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ROLLUP: Crypto in Free Fall | Vitalik’s L2 Pivot | Warsh Fed Pick | Clarity Act Showdown
01:04:38
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- [00:00]
Ryan Sean Adams
Foreign bankless nation. It is the first week of dreary February. My God, this has started out pretty sad, hasn't it, Dave?
- [00:11]
David Hoffman
First week in the bear market. Let's go.
- [00:12]
Ryan Sean Adams
Oh my God. I feel like we've known it's a bear market for a while, but this was this confirmation.
- [00:18]
David Hoffman
Some people have known it's a bear market of which you were one and I was not. And now really, you're just winding this out. Well, and I was like, you know, prices go up, prices go down. This does remind me of that one day in 2018, halfway through 2018, where like Bitcoin had fallen from $20,000 down to like 8 or $9,000. And then people were still optimistic. And then one day it went from $8,000 down to like $4,000. And that's when the whole industry was like, yep, this is a bear market. And I feel like the last people holding out on like, whether this is a bear market or not, it turns.
- [00:58]
Ryan Sean Adams
From bear market to like just pure pain market and despondence. Like, it's more like. It's more like. And crypto and it's dead. That's what it's starting to feel like.
- [01:06]
David Hoffman
Sentiment, crypto sentiment right now is perhaps the lowest I have ever seen it.
- [01:11]
Ryan Sean Adams
We'll get into that. It's not just that though. It's a very confusing time in the market. This was a tweet that you sent me right before this episode. I honestly have no idea if we are close to a crash, a melt up, or World War II, an AI industrial revolution, a mother of all short squeezes, a depression, a recession, or aliens. But it sure feels like all these things at once.
- [01:31]
David Hoffman
Yeah, crypto's not at. Not the only the sector that is just materially impacted in the market right now. There's like tech stocks to talk about. There's like a rotation. Not all stocks are down. There are some people's portfolios who are just super happy right now.
- [01:44]
Ryan Sean Adams
No one we know.
- [01:45]
David Hoffman
Yeah, it ain't us. But if you were invested in value stocks and like yield bearing stocks with revenues and dividends, like, you feel pretty good right now.
- [01:55]
Ryan Sean Adams
Yeah. All right, well, we'll talk about crypto and free fall. The market carnage will evaluate it. The question is, is it over? And also Vitalik had this tweet heard around the world. Let's give him a quote. He said this. The original vision of L2S and their role in Ethereum no longer makes sense. And we need a new path to talk about all the controversy behind this.
- [02:15]
David Hoffman
Tweet also, the White House is just demanding that the banks and crypto get in a room and hug it out. They want clarity act pass as the demand from Donald Trump. So we're going to talk about all that news. And also out of the Trump world, the new incoming Fed chair has been named. Who is he, what's his stance on crypto and is he good or bad for the markets? We're going to talk about all of that and more. But first moment to talk about some of our friends over at Kraken and their brand new defi mullet. Shiny, long, robust defi mullet. Flowing, flowing, flowing locks of defi mullets. It's called defi earn. So if you stabled up in the last few weeks or maybe you stable up today out of fear, you can put it in Defi earn, get 8% on chain, no wallet, no seed phrase, no transactions. Just put it. Put your stables into One of Kraken's three possible stable strategies to get up to 8% APY not guaranteed though, you know and you know how the defi mullet works, right? You put the stables in the front goes into on chain defi apps in the back. You can get access to that at bankless cc.
- [03:12]
Ryan Sean Adams
Crack it. Nice to have stables right now. And if you have a stables it.
- [03:15]
David Hoffman
Is nice to have stables right now.
- [03:17]
Ryan Sean Adams
I wish I knew what that felt like. But you can earn that 8% while you wait for this to all blow over. David, I'm sure it's just a passing thing. So let's talk about the market and some of the carnage we're seeing. Bitcoin has dropped below the April 2025 bottom that was the tariff scare. Where are we at the time of recording? Realize guys, this is falling like a rock. As we were even recording this episode.
- [03:40]
David Hoffman
Yeah, we, I thought like maybe it paused, but no, it continues to drop. So these prices might be outdated. Who knows, maybe we bounce by tomorrow. You know, maybe, maybe we're out of the bear market tomorrow. We, Ryan, are back to prices pre Donald Trump's inauguration. Yeah, we are, we are pre Donald Trump prices back into like the November. Remember, remember when bitcoin just absolutely rocketed on the news that Donald Trump won the election? That's where we are. We're all the way back there. We haven't erased the entire entire Donald Trump presidency. So 46% of the in total crypto market cap has been erased since this October 6th. So you know, 1010 happened and 1010 was like, you know, crypto had Already started to roll over. We've lost almost half of the total crypto market cap since that moment. That is not the only story going on in markets right now. Q. Q. Q. The tech sector down 6% in the last like week or so. And then there's this IGV which is the tech software sector, which is down 17% week over week and 30% in 2026. So not only is crypto crumbling, but other parts of the market are taking a, a massive beating. This is not, this is, this is a unique week in the markets for a variety of markets. Gold, precious metals are also falling. Gold has fell below 4,500 and silver fell below $72, which represents something like down 12 and then also 30% respectively. Those have kind of come back. But overall there is just turmoil left and right no matter where you look.
- [05:14]
Ryan Sean Adams
All right, people are selling a lot of things. What are they buying? They got to exchan thing. Is there anything that's going up?
- [05:19]
David Hoffman
Yeah. So energy, consumer staples and then US dollar yields, these are all up. So consumer staples up 6%, energy's up 4.5%. So boring. Cash flow, high revenue sectors have been the place that.
- [05:35]
Ryan Sean Adams
What's a consumer staple? Is that like Procter and Gamble? Something like that? Yeah, yeah.
- [05:40]
David Hoffman
Recession resistant products, the Warren Buffett, stuff like Depend. No, no matter what, like the crypto market does, people are still buying like shampoo and you know, stuff like that.
- [05:51]
Ryan Sean Adams
Yeah.
- [05:51]
David Hoffman
So the, the theme that I've come to like, what's a common denominator here is in addition to crypto having its own reasons to be bearish. We can talk about the Clarity act, we can talk about the incoming Fed, Fed Chair, that's potentially hawkish. But overall there's a handful of just like crowded trades across multiple asset classes that like leverage is getting kind of cleaned up and wiped out all at the same time. So you have like the AI Capex trade, you have crypto and precious metals. They're all kind of seeing the same move that you usually get when like there's a bunch of people on the same side of the trade, perhaps with a little bit too much leverage. And then liquidity is also kind of thin. And so there's kind of just a resetting of some of the risk end of the market, the growth end of the market. And especially with Google's earnings. Ryan. Google announced earnings this week and they forecasted something like a 50 or 60% increase in their capital expenditure for next week, going from $110 billion of spending to $170 billion of spending.
- [06:52]
Ryan Sean Adams
Okay.
- [06:52]
David Hoffman
And so the market digested that and was like, oh, this is a lot of money. I'm kind of scared about the whole cat, the AI side of this growth market. Let me perhaps diversify into, into value. Okay? That's what's happening in trad markets.
- [07:07]
Ryan Sean Adams
So if you want to explain these things, why is QQQ down? It's because there's AI CapEx fatigue. And it's also because are just like getting blown away right now because AI is poised to disrupt them. You know, if AI can write its own software, why do you need a Salesforce CRM? So that's happening. And then an explanatory reason for why silver and gold are going down is maybe the wash factor, which we're going to talk about. This is the new incoming chair of the Fed and he might be hawkish, actually we'll talk about that in more detail. But that could be a reason if you want an explanatory reason for why those markets are selling off. Why is there so much more pain in crypto, David? So we talked about the price of Bitcoin now 66k and continuing to drop. But what is that? That is down 21% since last week. ETH is down 30% since last week. Just getting absolutely walloped here. Why is crypto suffering for all of the mistakes from AI and SaaS products and why are we taking the brunt of this?
