Greg Xethalis

I appreciate the interest in--but not the hyperbole about--the contemplated innovation exemption for the onchain trading of tokenized NMS stock. Keep in mind: I've always expected that it'd be limited in scope & would facilitate trading only of digital representations of the same underlying equity security that an investor could purchase in the secondary market today, not synthetics.

To continue clearing up misconceptions about market structure especially the parts that affect law enforcement, I encourage everybody to read our 10 Common Misconceptions About the Clarity Act materials, which I will put in the replies. In response to these comments: 1. The Clarity Act Title II is entirely dedicated to address illicit finance concerns, treating a whole range of entities which are not currently subject to BSA obligations as FIs to be FIs. I dispute that the BRCA is a "trade off" but if it is, law enforcement is getting the lion share of that trade. I can say that the BRCA is a red line issue from the digital asset industry. Take away the BRCA, and I can say with certainty every major industry advocacy group and politically involved entity withdraws support for the Clarity Act, including Title II, entirely. The bill theoretically could pass without industry support, but it almost certainly won't. 2. Yes. Developers of non-custodial software will move offshore if there aren't protections for them in the Clarity Act. I know because I am in direct communications with those developers every day. This includes developers who serve on security councils and regularly work with law enforcement. Will those security councils act like Arbitrum did with no Americans serving on them? No way to know. But I certainly would want those roles to be American vs. (insert basically any other jurisdiction). Straw man argument about "Developer A didn't help law enforcement" ignores the thousands of American developers who have, and continue to, assist law enforcement. That number of people with such expertise in America will dwindle. This isn't theoretical. It has already happened and will continue to happen under the status quo. 3. There is ZERO evidence that that 2001 Patriot Act amendments to Section 1960 was intended to address "non custodial" facilitators of ML. While it was clear that Congress intended to account for informal value transfer systems broadly, including your often cited hawala-style facilitators, who didn't have custody/control of funds in the same way conventional banking did, but it was still addressing where human or entities took physical custody of funds and moved those funds for other humans or entities. Even the party without custody had "control" in the sense that they directed who and how funds moved. This is night and day different from a software provider who never controls another human's funds and cannot direct those funds to be moved by others. There are plenty of references to "informal money transfer system[s]" but none that I am aware of regarding messaging providers, encryption providers, or purely technical infrastructure participants. 4. Yes, the BRCA will require going forward that to be convicted under 1960(b)(1)(C) to prove the actor acted with the specific intent of facilitating illicit finance. Is this a higher standard than "a person who never assisted or communicated with criminals re: money laundering but wore a t-shirt once with a washing machine" which is the current standard being proffered by the DOJ to send developers to jail? I guess. I believe the law already requires that and would be determined on appeal in the Tornado case if necessary, but generally legislative clarity is better than judicial clarity. 5. Law enforcement will always want their jobs to be easier. Which is admirable. But in America we have many laws, including the supreme law of the land in the Constitution, that are designed to make their jobs harder in the interest of ensuring fair justice and protecting against the erosion of civil liberties. No matter how noble the intent of law enforcement, the law sometimes has to step in to provide guard rails. This is one of those occasions. Do you think law enforcement advocacy organizations would be supportive of creating the 4th Amendment if it didn't already exist? Probably not. But that doesn't make it any less essential to our American way of life. I am confident that, just as law enforcement is able to put bad guys behind bars despite the burdens of the Fourth Amendment, that law enforcement will continue to be able to put bad guys behind bars despite needing to prove the bad guy actually intended to do the illegal money transmission they are being accused of facilitating.

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