← The Wolf Of All Streets
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- [00:01]
Scott
Happy Liberation Day. To those who celebrate. I can say, as an American, I've been feeling this deep lack of freedom and that I need to be liberated from the chains of tyranny. And finally today, not in 1776, not after the Civil War, but today, as an American, I finally feel liberated. What are we being liberated from? Anybody have an opinion? Because I don't really understand the idea of liberation, Nick.
- [00:27]
David
Low prices.
- [00:30]
Scott
Liberation from low prices. That's got to be it.
- [00:32]
Mike
That's right.
- [00:33]
David
Yeah. Liberation from getting a deal through trade. Yeah.
- [00:37]
Scott
Oh, so liberation from disinflation.
- [00:40]
David
That's right.
- [00:42]
Scott
I feel liberated. Yeah, we're liberated from lower prices. It's going to be interesting to see what happens. The funniest take, and it was like, I think literally on a Bloomberg terminal yesterday, was that within the administration, people are viewing Liberation Day as Lutnik's idea, and if it goes bad, that Lutnick will be liberated from his job, which I think would be bad for the crypto industry. And I'm not saying I have that expectation, especially him and Trump are best friends for a very long time. There's a lot of risk here. Obviously, with Liberation Day, it feels like this is purposeful chaos and that with this announcement coming at 4:00pm Eastern Standard Time, maybe the administration still doesn't know what it's announcing. Does anybody get that feeling? David, you can go ahead. I mean, do you think that they know exactly what's being announced at 4 o'clock?
- [01:29]
Nick
I don't know.
- [01:30]
David
All I'm going to do is run out and buy a lot of toilet paper, you know? Well, that worked five years ago, right?
- [01:34]
Scott
Tis the season. It's worth more than gold. And speaking of gold. Hey, Mike, what do you think of all this? Obviously, when I want to know what the hell's going on in the macro and how bad it's about to be.
- [01:44]
Tom
There'S a guy I call, well, here's my macro play. First of all, still bullish gold and less bullish cryptos. And I want to point out, first of all, some of the facts of what this is happening. And it's the certainty that we are getting tariffs and they will be focused on reducing the substantial US trade balance, which, based on the last 12 months of information, is about a trillion dollars. It's the most in history. And that's a certainty that will happen. The key thing is that will reduce corporate profits, full stop. As Dave says all the time. There's no way to stop that as being reflected in the stock market. It's another Certainty is and the facts of what's happened. We have a bear market in cryptos. If you look at the 200 day moving average of the Bloomberg Galaxy crypto index it's tilted lower and we have a bull market in volatility. If you look at the Vix 200 day moving average it's tilting higher. So I think this is fitting into, it's a great narrative for traders. This is a great traders environment. But I think what's happening is people who become depend dependent on the stock market going up and dependent on exporting to the US for decades it's being shut off. This is a basically it's the end of the post World War II era and basically the rest of the world's just finding out that right after things like the attack on Pearl Harbor America's pissed off and this is just what's happening. Sorry but. And I feel bad for Canada but it's impossible to have a country that is one tenth the size of the U.S. to not have a trade surplus with the U.S. they're just trying to rebalance it a little bit. I just hope the whole world and human nature can deal with this mercurial presence and see what's going on. So what does it mean for markets? So to me the key thing is gold should continue going up in this environment. Volatility in the stock market bottom from a six year low last year. Guess what time it bottomed? Right about the time the Fed eased. And I've just never seen this before. The Fed to ease when the stock market's making record highs. That was a big mistake. So now we just added another thousand bucks to the s and P500. That's reverting. It's probably going to go back towards at least 5,000 initially. And that's the base case of my our chief strategist Anna Wong and our chief equity strategist Gina Martin Adams that it's going to continue to correct. Maybe they'll be wrong but which means major pressure on what's been, you know, a high correlation to the stock market and that's cryptos. Now they're already rolling over. The good news is Bitcoin's outperforming now. I think bitcoin dominance will continue to rally but we're going to see happening today is is a known known we're going to get these tariffs. It's just a question of how much, how much the concessions will be. And I let other people dig into the details but to me the macro is clear. Yeah, gold's getting a little expensive, but I think by the end of the year it'll be one of the best performers. Along with US treasury long bonds. We get the S&P 500, have a normal correction down to Ryan 5000 and maybe it stays there for a little while. We get the deflation from the inflation, which is all the lessons of history. Jeff Booth has been over that price of tomorrow, price of time. Edward Chancellor has been pointed out, these things always happen. And the question you have to ask yourself is, well, where are the nuances in between? So I look at, I'll end with this. I look at the key indicators I've been having. You just look at. You can ignore everything they say, but you can't mess with the bond yield. 10 year old yield in China is 179. I think we're going there. I traded JGBs in 1995 and saw.
- [05:03]
Scott
Exactly the same thing. Yeah.
- [05:07]
Tom
So it's all very similar situation. So to me this is part of the macro. Now it doesn't mean we're not we. And we should have some great volatility for trading.
- [05:17]
Scott
I don't know if it's your phone connection or your mic, but you're going out a couple seconds at a time. So I don't know if you can jump down, jump out or fix that. But you can try one more time.
- [05:27]
Tom
I'll try one more time. Must be my mic because I'm at work. So end with this. To me this is just part of the big macro reversion which we've been overdue and the question is where does it stop? But so we get through payroll tomorrow, we expect it to be somewhat strong, but by the end of the year they go up to 4.5%. And remember, this is just all happening and cryptos are the leaders in terms of volatility. And so to me it's the certainty that the markets finally realize that the big bull market is probably over.
