Marisa Tashman Coppel Interview - Blockchain Association's Amicus Brief in Grayscale SEC Bitcoin Spot ETF Lawsuit

Marisa Tashman Coppel is Policy Counsel at the Blockchain Association. In this interview we discuss the BA’s amicus brief filed in the Grayscale SEC lawsuit over a Bitcoin Spot ETF denial. We also touch on crypto regulations, SEC Ripple XRP lawsuit, NFTs, Tornado Cash and more.

Transcript

Welcome back to the Thinking Crypto Podcast, your home for cryptocurrency news and interviews. With me today is Marisa Tashman Coppel, who is policy counsel at the Blockchain Association. Marisa, great to have you on the show.

• Thanks Tony, it’s great to be here.
• Marisa, I’m excited to speak with you. You and the folks at the Blockchain Association are doing great things on behalf of crypto. Lots of talk about, especially with the Grayscale lawsuit against the SEC. But let’s start with your background, where are you from and how did you end up working at the Blockchain Association?
• Sure, so I’m from Los Angeles. Before the Blockchain Association, I was at Covington and Burling, which is a large law firm. And I was in their Los Angeles office doing mostly regulatory enforcement defense work and litigation too. And before that, I clerked, and this is tied into how I came to the BA. So I clerked for a federal judge, coincidentally the same judge that Jake Chervinski, our head of policy, clerked for. So Jake and I, Jake actually interviewed me when I was in law school for my clerkship. So he clerked a few years ahead of me, but we remained connected. And then when I was thinking about my next move post big law, I saw that the Blockchain Association was hiring a policy counsel, and it sounded super interesting, so I reached out to him immediately and that was, I joined back in May. So we started having the conversations this past spring.
• Oh, that’s awesome. Yeah, I follow Jake on Twitter and aware of his work as well. A small world that you guys ended up at the same place.
• Yeah, it’s pretty funny. I don’t think that any clerks from our judge have ever worked at the same place together, so we’re the first, which our judge is happy about that.
• Now, you’re at the Blockchain Association, which obviously is doing a lot of work on behalf of crypto and blockchain, but what was your first encounter with crypto and what was your “aha” moment about the technology?
• Yeah, so when I was a first year lawyer, I was actually at O’Melveny, which is another big law firm, and I worked on a crypto-related SEC investigation, and I just thought that it was fascinating. The questions that we were trying to answer were intellectually complicated and really interesting as there was no precedent as to whether the digital asset we were dealing with was actually a security. So that was my first intro to it and since then, I have just stayed up to date with various legal developments and I just think it’s interesting ’cause it’s sort of, it’s so new and the technology is developing so quickly and it raises a lot of novel legal issues. And then I think just generally speaking, the technology, there’s a lot of potential to create a more equitable financial system. So that was sort of what bought me into the mission behind the work.
• Very cool. Do you mind me asking you if you hold any crypto? Have you bought any Bitcoin or anything like that?
• I do a little bit, not like a so significant amount. My husband and I recently bought a house, so most of our investment right now went into the house that we bought. But I love like playing with it and learning the technology, and so I’m like experimenting with it as a way to learn.
• For sure. And I smiled when you made that comment about buying a house ’cause I just remember the conversation I had with my wife, like okay, we’re not buying any assets or any more crypto, we gotta save to put a downpayment.
• Right, I know. And like, it was so funny ’cause in the whole process of buying a house, you’re obviously dealing with traditional financial companies and everything is slow and there’s a ton of paperwork and the funds don’t hit the account until a couple days after ’cause it has to go through all of the intermediaries. And I kept saying, if only we could pay in crypto, it would be instantaneous.
• Well that is definitely coming, and there’s a lot of companies building the infrastructure for that real estate, mortgage wise, and instant settlement, so.
• Right.
• Maybe a few years from now, they’ll have the technology fully fleshed out.
• Right, totally.
• So let’s talk about the Grayscale amicus brief. So obviously, Grayscale suing the SEC over denial of Bitcoin’s spot ETF. Tell us about why you and the folks at the Blockchain Association decided to file this amicus brief and the details of it.
