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- [00:01]
Host
Bitcoin may be cooling off, but we have some of the most bullish news that we've ever seen for the crypto market happening this week. Also, Ethereum looking very jumpy. Still outperforming and looking like it could break through $4,000. What is driving this bullishness? What's happening in the market and the news? Luckily, we've got NLW here to unpack it all on the Friday 5. Let's go. Let's do. It's been another one of those not quiet summer weeks that we have gotten used to here in 2025. A lot happening, I would argue some of the biggest stories that we've had yet. But of course, we'll forget about them by Saturday. Man. Wow. A lot going on here. I guess we could jump right in. Listen, we'll do the most boring thing first, which is bitcoin has entered a bullish cooldown phase. So, like, apparently now that we're at 116,000 and chilling with bitcoin, that's bad. But we have Ethereum looking like it might jump through 4,000. It's August, man. This is supposed to be the worst month of the entire year, and here we are at $116,000. Bitcoin.
- [01:22]
NLW
Yeah, listen, I love a good narrative architecture, and bullish cooldown is actually a great phrase. Like, the funny thing about it is that I actually think it's a useful descriptor. Like that says pretty well, I think what's going on. There's, you know, a. Basically a foot. The foot has come off the gas for a variety of reasons. There's plenty of factors going on around and outside the asset that make it sort of pause. But bullish cooldown, I think is. Is sort of accurately reflective of the fact that, you know, we like all of our language around these things is dramatic.
- [01:54]
Host
Right.
- [01:55]
NLW
If. If it stops going up, that means we are crashing right on back down. So I think it's a great phrase even regardless of the fact that it's a little. A little.
- [02:04]
Host
A little pitchy. Yeah, I don't mind it. I think that it's decent and it's probably accurate. And the fact that we're not down 45% in August is probably really good news when we usually get these brutal summers. But let's just dig into the news. There's so much, and almost all of it is tied to the United States government in one way or another, which has become the trend clearly throughout the summer and since Trump took over. But SEC declares liquid staking is outside of securities law in latest guidance following Project Crypto initiative. So dig in.
- [02:38]
NLW
Listen. So this is a big one. It's, it's a little bit. The discourse around it has been interesting. So this follows from the big sort of Paul Atkins speech that we got around that basically is sort of de. Decriminalizing D4 letter wording securities. Right. Part of what was so powerful about that speech that we got from the new SEC chair is not only that it was sort of allowing crypto to have a seat at the securities table and find ways to, to play and do interesting things. It was also a broader reminder that innovation around securities is a big important part of American financial markets. It's part of why they've been successful. And we want to encourage that, not discourage that. And that's such a breath of fresh air coming off of just absolutely years where crypto had to constantly make sure and argue, you know, in every way possible that nothing it was doing had any sort of resemblance to securities types transactions. And so that was the sort of frame setting speech. Now we're starting to get specific manifestations of that. Right. And this I think is part of that. So this was guidance around liquid staking is very kind of detailed and nuanced, probably beyond the scope of the show to go into the exact details. But what was interesting about it was the SEC was very clearly saying this is an important path on the road to this sort of broader, you know, bringing crypto into the traditional financial system. I think a lot of the folks who are now have to go figure out what to do with this guidance. Feel like maybe there's, it creates, you know, it opens up as many questions as it, as it solves. But I think that if you kind of read the tea leaves, and I think Nate Garassi, formerly of the ETF store said this pretty clearly. To him it looked like they were trying to clear the way for staking with the eth ETFs basically. And, and I think that that's probably the right way to read this and.
- [04:31]
Host
More clarity on staking as a service, which was one of the big. You can't hear me? Hello? Can you hear me? Can you hear me? I wonder if it's me. It might be you. I. I can. My, my mic is on. Can you guys hear me in the comments? You'll be able to tell me because otherwise I won't know if something happened there. Can you hear me in the comments? Check, check. Nobody's even commenting.
- [04:56]
NLW
I cannot.
- [04:58]
Host
Can you hear me now? Yeah, they Hear me. It's N.L.W. can't hear me, guys. You can say whatever you want about him now. Hello? I can't hear you. Nope.
- [05:10]
NLW
I'm gonna refresh.
- [05:11]
Host
Check. Cool. We're gonna get a refresh from nlw. I'm gonna talk more about that. I think the best tweet of the entire week, as I mentioned on other shows, was when Jesse Powell, the founder of Kraken, simply, quote, tweeted this news and said, can I get a $30 million refund? Because you guys might remember that they paid $30 million fine, effectively for staking as a service. Can you hear me now?
