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Dave
Well, good morning, everyone. First, before I talk for a long time. Can you guys hear me? Let's start with that. Anybody? Yeah.
Adam
Gotcha.
Dave
Okay, cool. You never know. And you know, having gone on soliloquies with into the, into the air, I really didn't feel like doing it again. I hear myself talk all the time and it's, it's, it's not so great. But this executive order that Trump put out is actually a big deal. And I just put out a quick, a quick video. The fact is it's an I told you so. When everyone was talking about Kevin Warsh being nominated, I, I didn't hear people discussing what it meant. The most important piece was the regulatory side of the Federal Reserve. I will continue to say that I said it last week and frankly, I would be stupefied if, if the new Fed chair hadn't actually had input into this executive order, I would actually be stunned. I'm curious if I'm the only one who thinks this, but what does it mean? Well, it means that the Fed now will have to, and all the Fed governors and all the Fed boards are going to have to chime in and weigh in on, on the whole notion of why we have restricted access to the financial system and that restricted access matters because, you know, anyone. And it would be, it would be awesome if we could get Caitlyn on because she fought for, for so long and got screwed by the Fed. Not giving access to the master account to Custodia Bank. But this puts the entirety of fractional reserve banking on, if not trial. But it will allow the market to determine whether fractional reserve banking is a big deal. Now why do crypto investors care? Well, the rails of all the various crypto firms are going to offer investment options and will also be able to offer payment options. And if you understand what's actually been happening, most crypto firms have been opting to be trust banks, but that gives them limited scope for what they can offer. This is essentially another path. I see the hearts up here. I didn't want to start until Carlo, you were up here because I know this.
Scott
Yeah, Dave, I would say not even just trust banks, but most of them even just had to operate through an intermediary bank. And we saw those banks repeatedly getting killed or cutting off the rails. So they were dependent largely on other banks.
Dave
So that's a good point. So I, I actually had a conversation at consensus with Scott Shea. If anyone doesn't know who Scott was, Scott was running Signature bank when Elizabeth Warren put a bullet in his head or put a bullet in the bank's head. And you know, and, and they will tell you, you know, with swear up and down on stacks of Bibles that they had billions in reserves, they had no issue and they were just regulatorily shot. They because the Democrats at the time listened to Warren and let them do so. And so, Scott, your point is very well taken. There are many crypto entrepreneurs, or many just regular fintech entrepreneurs that have been very wary of starting businesses that could be killed by regulators. And this is a point of just changing policy to make that impossible. So it is a very big deal. You are absolutely right. Anyway, good morning. Carlo, are you there?
Dan
Good morning. Good morning.
Carlo
Good morning.
Dan
Yeah, you know, it's interesting. There's been a convergence of three interesting events around this. I put out a video yesterday in response to Senator Warren's letter to the occ. She is demanding that they produce all of their communications and all of their records that went into their nine crypto firm trust charter grants. And I asked the question in my video, what is a bank? Because I think for the first time in well over 100 years, crypto is forcing the conversation around what is a bank? So I built on that after I saw the President's executive order come out and I put out an article that kind of touches on all of this because it is a question worth asking. The interesting timing of this is also that in addition to Warren's memo, we had a very lengthy and I think a very well thought out article that was put out by one of those actual bank charter players. And I mentioned that as well in the piece that I just put up in the nest because he pushes back against Elizabeth Warren. This is BitGo's CEO Mike Belshi, and he basically challenges the notion that, you know, before we can have this conversation, we gotta clearly define what a bank is. And you can't just simply throw out the word crypto bank because you're muddling, as you very well articulated, you're muddling the difference between what a trust bank is, what an FDIC insured bank is that actually works on a fractional reserve model, and how once again, she's lost the narrative because what she's doing is, and she makes valid points in the sense of the charter language and the fully regulated bank language are not necessarily crystal clear on all this. The Genius act doesn't necessarily clarify it all in her opinion. She makes valid points. However, she, as usual, goes too far. Because what she's essentially saying is that again, I want to protect the consumer by denying options and choices. And, and I want to paint this in a frame that banks are safer because they have FDIC insurance and because they're fully chartered. But that doesn't tell the whole story, as you and I know, because they work on fractional reserve. And what Belshi says in response is basically, actually no, these trust banks are probably safer because they are required to custody separately customer funds in remote accounts that are bankruptcy protected. So this is all leading up to, with the culmination of the White House's memo and their executive order. This is going to really press the Fed to have to decide because what the executive order is essentially saying, Dave, is he wants to give Fed Master to these crypto centric banks. And this is exactly what Custodial bank wanted with Caitlin Long. She was shot down and this will drive the banks crazy if it happens. So I've got my popcorn out and I'm tuned in for this one.
Scott
Isn't he also saying that he wants to give it to the ones that aren't banks yet, the exchanges?
Dan
Yeah, it's very, very broadly pushing the boundaries. So this is really pushing the conversation now of do we need to revise the definition of what a bank is if we're going to truly integrate blockchain technology into this financial rail?
Dave
Sort of. Sort of. I mean, I think that, that when you say things like that, I mean, and I'm not trying to be offensive, what you're doing is you're giving people in the banks the ability to say, oh look, you see, you see, they're trying to destroy banks and make it unsafe. That's actually not true. What you're, what you're saying is that the function of being able to pay a bill, to be able to instantly send money, you know, we've got, it's been, it's been moving and changing. Right. You know, with Zell and, and other things that the bank started, you know, Venmo, et cetera, it's been neo banking, but still the average vendor, when you want to pay, you know, I use the example this morning and you know, our air conditioner cleaners are coming on Friday to clean our coils. Right. You know, I want to pay them. I generally have to use a bank, a payment account from a bank to do that or a third party processor. Well, let's say my money is being saved in bitcoin and I want to sell bitcoin to make the payment. Now I'm actually not doing that. My bitcoin, I'm not selling. But it doesn't matter if I want to do that, why should I have to go to a separate application? Why shouldn't a firm that has the ability to safeguard customer assets and make people and take people's investment account to go from investment to payment instantaneously and being able to make those payments, why shouldn't that be allowed? And wait, David, are you saying that
Dan
you want to make your wallet your bank? I know a guy who wrote a book about that very thing I heard about.
