Episode #31 (PART 1): Sheila Warren — CEO of the Crypto Council for Innovation

Episode #31 (PART 1): Sheila Warren — CEO of the Crypto Council for Innovation

Last updated:
March 8, 2023
Total length::
26 min
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Cryptocurrency, Crypto
DigitalAssets
DeFi, CeFi, TradFi

To celebrate this International Women’s Day 2023 our guest today, joins us for a special two part interview.  Joining us is Sheila Warren, Chief Exec of the Crypto Council for Innovation. In this first part we’ll be covering what the US is investing in and how China is influencing the crypto ecosystem.

Walter Jennings: To celebrate International Women's Day 2023, our guest joins us for a special two-part interview. We sat down and covered so much. We wanted to give you two courses of crypto insights from one of the leading women in the industry. Our guest knows the innermost thoughts of the most influential leaders in the crypto industry. She represents them at a global level. Joining us today is the formidable Sheila Warren, Chief Executive of the Crypto Council for Innovation. As she steers that ship, I wanted to know what directions are the winds blowing as an industry? Are we able to innovate our way out of troubled waters? In this first part, we'll be finding out what Crypto Joe Biden is investing in, and then pivoting to talk about how China is influencing the crypto ecosystem.

Sheila, thank you for joining us on Waves in the Finoverse. I want to dive right in because you know, it feels as though today the industry is at a crossroads. What are you looking at as we head into 2023 and what are the kind of priorities for yourself and the Crypto Council for Innovation?

Sheila Warren: Well, thanks for asking, Walter. It's so great to be here with you today. So I'm coming up actually on the one year anniversary of when I became the CEO of the Crypto Council. And let me tell you, it's a very different environment today than it was last February, to say the least. I came in during the height of a bull market in kind of a build model. We thought we were going to have a lot of conversations and maybe move a bunch of things across the line last year. And then of course, with events of last summer, we had the events of the fall and we had all kinds of other things that happened that have nothing to do with crypto. We had rampant inflation, we had war in Ukraine, we had supply chains. All this stuff that happened that really affected, I think where the industry wound up in 2023 going into this year.

Now, all that being said, this is not the first such cycle that I've been through, and certainly that the industry has been through. So I think from a policy perspective, what this does is give us time to say a lot of some, frankly, some of the bad actors have exited the space. There's less incentive for such folks or folks that have maybe non antisocial, shall we say, ambitions or more selfish ambitions, less center for them to join this space. And we're seeing a return to really focusing on what are we all here for? And a return to, I think, fundamental values in the crypto ecosystem. All of that I think is a good, and so what that means is a chance to share what this industry really is about, what builders in this space and what users of this space are really in it for. And to me that remains exciting and it remains pretty consistent along the course from when I moved full-time to the space, you know, over five years ago.

Walter Jennings: Now, as CEO of the Crypto Council of Innovation, you represent the big players such as Coinbase, Fidelity assets, digital assets, block to name a few. What are these firms looking for you to achieve?

Sheila Warren: Well, again, that's also shifted. So I think last year we were looking at building a fully global organization. We are up and operating already in California, Denver, New York, Washington DC, London, Brussels, and Hong Kong, with some engagement in countries beyond those jurisdictions, based on just capacity that we have. And even though we don't have people necessarily located in other jurisdictions. And right now we're kind of forced, start forced to be really, really specifically strategic about where we want to engage and make some tough choices about where are the countries that are going to be moving forward in this space. And really not just kind of at a principles level articulating what they might do at some point in the future, but getting very specific and look no further, of course, than Europe. With MiCA, the final vote there is slated now for April.

It's been bumped back from February to April, but that will go into implementation. And over the course of the next 18 months to 2 years, we'll see some of those ideas around how to regulate this space, come into life, come to actual life, and have to wrestle with what implementation really means. You're seeing in the US a very challenging time for any legislation because of the nature of our political process and what that's resulted. We have a split Congress here where each party is running one branch of Congress and historically the ability for anything to be approved and passed becomes much more complicated in that environment. So you're seeing a lot more authority go over in this country, in the United States where I am to the judicial branch, to the courts, but also to the executive agency, which includes some of the bank regulators.

