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- [00:00]
Matt Dines
If you go long bitcoin, your long offshore dollar, stablecoin liquidity, this is where it's going to be fought and won and everything is at stake here for the nation states because if the US can do this and get the genius act stablecoin dollar anchored to the T bill that sets up a future where we have this bitcoin reserve and then eventually you can actually accomplish the next version of the 1875 Gold Remonetization act where we can have a dollar that is redeemable at a fixed peg versus call it gold Bitcoin. We'll see how that plays out.
- [00:36]
Brian
We are back. We are back. It's the last trade. We are sitting down today with Matt Dines, CIO of Build Asset Management. Matt, it has been a while since you've been on the show, so thank you for joining us today. How are you doing?
- [00:48]
Matt Dines
Doing great. Great to be back on here with y'.
- [00:50]
Michael
All.
- [00:50]
Matt Dines
Can I just provide invite a quick
- [00:53]
Michael
disclaimer for anybody that if you're invested in DATs or stretch and you do not mind open minded, objective conversation about it, then keep listening. But if you are not that individual, you should turn off the pod now because I have some sense that we're going to end up in that direction and you're not going to be happy. And then when you go back to Twitter and reference it, we told you before, it's just not going to be the thing you want to listen to. So you actually are. This is our disclaimer that you're giving up the right to go on Twitter and scream about any analysis that's discussed here.
- [01:27]
Brian
Well, I should mention as well you don't want to turn the podcast off just yet. If you turn the pod. If you don't want to hear us talk about it, wait until the second half of the show. The first half of the show I think is going to be some of the most important foundational insights and alpha that you can get in the space as it relates to the shifting that's happening with the monetary order and the global macro. So if you don't want to hear the DAT conversation, you can hop out the last half. But Matt, let's talk about what is happening behind the scenes because I actually think of a couple weeks ago I had a tweet, I was quote twee something around the fact of someone mentioned something regarding Iran being potentially a big foreign policy error. And then you actually said check your. You replied to me and said check your assumptions and you laid out a really solid thread online about Some of the key things that you're paying attention to. And then you recently authored just two weeks ago, a new piece, which I'll pull up here in a second, called the Offshore Dollar is Being Left out to Dry. And so I would love for you to set the stage. You can take us back to the election of 2024. What you've been paying attention to in this monetary reshuffling set the stage about what is actually happening and what most people are missing currently.
- [02:32]
Matt Dines
Thanks for that intro question. It's a great place to start. So I think what we've seen this year, 2026, is a big year, I think, in history as this kind of reshuffling, reshaping of all the social systems, governance, regional spheres of influence kind of coming to their clash against each other, economic blocks, all of that shifting alliances taking shape and financial changes happening at the base layer, infrastructure of global capital markets. And then on top of that, rerouting of supply chains for the business of global trade, which is the largest business franchise in the world in my view. Ships moving cargo from A to B, you know, from Persian Gulf to Asia China or Persian Gulf to Europe, all of that. This is all part of this massive reshuffling that's going on. This is the way I think about it. And I think what we're seeing with so many people just, you know, spurging out, you know, just, just, just losing it, especially with Operation Epic FURY Ever since February 28, it's kind of been a reveal to me that a lot of people didn't have any foundational grounding and their entire mental map of geopolitical reality, but also financial reality, which is a twin brother of that, and it bleeds into Bitcoin. So we'll get onto Bitcoin later. But the way I think about what's going on, this thing started the unwind of the old post World War II order. Bitcoiners talk about it in terms of the petrodollar. I think a better term is the offshore dollar or euro dollar, because it's bigger than just one commodity, but it's the fractional reserve, it's the fiat dol. But the key thing about this system, I think that we missed in our discussion in 2020, 2021, as we were talking about money printer going brrrr QE, ZIRP, you know, fiscal Cares Act, Inflation Reduction Act, American Recovery act, all of that deluge. We missed some key things at the base layer and I'd say overlooked the mechanics of the dollar structure that came from that legacy, post world, post World War II order from the Allied powers coming out, what was established at Bretton woods, what actually happened in 1971, what happened as we moved towards this system where LIBOR in London was the kind of the command and control center which set the global price of dollars from let's say, the 1950s, 1960s all the way until 2022 when it was deprecated. This is all part of a bigger thing happening in my mind now. To bring that into that piece I wrote on Substack, the offshore dollar is left out. The way that this system worked was the buildup in dollar claims on this global dollar standard was encouraged, right? It was a pure fiat system. To get more global or to get more GDP squeezed out of the global economy required just more increasing amounts of credit, right? So we all know this. The more $ious we were printing, you can see it in the charts, the less bang for the buck you get out of your gdp. Now, the way I think about this Fed dominance, right, we had these Fed chairs from, let's say Bernanke, or, sorry, Greenspan era, to Bernanke to Yellen to Powell, and their, you know, monetary policy was basically kind of in business with this global offshore dollar system. Why do I say that? This offshore dollar, right, there was no Fed like Linder of last resort. At the end of the day, all they had is US Treasuries as their base, their risk asset. And then all of these dollar claims that were building up in this system were essentially just leveraged USTs, hence my handle right on X Free plug there. I just, you know, thought it was funny, came up with it, whatever, but it fits here. All right, so every time this global offshore dollar system wants to go into a recession, what happens, right? Well, you have to have a Fed that is cooperative with this system, which is centered out of, you know, and then it spreads into all these offshore, you know, dollar banks, Hong Kong to Caymans, et cetera, all of these, you know, global money centers, and then the secrecy jurisdictions where you hear about, you know, money being hidden. Cayman Islands, British Virgin Islands, all that stuff. Under the Fed dominance era, those four Fed chairs I mentioned, what they do, right, this system required more Treasuries, more base layer collateral, like, emitted into the rest of the world, from the onshore US Economy to the rest of the world. So the fiscal stimulus, right, was actually bailing out this offshore dollar system. And we had Congress people who were, let's just say, like, financially incentivized to cooperate with this and Pass this crap. Right. And you had presidents who were also willing to go along and you know, sign their name on this crap. And then you had Fed chairs who would do what it took to, you know, comply, give this offshore dollar system what it needed whenever a recession materialized to reflate the system. What do I mean by that? We cut interest rates, make the debt easier to service. You know, functionally this is kind of easy to understand. GDP down, that's less economic activity just for the debt to, you know, kind of take its cut out of. So what do you do? Oh, you just lower the cost of debt service to mirror that. So you follow those on the way down and then you reflate. So the Fed would increasingly do QE quantitative easing to pull out all the excess debt from the system, essentially monetize it on its own balance sheet. Right. My point is we saw the apex of that pattern or that whole model with COVID in 2020-2022, in my opinion. And this is why I call this era Fed dominance. Right. You had to have a Fed who would dominate the onshore system to comply with the rest of the world. Right. This system has kind of squeezed all of its water out of the rock. And we've been in a transition ever since. It's right out in the open for people to see. I just think sometimes it's hard for us recognize it's here. So this shift, I mean it started in the 2000 and tens coming out of 2008. We had a discussion in finance. I remember at my time at Citibank 2011, 2012, we're talking about what's going to come after Libor. Right. And everybody, the Americans, it was slowly trickling into the industry. Hey, these guys are just making up Libor every day. There's no market pricing. Also there's the Libor rigging scandals. It's like, well, that's just normal course of business. They were just talking about the way the mechanism worked. Like you have 16 bids every day, highest and get highest and lowest get trimmed. People would obviously the banks are going to do what they need for that interest rate to work for them. All right? So we started to see as early as early 2010s coming out of the GFC. We needed to move to a new indexing rate to set the marginal price of dollars in the system. And that led to this SOFR thing, secured overnight financing. So instead of the marginal cost of dollars being set in London, you know, every day and all like your mortgages, your car loans, everything were anchored to that Cost of borrowing. The Fed launched this sofr thing in 2016. It really kicked up in 2018. But what that did is it