Dave
You know, I was going to try to tee you up, you shouldn't do it yourself. But yeah, no, all kidding aside, you know, it's like I was having an argument as I was flying back from New York to Miami yesterday with somebody who is like, you know, a bitcoin maxi going on about how Bitcoin's network effects are not helped by microstrategy or not helped by the ETFs are not helped by institutionalization because it's stopping people from using Bitcoin. What drives me absolutely crazy about Bitcoin maxis who believe that is they have absolutely no idea of how you would want to get Bitcoin into the hands and the value proposition into the hands of the average human being. Not. Not tech, you know, you know, not cypher punks, not tech people. And, and that's a big deal. What you. Once you can own Bitcoin and use it the same, use it in an. In a superior way to what you do with stocks or anything else to be able to make your payments and live your life and invest and save. Once you actually have a savings account that can use Bitcoin, that's a very big deal. It's a huge unlock, in my opinion. I mean, I gotta believe psy triggered somebody here, but I don't see any hands. So do I have to start calling on people?
Matt
I'll jump in here. I gotta give a shout out to Carlo. It's great, great stuff you've been putting out, especially with the book. But I think that banks have always had that giant advantage that's, you know, access to the Fed's plumbing. But we see crypto firms get even, limited access, man, that moat, that moat's getting smaller. And Waller's been an advocate for this. We know, like back in December of last year, they were talking about this and Kraken obviously kind of leading the way. But the skinny master count concept, really, from what I've read, is about giving eligible payment focus firms access. Right. So not just everybody. I don't know, man. I mean, I'd like to see. I didn't see what Trump put out, but I really think at the end of the day, the, the hot take for me is this could be the beginning of the PayPal moment, really, for stable coins, where they move from, you know, like crypto trading to everyday settlement layers. I don't know.
Dave
I think that's a big deal. Dan.
Chris
Hey, morning, fellas. Yeah, it's funny, I. I haven't used my bank in a long.
Scott
I won't hear Dan if he's speaking.
Chris
Can you hear me?
Dave
You can. I can hear you, Scott. You can't hear.
Scott
Okay.
Dave
Oh, I think Scott's in a car, so he's going to be bouncing up and down.
Chris
Okay, I'll try and continue. Yeah, I don't, I don't use my bank. I came on here before and said that I live on stable coins and on crypto and that kind of stuff, and I still do. Previously, I was using the cast card. That was a company that I was working for. But recently I've gone back to my crypto.com card and I have an amount of bitcoin in my crypto.com app and I have an auto top up so that when my card drops below $500, it tops up by another $100. I just leave the money in bitcoin on my account and spend on my card. I get cash back immediately in tokens and I have an automated task at 9am every morning that converts my CRO back into Bitcoin. So I live on bitcoin and spend on my card. I don't really think about it. Doesn't matter to me what's, you know, permitted in the US or whatever. I don't live in the US Not American. I live on my crypto card. I. I spend my bitcoin every single day and get cash back effectively in bitcoin. It just works. Don't even think about it. Anywhere you can spend Visa, you know, I do my Airbnb, everything, tap it. Physical card, in, in personal, Apple Pay. I mean.
Dave
Well, I mean, we're going there in the U.S. the point is, is eventually the U.S. gets to the same place. The difference is the biggest, the last remaining hurdle, the final boss, is tax policy as far as bitcoin is concerned. That is true. And I'm going to assume jurisdiction.
Chris
Well, jurisdictionally would be in Singapore, so there's no capital gains. I. I've never paid capital gains in my life. Don't even think about it. I've never thought about it, so.
Dave
Yeah, yeah, right. So that's the biggest deal. But, but the ease and use and, and ability to do that makes life really easy. I mean, you're, when you talk about Bitcoin, are you, you, you know, it's, it's the UI UX for, you know, sending, you know, sending bitcoin from one place to another. I know people who still, you know, get terrified and sweaty palms every time they have to do it. You know, having. You don't have that problem, obviously. Yeah, it was a bit of a
Chris
pain in the ass today. I'll level with you, because I had to. I'm currently in Indonesia. I'm on a small island in the West Java Sea, I guess, somewhere about a thousand people on the island. Um, and I had to, I had to move some money for. I didn't deribit. Now deribit's blocked by the Indonesian government, so I had to VPN and then I had to go onto deribit, and then I had to send it from deribit to Coinbase because that's the only place I could withdraw it to. And then from Coinbase, I could withdraw it to my crypto.com account. And the whole thing, each one took, I think, two or three confirmations. It took well over an hour to move that big round, which was a pain in the ass. But, you know, Tony kind of all have to do that. Yeah,
Dave
yeah. Well, that, obviously, obviously that makes it tough. Right? You know, but, you know, but now
Chris
it's in the crypto.com app.
Dave
I can hold it there. Yeah, no, no, yeah, I can hold it.
Chris
I can do whatever.
Dave
Yeah, yeah. But now imagine crypto.com in the United States as getting, you know, access to the banking system, which is clearly what one of the things that's, that's gonna. Oh, yeah, yeah.
Chris
You know, it's interesting when I, when I make a deposit. Go ahead.