- [06:01]
Scott
There's this expectation that tariffs will cause this tremendous volatility this afternoon. I understand that definitely possible. But my gut feeling that the chaos is priced in in the process. And what could he announce that would be a surprise in either direction? I mean, is there like Mike or anyone else, usually when we have an event like this, jobs or you know, inflation numbers, there's an expectation and markets trade based on the up or down from that expectation. Do we even have a set expectation as to what these tariff announcements will be?
- [06:39]
Carlo
I mean, I don't.
- [06:40]
Scott
Yeah. Either. Yeah, I mean only 20 isn't it 20 on all countries. That's why.
- [06:47]
Carlo
Yeah, something like that.
- [06:48]
Simon
But.
- [06:48]
Carlo
But the important reason that the stock market's not down very much today and that it's come off the lows is because dissent said that that's a ceiling, not a floor. The exception of special cases. But when you basically look what you obviously have is an administration that doesn't take a rocket scientist to see that you have hawks and you have doves on the tariff idea. They're all kind of bought into the notion. But Bassento is trying to be a moderating force and the markets are hopeful that he will ultimately his wisdom will prevail and that's what's going on there. But I mean, I did want to point out one thing, Mike. You know, the NASDAQ was down what, 1% this morning. It's only down a little bit. And bitcoin's up. That beta is looking kind of funky. And I'm going to keep doing this every day it happens because it's not. Not to say that bitcoin is necessarily going to outperform, but to say that beta is notoriously unstable and the correlation isn't there. And I will keep making that point every time I see it just because it's just so obviously a random walk to the correlation being kind of weak. But the important thing that's going on here is your gamestop about to buy a billion and a half. You have multiple more and more every day. And the real question is where's the supply going to come from? And if the supply is coming from which it has been from people in the crypto world selling bitcoin to pay their taxes or to buy all coins or junk hoping to catch a falling knife at the bottom, I think that you're going to see that that that's has to be slowed down. So the real question is, is supply demand inside of bitcoin and similar things are some of the Tier 1 or Tier 2, however you want to look at it, alts as opposed to memes and you know, etc. Etc. Etc. So I think you really do have to take a look at what's going on in the market. I feel sort of like Tom Lee sitting here saying, I just don't see the bearishness. I don't see what the bearish catalyst is. What could he say? That would be a downside surprise. That would be more.
- [08:44]
Scott
No, that's my point. It's like if it feels like the entire thing is so chaotic that the downside should be priced in the process is the downside.
- [08:52]
Nick
Right.
- [08:53]
Scott
That's why we've corrected.
- [08:54]
Carlo
That's right. But Mike does make one point that I agree with and that is the key point here which is just let's, let's ignore them. The and look at what's going to be impacting corporate profits. If your companies that are multinational companies that are going to be impacted, you're going to see their profit margins down. If you're a company that's a domestic producer, whereas is whatever and it's going to be incentivized, you're going to see your profits helped in the long run and the markets will adjust. And so what the weightings are in which indices and how that trades. Passive investing makes this all harder. But active managers theoretically should be able to do better in this scenario. I'm not sure that they actually will, but they theoretically should. But it is important to understand. But bitcoin doesn't have anything to do with profits. It's based on the denominator. And if there's anyone on the panel who thinks that we're going into monetary austerity and that we're not going to continue to see money printing expand, then I'd like to hear that because to me liquidity is the only thing that's going to matter and they're going to continue to be pumping in liquidity.
- [09:56]
Scott
And we're on that three month delay in the M2 pivot at this point. Right. Which is usually the lag that you see before risk assets or liquidity starts to enter the system. Go ahead, Mike.
- [10:06]
Tom
So I just got to piggyback a little bit. And since the facts of the year, Bitcoin's down around 10%, gold's above up around 20% s and P500 is down around 4%. I'm not looking at a day trade. I'm thinking the next 10% in this S P500 which I call beta is more likely me go down and the stock and bitcoin cryptos are more likely to drop with that. Now what's been unique is what's going to continue. Here's a good bull market is Bitcoin dominance should continue to increase. I expect that maybe you know my call, Ethereum broke two grand. I think it goes to one grand. I think it gets flipping by tether and we see all this focus on stablecoins but the macro is clear. It's not a day trade. It's not something you look at and I mean those of us who spent their lives growing up day trade with lots of leverage in trading pits, try to ignore that. So to me, that's the big picture factor. And yes, we're going to get past this event, but it's the certainty of the event that we have to expect going forward. We will have certainty that we will continue to get this very mature leader being, being Mr. Trump, being. And he's very emboldened until something goes wrong, which he's way overdue for. You have to have a little bit like, you know, like you said, might be the fall guy. Remember, key thing I want to point about Lucknick, for those of us who worked at primary dealers for decades, that he was one of the most hated person on Wall street in part because he was a tremendous shark. Just want to be in the same foxhole with him. And some of us have learned the hard way being in their wrong foxhole with him. But this is the fact of what markets are doing now. Now it's just a wait game. We get to the end of day tomorrow and then we get payrolls tomorrow. Now, payrolls based on our recommendations from Anna Wong is probably going to be strong, yet the unemployment is going to drop, go up to 4.2%. But the sense I'm getting on the global basis is to sell US assets. Get me out. We do not like your leader. We know he's not there to support us. He is pushing back and something we've been dependent on for decades and we need to export to the US to support our economies and that's been shut off. And so to me, this is some of the things that we talked about on Macro Mondays forever. They're just starting to come to fruition. For instance, remember, this is happening with the US Stock market, some of the most expensive levels and ever. Certainly the key thing I've been watching is versus the rest of the world. So we have, you know, it was 2000/2 of global stock market GDP. We're only 20% of 1/5 of GDP and 1/20 of the population. That was about as good as it gets. Now Trump is flipping the switch for that reversion to questions. Where does it stop? So I'll just give you my base case is sure we might get a bounce in risk assets, but I think beta, the US stock market is going to drop another 10% and that'll be the good indication. Now, if bitcoin can drop only 20%, it's already showing decent divergent strength. This is what I'm waiting to see. But the point is it's heading lower and all cryptos are heading lower. For now, the trend is down. If you look at 200 day moving average of Bloomberg Galaxy Crypto index, the next thing to tilt over is S&P 500. Remember these are things that are just way overdue. But the bottom line is the VIX BO bottom last year and the last time that happened, cryptos bottom like a week, a couple months later and then the S P500 dropped, started dropping after that. This is what's happened. This is, these are bodies in motion. What stops.
