RegFi Episode 60: Balancing Innovation and Regulation in the Blockchain Ecosystem
34 min listen
RegFi Co-Hosts Jerry Buckley and Sasha Leonhardt welcome Orrick partner Behnam Dayanim to explore the applications of blockchain in financial services, including cryptocurrencies, stablecoins and decentralized finance. The conversation also covers the evolving regulatory landscape for these technologies following the recent White House Digital Asset Summit, guidance from the new administration and rulemaking activity at the state level.
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Jerry Buckley:
Hello, this is Jerry Buckley, and I am here with RegFi co-host Sasha Leonhardt. Our guest today is our partner, Behn Dayanim, whose practice, among other things, focuses on how blockchain solutions are impacting the financial services industry.
We will be discussing virtual currencies, including cryptocurrencies and stablecoins, as well as other impacts that the blockchain technology may have on the payment system. We’ll begin by defining some basic terms and then get into the changing regulatory landscape.
This is not our first RegFi podcast related to blockchain and virtual currencies, but for those who may be new to RegFi, Behn, could you briefly describe blockchain technology and how it is being utilized in the financial services industry?Behnam Dayanim: Sure. And great to be here. Thanks for having me. Blockchain at its basics is simply a decentralized public ledger. So, imagine a notebook that records all the transactions that take place. This is a public notebook. Each time there is a new transaction, it creates probably — since we call it blockchain, instead of using a notebook analogy, I’ll use a chain analogy — we create a new link in the chain or a new block in the chain. And that chain is stored in a distributed fashion across thousands and thousands of servers, which makes it, at least in theory, impossible to defraud. Because as soon as the transaction is accepted by the blockchain, it is instantly replicated throughout. And in fact, it won’t be accepted until it is validated by a number of individual servers — what are called nodes. So blockchain technology is simply a new way of entering into and recording transactions.
Jerry: If you could, Behn, maybe give us a little insight into the areas where you see the financial services industry utilizing blockchain. Behn: Yes. So, I think there are a few different ways in which the blockchain technology is starting to be utilized in the financial services industry. The most common, what people typically think about when you talk about blockchain, is simply crypto tokens. The most common are names that are by now household names like Bitcoin and Ethereum. But there are all kinds of crypto tokens.
And I think when people think about blockchain now, most often they think about those. And those tokens are treated in some ways as a form of currency and regulated that way. They’re treated in some ways as a commodity, a store of value, and in some ways as securities. So that’s one way in which this technology is being used.
A second, more interesting way is as a form of decentralized finance. It’s a way of disintermediating financial institutions from financial transactions because the self-verifying nature of the technology allows parties to engage and transactions without the need for a trusted third party. And so, we already are seeing forms of that happen, direct kinds of transactions. DeFi, decentralized finance, I’m sure is a term that you’ve heard of that’s out in the zeitgeist. That refers to a range of different types of savings and other types of financial protocols that allow people to engage in a range of financial services directly, whether it’s lending, for example, or investing.
And then the third and probably least sexy aspect of blockchain, but maybe in the long run, the most significant is that financial institutions themselves are exploring the use of blockchain technology to manage their own internal records. The blockchain is viewed as, as I said, a very reliable and also secure method of recording transactions. And so, banks and other significant financial institutions have been exploring how they might use it in their own environments. So, I think those are some of the different ways that we’re seeing it.Jerry: But Behn, and if I may just press a little bit more, with respect to the maintenance of records within a financial institution, obviously there are privacy issues. So, it is not distributed across the entire blockchain. And so how do they go about doing that? Behn: So, I’m glad you asked me that, because when I was defining blockchain at the outset, I was really talking about sort of the most well-known forms of blockchain. But there’s nothing about blockchain that is inherently public. You can have an internal proprietary blockchain network. The technology is agnostic as to that. It’s just that the most common and popular forms of blockchain technology that we see, like Bitcoin, for example, are not that way. But there are all kinds. Jerry: Thank you. Sasha? Sasha Leonhardt: Behn, thanks for joining us. We’ve chatted in the hallways, but I’ve never had a chance to sit with you and really dig into your practice. So, I’m going to take advantage of this opportunity while we have you trapped for about 25 minutes to ask all the questions I’ve never gotten to.
You mentioned Bitcoin, and I want to press a little bit more about Bitcoin and Ethereum and those cryptocurrencies. People have long talked about how they may well change the landscape for financial transactions and investments. And I think we’re absolutely seeing this. But you’ve obviously got a unique perspective representing a wide variety of clients. What’s your take on this?Behn: So, I do think they have the potential to be revolutionary and they already are having a significant impact in the way people do business and engage in transactions. I think for a number of reasons.
