← The Wolf Of All Streets
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- [00:01]
Scott
Good morning everybody. Welcome to crypto town hall. Every single weekday at 10:15am Eastern Standard Time here on X. Obviously this is one of those days that people likely want to discuss price action. When we were having the conversation yesterday, we were talking about a key resistance for bitcoin at around 88, 800. Obviously bitcoin blew through that. Also at the same time we were talking about the fact that gold really looked like it was having a blow off top, which seemingly was the case as bitcoin drops, excuse me, as gold drops relatively aggressively from the highs. At the moment, actually bitcoin and gold are dropping while stocks are up. So it's very clear that bitcoin is not behaving like either of them, kind of forging its own path, which I think is what every single bitcoiner wants to see. Dave, what do you make of this price action here? Obviously before market open today I haven't been paying much attention. I was at my kid's school. But before market opened today, bitcoin kind of had ripped, you know, making highs over 94,000, almost 95,000 now trading below 93. Stocks are up, Gold's dumping all over the place.
- [01:10]
Dave
Well, I mean a couple things first. I mean I did a video last night on X and basically said that 94 is a key level to watch because it was the high from last month. And you know, look, there are people who are looking at these levels. There are lots of technical traders who will are looking to establish shorts and you're going to see that action. At the same time, the tailwinds for bitcoin just continue to grow. I mean the market yawning about SoftBank establishing a competitor Microstrategy and putting Jack Mallers in charge. I mean to me that's not a small thing. People used to get really excited about the having. Think about the difference in supply from the having this company given SoftBank's balance sheet and the amount of money literally is more than a year's supply of mining. It's going to be gone and people don't really care. Look, when I look at bitcoin I think people will look back at this, that this period of time and say, you know, wtf were you thinking? You know, if you, if you believed in it to not be accumulating here and just kind of ride out the volatility traders are going to make a lot of money trading around these positions. I'm not against trading but I think when you look at it it just looks what is wrong with this picture? Meanwhile, gold I mean, yeah, it got ahead of itself. It doesn't mean the long term trend for gold is enough. But you know, gold isn't the kind of asset that's parabolic like that. It's a supply demand thing. So people all rushed in and bought it and they expected that to continue. Well, it doesn't work that way. I mean, gold is at best a really good preserver of purchasing power parity. But it's proven not to be a great preserver or follower of financial assets. And Bitcoin is going to do both at some point. So yeah, it's not surprising to see bitcoin delinking from stocks because you know, we like the, we like Monday's delink from stocks better than we like today's. And it's not surprising to see Bitcoin move slightly the same as gold but with obviously different market moves. The reality is it's uncorrelated. And every time I hear people talking about the correlation, the only real correlation is when there's a major event. The one thing that you could look at today is if in fact the markets are rallying because people think that the administration is going to relent and that, that, that Scott Besant and his views are in charge, then maybe people think that means less liquidity is going to get, have to get pumped into the market, which I think is delusional. But that would explain why Bitcoin is underperforming stocks today. Frankly, I think anyone who thinks liquidity isn't coming, that the damage hasn't been done, they literally are delusional.
- [03:57]
Scott
But that's, Yeah, I think also, I mean it just had a big move. You break through a key level if you're a technical trader, the second it blows through that 88.8 level you bid, doesn't mean it's going to hit. But you know, a strong resistance to flip to support. You bid that level maybe 89 and.
- [04:15]
Dave
You short at 94. Right. You know, you pick and you know, if it breaks through with actual spot LED buying, then okay, then you're small.
- [04:23]
Scott
Loss and move on.
- [04:24]
Dave
You get your small loss, you take your, you're stopped out and you move on. But if not, you take your scalp and that's the kind of stuff that people always ignore. I mean, you know, as I said, you know, I, I, it's funny, I made sure to do a video last night to get it, get it so that it's clear. But I said caution around these levels from a technical trading point of view, but that doesn't change the long term thesis.
- [04:46]
Scott
Right. So a couple things in the news and you highlighted maybe the biggest one. So we should, we should touch on that for sure. This was the news that you just talked about. Jack Ballers wasn't actually included in the original post, but this is the news. Brandon Lutnick, son of the U.S. commerce secretary, is leading Cantor Fitzgerald in a planned 3 billion Bitcoin investment initiative with Softbank, Tether and Bitfinex. The project involves the creation of a new entity, 21 Capital, with Tether contributing 1.5 billion in Bitcoin, SoftBank 900 million and Bitfinex 600 million. The initiative aims to replicate MicroStrategy's Bitcoin investment strategy. And then the next piece obviously was announced earlier today, which I believe is that Jack Mers will be heading the initiative. He'll be the CEO, I guess working with Brandon Lutnick there. What do we think that this actually structurally looks like? So they're obviously seeding it with 3 billion. What is the plan afterwards? Is it pure conjecture? Do we have anything structurally that we know is going to happen? Jonathan, go ahead.
- [05:51]
Jonathan
No idea on that, but I think the, the big safety thing here is that Tether, Bitfinex, Softbank, that's a great thing for Tether because what's that and cancer? I mean Heather's been, depending on how long you've been in the space. It's been a shady thing and then not so shady and then shady. I mean talk about a liquidity threat. Tether's always been something that's been hanging out in the background as a thing that could spook everything. But that's no, at least for four years. That doesn't seem to be the case anymore.
- [06:29]
Scott
Yeah, I mean Tether truthers are done. There's nothing left to say, I think about Tether. That's negative. When Cantor Fitzgerald has stated clearly that they are custodying the assets and that they're safe. Lutnick has taken a position in the company and he's now the Commerce Secretary. So yes, I think we're pretty good.
- [06:49]
Simon
For the next four years.
- [06:49]
Jonathan
Is he running Cantor Fitzgerald now, is that right?
- [06:52]
Scott
He's certainly running this. I didn't know that his son was running Cantor Fitzgerald, but it seems that way. Yeah. And for those who don't know the story of Howard Lutnick and Cantor Fitzgerald in 9 11, you should look it up because it's absolutely astounding. Basically everybody in the company died in one of the towers in 911 and they rebuilt from scratch to still be One of the biggest institutions in the world, including his brother, like 30 or 30, 60 people that were at his wedding. Literally everybody in his life he lost in 9, 11, basically. So a worthy story to look up if you guys have never done that. Amateo, then.