- [13:07]
Scott
This is what always happens. You always get we talk about this all the time. And then David, you're up next. I saw your hand up but I mean that sort of process that you talked about which is we finally get the yield curve on inversion or normalizing and then the Fed pivots and then the stock market drops. It's happened every time that we've had that combination of occurrences in the last 25 years. So it shouldn't be a surprise that we're getting this correction. The question is have we had enough correction? Right. Because after the Fed pivots, the stock market corrects. That's just the way it goes. David, go ahead.
- [13:40]
David
Yeah, a couple of thoughts here. I was just going to say one, yes, the uncertainty we have right now is about what is Trump going to say the additional uncertainty after that is then what's the response going to be from other parties. So you know, certainly the issue is has been outlined clearly is that yeah, the knock on effect here is going to be a hit to corporate profits and we're seeing the risk premium blowout just because all the uncertainty involved. So yeah, trading volatility here is a great thing to do. You know, comment relative to the S P here we are what, 56, 30 or something like that? You know, I would argue that we're kind of forming a head and shoulders pattern here. And then I think we do a test of a longer run average which would be a 400 day at about 53 60. And then there's a distinct possibility we could go back and test an even longer level which would be the highs we had back in 2022 on the S&P 500 which was at approximately 4750. So those are the numbers that are stick out in my mind in terms of where the downside risk in this market is.
- [14:59]
Scott
Anyone specific thoughts on what the tariff news today will do to markets? Do we expect volatility? Do we think that it's largely priced in? Does it even matter? David? Giraffe, you can Go ahead, Dan, go ahead. I, I thought you're putting your hand up but you're giving a thumbs up but now you're on the spot. Yeah, yeah. I don't know. I don't think it's going to be as bad as people think. I would imagine it's mostly priced in. I'm an ever optimist. I think it's going to go up after today. So that's all. It's been pushing nicely so far, but still clearly kind of sideways in this range. Joe, go ahead.
- [15:36]
Nick
I love how Mike, it's like today's supposed to be this huge big day, Liberation day. He's like looking at payrolls, right? Like he's already like pat, just like everything's kind of been a nothing burger, right? And everything that gets announced has just kind of been like, right. There's not been, there's not been any news. Like normally it's like hey, buy the, buy the rumor, sell the news. And this would be the inverse of that, right? If you think it's negative, it would be, you know, you're buying the news. But we don't know the rumor, right? And the news is going to come out and we don't know what it is. So we're all just going to have to wait, wait and see. But I don't, I don't expect any sort of ground shaking announcement. Kind of everything that's happened since the administration has got in. Even with, you know, the Bitcoin reserve, you know, crypto reserve, it's kind of been these unorganized one shotted announcements that come out that you know, they, it's the way that they roll and like they got elected and that's kind of what we're dealing with. But I, I don't think it's been a necessarily positive thing, you know, for markets the way that things have unraveled. But you know, that we, you know, it's kind of like you can't micromanage the person you hire. You just kind of have to tell them the outcome and then let things happen. I think there's a more existential thing happening and that's what I'm worried about in, in the, in the crypto space, you know, it's like if you bought, you know, Ethereum at the end of 21, like you're down, right? Like there's been a multi year bear market, you know, for, for Ethereum and for some alts and you know, just kind of looking at this, you know, through the lens of social media and trading it's, you know, you have to, if you're going to play some bets you have to be very specific. You know, Ethereum is not, is not gold, is not Bitcoin. Right. There's an actual use case utility function that needs to happen there. It's not just gonna, a rising tide is not gonna always just lift all boats when it comes to the rest of the market. And so that's what I'm looking at. I do think that alts are very, very oversold. It hasn't traded exactly in correlation with the rest of the stock market. Over the last couple of years we've been in a, you know, we had a two year bear market. You know with the fraud and fallout that happened. We had a little like bright spot with the Bitcoin ETFs that helped in some crazy meme coin shit that went down. But overall we are in a very bearish oversold market. So I would expect alts to return faster than the rest of the stock market. I think there's going to be some sort of diversion that happens.
- [18:01]
Scott
You mentioned it and it was going to be my next comment when you were kind of talking about how these are one shot news events and nothing seems to affect the market. Mike's already moved on. My joke was going to be remember the bitcoin strategic reserve? Remember that thing that was the most important thing to us for six to nine to 12 months. Could it happen? The guy writes an executive order and bitcoin moves four doll. I mean exactly nothing. There's no single piece of news and IB tariffs in the same light that can, that can get us there. But the thing I would push back on is you kind of, and you said, you know, the ETFs were kind of the one thing. I mean the ETFs did basically double the price of bitcoin. Yeah, bitcoin.
- [18:40]
Nick
And then we, we didn't, we saw some of the, some of the alts move but overall there's been a big divergence in price there. But you know, I, I, I will say, you know we, it's going to be a tough, it could be a tough year for you know, your favorite like L1 bag that potentially might not come back. And so I think you just got to be very picky with what you're, what you're investing in and you got.
- [19:02]
Scott
To sell your losers that my entire portfolio. Go ahead, Tom.