You're seeing movement in Australia and I can go on South Korea and Mexico and Thailand and Japan, right? A lot of movement in specific parts of this ecosystem, whether it's NFTs or identity or tokens. You're seeing a bunch of these kinds of things, London, all this stuff happening around the world. So, so I think that the time for thinking about, we had hopes at the beginning that we could think about some sort of global harmonization of the regulatory approach across different countries. I think that is a pipe dream. It was always sort of a bit of a dream if you will, right, in any space. Look at the other, the fragmentation in many other industries and spaces around how things are governed and the regulations, and rules that apply. But I think that before this industry even has a chance to really, really take flight globally, you're going to have a variety of different rules of the road in different jurisdictions. And we're going to have to make choices. The companies and funds, and all are making choices about where they want to put their time, right? Like, do they want to be present in certain, you've seen some of our members even move out of certain jurisdictions in recent weeks, and that's different. I think that's very different from where things were last year.

Walter Jennings: Yeah. And here locally in Hong Kong the government has firmly embraced digital assets and wants to be the digital asset center for Asia Pacific. We've got two licensed exchanges and I'm just waiting for the waves of STOs to come soon after.

Sheila Warren: We are going to see what happens, right? So you've got kind of Singapore now that they've landed, and of course we all know how in the region there's different views on are we going to follow Singapore, not follow Singapore? What does that mean? Right? Different countries. I think ASEAN is looking like a block at this point in time with some differentiation across Vietnam, Philippines, Malaysia, Thailand, and Vietnam. But there's also some differentiation happening in those countries as well as they're leaning into certain aspects again, and certain parts of the ecosystem more than others. But yes, Hong Kong definitely. And the Bay in general, I think has been very forward thinking and this innovation, and has basically put out very strong signals both formally and informally, that this is something they think is part of the future of the financial, of the digital economy globally. And they want to be at the forefront of that. That attitude is very different place to place.

Walter Jennings: Well, and you're based in the US and that seems to be, if not a leader in regulation, certainly a leader in share of voice. How do you think Joe Biden's crypto portfolio is performing more seriously? Is he in support of the industry?

Sheila Warren: So again, it's interesting to kind of look at what that, how that manifests. So we had the executive order that came down last year that really laid out pretty clearly that there was a positive path forward for engagement with digital assets. That the blockchain technology, that Web3 was a critical innovation for the United States, both for employees, for businesses, for users, all of that. I made it clear this was here to stay in something that had to be reckoned with. And so that really put out a call to action to many of the federal executive agencies. So the White House has a number of different executive agencies, and it put out a call to them to say, do some studying and take a look at this. Frankly what we observed was some of those agencies coordinated, some did not seem to have done so.

And so there's a little bit of a scattershot model, some of the guidance that came out from those agencies, even if it's just the indication of direction of travel, right? And there was a bit of a scramble by some folks suddenly have to get to speed on a very, very complicated area. And to be frank, they weren't given a lot of time. The timing around when those things needed to be issued. And the deadlines for submission were very, very tight. So it was an interesting statement to say this is a really important area, it's important for consumers, it's important for innovation, it's important for American innovation and leadership and the digital space both economically and technologically. But then you don't have a lot of time to actually wrestle with it. And it's really complicated, as we all know, is an interesting signal mix. Mismatch, right?

Walter Jennings: No, I was just going to say, it sounds like they're being asked to put guidelines in place for an industry they don't fully understand.

Sheila Warren: And I think they couldn't possibly fully understand if they had not been quite educated before that executive order came down, which was true for some people. But some people were like, I did not really know that was a thing I had to pay attention to. And suddenly I have to issue an opinion about it, like in three months. That seems very, in addition to my day job it just is like whoa. So it was a lot. And we tried to be very helpful in terms of getting curated information to folks like, this is accurate information. Cause there's, at this point in time, there's just so much hype out there on both sides. It's not evidence-based. So to kind of get back to one of your earlier questions, Walter, like the way we see ourselves at the Crypto Council is we are a global alliance of industry leaders in digital asset and Web3, in these spaces.