- [07:26]
Mateo
Dave.
- [07:29]
Perry
Yeah, I think the Tether fud just disappeared once rates hit as high as they did. And Tether became essentially a money printer for all the cash that they had on the balance sheet. And when that occurred and they were just printing money, any risk that was outlined within Tether due to how they were managing their asset allocation I think just went out the window with those profit margins. So as they were looking at the essential portfolio mix that goes into backing Tether and they're organizing this, I think you look at this and say, well, where's the opportunity to have a debt vehicle to raise an enormous amount of money, to have legit parties back it and be able to bring in billions of dollars to accrue Bitcoin the way that microstrategies did, taking it out of their playbook. And I think it just makes a ton of sense. It's kind of wild to see it come together, but yeah, I expect them to easily be able to raise far beyond what they're putting up as upfront purchasing power for their bitcoin reserve.
- [08:36]
Scott
Yeah. And Tether was the sixth largest buyer of United States Treasuries last year. That's without the other stablecoin providers. And in a world where there's questions as to what foreign countries are going to do with United States debt, Tether's only going to grow. There's a world where they're first, second, third, certainly fourth by next year in how much they've bought in United States Treasuries. I mean, it's pretty astounding. I mean, Simon, you're an early Tether guy, so I think we can, it's fair to say that we're in a good position with Tether now.
- [09:14]
Simon
Yeah. For disclosure.
- [09:15]
Chris
Yeah.
- [09:15]
Simon
Bitfinex shareholder I think the bigger story, and again, I want everyone to see the story outside of the story, is the microstrategy, let's call it strategy now figured out a way of shorting the dollar and accumulating one of the largest bitcoin positions in the world by using dollar based financial products. And Tether did the same. They essentially said, we'll give you a full reserve blockchain asset that's backed by the US Government and we'll make more money buying Bitcoin with the yield from the government than Citibank did in terms of profits. So both of them, one of them became the highest performing company on the stock market. The other became one of the most profitable company in the industry simply by shorting the dollar and going long. Bitcoin. And so to me, when Cantor Fitzgerald, if you don't know, one of the most important and significant primary dealers of U.S. treasuries direct into the Federal Reserve, starts working with a stablecoin issuer tether and at the same time does a joint venture in order to do the strategy. Strategy. He is the commerce Secretary and working with Scott Bessant, who is a currency raider from his work with George Soros on the pound. If you can't put all that together, the Trump administration are going all in on Bitcoin and short on the dollar. And they can't tell you that. But if you just follow the money and look at the joint ventures, look at everything that's being lined up, essentially the demand for Treasuries is not there. So they're all going to have their own stable coins to back those Treasuries and dump Treasuries on the US On US People, which is why Cayman island is now the largest purchaser of Treasuries, because that is your pension. And now they're using those high yields in order to accumulate as much Bitcoin as possible and do partnerships where they can leverage the debt markets and the capital markets in order to buy Bitcoin. I mean, I don't know.
- [11:41]
Scott
You can strengthen the dollar while doing their money.
- [11:44]
Mateo
Yeah.
- [11:45]
Scott
And strengthen the dollar while doing it because they'll back it.
- [11:48]
Simon
But are they strengthening the dollar? They're only strengthening the dollar if they do a bit, a bit bond, a Bitcoin strategic reserve. It looks to me like they're shorting the dollar and they're buying Bitcoin.
- [12:04]
Scott
Aran, you had your hand up.
- [12:05]
Arian
Yeah. And yeah, great, great points, Simon. But I think that's underway. I do think the Bitcoin strategic reserve bit bonds, they are underway. And I am privy to some of those conversations that are happening in D.C. but it won't be for several months. Right now, Washington is focused on the market structure bill and the stablecoin bill, and it won't, it probably won't be until after August recess that they'll take up bit bonds and the Bitcoin Strategic Reserve Act, Senator Lummis's bill. But that's coming. A couple comments. I mean, really, really big news this week. It's really an exciting week in the Bitcoin and the crypto markets. Just real quick on this cantor deal with SoftBank and Tether, correct me if I'm, I'm wrong, but my read of this is that this will be essentially a special purpose vehicle that's exclusively executing the strategy. Strategy, Michael Saylor's strategy of issuing bonds and debt out to the market to use that to acquire large amounts of bitcoin purchases. So just.
- [13:16]
Jonathan
It reads like a spec, doesn't it?
- [13:18]
Scott
Yeah. And isn't the story here, Perry, just quickly. Yeah, okay, yeah, I was gonna say, isn't the story here that this, in this announcement says softbank's gonna contribute $900 million of bitcoin and at no point have I ever heard news that SoftBank has $900 million worth of Bitcoin, which means SoftBank's gonna buy $900 million worth of Bitcoin or has.
- [13:37]
Arian
Yeah, yeah. I mean, it's very, very possible that there's many institutions that have bitcoin holdings that just haven't been disclosed that we don't know about yet. But I think what's an important distinction to point out between this new venture and what MicroStrategy or Strategy has done is that MicroStrategy, and sorry, they've rebranded the strategy, they have an underlying cybersecurity business. So this would be a company that doesn't have that underlying business. So that's different. And that's a unique thing we're starting to see. And there are other major bitcoin entrepreneurs and investors that are building similar structures internationally to do just that. But we have not seen how the markets will respond to a public company that's issuing debt that doesn't have that underlying business underneath it. So it'll be really interesting to see how the markets respond to that. There's a couple different trains of thoughts. One is that underlying business adds some additional stability to that venture. And there's another one that says it adds additional risk because you're dealing with all the operational challenges that come with operating another kind of side business in addition to doing the bitcoin strategy. So we don't know how this is going to play out. But I, I do believe that there, there, this is a huge mega trend.
- [15:19]
Scott
Isn't it interesting that they're seeding it with $3 billion basically before raising any debt or, you know, following this strategy. Strategy, so to speak. Because that means that there's a pretty strong base here. And I think there's also the signal, I mean, Tether we know has many more billions of dollars in bitcoin to back this if they need to.
