B (3:27)

Actually, actually, Dave, I, I would say it was very interesting. If you've been following gold for as long as you have, you're probably familiar with Fred Hickey.

A (3:34)

Of course.

B (3:35)

I was looking at a post that Fred put up about an hour ago, basically, and he's been longtime gold bug, funny guy. I mean he basically does semiconductors on one side.

A (3:45)

And when I was investing, David, he had the best newsletter.

B (3:48)

Yeah, but in any event, the tip to the chase here, he was citing a guy, Richard Russell, who basically said there's no fever like gold fever. And then Fred commented that a year ago he put up a tweet adding a word to it, saying there's no fever like Chinese gold fever. Now you basically said there may be more people out there chasing after bitcoin. When you throw in the population of China, I think things have gotten weighted on the side of gold. Hate to say it.

A (4:18)

Well, actually China, this is important. China has had for a while now guidance to their citizens to buy silver, not gold. And China has always, you know, historically we're talking thousands of years has considered silver money. Silver got demonetized by gold post 70s post Hunt brothers collapse. You know, people forget. And the reason that I'm so much, I've been much more bullish on silver than most of those other professional traders that I talk to because I look at it as the ultimate stat arb trade. It's a long term stat arb trade. But in the 70s before the hunt Brothers and the collapse of silver after that. And we should talk about that too. The silver gold ratio was average around 35. I mean yesterday we were at 47. I don't know where we're going. I've said it's going to get down to the 30s. I mean I've been saying that and beating that drum since Silver got to first hit 80 in the CME raised reserve requirements. So the geopolitical thing from China is a big reason why. So it's a good point you make. But understand that silver really is there. And I don't think that most of the people trading this is the problem with recency bias. Most people trading don't really understand.

B (5:33)

Yeah.

A (5:33)

And you know, and so you know, here we are on smelting Town hall. But you know, the truth is, you know, Scott had talking with Noel this morning. It was a great episode. Scott, I don't know if you're up here yet.

C (5:46)

Yeah, I think it's working. I tried to accept a co host invite about nine times and it would rug me and send me to listener. So here I am. Can you hear me? Good. Okay.

D (5:54)

Yeah.

C (5:54)

Good.

A (5:55)

But you know just to since you don't have to repeat what you said this morning. I mean they were talking about this and you know the silver is trading like an altcoin and trading like all season except for here's the thing that we all know and we can't, you can't unknow this or can't forget it when all season starts. It's not over in a week. Right. So all the people who think, who thought that when the CME raised reserve requirements and you remember because it was on this show that I said, so I'm going to take remind people I made the point that that will actually increase volatility and likely be positive for the market because most of the buying of silver is coming from not the United States. It's coming from the CFD markets and the other markets around the world. And the market makers that are based in the US were using the CME to hedge. So effectively what they did by raising the reserve requirements and tying it to the price, as the price goes higher, market makers have less ability to hedge or it's more expensive to hedge anyway which exacerbates price rises and it starts to trade like a meme stock like Gamestop in the short squeeze.

B (7:05)

Yeah. Dave, one last comment on Silver, which is something that Fred Hickey again brought up was people were thinking that silver had scarcity because China was Going to restrict silver exports. Fred Hickey did a channel check to say it's not really the case because major exporters in China are not seeing a significant change in shipments. So there's a lot of rumors of scarcity out there. This appears to be one, which is wrong.

A (7:31)

No, I think that's true. I think that's true. I think this is speculative demand and this will collapse. Look, let's understand, just like alt season does, it's just expecting it to do so right as it's got. As it's gotten started is kind of.

C (7:44)

Dave, I think you're. I think your point about alt season is important because you said alt season doesn't last a week, but alt season for an individual token may last a week before there's a rotation into some other token. Right. Because the natural flow of alt season is when you're just getting these massive fast rotations and you throw the dart and the thing you've been waiting for finally catches a bid. So it begs the same question we've discussed here many times, which is where does the rotation go if it really is kind of like an alt season?

A (8:15)

Right, right. And my point, which has been the.

E (8:18)

Point all along, I mean, if I could just make a quick point. So this is Ian, CEO of Coin Routes. We just listed Comex futures for all of our clients today, and we've had unprecedented demand for trading metal futures both across crypto markets. I'm sure you guys saw hyper liquid surge 25% today on news that their number two token was over a billion dollars in volume in silver perps. So all these crypto players are now trading and rotating metals. Coinbase, all these players are trading a huge amount. I mean, we've seen huge, huge, huge demands. I'm meeting with the Dubai Commodities Exchange on Thursday to go set up with them as well. I mean, look, there's just huge demand for these coins, and I think that this is gonna ultimately. Cause it already has caused capital rotation out of crypto. It's definitely suppressed all season, and definitely a lot of these people in bitcoin have rotated into gold. So I think there's.

C (9:06)

Yeah, and I think that's really interesting because it clearly speaks to speculative demand and we can talk about the fundamentals. And people need silver, and companies that, you know, require silver for things are having to buy them at a higher price. Try to lock it in. But come on, right? I mean, hyper liquid and your platform and Coinbase, these are built for traders, and that's retail trying to get by them.

