Crypto execs meet with Biden administration over regulatory crackdown concerns: CNBC Crypto World

Summary

MicroStrategy's stock surges 22% after a 10-for-1 stock split announcement, making it more accessible to investors. Crypto exchange BitMEX pleads guilty to violating the Bank Secrecy Act, facing up to 5 years in prison and a fine. Former President Trump will speak at the Bitcoin 2024 conference, signaling growing crypto support. Crypto executives meet with the Biden Administration to address regulatory concerns, with bipartisan interest in the industry's future.

Takeaways

• 📈 Micro Strategy's stock price jumped over 22% after announcing a 10-for-1 stock split, aiming to make the stock more accessible to investors and employees.
• 🗣️ Former President Trump is set to speak at the Bitcoin 2024 conference in Nashville, reflecting his rising support for the digital asset industry.
• 🤝 A meeting between crypto executives and Biden Administration officials took place, discussing industry concerns regarding the administration's regulatory approach.
• 💼 Crypto Exchange BitMEX pleaded guilty to violating the Bank Secrecy Act, admitting to not establishing an adequate anti-money laundering program.
• 💡 The importance of bipartisan support for crypto legislation was highlighted, with the potential for crypto to be a significant issue in the upcoming elections.
• 📊 A recent poll indicated that cryptocurrency is an important issue for a significant portion of swing state voters, possibly influencing election outcomes.
• 🚫 FTX lawyers objected to a claim that would make the state liable for nearly $264 million, arguing that a loan agreement was never commenced due to non-delivery of tokens.
• 🌐 The discussion emphasized the global nature of crypto technology and the need for the U.S. to act to maintain its leadership in the space.
• 🛑 The SEC's aggressive stance towards the crypto industry was criticized, with calls for clearer regulatory frameworks to support innovation.
• 🏛️ Legislative discussions are ongoing, particularly around market structure and stablecoins, with the aim to provide clarity and support for the crypto industry.
• 🔍 The crypto industry is seeking regulatory clarity and a nonpartisan approach to legislation to foster growth and innovation.

Q & A

Why did MicroStrategy's shares jump after the announcement of a stock split?

MicroStrategy's shares jumped more than 22% after the company, which is the largest corporate holder of Bitcoin, announced a 10 for one stock split. The move was intended to make the stock more accessible to investors and employees.

What is the significance of the Bitcoin 2024 conference in Nashville?

The Bitcoin 2024 conference is significant as it is scheduled to take place from July 25th through the 27th, with former President Trump scheduled to speak on the last day, indicating his support for the digital asset industry.

What was the outcome of the meeting between crypto executives and Biden Administration officials?

The meeting was described as productive, with discussions aimed at addressing the crypto industry's concerns regarding the administration's regulatory crackdown. It was an important step towards increasing dialogue between the agencies and the industry.

What was BitMEX charged with by the US attorney's office?

BitMEX pleaded guilty to one count of violating the Bank Secrecy Act by willfully failing to establish and maintain an adequate anti-money laundering program, which led to it being used as a vehicle for large-scale money laundering and sanctions evasion.

What is the current status of the FTX bankruptcy and the claim against it?

FTX bankruptcy lawyers are pushing back against a claim that would make the state liable for nearly $264 million. They argue that a loan agreement involving serum tokens, which were never received, never commenced, and therefore the claim is baseless.

How has the crypto industry been perceived by the Biden Administration prior to the recent meeting?

The crypto industry has felt that it has not been treated fairly by the Biden Administration, with a lack of regulatory clarity and the perception of regulation by enforcement by the SEC being major concerns.

What is the role of the Blockchain Association and the Crypto Council for Innovation in the recent meeting with the Biden Administration?

The CEOs of both the Blockchain Association and the Crypto Council for Innovation, Kristen Smith and Sheila Warren respectively, attended the meeting to voice the industry's concerns and to discuss the need for a regulatory framework that supports innovation and clarity.

What are the potential implications of the SEC's aggressive stance on the crypto industry?