And we see our mission and our goal as really serving to educate consumers and policy makers and really advocate for responsible policy that spurs responsible innovation. Because I do think our members understand as a body individually and together that any call for kind of like we cannot be regulated. And that doesn't make sense. And we're at a point in some parts of the industry where we're mature enough that innovation can actually be catalyzed by good regulation. Of course it can be crushed by bad regulation to be sure. And no one is arguing in favor of bad or thought, not thoughtful regulation, but thoughtful regulation that acknowledges both the benefits and challenges of this new space and understands the path to solving some of those challenges within industry itself is something that I think our members and we look to as not just inevitable but important. And so that differentiates us, I think, from where a lot of industry actors were even a few years ago.

Walter Jennings: Now, Sheila, we're at a segment in our podcast - You heard it first here on Finoverse. So we ask people to share news that maybe we haven't heard yet. It's something people may not know about you or the Crypto Council for Innovation.

Sheila Warren: Yeah, sure. Thank you for asking. I would say one thing, I think a common misperception about the Crypto Council is that we are just a lobbying trade organization, and so we certainly do advocate for responsible policy and responsible innovation, but we also do a tremendous amount of education and we educate industry as well as we educate policy makers. So just as we do at education policy makers about what the blockchain is, what crypto is, what digital identity is, all these things. We also educate industry about the ways in which policy is actually a catalyst for innovation, right? And we educate them about like government processes and the government's not the enemy, depending on who you're talking to in our industry, it can be, you're starting at a different place. So that's something I think is really important.

And we see ourselves as brokers and creating collaborations between industry and policy makers to forge better understanding. And our goal is that better understanding is going to lead to trust. That will lead to the ability to experiment with policies and talk about them openly so we can do the right thing by users of these systems. Because if we don't do right by users, the whole thing's going to fall apart ultimately, right? I mean, every industry is reliant on users wanting to be in that space. And if that doesn't happen, if we don't protect, wrong use the word protect, if we don't educate and empower and to some extent protect users in these spaces, this whole thing's going fall apart. That has to be a joint project of the public and private sector in our view. So I think that's a common misconception about us. That's something that I would love to correct. And so to that end we do engage. We're a global organization, so we are talking to people really all over the world on a regular basis, trying to provide consistent evidence-based information about what is actually happening both in this space and within government as they wrestle frankly, with this complicated innovation.

Walter Jennings: In China, blockchain is part of the national development goals. It's part of the five year plan, and there's a lot of effort going into that. Yet crypto is banned. China has its own separate social media ecosystem. How has China impacted the global market, the global landscape for crypto? And do you think we're going to wind up with two systems.

Sheila Warren: There's a lot in there, Walter, to unpack. So let me start with the influence of China. The influence of China cannot be overstated or understated, which cannot be over, it is massively influential. It's not the decision to ban Bitcoin, which is like, actually not, wasn't that, I mean, didn't have that much effect, be perfectly frank, right? I do think that the engagement by China of a CBDC, a Central Bank Digital Currency, namely the e-CNY, the RMB, that was a gigantic catalyst for central banks all over the world to pay a lot of attention. Now, I mentioned those was at the World Economic Forum. We pulled together a group of central banks in 2018-17, let me think, 2018 to 2020 and 35 central banks and the IMF and the World Bank and a bunch of others.

And we published a Central Bank Digital Currency policymakers toolkit that basically said, if you are thinking about, this is however many years ago at this point, six years ago, if you're, when we started it, if you're thinking about engaging in this work, what might be the considerations that whether or not to issue a CBDC. And I have to tell you, that thing holds up. It was very robustly researched by the team and we got a lot of input from a variety of places, different projects. And the reality is that until China really started blowing the space wide open, most developed economies we're kind of like, eh, I don't know about that. I'm not sure I really need that kind of digital fiat that runs in that way.

