The Great Convergence of Crypto & TradFi w/ Alex Thorn

Summary

Galaxy Brains Episode Summary
The Great Convergence of Crypto & TradFi w/ Alex Thorn
Release Date: March 12, 2026
Host: Alex Thorne, Head of Research, Galaxy

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Episode Overview

This episode centers on two interwoven megatrends reshaping finance and technology:

1. The accelerated convergence between the traditional financial system (TradFi) and the blockchain/crypto industry, with a focus on recent institutional adoption and the regulatory landscape.
2. The implications of potential government disclosure of UAPs (Unidentified Aerial Phenomena), also known as UFOs, for markets, society, and technology—including cross-currents with AI advancements.

Alex Thorne, joined by Galaxy Trading’s Bimnet Abibi and regular contributor Phineas, provides sharp, candid analysis on recent market shocks, the political economy of banking, and how disruptive technology is threading its way into capital markets—while also exploring the societal and financial stakes of possible UAP disclosure.

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Key Discussion Segments & Insights

1. UAP Disclosure: Drip, Distraction, or Disclosure?

[00:20]–[08:48], [18:30]–[31:04]

• Public Mood Shift & Government Communication

  • There’s been a notable change in how the US government treats UAPs, moving from dismissive secrecy to a strategy of “drip, drip, drip” disclosures. High-profile political figures and intelligence officials now openly discuss the reality of UAPs.
  • Recent documentaries (“Age of Disclosure”) and Congressional hearings have brought the topic fully into mainstream dialogue.
  • Speculation: Is gradual disclosure a way to acclimatize the public to minimize panic if full disclosure occurs?

• Market Reaction Scenarios

  • Alex and Bimnet debate what would happen to financial markets following a formal UAP disclosure:

    • Risk-Off Event: “My initial gut tells me that it’s gotta be a risk-off move.” (Bimnet, [24:18])
    • Societal Impact: Concerns around existential and theological questions, obsolescence of entire industries due to revealed technologies (e.g., anti-gravity, zero-point energy), and the need for broad social “amnesty” if past coverups are confirmed.

  • Quote:
    “What you’ve seen recently, particularly in the Age of Disclosure, is a big push for amnesty...there’s tons of cold cases, who knows, we don’t have to speculate. But high-level private companies, defense contractors, intelligence agencies that have kept people quiet or whatever, there might be calls for investigations.”
    — Alex Thorne [26:06]

• AI & Verification

  • Phineas raises the paradox: despite ubiquitous high-quality cameras, most UAP footage remains grainy; with AI-generated content, verifying authenticity only gets harder ([02:28]).

• Connection to Broader Themes

  • The slow reveal method is compared to similar strategies in disclosing sensitive military technologies (e.g., directed energy “Havana Syndrome” weapons).

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2. Markets in Turmoil: Oil Price Shocks & Credit Market Fragility

[09:33]–[18:30]

• Oil Market Whiplash

  • Massive moves in oil: WTI crude futures spike to $120/barrel due to Middle East conflict and threatened transit through the Strait of Hormuz, before falling back to $80.
  • Secondary impact: global commodity markets, European inflation expectations spike, G10 bond markets sell off.

• Private Credit Concerns

  • Growing unease over the stability of private credit: “JP Morgan is going to restrict lending versus private credit...others might follow suit.” (Bimnet, [11:06])
  • Headlines of major fund redemption halts (e.g., BlackRock).
  • Investment grade (IG) and high-yield credit spreads widen; increased borrowing costs may hamper economic growth, especially for capital-intensive/AI-driven businesses.

• Quote:
  “Credit spreads are going up. So things are getting more expensive and they’re having to pay more to borrow to buy them…at some point, that’s going to reflect itself in the broader equity market.”
  — Bimnet Abibi [16:29]

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3. AI Disruption: The “SaaS Apocalypse” and Endemic Whack-a-Mole

[15:27], [27:49]–[28:24]

• Software Rerating

  • AI is “rerating” the value of many software companies, leading to stock sell-offs on speculative risks (“SaaS apocalypse”).
  • Fast-moving AI breakthroughs create ongoing uncertainty over which sectors or roles may be disrupted next—even extending to professional services like investment advisors or dentistry.

• Quote:
  “One person suggests, maybe dentists could be disrupted, and then all the stocks related to dentists go down 10%.”
  — Alex Thorne [15:27]

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4. Institutional Adoption: The Great TradFi–Crypto Convergence

[31:18]–[62:03]

• New Developments

  • Major exchanges (Kraken, OkX) partner with NASDAQ and NYSE (ICE) to tokenize stocks.
  • Select crypto firms receive OCC banking charters—including Kraken Financial (Wyoming SPDI), now with a “skinny master account” at the Fed—potentially breaking banks’ monopoly on payment settlement in US financial architecture.
    “For the first time ever, a non-traditional bank in the US has gotten access to the Fed payment systems.” — Alex Thorne [31:30]

• Banking Lobby Backlash

  • Intense resistance from the banking lobby against stablecoin rewards, OCC charters for crypto firms, and Fed account access for non-banks.
    “They look pretty obstinate doing it. It’s...much more about protecting their monopolies and the regulatory moat...than it is about risks to the financial system.” — Alex Thorne [36:27]
  • Ongoing efforts to delay and litigate regulatory clarity (e.g., Clarity & Genius Acts), serving as a stalling tactic as banks ramp up internal development and partnerships for blockchain integration.

• Cognitive Dissonance & Strategy

  • Banks are paradoxically preparing to integrate blockchain while lobbying against open access and competition.
  • The “innovator’s dilemma” is in full effect: “[Banks] recognize the inevitability and so they know they have to prepare and want to try to make it a managed transition so they don’t get disrupted.” — Alex Thorne [40:45]

• Industry Trajectory

  • Convergence is framed as inevitable, but incremental and complex. The likely outcome isn’t the “death” of TradFi, but deep mutual adoption: traditional players will integrate crypto/blockchain rails, stablecoins, and tokenized assets into their core infrastructure—often behind the scenes.
  • Crypto’s role as “boring back-office infrastructure” is both a triumph (widespread adoption) and, for purists, a letdown compared to cypherpunk utopias.
  • Key insight: Regulations and the banks’ “pump the brakes” strategies might slow, but not stop, this convergence.

• Quote:
  “Crypto winning looks more like, we get integrated and become the infrastructure, than like, overthrowing the banks and running everything on fully decentralized rails overnight.”
  — Alex Thorne (paraphrased; theme throughout [43:34]–[47:56])

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5. AI, Digital Scarcity, and Crypto Use Cases

[59:14]–[62:03]

• AI Preference for Crypto

  • New research from the Bitcoin Policy Institute: across major models, AIs “prefer stablecoins for payments and Bitcoin for savings.” (Alex Thorne [59:14])
  • Anticipation that future autonomous agents will choose Bitcoin for its immutable, programmatic properties—a natural “store of value” for machine actors.

• Digital Scarcity vs. Digital Abundance

  • As AI detonates an era of frictionless content creation and data abundance, blockchains (especially Bitcoin) are positioned as the antidote: a verifiable scarcity in a world of infinite digital “slop.”
  • Blockchains’ open, programmable structure is perfect for AI-powered economic agents, reinforcing the mutual growth of both technologies.

