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JIM ARMSTRONG: What’s the point of crypto if it’s heavily regulated? Alternatively, how could you possibly trust an asset class that is not regulated? If the virtue of crypto is its decentralization, and the fact that it exists outside of mainstream finance, then, why would you want to wrap all of that in a coding of rules and regulations and policies? And then, how do you navigate the tension that inherently exists there?
Hey there. Welcome to the Covering Crypto Livestream. I’m Jim Armstrong with Fidelity. We’re prepared to have a candid and good discussion today about those questions—and a lot more. So I’d love it, Chris and Greg, if you could just both introduce yourselves briefly, talk a little bit about what you do here at Fidelity, and we’ll go from there. We’ll start with you, Greg.
GREG LOWMAN: Thanks, Jim. Yeah, my name is Greg Lowman. I sit in Washington, DC, with Fidelity’s Washington Government Relations Team, Federal Government Relations Team. We deal with a host of public policy issues that impact the firm and our clients, and not only the future of finance, but some of our traditional issues, like the 401(k) and IRA. But so much of our product set runs through Washington, including the future of what that looks like in finance around digital assets. So I’m looking forward to digging into that in more detail today.
JIM: Excellent. Sounds good. And Chris, how about you?
CHRIS KUIPER: Yeah, thanks, Jim. Thanks for having me on. Chris Kuiper, Vice President of Research at Fidelity Digital Assets®, which you’ve introduced us before, so some viewers may be familiar with us. But we are a separate entity, a subsidiary of the big Fidelity. And one of our core products is custody of digital assets. So, we actually provide the custody services for Fidelity Crypto® and a lot of other digital asset products at Fidelity. I actually sit on the research team. So, myself and the team, we provide research to our clients, thought leadership, analysis, a lot of education. So, education for viewers like you and our clients is what we do day to day.
JIM: Perfect. Glad to have you as well. Sidney Wilson joins us as well, also on the Fidelity Digital Assets® team. Today, you’re going to be helping us navigate the interactive elements of the livestream. It’s been a minute, Sidney. Great to have you back.
SIDNEY WILSON: Hey, Jim. I’m so happy to be back. Hi, everyone. If you’re new here, welcome. And if you’re returning to the show, we’re so happy you’re back. Our show is built all around viewer questions and live poll results. We’ll be talking through a bunch of questions folks asked while registering throughout the episode.
JIM: As a matter of fact, Sidney, we’re going to keep you super busy with this episode of the livestream. We’re going to start off with a live viewer poll. Do you think increased regulation and lawmaking help or hurt crypto?
And while you’re voting, just a quick note—we got a ton of excellent questions before this particular livestream with people asking about the basics of cryptocurrencies. What is crypto? How does it work? What’s the blockchain? They are all the exact, correct questions to be asking, especially if you are fairly new to this space. They are also questions that we have answered extensively in the past, so we’re not going to revisit all of the basics in today’s show, but we can suggest you check out Fidelity.com/LearnCrypto.
That’s where you’ll find all the older episodes of the livestream, as well as just an overwhelming amount of excellent resources—articles, and infographics, and videos, and animations, frequently asked questions—lots of stuff to get you up to speed, a glossary of terms as well, so you can start to figure out some of the jargon here. Fidelity.com/LearnCrypto can be a fantastic resource if you’re just starting out. We’d love to have you stay for the rest of this conversation, though. And with that, we’ll turn it back over to Sidney to see what people said about the poll. Was there a clear winner?
SIDNEY: Pretty split. So, we have C with a mix of both, with 45%. And we have A of helps with 38%.
JIM: OK, so not many people thinking that it hurts. Sounds good. All right, Sidney, we’ll check back in with you in a few minutes. But Chris and Greg, would love to bring you into the conversation now, as well as flash a couple of questions that came in from viewers. Because this question of regulations’ role in cryptocurrency is something we get asked about a lot. Sergio wants to know exactly that poll question—is it helping or hurting? Brian’s asking if they’re just straight-up inevitable.
Now, we did just see last month, the president’s discussion about policy—about crypto policy, specifically—further news out of Washington does have potential to move the markets and to potentially move opinions. Chris, we’ll start with you, I guess. How would you answer that poll question? What’s your sense of the role that regulations can, should, or might play in this space?
