STABLE Act: An Advisor’s View of the Controversy

Published on
December 23rd, 2020
81 minutes

STABLE Act: An Advisor’s View of the Controversy

The Interview - Crypto ·
Featuring Rohan Grey and Santiago Velez

Published on: December 23rd, 2020 • Duration: 81 minutes

Rohan Grey, president of Modern Money Network & doctoral fellow at Cornell Law, joins Santiago Velez, co-founder and R&D division lead for Block Digital, to discuss the controversial STABLE Act, the history of private and public monies, and the future of stable coins. Grey gives a detailed history lesson on money and its relationship to government. They talk through the key tenets of the STABLE Act and its implications for the crypto space over all and stable coins more specifically. Grey explains the differences between Central Bank Digital Currencies and E-Money and touches on the importance of privacy for financial transactions. Filmed on December 14, 2020. Key Learnings: The government and public monies are strongly connected, and Grey believes that there are major systemic risks presented by assets aiming to disrupt the government's oversight of the issuance of its money with history providing strong evidence of these risks. For those investing in the crypto space, the passing of the STABLE Act may negatively impact certain types of stable coin projects as some may fall under the umbrella of this bill. Higher regulatory burdens may force some crypto projects to shutdown while those who are capable of meeting the higher bar may flourish with regulatory backing.



  • IO
    Indi O.
    5 January 2021 @ 17:40
    Excellent interview. I'm so glad I watched this. It changed my mind on the STABLE Act. I still think the first draft I read is too ambiguous when it comes to what sorts of financial instruments it applies to. But this is a very clear case for why ultimately some version of that Act is needed. It doesn't intend to threaten cryptocurrency, like Bitcoin or most tokens. It just needs to be carefully written to make sure that it doesn't.
  • JK
    John K.
    3 January 2021 @ 06:07
    I meant to say blockchain and electronic voting earlier . Also this interview wad far more interesting than I thought it was gonna he. Great job guys! Rohan makes some really interesting points and changed my mind about the regulation
  • JK
    John K.
    2 January 2021 @ 20:32
    Your argument against algorithmic stable coins is the same one I make against blockchain and stable coins
  • SV
    Soeren V.
    1 January 2021 @ 23:03
    Great interview and among the most valuable ones on this platform! Finally there's some food for thought challenging the ever present moonshot-narrative around crypto and the religious believe in unstoppable innovation. Whether one agrees with what Rohan says or how likely the scenarios he's paintings are, is not as important as being able to look at this space from a not so popular perspective. Thanks to both of you for having this conversation!
  • VM
    Veliko M.
    30 December 2020 @ 03:09
    Almost wish the likes and dislikes came with a reasoning box. That guy made a lot of sense, why the downvotes?
  • jG
    james G.
    30 December 2020 @ 00:39
    at 44 mins ... real life stable coin example. I grew up in Scotland. Bank of Scotland would issue it's own very pretty pound sterling notes. They were fine in Scotland but the English would only give you 19 shillings for it..... They expressed a lack of faith in it's value ... --- such a common sense system ... 20 shillings in a pound, 21 in a guinea, 144 pennies in a pound, 40 sixpenny bits, 80 thrupenny bits, 576 farthings ---- what could possibly go wrong >>>>>
  • SV
    Santiago V. | Contributor
    23 December 2020 @ 17:12
    This is one of the most enjoyable interviews I've done from both an ideological and intellectual standpoint. It challenged some of the fundamental premises I held before the discussion and I continue to dwell on it with thoughtful consideration. Anyone in the crypto space should pay attention to the arguments presented and ponder how it could impact them from a risk / return perspective. Attacking the messenger is not productive, understanding the thought process is paramount. Thank you for watching!
    • DH
      Daniel H.
      23 December 2020 @ 17:15
      Great interview and glad to get the other side of the argument presented in such a coherent and well reasoned manner. I still fundamentally disagree with some of his premises and all of his conclusions, but glad to get the perspective.
    • TP
      Timothy P.
      23 December 2020 @ 17:27
      Going to need another 7 years for Ripple to "be on track". XRP -33.13% 0.315054 / BTC +0.83% 23540
    • GS
      Gustavo S.