- [19:08]
Joe
Yeah, morning everyone. So a few points here. You know, I think I don't know how much worse the tariff news can be as you Mentioned the uncertainty is what's been killing the market and investors because we change based on what is it true social posts every day. 20% is the line in the sand right now. Anything better than that, or even at that, I think markets are going to rally. So clarity is key here. Another point I'd bring up is April's traditionally been, at least for bitcoin, a very bullish month. But for equities, particularly after years where the market's up 20% or more, the two or three weeks right before tax season, which in the US is April 15, has been historically negative. So another headwind to watch out for in the next few weeks. But tariff news I think would likely offset that if we receive some positive news here. And the thing I think just taking a step back more broadly is we're forgetting is, okay, we could talk about eth versus Bitcoin or ether sol, but I think in the light of the Bitcoin strategic reserve, I think if this tariff news wasn't in place, we'd be basically back at the levels we were at when Trump first took office. And then we'd focus on the things that really matter, like this administration putting every single priority that we've wanted at first, you know, first and foremost. And I can say, I can say this firsthand. So I'm going to meet with the Trump administration next week and I emailed people around Washington just asking who I can meet with. You know, senators, congressmen, sec, cftc. It was amazing how many people got back to me and are willing to engage on these topics despite there being very other important things that they're working on. You know, tax legislation, tariffs, whatever. Like this is a priority for the administration. And if you don't think that's good for the broader like all COIN complex, I mean, I think you're crazy.
- [20:51]
Scott
So wait, what are you meeting with them about?
- [20:54]
Joe
Just broadly input into policy agenda. Talking from the venture and early company perspective, how the legislation and how policy could affect portfolio companies and venture more broadly.
- [21:10]
Scott
Congrats.
- [21:11]
Joe
Yeah, yeah, it should be fun. But I mean, things like that, people just totally don't understand how receptive this administration is to feedback and how, how much crypto matters to them.
- [21:24]
Scott
Yeah. And it just shows how inextricably tied we are right now to the tariff news and macro and markets in general at this moment. Moment. And I would argue, like at the whim of Trump and his family to some degree. Right, Tom. I mean, and, and to that end, like as much as the early entrance to crypto by the Family was a bit shaky, obviously. NFTs, which I think have actually done particularly well, or at least relatively well, and they're still interested. But then the Trump token in Melania was horrible. But now you do have the suns, you know, with the wealth management firm putting bitcoin on the balance sheet and partnering with Hunt8 for a mining company. So it seems like they're moving in the correct direction on our speculative crypto spectrum at this point. You think that's fair to say, Tom?
- [22:17]
Joe
Totally agree. I mean there's a ton of nonsense here, but the real actions they're putting in place between stablecoins and market structure and the right appointments are tangible. We have to fight through the meme coin stuff, but hey, I mean that stuff, short term, the long term stuff, the stuff they're putting on the books.
- [22:35]
Scott
Interestingly, you just mentioned stable coins. I think we all agree that the lowest hanging fruit for the industry from a legislative perspective is obviously stable stablecoin legislation. We had a bit of interesting news on that today. I think they're marking up the Stable act in the Senate where they're also marking up the act in, in Congress. But Brian Armstrong and others were pushing pretty aggressively to include language or the idea that yield bearing stable coins would be allowed. And it makes a lot of sense, right, because obviously these companies are making a ton of money on the Treasuries. Why shouldn't some of that be passed on to the holders? But French Hill, who's been a huge champion of the and basically leading discharge to some degree in Congress and others, said no way basically today. Carlo, you actually, I know that you wrote about this today or sent it to me. Good morning, Carlo. Thoughts?
- [23:28]
Matteo
Good morning, Scott. Happy Liberation Day.
- [23:30]
Scott
Happy Liberation Day to you.
- [23:33]
Matteo
Yeah, look, I put out a pretty deep dive on this and actually got quoted in Eleanor's recent blog post that she put up. You know, if we don't get yield on stablecoins then this really isn't financial innovation. It's just banking as usual. But with a blockchain wrapper is kind of my global takeaway from this. I don't understand the resistance to this. Of course there's a lot of upside to the banks. They continue to bank as usual and pay depositors nothing to take their money and spread it around and make money off of it. And the stablecoin issuers get to keep all of their upside because they don't have to pay out yield. I agree with Brian Armstrong. If we're really in this to change things, then this has got to be a critical component. And I think it boils down to Scott, the problem is that, and this is going to require rallying the troops again, just like we did during the election cycle. You've got a lot of banking lobbyists who are very much entrenched in Washington and are trying to really move this thing. They see value in this sector, they see a lot of attention in this sector and they want to maximize gains. I understand there's debates about what potential downside there could be to this, but it's frankly no different than the downside for any other interest bearing holding that a bank has. So I fail to see why they're making this a, a line that they don't want to.
- [25:05]
Scott
But interestingly, Carlo and I saw, and I love Dante from Circle, Dante Desparte. But his comments, I think right under yours in that same piece by Eleanor, if, if I'm remembering correctly, were basically that, and he's a representative of the biggest stable coin that's US based was basically that once you start talking about yield, you start talking about securities. And when Circle was founded, their intention was just to be a superior payment form and that they shouldn't have yield. So this is interesting. Right. But what's interesting there is that Circle obviously has a self interest, I guess, not to pass the yield on to customers because they're keeping that money. Correct. But Ryan Armstrong is the one pushing for the yield. And I believe Coinbase makes more money on USDC than Circle does.