The SEC's aggressive stance, led by Chair Gary Gensler, has resulted in what the industry perceives as 'regulation by enforcement,' causing uncertainty and making it difficult for industry builders to know how to proceed.

What legislative actions are being discussed in Congress related to the crypto industry?

Legislative discussions are focusing on market structure and regulatory frameworks for the crypto industry, with the FITT Act (Financial Innovation, Transparency, and Technology Act) being a key piece of legislation passed by the House and currently under consideration in the Senate.

How does the crypto industry view the importance of bipartisan support in Congress?

The industry views bipartisan support as crucial for the advancement of crypto-related legislation, as it helps to ensure that the technology is not politicized and can develop in a manner that benefits all stakeholders.

What are the next steps for the crypto industry in terms of regulatory clarity and legislative progress?

The industry is looking to the Senate to take action on market structure legislation and to address the regulatory framework for stablecoins. It is also hoping to resolve jurisdictional authority issues to provide clearer guidance for builders and innovators in the space.

Outlines

00:00

📈 MicroStrategy's Bitcoin Holdings and Stock Split

MicroStrategy's shares experienced a significant jump of over 22% following the announcement of a 10-for-1 stock split, aimed at making the stock more accessible to a broader range of investors and employees. This move by the self-proclaimed largest corporate holder of Bitcoin comes amid a period of stability in Bitcoin's price, with many expecting an uptick in the second half of the year. The stock split will result in two classes of common stock, Class A and Class B, further democratizing investment opportunities in the company.

05:01

🗣️ Crypto Industry Dialogue with the Biden Administration

A roundtable discussion led by Democratic Congressman Ro Khanna brought together approximately 25 to 30 representatives from the crypto industry and members of the Biden Administration. The meeting, which included the presence of Senator Kyrsten Sinema, aimed to address the crypto industry's concerns regarding the administration's regulatory approach. Kristen Smith, CEO of the Blockchain Association, highlighted the importance of treating the crypto industry fairly and fostering increased dialogue between the industry and government agencies. The conversation also touched on the bipartisan nature of crypto technology and the momentum it has gained in Washington in recent weeks.

10:02

🏛️ Regulatory Challenges and Crypto's Future in Washington

Sheila Warren, CEO of the Crypto Council for Innovation, discussed the challenges facing the crypto industry in Washington, particularly the lack of regulatory clarity and the aggressive stance taken by the SEC under Gary Gensler's leadership. The industry is seeking a clear framework for jurisdictional authority over crypto assets, which has been hampered by the absence of congressional action. Despite the challenges, there is a growing interest from lawmakers outside the core committees, indicating a shift towards a more constructive approach to crypto regulation. The conversation also highlighted the importance of approaching crypto regulation in a nonpartisan manner, emphasizing its potential to shape the future of technology and financial services.

Keywords

💡Micro Strategy

Micro Strategy is a company that is known for its significant holdings in Bitcoin, which makes it a key player in the cryptocurrency space. In the video, it is mentioned that the company's shares jumped after announcing a stock split, indicating its relevance to the video's theme of cryptocurrency market dynamics. The stock split is a corporate action that makes more shares available and typically more affordable to a broader range of investors.

💡Stock Split

A stock split is a corporate action that increases the number of a company's shares by issuing more shares to current shareholders. In the context of the video, Micro Strategy announced a 10-for-1 stock split, which means for every share an investor held, they would receive nine additional shares. This is done to make the stock more accessible and affordable, potentially increasing the number of investors and the liquidity of the stock.

💡Bitcoin

Bitcoin is a decentralized digital currency that operates on a peer-to-peer network without the need for intermediaries like banks. It is the first and most well-known cryptocurrency and is central to the video's theme. The script mentions that Micro Strategy is the largest corporate holder of Bitcoin and discusses its price fluctuations and its role in the financial system.

💡Crypto Exchange

A crypto exchange is a platform where cryptocurrencies can be bought, sold, and traded. Bitmex, mentioned in the video, is an example of a crypto exchange that pleaded guilty to violating the Bank Secrecy Act, highlighting the regulatory challenges and legal issues that can arise in the crypto industry.