• Quote:
  “In this world of increasing digital abundance…digital scarcity will become even more important and they’ll dovetail and grow together.”
  — Alex Thorne [60:15]

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Notable Quotes & Memorable Moments

• On UAP Disclosure & Markets:
  “This is the type of thing where it can’t really move forward without amnesty for the past…If they [get] that, then disclosure and productively moving forward looks easier.”
  — Alex Thorne [26:06]

• On Incumbent Bank Strategy:
  “They are actively opposing [blockchain innovation] while also building it, which is a reasonable strategy. Let’s prepare, but let’s also pump the brakes.”
  — Alex Thorne [36:26]

• On Crypto’s New Role:
  “If blockchains become just good back office infrastructure, is that the end of the exciting speculative era of crypto? …Many envisioned something a lot more cypherpunk than that.”
  — Alex Thorne [59:14]

• On Scarcity & AI:
  “Bitcoin can be an antidote to slop—slop in all forms: AI slop, content inflation, slop of the never-ending money printing.”
  — Alex Thorne [60:15]

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Timestamps for Key Segments

| Timestamp | Topic/Quote | |---------------|-----------------------------------------------------------------------------------------------| | [00:20] | Introduction; UAP disclosure “drip” strategy and market impact speculation | | [09:33] | Bimnet Abibi on oil price spikes & bond market stress | | [13:39] | Private credit meltdown, halted redemptions, regulatory anxiety | | [15:27] | The “SaaS apocalypse”: AI’s market disruption cycle | | [18:30] | UAP history overview and market implications | | [22:44] | Potential risk-off market moves & existential questions upon UAP disclosure | | [24:46] | UAP technologies, anti-gravity, and death of old industries | | [31:18] | TradFi–crypto convergence: OCC charters, Fed master accounts for crypto banks | | [36:26] | Bank lobby’s resistance, contradictory strategies, and regulatory challenges | | [40:45] | The innovator’s dilemma and inevitability of blockchain integration | | [43:34] | Preparing for managed transition, not wholesale disruption | | [59:14] | Bitcoin Policy Institute AI study: AIs prefer Bitcoin for savings, stablecoins for payments | | [60:15] | Digital scarcity as the counterpoint to digital abundance in the AI era |

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Conclusion

Alex Thorne and the Galaxy team paint a nuanced, first-hand portrait of a financial system at an inflection point:

• Incumbents and innovators are locked in a dance that will reshape back-end architecture, business models, and regulatory frameworks—slower than some crypto idealists hope, but more rapidly than banks would prefer.
• Framing these changes is a culture-wide confrontation with technological, philosophical, and even existential questions—whether about UFOs, AI, or the nature of money itself.
• The next decade will witness not only inevitable “integration,” but also the need for cross-domain expertise and thoughtful adaptation as digital assets, AI, and institutional incumbents weave together.

Contact & Closing:
Alex invites listeners to send feedback and voice notes, hinting at future participatory formats for the show.

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Explore Further:

• Read more at galaxy.com/research
• Follow Alex (@ntangiblecoins) and Galaxy Research (@LXYResearch) on X/Twitter

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For listeners:
This episode is a must-listen for anyone interested in how crypto and traditional finance are merging at the highest levels, why the banking lobby’s resistance matters, and how AI and even UAP disclosure loom as wildcards in the capital markets’ future.

Transcript

[Alex Thorne]

Welcome to Galaxy Brains.

[Phineas]

An infinite amount of cash.

[Alex Thorne]

Cash. I'm your host, Alex Thorne. The US Banking system is sound and resilient. Bitcoin meeting new all time high.

[Bimnet Abibi]

If you're not long.

[Alex Thorne]

If you're not long, you're short. Satoshi is going to come on there, laugh hysterically, go quiet.

[Bimnet Abibi]

All bitcoin's gonna be erased.

[Phineas]

Bitcoin.

[Alex Thorne]

Bitcoin's the best crypto. Bitcoin is going to zero. Welcome back to Galaxy Brains. As always, I'm your host Alex Thorne, head of firmwide research at Galaxy Bitcoin. Not zero. We have a great episode for you today. No external guest. I'm going to go on a little bit of a rant about the state of the on chain economy and its impact on the traditional financial services industry. But we will check with our good friend Bimnet Abibi from Galaxy Trading to talk about markets. Huge moves in the oil market over the weekend related to the possible lack of transitability across the Strait of Hormuz with the ongoing conflict in the Middle East. But we're also going to talk with Bimnet about UAP disclosure specifically. That's unidentified aerial phenomena. There's a poly market on whether or not the President or the Cabinet will formally disclose the existence of alien technology in 2026. And President Trump also posted ordering agencies to disclose information about this. I'm going to ask BIMAT what he thinks the impact on markets would be if such disclosure occurred. And before we get to any of that, I need to remind you to please refer to the link to the disclaimer in the podcast notes. And note that none of the information in this podcast constitutes investment advice or an offer recommendation or solicitation by Galaxy or any of its affiliates to buy or sell any securities. Well, we just wrapped up the conversation with BIM Net, which we did talk about UAP disclosure a lot. Phineas, what was your take on that convo?

[Phineas]

Bibnet. And once we wrapped, he goes, are you a believer to me? And I'm like, I don't know. I'm open, I'm open. I'm interested in how it interacts with the markets. I thought the conversation was informative in that front. I think it's hard for me to believe that we've been around for as long as we've been around and there's nothing else going on.

[Alex Thorne]

It does. I will say one of my lead skepticisms is that like, we've now had like multi megapixel cameras in every person's hand on Earth for like, what, 10 years, basically.

[Phineas]

Yeah.

[Alex Thorne]

And yet, like, we still only see, like, grainy videos usually. I mean, sometimes you see slightly better ones.

[Phineas]

But, like, I would call myself a pessimist probably, but I will say, like. And the one thing I would say to Nat, from now forward with AI, it's going to be hard to. I mean, just verifying anything that's new.

[Alex Thorne]

Yeah.

[Phineas]

Is going to be almost impossible.

[Alex Thorne]

Right.

[Phineas]

And so I would say up to this point, I've been very much a skeptic.

[Alex Thorne]

A skeptic? Yeah. Well, I think that's A lot of people have been. And I think what's really sort of turned the tide on some people's skepticism has been just these disclosures, this drip of disclosure that's been happening. We talk about it a little bit with BIM Net, but like US Senators, I mean, a decade ago. Right. Dennis Kucinich and Harry Reid. Do you remember that they both said that they saw UAP and that they're real. Right. A while ago, like 10 years ago or something. And then now you've had former intelligence officials testifying before Congress that they're real. You've got this movie that's on Amazon, the Age of Disclosure, that features a bunch of former DoD officials and senior government officials, including Marco Rubio, the current Secretary of State and national security adviser, all kind of saying it's real. And so one of the other questions, we didn't get too much into BIM that, but, like, let's say that it's is real. What is. Surely that movie, Age of Disclosure, would not have been allowed to have been made in the past when the government was covering it up, because it's real. In this hypothesis, is that part of a strategy to condition Americans to, you know, accept the news without, like, too much panic if and when it comes?

[Phineas]

Yeah. I mean, the two questions I would have are if the government or the CIA or other agencies or any agencies, any secret, you know, agency within an agency is hiding it.

[Alex Thorne]

Yeah.

[Phineas]

To two questions. One, why not disclose it fully? I guess mass panic market, you know, panic. Collapse of the economy, presumably. Presumably that's the reason.

[Alex Thorne]

But, yeah, maybe there's another reason.

[Phineas]

To me, the world seems ready to just be like, yeah, this is real.

[Alex Thorne]

Right.

[Phineas]

So it would have to be quite dramatic.

[Alex Thorne]

Right.

[Phineas]

And two, if there's anybody who would disclose it, it's the current president. And so I'm just like. I guess. I guess I just. We've lived with Trump for long enough now to know that, like, he's probably the guy who would like to disclose.

[Alex Thorne]

It feels like that. Remember, I think when he was first in office, he was going to disclose all this stuff, like, for example, on the Kennedy assassination. But then he didn't.

[Phineas]

But then he did.

[Alex Thorne]

Yeah, but, like, they didn't give it. Remember, they didn't give it all, but,

[Phineas]

like, they've given a lot more.

[Alex Thorne]

Yeah, but they released a lot of documents. But, like, let's be real, there's one question we'd like to know about the Kennedy assassination that he did not answer.

[Phineas]

Yeah.

[Alex Thorne]

So, yeah, I agree, though. I mean, he's. He's demonstrated an interest in disclosing, but he also likes.