- [25:54]
Matteo
Yeah, look, obviously there's a lot of players who can benefit from this, but what I don't understand about Dante's take is the SEC rescinded SAB121, replaced it with SAB122, which now opens the door for banks to hold crypto. We're going in the direction that we're encouraging banks to hold these assets. I don't think this is a securities debate so much anymore. I think that's language from the, the old way of doing things. We're now rewriting the entire playbook in real time. And I think we can be nimble enough to work around this where we don't, we don't create a securitized asset class. If we're giving yield to stablecoins that people are holding in banks, I think that's just really, that's old thinking and I want to get beyond that because we've got a whole new paradigm now.
- [26:47]
Carlo
Is that me, Scott? So I was having a conversation with an attorney yesterday in the space not on stage. So no not making fun of Carla. And I made the observation that when attorneys go to look at anything, they start from the presumption of what they would call stare decisis, which is precedent, rules. So when you do that, what you do, you assume that everything exists for a reason and we don't want to change anything. And so when your starting point is that of course you're not going to be pro innovation, the thought process here and this debate happened once before. It happened before the Internet really, but it happened once before with money market funds. And the argument was, well, why should brokers be able to allow money market funds that will compete with banks? It will take away deposits. That'll be a bad thing because people won't be able to get mortgages, yada, yada, yada. Well, there's two points here. First, if the argument now is complete bullshit, I mean literally complete, it used to be if you want to get a mortgage, you'd have to go to some local bank and they would know or have an understanding of your property market and that would be where they could figure out whether or not to lend you and other lenders wouldn't be interested in your property because they don't know the area. Well, that's all changed with securitization and with the Internet. So sourcing mortgages. Now it's just a question of where's the money going to come from. So just the fact that people think it's still tied is because they literally don't understand economics or they don't care. So that's thing number one. Thing number two is when you talk about payments. So if you're talking about Brian Armstrong, what is the biggest single use case for stablecoins today? The biggest use case is buying crypto and trading on exchange and doing so would dramatically last resistance or friction than using fiat. And once. So once you're onboarded into the crypto ecosystem via stable coin, you can trade freely back and forth, no problem. Saturday, Sundays, doesn't matter, no settlement risk. It's all taken care of for you. Huge important use case circle is saying, well yeah, but that use case could go for other industries. And that's true. But the point is that what the other big thing that crypto does is it allows asset to asset swaps and transfers. And so whether, why they don't, why, why are they worrying about this? Well, because you're going to end up with money market tokenized, tokenized money markets and people are going to then want to swap that. And so you could end up with A market where the workaround is, yeah, you have for entry into the system, but then you swap that for a money market fund and some enterprising exchanges will say well wait a minute, why do we want to make people go back and for yeah, we'll accept it or we'll deal with it. But those tokenized money market funds may not be quote stable coins, but they're going to provide the same thing. But the average person, the average person who has a checking account won't necessarily access that because the banks won't necessarily give them access to it. And so it's effectively another hop that the industry is going to have to go through that will not allow people in the average walk of life to take advantage of some of the efficiencies here, which is why I'm so aggravated about the process and share Carlo's discuss.
- [30:04]
Scott
Does anyone here believe that they should not offer yield bearing stable coins like the congress people seem to believe? David, go ahead.
- [30:13]
Carlo
Oh, sorry, I just want to make one. I just could just make one other point I forgot which is a big, big difference between yield bearing stablecoins in general and allowing stablecoin issuers to pass on a percentage of the yield that they are already that they're receiving from their assets. And that has to do with the difference between Celsius and a stablecoin.
- [30:34]
David
Right.
- [30:35]
Carlo
You know, you shouldn't be able to declare a dividend and have it be inviolate regardless. It should be a percentage of the yield you're actually receiving.
- [30:42]
Scott
Right.
- [30:42]
Carlo
And that that would eliminate a lot of the concerns on the risk side.
- [30:45]
Scott
Right. Not rehypothecating and then acting as a hedge fund to try lots of different.
- [30:50]
Carlo
Ways, but just make it very clear that the only thing yield is coming is literally pass through of the. Of what is what you've invested your stable coins in else. Sorry, David.
- [31:00]
David
No, no, not at all. I was just very curious, you know, in terms, yes, I support yield bearing stable coins. I mean that's necessary for adoption on a, on a mass scale. I'm very interested and unfortunately have not had a chance to read it yet, but when you have a stablecoin issuer such as Circle now filing for an IPO me my question for them is going to, as I go through the details is to say are they going to be offering a dividend? And the question then if they are offering a dividend then it would say yeah, it would arguably say that some of the yield that might be on a stable coin is now being set aside to compensate or incentivize the equity holders in the stock when it goes public. Which raises the question here. Since most shares are owned by institutions, we clearly have to recognize that not all investors are created equal here. And so you've got a conflict of interest potentially between here where circle as a publicly traded entity and addressing its arguably institutional investor base is going to be withholding potentially funds that might otherwise flow through to the stablecoin holders, which is what obviously we're all interested in hearing or seeing here.
- [32:27]
Scott
Hopefully you guys can hear me. I believe my connection was lost.
- [32:30]
Nick
You're back.
- [32:32]
Scott
Okay, good. Simon, go ahead.