- [08:12]
David Hoffman
Yeah, it's interesting. It's a million dollar question. There's a chart that's been going around which is that crypto has had this very high correlation with the software index. Software is the SaaS index. There's this word that's been coined in the last week, the SaaS apocalypse in the traditional equities market. So as you kind of alluded to Claude, code came out, cloud code work, these new tools that people think are can just totally replace entire businesses like Figma, LegalZoom, Adobe Salesforce. And so the SaaS apocalypse was this week. That's what's going on in tradition.
- [08:43]
Ryan Sean Adams
Is that what this chart is? I ban a tech. This is an ETF that tracks SaaS products.
- [08:48]
David Hoffman
SaaS. If you overlay the SaaS index over bitcoin, it is the same shape. Like, I know like sometimes like doing stuff like this is a little horoscopy, but like you can't tell me that that doesn't look a little.
- [08:58]
Ryan Sean Adams
It's the same shape over the last. What is this, 18 months? Two years. Two years.
- [09:04]
David Hoffman
18 months is. Yeah, September of 2023.
- [09:06]
Ryan Sean Adams
It wasn't always the same shape. It wasn't always scroll out a little bit. It's different. This is selected data. But I see the point.
- [09:12]
David Hoffman
Yeah, I mean why is crypto down so bad? I mean I think we can talk about a handful of things. The hawkishness of the new Fed chair that we talked about. We could also just say the four year cycle, Brian.
- [09:22]
Ryan Sean Adams
Like oh yeah, that's what I want to say.
- [09:24]
David Hoffman
You can totally just say like. And I have been a fan of like saying the four year cycle's dead. But like if you look at the.
- [09:31]
Ryan Sean Adams
Price chart, I have not done.
- [09:33]
David Hoffman
It's not what the price chart says. The four year cycle is just continuing to play out exactly to a T. That's right.
- [09:39]
Ryan Sean Adams
That's right. So I am not one to really play these cycles. I don't really trade them. But the person I follow most closely as you know, I'm sort of Mike NATO pilled and have.
- [09:48]
David Hoffman
He is just getting more and more correct. I hope he's doing some public tweeting about taking some victory laps.
- [09:53]
Ryan Sean Adams
I've been trying to build him up. And for bankless listeners, there's a weekly report that Mike puts out on a podcast called the Defi Report and I joined him in those episodes. That's how I've been following this. But he's been calling for 65k bitcoin, fair market value of bitcoin since like October before even 1010 when it was like not popular, when it was not cool. And this is what's playing out. Like it's. So there's a lot of fear in the market by some level. David, if the four year cycle is playing out, this is exactly what you would expect to a T from a price perspective. Also from a timeline perspective, it's just like not that scary if you believe in the four year cycle. Like that's the thing. I, I would be more concerned if people like Mike hadn't been predicting that this is exactly where the market is going and this provides a buying opportunity. Now that doesn't mean as soon as it hits 65k like it's over. Like you buy, you know, this was it and then we, this is the bottom tick. No, there's there it's going to take, you have some time here. It's going to play out over a long period of time and this is.
- [10:59]
David Hoffman
When you start being more aggressive in your DCAs. But you don't dump your load.
- [11:03]
Ryan Sean Adams
Right, right. Yes. But like, and then we have apathy to look forward to.
- [11:08]
David Hoffman
I suppose, yes.
- [11:09]
Ryan Sean Adams
But somebody go check in on Michael Saylor and Tom Lee. Okay. See if they're okay because it seems like they're down bad. What's the story here?
- [11:17]
David Hoffman
The dats are epically underwater. So we are well below, not well below, but we are under the strategy cost basis. Current strategy microstrategy cost basis is $76,000 Bitcoin. We are, we are $65,000 Bitcoin. So micro Michael strategy. Michael. Michael strategy is currently sitting at a $6.5 billion loss. So they underwater by $6.5 billion.
- [11:41]
Ryan Sean Adams
And that seems.
- [11:42]
David Hoffman
Which kind of sounds bad. Sounds bad. $6.5 billion is a lot of money to lose. Total Strategy holdings is $50 billion. So like yeah, they have a lot of money though.
- [11:54]
Ryan Sean Adams
But. So he's been at this for five years and he's still under his cost basis. Like Michael Saylor has been doll five years and now he is underwater on that dollar cost average strategy. Right? It's notable. It's not.
- [12:08]
David Hoffman
Yeah, it's notable.
- [12:09]
Ryan Sean Adams
Yeah, it's notable. How about Tom Lee? I mean he's only been at this for less than a year, right? How's he doing?
- [12:14]
David Hoffman
He, he. In less than a year, Tom Lee managed to rack up a $6 billion unrealized loss.
- [12:19]
Ryan Sean Adams
You know it's greater than that, David. Actually it's closer to 8 to 9 billion dollars at these prices.
- [12:26]
David Hoffman
Oh no. Yeah, it's like I, I'm actually having a hard time like actually getting updated figures on that. So. So Tom Lee accumulated $4 million at an average cost basis between $3,800 and $4,000. Ether. Yeah. So I mean, impressive that he is beating Michael strategy. Why do I keep doing the Michael strategy in unrealized losses despite only being in the game one quarter of the time?
- [12:53]
Ryan Sean Adams
That makes sense. Right? Because he bought some at the top. I mean, who among us hasn't top blasted in crypto from time to time? Right. Now here's the thing though, with both microstrategy but both strategy and Tom Lee is people think that these DATs are going to like completely evaporate and die and go bankrupt or something like that. MicroStrategy does have some debt that we've talked about, but so long as this bear market doesn't last for like many.
- [13:21]
David Hoffman
Years, like, like 10 plus years.
- [13:23]
Ryan Sean Adams
Yeah, I mean he's, he's gotten well structured. It's just like not that bad and so should be able to weather this out. Right now you're not going to get an MNAV premium that's attractive, of course, on strategy. It might even go below MNAV of one, basically. And then bitmine is in a similar position, except from a debt perspective. Even better. Even though it has those unrealized losses. Of course they're just unrealized losses at this point. There's really no debt on the Bitmine balance sheet. In fact, they have a healthy cash position. Right, right.
- [13:56]
David Hoffman
It was just a bad trade, but they still own all of the ether and they have no obligations.
- [14:00]
Ryan Sean Adams
It's a bad trade. So far.
- [14:03]
David Hoffman
So far. So far in this moment, in this.
- [14:05]
Ryan Sean Adams
Yeah, of course. So. But everyone is dunking on Tom Lee and be like, oh, you idiot. Look, you've lost so much money. I don't. I think as long as the market returns, I think it will. Tom Lee will be pretty well positioned. It just take. Might take a long time for that to play out. Like he's going to have to eat crowd for a long time. Did you see there was a video clip of him actually calling a bottom at 2400 ETH earlier this week?
- [14:31]
David Hoffman
Little early, but yeah, it was just last week in which he made that clip. The clip's already outdated.
- [14:37]
Ryan Sean Adams
That was not the bottom. But Tom, there's another article I read from CoinDesk saying Tom Lee saying that Bitminds loss, paper loss, we could take paper losses by design, basically, it's all according to the plan. I mean, maybe not that, but the structure is meant to weather this type of storm. And of course they're staking their eth. So they have cash flow, positive cash.
- [14:59]
David Hoffman
Flow, unliquidatable, pretty hard to liquidate Tom Lee.
- [15:03]
Ryan Sean Adams
So anyway, it's impossible.
- [15:04]
David Hoffman
It can't be done because he has no leverage.
- [15:06]
Ryan Sean Adams
That's right, can't be done.
- [15:07]
David Hoffman
I mean, like, I think the most valid critique of Thomley you can say is that he just did not optimize for price execution and just blindly bid eth at whatever price. Yeah, but that's. That's satisfaction.
