Zack Shapiro is Head of Policy at the Bitcoin Policy Institute and Executive Director of the P2P Rights Fund. We discuss the current regulatory landscape and how it may evolve under the upcoming Trump Administration.
Bitcoin Policy Institute: https://www.btcpolicy.org/
P2P Rights Fund: https://p2prights.org/
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(00:01) CNBC Intro
(02:49) Current Bitcoin Policy
(05:58) Bitcoin's Global Impact and Government Adoption
(11:30) Judicial Challenges and Peer-to-Peer Rights
(27:51) Trump's Executive Orders and Bitcoin
(44:16) Regulatory Concerns and Future Outlook
[00:00:00]
Unknown:
Going to have or whether your thinking has evolved. It almost sounded like you you wanted to going to have to separate Bitcoins from the rest of the industry. And I'm wondering whether you're actually warming to to the idea of of, of of at least Bitcoin. And whether yeah. Again, people are are tweeting you that I said you either stood in the way of an extraordinary industry or were utterly unable to prevent a a massive bubble. What do you think the future holds? Do do you have a feeling on what which it is? Do you do you think Bitcoin has inherent value and is a store of value, or do you feel that that when we look back on a 10, 15, 20 years from now, it's gonna be something from the 18th century with tulips.
[00:00:45] Unknown:
Joe, it's it's hard to predict. I think I really do like you because I know that you think, I'm gonna out you and think negatively on many of these odd coins. You, Joe. But in terms of in terms of Bitcoin,
[00:01:01] Unknown:
we at the SEC have never said it's a security. I have not. What do you think? It's You talked to MIT. I think you know. I think you gotta have some kind of feel do you read you've read the books? I Bitcoin Standard?
[00:01:13] Unknown:
Yeah. I think I think that Bitcoin is a highly speculative, volatile asset, but with 7,000,000,000 people around the globe. 7,000,000,000 people wanna trade it just like we do have gold for 10000 years. We have Bitcoin. It might be something else in the future as well. Right. These other thousands of projects need to show their use case and show that they actually have fundamentals underlying them or they won't persist, Joe. Oh my god. You own Bitcoin. The public that's that's that's what the public needs to know. That's what it's I don't You love it. I've never owned You love I've never You love it. You don't like those other coins. I've I've never owned any of these, and I've been consistent for 7 or 8 years on this. Well, now you can't because you won't be a SEC chair.
[00:02:50] ODELL:
Happy Bitcoin Wednesday, freaks. It's your host, Odell, here for another Citadel Dispatch, the interactive live show focused on actionable Bitcoin and Freedom Tech discussion. I'm broadcasting live from a undisclosed location because we have a very timely topic to bring to you, freaks. That intro was our boy Joe Kernan, who runs the number one Bitcoin podcast in the world, Squawk Box on CNBC, roasting outgoing SEC chair Gary Gensler. Our topic today is the upcoming Trump administration, the regulatory outlook, how policy is shaping up, and what that means for Bitcoiners both in America and around the world. I'm joined here by a good friend and head of policy at Bitcoin Policy Institute, Zac Shapiro.
Bitcoin Policy Institute is one of the leading think tanks, advising the upcoming Trump administration and other policymakers. They also have a p two p rights, like, subgroup, that, Zach Zach is, executive director of. So how's it going, Zach? Good to have you here. Doing well. Thanks for having me. This is, crazy times where I guess we're about a week away from the upcoming, presidency. We have a lot of there's a lot of excitement. There's a lot of excitement about what could be our 1st Bitcoin president, and there's a lot of concern about whether or not people that like using appreciate using Bitcoin as freedom money, appreciate using Bitcoin as freedom money, are concerned what it might mean for them going forward. So how how are you thinking about, what comes next?
[00:04:58] Zack Shapiro:
Yeah. For sure. So my overall reaction to the what we've heard from the Trump administration and from the incoming congress, is, in many ways, a huge sigh of relief compared to what would have been, if the election had gone the other way. I I don't see the sort of mainstream adoption of Bitcoin, you know, including by Wall Street, including by governments, as at odds with the mission of Bitcoin as as freedom money. I think these are very both important, you know, themes in Bitcoin. It's monetization. It's, going from being seen as a legitimate asset or a hobby or a tool for money laundering into a portfolio of financial system, you know, especially in the west.
But then in other parts of the world, especially in the global south, a sort of vital means of resisting authoritarianism of, using Bitcoin as a medium exchange and as free to money in sort of every sense you could mean.
[00:05:59] ODELL:
Yeah. So, I mean, there's a lot to break down here. I so you you've been active in this space for a while now. If you were compared to where we stand today versus, let's say, 6 months ago or a year ago, how would you compare and contrast, you know, current developments?
[00:06:23] Zack Shapiro:
I think it's night and day. So I I think there there are different, sort of buckets we can look at. So starting with the government, if you look at each of the 3 branches of the federal government, the biggest change we're gonna see definitely is with the executive branch. If you look at the way that the Biden administration, look at at Bitcoin and and crypto writ large, you just Bitcoin, multiple parts of the government seems to be all out attacking. If you, you know, SCC, the biggest news for Bitcoin SCC in 2024 was the approval of spot Bitcoin ETFs, which seems like it's had a pretty big impact on price and sort of on the broad perception of the company, from people outside the community and Wall Street. The, suit against the SEC, it involved Gary Gensler writing sort of the saltiest ever concurrence on the decision to grant the spot ETF.
It you know, there's no in kind creation and redemption. They're a slow rolled options. You know, the SEC in in general, you know, and then aside from the ETF, SAB 121 prohibited banks from holding Bitcoin as collateral. Totally sort of anti Bitcoin policy. If you look at the IRS, we just had sort of a midnight surprise from the Biden, IRS where they're saying that anyone who creates software that facilitates people's trading, including in Bitcoin, could be seen as a broker. And if they're in a position to KYC, they have to KYC to be able to report trades to the government even if you're just a front end, for example, for for a Taproot swap on the back end or potentially an e cash mint or, you know, any kind of noncustodial tool.
If you look at the DOJ and Treasury, you know, the DOJ launched these actions against Tornado Cash and Samurai directly going after developers of noncustodial tools. The Treasury has not come out with guidance that's helpful there. The treasury you threw it its OFAC, office sanctioned the smart contracts for Turtaino Cash, which are just code that's running on the Internet. We were really sort of in a defensive posture when when they had the, infrastructure bill. They tried to sneak in redefinitions of brokers that would include almost everyone in in the Bitcoin industry. And so going from that to having a president that, you know, bought burgers over the lightning network at Pub Key, that's, you know, appointing not just pro Bitcoin people in terms of their stance, but people that, you know, in many cases, understand and hold Bitcoin into really key roles across the administration up to the cabinet level.
That's really night and day. And, I think a lot of the change in the executive branch is something that's just going to happen naturally, because of the personnel shift. A lot of the key personnel, who oversaw Bitcoin related issues in the Biden administration were handpicked by Elizabeth Warren who, you know, really wants Bitcoin to die. That's that's one of her sort of key missions. And she's gonna be replaced by people who, got to where they got in part by being supportive. And, you know, I think both through executive orders coming through the White House and just through different decision making at these different executive agencies, we're gonna see, like, a huge, you know, if not overnight, pretty rapid difference in the way the government approaches Bitcoin from the executive branch. In the congress, you know, it's a little bit more of a mixed bag there. You know, we're pushing really hard to help people understand, senator Lummis' Bitcoin Act bill, which would create a strategic Bitcoin reserve and and buy a 1000000 coins.
You know, we're gonna definitely, help draft language where appropriate for other legislation that we think are really important for Bitcoin related priorities, whether those are accounting, whether those are protections for developers, whether that's fair treatment for minors. You know, there's lots of opportunity there, but we are more competing with legislative priorities in congress from other interests in the in the crypto space. So for example, you know, the SBR bill is one of the potential, sort of marquee crypto related bills that could go through congress, but there's also a stable coin legislation that I think TradFi is really interested in, so they can enter the space and get the legislative clarity they need to create JPMorgan coin or BlackRock coin or whatever they're trying to do to compete with Tether. And then, you know, the market structure bill, which is really important to the crypto exchanges, really important to the crypto VCs to sort out which token launches constitute securities offerings, which don't, and create a safe harbor for people who, you know, wanna do VC token launches. And there's a lot of money and interest behind all of these. So congress, I think, is, poised to be friendlier to Bitcoin than they have in a while, but the question is, like, where do we rank in their priorities? And then the judicial branch, judges are more insulated at the federal level from politics. They have lifetime appointments, and that's where I think there's still, the most work left to do. I'm sure we'll talk more about the peer to peer rights fund, which is a nonprofit litigation fund meant specifically to get involved, with the federal courts where, you know, the rights of developers and and individuals to to transact on a peer to peer basis are in jeopardy. But I think that's where the election is gonna have the least impact, going forward. And then it's worth mentioning also, sort of traditional finance, looks at Bitcoin so differently, I think, right now than they did a year ago. I think the career risk around being involved in Bitcoin, around investing in Bitcoin, holding Bitcoin, recommending Bitcoin, is just in such a different place. It seems so much more legitimately than it was even 1 year ago, and a lot of that is just about the number go upside. But I think there are some positive externalities for Bitcoin as freedom money, and Bitcoin the network. I think it could bring people into the developer space. I think it could, you know, open people's minds to self custody as opposed to just holding ETFs and, you know, that shift in the Overton window coming from the private sector is a is a real ingredient both in its own in terms of, how people writ large think about Bitcoin in the United States abroad, but also it could have a ricochet effect on how how the government thinks about and deals with Bitcoin.
[00:12:31] ODELL:
Awesome. Huge shout out to the live chat. I apologize about the echo. I think I solved it. So thank you for bringing that to my attention to our attention. And huge shout out to Mab 21 who zapped 10,000 sets. To those watching on YouTube or Twitch, the Noster live chat can be found at zap.stream/odell. So, Zach, I mean, there's a lot there. So I'm trying to think where I wanna go first with this. Do you think there's a concern? Is there is there a real concern? I've heard a lot of people voice this. Is there a real concern about this idea that Bitcoin most Bitcoin will be used in, like, an ETF type of situation or a custodial type of situation, a custodial regulated type of situation while self custody will continue to be pushed down on? Like, is how do you think about, people's ability to freely use Bitcoin in a self custody, freedom oriented fashion going forward?
[00:13:41] Zack Shapiro:
Yeah. I would separate those two things out. I think it is true that we are likely to see more Bitcoin as a proportion of the network end up in custodial products. I think that is a function of people starting to understand Bitcoin the asset and wanting to hold it in what they see as less risky ways. You know, these are people who are not necessarily gonna understand how to self custody, feel okay self custodying. And, you know, the truth is I don't know how much there is we can do about people making that decision, and I expect that secular trend to continue to some extent. I don't think it necessarily, at least the way it's happening now, comes at the cost of using Bitcoin, the network, and and Bitcoin as, freedom money.
