know,
(12:14):
a stable coin for themselves.
I'm
bringing us back to the,the payments piece of it.
What, what are you seeing or whatare you hearing as far as the
benefits of why the stables are,are picking up as a form of payment?
You know, there, there's a.There's many different kinds of
stables, and we're not gonna getinto the differences between them.
(12:37):
But, you know, the, the stable coin is, isalmost a equivalent to a digital dollar.
But why, why do you feel, or,or what are you seeing that has
garnered the attention of it so much?
So outside of regulatory, outsideof those things, what, what
(12:58):
are some of the things that.
Are making it appealing to, tothe powers that be, let's say?
Sure.
Well, I mean, as you know, um, and anyonewho has, uh, observed or worked in the
FinTech industry has known, um, paymentsare clunky historically, had have been
relatively clunky, uh, for a long time.
(13:20):
And, you know, the technologyhas evolved over time.
Um, we still have instances where,you know, international wires have
trouble clearing on time, where, um,you know, companies feel like they're
paying way too much, uh, for payments.
Are there too many intermediariesinvolved in processing payments and,
(13:41):
um, stable coins Being powered byblockchain really do solve a lot of those
problems, you know, fundamentally, um.
Blockchain in, in many respectsis about removing intermediaries.
And so when we talk about payments, thatmeans removing all the corresponding
banks, uh, that are underlying and sitbehind any, any, any payment transaction,
(14:07):
any electronic payment transaction, uh,especially international, and streamlining
that so that you're having this, thosepayments, uh, cleared by a blockchain.
Now, of course.
When it was just, when we were justtalking about Bitcoin before the, the,
um, idea of stable coins came along,you know, no one was really, none of,
no one who was really making, um, largehigh volume international payments.
(14:32):
Uh, really thought Bitcoin itselfwas a solution to that because
of all the price volatility.
Uh, and then you enter, enterstable coins that attempt to
solve that problem by saying, Hey.
We're creating a, a digital asset thatfunctions just like Bitcoin in terms of
its transferability, uh, and its, um,accessibility on a blockchain network.
(14:54):
Uh, and each unit is gonna be backed bya real dollar and a real bank account
audited by a US public accounting firm.
Now, um, that, that to me, uh,that type of stable coin, a fiat
backed stable coin, so to speak.
Is, um, in my view, one of them, uh,the innovations in this industry that
really excites me the most becauseit solves a lot of these fundamental
(15:17):
problems and payments that you andI and others that have been working
in FinTech have been dealing with,you know, for our entire careers.
Um, by making them faster, um, nearinstant, you know, there's still
some issues with, uh, some of thenetworks, but really a lot faster
in most cases than existing methods.
(15:38):
Then, especially from an internationalstandpoint, uh, a lot less expensive.
Uh, and then fully transparent on ablockchain network so that everyone
knows, you know, when I'm payingyou, you know that you received it
and I know when you received it.
And, uh, we're both looking at thesame record of that transaction.
Uh, so those are some of the things,some of the things that I think
(15:58):
excite, uh, FinTech professionalsand, and businesses working in
the payment space or businesses.
Looking to accept paymentsabout stable coins.
And then we can also talk aboutsome of the advantages, uh, for
actually just the merchants.
Um, but I'll, I'll pause there.
You're building a FinTech product.
You want to offer digital assets,but wallets, that's the hard part.
(16:20):
Security, compliance, keyorchestration, blockchain integration.
That's why fintech's, paymentplatforms and custodians.
Choose defense.
They provide wallets as a service.
That's API first, multi chain bydesign and secured within NPC.
No single point of failure.
So you can launch across over50 Blockchains, automate policy
(16:41):
controls and stay audit readywithout managing private keys.
Stripes, bridge powers, crypto paymentsthrough Defense Moon, PAYE Scales.
Wallet securely with defense sphere.
Grew without compromisingon control or compliance.