- [15:40]
Arian
Yeah. And it also shows that this is a very, very serious endeavor with real money behind it. So it'll be interesting to see exactly how the market responds to this. But I would expect it to be successful. So much so that I think we're going to see many, many, many other companies follow suit. I believe that every public company in the long run, or the majority of public companies will have bitcoin on the balance sheet in the long run. And just want to give a shout out to our team at the Digital Chamber that petitioned the Financial Accounting Standards Board and successfully got them to change the way bitcoin is treated on the balance sheet that allows for public companies to hold bitcoin on the balance sheet. So if it wasn't for all that hard policy work that our team did, this, really, we wouldn't see this take off. And those standards, those accounting standards just went into effect last year. So it takes.
- [16:36]
Scott
That's the gap accounting, basically.
- [16:38]
Dave
Right.
- [16:39]
Scott
Just for people to understand it's gap accounting. When MicroStrategy did it and Square and others, you had to basically write down your bitcoin position to the lowest price every quarter, which crushed your earnings, and.
- [16:50]
Jonathan
You could never change it up if it gained.
- [16:52]
Scott
Correct. So basically you always were taking a loss on bitcoin against your earnings every quarter.
- [16:58]
Arian
And most CEOs would just be unwilling to do that because of the argument that you'd be hindering shareholder value. So it's made it very difficult unless you're, unless you're Mike Saylor or unless you're Jack Morsi or maybe Elon Musk, you actually understand the underlying technology. Probably not going to stick your neck out, you know, being CEO of a public company to implement the bitcoin strategy. But that, that's changing because we got those rules changed. Scott, we started the show talking about how bitcoin is performing. And a big part of the conversation today is bitcoin emerging as its own asset class and decoupling from the stock market. So I just wanted to also point out a report that was published by the Federal Reserve of St. Louis in January of 2018. The Fed stated that it's likely that Bitcoin will emerge as its own asset class and have the potential to develop into a diversification instrument. So many people have been right to point out that bitcoin has been somewhat correlated to market activity. But I think that really has just been because it's, you know, it's in the past, still been thinly traded. Massive, massive macro events have impacted Bitcoin. But we're starting to see that breakout as bitcoin emerges into its own asset class and matures, has the liquidity, has the, the global support behind it to really operate as a diversification instrument. So that's something we've been expecting to see and we're just now really starting to see that play out in the market itself. I think that's a very, very important shift to take note of.
- [18:51]
Scott
I think the, the. I just pinned a tweet above, but I, we talked about this, this ad nauseam yesterday. So I don't want to go too deeply into it, but I definitely take the other side of the correlation argument. I know you do as well. But if you look at Bitcoin vers Tech, this is Bitcoin versus qqq. If you guys are looking at that chart, it just made another all time high and looks like any other bitcoin versus dollar Bitcoin versus anything chart up and to the right. If those were correlated, you'd basically see a flat line.
- [19:17]
Mateo
Right?
- [19:17]
Scott
So bitcoin is outperformed, continues to have peaks and valleys, but continues to outperform the nasdaq. And if you look at a bitcoin versus gold chart over time, very similar. So it doesn't really trade like either of them. Dave Simon, I know you guys have your hands up. Matt, I want to just go to you really quickly because as I was just saying that Softbank news, I was looking at your feed and read 30 seconds later that you said nobody's talking about the fact that SoftBank is buying $900 million. So we had one of those great minds, I guess moments. But has there ever been a report that SoftBank actually owned $900 million worth of Bitcoin? To bid this, to contribute and to that end this price action 94 to me looked like a steady bid. Like somebody was just twapping this and buying and buying and buying, like really orderly. Do you think it could be part of this?
- [20:11]
Mateo
Oh, that's, that's an interesting thought. I love that we were thinking the same thing. It really was remarkable to me. I mean I looked across, you know, blockworks, the block coindesk and the story was nowhere. And this is like it's such a massive piece of news. It's really amazing how far we've come. I think it's accurate to say that no one has reason to believe that they previously owned a billion dollars of bitcoin. Could they have been the source of the buying? Maybe That's a reasonable idea. I think there's also been a lot of flows coming back in from the basis trademark, sort of steady investment from institutions. But could this be a sign of, you know, another firm establishing a billion dollar position? That could make some sense to me. Either way, I think it is massive news. I think it's part of this meta story of bitcoin emerging as a true macro tool in every institutional investor's toolkit. And yeah, it's pretty incredible that we as an industry can just sort of shrug at Softbank coming in with a billion dollars. It's an amazing event.
- [21:20]
Scott
You're still obviously constantly having the conversations with all of these institutions about adding Bitcoin. Right. So I know when we talked at first it was sort of a sales pitch about Bitcoin itself, and then it becomes a sales pitch about choosing the bitwise ETF versus others. But just generally in context of everything happening this news and strategic bitcoin reserves, how are those conversations evolving? Is it getting easier?
- [21:47]
Mateo
Oh, it's getting way easier. I mean, I'm, I'm calling you from a hotel I'm at about to speak at a major wirehouse conference. That was not something that was available to the bitcoin community a couple years ago, and now I'm doing it regularly. All of these things make the conversation easier. Right. Remember, the two biggest things that prevented institutional investors from accessing Bitcoin were regulatory risk and reputational risk. It wasn't volatility, it wasn't environmental concerns, it wasn't worried about tether. It wasn't most of the FUD that the crypto community talked about. It was regulatory risk and reputational risk. And the incredible thing that's happened over the last six months is those walls are just being torn down. Right? The regulatory risk has been reduced effectively to zero over the last six months in the fastest regulatory switch I've ever seen for an industry. And the reputational risk, while a little bit stickier, is coming down extremely fast. When you have Larry Fink talking about bitcoin and the Commerce Secretary talking about Bitcoin and a White House strategic bitcoin reserve and Abu Dhabi buying Bitcoin and Softbank buying Bitcoin, it becomes much more difficult for the blockers at large firms to say, well, we can't do it right? Who are you to stand up against Ray Dalio and Stan Druckenmiller and say that you're right? So I think we've torn down the two biggest barriers to institutional adoption. And I think what that Means is we're going to see it happen really. You know, institutions move on a glacial timescale, but from a, from a institutional perspective with very rapid speed, I think it's really a different ballgame than it was even three months ago and certainly six months ago and an entirely different universe from where we were two and a half years ago. Talking about FTX and Bitcoin 5000 and.