- [32:36]
Simon
Yeah, I just wanted to say beware of what you need to do versus what your politicians need to do. Remember, every politician that's fighting for stablecoin legislation right now is also going to be a stablecoin issuer. The stablecoin issuer wants to keep the super subsidy from being able to give you an interest free stablecoin and do what Tether's doing. And so if you think that World Liberty Financial, Elon Musk and every single other one that's about to try and get the future of the dollar doesn't want to keep all of the yield for their own profits and not pass it on to you, then you may not have figured out the people negotiating the future of stablecoins are also negotiating the system for their own special interest. They want to take away the profits from banks and hand it over to the technology companies. So if there ever was a situation where you, the people, the Americans, maga need to hold Trump to account and David Sachs and the administration, this is the fight because this is how we get, you know, this is how the dollar becomes in the interest of the consumer and we take away the special subsidy away from the banks. Now if all you end up doing is being able to issue stable coins and create loads of tethers where Elon and World Liberty Financial get the super subsidy, then they're just going to be accumulating the bitcoin that you should have accumulated. And so these companies like Tether, you know, in Q1, you know, and again, full disclosure, I'm a shareholder in Bitfinex, Circle Ripple Labs. So they're all in that game. They all want to keep, they want to keep the yield so that they can get the free bitcoin position. You know, tether got 8888, whatever it was in Q1, 20, 25, that should be yours and that yield should be auto, you know, have the ability to auto convert it into bitcoin so that you can buy the bitcoin and it can all be done on chain. So just remember that your politicians are engaging in self dealing here and you know you the people need to put up the fight to hold them to account because they may not be representing your interests while they're just trying to steal that profit from the banks and hand it over to the technocrats. Just wanted to point that out.
- [35:13]
Scott
Yeah, it's interesting then that Brian Armstrong's on the other side of that, but I think you're 100% correct. Go ahead Tom.
- [35:21]
Joe
Yeah, I have a bit of a variant perception here. I think unfortunately yield is the price we're going to have to pay to get bills like this passed. Show me the incentive, I'll show you the outcome. Their incentive is their profit margin here. They really could care less about more transparent, innovative, quicker financial systems and actually that hurts them because that eats into their take rate. So if the price is sacrificing some of this yield and the yield is routed back like Coinbase does at sort of the app level, I personally am okay with that if it increases the value of stablecoins. And there are other frictions too. Right? So dollars, if we just think about dollars, what are yield bearing dollars? They're called short term treasuries. Why don't we trade short term treasuries for everything? Because they're are inherent frictions in the system that don't allow that and because there are investors who don't understand these things still, even at the most basic level, which is why money market funds exist. So in an ideal world it would be great to have yield on these things but I think in reality it's likely the price we're going to have to pay to get this bill passed.
- [36:24]
Scott
Yeah, I'd push back to pragmatic honest take. Yeah, go ahead Simon.
- [36:28]
Simon
Yeah, I'd push back on that. All you're doing is you're handing over from gangsters and banksters at the banks and handing it over to technology companies like Elon that are building a social credit score with AI and X data. And if all that, if all you're going to do from that, where are you going to benefit? The real benefit comes from us from people being able to have a digital dollar. And this is what I believe is right for the long term future of America to be able to have a counter force to de dollarization. If you want the world to use stablecoins and you want the entire world to reverse the de dollarization trend, then you need to take away the super subsidy from banks and not just hand it over to technocrats. And that is.
- [37:19]
Joe
Yeah, but there will be applications that do that at the company level and there will be a number of options that are provided for users. But if you want broad adoption of digital dollars, keeping them as straight, digital dollars is the easiest way to do that. Right. So if you can have USDT or you know, USDC in the hands of a million people or you can have it in the hands of a billion people because the US government blessed it because it's not yield bearing, I think that's the much more preferable option. And there's always going to be someone.
- [37:50]
Simon
Who'S profiting so who though you're not going to benefit from that. You're just shifting who controls the centralization and you're moving over to tech companies which are going to be probably worse than banks.
- [38:03]
Joe
No, I think we have this view of bankers. There's some monolith of all these crazy people who just want to take all your money. No, they're individual profit seeking organizations who try to do what's best within the constraints of the system that has been built. And you could change the system.
- [38:19]
Simon
Absolutely not. They're part of a Federal Reserve system which is predatory in nature in order to create wealth inequality. And yeah, they may be, they may be the regulations and the game is rigged in order to. So if you think banks are just like people that are, you know, acting in, in the interest of the consumer. No, there's, there's a, there's a whole structure and system that's set up. That's not what I said.
- [38:45]
Joe
I said each individual. Okay, I don't want to go down this rabbit hole. But the broader point is yes, US stablecoins are not beneficial to US holders so they are not really beneficial to me. Like yes, it's great to be able to make payments on a Saturday or send money outside the traditional banking system, but where it's more valuable is outside the U.S. right. So those are the people that are going to benefit and getting it in the hands of more of those people. And the support and technology rails that a lot of these institutions will bring and help facilitate will help do that. The marketing efforts. I'm sure they're going to have all that stuff. Right. All of that stuff is constrained today because it's effectively black market currency.
- [39:24]
Simon
But if you could get the yield, this would be a superior product to savings account. If you can have a superior product to savings account, you can have a leapfrog in terms of how useful the dollar is to the everyday American, the ability to receive the yield on your digital deposit and take that special subsidy away from the banks is how you hollow out the middle class. This is a wealth redistribution. If you can do that, if you haven't figured that one out, this is the battle of all battles. Look, Bitcoin has won. The central banking battle is game theory from here. But now you've got to take away the special subsidy to banks if you want to hollow out the middle class. Otherwise if you just put stable coins you've created technology for banks to be able to commit crime cheaper and that's it.
- [40:17]
Joe
I think this is like crypto anarchist crazy talk. I mean like this is the kind of stuff we go down rabbit holes in and like it's not in reality to the 99.9% of people in the world.
- [40:25]
Nick
Did you not, were you not alive in 2008? These banks will just fleece. You like to say that they aren't trying to come after you for your money is just asinine.
- [40:37]
Simon
They've got a special subsidy like they're too big to fail.
- [40:41]
Nick
So you're wrong. The reason you don't want to go down that rabbit hole is because you're wrong. And so second off on that, this is an easily solvable thing for them. So I think it's actually a lot simpler than people than you guys are talking about. If the actual issuer themselves can't pay interest, why can't Circle just start another company that's not the issuer and then create interest.
- [41:02]
Scott
Right?