Carlo
Yeah, No, I, I, I love what you're saying, Dan, because we're trying to solve for that. And, you know, I'm trying to, I'm trying to build out the education module to help consumers actually do that. And it's very fragmented right now in the United States. Really, you have two ways to do it that, that are pretty straightforward. One, of course, you can get like a Coinbase debit card, and you can use that at the point of sale with a usdc, and you can pay directly in Stablecoins if you don't want to touch your Bitcoin. And then two, which is what I do also is I do the Gemini card, where I tap at the point of sale and I get Bitcoin rewards. It would be wonderful to have that all seamlessly integrated into a banking app where you don't have to go through those other intermediaries to get there. And I think that's what the administration's building towards.
Dave
I think that's probably true. So, I mean, look, the implications for the market are non trivial and, and you know, we're still. And nothing else is happening. Right. You know, the market is like kind of sitting right where it was not. No one seems to be.
Scott
Can I. Yeah, sorry, Dave. I was just gonna say I, I think it's, I'm assuming it's just coincidence, but the fact that Warren wrote that letter on Monday to the OCC and then Trump came over the top directly to the Fed with an executive order on Tuesday is great comedy.
Dave
Well, I mean, look, Warren, you know, Elizabeth Warren and you know, we like to make fun of her here, but I mean, it's, it is really, she is a parody. I mean, she is an Ayn Rand character come to life. You know, you're talking about all the memes of her acting like, you know, Karen, right, And yelling, but that's what she does. She hasn't gotten any bills passed in her entire tenure, but she writes letters and she tries to annoy people and you know, there's theoretical oversight. Ish. But you know, they don't have to respond. They could ignore her, but you know, if you ignore her, then she'll grandstand. Oh, look, they're ignoring me. So she just likes to create work for people. But unfortunately, underneath everything she does, Scott, there's no, the, the, there's no assumptions and no, and she never answers. So, you know, why is it that this is a big deal? Well, you know, there's a, some, the assumption, like I heard I was talking to somebody, random person who doesn' really know very much about this stuff, but was genuinely interested. And they were saying, but wait a minute, you know, what would happen to my FDIC insurance? You know, if it's not, you know, why would I want to put money in a bank that doesn't have FDIC insurance? And I, and I laughed at them. And I said, well, you do understand, you know, why you have FDIC insurance? They go, no. I said, because when you put deposit, this is a normal person. Do you realize that when you put 100 bucks in your bank, the likelihood is somewhere between 5 and 10 cents of that are actually at the bank? And so as a result, in the 30s, there were bank runs and banks could go out of business. So they had to create the FDIC in order to make people be willing to put their money in their banks. But if their bank actually, if you gave them $100 and they had the hundred dollars and it was always there and by law they had to hold those as resources. You don't need that insurance. The only time you would lose money is if it fails. And people, you say that to people, they go, that can't be true. I'm like, you know, and it's, it's funny, right? It's, it's literal financial illiteracy in this country. And Elizabeth Warren is banking on people being stupid and ignorant. And it's not stupid people being ignorant because nobody, nobody, you know, knows this. I mean we know this because. And you know, and that's the whole thing that, that Caitlyn always talked about. She always talked about. It wasn't about being crypto. It wasn't the fact that it was a bitcoin bank. It was, it was a fully reserved business model where banks charged fees and didn't make their money by lend, by, by doing, you know, this fractional reserve banking that, that's what she always said was the real bugaboo. And I always thought she was right. Matt, that's a new hand.
Matt
Yeah, that's a new hand. One thing that I think a lot of folks here in this room got some really bright minds. Bitcoin lending is something that I'm really focused on. I've heard a lot of conversation about that. My question would be maybe to some of these smarter folks in the room, could the Fed access that we're talking about here with this executive order, could that really turn bitcoin from buy and hold really into a pristine collateral inside modern lending? Because I really think that that is where things are going is bitcoin lending. And I looked at some numbers. By 2030, if this all gets approved, I mean banks could, they could be bitcoin backed credit lines, there could be all sorts of new financial services and products. You know, private bank bitcoin loans, high net worth clients using bitcoin as collateral, etc. So I'm wondering if this does not actually kind of help move that along a little bit farther and bring it in online. Because I think again, Waller's talking about having all this rolled out by, by Q4, right?
Dave
I don't know.
Vic
Who?
Dave
Waller. You mean Kevin Warsh?
Matt
No, no, Waller. Chris Waller. The Fed governor, Right?
Dave
He is a Fed governor, right, yes. You know, Waller was the one That I had to get. Absolutely.
Carlo
He's the architect of the Fed skinny, right?
Dave
Yeah.
Matt
And he's the one that said it wants, he wants to roll this out by, by Q4.
Dave
Right, right. But well, now that they have 120 days to respond, but they'll prop, you know, which in government terms basically means you'll get it on day 120. I mean it would be nice to think that they'll do this quicker, but it's pretty clear that the direction that they want to move in, right? I think it's pretty clear. But I mean as far as your, your question, I don't want to be the only one to answer.
Matt
Yeah.
Dave
You know, there are a bunch of people here who probably care and I think that. Yeah, Jamie, go ahead.
Jamie
Hey, Dave. Yeah, I mean, you know, it kind of falls in line. I mean Trump's obviously got pro crypto policies, right. Then you add Fed access and then like Matt mentioned earlier with the stablecoin clarity, I mean that, that clearly seems like that's the strategy they're doubling down on. And you know, I was, you know, recently kind of like we were talking about it in spaces, you know, given the environment, it's like It's a high GDP environment. You got 40 trillion in debt. I think you even had a post about this. But it's, it's, it's not an ideal rate lowering environment. Right. So like, you know, the idea for need some, some massive growth. I mean these, these kind of initiatives are the things that could help those things happen. You know, productivity gains and you know, business investments, you know, consumer spending. That's kind of like what we need. If we don't have the environment where we could kind of lower rates down from a, that side of policy to stimulate it. I mean, I'm assuming that's kind of where your head's at as well. Am I right?