Even major fis like Fidelity, ABand Amro, as well as custodians like
(17:02):
Zoia and Tungsten trust defense topower their on chain infrastructure,
developer ready, compliance approvedproduction grade from day one.
If you're building in payments.
Exchanges, OTC desks, marketmakers, or defi defense wallets.
Work the way you need them to requestyour demo at fintechconfidential.com/dfns
(17:28):
defense Secure wallets built around.
One of the things you left outthat is something that gets me most
excited is really the ability to.
Programmatically have things happenbased upon, uh, a trigger or based
upon a rule, or based upon someaction happening or a time period,
(17:51):
like all these different things.
So instead of having to have a personthere or waiting for the next cycle to
happen is, is most of the financial worldhas been batch processed on a daily basis.
A lot of that starts to go away.
And I think that is, that isreally interesting, um, that
we've been able to, to do that.
(18:13):
I agree.
And I think that will be the nextphase that we see, you know, once uh,
we get a stable coin, uh, act passedinto law and businesses become more
comfortable with stable coins, I thinkthe very, one of the next phases is
going to be a lot of experiments with,you know, what you mentioned, what
folks call program programmable money.
(18:34):
Where, um, you know, paymentsare made instantaneously upon the
occurrence of predefined events.
Uh, and that theoretically youcould unlock a lot of liquidity
in the financial system.
So as we talk about stable coins, youknow, it brings us back, and you even
mentioned it, you know, we reallydidn't look at Bitcoin is a, well, and
I shouldn't say we, but Bitcoin hasnot been very frequently looked at.
(18:58):
As a means to make a payment.
It's looked at more of an assetand, and we can go into all that fun
stuff, but it hasn't been a reallygood means to do a, a transaction.
And I think this is why, you know, thestable coins give you that nice bridge
between the crypto native and, and thetraditional finance side of the house.
(19:22):
But I, I would be remissto state that in April.
Bitcoin finally made it backup in the 95, 90 $6,000 area.
What are some of the other thingsthat, that you're looking at, that
you're seeing, especially when we startthinking capital markets type stuff?
(19:44):
Um, and we can, we can start withthe Bitcoin and then move from there.
Crypto and digital assets,uh, certainly over the last
month and also just over time.
Appear to have to be becoming more andmore intertwined with traditional finance.
And so we're seeing that samething theme play out in, in
(20:05):
the cap in capital markets.
Now, I, I always say I'm notan expert on the Bitcoin price,
so I'm not gonna opine on that.
But what I will say is that, you know,more on a lot of occasions it seems
to be tracking, um, what's happeningin, uh, the US equities markets.
And so that itself, you know, is apotential sign that the crypto markets
(20:29):
and the traditional capital marketsare becoming more and more intertwined.
Uh, and to your point, um, you know, someexamples of that have been some of the
traditional players launching crypto basedETFs, and that's absolutely been a theme
in April and over the past several months.
Well, yeah.
And, and so even in, in April, I know,I know we're talking a lot about Kraken,
(20:50):
but they did a lot this month, right?
So they decided to launchinto the traditional markets.
They're offering over a LA 11,000 plusUS listed stocks, ETFs, FX futures.
I mean, it just, it just keepsgoing and going with that one.
But us isn't the only placethat things are changing, right.
(21:12):
So, um, in Hong Kong and Canada,they both, uh, approved some
ETFs, um, Ethereum and Solana.
But the part that I thought that wasreally interesting is that we started to
see the, the staking and, and the lendingof digital assets starting to roar back.
(21:37):
And so I. What do you think is, isreally driving that desire to on,
on those return side of the house?
Does it have anything to do with thestablecoin stuff that we talked about?
I, I think it's mostlyseparate in my view.
I, I, I think that, um, you, thesimilarity again is the continued.
(22:00):
Inter meshing of thetraditional and Web3 markets.
Um, I think the staking pointthat you raise is to me the
mo the most interesting.
Uh, and that's, um, arelatively new development.