pulled that overnight funding cost of dollars in the system towards New York. So the way SOFR works it's tri party repo and the tri party means you got a borrower, you got a lender and then you got a custodian in the middle who's actually watching this thing. And that is Reserve bank of New York. Right? So you have these entities now to get dollars you have to come to New York. And I know this sounds like blasphemy or just craziness to bitcoiners, but it's actually a secured rate, right? So instead of just unsecured borrowing, which LIBOR was essentially supposed to be, what's the lowest rate you'll offer for an overnight dollar loan on an unsecured basis to your best customers? Right. SOFR flips that. It says what's, what's your overnight rate to a credit worthy borrower in the financial system who needs dollars but they're going to post collateral so usually it's going to be Treasuries T bills. So there's, it's actually secured. So now you've got a market rate and there's skin in the game, right? That's huge. I can't tell you like it's a, like the way I, the way I put this to people now. Instead of infinitely rehypothecating dollars in this credit bubble system like where it just blows up offsh, you actually have to put some of that like your, your lowest layer collateral, the levered USTs, you have to actually put that into ante on the hand. So you don't just get to play free hands and operate with a dealer, the Fed in this case who is going to just bail everybody out every other hand when, when you know the table goes broke in some scenario like 2008 or 2020 and just inject like double everybody's chip stacks or something like that with a, with a QE or a bailout. Okay, so that's SOFR key piece. We also had a political battle and also an election to settle it on the future of the dollar itself. So this fiat dollar or a liability based definition of a dollar where you interact like our money in the private sector in dollar terms is just a liability of a bank or a financial institution as your counterparty. We are moving and that's the old offshore dollar standard part of that we are moving towards an ass of a dollar. Right? And I'LL get into what that is, but it's right out there in the open for everybody to see. So key things politically, 2022, the Biden administration puts out an executive order. I think it's 14067. But what it was doing was directing all of the government agencies towards the cbdc. And what, like, when we say cbdc, what do we actually mean? I think bitcoiners have a good sense of it. What, what it actually means is your base layer money is. It's an outside money to the rest of the economy. Like, it's a, it's a database entry at the Fed that the private sector can't actually own and hold it accountable or hold this credit issuing, you know, authority accountable to the European Union is going that route. That's what the digital euro is. It's going to be a public outside money. Like it's like private sector. We don't trust you with this. It really just means it's cartelization is what it amounts to. Like, can't tell, in fact, everything we're used to from the old world as bitcoiners that we don't like, that's, that's the path EU is going down. All right, what is a, like a private sector money and an inside base money. What that would mean is you've got private sector entities, so banks issuing, you know, your dollars and then your inside money as a, as a base money would be like some sort of monetary good that's in the hands of the private sector. So gold, bitcoin would both fit that definition. Right. We as private sector entities can choose to hold that base layer money ourselves. And that keeps a check on the financial system from overextending, credit system claims, fiat, fractional reserve, all of that. All right, so why do I bring that up? The 2024 election was a key point, like a fork in the road in the monetary history of the United States, in my opinion. And it's gonna become more and more obvious as time goes on. So you think about this transition. You had the Biden administration and their little power faction going one way towards this CBDC route. Enter the scene. You could say the Trump campaign showing up at the Bitcoin conference. 2024 in Nashville was a huge moment. It told us what that was, was signal this little political movement, this, whatever this MAGA thing is that's being tapped into, like that underlying faction of the electorate. Someone, his campaign saw that and they kind of latched on to this move is bitcoin that's been underway since, you know, September, October 2008. Right. Right at the time of the Lehman collapse. What comes in and he rides that to the election victory. You could say that Butler, Pennsylvania is what, you know, made it a fit, made, made him unstoppable that election campaign. But I would say building his, his block of the electorate. You know, I think about what you say, crypto adoption, but bitcoin adopters in the electorate. What, what percentage of the American population wants bitcoin? Right. You call them bitcoiners, but just want to own it. I'd say, I don't know, 2 to 3%, 4%, 5%. You bring those in, that's enough. In these close elections when there's polarization, it's just a tug of war. Who can take power. We flipped 2016, 2020 back in 2024. Getting that 3, 4, 5% of the population is a huge swing in a Democratic election where it's 50% plus one majority control. All right, so why do I say this? It's like the transition from a liability based dollar with the offshore dollar standard and you could say the Federal Reserve notes fiat dollar, all of that towards this asset backed dollar which starts with a stablecoin. Right. You can see it in Scott BESANT and the 47th administration, the people who talk about money and what's going on in the financial system. You can see it in the priorities. Right. You see it shows up in day one, basically like first week of the election campaign. What does Scott Besant do when he's on Meet the Press or spe? He gives you your quiet part out loud where he says, we're going to monetize the asset side of the balance sheet of the federal government of the United States on behalf for the benefit of the American people. Tough thing to understand, but what it amounts to, it's this transition towards an asset backed $. And it starts with this genius act. Stablecoins, right. That's a redefinition of a dollar. And when I see that, if you've read history books, Edwin Vieira's Pieces of Eight, the monetary history of the United States is a good kind of history, fun read if you like this stuff, but goes through all these changes in the dollar. When you see that happen, it's usually a good tell. That's the way this big picture thing that is the United States wants to bend. All right? So then you get, at the same time you start working on the strategic bitcoin reserve, right? And everybody, I think in bitcoin we talk about having low time Preference, I think we're not in this case, we're like, we want this now. Right. But if you look at it, he actually is very clear. The United States is going to set up a bitcoin reserve. It's just a matter of getting it done properly through the legislative channels. So you have all your I's dotted t's crossed. So it's on a sound footing, both from a legal footing, implementation footing, and also like a technological footing. How are you going to actually custody these things, all that stuff? All right, so you see the executive orders, like they start with first, it's like all these bitcoin that are scattered around these government agencies, these little fiefdoms, just someone's little business franchise within this big government complex that's ballooned way too large in size. I think would generally, most of the audience will agree with that. We start collecting those and say, oh, all of this like, hey, U.S. marshals, you see some bitcoin over here and a civil asset forfeiture or a criminal case, something like that, or FBI, you have some, those are all going to come in. And those map to treasury now. So that was your first step in that executive order establishing that central line of command that all these bitcoins are going to roll up into Treasury. That's your first tell. All right. And then you're seeing in the last week or two now we're seeing like the next steps in that process of this bitcoin reserve. It started as the Bitcoin act with Senator Cynthia Lummis, all of that. It's now, I mean, I think Senator Lummis is not running for reelection is my understanding. It's shifted over. That bill has a new sponsor and it's become a little bit more encompassing. Like it's. This is Begich from Alaska, Congressman proposed just a few weeks ago the American Reserve Modernization act, which would basically, it kind of takes from that old bitcoin act and says, okay, we're targeting 1 million Bitcoin as the target for this bitcoin reserve. Hold them for say a 20 year period. But it's basically like, it's an even more refined version in my kind of read of the situation than what the bitcoin act was. So you can see this timeline, this order of events, and I think the heart of it, like the key step in this transition, this offshore dollar, this Federal Reserve note, they're circulating at the same time as the next dollar is out there. We're in that middle state where you've got two competing dollars and this old dollar, like that's the path. We're just 86ing. It's not happening anymore. That includes this rewiring of all the supply chains of commodity flow and the payment rails, the dollar rails that those transactions process on. So say this is why Dubai is being attacked. This is why the IRGC is in play. This is why what's going on in Japan is huge. This is why Venezuela is coming into the picture. But all these things are, it's like we're right in the middle of the peak innings of this dollar transition process going on in my framework. And I think that's just how I start building up my foundation of what's going on. So we'll leave it there. Open up some discussion. Sorry for hogging the mic.