[Phineas]

He enjoys the show of it as well. So he could be just holding it

[Alex Thorne]

back, it feels like, because we didn't talk about this with BIMAT either, but there was a 60 Minutes story episode this past Sunday about the Havana Syndrome, which is there was the CIA barracks or office in Cuba or whatever, State Department building, like, several years ago, where a bunch of US Officials there started, like, having terrible migraines and like, whatever. And even I think some even died later from their complications. I don't know if caused cancers or something. And at the time, this was sort of ominously titled the Havana Syndrome. But the fears then and still now had been that was it like a directed energy weapon of some type being deployed against our people by foreign adversary.

[Bimnet Abibi]

And.

[Alex Thorne]

And CBS did a segment this past weekend, 60 Minutes, where they said that multiple officials have confirmed its existence and specifically that the story is that DHS agents were able to purchase one of these on the black market from a Russian criminal network and that it was a little box and it could do stuff. And this is interesting to me in relation to the UAP thing because again, like, oh, they kind of framed it like whistleblowers, like leakers had told them. But, like, let's be real. If multiple US Government agencies tell something to the media, they want it in the media. And so it looks similarly like a drip to. And now I don't know why you would need to disclose that there's this weapon that exists, but maybe because we're going to use it. I think there were a lot of reports that it had been used by us in the capture of Nicolas Maduro in Venezuela.

[Phineas]

Yeah, this. This I've been following.

[Alex Thorne]

Yeah.

[Phineas]

And this I believe.

[Alex Thorne]

Yeah. So, but to me, it's like that same sort of selective drip. Disclosure is something that they want the public to know. They want the public to know, but they need to control how it is told. So it doesn't result in pain or

[Phineas]

they're ceding the market to sort of. Or the public to understand what the reaction will be. Give them a little bit, see how the reaction is.

[Alex Thorne]

That's right.

[Phineas]

So then if it's all about slowly muted, maybe we can release it more.

[Alex Thorne]

That's right. I think that's right. And not that there is necessarily any connection, but what if part of the reason to disclose that is that they're intending to disclose uap and what if this was made with alien technology? Right. I mean, that's part of the theory that people have. But even if they're not directly connected, I think it's instructive for how the government chooses to put controversial information in the hands of the public when they're worried about what the reaction might be. And I think that's what you're seeing with the UAP disclosure. The fact that New York Times was able to run that story in 2017 saying the Pentagon had a UAP investigation bureau. The fact that that movie, Age of Disclosure, was even allowed to be made. By the way, I think there's a movie by the same name. Maybe it's just called Disclosure, A fictional movie by Steven Spielberg, I believe is coming out this summer, which is probably going to be awesome. I think about Aliens should be great. Another great Spielberg Alien movie. You know, like ET And.

[Phineas]

Yeah, sure.

[Alex Thorne]

Was that other one.

[Phineas]

Well, Alien.

[Alex Thorne]

No, he. I don't think that's Spielberg, though. No. The one with the kids, it was like 8 millimeters or something. Like it was one of the film types. Was the name of the movie, I can't remember. It's very similar to E.T. he also put out like maybe five years ago or something. So, yeah, it's definitely top of mind. I think the one question nobody's asking is the one that we ask BIM Net, which is what will be the market reaction.

[Phineas]

Yeah, it's interesting answer.

[Alex Thorne]

Yeah.

[Phineas]

So you're gonna do something after the BIM Net?

[Alex Thorne]

Yeah.

[Phineas]

And so maybe tee that up.

[Alex Thorne]

Yeah, I've got BIM Net. Well, I've just. It's, you know, every month or two, I sort of roll up enough information and to have opinions about stuff and they congeal into a fully thought out thesis. And I've done this before on the show, and I have one. And I would say the main thing is that it's capital markets and blockchains are converging, and I think people know that. But I want to get into some of the pieces that we see occurring and what we expect will result from it as well. So stay tuned for that after we talk with Bimnet. But let's hop right into it with Bim. Let's go now to our friend Bimnet, a BB from Galaxy Trading. As always, Bimnet, welcome to Galaxy Brains.

[Bimnet Abibi]

Thanks for having me.

[Alex Thorne]

What is happening in markets? I've been very disconnected. I was on vacation a bit last week, it seemed. I did see that we had the crazy oil move. Maybe we should start there because that was a historic move. What oil? West Texas intermediary. Whichever spike to 120 has already come all the way back down to 80, I guess over the weekend.

[Bimnet Abibi]

Yeah. So basically on the Sunday at the futures open, you had WTI crude and Brent trade as high as like 120,

[Alex Thorne]

so which was of almost 50% basically in that magnitude.

[Bimnet Abibi]

I think it was like a 45% move. Yeah, something like that. But that sent reverberations across a ton of different markets. NASDAQ at the session lows I think was down. NASDAQ futures were down like almost 3%. And other commodity prices were also spiking. Things like nat gas, things that are associated with the energy complex. And then that led to de escalation efforts by the Trump administration.

[Alex Thorne]

Right. They started walking back some language about

[Bimnet Abibi]

the war generally making it seem like it was going to end sooner rather than later. Reassurances about their ability to step into the oil market with the Strategic Petroleum Reserve. Right.

[Alex Thorne]

I saw treasury saying they would maybe

[Bimnet Abibi]

be trading in the futures market potentially. I don't think that's confirmed or not.

[Alex Thorne]

That's right.

[Bimnet Abibi]

And so basically it seemed like we hit the market based stop loss order for the administration.

[Alex Thorne]

Right.

[Bimnet Abibi]

And everything that's happened since, you know, that Sunday open has been, you know, de escalation oriented.

[Alex Thorne]

Yeah.

[Bimnet Abibi]

Now the problem is like there's still limited traffic through the Strait of Hormuz and folks have cut production in response

[Alex Thorne]

to that because they don't have boats to put it on necessarily.

[Bimnet Abibi]

Correct. And there's also like a backlog of orders and deliveries.

[Alex Thorne]

Correct.

[Bimnet Abibi]

Yeah. The situation is very tricky. The futures market is a little dislocated from physical markets because at the end of the day, oil and commodities is about moving molecules from A to B and the true cost of the molecules, not some financial representation in futures form or options, whatever it may be, like the ultimate cost is higher. And taking a step back, what markets are basically saying is that the inflationary impact of higher energy prices and what they know about the situation on the ground is gonna lead to persistently high inflation. Especially if you look at European inflation breakevens because their economies are super sensitive to things like nat gas prices. You're talking about some places in G10 economies having 4% expected inflation. That's a big deal, particularly for the bond market. You've seen a pretty huge sell off in G10 fixed income. The US is probably the best one where it's had the least amount of sell off because it's probably least sensitive to energy prices and net gas prices. But the rest of the bond market is a bit scared. And then what's happening in conjunction with that is you've had these fears around private credit. And there was a headline out today saying that JP Morgan is going to restrict lending versus private credit. And the implications are that other banks and large G sibs as well as some regional banks might follow suit. And you've already had a crazy amount of redemptions.

[Alex Thorne]

I saw that BlackRock has a big private credit fund that they halted redemptions for. Correct.

[Bimnet Abibi]

And a bunch of other ones have also halted redemptions. And so, you know, people are starting to get concerned.

[Alex Thorne]

This is a big concern for the Treasury Secretary. I was watching him maybe two weeks ago at the Dallas Economic Club and he was talking a lot about this. They were sort of trying to get him to talk about inflation and other stuff like that. And he kept saying like, just to be clear, like I'm one of the main things that we're concerned about. Not, not even. He wasn't even saying that there were fears that they had. But like one of the main things they're following is the private credit markets and their interaction with public markets. And like what this. Because I guess this has been. I'm not an expert in this at all, but a giant rise in this private credit is pretty new in the scheme of things. Right. And now you're getting so much lending is done through private means and private credit and not at the banks where regulators do have a lot of oversight. And so it's like outside the view of the regulatory agencies and the treasury side then if it goes.