- [41:02]
Nick
Like that's exactly what I'm saying.
- [41:03]
Simon
That's exactly what I'm saying.
- [41:04]
Nick
As long as there's going to be.
- [41:06]
Joe
Stable coins, but there's going to be stable coins that are blessed by the US government and then there's going to be yield bearing instruments that are blessed by individual applications and companies.
- [41:13]
Nick
And I do very straightforward There I agree with you. There I definitely disagree with you and like you should definitely take the veil off on the banks. These are some of the most crazy institutions that are going to take anything from you at any single moment. And so they, their incentive is to make the money. And right now they're making a ton of money. I mean look at the 10 year coming off. But the 30 year mortgage is going to stay high, right? They are going to take every opportunity to make as much money as humanly possible.
- [41:39]
Joe
I mean it's, it's I was born.
- [41:42]
Simon
In 2008 is systemic. Is systemic.
- [41:47]
Joe
And who benefited from that, the American consumer was saved. I. I don't. I don't understand this argument.
- [41:53]
Simon
No, what I'm saying is the FDIC system and the Federal Reserve too big to fail system is systemic transfer of wealth which hollows out the middle class and transfers wealth to those that are closest to the Federal Reserve system. So while an individual bank may be acting in its own interest, if it knows that it can take risk with client money, or it can create deposit every time it issues. Sorry, it can create massive yield every time it issues a loan. It is incentivized by definition to be subject to an FDIC takeover to roll it into JP Morgan. And JP Morgan is too big to fail. So in every financial crisis, you end up with an event like 2008. This happened 20 times since the Federal Reserve was created, and that is the theft from middle class America that has happened. And if you call that a crazy conspiracy theory, it's just maths. And that's the beauty.
- [42:53]
Joe
You're literally arguing against the fractional reserve banking system.
- [42:56]
Carlo
That.
- [42:57]
Simon
Exactly.
- [43:00]
Joe
Okay, that literally made the US the greatest country in the world over the.
- [43:03]
Simon
Past hundred plus years. It hollowed out the middle class and transferred wealth over to an incredibly elite class that bribed politicians.
- [43:13]
Joe
That had literally nothing to do with it. The hollowing of the middle class occurred in the 1980s after the Plaza Accord with the devaluation of the dollar. It had nothing to do with the banks.
- [43:21]
Simon
So you're saying a system whereby the money to pay the interest doesn't actually exist list doesn't fundamentally transfer wealth over to those that can borrow at 0% relative to those that are paying a credit card at 25% or a payday loan at 30%. 100%. It was. Ever since the Federal Reserve was created, the American government's gone from 250 million debt to $37 trillion of debt systemically. And you can't even pay down the debt right now because of that system. If you pay down the debt, you crash the dollar and you kill the economy. So can we stop pretending like Doge is trying to pay down the debt? If you haven't figured this one out, it's the largest transfer of wealth and wealth confiscation. And it was created by the Federal Reserve System.
- [44:12]
Scott
Samate, you want to jump in?
- [44:15]
Anteo
Yeah, and thanks. I don't think I've been glitching here on spaces. Look, this is a very heated conversation and by all means, I expect anyone who has something to financially gain to try to tilt this thing towards their benefit. But I can't help but give a little bit of the benefit of the doubt here when we look at yield and ask ourselves where is the yield going to be coming from? Is there bumpers and regulatory clarity on how the yield is generated? And if stablecoins are going to actually become a huge factor in the US and the global economy, replacing many aspects of digital commerce with stablecoins, you don't want to add a whole bunch of unnecessary yield bearing risks to the system. We saw a microcosm of that in Celsius and Voyager and BlockFi, an FTX. We do not want to see a macro version of that. And I'm sure that that's something that actually does matter to the people who are being thoughtful about this. It's extremely critical they get this right. I wouldn't be surprised if there's a step one here. And the step one is being able to put a regulatory framework around stablecoins in place. Step two, being able to apply some kind of regulatory adjusted yield bearing aspect to how treasury yields or anything else are properly passed down. If they can do that simply with, with guardrails, I think it's fine. But of course people will stand to benefit. It makes things more competitive with banks. But I, I think you just have to consider that as being a primary factor here, not being overlooked.
- [46:08]
Carlo
Scott, let me jump in because Anteo just completely ignored what I said earlier and actually it flips his argument completely like a complete, what we used to call debate, a turnaround. If you do go down the road of not allowing yield bearing stable coins, where stablecoin yield is limited to pass through of the yield from the assets backing the stablecoin, therefore taking out all the risks that you were just talking about. That's why I made the point. If you don't do that, then what will happen? You will have tokens that are created that are whether they're called securities or who the hell cares what they're called? Probably not, because they'll be income streams, they won't be ownership in a company or debt. You will have tokens that are interest bearing not. They won't be called stable coins, they'll be interest bearing tokens. And those interest bearing tokens then are much harder to regulate. And therefore there will be, maybe many of them will be completely the right way, but there will be others that won't. And that's where the risk comes into the system. You will see a proliferation of that. Because remember the use case for stablecoins is quick and easy transfers. You know, people have to understand the whole notion of a checking account is stupid. In a world of stable coins no one would ever hold money in in bank deposits. That's what people they keep missing. They'll hold them in stable coins for ease of use. But the fact is you're not be writing paper checks. You're going to be doing the next version of Zelle or Venmo or whatever. But using stablecoins are going to be much cheaper, much more efficient and global in nature. So that'll happen. But the real question, the real question is what do we want the next system to be if we want the next system to be that the dumb poor people have to hold their money in things that don't bear yield and the rich people are the ones who are capable of figuring out how to get yield. That's what Simon is talking about. And one more thing Tom. I would love someday to have a deep dive on fractional reserve banking. Because you're fighting the last war. The notion of fractional reserve banking is responsible for the US economic miracle is the same way as the French believing imagine or not line will protect them from the Germans. It was based upon the old fashioned warfare. We don't need fractional reserve banks banking to generate capital flows anymore. We used to when banking bank loans were the backbone of all small businesses. But take a look at how at the efficiency of capital markets and take a look at the efficiency of the crypto markets for raising money. If you allow new rails there's no necessary need for it anymore. Now I'm not like Caitlin Long. I don't think all leverage should be taken out of the system. I think there's a time and a place for everything. But it's not so cut and dried anymore.
