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The Wolf Of All Streets
Bitcoin Demand SURGES! But Should We Be Concerned? Trump, Fed & SEC Shake The Market
00:18:40
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- [00:01]
A
Bitcoin demand continues to rise and so does price at the moment as it's trading back above $113,000 right now. In the midst of that, of course, we have a massive Trump roller coaster going up, down and all around. News from the CFTC and SEC and from the Fed. As usual, it's the Friday 5 and we're talking about the United States government. Let's go now. Let's do. Let's dope. Good morning and welcome to the Friday 5, where NLW and I unpack the biggest stories of the week every single Friday. Get to bring them on right now and get right to it. Shockingly, we're talking about the government. Yep, I know that's going to blow people's minds.
- [01:02]
B
We've moved into the fall, but it definitely feels very similar to the summer in terms of all these stories.
- [01:07]
A
It does. The first one here, U.S. fed to hold conference on digital assets amid challenges to leadership. Obviously, we have Fed Governor Lisa Cook defending herself against dismissal in court, but the central bank said it will hold an October event to address innovation in payments. I guess, you know, Swift isn't fast enough and they're willing to consider using technology that's not from the 1970s and 80s.
- [01:34]
B
Yeah. So, I mean, look, there's, there's, I think that broadly speaking, we're in a phase where it kind of makes sense to stop or to, to try to move away from judging how things are going from a regulatory perspective by what people are saying to what people are doing. And, and this is kind of a weird in between in the sense that, yes, it's just a conference, conferences aren't going to change anything. However, I do think that people are taking it as one, a pretty clear signal of the change in, you know, sort of disposition of the Fed towards this industry, given that it wasn't, you know, just about a year ago that they were still trying to kind of keep it out of the regulated financial system. But two, we got a couple of weeks ago around Jackson Hole, these speeches from Governor Waller and a couple others that sort of seemed to indicate that the Fed was interested not just in creating kind of, you know, clear rules of the road for crypto, but also thinking about how it might impact their core functioning. And so to then have that followed up with a conference just a couple months later, that is about that same theme and topic again, not just should crypto exist, should it have a place in the regulatory sphere, but can it actually help? What we do at the Fed, I think, is fairly exciting to people. So that's kind of the. It's. Right now it's more of a signaling than anything else. It's a small thing that could become a big thing. It's maybe the best way to put it right.
- [02:57]
A
And this kind of follows the Commerce, the Commerce Department putting GDP numbers on the blockchain and all these other things, and actually adopting the technology as opposed to just talking about whether it should be regulated and how, and what legislation to pass and whether these are securities or commodities. This seems, as you said, to be more about how can we actually use this thing to improve our processes.
- [03:21]
B
Absolutely. And I think, you know, as we discussed with the, you know, putting the, putting the numbers on the blockchain, while that doesn't solve some of the core issues that people are concerned with when it comes to cooking the books and the numbers themselves, it does show the government, to your point, trying to actually use these technologies to find. Use cases that are relevant for them that they feel solved problems that they're facing. And, and that's obviously a very different level of adoption than, again, simply making it okay to hold and use these things.
- [03:51]
A
Absolutely. And the next regulator that we need to talk about is actually two of them, the SEC and the cftc. Their staff's issuing a joint statement on trading of certain spot crypto asset products. I think there's been a lot of confusion around this one that it's maybe a little bit more siloed and segmented than people are believing, but it does effectively open the door for a lot of American platforms to offer spot trading services and potentially for Americans to trade on select foreign exchanges. And also, I think there's just the fact that you have the SEC and CFTC making statements on crypto together, which was the least likely thing on your bingo card during the last administration. Yep.
- [04:35]
B
This is, you know, if you're watching the meta story, it's sort of an indication at the end of the turf war, which is great because obviously we don't want there to be a turf four. Like, a big part of the reason that we don't have clarity around whether these assets are commodities or securities was that turf four, you know, rather than a, a realistic or sort of thoughtful designation or consideration. But I think that the bigger thing is here, and I agree that there's been sort of some strange interpretations. Seems pretty clear. They're basically saying that if exchanges, including not crypto exchanges, are cool to start offering spot crypto.
- [05:12]
A
Right.
- [05:13]
B
It's a, It's a very, It's. It's not complicated. That's what this is saying. And that's certainly how lawyers from all of the big exchanges are interpreting this. Now to your. The, the one other thing that you mentioned, which is sort of like the good news, bad news for American exchanges, they're clearly trying to, on the one hand, create space for American exchanges, both crypto and non crypto exchanges, to compete in the clear, in the legal clear. But there is also an indication that there will be access to international venues, offshore venues for people. And so, you know, if you are a trader who's kind of deciding where to throw in your chips, maybe it's not so clear where, where you want to go. So, you know, maybe that creates some amount of additional competitive forces for American exchanges. But by and large, it's really good news for people who want to offer crypto to Americans.
- [06:06]
A
Yeah, and I also wonder what this means, and I've said this before, but what this means for the U.S. wings of international exchanges, the Binance U.S. you know, and anyone who has an international branch or is the main international exchange is trying to come to the U.S. whether this actually means that one day Americans are going to be able to trade on the actual finance, I'll say again, because everybody did. But, and whether that will be the full suite of access to their assets and everything that's on those exchanges or whether we're still going to see this American version or even the real version, but with only certain assets available to trade.