CHRIS: Yeah, I really don’t want to evade the question. And I’m not trying to do that with this answer, but it really all depends. It depends on the regulation itself. You can have good regulation. You can have bad regulation. And what I mean by good regulation would be an example of a regulation that provides clear rules—so clear rules of the road for investors, people who want to build companies, want to build on this technology.
And those rules have to have a strong foundation, or a link, to other rules that make our capital markets great in this country—enforcing property rights, for example; encouraging the formation of capital; the ability for entrepreneurs and users alike to take advantage of this new technology. If those rules do that, then it helps. If it fails at these things, then maybe it could be a net hurt, on the other hand.
JIM: Greg, how about you?
GREG: Yeah, just adding to what Chris said, I think it really does depend. And where I come at it from on the dependent stage is where the regulation emerges from. So, whether a regulation is good or bad, of course, impacts crypto, but also, if it emerges from a law. And this goes a layer deeper into how some of the legislative and regulatory process works in Washington.
But ultimately, for instance, on stablecoins—which was just an enacted law—the Congress gave the regulators, through explicit statute in the law, the ability to regulate and create frameworks for that stablecoin law, that framework that was passed by Congress. And so they’re carrying that out as we speak. And we’re actually waiting for regulations from the Office of the Comptroller of the Currency to come any day now on that front. That’s an example where the regulations, in many ways, have a clear understanding from the legislation of what they need to be and the general parameters around them.
They’re also really durable because they come from an enacted law and can’t easily be overturned from one administration to the next because underpinning them is that GENIUS Act, which is that dollar-backed stablecoin framework we got last year. Where regulations can still be good or bad, but can often be less durable, is when the regulators act without congressional intent. And I know we’ll get into the CLARITY Act, but what you’re seeing is a plan B around the potential absence of a CLARITY Act passing in the coming months or year, is the potential for regulators to fill that void, particularly at the SEC and CFTC.
And while that’s all good for the short term, a short-term dopamine plan B hit is, it can be overturned with a new administration or challenged by lawsuits that are easy to file when regulators act without congressional intent. And there’s a whole body, obviously, of Supreme Court precedent that was recently underpinning a lot of that momentum towards regulators doing less, unless Congress authorizes. So, that’s where I come down on, depending on which regulation.
JIM: I think we should get right to some specifics, then, since you brought up the CLARITY Act. And I can see questions already coming in, in the live chat about it—a question from John, for example. I got a question from Gerald we can flash on the screen, too, that came in during registration.
So, let’s set the stage. And Greg, we’ll start with you, just to make sure everybody’s on the same page here. What is the CLARITY Act? We remember, just a few days ago, a couple of weeks ago, the president went publicly out asking for a, quote unquote, “fair” version of the CLARITY Act. The administration senses that it can help position the US in terms of domestic crypto innovation. But foundationally, what’s it meant to accomplish from a policy perspective?
GREG: Yeah, from a policy perspective, I had mentioned the GENIUS Act, which is really the first federal framework passed by law on a bipartisan basis for stablecoins, which was really fantastic as a “first of its kind” in the US market. If we’re equating it to a baseball analogy, that was the single in the digital assets industry.
This is the home run that would really take care of the other regulatory and legal framework for the rest of the digital asset industry, particularly around bitcoin and ethereum, defining whether they’re commodities, investment contracts; who regulates what aspect of the digital asset market at the token level, and in through that bitcoin and ethereum space, amongst many others; splitting up jurisdictional issues with the SEC, the CFTC; providing clear guidelines for the future of finance around potential tokenization exemptions and other avenues of which the regulators will further flesh out the details, but ultimately, give credibility and legal underpinning to a lot of the blockchain decentralized finance technology that is currently waiting to back up the plumbing of some of the financial system—so ultimately, really creating that framework of who’s responsible for regulating this nascent industry compared to the traditional financial model.
JIM: Chris, anything you would add from your perspective?