There’s the low hanging fruit. And by low hanging fruit, what I mean is, for example, cross-border transactions in the fiat world. If I’m in the United States and I want to send you in France money, unless I am a sophisticated individual with, you know, offshore accounts, I’m going to send dollars, and those dollars are going to have to be converted to euros and then deposited into your account. There are a lot of transaction costs associated with that. FX fees, for example.
With a cryptocurrency, I can avoid all of that. I can send you Bitcoin and you receive Bitcoin. And there’s no need for any FX. That’s a very small example, but nonetheless, I think an interesting one about how this kind of technology can make transactions easier and less expensive.
In addition, cryptocurrencies offer at least the prospect of expanding accessibility to financial services for people who are unbanked or don’t want, for whatever reason, to deal with established financial institutions. It allows them an opportunity to engage in financial transactions, whether it’s investments or other things, without having to go through that process. And in that regard, I know we’ll be talking a little bit about stablecoins and the debt. Stablecoins are particularly useful and interesting.
Cryptocurrencies also, frankly, offer just a new asset class for investors. Something else to invest in. Incredibly volatile. Many people would call it gambling. Although, if you look at the trend lines over the past decade, it’s been a pretty good bet if you have a long-term horizon. But nonetheless, very volatile. And so that’s another way in which I think it’s making a significant change.
And then another interesting way in which blockchain is used, I think maybe this is a little bit adjacent to your question, but I think it’s a fascinating area through the tokenization of assets, meaning you can take a real-world asset and represent and trade it as a digital token.
So, I’ll give you a very simple example that I see in part of my gaming practice, which is part of what I do: Trading cards. Trading cards have long been a hobby that many people engage in and actually where there’s significant amounts of money at stake because some cards can be extremely valuable, right? Baseball cards, football cards, all kinds of cards.
There are businesses now that will store the physical cards. And when you buy and sell them, you will buy and sell a digitized token that represents that card. And because it’s on the blockchain, your ownership of the card is not disputed, right? It’s clearly your card. The physical card never has to leave the vault, so it remains in mint condition. And you can buy and sell the digitized version. And that’s through the use of blockchain technology.
And obviously, if you do that with the trading cards, you can do that with much more significant assets like real estate, artwork, a range of things. In fact, as you know, we’ve seen digital art sold for millions and millions of dollars. So, I think those are just some of the examples as to how this technology is really changing the landscape of financial transactions and financial investments and all those kinds of things.Sasha: That’s great, Behn. And I think there’s so many use cases here. You alluded to one that we wanted to loop back to, which is stablecoins. Obviously, people hear about Bitcoin and Ethereum and the volatility in those. Stablecoins are designed differently. So, could you chat a little bit about how those are created, how they kind of keep them pegged to whatever the underlying source of stability is and the role that they may play that varies from the topics we’ve just discussed. Behn: So, a stablecoin is exactly what, or at least it aspires to be exactly what the name implies, a digital currency that maintains a stable value over time. Usually, I don’t think necessarily always, but usually they are pegged to a fiat currency and the most popular, as you would expect, is the U.S. dollar.
The way they maintain that stability is through a combination of actual reserves. And by the way, each stablecoin, because they’re privately issued, is managed somewhat differently. So, like there will be some stablecoins that rely almost exclusively on fiat reserves in the denomination that the stablecoin represents, right? So, if I issue a dollar worth of stablecoin, I’ll have a dollar in my bank account. That’s how some stablecoins are managed.
Others rely more heavily on algorithms to stabilize their price. And as we’ve seen, that isn’t always entirely reliable. We’ve had ups and downs with some stablecoins where they relied on algorithms that proved not to be sufficiently resilient to maintain a completely stable level of value. But it’s a combination of reserves and those algorithms. And that’s how stablecoins are intended to maintain that value.
And the attraction of stablecoins as compared to other digital currencies, of course, is in fact that they are intended to avoid the volatility that we see with things like Bitcoin or ETH.Jerry: You know, when we’ve had discussions with others, the point is sometimes made that, of course, fiat currency is, since the decoupling of the dollar from gold in the 1970s, is essentially an act of faith in the performance of the U.S. economy and the management of the money supply by the Federal Reserve.