      28 December 2020 @ 22:11
      Thanks Santiago (and Rohan) for the long and valuable conversation. You suggested to hear it twice and you were right: it's one of the most valuable videos in RV. It would be worth to complement it in the (near?) future going into those "rabbit holes" you've avoided: gold standard, USD as reserve currency, non-US <or international> approach, etc
  • SJ
    Salil J.
    28 December 2020 @ 16:39
    Every other interview is more or less what people want to hear. No this is one of the most valuable interviews. I personally learned a lot and left the conversation with new and interesting questions than before. Kudos for giving Rohan an opportunity to express his thought-process. Long-form content is the best! ps: Thanks Raoul for RV Crypto!
  • RM
    Russell M.
    28 December 2020 @ 16:22
    Grey has a firm and deep appreciation for the banking system and role of money. Very illuminating discussion:)
  • GG
    Getty G.
    28 December 2020 @ 04:58
    To distill the "enforcement" part of the discussion into a use case with Dai on Etherium Mainnet - is Rohan Grey saying that the Stable Act will criminalize Etherium node operation inside the United States? Since it's a DAO and the network is enabling the Dai token? Just trying to understand Rohan since he has a tendency to talk fast and use a lot of non-crypto legalese I don't exactly follow.
  • AP
    Alex P.
    27 December 2020 @ 18:39
    The last few statements by this man should have many shitting their pants right now. Regulation is coming like a freight train, slowly but powerfully. Hopefully for 2021 RV gets more people like Rohan and less Winkles, poetic used car salesmen or Asian cowboys.
  • GB
    Gary B.
    27 December 2020 @ 15:25
    As a long-time Real Vision subscriber, I appreciate all the enthusiasm around crypto. However, sometimes the enthusiasm seems more like a sales pitch than investment/market knowledge. This interview, in my humble opinion, harkens back to the origins of RV and is a superb review of the history of currency and some challenges for crypto going forward. It was a true education in the finest sense of the word. Well done gents!
  • AD
    Arun D.
    27 December 2020 @ 09:39
    Wow really great interview! Learned a tonne.
  • DW
    Dave W.
    26 December 2020 @ 15:24
    People are getting really worked up about it, but I think it's this simple: Do you think stablecoin issuers should hold an audited, 1:1 stablecoin to dollar reserve [not denominated in crypto or other assets]? If yes --> STABLE Act. If you think it's okay for them to never show a balance sheet, and potentially hold btc, crypto as collateral (a systemic risk that the tether folks even identify in their own white paper) --> no STABLE Act. You decide.
  • AA
    Aymman A.
    25 December 2020 @ 21:42
    Excellent discussion! Must watch.
  • TR
    Theodore R.
    25 December 2020 @ 01:52
    Now THIS is one of the top videos. Excellent. Thank you both.
  • GF
    Guy F.
    25 December 2020 @ 01:47
    One of the best videos posted here yet. Mind opener. THANK YOU.
  • MO
    Master O.
    24 December 2020 @ 05:13
    Fantastic discussion guys. I really enjoyed this conversation. Can Rohan recommend a few books to read about the history of money and the evolution of law towards money?
    • CD
      Christopher D.
      24 December 2020 @ 15:28
      I am not Rohan but I'll suggest just one book by John Kenneth Galbraith Money whence it came, where it went Excellent, as everything JKG wrote (take a look at The Great Crash 1929)
  • ML
    Max L.
    23 December 2020 @ 09:31
    A strange naiveté from Rohan in believing that governments today are going to support a fully anonymous, private, government-issued digital currency. He talks about bitcoiners being in denial but seems quite firmly settled in his own. Government-issued ecash is almost certainly an end to such anonymity and, as he notes, it will be in the name of anti-money laundering, anti-terrorism etc.
    • TP
      Timothy P.
