What They Don’t Want You to Know About The Clarity Act

One of the top US officials,

the US Treasury Secretary Scott Bessant

is in DC this week speaking to Congress

and it has been an absolute show

>> to know whether you will commit today

to pause

and heighten

and the scrutiny of any bank charter or

licensing application at the OC

connected to the world liberty financial

until all of these conflicts of interest

and floren influence reviews are

completed and shared with the United

States Congress. All you have to ask is

yes or no.

>> Uh no congressman the

>> all you have to ask the asking you to do

your responsibility as secretary of the

treasury and

>> stop covering all the president. DON'T

BE A WORK FOR THE AMERICAN

PEOPLE.

VENEZUELA. Work for the American people.

DON'T BE A COVER UP for a mob.

>> Serious question and a serious issue for

the financial services industry,

especially as a secretary of the

treasury. That's an important No, this

is my time. I haven't asked any more

questions. Ask

>> I haven't asked you any more questions.

>> The gentleman from Massachusetts.

>> I'm trying to get to my next question.

Could you speak a little louder? I can't

hear you.

>> Yeah. Okay. I I I might I might

>> 10 and 20 million immigrants took up the

housing housing stock of working

Americans and can you maintain some

level of addiction?

>> Gentleman's time is expired.

>> Uh does the Treasury Department or the

various components of the FMOC have the

authority to bail out Bitcoin?

>> Could you please elaborate what exactly

does bail out Bitcoin?

>> Okay. But the one thing that has been a

recurring theme throughout Scott

Besson's congressional testimony is

cryptocurrency and how the United States

plans to remain dominant in the

industry. Now, one of the most important

things is that the US does not fall

behind China and the development and

adoption of blockchain technology. China

has been working on is essentially

managed uh basically programmable money

by the federal government. Would love to

work with you on the future of money. I

really think it's going to shape the

future of Western civilization. I

>> I I couldn't agree more with with you,

Congressman. And it's moving fast and

the US has to keep the lead. And one of

the major things that's holding the US

back from being the crypto superpower of

the world is the passing of the market

infrastructure bill called the clarity

act and Scott Besson makes it clear that

the passing of the clarity act will be

necessary for the US to be able to

proceed. What is your opinion about the

importance of having clear rules of the

road market structure legislation in the

United States?

>> Uh, look, I I I think that it's

impossible to proceed without it. We

have to get this Clarity Act across the

finish line and any market participants

who don't market participants who don't

want it should move to El Salvador. Now,

on the surface, it seems that one of the

biggest holdups has been big banks and

their fear of this technology making

their business models less relevant.

>> Banks are fearful of a new technology.

That's not new. This is the same

discussion with money markets. Just as

Ian said, and with ATMs, don't forget

that ATMs were about deposit flight. But

I do think the banks have an o overblown

concern that crypto is going to destroy

them by one regulatory change that

enables uh people to get something back

for having uh money their dollars stored

as a stable coin.

>> But while everyone thinks the hold up on

the Clarity Act is all about these big

banks not wanting to have to compete,

I just found something that might offer

a more unsettling reason for why this is

actually happening. and that's national

security.

>> I I feel like I'm in crypto hell. Um

>> we got a lot of bi broad bipartisan

support. Um at least many of us, I think

all of my Republicans and many of my

Democratic friends agree we want these

products built in America. Crypto is

here to stay and we need clear rules of

the road. But there are a lot of issues

around national security that you have

unique perspectives on with Finland,

with the Secret Service. We sure as heck

don't want to take away from prosecutors

some of the tools they have to go

against bad guys. You know, we've got to

have some area to close down some of the

gaps in DeFi. And again, there's

bipartisan agreement on this, but if you

can just make clear that this is a real

problem,

>> Senator, I look forward to working with

you on that. Everyone believes that

America has rejected the concept of a

central bank digital currency, but it

really just seems like

there's one being built anyway, but it's

being built through stable coins.

According to Galaxy Digital, the most

recent version of the Senate Clarity Act

draft would expand the US Treasury's

authority to freeze crypto transactions

for up to 30 days without any judicial

review. And some people are looking at

this as the largest financial

surveillance increase since the Patriot

Act in 2001. What's important to

understand here is that the US Treasury

has a few major roles. One of them is

managing the government's money, right?

