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- [00:01]
A
Good morning, everyone. Sorry, I was muted and talking like an idiot into my muted microphone. It's a beautiful day here and, you know, crypto markets are kind of sitting in the same spot. We've reached 64, 000. So I guess it's time to get out the, the pails and start bailing water out of our failing market now. I mean, obviously, I don't think anything is different than the last couple times that we've talked about this, except we're seeing even more stupidity from the legacy financial institutions on the Clarity act, and we're seeing more nonsense around things like you get people trotting out retired generals to talk about national security, despite not a shred, and I mean not a shred of evidence to indicate that any of the rules that they want that they propose would do anything. Moreover, that crypto, Bitcoin in particular, isn't actually easier to trace than the nonsense in the current financial system where billions of dollars are used for illicit purposes. I mean, it's borderline insane, some of the stuff. And then of course, we get the nonsense from the chamber of commerce and the community banks and all this other crap. Meanwhile, without Clarity, assuming geniuses enforced, they're actually far more screwed. So, you know, very, very hard to understand, you know, how dumb you have to be. I mean, I did a post yesterday where I basically said, how did I phrase it? I'd pay to see someone to force Elizabeth Warren to explain how no regulation is better for protecting investors in a robust framework because she keeps saying it, and it's just like you have a senator. And it's one thing to be dumb. I mean, we kind of expect our politicians to say stupid things, but usually there's a veneer of truth or something they can point to, to twist and turn it. But in this case, what she's saying is just completely the opposite of the truth. I mean, literally impossible.
- [01:49]
B
And it's not so much that she's dumb, David. She's not dumb. She's very well educated.
- [01:54]
A
No, she's. She's evil.
- [01:56]
B
She's pandering. She's pandering in a very disingenuous way, and she's not telling the full story. And it's. It's ridiculous.
- [02:03]
A
No, it's not pandering. I mean, pandering is she's getting paid for it.
- [02:07]
C
This is.
- [02:07]
A
This is naked power, a naked power play. She wants someone phrased it well, I can't remember who. Either John Deaton or Scaramucci or somebody. She wants bank oligopoly that she can put her thumb on the scales and her and her political allies can control the economy. I mean, she is a Maoist, let's call it what it is. She almost dresses like that. The fact is, however, Mao wouldn't have listened to her because she was a woman. So she's a modern Maoist. But whatever it, you know, when you, when you believe that you are smarter than everybody else and that you should have all that power, you will say anything to get it. And she's one of those people. And that's what's going on here. And that's why, you know, it just, it aggravates me. But honestly, this too shall pass because at this point I think it's pretty clear that where, where the roles are, the banks are starting to come in the line on this. So, you know, it will happen. Whatever. I mean, you know, it's going to. Whether it happens this year, whether it happens during the midterm year, whether it happens after the Democrats win in the midterms, it isn't going to matter. They can't. The Democrats aren't going to allow it to be a political issue in 2028. So we're going to get there. It's just a question of when. I mean, that's, that's my contrarian take. Anybody agree, disagree or think before we move on to real topics?
- [03:25]
B
I agree. I think it's, I think actually it's got a shot at passing despite all the negative reporting that we're seeing, because the Dems that, that pushed back against it, like the current version of it, and they're actually writing their own version. And I think there is room somewhere in there for compromise. David, and I agree with you. It is vitally important that this gets done. Every sector at this point in finance understands that. Every sector understands that this is all gonna go on chain. And I think that these takes that are coming from Warren and this negative perspective on all of this is finally just the desperation that we all expected we'd see at this level and at this stage of the legislative process. I actually wrote a piece this week where I talked about the fact that despite the fact that clarity probably goes against my own self interest because as a lawyer I probably stand to get more work from the ambiguity of that comes from the lack of crypto clarity in regulation. I want to see it pass because I think the net upside for the entire sector, for the country far outweighs what the lawyers are making right now. And I think that in the end, even the lawyers want to see regulatory clarity because this is not sustainable. And the more regulatory ambiguity we have, the more victims we generate, which is the exact opposite of what Warren built her entire career on protecting consumers. But now going around saying that we should keep this deregulated and keep it, and keep it a gray area.
- [05:09]
A
Well, you're way nicer than me. I don't think she built a career on protecting consumers. I think she built her career out of scaring consumers and claiming that, that she need. If you give her power, she'll be able to protect them. But that's. That, that's a nuance. I saw Ryan's hand and then William.
- [05:25]
D
Yeah, I was just going to say that. I mean, I don't even have to click for details. A lot of the time you just look at the psychology of these people and it's, it always tends towards greater control. You know, every system will oscillate from more decentralized, centralized. More decentralized, centralized. I feel like we went through such a period of decentralization with like no control, that they're trying to find a way to, you know, if they're going to centralize it and control it. So it's like even without even going into detail of what they say, it's like you just, you know, the mindset of it is they don't want to do anything until they can figure out how to get it towards greater control, greater centralization, so they keep the power. So.
- [06:07]
A
Yeah, I mean, that's your point.
- [06:08]
D
I think it's power. You're.