      23 December 2020 @ 18:27
      A two-tiered system could emerge, but as govts will find out -- people will prefer the freest alternative. They can enforce payments in their GovCoin for certain things, but you better believe the cat is out of the bag when it comes to digital assets. Hell, even China has tried to ban Bitcoin three separate times that I know of, and their OTC markets are still thriving. If a totalitarian regime with pinpoint control over their citizens can't stop it, what hope does any other country have? Zero, that's what. So I welcome GovCoin and any other form it will take. Just will reinforce the principles of open and free transfer that Bitcoin represents. Hell, we even have our own satellite (soon to become two) that broadcasts the blockchain from space. I'd call that extra-sovereign.
    • AP
      A P.
      24 December 2020 @ 11:36
      Govt. needn't 'issue' ecash, they could simply establish / back an open source platform (namely, full visibility into code etc. a la cryptos) that plays on the the terms they set. Think, for instance, Amazon saying you can only pay in Litecoin from now on. Taxes ... that's Kelton's basic argument for the utility of a public money. It's possible. And if they don't get there ... we'll know.
  • RM
    Ryan M.
    23 December 2020 @ 19:10
    Well, this is my third comment now, so I suppose I'm playing devil's advocate here.. But in any case, I disagree with Rohan's assertion that no crypto projects give all participants a voice, but federal governments are somehow more benevolent by offering the right to vote... People with money in the United States (and elsewhere) have immense power over the government, and poor people do not. A vote is important, but it's not much compared to a boatload of cash to influence elected officials. In the decentralized world, the vast majority of token founders are out for themselves.. however, many of the popular cryptocurrencies and smart contract tokens center around decentralized finance.. so money talks. However, some distribute governance rights to individuals who simply use their platform.. Take Uniswap or YFI for example... or Proof of Stake cryptocurrencies that don't require a minimum amount to stake (e.g. Algorand).. or cryptocurrencies that are simply airdropped to community participants (e.g. Ontology).
    • AP
      A P.
      24 December 2020 @ 11:29
      "People with money in the United States (and elsewhere) have immense power over the government, and poor people do not." It appears you've made a case for fixing government (Citizens United) ... not for stablecoins.
  • TH
    T H.
    24 December 2020 @ 08:16
    I appreciate Rohan's willingness to engage, and I agree that good regulation can further or create public good. However, the inverse is equally true; bad regulation can further or create public bad. I see fundamental problems with his approach to this bill, and I hope he is willing to listen to and evolve with criticism. But this criticism is not an endorsement of USDTether or any other stablecoin, some of which may indeed be quite problematic in different ways. The problems with this approach to policy stem from the US Dollar, practically speaking, being much more than a legalistic "public money" of the domestic United States. The US Dollar is the global reserve currency, and is used to settle nearly 70% of global trade flows. Regulating the US Dollar (well) is a fundamentally different proposition, in all practical senses, from regulating any other currency, from the Japanese Yen to the Argentine Peso. Any approach that ignores this real world context is, simply put, not going to solve the problems it aims to solve, however technically or legalistically correct it may or may not be. A few Google Trend searches indicate that it is in fact the non-domestic offshore world that is broadly demanding these US Dollar-pegged stablecoins. A search for USDT shows that the US ranks 70th in interest by region. Unsurprisingly, countries that top the list include several where people may have very good reason not to trust their governments and/or their banking systems: Cuba, Hong Kong, Nigeria, Turkey, Philippines, Malaysia, Argentina. Argentina is an interesting case study, for example. Its 4-yr government bond currently trades at a yield of 56.5%. The market clearly believes in a story of uncontrolled inflation / currency devaluation / sovereign default. And yet, access to US dollars by the official system is officially restricted to $200 a month, so the people have overwhelmingly "voted" in a pragmatic sense to use DAI, a synthetic, algorithmic, US Dollar stablecoin. Using Rohan's framework, should Argentines submit to the sovereignty of their government and its monopoly of force, and watch their life savings be wiped out by 50% each year? Given this backdrop, I doubt they have much interest in legalistic theories of the supremacy of their sovereign over their "money". It's reductionist and overly-simplistic to assert a view of history that money is purely a construct of government. It assumes a degree of political legitimacy and competency which simply does not obtain in far too many real world cases, both in history and in in the present