And you know, as you mentioned, wesaw, um, some developments in Hong Kong
where there was some regulation passed.
(22:23):
Uh, to provide the market with someclear rules as to how to do this in a
way that was going to be, um, met withapproval by the financial regulators.
If your provider doesn't allow youto manage all your assets in one
place, we're already starting tosee that, that people are behind.
So that's gonna be a big piece of it.
And of course, you gottahave the trust and, and.
(22:46):
We're gonna move into the next segment,which is the regulatory side of the house.
And of course, if you don't, if youhave all that stuff in one place, that
means you have to make sure you've gotall your ducks in a row and are being re
in the regulatory sites in a good way.
I, I think I. It's been really good,and I'm gonna come back to the US again.
(23:06):
Uh, we're just, we'll just land backin the us Heck, let's go to DC and, and
talk, you know, uh, all of the, the,the acronym agencies have, have really
decided to, to roll back or to simplifyor to make, make it a little bit easier
for these digital assets to move forward.
(23:29):
I, I really like thedirections it's gonna go.
At least my perspective.
I'm liking it.
But, you know, you started to talkabout it earlier and I'd love to go a
little bit deeper into, uh, the SEC'sguidance on stable coins and, you know,
it being us backed one-to-one redeemable.
Requiring liquid reserves,not securities, like, help us
(23:53):
uncover that a little bit more
in April.
Um, the SEC published itsown, uh, set of guidance.
Uh, and this is from the SEC's division ofTrading Markets, I believe, uh, addressing
what they call covered stable coins,
it makes me start to to wonder, are theyalready expecting to provide returns on.
(24:18):
On stables, like, like are they, it'snot like they're preparing for that
type of a, a position to be placed in?
Well, that, that's an interesting comment.
I hadn't thought about it that way.
Um, you know, from my perspective,um, you know, and just to give a
little bit more context, a coveredstablecoin, according to the guidance,
(24:40):
if it meets that definition, generallywould not be considered a security.
And that's the whole pointof the guidance is to give.
Market some confidence that if you'redoing stable coins the right way,
you're, you're not going to get anenforcement action or a subpoena by the
SEC. Um, and, you know, we talked aboutthe payment Stable Coin Act before.
(25:02):
I think another, um, smart thing thathas been done by the SEC here is that
they're getting ahead of the, the paymentstablecoin Act a little bit and giving
the market a little bit more comfort.
Wow.
Some of the similar definitions are workedout in what will eventually become a
law, um, and maybe giving, you know, insome respects, giving the legislators.
(25:23):
Um, you know, some advice as towhat that definition, you know,
might look like in the law.
Um,
just, just kind of giving alittle bit of guidance, you know,
trying to shepherd it along.
I mean, that there's, there, there couldbe worse things that go on with that.
Uh, but the other thing that alsohappened, again, just keeping in
alignment with some of our, uh,our federal, federal agencies.
(25:46):
I mean, federal Reserve, uh.
Rolled back their restrictiveguidance and really got it
really aligned with OCC and FDIC.
And, and you know, this, this monthI've had a, had the opportunity to,
to participate, um, at, at the NACHAconference in, in New Orleans, Louisiana.
(26:06):
And this seemed to be a really bigthing that they were talking about.
There is the, the guidance that hasbeen adjusted by the OCC and the
FDIC around these types of things.
Really seems to be opening up anumber of opportunities and making
these financial institutions feela little bit more comfortable
with bringing on digital assets.
(26:29):
Now, again, I said a littlebit more comfortable.
Not a lot.
It's not like they're gonna openthe floodgates, but they're,
they're feeling that way.
Uh, what, what other things are youseeing with all of these rollbacks
and, and the perspectives that,that others are having from this?
Well, I, I think the develop thedevelopment you mentioned where we
now, as of the month of April, haveall of the major US banking, right?
(26:53):
Federal regulators, essentially, um, inalignment in saying that, um, the, the
former process of a bank, uh, needing.