I think, you know, there are a couple of ways you could take this. 1 is, alright. As Bitcoin becomes more integrated into Wall Street and then especially if we get something like a strategic Bitcoin reserve and Bitcoin becomes an important asset to governments like the United States government, how does that impact freedom money? And there's definitely some narratives out there that that could be an attack on Bitcoin, that this is really not in our interest, to support this decision making. I totally totally disagree with that. You know, we sort of started this chat about how different things are, from a year ago. I think in in most of those ways, things are are moving in a positive direction, for people who hold Bitcoin in the United States and people who are building Bitcoin businesses and developing Bitcoin tools. I think the risk goes down as incentives, are aligned.
And I I think that it's not just true in the in the positive sense that if the United States government sees Bitcoin as an important asset, they're more likely to protect Bitcoiners and people building on Bitcoin. I think the converse is also true that if the United States government doesn't embrace Bitcoin, the game theory is that our adversaries will. I think ever since 2022, with the beginning of the Russia Ukraine war, We've seen countries react to the United States freezing Russia's treasuries reserves, by buying gold and selling treasuries. And I think sort of the the the game is up that, you know, US treasuries are a neutral, reserve asset. Right? That, you know, are are sort of like a commodity. No. They're they're printed and controlled by a country that has its own monetary policy and has its own, you know, sanctions policy.
And gold does not work that way. Bitcoin is just better than gold if you're trying to hold a neutral reserve asset. There are some countries we've seen come out and and say that. I've heard, I think many of the same rumors that you probably have that there are other perhaps bigger countries that are accumulating Bitcoin, mining Bitcoin that aren't talking about it publicly. And if it's not the case now, I I'm quite confident it will be the case that the countries that are stacking Bitcoin will include our adversaries. And if those countries were to come out, if Russia or China or Iran were to come out and say, hey. We're mining Bitcoin. We're holding Bitcoin, and the United States is not. I think the consequences in terms of the policy response from the United States for Bitcoiners and for Bitcoin developers is likely to be very severe. And so, aside from aligning incentives and, you know, improving education for the United States government by creating a Bitcoin reserve, especially Bitcoin reserve in self custody in the United States, The, you know, the just the ability to avoid, this sort of geopolitical time bomb of our adversaries coming out as pro Bitcoin or holding Bitcoin and then, you know, having a negative perhaps bipartisan reaction is really important. And so these things are rowing in the same direction and and and not sort of at odds with one another.
[00:17:17] ODELL:
Awesome. I mean, so first of all, before we continue, I probably should disclose that I'm one of the founding board members of Bitcoin Policy Institute. There's 3 of us. I do not get paid for that role, and it's more of a support role, really. David Zell and Grant McCarthy are incredibly impressive individuals, and they run the operation. So where I wanna go here is so on that note, you did mention, the tornado cache and samurai cases. I'm kind of curious on your opinion here of where those stand or how you think about them going forward.
[00:17:57] Zack Shapiro:
Yeah. So, given that you mentioned BPI, let me give you a little bit of background about how sort of we think about policy issues. So BPI is not a lobbying organization. It's it's a think tank. We definitely have policy preferences, and there may be times in the future where we get more directly involved in lobbying. But our goal is to really think deeply about what should good policy around Bitcoin be in in the broadest sense possible and then to educate relevant policymakers, about what good policy should look like and and, you know, draft bills, draft executive orders, and get involved, where we can to help affect that policy. Our only client, our only real constituent is the Bitcoin network. Now there are many different types of people that are part of the Bitcoin network. It, you know, it could be individual Bitcoin holders. It could be node runners. It could be miners. It could be developers. And and so we are sort of looking out, you know, and and there are other important roles. Right? Developers obviously do their own thing that's incredibly important, but we think policy has a role here. And so, you know, we wanna do what is in the best interest of Bitcoin vis a vis, especially US federal policy.
The peer to peer rights fund started, this year in April in reaction to 2 things, that happened in the span, I think, of of 1 week, that were just incredibly concerning to me. The first was the prosecution against Samurai Wallet that included charging the developers of Samurai Wallet with being unlicensed money transmitters, essentially for writing and supporting code that allowed people to spend their own Bitcoin in a private way, when, you know, in in my view as a legal matter, they were not transmitting anyone's money. People were using samurai wallet to transmit their own money, and this was something the government was either, you know, negligently or or intentionally conflating, in order to prosecute these individuals. And then that same week, we got a reply brief in an earlier action, similar action that had been brought against the developers of Tornado Cash, which is a privacy tool on the Ethereum network, that really laid out for the first time in full the way the government thinks about or the the DOJ specifically thinks about what money transmission is in the context of noncustodial tools. And it has, you know, had language in this brief that some of your listeners might remember from the time, saying that, listen, in the way that a frying pan transmits heat or USB cable transmits data, a noncustodial tool can transmit funds, and that doesn't require actual custody or control of those funds.
And right away, if you just think through what that means, you get to a really crazy and and dark place. There's no limiting principle if you're talking about frying pans transmitting heat. If all it takes is to you you take some action that facilitates people's movement of their own money on a peer to peer basis, and now you're a money transmitter, well, you know, everyone in the Bitcoin ecosystem is a money transmitter. Right? Miners append transactions to blockchain. They're money transmitters. Should miners have to KYC transactions? Is that even possible?
Are we gonna have to change the code for mining, or is mining gonna be banned in the United States? If you run a node, or let's say you don't run a node. Let's say, you know, you use Ledger Live software. You're new to self custody and you're using Ledger Wallet and you're using Ledger Live and you're using their node. They are facilitating the broadcast of your transaction that you signed with your keys, to the network. Does that mean that running a node on on behalf of others is money transmission and the only people who are gonna be able to directly interact with Bitcoin are people who can spin up their own node. That seems like a real problem. And you can take this to, like, you know, really crazy places even outside of Bitcoin. Right? You know, if someone hands someone, someone else cash in an envelope, is the, you know, timber company that cut down the tree that made the paper for the envelope that holds the cash, a money transmitter has to KYC anyone who makes an envelope out of their wood. Like, you really need to have some living principle here.
And so aside from, various unjust features you can point to in both the Tornado Cash and Samura wallet prosecutions, the reason why we started the peer to peer rights fund, is about the precedent that these cases set if they come out the wrong way. And so the the broad mission of the peer to peer rights fund is to get involved specifically in court actions, right, in in court cases where the government or the prosecution or whoever is making a sort of category error, between what is a regulated financial institution and what is just code that allows people to operate on a peer to peer basis. And, you know, one of the things that made Bitcoin succeed where the other protocols didn't is that Bitcoin really truly operates on a peer to peer basis. Right? The idea of proof of work, allows people to interact with each other in a trustless way without a trusted intermediary. And, like, that just is a new concept for the law. And so there are some cases where, people are sort of maliciously, making this conflation to kill Bitcoin. I I think that the easiest example of that is Elizabeth Warren's dam law bill, which redefines explicitly everyone in the Bitcoin space, including node runners and miners as money transmitters in a way that she knows they can't comply with. There is what I think is sort of like bumbling conflation or, you know, motivated not looking into it, like the prosecutors in the samurai wallet and, tornado cash cases where they're not so concerned about the collateral damage of the precedent they're setting, but they really do see money laundering using crypto as a problem. And so they're gonna use whatever legal theory they think is best. And then there's the judges who are overseeing these cases and are gonna have to make these rulings who I don't necessarily think have malicious intent at all.
But the idea of what it means to do a peer to peer transaction, how that's different than, for example, using Venmo is a really foreign concept. And so main VPI, the mission is to educate policymakers about what good Bitcoin policy is and help them make good decisions. Peer to peer rights fund is just extending this to the judicial branch, which is increasingly where this battle is gonna be fought. And it's where you can get bad policy overnight without any democratic input. If a federal judge decides something the wrong way, that can become law, and and there's not much you can do about it. And so we need to educate judges. And so the peer to peer rights fund, part of what we do is we help fund cases like the the samurai defense.
We've raised about $1,000,000 for that to make sure that they have, the resources they need, to fight this case and not fold and set that precedent. We're gonna be involved in cases by writing amicus briefs to help directly educate judges on how this stuff all works and what and what the law is. And then we're gonna branch out especially in 2025 2025 into providing free or or low cost regulatory advice, to people who are building, especially, open source, noncustodial tools in Bitcoin to help them navigate what is a pretty confusing, regulatory environment.
Right now, I know you asked specifically about these cases. Unfortunately, not much has changed in terms of the cases. We've gotten one actual substantive federal court ruling that was in the tornado cash case, and that was horrible. It went about as badly as you can imagine. The judge explicitly saying that the Bank Secrecy Act does not require control or custody to apply, that the smart contract system in Tornado Cash, was money transmission, at least as the government alleges the facts, that this will have to be decided at trial and that there aren't first amendment protections, for running the smart contracts, like the Tornado Cash smart contracts. There was a subset subsequent good ruling about the OFAC sanctions against Tornado Cash, which is great and welcome news, but does not really help, with the money transmitter issue isn't as relevant in that case.
And then, we haven't had any substantive rulings yet in, the samurai wallet case, but the, you know, we've not had great signs so far. The I think the Tornado Cash decision is gonna make this difficult, and, the defense counsel in samurai wallet tried to separate out their arguments to first deal with this money transmission issue before they get to the extraordinary amount of discovery they need to get through before trial and the judge refused to do those things separately. The judge said we're gonna handle this all at once which, frankly is not like an amazing sign, about how, sympathetic the judge is to this issue.
I would say looking at the election, the one bright spot for these cases in particular, I guess there are 2. One is depending on who ends up at FinCEN, which is the part of treasury that deals with illicit finance. So this is someone who's gonna be a Trump appointee and work under Scott Bissen. That person could put out guidance that clarifies how FinCEN, thinks about noncustodial tools. They did this twice in 2013 and 2019, and there have not been updates since 2019. And so it could be quite helpful in these cases if FinCEN comes out and gives useful guidance, which is definitely something that we are advocating for at BPI. The other thing that will change that could be helpful is the head federal prosecutor in New York, in the US attorney's office here called the Southern District of New York, which is bringing both the Tornado Cash and Samurai cases, is, being swapped out for someone who, you know, is an advisor at a crypto VC fund and certainly understands at least what the words noncustodial means. And so, you know, it probably doesn't mean that they'll drop those cases, but it might mean that they're more careful about what precedent they set for the whole industry.
[00:27:18] ODELL:
Okay. Great. I mean, thanks for the very deep breakdown there. I mean, it seems like all things considered, it's a much more positive outlook than, even just a few months ago. I would like to I would like to move towards so the one of the things that, there's been a lot of excitement about is this idea of Trump doing things day 1 from with his executive privilege. I don't know how much insight you have there, how much how how involved you are on that side of things, but how are you thinking about that? Is there really is it realistic to expect anything significant in, let's say, the 1st week or the 1st two weeks of a Trump presidency here?