[Bimnet Abibi]

Yeah. But again, it is a relatively small market in the context of things. I think the global private credit market is around $2 trillion versus I think the S&P is worth 65. And the global bond market is way bigger than that. But it doesn't mean that the underlying reason why some of this credit is shaky is going away or doesn't manifest itself in other parts of the market. Part of the reason private credit sold off so much is because of the AI rerating of software enterprises basically does that challenge large parts of the traditional equity markets as well. I mean you've seen software already calling

[Alex Thorne]

it SAS apocalypse a couple weeks ago. Others and you know, one person like suggests that like maybe like dentists could be like disrupted and then like all the stocks related to dentists go down like 10%. Right. And there was one about, I think, I can't remember who said this, but it was like a research note from a bank or something that said that registered investment advisors could be the next one to go. And then all the brokerage stocks went down.

[Bimnet Abibi]

Yeah, we're still playing whack a mole with that definitely.

[Alex Thorne]

Yeah.

[Bimnet Abibi]

And you know, AI's only continuing to get better, arguably at an increasing rate.

[Alex Thorne]

Yeah, that's true.

[Bimnet Abibi]

What that like the private credit concerns and the SaaS concerns, you're seeing that manifest itself in credit markets like so IG credit has gone from like a 40 handle to like the mid to high 50s. High yield credit spreads have also widened out. So not only are the outright like nominal level of interest rates going up because of inflation concerns surrounding oil, but the credit spreads that a lot of companies need to pay for are also increasing.

[Alex Thorne]

So it's like a double wage. Things are getting more expensive and they're having to pay more to borrow to buy them.

[Bimnet Abibi]

Correct.

[Alex Thorne]

Basically

[Bimnet Abibi]

at some point that's going to reflect itself in the broader equity market. Because if you think about it, one, what is an equity? It's in theory discounted cash flows. If your yield levels are going up, the present value of those assets are going down. Right. And then you think about how much paper has to get rolled this year or how much new issuance there has to be on a go forward basis. You know in the US you've got all this CapEx, right. That has to get funded, a lot of which hasn't been funded. I think this week alone you've got like almost $70 billion worth of IG that's getting issued. What is IG investment grade. So higher quality behind the highest quality.

[Alex Thorne]

The highest. Got it. That's an enormous amount. 70 billion.

[Bimnet Abibi]

Yeah, but the real implication is okay, as paper matures and has to get rolled or as more capex stuff needs to get funded, it's happening at higher outright levels of Treasuries or risk free rate and higher credit spreads. And so that might cause some problems.

[Alex Thorne]

So you're saying there might be even some. Let's say it's an AI company, we're talking about data center type buildout or any Kind of company that needs to borrow a lot of money, it might become cost prohibitive, and thus you'd see growth slowdown.

[Bimnet Abibi]

No, no. I mean, it's just. I don't necessarily think that the market freezes up. Like, there's an. I think there's enough liquidity, and if there isn't, you know, Fed will probably step in on the. On the liquidity side. But it's just like the cost of it is going up, and so you're getting RORs are going to.

[Alex Thorne]

Right. When you need even more, it's getting harder. So it's an interesting situation. Let's turn to another topic I've been talking with you about for a while, which is UAP disclosure. Unidentified Aerial Phenomena.

[Bimnet Abibi]

Yes.

[Alex Thorne]

Formerly called UFOs. You know, I think our audience probably knows a bit about. I mean, everyone knows something about UFOs. Maybe you've just seen like, you know, Will Smith saying, like, in Independence Day, like, welcome to Earth. One of my favorite movies, by the way. Independence Day, phenomenal movie. But I'll give a little just backstory for the audience if they haven't been following and I'll skip forward. But suffice to say, for all of millennia, all of time, there have been hints that there might have been some sort of uap. You can see this in ancient hieroglyphs and medieval woodcuts. I mean, who built the cave paintings and stuff, right? So that question has long existed. And then in the 40s, right, there was the event, whatever it was, in Roswell. And then sort of through the 50s and 60s, UFOs became a cultural phenomenon. Right. There were sightings. There's all these movies made about it. Right. The government created a project called Project Blue Book to investigate and then reportedly shut it down in 1969, saying there was nothing to see. So then you fast forward and by the way, like, discussions of it were relegated to, like, conspiracy theory, basically. And you may even remember there's a. I know you like the West Wing, which I'm a big fan of. There's an episode where a guy goes from, like, NASA, he goes into Josh Lyman's office and is like, there is an unidentified flying object, like, coming in and out of radar over Hawaii, and our Navy doesn't know what it is. Don't you think this matters, Josh? And he's like, no. So anyway, the situation has changed dramatically recently. In 2017, I think, was the real blockbuster. New York Times revealed the Pentagon had been running a secret program to look into it again. Navy pilots had started coming Forward with cockpit videos, objects exhibiting flight characteristics that defy known physics. Congress held, has since held congressional hearings. David Grush, a former intelligence official, testified under oath about crash an alleged crash retrieval and reverse engineering program.

[Bimnet Abibi]

Biologics that were recovered.

[Alex Thorne]

He said there were biologics. Right. Like. And this is all just an open congressional testimony. Kudos to. Yeah. And kudos to Congress. There've been a lot of. Harry Reid, the former Democratic Senate majority leader, was a major proponent of disclosure. And coming out about this, I think he actually once had told a story and I think Senator Reid has passed so rip but he had told a story about seeing a UAP himself and it being a spiritual awakening moment for him. But kudos to Congress, which has really been pushing and giving, you know, David Grusch and other, I guess, whistleblowers, we'd call it. Anyway, now there's a new documentary that's been out for six months or so on Amazon called the Age of Disclosure, which compiles a lot of this story and has former DoD officials disclosing and saying that this is going on. And by the way, features like Marco Rubio, I believe, from when he was a senator, but it's not clear he's cited as the national Security Advisor and Secretary of State, which he currently is also saying that it should be disclosed. So, and then just to wrap it up, to lead into the main question I want to ask you, which I don't think people are asking, and it's a very important question, but Trump, following Barack Obama, did an interview where he basically said aliens are real. And he tried to walk it back and saying it was like the, well, like the Fermi Paradox, where it's like, what I really meant was like, surely they're real because the universe is so large. But in response to that interview, the president, President Trump, posted on Truth social media ordering agencies to release files related to, quote, alien and extraterrestrial life, unidentified aerial phenomena and unidentified flying objects, and any and all other information connected to these highly complex but extremely interesting and important matters. So it's not fringe anymore. And there is a poly market which currently has pretty low odds, like in the 20% range of formal US government disclosure before the end of this year. So the question to you, Bimnet, is, and we'll leave aside some of the big topics and philosophical questions. I'm interested what you think the market reaction would be to a formal UAP disclosure. Some ideas. It could be a risk off moment, maybe flight to gold or Bitcoin or safety, maybe defense rallies on the idea that we're going to, I don't know, spend a lot more money either to build stuff with the tech or to fight it. Right.

[Bimnet Abibi]

Yeah.

[Alex Thorne]

Or maybe the market just shrugs it off because of this drip, drip, drip of disclosure has sort of conditioned the public and everybody kind of already knows. What would you think if, I don't know if the President came out tomorrow?

[Bimnet Abibi]

I mean, at this point, people have gotten desensitized to it. But I really think what's important to think about in this scenario is, like, why there's been this drip, drip, drip of information, as if, you know, they

[Alex Thorne]

wouldn't have let, like, intelligence officials testify in the past.

[Bimnet Abibi]

Right. Yeah. And you know why? Like, there's still, like, scientists that are going missing. And, like, there's been like, three.

[Alex Thorne]

I saw that. Like, there's energy experts and stuff, like physics labs. Yeah. There was one in California, the military

[Bimnet Abibi]

official, like, two weeks ago that's gone missing.

[Alex Thorne]

Former Dodge, like, UFO official. I mean.

[Bimnet Abibi]

And so, like, I feel like the reason and why the government is like, drip, drip, drip is important to know, but I don't necessarily know if that reason is going to be given away by.

[Alex Thorne]

Right. We don't know what the reason is, but it does feel like what you would allow to sort of slowly push it out into the public domain if you did intend to disclose something.