Notice or a letter of non objection,in other words, permission, um, to
engage in crypto related activities.
That guidance is gone and bankscan now engage in crypto related
(27:14):
activities at their own discretion.
Mm-hmm.
But also subject to the normalsupervisory review process.
So a bank will get reviewed and they'llget reviewed for a lot of different things
and crypto will be one of those things.
You know, and I think, um, part ofthe, um, press releases that announced
these developments noted that.
Um, the Web3 and digital asset industryhas matured enough that some of the
(27:39):
risks that were there maybe a coupleyears ago, um, are not as prominent.
And so, you know, theserisks can be addressed in the
normal supervisory process.
Now,
if the.
Systems and the market itself hasmatured a lot, though I believe that the
understanding from those who regulate itprobably has matured more so than, than
(28:00):
the actual products and and technologies.
So that, that one, I, I seewhere you're headed with that.
Um, but you know, the thing I wannatalk about next is really, you
know, we look at this, we're talkingabout federal regulators, right?
And federal regulation.
But in the US the states can do all sortsof fun stuff, um, all by themselves.
(28:24):
And you know, the one that thatmakes, that has come to light,
especially this month, was Wyoming.
Um, they've decided, uh,to, to launch the YST.
It's in testing, they'rerunning with that.
And then on top of that, you've gotCustodial and Vantage that launched
(28:46):
their first bank stable coin.
I mean, there's just, there'sso much stuff that's going on
at the state level right now.
Um, I, I, I'm starting to feel, andyou and I kind of talked about this
as we were prepping over the last fewweeks, because I'm starting to feel
like, I wonder if we're gonna startlooking at digital assets the same way
(29:07):
we look at money transmitter licenses.
How it, it's, it's astate by state variation.
Uh, what, what are your.
Perspectives and what are, whatare the things that I left out
that's going on at the state level?
Sure.
Well, I, I think first, you know,at, I think the states now are gonna
become a lot more comfortable, um,taking actions that maybe, uh, they
(29:31):
wouldn't necessarily have taken in,in the absence of, um, the recent
guidance from the federal regulators.
So companies and then evenstate-based agencies now have a
little bit more comfort, um, that.
The, um, the scrutiny that was therefrom the federal banking regulators
is not necessarily gonna be, um, asintense as it was a couple years ago.
(29:56):
That opens up, you know, gives confidenceto state-based agencies as well as banks
within states that are operating our statecharters, um, to take some actions that
maybe they were kicking around from, likean rn, you know, research and development
and new product perspective that.
They were afraid to launch a coupleyears ago and now, you know, I think
some of that fear has been lifted.
(30:17):
Um, and so I think in large partthat has triggered some of these
developments, uh, like the ones youmentioned in the state of Wyoming.
Um, so when I look at
Wyoming is, has been very, um, digitalasset forward for a really long time.
And then you look at a statelike New York that has been
(30:40):
very, very super restrictive.
And the other state that I'm stilltrying to figure out why the, where
they're going and what they're doingwith, with digital assets is Illinois.
But what, where do you, do youthink it's gonna still be that,
that really broad chasm betweenlike hyper restrictive and hyper uh.
(31:05):
Enablement, like, are, is that,is that something you're seeing?
And as you look through all of this stuff,
I, I think we're gonna see a,a, a real mix across the board.
I, you know, I think we're gonna see,um, you know, on one end, like the state
of New York, very restrictive licensingregime on another end, like the state
(31:25):
of Wyoming, uh, very open to innovation.
We couldn't picked anytwo further opposites.
And, and we'll see everything in between.
We'll see.
We're gonna see everything in between.
Um, and I think over time it may be,it may be that some of the states that,
um, are slower to act may sort of, uh,observe what the results are in, you
(31:47):
know, the more restrictive categories,less restrictive categories, and
then sort of follow suit, you know.
Um, and so just as a couplemore recent examples, um, you
know, some states have been.