- [15:21]
Ryan Sean Adams
It could have broken a different direction. It just didn't. Mike novogratz, galaxy post $482 million loss in this crypto cash crash too in Q4. So imagine what it is in Q1 once that gets reported.
- [15:35]
David Hoffman
Yeah, that's a good point. There's also there was a conversation about during earnings, Galaxy earnings. Mike Novograss implied that Galaxy had a client that sold $9 billion worth of Bitcoin and at least mentioned Quantum during that conversation about why they were selling. And so Nick Carter and them went back and forth on this, but Nick Carter emphasizing the point that Quantum is a dampener on what bitcoin price can do in the short term.
- [16:04]
Ryan Sean Adams
Yeah, I think that's true. I'm believing I'm on Nick Carter's side of that narrative. Now. If you want to trade on Bitcoin or Quantum or where price is going, polymarket has some great opportunities for you to go do that. In fact, this is useful to just see the probability. What price will bitcoin hit in 2026? Wow, this has changed a lot. What are we looking at?
- [16:24]
David Hoffman
Yeah, so you see bitcoin price in $5,000 increments. And of course, Polymarket is giving. It's telling us the market probability of what the market thinks that bitcoin price will hit. So the most likely thing, because we are basically there, we're just a few couple hundred dollars away, $700 away is $65,000. But you can go in either direction. $60,000. There's an 80% chance according to Polymarket that Bitcoin will hit $60,000 as opposed to only a 47% chance that Bitcoin will hit $100,000 in the year of 2020.
- [16:57]
Ryan Sean Adams
And all it has to do is hit it. So it could just touch it, right? Just wick it and these conditions will be fulfilled.
- [17:02]
David Hoffman
Yes. Yeah. And so you can kind of see this is an interesting financial tool.
- [17:07]
Ryan Sean Adams
It's really interesting.
- [17:09]
David Hoffman
I would like to see how accurate or capitally efficient this tool is, but I don't think we've ever seen anything like this, I guess from, I guess other than like implied price or implied volatility from options and stuff like this.
- [17:21]
Ryan Sean Adams
Yeah, but options are so opaque to me. They're, they're, they're hard to kind of reason.
- [17:25]
David Hoffman
Yes, this is very easy to reason about. Like 55% chance according to polymarket traders that Bitcoin hits $50,000. 5, 000.
- [17:36]
Ryan Sean Adams
Okay, but David, there's a 5% chance that we hit 250k this year. All right? So don't give up.
- [17:43]
David Hoffman
That's more than just a chance.
- [17:44]
Ryan Sean Adams
There's always a chance. One of the interesting things about this crypto crash, as Eric Balcunas has observed, is that this is primarily coming from OG selling. And I guess, David, you made the point earlier. To me, it's always that.
- [17:59]
David Hoffman
It's always that. That's always how cycles end.
- [18:01]
Ryan Sean Adams
I echo that and I agree with you, but this is Eric Balchunas. He says facts only. About 6% of the assets in the Bitcoin ETF have left 94% hanging tough. Those ETF holders, they're hanging in there despite a nasty 40% downturn and many being underwater. OGs, on the other hand, the OGs are selling. So they are selling to the new holders who are, I guess, Institutional Tradify etf. That was their exercise, turning the wheel.
- [18:28]
David Hoffman
This is the cycle. This is what happens. Welcome a new generation of bag holders. Welcome to the podcast.
- [18:34]
Ryan Sean Adams
Now you gotta pay for it next time.
- [18:36]
David Hoffman
Come join the community. Eventually, you wait enough cycles, you will be dumping on people. They will come join the community. And the cycle repeats. And every cycle, Bankless gets new listeners. This is good.
- [18:47]
Ryan Sean Adams
But there's always a next cycle, right, David? There's going to be a next cycle, right, David?
- [18:51]
David Hoffman
Until proven otherwise.
- [18:52]
Ryan Sean Adams
All right. Until proven otherwise. This is some hopeful. A hopeful take. If you want to inject some Hopium, I don't know, you may not be in the mood for this, but Matt Hogan said, actually, I know it's crypto winter, but the good news is crypto winter started last January 2025. He goes through some justification.
- [19:10]
David Hoffman
So we're 13 months into this.
- [19:12]
Ryan Sean Adams
Yeah, he goes through some justification, and he basically says he shows that, well, crypto winter started last January. We just didn't feel it until now because ETFs were doing so well, essentially because of DATs and the institutional bid and ETFs. And so if it started 12 months ago, maybe we're closer to spring than you think. What do you think about this take?
- [19:34]
David Hoffman
I think that's right. I think that's right. 1. Wow. Despite the fact that I'm poor now.
- [19:38]
Ryan Sean Adams
Yeah.
- [19:39]
David Hoffman
I feel refreshed and optimistic about the opportunity that is presented to me. And this is something that Zeneca said in a tweet. Just kind of like, you know, markets take psychological discipline. And I think that's maybe like, say something I would just kind of like to call out of just.
- [19:56]
Ryan Sean Adams
There's. Investing is pain.
- [19:58]
David Hoffman
Investing is pain. This is. This is a psychological experience. This is an emotional experience. Despite how everyone's supposed to be an unemotional emotional investor, investing in markets is. Is fundamentally about your relationship with your own emotions. One thing that he says, he puts out just like a list of advice, and I want to kind of read out a few of these things. Number three is one of my favorites. Recognize that as the price goes lower, more people give up. Your competition literally leaves. There are outsized returns for people that stick around. So, like, investing just gets easier as people fundamentally give up. Uh, six, Go on walks de stress yourself. Uh, it's worth noting that if you are in this market and you've lost a lot of money, you are probably stressed out even if you don't think that you are or don't want to admit it. Uh, and so take a moment, close your eyes, have a deep breath. It's okay to be stressed. Ignoring your stress is worse than not ignoring your stress.
- [20:54]
Ryan Sean Adams
Stop checking price all the time. Stop check.
- [20:56]
David Hoffman
Stop checking prices. Do what you need to do to maintain good psychological health because bad psychological health will lead to what he says in number seven. Obvious traps that people fall into when trying to feel better. Alcohol, drugs, leverage, revenge trading. Revenge trading. Don't do that. You need to be smart. This is when the opportunities are here. So be smart.
- [21:17]
Ryan Sean Adams
Overall.
- [21:18]
David Hoffman
There's a link in the show notes to kind of list all of Zenego Sweets. But overall, I, I ask listeners if you want to maximize the opportunity that we have ahead of us in the next year. Be honest with yourself, be psychologically sound with yourself. And that's how you prepare yourself to, to be a good investor.
- [21:34]
Ryan Sean Adams
You know, it's a bear market. When Bankless goes full therapy mode on a weekly roll up. That's good advice.
- [21:39]
David Hoffman
I gotta put my undergrad degree in here somehow.
- [21:41]
Ryan Sean Adams
That's good advice though. I. My take on Matt Hogan's stake is I think he's being a little too optimistic. So I'm still in the camp of Michael NATO where the actual bear market started in October. We got a full year to put in. So not until October of next year will things start to look a little more springtimey and will we get some buds until then.
- [22:03]
David Hoffman
But does that mean that you are dca? What are you doing about that fact?
- [22:07]
Ryan Sean Adams
Oh, you gotta. Well, either DCA if you have, you know, stables or something like that and you can always dca. You can DCA through all markets. That's kind of the default strategy.
- [22:16]
David Hoffman
Yeah, but I like timing my DCAs.
- [22:18]
Ryan Sean Adams
All right, well if you, if you time it, honestly, if you time it, I would clue into the defi report and you know, Mike thinks fair market value is 65k and under and then he's gonna start going risk on. So I would tune into that and I mean not quite yet, but it's getting really attractive out there, I think for, for long term holders probably. David, we got more to discuss, including Kevin Warsh, the next Fed chairman. What's he about and is he positive for crypto? He says some things about crypto and bitcoin. Also Vitalik, his comments is the roll up centric roadmap over. David Was this the pivot? What is happening here? We'll talk about all that more, but before we do, we want to thank the sponsors that made this episode possible.