[Bimnet Abibi]

Right.

[Alex Thorne]

It feels like disclosure is coming.

[Bimnet Abibi]

Yeah. But, yeah, I mean, just going back to that question, like, my initial gut is like, I can't avoid the theological questions. Right. Like, why are we here? What is that? All that stuff.

[Alex Thorne]

That's not typically the type of stuff you want the market thinking about, because it creates fear.

[Bimnet Abibi]

Fear. So my initial gut tells me that it's gotta be a risk. Golf move.

[Alex Thorne]

Yeah.

[Bimnet Abibi]

But in terms of, like, the crazy stuff, I think is really kind of like the physics implications.

[Alex Thorne]

Right, Right.

[Bimnet Abibi]

Like, oh, yeah, these objects, like, move around.

[Alex Thorne]

I mean, there's famous, apparently documented, certified, formerly classified sightings of the Tic Tac, where it's, like, accelerating to the speed of sound with no noise and no propulsion and then stopping immediately and hovering. And like.

[Bimnet Abibi]

Yeah. I mean, there's that Kentucky congressman guy that's like, oh, yeah. You know, we think there's like, Thomas Massey, Thomas Massie's like, oh, yeah. We think there are four bases in the ocean.

[Alex Thorne]

Right.

[Bimnet Abibi]

In the mountains.

[Alex Thorne]

Right.

[Bimnet Abibi]

And so, like, are they living here? What are they trying to do? How many species are there? Like, you know, what parts of physics, like, do we know? Is there, you know, zero point energy Free energy. Like there's so many like.

[Alex Thorne]

Right. Things to anti gravity technology.

[Bimnet Abibi]

Yeah. Oh man.

[Alex Thorne]

Yeah. But so you think risk off in the sort of. I think risk off and then they manage it.

[Bimnet Abibi]

There could be like whole industries that are completely obsolete.

[Alex Thorne]

Totally. And. Yeah.

[Bimnet Abibi]

And you have to like present value that like today. Right. And so it has to be risk off. And I think that's one of the big motivations as to why there hasn't been that much disclosure and why they're

[Alex Thorne]

dripping the disclosure to try to minimize the impact and the fear not just on the market, but just in Americans and people's minds.

[Bimnet Abibi]

And it's also, I do think that there's a little bit of an angle where I'm pretty confident that like lots of laws have been broken in order to prevent disclosure and to avoid mass panic and to, to keep secrets secret.

[Alex Thorne]

Yeah.

[Bimnet Abibi]

But what you've seen recently, particularly in the age of disclosure, is a big push for amnesty.

[Alex Thorne]

Yeah. And I think that'll become a question. Yeah, it'll become. I'm sure there's tons of cold cases where, who knows, we don't have to speculate. Everybody can understand what we're speculating about. Right. There's movies about this and I don't

[Bimnet Abibi]

know, but I mean high level private

[Alex Thorne]

companies like defense contractors or like intelligence agencies that have kept people. People quiet or whatever. Yeah. There might be calls for investigations. But you're right, it probably is the type of thing where it can't really quite move forward without amnesty for the past, whatever it was that they had been doing. If they want to, if they get that, then disclosure and productively moving forward looks easier. Yeah.

[Bimnet Abibi]

But right now equities in my head are less about does this company produce cash flows, et cetera. And I think it's just turned into a store of value trade for a lot of stocks.

[Alex Thorne]

You just got to own stocks to

[Bimnet Abibi]

eat inflation to keep up with inflation. And so does that thesis get challenged by uap? UAP disclosure? Because it's really, it's so hard. It's like, does money even matter?

[Alex Thorne]

Like,

[Bimnet Abibi]

I don't know where it goes

[Alex Thorne]

because of the unbelievable weight that the big tech companies have in the indices and just in the market their size AI is. And that AI could disrupt a lot of them. Has that dented the store of value thesis a little bit as well? Right. Like if they're just. They should be, not anyone in particular, but like SaaS companies should be less valuable. They should.

[Bimnet Abibi]

I mean like every day I'm confronted with somebody that like, creates something really cool and new.

[Alex Thorne]

And like, I mean, it's our favorite, Our favorite conversation at the office is like, literally, what are you building with AI at this exact moment? And then should I build it too? Right. I'm always asking people now what they're using it for so that I can get ideas for what to use it for.

[Bimnet Abibi]

No, absolutely.

[Alex Thorne]

So it's, it's.

[Bimnet Abibi]

But you get this, this is one of the. This is a little meta. But AI, if run honestly, can maybe discover the physics concepts that have been kept hidden.

[Alex Thorne]

Right.

[Bimnet Abibi]

There was that research piece that got actually published in a physics journal like

[Alex Thorne]

a couple weeks ago on zero point energy.

[Bimnet Abibi]

Correct. And energy in the quantum vacuum. Apparently in a single quantum vacuum block or whatever, there's more energy than that's produced in the sun. So if you can figure out a way to harness that. But really, I do think that there's been a ton of censorship of physics departments and knowledge, which, by the way,

[Alex Thorne]

is totally precedented with nuclear technology, as one example.

[Bimnet Abibi]

Manhattan Project.

[Alex Thorne]

It's crazy to think that as part of this disclosure, if it occurs, one of the things that Americans might be told, which is what you're saying that actually whole branches of science may have been classified in order to cover stuff like this up.

[Bimnet Abibi]

Absolutely.

[Alex Thorne]

And that is just a crazy thought. Not just because of whatever might have been deemed too classified related to UAP science, but also just the idea that there are bodies of knowledge that you're not allowed to work on, which was true during the Manhattan Project as well.

[Bimnet Abibi]

Yeah, I mean, the other parts are like the historical, like, implications. I mean, if you read about.

[Alex Thorne]

Right.

[Bimnet Abibi]

Some, some of the ancient stuff, even

[Alex Thorne]

like in the Bible. Yeah, there's, there's crazy, like, descriptions of things that, you know, are often, I think, by theologians attributed to like, angels, but like, you read the actual description in the Bible and you're like, what is that? Yeah, that doesn't sound like I'm, you know, a kindly fellow with wings. That sounds like something a little different.

[Bimnet Abibi]

What's fascinating though, is Elon's take on this stuff. He still claims that. Oh, he hasn't seen any information on this stuff. I'm like, dude, come on, like, you run the largest private space company.

[Alex Thorne]

You guys haven't like, documented that there's no chance, because there's also been a bunch of old stuff. And I think we'll wrap it up in a second. But like, there's videos of apparently, like, apparently real of like, from the ISS and like, in space and like, entails from Astronauts who like we see weird stuff up there that doesn't always make sense, like. Yeah. Things flying around in the atmosphere and stuff.

[Bimnet Abibi]

I mean, I could talk about this all.

[Alex Thorne]

Yeah, yeah. Well we, I. So your. But your initial take is what risk off and then they try to manage that and, and you know, drip and try to calm fears after they. Yeah, yeah.

[Bimnet Abibi]

It's just a lot of, there's a lot of people have panic. I mean folks that are like deeply

[Alex Thorne]

religious and like it raises the biggest, deepest questions. It's not just like let's keep the factory open and make widgets. And that's our main focus now. We've now got to reassess everything.

[Bimnet Abibi]

Yeah.

[Alex Thorne]

All right, well, we don't know when that's coming, but I think the poly market is about 20% likelihood that it happens before the end of 2026. So we'll see. And thank you my friend Pimnadabibi from Galaxy Trading.

[Bimnet Abibi]

Thanks for having me.

[Alex Thorne]

All right, so I wanted to give a little update of where I see the convergence of traditional capital markets and blockchains because there is no doubt it is converging. They are converging.

[Bimnet Abibi]

Really.