- [20:20]
Brian
Well, thank you Matt. You are the guest after all. So appreciate you setting the and I'm sure Michael and Brian want to share some thoughts too. I just want to make sure that before they do, I want to come back to a couple of things just to refresh my memory before Brian and Michael chime in. So I want to make sure that we touch on the monetization of the balance sheet of the US Treasury. We don't need to get into that right this second, but I think that's a critical distinction for all of us to understand because one of the main takeaways I want to make sure that the audience comes away from this episode is understanding what does it actually mean to pivot from the Fed dominance that you characterized over the past several decades into a what you've described kind of like a Bismarckian playbook, which is what the treasury is currently doing where they're looking to monetize the asset side of the balance sheet and what that actually means for investors. But before we get into that, I am curious Brian and Michael, if there's anything that you wanted to react to because this is probably going to be the next leg of the conversation that might take a little bit of time. On Ramp Finance is live and the Genesis program just launched. Over half the spots are already gone and once they are claimed they are gone for good. The first 210 signups get one year free of multi institution custody Highest on ramp rewards tier earn up to 5% 1 1/2% cash back on every swipe a signed copy of gradually then Suddenly by Parker Lewis 21,000 sats deposited into your account upon activation. Sign up in 5 minutes on ramp bitcoin.com use the code TLT and do not wait. Once these spots are claimed The Genesis program closes for good.
- [21:51]
Host
Yeah, I mean, I was, I was just going to say, you know, that's a fantastic sort of overview of your thinking on, on all of this machinery and, and the sort of shifting landscape. One question that came to mind as you were walking through that is, you know, I think we kind of as bitcoiners, we jumped to like the bitcoin side. But I think gold is a huge part of this as well. And maybe you could speak to that a little bit because Besant himself is a former gold bug. And I think there was interviews with him prior to the election, you know, where he, he basically articulated like, gold's a store of value, Bitcoin's a store of value. And that's kind of when he said those things around monetizing the asset side. So where does gold fit into all of this, particularly given all the geopolitical stuff as well?
- [22:34]
Matt Dines
Yeah. So I'll keep this one to 30 seconds, but think about this. We're draining this offshore dollar liquidity pool. We're reining it in. Your dollars want to now flow to New York as we've taken control of silver marginal price, the cost of the dollar as that. You think of that as the money printer. Right. As the actual money printer moved across the Atlantic, that existing liquidity pool disappeared. And what that shifted into was gold. Right. So all these central banks are, most of them, London sold all their gold, or, sorry, the BOE sold all their gold, famously the brown bottom, all of that. But gold now becomes, in this framework, your biggest liquidity pool. Right. So that's the huge markup. It's the, oh, crap, we need this thing now. Let's mark up liquidity there. That actually plays into the U.S. treasury's hands. Right. Because you know, all the gold at Fort Knox, West Point, Colorado. Right. But that's now your dollar liquidity funding source. And so 2026, why is there a gold consolidation going on? We're in dollar tightness. And now to get to access dollar liquidity because everybody still at the end of the day needs dollar liquidity. Gold just takes that the US Treasuries or the old infinite QE money markets used to provide.
- [23:56]
Michael
I guess the only thing to add or respond to is how do you see China playing into all of this? Because you reference. I think a lot of individuals forget that this really started after the GFC and this has been occurring or the playbooks being set for the past 15 plus years. And China has been doing things, whether it's a belt and road initiative Net settling yuan in gold, the different exchanges, inventory setting up across the world. How do you see their response to a lot of this?
- [24:21]
Matt Dines
Factoring in that could be a one hour question. I want to make sure I keep my answers short. Think about the China thing. There's one camp of the world who wants to position the US as US China relationship as antagonistic. It's very clear this whole Thucydides trap psyop going on. It's like, hey, these two have to come to a head. There's gotta be a war here. Someone wants that. And my argument is it's the old system who wants to see us and China go into war versus if you actually talk to the two, Trump as the sovereigntiest kind of leadership in America, taking Reign Xi as well within his own political faction as a sovereigntist. They want to go kind of party to party and come up with what this new system, how it's going to benefit both countries and thrive in a new cooperative framework versus I think an old system just wants to pull these two parties into war. I'll leave it at that. Otherwise we could spend forever on that topic.
- [25:23]
Brian
Yeah, I appreciate that, Matt. So going back to the idea of investors and how they should start to process this information, what does it mean for capital allocation? When I reference what we discussed online on AX a couple weeks ago, I just mentioned something related to Iran and you have CPI creeping up, you have rates holding still potentially projected to go up, which different than what investors expected at the tail end of last year. And so I want to help people and I also want to help myself understand like what you're describing with monetizing the asset side of the balance sheet. What does that actually mean compared to the past two decades or longer of Fed dominance? Because I think a lot of people kind of see what's happening currently and think that this is not going according to plan. But you would make the case that this is exactly how the powers that be in the US want it to go. And then there's definitely going to be implications for people to how they are going to allocate capital to take advantage of that monetary transition that you're describing.