- [06:46]
B
My, my strong instinct is that the way that exchanges will handle this is they're not going to take for granted that they're totally in the clear forever. You know, they understand and have lived through political win would anticipate they continue to build up their American and non American divisions. You know, for, for exchanges like Coinbase and Kraken, that means building out their international offerings. For other exchanges, it means building out their U.S. offerings. And you know, as things resolve, they will take advantage of different types of regimes to try different things. I would anticipate, for example, you know, Binance International to continue to be a place where they're going to experiment with things that they can't get away with, even in the most permissive of US Regimes. But they're going to invest heavily in their US Apparatus as sort of a flagstone as well. That's my best guess, you know, having been in this a little bit.
- [07:35]
A
Speaking of people who are trying things in the United States, we have a whole lot of Trump news. New crypto token boost Trump's family wealth by a casual $5 billion. I'd imagine that's a little bit lower now, but obviously we had the World Liberty Financial launch on Monday, which we've been talking about all week. Price hasn't done too well. Right. Obviously it pumped to in some places above $0.40 on the first day and has been nothing but selling since. Down to about 18 cents at the moment, but still a huge boon for the Trump family. Of course, on top of all that, we had to have Justin sun drama because we know that he was an early supporter and part of World Liberty Financial. Well, he's apparently been blacklisted. He promised not to sell, but then moved a bunch of tokens and they think that he was finding sneaky ways to sell. And of course, after being blacklisted, he comes back and says, come on, guys, you know, like, I'm just participating here. This is decentralized. I love you guys. Give me, give me my tokens back.
- [08:36]
B
Tokens are sacred and buy and inviable.
- [08:38]
A
That's right, they're sacred.
- [08:40]
B
You know, when all of this is said and done, what will be interesting to see is if and how it impacts norms for political entanglements and finance.
- [08:53]
A
Right.
- [08:54]
B
There's, there's a lot of gray area, you know, for media, this is all just a big cudgel. For Democrats, this is a great big cudgel to hammer the current administration. And it's very clear that Trump and the current administration do not gaf about whatever implications there are around that. The flip side is, you know, that nominally these things are all or many of these things are being done by the family, not by the President himself. And so that's going to create nuance and blah, blah, blah, blah. Look, when it comes to practical impacts around these things, we are gearing up for maybe the last period where there's actual kind of cloud cover and momentum to get legislation done. And every one of these headlines makes it harder to for Democrats to actually get behind reasonable crypto legislation because of the politics of it. In fact, we've heard from Republican members of the Senate Finance Committee, I think Tim Scott was talking about this, that they are working very hard behind the scenes to find ways to give Democrats who are pro reasonable regulations with crypto the cloud cover. They need to actually support those rules because of how fraught the political environment is. What that means, we don't know. But the fact that that's making it out into the ether as a thing that they have to do indicates what an impact this is having.
- [10:10]
A
Yeah, totally agree. And it wasn't just in the decentralized side. I mean, it's funny because all of this was about them being blacklisted from banks and being debanked and all this thing. And immediately, you know, they just did that to Justin sun in a purportedly decentralized protocol that was going to change all of these things. But hey, what do I know? I, I have no idea whether they should or should not have done that to Justin sun or what was behind the scenes. But we also have a public launch, not just a crypto launch. We have the Trump American bitcoin, which had trading halted five times due to volatility. It basically doubled in the first hour. There was a halt. It ended up settling in at the end of the day at 16% or so up. But I mean, this was all over the place. Nothing new here. I mean, we see IPOs or listings where we have this kind of volatility and insanity generally. But of course, it had to happen this week while World Liberty Financial is also happening.
- [11:04]
B
Yeah, I mean, this one felt like we've done pretty well to bring some of the chaos of the crypto sphere into Wall street, although we've mostly had to play by Wall Street's rules. This one felt like Wall street getting a real taste of what an average day is for for a crypto trader.
- [11:23]
A
Yeah, it's. Yeah, I guess there's no real story here. I have no idea what their edge is versus any other mining company. These. So they're trading for a very long time. Is the edge Trump?
- [11:35]
B
They're basic. Their argument was basically that they. I think that the exact quote was that they're accumulating Bitcoin at $0.50 on the dollar because they can mine it. That's sort of the premise, the sort of additional layer of arbitrage in that argument. But it's obviously, it's a, it's a brand play, as all these initiatives are. I mean, look, if you take these last two stories packaged together, this is our kind of weekly check in on the status of the President's familial entanglements with crypto good, bad and otherwise. And they continue to expand. I think, look, when this administration, when this administration is over, it will be pretty undeniable that the Trump family is first and foremost crypto moguls rather than real estate moguls. Just pretty undeniable at this point. Like it or not, we're going to.
- [12:22]
A
See a lot more. We're going to see a lot more of these things.
- [12:24]
B
Right?