In the case of Bitcoins, there is a limited amount of bitcoin that can be created. And of course, there’s a lot of energy that goes into the creation of them. But of course, this is an act of faith in the ecosystem in which Bitcoin exists. Not quite the same as fiat currency. And obviously the volatility is, I guess, based on the attractiveness of the investment to the group of people who feel it’s an investment they want to make.
But the question that’s raised by some critics is that the, not stablecoins, but the pure cryptocurrency is, number one, not backed by anything other than the culture around it. And two, that it is sometimes used as a way of avoiding exposure to the legal system. And of course, it’s been used in transactions. So, there have been critics, although that seems to be fading. But would you care to address those issues?Behn: Sure. So, let me take them one at a time. You’re absolutely right that digital currencies have the value that people ascribe to them. But that’s really no different than gold. Why is gold valuable? Because we give it value. In part, that’s because it’s perceived to have limited supply, which is true of Bitcoin, as you note. In part, it’s because we find it to be pretty, right? Or we’ve all agreed over the centuries that it’s a useful surrogate for values that instead of me trading my goat to you for your sheep, I can give you the equivalent of a gold instead, right? So, it’s a societal decision. Jerry: And it can be a physical token. Behn: Yes, correct, right. Jerry: As opposed to Bitcoin, which is a digital token. Behn: Yes, that’s true, although I don’t think — I don’t ascribe any significance to the fact that one is intangible, and one is tangible. Jerry: No, I didn’t say you have to, but that’s the only distinction. Behn: Right, correct. And in fact, as I’m sure you know, in the history of money in the United States, there was a time before the government issued dollars when individual banks would issue currency. And so, I would have a bank note from, you know, Acme Bank, and you would have to decide whether to take it or not and how much value to give to it. And that was volatile. Jerry: No kidding. We had some serious financial crises as a result.
Behn: Correct. Absolutely right. And, you know, Bitcoin in some ways is like that, right? And so, it creates volatility. But because people ascribe value to it, it has value.
Now, to your question about the ways in which it can be abused, you’re absolutely correct that just like I could use a suitcase of $100 bills to commit a bad act, I can use a cryptocurrency. I would posit, though, that in fact, the suitcase of $100 bills is more anonymous and harder to trace than cryptocurrencies because most cryptocurrencies are in fact readily traceable which is how the government is able, in many cases, to track and seize crypto funds from illicit activity.
Now, it’s not identifiable. It doesn’t say Jerry Buckley owns this Bitcoin, but it’s pseudonymous, right? And so, they’re able to track. But yes, it can be abused, absolutely, just like many other things, but there are also a number of legitimate uses. And you are correct that — and we’ll talk more about this, I think, later — the regulatory environment certainly is shifting more toward one that recognizes the benefits rather than emphasizes the risks.Jerry: If I could just persist a little bit more. Behn: Yeah. Jerry: Given the limited nature of Bitcoin, because only so many can ultimately be created, it’s harder and harder to create more Bitcoins or other similar currencies. Would it be a question of whether the Bitcoin should inflate unless the alternative currencies become equally acceptable. And Ethereum and others are in that league, I guess. But if they can’t produce more, then the value of the Bitcoins goes up. And in some ways, it is inflationary. Behn: So, you’re going to test my technical knowledge now. And remember, we’re all lawyers here, not technologists. So, I will do my best.
So firstly, not all cryptocurrencies have a fixed immutable supply. Bitcoin does. Bitcoin, as far as I understand, cannot be expanded beyond the supply that was allocated at the outset. And that’s why there are fewer and fewer that can be mined. And over time, eventually there will be no more that can be mined. And it will just be whatever supply is there. And to your question as to Bitcoin, that should imply, based on the law of supply and demand, that the value will continue to go up because there’s limited supply unless something else happens, unless people lose faith in it, decide to move to other things, etc.
But other cryptocurrencies are not subject to that limitation. They do have the ability to have supply expanded based upon whatever decision-making protocol has been established for that currency. Often, it’s consensus or super majority vote of token holders, things of that nature. And so, they don’t have that same limitation or benefit depending on how you look at it.
So really you have to look at each type of crypto token, I’ll say instead of currency, individually and assess it. Some have obtained of much broader popularity and acceptance than others. That’s due to a range of factors, including how useful they are. You know, what are the transaction costs associated with them? Not all crypto tokens are equal in that regard. How much it costs to use them, the transaction fee, which is called “gas.” So, there are a range of factors that go into those considerations.