- [23:44]
Scott
What about all the altcoin ETFs? We have Solana obviously launching in Canada. We've seen the downtrend of Ethereum versus Bitcoin of late. So we know that that hasn't performed as well as maybe some expected versus Bitcoin. Do you think that there's going to be first number of them coming online anytime soon? And I guess the second question is, will there actually be buyers for those?
- [24:10]
Mateo
Yeah, I think, you know, obviously I can't speak about Bitwise's filings, but broadly speaking, I think the answer to the first question is yes. I'm optimistic that we'll see approvals. No guarantees of course, but I'm optimistic. But I do think buyers will be slow to move into that space. You know, ETF buyers you can think of almost as sort of following community vibes and there's just not yet a lot of demand for those, those coins beyond Bitcoin. I think that will come eventually. There, there's excitement about tokenization, there's excitement about stablecoins, there's bubbling excitement emerging about DeFi and DePin. And I think all that pulls back in some, into some of these layer ones. But you know, my expectation is that this is a, a Bitcoin dominant market from a narrative perspective and a flow perspective for at least the short term, foreseeable future. Maybe we'll see some people building positions slowly in altcoins in anticipation of where we might be in six or nine or 12 months. But I wouldn't expect those ETFs to burn down the house from a flows perspective on day one. I think the community vibes and the fundamentals surrounding those blockchains have to improve but before we see huge flows from the institutions into them.
- [25:35]
Scott
Yeah, my, my assumption, and, and maybe I'm wrong. Someone actually asked me this question yesterday is that altcoin ETFs will take some percentage whether 10, 15, 20 of the entire crypto ETF market and the entire market will grow, but it's unlikely that percentage will grow.
- [25:52]
Mateo
Yeah, I think that's right. I also think index based strategies will get their share of institutional flows indexing. Is a sort of classic approach, approach amongst the institutional set. So I, I think, you know, it may be Bitcoin and then index based strategies and then individual altcoins. That may be sort of the order of operations from a flows perspective. And of course the indexes will be, you know, majority Bitcoin. But that's, that's kind of what I expect, Dave.
- [26:23]
Dave
So I actually have a question for Perry Ann and, and it's one that I think matters that people don't talk about. It's a plumbing question, but it, it, you know, the Basel III rules and the rules that are set up around capital for Bitcoin are probably the last blocker as far as I can tell. I mean, the rules I think still are that if a broker were to do a swap against Bitcoin, say a billion dollars long and another billion dollars short, that's a $2 billion capital charge, as opposed to some rational 10, 20% haircut for offsetting positions to represent counterparty risk as opposed to asset risk. I'm curious from a policy perspective if any thought or talk has gone into that, because that's a really big unlock. Basically the notion of Bitcoin as good collateral which will allow bit bonds to thrive, allow them to be more than a fringe product, I think is dramatically larger of a potential driver than people realize. So I'm curious if that conversation's been going on.
- [27:30]
Arian
Yeah, it is. I will say the rules at Basel need to be changed and updated. It's a little bit harder to influence that body since it's not, since it's a US body as opposed to the US Federal government. You know, it's controlled by many different international players. So it's not something that's as easy to change, say as the, the Saab 121. The, the custody rules at the SEC, which we were able to do here through, just through, you know, an action directly at, at the sec. So it does need to change. We are seeing kind of similar rules have already been changed here in the United States which will help build that momentum to address this at an international level. The Saab 121 was the first that was really on essentially day one of the Trump administration and Gary Gensler leaving the SEC, that our acting chairman Mark Uada brought that forward to be rescinded, which was a huge step forward because it made it impossible for a bank to offer custody services for Bitcoin because it required essentially 200% reserves. If you had $100 million of Bitcoin in, in custody, you would also have to have $100 million in, in a cash like asset to back that which is just, you know, essentially makes it impossible to have a, a business doing that. We've also seen some really good changes over at the CFTC where cryptocurrencies will be able to be posted as collateral for various CFTC trading activities. So we are seeing some positive movement. But you're right, Basel, the Basel capital rules are really impacting the international use acceptance, international uptake of Bitcoin. And I think that's really the next frontier as we get these major policy wins and shifts in the United States, be able to take that at the international level and fix it for the rest of the world.
- [29:40]
Scott
Arian, as you talk about the situation at each regulatory agency and all of these rule changes, I do one of the biggest stories that we had lined up today, just want to read this. New SEC Chairman Paul Atkins stated that his top priority during his tenure will be to, quote, to provide a rational, coherent and principled regulatory foundation for digital assets, end quote. He also pledged to work toward making the United States, quote, the safest and most favorable place in the world for crypto related activities. I just want people to absorb that because that's the guy that's replaced Gary Gensler. Can you imagine at any point in the past few years having the SEC Chairman making those statements? You could not have a more favorable environment.
- [30:27]
Arian
Very exciting. And I know Paul personally. He served on our Board of Advisors at the digital chamber since 2017 and he helped. He was one of the co chairs of our Token alliance, which group started in 2017 and that was our working group to help establish and address all of the regulatory challenges the industry has had between the SEC and the cftc. So I brought in Paul and then I brought in Jim Newsom who's a former CFTC chairman. So Paul is a former SEC commissioner, so he previously served on the Commission. He was just sworn in yesterday as Chairman. But I know Paul very, very well. I've spent a lot of time with him. He understands these in depth. He has a technical knowledge, he has industry understanding and he also understands the inner workings of the SEC because he, you know, he's worked there previously. So he understands what's fundamentally wrong with the securities and Exchange Commission. And a big part of his agenda is going to be, you know, fixing a lot of the political problems just in terms of how the agency operates. We the just in the past couple of months we've gotten a really, really cool and good preview into what a Paul Atkins SEC is going to look like or what the Trump administration's SEC is going to look like. I mentioned essentially on day one of the Trump administration coming in, of course Gary Gensler had resigned and his chairman post, Mark Ueda was brought in. He's been serving as acting chairman up until yesterday. And just in these past couple of months, look at how much activity we have seen with the sec. They started the crypto task force as headed by Hester Purse, Commissioner Purse, AKA Crypto Mom. She's been called Crypto mom by Pyex and by all her Twitter fans. They rescinded sob121 on day one. They've issued stayed for a number of frivolous lawsuits where there were no allegations of fraud. Really just that regulation by enforcement posture on the industry. So we're really excited about the future of the SEC under Paul Atkins leadership, really confident that we will establish that regulatory clarity for the industry. And I think just all of the really positive news that's come out of the SEC over the past couple of months on day negative one, before he's even taken off this really will just foreshadow the changing of the guard and how how big of a shift this is going to be to help build safe and robust crypto markets here in the United States.