• Yeah, so our role as a trade association is to advocate on behalf of the industry, and part of that includes helping provide some additional context to the court when there’s a litigation that potentially could impact the industry on a broader scale. So in our decision to file an amicus brief here, that really factored into it. We think that the SEC’s denial of the spot ETF or ETP, it just would have a huge impact on the industry generally if they allowed it. Obviously it would allow the industry to grow and it would allow greater access to retail investors. So that was the motivation for filing it. And in terms of like the substance of our brief, again, our role is to provide the court with some additional context. We didn’t wanna get into the weeds of the Grayscale specific facts or the legal arguments because Grayscale is handling that and they handled it extremely well. So we wanted to provide the court with some information as to why Bitcoin is a valuable asset, the wide adoption of it, it’s not some, it’s not like an asset that nobody has, there’s like millions of people in the United States that hold Bitcoin and there’s plenty of more that want a way to gain exposure to Bitcoin without actually having to hold Bitcoin itself. So we explain that that’s the value of an ETF, and then we talk about the differences between a futures based ETF and a spot based ETF, and the SEC has approved futures based Bitcoin ETFs so it just doesn’t make sense why they wouldn’t approve a spot based one if it’s essentially, the underlying asset is the same, but a futures based ETF is arguably a riskier investment than a spot based one. So we went into detail into why that decision just doesn’t make any sense.
• Yeah, absolutely. And funny, I interviewed former SEC Commissioner, excuse me, Joseph Grundfest about seven months ago and he served under President Ronald Reagan. And at that point, he said these applicants have a right to sue the SEC over denial because it just doesn’t make sense, exactly what you’re saying.
• Right.
• And I don’t know, this is a hard question to ask ’cause we don’t know what folks are thinking, but maybe given the Blockchain Association’s position with the regulatory circles and and politicians and so forth, what are you guys hearing as far as why the SEC has not approved the a Bitcoin ETF?
• It’s hard to know, and this is pure speculation, but the SEC has a history of being very anti-crypto, and it’s possible that they wanna figure out how to slow down the industry. So again, that’s pure speculation. We don’t have a direct line of communication with the SEC and even if we did, I don’t think they would provide us with insight into their decision behind denying the SPOT ETF. But that could have something to do with it, just their desire to slow things down once they actually obtain, I mean they hope to obtain more jurisdiction over the crypto asset market generally and until they do, which who knows if they will, but they want to try to slow down the industry as much as they can.
• Now with your amicus brief file, what would be the next step? Would it be the judge approving it, and then are there other steps after that?
• Yeah, so the judge can approve the amicus brief and basically the next substantive filing will be the SEC’s brief which responds to Grayscale’s Brief. And the SEC can also respond to any amicus briefs that are filed as well as part of their brief. And they have to respond by, I think it’s November 9th, is their deadline to respond. And then Grayscale gets to submit a reply to the SEC’s brief. So Grayscale has the last word since they’re the ones that filed this lawsuit. So Grayscale responds in December, or maybe it’s at the end of November. And then any sort of final briefing that the court might order happens in late December, and then the court sets oral argument. So the oral argument in this case probably won’t happen until the spring of next year. And then who knows how long it’ll take the judges to decide the issue, but theoretically, the judges will decide and then it potentially could get appealed to the Supreme Court. I’m not sure if it actually would, but hopefully, the decision comes out in favor of Grayscale.
• For sure. And we also saw other folks in the industry such as the Chamber of Digital Commerce yesterday was announced Coinbase also filed amicus briefs. What are your thoughts on other folks piling in as well?
• I think it’s great. I mean the industry’s definitely behind Grayscale, and for good reason. I think Coinbase’s Brief in particular shed some light on how certain risks of market manipulation are mitigated. They have a unique perspective on that. And then the Chamber of Digital Commerce signed onto our brief along with Coin Center and the Chamber of Progress. And then the Chamber of Commerce, just like the general Chamber of Commerce filed a separate brief, which was also very helpful and provided the court with some context in terms of how this could affect the market from a more general business perspective rather than from the crypto perspective. So I think the more amicus briefs, the better, and the more context that the judge has, the more likely they’ll make the the right decision.
• Mm, for sure. Now one of the things I’ve been waiting for in addition to Grayscale suing the SEC, I’m waiting for the other applicants to do that. I don’t know if they will, and I’m hoping they do, but let’s say the likes of a VanEck and these others throw their hat in the ring, will you and the folks at Blockchain Association also look to file amicus briefs there? Or does it not make sense given that you already did it with Grayscale?
• Well, we would consider filing it. I think each judge or each panel of judges can view a case differently. So I would think that our perspective could be valuable, of course, depending on the potential impact of the case. But if there was another similar case, we would definitely consider filing one to support that party.
• Now there’s a lot going on with US crypto regulations, and without throwing too much at you, it’s like we have the SEC and then you now have the CFDC doing their thing, you have the Biden Crypto Executive Order, you have different bills being introduced by members of Congress, even a great bipartisan one with Senator Lummis and Gillibrand. And then you have these legal things going on. You got the Ripple lawsuit, you got the Grayscale lawsuit. So I don’t know, what are you guys anticipating is gonna happen next year? Is this gonna get even more messy and murky or maybe it gets resolved because there’s so much pressure on the SEC now and maybe Congress decides to act, and we get some clarity.