E (9:29)

Yeah, I Think, look, I think as long as these gold and silver are rallying, we're going to, we're going to see, you know, decrease kind of like interest in bitcoin and cryptos. I think it's clear rotation out and now, I mean Paxos gold, whatever the gold, it was like $300 million in volume yesterday and it's just ramping. All these gold tokens are ramping and now the futures on Hyper Liquid and other exchanges for metals are ramping. So the volume is moving and the price is moving out of these crypto assets into metals. And it looks to me like kind of like the speculative thing. Of course, you know, I can't speak to the fundamentals, but I think that means that crypto will be depressed as long as this huge precious metal rally continues.

C (10:05)

Right. But then from what you're seeing, we have this conversation every day. It's nice to have a new person to have the conversation with. Also named Weisberger. Do you think it rotates back?

E (10:15)

I think Bitcoin, yeah. Alts. I don't know.

C (10:19)

Fair.

A (10:19)

I think, I think the point is, and Ian, thank you so much for the, for the data because that's, it's literally the thesis that I was trying to articulate which is, you know, and part of the. We've been joking about smelter town hall, but it's actually funny. It's now crypto.

B (10:32)

Right.

A (10:32)

So now you can trade it cryptographically and that matters. And the people who are the people trading silver that look more like me but don't necessarily think like me. That is old people think of the only speculation silver is on the CME and in the futures markets. And that is not true between the CFD markets and now what's going on that Ian was talking about. I mean this is a big deal.

C (10:56)

Yeah.

E (10:56)

I think the interesting thing, and I remember, you know, Weisberger Sr. Had mentioned this previously that the CFD markets are opaque and it's hard to guess volumes, but I would guess that a lot of those volumes are moving to these defi platforms like Hyper liquid with over $1 billion a day in volume happening and also to the crypto platforms. I would imagine a lot of this volume is going to become more transparent as this goes on. And we're just seeing also the benefits of being able to cross margin holding gold tokens as collateral to go and trade bitcoin. I think ultimately it's going to become more transparent of a market and that's also a new development in this precious metal cycle. Is now I can own a crypto token representing an ounce of gold and use that as collateral to transparently borrow cash to trade bitcoin and even to trade stocks, even to cross margin. I could buy Nvidia per using my gold as collateral, basically. So I think it's definitely interesting and we're going to see a lot of those knock on effects and people should.

A (11:50)

Know we did not actually talk about this beforehand. This is the first time we're talking about it. But this is the ultimate irony. If one of the things that's going to propel the next set of use cases for crypto trading and crypto trading software and crypto and hyper liquid and tokens like that is actually a market that has always been opaque and hard to trade I. E. Metals that it makes it easier. That is it could be crypto's second killer app past stablecoins. It's just worth. It's worth. The irony I think is interesting.

C (12:21)

Meanwhile, if stablecoins have been the killer app and Tether has been the leader there, all eyes are on their gold hoard.

A (12:30)

Right. So it kind of goes there, right? Yeah.

C (12:34)

So it clearly is all very much intertwined. I don't know if you saw the news that Fidelity officially launched a stablecoin today. FIDD Fidelity launches fully reserved back 1 to 1 US dollar stablecoin FIDD. I remember when these were actually headlines that people cared about, but I guess now they just get lost. There's a default assumption that everybody's going to launch and have a stablecoin and participate in the industry. But there was a time when this would have been considered important news, right?

A (13:04)

Yeah. Well, I mean it's. I think everyone is worried about is looking at this food fight in Washington.

E (13:10)

You know, I'm not super bullish, especially after just leaving Davos last week. I'm not super bullish on clarity act passing anytime soon or if it does it being extremely watered down. And I think that's why we and a lot of other players are repositioning to do, you know, our big trading operations offshore where we can actually trade all these instruments. It's just going to be a long slog. And so I think that's also coming into effect here.

C (13:31)

Thank you. Because I was the first to admit that I was a 95% chance it passes because I was listening to the talking heads and the guests and everybody talking their book and then when I saw the Coinbase news and then really started digging into the bill and all the problems with it, I've put it at a 5% chance of passes. And interestingly, if you watch the media from Davos, you would think that the Clarity act was going to pass this week, Ian. So you're there on the ground and obviously getting the opposite impression. And the people who are actually there, I'm hearing what you're saying, and the people who are putting it on TV are saying we're very close and this is going to happen and blah, blah, blah.

E (14:14)

Yeah, Garamucci got up and said, he.

C (14:17)

Said the body language really, when he.

F (14:22)

So I don't know.

A (14:23)

Oh, you're, you're, you're, yeah, I'm losing the.

C (14:25)

And he's, Go ahead, Dave. Ian, you're glitching.

A (14:27)

But so, I mean, I, as I said, I was at this, this conference yesterday and there were, I would say that the most optimistic person was, you know, from, you know, people who actually are spending time in D.C. because half the people it was in Miami and half the conference was flying there from D.C. and which of course was, it was challenging under, you know, you know, under the circumstances of all the snow for people who don't know that was going on, I'd say the most optimistic was 50 50. And you know, and that is at least in the, you know, in the foreseeable future.

B (15:01)

Right.

A (15:01)

You know, and we're talking, I mean, the conference had, you know, still, you know, Stu from Ripple was there and he was, he was telling us that he was surprised about some of the, of what went on. When I asked Hester Purse about this, I mean, she admitted that the SEC was surprised that there was language in the Senate bill that would restrict their ability to work and do exemptive relief. And that considering that's their plan to try to figure out with the CFTC how to move forward, that's very troubling. So it's pretty clear that the anti crypto army, one way or another is alive and well and that whether it's being used for negotiations in order to get their, their pet peeve about yield on stable coins, it's, it's just, it's a morass, Scott. I mean, this is, yeah, it's.