- [33:16]
Scott
Really is surreal. Simon, I know you had your hand up.
- [33:19]
Simon
Yeah, sorry, just on the previous conversation I was probably going to say that the other side of the counter Fitzgerald business would probably be to either do the stablecoin side at the same time because you've kind of created a self dealing mechanism for backing your stablecoin through these primary issuances. So the fact that Kant is doing that they have direct primary issuance, they can back a stable coin. The other side of it is they probably do an investment bank where they roll this out to anyone else that wants to do this would be the most likely and obvious when you're putting all of that together. Which brings me to a couple of points and that is that with the Basel requirements, I'm not quite sure why Bitcoin needs to be added to the bank's balance sheet so they can lever up and why don't they just do it off balance sheet with the ability to collateralize it and just rather than combining these two systems because you create a real risk factor that doesn't really need to be there and many of the products were done off balance sheet rather than on bank balance sheet. The other thing is the two most important things is the ability to compete with decentralization and my understanding is they're doing a two year where it can't be done via defi. And the second thing, which is actually the question is that if the stablecoin issuer, which I've said a number of times, cannot pass on the yield, then you're not fixing the dollar, you're just asset stripping still and taking out the final yield of the dollar while you pass it on in the hot potato of the debt based Ponzi scheme. If you can pass on the yield and you can allow people to convert it into bitcoin, then you can demonetize and actually move to a sustainable dollar. So to me the fact that the banks are saying put it on balance sheet and don't pay the yield and don't compete with defi implies to me that this is just using stablecoins as a mechanism for asset stripping Americans rather than actually any kind of substantial monetary reform at the same time as doing tariffs, which is a tax reform, when it's going to be a monetary reform that fixes the issue. That's all I'm saying.
- [35:49]
Dave
Yeah, I, I want to say a couple things here because the first one, the stablecoin one I saw Perry and give the 100, it's true, but it's only a first order effect. I mean you got to look if you play chess, you can't look one move in advance. I mean what will happen, and this is obvious by the way you can keep this recording, is yes, you'll get stable coins can't pass on issuers. And in the beginning people will keep balances and stablecoins to be able to move them around. It'll be no different than checking accounts. Fairly quickly institutions will start to figure out and start offering automatic sweeping of stablecoins into on chain non stablecoin money market equivalent type products that will provide yield. And so because unlike moving money from a checking account which takes three days, the banks keep float etc. ET it's not really practical. Stablecoins will allow the movement instantaneously. You will end up in a place where it absolutely will compete with the banks. But the banks are thinking one dimensionally, they're thinking they can keep this. The real question is making sure the regulation doesn't stop the actual free flow on chain of capital because once that happens then you get what you want. So that's just a point that needs to be made. As far as the other, I think Simon, it's something we should hash out because I think that the capital rules are important. Bitcoin is good collateral is important and I think people always underestimate the importance of market makers who are the ones most impacted by Basel iii, not necessarily bank balance sheets is the issue. So it's a much more complicated topic that we're going to get down today but it is definitely worth something diving into.
- [37:33]
Simon
Yeah, it's a very geeky bank conversation.
- [37:37]
Jonathan
This is not part of the geeky bank conversation but I know we got a lot of altcoin lovers and followers including me. We've looked talked about the SOPR and the mvrv but if you look at Ethereum's percent of addresses in profit when Terra collapsed at the low In May of 2022 it was at 52% of the of the Ethereum addresses were in profit. And then you get six months later you get into the November December 2022 lows when FDX collapses and it's like in the high 40% quick. If anybody wants to guess what it is now, what's coming off of these lows that we just had last week? 33% the lowest, insanely stupidly low. I mean we went from December beginning of December 2024 we had like 94% of the addresses in profit to where we are now. I mean it, it's not even a dumpster fire, it's like a porta pot explosion at a taco festival in Tampa in August and it's day seven of a week long taco festival. It is just the worst looking chart for Ethereum I've ever seen.
- [38:53]
Scott
I'm having a mic issue. Yeah, Ethereum has taken a beating. I would argue that. Oh God. I don't know if I should say it out loud but I've been saying it on X because I would argue that now is a pretty good time to enter Ethereum because either it's dead or the upside is massive. You can cut it pretty pretty close below here if you're trading it. You cut it justifiably pretty close below here.
- [39:18]
Jonathan
Short term trading perspective the altcoins in general. But Ethereum, Ethereum out of all the altcoins is like one of the worst performers. If you look at the market cap excluding Ethereum is doing better than the altcoin market with Ethereum.
- [39:35]
Dave
I mean it is worth pointing out Scott that today as a microcosm looks like a mini alt season Bitcoin kind of staying at the level it was at the beginning of the day. While Solana rips higher. Ethereum actually got recovered. The not so important and I couldn't care less level of 0.019 on the Ethbeat bitcoin ratio. So there's definitely crypto people who've made some money who, who are pulling bitcoin out into alts. I think they will regret that action. That's my, that's my suspicion. Although I'm quite bullish on Solana particularly. But I think doing that indiscriminately is. It's definitely happening today. I mean, you can see it across the board. It's a tiny little green shoot. I don't think this is the beginning of a long term alt season, however.
- [40:24]
Scott
There will be a long term alt season. I think there will be select narratives and certain ones that do well, but there's just too many tokens for it ever to be the dart throw. Everything goes up that there was of the past, in my humble opinion. That doesn't mean that there won't be. There won't be some exceptional out performers. There will. They'll be amazing. I think this time you just have to actually, you know, choose wise.
- [40:46]
Dave
You mean do research? Oh my God.
