On the morning of February 6, 2018, when CFTC Chairman Chris Giancarlo submitted his written remarks on bitcoin to the Senate Banking, Housing and Urban Affairs Committee he became a celebrity among crypto fans because he warned the Senators that ignoring this paradigm shift in finance (and tech) would be a mistake and that we should embrace it in part because its adoption might be inevitable based on his own experience at home. He proceeded to tell the story of how engaged his three children had become with the financial world as a result of their interest in Bitcoin; he concluded the regulatory reaction needed to respect the next generation’s hopes and aspirations. Crypto Twitter went crazy, as almost 48,000 people flocked to follow him on Twitter and a meme was born, dubbing him “Crypto Dad.”
Giancarlo, a Republican who was appointed CFTC Commissioner under Obama, finished his five-year term in July 2019. Since leaving, he’s announced joining the board of a blockchain lobbying firm and another company looking to use ethereum to replace LIBOR. In the following interview, we hit everything from Giancarlo’s Bitcoin conversion to blockchain’s usefulness to regulators to how a letter he sent to the Vatican helped prepare him for his new role as blockchain advisor .
Excerpted from Forbes CryptoAsset & Blockchain Advisor .
Forbes: Can you share your previous title and a little bit about the career change you just went through.
Chris Giancarlo : I just completed a five-year term of service as a commissioner of the U.S. Commodity Futures Trading Commission in Washington and for the last 30 months serving as chairman of that agency.
I was nominated in August 2013 by President Barack Obama, and I was unanimously confirmed by the Senate in June 2014. And then I was nominated again by President Trump, this time to serve as chairman, in March, April 2017. And then once again unanimously confirmed by the U.S. Senate in August 2017.
I think I’m rather unique amongst senior government officials to have been both appointed by Obama and Trump and unanimously confirmed each time by the U.S. Senate. Something that a family member said: either no one knows what my commission does, which is probably likely, or I hadn’t pissed off enough people.
Forbes: So much of your career between college and today has been very well documented. I don’t want to ask you to repeat your resume. Let’s go to your discovery of Bitcoin. If you could walk me through what we used to call your Bitcoin ah-ha moment.
Giancarlo : We were in the middle of the crisis—the Federal Reserve Bank of New York was calling around to brokerage stores like mine to understand about the credit spreads on large money center banks and investment banks. And we were explaining to them the gapping out by the minute of spreads on things like Lehman Brothers and even Morgan Stanley and Goldman Sachs. It was clear to me that regulatory authorities were frightened of the failure of these banks but had no way of quantifying the amount of risk. And at the time it was perceived that the amount of credit CDS written against Lehman Brothers was $400 billion in outstanding notional, but there was no way of knowing for sure. We now know that the amount of outstanding on Lehman Brothers made it down to about $9 billion. Had we known that then, the response to the crisis could have been entirely differently. Lehman could have been easily backstopped, guaranteed, or bought. And the other firms could have been backstopped in a suitable fashion.
I’m not saying that was the right choice to make, but certainly that choice would have been available if the amount of exposure could have been quantified precisely. And that’s the point. With blockchain, the amount of exposure could have been quantified precisely and immediately.
The “ah-ha moment” for me came then. And as I read about Bitcoin or read about the blockchain, it struck me that, “Wow, that is a technology with extraordinary potential and potential that had we been able to realize back to 2008, the response could have been entirely different.”
This is a story I told in what became a famous Senate hearing when I received the title of “Crypto Dad.” I think it was early February 2018 when Jay Clayton and I appeared on the Senate Banking Committee on cryptocurrency. The back story on this is in preparing for that testimony, working with my staff at the CFTC, we prepared, about a 40- or 50-page submission of my written testimony. As had become my practice at the commission—after submitting the written testimony I would usually the night before sit down and write my five-minute oral presentation.
And the reason I did it the night before is because I really wanted it to be fresh as I read it the next morning. I sat down with that 45-page written testimony and I thought, “Oh my goodness, I can’t talk about this.” And so, I went in there and I did something that was more unprecedented for me than anything I’ve ever done.
I actually stopped, wh...