- [26:20]
Matt Dines
Yeah. So just to set the groundwork here, they're like, there's no guaranteed outcome. Like it's, you know, we've gone to the mat, the war is here. I mean it's even extended where EU is, you know, lobbying attacks at St. Petersburg through, you know, NATO territory. Right. So it's like we don't know how this thing fully plays out. So I just want to set the stage there in terms of like getting to the meat of the question though, the allocation. All right, but this is the key phase, I think of the US treasury accomplishing its leap from the lily pad from this old system, the offshore dollar framework into this new world, the stablecoin dollar backed by US Treasuries with genius act. My opinion, that's a middle ground. It lets us get somewhere and we can speculate on 10 years from now, 15 years from now, where we're going. I think bitcoiners will like what I have to hear on that one. But in the meantime, this is a war. This is why we've know rename the Department of Defense the Department of War. Like it's very clear this administration views this. It's wartime, right? And I think, you know, the public is slowly starting to get it. I think the rest of the world is slowly starting to get it as well. There's still some holdouts. All right, my point here, what we're doing like right now, everything, Venezuela, Iran, that's the physical economy chain, the actual financial chain. Think about it this way. We are in process of reining in kind of onshore or United States regulators or oversight over all of these financial venues where settlement of commodity based or cross border international trade takes place. What do I mean by that? When you see the OFAC blotter and go read through it now, you'll see like oh, this Iraqi oilman who was doing business with the IRGC selling sanctioned oil in the market. Oh, he's out. All right, next one crypto exchange tied to Iran. Oh, they're out. You just go through these, we're just like cleaning up. And it's the same thing as a war, but it's, it's in the capital markets arena, right? Which is, you know, hard for most of us to see because there's no missiles flying. But in my view what's going on here, we are slowly, when I say we, the United States, like the Power Center, Washington D.C. the American families, the high net worths, et cetera, they are making sure that all of these offshore interest, and you could say it's the crypto infrastructure, everything going on like as we transition to this stablecoin dollar, it is not just going to be a copy paste rehash of the old offshore dollar, right? So this is a case like if you're a high net worth individual, a family, it's very hard. You can't play both sides. What you could do is you can park in gold or park in bitcoin long term and just see how it plays out. But your financial assets, your sovereign debt, your bond portfolios, you could say equities to some extent, they're all tied to this outcome in my opinion. Like which little faction here prevails in this new era. Now my horse I'd bet on in this race would be the American led faction coming out of this administration. But those are, I guess you could think about it. What's risk off risk on in this world? Well, risk on might mean your SpaceX IPO or your equity markets of these technology companies, defense companies, you could say energy companies as well, metals and miners, et cetera, that are tied to like giving the US and their partners the things they need to prevail in this clash like World War 3, whatever you want to call it, that's one way to play. That's your risk on and then maybe your risk off in this case are things like gold. It would be the one that I think everybody around the globe has kind of come to that conclusion at this point. Bitcoin, if you see it and you see where we're going or have a view on where we're going with bitcoin, to those people, Bitcoin, then it is their risk off. But I'd say that one, the market doesn't understand it at this point. They're not viewing. If you just pull the family offices, bitcoin is not the risk off asset at this point. But in the long term framework, if you take that fundamentals, bottoms up view, it can be that for you. Right, if you're betting on that horse. But that's what I'd say. That's like risk on, risk off. It's if it was was post 2008, it was like bonds versus equities. It's different. It's like bonds and equities versus those two assets. I just mentioned there would be the way I would think about it.
- [30:42]
Brian
Yeah, I mean that makes a lot of sense. And then in the context of what you're describing with these two competing dollar systems, the monetary transition into the stablecoin dollar and you mentioned that bitcoin for the four of us and for our listeners would be perceived to be a risk off asset. But we're very far away from the market understanding that. And I'm curious what like, you know, how would you categorize bitcoin fitt to this narrative and this analysis that you're doing currently? Because I'd imagine that you're describing a transitionary period that May take, you tell me how long it takes to play out. And then where does Bitcoin actually fit into this new monetary ordering that you describe where the US is leading the helm and they're transitioning to this new dollar system. But it's going to take time to get there and it's going to take a lot of time and probably buy in from both the private and the public sector, which we're seeing a little bit of, for people to actually start to perceive Bitcoin for truly its fundamentals and utility. But it still feels like we're a ways off.
- [31:39]
Matt Dines
So prior iterations where there were two versions of the dollar circulating at a time and the big plan was, hey, we're going to withdraw this old one, put in this other thing, it's the Indiana Jones swap the gold thing on the temple and all right, the boulder comes at you. You've seen it in the past, whether it's like Civil War greenback versus the banknotes, right? Backed by specie, you know, panic of 1857 to Civil War 1865 and then 1875 United States repegged back to gold. That was like an 1820 year type of process right from start to finish. You saw like another one I like to bring up often is the shift from the silver certificates. People don't think about this especially on bitcoin, right. We think of Executive Order 6102 as the end of a precious metals back dollar. It's actually not the case. You had silver certificates, dollar, silver cert in your wallet that were redeemable into silver at a defined weight at U.S. treasury facilities that lasted up until 1967. It was actually 1957, I think when we launched these Federal Reserve notes which were instead of that silver certificate as like this is backed by silver redeemed about the US treasury, blah blah blah. Fed Note just says this is good for. This is legal tender for all debts, public and private. And it's like what was removed was the key thing. It's like this is backed by nothing, nothing. It was just a debt based money. So those two things circulated for probably about a decade. So that's a benchmark. And then it was like 1968 where prior year an act of Congress passed the Silver Certificate act which was like sunsetting the redeemability window for silver. And this was for the actual private economy inside the United States, households, businesses and that to actually transact in a silver backed dollar. It took 10 years for those things to wash out, give or take. So if you think about We've been living in a stable coin versus fiat dollar or offshore dollar kind of standard. Those two things competing with each other. Think about like tether launched in, was it 2014 or 2015? We're already like 10 years in. And my view here of what we're going through in 2026, the American sovereignty and their kind of power faction that wants to move the dollar this way, they're clearing the ground so that the same mistakes of the offshore dollar system won't be made where they didn't have control of the dollar itself from a regulatory standpoint, just financial oversight. Was it inside your financial system or European financial system? We're not making that decision again. And I think that's what Venezuela, Iran are part of a broader kind of military and capital markets operation. But yeah, I think we've already been living in a world with stablecoins and Federal Reserve notes or offshore dollar standard for well over a decade. Genius established the starting point where it's going to actually be an asset backed dollar in 2025. So I mean this could play out maybe another five to 10 years and then you get where we're going, which I think the Bitcoin reserve that Scott Besant, if you listen to his language, congressional testimony last week, he gets seated a question on this. He says we're moving at deliberate speed. Now that doesn't mean it's going to be done tomorrow. You have to follow all these procedures to do it the right way. But I think that's where we're heading. And you get to a point where like in 1875, I like to use this example. So civil war, what the US had to do. Congress gives treasury the authority to issue these greenbacks, which is just a, you know, a pure Treasury IOU bill. It's not like the silver certificate. Even in the 1950s, 60s that we were using which was it was issued by the treasury but it was redeemable in silver. This was a dollar, the greenback that was issued by the treasury redeemable for nothing. Right. But you could use it to pay debts in the system. What that did? Well number one, it allowed the north to get the means like the guns, the bullets, the pay the soldiers to win the civil war. But it also inflated away the debt, debt overhang that was in like that the panic of 1857 kind of created in the old dollar structure. Right. So from there it took, let's say within, within 10 years we were back to hard pegging the dollar to gold. Can we move that fast? I don't know, but I see that happening here. This old offshore dollar system where you got a treasury that has to keep emitting debt to the rest of the world. You can see it in the headlines, right? Ever since I forget his name, Nick Shirley, I think maybe. But it was exposing quality leering centers and all that. You know, just the grift operations and all the stuff going on in Medicare, you know, Medicare billing for hospice services in Los Angeles or you know, whatever, all of that is being rounded up so that this pull of dollars like out of the US treasury and we were just going to exponentially grow this debt to keep bailing out this offshore system, we knew we know how that ends. Like it doesn't end well. So we're in the process of reigning all of that in, condensing that down. Mapped to stablecoin dollar, it's actually your IOU here or your asset back in that dollar is the 45 day or under T bill, which there's a four week that fits that definition. So your collateral is the most, in the context of the offshore dollar system, it's the most liquid, lowest credit risk dollar IOU there is. So you can kind of see the thinking here, like the call it a war plan. What you're slowly doing is you're collapsing all that debt bill out hundreds of trillion dollars in IOUs outstanding globally. It's migrating to this token form, this asset backed $. What it's doing is it's pulling that lowest risk T bill into that orbit. And so as this offshore dollar system, the debt bubble system, think about it, you see it in the maturity profile. Everybody understands like after TLT stilts, your fixed income investors kind of realize what's going on. They're not willing, they want to choke down the maturity just because they see this old system. This isn't going to be a store of value. So maturity starts to come down, yields come up, all of that comes into play. It's enabling that shift over here to the stablecoin iou. Now in my thinking, what's coming next as this stablecoin dollar and in 10 years we'll just call them dollars, right? Same way where we shifted from federal or from silver certificates to Federal Reserve notes, the general public, just whatever, it's a dollar, right? I think that's what happens here. That purchasing power in the offshore dollar system migrates into this stablecoin dollar which is tied because of the T bills we talked about SOFR versus Libor. Now with that T bill you're plugged into New York and they're central kind of hub and spoke of this new system. And then all of these offshore dollars now have to like it's musical chairs they have to compete and what it means is higher yields for them. Which the bet is the American economy has a growth potential in it that the rest of the world just can't match. And so we're taking back power that way. So now you think about well now we have a bunch of stablecoin dollars backed by Treasury IOUs which are in this old system. What happens when right here we're at like $350 trillion in that offshore system and probably not even a trillion in the stablecoin dollar system. What happens when those things over the next five, ten years, you know they shit and the stablecoin dollar takes over. Well now the collateral in this old offshore dollar system like you don't have enough to pour it into this and that's where you need to start shifting over greenback goes to the gold peg dollar. That's when you need to pick a private sector inside base money to foot to. So that's where I see this going. You can kind of put two and two together. I think it's an extremely bullish situation for bitcoin in the long term. But in the short term literally there's a war going on and you want to be on the right side of the bigger picture. Short and medium term trend of dollar liquidity as this massive historical thing is progressing.