- [23:01]
David Hoffman
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- [25:08]
Ryan Sean Adams
Did you know David. So he, he was in the fomc, but he actually rage quit the fomc. He was one of the governors. He rage quit somewhere around it's 2010, 2011. Because he was fine with the initial bailout stuff. But then when the Fed like doubled and tripled down on quantitative easing, he was like, that's not what we should be doing. This is bad Fed policy. He prefers like quantitative tightening. And he thinks that the Fed has been grossly irresponsible in terms of intervening in monetary policy in the way that it has and expanding its balance sheet in the way that it has.
- [25:41]
David Hoffman
Do you mean, do you mean post 08 crisis, a couple years after that, after the initial reaction, he was criticizing the Fed for peeing, being too zerpee.
- [25:50]
Ryan Sean Adams
Yeah, well, less zerpee. So less zerpee. So zerpie. You mean zero yield, right?
- [25:56]
David Hoffman
Yeah, zero interest rate policy.
- [25:58]
Ryan Sean Adams
It's unclear what he will do with interest rates. I think he will lower them. In fact, Trump is kind of indicating that, like that's kind of why I picked them. But there's some Trump comments here, but less serpy, but more a critique of how the Fed has done quantitative easing. So buying assets basically and placing it on its balance sheet.
- [26:16]
David Hoffman
Oh, being more hands on and opinionated than what could they could have otherwise been.
- [26:20]
Ryan Sean Adams
Yeah, he basically says it's, it was a bailout for Wall Street. Asset price inflation. For Wall street, yeah. Asset price inflation is a bad thing and like shouldn't be done and it caused massive wealth inequality in the US and like he's saying many of our talking points essentially, which is why he's an interesting choice from Trump.
- [26:42]
David Hoffman
Okay, okay. What about crypto? What does he think about crypto?
- [26:46]
Ryan Sean Adams
So he had some interviews. He said that bitcoin is the new gold for people under the age of 40. He's also, he's also a holder of crypto. Here's his on chain metrics.
- [26:58]
David Hoffman
We have his wallet.
- [26:59]
Ryan Sean Adams
We know his wallets. We think we know his wallets. Anyway, he's got about 9 bitcoins. He's got about, but 745k of crypto assets between Bitcoin and ETH, that's probably worth a lot less now.
- [27:09]
David Hoffman
It's mostly bitcoin. It's mostly bitcoin. It's nine bitcoins and six ether. So, you know.
- [27:15]
Ryan Sean Adams
Yeah, total favorite of bitcoin, people from crypto, like Evitul from Electric Capital, like know him, think he's an excellent pick for, for Fedshare Actually, let. Let's get this direct quote because he went back and forth with an interviewer about bitcoin. This is what Kevin Warsh had to say. You made reference to bitcoin. And I thought I heard a little bit of condescension that people are buying bitcoin in these things. But doesn't it. Charlie Munger.
- [27:44]
David Hoffman
This is two or three years before he died.
- [27:45]
Ryan Sean Adams
Charlie Munger attacked bitcoin.
- [27:47]
David Hoffman
He called it evil in part because.
- [27:49]
Ryan Sean Adams
It would begin to undermine the Fed's.
- [27:51]
David Hoffman
Ability to manage the economy.
- [27:53]
Ryan Sean Adams
Or it could provide market discipline or it could tell the world that things need to be fixed. Bitcoin does not make you nervous.
- [28:01]
David Hoffman
Nervous.
- [28:02]
Ryan Sean Adams
Bitcoin does not make me nervous. I can hearken back to a. A dinner I had here in 2011 with a. Someone who is another guest on your show. I won't say his name. Okay. I just did Mark Andreessen, who showed me the white paper. That was the original white paper. I wish I had understood as clearly as he did how transformative Bitcoin and this new technology would be. Bitcoin doesn't trouble me. I think of it as an important asset that can help inform policymakers when they're doing things right and wrong. It is not a substitute to the dollar. I think it can often be a very good policeman for policy. So his comment on bitcoin is basically that it was a check on bad Fed policy. I think pretty healthy from an accurate perspective.
- [28:52]
David Hoffman
Accurate and healthy, yeah.
- [28:54]
Ryan Sean Adams
And he mentioned Marc Andreessen actually introducing him to it. So he's not. Not afraid of it. He's familiar with that world. He's a crypto investor. At least at some level. This is why Donald Trump, according to him, according to Donald Trump, actually picked Kevin Warsh. Trump called Warsh highly qualified, predicted that he would be remembered as one of the great Fed chairman who would not let you down. Did Trump pick him because he would cut rates? Trump was asked that very question. He replied. We talked about it. I've been following him. I don't want to ask him that question. I think it's inappropriate.
- [29:31]
David Hoffman
Hilarious.
- [29:33]
Ryan Sean Adams
What? And then he went on. It probably would be allowed, but I want to keep it nice and pure. But he certainly wants to cut rates.
- [29:42]
David Hoffman
He just wants to out of the.
- [29:43]
Ryan Sean Adams
Goodness of his own heart. Of course it would be inappropriate. It would be me to tell the.
- [29:48]
David Hoffman
Federal Reserve governor to cut rates. So I'm not going to do that because I want to peer.
- [29:54]
Ryan Sean Adams
Wow.
- [29:54]
David Hoffman
What kind of double talk is that?
- [29:56]
Ryan Sean Adams
So Kevin Warsh is Also I think highly respected among investors. So he worked for Stanley Druckenmiller. Ray Dalio also likes him. So Ray Dalio said he's respected for his capabilities and judgment. He understands the risk of having a Fed policy that is too easy as well as too tight how to judge what's what. That's a good take. Luke Grauman actually thinks that he will be less because people are talking about him as being actually hawkish, maybe more hawkish.
- [30:24]
David Hoffman
That's the word that everyone is describing.
- [30:25]
Ryan Sean Adams
This guy as hawk. I think he could be by default. But there's a difference between what you say when you're outside of the chair and when you're in it.
- [30:33]
David Hoffman
Yeah.
- [30:33]
Ryan Sean Adams
Okay. So like he might be constrained by all.
- [30:35]
David Hoffman
We know this from Gary Gensler.
- [30:37]
Ryan Sean Adams
Yeah. And so Luke Groman quotes, he says Warsh is the hawkish choice for Fed chair. But in 2018 he co wrote this Wall Street Journal op ed begging the Fed for more liquidity. That was despite strong economic growth in 2018. So it's a, it's a, you know, mixed picture. We don't know what he's going to do until he's actually in the seat. It's hard for me. Like, I know Michael NATO was, was throwing out there like, hey, he could be like super hawkish. But then there's always the question of like, then why did, why did, why.
- [31:08]
David Hoffman
Is Trump so comfortable with him putting him in there?
- [31:11]
Ryan Sean Adams
Because Trump is not one to take short term pain for long term gain. Right. And if there's any Fed policy that prescribes that, he's going to not want that to happen.
- [31:22]
David Hoffman
Yes, yes, yes. Granted, Trump also doesn't know what Kevin will do once he is in office because once Kevin is in office, he gets to act somewhat independently. He can Trump off if he wants, but one does have to like, you know, begs the question, why is Trump so happy with him coming into office if he doesn't think he's going to get exactly what he wants, which is a easy money paradigm for the market.
- [31:48]
Ryan Sean Adams
I mean, the minute stocks drop, okay, he's going to want those, you know, that, that money to flow anyway. We'll see what happens. It's a mixed picture. Very interesting choice though, for sure. David, let's get to the tweet heard around the crypto sphere. This is from Vitalik. It's a, it's a long tweet, really. What's the thing to focus on?