C (15:53)

None of that even gets into the politics. Right, none of that even gets into the politics. Which I think the bigger problem among all of that is just that the Democrats and Trump are not going to come to an agreement on ethics clauses.

A (16:05)

And you know what's funny? That didn't even come up, although that's exactly what I was thinking and I didn't even bother asking about that because what's the point.

D (16:11)

Right?

A (16:11)

Yeah.

C (16:12)

Just shows me how far they, they're going to be apart. Even if they hammer out the details on some of the things that are more important to the, to the industry.

A (16:21)

Yeah, the crypto industry mostly doesn't want genius relitigated and doesn't want, you know, the prescriptive that that is in the current, in the current Finance Committee draft or the Banking Committee draft. The, the, the draft from Ag is better, they say, but I don't know who wants to spend their time it's.

C (16:41)

Quote unquote better, but doesn't have the support of a single Democrat even on the Ag Committee apparently. And it hasn't been commented on at all by the Finance Committee. Right. So like I see these articles are like markup. Tomorrow the Senate Agriculture Committee is going to vote and we're going to have the Clarity act. And it's like one in 30 steps in the direction.

A (17:03)

There's just no way around it. You know, the political mess means that until unless there is something that happens that either pushes against it or for it, it's going to be stuck. And so what Ian said is true. There are people moving for. There are things that are going to happen in the US you will get bitcoin businesses, get exemptive relief because bitcoin businesses are simple, which is better than under Gensler. But if you're a broad digital trading business, it's like the CEO of Securitize was there and he was talking about what's going on and everything was about KYC and AML and how the thing has to. It's just the promise of tokenization is being restrained and everyone kind of knows that. And so it's at least in the US So it's not great. It's not as bad as it was under Gensler. But I think that people's expectation going in post election a year ago, it's very different right now.

C (18:01)

Okay. So we have obviously massively bullish voices in the industry like Matt Hogan who have been very bullish on this, passing big price targets, things like that. He said something, I guess yesterday on the news. I covered it on my show today. But he basically also admits that there's cracks in the facade and he said, listen, if Clarity doesn't pass, it's a critical moment for the crypto industry because we have to actually show massive mainstream and institutional adoption not just of ETFs and people buying, but of the actual technology and the industry in the next three years. While even if we don't get the Legislation, we will still have a favorable regulatory environment. And I thought that that was a pretty stunning and really eye opening admission, but wildly accurate and something we've talked about a long time here, right? I mean like we've long talked about the UX UI needs to improve. This stuff needs to be easy enough for grandma. We need to see meaningful adoption block space being filled. Well, if we don't get this act, as Noel aptly said on my show this morning, we need to become too big to fail in three years. And I thought that was really.

A (19:14)

Yeah, I think that's a very good point. And that is the interesting thing is the two agencies, that's what they want to have happen, which is interesting. The question is the processes, the way it actually works. It's time. So let's just say the FTC comes up with a rule proposal, you then have 12 months of basic back and forth and public comment and implementation period. So. But once they get it done, generally it's hard to undo. Except for those who don't know. Most of the rule proposals of the Gensler era never got implemented and have been, even though they were passed and voted on, most of them have been neutered or struck down. You know, neutered or struck down or will be amended. And so there is definite fear that a anti crypto army style Gensler 2.0 could undo a lot. But Gensler 2.0, Gensler 1 didn't do rules on crypto. Really what he did was just enforce. And so what could end up happening is there are a variety of smaller bills that might be able to get bipartisan support that don't do nearly as much, that might be able to neuter that because there are a lot of people, the Democratic Party just don't want crypto to become a campaign issue in 2028. That's their biggest concern. And so the best way to do that is to get some sort of moderation. So I suspect, I think a lot of people in the crypto and a lot of the lawyers think that what will end up happening is nowhere near as bad as people are now thinking with no action. But not, not great. And there's still the idea of us being the crypto capital of the world is DOA if we don't get, you know, if we don't get legislation because it's just, it's just too damn expensive for entrepreneurs to bank on a US regulatory environment that you like.

C (21:10)

I mean, Ian just said, and I want to go to the panel to discuss all I'm Saying Ian literally just said like the company that, you know, you guys go for founded and you're on the board and he's running is not focusing on the United States right now. Doesn't that everything you need to know?

E (21:26)

Yeah, I just arrived in Dubai actually and we're headed to Hong Kong next week. But yeah, I mean, look like the business has moved offshore for the large volume traders and hedgers and our large clients and everyone else who may have US companies, they have to set up desks in Hong Kong, Singapore, Dubai, whatever, to go trade. And that's been the status quo for years and I don't see that shifting anytime soon. And furthermore, all the funds that are trading this stuff, most of them have funds sitting in BVI or Cayman or whatever and they're trading out of those entities. It's going to take basically a miracle at this point to bring those funds back onshore. I don't see it happening. Which means that these US crypto products are going to continue to be anemic. If you look at the volumes on Coinbase's onshore derivatives, it's tiny. I ultimately think it's going to be more the same.

C (22:16)

Yeah, that definitely flies in the face of the narrative that everybody was coming home.

