Former CFTC Chairman Christopher Giancarlo (right)
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On the morning of February 6, 2018, Chris Giancarlo, then Chairman of the Commodity Futures Trading Commission (CFTC), submitted a written comment on Bitcoin to the Senate Committee on Banking, Housing, and Urban Affairs, and has since become a celebrity fandom Because he warned senators to ignore this paradigm shift in the financial (and technology) field would be a big mistake, and we should accept it. This shift may be inevitable. He went on to tell the story of how his three children got involved in the financial world because of their interest in Bitcoin; he concluded that the regulator's response needed to respect the hopes and visions of the next generation .
Immediately after that, the encrypted Twitter circle was excited. Nearly 48,000 people followed him on Twitter, and an emoticon was born, calling him " Crypto Dad " (crypto dad).
Giancarlo, a Republican who was appointed a CFTC member during Obama's term, ended his five-year term in July 2019. After leaving, he announced joining the board of the blockchain lobbying company and another company that wanted to replace Libor (London Interbank Offered Rate) with Ethereum. In the following interview, Giancarlo talked about the usefulness of Bitcoin and blockchain, as well as the regulation and how a letter he sent to the Vatican helped him prepare for the new role of blockchain consultant.
Forbes: Can you share your previous title and the career change you just experienced?
Giancarlo : I just ended my five-year term as a CFTC member in Washington and chaired the committee for the past 30 months. I was nominated by President Obama in August 2013 and was unanimously approved by the Senate to become a member of the CFTC in June 2014. Then I was nominated again by President Trump, this time as the CFTC Chairman in March 2017. It was again unanimously approved by the U.S. Senate in August 2017.
I think I am unique among senior government officials because I have been appointed by both Obama and Trump and have been unanimously approved by the U.S. Senate every time. One of my family members once said: either no one knows what my task is (it's very likely) or I don't make enough people angry.
Forbes: From college to the present, your career has a lot of records. I won't repeat your resume here. Let's talk about your relationship with Bitcoin. Please tell us about this.
Giancarlo : We were in the midst of a financial crisis at the time-the Federal Reserve Bank of New York called a brokerage firm that included my company and wanted to understand the credit spreads of large currency center banks and investment banks (credit spreads). We explained to them the difference between Lehman Brothers, and even companies like Morgan Stanley and Goldman Sachs.
I clearly saw that the supervisors were afraid of the failure of these banks at the time, but were unable to quantify the magnitude of the risk . At that time, it was believed that the outstanding nominal value of Lehman Brothers' credit default swaps was $ 400 billion, but it was impossible to determine. We now know that Lehman Brothers' outstanding debt has fallen to about $ 9 billion. If we knew that at the time, the response to the crisis could have been completely different . Lehman could have been easily supported, guaranteed or acquired. Other companies could have received proper support.
I'm not saying that this was the right choice at the time, but it is certain that such a choice can be made if financial risk can be accurately quantified. With the help of blockchain, financial risk can be quantified immediately and accurately.
When I read an article about Bitcoin or blockchain, I suddenly realized, "Wow, this is a technology with extraordinary potential- if we can realize this potential in 2008, the result may be It's completely different . "
This is a story I told at a Senate hearing, after which I got the title "Crypto Dad". I remember it was in early February 2018 that Jay Clayton (currently the Chairman of the US Securities and Exchange Commission) and I appeared at the Cryptocurrency Conference of the Senate Banking Committee. In this background story, in preparing the testimony, we worked with CFTC staff to prepare a 40 to 50 page written testimony. Following my convention at the committee, after submitting written testimony, I usually sit down the night before and write down my five-minute oral statement.
The reason I wrote the night before was that I really wanted it to be "freshly baked" when I read it the next morning. I sat down and faced the 45-page written testimony, and I thought, " Oh my God, I can't talk about this ." So I went there and did something unprecedented for me. When it was my turn to speak, the lights turned green. I looked at the senators and said:
"Senators, before I start my speech, I want to talk to you as a financial market supervisor, but if you have a minute, I want to talk to you as a father. I am the father of several teenage and young children. My family has just returned from an annual ski trip with my siblings and their children, and my niece and niece. When we were there Every night, the conversation at the dinner table is about Bitcoin. It is worth noting that for the past few years, my wife and I have been trying to get our children interested in the stock market because they are growing up and we even They opened a small brokerage account, hoping that they could make some money from it and learn something. They weren't interested. But all of a sudden they were talking about Bitcoin now. "
"When we held this hearing today, what we saw here was intergenerational, which shocked me. We are responsible to this generation, not to treat their interest as childish, stupid, or Don't have the brain, but take it seriously, recognize some of it, something we must understand. We must ensure that there are consequences for those who want to take advantage of the enthusiasm of young people (fraud) At the same time, we need to design a regulatory mechanism so that if there is something here, it can develop in the right way . "
I then returned to the testimony I had prepared in advance. At that time, I thought I had 1,000 followers on Twitter. After that, my Twitter exploded, and within 48 hours, I had about 40,000 followers, and all these emoticons. You know, "Crypto Dad", and the one my mother didn't like, "Bitcoin Jesus", and all these things.