CHRIS: No, I think that’s great. Greg’s the expert here, so I’ll defer to him on all of those specifics here. I would just say, in terms of competitiveness—this is something that comes up a lot when talking about these bills—we need this passed to stay competitive, compared to other countries. And I would say, as someone who’s been in this space over a decade—I’ve been at Fidelity for five years now—I have personally witnessed an era where there was a lot of developer mindshare, a lot of talent and people and brainpower and capital that all flew overseas at a time when things were not clear in the US, and even hostile, to some extent.
There was, quote, an “enforcement,” or “regulation by enforcement,” where you didn’t have the rules of the road, and then all of a sudden, a company might get hit with something, saying they violated something. They had no idea why or how to fix it. And so that was not a good time. And a lot of our capital and talent flew overseas to build the crypto markets there.
That has reversed. A lot of it has come back, which is a great thing. So I think that’s the only thing I would add there, is that when you’re talking about this stuff, that’s the other aspect to think about. Ideally, we want all of this back in the US to build on here. And that’s what, hopefully, these laws will incentivize people to do.
JIM: As you can probably both guess, get a lot of questions about whether or not the CLARITY Act is actually going to pass. It’s been in the headlines for a while. But you get questions like this one from Frank asking if it’s going to get passed. Deborah wants to know if it’s not, why not? Greg, it is probably someone in your role’s least favorite question to answer, but what do you think here, as we sit here the Tuesday after Labor Day 2026, midterms coming up fast? What do you see?
GREG: Washington experts always give you a lot of caveats. But I’ll also just mention on that last question, Jim, one of the other important elements of the CLARITY framework is this idea of preemption. Right now, this industry can be regulated at a state-by-state basis, which always creates a lot of challenges for large national financial services product rollouts and regulation. So the CLARITY Act would preempt and create a federal standard, which would create a lot less confusion in the marketplace. So I’ll just put that in there as one item I failed to mention.
Yeah, the CLARITY Act—here we are, several weeks out from the midterm elections. There is this well-announced—if you’re watching the Beltway digital asset headlines closely—September 15 Senate vote. It’s worth remembering how we got here. The CLARITY Act has passed the House of Representatives. It passed it last year on a bipartisan basis of 294 to 134.
Another example of Washington working together in this space, it’s worth remembering the GENIUS Act was also a bipartisan bill that was enacted into law. Despite all the partisan rancor, there are some glimmers of this. And we’re seeing it in digital assets, particularly policymakers understanding, now, the need for certainty in this space, with the amount of flows and attention paid to this industry, as well as the consumers who want it.
So we’re waiting for this September 15 vote. Getting into how the sausage is made, it has passed out of committee, the Senate Banking Committee. That was earlier this spring. But this is the big vote. Quite frankly, with the midterms looming, some political fights over some provisions within the CLARITY Act that have not been settled yet around ethics, in particular, with the White House, we’re probably facing a failed September 15 vote.
But what it will do is it will put members of Congress, senators on record as to whether they supported or did not support the CLARITY Act. And there’s potential political fallout and policy negotiations that will get jump-started from there. But I would say, you’re looking at a post-midterm CLARITY Act negotiation to continue. And where that goes, depending on the election results, is really uncertain at this stage.
JIM: So moving from the policy side to the product market side, Chris, a couple of registration questions that I think are closer to your wheelhouse, people asking for the impact. So, in a world where the CLARITY Act does come to pass, Alice wants to know what the impact could be. And Eudania has what I feel like is, essentially, the opposite question—what’s the world look like in the case in which the CLARITY Act does not pass?
CHRIS: Yeah, there’s a few ways you could take this question. So to Alice’s question, first—a broad overview comment here—if it does pass, it gives us rules of the road. It gives us more clarity—no pun intended there. But to Greg’s point, it’s going to just help the overall environment get comfortable with this. That’s incrementally better for everyone.
But I don’t think there’s a big bang that’s going to happen. There’s some people that you may have heard on TV or interviews or podcasts, or whatever, say things like, trillions of dollars are just waiting to flow into this space, and they’re just waiting for this to pass. I personally am not in that camp. I haven’t really seen it. I haven’t heard people actually talking that way.
And I’ve also just seen a lot of businesses—Fidelity included—where we already are building. We continue to keep building. And so whether or not this passes, I think you’re still going to see the market build and people work within the parameters that they have. Maybe we get some more regulation by the agencies instead. That could be helpful as well, but to Greg’s point, maybe not as durable.