- [32:07]
David Hoffman
The, the thing to focus on is that he is retracting. I'll call alcohol I'll say he's retracting the roll up centric roadmap to Ethereum. He's taking the centric out of the whole roadmap North Star for Ethereum and saying that many layer twos or focusing on layer twos as the enshrined scaling solution for adherence plan no longer makes sense. The way that's what he said. No longer makes sense. He does not say that layer twos make sense, but he is saying that like layer twos as a North Star for the Ethereum technical roadmap no longer makes sense and we need to pivot. He didn't say the word pivot, but I'm happy to pivot what Ethereum scaling strategy is to something new. And so he kind of reframes as layer twos as needing to be strongly customizable or strongly specialized in some specific direction. Whereas generalized EVM equivalent layer twos that don't do anything other than just like add scale to Ethereum is now kind of redundant because he is talking about how incredibly scaled the layer one is about to be in the short term. That's kind of like the broad strokes of it, I'd say.
- [33:22]
Ryan Sean Adams
I've seen so many different interpretations of what Vitalik is saying. Maybe we should just read a few things that he said. Actually, just to get put it in his own words. And this is he said there have recently been discussions on the ongoing role of layer 2s in the the Ethereum ecosystem, especially in the face of two facts. These are the two facts. L2's progress to stage two and secondarily on Interop have been far slower and more difficult than originally expected. Okay, that's the first. The second is L1 itself is scaling fees are very low and gas limits are projected to increase greatly in 2026. Both of these facts, for their own separate reasons mean that the original vision of L2S and their role in Ethereum no longer makes sense. And we need a new path. Talk about that new path in a minute. But this to me is saying that the rollup center grid map that was instantiated sometime in 2020 didn't work out quite the way Vitalik had hoped.
- [34:24]
David Hoffman
Or that had hoped.
- [34:26]
Ryan Sean Adams
Yeah, well, I guess maybe, yeah. There's two reasons here. One is the progress has been slower, particularly in the Stage two Interop hasn't quite worked. And then also now this is the good part of it. L2 has found a ZK centric scaling path where scaling Ethereum via route of L2s no longer become necessary. Now let's go back to October 2020. Okay. And the rollup centric roadmap. The rollup centric roadmap, to me, and I think for people in the Ethereum community that were there, basically was the way Ethereum planned to scale. Right? It was a message of Ethereum will be always kind of slow. Therefore we will extend Ethereum block space via these layer 2s. And so if you are an app, if you are a user and you want to extend Ethereum block space, you, you, you must do it on an L2. And that is the scaling roadmap, essentially for Ethereum. There's other things on the back burner, like maybe we figure out how to scale L1 at some point in time. But rollups were really the path forward for scaling Ethereum at that time. I mean, is that your recollection of things?
- [35:39]
David Hoffman
That's right. Yeah, that's right. And everyone got in line around this strategy pretty quickly. And Investment into the layer 2 space grew rapidly. Because, because what Vitalik did was he put scaling the Ethereum, scaling Ethereum into the free market and allowed the free market to really like solve that problem. And a bunch of things happened that I don't think you could really have hypothesized back then. But no, no one individual roll up team had any sort of incentive to build an interoperability standard. In fact, five different interoperability standards came out of that and not anyone was really picked by the market. And this is one of the failings that Vitalik is saying that never really happened.
- [36:20]
Ryan Sean Adams
He does say that L2s have a place, right? And he talks about L2s. They can't just be a clone of the Ethereum LVM. Yeah, basically they, they should differentiate in some way so you could, you can imagine something that is extreme levels of scaling, something maybe like a mega eth or you know, app centric layer two, something like a, a lighter doing perps. But the days of just cloning Ethereum L1 and all of its apps and spinning up an EVM and setting up an optimistic bridge and slapping stage one on it, he's like, that hasn't worked out very well for Ethereum. That's a summary. I mean, there's a lot here, right? And there's multiple interpretations of this. But to me, this reflected something that needed to be said, probably right? Like a pivot that we had hoped to see, that you and I had talked about before and had hoped to see from the Ethereum ecosystem of like, hey, let's get back to scaling the L1 and L2s are great. That path is already moving forward, but that can't be the focal point for Ethereum block space moving forward. And I think he said the quiet part out loud with respect to that. Some people, though, feel like he also in this tweet through L2's under the, like under the bus a little bit.
- [37:41]
David Hoffman
And I don't know. That's not how I feel.
- [37:44]
Ryan Sean Adams
How do you feel?
- [37:46]
David Hoffman
I feel like some people are frustrated that like, you know, Vitalik pushed for layer twos and then, and then has like pivoted Ethereum away from them in a moment of time where like the market had already realized that and many people in Ethereum had already realized that and it's. And I think people are frustrated. One of the things I feel is that like, why does Vitalik have to seemingly have to be the last person to.
- [38:12]
Ryan Sean Adams
You first say that it took so long.
- [38:14]
David Hoffman
That it took that it took so long and the person with the most amount of influence and control took the longest amount of time to really come to this conclusion. Where other people in the industry, in the crypto industry have been saying this for anywhere between zero and four years now, depending on like where you are in, in, in the market. And I think a lot of people are frustrated about that. That one thing that I'm seeing that I will also resonate with is like I'm, I'm glad that we are finally able to speak plainly about this. There's been just a lot of bike shedding about layer twos that I think we don't have to do anymore. And so there's something just like intellectual honesty comes to mind. Some people are praising Vitalik for that. Overall, you and I are going to do something like a 40, 45 minute long episode on this. So we won't cover all of the details here comprehensively, but like this, it's a big moment in Ethereum's story trajectory and it deserves a lot of attention.
- [39:07]
Ryan Sean Adams
I think so too. I think it's the end of an era. I do think this is a pivot from the roller centric red map perspectives. Worth some reflection. What went right? What went wrong? I do think L2s were overall and are overall very net beneficial. And so there's this weird kind of swing on the pendulum where I feel like we're going a little, Some people are going a little too far and saying L2s were useless. It waste of time. I don't, I don't feel like that. Anyway, you and I will be recording an episode and talk about all these things shortly. Let's maybe get a reaction from the rest of the community here. So this is Tamash. What, what was his take? He is the executive director of the ef.
- [39:42]
David Hoffman
Yeah, he, he gave out a handful of takes. His first one is that many, many Ethereum layer twos have already specialized despite Vitalik taking, you know, until 2026 to say that specialized layer 2s are the way to go. So he, he's kind of alluding to the fact that like the layer two landscape has already been moving in this direction for years. And he also emphasizes really I think what Vitalik understated, which is that the idea of a ZK VM is an incredibly powerful scaling strategy that is now the core focus of that and then a handful of other things. But I think those are the two main things.
- [40:18]
Ryan Sean Adams
This is Ryan Watkins. He's an investor. He's been historically, I think fairly bearish on Ethereum.
- [40:25]
David Hoffman
Highly skeptical of Ethereum ever since this whole roll ups versus monolithic Ch B became a thing in like 2023.
- [40:33]
Ryan Sean Adams
Yeah, but he says this lot to be excited about in Ethereum lately. Explicit plans to greatly scale the L1 formal team for quantum resistance retheorizing the role of L2. So they expand the app design space, native rollup, pre compiles. He's basically saying this pivot is exactly what I want to see as an investor. And he's swinging more bullish on it. So that's an outsider's take. Joseph DeLonge is an Insider and he had maybe more the pessimistic insider Ethereum community type take that I saw.
- [41:04]
David Hoffman
Yeah, he tweeted out, I joined Ethereum to displace banks. Ethereum now feels like Vitalik's little Urbit esque side project building a temple to nothing. Urbit is a. How would you describe Urbit? A distributed systems nerd snipe around. It's very hard to describe it. Maybe that kind of illustrates it's been.
- [41:25]
Ryan Sean Adams
The next big thing among nerds for like 10 years. Right. It's like a decentralized operating system.