- [06:09]
A
You're so right. I mean, the only, only nuance here before we go to William and then Michael, is they. It depends. If you're talking about politicians, it's 100, right? You're talking about corporations. They tend to fail when they try to centralize without political help and new competitors evolve. I mean, you know, we've seen this many times and every single disruptive technology has created new oligopolistic behaviors, right? Google came out of the ashes of the dot com bubble citadel and Virtu came out of the ashes of the electronification of Wall Street. There, there. It. It will see it. And you'll see the same thing here. I don't know which protocols will be the ones that succeed in terms of the rails of crypto. I don't know which firms will be the winners in tokenization. What I know is there will be some new behemoths that come out and new markets. I mean, look, I care about market structure a lot, and I can tell you that Once there is a Clarity act, everything is going to go tokenized faster than you think. And every single firm is going to have to completely rewrite or buy into modern versions of their tech stack. And you know, having built a company that does exactly that, I, I know a lot about this and I, I can tell you that the, on many levels, whether it's trading settlement, the way they process, how they, they're structured in terms of middle and back offices, there are major changes that are going to happen on Wall street from tokenization ones that will make the firms more profitable, but there will be new firms that will arise. And so there's a lot, there's a lot at stake here. Anyway. WILLIAM and then.
- [07:42]
C
Michael yeah, I just wanted to react to two things that I heard this week that were interesting. Number one, Scaramucci observed that in the last elections, 45 of the, of those elected that were in the, in the pro crypto lobby bucket, all got elected. So pro crypto lobby, meaning has had 100% hit rate. And what he said was that it wouldn't be a good career move for any congressperson that is up for election to appear to be anti crypto because of the hit rate that the crypto lobby has had. So that's kind of the positive side of the Clarity act passing, whether you're either Democrat or Republican. And I agree with that observation. The second thing that I heard and I agree is, is Novogratz. He thinks that currently at the, the way that the market is behaving, it is pricing in the Clarity act not passing. And I kind of agree as well because of the sluggish that we saw, it barely popped to 265 and then it stalled and he, he put it at 60, 40, not passing. So at the current moment, right now, I would agree with him as well. So these were two interesting observations.
- [09:12]
A
Yeah, Michael.
- [09:13]
E
Yeah, I kind of echo that, basically. I want to go back to what you said earlier, Dave, which is like no matter what, like by 2028, this can't be an election issue, which I think is right. Even from like the Clarity opposition side. As William points out in the last few cycles, there's two things that politicians are afraid of, like money and the electorate. So money obviously has shown its power and that's only increasing. It's not a good political move to be on the anti side because the money will flow to your opponents and there really is not an anti crypto electorate out there. This cannot be an election issue, as you said, Dave, because what are you going to say like we're against your freedom and against your protections and against this and that. It's not a topic that you want to run on come 2028. So I don't know if it's going to be the next few weeks or next year, but, but by 2028, this is not on the docket anymore.
- [10:15]
A
Well, that's my hope. You know, I, I think that that is the most likely scenario, but I don't. We talk about this a lot. The, the reason that it matters. I, I will say something. I think that people keep saying that it'll be a big catalyst for Bitcoin and maybe it will only because there are probably a bunch of, of dumb financial advisors that have told investors to wait until after this to buy. And so, yes, I suppose it could. But realistically, from an actual fundamental point of view, Bitcoin doesn't need clarity at all. It's the tokenization. It's the businesses that, that, that, that want to equitize their tokens and provide, and provide a, A, a clear economic value to holders. It's innovators in the space that are trying to build real businesses. That's where it matters. I mean, bitcoin is fine as a commodity and it is actually amusing. But I'm not saying that it won't get a pop. In fact, frankly, I think it will. But it's kind of funny because it doesn't really need it. And when you sit in bitcoin spaces all day long, they all say this and they all kind of understand that it probably will happen, but it's kind of funny. I think we all kind of know that that's true. But the reason that we titled Black I picked the BlackRock and Strategy Unite for Bitcoin topic is because in the bitcoin space and in the crypto community, there's this. And Ryan, this is really for you because you talk about centralization all the time. The real question is, does having large holders who are economically incentivized to help the community react to threats, whether that threat is quantum or spam or whatever, is that a bad thing? Is that true centralization? Or is that simply economics? And based on the rhetoric, if you, if you hang out in crypto, Twitter or whatever the hell we call it these days, I mean, you would think there's this existential fight over, you know, bip110 that just doesn't feel existential. I mean, I, I was really, really happy to see Liz Lyn Alden characterize basically, far more articulate than me you know, basically make my opinion, you know, known, which is the same thing, which is this is not an existential thing or shouldn't be, but yet people keep talking about it as if it is. And so I'm just curious, Ryan, what do you think of it? I. I think that having people who are large holders or fiduciaries for large holders should be financially incentivized to help the protocol defend itself against threats. I mean, am I crazy? You know, what am I missing here?