Dave
In my head is at that the Fed is can't act alone and succeed and do anything that they're trapped. I mean, you know, Scott, what was your, your analogy about how bad of a job you know, you wouldn't take?
Scott
You know, I mean, yeah, I've had a lot of them, but I mean, I can't imagine stepping into a worse job at a worse time than Warsh. And he could have literally, I mean, you know, he's married to Estee Lauder's granddaughter, he's worth billions of dollars. He could have ridden off into the sunset and done anything with his life and now he just has to be beaten down on One on both sides in a no win situation. It's unbelievable.
Dave
Well, I mean, but what it means is the Fed can't be independent anymore. We're going back to a situation. The last time we had debt to GDP at this level was at the end of World War II. And, and what happened? The Fed and Treasury worked together. The words that, that, it's actually a pretty reasonable word, the words that economists use is financial repression, to talk about it. And what does that mean? What that means is a set of policies to disincentivize, you know, basically to incentivize holding government debt is what that is really what it was.
Carlo
Also the birth of Bretton woods and the entire, and the entire debt cycle that we've, that we've gone into. So it actually opens the door now to revisit the entire dollarized network in the world. And I think that's why stablecoins are really timely in that conversation. Dave?
Dave
Yep. No, you're right. I mean, so I think that you're going to see a lot of policy, you know, you're going to see a lot, I mean, but at the end of the day, if we continue to run two and three, $5 trillion budgets, you know, deficits, there's not a damn thing the Fed can do. The only thing they can do is figure out a way to print money to keep the inflation pushing into assets and away from consumer prices by stimulating investment, lengthening supply chains, yada, yada, yada. And that is not easy to do. Right. And I've been talking about that for a long time. But what does that mean if you're a bitcoin holder or if you're in crypto? Well, if you are building the rails that are going to speed up finance, that's good. If you are holding Bitcoin as a provably scarce asset, that's good. What does it mean for, you know, dog memes? I have no idea. But if you do have a lot more liquidity sloshing around the system, I think you might see a lot of other things up. Adam, I finally got you to raise your hand.
Adam
How's it, how's it going, man? Yeah, I'm wondering how they're going to tie these kind of two things together. How they're going to tie stable coins into kind of the broader use case of like globally. How are people just going to use their Visa card and pay in stable coins? Like, like what Dan was describing earlier, right? He's using centralized exchanges to basically spend his, his Bitcoin through, you Know that exchanges Visa card. Totally understandable, but that's not the way most people are operating. Right. If you're in whatever, I'm in Costa Rica. Everybody I know here pays for everything, 100% of purchases, you know, using their Visa Card or their MasterCard. How's it all going to get get done? So that person in X country is just paying with a US stablecoin and doesn't even realize it. Like what's the bigger kind of play to get that to happen kind of globally? I'd love some input in that.
Dave
I'm waiting at Carlo. I thought I saw new hand.
Carlo
Yeah, yeah, no, I think about this stuff a lot and I think the way that's going to happen is that there's going to have to be a massive change in the point of sale tap and pay mechanism. The credit card companies already understand that they're getting immense pressure from stablecoins because of their instant settlement and the merchant side not having to wait for their money while it's being parked in float. So there's going to be a huge incentive to disrupt at the point of sale and it's going to essentially I think be something that's going to force banks to have to integrate into their back end the ability for the consumer to pay directly with stablecoins. And that is the flywheel that will usher in, I think the next Bretton woods, which will be the next era for dollarization of the world, which will be people getting easy access to dollars without having to go through intermediaries, be it their own local bank, their own FX exchange and once they get digitized dollars that can flow seamlessly like that, that's going to spark and I think that's best play. That's going to spark massive demand for Treasuries.
Adam
Yeah, that's where I'm kind of, that's where I'm kind of going. Carlo, for example, like wherever, if you live in a different country, they almost always have these banks have, you know, you can have, you have a account in the local currency and then you have an account in dollars. Right. And so getting these banks in these other countries to basically turn on well, you can have an account.
Dave
This space was downloaded via spaces down.com visit to download your spaces today.
Adam
Now in stablecoins. Right. In US stablecoins. How does that work? Right, how does that, I mean I would think it's a really heavy, heavy like regulatory lift to get that, get
Carlo
that done a hundred percent. It is. But here's the thing, you're going into an era where you're not going to need the banks anymore. Because once you have options in the way of using your own wallet as your bank, you completely bypass the banking system. And if you can pay directly at the point of sale by tapping your crypto wallet, then you don't need the bank as the juggernaut, the intermediary.
Adam
Of course, I love that and I see Vic from Cake Wallet here and I, you know, I, I do, I, I do get that, but I also get that most people just don't have the aptitude to even begin that process. Right. Most people, they just have their bank card, they just want something simple. Right. So I don't know, it just feels to me like there has to be this adoption by banks around the world to it. Right.
Carlo
And whether that's, I think it has to be adoption by consumers around the world through education when they realize they can save money by doing this cheaper and faster, I think they're going to realize that they have choices and you have to make it easy for them to execute on those choices. I 100% agree. But if you're going to wait on the banks to make that easier, I think that's going to be a long wait because they'd rather drag it out and use their legacy system so they can continue to extract money from people.
Matt
Yeah.
Scott
Really quickly, Vic, I know you're here
Dave
to see us here at Cake Wallet.
Carlo
I'm sure you've got some serious thoughts
Dave
on what's happening right now. Yeah, I'd love to hear your. Yeah, yeah.