- [39:51]
Michael
Yeah there's interesting or fascinating breakdown. There's two threads to pull on there. One of them is and they're a little bit related but also opposites. One is just the natural the different factions that are competing right now when you think about and a lot of the market conflates them but the tokenized deposits in the traditional banking system. It came out last week with JP Morgan I think Schwab and Wells Fargo and what they're looking in their closed loop system. And then you have like the stable coin. It's almost like the emergent players the stripes, the visas, the fintechs that are coming to operate in that world that's one just angle to it'd be worth you know getting your thoughts on but the other side of it is we've been talking about this a lot and you can go down I know you probably we don't have to do it here but the rabbit hole of tethers foundation their interconnectedness of with different factions but you can already see them preparing for this playbook because if you end up in this World where you have this free floating dollar AKA Stablecoin, you start to go to the world of the credibility and what backs it and that they've already started preparing the past, call it five years for this with the allocations of gold, recognizing that treasuries and the credibility there won't naturally in a free market, to your point, as the treasuries lose credibility, you're going to naturally need to peg it to other assets. And that's where gold and what you were alluding to, bitcoin come into play. And so you can kind of see this like private market example almost in the same way we've seen like crypto. I think people are starting to realize that crypto was always kind of a false signal. It was just the test net for the tradfi world coming into.
- [41:26]
Matt Dines
All right, so I think a key moment and talk about that window of 2022 to 2024, Bitcoin coming out of the bear market. There were big things happening that I think we didn't actually pay attention to. Like we had our eyes on the ETFs as the shiny object. We all noted this story, tether, invited, accepted, however you want to frame it. But they invited the FBI and US law enforcement into their business operation which really enabled all of this operation economic fury. You see, like Scott Besant pursuing here talked about the OFAC sanctions, all of that, taking out all these Iranian crypto exchanges, exchanges, et cetera, Iraqi or oil middle market traders who are buying, selling Iranian oil, IRGC oil has to be more specific there because those are two separate things in my framework. But the key thing in my mind that allows that to happen is tether that decision in December 2023 to align with what I call the American sovereignist movement, the D.C. and New York pushback to this global dollar, fiat dollar, offshore dollar paradigm. And it shows by their shift towards this USAT the Genus act compliant stablecoin. So tether coming in to this orbit is a very interesting kind of geopolitical development that we talked about it, right. But we didn't see it in this bigger picture, the. What do you call it, first principles of what's going on here. There's huge implications there. So tether, right. They're, you know, based in Switzerland. They're, they're. My understanding they're, they're Italian. You know, from a nationality standpoint. I think in the grand scheme of. There's a power struggle as well going on in Europe. Right. All of these political blocks are interesting, you know, in and of themselves but you see a big power dynamic I think in the tether decision to align with Washington D.C. and New York that is reflected of the pushback of, you know, the southern European, European countries and financial sense, political structures, all that versus the north. So you think about E3, the new kind of acronym they've given to France, UK and Germany, Belgium up there as well with all the financial asset custody as well as European Union kind of central bureaucrat technocrat headquarters. That tether situation is very much plugged into its own little power struggle within continental Europe. But then in the big picture as well, aligning with the United States, I think, I don't know. In my framework, tether coming in in December 2023 into that American orbit was like a huge development, possibly just as big as the 2024 election. But maybe it enabled that 2024 election to think about, I don't know. Chicken egg Whether you've been in Bitcoin
- [44:18]
Brian
for 10 months or 10 years, managing your bitcoin wealth has been a fragmented experience. One place to buy, another to custody. A patchwork of providers for your ira, your loan loans, your estate plan and everything in between. Every additional platform is another point of failure. And that is why we built on Ramp Finance, a unified platform for your entire bitcoin life. Enhanced brokerage cash bearing accounts with earn rates up to 5%. A card that earns cash back that you can use to stack more bitcoin. Multi institution custody IRAs and built in inheritance planning all under one roll roof. The genesis program is live and spots are filling up fast. You can sign up in five minutes at onramp bitcoin.com and use the code TLT to lock in one year free of multi institution custody and our highest earn rate. Yeah, I mean, makes sense. I. I'm also mindful of our time, Matt. I know Michael teased it at the start of this episode, but we should talk about what's happening with just the broader fragmentation in the bitcoin space because you did mention earlier that this is wildly bullish for bitcoin. We view bitcoin as a risk off asset. It's going to take time to play out and I think if anything, maybe there's a little bit of boredom to categorize what's happening in the bitcoin sentiment today. And because of that boredom and because of the depressed prices, we're seeing a lot of infighting in the bitcoin industry and online. And you've described the fragmentation that's currently happening and you've also been, I would say, incredibly objective in your analysis of what's happening with strategy and their stretch product as well. And I know you have ideas of how this kind of ties into the framework that you've been laying out this entire episode. So I want to hand it over to you to set the stage and then we can have maybe a more involved discussion or a more of a lively discussion about just what's playing out currently. Some of the notable things that have happened with strategy, selling a small tranche of bitcoin. Just recently, there's also been maybe some people critiquing some definitional changes around bitcoin per share and strategy, raising capital to not only buy bitcoin, but also to stockpile USD reserves. So there's things that are happening that haven't been discussed widely yet from an objective lens. But before getting to all of that and the more recent developments, I'm just curious how you think about bitcoin in this, you know, in this broader or not bitcoin strategy in this broader dynamic that you've been describing.
- [46:42]
Michael
Jackson? I think it's called accretive dilution. That's what I just saw from Quoth the Raymond. It's accretive dilution.
- [46:48]
Brian
Exactly.