And then in terms of more of the price action, which I think is what some people want with these questions, too, is, obviously, I don’t have a crystal ball. I will say, though, as an analyst, we’ve been watching this closely for months now. And one thing you can do is, you can read the tea leaves. You can see where things are moving. Nowadays, you can also, of course, watch the prediction markets.
And as we’ve seen the prediction markets and data show a lower and lower chance of the CLARITY Act passing, the prices of cryptocurrencies and digital assets haven’t moved lower with that. So, to me, as an analyst, that says, the market’s already pricing in that this is not going to pass. So if it goes ahead and doesn’t pass, as Greg alluded to, or looks like things are shaping up, I don’t see that as a big negative. I don’t think we would see a huge drop-off because of that, in terms of price or sentiment, because it’s what people are already expecting.
Now, of course, if it does pass, that would be a positive surprise to the upside. So you could see a short-term boost there. But overall, it’s not something that’s going to create a huge one-day event, in my opinion, which is, I think, what a lot of people are wondering or asking about.
JIM: Greg, would love to give you a chance to chime in as well.
GREG: Yeah, and I think I’m just going to go back to what Chris alluded to in an earlier question around the landscape that the crypto and digital asset community is currently working in, in which, yes, legislation, durable laws are a nice-to-have, but ultimately, the beat goes on in an environment which has been a 180 from the previous administration, that regulation by enforcement, that fear of walking into agencies, really, with your playbook to walk through how you may unroll, unveil a new product and work with regulators on what that could look like.
Now, regulators are saying, hey, how do we create runways for you? How do we create exemptive relief? I say all that, of course, with the caveat that that could change in two years. And so, yes, the CLARITY Act, much like the GENIUS Act, are what they ultimately want. But it’s not slowing digital asset firms, obviously, from coming back onshore, as Chris alluded to. And I won’t get into price momentum or any of the asset impact.
But I think from a credibility standard, how far CLARITY has gotten, frankly, in the Congress, in the wake of the GENIUS Act, is very impressive. And many people you would have asked two, three, four years ago would have laughed you out of the room. So that momentum, in and of itself, and the amount of staff, education, principal education, and time that has been driven by this act is going to benefit further negotiations and momentum to come. I really do think it will find some avenue with the investment that has already been put into it. But I think we’ll have to see the timing around it as the real uncertainty.
JIM: That actually works as a really great segue to this next couple of registration questions that came in, Greg, the first of which came from a registrant named Derek, who wants to know what pending legislation could impact crypto in the next 6 to 12 months or so. But I’d love if you could answer that maybe through the lens of this amplified education that’s happened among lawmakers on the Hill. I think you’re exactly right. I mean, five years ago, I don’t think they could have defined the blockchain. Now, they’re having more nuanced, sophisticated conversations about the blockchain’s impact on finance. So that’s interesting.
You got Barry’s question as well, more generally speaking, looking ahead—what economic conditions, positive or negative, might impact crypto? So Greg, I’ll turn it right back to you. But then, Chris, we’ll hit you as well, just for those macro factors that could move the markets coming up.
GREG: Yeah, obviously, the topic of the day is CLARITY. I would urge our audience not to lose sight of the GENIUS Act as being a really formidable case study in real time for where policymakers and the marketplace can get more comfortable with broader market structure and entrance into traditional finance, where there may be some competitive moats or concerns, or people not as educated on the Hill or what have you at the agency.
And so the GENIUS Act just gives us a perfect real-time case study of, hopefully, the marketplace and market participants working with that law as it’s enacted. And you’re already seeing announcements from industry and the development of blockchain technology and traditional financial firms and stablecoin consortiums, both in Europe and here. And I think that all adds to this mainstreaming of some of these elements of new finance and will only help to benefit CLARITY. So it’s like, GENIUS is the foundation, I believe, of further potential and increased odds of CLARITY happening, as that continues to be a great case study in real time of a law going through the legal and regulatory process.
JIM: And Chris, your perspective of the next 6 to 12 months?