- [12:25]
A
We got two in a week. It's not going to be the Last we hear from the Trump family trying to launch things in the crypto space. To your point, the next story we have here I think is actually really, really compelling and interesting. Polymarket has been given the green light to go live in the USA by the cftc. Credit to the commission and staff for their impressive work. This process has been accomplished in record timing. So of course we have them coming in. But there's also the question as to whether the next wave of products from actual crypto exchanges is also going to be this right underdog crypto.com to launch sports prediction markets in 16 US states. I think that's what's going to be coming from pretty much every exchange. Feels like prediction markets are the next big wave here in the US for crypto and beyond.
- [13:11]
B
Yeah, I mean it's very clear that they have product market fit from the standpoint of people finding them interesting, right? They're, they're small enough that I think it's very hard to draw huge conclusions about what type of force they're going to be in markets. But what was interesting and sort of, if you look at the trajectory of Polymarket, it settled with the CFTC back In, I think 22, right. A long time ago, while it was still tiny and while no one was really paying attention, it basically agreed to geo block US users. It paid a very, you know, modest fine. It was like 1.4 million or something like that. And, and it sort of, you know, went on its merry way. But then around the election cycle especially, but really throughout 2024, prediction markets started to become more and more of a thing, right? You had more and more attention and, and more than just people using them, they started to get quoted, right? They, they were a faster way to judge response to current events than polls were and that's how media started using them. Then about a month before the election cycle you had Kalshi which won a court case against the cftc. Basically the courts ruled that US election markets were legal and, and so they, they were on. Now KI took a totally different approach than Polymarket did when it came to how they structured Polymarket sort of did the let's, you know, do it, you know, for forgiveness, not permission kind of approach. Whereas Kalshi tried to do the kind of ground up coinbase, have everything all buttoned up from the beginning approach. But that's going to be a really interesting, I think, business battle to watch. I think to your point, there's, it's very clear that this is a, a type of experience that people want there's going to be more of it. It's going to be diverse. There's going to be lots of specialization. We don't know yet whether it's going to be everything exists in, you know, concentrated markets like a poly market or a Kalshi, because that's where liquidity is, if there's going to be room for hypersp specialization. But you know, it's very clear that this is a thing that people want and is a trend that's very much continues to be in the upswing.
- [15:12]
A
That was our five main stories, but there's one more I think definitely deserves a quick honorable mention, which is NASDAQ titan scrutiny of companies raising cash to buy crypto. A lot of people saying is this the end of the treasury trend? I don't think so. I think that this is definitely going to make it a bit harder, which I think maybe we all agree it should be and that the loopholes that they're using are likely to be closed. But I don't think that the big treasury companies are going to have much issue here. But I don't know how much you've looked deeply into this.
- [15:41]
B
Yeah, I don't think that the this is the type of story where the specifics aren't all that relevant. They didn't announce some dramatic new policy. They basically just said that they're going to look closer at things and they are aren't opposed to delisting if they find things that they don't like is sort of the nut of it. Look, I think that everyone has treasury companies as their odds on predictor for the thing that makes the music stop this time around to the extent that you think that that's the case. Things that let the air slowly out of the balloon rather than sort of with a big pop aren't necessarily bad. I tend to think that it's going to be largely driven not by NASDAQ policy but just by market demand. But well, we'll see. You know, look, I think that we have a couple of IPOs I think coming up next week, which should be interesting bellwethers for how much, how where the animal spirits are right now. I think it's kind of a weird time. Everyone is sort of, you know, you feel this around AI stocks, you feel this around crypto stocks, you feel it around just stocks in general heading into the rate cycle. I don't think anyone has a really clear, clear read on how to feel about markets right now. And so I think it'll be very interesting to see what IPOs do kind of released into that environment.
- [17:01]
A
Yeah, it's going to be interesting if Bullish was truly a top signal and was the peak of exuberance or whether more rational launches can continue to do as well as them. Because I think Gemini, obviously a much bigger household name than Bullish was. So if it.
- [17:15]
B
Yeah. Although Gemini's business isn't looking very good from. From what they shared. I mean, if you. If you go look at the tweets, you know, the. The average tweet said something like, how bad do you have to be to lose that much money during. During this crypto cycle? So, I mean, I don't know if.
- [17:34]
A
Those things matter, I guess, is the real question.
- [17:36]
B
Exactly.
- [17:37]
A
Spirits continue to outweigh that because with Bullish, I don't even think people were looking at the numbers. They were like, yay, crypto exposure.
- [17:42]
B
Look, if. If I could write the script just from a. What would be interesting for us to get a real read on things? You know, Kraken doesn't seem all that ready or all that close. But Kraken is the one from an actual. Where there is investor demand, whether that's up or down in the cycle. People will be excited for Kraken to go public. If, if it's underpriced for a while, they'll be excited for it. That'll be the one that I think really gives us a sense of. Of where things are. But, you know, in the meantime, we're going to have what we have and we'll learn what we learn.
- [18:10]
A
Nice. Knocked it out fast. That's the Friday 5. Give everybody. Give NLW a follow, of course. And check out the breakdown where he does this on a daily basis. And we will see you guys next week. Thanks, man.
- [18:20]
B
Later.