[Alex Thorne]

The sheer volume of developments is almost impossible to track day by day, even let alone week by week. Just a couple recent things that have occurred. So Kraken is reportedly partnering with NASDAQ to somehow assist them with tokenizing stocks. That followed previously last week when I believe NYSE announced ICE, which owns NYSE announced a strategic investment in OkX apparently also to solidify a partnership to do the same, numerous crypto companies have gotten OCC Banking Charters, which is the National Banking License and very interestingly and importantly Kraken Financial, which is their Wyoming special purpose depository institution, which is effectively a narrow bank, a non lending, fully collateralized bank in Wyoming. It was just granted apparently provisional access to a so called skinny master account at the Fed, which is a. An account at the Fed that gives them an ABA routing number. It lets them affect final settlement of dollars. They can't access lending facilities or other things at the Fed, but they can move money. And I don't think people realize this just as an aside on that one, that you can't actually move dollars without a bank that has a Fed account. Okay. In fact, basically the only type of money that really there's only three types of money of dollars, right? There's money in a Fed Master account, there is physical paper and coins and There is the TGA, the Treasury General Account at the U.S. treasury. Like so every time you've ever sent money like Phineas. If I send you money on Venmo, obviously if I have money on there already and you don't cash out, then it's really just rejiggering inside Venmo's bank account. But if I put money on Venmo from my bank and then send it to you on Venmo and then you export the money back to your bank, that's Venmo's not doing much. Venmo is a slick UX on top of a traditional bank and the traditional bank is using correspondent. If they don't have a Fed account, the traditional bank literally has a bank account at a bigger bank that has a Fed account. And it's that Fed account that ultimately settles the dollars. Right? Effectively so totally ground shaking news that for the first time ever, a non traditional bank in the US has gotten access to the Fed payment systems. It's not old, it's not new worldwide. So the bank of England already gives these out to like 300 non traditional banks like you know, Stripe and Revolut and like Fintechs, so does the European Central Bank. But in the US it has never has not been the case since the creation of the Federal Reserve. Right. Banks have had a total monopoly on payments. And like I said, like even other things you think you're doing payments with ultimately is actually a bank under there, right, that's doing the payments. So this potentially portends an entire new era of how payments work in the US Setting wholly aside the question of stablecoins. And there's a whole bunch of other stuff that's been happening with the convergence between traditional banks and financial services and blockchains. But I want to talk about the banking lobby because they've been actively opposing stablecoin rewards and thus holding up the Clarity act in the Senate. They have, they are very big mad about this skinny master account, claiming it will it poses risks to the financial system, which you have to chuckle at because like it's the banks themselves that have repeatedly posed risks to the financial system. And also Kraken is a non lending, fully collateralized bank. How does that pose a risk to the financial system? And there might be a way it might be too safe. People might, I think they might worry that, well, if they. Where would you rather hold your money, Phineas? A bank that has a zero percent reserve ratio and is either lending or investing all of your deposits. You need to rely on that just to send a payment. Or would you rather use a bank that takes no risk at all? Right.

[Phineas]

No risk at all.

[Alex Thorne]

Right. I think that's, this has been one of the theories about why the Fed hasn't previously allowed these types of accounts because they're worried that it would expose the fragility of the fractional reserve banking system, which is the rest of the banking system. So maybe there is some truth to there being risk from the banks, but I will say they're actively opposing that. And you know, that's, that's a pretty esoteric argument I'm making. I think the reality is like, it's just like actually insane that like why does, why do Americans have to exclusively use highly levered institutions just in order to send a payment? Right. That seems crazy.

[Phineas]

Yeah.

[Alex Thorne]

So I think it's going to continue and expand would be my guess, like it has in the UK and in Europe. But there are, the banks are also. Now I saw a story in the Journal, Wall Street Journal that they're threatening to sue their own regulator, the Office of the Comptroller of the Currency, the occ, which is the national bank regulator, because they're mad that it's been giving out banking licenses to crypto firms. Right. I think Ripple has one, Anchorage has had one.

[Bimnet Abibi]

Right.

[Alex Thorne]

And there's others. I don't want to, I don't want to misname any, but. So they're suing the banks, the banking regulator, about crypto firms getting access. They're probably going to sue the Fed over the skinny master account. You have to assume this is the banking lobby. So the Bank Policy Institute, which represents like Goldman and Morgan Stanley, some of the biggest banks, the American Bankers association, which is like all the banks, and then the icba, which is the lobby for the community banks, they're all furious about all three of these things. Stablecoin rewards that was going to threaten the banking system. OCC giving licenses to these new banks, that's going to threaten the banking system. Letting a firm access a Fed account, that's gonna threaten the banking system. Right. It's this full throated opposition to these innovations, each of these undeniably an innovation. And they look pretty obstinate doing it. Like it's pretty transparent in my view that it's much more about protecting their monopolies and the regulatory moat that they've created for themselves over the decades in the US Than it is about risks to the financial system. Again, not letting people get interest on their money. Like we had a whole episode with Omid Malaikhan from Columbia Business School a couple weeks ago that was really good where he just wholeheartedly thrashed their arguments about they don't even do the lending, most of it, et cetera. And we talked with Bimnet earlier about private credit. This is what's so interesting as sort of a dichotomy to me because you've got all the big banks doing stuff with crypto, saying they're building it, right? You got the big custody banks like BNY and publicly working on crypto custody and other stuff, right? You've got Morgan Stanley with Bitcoin, ETFs and a bunch of other work they're doing, right? And those are the same big banks who on the one hand are preparing to integrate or actively integrating blockchains into their products or workflows, while their lobbyists are directly opposing the innovations that would let others do it. So this is a very interesting time, I believe, for traditional financial services because this is one of the most highly regulated and gatekeeped industries in gatekept industries in the world that has not been subject to substantial disruption from innovative technology. I mean, maybe like, you know, it's true that like the, the voice and physical trading floors of old were replaced by computers. Right now if you go to the New York Stock Exchange, it's mostly just performative, right? And it is cool place to go, but like, the people there aren't the ones actually like trading a lot of the stocks usually. And so, so there have been some obviously technology improvements, but they have not been wholly disrupted by a challenger before. And this is another point. This is one of the reasons I don't think stablecoin rewards are quite the issue. I think that in clarity, in the clarity debate, I think it's much more, again, about them, perhaps rightly fearing disruption to their monopoly, the banks. Right. So, and I've argued that the, the, you know, fears of like, oh, community banks will be hurt specifically is kind of a red herring. And they're kind of using these cute little hometown banks. They like to pat them on the head and say, you surely wouldn't want to kill this. They're using community banks as a human shield in the negotiations. And it really is a dichotomy because they are actively opposing it while also building it, which is a reasonable strategy. Let's prepare. But let's also pump the brakes. And you see this on tokenized stocks, despite all the announcements, like, really not, you know, not that much from a regulated standpoint has occurred yet. Right. We expect more from the SEC that, you know, they're preparing while they're also sending their lobbyists to oppose it. It's very. What do you make of that? Is that feels like an interesting dichotomy to me. It seems like they recognize the inevitability and so they know they have to prepare and they want to try to make it a managed transition so they don't get disrupted. Basically, that seems to be the strategy.

[Phineas]

I think also that the pace of change is making people uncomfortable and they don't know how to change or evolve or integrate or update or tweak. And so they stall. You see this in a number of different sectors that are related to crypto or blockchain or. Now, AI, of course, is the obvious elephant in the room when it comes to the pace of change.

[Alex Thorne]

Even the newspapers relating to the Internet. Right. Like now New York Times makes more money than they ever made just with nytimes.com.

[Phineas]

right. And these, these, they're. They're. They could acknowledge that many of these changes are ultimately inevitable and even positive.

[Alex Thorne]

Right.

[Phineas]

And I think, I do think that most people, when you sit down and have a conversation, when you break down the merits of blockchain and its integration with TradFi.

[Alex Thorne]

Right.

[Phineas]

I think people would agree that ultimately that sounds good. Decentralization sounds appealing and is inevitable and positive. But the level of understanding and the sort of the mental and what they would potentially lose its power. You know, there's a lot of things there. And so the pace of change, I think it's more of a delay. It.