- [40:48]
Scott
No, I didn't say don't go that far, Dave. I mean that's crazy. Yes, do research and choose well. Mateo.
- [40:57]
Mateo
Yeah.
- [40:59]
Perry
I mean, I think it's just funny because just a few days ago we were having this conversation and it just seemed like the sentiment was altcoins will not catch a bid for a very long time. And then here we are today and they are catching a bid. And I think there is a lot of interest in alts, especially when it comes to AI. There's also been a tremendous amount of discussion questioning what's actually been built on a fundamentals basis in the crypto market. And I just don't think that the Bittensor ecosystem gets enough attention. I think that it's.
- [41:37]
Scott
You're like the 10th person that said that to me this week.
- [41:42]
Perry
Perfect. I mean, if you, if you actually.
- [41:44]
Scott
Look to do a bit Tensor show on my channel, like all Bittensor, and of course I'm like, what?
- [41:50]
Mateo
Why?
- [41:50]
Scott
Why what?
- [41:52]
Perry
Yeah, I mean, what we at masa, the company I work for, we build exclusively on BitTensor. We run two subnets. But that aside, like there's actual real AI products that are competitive with Web2 that are providing AI inference. We're providing data, providing, providing compute. Many altcoins that you see in the market that are AI related are just subnets within the Bittensor ecosystem. And many of them have full web2style interfaces that are providing web2style services. You may not even realize that Bittensor is powering them and it has the token model of Bitcoin, 21 million halvings, et cetera. So there's a lot more that we could get into that. But I think you have to look at the AI sector as a real outlier here. Bittensor has been a very strong performer off the bottom. I expect it to continue to do very well. And I think if you're questioning the fundamentals in crypto and you're not looking at that, then you're really missing what's being built right under your eyes.
- [43:03]
Jonathan
About that potential ecosystem is like the. The tokens that make up the artificial superintelligence, Ajax, Fetch, Ocean Protocol. Are those part of that?
- [43:18]
Perry
No, no, those are separate projects. Obviously, some of them have been merged together. But Bittensor is a standalone competitive environment where instead of the miners in the bitcoin model that provide hash power to process transactions in Bittensor, the miners are actually performing dynamic AI tasks for BitTensor reward emissions. It's a really kind of complex model to wrap your mind around. Barry Silbert, who's obviously the DCG and Bitcoin og, did a recent podcast with Raoul Paul, and towards the end he breaks it down. But no, it's a standalone ecosystem with some of the most impressive innovation happening in this industry.
- [44:10]
Scott
Perfect buzz. I think we're good to go if you want.
- [44:14]
Samuel
Yeah, I, I also saw that, that interview about Bittensor, and that was surprisingly, being in crypto every single day. One of the first times that I had done a deep dive into Bittensor, and I was pretty, pretty impressed. Scott, I think that you should definitely.
- [44:30]
Scott
Do a show on. I'm telling you, I. I'm not kidding. It's got to be maybe in the last two weeks, but I've been approached so many times by people saying that. And then of course, I think Raul Paul, like, did a conversation with Barry Silbert or something. I didn't realize that either of them were particularly passionate about Bittensor, but seems very silver from DCG is. And so I think that got it more attention, I'm going to tell you. Is that accurate?
- [44:53]
Perry
Yeah, Barry Silbert has been building extensively in the Bittensor ecosystem. They run validators. They have Yuma, which invests exclusively in the Bittensor ecosystem. This has been his biggest bet since bitcoin, I mean, and that says a lot. So, no, he's, for all intents and purposes, all in. If you would say he's very invested.
- [45:18]
Samuel
In Bittensor, yeah, Scott, I'd be very interested in seeing you do a deep dive there. But we do have a sponsor today. It's Kuladao. And just a disclaimer before we get started. Mario's company, ibc, does marketing, incubation and investing. And sponsors on the show are sponsors working directly with ibc and not necessarily crypto town hall Scott or myself in particular. But we have Chris up here from Kula Dao as we get started with the sponsor segment. Chris, did you just want to give an overview or an elevator pitch of what Kula is?
- [45:54]
Chris
Yeah, sure. It's great to be. Can you hear me okay?
- [45:58]
Samuel
Loud and clear.
- [45:59]
Chris
Great. It's great to be with everyone today. Thanks for the space and time. Kula actually launched last week and we've been building for about four years. And specifically to do an impact investment into projects anywhere around the globe. But utilizing and leveraging blockchain to make the shared equity on any real world asset be underpinned by good governance. So the blockchain component is given that governance aspect to the overall project and then the equity gets shared across the different stakeholders and everyone's integrated into the smart contracts and can share in the direction of that particular assets development and also sharing the equity and the upside of it. So that's kind of the overview of what the project's about and what it's doing. We have currently projects in three countries and either in process or growing proof of concept was in Zambia where we invested into a limestone mine and then took an equity position and then used the smart contracts to push some of the equity to the local community there. So they get, they get a real say in the direction of that project. Also get some financial return from that on the equity that they hold in the project alongside the developer that's developing the project overall. And we've got other projects in Nepal and Malaysia that are in development.
- [47:21]
Samuel
I've helped start daos before, so there's a soft spot in me for daos. And I really love the way that you guys are doing this specifically with RWAs. But when it comes to the RWA sector in general, what makes Kula different from some of the other projects that are launching in that vertical?
- [47:42]
Chris
Yeah, I think it's really interesting, right? There's a real. My macro's in governance, so I did all of my studies in organizational design, political governance and my research. I mean I've been in the crypto space for about seven, eight years and just kind of tracking right the overall process of how daos grow and how they build constitutions, what works, what doesn't work, and really realizing this you know, the upside of blockchain technology is this incredible way of actually providing strong governance with checks and balances that maybe isn't fully decentralized in the utopian ideal of a dao, but I'm not sure long term the full scale democracy, liquid democracy, of what a DAO can do necessarily ends up in a good place over a longer trajectory. And so we've kind of started looking at that as a kind of a continuum and built a protocol that kind of sits in the middle between centralized oversight and decentralized decision making, and then scaling it up towards the decentralized end of that continuum as we keep moving forward. And I think in the RWA space, it's all about fractionalization and own a small piece of an asset that you wouldn't have necessarily access to. The reality is underneath that there's still a government that wants to take its tax cut on that asset. Right. And so there's a legal structure somewhere and someone has the 51% equity, irrespective of the tokenization that sits on top. And people are working hard at that. And it's like evolving and in process for Kula, where we feel like our sweet spot is really on the governance side of that equation. So we've built a really robust kind of constitution, institutional framework that sits around how those assets get governed and people actually get to participate in the decision making and not just be passive in the background on a fractionalized tokenized asset, on a real world asset, but actually get to shape and be part of the process of decision making, even at the legal fundamental level of the asset itself.