[00:28:08] Zack Shapiro:
Yeah. I mean, I think it depends what we're talking about. I think there is broad consensus, among everyone who's talked to Trump. There is going to be a lot of specifically day one executive orders. So, yes, Trump Trump will definitely try and take action as quickly as possible for, a lot of his priorities. Now Bitcoin specifically, that's a harder question, and I think no one other than Trump knows what he's gonna do on day 1 or, shortly thereafter. I mean, he's repeatedly promised to free Ross on on day 1. That is something that's absolutely within his power, and, you know, something that if the community feels strongly about, they should hold him to.
But, you know, that is something he said he would do, for what that's worth. There's been reporting, recently that, there are likely to be either day 1 or 1st week executive orders, related to SAB 121, which is the SEC rule that basically prevents banks from holding Bitcoin. And that there may well be an executive order on, debanking, you know, perhaps shaking things up at the FDIC and and trying to, you know, either investigate or remedy what happened with operation choke point 2.0, which has been a real hindrance for, Bitcoin startups. We also at at BPI, drafted, you know, and it's been made public at least in an early form, an executive order, for a strategic Bitcoin reserve.
And, you know, we we don't know if he's gonna sign that right away. We we're hoping he will. We think that that is a good sort of first step towards an SBR. Our executive order, is constrained by the sort of power that the president has as opposed to the the congress. And so we we really tried to think through what is the most you could do by executive order that would be helpful in terms of an SBR. And we we did three things. The first is sort of just the legal pronouncement of it of an SBR that Bitcoin is a strategic, asset for the United States.
We actually got some flack around the language, from Bitcoiners about, it's a it's a gold like store value asset. Really that is a, not meant to have any specific legal effect. Just because something is said by the government to be a store value asset doesn't mean it's not also a medium exchange or freedom money or anything like that. It's just signaling why there are a lot of people if they hear about strategic Bitcoin reserve, they're just gonna think that's crazy. It would be like Bitcoiners hearing we're gonna have a strategic, you know, Doge or XRP reserve. And, you know, it it just sounds like stupid and and corrupt and grifty, and explaining that, like, no. Bitcoin has fundamentals that in some way is is like gold, really just as meant to situate why you would do a strategic Bitcoin reserve in the first place. So it is it pronounces that. That's part 1.
Part 2 is to move Bitcoin that is currently in the custody of the United States government to the strategic Bitcoin reserve if the government has final legal title, to that Bitcoin. So there's been a lot in the news over the last week or so about what is gonna happen to the Bitcoin the United States government has now either from the Bitfinex hack or the Silk Road case. And it, you know, it may well be that by the time Trump takes takes office, they'll have sold all of that, which, you know, if I were Trump, I would I would see as a challenge and and one to be redressed. But, we got exactly the type of order that our executive order, references in the Silk Road case where a judge said, listen. This Bitcoin belongs to the US government. It doesn't you know, we don't know who individual x is or we're not gonna give it to individual x. X. And so if the government hasn't sold that Bitcoin, that Bitcoin would be eligible for inclusion in the SBR. And so part 2 of our executive order transfers that Bitcoin to the SBR, as sort of the seed. And I think there would be something poetic about, you know, if Trump on day 1 both freeze Ross and moves the c silk road Bitcoin into a strategic Bitcoin reserve. It's hard to imagine a more powerful sort of one two signal of, where Bitcoin is compared to where it has been in, you know, its relationship to the government.
And then 3rd, and this was the the legally tricky part, we we tried to think through, okay, what mechanism could Trump use by executive order without having to get buy in from congress in order to actually buy Bitcoin? And the best that we came up with is, the exchange stabilization fund, which is essentially a slush fund, for the treasury department that is meant to allow the secretary of the treasury, who's gonna be Scott Bissent, to buy assets, if he thinks it's in the interest of the long term stability of the dollar. And the laws that allow for the the exchange stabilization fund, the ESF, allow the secretary of the treasury. It it enumerates each of the things. It says you can buy gold, you can buy foreign exchange reserves or or instruments, and then you can buy instruments of credit or securities.
So gold is not gonna fly. We can't make the digital gold analogy because at the time this was passed, it was there was the Gold Reserve Act and gold meant something very different than, for example, silver. We thought about, okay, could Bitcoin be a foreign exchange instrument? The case law we found makes that a little bit difficult to argue because the sort of standard legal definitions of f FX, are instruments that are issued by foreign governments, not just adopted, as legal tender like it is in El Salvador. You could use an instrument a securities instrument to stack Bitcoin through the ETFs, but that feels, a little bit less neutral and you're picking winners and you're holding ETF shares. And that really feels divorced from sort of the ethos of Bitcoin as freedom money to have, you know, the United States buy BlackRock, shares that are custody at Coinbase.
But, it came up with this idea where, okay, instrument of credit is incredibly broad. So why couldn't the United States government buy an instrument of credit, essentially a bond, that's payable in kind in Bitcoin, that can be held in self custody by the United States? And so, you know, we have parts of the United States government in the executive order creating cryptographic standards to do geographically, separated, you know, multisig self custody and really sort of modeling, you know, what is the the best standards in terms of holding Bitcoin. And and, you know, that that's the way that the executive order, takes care of that.
And so we're very much hoping Trump will sign the the SBR executive order. We have several other executive orders drafted, including, stuff dealing with the, peer to peer rights fund, style issues. There are our top priorities and asks for the new administration are first and by far the most important to clarify that non custodial tools are not subject to the bank secrecy act. This is definitely something that between the DOJ and the Treasury, they can do. I don't think we need a new law. I think the Bank Secrecy Act is it's currently written. It says you need to accept and then transmit funds on behalf of the public to be a money transmitter. That's just not what self custody is, but it would be good for the government to clarify that. And then for custodial businesses where you are gonna custody funds, currently, it's a nightmare, to get licensed as a money transmitter. Right? Some of the best best Bitcoin exchanges like River are not available, in in New York City because of the BitLicense.
If you're gonna do any kind of, like, custodial lightning startup right now, my day job is I I work with a law firm. I run a law firm that works with Bitcoin startups, and, you know, we help deal with these issues for clients. If you're gonna be a money transmitter, you're sometimes spending well over $1,000,000 to get 50 state licenses. You have a huge compliance overhead and it just it sucks. And streamlining that process would would be really helpful for for custodial tools. And so I think this is a that's a little bit of a heavier lift than clarifying the Bank Secrecy Act doesn't apply to non custodial tools, but, like, there's a lot we can we can do there. So to be clear, there's there's an executive order drafted that clarifies that the Bank secrecy act does not
[00:35:56] ODELL:
cover self custody tools.
[00:35:58] Zack Shapiro:
Drafted drafted by us, not drafted by the Trump team, but yes.
[00:36:04] ODELL:
And so then it's just an open question on whether or not he actually signs it though. Yes. And then for and then same deal with all the executive orders in this case, but, the with the strategic Bitcoin reserve, if do do I recall correctly that specifically it calls for buying $21,000,000,000 worth of Bitcoin?
[00:36:26] Zack Shapiro:
At least 21,000,000,000 with the goal of being the largest government holder of of Bitcoin. I I don't know if the final version is going to include that specific number or not. 21 is obviously a number that's important in the Bitcoin community and and symbolic. The sort of ballpark we got here as we looked at the net position of the exchange stabilization fund, because they hold all sorts of FX instruments now, and the the language of the statute that creates the ESF says that you have to be beholden to whatever, obligations to the IMF you have. And so the available funds that the ESF could use to buy Bitcoin are, I think, around 39,000,000,000 and so that's we we went with the with the mimetic number.
[00:37:13] ODELL:
Do you think, in your opinion right? So not as, you know, head of policies at Bitcoin Policy Institute. In your opinion, do you think, Ross will be free day
[00:37:30] Zack Shapiro:
You cut out there a little bit. It sounds like you asked if I think Ross will be free day 1. Yes. I think so. I I mean, this is something that Trump has said more than once, said very plainly, and, you know, it it I don't know how much political capital it cost him to do it. I do think it will be confusing to a lot of people who are not, libertarian or or steeped in the, you know, early Bitcoin history, and so there will be some sort of education around why, he made that choice. And, you know, there may be some pushback, but, you know, I don't know that Trump would have said that so specifically and directly if he wasn't going to.
[00:38:13] ODELL:
Yeah. Out of all of this, that seems the most likely, expectation out of all the executive orders, all the things he can do in the 1st few weeks. Because those are, like, for my opinion I mean, he's first of all, he's not pardoning Ross. He's commuting his sentence, so it's basically time served. So as you said, it does doesn't really take much political capital. And, obviously, it's a, would just be a massive win, I think, for humanity for because Ross has served a significant amount of time, for a nonviolent crime, so it'd be great to have him free. I'm I'm quite looking forward to that, and I it would probably be the single most that that would just be a massive disappointment, and I'd feel fucking horrible for Ross, if after all this time that doesn't happen. So I expect to see that.
In terms of the strategic Bitcoin reserve thing, we've and you could just tell me, you're not gonna answer it. But percentage wise, what percent do you think, the chances of of him signing a strategic Bitcoin reserve in the first three weeks of his presidency?
[00:39:25] Zack Shapiro:
Yeah. I I don't think I'd wanna put a specific percentage on that other than to say, you know, this is something that I I think is being taken quite seriously and, you know, both in terms of the executive order and in terms of the Cynthia Lemus Bitcoin Act. And, you know, I think there are a lot of people, in the industry and a lot of people in the incoming administration, who want to see a strategic Bitcoin reserve and, you know, we're we're gonna do our our best. I think some of the challenge here is, especially on the legislative side as opposed to the executive order, Some of the challenge is what are the top crypto priorities, and, you know, we're a little bit competing for energy and space and political capital with stable coins and with legalizing VC token launches.
[00:40:15] ODELL:
Yeah. I mean, I really don't care about either of those issues. Do do you do you think I'm absolutely crazy if I think it's 90%?
[00:40:25] Zack Shapiro:
You know, I I feel like I'm almost too close to this to be able to, to to give a a good answer. But, look, you know, I think in congress, the the main issue, like I said, is is competing with other priorities. And and, look, the way it works with an incoming congress, especially with a new president, is that you have 6 months or a year to really get stuff done. And then you have to start thinking about everyone's reelection, and there's just sort of less focus on legislative priorities. And so, while this is gonna be the most pro Bitcoin congress ever, I think there's no dispute about that, and there's, you know, a lot of interest across the industry, from an SBR, not not just from sort of pure, Bitcoin only folks, but from the the crypto community. I think people are broadly supportive.
It's just gonna be a race to see what gets done with regard to digital assets and, you know, can we make, the strategic Bitcoin reserve a top priority? The sort of piece of good news there is that at least on the senate side, it looks like senator Lummis is going to chair the digital asset subcommittee. I think that is a pretty good bet, that we might get hearings on the SBR in the senate. And so, you know, hopeful that it happens even if, it doesn't. I think there's a really good opportunity to move the Overton window and really start talking about Bitcoin as a strategic, reserve asset.