- [12:53]
D
Well, what's interesting is bitcoin being the largest cryptocurrency in the world is still proof of work. The decision around the protocol, the transferring of tokens, the minting of new tokens, what goes in and on chain is completely uncorrelated from holdings. So you could have hundreds of millions or billions of dollars in Bitcoin. Your power to do anything on the network is zero by design. You know, the, the moment Ethereum went proof of stake, all of a sudden the, the minting got very centralized around Coinbase and Binance and all the other exchanges that were holding huge caches of Ethereum. Bitcoin is, you know, blackrock. You had to take interest in mining companies in order to have some type of security around the transaction flow. Coinbase, when they wanted to mint a message onto the blockchain, actually had to partner with a mining pool in order to make it happen. Because although Coinbase had billions of dollars of bitcoin in their wallets, they had no ability to mint a block. So I honestly, and I've been wondering and waiting how long it's going to take for these large holders and banks to realize and even nation states to realize unless they get involved on the energy infrastructure side with bitcoin mining, they have zero control over the actual bitcoin sitting in their wallets.
- [14:28]
A
Don't you think that's one of the reasons behind the all time bitcoin hash rate still hanging in over, you know, you know, at the levels that it's at, despite the AI data set, data center competition and miners exiting. I mean, we're still sitting at 900, whatever, I lose it, but you know, we're still much closer to the all time high in hash rate than we are to, you know, Even, even any 200 week moving average of hash rate. Yeah, because of exactly what you're saying.
- [15:01]
D
Well, retooling to AI compute is very, very expensive. It's very, very risky and the hardware is moving very, very fast and it's hard to get. So there's a lot around that, but what people have been saying for years is, well, what happens when the mining reward goes away? Who's going to mine? Why are they going to mine? Well, the reality is it's the large holders of bitcoin are going to have to mine to secure their holdings in the bitcoin network, otherwise they could be blacklisted. So I think you're exactly right that there is real economic incentive for blackrock and a lot of these ETFs and large wallets to actually have mining hash power to make sure that they don't get blocked on the network.
- [15:48]
A
Right. And I think that that's non trivial. Right. You know, but you know, do you agree that, do you think that what's going on with any of this stuff is an existential threat?
- [15:58]
D
No, it's, it's almost like someone took a lot of time to really think this out and design it really, really well and then not touch it. Right. It's like someone didn't monkey with it. They, they designed it really, really well, they built it, they deployed it and somehow it's still working.
- [16:17]
A
So for those fans of Isaac Asimov, I, I have often compared Satoshi Nakamoto to Harry Seldon, so we'll leave it at that. But it does matter. But the one thing that is interesting is the notion of putting money where their mouth is and setting up funds to research and be ready for Quantum and to help basically support bitcoin core developers financially in order to help the network. I have a hard time seeing how that's a bad thing. Obviously it's a bad thing if in fact they can co op the network and get people to do illicit stuff. But I don't see any risk of that, particularly given their, their, you know, where the money's coming from and how they're using it. I mean, once again, am I nuts or, you know, is, is this a much bigger risk than we think? Because if you listen to people on Twitter, I mean, Christ, I mean, the, the notion, the, the, the narrative.
- [17:14]
D
Well, that's your first problem.
- [17:16]
A
The narrative of, quote, big Bitcoin I find, I find amusing because I think it's an oxymoron. I don't think it makes any sense.
- [17:25]
D
Well, it's not fun headlines to say, oh, Quantum's a risk, but there's already 10 different patterns out there to solve it on bitcoin without even a hard fork.
- [17:34]
A
Right. So I was, I figured you would, you would care, you would, you would chime in on this one because you get to hear this even more than me. I mean I tune out a lot of these spaces at this point. Frankly, I'm enjoying my summer too much to, you know, to want to, want to get aggravated. But what do you think?
- [17:50]
F
Yeah, I mean, well, you know, I'll be excited when in August or So when the bit 110 deadline is over for sure. As well as clarity. But I mean the best thing about bit 110 is that a lot of people got to learn a lot more details about how the network operates, including myself, by the way. So I think that was productive. But yeah, certainly tired of seeing all the spaces about it. But as far as the Institution Security Consortium, I think, you know, it's not so much about the, the money, it's not really a lot of money, but I think it's a signal that they're at least taking it seriously as like a, I don't know, multi generational asset, you know, not some speculative trade. Right. They're not ignoring the fud and that's constructive. But you mentioned about the Pantera Capital. I think that, and this is a signal that there, that there is a maturing viewpoint toward this asset class. And I think overall that's a great direction for retail to pay attention to. I don't think this is something small to ignore.
- [18:58]
A
Yeah, I think that's probably true. I can't tell. I don't see any other hands up there. So the real question that I was trying to get at is, or. Oh, hold on. Scott got bounced. Let's see if I got him back. I can't. This, this thing is, is crazy. Scott, are you back? Yeah, well, whatever. He's, he got bounced. I tried to invite him back.
- [19:23]
G
I'm trying.
- [19:24]
A
Oh, there you are.
- [19:26]
G
Yeah, I think I'm a speaker now. Can you actually hear me? I've been kicked off like four times.
- [19:30]
A
Yeah, we, we, we can hear you. I mean, I mean look, you talk to a lot of people, you know, obviously every single day about this stuff. I mean it seems like the two narratives that we keep, they keep dominating the conversation are obviously the clarity conversation and this whole notion of big bitcoin and you know, is there centralization? Is it being co opted and all the other stuff? And I know you have pretty strong opinions on this.