[Alex Thorne]

Right. Yeah. I mean, we did. When I worked at Fidelity and I ran blockchain research in the innovation department, you know, that group had done 50, I don't know, call it 50 proofs of concept for how to use blockchains in Fidelity's businesses, which of course are brokerage, not a bank, but trading. Right. Stocks. And the vast majority of them, we decided were either not viable, were not viable for one of a few reasons which were, okay, the tech wasn't ready. Okay. Right. That occasionally happened, but. Or it's the wrong tech. Actually, the issue with XYZ was something else. Not that like we need a decentralized ledger, but some other thing. But a blocker for plenty of them was the presence of intractable entrenched intermediaries. Right. Where it was like this would be a good idea, but the main parties that would need to be would have to disrupt themselves and they choose not to. Right. And that has been a whole issue. Right. Like with all innovation is, you know, and you can disrupt. Right. There's the. They call it the innovators dilemma. Can the incumbent, like innovate fast enough, faster than the challenger can disrupt them as like sort of the, and that's, that is I think where we find ourselves now with the banks and the brokerages facing the innovators dilemma where it's like they have to, they want to prevent the disruptors from disrupting the innovators but they also have to innovate themselves because you can see it converging on a point. I do think their protectionism is going to fail ultimately and I think they probably know that. And like you said it's an effort and delay I think to give themselves time to build it up. It's quite interesting, quite interesting.

[Phineas]

What would lead to them successfully avoiding what we believe or what we hope?

[Alex Thorne]

Well, they want to rebuild, I mean they want to rebuild, right? Like think, think about and I, and by the way, I think they absolutely, absolutely can. Like I'm not at all predicting the death of the traditional banking system or the traditional capital markets. Far from it. I think they will successfully integrate a lot of this. Take stablecoins as an example. I think they're cool because I can sell, you know, with reasonable assurances self custody digital dollars myself for the first time I don't have to put it in a Venmo app that actually has a bank and a correspondent bank below it that has a Fed account. Now of course they can be frozen or seized but like you know that's really only used for terrorism and stuff. So I'm not saying it's like full self custody the way like hiding dollars under your mattress might be but I like that and I intend to use noncustodial wallets to store dollars once that becomes widely, you know, once, once the economy is widely. Of course I have stablecoins separately in for, for crypto purposes for the most part but once everyone can accept stablecoins I'll be walking around with digital dollars self custodially but prob will actually still just use the payments cards, the fintech apps. Right. And those companies will be using stablecoins in their back office processes. So again I think that's like an interesting thing where there will be some marginal bleed where I no longer use a checking account because I can just use a non custodial stablecoin wallet. But most people probably won't do that in which case they'll survive. Right? And I think that's what we're going to be seeing. There'll be disruption here and there but it's not like everyone immediately decides to self custody and stops using their bank or Their credit card. Right. That's why the card companies like Visa and MasterCard have done tons of work on stable coins. Right. They intend to use them. So I think it'll be similar for the big banks and for the brokerages. Right. And, and you know, it's almost like the Bitcoin ETFs. Right. Like a lot of people just own that. They don't own the quote unquote physical Bitcoin. Right. And, and that has big and possibly negative implications for crypto architecture or the ethos of self sovereign use of crypto. But that tension has always existed in crypto as well, like the push and pull between custodial services and non custodial decentralized use cases. There will always be both. To be clear and I think like in relation to the Bitcoin ETFs as one example, like rather than oppose them, I think what, what I've advocated for and have done myself is work to make sure they're on our team, that they understand that Bitcoin is only valuable because it can be self custodied. That doesn't mean everyone must self custody, but there are certain red lines that can't be crossed or we'd lose the decentralized nature which is actually the thing that makes it valuable. Right. Like if it was just a ledger of fake, you know, digital coins in a bank's ledger, that then it's not a decentralized blockchain and that's been possible for decades and it's been valued by the market at exactly zero. Right. The reason. So it's more about, I think, trying to help them understand the, the actual core benefits. It's not about trying to convince them to adopt an ethos. It's to make sure they understand why these things are valuable, why people want tokenized stocks, why they might use stable coins. Right. And not corrupting that. So trying to turn the institutions into our biggest advocates and not our adversaries has been, I think that that's the only real path. You're not gonna, you can't bring in the idea that, you know, hey, here's Tradfi, this giant institution and we're just gonna tear you all down and use defi. Like they'll never stand for that. The government won't stand for that. Right. So it's an integration, not a, you know, excoriation or a.

[Phineas]

Well, it's also why folks like yourself, not to pump you up, but folks like yourself, that situation with a deep understanding of both sides. I mean there's, there's a lot of sort of, like, there's a lot of many folks and there's a lot of discourse that are just very crypto focused or blockchain focused that don't acknowledge the real actual. The way that these things happen in government and the way they're adopted in committee rooms and.

[Alex Thorne]

Right.

[Phineas]

You know, and that's a really. There is somewhat of a disconnect there. There's been more, obviously, in recent years of sort of the. That crossover, but still, I think, quite minimal.

[Alex Thorne]