And there’s also, I’m not going to go into detail on this, even if you want me to, because it’s going to really press the limits up by my knowledge, but there are different ways in which new blocks on the blockchain can be created depending on the token. So, there’s proof of work, which is the traditional way in which new tokens on a blockchain are created, which is basically solving math problems. You solve math problems, and you get rewarded with new tokens. That’s how Bitcoin is created.
That has been criticized as incredibly energy intensive, as I think you mentioned earlier. And there’s proof of stake, which is a newer mechanism where instead of solving math problems, participants, they’re called validators, will stake their own cryptocurrency to participate in validating transactions on the block. And that is a much more environmentally friendly, less energy intensive and less expensive way of facilitating transactions. And for example, ETH is moving to that model.
So, there are a whole range of factors that go into the utility of different crypto tokens and therefore their value. Because remember, value is what we ascribe to something, right? So, if people perceive a particular token or currency as more valuable, then it will become more valuable.Jerry: Really fascinating. And Behn, thank you. You’re certainly educating me, and I think many of our listeners. And there’s a lot more to be explored there, and particularly on the regulatory side. Last week, there was an important White House Digital Assets Summit. They really covered it in the media as a major development.
And the last two months have seen a flurry of activity in crypto front. Not only this White House Summit, but two new executive orders. And clearly, the regulatory environment around crypto is changing. And that’s, you know, our heavy focus on RegFi is how is the regulatory environment for financial services-related crypto going to evolve. And it’s been a big debate for quite a while. It seems like there is now some consensus developing around, well, we have to have a regulatory environment that is not terribly confusing or terribly frustrating of this market. But you know it so much better than us. So, could you give us your thoughts?Behn: Sure. It has been a whirlwind, really, since the inauguration. As you mentioned, there have been two executive orders in the Digital Assets Summit, and we’ve really seen some really interesting developments.
So firstly, two days, three days after the inauguration, the White House issued the first executive order on digital assets. And that had several really significant components. The first thing it did was it revoked the Biden administration’s executive orders on crypto, which were focused a lot on concerns around crypto, ensuring accessibility, non-discrimination, security, range of potential harms, in addition to fostering, you know, recognizing that it has a role to play, but nonetheless, very, either you could say balanced or weighted, depending on your point of view, toward ensuring that those harms are also addressed. That’s one thing it did.
Secondly, it actually, I thought really interestingly, made explicit reference to the importance of self-custodied wallets, self-custodied crypto wallets. A self-custodied wallet is basically like your wallet. You put your cash in your wallet, right? The bank’s not holding it for you. You’re holding it yourself. You don’t rely on anybody else. It’s there.
So, the equivalent in a blockchain context is either software on your computer holding your cryptocurrency or actually hardware like a USB drive or something holding your cryptocurrency. The advantages of that are you’re not dependent on anybody else. It’s there. You’ve got it. You’re not responsible to anybody else. You’re not KYC-ing yourself, right? You got that money, right?
The disadvantages, by the way, are if you lose it, then you’re out of luck. And just short aside, I actually had a self-custody wallet with some crypto in it, and I lost my password and seed phrase. And I spent literally like ten hours frantically trying to recover, which I was able to do. I was able to find a deleted file on my computer, but it was after that, I ran like a self-custody wallet and just relied on Coinbase.
But what’s important about that is that under the prior administration, there was never any explicit talk about prohibiting self-custody wallets. I don’t think legally the government could do that anyway. But there certainly was an emphasis on driving people to the extent possible, incentivizing them to use centralized wallets like a Coinbase, because those exchanges and those asset holders are subject to the range of financial regulation with which we are all familiar as lawyers —KYC, AML, sanctions — and so, there was more control because there were the gatekeepers.
When you move toward a more self-custodied world, you don’t have that. And so, the fact that the executive order explicitly endorsed self-custody, while legally, I mean, again, I don’t think that they could prohibit it. Nonetheless, as a policy matter, we’re seeing things. That’s number one.
Second thing that first executive order did was it endorsed stablecoins, which also have been a subject of some controversy. As I mentioned, there have been some incidents where stablecoins proved to not to be quite so stable, but this executive order endorses them.
And at the same time, it kills any concept of what are called central bank digital currencies. Central bank digital currencies are essentially digital representations of fiat issued by the central bank of the country. So, in our case, it’ll be the Federal Reserve. Other countries like China, for example, are moving toward CBDC as a way to either, you could say, control this phenomenon, or you could say, facilitate technological innovation for their own fiat currency.
