The Crypto Market Structure Bill will Pass in Q1 2026! with Adam Minehardt

Episode Transcript
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Speaker 1 (00:04):
Hey, folks, we are recording at Chainlink's smart Con event
and joining me is Adam Mainhardt, who is the head
of public policy at Chainlink.

Speaker 2 (00:12):
Adam, great to have you. Thanks for having me.

Speaker 1 (00:14):
Adam, excited to chat with you. You have a very
interesting background. You could be considered a crypto og because
you worked in Tradify, you worked at different crypto companies
and so forth.

Speaker 2 (00:24):
Tell us a bit about that. Yep.

Speaker 3 (00:26):
Sure, I started off really in government. I worked at
the Federal Reserve. Then I went to Capitol Hill for
the majority of my career. I spent seventeen years on
Capitol Hill, Wow, working for a member, a member who's
senior on the Financial Services Committee, so deep in financial
services policy, which now has jurisdiction over a crypto digital assets.

Speaker 2 (00:47):
Yep.

Speaker 3 (00:47):
From there, I actually went to City Group, where I
worked in government affairs and policy there. And that was
right around at the time that the PWG report on
stable coins came out. Sure, crypto was starting to become
a little bit more widespread, and being in a big
bank at that time was very interesting. There was you
might say, some reluctant to engage on a issue area

(01:11):
that was not quite yet mainstream. Obviously a lot has
changed for sure. From City, I went to Stellar Development
Foundation Layer one. While I was there with some colleagues
in the Layer one space, started a Layer one coalition
of about fifteen Layer ones where we really engage collectively

(01:32):
on policy issues in DC from the Layer one infrastructure perspective.
And then moved to FS Factor where I stood up
a crypto policy practice with a lot of major players
in the space. And then more recently about six months ago,
joined Chainlink Labs as they're head of policy, really standing

(01:54):
up their government engagement.

Speaker 2 (01:57):
Side of things. So it's been fun.

Speaker 3 (02:00):
I've loved crypto every minute of it.

Speaker 1 (02:02):
Yeah, I mean you've seen different facets of crypto, and
you know, even being at City, it's amazing now cities
embracing crypto, just recently partnering a coinbase, looking to launch
custody and things like that.

Speaker 2 (02:12):
Yep.

Speaker 3 (02:13):
I think the journey of a lot of Jesives, the
largest banks has been one of probably opposition to reluctance
to now embracing it. So I think we've seen that
that that process play out. I think at the beginning
you saw this really across Wall Street that hey, we

(02:36):
don't really want to touch this. But as the industry
has matured, as I think we're starting to see a
regulatory framework emerge, I think there's growing comfort and I
think now if you look at if you read the
Tea Leaves, crypto is going to be part of the
financial services market, echo ecosystem for the you know, for

(02:58):
for the foreseeable future.

Speaker 1 (03:00):
And chain Link is playing a big part of that.
I'm amazed at the adoption chain Link is getting, not
only from trad five, but native crypto firms and competing
blockchains which need chain link services.

Speaker 2 (03:13):
No exactly.

Speaker 3 (03:14):
Chain Link really has positioned themselves at the center of
a lot of what's happening in distributed ledger technology. They're
really becoming the connective tissue for really any institution that
wants to connect with the blockchain, they want to do
so in a compliant manner. They want to do so
in a way that allows them to interoperate with other systems,

(03:37):
and they also want to be able to bring critical
off chain data onto the blockchain. So you put these
things together and you really end up with a full
stack of technology that's really enabling anyone. It could be
Web three, it could be someone like AVE the world's
largest DeFi protocol to someone like a DTCC JP Morgan

(04:01):
that have similar needs to want to access blockchain, but
in a way that's structured and makes sense from a
regulatory perspective. So chain Link is really well positioned I
think for the foreseeable future.

Speaker 1 (04:17):
Yeah, I mean it's incredible technology Surgey and the team
have built, and I gues say, I'm blown away that
these these different facets, which sometimes can seem like they're
competing with each other, all integrating with chain Link they do.