💡Bank Secrecy Act

The Bank Secrecy Act is a U.S. law that requires financial institutions to assist U.S. government agencies in preventing money laundering. In the video, it is mentioned that Bitmex violated this act by failing to establish and maintain an adequate anti-money laundering program, emphasizing the importance of regulatory compliance in the cryptocurrency sector.

💡FTX

FTX is a cryptocurrency exchange known for offering various products and services in the crypto space. In the script, FTX's bankruptcy lawyers are mentioned in relation to a legal dispute over a claim that would make the state liable for nearly $264 million, showcasing the complex financial transactions and legal battles that can occur in the crypto industry.

💡Crypto Donations

Crypto donations refer to the acceptance of cryptocurrencies as a form of contribution, often for political campaigns or charitable causes. The video mentions that former President Trump's campaign started accepting crypto donations, indicating the growing acceptance and integration of cryptocurrencies into traditional financial and political systems.

💡Regulatory Crackdown

A regulatory crackdown refers to increased enforcement or stricter regulations imposed by authorities on a particular industry. In the context of the video, the term is used to describe the Biden Administration's approach to the cryptocurrency industry, which has raised concerns among crypto executives who met with administration officials to discuss these issues.

💡Blockchain Association

The Blockchain Association is a trade association that represents the crypto industry and advocates for clear and balanced regulation. In the video, the CEO of the Blockchain Association, Kristen Smith, discusses her participation in a meeting with the Biden Administration, highlighting the association's role in shaping policy discussions around cryptocurrencies.

💡Crypto Council for Innovation

The Crypto Council for Innovation is another organization that represents the interests of the cryptocurrency industry. The video features Sheila Warren, the CEO of this council, who shares her insights from a roundtable meeting with the Biden Administration, emphasizing the council's efforts to foster innovation and address regulatory challenges in the crypto space.

💡Market Structure Legislation

Market structure legislation refers to laws and regulations that govern the framework of financial markets. In the video, it is mentioned in the context of the FITT 21 bill, which is a legislative effort to establish a regulatory framework for the crypto industry, indicating the ongoing efforts to formalize and legitimize the role of cryptocurrencies in the financial system.

Highlights

Micro Strategy shares jumped over 22% after announcing a 10 for one stock split, aiming to make its stock more accessible to investors and employees.

Inflation dropped slightly in June, which could influence the Federal Reserve's decision to start cutting rates.

Crypto exchange Bitmex pleaded guilty to violating the Bank Secrecy Act by failing to establish an adequate anti-money laundering program.

FTX bankruptcy lawyers disputed a claim that would make the state liable for nearly $264 million, arguing that a loan agreement was never commenced.

Former President Trump is set to speak at the Bitcoin 2024 conference in Nashville, showing his rising support for the digital asset industry.

Crypto Executives met with the Biden Administration to discuss concerns over regulatory crackdowns on the industry.

Kristen Smith, CEO of the Blockchain Association, discussed the importance of treating the crypto industry fairly and the need for increased dialogue.

A recent poll indicates that cryptocurrency is an important issue for 20% of swing state voters in the upcoming election.

Crypto technology is seen as a democratizing force and an alternative to Big Tech and traditional finance.

There is a bipartisan interest in crypto, despite some anti-crypto sentiments from figures like Elizabeth Warren and Gary Gensler.

Market structure and stablecoin legislation are key areas of focus for crypto regulation in Congress.

The crypto industry is looking for regulatory clarity and is concerned about the SEC's aggressive approach to oversight.

Sheila Warren, CEO of the Crypto Council for Innovation, emphasized the need for a nonpartisan approach to crypto regulation.

The roundtable meeting with the Biden Administration was seen as productive, with openness and interest from both sides.

Crypto is increasingly becoming a prominent issue in the political landscape, with potential influence on voter behavior.

The crypto industry is seeking to move forward on legislative progress, especially with limited legislative days left in the year.

There is a push for crypto-friendly policies, especially as other countries are not waiting for the U.S. to act on crypto regulation.