Discussing their own state-basedstrategic Bitcoin reserves.
You know, um, Arizona apparently is,is pretty far along in that process.
(32:10):
Yeah.
From what I understand.
But it's been really interesting tosee how, how those types of things.
I think Texas is another onethat has it on the books as well.
Um, I think we're gonna see alot more, more folks do that.
And,
you know, this market is growing.
It's very big.
It's not just a one size fit all market.
(32:30):
So, uh, you know, as some more examples,you know, strategic Bitcoin reserve could
be one area where state focuses on anothercould be stable coins like Wyoming.
Another could be licensingfor exchanges, think New York.
Oh yeah.
Um, another area couldbe the mining sector.
And Texas has been very receptiveto the, the mining sector.
Uh, and there are, you know, I'm surewe could come up with many more, and
(32:51):
I think different states, maybe evenbased on their own sort of economies.
May pick and choose which areasin this market that they want to
regulate more heavily versus, um,take more of a light touch approach.
A lot of these states, and a lotof the players in this space aren't
waiting for an act of Congress, right?
They're, they're looking at theframeworks that are already there
(33:14):
that have already been working.
They're taking guidance fromthe enforcements that have
happened over the years and.
Really allowing people to, to findtheir way, whether they're, they're
navigating just based on the regulatorytone shifts, uh, the enforcements kind
of managing through that because it.
(33:35):
It doesn't mean that it's lessresponsibility when you have,
uh, everybody on the same page.
It just means that everybody is startingto look at it from the perspective of,
okay, so we know it's going to be here.
We know that we're gonna have to protectconsumers and businesses and, and keep,
make sure that our economy keeps moving.
(33:56):
Um, and I, I think a lot of themare, are really starting to.
To, to see it from that perspective.
But,
but coming back to kind of your originalpoint about Wyoming, you know, the concept
of a state getting ready to launch itsown stable coin, that's groundbreaking.
You know, that that is really somethingthat is, we haven't seen anything
(34:16):
like this before, you know, andthat's, that's, that's fascinating.
And then also hosting, beingthe home state for what will
very likely be the first.
Bank, you know, charteredbank to issue a stable coin.
And I, I am, uh, pretty sure we're gonnasee many more chartered banks issue their
own stable coins in the coming years.
You know, it's funny and I appreciateyou bringing us back to that because
(34:37):
I've, I've been watching custodian andI've been watching Wyoming for so long,
and as probably many in the, in theindustry have been that that big change
sometimes just is kind of like the.
The obvious next step, right?
So it doesn't feel as climactic as whenyou step back and you look at where it
(35:01):
started and where it's at today, thatthat really sets the, the stage and really
gives us a good perspective to look from.
I don't like to talk aboutall the negative stuff, but
I've got to bring it up.
And of course, because we have youfrom Baker here, um, I, I, I, I do
gotta, I, I do have to talk about the.
(35:23):
The legal regulatory enforcementwhirlwind that we've had.
But I thought it was really interestingthat in April alone, um, SEC either
dropped or settled with Ripple andCoinbase and Kraken and Immutable
and Yugo Labs and Gemini, andConsensus and Robinhood and open seat.
(35:44):
Uh, I could probably go on for anotherfive minutes of listing all of the
enforcements that were in flight.
Have just been resolved.
I've got to imagine that you'reseeing and you're hearing a
huge, huge sigh of relief.
(36:07):
What, what is your perspective onthis enforcement environment now?
Well, you know, look, being a, um,a payments professional and FinTech.
Web3 attorney for, you know, over 12years now and working my entire career
in compliance and investigations.
(36:28):
I think what I could say big pictureis that, you know, the regulations
are always changing, so, you know,you've gotta be nimble, especially
in FinTech and Web3 because they'rechanging, they always change rapidly.
And, um, you've gotta keep up on thosechanges so that you can understand the
current environment plan for the future.
