On "Carpe Consensus," hosts Ben Schiller and Danny Nelson are joined by Nik De to review some of the most influential figures of the year in crypto as part of Consensus Magazine's Most Influential 2023, including Messari CEO Ryan Selkis, Elizabeth Warren, Gary Gensler and more.

“Carpe Consensus” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl.

Audio Transcript: This transcript has not been edited and may contain errors.

BEN SCHILLER:

Hello, and welcome to the show. My name is Ben Schiller. I'm the Features Editor here at CoinDesk. This is "Carpe Consensus" and a podcast from the CoinDesk Podcast Network. And I'm joined today by the ineffable, the inestimable, the incredible Danny Nelson. Good day to you, sir.

DANNY NELSON:

I only know what one of those words means. I'll accept it. Thank you, Ben. I'm happy to be here.

BEN SCHILLER:

Okay, well I think they're all pretty good words, and they're all most appropriate. How are you? Are you surviving December and everything that's going on?

DANNY NELSON:

You know, I'm excited as ever for the end of the year and the break that I think we'll get, but it seems like we're back in bull market territory. As we record this bitcoin is, I think it's near $44,000.

BEN SCHILLER:

Surging away.

DANNY NELSON:

Surging, it's, why I think people are buying, I think they're buying Ben, because they just were so inspired by our coverage of the movers and shakers of this industry that they thought, wow, I really need to have a piece of this.

BEN SCHILLER:

That definitely is true. And I think you're referring to our Most Influential package, which debuted on Monday, Dec. 4. It's 50 profiles of, as you say, movers and shakers in our industry. And it's something we do every year around this time. And so identifying the people who, as we say, define the year in crypto, who spoke to the big themes of the year, and we're gonna get into some of the profiles that we published on Monday, including a couple that Danny did. And a couple that a couple of other writers did, who will bring on the show and some exciting package and a good way to review what has been a momentous year for crypto, full of ups and downs as normal. But it's been a different type of year, I think some of the other ones we've covered Danny. In the last few years, it was very kind of a tale of two halves, of a retrenchment after the scandals of last year. And then lately, as you say, the start of what we think is another bull run in bitcoin and other crypto assets. So let's get to that.

DANNY NELSON:

Here, we had a whole team effort to get these 50 profiles done, as Ben was saying, and I participated in that effort. I took one, a big one and one smaller one. The big one was about Brian Armstrong, who I defined as crypto's 'last big man standing.' And what I think I meant by that was, he's really the last remaining big exchange CEO that's been around for a while who isn't in prison or going to prison. And I think that's worth thinking about. Because Brian Armstrong has a lot of power, he has a bit of a bully pulpit, if we're being honest. Coinbase is in a top position for the U.S. market. And it's only poised to grow more powerful with products such as Base, which bring it into the DeFi space, as well as the bitcoin ETF, which everyone is going to be using, it seems, Coinbase to hold their bitcoin. So this company is taking a really important role. And I think it was worth looking at the person at the top of it, Brian Armstrong.

BEN SCHILLER:

Exactly. So Brian Armstrong is as you say, he's a survivor, the kind of big guns. So, CZ is gone at Binance. Kraken's Powell has also gone and also, obviously SBF at FTX, for slightly different reasons. But Brian is definitely a survivor. And you do sort of wonder how he's kept it all together all these years. I mean, he's been in that seat for 12 years, through all of the ups and downs of the markets and all of the, you know, the company going public and everything they've had to deal with on the regulatory front, including this year, a big SEC investigation lawsuit. It's a lot. And so for him to survive and still be there and still thrive. It's pretty incredible. And you mentioned Base. That's the layer 2 that Coinbase released this year, which has big implications for the future of exchanges. A lot of people think that exchanges will move to layer 2 for cost reasons and for other revenue generating reasons. It's pretty interesting. And they also had a big move into derivatives this year, setting up an international exchange, and also a lot of us business as well. And they seem very well placed, as you say in the piece, to meet the needs of the new crypto era, which will be much more Wall Street dominated I think.

DANNY NELSON:

I was going through the list. It seems like there are a lot of politicians and regulators.

BEN SCHILLER:

I think that's probably true, probably more than in previous years. And that speaks to the kind of year that we've had. Obviously, the narrative of the year was very much dominated by the SEC and the very aggressive enforcement actions made by the agency. And there was also a lot of talk in Congress of passing new laws. They didn't quite get there in the end, but that was very much the flavor of the month at that conversation. And the package really speaks to this regulation storyline and also a storyline of retrenchment in the industry where it's trying to kind of catch up from what happened last year and set itself up for better days ahead.