CHRIS: Yeah, I’ll add on to that, to the 6 to 12 months. I agree with what Greg said. But also, just on the GENIUS Act, it just turned one year old. And as Greg said, we’re waiting for some actual rules to come out of that from the agencies, like the OCC. People forget this. It’s like the big votes in Congress get all the headlines. GENIUS Act passed, and then tons of stuff written about that up into and after. And now, of course, we’re all looking at CLARITY. And we’re all going to watch that vote, and it’s going to pass or not pass.
But people forget that once this actually passes, then it’s up to the agencies to actually create the rules. Even if what passes is hundreds of pages long, the rules themselves are multiples of that, more and more pages. So that’s where the details actually happen. That’s where the rubber meets the road. So we’re going to be watching that closely. But I just want to emphasize that to the viewers that you’re probably not going to hear a lot about it, unless you’re really deep in the weeds in the industry there.
So that’s something to watch, something that’s going to tell us a lot. Could change things, for better or worse. And then, also, I’ll just flag over the next 6 to 12 months, you could see more rules come from the agencies themselves. What is it? Two weeks ago, now, we saw the SEC propose some rules for exemptions to raise money via token issuance. Depending on what amount you’re raising, you may be exempt from some things. So we could see more of that come down the pike.
And then, on the second part—Barry’s question, looking out ahead 6 to 12 months, more of the macro factors—that’s really where myself and our team are focusing a lot of our time right now, because right now, there’s just a lot of stuff going on in the macro world. But we’ll save that for another episode. But the bond market is getting very interesting. You see interventions in the foreign currency markets, like the Japanese yen. We’ve got a lot of different views and opinions on what the Fed is doing with the new Fed chairman now 100 days in. So that’s, in my opinion, probably going to be a bigger driver over the next few months here, rather than some of this legislative news.
JIM: Let’s head back to see what our live viewers are thinking about the conversation so far. What is one of the biggest challenges facing crypto regulation today? I see votes are coming in. I see that the chat is really active. Sidney, how’s the poll looking?
SIDNEY: Yeah, the poll, we’re up to almost 70 votes, Jim. And looking here at it, right now, we’re A, the biggest challenge facing the regulation for crypto is protecting consumers from fraud and abuse.
JIM: Excellent. All right, Chris, and so I’d love your answer to that question, too. And I guess, intuitively, it makes sense that people watching the livestream right now would look to regulations for that level of protection, as people who might be about to make investments.
CHRIS: Yeah, I think what’s interesting here is this tension here. There’s one side you see that really want regulation. They want regulation to protect them. But of course, this has traditionally been a space that has had very little regulation. If you go back to its cypherpunk roots, the code is law. And it somewhat existed outside of other laws because you didn’t know the identity of people. And if you figured out an exploit or a hack, or you missent your bitcoin to somebody that you thought you were sending it to, there’s no way to recover that. There’s no way to go to a court or a police or anything like that. And that’s still true today.
So, number one, I would just say, yes, let’s look at laws that make sense for protecting consumers against fraud and abuse. But as you and I have talked about on this show ad nauseam, almost every single episode, do your research. Make sure you know what you’re doing. Be on alert. There is all kinds of, unfortunately, scams and schemes out there that will try to separate you from these digital assets because they are these true bearer instruments.
And the second thing—something we’ve talked about, too—is this inherent tension of you want these digital assets to succeed, and you have people who want them to succeed without regulation. And then regulation comes along. And so it’s like, well, which one is it? And I think there’s a catch-22 where people who, even if they don’t want some of the regulation, they have to at least admit that if this becomes successful enough, if this space becomes big enough, they should expect governments and regulators to start looking at it.
If it was a failed experiment, if nobody put any value on these things, the regulators wouldn’t be looking at it because there’d be nothing to regulate. There’d be no value there. So I think we just have to take a step back and at least admit, hey, we’ve gotten so far, and we’ve become so big that you are now having a single-issue law being passed already, the GENIUS Act last year. And now, we’ve got CLARITY Act this year. So the fact that we’re even talking about this shows how far we’ve come.
JIM: Greg, I’d love to have you weigh in as well, too. I see this comment that came in the chat. A viewer named John says, seems like the regulations detour from crypto’s original thesis—which is, I think, the point Chris was just making. If we could get Satoshi on the show, I don’t know that his, her, their answer to regulations would be a full-throated double thumbs-up. It’s probably not the picture that they had in their mind when they created Bitcoin.
