Chapter 1: What is the main focus of the CLARITY Act?
Welcome to Crypto Talk Radio, the podcast for everyday investors like you. Visit us on the web at CryptoTalkRadio.net. And now, here's your host, Leister. Thank you for that, Bailey, and welcome everybody out there on Crypto Talk Radio, found at CryptoTalkRadio.net.
Late in the evening She's wondering what crypto to buy She opens her wallet Taps the connect on the side And then she'll ask me Is this one all right?
and i said no biatch that crypto will scare you tonight clarity such a simple term with such a diverse definition cryptotalk.fm my name is leister i am your host Interesting. I've not spoken to some of you since last year. Welcome. Welcome back. Hopefully you had a good holiday time off. Unfortunately, there are some the snowflakes. There's a lot of snowflakes still.
And this idiot in their vehicle that did like a triple U-turn. I don't know what they're doing. And they pulled into the commercial and then they did a zigzag eight shape coming out. And then they then they finally parked on the street. Nowhere close to where I think they're going, but I'm not really sure. Cause it doesn't look like they know what they're doing either.
Cause there's like a school down the road and there's some sort of parent, whatever going on and they're bringing their kids, but he's nowhere close to the school. And he did this weird eight shape thing in the middle of the road. This is a busy through fair. And I didn't know what he was doing. So,
It occurred to me that I had not, as somebody brought up, I had occurred to me, I had not spoken about the clarity act or the genius act. However, when I thought it through, there is a reason that I did not speak about clarity or genius. And it's simply because I felt like these are just trying to placate the industry. Well, do something.
You know, there's no real thought, heavy thought, I think, behind them. Now, when I say no real heavy thought, I don't suggest that nothing was done or that people didn't try. I'm saying that I feel that both missed the point. And I speculate, and just for some that don't seem to understand this, I have every right to speculate and share my opinion about what I think on something.
You as listener can listen to what my point is and my argument and form your own opinion, whether it agrees or not. I don't expect you to group think I share the opinion and put it out there irrespective of some people who don't want me to do that. So first let me summarize genius act. At a basic level, I'm not going to dig into genius.
I'm going to dig into clarity because genius has already been passed and signed by the president. These are two parts. Genius was designed to get some framework around stable coins. This is why you might have heard news articles talking about banks getting on board with issuing stable coins. And so it opened the doors for a connection, a legal connection between stable coins and fiat.
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Chapter 2: How does the CLARITY Act differ from the Genius Act?
of the U S dollar and its devaluation over time pegged to stable coins means that you are not getting away from the impacts of inflation that Fiat has wrought. Look it up, look it up. And this was purposely written. It was purposely written to avoid decoupling from inflation by way of stable assets. The banks as the impetus behind this,
banks are sitting on cash they're dependent on cash so in order for the government to be okay with them getting into crypto they still have to be beholden to cash i can envision and this is my opinion a world where when you're trying to do a transaction that is for cryptocurrency you are compelled to use a certain type of stable asset pegged to whatever fiat
such that you can not benefit directly from a non inflated value or price. And because of the transaction and the nature of it being connected to Fiat, it's no different than you doing a straight cash transaction with devalued assets. I know that sounds kind of complex, but follow. If the bank gets into cryptocurrency, and they tie it to Fiat.
It means that the price that they have to offer would have to run lock step with that inflated value or artificial value. So I'm suggesting, and it's only a suggestion that it would not be financially advantageous to transact through the banks because their pricing would have to be
lockstep with an inflated value not a market value market might be disrupted by the inflation present with the stable coins connected to the fiat this is all speculation but what i saw that they are purposely trying to connect stable coins to existing fiat purposely how can you then decouple from inflation you cannot you're connected to an inflated asset, which is the flaw of crypto.
If you're connected to an inflated asset, you are connected to inflated values and inflated pricing. And when you do it to the stable coin, which is the main transaction exchange point is through a stable coin. You're essentially tethering, no pun intended, your cryptocurrency to an inflated value. If my speculation is correct, and I can't say that it is,
The second category is called a investment contract. This is originated from what the sec described that cryptocurrency was that qualified it as a security. The idea that it is an investment contract. I am investing money with an expectation of a return of value. And anytime that you are issuing a cryptocurrency peg to value in this regard, that it constitutes an investment contract. So now,
They're defining in the future state an investment contract. They are accounting for cryptocurrencies. However, what they're saying now is this has to be something that is sold for the purposes of raising capital. So now you're talking specifically around like an ICO. or an ITO, something where you're generating a presale, you're generating for the purposes of getting money from people.
And so that initial transaction is an investment contract because the only reason somebody would buy in the presale is the expectation of a return on their investment. It goes further to state once that token has been purchased by a person, If the purchaser then turns around and resells it on the secondary market, that resell does not qualify as an investment contract.
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Chapter 3: What are the implications of categorizing digital assets?
What is custody? Custody is your keys. You hold the keys. This connects, in my opinion, to the IRS in one key way. We already have the requirement of reporting cryptocurrency behaviors to the IRS. Right now, it applies largely to the central exchanges. Let's take a world where in this case, they say all cryptocurrency assets, all of them.
that fit any of these categories to basically any and all of them have to be reported. Custody has to be reported that violates again, privacy. The whole point is why should you have to know how many assets I'm sitting on at any given time? Why do you care? They care because if you're connecting it ultimately to Fiat, they want to have oversight over the connection back to a Fiat world.
They want to have control over how much Fiat you can take from the system. That's how I interpret it. Whether that's true or not, that's how I interpret that in what I see. So, two points left. One, and this is my beef too.
When I describe the idea that everything that's blockchain essentially is a digital commodity and it starts that way, CFTC, and then goes to an ICO, becomes an investment contract, and then after it's done there, it goes back to be a commodity and it's traded on a secondary market. Sounds good, right? But
As written, that does not stop somebody who's at a basic level of intelligence saying, okay, I'm going to create the token. I'm not going to advertise it yet. I'm not going to advertise a presale per se. I'm going to create the token. I'm going to mint the tokens out. I'm going to tell the people that I'm going to launch said token on a certain date.
On the date that I launch it, I make the tokens available for sale. That's a secondary market transaction, but it's not because the owner is the one doing the sale. It's a one level first. It's not resold. If the owner issues the tokens in their own contract and then they go buy them and then they sell them, it's now become a secondary market transaction, which circumvents the SEC really easy.
And I agree with that risk because of the way it's worded. You're, you're making the assumption of ethical behaviors that has not been, it has not been evident in cryptocurrency, at least not to my knowledge. It has not been. The other one is an explicit ban on wash trading. If you don't know what wash trading is,
you'd be surprised to understand that the vast majority of, if not all exchanges are aware about wash trading activities and do nothing about it. An example of a wash trade. If you have somebody that you partner with and you say, I want you to buy and sell my token at a high velocity, you're doing it and then increase the price each time that you do a transaction. So,
You offer it for sale at $0.50. You buy it at $0.50. You offer it for sale at $0.60. You buy it at $0.60. You offer it at $0.70. You buy it at $0.70. Sometimes you mix in there. Sometimes you sell it a little bit lower so it doesn't come across obvious and you usually will control how much traffic you're pumping through it because you don't want it to raise flags.
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