Crypto Is Returning to US: August’s Kantorovich

Key Concepts:

• Regulation by Enforcement vs. Clear Regulation
• KYC (Know Your Customer) and AML (Anti-Money Laundering) Requirements
• Onshoring vs. Offshoring Crypto Companies
• Transparency in Crypto Holdings
• Professional Regulators vs. Industry Experts
• Stablecoin Regulation
• IRS Broker Dealer Rule
• FIT 21
• Geographic Regulatory Competition (MiCA, MARs)
• Token Foundations (BVI, Caymans)

1. Regulatory Landscape and Political Perspectives

• The discussion revolves around a potential shift from strict "regulation by enforcement" (referencing Gary Gensler) towards a more balanced approach that fosters growth while protecting consumers.
• The importance of clear regulation, KYC, and AML requirements across the crypto industry is emphasized. Paul Atkins is highlighted as being very strict about no market manipulation and no fraud.
• Senator Warren's perspective is mentioned, noting a shift from pushing American companies offshore to creating opportunities to onshore them.
• The need for transparency regarding crypto holdings by individuals in positions of power is discussed, ensuring they don't personally benefit from regulatory decisions.

2. Transparency and Disclosure

• The example of David Sachs divesting a significant amount of assets (approximately $200 million) at a loss is used to illustrate the importance of disclosure.
• The speaker discloses his own equity positions in Anchorage and Off Chain Capital, emphasizing the need for transparency.
• The question is raised whether it's preferable to have professional regulators without industry experience or individuals with direct experience in the crypto space making regulatory decisions.

3. Stablecoin Regulation and Recent Developments

• There's a focus on stablecoins and a potential unwinding of recent actions by the Biden administration.
• The IRS broker dealer rule was voted by the Senate and is going to President Trump to unwind.
• The rule requiring decentralized exchanges to file 1099 forms for every user is deemed inapplicable to permissionless platforms.
• FIT 21, a bill going through Congress, addresses stablecoin regulatory oversight and guidelines.
• Wyoming's plan to launch a stablecoin through a bank is mentioned as a positive development.
• The speaker notes significant progress in the last four months compared to the previous four years.

4. Paul Atkins' Perspective and Common Sense Regulation

• Paul Atkins is quoted as saying that "unclear, overly politicized, complicated, and burdensome regulations are stifling capital formation."
• He advocates for a return to "common sense" in SEC regulations.
• The discussion touches on what's already underway regarding stablecoins.

5. Geographic Regulatory Competition and Onshoring

• The United States is seen as lagging behind Europe (MiCA) and Singapore (MARs) in the geographic regulatory space.
• The goal is not only to onshore American companies but also to attract companies from Europe to build in the United States.

6. Token Foundations and Transparency

• The common practice of token foundations being based in BVI or the Caymans is discussed.
• The need to bring token foundations to the United States with clear guidelines is highlighted.
• The benefits of onshoring token foundations include increased transparency, access to tax filings, and auditability.

7. Conclusion

• The speaker expresses optimism about the path forward with Paul Atkins and the potential to make New York and the United States the crypto capital.
• The overall sentiment is that clear regulation is necessary to foster growth, attract companies, and provide transparency for investors and entrepreneurs.