- [46:48]
Matt Dines
Yeah. I want be fair to everybody. And, you know, granted, this, this will be the section, I think, that everybody clips online and posts on X. So whatever happens, this will be about trends. All right, so I think the. You can see the divide in bitcoin, right? I mean, Saylor even made a post where he splits the. The bitcoin community or whatever so far adopters into four camps. There's a divide and conquer going on. Or if you want to think about everybody just kind of aligns how they see bitcoin, how they interact with bitcoin. I think that's, you know, think about this as an iceberg in bitcoin. We view that, like bitcoin as the most important thing. We're the straw that stirs the drink. And in the long term, we are. But in the medium term, the short term, this big process I talked about, that's happening, that's actually the tip of the iceberg here that's going to influence which direction I think history unfolds in this tug of war. All right, so in that kind of framing, I think about bitcoin, like, flip it on your head like you're watching Stranger Things on Netflix. On Netflix, there's the world you and I see, which is the above ground. And then you flip upside down and there's. What do they call it? The other side or I don't know, I don't watch, my wife watches it. I watched a couple seasons. But they go into the upside down. That's what they call it. So flip strategy and think about it upside down instead of as this. The way we're all thinking about it, it's hey, it's a bitcoin strategy. What I do, I borrow, borrow in dollar liabilities at 11 to 13% and I buy Bitcoin, I assume a 30% keg or what can go wrong, right? Flip it and think about it as a dollar strategy, right? Because at the end of the day, what's going on, you're borrowing dollars from somewhere. My point here, the liabilities that you're raising capital from, it's the US equity markets, the onshore capital pool. You're tapping liquidity there for 11 to 13% and you're going long A bitcoin pair that so far up until this point we haven't made that genius ax stablecoin transition. So far the majority of liquidity in bitcoin and dollar terms in that FX pair, which dollar dominates bitcoin liquidity at the margin most important currency pair bitcoin to dollar. But even more so, which dollar are we talking about, right? And you look at the exchanges, the only bitcoin dollar pair in a bank deposit like an onshore Fedwire bank would be coinbase, right? And the rest of the top 101 what is it up bid or something like that in Korea as it's important. But the rest of the liquidity, it's coming in old tether, right? The pre genius x stablecoin tether. So call that the offshore dollar stablecoin. It's still the liability standard. That's the liquidity pair. So if you think about it, what a strategy right now if you go long bitcoin, your long offshore dollar stablecoin liquidity, right? Talked about this process. Like this is the, this is. And the way I think about this, this is the meat of the innings, right? This is, this is, this is where it's going to be fought and won and everything is at stake here for the nation states because the one that ultimately like if the US can do this and get the stable, the genius act, stablecoin dollar anchored to the T bill that sets up a future where we have this bitcoin reserve and then eventually you can actually accomplish the next version of the 1875 Gold Remonetization act where we can have a dollar that is redeemable at a F versus call it gold bitcoin. We'll see how that plays out. By the time we're 60, 65 we'll be able to go back and have this chat and hopefully we're all around and know how this plays out. But my whole point there if your dollar strategy is I'm borrowing from US equity capital market liquidity and then I'm going long this offshore dollar liquidity and if you get that the wrong way, you gotta be aligned with what Scott Besson is doing doing first and foremost because he's the most important person in the system. And then there's other like the Kevin Warsh Fed. That's a whole new era. We're not even going to get into the US domestic banking system. We talked about Schwab, JP Morgan, Citi, et cetera wanting to cartelize the stablecoin dollar genius act era for themselves so they can be the biggest fish in the sea. All of this stuff is going on. And I think what I would say to preferred perpetuals investors, there's a lot of it going on too. If you dive under the H stretches being funded crypto assets, all this apyx USD at like there is a lot of, I don't know, just crypto offshore liquidity funding, just pure yield seeking. I say just make sure like first and foremost get on the primary trend because that's what's gonna set the risk backdrop. So yeah, and this is something you don't wanna be on, you know, offsides on the long of offsides at the line of scrimmage once the ball is hiked. Here would just be how I would kind of ask people to think about it.
- [51:43]
Brian
Yeah. So I'm just curious like in terms of the more in, in light of the more recent events then Matt, how do you, how are you thinking about. I mentioned the sale of bitcoin. You know there was only one sale that preceded this. So there was the sale of 2022 I believe for tax loss harvesting purposes. But then Saylors famously said that he was never going to sell bitcoin and then has recently sold a little bit of bitcoin in his terms to inoculate the market. And then there was the capital raise which historically meant that they were raising capital to purchase more bitcoin but now they're raising capital as well to fund their USD reserve. So I think some of the contentious points as well today surround the shifting of the goalposts in terms of sailors categorization of A never selling your bitcoin and now doing so and then B mentioning that you know, kind of changing the definition a bit on bitcoin per share being the North Star now it's a little bit different because it's not. We're not only talking about bitcoin, we're also talking about USD reserve. So have you, I'm sure you have some thoughts and some in light of the more recent developments and, and how you're thinking about that and what investors should be paying attention to there as well.
- [52:48]
Matt Dines
So I've been following strategy as a company probably longer than like back when it was just a bi analytics company. We used it at an ad exchange business that I was working at as far back as like 2014, 2015. They had their, what do they call it, their cubes, all of that stuff, the analytics. And I would just say the strategy has been changing, changing constantly. The one constant is obviously change. But bitcoin has been on the scene since August 2020. Right. But if you actually look at kind of the developments on the way, it wasn't always the same thing. It started as, oh, we're still going to be focused on this business intelligence and they called it hyper intelligence business that the executives were pitching to the market as the growth of the core business. I mean as late as even just recent years, 2022, 2023 et cetera. But I think people, people don't appreciate enough that the strategy itself has changed over time where just this shift towards hey we're going to go issue a bunch of common equity at the money, we're going to do these perpetual preferreds at the money and just the strategies, we're going to suck all liquidity off the table and get long, longerer bitcoin on the asset side, they're all just iterative developments. And this is, you know, I don't want to be unfair to people like as the facts and circumstances strange like yeah, you're your own corporate strategies can or you know, you're free to adopt or adapt as, as management but you know some of the things like just I just find them a little bit gimmicky. Like we're going from monthly to semi monthly dividends. At the end of the day it's like whoop de doo. Like they're not that big a development. So what I try to do is just read between the lines what might be management's incentives here. Why might they be doing this? And then that's the same thing. The 32 Bitcoin, it's like yeah, they did sell high, buy low in this case, right. For the 32 and then they bought back. I think they mentioned in their press release the following week or this week like 1500 Bitcoin purchased. But just a little bit of why. And I think there's always that little bit of the like the cat and mouse. There's just, you know, dangle this in front of the cat just a little bit further. You're leading the market, leading your shareholders one way. Um, and I, I just kind of see a lot of that in the, just the communications and then corporate actions from, from management and, and in the grand scheme of things like selling 32 bitcoin, it's kind of like having I, I have, I have twin, twin boys. Right. I have one of them who likes to get a rise out of the other. He loves to troll him. And I think selling 32 Bitcoin is, is a little bit of that. Like just I just want to, let's do this so I can get a illust like elicit a response just from X from the markets. Just get in the headlines and then that's leading. Most likely preparing for future developments and corporate actions in the future is the way I try to view it. But I don't see the signal in the cell of 32 bitcoin itself. I would say look at that event and what were they trying to accomplish and then try to anticipate what was the purpose of that and what might be coming down the road. But at the end of the day I'd say management decisions can only do so much. It's the, you know, if you're a sea captain, it's what's the weather doing, what are the conditions of the high seas and that's this dollar liquidity environment. What's going on with this bigger picture transition. That's what I would focus on if I'm a shareholder or especially in a yield seeking product like a perpetual preferred. Get that one right first, first worry about these little things from management like just understand what they're trying to do. You can see it, you can acknowledge it, but it's not the most important thing is the way or how I would frame it.