Vic
Thanks for, thanks for having me on. Really appreciate it. I didn't want to butt in, but I think, you know, with everything you're saying now with banks overseas supporting stablecoin deposits or even individuals holding stablecoins and Cake Wallet for example, I think the bigger picture of just dollarization of the world and going back to Elizabeth Warren and what she's doing with her 100amendments, which almost seems like a filibuster than anything else. But I think the proponents could probably use all this against Elizabeth Warren and her clan as an anti dollar stance. Say, are you anti American? Are you anti dollar? Because this is what really it comes down to, right? All these USD backed stablecoins. It's about dollarization of the world and having the US dollar continue be the world standard, which it is. So I think that angle is quite interesting. I just wanted to add that to everything you guys are saying. I have lots of thoughts on this. I can go on forever. I mean the other thing is, should Stable coins be in the same conversation and bills or orders as what I call true cryptocurrencies like Bitcoin or litecoin or Ethereum or what have you. The fact that stable coins have a central issue or kind of goes against the whole concept of cryptocurrencies in general, but that's a whole other topic we can discuss.
Scott
It's a worthy one, though. It's a worthy topic, Vic, because I agree. I think there's an irony that bitcoin was created as a hedge against fiat and the killer use case of the underlying technology is hyper dollarization.
Dave
Exactly.
Vic
I think there should be two parallel conversations and maybe separate bills. But, I mean, I know a lot of bitcoiners say bitcoin, not crypto, but I'm actually looking at the other way around. Yes, bitcoin is crypto, but stable coins are not crypto. Because especially now, I think one of the topics you want to talk about is ark by circle that continues to make it even more centralized and goes against the whole crypto ethos. So those are my thoughts on it.
Dave
Yeah.
Scott
I mean, even there's one side that's using crypto and the like, to your point, and the other side is just plumbing for improving the existing system.
Dave
Well, exactly, yeah, plumbing. But one. One quick point. Plumbing, yes, 100%. But it also makes it way, way easier for people who want to be in the original system to access investments that are bitcoin and others. So anything that that's tokenized, anything that uses that plumbing becomes far easier, as opposed to being able to build wall moats. I mean, we literally live through four years of, you know, being shot at while trying to build, you know, and now you're talking about being able to be led into the system anyway. Because this is a perfect conversation segue for you, Lou, because I know this is something you're very passionate about and you are next with your hand up. You still there?
Lou
Yeah, I just wanted to say. Yeah, I was just saying that there is an assumption here in the roses every time I'm here that the. That the dollarization of the world means that the stablecoin dollars are going into Treasuries and, you know, tether became the dominant stablecoin in the world without buying a single treasury. So the idea that the only stablecoin dollars are going to be in treasuries, I think Mrs. What's going to be a much bigger opportunity is the kind of non US regulated dollars.
Dave
Well, yes and no. I mean, tether is the largest one of the larger, they're, they're, they're higher, they have more treasuries than many sovereigns. I mean they're a pretty large buyer. That's why, you know, on Scott, on if you're there, I mean you had Mike Alfred on this morning and you know, he made the point of just how, how much access Paolo from tether had from President Trump. So obviously it is kind of a big deal. Right? Are you there, Scott? Okay, he must, he's driving. So who knows? But it is, they're there. But your point, which is kind of right on the edge there, Lou, is we talk about hyper dollarization but we have these, these ridiculous rules in the United States. They, they came up with post 9 11, the bank secrecy act and the Patriot act and all these things that basically don't work to stop money laundering but create enormous amounts of layers and that's going to be the issue to hyper dollariz figure out a way to allow people anywhere to use dollars and that's not so easy, is it? Anyway, Adam, is that a new hand?
Adam
Well, I just, it's interesting, you know, I don't know, maybe we're on a path, you know, moving from, you know, what Dan's describing is basically purchasing through centralized kind of third parties, moving towards, you know, vix, you know, model, which I think, you know, a lot of us here want, want to see, which is, I'm, I'm my own bank. I, I buy with whether it's stablecoins or bitcoin or whatever through my own bank. And I, I do think we're at that point where it's possible now. And I do know people who are living off crypto and not using centralized exchanges. But obviously that is not, I mean that is, that is the 001 percenters are able to do that.
Dave
Right.
Adam
Just because it requires just a different mindset really. And I think in America we've gotten spoiled with our banking system, frankly, you know, where we, we lean on it so much. There's so much of this like, you know, you can do, you can screw up so badly and still have nothing affect you that it's really hard to give up and there's no reason to give it up. So I don't know, that's just where it feels like to me like we may have to go through another, you know, decade of doing it.
Lou
There are actually lots of good reasons to give it up.
Adam
But I don't disagree with you. I don't disagree with you at all. And obviously I don't disagree with you at all. I just think maybe that it's a process that kind of humans have to go through, moving kind of through Dan's current process into like, you know, holding your assets natively and using and transacting on cake Wallet. Right. I think that maybe just is something that, that takes a decade or longer to kind of play out.
Dave
Yeah, I can't tell. In terms of the hands, Vic, is that a new hand or an old hand?
Carlo
I got a hand. If you're, if you're down.
Vic
Yeah, go ahead.
Carlo
Yeah, Vic, circling back to what you were saying, I just sent you a DM with my PIN tweet which is a link to what I wrote. Make your wallet your bank. Because I had to grapple with this very issue. And I get into a lot of bitcoin spaces and I talk with a lot of bitcoin people who are living on the bitcoin standard. And I always position it this way for the average consumer. You've got to, you've got to work in the economy that we're currently living in and it is a fiat economy. So that's why I came up with the notion of spend in stables because obviously that is, that's where the dollar is, is predominantly the world's commerce currency stack in sats with the savings that you realize in spending in stables. And make your wallet your bank. Because I think the quickest way to onboard the consumer to actually taking possession and making their wallet their bank is by first integrating them into the dollar system through stablecoins because that's how you pay your bills. There's still not enough universal adoption at the point of sale of bitcoin. But an easy pivot is stablecoins. And then how do you bridge that to bitcoin? Well, you do a two asset strategy where you take the money you're saving and you pivot it into bitcoin. And now that's how you onboard people into the real future. Because again, the dollar, it's probably not going to be sustainable at the current debt level. We're going in and we're going to probably see bitcoin become more of that reserve currency in a lot of countries as they get away from the dollar. So you're hedging yourself against that dollar collapse, but you're spending in the economy that exists now.