Speaker 3 (04:32):
I mean, there is a lot of vision from Sergey
and the folks that created this technology to really understand
the needs of blockchain technology and how it would work,
and really the need for verifiable data that is critical

(04:53):
for the operation of this whole ecosystem, for smart contracts
to work, you know smart it's called smart Cohn the reference.

Speaker 2 (05:00):
Are at.

Speaker 3 (05:02):
Chain Link has basically made themselves almost indispensable for all
of this infrastructure to really operate.

Speaker 1 (05:09):
So absolutely, now, Adam, we still got a lot of
work to do in DC, which you're very well versed,
and we know the government shut down, but once it
opens back up, we're hoping to get the Clarity Act
passed through the Senate. Tell us about what you're seeing there,
what are some work chain link and the team has
been doing to advocate okay for Crypto.

Speaker 3 (05:27):
You know, an interesting thing about the shutdown is while
the executive agencies are shut down, we and we do
know essential workers are still working travel TSA, air traffic controllers.
Congress is open. Congress is open, they are not They're
not off. So in many regards, the shutdown has actually

(05:51):
enhanced some of the work on key legislation. So we've
seen a lot of critical meetings occur with regard to
the Senate version of these past Clarity Act. Yeah, there
have been key meetings. Within the last couple of weeks.
The Senate Democrats hosted ten plus CEOs and executives. Sergey attended.

(06:15):
The Republicans did the same. So I'd say during the
shutdown there have been a lot of critical discussions. I
think there's some optimism now about the process being able
to move forward before the end of the year. Do
we get to the point where there's a bill going
to the President's desk?

Speaker 2 (06:34):
I don't think so.

Speaker 3 (06:34):
Okay, but I think we're going to see progress, So
that's the hope. But you know, I will say a
lot of key meetings are occurring during the shutdown on
the hill, So progress is happening.

Speaker 1 (06:48):
That's good to know it because from the outside, you know,
you think nothing is happening, but glad to hear certain
factions of it is.

Speaker 3 (06:55):
We're still working, definitely, definitely, and I think, you know,
hopefully the shutdown ends somewhat soon.

Speaker 2 (07:03):
And when it does, I think.

Speaker 3 (07:04):
That will open up some other areas of engagement, sure,
Treasury for instance, things like that they can actually help
move the process forward even more.

Speaker 1 (07:14):
Oh absolutely, So are you thinking and this is we're
all guessing here, but maybe Q one is when it
goes to President Trump's desk?

Speaker 3 (07:21):
Yep, I could see uh spring next year being a
realistic timeframe to maybe get a bill to the President's desk. Sure,
I think there will be meaningful progress towards the end
of this year. Does that mean a bill gets through
the Senate? I don't know, Maybe through committee?

Speaker 2 (07:39):
Sure?

Speaker 3 (07:40):
And you know, I would say the legislative process is nonlinear,
it's at best complicated.

Speaker 2 (07:51):
Sure, so.

Speaker 3 (07:54):
This thing could potentially hit another hard spot. That doesn't
mean it's ever dead, right, So oftentimes sometimes you do
have to have these critical points where maybe things stop
working and that actually causes people to come back to
the table in a more meaningful way. So, you know,
I'd look for a lot of ups and downs in
this process. We see it with every sort of policy issue.

(08:16):
There's a degree of brinksmanship involved psychology.

Speaker 2 (08:20):
So I think we'll see more of that.

Speaker 1 (08:22):
It's it's hot, a sausage is made, as it would say, right,
it's ugly, but you know, this is how government works.

Speaker 2 (08:28):
Yep.

Speaker 3 (08:28):
And one thing I'll add to that, I think overhanging
a lot of this was the last Biden administration, what
we saw out of the SEC. Yes, so I think
to industry and you know, you really always overvalue the
present versus what maybe could happen in the future. Sure, so,
could we see another Gary Gensler at the SEC? Could

(08:51):
we see another democratic administration? So I think that's in
the back of everyone's head. Like, so if you get
market structure that can put some rules around all of
this to potentially mitigate some of that.