And the EO front, that's really anyone's guess. You know, I don't, again, I don't wanna say an exact percentage, but, you know, if you look at how Scott Bessent has talked about his view on monetary policy and how we need to grow our way out of things, and how he sees the United States economy as sort of a geopolitical issue. I think the idea of an SBR aligns really well. It's public that he's met with senator Lummis, I think, specifically and and talked about the SBR. You know, for those who wanna sort of be wonky about this, encourage you to read the, BPI working paper, by Matt Pines specifically addressed, and sent to, Scott Pesent and his his team really, I think, forcefully making the case why at a geopolitical level this makes sense, for the United States. So optimistic.
I I think the sort of betting odds now are about a 3rd. You know, if if you really force me to, I'd probably say it's somewhere between that and and 90%. It's a big range. But
[00:42:53] ODELL:
Yeah. I mean, when you say the betting ons, like, Poly Market or whatnot is I think it has it around 30 like, mid thirties or something like that. Okay. We have about 15 minutes left here. I I kinda wanna move towards and and before we move, just real quick, when I'm thinking about these things, first of all, really, the only person who knows whether or not these executive orders happen is Trump. And he could change his mind literally 10 minutes before he's planning on signing them. He's he's he's shown that, that is the way he often operates.
But I am quite optimistic, and I think what a lot of people do not realize is us and the Bitcoin community are focused on, you know, maybe 5 to 10 executive orders, while Trump will likely sign over a 1000 executive orders in his 1st month of president presidency. So it's really a small number amid a much larger slew of of signed papers. But I wanna move towards, so from your from your position going going forward going forward over these next, 2 years, what is what is your biggest concerns, in terms of regulatory outlook, policy, and how that affects, Bitcoiners?
[00:44:17] Zack Shapiro:
Yeah. I think there are a couple of things. So my biggest downside concern, is still the courts. I think that's an x factor. I think that is less, relevant to this sort of, you know, friendly political moment for Bitcoin, and we could get really bad court rulings, that hurt Bitcoin, you know, both from the existing Tornado Cash and Samurai Wallet cases. There's a sort of recent thing that touches on the peer to peer issue around, brokerage rules and can certain noncustodial software providers be brokers. And a judge coming out the wrong way on this stuff is is always a threat and may or may not be something that either the congress or the administration, can or would spend the political capital to overturn. So definitely something to keep an eye on. That's sort of the shark that's that's still out to sea.
I think this is a, you know, real moment for Bitcoin to prove itself from a from a policy standpoint and and the community. We've been we're set up now better than I we ever have been. I think we need to take advantage of this. I think if we fail to, that that could be an issue. So, you know, everyone at BPI is working super hard. We're expanding a ton. I think it's public now. We're, opening up a physical office in DC, partnering with Pubkey for that, which should be pretty awesome. For those of you who are in DC, it's likely I guess I shouldn't say the exact location, but it's gonna be, if the the current plans end up playing out, it's gonna be an awesome location, and it's gonna be something that'll be well worth the trick to track down to DC, to visit this sort of Bitcoin embassy slash bar slash, media space. It's gonna be it's gonna be awesome.
But, you know, I really think that, like, we need to make absolutely the the most advantage of this time, that we can and really interface with every part of government, not just the Congress, not just the White House, but really all of the agencies to make sure they understand Bitcoin and they're not making, bad policy. And then I think there is, while I don't think that the government's embrace or adoption of Bitcoin is a threat to self custody Bitcoin or Bitcoin as freedom money, I do think the financialization of Bitcoin kind of is a threat in that regard, you know, with really easy options like the ETFs, you know, people who are selling Bitcoin to own MicroStrategy. I think there is people can lose the plot about what the Bitcoin network is here for.
And so, you know, while I I really I think that SBR is good policy and good policy specifically for Bitcoin is freedom money, and not a threat to self custody. I I do think we need to be relentless in encouraging self custody. And I think the people who are in the best position to drive that forward are the people who are building, specifically Bitcoin companies and making self custody easier, more convenient, and more attractive than holding Ibit shares. Right? So people who build, you know, really good hardware wallets, people who rebuild really good software wallets, people who are offering, liquidity against self custody Bitcoin, people who are offering insurance for self custody Bitcoin. These are all really important if we're gonna compete with, you know, holding Bitcoin in your Schwab account or your Robinhood account.
And so, I'm I'm hoping that both builders and and VCs will really step up and use some of this good regulatory cover we have to to build the tools that'll help, Bitcoin serve that that freedom money function.
[00:47:47] ODELL:
Awesome. And, I mean, going forward, there's peep there's a lot of people listening to the show right now probably thinking to themselves, how can they best support, the work at Bitcoin Policy Institute and the P2P rights fund? What is your answer to them?
[00:48:01] Zack Shapiro:
Yeah. So, both are are, 5 0 1 c 3, tax deductible nonprofit. So, you can donate money, for starters, either to BPI as a whole or the peer to peer rights fund as a whole. And and donating to the peer to peer rights fund as a whole allows us to build up a war chest to support, developers that are under threat. It allows us to provide, you know, regulatory resources to people who are building in the Bitcoin space and further this mission of building non custodial tools. Or you could, donate directly to the, samurai wallet defense fund, if if that's your specific issue.
Definitely just, you know, we're gonna try and sound the alarm, when either something good or bad is coming down the pike and and really do a good job organizing people, to call their representatives, if, you know, something comes up. So, you know, following us on on x, I'm sure we have various counts on on Noster, but keeping tabs and keeping informed is really important. And then later this year, we'll have the, the policy summit in DC, which will be a pretty awesome high signal event, if folks, wanna come to that. I don't know if we've announced the date yet, but, if you go to bitcoin policy summit.org, that's where, we'll have information.
[00:49:26] ODELL:
Awesome. Do does does the calling your local politician really does that make a difference? I mean, I think it's almost kinda become a meme at this point.
[00:49:37] Zack Shapiro:
No. I I think it really does make a difference. Not that your local politician is going to listen in-depth to what you say, But the way this works is lawmakers will have aids whose and it's calling specifically more than it's emailing. But if a bunch of people call about an issue, that is something that the lawmaker will hear from their staffers. And I think it's really as simple as, hey. You know, we're considering this bill. We got 900 calls saying support the bill. We got 40 calls saying the bill is a bad idea. And, you know, just in terms of allowing lawmakers to hear what the grass grassroots support, for stuff is, you know, that that's really important. The, you know, biggest example that the industry, has, you know, helped us on is with the the infrastructure bill. I forget if it was 2021 or 2022, but where they were trying to add these terrible noncustodial broker rules that arguably applied to Bitcoin miners.
People in the senate heard enough from constituents that that was bad, that that was one of the things that, like, pushed Ted Cruz to say, listen. None of you understand Bitcoin. Let's not make these rules that will will dramatically hurt it. So, yes, it's not the how beautiful your letter is drafted or how eloquent, you know, the call is that you have with them, but the fact of your writing or especially the fact of your calling does actually make a difference.
[00:51:01] ODELL:
Awesome. Yeah. I mean, I think it's easy to get disenfranchised, by politics. I know I have historically been, for quite a long time now, and I really do not trust any politicians. But one of the main advantages we have as a Bitcoin community is that we are a very strong grassroots based community, and we can definitely leverage that and focus that in the right way. Before we wrap here, I just wanna do a quick shout out to doctor Jeff Ross, who's up 10000 stats in the live chat. Thank you for supporting the show. Ciel Dispatch is completely funded by Bitcoin donations. We have no ads or sponsors.
And in podcasting 2 point o apps like fountain podcasts, you can also support the show. If you're not listening live, you can just download fountain in your favorite app store. The largest zap we got, for the last episode was ride or die freak, Ape Mithraandir, with 17,777 sets, and he's recommending that everyone go back and listen to dispatch episode 5 with Max Tannehill and Diverter. We talked about the dangers of KYC, and tying Bitcoiners to our transaction history. If you're a new listener in general, you should consider going back to the entire back catalog of sale dispatch. There's hours and hours of really great discussion that I think has aged quite well and is still quite helpful.
Before we wrap here, Zach, first of all, I wanna say I'm just incredibly proud of you. You've been absolutely crushing it. Thank you for for, you know, fighting the whole hard battles out there and just constantly you're just constantly grinding. So I I just wanna say thank you in a big way and, that I'm very grateful to to have you on team Bitcoin. And then with all that said, what are your final thoughts,
[00:53:08] Zack Shapiro:
for the freaks? Yeah. Thank you for that. My final thought is that look. We're fighting one part of this fight. I think it is an important part. I think it's, you know, what myself and the folks at Bitcoin Policy Institute are are well situated to fight, which is advocating for Bitcoin policy, with lawmakers and then when necessary in the courts. The truth is if Bitcoin plays out over the long term, like, it it seems like it inevitably will, this is sort of a rear guard action. There are many ways where, you know, like we talk about all the time, Bitcoin is, works well with American values. It's in the United States government's interest to have some, and to have good policy with regard to Bitcoin.
But there are aspects of Bitcoin that do take some power, away from the state. Right? Its monetary policy is not set, by the Federal Reserve. It's set by code. You don't need permission to move Bitcoin. You don't need permission to mine Bitcoin, etcetera. And so there is you know, as important as this fight is, and I think it's important and I encourage everyone to both support it. And if there are ways that we can help whatever you're building from policy perspective, please reach out so we can be your advocate. In some sense, what we're doing is a a rear guard action. Right? It's to buy time for the builders. Right? The most important people in the Bitcoin ecosystem who are the people who run Bitcoin, who who build stuff on Bitcoin, who make Bitcoin usable, to build the Cypherpunk tools that make Bitcoin useful permissionless money and make it into freedom money. And, you know, I also wanna so definitely shout out to all of the developers who are working especially on noncustodial tech. The best thing we can do in terms of having good Bitcoin policy is to have good tech that, you know, the government will have to build policy around because it just exists.
And, you know, that that is the most powerful thing, and that's sort of the the cypherpunk ethos of getting a good policy through just building, rather than asking permission. So that's super important. And then also, I wanna give a shout out to the the people at at HRF who are taking the tech that exists there now and using Bitcoin directly as freedom money to help people who who need it the most. So, you know, we wanna be your advocates in Washington DC. Definitely don't be a stranger. Reach out to us and, you know, we'd love your feedback. We love your donations, and and please stay tuned, when we need to to mobilize you all, to to protect Bitcoiners from from bad policy and to help create good policy.
But, you know, important not to lose sight of, you know, what what the Bitcoin network does and how important, the people are who are actually building, ways to leverage the Bitcoin network for good.
[00:55:47] ODELL:
Awesome. Wonderful conversation, Zach. Thank you for joining us. Freaks, I have, on Tuesday, I'm planning to have a wide ranging conversation with Jack Dorsey. I do not know the time yet, but if you follow me on nosterprimal.net/odel or you subscribe on YouTube, you'll be notified of the time ahead of time. Otherwise, you can listen to it in your favorite podcast app as always by searching dispatch. I'm gonna be trying to keep the momentum up here, with dispatch. Life has been quite busy lately, both on the professional and family side, which I'm quite grateful for.
