UPD 02/09/2023

Opens the video from Colorado on staking and regulation, prompted by a Coindesk report on Kraken and SEC settlement talks plus Brian Armstrong's tweet on staking scrutiny.

There is no canonical definition of staking, delegation, or custodianship, since Avalanche, Polkadot, Tezos, Cardano, Ethereum, and Algorand each use different custodial, liquidity, and bonding or slashing mechanics.

Handing an asset to another party to generate a return can create a regulated relationship, due to custodial risk and information asymmetry rather than a shared enterprise.

Contrasts Bitcoin mining pools and Cardano stake pools, which stay non-custodial and use synthetic resources, with custodial models that carry information asymmetry between the two parties.

Warns that some staking services go beyond plain staking into DeFi yield plays or issue synthetic liquid tokens with redemption rights, layering on extra regulatory risk.

Reads the SEC as converging on a view that exchanges staking on a customer's behalf is problematic, and welcomes exchanges exiting staking so the activity stays distributed among small stake pool operators.

Cautions that regulators applying one-size-fits-all interpretations could rule that all Ethereum staking, being mostly custodial, is a regulated activity, forcing the question into litigation.

Flags the US infrastructure bill's unenforced broker reporting mandate that would require stake pool operators to collect KYC data on delegators, though Treasury says it will not enforce it for now.

Outlines a planned Cardano CIP for a new stake pool certificate that replaces today's non-consensual push delegation with mutual consent between delegator and operator.

Walks through the contingent staking example where Alice's delegation to Bob's pool stays pending until Bob also signs, turning delegation into a bilateral consensual relationship.

Many ISPOs already blacklist US citizens from participating and only ask for identity proof after rewards have already been paid out.

Proposes contingent settlement, where delegators sign a distribution agreement and complete KYC upfront through the transaction itself, giving stake pools a full compliance log.

Considers letting stake pool operators run under a syndicated license from a regulated entity such as an RIA, or become directly regulated themselves, if pools are ever formally regulated.

Expects the industry to live with regulatory uncertainty for the next 12 to 24 months until Congress reins in the agencies, though better technology can ease stake pool compliance overhead, and argues Ethereum's custodial staking complaints should not transfer to Cardano's liquid, non-custodial model.

Uses a wheat and gold commodity analogy to argue that regulating an activity built on top of an asset does not automatically make the underlying asset itself a security.

Maintains Cardano's staking model is fine as it stands, but worries conflation with Ethereum's regulatory troubles could still drag Cardano into an uncomfortable position, urging proactive tools like Atala Prism and DIDs.

Advises stake pool operators to weigh this regulatory risk in their 12, 24, and 36 month planning, citing precedents like FinCEN's auxiliary asset concept as a path to future statutory clarity.

Criticizes regulation by enforcement as the worst way to run an economy, arguing it is pushing crypto businesses offshore to hubs like Dubai and Switzerland.

Acknowledges bad actors like FTX, Silk Road, Mt. Gox, BitConnect, and OneCoin, but stresses these were failures of centralized trust rather than of the underlying protocols, a risk also present in custodial staking.

Vents about his solicited Twitter opinion being turned into an article and mocked on cryptocurrency Reddit, calling out the immature level of discourse in the industry.

Calls for civility, saying it is fair to point out that protocol design choices can create regulatory problems without descending into personal attacks.

Recalls testifying before Congress on behalf of the industry as a whole, pledges continued advocacy for fair policy, and argues the industry must hold accountable the bad actors who still raise money without consequence, as with the South Park BP CEO apology.

Reminds viewers that trusting someone with your private keys is always a leap of faith, since any business relationship carries the risk of betrayal.

Gives a brief update that he finally received the data room for a potential Coindesk deal but is under NDA and cannot share details yet.