day. Anyway, this is all part of the story of the demand side. The supply side is an equally vexing story. Various metrics indicate that the shadow banking system may in fact be larger than the actual banking system. The Eurodollar market is also elusive, massive, and has grown far beyond its origins in Europe to touch much of the globe. Regulation of this entire global liquidity apparatus is very light and well out of sight (and comprehension) of Congress. The FED doesn't even have a good handle on all of this. US Treasuries are the primary collateral used in these systems, and they are re-hypothecated several times over (creating US Dollars) in ways and in instruments that very few people on the planet even understand. The point of all of this activity is to create US dollar liquidity to lubricate the entire global economy. I bring this all up to make two points. If we are concerned with protecting the world from systemic risks, stablecoins are practically irrelevant compared to these known problems that nobody is doing anything about, even though we know that they caused the GFC in 2008. And, stablecoins cannot be "fixed" without addressing these much bigger problems. The US can regulate stablecoin issuance onshore, but the obvious foreseeable conclusion is that offshore entities around the world with some tenuous connection the the Eurodollar system will simply come in and fill the existing demand. Stablecoins may properly, and practically, be considered an extension of the Eurodollar market to underserved areas. Problems cannot be solved out of context. Of course, it's not surprising to see a lawyer take such a highly legalistic approach. But creating good public policy is about much more than just understanding the letter of the law. Congress' record lately speaks for itself, and there are reasons why its approval rating has hovered around 20% for a more than a decade. One shouldn't simply assume that new policy will create more positive than negative effects. The empirical record lately would in fact indicate the opposite. Potential negative effects of this policy, such as: pushing innovation offshore, and allowing the megabanks in the US to monopolize this market like they have every other financial market, also should not be taken lightly in the overall calculus.
    • TH
      T H.
      24 December 2020 @ 08:51
      Also, it's ironic to hear "monopoly of force" theories of money that ignore gold and silver, and especially in relation to the dollar, which is in fact named after "Joachim's thalers", an ounce silver coin minted by a local Count but widely circulated and used throughout Central Europe. One could argue it's almost a linguistic self-contradiction.
    • AP
      A P.
      24 December 2020 @ 11:26
      You're overthinking this, mate. Argentines trying to get their money out of pesos can still hold BTC. "STABLE" Act is specific to stable coins. And, it's not clear where he's asserting that he's solving world hunger.
  • JT
    Jackson T.
    24 December 2020 @ 05:11
    Definitely learned a bunch, really thanks or the interview, didn't sign up for real vision, because already watching too many videos and podcast, and always believed in speculation one must not listen to others, and have ones own thesis. I really learned a lot from real vision crypto, maybe should give real vision a try. Good work.
  • RM
    Ryan M.
    23 December 2020 @ 18:04
    This was a very interesting conversation. And Rohan, I appreciate that you seem genuinely invested in avoiding a massive financial crisis. However, I'm curious how/why you think something like the stable act could actually be regulated..? I ask this question because, to my knowledge, regulators would have no ability to prevent the development or use of algorithmic stablecoins (or stablecoin wallets) that are developed by a distributed group of individuals (who are sometimes anonymous), and built on top of unstoppable/uncensorable trustless decentralized ledgers. We're at a point right now where a nerdy 9 year-old in his/her mom's basement can develop and deploy an algorithmic stablecoin on top of Ethereum or any other smart contract capable decentralized ledger... And you can't shut it down. If anyone has some insights into the current line of thinking here, please feel free to share.
    • JT
      Jackson T.
      24 December 2020 @ 05:06
      The problem is black swan event, dai is backed 200% ethereum, if eth goes down 50% margin calls and position liquidated, and eth has definitely went down more than 50% before, same risk with yfi vaults, algorithmic coins is just disaster waiting to happen.
  • AS
    Adam S.
    23 December 2020 @ 22:14
    Rohan. Bringing Marx to crypto.
  • KP
    Kaushal P.
    23 December 2020 @ 20:58
    I understand that it is important to make sure stablecoin issuers are above board and regulated properly (don’t need to have a huge philosophical argument to convince most people of this) but I don’t understand why the solution is a full bank charter as required by the Stable Act? Why not provide a limited charter i.e. Wyoming that makes sure there is oversight of stablecoin issuers having 1:1 USDs without needing a full fractional reserve bank charter?