A (22:20)

Yeah. By the way, if anybody wants to speak, I, I, I, I have yet to see a hand. Yeah, same from the panel. And so if, if, if we're not seeing it, just, just interrupt and Rudo, did you just lift your mic? Did I capture you?

F (22:38)

That's not, no, no, no.

C (22:39)

I'm enjoying the, the, the, the conversation so I'm happy to listen for now.

A (22:43)

No, that's fine. I just, I, you know, just from time to time we, you know, people complain that we're trying talking over people. Believe me, that's not the case. So I'd say. And you'll go. So you know our resident expert on, on metals, Florian. I'm curious, you know.

G (22:57)

Hey guys.

B (22:59)

Okay, go ahead.

C (23:01)

Yeah.

G (23:02)

Oh, it's Lou. Hey, I'm walking around Dubai after Great weekend. I agree with basically everything that people say. I will say one piece of anecdotal information is literally over the last week post Davos, I've had three meaningful organizations you reach out to Crypto Mondays about that. They want that they're now feel that things are open in the US for their, you know, or going to be opening up and they're positioning and spending money against that and marketing to get customers. That the US is opening up.

C (23:49)

Yeah, Lou, you were breaking up there, but you did come Back there at the end. Hey, are you still speaking? Sorry, you totally disappeared.

G (23:58)

I apologize. Yeah, I'm probably not getting great reception in Dubai. I was just saying that there are foreign companies, you know, reached out to Crypto Mondays, like, you know, big ones who are now, you know, you'll think that the regulatory market in the US is changing and they want to start establishing presence.

C (24:17)

Yeah, but I guess that could rapidly change if, you know, the environment here seems.

G (24:23)

Oh, undoubtedly. I agree with everything you guys said.

C (24:26)

Yeah, just kind of piggybacking on what you said. Dave, I know you're trying to go to Florian. I didn't even see him on stage. So if you.

A (24:33)

No, just, it's just because, you know, Ian made some very interesting points.

E (24:36)

Oh, and by the way, Lou, I'll see you on Monday, I think. Hopefully we're coming. We'll see you at your, your, your event. So it'll be great to.

D (24:43)

This space was downloaded via spaces down.com visit to download your spaces today.

E (24:47)

Catch up. But I'm not saying that we're not investing in the U.S. we are, but as far as our regulatory like budget goes, it's not like a big chunk of it. It's not more than half for sure. You know, we're investing abroad, I would say more than in the US Just based on our, on our viewpoint. That said, like, yeah, we've spent some money and hopefully coming up we'll, we'll get some licenses, but it's not like our primary focus as of right now.

A (25:18)

So I mean, you have it from, from the horse's mouth, you know, and probably talked to four or five other companies that had similar opinions, you know, over the last week, you know, particularly yesterday. So it, it's, it's really interesting and it's, there's even, you know, what that was in. So I'll keep that one away. But you know, it's just the overwhelming opinion is, that's out there is that you can build on in Bitcoin and you can, can work on some of the UI UX and some of the custody and the things that people care about Bitcoin, but that a lot of the other use cases are like impossible. And as far as speculation goes, until Selig really gets a full CFTC up and running to address whether or not perpetual swaps, you know, whether people can trade in them. Right. You know, until they actually start analyzing this, the US is still blocked. I mean, no matter how you want to look at it, you can't, no, nobody from the US can trade legally on, you know, finance, Bybit, OKEx, Etc. Theoretically you're not legally allowed to trade a hyper liquid although that's a little bit of a grayer area. And maybe we'll get you know, defi might be the bridge or the way.

C (26:31)

I think okx is legal again by the way they. So I can't think you can there.

A (26:36)

Well, you can trade on there. You, you can. You trade perpetual swaps and okx from the US in the same.

C (26:42)

Not the swaps. Yeah, I doubt it's the same.

A (26:44)

Yeah, I mean that's. But they're looking at it. We just don't know what they're going to say. He's still new in the role and it's going to take a few months before we get a pretty good idea.

E (26:54)

So I can actually comment a little bit on what the US exchanges are doing. So spot and leveraged spot is legal. So what they can do is let's say you want to buy Bitcoin on leverage for an institution or an accredited investor in the US OkX and similar exchanges will basically lend you tethered buy Bitcoin or they'll lend you Bitcoin to short Bitcoin. So you can do that and there is a financing rate. So it's a little bit like a perp but it's very bespoke and, and it's not open fully to retail. Similarly, some of the prime brokers are, are launching similar products where it's like this leveraged product but it's not as effective as, as, as a perp because they need to actually have the inventory and so it's not as widespread.

A (27:35)

Exactly. It's the thin entering wedge and you know whether, whether they'll get there not. The problem is that there's politics. All the people who, let's just say all the big brokers, brokers, FCMs, what they're called on the CME, don't want the competition. Right. So you know it's, it's. And so we're seeing what's happening. I mean ironically if there are bodies that end up floating to the top of the pool in the silver market, you know, kind of like what GameStop was doing. What happened in GameStop, that happens at scale.