(36:48):
And we're seeing, we, we have seen areal sea change, uh, no doubt about it.
I think that is, at this point, youknow, based on all, a lot of those, um,
actions you just mentioned, it's, itis 110% clear to everyone that there
has absolutely been a sea change,um, in the enforcement environment.
And that obviously opens up a lot ofopportunities and, uh, you know, allows
(37:12):
businesses to pivot from, you know,sort of, uh, what may have been a more
defensive stance, uh, to more of anoffensive stance, you know, to, to
try to capture or be more aggressive,try to capture some of those market
opportunities, uh, that maybe theywere discussing in years past, but
were, um, you know, a little bit,bit too, uh, Tim had just pull the
(37:32):
trigger on for, for very good reasons.
Um, and so I think that, you know,that change in the marketplace
has at this point become.
Absolutely 110% clear to everybody.
There's no doubt thatthere has been that pivot.
And I think that is, you know, oneof the things we can absolutely say
coming out of the month of April, uh,with all of the actions you mentioned,
(37:54):
um, be being dropped, uh, over thecourse of really March and April, I.
Support provided by Sky Flow.
What if you could buildfast but not break privacy?
What if you could ensure dataprivacy, governance, and compliance
with just a few API calls?
What if you could worry less aboutPCI requirements while actually
improving privacy and security?
How much more time would yourteam have to truly innovate?
(38:16):
How much faster could youbuild and ship new features?
How much more powerful could your app be?
Sky Flow is a zero.
Trust data privacy vaultdelivered as an API.
Sky flow's radically Simple design.
Choose to collect, secure, andtokenize personal information like
card data and payment details.
And with built-in features likeencrypted data analysis and sharing
(38:36):
anonymization and advanced governance,your days of choosing between data
security and data usability are over.
Whether you're just concernedwith PCI compliance.
Or need to go further to includeCCPA, GDPR, SOC two and beyond.
Sky Flow has you covered.
What if you could build fast but notbreak privacy with Sky Flow, you can visit
(38:56):
https://skyflowsecure.com today to learnhow, so that, that makes a lot of sense.
And you know, New York hasalways been very, uh, regulatory
or, or enforcement heavy.
I mean, just this April.
Um, they find block, uh, $40million for some a ML violations.
(39:19):
I don't know that's quite a bit.
But if you look at the totalassets that block has in digital
assets, it's not really that
much.
You know, part of the messagewith that action is that the
state of New York, as we would'veexpected, is going to continue.
To police this industry and is goingto continue to find companies that it
thinks, uh, are violating its New YorkBit license regime and is gonna continue
(39:44):
to take, uh, in particular anti-moneylaundering violations very seriously
In the early days and evensome conversations today, you
still have people saying thatcryptocurrency is, is for criminals,
cryptocurrency is for the scammers.
Um, I think we're, we're.
We've moved past that, but this is justanother area where the, the providers
(40:08):
and the technology and the fintechsin the middle can, can get a little
bit over their skis and, and maybenot meet the criteria that is there
and perpetuate a little bit of that.
Hopefully it doesn't keep going,but you have the hacks and you
have the social engineering.
You have all these other different thingsthat, that the losses and the fraud
(40:30):
and the scams that go along with it.
Are are crazy.
Um, but one of the things thatyou wrote about in the blog
is that crypto theft totals.
Um, right about 1.63 billion ish.
I'm using a ish area.
(40:51):
Um, I thought that was really interestingbecause if you look at it, that's
about 1% of the total market cap.
For Bitcoin itself.
So that's a lot, a lot ofvalue that's been stolen.
Yeah, it, it, it's, it's, it'sreally a staggering number.
(41:14):
And, you know, as you know, Ted,like one of the things I, I say all
the time is that, um, in my view,the biggest threat to the crypto
industry, uh, becoming adopted bythe mainstream is not regulation.
It's actually hacks and scams.
And other related threats.
And I think, um, a lot of the datathat we saw published in the month of
(41:36):
April, um, really underscores that.