- [48:50]
Scott
Meanwhile Bitcoin's at 86 000. For those who are keeping score and paying attention. Thank you.
- [48:56]
Mike
Thank you Scott. Bringing up the important the price.
- [49:00]
Scott
There we go Gary. Let's go Gary.
- [49:02]
Mike
Advertising Dude, I, I, I think I, I personally think we are getting ready to roll dude. I think this circle trade is really important. The tether trade, all this M and A. I'm going to say I don't think we're going to see sub $80,000 number. I think we're going to start moving here. There's too much money coming into this space. Whether it takes three months or six months I don't really give a fuck. That's an extremely short period of time. And the Bitcoin is the only solution that solves so many of the things we're arguing about if we actually got on a first principle basis, 99 of the arguments we have in every one of these spaces wouldn't even exist. So we have a real shot here. If you're not off zero yet, you are and you've listened to 30 hours of these spaces. I don't know what you're waiting for, man. You must be here for like some kind of weird entertainment. But this is a life changing opportunity. Gold, silver and bitcoin are all up almost exactly the same amount today. And I, I think you're going to see all three of these commodities start to move and step change. So lock, lock, step myself.
- [50:21]
Scott
Who you calling weird entertainment, man?
- [50:23]
Mike
Yeah, well, there's a lot of it, buddy. We might, we could do a space on it.
- [50:27]
Scott
Yeah, it is us. You're right. I can't, I can't deny it. I agree with you, by the way. I mean, as much as we can talk about how the moo. The news hasn't moved things and how the tariff news or macro is holding it down like is a pressure cooker and it's nothing but tailwinds, especially if you just zoom back 12 to 18 months and see what the environment was like for this asset class and where we are now. It's unbelievable. Matteo then Simon or Joe? Joe, go ahead real quick.
- [50:57]
Mike
I'm just going to say one thing. I don't know if you saw Eric Trump being interviewed by Bartoloma, whatever her name is, but dude, I mean that guy's not even primed into like, you can see the way he's talking. He's just got the first maybe 30 hours. This guy's not even really laser beamed bitcoin, whatever you call it, right?
- [51:20]
Scott
Laser eyes.
- [51:21]
Mike
That's laser eyed, this guy. I mean, Grant told me he spent, I don't know, an hour with him about three weeks ago. He said, God damn, dude, the guy won't stop talking about crypto. And when I saw him do that interview yesterday, if you guys have not seen it on Fox, it's a very good interview, guys. Jacked up.
- [51:41]
Scott
Yeah, he gets it.
- [51:44]
Mike
Yeah, totally. Yeah, he totally gets it.
- [51:46]
Tom
Yeah.
- [51:46]
Mike
Thank you, man.
- [51:47]
Scott
So listen, it's interesting and we're gonna have to wrap in a couple minutes, but you see the progression. We were talking about that earlier, kind of the trumps from NFTs to Bitcoin mining, right? But you can see it with all of these huge public figures and institutions that discover bitcoin and watch them cross the spectrum. I mean, look at Larry Fink Right. He started out with Bitcoin effectively being a scam and now is saying it could be the global reserve currency replacing the dollar in his last BlackRock letter. I mean, it's. And that's the progression that I feel like Eric Trump is on as well. To your point, Simon, go ahead. We're going to have to wrap it in a couple minutes because I got to run.
- [52:26]
Simon
Okay. No problems. I'll make it quick. Yeah, Bitcoin has solved the savings problem, but you do need to solve the spending problem. And the spending problem is where all the systemic risk in the system is all the debt comes from. And so, you know, the stablecoins is a significant improvement. It provides the transparency of what's behind it. If you get the regs right and as long as you can pass on the yield, then you get to actually reverse the system. If my prediction, you know, again, you know, having market pricing, taking out too big to fail, taking out the FDIC insurance, that's how you take away the theft from the average American. That is a super subsidy to the banks that are able to borrow cheap and get those yields. But if you, if you think that in two steps it will happen, maybe I'm completely wrong. Maybe you know the process better. But my guess is that if you get step one and they get to keep the yield, step two will never come. And you'll recreate banking, but you'll hand it over to technology companies and they can do way more lethal things with that than banks ever could.
- [53:40]
Scott
Man, I just want to be happy about the good things in the industry, Simon. Jeez, I'm just kidding. I think you're absolutely right, by the way. And we know that the technologists effectively won this election for Trump with their donations, including the crypto industry. So there's obviously self interest there. Everyone. I would love to keep this conversation going. That was absolutely great. Incredible panel. I just actually have to run. So unfortunately, that means that the show has to end today. Liberation Day once again, Happy Liberation Day. I guess we'll see what happens at 4 o'clock. If Bitcoin goes up either 10 or down $10,000 at 4 o'clock when tariffs are announced, maybe we'll launch another show. But my feeling is that we're seeing the grind up right now and it probably won't be as big a deal as we all think. That's all I got for you guys today. Give everybody on stage a follow. Otherwise, we'll see you tomorrow for another Crypto Town Hall, 10:15am Eastern Standard Time later everybody.
- [54:33]
Carlo
Good night.
- [54:34]
Scott
Good night.