- [19:56]
G
Yeah, bitcoin on the latter. Bitcoin will be fine. And it's bear market noise because people are bored, they don't have anything to talk about so they're just going to fight with each other. It happens every single time. But clarity I think is much more important. And I mean, like, is there a greater circle jerk on planet Earth than bitcoin spaces screaming about things that don't matter?
- [20:14]
A
Right?
- [20:15]
G
So I think we can accept that if price was 85 tomorrow, none of those spaces would even exist. Everybody would just be talking about when new all time high. Okay, So I think, you know, aside now, Clarity Act, I think is much more interesting. And I got, you know, I went to the out east conference the last few days and like Long island, which is thrown by Josh Frank at the tie, it's like 350 people, completely institutional and just an incredible room where I think a lot's being done. And so I got a lot more insight. Like every single person I talked to was like, well, I just got off the phone with my lobbyist or we just got off the phone with the White House. And I can tell you that I think John d' Agostino from Coinbase, who's amazing, he and I had a conversation and he said, listen, he said, this is how I put, put it. He said, on the inside, insiders six months ago were extremely optimistic about the Clarity Act. He said, all of our lobbyists, every time we called, we thought that there was real optimism, but retail was extremely negative. And he said, strangely, although you wouldn't think so right now, it's flipped completely. Retail has been starting to believe that this could get done, but the insiders are much more pessimistic than they were six months ago. So, I mean, take that for what it is. He said, you know, I'm not on the policy side, but you know, we're talking to people and everybody there, you know, listen, I'm sitting with like Amy, you know, Sandy at Franklin Templeton and Amy Oldberg from Morgan Stanley and Chris Giancarlo. I had a conversation. It was the head of the cftc. He's like, listen, the best thing the crypto industry can do right now is stop saying we need the Clarity act done. Because when it doesn't get done, we're going to look like idiots that don't believe our industry can move forward without it and we don't need it. And you're talking about the head. Ex. Head of the cftc.
- [21:56]
A
Yeah.
- [21:56]
G
Right.
- [21:57]
A
So. So that's sort of like what. Yeah, I got that. And, and Dagostino, your, that interview was really good. He had a bunch of nuggets in there.
- [22:05]
G
Yeah, he's, he's a killer. So, yeah, listen, I mean there, I think there is a chance it gets passed. But even thune now saying, listen, even if we can come to some agreement, the Runway's over. Like, when does something get done in 10 days in government, you know, So I think that even if they can come to an agreement, running out of time, I would say on the optimistic side, you do have seven Democrats, which is exactly how many they need to get this passed, coming together and saying, we don't like this, but we're talking. Right? So maybe that's some sort of positive signal that the seven of them could in some way do this. But I don't think they like the ethics language. I think there's two or three other sticking points, and I just don't see it getting done in time. And, you know, even Thune now saying, you know, it won't be done by August, that's saying it won't be done.
- [22:52]
B
What's messed up about that, Scott, is the biggest sticking point seems to be the ethics, because it doesn't touch on past profits that the Trump family has made in crypto. And you juxtapose that against the fact that they just voted through a bill that limits stock trading by sitting senators and congresspeople on inside information, but doesn't look back to the profits they've made. So it's kind of ironic that that's their major contention when they. When they bake that into their own bill to protect their own past earnings.
- [23:23]
G
Yeah, I agree. I agree. And I think, you know, I think there's more here, but I think that is the biggest point and the. The irony should not be lost anyone. I mean, I think the fact that the sunsets in 2029 is very strange. You know, there's the sticking point between the DOJ and the state attorneys that I understand kind of from both sides, actually, or, you know, who. Who would prosecute this or be able to pursue it. But I, I mean, at the end of the day, I just don't. Doesn't seem like they're that close, you know, like, I mean, Gallego, I think, said that the ethics, you know, the, the idea proposed by the White House, I think he literally called it a piece of shit.
- [24:01]
A
Yeah, it is. It is amazing how much they just the. The hatred and the emotions are here. I mean, look, there I. I went and I did a bunch of research. There is literally not one example, not a single one of any law anywhere where state attorney generals can prosecute federal employees. Not one, zero. And by the way, that makes sense, right? You know, it's from a division.
- [24:25]
B
It's totally impractical, Dave.
- [24:27]
A
Of course it is. But there's literally not one. And so these are made up arguments. This is Orange man bad, therefore we don't want it. The problem is they can't afford that be the case once Orange man is not in office anymore. I mean, it doesn't really matter. I mean, then it's just vindictive. Then they're going to do whatever the hell they're going to do. And by the way, you know, they're going to want more than anything to control the DOJ so they can go after him again. Right. You know, it's just for whatever reason, this is, this is just a mind virus that affects the country and, and that's what we're dealing with. I mean, but the thing that retail, retail carrying is interesting because if retail starts carrying, this is the funny part, Scott, is if number goes up, just say for the sake of argument, number does go up and there's a rally and the bear market ends and there's a bull market. To say that being on the other side of that would be politically dangerous might be one of the understatements of the century. Being on the other side of crypto right now, after people have been hurt in it and not doing very well, probably not nearly as problematic as if crypto goes through another cycle. Certainly if bitcoin goes to another cycle.
- [25:36]
G
I totally agree.