So 1.3 billion worth ofcrypto lost in Q1 2025 alone.
So just the first quarter of this year.
And as you mentioned, that representing1% of the entire, what is it,
the entire Bitcoin market cap.
Uh, yeah, so that's a,that's a very big number.
(41:57):
Um, that's a, it's a very bigvulnerability, frankly, um,
of this growing, um, digitalasset based financial system.
I mean, these things arehappening on, on defi platforms.
They're happening through,you know, social engineering
where someone says, Hey.
Take a picture of the, the QR codefor your wallet and like, there's
(42:21):
so many different things on doyou are, what are some of the.
The ones that, that you came across indoing the research that just, you're like,
wow, I would've never thought about that.
Generally, um, take acouple different forms.
So, um, hacks of exchanges,that's always been a threat.
And, you know, we, um, had therecent buy that hack, I believe
(42:42):
that was in March on April.
But, um, that was the, at that timethe biggest, became the biggest
hack, uh, of an exchange ever.
Happening happening in 2025.
Uh, we've got scams.
To your point, that'sbeen a growing concern.
Uh, um, and you know, there are even.
Um, by, by many accounts, um, largeoperations overseas that are all fully
(43:08):
with like the lots of people dedicatedto proliferating these scams where
they're just looking to trick people, uh,into sending them their cryptocurrency
or trick people into giving themcredentials that allow them to hack
someone's cryptocurrency accounts, um,or company's cryptocurrency accounts.
Um, and then we've got Defi Hacks.
So just a couple datapoints, um, from April alone.
(43:30):
Uh, in April, $90 million worth ofcrypto was stolen from Defi platforms.
Um, some of those, some examples, uh.
We had hacks of the Aber Cadabra MoneyDefi platform, the ZO platform, and more
recently the the Luke Scale platform.
(43:51):
These are all popular Defi platformsthat were hacked for 13 million,
8.4 million, 5.8 million in crypto.
Um, not enormous, but enoughto really, uh, it adds up.
Yeah.
And, and diminishes trust, you know,and I think that's another big factor.
Yeah.
From my perspective, it makes sense.
(44:11):
Like the, the folks who are moretechnologically or technical savvy
would be less prone, uh, to, tosome sort of malicious attack
or hack or something like that.
But it seems to be, at least forright now, and maybe it's vibe
coding that's causing this to happen.
(44:31):
But you know, they're coming through,uh, API hacks, they're coming through,
uh, Python packages, like all thesedifferent things that are coming on
that you would think that someone whounderstands the technology at that layer
would, would know what to look for.
(44:53):
It, it like.
That's surprising to me.
Yeah.
And that's an example of a newa, a growing attack vector.
And I think a sign that some ofthese attacks are becoming more
sophisticated and looking to targetmore sophisticated victims, people
that are likely to use crypto or maybelikely a whole large amounts of crypto.
Um, but to your point, you know,in April we, we reported on, um,
(45:15):
two pretty sophisticated hackswhere the hackers didn't attempt
to hack the victim directly.
Instead, the hackers.
Um, altered and inserted malware,uh, crypto malware into popular,
uh, programs that are, um, popularamong crypto users to download and
(45:37):
deploy in various applications.
So, you know, that's a sign that you seehackers targeting, um, more sophisticated
users, whether those might be companiesthat are building their own crypto
infrastructure like we talked about.
The proprietary staking services earlier,uh, or maybe, uh, they're targeting
more sophisticated users who are morelikely to hold crypto on their own rather
(45:59):
than on, on a third party exchange.
Uh, and likely to hold, frankly, morecrypto, you know, higher volumes.
Um, and obviously the hackersare interested in that.
Oh yeah.
The, the bigger the honey pot,the, the more bears will come,
come trying to get to that honey.
So, totally.
Got it.
You know, we've covereda bunch of stuff today.