DANNY NELSON:

And one of those is Ryan Selkis, right? The former CEO of CoinDesk. Now running Messari.

BEN SCHILLER:

That's right. Ryan Selkis has become an important crypto advocate this year. And that's something that Marc Hochstein talks about in his feature story about Selkis. You know, he's a longtime crypto media entrepreneur, who's really taken on himself, sort of through anger and annoyance at the lack of friendly relations between regulators and the crypto industry. He's, you know, he's not a fan, to put it mildly, of Gary Gensler or much of the political class because he feels like they're dragging their feet and not really doing their job of making crypto safe for the U.S. So he's really taken himself to raise money to back candidates and to be a forceful advocate for change and action in the regulatory sphere.

DANNY NELSON:

And the way that Ryan carries himself, he's not really trying, in my opinion, to win over the doubters and the haters, right, he's a little bit too brash for that, and so he's only going to be effective if he can help bring new people in. One thing that I think is worth thinking about is what effect will it have when crypto money moves into politics in size? Last year, we saw a candidate in an Oregon district for the House. I don't remember the name of the candidate, but it doesn't really matter, because Sam Bankman Fried, and this is before it all blew up. But Sam Bankman Fried gave PACs supporting that candidate tens of millions of dollars, to such an extent that the other candidates for that office actually made crypto into an issue, saying 'Look at how these crypto millionaires and billionaires are trying to buy our election.' Is that a bad thing? So I think that as crypto grows in prominence, and we see people like Ryan turning toward that fundraising model, we're gonna have to think about, well, how is this going to be perceived if this is actually scaling up to a decisive amount.

BEN SCHILLER:

Yeah, that's exactly right. And that was definitely a theme of this year, of the actual politicization of crypto. In the past, crypto has been strangely bipartisan. And this year, it very much became partisan. And you could point to, for instance, Elizabeth Warren. So we're joined now by Nik De, he's a regulatory editor at CoinDesk. And, you know, an aficionado on all things regulation in crypto. So thank you for joining us, Nik. We were just talking about Elizabeth Warren and how she was part of the politicization of crypto this year. And you've seen that front and center in your daily reporting. How have you seen that process take hold in Congress this year?

NIK DE:

Yeah, it's been really interesting, right? Because Senator Warren from Massachusetts has been a pretty vocal critic of crypto and its advocates in the U.S. legislature. She's introduced bills. She's worked across the aisle, she's, you know, worked with Senator Roger Marshall of Kansas, on multiple legislative efforts to get bipartisan, you know, you know, bills to address what she sees are flaws in the crypto ecosystem. And the crypto industry has really kind of painted her as this enemy of progress, which she's leaning into. There was a headline in Politico a couple of months ago that said she was building an 'anti crypto army.' And a few months later, you saw that on her campaign ads, the precise headline, and it became a thing that the entire industry started freaking out about.

BEN SCHILLER:

Yeah, launching what she called an anti crypto army. And I think that's less to do with actually, with actual crypto policymaking and more to do with the reputation of crypto, which has become a kind of meme or a trope in political messaging. It's helpful for her politically to be against the crypto army, not because he's really necessarily against, you know, aspects of crypto, but she's against it in a more sort of people sense that, you know, there's there's votes to be won, casting your lot against, you know, the perception of crypto as this bro infested cesspool of financial speculation.

DANNY NELSON:

You can say a lot of things about crypto, Ben. And you can also say that it's a bro infested cesspool, and I think its nuances are important, but there are certainly aspects of crypto that fit that bill. Maybe not the whole thing, but some of it.

BEN SCHILLER:

Well, I mean, I guess it's always been true. But we haven't had politicians coming along to really make hay out of that. All right, let's just get to the main substance, Nik.

NIK DE:

You know, if you look at what she's actually focusing on it seems to me that there is a kernel of reality at the heart of her concerns, that there are a lot of projects that have been hacked, or collapsed in recent months. We've talked about some of those last time I was on this program, and the industry is kind of, I don't say to ignoring those concerns, but they're kind of emphasizing the other parts of what they disagree with, rather than kind of grappling with this detail that, yeah, at the heart of Senator Warren's actions are the fact that billions of dollars have been stolen from crypto projects from exchanges, etc over the last couple of years.

DANNY NELSON:

Yeah, and we're seeing some of the big names in crypto policy leaving. Patrick McHenry is the head of the House Financial Services Committee. He's the bowtie wearing guy from North Carolina, also a big crypto advocate. He's just announced he's leaving Congress at the end of his term.

BEN SCHILLER:

Any comment, Nik, on the loss of Patrick Henry from the Congressional scene? Will that impact crypto's agenda next year, do you think?