• So our executive director, Kristin Smith, who’s awesome, she describes this landscape that we’re in as sort of the age of legislation and litigation. And it’s interesting because until congress acts, which I’m pretty, I feel optimistic that something will happen either next, probably next year, so we’ll see what that looks like. But until they do, the agencies either can do rule making, they can issue guidance, and they can bring enforcement actions. And so far, they’ve really trended toward bringing enforcement actions, especially the SEC. And so we’re living in this age of regulation by enforcement, where the industry doesn’t have a ton of guidance other than what the agencies are saying via their enforcement actions.
• Hmm. Yeah, it’s really tough. And then I think the lawsuit that a lot of people are paying attention to is the Ripple lawsuit, because it would set the precedence for the rest of the altcoins in the market. Any thoughts you have on on that lawsuit?
• Yeah, I mean it’s a good example of regulation by enforcement. Like Ripple’s, the facts of Ripple and XRP are very unique from any other digital asset, and the SEC hasn’t provided any helpful guidance, especially with regard to whether a cryptocurrency or a token would be considered a security on the secondary, like for secondary sales rather than like an ICO. They just haven’t provided helpful guidance, yet they’re bringing these lawsuits. So I think it’s great that Ripple has hired a team of amazing lawyers to really, really defend this lawsuit and make sure that the SEC is held to their burden. And then hopefully, we’ll get some clarity that actually makes sense and that the judge will be able to see the issue from a fresh lens and yeah, hopefully it’ll lead to some clarity in the future.
• For sure. Another item that it seems the SEC is looking to target are NFTs. And this is an interesting one because you have the artwork and it as though you go to a gallery and buy an artwork and you pay a currency. And you can use Ethereum to buy these NFTs or Solana or whatever it is. And, are you guys doing any kind of type of prep work or watching this closely to see what is the SEC gonna do and how can we help in in any way?
• Yeah, we’re definitely watching it. And the recent news is the SEC’s investigating Yuga Labs into whether the Bored Ape Yacht Club NFT collection constitutes securities. I haven’t reviewed it in such detail to make any determination on my own, but like you said, NFTs can be, there’s such a broad array of what an NFT could be and it could be as simple as a piece of art.
• Yeah.
• And in some instances, it may represent a security, but that’s, it might not, it would depend on the individual facts of it. But I think the ones that we are seeing most often now, it falls into that category of like a collectible item or a piece of art. And it’s just hard for me to imagine how that could be considered a security. Like a Picasso painting isn’t, it’s not regulated by the SEC, at least I don’t think it is.
• Yeah, and the funny thing is, I was talking to someone else about this, I’m about to launch an NFT collection, but I’m like, should I hire a lawyer?
• Right.
• I’m just selling like artwork.
• Yeah.
• And it will have some utility, kinda like what Starbucks is looking to do, where NFT holders will have perks and benefits and be able to get exclusive access to things. And that’s what I’m trying to do, but I’m like, oh, am I gonna get targeted by the SEC? It’s just-
• Yeah, that’s the problem. I mean that’s, it stifles innovation when there isn’t that clarity. I’m an artist also, I took these pictures behind me and I’ve thought about making my art into NFTs. But I highly doubt the SEC would come after me ’cause I’m just this like lone person who would put some art on the internet as an NFT. But you never know, so if they’re saying that all NFTs are securities, I think that that would inhibit a lot of people from creating their own work into NFTs. And the benefit of of like creating a digital record on the blockchain that represents your ownership of something is huge, so I don’t know why the SEC would try to prevent people from doing that.
• Right. By the way, Marisa, when you’re ready to launch your collection, you can come on the show, I will tweet it out, and we’ll make it famous.
• Awesome.
• Yeah, it’s just a lot of uncertainty. And then I think some creators now are even worried, it’s a bit of fear because it’s like, what are they gonna do next? And then you just look at the Kim Kardashian situation and it’s like the SEC almost does some of these things as political stunts and it’s like, where were you for Celsius network? Where were you with the Voyager and 3AC and so forth?
• No, exactly. And the Kim Kardashian example is a perfect example of regulation by enforcement. Like they settled with her and declared that Ethereum Max is a security. There’s no judge that is deciding this, she didn’t even really defend, they settled, and the actual asset doesn’t have an opportunity to come in and defend itself.