- [05:36]
NLW
I can. Yeah. I don't know what that was.
- [05:38]
Host
That's cool. So I was just saying that what I was leading into there, and I just mentioned, obviously, Jesse Powell's hilarious. Yeah.
- [05:45]
NLW
Can I get a refund?
- [05:46]
Host
Can I get my 30 million back? But this, you know, liquid staking is oddly specific, but this also really lets you know that staking as a service, which a lot of these exchanges are providing and was one of the major sticking points of the last administration, is going to be fine.
- [06:02]
NLW
Yep. Yeah. I would view this as likely the first guidance of a set of guidance around these issues. And they just didn't want to take on too much. You know, we're not used to this, but we're in a paradigm now where they don't have to deal with everything all at once in every communication. Because this is just part of now what they do. This is just, you know, it's actually considered part of their job, which is, you know, nice.
- [06:23]
Host
Crazy. Crazy. Think about that and listen. The person kind of behind all of it, who's been driving even anything reasonable from the SEC through the Gensler, of course, is Hester person. She gave a banger of a speech here, zealously defend financial privacy and crypto era, if you missed it, peanut butter and watermelon, financial privacy in the digital age. And this, of course, we had the Roman storm kind of at the end, but I'm going to tie that into this one. So what's Purse talking about here?
- [06:51]
NLW
I mean, look, the. You know what. What this represents to me is the fact that now that the leading advocates are don't have to fight tooth and nail for every small common sense, you know, change that needs to be. And a lot of those. Those balls are now rolling down the hill. Purse gets to turn her energy to the bigger, larger kind of arguments like this that are about, you know, sort of much more fundamental issues. And I think that's what this speech is is a, it's a, it's a call for the instantiation in, in politics of, you know, rights to privacy. You know, she talks through all the different ways that, you know, all the different privacy preserving technologies, what they mean, but ultimately it's just a sort of a much broader call than, than around any one specific thing.
- [07:39]
Host
Do you think that this is inspired by the fact that this case was ongoing and just ended? Tornado Cash co Founder found guilty but avoids worse counts or do you think that she's just taking the opportunity in the tailwinds to make sure that people realize that everything has not been addressed and that privacy is a major issue?
- [07:57]
NLW
I think it's a combination. I don't, I think that she's. It would be very strange for it to be completely unrelated given the timing.
- [08:05]
Host
Right.
- [08:06]
NLW
I think that, you know, the Tornado Cash trial has brought up one of the, one of the, the parts of it that that's sort of most relevant for our industry is that even in the context of everything getting better, basically there's still this sort of criminal prosecution which, you know, we'll, we'll get into it, but, but really ran in the face of previous guidance. You know, it shows that there's still real questions around how the government is and will look at these issues and also that a lot of the changes that are being made right now are likely to be fragile changes that could be walked back. And so I, you know, I would be very surprised if it was completely unrelented, let's put it that way.
- [08:46]
Host
Well, listen, while we're on the topic, let's talk about what happened in the tornado cache. Basically, he was found guilty of one of the three charges. Some would argue that it was the least of the three and the easiest to fight, which we will see. Apparently when he left the courtroom, he actually had a smile on his face and said, good, because this one I can definitely fight back against and I can go home and see my kids. Right. But still a very dangerous potential precedent being set here if this stinks.
- [09:13]
NLW
Yeah. So basically it was the, it was a sort of conspiracy to run an unlicensed money transmitter business was the one that he was found guilty on. The other two were, were, you know, the, the, like the, you know, actually committing money laundering intent to do that. Those are the ones that had a hung jury. Right. And so what's interesting is that the charge that he was found guilty on was basically predicated on the judge throwing out 2019 Finsen guidance as something that the jury could consider. She basically. Right. At the top of the trial said that you can't, you can't consider that. Right. You can't, can't include that guidance as, as part of this. However, in the wake of it, she acknowledged that it was an extremely fluid, open question. She thought that this question in particular was some of the most interesting. She also declined to remand him during the, during the sort of the, the period before sentencing and, and before, you know, potential appeals. She basically made kind of a two part point which was one, one is there's very likely to go to appeals. This guy has a good reason to want it to go to appeals. I don't think he's a flight risk because he's, there's, there's so much room to contest.
- [10:33]
Host
Yeah. What a statement. No, this is probably wrong, so.