That was just kind of a quiet reality. They were looking at it because they felt like they should, as they should, but they weren't necessarily going to go big on it. And then once China did that, it was massive. And so, something that I talk about a lot that can, that a lot of things keep me up at night, but that I worry about is, I think we are massively underestimating the contagiousness. And I don't mean that in the pejorative way of something like a very, very user-friendly, easy to use central bank issued digital currency, which China has. I think we are underestimating when that leaks beyond China's borders and when, which I think is inevitable, China, PBOC and the Chinese government starts conditioning certain kinds of investments in things like core infrastructure on the use of that system.

We are gonna be in a very different world than we are now. So if you look at the amount of investment, so you have to consider a couple things. Number one, the debt burden. So you've got countries in Latam and countries all over the continent of Africa that have massive crippling debt burdens and the islands, right? No relief in sight. Pandemic, there was some forbearance and things like this, forbearance. And deferring of cost like that is massive, right? Many of these countries are just paying out interest on this debt, and there's no signal that's ever going to get forgiven at some point when you factor and you vector in climate migration, increase refugees, right? You vector in all the droughts and all the things that are happening in climate world, scarcity, famine, all these things. Some of these countries are going to have to go and take even more engagement from whoever's gonna bail them out.

And the Chinese have expressed a lot of willingness to do this, and some of that's been conditional upon the use of e-RMB as a system. So how long is it going to be before a country in Latin America or sub-Saharan Africa that's dealing with, and people don't realize the amount of migration happening in sub-Saharan Africa right now, today. This is not like a science fiction kind of situation. This is happening right now, right? All we get to talk a lot about Ethiopia and Syria, but it's happening all over the continent. How long until someone comes in and says, oh, hey, we'll build you railroads or this or that, or god forbid, like walls or whatever it is, right? At some point a government's gonna say, oh my God, we just need the help. We just need the help. We need the financial help. Great, let's just do this.

And next thing you know, you've got a highly surveilled system that is very hard to extricate from because it's very easy to use. It's technically very sophisticated, but again easy to use. So this is the world we're operating in. And when I think you live in a place like Hong Kong and you live in a place like China, or you live in a place like India where technology is so, it's just easy, right? Like in the United States, technology isn't necessarily easy. I don't know how to explain those people who don't live here, it's just not easy. It is still something that is quite stratified and it's usage. A phone is easy, fine, great, using apps is easy, right? But there was this hilarious, and it wasn't hilarious. It was horrifying me on Twitter I saw a couple days ago that was like, there are 16 year olds who do not understand how to use a basic OS on their computer because they're on their phone all day and the app store downloads everything, and they just, like, it shows up on their phone.

They have no concept of like a file server. They don't know what that is. So you're like, Hey, go to your downloads folder and get the file. And they're like, I don't know what you're talking about. It's just, so we are operating in a world where that fast easiness is eroding certain kinds of other skills, but it's happening so rapidly in some parts of the world faster than others. So all of these things, I think when you look globally, it's something like crypto. I'm just going to sum up a little bit. China is way ahead of the curve in terms of forcing citizens to engage with technology. And just like India as well, like India has a system called UPI, Unified Payment Interface. Everyone has digital identity there. There's something called the UID. Now, there are some serious issues again around surveillance with all of these systems. Regardless, they exist. And regardless of it's a big caveat, so I want to land that, but there's a lot of familiarity with these systems. And it's not done by class, it's not done by wealth. It's kind of ubiquitous, right? That is not a thing that exists in most part of the parts of the western world. And so the ability and fluidity you're gonna see and the stratification in populations, different populations, familiar with technologies only when to get more and more and more differentiated.

Walter Jennings: Yeah, look, you talk about CBDC and China's being very easy to use. And yet, still on some of the exchanges, the UX and the engaging with and trading isn't where it needs to be. So it's...