NIK DE:

Absolutely. I think the question is to what extent. So, Congressman McHenry said, he's going to stay in office until his term ends, which means he'll be here till January 2025. So he has another year left to try and pursue crypto legislation. But because it is an election year, that really functionally means he has a few months left to go do what he's trying to do before everyone leaves town and tries to get reelected. Everyone else, I guess. Obviously, he's trying to get a market structure bill addressing crypto and the stable coin bill, through Congress to the President's desk. Both those bills seem to have a pretty clear path out of the house right now. The bigger question has always been, will the Senate take them up? And that's still an open question. But again, if you know, he has a year, he's not running for reelection. Now, you know, McHenry might have some real momentum, especially as a retiring member who is, I think, widely respected in the halls of Congress. Certainly amongst the Republican Party after his stint as the Speaker Pro Tempore. It should, it may, give him a lot of heft to try to get this done. But we'll see if they care.

DANNY NELSON:

But is this, to him, worth that? Is he so passionate about the crypto issues that he's willing to expend that lame duck capital on this.

NIK DE:

So, this is a little bit of speculation, but the answer seems to be yes. If you go back to a week ago, there were reports that Congressman McHenry had threatened fentanyl legislation in the National Defense Authorization Act, the annual must-pass defense bill, if he couldn't get his crypto bills onto that. Now, fentanyl has been an issue that the Republican Party and his party has repeatedly made a huge issue over the past couple of months and over the past year. You know, fentanyl obviously, is a serious thing. But it seems to be used as a political talking point. And the fact that he was willing to upset his own party, and threatened bipartisan legislation from the Senate suggests that he is certainly willing to expend, as you say, his political capital on this one issue. I think the question again goes back to, is that enough? Is there enough political capital there to make this happen?

BEN SCHILLER:

Nik, you wrote a big profile of Gary Gensler, who's obviously the head of the SEC. And we debated whether to put him on the list this year, because he was also on the list last year, but we ended up, I think, agreeing that we couldn't really ignore him, that he played such a big role this year, that he really had to be on the list. So looking at Gary Gensler, I'm just wondering, what do you think takeaways are in that profile? And also, maybe more importantly, do you think he's gonna survive the next year? Do you think we'll be thinking about him next year for inclusion on the list, or do you think he'll be on to new things?

NIK DE:

I think he's certainly going to stick around through the end of his term as chair. Yeah, I guess the question here is, who's going to win the next election? And you know, where we're sitting in December 2023, I think it's probably way too early to tell. If a Republican wins the election in November 24, how long Gary Gensler sticks around as I think that that's an open question, fair question to ask. And it'll depend. If President Biden wins reelection in November 24, then I imagine we'll see Gary Gensler continue to enact this agenda he set up. But if we're looking back at 2023, I don't think there's any debate now about what exactly he views as regulatory clarity, and I don't think there's any real debate amongst crypto companies. The question now is there's this kind of fundamental disagreement over whether Gensler and the SEC writ large, whether that interpretation is correct, as far as how crypto and securities laws mix, or whether crypto companies are correct. It's something that we're watching the judiciary system address piecemeal. We don't have any binding precedent yet, but we've seen some progress, and we can totally talk about that later. It's now we've kind of gone from, what is regulatory clarity to again, this question of which interpretation is correct, which fits the legal system that we have, and what does that mean for companies going forward? So, obviously, the things to watch right now are the enforcement actions against Coinbase, and Kraken and Binance. We'll see how the courts address these other lawsuits that we're watching. But it does feel like we have kind of advanced from this place of, you know, no one knows where there's all this ambiguity to. Okay, now we know how they're looking at it. And what does that mean? So it does feel like we're making progress in some way.

BEN SCHILLER:

So that was Nik De. Thank you very much for joining us again, Nik. And we'll see you out there as the political season heats up next year. And we're looking forward to that. It's gonna be fun and games, as usual.

NIK DE:

Thanks for having me.

BEN SCHILLER:

All right, you have been listening to the best crypto podcast in the business. And that is because of Danny Nelson, who is sitting right here virtually with me. My name is Ben Schiller. I've got nothing to do with this being good or not good. But you can blame Danny. And our producer is Eleanor Pahl, who does an incredible job bringing this all together. And thank you to our contributors today. And please check out the podcasts on Spotify and Apple and all good platforms like that, and leave some comments and feedback.

DANNY NELSON:

And make sure you make sure you ask us some questions, too. I'd like to know. Do you really think that Brian Armstrong can survive? That's my question of the week. If you have any thoughts on that, read my piece first. Maybe don't. I don't care, although probably you probably should. Head over to Spotify Q&A. Tell me, do you think Brian Armstrong will survive this next cycle?