Transcripts

today micro strategy shares jump after

the self-proclaimed Bitcoin holding

company announces a stock split former

president Trump will speak at the

Bitcoin 2024 conference in Nashville

later this month plus Kristen Smith the

CEO of the blockchain association and

Sheila Warren the CEO of the crypto

Council for Innovation discussed what

was addressed at a meeting yesterday

between crypto Executives and Biden

Administration officials

[Music]

welcome to cnbc's crypto world I'm

McKenzie sigalos major cryptocurrencies

are pretty flat after new data out this

morning revealed that inflation dropped

slightly in June compared to the month

before and that helps with the case for

the FED to start cutting rates as of no

Eastern Bitcoin dipped by half a percent

holding study above

$57,000 ether fell slightly trading

above

$3,100 salana however dropped nearly 2%

now taking a look at crypto Focus stocks

micro strategy shares jump more than 22%

as of midday after the company which is

the largest corporate holder of Bitcoin

announced a 10 for one stock split this

morning now shortly after markets opened

the stock Rose more than

99.5% micro strategy said that the

shares will be split into class a common

stock and Class B common stock to make

it stock more accessible to investors

and employees the move comes amid a lull

for the price of Bitcoin which has been

stuck in a tight range for about 4

months but which many investors expect

to Rebound in the second half of this

year okay let's talk about the top

stories crypto exchange bitmex pleaded

guilty to one count of violating the

bank secrecy act the US attorney's

office for the southern district of New

York announced yesterday that bitmex

admitted to violating the act by

willfully failing to establish Implement

and maintain an adequate anti-money

laundering program now in a statement us

attorney Damen Williams said that the

crypto exchanges Founders and a long

time employee first admitted in federal

court in

2022 that the company operated in the US

without any meaningful AML program as

required by law Williams went on to say

that as a result bitmex which was one of

the leading crypto derivatives Platforms

in the world from 2015 until 2020 opened

itself up as a vehicle for large-scale

money laundering and sanctions evasion

schemes posing a serious threat to the

Integrity of a financial system at one

count of viol viting the bank secrecy

act carries a Max sentence of 5 years in

prison and a fine next FTX bankruptcy

lawyers are pushing back against a claim

that would make the state liable for

nearly $264 million now for some context

tyo Shan is a subsidiary of jump trading

and it reportedly invested in serum a

decentralized crypto exchange back in

2020 which became defunct about 2 years

later following the collapse of its

backers FTX and alamer research now in

this objection filed yesterday FTX

lawyers argu that osan's purported

valuation of its claim is quote baseless

the subsidiary of jump trading alleges

that Alam FTX is Sister hedge fund

agreed to lend them 800 million serum

tokens but that the tokens were never

received in the filing FTX lawyers argue

that since Alam failed to deliver the

loan never commenced it goes on to say

that Alam has the right to terminate the

master loan agreement at any time which

would also terminate without damages the

loan at issue which never commenced now

the filing also alleges that Tai mosan

may be liable to the debtors for

fraudulent transfers last up former

president Trump is scheduled to deliver

a speech at the Bitcoin conference in

Nashville later this month now recently

the presumptive Republican nominee has

been pretty vocal about his Rising

support of the digital asset industry in

fact the Trump campaign announced in May

that it would start accepting crypto

donations this week the Republican Party

officially adopted a new policy platform

that would seek to support crypto

Innovation Bitcoin 2024 is scheduled to

take place July 25th through the 27th

with Trump scheduled to speak on the

last day meantime crypto Executives met

with the Biden Administration in

Washington DC yesterday to voice their

concerns tied to the administration's

regulatory Crackdown on the industry

Democratic Congressman Rana hosted the

meeting his staff

confirmed all right sticking with that

meeting for our main story Kristen Smith

the CEO of the BL blockchain Association

was in attendance and I spoke with Smith

about what was discussed and whether the

industry's concerns were addressed by

the Biden

Administration Kristen thank you so much

for being here now you were at a round

table led by Democratic Congressman

rokana it included several industry

players and members of Biden's

Administration as well walk me through

this meeting and what you brought to the

room and can you also weigh in on how

many groups were there yeah no it was a

really productive meeting uh that was

held uh across the street from the White

House yesterday with I think there were

probably about 25 to 30 uh people within