Yeah. I mean, there's. There's some noted. Yeah, there have been some. But you're right. It's like, it's kind of something that the crypto world has anticipated as far on the horizon. Right. Like, we will win eventually. We'll win, quote, unquote. But I don't. It's one. A sign of the times, of how successful crypto has become that now I'm talking about the inevitability and that the banks are actively building while lobbying against, like, they didn't care 10 years ago. Now they care so much that they're spending millions to build and spending millions to delay. Right. Like, it's a major milestone, I think. But you're right. This is also like, earnestly discussing and delving into and planning for and building for the overlap and eventual integration of crypto into traditional capital markets. That is a sign of the times as well. Right. And so those conversations. There are now more people than ever before who can do that crossover, which is good. That's a story of growth. Right. But this is gonna be one of the more interesting tensions in markets for a decade, this transition. There will be a transition period. In fact, I'm more convicted now than ever before that they really are gonna integrate. There really will be stocks on blockchains. There really will be stocks you can use in defi. There will be your ability to, like, send in or receive stable coins or bitcoins from your banks and brokerages. I think they all know that it's great. The products are great for them, by the way. Like, look how big these crypto exchanges have been. They're great businesses. Right. Like, there's. The banks want that business. Right. And they don't have to take a moralizing view about whether or not they like bitcoin. They're not out here saying they like every stock that they let clients trade on their platforms. Right. Like, I think that what's so interesting is that what had been furious opposition, even literally to, like, bitcoin specifically has now morphed into complacency and acceptance of, of these assets and this technology. But there will be a lot of difficulties in integrating too. I think that's why there's a good delay strategy. And there are many companies, galaxy included, helping these institutions adapt and adopt, adapt to blockchains and adopt blockchain technologies. It's kind of interesting too, because the genius act is really the straw that breaks the camel's back here. Because now if you're a bank, a big part of your job, as we discussed, is sending and receiving money. And now there's this new, totally sanctioned, regulated, extremely efficient way to send and receive money. Surely you immediately need to at least have the capability to do that. It's not saying you have to issue your own stable, but like, surely you have to be able to send and receive stablecoins or, and provide the option to your clients to send or receive stablecoins. Like pretty quickly some employees of some companies are going to start getting paid in stablecoins and they're going to want to put them in their bank account. And any bank that can't do it is going to lose that customer. Right? So, but what's great is that that's the key management, the wallets, the custody of the private key material to manage stablecoins, either for the bank itself or for its clients, is materially similar to the wallets and key management and custody you need for Bitcoin and other cryptos. So it's like even if they don't want to allow you to send and receive Bitcoin from your bank account, they yet or they don't think they want to build that, but then they decide they have to build stablecoins, they ultimately kind of end up building both at the same time. So I think that is already happening. And I would say Clarity act, which as we all know, is effectively tied up in this dispute between crypto and the banks right now, it would materially help here as well. That is the last leg of Clarity that a lot of these banks and brokerages and institutional investors want to see to fully settle the question of how cryptos fit into the markets. Broadly, I'm of the view you don't quite need clarity and like, look at all the stuff that's already happening without a new statute, and that you're going to get a lot of what clarity has from administrative guidance or interpretive, you know, interpretive guidance and exemptive relief and stuff from the SEC or the cftc. But that stuff is possibly time limited, it's not codified in statute it can be changed and rolled back. And it's not the foundation upon which you want to build an entire long lasting new financial economy. The way things like the securities and Exchange act, right, the main legislation that literally empowers and powers US capital markets was all passed in the 30s. So something like clarity, without clarity, we're probably in pretty good spot with this current regulatory agencies, but that's theoretically only about two and a half more years, right? Then administration changes, who knows what happens. Whereas codifying genius and then clarity in federal statute, that's the thing that hundred year industries are built on. So I think they do want it, we need it, they need it. But also is it all about stablecoin rewards? That's ostensibly what the dispute is over in clarity, but I think it's also part of their just like pump the brake strategy here, right? Like they need time. And one of the other things, a couple other things I want to talk about in relation to all of this. One of the outcomes for crypto is that it's boring now, right? Because the big growth area right at this moment, and there have been many over the years, we've talked about them, you know, NFTs and whatever else and stuff, the big growth area right now is effectively back office infrastructure at traditional financial services companies. That is the, there is a gold rush happening right now for that. I talked about NASDAQ and Kraken and OKEX and NYSE and there's myriad other examples of this, right? If blockchains become just good back office infrastructure, settlement rails, clearing tokenized assets, stablecoin payments, et cetera, is that the end of the exciting speculative era of crypto? Right now we're getting what we wanted, which is they really are admitting that blockchains and defi have really good uses and they're gonna try to bring them in house or interact with them. Like isn't that what winning looks like? And I think it is, but I think it also can feel deflating to the crypto natives because many envision something a lot more cypherpunk than that and a lot more self sovereign than, you know, Satoshi didn't say. Like the root problem with traditional fiat money is that the banks don't have a faster payment. Stablecoin. That's not what he said. Right. Like the underlying vision that launched Bitcoin and subsequently spawned this entire crypto ecosystem was something even more disruptive than that rather than just like, oh, this is a back office tech upgrade for the existing financial system. So I think that's creating that the fact that this convergence is occurring and it is occurring is extremely positive and a sign of maturity and adoption of the technology. And it can bring a stablecoin or a bitcoin or an ether into every person's account or portfolio or whatever, which is positive. It's also a little deflating and I think it's one of the aspects in this bear market, even though we're at $71,000 of Bitcoin, which still to me seems so high. I mean not like it's too high, I think it should be higher. But I mean I've been around for a long, we've been. I was sitting in this chair when it was $15,000 after FTX. Right. Like so in this bear market I think this is one of this tension between the traditional and the defi is one of the sort of malaise causing tensions in the, in this current bear market. That's quite interesting. Okay, another final thing here this time about bitcoin a little bit different here. The Bitcoin Policy Institute, great folks over there shout out Connor and David and Grant and Steven and everyone who works at the bpi, that's the Bitcoin Policy Institute, not the Bank Policy Institute. They're both called BPI which is I think an intentional joke on the bpi. They put out a fascinating study, they did an empirical study and ran 9000 queries across all the major Frontier AI models and they publish the queries and they're non partisan and like they used, I don't know, scientists to prompt in a non biased way. But they found in interrogating the models that AI broadly prefers stablecoins for payments and Bitcoin for savings and they have numbers for each. The one that preferred Bitcoin the most across the most test was anthropic, I think the lowest was OpenAI but very interesting dynamic I think possibly set to emerge, particularly if we actually do start to see autonomous agents running businesses, stuff like that is that they are choosing Bitcoin for store of value and I think shouldn't surprise anyone. That makes a lot of sense. Right. And it makes particular sense for an AI, let alone one that was invented by humans and humans like Bitcoin for store of value. But an agent can't store wealth in a non immutable digital asset, then there it's pretty straightforward thought process. Wait a sec, someone can take my wealth away? That's not a good option. Right. And so you can, I can really envision that Bitcoin will be widely owned by AI and by the way things like the lightning network are great for AI, I mean, lightning is faster than stablecoins actually. It's incredibly fast transfers, but it's a little clunky to use. But you know who's good at figuring out weird little tech stuff is the robots, the clankers. They're good at it. So I think it's something to watch. And I think also, you know, in this world of increasing digital abundance, where I can generate images of anything I want and at the push of a button and tell Claude to write 10,000 words about XYZ and it's just like instantly done, right? Like in that world of supreme digital abundance, I think digital scarcity will become even more important and they'll dovetail and grow together in a way. I'm saying that Bitcoin can be an antidote to slop, slop in all forms, AI slop, content inflation, slop of the never ending money printing. That's going to certainly be part of our story of growing digital abundance. It can't be copied, diluted, manufactured without limit, right? And that's juxtaposed against the AI revolution in which everything can be copied, diluted and manufactured without limit, right? So I think there's going to be, and I think it's deeper than people realize, like the dichotomy that is going to, they're going to grow together for that reason, I think digital scarcity, whether in the form of Bitcoin as an asset, which of course is scarce, or just the verifiable scarcity that blockchains provide, I think they will be overlaid on top of more parts of our economy, as we talked about in finance, as an antidote to the AI slop that's going to be, that is being produced at astronomical rates and volumes. So I think something really important to follow there as well. And it's part of our thesis at Galaxy as to why we are working and building in both AI and crypto. Because blockchains, I think provide not only the data structures that agents need to transact, right? They can't. Like, I mean they actually can, which is crazy. But like AIs aren't loading up a website and dragging a mouse to a box, right? Like and clicking a button. They want to interact with data and transactions programmatically. And blockchains are programmed perfect for that. They're open, think of them like open API structures that anyone on earth can access at any time and build on, right? And that is very powerful. And you're going to see, I think, not only payments and the stuff that storing wealth and the assets, or not just their adoption in traditional financial services, but you're going to see blockchains emerge as an important counterweight to the digital abundance of AI. And they are already. So we're at the early stages of that, too. These have been the two big thoughts in my head over the last two months, basically, since the start of the year. Is assessing, participating in the convergence of traditional finance and decentralized blockchains. Of course, we have our own tokenized stock, glxy, which is our stock. So we're working in that space directly. Right. And we build infrastructure for blockchains for institutions. Right. So obviously we're participating in the convergence. We also believe it is a megatrend. And then this overlap between bitcoin and AI. And like I said, not even just bitcoin, just verifiably, provably, scarce, transparent digital ledgers. Right. Of course. Of which bitcoin is the oldest and most decentralized. Ethereum and Solana are excellent, as well as blockchain structures that are decentralized. These are the two big ideas. I don't know, people, if you have comments on these ideas. I mean, I've been posting plenty about them, but hit me up. You know, we gotta get a phone number. Phineas, remember you like a radio station, people can call up. Do you know Heather McMahon, the comedian? She's got a great show. I love it.

[Phineas]

Yeah, we need a phone number.

[Alex Thorne]

She has people voicemail her.

[Phineas]

Yes.

[Alex Thorne]

And like, she plays the voicemails on. On her show and they're always really funny. I think hers is absolutely not is the bit.

[Phineas]

It's like, for now, send Alex DMs on Twitter with a voice note.

[Alex Thorne]

Send me a voice note and we'll consider playing it on the air. Yeah, I think that'd be fun.

[Phineas]

I like that.

[Alex Thorne]

All right, my friend, that's it for this week's episode of Galaxy Brains. Thank you to our friend Bimnet Abibi, as always for joining and everyone have a safe and happy weekend. We'll see you next. Thank you for listening to Galaxy Brains, the weekly podcast from Galaxy Research. I'm Alex Thorne, head of firm Wide Research at Galaxy. Follow me on X N tangiblecoins. Follow Galaxy Research on X, L X Y Research. Read our written [e-mail] research and don't forget, if you like Galaxy Brains, to like and subscribe on your favorite podcast platforms like YouTube, Spotify, Apple Podcasts and more, we'll see you next time.