But, it's it's really important to be able to connect with you guys directly and talk about these very important conversations. And with that, I love you all. Stay humble, Stack Sats.
Going to have or whether your thinking has evolved. It almost sounded like you you wanted to going to have to separate Bitcoins from the rest of the industry. And I'm wondering whether you're actually warming to to the idea of of, of of at least Bitcoin. And whether yeah. Again, people are are tweeting you that I said you either stood in the way of an extraordinary industry or were utterly unable to prevent a a massive bubble. What do you think the future holds? Do do you have a feeling on what which it is? Do you do you think Bitcoin has inherent value and is a store of value, or do you feel that that when we look back on a 10, 15, 20 years from now, it's gonna be something from the 18th century with tulips.
[00:00:45] Unknown:
Joe, it's it's hard to predict. I think I really do like you because I know that you think, I'm gonna out you and think negatively on many of these odd coins. You, Joe. But in terms of in terms of Bitcoin,
[00:01:01] Unknown:
we at the SEC have never said it's a security. I have not. What do you think? It's You talked to MIT. I think you know. I think you gotta have some kind of feel do you read you've read the books? I Bitcoin Standard?
[00:01:13] Unknown:
Yeah. I think I think that Bitcoin is a highly speculative, volatile asset, but with 7,000,000,000 people around the globe. 7,000,000,000 people wanna trade it just like we do have gold for 10000 years. We have Bitcoin. It might be something else in the future as well. Right. These other thousands of projects need to show their use case and show that they actually have fundamentals underlying them or they won't persist, Joe. Oh my god. You own Bitcoin. The public that's that's that's what the public needs to know. That's what it's I don't You love it. I've never owned You love I've never You love it. You don't like those other coins. I've I've never owned any of these, and I've been consistent for 7 or 8 years on this. Well, now you can't because you won't be a SEC chair.
[00:02:50] ODELL:
Happy Bitcoin Wednesday, freaks. It's your host, Odell, here for another Citadel Dispatch, the interactive live show focused on actionable Bitcoin and Freedom Tech discussion. I'm broadcasting live from a undisclosed location because we have a very timely topic to bring to you, freaks. That intro was our boy Joe Kernan, who runs the number one Bitcoin podcast in the world, Squawk Box on CNBC, roasting outgoing SEC chair Gary Gensler. Our topic today is the upcoming Trump administration, the regulatory outlook, how policy is shaping up, and what that means for Bitcoiners both in America and around the world. I'm joined here by a good friend and head of policy at Bitcoin Policy Institute, Zac Shapiro.
Bitcoin Policy Institute is one of the leading think tanks, advising the upcoming Trump administration and other policymakers. They also have a p two p rights, like, subgroup, that, Zach Zach is, executive director of. So how's it going, Zach? Good to have you here. Doing well. Thanks for having me. This is, crazy times where I guess we're about a week away from the upcoming, presidency. We have a lot of there's a lot of excitement. There's a lot of excitement about what could be our 1st Bitcoin president, and there's a lot of concern about whether or not people that like using appreciate using Bitcoin as freedom money, appreciate using Bitcoin as freedom money, are concerned what it might mean for them going forward. So how how are you thinking about, what comes next?
[00:04:58] Zack Shapiro:
Yeah. For sure. So my overall reaction to the what we've heard from the Trump administration and from the incoming congress, is, in many ways, a huge sigh of relief compared to what would have been, if the election had gone the other way. I I don't see the sort of mainstream adoption of Bitcoin, you know, including by Wall Street, including by governments, as at odds with the mission of Bitcoin as as freedom money. I think these are very both important, you know, themes in Bitcoin. It's monetization. It's, going from being seen as a legitimate asset or a hobby or a tool for money laundering into a portfolio of financial system, you know, especially in the west.
But then in other parts of the world, especially in the global south, a sort of vital means of resisting authoritarianism of, using Bitcoin as a medium exchange and as free to money in sort of every sense you could mean.
[00:05:59] ODELL:
Yeah. So, I mean, there's a lot to break down here. I so you you've been active in this space for a while now. If you were compared to where we stand today versus, let's say, 6 months ago or a year ago, how would you compare and contrast, you know, current developments?
[00:06:23] Zack Shapiro:
I think it's night and day. So I I think there there are different, sort of buckets we can look at. So starting with the government, if you look at each of the 3 branches of the federal government, the biggest change we're gonna see definitely is with the executive branch. If you look at the way that the Biden administration, look at at Bitcoin and and crypto writ large, you just Bitcoin, multiple parts of the government seems to be all out attacking. If you, you know, SCC, the biggest news for Bitcoin SCC in 2024 was the approval of spot Bitcoin ETFs, which seems like it's had a pretty big impact on price and sort of on the broad perception of the company, from people outside the community and Wall Street. The, suit against the SEC, it involved Gary Gensler writing sort of the saltiest ever concurrence on the decision to grant the spot ETF.
It you know, there's no in kind creation and redemption. They're a slow rolled options. You know, the SEC in in general, you know, and then aside from the ETF, SAB 121 prohibited banks from holding Bitcoin as collateral. Totally sort of anti Bitcoin policy. If you look at the IRS, we just had sort of a midnight surprise from the Biden, IRS where they're saying that anyone who creates software that facilitates people's trading, including in Bitcoin, could be seen as a broker. And if they're in a position to KYC, they have to KYC to be able to report trades to the government even if you're just a front end, for example, for for a Taproot swap on the back end or potentially an e cash mint or, you know, any kind of noncustodial tool.
If you look at the DOJ and Treasury, you know, the DOJ launched these actions against Tornado Cash and Samurai directly going after developers of noncustodial tools. The Treasury has not come out with guidance that's helpful there. The treasury you threw it its OFAC, office sanctioned the smart contracts for Turtaino Cash, which are just code that's running on the Internet. We were really sort of in a defensive posture when when they had the, infrastructure bill. They tried to sneak in redefinitions of brokers that would include almost everyone in in the Bitcoin industry. And so going from that to having a president that, you know, bought burgers over the lightning network at Pub Key, that's, you know, appointing not just pro Bitcoin people in terms of their stance, but people that, you know, in many cases, understand and hold Bitcoin into really key roles across the administration up to the cabinet level.
That's really night and day. And, I think a lot of the change in the executive branch is something that's just going to happen naturally, because of the personnel shift. A lot of the key personnel, who oversaw Bitcoin related issues in the Biden administration were handpicked by Elizabeth Warren who, you know, really wants Bitcoin to die. That's that's one of her sort of key missions. And she's gonna be replaced by people who, got to where they got in part by being supportive. And, you know, I think both through executive orders coming through the White House and just through different decision making at these different executive agencies, we're gonna see, like, a huge, you know, if not overnight, pretty rapid difference in the way the government approaches Bitcoin from the executive branch. In the congress, you know, it's a little bit more of a mixed bag there. You know, we're pushing really hard to help people understand, senator Lummis' Bitcoin Act bill, which would create a strategic Bitcoin reserve and and buy a 1000000 coins.
You know, we're gonna definitely, help draft language where appropriate for other legislation that we think are really important for Bitcoin related priorities, whether those are accounting, whether those are protections for developers, whether that's fair treatment for minors. You know, there's lots of opportunity there, but we are more competing with legislative priorities in congress from other interests in the in the crypto space. So for example, you know, the SBR bill is one of the potential, sort of marquee crypto related bills that could go through congress, but there's also a stable coin legislation that I think TradFi is really interested in, so they can enter the space and get the legislative clarity they need to create JPMorgan coin or BlackRock coin or whatever they're trying to do to compete with Tether. And then, you know, the market structure bill, which is really important to the crypto exchanges, really important to the crypto VCs to sort out which token launches constitute securities offerings, which don't, and create a safe harbor for people who, you know, wanna do VC token launches. And there's a lot of money and interest behind all of these. So congress, I think, is, poised to be friendlier to Bitcoin than they have in a while, but the question is, like, where do we rank in their priorities? And then the judicial branch, judges are more insulated at the federal level from politics. They have lifetime appointments, and that's where I think there's still, the most work left to do. I'm sure we'll talk more about the peer to peer rights fund, which is a nonprofit litigation fund meant specifically to get involved, with the federal courts where, you know, the rights of developers and and individuals to to transact on a peer to peer basis are in jeopardy. But I think that's where the election is gonna have the least impact, going forward. And then it's worth mentioning also, sort of traditional finance, looks at Bitcoin so differently, I think, right now than they did a year ago. I think the career risk around being involved in Bitcoin, around investing in Bitcoin, holding Bitcoin, recommending Bitcoin, is just in such a different place. It seems so much more legitimately than it was even 1 year ago, and a lot of that is just about the number go upside. But I think there are some positive externalities for Bitcoin as freedom money, and Bitcoin the network. I think it could bring people into the developer space. I think it could, you know, open people's minds to self custody as opposed to just holding ETFs and, you know, that shift in the Overton window coming from the private sector is a is a real ingredient both in its own in terms of, how people writ large think about Bitcoin in the United States abroad, but also it could have a ricochet effect on how how the government thinks about and deals with Bitcoin.
[00:12:31] ODELL:
Awesome. Huge shout out to the live chat. I apologize about the echo. I think I solved it. So thank you for bringing that to my attention to our attention. And huge shout out to Mab 21 who zapped 10,000 sets. To those watching on YouTube or Twitch, the Noster live chat can be found at zap.stream/odell. So, Zach, I mean, there's a lot there. So I'm trying to think where I wanna go first with this. Do you think there's a concern? Is there is there a real concern? I've heard a lot of people voice this. Is there a real concern about this idea that Bitcoin most Bitcoin will be used in, like, an ETF type of situation or a custodial type of situation, a custodial regulated type of situation while self custody will continue to be pushed down on? Like, is how do you think about, people's ability to freely use Bitcoin in a self custody, freedom oriented fashion going forward?
[00:13:41] Zack Shapiro:
Yeah. I would separate those two things out. I think it is true that we are likely to see more Bitcoin as a proportion of the network end up in custodial products. I think that is a function of people starting to understand Bitcoin the asset and wanting to hold it in what they see as less risky ways. You know, these are people who are not necessarily gonna understand how to self custody, feel okay self custodying. And, you know, the truth is I don't know how much there is we can do about people making that decision, and I expect that secular trend to continue to some extent. I don't think it necessarily, at least the way it's happening now, comes at the cost of using Bitcoin, the network, and and Bitcoin as, freedom money.
I think, you know, there are a couple of ways you could take this. 1 is, alright. As Bitcoin becomes more integrated into Wall Street and then especially if we get something like a strategic Bitcoin reserve and Bitcoin becomes an important asset to governments like the United States government, how does that impact freedom money? And there's definitely some narratives out there that that could be an attack on Bitcoin, that this is really not in our interest, to support this decision making. I totally totally disagree with that. You know, we sort of started this chat about how different things are, from a year ago. I think in in most of those ways, things are are moving in a positive direction, for people who hold Bitcoin in the United States and people who are building Bitcoin businesses and developing Bitcoin tools. I think the risk goes down as incentives, are aligned.