So the Treasury collects taxes through

the IRS. Uh it pays the government's

bills. It manages the national debt by

issuing Treasury bonds. And secondly,

the treasury is responsible for economic

policy and financial stability. So the

treasury advises the president on

economic and financial matters and helps

to shape fiscal policy which is

government spending and taxation. Third,

the treasury technically also issues

currency, right? It oversees the

production of the paper money and coins.

Fourth and this is the dinger.

They are responsible for enforcing

financial laws and there are a few

agencies within the treasury that do

this. One of them is called Fininsson or

the financial crimes enforcement network

and they are fighting things like money

laundering and other financial crimes.

But then you also have the OFAC or the

office of foreign assets control and

that agency or department is responsible

for administering economic sanctions. So

Fininsson is the intelligence hub for

financial crimes. They have incredible

databases and networks and monitoring

tools that they use to keep up with what

is happening in the financial system and

to see if there's any bad actors or any

uh terrorist financing or anything like

that that's going on. And the OFAC is

much more relevant in the terms of trade

and sanctions. They block countries,

companies, individuals, and in this

case, crypto addresses from being able

to use the US financial system. Now,

this provision that's in this new

version of the Clarity Act builds on

section 311 of the Bank Secrecy Act,

which is enforced by Fininsson. Section

311 already allows the Treasury to

designate foreign jurisdictions,

institutions, or transaction types as

primary money laundering concerns and

impose special measures. And that can

include a slew of different activities.

The way that this draft extends the

powers of the Treasury is by extending

that language to cryptospecific

special measures uh including the

ability to restrict or condition digital

asset transactions that are tied to

designated risks. In this bill, the

treasurer would be allowed to put a

temporary hold on transactions uh

delaying execution, conversion, or

withdrawal uh for up to 30 days without

any initial court order. The draft

explicitly requires digital asset

intermediaries to comply with OFAC rules

as well and their sanction programs. So

the goal here is to make sure that

there's a strong sanctions framework for

crypto, including ensuring that

centralized entities and even some DeFi

frontends implement riskbased protocols

to block or reject sanctioned

transactions. And some people are

complaining about this. They're like,

"Hey, that's not how DeFi works." and

others are pointing to the fact that the

whole point of not allowing a CBDC is to

prevent this kind of control over money.

And if the Treasury can just block

stable coin transactions whenever they

designate it necessary, then we might as

well have a central bank digital

currency anyway. And I'm personally not

going to be surprised if this kind of

language does make it into the final

version of this bill. I mean, is there

really going to be anyone to fight

against this kind of future? You've got

stable coin providers and exchanges that

are much more focused on whether or not

they're going to be able to offer yield

to their clients on these stable coins

rather than trying to fight against the

Treasury having more power. But we'll

see how it all goes down. None of this

is financial advice and I'm not a

financial adviser. Please do not take

financial advice from a random guy

walking around a park talking to a

stick. But

the unfortunate reality is that when it

comes to looking at these technologies

and trying to find a way to invest in

them as far as crypto and blockchain,

it usually makes a lot of sense to look

at whatever is going to actually be

compliant with this sort of a future,

right?

Privacy is something that can be

maintained, but the control over these

systems is something that's going to be

necessary. So, what kinds of protocols

and what kinds of technologies are

allowing for a more permissioned

nature of how this stuff is all going to

be used, right? A lot of people will

point to things like the XRP ledger.

Also, there's other considerations

outside of just a blockchain in

particular, but also uh data and how

that can be used within these

permissioned and or permissionless

systems such as Oracle solutions and we

constantly talk about chain link. We've

also talked about the Canton network and

how they're working with the depository

trust and clearing corporation.

And then there's things like and so on

and so forth. But the point being

is that the wild west days of crypto are

over. And when it comes to trying to

make investment decisions,

uh, we might be better off looking at

the things that are actually going to be

compliant with how rules and regulations

are going to come into place rather than

trying to skirt around them and build

outside of the current system. But

that's just how I'm looking at it. Maybe

I've completely lost the plot. What did

I miss? What did I get wrong? Or how

could I be looking at this differently?

Let me know in the comments down below.

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