CHRIS: Yeah, it’s so true. And I agree with what Chris was saying around, what do you want? Do you want a fulsome industry that, all of a sudden, becomes more accessible and brings costs down and more efficient and liquid and mainstream because traditional players, in some respects, are involved in it? And without those regulations and laws, you’re not going to have that momentum. And you’re going to remain a fringe industry that struggles, frankly, I think, from a customer and product perspective experience, would be quite challenging.
And then when you’re bringing and educating new customers along, well, who are they going to feel more comfortable with? I know from Fidelity’s perspective, we’ve, obviously, been very cautious around the regulations and legislation at play. We launched a stablecoin with FIDDSM after the GENIUS Act was enacted—a perfect example of how an institution that was at the forefront, that is at the forefront of digital assets, and leading that charge, frankly, within the industry, was still very cautious around the rules of the road and waited for that law to be enacted. And here we are now. We have a stablecoin. And what’s the next step? And on and on.
And so I think, yeah, that’s the natural tension. You were living in a rule-of-law world where some of these financial institutions have many other lines of businesses that they have to be cognizant of. This is just one of them. And they’re not going to change their identity and live on the fringes of regulatory and legal authority for that, while maintaining highly regulated businesses over here. And ultimately, I think, to the benefit of the customer, the competition between new entrants, traditional financial firms, and those in between really enhances the customer experience.
JIM: I like that idea of looking a little bit further ahead, Greg. So let’s continue that, and then I’ll ask you to imagine a world maybe three, four, or five years from now. What does that world look like to you if crypto regulations are working well, however you personally choose to define “well”? What is the digital assets landscape look in a more regulated space for investors?
GREG: Yeah, and I think I’ll take the pathway of, again, that GENIUS Act, which is what we know, as a fact, is enacted law. And it’s not going to be overturned anytime soon. It’s only going to become, I think, a more fulsome part of the financial services equation moving forward.
The CLARITY Act, with all the uncertainty around it, I still have confidence in it, but I want to work from a fact-based parameter of that GENIUS Act being before us and being that durable element that we know will be there in three to four years.
So I think that is ultimately the test case as to how that gets implemented and where we see financial services firms, both new and old, maybe rewiring the back-end plumbing of our system a bit. And how that shows up for the customer is going to be really fascinating to watch. Am I approaching my local coffee shop in two to three years with a fully enacted, legislated, and regulated GENIUS Act, with a FIDDSM wallet in my hand, paying for my coffee, as just one of the many financial services apps on my phone?
Am I able to provide remittances or pay my vendors with it? Are the frictions less? Am I able to transfer in real time versus a three-day wait? When’s it arriving internationally? And all the like. If those processes are smoothed out for the customer, I think we’ve seen, in three to four years, a really successful case study in the future of how the blockchain, stablecoins, and many other of these elements can impact our economy.
JIM: Yeah, from what you’re describing sounds pretty exciting. So let’s keep our eyes peeled for that. But Chris, from a broader crypto market perspective, I wonder what you think of what this space could look like, again, three and four years, if digital assets are, in fact, much more heavily regulated? Do you think that makes them potentially behave more like other traditional asset classes that people are familiar with today? Or does the distinct nature of cryptocurrency make it always stay in its own silo?
CHRIS: I think it’s both. I think you have a lot of the look and the feel of these looking and feeling like traditional assets. And that’s what we do at Fidelity. We want people at Fidelity Crypto® and other services we have to see their digital asset holdings alongside everything else. So from a user perspective, that looks and feels the same. It has some of the same legal structures around it. So that’s a good thing.
But I still think, in the back end, it’s fundamentally different. Bitcoin is fundamentally different than the stocks and the bonds and everything else in your portfolio. These other digital assets are fundamentally different. So I think that will continue. And I think regulation is going to have to grapple with that.
You’ve seen, over time, how regulation had to grapple with the changes in all kinds of technologies. When the internet came forward, you had regulation trying to grapple with that. When encryption came forward, that was very scary with a lot of regulatory handwringing. And then you realized a lot of people needed this and needed to be adopted, not trying to regulate it too much or prevent it.