- [56:40]
Michael
Yeah, I mean you don't have to respond to this. You can if you'd like or the guys can. Something that like taking a step back I've been thinking about is going back to like first principles. I think the notion of a digital asset treasury company or what strategy started out and to your point iteratively has changed. We'll look back on in the same way we talk about in 15 years we'll kind of laugh at the way that custody has evolved today because the price will be so much greater. And we'll think it's crazy that we had these hardware devices in our house. So we let coinbase hold X percentage of it. And I think in the future, and this is where a lot of the contention comes from, is that people presuppose that like a strategy, a strategy of an entity being a standalone Bitcoin accumulation machine will persist into the future. And I think they forget that A we're so early in this story. In Bitcoin's monetization, that health strategy started. There was no ETFs, there was no way for anybody to get access outside of the retirement account. They were selling common equity. And then it's evolved into this. And the thing that maybe from one side of the camp that we're in the, the short run aren't as good at long term. It's, it's just really the, the truth, so it'll end up plain, is that you don't necessarily have the marketing engine to go and tell a different story. Because if we looked at crypto's history and a lot of these narratives around AI or whatever, if you have the marketing, you can coalesce that you can end up telling a story where you need this, you're speculative attacking the market. And then the market just starts to assume that is, that is correct and that is true. And that's kind of how where I see we're at today and there hasn't been a counter story or narrative of like well, what does the actual Bitcoin monetizing look like? What does it look like from whether it's the dollar side of it or businesses of all shapes and sizes holding a better asset. We're so early that they don't even recognize Bitcoin as a store of value. So how could they do that and how will this play out into the future? And part of that I believe story would be that will the premiums get sucked out of anything holding Bitcoin because if they're not accreting, you're effectively a closed end fund. So you should be trading at a discount to now. But the story doesn't get told because again this really interesting part with your commentary, Glenn's Parker's, that there's been very few people that either recognize and understand the existing system in a lot of the equity markets and Bitcoin to be able to articulate how these from first principles don't actually make sense or persistent in the future. And So I think that is just something that is starting to come to light in the past couple of weeks and will continue. And if it's right and true, you can see over a long enough time horizon how this will just get deconstructed because they don't have like logical standings from first principles of, of the notion of a digital asset treasury company and how you speculate speculative attack the market doesn't just make sense. And the last thing I'll say and Brian, put out a piece on this and you're the closest to this more than anybody. Like you talk to institutional allocators all the time. You understand their risk profiles, how they think about it. It's always been this notion. If they're ever going to adopt Bitcoin, they're going to go to it in the cleanest way possible. They're not going to go and buy three different layers deep of something that gives exposure to it because they still have to go back to first principles and understanding the premise of what they're holding in reserve. So I think there's just a huge, there's a large number of misnomers that exist in this industry and I think a lot of first principled intellectual people are recognizing they kind of did a disservice by not speaking up in the past couple years about these constructs and they're now doing it. And I think that's where a lot of this narrative is actually coming.
- [60:07]
Matt Dines
Do you want me to answer Brian? I can tee you up here and this might be my last comment. So think about the integration of Bitcoin into just this. We call it tradfi whatever. It's just call it US equity capital markets. All right. We are seeing a trend now. If you go, there's websites tracking, I'm not going to give them free plugs. But this whole real world assets tokenization, all of that like what that reflects is kind of another attempt to pull value out of the domestic US and our economic engine, move it offshore so they can access that liquidity, free ride, et cetera. All right, my point on that, if you look at tokenized stocks like go to, I'll just say RWA XYZ stocks you can go through and see like US equities and the market cap that's being tokenized in this form. And just look at the graph, you see it going up and to the right. This is going to be a thing, right? This tokenization of equities. What do we mean by that? Well, it's 247 settlement tradability liquidity and bringing in that capital markets activity into these new rails that we've been building out ever since Satoshi gave us the white paper in October 2008. One of the key things I think that hasn't been talked about as much or as much as it needs to these last eight weeks post Iran. It's got washed out in the media cycles. You saw CME, NASDAQ, NYSTA come out and say we're doing 24. 7 trading. They are moving to shift over to the exchange, to this new paradigm, the tokenization. And back in 2021, 2022, corporate bonds, the $ious used to settle T plus 2. They gave a mandate or FINRA, right? SEC gave a mandate for the industry, the back end, the back office custodial side of the U.S. capital markets business. You need to shrink down from T plus 2 to T plus 1. And this was for like non U.S. treasury dollar IOUs. U.S. treasury IOUs already settled T plus 1. All right, that was a big leap considerably, right? It was a big deal back in 2022. Now they're saying like we're going to do, we're shifting over not even T +1. We're going like T +0 and 24. 7. Like all of the US capital markets are moving onto this paradigm and like it's going to come fast in the grand scheme of things. Like they're getting ready for it. So if you see this, this development, like you all highlighted it, Schwab onboarding like utxo, Bitco to their customer base. Now you don't have to own ETF and an ETF or Bitcoin in an ETF wrapper anymore. Now you can actually have your own custodial solution within your brokerage account. Right? Schwab is moving that direction, Fidelity, et cetera. The way I view this, and I'm trying to think like Wayne Gretzky, where is the hockey puck going? We're moving into a world where, all right, bitcoin is your shortest term final settlement of asset and you're going to have these equities now trading hands 24 7, all of that advantage. But my point here, US capital markets players are existing businesses. I talked about us not making that fatal mistake that we made in the prior system, the offshore dollar system, the Bretton woods system, all of that, where we let non US kind of entities and sometimes not even aligned with us on the bigger picture, geopolitical, the big power questions, that type of thing. In my opinion, the domestic US power players, the wealthiest families, the politicians who are on the American sovereignty side of this. What they're telling us is they're not going to lose the franchise this time around. So you need to my framing, you want to be positioned for that world as that plays out. And that's where I think, okay, well they're telling you where they see the business going. It's just now it just needs to play itself out. We're really in that scenario though. I call it the middle innings. The most violent part of this transition or the most volatile part of this transition. That's how I would frame it. Right now we're in the peak years and we just saw it with Iran. Right. A huge. One of the most important events of the 21st century so far. We've got a little breather window here, I think until the November elections. You don't want to upset the apple cart too much, much before people elect a new Congress. And ideally you want the people to give you a Congress that'll pass the American Reserve Modernization Act. But that's the way I see this going. So Schwab incorporating on chain bitcoin into their account solutions. I think there's a huge tell to that. And you think about this in the real world assets, the tokenization framework that'll help you kind of get your bearing bearings in this very confusing time we're living through right here.