• Hm, and to that note and point, it seems that it’s almost easier to settle with the SEC because they seem to use a lot of delay tactics and drag things out where it’s like you get tired and the amount of money you have to pay from a legal fees perspective, it’s like okay, I’ll just settle ’cause it’ll be cheaper.
• Right. Yeah. I mean and that’s the unfortunate reality of how expensive lawyers are too.
• Yeah.
• That sometimes it costs less to settle than it does to actually defend a lawsuit, which is why it’s so great that Ripple is investing so much money into defending their lawsuit.
• Hm. Question for you, and I don’t know if you can answer this ’cause it’s kind of like speculating a bit, but Chairman Gensler, he has the seat right now. Let’s say for some reason he’s out and then another chairman comes in. Could that chairman dismiss these lawsuits, or can he not? It’s like already in the system and it has to go through its process?
• I think from a legal perspective, a chairman could do that. Like any litigant when they file a lawsuit could choose to dismiss it.
• Okay.
• You basically file something with the court saying it’s like a voluntary dismissal.
• Hmm.
• The DOJ does that, not frequently, but when the DOJ brings a prosecution and let’s say there’s the piece of evidence that was illegally obtained, and the judge rules that it was illegally obtained and now the government has no evidence for the crime, sometimes they’ll file a motion to dismiss the case.
• Got it. Yeah. My hope is that Hester Peirce, who’s been on the side of crypto, she gets promoted to Chairman and gets rid of a lot of these things. But that’s wishful thing.
• Yeah, we can all try to manifest that happening. For sure. What are your thoughts on what’s happening with Tornado Cash? And I apologize if I didn’t do my research here, I believe you guys did some stuff there if I’m not mistaken. But I know Coinbase and some folks are suing the US Treasury over what they did with Tornado Cash and sanctioning the code versus the bad actors.
• Right.
• What are your thoughts on that?
• Yeah, I mean, I think that the Treasury Department, OFAC in particular, I don’t think they have the authority, they only have the authority to sanction persons or property, and Tornado Cash is neither.
• Right.
• So I definitely am in support of the arguments in the Coinbase lawsuit, and also Coin Center filed a lawsuit too. So I’m looking forward to seeing how those turn out and we’re figuring out how to best support those efforts also. ‘Cause I think it’s, I mean it’s hugely important to make sure that this doesn’t happen again in the future.
• For sure. I’m sure you guys are so busy because there’s so many things the government’s doing right now to attack crypto. And there’s still a lot of educating and advocacy that’s needed. Are you guys busier than ever?
• We’ve been busy this fall. September was particularly busy. I handle all of the litigation related initiatives at the BA, so I have been particularly busy with Grayscale this month. And as there’s more litigation and more enforcement actions, we’re just gonna to stay busy. But that’s something that I really like about this industry, is there’s always new developments and there’s always news, which just keeps it interesting in my opinion.
• And what’s fascinating, and this could be the age old story playing out again. While all this is happening, you have some of the largest institutions in the world jumping into crypto just last week, BNY Mellon, Google said we’re gonna accept crypto via Coinbase, you have BlackRock a couple months ago, what are your thoughts on that? It’s like these two things are happening in parallel, a lot of confusion, government doing nonsense, but these big investors jumping in.
• Right, I just think it shows that crypto’s here to stay. It’s not going anywhere, there’s just gonna be wider and wider adoption of it, whether it’s from a retail investor or consumer perspective to these large institutions getting involved in it.
• For sure. All right, I got some wrap up questions here for you. First is rapid fire, favorite food?
• I think sushi, pizza or fruit, which is like a broad category of foods.
• Favorite musician or band?
• That one’s really hard. I recently saw FKJ in concert and Stevie Nicks, so those are the two in the front of my mind.
• Favorite movie?
• That one’s also hard. Maybe American Psycho or Kill Bill is a great one.
• I’m a huge fan of American Psycho, I mean just Christian Bale, and the dark comedy of it.
• I know, yeah. You have to view it from like a comedic lens, otherwise it’s like way too disturbing.
• Right. Favorite book?
• I think Brave New World by Aldous Huxley.
• And when you’re not working at the Blockchain Association, what are you doing for pastime hobby?
• Trying to get outside as much as possible. I love hiking and walking outside and camping, so just trying to be in some trees and in nature.
• And if you could create your own metaverse, what would the theme be?
• Probably like tree or like forest frolicking or something, magical forest.
• I don’t know why I immediately thought of Lord of the Rings for some reason. Maybe because I’m a nerd, but yeah.
• No, I mean it would be awesome if that’s what it looked like.
• For sure. Marisa, pleasure chatting with you and hope to have you back on as things progress with these amicus briefs and so forth, but thank you for joining me.
• Definitely. Thank you for having me.