the crypto industry as well as a handful

of folks from the administration uh

Senator gilbran uh was there as well um

but R Conor really deserves credit for

pulling all of this together it was a

really productive conversation I think

you know for a long time the crypto

industry has felt like they haven't been

treated fairly by the Biden

Administration and I think that um you

know this was a really important step

towards increasing the

um uh dialogue between the agencies and

um we're really excited to be a part of

the discussion so we've seen a lot of

momentum toward crypto in Washington in

recent weeks how much of that do you

attribute to voters that hold or believe

in crypto is that a real Force out there

even if it might just be one in five

voters like a recent poll placed it yeah

no it turns out the crypto voter is real

it's it's really remarkable to see it's

stronger than I even would have thought

it would have been yes as you noted

there was a poll from about two months

ago that said in one in five swing state

voters considers cryptocurrency an

important issue in the upcoming election

uh very interestingly there was another

poll that came out yesterday that said

of the Republican voters who were not

planning to vote for Donald Trump 133%

of them are considering doing so because

of his new Pro crypto stance and so this

is an

incredible um powerful force I think you

know if you look at what crypto is it

really represents a better future it

represents an alternative to Big Tech or

to traditional finance and I think

people have this sense around the

country that some institutions have

failed them and they see crypto as an

alternative so it turns out to be a very

very powerful issue and one that is

driving uh voter interest um uh in the

polls and and and probably ultimately in

November now as I mentioned this event

was put on by a democratic congressman

which you know the Democrats have faced

criticism that they aren't as

crypto-friendly as Republicans do you

see that tide turning and is it feeling

more bipartisan in general this topic of

crypto yeah no well cryptotech is

nonpartisan and and so I think the

interestes in crypto um is bipartisan we

do have a couple of people on the

Democratic side mostly Elizabeth Warren

and Gary Gensler who have been very

anti- crypto but we have a lot of

members of the House and Senate on the

Democratic side of the aisle that are

very proc crypto and I think that this I

was saying before the issues and values

of crypto align very well with those

values of the democratic party it's a

very

democratizing uh technology and so you

know I think as we particularly head

into next Congress that we should um you

know we should have uh fairly strong

bipartisan support in the house and the

Senate and the White House regardless of

which party is in charge and we are

seeing more bills moving through

Congress obviously fit 21 there's an

attempt to overturn Biden's veto on Sab

121 do you feel like there's momentum on

your side is crypto's messaging getting

across here yeah well I think the most

promising legislative discussions right

now are happening around Market

structure um this is a market regulatory

framework for the crypto industry uh as

you noted fit 21 was The house's version

of this Market structure legislation and

it was uh passed with overwhelming

bipartisan support earlier this spring

uh the ball is now in the Senate's Court

there's a lot of discussions going on in

a bipartisan fashion to try to figure

out how they can get a vote in the

Senate agriculture committee which would

oversee uh the cftc which might regulate

crypto um as well as potentially even

moving that bill to the floor so there's

certainly a pathway for activity this

year uh it is obviously a very narrow

pathway there's only about 45

legislative days left this year but

we're very um you know engaged and and

hoping that that we make some progress

because even if we don't get all the way

done this year that will be a better

Foundation uh to start from when the new

Congress convenes in January and what

are the progress would you like to see

from Capitol Hill on either side of the

aisle yeah well in addition to Market

structure I think getting something done

on stable coins is important the

president's working group both in this

Biden Administration and the Trump

Administration last time identified this

as an area where there is no appropriate

Federal regulator and so what we need um

is for to step in and pass a regulatory

framework and the house uh looked at

doing legislation on this already um the

Senate uh has also expressed some

interest so those conversations are are

ongoing and that's something else we

would also love to see get across the

Finish Line this year Sheila Warren the

CEO of the crypto Council for Innovation

was also at that meeting with the Biden

Administration and I spoke with her as

well to get her take on how the meeting

went and what was

accomplished Sheila thank you for taking

the time now you were in Round Table led