- [49:52]
Samuel
Most daos that launch, they kind of do a soft launch of their dao, almost kind of recognizing how difficult it is to decentralize decision making. And from my question is, from a strategic perspective, why did you guys decide to build around a governance first model? Like, I assume that was very challenging, but there was a strategic element there.
- [50:16]
Chris
Yeah. So I spent 20 years working in international development in Asia with multilateral bilateral agencies and just saw a tremendous amount of promise in those projects. And then over time, and I can say, because I'm not naming the projects or the countries, but incredible waste. I mean, I'm talking about billions of dollars invested into projects and then just a few hundred thousand dollars reaching the grassroots time and time and time again. And it was like the promise to these communities what's real in reality, the development project may go ahead, the external partners taken a huge cut and done really well, and the local community is either displaced and pushed out into urban slums or doesn't get anything from the projects and still lives on the land and the mess that's left behind. And it was like, that's a reality in life and it's not something cooler's trying to fix because we're just trying to move the needle, you know, in certain projects that we, we get access to. But the governance protocol really comes out of that, that heart and that mind. To see local communities genuinely having participation in smart contracts lock that privilege, right? You can make the promise, but later, later in the process of a project, you can renege on what you said you were going to do for a community or what, what involvement you promised them. You can renege on that. And that's sadly quite common from my perspective. The smart contract component of this and the governance first piece is really baked into that perspective of, okay, let's use the power of smart contracts to actually lock that equity and that participation, right, and tie financial disbursement to that process for the communities themselves so that if they're not engaging and they're not part of the process and they're not being listened to, then maybe that mining company can't stick a road through its village. And that's not happened. It's just giving an example of what we're trying to achieve. And again, to kind of situate it in reality. We're not trying to overhaul these massive industries where we get access to these overlooked assets that larger players don't want to look at. Smaller banking communities don't really want to take on that level of risk. We're finding these great opportunities, particularly in developing contexts where we can access, deploy capital and see really robust returns in what we're investing into on the private equity side and then trying to leverage that to make an impact at the community level that working alongside.
- [52:50]
Samuel
Appreciate that for people who are tuning in. I did just pin up one of Kuladao's posts, so make sure that you click on their green icon up in the speaker spot right now and check out their profile. And I did pin that into the nest, but in a lot of the marketing collateral. Chris, you guys talk about the hybrid model, like a web 2.5 structure. Can you talk about how that works in practice?
- [53:18]
Chris
Yeah. So I think we genuinely wanted to build towards the decentralized end of that continuum, like I'm saying. But we also realize we, we're not going to be inauthentic and not deal with the reality that you've got to have real world assets, have legal entities and you can't get away from that. So we've built a fairly comprehensive structure where we've got the assets in a protected cell company that's regulated and siloed so that none of the assets actually affect the underlying value of our Treasury. But that way we, we kind of sit between a traditional private equity firm and then leveraging the upside of blockchain in terms of what we can achieve. And we found, like, let's be honest about that and sit in the middle, not try and pretend that we're this decentralized protocol that's got all of the stuff that's going on in the background that most decentralized protocols don't talk about. Own it and sit in that place and then be working from within the system to move it towards more decentralized protocol behavior over the next 5, 10 years, as the market itself gets more comfortable with RWAs and projects that have utility that are still kind of emerging into a really early industry. Right. We're still really early days and all that. We're doing all that we've been talking about. We're still so early in that process. So really it's a choice to embrace it from inside and then move it in the direction as the industry gets more acceptance, more regulation, more clarity about how it can operate.
- [54:53]
Samuel
Well, despite it being early in the life cycle of Kula, you guys do have some very impressive projects that are already underway and onboarded. Can you speak to some more of those? I know you've dropped a couple hints so far.
- [55:07]
Chris
Yeah, for sure. I think we started right. We figured we'd build the project and then launch token, get some investment and go. And we realized, okay, we don't have anywhere enough capital to get going. So we started pitching to initially angel investors and realized, okay, we need proof of concept. They're not going to jump on board unless they've got something they can look at. So our first project we invested into about two years ago, two, three years ago, in Zambia in a limestone asset and worked alongside that community, a really good partner, very strong, kind of aligned to what we were trying to achieve. Did some water boreholes for the local community just alongside them to start building relationship on the ground. But, you know, they really embraced it. Right. And so the. For each regional project, we create sub tokens that are illiquid and. But that gives that project a set supply of tokens to, to run their governance with. But then the, the profit from the project goes back into the about the value of that token. And so the local community is given a stake. And so we won't put any investment into, into a project where the local developer isn't interested in actually putting that, that share and that stake out towards local community members. And it's just been really interesting to see how that's impacted at a level that's in, in direct contradistinction to what I've seen in UN work or other things that I've been involved in. And so the local community, like men and women in the, in the, in the mine, they voted for pay parity. So, you know, given choice of what do you want to actually propose on and vote on as a local constituent, they voted for pay parity. The developer has to agree to that. And they voted for a slight pay rise in their income. Developer agrees to it because it's part of the protocol. But then you start seeing the microeconomic impact of that at the grassroots level in that particular context. And so you've got new industries emerging around that particular asset that haven't been there before, but you've also got a much more incentivized workforce that are increasing production and actually having an effect on the bottom line. So we've seen some really substantial impact which is really what we're about as a project in that first proof of concepts over the last couple of years, which has been really rewarding to see because it is actually achieving what we've been, we set out to go for. And the same now we've got a couple more projects there in Zambia and we've also been working quite intensely at the central government level and we've got good relationships in the country and the poor at the central government level and working on educating central banks and finance ministers on even just like changing their, their crypto laws. Right. So they can actually be open to the idea of bitcoin in their system. Same in Zambia. We've worked quite closely with the government there, running workshops for central ministers on what, what blockchain and cryptocurrency engagement can do for them at that level as well. Our third projects over in Malaysia, and that's much more earlier in the pipeline, but still still really interesting in terms of how it's going to impact at the local level. And, and we realized, we started off in the mining sector, but we realized pretty much any asset with intrinsic value we can actually address that. We bring on a bunch of very qualified and solid practitioners in that particular sector or that vertical and then work alongside them to make sure we've done our due diligence and vetted the projects. Before we start deploying capital to them.