E (28:05)

I'm going to have like a small contrarian point to that. So I don't know if you guys saw the news, but Interactive Brokers and a bunch of other equity and futures brokers are now taking basically stablecoins as settlement. So that's a huge kind of development on the Legacy front. And what I've been saying to most people who ask or whatever is that the kind of traditional asset world and crypto worlds are coming together. And what that means is now I can put up margin in tether on a weekend instead of waiting for the banks to open. That actually at some point will allow the fcms and will allow the traditional brokers, if they want to, to do real time liquidations and to start looking more like how the crypto exchanges operate today. The thing is like it's not going to happen overnight, but by allowing margin settlement in stablecoins, I think that's one step in the right direction and ultimately I think we're going to see these players kind of end up competing in the same market over time.

A (28:57)

Yeah, that's not contrary at all. I agree with that. That exactly. I think that's a great point though, right? It is a great point because that's the way you get adoption. People always forget that you don't get adoption by. You just wave a wand and it happens. You get adoption when people start looking at it. You know this really well, Ian, because you're the one who explained it to me first. The reason FTX got to be the biggest exchange at the time was because of cross margin. Cross margining is a very big deal. Anyone who's ever been in a hedge fund to run money understand that the ability to cross margin across all these products is, is a holy grail. Right.

C (29:34)

Yeah. That's an interesting conversation. Leads to the kind of new hot thing in defi, which is vaults. But yeah, I think cross margining is everything.

A (29:46)

Yeah. So you want to, you want to tee that one up?

C (29:49)

Because, I mean, I don't know that I think we should set a better. Yeah, I think when we have more informed people than myself here to discuss it, it's probably a good topic. I think it just is interesting that every road is leading towards exactly what you just kind of mentioned. All of your assets in one place, probably tokenized, that you can use in a variety of ways.

B (30:09)

Right.

C (30:10)

Becomes your bank account, your yield, generating portfolio, your wallet, everything. I think that's kind of the general trajectory.

A (30:23)

Yep. And you know, yeah, I really don't have a whole lot to add there and I don't need to just listen to listen to myself speak. I mean we got a couple other people on the panel, we've talked about this. You know, I tried to tee you up, Florian. I don't know if you're actually behind the mic, but you know, you must find what's going on in the precious metals markets. Interesting. I'm curious what I was going to ask you before was what Ian was talking about in terms of tokenization and hyper liquid and all that. Is that meaningful in terms of what's going on in the market markets to your your opinion?

C (30:53)

Yeah.

D (30:53)

Hi guys, thanks for having me again. Well obviously it's pretty exciting the metals markets. The music is playing here. It's very clear. Whenever you think it's gone too, too far, too high, you have a sharp pullback and then new all time highs in, in, in gold and silver. So it's pretty crazy price action. We've seen silver coming down from 11770 I think down to 104 on Monday and yeah it's up again at 115 today now 113. So yeah it's a bull market. I think the metals in the mid to longer run are going to move higher here. It's pretty overboard. It's pretty vertical steep rally here. So risk reward is obviously not very good here. But I think any pullback is a buying opportunity. The trend is in place and I think, I think this has much further to run down the road. We can also see that the whole commodity sector is seeing massive inflows and copper prices up above $6 recently. Oil stocks are moving higher. So I think we are in a commodity super cycle. It's not really clear what that means for bitcoin. I think we haven't seen anything like that in the last 15 years since Bitcoin is around. So it's going to be very interesting. But yeah, regarding your question. I mean obviously tether buying a lot of gold, the tether holding buying a lot of gold from their revenues is a big driver. Nothing new. I met Juan Satori last year September in Beaver Creek and he told me they're buying one or two tons a week. So that's a massive player. And just the last few days I've seen that they actually want to become kind of a gold bank for the world in case the whole financial system should break down or not work as we are used to. I mean it's wonderful. I can send a kg of gold to you within a few seconds and basically we just change the ownership while it's sitting safely in a vault somewhere in Switzerland. And that's one part of the story. The other part is of course tether gold, the XAOT token which is also making more and more volume and I think is becoming more and more an important player in the, in the whole Gold space. And besides that, the whole tokenization itself, I mean I've seen numerous projects and attempts over the last five to 10 years. Many if not most of them failed. But I think down the road, road, it's a very important factor and I think it's, it's clear that tether gold is, is the number one and the most important player here and it's going to continue to grow.

E (33:48)

Do you have any idea what the actual spot volume in gold buying is? Because when I look at the volume on tether gold, I'm seeing 600 million a day and then PAX Gold is 700. So I'm seeing a billion and a half dollars of token volume. How does that compare to the actual actual cash gold volume on the market? I know the Derivs is huge, it's like 50, 50 billion or whatever. But on the cash market, is there any way to know how big it is compared to the overall market?

D (34:11)

Well, I mean you have to understand that gold is a real decentralized market, right? I mean it's a huge market, 5000 years proof of work. And the main part, of course, and that's I think the main driver for this crazy rally is the physical demand out of, of China, out of Asia, out of India as well. And it's very hard to measure in the end of the day how much gold has been sold. We know that for example, not probably many ounces of gold have left China over the last five years. China has become the largest gold producer. They are very intransparent with all the numbers. It's also very intrasparent about their gold holdings. And another very important factor is the central banks buying gold gold. And the World Gold Council is trying to bring in numbers and give some transparency there. But it's still very intransparent. So I think the, the whole Pax gold and tether gold is still a rather small part of it. But of course if you have a entity buying every month or every week a ton of gold or two, physical gold in a market that for 50 years has been mainly settled on paper, that's changing a lot of things.