Speaker 2 (09:04):
So I think that's I think that's what we're all
wrestling with.

Speaker 1 (09:06):
Oh absolutely, And boy, I can't wait for this bill
to be passed Adam to see the innovation and the
economic boom that's going to come out of this industry.
What are you anticipating posts this bill being passed.

Speaker 3 (09:20):
I think we're going to see a lot of For me,
it's really an increase in asset tokenization and increase in
tradfy engagement. I think we're going to see more entities
enter the space who perhaps have been on the fringes.

Speaker 2 (09:37):
Sure.

Speaker 3 (09:39):
I also think we may be at the point where
we start to see an inflection point for consumer adoption. Really,
a lot of the people that use crypto today, at
least regularly, are people who have a technology background. They've
been in the space for a long time. They can
handle the UAC, that's right. So I think getting it

(10:02):
to more mainstream consumers to do so, I think what
you really need is a regulatory framework to make them comfortable.
So I think I think that could be a really
big outcome of all of this.

Speaker 2 (10:15):
Yeah, because I think.

Speaker 1 (10:16):
About the applications and the things I do on a
daily basis, whether it's YouTubers or podcasts or whatever app right, yeah,
health app, whatever it is, I'm waiting for when blockchain
could be integrating to that and it creates new features
and new benefits and things like that.

Speaker 3 (10:32):
And I think, uh, I think that UX is something
I don't think we talk about a lot.

Speaker 2 (10:36):
Yeah, I think we.

Speaker 3 (10:39):
I think the more you have these regulatory guardrails, more
people will use it. Perhaps the features the ease of
use will get better. They're looking at technology. So if
you lose your seed phrase, yeah, your key. So there's
this key recovery type technology. There's other areas that can
maybe lessen the uh A version of more mainstream consumers

(11:02):
to say, wait, I could look at this as a
payments platform. Maybe I want to invest directly here. Maybe
I want to try DeFi. So I think a lot
of that could be unlocked here.

Speaker 1 (11:14):
Is DeFi included in the market structure Bible or is
its own separate thing.

Speaker 3 (11:18):
It's been exempted from the House past version they exempt
They largely exempt DeFi in the Senate. One of the
main issues that they're trying to reconcile is how much
will they regulate or include DeFi. Most of all of

(11:38):
us in the industry would just prefer hands off, let
the technology grow in a way that allows for its
evolution without the constraints of regulation. I think there's a
big education gap in terms of understanding of what DeFi
is and isn't. I think people have an idea of
what they think DeFi is, and it usually ends with

(11:59):
North Korea, and you know that. You know, when people
hear that, they're like, we need to regulate this. The
reality is is that that's not really what DeFi is, right,
we need to really ring fences to allow the technology
to evolve at this point.

Speaker 2 (12:17):
So that's the hope. That's the hope.

Speaker 1 (12:19):
Yeah, well said, and hopefully they can get it right.
I know it's complicated. I know, I can't imagine being
a lawmaker policymaker, remember of Congress. Then you're just like, whoa,
this technology is like, yeah, moving so fast, it's so
different from anything that we've seen over the past fifty
years or whatever it may be, or more than that.

Speaker 3 (12:38):
Well, definitely, I mean even people in the industry who
have technological backgrounds, you know, understanding what DeFi is and
isn't through a policy lens is really complicated. Ideas of
control of custody, of how pools work, who can enter

(13:01):
the pool. These are both complex technological questions, they're complex
legal questions. Government agencies haven't thought of it in this
context before, So a lot of it's new and a
lot of it's, frankly, intellectually a steep learning curve to understand.
Even if like if you know computer science, great, but

(13:24):
understanding the policy and legal overlay that's a different that's different.
So whole is it's really tricky.

Speaker 1 (13:33):
Yeah, I don't be the regulators in that front and
what they the work they have to do.

Speaker 2 (13:40):
It's just so.