And I I think that it's not just true in the in the positive sense that if the United States government sees Bitcoin as an important asset, they're more likely to protect Bitcoiners and people building on Bitcoin. I think the converse is also true that if the United States government doesn't embrace Bitcoin, the game theory is that our adversaries will. I think ever since 2022, with the beginning of the Russia Ukraine war, We've seen countries react to the United States freezing Russia's treasuries reserves, by buying gold and selling treasuries. And I think sort of the the the game is up that, you know, US treasuries are a neutral, reserve asset. Right? That, you know, are are sort of like a commodity. No. They're they're printed and controlled by a country that has its own monetary policy and has its own, you know, sanctions policy.
And gold does not work that way. Bitcoin is just better than gold if you're trying to hold a neutral reserve asset. There are some countries we've seen come out and and say that. I've heard, I think many of the same rumors that you probably have that there are other perhaps bigger countries that are accumulating Bitcoin, mining Bitcoin that aren't talking about it publicly. And if it's not the case now, I I'm quite confident it will be the case that the countries that are stacking Bitcoin will include our adversaries. And if those countries were to come out, if Russia or China or Iran were to come out and say, hey. We're mining Bitcoin. We're holding Bitcoin, and the United States is not. I think the consequences in terms of the policy response from the United States for Bitcoiners and for Bitcoin developers is likely to be very severe. And so, aside from aligning incentives and, you know, improving education for the United States government by creating a Bitcoin reserve, especially Bitcoin reserve in self custody in the United States, The, you know, the just the ability to avoid, this sort of geopolitical time bomb of our adversaries coming out as pro Bitcoin or holding Bitcoin and then, you know, having a negative perhaps bipartisan reaction is really important. And so these things are rowing in the same direction and and and not sort of at odds with one another.
[00:17:17] ODELL:
Awesome. I mean, so first of all, before we continue, I probably should disclose that I'm one of the founding board members of Bitcoin Policy Institute. There's 3 of us. I do not get paid for that role, and it's more of a support role, really. David Zell and Grant McCarthy are incredibly impressive individuals, and they run the operation. So where I wanna go here is so on that note, you did mention, the tornado cache and samurai cases. I'm kind of curious on your opinion here of where those stand or how you think about them going forward.
[00:17:57] Zack Shapiro:
Yeah. So, given that you mentioned BPI, let me give you a little bit of background about how sort of we think about policy issues. So BPI is not a lobbying organization. It's it's a think tank. We definitely have policy preferences, and there may be times in the future where we get more directly involved in lobbying. But our goal is to really think deeply about what should good policy around Bitcoin be in in the broadest sense possible and then to educate relevant policymakers, about what good policy should look like and and, you know, draft bills, draft executive orders, and get involved, where we can to help affect that policy. Our only client, our only real constituent is the Bitcoin network. Now there are many different types of people that are part of the Bitcoin network. It, you know, it could be individual Bitcoin holders. It could be node runners. It could be miners. It could be developers. And and so we are sort of looking out, you know, and and there are other important roles. Right? Developers obviously do their own thing that's incredibly important, but we think policy has a role here. And so, you know, we wanna do what is in the best interest of Bitcoin vis a vis, especially US federal policy.
The peer to peer rights fund started, this year in April in reaction to 2 things, that happened in the span, I think, of of 1 week, that were just incredibly concerning to me. The first was the prosecution against Samurai Wallet that included charging the developers of Samurai Wallet with being unlicensed money transmitters, essentially for writing and supporting code that allowed people to spend their own Bitcoin in a private way, when, you know, in in my view as a legal matter, they were not transmitting anyone's money. People were using samurai wallet to transmit their own money, and this was something the government was either, you know, negligently or or intentionally conflating, in order to prosecute these individuals. And then that same week, we got a reply brief in an earlier action, similar action that had been brought against the developers of Tornado Cash, which is a privacy tool on the Ethereum network, that really laid out for the first time in full the way the government thinks about or the the DOJ specifically thinks about what money transmission is in the context of noncustodial tools. And it has, you know, had language in this brief that some of your listeners might remember from the time, saying that, listen, in the way that a frying pan transmits heat or USB cable transmits data, a noncustodial tool can transmit funds, and that doesn't require actual custody or control of those funds.
And right away, if you just think through what that means, you get to a really crazy and and dark place. There's no limiting principle if you're talking about frying pans transmitting heat. If all it takes is to you you take some action that facilitates people's movement of their own money on a peer to peer basis, and now you're a money transmitter, well, you know, everyone in the Bitcoin ecosystem is a money transmitter. Right? Miners append transactions to blockchain. They're money transmitters. Should miners have to KYC transactions? Is that even possible?
Are we gonna have to change the code for mining, or is mining gonna be banned in the United States? If you run a node, or let's say you don't run a node. Let's say, you know, you use Ledger Live software. You're new to self custody and you're using Ledger Wallet and you're using Ledger Live and you're using their node. They are facilitating the broadcast of your transaction that you signed with your keys, to the network. Does that mean that running a node on on behalf of others is money transmission and the only people who are gonna be able to directly interact with Bitcoin are people who can spin up their own node. That seems like a real problem. And you can take this to, like, you know, really crazy places even outside of Bitcoin. Right? You know, if someone hands someone, someone else cash in an envelope, is the, you know, timber company that cut down the tree that made the paper for the envelope that holds the cash, a money transmitter has to KYC anyone who makes an envelope out of their wood. Like, you really need to have some living principle here.
And so aside from, various unjust features you can point to in both the Tornado Cash and Samura wallet prosecutions, the reason why we started the peer to peer rights fund, is about the precedent that these cases set if they come out the wrong way. And so the the broad mission of the peer to peer rights fund is to get involved specifically in court actions, right, in in court cases where the government or the prosecution or whoever is making a sort of category error, between what is a regulated financial institution and what is just code that allows people to operate on a peer to peer basis. And, you know, one of the things that made Bitcoin succeed where the other protocols didn't is that Bitcoin really truly operates on a peer to peer basis. Right? The idea of proof of work, allows people to interact with each other in a trustless way without a trusted intermediary. And, like, that just is a new concept for the law. And so there are some cases where, people are sort of maliciously, making this conflation to kill Bitcoin. I I think that the easiest example of that is Elizabeth Warren's dam law bill, which redefines explicitly everyone in the Bitcoin space, including node runners and miners as money transmitters in a way that she knows they can't comply with. There is what I think is sort of like bumbling conflation or, you know, motivated not looking into it, like the prosecutors in the samurai wallet and, tornado cash cases where they're not so concerned about the collateral damage of the precedent they're setting, but they really do see money laundering using crypto as a problem. And so they're gonna use whatever legal theory they think is best. And then there's the judges who are overseeing these cases and are gonna have to make these rulings who I don't necessarily think have malicious intent at all.
But the idea of what it means to do a peer to peer transaction, how that's different than, for example, using Venmo is a really foreign concept. And so main VPI, the mission is to educate policymakers about what good Bitcoin policy is and help them make good decisions. Peer to peer rights fund is just extending this to the judicial branch, which is increasingly where this battle is gonna be fought. And it's where you can get bad policy overnight without any democratic input. If a federal judge decides something the wrong way, that can become law, and and there's not much you can do about it. And so we need to educate judges. And so the peer to peer rights fund, part of what we do is we help fund cases like the the samurai defense.
We've raised about $1,000,000 for that to make sure that they have, the resources they need, to fight this case and not fold and set that precedent. We're gonna be involved in cases by writing amicus briefs to help directly educate judges on how this stuff all works and what and what the law is. And then we're gonna branch out especially in 2025 2025 into providing free or or low cost regulatory advice, to people who are building, especially, open source, noncustodial tools in Bitcoin to help them navigate what is a pretty confusing, regulatory environment.
Right now, I know you asked specifically about these cases. Unfortunately, not much has changed in terms of the cases. We've gotten one actual substantive federal court ruling that was in the tornado cash case, and that was horrible. It went about as badly as you can imagine. The judge explicitly saying that the Bank Secrecy Act does not require control or custody to apply, that the smart contract system in Tornado Cash, was money transmission, at least as the government alleges the facts, that this will have to be decided at trial and that there aren't first amendment protections, for running the smart contracts, like the Tornado Cash smart contracts. There was a subset subsequent good ruling about the OFAC sanctions against Tornado Cash, which is great and welcome news, but does not really help, with the money transmitter issue isn't as relevant in that case.
And then, we haven't had any substantive rulings yet in, the samurai wallet case, but the, you know, we've not had great signs so far. The I think the Tornado Cash decision is gonna make this difficult, and, the defense counsel in samurai wallet tried to separate out their arguments to first deal with this money transmission issue before they get to the extraordinary amount of discovery they need to get through before trial and the judge refused to do those things separately. The judge said we're gonna handle this all at once which, frankly is not like an amazing sign, about how, sympathetic the judge is to this issue.
I would say looking at the election, the one bright spot for these cases in particular, I guess there are 2. One is depending on who ends up at FinCEN, which is the part of treasury that deals with illicit finance. So this is someone who's gonna be a Trump appointee and work under Scott Bissen. That person could put out guidance that clarifies how FinCEN, thinks about noncustodial tools. They did this twice in 2013 and 2019, and there have not been updates since 2019. And so it could be quite helpful in these cases if FinCEN comes out and gives useful guidance, which is definitely something that we are advocating for at BPI. The other thing that will change that could be helpful is the head federal prosecutor in New York, in the US attorney's office here called the Southern District of New York, which is bringing both the Tornado Cash and Samurai cases, is, being swapped out for someone who, you know, is an advisor at a crypto VC fund and certainly understands at least what the words noncustodial means. And so, you know, it probably doesn't mean that they'll drop those cases, but it might mean that they're more careful about what precedent they set for the whole industry.
[00:27:18] ODELL:
Okay. Great. I mean, thanks for the very deep breakdown there. I mean, it seems like all things considered, it's a much more positive outlook than, even just a few months ago. I would like to I would like to move towards so the one of the things that, there's been a lot of excitement about is this idea of Trump doing things day 1 from with his executive privilege. I don't know how much insight you have there, how much how how involved you are on that side of things, but how are you thinking about that? Is there really is it realistic to expect anything significant in, let's say, the 1st week or the 1st two weeks of a Trump presidency here?
[00:28:08] Zack Shapiro:
Yeah. I mean, I think it depends what we're talking about. I think there is broad consensus, among everyone who's talked to Trump. There is going to be a lot of specifically day one executive orders. So, yes, Trump Trump will definitely try and take action as quickly as possible for, a lot of his priorities. Now Bitcoin specifically, that's a harder question, and I think no one other than Trump knows what he's gonna do on day 1 or, shortly thereafter. I mean, he's repeatedly promised to free Ross on on day 1. That is something that's absolutely within his power, and, you know, something that if the community feels strongly about, they should hold him to.