- [25:38]
A
And, and, and that's, it's sort of like, you know, if, if you, when you, anyone like me, who spent their, their lives building trading where you hedge various risks that you don't want to take, if you're a politician, you do not want to take that risk. And to me, the ultimate hedge. That's why I don't, I don't buy the notion that the midterms make it impossible to get it passed. Getting it done by August seems impossible to me just because I don't think these people could tie their own shoes in the morning and get that done within 10 days. But you know, it, it's the, the notion that they're not going to do this. I think they want to hedge this because, you know, let's say you're in a race and God forbid, from the perspective of a race where there's a clear crypto skeptic running against someone who's not, and bitcoin goes to new all time highs in September, you've literally lost the election. Do you really want to take that risk on something that you can't control? No. The answer is you don't. Michael?
- [26:31]
E
Yeah, I think the risk is on the one hand Obviously politicians, as you mentioned, but I think the risk is bigger for the country. I mean, we as a project started in the United States, but then when it was time to launch, we domiciled in Switzerland because there was clear regulation.
- [26:48]
D
Right.
- [26:48]
E
Like there's a regulator there, finma, that basically designed a regime that works for private projects. We share an office building with the Ethereum foundation for the same reason. I mean, why would the next Ethereum or Casper for that matter, not be founded in the United States? And dumbass out there, we're just losing out as a society and that is the bigger risk.
- [27:10]
A
Oh, I, I agree.
- [27:11]
G
Look, yeah, Dave, you know that one.
- [27:14]
A
Yeah, yeah. Scott had, had, had Ian, you know, my son, who he and I build coin routes together and he's running the company now. He moved to Dubai specifically so we could open. We, we now, you know, we've just gotten or in the process of getting, you know, brokerage in Switzerland set up and offices all over the place. You know, we used to be a US company. Had no choice. Right. You know, it's like 100. There's no path, literally no path in the United States. Now obviously if we get the path the United States, it's going to dramatically increase the value of the company, and that's good. But you know, if you want to survive a regulatory regime that was brutalizing anyone who wanted to do financial activities in crypto, you know, you either had to have enormous pockets to be able to, you know, the legal bills are in the hundreds of millions among all of them, or you did what you, your company and my company did and you move over.
- [28:07]
E
Well, it's, it's pockets and you have to be comfortable with the uncertainty and the fact that, you know that like any day of the week you could receive, receive a Wells notice and it's, it's like, who wants to deal with that?
- [28:18]
A
Well, look, I, I personally have known many SEC commissioners and I asked them early. This was in, in 2017 or 2018, I can't remember. It was either early 18 or late 17. And they personally, they told me, they said, yeah, you guys would be one of the first ones to get a Wells notice, because we know you. I'm like, okay, great. That's just fucking lovely. So we, we stayed pure software until we can do things overseas. And we're still pure software in the United States. Absolutely, 100%. And it's, it's unfortunate because there's some incredible technologies that would really help that, you know, in terms of like there, there's a whole Variety of things. But in terms of collateral management, for example, and hedging and de risking, there's things that, that, that, that our company can do that is kind of limited. We can't have us people in there until there's, there's some clarity or CFTC and SEC rules that are very. And, and that seems that takes a long time and you know that. Right. Anyway, that, that's beating 100.
- [29:23]
E
Yeah, for sure.
- [29:25]
A
Yeah. So, Scott, other than, other than these two topics, you know, other than the, the silliness, I mean, what are the other things that. That's on your mind? I mean, you guys, you know, you've talked from the Audi's conference.
- [29:37]
G
Tokenization is the same.
- [29:38]
A
People care.
- [29:39]
G
You got it, yeah. Tokenization in rwa, I would say was still the continued biggest narrative out there. Clarity act is the only thing anyone was talking about that's very in the moment. Nobody was talking about price, obviously, or cared. I think there was a lot of conversation about the push and pull between Wall street building their own systems and utilizing the existing decentralized systems, or crypto. Like whether big conversations around, for example, the dtcc, obviously talking about tokenizing trillions of dollars worth of assets and 4.5 quadrillion in volume. But how does that help us? Right, that's sort of one side, which is they build the plumbing, better plumbing for their existing systems within their walled garden. But then there's the other side where you actually tokenize assets and give people access to them all over the world who no longer have it. So I think that that was a kind of a conversation that was being had. And then the obvious other one is, you know, that was, I would say even the most maybe prevailing narrative is AI agents, agentic trading, AI agents, AI crossover to crypto.
- [30:50]
A
Yeah.
- [30:51]
G
It's interesting because we're down to so few buckets of conversation now. And so I think people feel like it's boring, but they're actually just such big topics that they dominate.
- [31:00]
A
Yeah. So you talk with Sandy Cole. I'm actually looking at it on, on, on X. I can see you talking with her, but I haven't had a chance to watch it. She wrote an article about agentic AI and crypto. Did you talk about that?