- [64:54]
Host
Yeah, I mean I agree with all that. I think it's very well stated. And as it relates back to sort of just the strategy specific stuff, I think there's a ton of fallacies baked into the marketing engine that is DATS in general and strategy. And I think you said it very well that they've pivoted the strategy basically on a continuous basis. It started as this thing that was an exposure vehicle before the ETFs, then it was amplified exposure, levered exposure exposure. Now they're doing all the preferreds. And so you see this sort of financial engineering complex continue to expand and expand to the point where now there's actually like conflicting interests. And I think that's what we've seen the past few weeks around. Well, you know, if we need to be able to service all of these fixed dollar obligations for these preferreds, does that infringe upon our bitcoin per share goals or stacking bitcoin? And so it's gotten to a place where the narratives are just continuing to evolve and progress. And if just stripping string, stripping back all of that sort of evolution, if you just think about it at a higher level, the main fallacy That I think Michael alluded to, that I wrote about a few weeks ago, is like that these things need to exist for some buyer who can't get spot allocation, whether it's because they're worried about volatility or the plumbing doesn't exist. And all of that is just not true. And to your point, it's also improving with the Schwabs of the world getting into spot exposure. These allocators, whether it's institutional or just high net worth folks, they don't need a preferred equity to get, you know, capped upside exposure to bitcoin. They can own the real thing. And there's a whole slew of reasons why they would want to own the real thing. Because if you actually go down the rabbit hole of understanding bitcoin, you know, you don't want all of these layers of counterparty risk execution, risk management risk. They're changing the strategy constantly. You want to own the real thing for a whole host of reasons.
- [66:37]
Michael
So yeah, one thing just funny and you don't have to respond to this Matt, because I could tell, you know, you don't want to get blasted, that's okay. But like just you just, I, you know, I like to take it left side of the barbell or the, the bell curve of think about like entrepreneurship or like any product that's ever made. I think the two that come to mind are like Henry Ford and then Travis Kalanick with Uber. Imagine them developing a product and saying they would never use it. It's for some made up theoretical person that they never use that. That's effectively digital credit. Because they all admit they don't use it. They all admit, you know, it's just the whole fallacy from the beginning and the premise, and I think that's what gets lost on individual, is that, and this maybe comes from a lot of the learnings because there's not a lot of things I'm good at. The one thing that I've done for a very long team, a long time is talk to individuals about bitcoin, help onboard them and help them size and manage risk appropriately. And once you go through that process, you come outside, you have to be educated. There's no way to get educated by any other way than actually buying the bitcoin and then understanding there's no way that's existed around that. And so the point is that to buy some derivative of it in this world that you're going to come to understand spot just fundamentally doesn't exist, exist. And so that's the whole angle of like Just the concept that Brian's alluding to that in this future world, if people are going to adopt Bitcoin, the way they're going to go through it is through the education, sizing the risk appropriately to withstand the volatility and then understand based on education, the volatility is your friend. As long as you manage the counterparty risk, I. E. How it's custody and the different levers levels between you and the underlying. That's the rational end of the uh. It's not even rational and pragmatic. That is how it's formed over the past 17 years. There's no way around it. And the best thing angle is there's no such thing as a free lunch, even though people attempt to. And I think that's the sign of late stage fiat is when you end up trying to like bypass the order of operations that we've seen for the past 17 years in Bitcoin.
- [68:31]
Matt Dines
So. Well, we.
- [68:32]
Michael
Unless you want to respond, go ahead.
- [68:34]
Matt Dines
No, I can listen. I'm not going to judge what is in someone, someone's heart or in their intents. You know, just take people at their word. You know, the comments about, you know, I don't know, saying this is something I wouldn't own, but someone should own this or you know, I'm marketing to, you know, I guess they're free to do that. And yeah, I don't want to come across as judgy, but I would just say this. So we are in a world where I think this is. That you can get wrong footed in big transitions if you don't recognize what's going on. Right. And if the game changed and your strategy didn't, and this is from the dollar standpoint and the big development that hopefully I've laid the groundwork and explained for people who've made it this far in the podcast, there's been a big ground chain or a groundswell shift in tides. I mean it's been in the works for over a decade. But you cross that point in the pendulum swing and it looks to me like one side's winning this tug of war and we're in a rapid change of direction to a new era of the dollar one versus the other. And I think part of our, one of our shortcomings as humans is for the most part, most of us look to the past and we extrapolate off of that. Think about our limbic brain stems, all of that that we evolve from. Where we recognize the watering hole is over here, here we go there day after day that's where we also go to hunt for animals. And so we pattern recognize based on just our immediate lived experience what happened to us post 2008 or post 2001 or the entire Eurodollar offshore dollar market system that we grew up with. And this is like every portfolio manager alive today. You can't find many still in their seat who spent any time in the business in a different dollar era like the 1970s or let alone in the 1960s. But when these big transitions happen, that's where people get wrong footed, right? So I would just say for all dollar strategies, you know, if you're looking at credit, you're looking at, you know, fixed income investments and it goes into all assets, you know, repricing. Because we still live in a world where, you know, the dollar is money and Bitcoin, you know, while being, I think the place we're going as, you know, one of two, two legit contenders to play out as that private inside money good that we re pegged to down the road once we're all coming back here to have this discussion when we're gray haired and hopefully have grandkids, all of that. This is that short term window, I think where risk is actually highest and that ability to get wrong footed is a huge problem. And if you're not long in the game, if you're the, if you're just promoting a product to people, then you have that problem in finance, the principal agent problem. I was a PhD student in Finance one day and that's one of the core topics of economics and we've never been able to resolve it. The answer is, hey, you make the principals also equity holders or stakeholders in the thing or the scheme or the project, whatever. That's always been the solution. But yeah, just final comments I guess just I laid the ground here for this big picture that we're in the middle of. I think broadly we're still not seeing that elephant in the room, right? We can all touch it. Everybody's aware of the genius act, but this is coming. You can see the events progressing, people in general, even the influencer space, even the geopolitics, even your commodity guys. It's still difficult to find people who are just picking up. And we've been waiting for the Fourth Turning now for like 15 years at this point. That book was written like two decades ago and it's kind of like would you recognize love at first sight when you saw it? Well, most people know, they tell it to themselves in hindsight like oh, this is how I met my wife. Or whatever. But like when the fourth turning is actually here, do you actually sense it and position yourself accordingly? So that's what I would ask everybody to do who is just investing, allocating in anything right now. Think, think at the ground level, this big picture transition like we're in the meat of right now and then build your strategy on that. Not, you know what you hear someone persuasively argue towards you. Like think, think hard about this is is what I'd ask what I'd ask people to do.
- [73:09]
Brian
Good parting words. Well, thank you, Matt. Appreciative of your time. Want to make sure we do a handoff here in terms of where you want people to find find you. I'll just call out real quick on our side. This is the piece that we were discussing throughout the conversation. You can find it on mineprinthash.com and then Matt, you also allude to at the end of this publication that there is more to come. You say to be continued. So make sure you check that out and get on the mailing list. But Matt, what else? Where else would you like people to find you?
- [73:37]
Matt Dines
Yeah, thanks for that promo and just X. You could hit me up on levered USTs.
- [73:42]
Michael
Yeah, hit his DMs. Thanks Matt.
- [73:46]
Host
This was fun.
- [73:47]
Matt Dines
Thanks guys.
- [73:48]
Host
Thanks for listening to this week's episode of the show. If you found the information valuable, please share the episode with a friend or leave a rating on your favorite podcast app. All the links we discussed in today's show will be in the show notes inside your podcast app. Before we finish, a quick reminder that On Ramp Media is for informational and entertainment purposes only and nothing should be construed as investment or legal advice. Regardless of where you are on your bitcoin journey, we'd love to hear from you. Visit onrampbitcoin.com contact to schedule a consultation with one of our private client advisors.