- [10:36]
NLW
Yeah, exactly. And really good stand. Yeah, so it was, it was a fascinating and weird, weird fight. But you know, look, the, I think where, where the crypto industry went is, you know, reminding that this is, it's still extremely, potentially damaging to, to, to, to developer activities and that, you know, the calls, I think from the crypto community are for a very loud response from, you know, the DOJ to basically drop the charges, not pursue a second, not pursue second trials on, on sort of the big counts and you know, have much more sort of strong guidance around the, the particular issue that he did get caught up on.
- [11:16]
Host
Yeah, I think that's the most important note that I learned yesterday from having a bunch of lawyers on crypto town hall was that the two that were hung could still be recharged by the doj, basically. So as much as it's over, it's only over in the context of this trial. Maybe that's unlikely, but it is possible.
- [11:34]
NLW
Yeah, exactly. Look, I think unfortunately that even if it's, even if it ends up going well, it's still going to have a bit of a freezing effect on developers who like, you know, look, if it's, if it's this close, that's too close. Right. For comfort, basically.
- [11:51]
Host
Totally. So let's dive into many, many, many things. Trump and executive orders. I would say that this might be the biggest unlock we've seen yet. Trump signs order easing path for private assets and 401ks, notably Bitcoin, crypto, real estate, private equity. This is not just a crypto order and actually something that is very sensible. Why should people be able to put whatever they want in their retirement accounts? I've seen political takes on this and it just blows my mind because this is just so reasonable. Yeah, I was hoping it was going to be for IRAs as well. And I didn't see language on that because the original reports of this, by the way, this news broke weeks ago that this happened, but that, you know, there's all these self directed IRA companies that you can sort of opt out of the main IRAs and you can already do these things. So I was surprised we didn't see language specifically on those. But still a huge unlock. You're talking about $12.5 trillion of available money that can now theoretically, we'll see how the mechanics work. But invest in crypto and bitcoin tax free in a retirement account. To me, the even bigger unlock is who do you think's opening a new 401k? It's not 50 year olds who have been saving for years. It's going to be people getting their first jobs at corporations who are in their 20s and already understand crypto and are going to go straight to bitcoin and crypto as opposed to any of these other assets. This.
- [13:08]
NLW
Yeah, no, I mean this is just, I, I think to your point, it's, you know, we, we talked about this a little bit when the, when the news first broke. It's great to see it actually come to fruition. It's just skating where the, where the world is headed. You know, this is just, you know, to, this is the way that it has to trend. Right. Hold aside even the, the fact that in general I think it's a losing proposition to try to overly control the financial decisions that people do and don't make. But second to your point, just where generationally people are, that's the profile of what they want to invest in is just totally different.
- [13:42]
Host
Yeah. And that's just one of a few, I'll call them crypto friendly executive orders that were non specific necessarily to crypto. The second one, of course, was Trump signs order targeting banks over political discrimination. So this is crypto discrimination, but also very specifically discrimination against conservatives by banks. This is actually nuanced and interesting because I think everybody agrees that choke point 2.0 is a problem and that targeting by banks is a problem. But also important to remember that a lot of these banks did it on guidance and threats from the federal government and those agencies, and this isn't necessarily addressing that side of it.
- [14:20]
NLW
Yeah, so good. Bad. Right, good. Is that it's a, it's a good reminder that it's very different to make big proclamations around how you shouldn't do an operation choke point than to actually have mechanisms to ensure that it doesn't happen again. You know, we had proclamations last time that you shouldn't do it again, and then it happened again. Right. So I think that it's good that we're seeing an orientation towards action now. Practically, what makes this type of activity so insidious is that it's whispers and suggestions. It's not things that are written down. It's basically playing on, you know, conservative risk mitigation policies that banks have to just, you know, it's not worth it. Right. And so it's very, very difficult to actually, you know, kind of identify a locus of power where you can even, you know, kind of make. Make these issues. However, to. To the other point, it did feel to a lot of people fairly retributive in this case, and not really about, like, the actual. An actual analysis of where the root problem was. Caitlin Long called that out immediately. She's basically, this is pointed in the wrong direction. You know, the banks did this. Not because the banks, you know, a priori, hated crypto, although certainly some of them were more enthusiastic, hello, bank of America. But, you know, it was. It was guidance from the youth, from the government. And so to the extent that we're taking actions, you know, that's sort of the directionality that maybe we want to be pointed in.