Sheila Warren: Really complicated. I mean, when you try to onboard someone into a wallet, like a non wallet, and they're like, what is the what, what I have to seed for? Who, what and words I have to print out it, can I just take a picture of it? And you're like, oh my god. It's not, and again, part of that's the evolution of the technology, right? I mean, like, there was like a multiple decades of early operating system functionality with computers where, like you, you had to be a programmer to know how to do anything online. You just had to be, right? You had to have your, you gotta provide your cursor and type in your commands. Like you had to use a command prompt. I mean, we are so far from that. Now, the vast majority of people have no idea.

They don't program, they're not coders. They have no, they just use this stuff. We're just not there yet. So that's part of what I think we're trying to explain to policymakers and others, that the idea is right now there is differentiation in the use because the safest quote unquote way to use this stuff requires you to have a level of sophistication that most people just don't have. Right? But that is going to be solved. That is a solvable problem. It is not a permanent problem. And that part is not that different from the early days. Forget the Internet, of just using a computer, right? Like using a computer to compute anything. You had to have a training in that, and then suddenly you didn't the pocket calculator, right? There's just all these kinds of innovations that took time to get down to a manageable interface that anybody like a two year old could use it, right?

That took a lot of time. So all that is my way of saying that culturally, we're in different places in terms of embracing innovation. We're in different places in terms of thinking about how we even gauge with money. There are certain countries where cash is basically just not even really a thing anymore, you know? And then there are certain parts of western societies, there are certain classes of people or types of people for whom that is a reality, but for a large part of the population, cash is still very much a thing. And whether it's like literal paper cash, or whether it's writing a check or whether it's using a debit card, whatever it is, they're still engaging directly in cash, right? And that is just something that we have to acknowledge the differences. And so any government of our policymaker is going to think about the population that they represent and hue their rules towards that population. What I'm saying is that's not at all monolithic.

Walter Jennings: And if you think about the last 30 years in China, you've seen hundreds of millions of people lifted out of poverty, thank you technology. And you look at the United States, and there's kind of a feeling that the quality and style of life has decreased over the last 30 years, thank you to technology. And so you have very different cultural perspectives about whether technology is a force for good or a force for bad. And then the adoption, the uptake, the enthusiasm, there's, it's insane here in Asia, the way new technology is just taken up and pulled apart and reformatted and remade and reapplied. There's just a real embrace.

Sheila Warren: Yeah. In 2018 the number one country, that per capita wallet holders, then the max amount was in South Korea. Like, that's where it was, right? Like, and so the Korean government was really looking at this stuff. Cause they were like, everyone's just using it and we don't really know what it is, you know, but it was just, there was such an adoption in that country. And so when I visited there in 2018 -19, and just talk to people and the differences between parliament's approach to it at that time, there's been a change of government now. And the new president there is very knowledgeable and savvy and all that. But like at the time it was like the differences in how Parliament thought about this, which is very hesitant and like, what is this crazy thing?

And the average person on the street who was just like, oh yeah, I got a wallet and whatever. It was remarkable. It was absolutely remarkable to see the distinction there. And I thought of that as a harbinger for like other parts of the world. And to see a kind of, because there is not a fear of a new innovation and a place like Korea or Japan, it to your point, it is, I'd rather play with it and try it, and that's cool. Whereas later adoption in most parts of American society is kind of a thing, right? Like, people are like that newfangled, they're still a newfangled technology kind of sense. And that's true. It's less true in younger generations and older generations certainly, but there's still kind of a hesitancy to sort of embrace something like that.

And I think that also we'd be remiss if we didn't talk about how that roots into different notions around the importance of things like privacy, you know, individualism and how a nation's collective identity and how the cultural identity of a nation, which again, is not monolithic and often is exploitative. But nevertheless, we have to kind of think about, what is that, what is the Horatio Alger myth in America that is not present in other countries? What does that mean for certain kinds of manifestations of technology and the willingness to use them or not use them.

Walter Jennings : Okay, I'm gonna press pause right here, but come back next time for the second half of this special two-part interview with Sheila Warren, where we will be covering criminal behavior, the internet before the internet, and how crypto is being used during the war in Ukraine. Next time here in the Finoverse.

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