- [58:52]
Samuel
You touched on the. The tokens a little bit in that answer, but I wanted to transition a little bit to the actual Kula token. K U L A For anyone who's tuning in, could you give an overview of how the token works and perhaps what people should understand in terms of how it functions as a governance token?
- [59:14]
Chris
Yeah, so it's essentially. It's the utility of governance, it gives rights. We are in the first stages now of deploying. We built our own app, our own interface for people to utilize that token in the governance process with proposing and then voting on proposals made. So really it's the invitation for people and we work really hard. Right. So we've been through this long regulatory process with different entities all over the planet, but resisted the temptation to kind of fall into a fund classification. And. And because we really wanted to make sure that we've got space for retail investors to be part of the journey. And that's been necessarily and at times frustrating, but good process to go through. Right. Because it's meant that we've got a really strong compliance functionality in that token as well. It gives people the right to be part of the process of directing where we deploy capital, part of the community in terms of decision making about where we grow and how we grow, and it gives people that right. But we've also got like a secondary level of governance on top of that, which is in place for the compliance and regulatory side. So whilst people do get to participate and get to be engaged in what happens with Kula as an overall protocol and business, there's a level of checks and balances that go with that CEO. So it's not like a move in a direction to train the treasury in this direction, but that would be overseen by an executive team that, again, is transparent. And there and then we have a third component built in with an arbitration court that's independent to all of that, that essentially will help and check and balance the overall process in a way that keeps the community incentivized, because they can see that the executive isn't just working against them, it's working with them for the overall good of the protocol. And that sits within the foundation. So that's kind of how it works. The token, essentially, the capital raised from Kuler then goes into a Treasury, gets deployed out to different projects within the protected cell company, and then as profits are returned from the stakes that Kuler has in those different projects, that just gets loaded back to the treasury so people can make more decisions about where they want to deploy capital or exit the process with whatever comes from that. So we have to be really careful. We stay very strong on the governance utility side and it enables people then to be really part of something that, where there's an increasing interest in impact investment and for family offices, institutions, for sure, that's definitely a move, but, but really to provide a protocol where people can be very close to the investments that they make as opposed to, you know, remove several steps away from, you know, you make an investment or whatever, you don't necessarily know what that money's gone to over time. And with Cooli, you can see it directly, directly and transparently on the blockchain of what way money is going, what it's working at.
- [62:22]
Samuel
Makes sense. And for people who are tuning in, what can they expect from, from Kula in the next couple months?
- [62:29]
Chris
Yeah, so we just launched, so we'll be deploying capital out to the projects that we've lined up, getting them spooled up and going. We've actually immediately got teams on the ground in a couple of locations right now to vet and make sure that we're fully run through the due diligence required on those projects. We run our testnet DAO system over the next month and then in month two and month three we're going to start bringing the community into the decision making process and testing that with different individuals. There'll be some airdrops to come with that and just incentivization and tokens that come along with that as well. And then we, you know, we're four years into building and the focus has really been on actually getting the architecture regulated and ready to go for market. I think we're just really excited now because it's there, it's in place. Right. So we can start building out from that. And we've got several projects. We'll be on the ground in Kenya next month meeting with a number of different African leaders. We just brought on the Ethiopian and the ex Prime Minister of Ethiopia has joined our team which has been a wonderful recruitment and just so well connected across the African subcontinent. And in terms of just opening access to government level and relationships, that gets us into projects. And so we'll be on the ground in Kenya, off to Ghana and yeah, building from there really and another side of the business as well as we white label our services out. So where there's projects that are really looking for a strong governance protocol and we can also provide that support and that's kind of white labeled. So we'll white label it out to different businesses that are interested in sticking the governance protocol in their own DAF system where they want that as well.
- [64:20]
Samuel
Excellent. Well, I, I really appreciate you joining us today as we're wrapping up here. For anyone who's tuning in, it looks like we have almost 4,000 listeners here. Is there any specific call to action or anything that you'd, you'd want to prompt people to do, to, to get involved?
- [64:36]
Chris
Yeah, for sure. I think, I mean, this marketplace, right, We've, we've been working for several years and the highs and lows of this last, you know, cycles and runs. We've not built this project for a flash in the pan moment. Right. We're looking for people that value the proposition that we're making and wanting to build a community that are actually really deeply value, leaving some level of impact on the planet we live in. Right. And sounds utopian, but I know there's a lot of people out there and so we didn't build this as a hype coin or hype token or meme. It's really, it's built for utility, it's built for purpose, it's built for value and it's built for the long term. And so I think if anyone's interested in that and really wants to get on board with that, please head to our site, really do your own due diligence on what you read there and dig deeper into what causes about what's doing, what it's working and where we go. The roadmaps are all there, but we really want to grow a community that are committed to that vision, to really see what otherwise would look investable, be investable and transformed. And that's really what we're about. So please, please do come on over to our site, check us out and if you want to join in with the whole governance protocol, get the tokens you need to do that and be part of the community along with us.
- [65:52]
Samuel
Appreciate it, Chris. And I know we have Samuel here as well. Make sure that if you're tuning in, you're following all three of the Kula account, which is up here with the sleek green logo. Chris and Samuel. So they're all up here in a speaker spot. Check out that Kula account and drop them a follow. There's a lot of good information there and their official link is directly in their bio, so it's Kuladao IO. So, Chris, really appreciate you joining and for everyone who's tuning in, thanks so much. Yeah, no problem. For everyone who's tuning in, enjoy the, the green day. These green days have been few and far between in the last few months, so hopefully the market can maintain this momentum and appreciate everyone for tuning into the whole show. So everyone have a great day.