Speaker 1 (13:41):
Do you think maybe DeFi comes years later as we
continue to fine tune to legislation and so forth.

Speaker 2 (13:47):
I think so.

Speaker 3 (13:48):
I think you know, what they did in Europe under
MIKA was they pretty much punted on DeFi. They left
it out. They chose not to put anything in it
in Mica. So it's kind of was put aside. Sure,
And I think that's really what we're looking at in
the US. I think that's the sensible approach, is to

(14:09):
make sure you don't really constrain the technology at the beginning.
If you did this with the Internet in the early
to mid nineties, you could have constrained the growth of
the Internet, and I had a lot of the promising
uses we see.

Speaker 2 (14:25):
Of it now.

Speaker 3 (14:25):
I think DeFi is at that point. It's a foundational technology.
It's not well understood. Let's take a beat, let's continue
to monitor it, and I think get to it at
a later point. I think that's the sensible tact. Sure,
we're seeing other jurisdictions look at that approach, so I

(14:46):
would hope that's where.

Speaker 2 (14:47):
We end up.

Speaker 1 (14:48):
Are you hearing anything new about bitcoin strategic reserve or
the digital acid stockpile?

Speaker 2 (14:53):
Yep.

Speaker 3 (14:55):
So we know Treasury is in the process of thinking
about this, about how to stand it up. I think
with the shutdown a lot of those plans have been
have been put on hold. One thing I will note
is that states. Three states have passed strategic reserves Texas, Arizona,
and New Hampshire, and they're all in varying degrees of

(15:17):
thinking through through how this would work from a custody perspective,
a taxpayer transparency perspective. So I think this may be
an area. You know, the cliche is like states are
the laboratory of democracy. This could be an area where
the states do provide some initial work in the area
that maybe Treasury can draw on. So the short answer

(15:40):
on the federal level is I have no news on
that front. I know they're thinking about how to do it.
Shutdown has delayed, but I think we're starting to see states.
Uh three states who who've passed laws signed by their
governors are now moving those along.

Speaker 2 (15:58):
So that's exciting.

Speaker 1 (15:59):
So maybe that's the better way because from the ground up, right,
the states can pivot and move versus the federal government.
It's like a tanker ship trying you're trying to you
can't move it like a cruise ship. Totally totally vote,
I should say, right, and uh, I mean that it
has a lot more eyes on it in a different way.
So I think thinking through the structure of this, the transparency,

(16:21):
the rules for holding it, the rules for custoding it,
when do you sell, all of these are complicated decisions
that will require a good amount of transparency so people
have an understanding of what's going on here. After all,
these are taxpayer funds when it comes down to it.
So I wonder this has been floated around potentially tariff

(16:41):
revenue being used to fund some of these things.

Speaker 3 (16:43):
Yeah, I mean there's been a lot of discussion about
tariff revenue being used for a lot of different purposes.
I think I think the one of the key questions
is will governments and states have wrestled with this in
the legislation, be allowed to just hold on to the

(17:05):
crypto assets that they have seized as part of law enforcement,
or take taxpayer funds and make open open market purchases
of additional assets. So I think that's a critical distinction.
I think what we think is going to happen in
the US here is really the former.

Speaker 2 (17:24):
But I think it's open.

Speaker 3 (17:25):
I mean, using taxpayer funds to acquire new assets is
very different than just taking seized assets that were part
of a criminal action, right and saying, look, look we've
already seized them, they're in the government custody. Yeah, let's
just not sell them because we think we can make
more money by holding.

Speaker 2 (17:44):
Them rather than selling them.

Speaker 3 (17:46):
So those are questions I think we're gonna have to
wrestle with.

Speaker 1 (17:49):
Yeah, well, I hope the government can get all this
result by Q one six.

Speaker 2 (17:55):
That'd be really great.

Speaker 1 (17:56):
That'd be awesome, Adam, Thank you for taking the time,
Thank you for having me.

Speaker 2 (18:02):
Really enjoyed it.

Speaker 1 (18:03):
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