Vic
Yeah, I 100% agree with you. And it's kind of like what Spark is doing or whoever's doing that USDB over lightning. And that's what I think that's a great use Case for it, right. Where people can see their balance and think, continue to believe they're staying in the US dollar but when they transact, they can save in Bitcoin. So I agree with you. People see Bitcoin as completely volatile right now and the simpler onboarding is to a USD stablecoin. I'm with you there, but I don't like it. But I'm with you.
Dave
Yeah, I mean it.
Lou
I'd argue actually that the simplest onboarding are central bank digital currencies. Yeah, you can say that, you can say that, but what do you think is going to onboard the majority of humans? Central bank digital currencies?
Dave
Yeah, I don't know. Someone just posted, I was reading this morning that former CFT chairman massage said that behind the scenes they're still working on a CBDC here despite, you know, Trump's opposition states saying that it's illegal, blah, blah, blah, blah, blah. But you know, they definitely want it. Look, if you want financial control, it's the ultimate weapon. Correct.
Lou
And you don't think Trump wants financial control?
Dave
Well, for who he's gonna, he doesn't
Lou
want the Fed to be independent. He wants, he wants, who says he's gonna leave? He doesn't want to leave. Let's, we all know that.
Dave
Yeah, well, Father Time will win anyway. But no, he, look, I, I, I don't want to go through the conspiracy nonsense. I mean there is this, this thing called the Constitution and they're not gonna be able to amend it, so, but it doesn't matter, right? Because what does he care about? He cares about his kids and his family business. And if it's his family business, what's going to happen when there's a Democrat in the White House? Does he want a CBDC that can basically freeze his family business out? No, he doesn't. So I think that's the much bigger,
Scott
at least they won't be able to, at least they won't be able to audit him.
Dave
Yeah, that, I, I don't even, I, I, I don't even know how to process some of, some of that, that news. I, I, it just doesn't make sense. So you're basically saying that we now have a family who can do whatever the hell they want and yeah, I, it just doesn't make any sense, but whatever. I mean, we're in bizarro world, Scott. It's, it's almost impossible anyway. You know, it's unbelievable. It, it is crazy. That news is crazy. I was hoping not to talk about that, but okay, you know you, you opened it up so I don't have
Scott
to talk about it. It was just a quip.
Dave
But, but, but the point of CBDCs and the point of AML rules, which, which are, you know, which are self defeating, all of that, if, if you end up in a system where the US is trying to push the dollar everywhere to try to get the, you know, to, to keep their, our rates down, they're going to make the decision that that's where, that's what they're going to have to do. And there's just no other way around it. Right? I mean, you know, if you want, if you want everyone around the world to use dollars, then you can't have proof of US identity to use dollars. It's just, I'm sorry, but you know, you get choice A or choice B. There is no choice C where you could do both. I mean, not that I can see. I mean, am I, am I crazy, Carlo? I mean, what am I missing?
Carlo
Yeah, look man, AML is a huge boondoggle of record keeping. And you know, banks can check off their compliance reports and do their suspicious activity reports, but at the end of the day, it doesn't really go anywhere. If you looked at the statistics at the amount of actual prosecutions that have come from suspicious activity reports, it's pretty low. You couple that with the antiquated currency reporting requirement of anything over $10,000 cash has to go through that disclosure form. This is all just outdated and frankly unnecessary anymore if we're going to really move to seamless, fast transactions and throughput of money. Especially when you layer AI agents on top of this. You're basically calling for the end of aml.
Dave
Yeah, well, I mean that it's not calling for the end of anti money laundering rules, it's calling for the end of stupid rules that don't do anything. Right. You know, it's like the data is, is so strong on this that, that these rules haven't done a damn thing. That suspicious activity reports, all this other stuff, it's nonsense. I mean, you know, it's form over function. And the fines that banks have paid for doing things that they know, I mean, the reality is if you're a bank and you take in, you know, somebody who just puts money in without a source of funds, that makes sense. You, they do it. I mean, they paid billions in fines. It's.
Carlo
Yeah, but don't forget they make even more in fees because even when those people get busted, the banks get to keep their fees.
Dave
That's right.
Lou
This is the way the system was purposefully set up. You guys are saying the system is broken. It's not broken. This is exactly what.
Carlo
Exactly.
Lou
That's why. Exactly.
Carlo
Right.
Dave
Oh, I agree, Lou. I agree with you completely.
Carlo
I, It's a feature, not a bug.
Dave
I'm not saying that the system is broken. Oh my God, these guys are doing. I'm saying they literally set up something that was purposely built to be self defense defeating because that self defeating rule creates competitive moats for the existing people in the system. It's, it's, that is the key most regulation. That's what we're seeing with the Clarity act stuff. Right. With the banks. I just think that in this particular case they're dumb. They really are stupid. Like they think that banning yields for holding stable coins helps them. And the reality is it doesn't help them at all. Maybe for, for, you know, a hot minute, but in the end, when you speed up everybody's investment options, they're not going to hold bank deposits. They don't need to, you know, it's just, they won't people, the need will go away. So, yeah, but this notion, this is America, you know what America has come to, people say, well, we have a capitalist system and it's flawed. It's like, well, we have a system that has some capitalist tendencies, but we have a crony system where big companies get to write rules that frees out
Scott
smaller companies and capitalism for the poor and socialism for the rich.