But in the United States, significant interests in the financial sector and others have been very opposed to the federal government getting into this role. And the Biden administration was exploring it, hadn’t committed to it, but was exploring it. And the Trump administration said, no, we’re not going to do that. That’s the third thing.Jerry: And Behn, often the constituency that was opposed to it was not only maybe the central banks, but also people who are concerned about the government having all my financial information. Behn: Yes, there were a couple of significant constituencies that were opposed. There are people concerned about it for privacy reasons, worried that the government could then track their use of the digital dollar, you know, wherever it goes. And there were, of course, the companies that are involved in the sector who issued their own stablecoins or aspire to and so didn’t want the government to come in and eliminate that competition. Absolutely right.
And so, and I think it’s the fourth, the last element of that executive order that was interesting to me was it made clear that financial institutions should not deny financial services or debank simply based on crypto, right? And crypto involvement.
As we all know, we all practice in this space. In recent years, it’s been increasingly harder for businesses that are in the crypto space to obtain banking services from banks because they were very worried that regulators required special approvals, and they were very concerned about being exposed. This administration appears determined to reverse that and to make clear that, no, you can’t deny banking services on that basis. So that I think those are all very important elements in that first executive order.
And then the second executive order that came out early March, just about a week ago, was also really interesting. I think less interesting than the first one, actually, but splashier. And that executive order announced the creation of a strategic Bitcoin reserve and a digital asset stockpile.
So, the strategic Bitcoin reserve is a reserve of Bitcoin that are obtained by the government through civil and criminal forfeitures and similar types of enforcement actions. Up until now, when the government would seize Bitcoin from criminals or as a result of criminal activity, the normal course was to auction it. And now what the government is saying we’re going to do is we’re going to hold that Bitcoin as a strategic reserve because it has value. And the theory is that its value increases instead of selling it is losing money.
And I think the White House’s new cryptos czar David Sachs. I think said that auctioning off Bitcoin has cost the United States something like $16 billion. I don’t know exactly how he calculated that, but it makes sense because Bitcoin’s value has continued to increase over the years. Of course, it can go down too. So, holding in a reserve is essentially gambling on Bitcoin’s continued increase in value.Jerry: And I think there’s supposedly 200,000 Bitcoins owned by the United States and about 20,000 were auctioned off before. But the amount in the reserve, I think, is about 200,000 Bitcoins. Behn: That could be. I heard 150,000. Jerry: Well, maybe it’s 150,000, but it’s quite large. Behn: Yes, correct. And also, by the way, two things. The administration said the strategic Bitcoin reserve has to be budget neutral, meaning they won’t go out and buy Bitcoin. So, it’s only Bitcoin that they attain through these kinds of actions.
But there will be a budget implication, I think, because I believe that what would happen in the past is when the government auctioned off the Bitcoin, it would then use the funds for a variety of government purposes. And presumably those funds will not be available now because they won’t be selling the Bitcoin. So, they’ll have to come from someplace else so there will be a budgetary impact even though the government is saying we budget neutral but in any event that’s the bitcoin reserve.
And then the second is the digital asset stockpile which is similar in concept it’s for other forms of digital currencies not yet specified what they will be also obtained through forfeitures. There though the government’s at least the premise is not that they necessarily will hold those funds, but they’ll decide how to use those funds.
So, I think the theory is we’ll decide in a more systematic way what to do with those funds. So, it’d be interesting. I honestly don’t think either of those creations is going to be hugely significant because notwithstanding the point that you made that the government is holding a fair amount of Bitcoin in the grand scheme of things, it might have a minor impact on the price in terms of limiting supply and raising the price, but I don’t think it will be significant.
I also think even recognizing the volatility that is associated with it, that it will have a significant impact on the solvency or stability of a government’s budget. I mean, it’s not enough, right? The government’s budget is enormous. So, people have raised concerns about the volatility issue. It would be unfortunate if it lost all its value and we’re left holding the bag and not having sold it, but it wouldn’t cause any kind of material damage, I don’t think, to the economy.
But anyway, so those are the executive orders. As you mentioned, there was a White House Digital Assets Summit that I think David Sachs chaired.Jerry: The president chaired it, and there was a lot of praise for him from all the participants. But I think Sachs convened it. Behn: Yes, you’re right. Yes. So, yeah, but Sachs is heavily involved. And yeah, you’re right. It was a remarkable change in tone from recent years, right? The crypto sector is now being embraced by the federal government. We’ve seen that in the SEC for example most strikingly.
It’ll be interesting to see what’s happening we’re on the sugar high now the sugar high of like wow after four years of being told that we raised all kinds of problems and concerns now we’re being welcomed and recognized for bringing value, this is amazing. But over time, that sugar high will diminish, and we’ll see where we are.