C (35:21)

Isn't there an irony here that bitcoiners, we love talking about digital gold, but you can actually just trade gold digitally?

A (35:28)

Well, the irony, I think the bigger irony Scott, if you think those of us who've been in the business a while, the fact that Tether is becoming one of the more trusted people who do own gold, that you trust their audits and them is me, I would not have had that on my 2026 bingo card, you know, from. But here we are. Yeah, I agree.

D (35:54)

And I mean I, I, I think I said this quite a few months ago already that while on the one hand you have this, in my opinion, huge house of cards in, in terms of companies, treasury companies buying bitcoin with credit and margins building up huge paper positions and on the other hand you have an old school market moving back to physical settling because China and the Asians are buying so much gold physically. It's been very, very, very interesting. But I want to just repeat what I've been saying for the last seven years. I really think you want to hold both. And this whole discussion, gold versus Bitcoin makes absolutely no sense in my opinion. I've been always a fan of physical analog stuff as well as digital and I think they complement each other wonderfully. And right now the music is in the metals and I'm pretty sure down the road, maybe already in a few months, maybe in a year, maybe in two, three years, the music will be also back in bitcoin and the digital space. So they complement each other wonderfully.

C (36:59)

I mean the size and magnitude of this move in metals has to have, have shaken some bitcoiners views on gold still being wildly inferior.

A (37:12)

Well, I think it undeniably, I mean, but at the same time what will, what when we look back a year from now, whatever, at some point we will look back and say, well, it was what. The other thing that's obvious is gold being, you know, two and a half times higher raises the ceiling for where you think bitcoin can go to in the intermediate term by two and a half times. Right. You know, that's happening now. So you have two effects. You have the short term money effect, which is what Ian was talking about, which is undeniably true. Absolutely undeniably true. The trading interest goes to where, where the, you know, where it is you will eventually get, I mean this, this is the tale as old as time, by the way. You will eventually get the lead lag stuff. You mean those who are really old remember the dogs of the Dow. But it's not just that. I mean, I mean that's how financial markets work. People always go after the laggard. It's just kind of, it's kind of funny that, you know, bitcoin briefly became a bigger market than silver is now. What, you know, silver is, is, you know, two and a half. You know, it's more than 100%, 150% bigger. I, I haven't done the Math reasonable to keep changing every day and it's changing so quickly. But. But the point is that, yeah, you know, that will happen because there's still. There are things about bitcoin that gold will never have. You will have to trust. Right. There's lots of stuff. Plus the difference is that transparency matters. The gold market, no one knows. We still Fort Knox. We have no idea. You were talking this morning, Scott, about Poland. They're not holding onto their own gold. They're trusting the Swiss, which is fine. Not saying the Swiss. I want Florida to get mad at me. Not saying the Swiss are not trustworthy, but it's still not the same thing. It's different.

C (38:53)

Yeah. I think that was great and perfect timing because we invited Mike Cagney here. We're very lucky to have him and nobody knows more about tokenization than he does. So Mike, I know I invited you. I wanted to give you some time, but it couldn't have been more perfect timing for you to show up. How are you, man?

F (39:14)

I'm good. Thanks for having me.

A (39:16)

Yeah.

C (39:16)

So I guess for people who don't know, you were the co founder and led SoFi, I think, you know, in the mid 2000 teens and now figure markets. I know you probably can't talk about share price, but I've been watching and of all the crypto adjacent equities that have launched, you guys have done exceptionally well. So there's clearly a heavy thirst here for the real world asset market. I mean, just Generally we've had RWAs and tokenizing assets as a narrative forever. I mean, in your mind, what's been missing for this to actually work at scale?

F (39:49)

Yeah, look, I think it kind of builds on the exact argument you were just making around gold and bitcoin. You need to be able to create native digital assets. And I think one of the challenges that the RWA space has had is there's been a lot of what I would consider non blockchain applications of, you know, I'm going to take an office building in Topeka and put it on the blockchain. You know that that's not a native digital asset. You have to trust that office building exists. You have to trust you actually have perfection to it. Once you introduce trust, you start to undermine the real value of blockchain. And so you know what we did with figure, we started originating loans native on chain back in 2018. We were the second entity to do that after Makerdao was the first in 2017 and we've dialed that, I think something like $23 billion of loan origination on chain. And the key is getting those loans into defi applications, so bringing that yield into where people can access. So it doesn't really matter to say, well, I've got a loan on chain or anything on chain. If you don't have the ability to use as collateral, you can't lend against it or borrow against it, or trade it. And so we've been working pretty steadfastly over the last few months bringing yield into different applications. So we launched Hastra over on Solana where I think that was the fastest growing token on Solana, bringing yield in and through Camino, looping that yield into high teens, low 20s, where fundamentally it's being backed by US mortgages. And we're going to do the same thing on Ethereum. We're going to obviously continue what we're doing on provenance with democratized crime where people can invest directly in this stuff or allocate capital directly to this stuff. The key is just bringing yield to people. And when Bitcoin's trading sideways, yield becomes a lot more interesting. And so it ebbs and flows. And when Bitcoin's ripping, everyone wants to get that exposure and obviously it brings a lot of the other coins with it. But when we're in a market like we're in right now, being able to clip 8% coupons unlevered and then being able to lever that to an even higher return, it matters and people care about it.