Dave
Yeah, it's sort of like that. I wish, I wish it's sort of true. And, and that, that's a pithy way of saying it, Scott, but that's what we get. That's why this, this executive order is such a big deal. Because it basically is saying, okay, you guys have been, you know, the Congress, the people who are taking all the money from the banks are going to be like, wait a minute, they can't do this. Except for the fact is they can and they don't need Congress to take do it. Federal Reserve is independent and so the
Scott
Federal Reserv, by the way, at the same time, this is all happening. Didn't the SEC yesterday have rulemaking about IPOs that made it actually much easier. I know it wasn't crypto specific. Make it much easier for crypto companies to ipo.
Dave
I didn't see that. I'd like to see that link. Did you post it? I, I'll define it, but that would be.
Scott
I will, yeah, I'll find it. Yeah, it's true. Like they, it.
Dave
Yeah. Can't I'll find it. Yeah. I mean, I had a whole conversation with a senior person at the SEC fairly recently about the need to modernize IPO rules to, to cut the regulatory arbitrage between crypto and equities. And they, they get it. That they. And I was told with a smile, we understand. I mean, this was not a. A. Oh, what do you mean? This is a. Yes, we understand that it can't. If you've had Grant Cardone on spaces, he'll tell you it cost double digigit, millions to IPO.
Chris
He.
Dave
He throws out 20 to 40 million dollars. Well, that's insane, you know, but is it also, is it sane to have someone from who you have no idea who it is publish a white paper and put out a, an ICO with nothing behind it, you know, immediately before there's any business? I mean, there is a middle ground here, right? And that middle ground is probably closer to the crypto side than the current side because, you know, having some template for disclosure, some things that make sense, that you could get done in three to six months of proof without spending more than, you know, whatever basic legal zoom sort of stuff probably makes sense, right? I mean, the cost of IPOing is insane in this country. And it's one of the reasons that so many crypto coins exist, because crypto became a, a vehicle for people to, quote, raise capital, unquote, immediately. The fact that they don't give the most tokens, don't give their, their holders rights, or economics. Yeah, it's just a detail. It's a detail in a casino. It's not a detail for investors, though. So, you know, but we all, we all know what I think about that when I talk about that all the time. Time, Matt, is that an old hand before I.
Matt
No, it's a new hand. And I know we're getting close to probably winding this thing down, so I'll bring it back to where we started. And Scott made a really great point about the Fed and Kevin Warsh, you know, coming into, like, kind of inheriting a shit show of a job. And one thing that I don't think we've talked about yet, or I haven't heard enough discussion, is that if he can't beat inflation, it looks like he wants to change the way that it's measured by, by swapping core PCE for trim mean pce. And that changes everything because I think, like, core is like, at 3% and trimmed is closer to like 2.3. Then that might give him the, the leverage or the COVID that they need to reduce rates. Just curious any of the other thoughts from folks on the panel about that?
Dave
What's old is new. Again if you look go back in the history anyone who followed a guy named John Williams back in the day did something called shadow stats. And so if you look at the definition of inflation under Reagan they changed it dramatically. Gee, what a surprise. And the, and markets took off and they were able to do all sorts of things. I mean it really depends when you measure inflation. It depends what you're measuring. I mean it is very, very uneven. It always has been. And so yeah, of course they're going to do that. I mean it makes sense. I mean you know it's like you know Captain Transitory who just left at, at the Federal Reserve is you know, trim mean would have been better for them. But all that. But that doesn't help if it's long term structural inflation. If it's oil prices are up and we're gonna because of XYZ war. Well yeah then it would help with that. That presuming it ends of course, you know, who the hell knows? I mean you know it's almost impossible to watch the news that goes by and the statements that goes by to have any idea of what's going to happen in you know with the Iran conflict and we don't really know. I mean there's two or three days from now some last deadline ends and Iran is saying well you know we're, there's all sorts of crap going on. And so making of that is tough. But you're right, you know he, you've ever heard Matt, have you ever heard of hedonics? Do you know what that is? It's, it's, it just I, I, I, I should. Okay so hedonics was in this is what was started under Reagan is they put substitution effects. So they had a basket of goods and services and they basically said well if the price of one of the of goods goes up but you could substitute with something else. We'll, we'll put something else into the calculation. So you know there have been all sorts of and you can go back and read about this once you go down this rabbit hole you're I basically I've sucked up a weekend if not a week of time because you start finding out that, that they change ground beef to this or that it really is something that's been put into inflation stuff. But what's weird about it is that lately they haven't done a whole lot. There hasn't been A whole lot of change. And that's why, because there's people like Truflation are calculating things daily now off of their basket and who knows what they're going to actually end up using. But the truth is that changing the definition is a time honored way of justifying the actions you need to take. So.
Matt
Because I don't think, I think to your point, they haven't changed it in like 40 years. Right. That's that to when Reagan went to what you're saying with the Reagan administration.
Dave
Well yeah, but that method, the change was to something that would be more dynamic. And so that's one of the reasons, I mean look, if we took a quick poll, there's 20, you know, 2,000 people here. I will bet you that I you couldn't find a hundred people out of, out of 2000 that would think that. Trust that the Bureau of Labor Statistics publishes data that that's accurate. I mean the revisions in employment, I mean, come on. I mean, you know, it's like this is all self serving. I mean who, who believes inflation is, is 2% when they go to the grocery store or they go to the gas pump or they look at their insurance bills or they look at their utility bills or whatever. I mean you, God forbid you're paying for a kid's education, you know, I mean whatever. Carlo, what do you think?