But it was an extraordinary experience that made me realize that there is something between two generations here. The new generation has lost confidence in our generation due to the financial crisis, and they will look back and say, "Look, all these institutions that we should have trusted, we don't know what they are doing." They started looking for something in some way. In a sense, things that deviate from the traditional institutional framework, off those tracks, and enter a meaningful new paradigm.
My interest in Bitcoin slowly became very clear. It's very diverse, from utopian dreamers, to some people who may engage in scams or conspiracies, to those who believe they are trying to be truly mathematical and mechanical, not based on capricious central bank officials or who may be subject to Corruption by officials, inflation or monetary policy.
Forbes: Before you left CFTC in July, what was CFTC's attitude towards Bitcoin?
Giancarlo : (CFTC's) attitude is true curiosity about this new asset class , a desire to learn not only by reading and increasing its knowledge, but also by directly engaging relevant innovators. From the time I started chairing the CFTC to the time I left, we had more than 300 contacts with personal fintech innovators. From cryptocurrencies to blockchains to payment systems. So this is a desire to learn, understand, and look forward to. I often talk to our senior employees, who talk to their employees about the exponential growth mentality, predict that the rate of innovation will advance at an exponential rate, and predict the rate of adoption.
Forbes: What will you do after leaving the CFTC?
Giancarlo : The arc of my career has been within a triangle of three access points: market, technology, and legal / public policy. As a practicing lawyer, as the founder of a company that launched the first electronic trading systems and over-the-counter swaps, as well as those who brought the company to the open market, there are market regulators.
So when I left the committee, all I had now was a certain level of visibility. In the days after I left CFTC, what I want to do is to provide my skills and expertise in these three fields and the combination of these three fields to the companies I truly believe in.
At this stage of my life, I can choose to participate in venture capital, opportunities, and scenarios of potential products or services that I truly believe in. A good example is the two announcements I made recently, and I will make more announcements in the future. I have announced that I am joining the board of directors of the American Financial Exchange (AFX), becoming a full board member, and then joining the Advisory Board of the Chamber of Digital Commerce.
Forbes: Do you have any projects related to blockchain and cryptocurrencies?
Giancarlo : There are a lot of things I'm thinking about now, but I haven't shared anything yet.
Forbes: Can you describe the type of communication you are currently doing? Are you talking to a startup? Or the government? Or work with regulators or other non-profit organizations?
Giancarlo : I have a lot of conversations with people in the private equity and investment banking world, especially those who follow Bitcoin, who know me because of "Crypto Dad" and other things.
Forbes: What do you think of the response of major central banks to Facebook Libra and Facebook's response to central banks?
Giancarlo : For our generation, the first "institutional relationship" we established outside of an educational institution was a relationship with a local bank or savings and loan institution. I remember my mother took me to the bank, and I got my first passbook savings account. I deposited the money and the money was deposited.
My kids' first "institutional relationship" outside of school was with their social media accounts-online retailers like Facebook, Amazon or eBay. So it's not surprising to me that these institutions will take advantage of their relationship with the younger generation and say, "We can be your payment system." You don't necessarily need a banking relationship. That is an impersonal system used by your parents .
So I think what we see is almost a change of time. I think this is a major challenge to the traditional banking system. This is a major challenge for the traditional banking system that global central banks use to manage their currencies and monetary policies .
I think Libra and similar attempts are very meaningful and substantial challenges. Some are technical, some are political, and some are only intergenerational.
Forbes: What do you think of the digital currency issued by the Chinese government that is backed by fiat currency (note: the central bank's digital currency) may be used to buy bread in Nebraska?
Giancarlo : I think this is an important step. This is a considerable move. I don't think this will be the only initiative of this nature. I think it is logical for countries to create a digital currency through their national currencies . This generation wants their payments to be as convenient as on a mobile phone. How could nobody be involved? I think that Western countries with reserve currencies also need to consider developing their own digital currencies .
Forbes: Is there anything better in your headlines today?
Giancarlo : In the United States, the size of the mortgage bond market is second only to the national debt market. The government has made great efforts and recently announced that it will develop a unified mortgage-backed bond to coordinate Freddie Mac and Fannie Mae. (Fannie Mae) The Difference Between Mortgages. I think this is a great opportunity to use blockchain technology in the effort to develop a standard home mortgage. I know that things like cryptocurrencies can be exciting, but I have always been interested in blockchain because it has potential at the most basic level of financial markets.
In the United States, nothing is more important than the home mortgage market. I think the opportunities for blockchain in the development and reshaping of the US housing loan market are huge.
Forbes: Can you elaborate?
Giancarlo : This is partly a joint effort of the two parties in the United States. It started in the previous administration and continues to develop under this administration. Freddie Mac and Fannie Mae formed a joint venture under the guidance of the Federal Housing Finance Agency, initially led by Mel Watt, and now led by Mark Calabria.
They recently announced the development of a standard mortgage agreement. But much work remains to be done. This is my concern because I am a market follower. What struck me is that we will see that blockchain will revolutionize the market .
Forbes: Do you have anything to add?
Giancarlo : A problem with the financial crisis a decade ago was the opacity of securitized mortgages. You bought a securitized mortgage, which may contain 100 mortgages, but you didn't know it. Another application of blockchain is to perform due diligence and learn how many mortgage loans are included in it. If that were possible in that crisis, maybe we wouldn't encounter the mortgage crisis that triggered the financial crisis .
Forbes: Thank you!
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