C (42:06)

Yeah. So in your view, we actually have the plumbing obviously to some degree. So why hasn't the real wall of institutional capital flowed into defi yet?

F (42:17)

So that's one of the key things that we're focused on, which if we look at defi in its purest form, you know, it's asset based lending. You're lending against liquid collateral. You're not really under it in the collateral. What you're doing is you're looking at how liquid is it, how volatile is it, Excuse me, what's the advance rate on it? You're making a decision to lend and there's $400 billion in the aspect commercial paper market that I think is better served. Over on DeFi, there's 1.3 trillion in prime money market mutual fund dollars that I think should be in defi. And so one of the things that we're leaning in on right now is we're talking to funds about, hey, why don't you set up a defi fund? Why don't you build pools of capital that can allocate across defi protocols, maximize yield with real liquidity. I think there's an appetite for that. That might mean that we have to do some things like perhaps we have to get one of our defi ports pools rated. We have to actually go out and get and have some commercial paper rating for a pool of assets people are lending against. And that's a little bit of an odd construct when you think about defi who is doing the rating and who's driving that process. But I think there's steps that can be taken to get that institutional money over. And I think that's the next leg of the process. I think the first was, hey, let's demonstrate we can originate the assets on chain. Let's demonstrate they can perform. Let's demonstrate they can pay yield. Let's demonstrate that they can be used across lots of different applications and use cases. And now it's all right, let's go and start bringing real institutional capital over. And one of the things that we did early on with figure is we got the Goldmans and the Apollos and the others of the world to start buying loans on chain. And as you can imagine, that was a Herculean lift. When we started, the funds would tell me, look, pay you more if I don't have to deal with blockchain. The whole reason why we created a lender was to get these firms onto blockchain and have them realize what the value prop and the benefit were. And so we left some money on the table early on to try to get them to convert over. And then once they converted over, they realized, hey, this is great. This is better than the way that we've done it before. And I think the same process is going to happen for institutional capital. I think we're going to have to, in the beginning, probably pay an outsized return to get those dollars to come over. But ultimately people realize the benefit of the blockchain ecosystem and I think be very committed to it.

C (44:55)

And you've built Democratized Prime. Can you break down exactly what that means and how that sort of impacts everything we're discussing here?

F (45:03)

Yeah, I mean, Democratized prime is basically a defi protocol where we've got a bunch of different assets on there. So it's where we run all the margining for. We run a relatively small crypto exchange which we really use for R and D purposes, but we do care about it and ensure there's liquidity in there and market making and so forth. And all the leverage that happens in that exchange is financed through democratized prime, it's through peer to peer defi. But we also have loans over there. We're bringing more and more of our loans on a democratized prime where we can let people get exposure. You can lend directly against U.S. mortgages on an over collateralized basis. You're kind of in that capacity becoming the warehouse Goldman used to provide to us. What we're able to do is obviously originating upwards of a billion of assets a month. We have a lot of collateral that we can bring over to support this. And one of the key things that we're going to be doing we've publicly talked about, we have an S1 for a new, effectively a second IPO for figure. It's not a dilutive one, it's a secondary transaction. But we're issuing figure stock native on blockchain and we're going to try to do this by mid February, within a couple of weeks. And that will also be collateral. You'll be able to borrow against on democratized prime. And one of the interesting things is you can potentially borrow where you use figure stock Bitcoin to buy figure loans. You could use figure loans to figure stock to buy Bitcoin. Your ability to cross collateralize is unique in that application. And that's one of the key value props that we're trying to drive home is unlike a traditional prime brokerage construct, you have the ability to build your own pools and borrow against those pools on democratized.

C (46:59)

Understood. So to my understanding, you have a credit first model which is different than the over collateralized systems that are pretty standard I guess in this space. How does that work?

F (47:11)

Well, we're a credit model in the origination of the loans. But then, you know, on the defi protocol it's very similar to the way that it works on the other protocols. It's, you know, we're, we're borrowing $0.90 on the dollar against the loan and there's a liquid marketplace for the loans to the extent that that needs to be liquidated. So it's, it's a similar structure. It's, it's not an unsecured lending piece. The loans themselves are traditional, you know, traditional credit. But, but the actual way democratized prime works is, is, you know, very similar to traditional defi protocol.

C (47:46)

Thanks for the clarification. So I was watching, I think you said in an interview or I read it that you made this great comment. You said we're tokenizing access, not tokenizing assets. Perhaps you give me more clarity because I love that.

F (48:01)

Yeah, I mean what we're doing is One of the reasons why we call the protocol we stood up Democratize prime is we're democratizing that access. So we're basically leveling the playing field where what used to be the domain of the Goldmans and the Morgan Stanley's of the world, we're bringing that same collateral and that same lending opportunity and roughly the same terms to anybody who wants to contribute capital. And so one of the things that we really like about blockchain, its ability to create that level into the playing field and know we're certainly doing that with democratized Prime.

C (48:40)

Yeah, I, I just love that comment. I hope that it goes wildly, wildly viral. So I guess for crypto native firms and institutions that are used to using DeFi, what's different here and what does this unlock for them?