- [15:54]
Host
But as I said, this language actually specifically is about politically targeted. Yeah, right. So what do you think of the crypto operation choke point 2.0 being lumped in with Trump basically saying, hey, there was a couple of banks that wouldn't give me accounts, so conservatives have been targeted. I haven't just seen. I've, you know, I've dug deeply into Operation Choke Point two, but. Oh, I haven't dug deeply into the political side of banks not giving people accounts.
- [16:20]
NLW
Look, to the extent that it's a real thing, it's a thing that shouldn't happen. And, you know, like, it's. This is. Look, operation choke point 2.0 is just operation Choke Point in general. This type of policy is the single greatest example of why you shouldn't wish bad things on your enemies. Because we live in a political system where the pendulum swings the. And, you know, you might like that. Banks and guns and, you know, whatever was blocked, you know, on that side. But as soon as it goes the other way, and it's access to reproductive care or things that, you know, that. That is important to your political position, you know, it becomes very clear why this is a problem. So, look, I don't have a super strong opinion on how endemic or widespread conservative blocking is. You know, I would prefer in general to, to not have crypto like lumped in with culture war issues to the extent that that's what's happening. But it's a very obvious and important thing not to be happening, you know, regardless of which group gets targeted for what reason. So I'm okay with it, even if it's, even if it's a little bit of a lumping.
- [17:31]
Host
Yeah, it's like the Senate super majority. I mean, unintended consequences of things you do to screw your enemy at first that end up inevitably coming back to bite you in the ass when you want something done a few years later. Welcome to the United States government.
- [17:42]
NLW
It's a wonderful place.
- [17:44]
Host
Trump did something else, though, and maybe this addresses a bit of that other side because Trump picked crypto friendly economist Steven Moran for Federal Reserve Board seat. Trump surprise Fed pick buys him time on chair selection. So we know that he's been bullying Powell for ages here, but I think he got an opportunity when we saw the last Fed governor last week step down, down to put someone friendly in already when we're talking about operation choke point 2.0, a lot of that guidance came down from the Fed. So having another Fed governor that's clearly crypto friendly could be addressing that side of the issue to some degree, but also aligning the Fed with Trump in advance of Powell stepping down or having his term run out.
- [18:26]
NLW
Yeah, yeah. I mean, this is pretty clear that this is the playbook, frankly, for people who enjoy separation of powers. This is a much more comfortable way of exerting influence than trying to fire the Powell early. So it is what it is. I think Net net, like you said, I'm glad to have people who are sort of pro crypto in the positions of power and I do think that that is going to contribute to pro crypto policies.
- [18:55]
Host
What a week. I think we actually just cooked through all of the stories relatively quickly. It's almost like you can't even give them enough time because I don't know if we have four hours or if we're going to get through it and 25 minutes. But I just think these are monster stories.
- [19:09]
NLW
Yeah, I mean, look, these are, we are now very firmly in the period of actions, not words. And that's a, that's a really nice place to be. Right. We were for a long time, like last year. This time it was, we lived in the realm of the possibility. What if, you know this, there's a big structural change in the administration and all These things came to fruition, and we didn't have to fight these fights then. For a long time, we were in the phase of, like, okay, now we're here, you know, and there's big, bold pronouncements and, you know, like work to. To that is now assigned to different departments. And now, finally, we're turning the corner into action phase. And. And, you know, part of the reason that I think it goes fast that we have so much is that there's a lot of action to be done. So I think it's encouraging that we sort of have more than we can easily cover every week.
- [19:59]
Host
Yeah, I mean, I. I know there's people who still are dismissive of the efforts of the administration or the change because we don't have a strategic Bitcoin reserve, or there's one or two things that haven't been fully met, but I don't care about your political positioning, what you think of Donald Trump, whether you're a liberal or a conservative. They're doing 95% of what they talked about and more.
- [20:22]
NLW
Yep.
- [20:23]
Host
You can't really fault them if you're a crypto advocate for the things they're doing. It's just unbelievable.
- [20:29]
NLW
Yeah, no, I think. I think. I think it's great. But I would also say, you know, for. For the screechers keep screeching, because that's the only way that people do, you know, get.
- [20:36]
Host
Get all the way to climb a wall of worry. Still, there has to be worry. You know, if we get full consensus, it's going to be time to go. All right, guys, give NLW a follow. Obviously, listen to the breakdown every single day. The best podcast out there, even better than this one, which sometimes falls on the brink. So I guess, you know, we do get the crossover. Man. Thank you very much, as always. I'll see you next week. Cheers, guys. That's dope.