- [41:29]
David Hoffman
Huge. Even more niche than like the Linux, the Linux believers. And so he's basically saying that just like this is just like a niche upon a niche of like an interesting computer science project. And he joined Ethereum to displace banks. And so I think Joseph is emblematic of many people who feel like they have dedicated five plus years to building out this Ethereum vision that the market realized that was invalid a while ago. And finally Vitalik's catching up to the point and people have, like wasted a lot of time and resources.
- [42:01]
Ryan Sean Adams
Yeah. Venting some frustration.
- [42:02]
David Hoffman
Venting frustration. Which I think is totally fair and I would like to also do that.
- [42:08]
Ryan Sean Adams
Well, I can't wait for our episode then. Yeah, there's also a bear take here. This is from Tom o'. Shaughnessy. He basically says, I think it's going to be very hard for allocators to rationalize being long eth in 2026. And he gives a reason why. On the technical side, Vitalik is calling for scaling L1 and using L2s for specific use cases, but both of these are achieved on faster L1s like Solana, who've been accelerating on progress like this for years. Ethereum got me in crypto in 2017. I think Vitalik should be massively respected for calling this out, changing course, but he thinks it's going to be an uphill battle for Ethereum.
- [42:47]
David Hoffman
I will say maybe to tie the section off, the day after Vitalik put out this tweet, a pay P a double Y, which is a roll up that uses Celestia for DA, transitioned to becoming an Ethereum layer 2. And so to some degree, whatever Vitalik's saying doesn't matter. Like Ethereum's network effects are Ethereum's network effects and People will deploy layer 2s on Ethereum no matter what for their own reason, reasons and purposes. The despite whatever Vitalik is saying and how the market has, like, moved away from emphasizing Layer twos, Layer twos are still the best business model for blockchains and crypto, full stop. And that is still a fundamental truth.
- [43:21]
Ryan Sean Adams
There you go. All right, more to cover the Clarity Act. Does it still have a chance of passing? There's talks in the White House this week, but it might require Trump to give something up, which is all of his Pluto holdings. Also, Polymarket opening a grocery store, David, in your hometown. Yep, that's real news.
- [43:38]
David Hoffman
The Polymarket is what it's called.
- [43:40]
Ryan Sean Adams
All right, guys, we'll get to all that and more. But before we do, we want to thank the sponsors that made this episode possible.
- [43:45]
David Hoffman
Hey, Bankless Nation, it's David. If you're hearing this, that's because you are listening to the free Bankless podcast feed. Did you know that there is a premium Bankless RSS feed? The premium feed has extra interviews that I do for my own personal research and just deeper questions that I want answered about the crypto industry. Questions that I want to answer so I can be more informed as an investor. Both at Bankless Ventures and also just in my own personal portfolio too. Also, there are no ads, which means if you listen to the premium feed instead of the free feed, you'll get about 20 hours of your life back every year because you choose to support Bankless directly. So if you're interested in getting extra content all while skipping the ads, or you just appreciate what we do here and want us to keep doing it, we'd appreciate it if you signed up for Bankless Premium and there is a link in the Show Notes to get started. Cheers to a good 2026. Few people in crypto put real skin in the game when they make public top or bottom calls. The Defi Report is one of them. The week before the October 10th flash crash, Michael from the Defi Report emailed his entire newsletter letter saying he's going aggressively risk off and sold the majority of his book from crypto into cash. This is when Ethos about $4,000 and Bitcoin was 110. Michael runs the Defi Report, an industry leading research platform built on data cycle awareness, risk management, transparency and most importantly, skin in the game. We like Michael at Bankless, we like his analysis and that's why you hear him on the Bankless podcast about once a month. And the Defi Report is giving Bankless listeners one free month of access to the Defi Report. So if you're looking for some sharp data driven analysis to make better informed decisions around your portfolio, you can learn why and how Michael called the top and what he's doing next. All in the Defi Report Pro. Check it out. There is a link in the Show Notes. How's the Clarity act going?
- [45:20]
Ryan Sean Adams
They're in talks.
- [45:23]
David Hoffman
That's where it has been. That's where it has been.
- [45:24]
Ryan Sean Adams
They're not, not talking.
- [45:26]
David Hoffman
So Tether has come out on the side of supporting the ban on stablecoin yield, which is the opposite side of where Coinbase is, which is.
- [45:34]
Ryan Sean Adams
That's the crux of this thing. They're all fighting the crux. They're fighting over the stablecoin yield. Who gets it?
- [45:38]
David Hoffman
The banks. That's the crux. And also Donald Trump's being able to profit from crypto.
- [45:42]
Ryan Sean Adams
But we'll shelve that for a hot second.
- [45:44]
David Hoffman
We'll talk about that for a second. So Tether has joined basically the side of the banks. Why does Tether. Why is Tether on the opposite side of Coinbase?
- [45:51]
Ryan Sean Adams
Yeah, it's surprising. It's a crypto native company and you know, Coinbase is saying, hey, the yields should go to yields, should go to the people. Right. We should have the ability to do that rather than the banks. But Tether's saying no, it's okay. I mean the provisions of Stable act were fine. Keep in mind, David, Tether makes a lot of money on not passing that.
- [46:11]
David Hoffman
Keeps all the yields, Tether keeps all of the yield. Coinbase wants to give the yield away to the users and to the stablecoin holders. Tether has no interest in doing that.
- [46:21]
Ryan Sean Adams
And I don't think it's because Coinbase is like, you know, are the good guys or whatever. I mean that's an okay view of the world, but like I also think it's like a one dimensional view of the world. Let's just Cisco, where the incentives are. I mean Coinbase has more to gain by passing on yield to its customers and making money from user acquisition other ways. Tether has a lot to gain from still stablecoin yield right now. So, you know, you show me the same.
- [46:45]
David Hoffman
Everyone's playing their incentives.
- [46:46]
Ryan Sean Adams
Exactly. Everyone's playing their incentives. And this is why. But it is interesting to see how a crypto native company can quickly become an incumbent and do something maybe like anti crypto user. So it's interesting that Tether is coming on the side of the banks, but there's some back and forth with Brian Armstrong and the banker of all bankers, Jamie Dimon. What the heck was this?
- [47:07]
David Hoffman
Yeah, so Brian Armstrong has been dubbed enemy number one on Wall Street. This is in the Wall Street Journal. Just because Brian is not backing down on the stablecoin yield thing. So it's basically Coinbase versus the banks. And like you can't really deny why the banks are doing this. This is the entire business model of the banks. And so you have Brian Arms telling the banks, hey, we are going to die on the hill of you guys lose your business model. So you can kind of guess why this tension is so big. And there was this face off in. Where was this?
- [47:38]
Ryan Sean Adams
Davos.
- [47:39]
David Hoffman
Yes, still. Davos is. Davos is still news. Brian was having coffee with Tony Blair apparently when Jamie Dimond walked up and cut in on this conversation, pointed his finger at Armstrong and said, you are full of shit. Accused him of lying about banks on tv. So why did Jamie Dimon do this? Armstrong apparently went on TV and accused big banks of trying to tank the Clarity Act. Yeah, when I think Jamie Dimon is like, no, dude, you're trying to tank the Clarity act because you won't die on this hill of trying to invalidate our entire business model.
- [48:14]
Ryan Sean Adams
Sorry, dude, we had the genius. Sorry, Jamie Dimon. We had the genius bill. The term like that already passed. The terms were agreed. Now you're stapling this yield bearing interest thing into a clarity Act. A clarity Act's not about that. I'm definitely on the side of Brian Armstrong here, although. So part of me wonders whether, like whether a compromise on something is worth getting it passed or whether we should just settle for no bill here. There is a trade off there and I'm not sure what the right side of that trade off actually is.
- [48:44]
David Hoffman
I would need to talk to somebody like Jake Stravinsky about that. Like, I do think the world where you can give yield to stablecoin holders is very interesting.
- [48:53]
Ryan Sean Adams
Yeah.
- [48:55]
David Hoffman
And is it so interesting that the rest of the bill is worth it? I'm not totally sure about that.