And I think the same thing is going to be with all of these digital assets and this technology. It will be in the background. People might not know it’s there, but it is there. It’s doing the things that Greg was just saying, either making the friction less, lowering fees, getting rid of some of what will look like increasingly archaic things, like something that can only move on a bank day, not a holiday or a weekend. Or we just had a holiday. It’s like, you couldn’t move your money. That’s going to seem so silly in the future.
And the regulations are going to have to change with that. If there’s something in the law that says, you have to deliver this within three banking business days, that’s going to go away. That’s a silly example, but that’s the sort of things that you would expect to see in the future. And so that’s my hope, that everything’s going to still look and feel, but you’re going to get that benefit because it is fundamentally different in its foundation, like Bitcoin, or in its foundation in its structure of some of these blockchain networks and how they operate.
JIM: I also wanted to ask if, in your opinions, there’s anything that you think the average investor, the average person, is either overestimating or underestimating with regard to the impact of regulations, especially through the lens of the upcoming midterm elections. And Greg, I’ll start with you.
GREG: Sure. I think, to the untrained eye, it’s been pretty clear that this administration has shifted, on its axle, the point of view of the crypto industry. And you’ve seen that through the agencies and, obviously, channeling down from the White House. I think what we might be overestimating at this current political climate is that that’s holding and that they’re no less committed, but the influence that that can have, necessarily, on their party policymakers who are there in the fight and maybe some of the negative impact it can have on the opposing party is starting to come through, as it relates to this CLARITY Act situation. So as important as that is, there may be an overestimation as to the influence it can still hold.
I would say, on underestimating, I would not underestimate the competitive moats that still exist in traditional finance and where they may pop up and emerge in a very serious, legal way, as it relates to some of these advancements. Obviously, there’s the question on legislation. When a law is enacted, there’s very little industry can do to reverse that course. On regulations, it’s different. There’s a lot of legal challenges and blockers that can be put in place.
So absent CLARITY, if the SEC keeps moving and doing their version of CLARITY through regulations, I think you can expect to see some challenges to that and some speed bumps from other industry participants who do not like the direction of digital assets being the core, focal point of the administration.
CHRIS: Yeah, and I would say, from my perspective—I’ll zoom out a little more, take a bit more of a meta approach here. So I’m not disagreeing with anything that was said or what Greg said. I think regulations definitely can have an impact. So I want to be clear about that. And we want to make sure we have good regulations. That can really set us back if they’re bad.
But if you zoom out, and you start talking about years and decades, even—I started as an equity analyst. And most good fundamental equity analysts know of Porter’s Five Forces, where you analyze an industry or a company through the lens of these five forces, like the moats he was talking about, like bargaining power of your suppliers or buyers.
Interestingly enough, a lot of people don’t realize that governments and government regulation is not one of the five forces. And that’s because Porter theorized and showed, also, through data, that it’s somewhat temporal. It can change. It can shift. It can be modified as these industries move and develop. And I think that’s the same thing that’s going to happen with digital assets, especially if you believe that politics is downstream of culture.
If there’s a technology—which I think this technology warrants this level of ascending to—that people are going to want, that provides extreme value, that you cannot stop it. If those things are true, the regulation is going to eventually adopt around that. It’s going to adopt around what people want and need and desire. And the more regulation does that, the better. So I think people overestimate this. They get a little spun-up about this stuff. But again, we like to take the long-term view. Zoom out a little bit, and I think you’ll find that it will have a lot less impact on the entire industry than you think in the long term.
JIM: Thanks for that, Chris. And Greg, Sidney, thank you as well for your time and fielding all these questions. Really appreciate it. Thank you, also, to everyone participating in the livestream today, asking and upvoting and taking part in our polls. We really appreciate your engagement.
If you’re looking for more answers to your questions, we would definitely suggest you check out Fidelity’s Reddit. There’s a great community there of people asking questions very similar to yours. You can help ask and answer them as well. Don’t also forget that if your question wasn’t answered today, please know that it was absolutely captured by our team and will absolutely help us figure out the types of content that we cover on future livestreams. So tune in to future ones, like the one coming up later this month. And there’s a pretty good chance that your question will certainly have influenced the content, if not show up explicitly, in the conversation.
Thanks, again, for making time to be with us today. And we hope to see you again very soon.