(46:19):
Obviously we can't cover everything thathappened in April, but these are the
ones that, that we really identifiedand thought were important to bring up.
One of the things that's important tonote is what we've noticed in April is
that the Web3 landscape, um, seems to beon that tipping point from the theory of
(46:41):
what could be to starting to move towardsthe execution of what can be and really
is giving us the next steps of what to doand how to get there and how to enable it.
And I can only imagine.
The number of announcements thatcome out in May are just going to
(47:02):
continue to come, especially with thesehistoric changes that we've had so far.
Rob, what?
What are some of the thingsthat, that you think we might.
Might see happen in May that were justsignals being sent to us in April.
Well, I certainly think we're going tosee this continuation of, um, developments
(47:26):
in stable coins, and I think we'regonna see more people enter that market.
Uh, the players that are already in thatmarket looking to launch new products.
Maybe there's products that are.
Getting ready to be launchedbehind the scenes, uh, that
could make a, a large impact.
Um, but I absolutely think stablepoint applications, integration
between traditional crypto firms,Web3 firms with traditional financial
(47:47):
services firms will absolutely foryou, uh, continue to be a trend.
I think it'll be interesting to see, um.
How the regulatory environmentin the US continues to evolve.
You know, as we talked about,we've seen a clear 180 degree
shift, a, a clear sea change.
And then, um, you know, will we see moredevelopments along those lines in may?
(48:10):
Probably, uh, what form will they take?
It's hard to say.
And so that, that will be interesting.
And then at some point we're gonnasort of, the regulatory environment
should shift focused from sort of.
Dismantling the policies of theprior administration to then building
kind of the foundational policiesof the current administration.
(48:31):
We're seeing some of that withthe SEC statements that we talked
about today, but I think we'regonna see more and more of that.
Um, the SEC is gonna continueits roundtables where it's
receiving input from the public,um, on, um, oh, you know what?
That round.
So the, the last round tableof, of, of April, um, I, I did,
(48:54):
I did, uh, watch it, uh, live.
Uh, it was very informative.
Um, if you watch it on YouTube, um,go ahead and bump it up to like five
x. Um, that, that'll get you there.
Or, or just copy the transcript.
Throw it in the chat,GPT and read through it.
It'll, it'll help you out and it'll saveyourself at least four and a half hours.
(49:20):
And, well, folks, I. That's itfor this episode of Web3 with FTC.
If this discussion about Web3 got yourattention today, that's great because
there's more from where this came from.
So go ahead, head over toYouTube, Spotify, apple Podcasts,
or wherever you listen, I.
Hit that follow button, and if youwant to stay plugged into everything
(49:41):
we're doing and everything we'retracking here, go over to FinTech
confidential.com and sign up becausethat's where all the deep dives live.
As well as the future episodes, you'll beable to learn more and be sure to share
this with someone who's serious aboutwhere FinTech is going, and as always.
Keep moving forward as wewrap up today's episode.
(50:02):
I've got one last thing for you.
If you are in the trenches fightingfraud and financial crime, you
know it's a complex battlefield.
That's where Hawks AI toolsfor real-time payment screening
a ML transaction monitoring.
And dynamic customer riskrating come into play.
These aren't just buzzwords.
They're game changers.
(50:23):
Designed to make your compliance moreeffective and less of a headache.
Imagine slashing through falsepositives with precision and giving your
compliance strategy the edge it needs.
Head on over to https://getHawkai.comto sign up for a demo and discover how
their platform can revolutionize howyou fight fraud and financial crime.
(50:47):
This has been a production of DDthree Media with all rights reserved.
This is provided forinformational purposes only.
It is not offered or intended tobe used as legal, tax, investment,
financial, or other advice.
We strive to provide accurate andup-to-date information, but will
not be responsible for any missingfacts or inaccurate information.
You comply and understand thatyou should use any of this
(51:09):
information at your own risk.
Cryptocurrencies are highly volatilefinancial assets, so research and
make your own financial decisions.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.