- [31:11]
G
Yeah, she wrote it that morning. You know, and that's the, the idea is, you know, that this is going to be the obvious bridge. She sort of giggled because, you know, Visa had put out a report I think last week that said they view transactions in two buckets. One is, you know, humans are going to still go buy a sandwich at Subway and use their credit card. But, you know, agents will only transact in micropayments, you know, like in, you know, paying each other for compute and expenses like that. And she sort of giggled at that and said, no, it's just going to basically all be agenda. Yes, there will be things that we still go do. But of course, Visa is talking their book. If they say, you know, that they won't be replaced, they'll just be additive. Right. And so I think that, you know, her thought is that this is where the next, you know, next wave is. And I think that that's a prevailing sentiment right now across the industry. From everyone I heard. I mean, what she wrote was, was tremendous, but it's echoing narratives that we continue to hear. Right. I think we all know that agents aren't going to open bank accounts. I can't tell you how many times I heard that statement in a week.
- [32:15]
A
So to close the loop, the one thing that the control people, you know, the national security people who scream national security, the people who, who, you know, defend the failed. And I say it literally failed AML regimes because, you know, the KYC AML regime has done a absolute crap job of doing what it was set out to do. I mean, they make, when they hear that, they go, yeah, that's right. These AIs are going to be dangerous. We can't let them. They have to have to open a bank account. We have to be able to trace them. I mean, anybody out there talking about, you know, how, you know, that gets satisfied or does that get ignored or, you know, how does that resolve? Because I think most people listening to this space and any of the ones that we talk to, I mean, we all think that this level of control is insane, that it doesn't do anything and it actually, if anything is counterproductive. Yet it seems that they keep talking about it. Does that get that get conversation or people just kind of like shrug their shoulders?
- [33:11]
G
I think they're punting it for now. I mean, not that it didn't get conversation. I just didn't hear it really. I think people are just talking about the politics of the Clarity act and then these few very key institutional use cases. But like I said, I mean, this was Morgan Stanley and Franklin Templeton having conversations every day. And so I think everybody's just trying to figure it out. And I think that there's still a sentiment that we're very early. That would be another takeaway that I had. As fast as things seem to be Moving the actual adoption and usage is. We're just scratching the surface, barely.
- [33:50]
A
Yeah, well, I mean, I think we kind of know that that's true. Every time you see these epochs you get major changes in finance and I've lived through a bunch of them. Michael, is that a new hand or an old hand? Because you can't tell on this platform.
- [34:06]
E
New hands or old hands? I mean, yes, we're seeing the changes, but I think we're actually seeing the data as well. Right. And I'm sure you guys have all seen like the Cloudflare reports that are coming out every month now stating that the majority of the traffic that they process on the Internet is now agentic. Right. So we as humans have become a minority on our own Internet, but nobody's equipped to handle commerce. Yes. I mean we can talk about X4.2 and everything and I'm sure we'll do that later. But there's a huge catch up that needs to happen in order to actually support all these agents and make sure that they can transact. And as you said, they won't open bank accounts, so. But from a regulatory perspective, I think it's another blind eye. We're turning to it and if we're not careful the same thing or if, if we're not careful, the same thing is going to happen where the United States going to be lagging. And as the leaders in the Internet, we cannot afford to do so.
- [35:07]
D
Right.
- [35:08]
E
So I think we, we need to make that a point as well.
- [35:11]
G
Hey, Dave, we don't. Do we have any other key topics? Because actually we invited Michael here and I wanted to have kind of a longer conversation with him about a lot of the things that we've actually touched and we can just kind of jump into it early if that's okay.
- [35:22]
A
That'd be better for me.
- [35:23]
G
So yeah, I know that you have to leave it around 1105 and Michael. Yeah. So you know, I mean, maybe Michael, maybe it'd be best instead of me giving an intro, you can introduce yourself and then we can talk more about to trying Casper because you guys basically launched this week, or at least you're trading on Kraken this week. And you're really at the center of all the narratives that I just floated. Right. And you're actually building this and doing it.
- [35:51]
E
Yeah. Thank you. Absolutely. So I'll do a quick intro on myself. I'm in the CTO and president of the Casper association, which is a Swiss nonprofit. As I just mentioned mentioned in an earlier response, we are based in Zug, Switzerland sharing an office building with the Ethereum foundation and some other projects that really should be in the United States but are not for all the reasons that we discussed. And Casper is a layer one blockchain originally started, founded really in 2018 based on research that came out of the Ethereum foundation when they were looking at how to move from proof of work to proof of stake. That research was originally called Casper, developed by Vitalik and some others within the foundation. But as we all know it was going to take them another five years or so back in 2018 to get to proof of stake and we believe that that was too long and saw some other reasons why. Ethereum at the time as well as I think the broader industry was mainly focused on let's call it sort of non serious business. Right. Like this was the, the ICO boom and then all these other sort of fads came and went, whether it was inscriptions or the NFTs and you name it and we were looking at the space and it's like well eventually businesses, enterprises and institutions are going to need to have real rails to transact on and what do they need? Can they afford Things like waiting for 64 confirmations for a transaction to settle? Well, if you're sending 100 bucks to an exchange you as a consumer probably can but if blackrock sends a few billion dollars to another fund they probably want to know who owns those assets in during those 10:15 minutes that it's sort of in limbo on chain and not not in the possession of the sender or nor the receiver. So that that was sort of the premise that Casper was founded on. And yeah you're right. We're right in the midst of the topics that we just discussed and that are, that are broadly discussed which is agentic commerce. We are a co founder of the XFO2 foundation under the Linux foundation where we are moving that standard forward and we have a lot to offer on the tokenization side as well and happy to be here, thanks for the invitation and looking forward to our chat.