But, you know, that is something he said he would do, for what that's worth. There's been reporting, recently that, there are likely to be either day 1 or 1st week executive orders, related to SAB 121, which is the SEC rule that basically prevents banks from holding Bitcoin. And that there may well be an executive order on, debanking, you know, perhaps shaking things up at the FDIC and and trying to, you know, either investigate or remedy what happened with operation choke point 2.0, which has been a real hindrance for, Bitcoin startups. We also at at BPI, drafted, you know, and it's been made public at least in an early form, an executive order, for a strategic Bitcoin reserve.
And, you know, we we don't know if he's gonna sign that right away. We we're hoping he will. We think that that is a good sort of first step towards an SBR. Our executive order, is constrained by the sort of power that the president has as opposed to the the congress. And so we we really tried to think through what is the most you could do by executive order that would be helpful in terms of an SBR. And we we did three things. The first is sort of just the legal pronouncement of it of an SBR that Bitcoin is a strategic, asset for the United States.
We actually got some flack around the language, from Bitcoiners about, it's a it's a gold like store value asset. Really that is a, not meant to have any specific legal effect. Just because something is said by the government to be a store value asset doesn't mean it's not also a medium exchange or freedom money or anything like that. It's just signaling why there are a lot of people if they hear about strategic Bitcoin reserve, they're just gonna think that's crazy. It would be like Bitcoiners hearing we're gonna have a strategic, you know, Doge or XRP reserve. And, you know, it it just sounds like stupid and and corrupt and grifty, and explaining that, like, no. Bitcoin has fundamentals that in some way is is like gold, really just as meant to situate why you would do a strategic Bitcoin reserve in the first place. So it is it pronounces that. That's part 1.
Part 2 is to move Bitcoin that is currently in the custody of the United States government to the strategic Bitcoin reserve if the government has final legal title, to that Bitcoin. So there's been a lot in the news over the last week or so about what is gonna happen to the Bitcoin the United States government has now either from the Bitfinex hack or the Silk Road case. And it, you know, it may well be that by the time Trump takes takes office, they'll have sold all of that, which, you know, if I were Trump, I would I would see as a challenge and and one to be redressed. But, we got exactly the type of order that our executive order, references in the Silk Road case where a judge said, listen. This Bitcoin belongs to the US government. It doesn't you know, we don't know who individual x is or we're not gonna give it to individual x. X. And so if the government hasn't sold that Bitcoin, that Bitcoin would be eligible for inclusion in the SBR. And so part 2 of our executive order transfers that Bitcoin to the SBR, as sort of the seed. And I think there would be something poetic about, you know, if Trump on day 1 both freeze Ross and moves the c silk road Bitcoin into a strategic Bitcoin reserve. It's hard to imagine a more powerful sort of one two signal of, where Bitcoin is compared to where it has been in, you know, its relationship to the government.
And then 3rd, and this was the the legally tricky part, we we tried to think through, okay, what mechanism could Trump use by executive order without having to get buy in from congress in order to actually buy Bitcoin? And the best that we came up with is, the exchange stabilization fund, which is essentially a slush fund, for the treasury department that is meant to allow the secretary of the treasury, who's gonna be Scott Bissent, to buy assets, if he thinks it's in the interest of the long term stability of the dollar. And the laws that allow for the the exchange stabilization fund, the ESF, allow the secretary of the treasury. It it enumerates each of the things. It says you can buy gold, you can buy foreign exchange reserves or or instruments, and then you can buy instruments of credit or securities.
So gold is not gonna fly. We can't make the digital gold analogy because at the time this was passed, it was there was the Gold Reserve Act and gold meant something very different than, for example, silver. We thought about, okay, could Bitcoin be a foreign exchange instrument? The case law we found makes that a little bit difficult to argue because the sort of standard legal definitions of f FX, are instruments that are issued by foreign governments, not just adopted, as legal tender like it is in El Salvador. You could use an instrument a securities instrument to stack Bitcoin through the ETFs, but that feels, a little bit less neutral and you're picking winners and you're holding ETF shares. And that really feels divorced from sort of the ethos of Bitcoin as freedom money to have, you know, the United States buy BlackRock, shares that are custody at Coinbase.
But, it came up with this idea where, okay, instrument of credit is incredibly broad. So why couldn't the United States government buy an instrument of credit, essentially a bond, that's payable in kind in Bitcoin, that can be held in self custody by the United States? And so, you know, we have parts of the United States government in the executive order creating cryptographic standards to do geographically, separated, you know, multisig self custody and really sort of modeling, you know, what is the the best standards in terms of holding Bitcoin. And and, you know, that that's the way that the executive order, takes care of that.
And so we're very much hoping Trump will sign the the SBR executive order. We have several other executive orders drafted, including, stuff dealing with the, peer to peer rights fund, style issues. There are our top priorities and asks for the new administration are first and by far the most important to clarify that non custodial tools are not subject to the bank secrecy act. This is definitely something that between the DOJ and the Treasury, they can do. I don't think we need a new law. I think the Bank Secrecy Act is it's currently written. It says you need to accept and then transmit funds on behalf of the public to be a money transmitter. That's just not what self custody is, but it would be good for the government to clarify that. And then for custodial businesses where you are gonna custody funds, currently, it's a nightmare, to get licensed as a money transmitter. Right? Some of the best best Bitcoin exchanges like River are not available, in in New York City because of the BitLicense.
If you're gonna do any kind of, like, custodial lightning startup right now, my day job is I I work with a law firm. I run a law firm that works with Bitcoin startups, and, you know, we help deal with these issues for clients. If you're gonna be a money transmitter, you're sometimes spending well over $1,000,000 to get 50 state licenses. You have a huge compliance overhead and it just it sucks. And streamlining that process would would be really helpful for for custodial tools. And so I think this is a that's a little bit of a heavier lift than clarifying the Bank Secrecy Act doesn't apply to non custodial tools, but, like, there's a lot we can we can do there. So to be clear, there's there's an executive order drafted that clarifies that the Bank secrecy act does not
[00:35:56] ODELL:
cover self custody tools.
[00:35:58] Zack Shapiro:
Drafted drafted by us, not drafted by the Trump team, but yes.
[00:36:04] ODELL:
And so then it's just an open question on whether or not he actually signs it though. Yes. And then for and then same deal with all the executive orders in this case, but, the with the strategic Bitcoin reserve, if do do I recall correctly that specifically it calls for buying $21,000,000,000 worth of Bitcoin?
[00:36:26] Zack Shapiro:
At least 21,000,000,000 with the goal of being the largest government holder of of Bitcoin. I I don't know if the final version is going to include that specific number or not. 21 is obviously a number that's important in the Bitcoin community and and symbolic. The sort of ballpark we got here as we looked at the net position of the exchange stabilization fund, because they hold all sorts of FX instruments now, and the the language of the statute that creates the ESF says that you have to be beholden to whatever, obligations to the IMF you have. And so the available funds that the ESF could use to buy Bitcoin are, I think, around 39,000,000,000 and so that's we we went with the with the mimetic number.
[00:37:13] ODELL:
Do you think, in your opinion right? So not as, you know, head of policies at Bitcoin Policy Institute. In your opinion, do you think, Ross will be free day
[00:37:30] Zack Shapiro:
You cut out there a little bit. It sounds like you asked if I think Ross will be free day 1. Yes. I think so. I I mean, this is something that Trump has said more than once, said very plainly, and, you know, it it I don't know how much political capital it cost him to do it. I do think it will be confusing to a lot of people who are not, libertarian or or steeped in the, you know, early Bitcoin history, and so there will be some sort of education around why, he made that choice. And, you know, there may be some pushback, but, you know, I don't know that Trump would have said that so specifically and directly if he wasn't going to.
[00:38:13] ODELL:
Yeah. Out of all of this, that seems the most likely, expectation out of all the executive orders, all the things he can do in the 1st few weeks. Because those are, like, for my opinion I mean, he's first of all, he's not pardoning Ross. He's commuting his sentence, so it's basically time served. So as you said, it does doesn't really take much political capital. And, obviously, it's a, would just be a massive win, I think, for humanity for because Ross has served a significant amount of time, for a nonviolent crime, so it'd be great to have him free. I'm I'm quite looking forward to that, and I it would probably be the single most that that would just be a massive disappointment, and I'd feel fucking horrible for Ross, if after all this time that doesn't happen. So I expect to see that.
In terms of the strategic Bitcoin reserve thing, we've and you could just tell me, you're not gonna answer it. But percentage wise, what percent do you think, the chances of of him signing a strategic Bitcoin reserve in the first three weeks of his presidency?
[00:39:25] Zack Shapiro:
Yeah. I I don't think I'd wanna put a specific percentage on that other than to say, you know, this is something that I I think is being taken quite seriously and, you know, both in terms of the executive order and in terms of the Cynthia Lemus Bitcoin Act. And, you know, I think there are a lot of people, in the industry and a lot of people in the incoming administration, who want to see a strategic Bitcoin reserve and, you know, we're we're gonna do our our best. I think some of the challenge here is, especially on the legislative side as opposed to the executive order, Some of the challenge is what are the top crypto priorities, and, you know, we're a little bit competing for energy and space and political capital with stable coins and with legalizing VC token launches.
[00:40:15] ODELL:
Yeah. I mean, I really don't care about either of those issues. Do do you do you think I'm absolutely crazy if I think it's 90%?
[00:40:25] Zack Shapiro:
You know, I I feel like I'm almost too close to this to be able to, to to give a a good answer. But, look, you know, I think in congress, the the main issue, like I said, is is competing with other priorities. And and, look, the way it works with an incoming congress, especially with a new president, is that you have 6 months or a year to really get stuff done. And then you have to start thinking about everyone's reelection, and there's just sort of less focus on legislative priorities. And so, while this is gonna be the most pro Bitcoin congress ever, I think there's no dispute about that, and there's, you know, a lot of interest across the industry, from an SBR, not not just from sort of pure, Bitcoin only folks, but from the the crypto community. I think people are broadly supportive.
It's just gonna be a race to see what gets done with regard to digital assets and, you know, can we make, the strategic Bitcoin reserve a top priority? The sort of piece of good news there is that at least on the senate side, it looks like senator Lummis is going to chair the digital asset subcommittee. I think that is a pretty good bet, that we might get hearings on the SBR in the senate. And so, you know, hopeful that it happens even if, it doesn't. I think there's a really good opportunity to move the Overton window and really start talking about Bitcoin as a strategic, reserve asset.