  • CD
    Christopher D.
    23 December 2020 @ 19:17
    Excellently informative. Still, few comments: Regarding the seeming impossibility of an internet and private property away from the state. It is a bit far fetched to say that the internet can be upended by cutting 3 cables. As a matter of fact, some crypto maximalists use direct satellite to trade their Sats. Unless we want to kick them all out of orbit, the technological argument is similar to saying the state would ban the paper invention to prevent people issuing their own paper money. Not doable. Then with respect to an enforcer of last resort, a monopolistic violent actor such as the state is not needed with crypto. Smart contracts are essentially a-jurisdictional, it's not as if the software had different versions depending on the countries where contracting parties reside. And there's no electron police to undo what a systematic contract has done on the immutable ledger. The algorithmic logic is the universal way the contract works independently of human law or history, and it is up to the contracting parties to agree on it (and -ok- possibly agree on a third party arbiter in case of unforeseen trouble). At time 28:25, re nominalism. First, contract law accounts for fiat depreciation by allowing inflation linkage of owed amounts, so it is not true to say that 100 remains 100 in the eye of the law. The inflation repression is coded into it. Second, in the strange case of the EuroZone, it has not even been true that private entities defaulting on the public good would be replaced with the benevolent state. Look at small depositors in 2013 Cyprus. Granted, the state of Cyprus was no longer in control of its currency public good. Not only were Cypriots deprived of some or sometime all of their savings, but to add insult to injury, Jeroen Dijsselbloem congratulated the EZ on having created a template for depositors bail-in. Another insult was that Cypriot officials front-ran the tax before they voted it (as you would expect) for their fellow citizens to swallow. No wonder trustless technology gets a boost. It is unreasonable to expect people to stay away from it and believe those who betrayed public confidence. That kind of memory won't go away that easily.
  • JL
    JAMES L.
    23 December 2020 @ 18:57
    That's why once again XinFin $XDC will win .. it's regulated by Singapore MAS and Abu Dhabi Global Markets which applies English Common Law to trade finance ..
  • TP
    Timothy P.
    23 December 2020 @ 18:23
    "Stable" coins are an extreme counterparty risk. The only reason they exist is because the legacy banking system is a pile of hot garbage when it comes to settlement time and access. Much like the centralized corpcoin XRP, which is enjoying new rollercoaster thrills in the red zone thanks to having a corporation the SEC can sue, "stable" coins also have centralized heads that can be pressured to submit to the legacy system as each country requires. Mr Grey at one point uttered -- "Bitcoin wasn't a declaration of independence from the conventional system" -- are you kidding me? There's a reason Satoshi included "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" in the genesis block. It is absolutely antipodal to the current centralized system. But, as I've said before, the market is the best arbiter -- as XRP is finding out -- and as "stable" coins will discover too. Hard to maintain a pegged token when one (or both) legs move rapidly. Guess which side has trillions of reasons to devalue fastest? Anyone keeping any value in "stable" coins is playing with fire.
  • RM
    Ryan M.
    23 December 2020 @ 18:15
    I would also venture to say that Bitcoin certainly can and would not only survive, but thrive, without the existence of stablecoins in the long run. And I would love to argue that point with you, Rohan, if we ever get the chance to speak :) In addition, Santiago, I would argue that we can divorce the enforcibility of contracts from fiat and the local geographic government via smart contract enforced governance within decentralized autonomous organizations. This infrastructure, and unstoppable, internet native organizations with no geographic affiliation already exist... I suspect that this idea may be scary to you, Rohan, but I think this interview on Real Vision here is a good starting point to learn about this...
  • PG
    Philippe G.
    23 December 2020 @ 16:25
    Great conversation!
  • DT
    Douglas T.
    23 December 2020 @ 14:07
    This is interesting and worth consideration. Historical precedence is a pragmatic and wise lens to use to evaluate this space. I particularly like his point on inherent ambiguity in smart contracts; at the end of the day it must be interpreted, and so there is a man machine interface here, particularly if issues need to be adjudicated.
  • JW
    Jay W.
    23 December 2020 @ 10:57
    Upvote for Santiago not for Rohan.