- [49:02]
Ryan Sean Adams
Yeah, I'm not sure either. I'm not sure how I feel, to be honest. Like, some other parts of the bill are incredibly useful for, for crypto. But the White House, of course, has a weigh in on this because Trump is the pro crypto president, as he's reminded us so often in the past. There was a two hour meeting at the White House this week, included all the reps from the major crypto companies and the big banks. And basically the take from Trump was, and I think Congress is this has to get done in February.
- [49:31]
David Hoffman
Lock yourself in a room, figure it out, but get it done is what they said.
- [49:36]
Ryan Sean Adams
Yeah, the White House set a deadline at the end of February for compromise on this yield language and warned that a failure to resolve the issue would risk the entire bill. Basically, they're not going to support it. You guys have to figure this out in February or it's not going to work. And so there is some reaction that there's some common ground. People are talking and they're trying to navigate their way through it. But if there's not progress by the end of February, Clarity act is not looking good. Polymarket, there's a 62% chance, which actually I feel like that's up on the week from last time we looked at this, right? Yeah, it is.
- [50:12]
David Hoffman
So there's the stablecoin hurdle that we have to get over. And you know, at least that's, the people are talking, at least that's, that's being productive. You know, February is a short month where it's only 28 days, so we don't have that much time. There's another roadblock, however, Ryan, and the White House is. This is the White House themselves. So while the White House is yelling at the banks and Coinbase to figure it out. They themselves are being a blocker because they will not give up the fact that Donald Trump gets to continue to do crypto things in the bill.
- [50:44]
Ryan Sean Adams
Yes.
- [50:44]
David Hoffman
And so Trump's advisor Patrick Witt said for Coinbase at the White House will only back the crypto market structure bill if Democrats drop the most aggressive anti Trump ethics language and refocus the text on industries rather than the President's personal holdings.
- [50:58]
Ryan Sean Adams
Oh, wow, David. I feel like that's a hard position to take, huh?
- [51:01]
David Hoffman
This is something that apparently Donald Trump is, that's the Hill that he is willing to die on is he gets to continue to do crypto business. And so the Democrats are currently strategizing with the industry to balance ethics on stuff like this. They're kind of teaming up with, with other industry leaders to like make sure that this part of the bill does get enforced.
- [51:22]
Ryan Sean Adams
I bet the Democrats would sign off on some other concessions if they got anti corruption like you know, Trump stuff in there because Trump family has made billions maybe on crypto so far.
- [51:34]
David Hoffman
Well, this was also news this week. So Abu Dhabi bought a 49 stake in World Liberty Financial. This was news that the Wall Street Journal broke bought the stake for about $500 million days before Donald Trump was inaugurated at for president. This deal was not public. We are now finding out about this. And the Wall Street Journal also alleged in addition to the 49 stake for $500 million, at least $187 million of that was upfront payment that went directly into the pockets of Trump family controlled entities. So using WLFIL World Liberty Financial as like kind of the conduit here, $187 million got pocketed by Trump families just four days before Trump.
- [52:17]
Ryan Sean Adams
Just distribution, just owners kind of draw distribution, not investment. That's staying in World Liberty Finance and of course World Liberty Finance. It's a stable coin and it's lending and borrowing protocol. It's like not super complicated here. It's sort of, it's you know, fork of AAVE or something like AAVE we.
- [52:35]
David Hoffman
Call it, sometimes we call centralization theater. I'll call this utility theater. Utility theater. Like it's, it's a fork of ave in the front, but it's Donald Trump's pocket in the back.
- [52:46]
Ryan Sean Adams
Sure. And so this is like $200 million of direct cash flow to the Trump family. And the thing here that the Wall Street Journal is reporting is that this was a quid pro quo. It's basically after that later In May, the uae, which didn't have access to Nvidia, the latest AI chips. Chips then got access to it. So the Trump administration basically said, okay, you guys can have access to it. There's no.
- [53:11]
David Hoffman
Because this is the Biden Chip Act. The Biden Chip act, when Biden was in office, put in this rule that prevented certain countries of getting access to chips. And then Donald Trump just leveraged that. It's like, hey, Saudi Arabia, Arab countries, would you like access to chips? Please put $187 million in my pocket.
- [53:27]
Ryan Sean Adams
That's the allegation. It's not just Trump and family. It's also, you know, Trump's special envoy to the Middle East, Steve Witkoff, his son actually runs, is the CE of World Liberty Finance. His family entities received $31 million according to the Wall Street Journal. Okay, so and this is, this is all alleged corruption of, you know, crypto and state secrets and using, using your position as president and political influence in order to enrich your pockets by route of crypto. Right. So it's not great. So Trump has actually asked about this and here's what he said.
- [54:06]
David Hoffman
Mr. President, the wall Street Journal reported.
- [54:08]
Ryan Sean Adams
That the Royal Family Abu Dhabi invested.
- [54:11]
David Hoffman
Hundreds of millions of dollars in your World Liberty Financial. Can you explain why you decided to take that investment? Was that a transaction? Well, I don't know about it. I know that crypto is a big thing and they like it. A lot of people like it. The people behind me like it.
- [54:25]
Ryan Sean Adams
My sons are handling that, my family.
- [54:27]
David Hoffman
Is handling it and I guess they get investments from different people. But I'm not, I have all I can handle right now with Iran and with Russia and Ukraine and with all the things we're doing.
- [54:38]
Ryan Sean Adams
So I don't know.
- [54:39]
David Hoffman
I don't.
- [54:40]
Ryan Sean Adams
There you go. Trump doesn't know anything about it. It's his son's handling it. He's got those a big things have to handle. So there's that. David. I mean it's definitely been a double edged sword with the Trump administration there.
- [54:52]
David Hoffman
I definitely think this is part of this story about why crypto is like crumbling in price right now, like downstream of news like this.
- [55:00]
Ryan Sean Adams
What do you mean? Like just its image, the image brand.
- [55:04]
David Hoffman
Like we are now just becoming so incredibly branded alongside of Trump corruption. Like Trump is doing great things for the industry in the sense that like we're finally getting regulation passed, the regulation.
- [55:15]
Ryan Sean Adams
That we've always getting paid for it.
- [55:17]
David Hoffman
He's also, he's also taking his pound of flesh as a result. And the future Blowback to the industry might be significant.
- [55:27]
Ryan Sean Adams
Well, one benefit though is with clarity, in front of Congress, we get interactions like this. You remember Brad Sherman, famous crypto hater. This is Brad Sherman vs Secretary of Treasury Scott Bessant.
- [55:39]
David Hoffman
Do you have the authority to order banks to buy Bitcoin or to invest.
- [55:43]
Ryan Sean Adams
US tax dollars in Bitcoin or Trump coin?
- [55:47]
David Hoffman
I am Secretary of the Treasury. I do not have the authority to do that. And as chair of fsoc, I do not have that authority.
- [55:54]
Ryan Sean Adams
So we're not going to see our.
- [55:56]
David Hoffman
Tax dollars invested in crypto assets. Well, why would a private bank be your tax dollars? Congressman, Excuse me.
- [56:03]
Ryan Sean Adams
I'm now asking about the money of our taxpayers, which you manage as Secretary of the Treasury.
- [56:08]
David Hoffman
Is it going to be deployed into crypto assets? We are retaining seized Bitcoin.
- [56:15]
Ryan Sean Adams
That's not exactly taxpayer money. You collect a lot of taxes this month?
- [56:19]
David Hoffman
No, that is an asset of the U.S. it's an asset of the U.S. government. And are you going to invest, and.
- [56:26]
Ryan Sean Adams
I will point out, Mr. Secretary, reclaiming my time.
- [56:29]
David Hoffman
Are you going to invest seizure. That 1 billion of Bitcoin was seized, 500 million was retained. And that 500 million has become over 15 billion. Gentlemen's time has expired.