And the EO front, that's really anyone's guess. You know, I don't, again, I don't wanna say an exact percentage, but, you know, if you look at how Scott Bessent has talked about his view on monetary policy and how we need to grow our way out of things, and how he sees the United States economy as sort of a geopolitical issue. I think the idea of an SBR aligns really well. It's public that he's met with senator Lummis, I think, specifically and and talked about the SBR. You know, for those who wanna sort of be wonky about this, encourage you to read the, BPI working paper, by Matt Pines specifically addressed, and sent to, Scott Pesent and his his team really, I think, forcefully making the case why at a geopolitical level this makes sense, for the United States. So optimistic.
I I think the sort of betting odds now are about a 3rd. You know, if if you really force me to, I'd probably say it's somewhere between that and and 90%. It's a big range. But
[00:42:53] ODELL:
Yeah. I mean, when you say the betting ons, like, Poly Market or whatnot is I think it has it around 30 like, mid thirties or something like that. Okay. We have about 15 minutes left here. I I kinda wanna move towards and and before we move, just real quick, when I'm thinking about these things, first of all, really, the only person who knows whether or not these executive orders happen is Trump. And he could change his mind literally 10 minutes before he's planning on signing them. He's he's he's shown that, that is the way he often operates.
But I am quite optimistic, and I think what a lot of people do not realize is us and the Bitcoin community are focused on, you know, maybe 5 to 10 executive orders, while Trump will likely sign over a 1000 executive orders in his 1st month of president presidency. So it's really a small number amid a much larger slew of of signed papers. But I wanna move towards, so from your from your position going going forward going forward over these next, 2 years, what is what is your biggest concerns, in terms of regulatory outlook, policy, and how that affects, Bitcoiners?
[00:44:17] Zack Shapiro:
Yeah. I think there are a couple of things. So my biggest downside concern, is still the courts. I think that's an x factor. I think that is less, relevant to this sort of, you know, friendly political moment for Bitcoin, and we could get really bad court rulings, that hurt Bitcoin, you know, both from the existing Tornado Cash and Samurai Wallet cases. There's a sort of recent thing that touches on the peer to peer issue around, brokerage rules and can certain noncustodial software providers be brokers. And a judge coming out the wrong way on this stuff is is always a threat and may or may not be something that either the congress or the administration, can or would spend the political capital to overturn. So definitely something to keep an eye on. That's sort of the shark that's that's still out to sea.
I think this is a, you know, real moment for Bitcoin to prove itself from a from a policy standpoint and and the community. We've been we're set up now better than I we ever have been. I think we need to take advantage of this. I think if we fail to, that that could be an issue. So, you know, everyone at BPI is working super hard. We're expanding a ton. I think it's public now. We're, opening up a physical office in DC, partnering with Pubkey for that, which should be pretty awesome. For those of you who are in DC, it's likely I guess I shouldn't say the exact location, but it's gonna be, if the the current plans end up playing out, it's gonna be an awesome location, and it's gonna be something that'll be well worth the trick to track down to DC, to visit this sort of Bitcoin embassy slash bar slash, media space. It's gonna be it's gonna be awesome.
But, you know, I really think that, like, we need to make absolutely the the most advantage of this time, that we can and really interface with every part of government, not just the Congress, not just the White House, but really all of the agencies to make sure they understand Bitcoin and they're not making, bad policy. And then I think there is, while I don't think that the government's embrace or adoption of Bitcoin is a threat to self custody Bitcoin or Bitcoin as freedom money, I do think the financialization of Bitcoin kind of is a threat in that regard, you know, with really easy options like the ETFs, you know, people who are selling Bitcoin to own MicroStrategy. I think there is people can lose the plot about what the Bitcoin network is here for.
And so, you know, while I I really I think that SBR is good policy and good policy specifically for Bitcoin is freedom money, and not a threat to self custody. I I do think we need to be relentless in encouraging self custody. And I think the people who are in the best position to drive that forward are the people who are building, specifically Bitcoin companies and making self custody easier, more convenient, and more attractive than holding Ibit shares. Right? So people who build, you know, really good hardware wallets, people who rebuild really good software wallets, people who are offering, liquidity against self custody Bitcoin, people who are offering insurance for self custody Bitcoin. These are all really important if we're gonna compete with, you know, holding Bitcoin in your Schwab account or your Robinhood account.
And so, I'm I'm hoping that both builders and and VCs will really step up and use some of this good regulatory cover we have to to build the tools that'll help, Bitcoin serve that that freedom money function.
[00:47:47] ODELL:
Awesome. And, I mean, going forward, there's peep there's a lot of people listening to the show right now probably thinking to themselves, how can they best support, the work at Bitcoin Policy Institute and the P2P rights fund? What is your answer to them?
[00:48:01] Zack Shapiro:
Yeah. So, both are are, 5 0 1 c 3, tax deductible nonprofit. So, you can donate money, for starters, either to BPI as a whole or the peer to peer rights fund as a whole. And and donating to the peer to peer rights fund as a whole allows us to build up a war chest to support, developers that are under threat. It allows us to provide, you know, regulatory resources to people who are building in the Bitcoin space and further this mission of building non custodial tools. Or you could, donate directly to the, samurai wallet defense fund, if if that's your specific issue.
Definitely just, you know, we're gonna try and sound the alarm, when either something good or bad is coming down the pike and and really do a good job organizing people, to call their representatives, if, you know, something comes up. So, you know, following us on on x, I'm sure we have various counts on on Noster, but keeping tabs and keeping informed is really important. And then later this year, we'll have the, the policy summit in DC, which will be a pretty awesome high signal event, if folks, wanna come to that. I don't know if we've announced the date yet, but, if you go to bitcoin policy summit.org, that's where, we'll have information.
[00:49:26] ODELL:
Awesome. Do does does the calling your local politician really does that make a difference? I mean, I think it's almost kinda become a meme at this point.
[00:49:37] Zack Shapiro:
No. I I think it really does make a difference. Not that your local politician is going to listen in-depth to what you say, But the way this works is lawmakers will have aids whose and it's calling specifically more than it's emailing. But if a bunch of people call about an issue, that is something that the lawmaker will hear from their staffers. And I think it's really as simple as, hey. You know, we're considering this bill. We got 900 calls saying support the bill. We got 40 calls saying the bill is a bad idea. And, you know, just in terms of allowing lawmakers to hear what the grass grassroots support, for stuff is, you know, that that's really important. The, you know, biggest example that the industry, has, you know, helped us on is with the the infrastructure bill. I forget if it was 2021 or 2022, but where they were trying to add these terrible noncustodial broker rules that arguably applied to Bitcoin miners.
People in the senate heard enough from constituents that that was bad, that that was one of the things that, like, pushed Ted Cruz to say, listen. None of you understand Bitcoin. Let's not make these rules that will will dramatically hurt it. So, yes, it's not the how beautiful your letter is drafted or how eloquent, you know, the call is that you have with them, but the fact of your writing or especially the fact of your calling does actually make a difference.
[00:51:01] ODELL:
Awesome. Yeah. I mean, I think it's easy to get disenfranchised, by politics. I know I have historically been, for quite a long time now, and I really do not trust any politicians. But one of the main advantages we have as a Bitcoin community is that we are a very strong grassroots based community, and we can definitely leverage that and focus that in the right way. Before we wrap here, I just wanna do a quick shout out to doctor Jeff Ross, who's up 10000 stats in the live chat. Thank you for supporting the show. Ciel Dispatch is completely funded by Bitcoin donations. We have no ads or sponsors.
And in podcasting 2 point o apps like fountain podcasts, you can also support the show. If you're not listening live, you can just download fountain in your favorite app store. The largest zap we got, for the last episode was ride or die freak, Ape Mithraandir, with 17,777 sets, and he's recommending that everyone go back and listen to dispatch episode 5 with Max Tannehill and Diverter. We talked about the dangers of KYC, and tying Bitcoiners to our transaction history. If you're a new listener in general, you should consider going back to the entire back catalog of sale dispatch. There's hours and hours of really great discussion that I think has aged quite well and is still quite helpful.
Before we wrap here, Zach, first of all, I wanna say I'm just incredibly proud of you. You've been absolutely crushing it. Thank you for for, you know, fighting the whole hard battles out there and just constantly you're just constantly grinding. So I I just wanna say thank you in a big way and, that I'm very grateful to to have you on team Bitcoin. And then with all that said, what are your final thoughts,
[00:53:08] Zack Shapiro:
for the freaks? Yeah. Thank you for that. My final thought is that look. We're fighting one part of this fight. I think it is an important part. I think it's, you know, what myself and the folks at Bitcoin Policy Institute are are well situated to fight, which is advocating for Bitcoin policy, with lawmakers and then when necessary in the courts. The truth is if Bitcoin plays out over the long term, like, it it seems like it inevitably will, this is sort of a rear guard action. There are many ways where, you know, like we talk about all the time, Bitcoin is, works well with American values. It's in the United States government's interest to have some, and to have good policy with regard to Bitcoin.
But there are aspects of Bitcoin that do take some power, away from the state. Right? Its monetary policy is not set, by the Federal Reserve. It's set by code. You don't need permission to move Bitcoin. You don't need permission to mine Bitcoin, etcetera. And so there is you know, as important as this fight is, and I think it's important and I encourage everyone to both support it. And if there are ways that we can help whatever you're building from policy perspective, please reach out so we can be your advocate. In some sense, what we're doing is a a rear guard action. Right? It's to buy time for the builders. Right? The most important people in the Bitcoin ecosystem who are the people who run Bitcoin, who who build stuff on Bitcoin, who make Bitcoin usable, to build the Cypherpunk tools that make Bitcoin useful permissionless money and make it into freedom money. And, you know, I also wanna so definitely shout out to all of the developers who are working especially on noncustodial tech. The best thing we can do in terms of having good Bitcoin policy is to have good tech that, you know, the government will have to build policy around because it just exists.
And, you know, that that is the most powerful thing, and that's sort of the the cypherpunk ethos of getting a good policy through just building, rather than asking permission. So that's super important. And then also, I wanna give a shout out to the the people at at HRF who are taking the tech that exists there now and using Bitcoin directly as freedom money to help people who who need it the most. So, you know, we wanna be your advocates in Washington DC. Definitely don't be a stranger. Reach out to us and, you know, we'd love your feedback. We love your donations, and and please stay tuned, when we need to to mobilize you all, to to protect Bitcoiners from from bad policy and to help create good policy.
But, you know, important not to lose sight of, you know, what what the Bitcoin network does and how important, the people are who are actually building, ways to leverage the Bitcoin network for good.
[00:55:47] ODELL:
Awesome. Wonderful conversation, Zach. Thank you for joining us. Freaks, I have, on Tuesday, I'm planning to have a wide ranging conversation with Jack Dorsey. I do not know the time yet, but if you follow me on nosterprimal.net/odel or you subscribe on YouTube, you'll be notified of the time ahead of time. Otherwise, you can listen to it in your favorite podcast app as always by searching dispatch. I'm gonna be trying to keep the momentum up here, with dispatch. Life has been quite busy lately, both on the professional and family side, which I'm quite grateful for.
But, it's it's really important to be able to connect with you guys directly and talk about these very important conversations. And with that, I love you all. Stay humble, Stack Sats.