- [38:27]
G
Yeah. So to dive in deeper, you're not necessarily operating your offices in the United States, but you finally actually as a token are available in the United States. Right. So a how did that happen? You just went live on Kraken and why is it actually such a big deal to be be available in the United States?
- [38:47]
E
Sure. So I mean Casper as I mentioned like we co founded in 2018, we went our mainnet launched in 2021 so we've been around for about five years and for most of the time, the United states has really. U.S. residents have really had a very difficult time participating in a network, and for all the reasons we discussed.
- [39:10]
C
Right.
- [39:10]
E
If the regime wasn't there. So that changed this past Tuesday with Kraken. And it's really happening at the exact moment that Washington is hopefully finally writing the rules. And we started building Casper really like 8 years ago, assuming that those rules would come. So many chains are retrofitting in order to become compliant, and we're, we're just ready. So we're excited about the, the timing and the opportunity.
- [39:41]
G
Yeah. So obviously you say you're ready, so that's ready to come into the United States, given the environment. But also, you know, I, I've said, I've. I've heard many L1 say that they're ready for institutional adoption. Right. So there's, and I kind of talked about this before.
- [39:57]
A
Right.
- [39:57]
G
There's all these approaches to what chain you're going to adopt and how you're going to do it. It. So maybe talk about, you know, why Casper specifically is institution ready and what you do differently than the others that are saying it.
- [40:11]
B
Sure.
- [40:12]
E
So I just mentioned one example. Right. A single block finality. You as an institution cannot afford to wait for 10, 15 minutes and 64 confirmations when you send a billion or more. I mean, even if it's much less. Right. We just think about the legal responsibility, like who's responsible for the asset during that limbo period. What if there's a black swan during that window? Are you the sender or the recipient responsible? Because the network cannot tell you who owns the asset. So that doesn't work for institutions. We've had instant single block finality since day one. Similarly, upgradable smart contracts. Your audience knows about how smart contracts work. They are generally immutable, but that's not how business or applications work. You download an app from the App Store and you know, you get daily, weekly, monthly updates. And similarly, if you run a financial application as a business, you must adjust to changing regulations. I mean, the US alone, clarity aside, we have 50 states with 50 different regimes, and rules change all the time. So blockchains are immutable, which is both their power as well as their handicap. And a lot of ecosystems have bolted on workarounds to this immutability point for smart contracts. But that also has resulted in many of the hacks that we as an industry are familiar with because it is sort of a bolt on. So we solved upgradability at the protocol level from day one with Governance built in so that you as a, as a institution can a deal with changing regulations and B, I mean your application and your business will continue to evolve. So should your on chain application. Same thing with permissions, right? If you have a business, the CEO generally doesn't have the same level of access as the receptionist on blockchain. An account is an account and everybody has the same access. So if you hold the key, you can do anything. So we build a chain where you can mirror your corporate governance on chain. So if you onboard an employee, they get roles, responsibilities and access. And that's something that should be mirrored on chain as well. Predictable costs. When you are running a business you have to be able to model out your costs of operations. Right? And in many environments that is very hard to predict. The network is business. If the network is busy, that is something that is completely outside of your control. But the cost might all of a sudden be 10x or 100x compared to when it's not. And enterprises and institutions cannot scale or predict their products that way. So we have on Casper. The same transaction will always cost the exact same amount, no matter, no matter what, whether it's network congestion or anything else. And then we touched on this earlier in our discussion around Bitcoin. Quantum readiness. So quantum security really for institutions is a must have. It's not a nice to have. And I think obviously the discussions are happening in Bitcoin, but I think on the smart contracting platform side of things, a lot of projects are still a little bit asleep the wheel, if you look at the reports that are coming out, Google just moved Q Day, as we like to refer to it, their estimates from the early 2000-30s to potentially the late 2000-20s. So if your horizon as a, as a project owner or as an institution exceeds this decade, you really need that answered now. So we foresaw this in 2018 and we built essentially pluggable cryptography algorithms into the protocol. So we already support multiple algorithms on our mainnet and adding quantum safe algorithms is essentially a plug and play exercise for us. So those are some of the examples of how we're designed for institutional adoption.
- [44:23]
G
That's a lot of examples.
- [44:25]
E
Yes.
- [44:27]
G
So I guess maybe we've addressed how you're different for RWA and tokenization in that regard, but maybe we should move on to agentic commerce.
- [44:39]
E
I'll add one thing on the RWA side, which is there is a standard emerging around compliance tokenization and it's called ERC3643 and it's obviously like throwing out ERC numbers is always very fascinating. Not but most of the tokenization assets that we all see out there actually based on this standard. And Casper has become the first non EVM, right, the first non Ethereum L1 to support this standard. And we are actually, actually part of the upcoming T Rex ledger which is. Which used to be called Tokeny, which was acquired by the, by the Apex group which obviously runs a lot of the back offices and expecting to see just Apex alone contributes over $100 billion of assets by early next year. So we're excited about sort of that pipeline and ready to support it.