- [56:40]
Ryan Sean Adams
Boom. Mic drop. I do love to see Brad Sherman putting his place on topics like that.
- [56:45]
David Hoffman
But dude, nothing just kills my faith in democracy faster than watching these Congressional.
- [56:50]
Ryan Sean Adams
Congressional hearings and.
- [56:52]
David Hoffman
And they are just asking the stupidest questions.
- [56:54]
Ryan Sean Adams
Showboating and jockeying and just looking for clips. Well, we played the clip, so I guess it's working. Good job.
- [57:00]
David Hoffman
I don't think that was the clip that he wanted us to play. Wasn't what the clip he was looking for.
- [57:05]
Ryan Sean Adams
Moving on, David Ondo Finance now on Metamask as well. This is kind of cool. So tokenized stocks in your Metamask wallet.
- [57:12]
David Hoffman
Yep. This is how we win. Tokenized stocks on chain accessible with Neo banks. On Ethereum.
- [57:17]
Ryan Sean Adams
Ethereum.
- [57:17]
David Hoffman
Don't forget the world's greatest super app. It's Ethereum. Also in this world, BITWISE has acquired Course 1. Course 1 is a staking operator and they are just buying course one to increase their. What do you want to call it? Their on trail yield opportunities.
- [57:33]
Ryan Sean Adams
Yeah, yeah. I mean this is their second actually staking acquisition. Do you recall?
- [57:37]
David Hoffman
Why did they buy two more?
- [57:39]
Ryan Sean Adams
The merrier. I mean staking is consolidating. Staking operators are consolidating. Right. It's like Bitwise asset managers acquiring staking providers. Not just one. Two in this case. Course one was doing More than I think is a company called Attestant that they acquired, which is primarily eth staking course one does all of the other networks. So it's just an expansion in that dimension.
- [57:59]
David Hoffman
Ethereum is also getting its standard for AI agents. 8004 got introduced last week. We did an entire podcast on this with W. Decrapis and Austin Griffith. So we're gonna have more of that. But like ERC8.04, it's like an identity construct, an identity primitive for agents to give agents reputation and give them a spirit. A spirit of sorts so that people can know what they are and what they do and how people think about them.
- [58:28]
Ryan Sean Adams
I think it's cool. I really hope this standard catches on. David. This is in your neck of the work woods, I think. Okay, so I didn't think this was real when Polymarket announced it. They said after months of planning, we're excited to announce the Poly Market is coming to New York City. By the Poly Market, they're talking about New York's first. First free grocery store. Is this real? This AI generated?
- [58:51]
David Hoffman
It is, it is. Well, this looks like AI generated. That's definitely true. But it is a real thing. It's only for five days. It's a five day free grocery store. So it's a pop up market. Not be permanent. I don't know where it is. I bet you it's out of my way.
- [59:05]
Ryan Sean Adams
Are you gonna go? You should go.
- [59:07]
David Hoffman
I have to figure out where it is. Like depending on the neighborhood, dude, like it could be really far away from me.
- [59:11]
Ryan Sean Adams
So I feel like polymarket is genius when it comes to attention and engagement. And they got some engagement with your mayor.
- [59:19]
David Hoffman
My mayor, who I just love. I love my bear. This is Mom Donnie tweeting out a tweet. It's the classic tweet of the worst person. You know, just made a very great point. And so Mom Donnie ran on a platform of like free government run grocery stores.
- [59:35]
Ryan Sean Adams
Yeah.
- [59:36]
David Hoffman
Very commie. And then he's retweeting polymarket which is like the worst person. You know, just made a very good point because like it's Polymarket doing the Mom Donnie campaign thing.
- [59:46]
Ryan Sean Adams
Thing.
- [59:46]
David Hoffman
But he's like negging Polymarket.
- [59:48]
Ryan Sean Adams
Yeah.
- [59:49]
David Hoffman
Why is Polymarket the worst thing which is inside the new. It was in New York. That's where polymarket was born. That's where Shane Coplin created Polymarket. So this is his. It's his constituent. And you know, like mom, why is.
- [60:03]
Ryan Sean Adams
Polymarket the worst thing? That mom dummy.
- [60:04]
David Hoffman
Like, because Mom Donnie is like super Lib and libs hate all the hyper financialization of prediction market markets and also capitalism.
- [60:14]
Ryan Sean Adams
Yeah, that's part of it. But also I don't think that, you know, Trump and family and corruption schemes are giving crypto a good reputation. And so it's been very much a, like a right coded issue. Now, crypto. Crypto is partisan, unfortunately.
- [60:31]
David Hoffman
Yeah. Either way. Yeah. I hate both sides of those things. Yeah.
- [60:38]
Ryan Sean Adams
Welcome to the 20. 20, 26, I guess, David. Well, speaking of two sides, you got two on the Super Bowl. We got the Seahawks versus. Who is it? The Patriots again.
- [60:48]
David Hoffman
Who? The New Aklan Patriots.
- [60:49]
Ryan Sean Adams
Oh, my God.
- [60:50]
David Hoffman
The last time the Seahawks played the New England Patriots in the Super Bowl.
- [60:54]
Ryan Sean Adams
No. When was that?
- [60:56]
David Hoffman
This was when I was in college. So it's going to be like 2014 or 2015 or something like that. And we had Marshawn lynch, who was like the greatest. I don't even know what position he played because I don't know football. But he ran a lot and he ran very, very hard. And that's what he was known for doing. He was the greatest runner. Runner of all time. And we were at like the one yard line with like a few seconds left to go, and our, our general manager, our coach, Pete Carroll decides to throw it. And like everyone at the time was like, marshawn's gonna run it. And they decided to throw it at the one yard line. I think just because like, everyone knows that we have the best runner of all time, they're obviously gonna give it to Marshawn lynch to get over the one yard line and score the touchdown. And then Pete Carroll's like, no, we're going to fake him out. We're going to throw it. And they throw it and it was intercepted at the one yard line and they lost. And that's what happened the last time the Seahawks played the New England Patriots.
- [61:47]
Ryan Sean Adams
Well, you'll be happy to know they got 69% odds on a polymarket right now. So this game could go. I imagine you're a Seahawks fan, right? You gotta.
- [61:56]
David Hoffman
Yeah, I mean, like, I. I have watched zero football games this season.
- [61:59]
Ryan Sean Adams
Okay. Actually, so I'm excited about this football game, just also because of a particular commercial that I want to play in the moment of Zen. So this is like anthropic Vers is OpenAI and I am throwing strays at each other. Okay. I'm loving this rivalry because. So OpenAI has recently announced that they are introducing ads in ChatGPT and Anthropic is throwing down and saying we will never have ads. And so this ad is going to play during the super bowl and talk about that. Exactly. And I love and I hope David for no ads in AI moving forward. I think AI like AI plus ads ads brings a very toxic brew that is going to like prey on us in a way that, you know, that is far beyond order of magnitude more than social media and could lead to some like pretty dark bad things. And I am hopeful that models exist that are just. You just pay for them. I just want to pay for.
- [62:55]
David Hoffman
I just want to pay for my products without ads. Crazy.
- [62:58]
Ryan Sean Adams
That's right. I. Because I don't want to be the product in AI. It feels like a very bad place to be anyway. We're gonna play that in a minute. In the moment is then before I do, got to let you know none of this has been financial advice. God knows not this week. Crypto is risky. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.
- [63:23]
David Hoffman
How do I communicate better with my mom?
- [63:29]
Ryan Sean Adams
Great question. Improved communication with your mom can bring you closer. Here are some techniques you can try. Start by listening. Really hear what she's trying to say underneath her words. Build conversation from points of agreement. Find a connection through shared activity, perhaps a nature walk. Or if the relationship can't be fixed, find emotional connection with other older women on Golden Encounters Owners, the mature dating site that connects sensitive cubs with roaring cougars. What would you like me to create? Your profile?
- [64:13]
David Hoffman
What's the difference between me and you? Me and you?