F (48:53)

Yeah, I think the key is it's, there's, there's an enormous amount of yielding collateral where the yield is, is relatively straightforward in terms of how it's being generated. So if you look at some of the processes that have happened before democratized prime, look at Athena, for example, and the yield coming from the spot to forward drop, that's not the most straightforward concept. And I think a lot of people probably didn't have a firm grasp of what that was and what the volatility of that yield was. In this situation, you're lending against figure helocs, you're lending against US Mortgages, and it's pretty straightforward as to where that interest rate's coming. And what we found, certainly when we launched Castra on Solana and the speed at which that was adopted was people really resonated with the idea of understanding where the yield came from and having comfort in the predictability and sustainability of that yield. And that's what we're doing is bringing billions and billions of yielding assets into to DEFI protocol that we think provide a foundation for not just generating return, but also building a lot of applications on top.

C (50:08)

Yeah. So I have a question. We talked about, I guess, unlocking institutional capital and why that hasn't necessarily come into DeFi. But this sounds like this could be the moment where DEFI just entirely leapfrogs traditional brokerages that crypto enthusiasts have been talking about, about for so long. I mean, is that possible here?

F (50:26)

Yeah, look, I think it's going to happen on a couple of dimensions. I think there's sort of a greenfield element with what we're doing in credit, because credit doesn't really have a, you know, certainly not a liquid capital marketplace. It's, you know, more of an OTC type market structure. And you know, what we've done with our loans on chain is we've created not just transactional efficiency, but liquidity and now financing opportunity. But where I think it's really going to upend the traditional capital market is again, what we're doing with the equity offering. In a couple of weeks, as I said, figure, we'll launch a version of figure stock that's native on the blockchain, which is very different than what a lot of our peers are talking about. A lot of our peers are talking about tokenizing an existing stock. DTCC Security. If you're not familiar with the equity ecosystem, DTCC registers virtually every security that exists in the US and those securities then trade on centralized exchanges like the nasdaq. They are lent and borrowed against through primarily prime brokers. And you access that exchange through an introducing broker like Robinhood. What we're doing is again, in the spirit of democratization, we're dropping equity native on blockchain. So there is no DTCC registry. We have an alternative trading system that functions like a decentralized exchange. So it's self custody and self settle. So basically you show up with a wallet. You don't need an introducing broker to attach you to that exchange. You show up with your wallet. And in our case, we use yields as our settlement currency, which is a yielding stablecoin that we have and yields. And you can buy the stock. You show up with the stock, you can sell, sell it. Then you can take that stock over to democratized prime and you can borrow against it and you can also lend it out. And you control what you pay in terms of the borrow and you control what you earn in terms of the lend. And so there's basically nothing in the traditional equity stack that exists in this new capital market. Goldman and Morgan Stanley and Canner are underwriting this transaction and they're all very, very eager to see how it goes because this will leapfrog the existing equity capital stack. And this is much more significant than tokenizing DTCC stock. This is actually a brand new equity capital market that's native on blockchain that is absolutely extensible into the broader DEFI ecosystem.

C (52:57)

This aligns so much with the conversations we've been having here every single day. So incredible. Encouraging to hear it. So I pinned a tweet actually above from figure because I noticed you guys are doing a $25,000 USDC giveaway celebrating. Well, here it says celebrating democratized prime. So maybe tell us a bit about that while you're Doing that?

F (53:16)

Yeah, we're just raising awareness and so we're boosting the returns that folks are getting, lending capital out on a peer to peer basis. And so there's $25,000. I think it's $20,000 is the main prize, and there's a set of smaller prizes that are coming in behind that. But it's really just to raise awareness and get people integrated into using Demo Prime. And again, we think that in terms of our ability to bring practically an unlimited quantity of yielding assets on chain that people can lend against and also buy and trade, you know, it's a little bit unprecedented in terms of what's happening in the blockchain space right now. As I said, we're adding into the ecosystem about a billion a month of new yielding assets and that's accelerating and we expect that to continue to grow as we go through the course of the year.

C (54:13)

Crazy number. And so I guess for anybody who's listening, what's the best way for them to enter and participate?

F (54:21)

Go to figuremortgage.com and sign up and start using Demo Prime.

C (54:26)

Yeah, I want to be conscious of your time. I know that I'm keeping you and keep running on, but I guess if people want to take away one major thing about democratized prime and I guess the future of kind of what's being built, what would it be?

F (54:42)

I think getting access to real world assets, getting yield from real world assets that are liquid that you can see through into the marketplace. You know, that that is the future and that's what we're all been, you know, what everyone's been trying to build to. And so, you know, it's, it's. You don't have to think about it as the future anymore. It's here right now.

C (55:01)

Well, it's good to hear because that's what we were just bloving on for about an hour before you showed up. So it's very encouraging to hear that it's here. Guys, I highly encourage you to participate, participate, give figure a follow, obviously. Give Mike a follow. Mike, anything we usually wrap around now, but any, Anything I missed that's worth mentioning?

F (55:22)

No, no. Look, I appreciate you having me on and I, I enjoyed the banner back and forth about gold and silver, so appreciate that. Morning.

C (55:31)

Yeah, come back on anytime and you can banter with us about silver. We joke that it's now silver Town hall instead of a crypto town hall because it's all we get stuck talking about. So good to have a different topic of conversation. All right, everybody. Please give Mike a follow. Everybody else on stage, thank you. Another great show and we will be back tomorrow at 10:15aM Eastern Standard Time for another Crypto Town Hall. Thank you, everybody. Have a great day. Thanks again, Mike. Bye, guys.

F (55:53)

Thank you.