by Rana which included members of the

Biden Administration and many crypto

focused groups what was the most

important point that you were trying to

get across officials in the

room well I was trying to reinforce

first of all what all of us were saying

which is that this Administration has

not been particularly friendly when it

comes to crypto especially not in recent

years but also to really land the point

this is the global technology other

countries have not waited for the United

States to act and also this is about

more than just Financial Services the

opportunity is much broader it's about

really um architecting in the internet

for everybody so making those points and

connecting them

together and how receptive has

Washington been lately I mean we've

obviously heard a lot about changing

sentiment on Capitol Hill but what have

discussions with lawmakers looked like

for you at the crypto Council for

Innovation well you know we've always

taken the approach this is a bipartisan

issue or nonpartisan truly like any

technology actually is and for us I

would say we have had more interest I

think from folks who aren't on the core

committee so I would say most people who

are on you know the Banking Committee

Financial Services where this is really

in their obvious perview or jurisdiction

have been interested for quite some time

but now we're seeing folks in other

compies of jurisdiction who are also

expressing a lot of interest and I do

think that that's forward progress and

movement that we're happy to

see what are the biggest challenges

facing the industry in Washington

specifically now we've you know had some

progress on crypto legislation though

it's not finalized yet but what's the

work that needs to be done that you're

telling lawmakers about or I mean even

the push back that you might have gotten

in the room uh during this meeting

yesterday well it's it's not just the

lack of regulatory Clarity that the

industry has been talking about for many

years now which really hasn't been

changed or fixed it's what that lack of

clarity and the lack of congressional

action has actually led to namely

regulation by enforcement by the SEC so

you have a very active and aggressive

SEC and a chair and chair Gary Gensler

who seems to have made it a personal

mission to essentially really police

this industry whether or not that is

within his jurisdiction remains an open

question according to the court so here

we are and I think resolving that

resolving that particular dilemma

figuring out with this novel asset class

this novel technology and opportunity

where does the jurisdictional authority

lie which agency or combination of

agencies is the appropriate one to be

having oversight here and I think until

we land that it's very difficult for

Builders to know what to do and how to

move so to go back to that round table

for just one second I think that one of

the points I saw you make was that it's

important to approach crypto in a

nonpartisan manner is that getting

harder when you see Republicans Garner

this perception of being more

crypto-friendly especially with uh their

presumptive nominee Donald Trump set to

speak at Bitcoin

2024 well look I don't think there's any

question that rhetorically the

Republicans are more supportive at this

moment in time than the Democrats at a

party level but you have to remember

that as I noted most people in this

space most Washington lawmakers have not

been paying a lot of attention to this

despite best efforts right because it

just hasn't fallen within the relevant

Committee of jurisdiction they haven't

felt that it's an important enough issue

to frankly take a position on so we find

that most people that we talk to are

still quite open-minded and have been

and are even more openminded now that

this is getting again more attention

more press it's getting more prominences

an issue space that is important so I

don't feel that we've ever been in a

place where this technology is not

nonpartisan or even by partisan it's

just that we haven't had I think the

traction that we're getting in this

election cycle to get folks that haven't

been paying attention to sit up and

realize this is really important I

better have a point of view last

question for you real quick that Round

Table meeting did anything surprise you

in terms of what was said in the

room not in the slightest I mean I have

to say I knew most folks in the room

I've known them for some time uh I was

really pleased tonally with how it went

on both sides I don't think anybody held

back in expressing frustration or some

of the concerns that they have uh about

the approach that some administrative

agencies have taken for example the SEC

but I felt that that was met with a lot

of openness a lot of interest and

eagerness and curiosity to learn more uh

and I felt that it was a very productive

and and constructive conversation

looking forward to next

steps okay that's all for crypto world

today but we'll be back again tomorrow

and we'll see you then

[Music]