- [45:56]
G
And does that fully cover. Let's talk about the Agentix side. Like how do you foresee AI agents? The crossover with Blockchain? We touched on it earlier and then that specific to Casper.
- [46:07]
F
Sure.
- [46:08]
E
So I mean we did touch on it. The Internet is becoming agentic, right. Like we invented it but. But it's being taken over by our digital friends. But they can't transact. I mean you hear it everywhere. As you said, they're not gonna open up a bank account, they're not gonna pull out a credit card, they're not gonna sign up for Amazon prime and renew their subscription every month. And the X402 protocol as it's called, really fixes that. It's about microtransactions, right. Like it's a payment standard based on HTTP requests and it was originally put forward by Coinbase but it's now adopted across the wider industry and as I mentioned, its development now sits under the Linux foundation and Casper is a co founding member there alongside the likes of Coinbase and Google and MasterCard and Visa who like you mentioned are obviously have a vested interest in this and obviously an attempt at staying relevant and hopefully with this they will be. And we are one of maybe one or two handfuls of chains that have X402 fully integrated on our mainnet. So that gives agents the capability to transact. But that's really just one side of the coin. I mean if you give your agent access to capital, you want to put some guardrails in place, right? Yeah. You want to be able to, to tell it you can spend $100 a day and this entitlement is only available to you for this week and you can only spend it in this venue and that needs to be enforced on a protocol level, not just in your agentic setup. So that's something that we are bringing to the table. Again coming at it from an enterprise and institute institutional angle where these types of things matter. Giving them access to capital is one thing, Guardrails is a completely other thing. And that's sort of what we're bringing to the conversation with our peers in the X402 Foundation.
- [48:14]
G
Yeah, and once again you rang in on a lot of the things I would ask you about, obviously earlier, but we talked about the Clarity act at length. I'm curious, what do you think the odds are that it passes? And assuming it does pass, I know that many people kind of fear regulation, but it seems like you seem to welcome it if we can get it. So I was wondering your view on that.
- [48:37]
E
Yeah, I mean, I think we talked about the odds. It's really a tough one. I mean, I've also talked with folks in D.C. this week that are in the midst of this thing and I don't remember who it was, but somebody heard mostly pessimistic noise. I heard optimistic noise, but at the same time it's Washington and anything and nothing can happen. But in the end it is going to pass in some shape or form. If not now, then in the near future because there really is, I don't think, an anti crypto electorate out there and good luck to anybody who's going to run on that. But right now I would say we're probably 50, 50. If the positive noise that I'm hearing continues through the week, I mean, then we're running out of time, but hopefully it can move the needle. But yeah, I'm all for this type of regulation. I've spent 30 years making new technology safe enough for serious organizations to take a bet on. And serious organizations need rules. And rules really aren't the enemy of adoption. They're essentially a prerequisite. And as I mentioned earlier during our discussion, the United States cannot afford to continue to see all innovation in this industry go or really remain overseas. Right. I mentioned we domiciled in Switzerland five years ago because they had clear rules. Same thing with our neighbors, the Ethereum foundation and others. Switzerland is considered the financial capital of Europe. United States wants to be the crypto capital of the world for the administration's words, but we can't do that without having clear regulations in place and these stupid political fights and really sort of the territorial fights between different agencies and things like that have to stop because we're just losing out otherwise.
- [50:43]
G
Yeah, I agree with all that. So just I guess quickly, before I take it up a lot of your time, but before I let you go, you know, is there any final thoughts on Casper? Maybe something the market's getting Wrong. You know why people should be paying attention?
- [50:57]
D
Sure.
- [50:58]
E
I mean as I mentioned, why should people be paying attention? We are new to the United States as of this week, coming with with sort of a long European overseas legacy in the European financial capital world of Europe. But so that's the main point. We're not new. We've been around for about five years. But that's five years of really five nines uptime and entering this market with technology that's on the forefront of innovation for really these two powerful forces that will shape our economy for the years to come. It's the tokenization of real world assets. That train has left the station and agent E commerce, same thing. The Internet already is being overwhelmed by agents and most websites that they visit do not know how to handle that. So we're here to lay those rails and excited to be finally in this market where we do have an opportunity to be the crypto capital of the world if we as an industry sort of do things right. So that's it.
- [52:14]
G
So obviously they're available on Kraken but quickly where can people check everything else out?
- [52:19]
E
Yeah, definitely. Visit our website Casper.networkwork or follow us on XasperNetwork. I think we're in listener as well so you should be able to find us there and feel free to hit me up on X or other places and yeah, looking forward to being part of this conversation with you guys.
- [52:42]
G
Thank you so much for joining Michael. Really appreciate you taking the time. Really, really helpful and hope it all goes exceptionally well. Let's see if we can get this thing passed and make life a little easier around here. I think Dave might have exited. Dave, you still here? I don't think so. So listen, we're going to go ahead and wrap it up. I think we covered everything for the week and we'll be back on Monday with the next crypto town hall. Thanks once again, Michael, everybody. Please give our amazing guests a follow. We invite them up here and they take their time to share incredible insight and.