I don’t think that this means there’ll be no more regulation of crypto. In fact, enforcement actions continue. There have been enforcement actions against crypto since the administration took office. Bad acts involving crypto will continue to be committed and will need to be addressed. Not all cryptocurrencies are the same. There are cryptocurrencies that will collapse and cause lots of financial loss. And so there will still be meaningful regulation.
But at least at the moment, the perception in the industry is we have a green light to move ahead. We have doors opening up to us that didn’t exist before. We’ll be able to enter into relations with banks. I think banks are very interested. I’ve seen a couple of remarks by some of my major banks saying that they are aggressively looking to get involved in the crypto asset sector.
So, we will see a lot of institutional money and institutional support coming into crypto. You know, as you know, I’m sure over the past couple of years, we started to see Bitcoin ETFs and things like that. We’re going to see a lot more of that. And we’re going to see just a lot more traditional financial sector involvement in crypto, which in some ways is ironic because the birth of crypto was designed to get rid of all the traditional financial services actors. And of course, what’s happening is the traditional financial services actors are co-opting this space.Sasha: Behn, as we’re kind of wrapping up here, I wanted to move back to a big picture view and see if there’s any emerging trends or innovations in the crypto space that we should be aware of. In particular, you and I and Jerry all do work with our privacy and data security group. So curious if you have any thoughts in particular on the intersection between cryptocurrency and digital assets, privacy, that whole interesting space. Behn: Well, that’s a great question. So, in some ways, cryptocurrencies offer significant advantages when it comes to privacy and cybersecurity because of the nature of the blockchain and the way that it operates. But yes, I mean, there have been very well publicized incidents of hacking digital wallets and digital currencies being stolen.
The infrastructure around custody and digital assets is still evolving, but that’s why it’s important from an individual perspective to understand — if you’re using an exchange to hold your digital assets — to understand who you’re dealing with, how are they regulated, are they regulated. You should be using somebody who’s regulated, because this is a regulated activity in the United States and that’s one thing that people don’t necessarily understand. Cryptocurrency does not mean no regulation it is regulated so you have to understand who you’re dealing with. I think that’s important.
I think on the longer term my concern about the security of cryptocurrency really stems from quantum computing. And the threat that I understand quantum computing may pose to the security of the blockchain technology. Again, I’m not a mathematician, so don’t ask me how that works. I don’t know. I just know what I’ve read, that in fact, quantum computing does present a challenge. There are ways to deal with it, but that I think will be a disruptor, whether that’s in three years or five years or ten, I don’t know, but at some point, down the horizon.Jerry: Behn, you’ve given us a far deeper understanding by your presentation. Obviously, we’re running out of time. What I would maybe ask you to come back on at some point is the formalities of how regulation is evolving at the state and federal level. And I think that might be the subject of another podcast episode, maybe not too distant, because it’s a, you know, I think of blockchain and particularly crypto as looking for a regulatory home.
It’s ironic because its purpose was to move away from the traditional regulatory environment, but it’s seen that it needs a regulatory framework and finding our way to what that will ultimately be given data security, given law enforcement risks. As you’ve described, the problem that existed in the earliest part of our country where banks were issuing notes, but when they were called, they didn’t have the ability to respond. If a cryptocurrency collapses, okay, you’re at risk. But how much do you have to understand before that you are taking a significant risk?Behn: Yeah, I’d be happy to come back in and talk more about those issues. You know, I’ll say your comment reminds me of something that a former colleague of mine used to say. He used to say to clients, “You have to pick a uniform.” And by that, what he meant, and I tell clients this to this day, is in this context, crypto tokens have to be something. They’re either securities or they’re commodities or they’re currencies. You have to decide which one you want and then try to structure it so that you can fit within that regulatory framework.
But there is a regulatory framework. There’s no vacuum. So, you are something. Understanding what that something is and what obligations and risks are associated with that are incredibly important. And there’s a lot of activity going on in that space, particularly in the state level. In fact, California’s digital financial assets law is going to take effect next year. Maybe we can have a podcast to talk about that and about what others can do.Jerry: And New York is already present. And we have a good friend, Kaitlin Asrow, who’s the executive deputy commissioner in New York, and she takes responsibility for that area. It’s fascinating. And I really do think sooner rather than later, we should have you back. But I want to thank you for being with us. And I know Sasha feels the same way. Sasha: Thank you, Behn. Great to chat with you today. Behn: My pleasure. Great talking with you both.