Carlo
Yeah. I mean it's ridiculous, it's ridiculous to try to nuance this by continuing moving the goalpost on what actual inflation looks like for the consumer doesn't match up with your checkout bill.
Dave
But to bring it to what people on this space care about. If you think we're going into a tightening cycle with reduced liquidity to hawkishly try to control inflation. I used to live, I actually did have in my apartment in New York when I lived there, had a view of the Brooklyn Bridge. I would love to sell you that bridge. I mean you can't possibly believe that yet. Mainstream economists, if you look at the DOT plots at the Fed, if you look at Bloomberg, they still predict more likelihood of rate rises and tighter liquidity. That's insane. And that's giving you an opportunity to buy assets that will do well in a positive liquidity environment. Cheap. And I think the bellwether for that is Bitcoin. And I will keep telling people that and maybe I'll be wrong. Maybe I'll be the permeable. And I'm far from a permeable, but I'm certainly a now bull who thinks that bitcoin is undervalued. By that doubling would be closer to fair value than where it is today. And I just don't understand why people seem to think that they're going to try to crush inflation by doing what Volcker did. If they tried, it would be an absolute disaster. I mean, what would the federal budget deficit do if interest rates went up by a factor of two or three or four like Volcker did?
Carlo
I've said this before, Dave, and every print cycle needs a catalyst. Whether it's Covid, whether it's the banking crisis. There's so many they can pick from. There's a massive global supply crunch about to come on board. The price of every single commodity is going through the roof. That would justify a print. There's the AI transition and the displacement of labor that could justify a major print. They just need an excuse because it's inevitable they're going to do it.
Dave
Yeah, sorry, I was just clicking Jamie. Published. Posted. Thank you. Jamie, are you still here?
Jamie
Yeah, yep, I'm here.
Dave
Yeah, thanks. I just saw your tweet. So I now I have, I have, I have my reading material for right after.
Jamie
Hey Dave, the other thing that was interesting, I don't know if you saw earlier like Jeff Bezos on CNBC was talking about the taxes and like re reintroducing those points. So like going to your point, like as far as the inflation goes, like I can see kind of like maybe the, you know, stimulating the media to see how they react to the idea of the taxes and lowering the, you know, and trying to create some discretionary income that way as well as going into the midterms. Like how would that be with the voter base thinking that that may be something that they get if they vote for the, you know, the current majority that they have.
Carlo
So Bezos isn't going to like it, Jamie, when the solution to that is taxing the robots. Because that's where it's going, man. If we don't have workers to tax, we're going to have to tax the damn robots.
Dave
Well, the truth is, is they're going to have corporate. Yeah, it you're going to end up having to have rules on corporate taxes that those who imply humans because arguably when corporate, before AI, corporate taxes were double taxation because you're already paying, you know, all the people, all the labor that goes into it. But yeah, clearly with AI, that's absolutely not true anymore. And so that is going to change things. And the other thing Bezos won't like is if you really did want a fair tax system, then Borrowing against your stock without selling it needs to be taxable as the same capital gains rates and capital gains. Look, I personally think capital gains shouldn't exist. But as long as they do, providing that loophole is insane. If you are going to tax capital gains, then at least do so. Having the loophole where you could borrow against it and not pay for appreciation is just wrong. You know, that's, that's the Bill Ackman point. It's always been that way. Some of this stuff's going to happen. But when you start actually looking at how bad our budget situation is, like just do a quick down the rabbit hole on Social Security alone and see what would it take to balance the trust fund you're talking about Uncapping it and raising it to by about 50% is roughly what you would have to do. And so, you know, that becomes a very big deal. Right? You know all these things. We are in a much bigger hole than people realize. We think we are at just under 40 trillion. The truth is when you take Social Security and Medicare in, it's closer to 120. That's $120. It's a big deal.
Vic
Sorry to interrupt. I probably don't need to announce my departure, but I got to run. Thanks for having me on, Dave. It's really a lot of fun. I hope to be on the next one.
Dave
Yeah, well, we're running up against time anyway, but thank you for participating. I think the topic you brought up one we want to talk about more, not less.
Vic
Excellent.
Dave
So any case you triggered me going about budget, I didn't want to talk about macro, but from the point is from an investor point of view, understanding what you're buying and understanding that the liquidity situation, it's, it's. They, they can't afford to be be hawks. So I mean it's too bad we don't have anybody on the other side of this right now, but so be it. Any other thoughts people? Because we are three minutes from the hard deadline, but there's no reason to start down a new rabbit hole. Okay, terrific. So we will see you all on on Friday at 10:15 and let's see if, if anything changes between now and then or. We're still talking about the same stuff, but thank you for participating and have a safe rest of your week.
This #CryptoTownHall episode centers on a game-changing executive order from President Trump, which could open Federal Reserve ("Fed") access for crypto firms, redefining the landscape for both traditional banking and crypto companies. Scott Melker and an all-star cast of guests—including Dave, Adam, Dan, Carlo, Matt, Chris, Vic, Lou, Jamie, and more—debate the implications of regulatory policy shifts, the evolving definition of "what is a bank," the future of stablecoins, and what it all means for the broader crypto ecosystem. The tone is direct, insightful, and often laced with sharp humor.
[00:08] Dave: The big news is Trump’s executive order, which appears to push the Fed to reconsider its longstanding restrictions on crypto firms’ access to Fed accounts and payment rails. Dave highlights that this could allow the market (instead of legacy regulators alone) to determine the significance of fractional reserve banking versus full-reserve crypto banking.
Quote:
"This puts the entirety of fractional reserve banking on, if not trial. But it will allow the market to determine whether fractional reserve banking is a big deal." – Dave [00:36]
[03:10] Dan: Responds to a letter from Senator Elizabeth Warren targeting the OCC and its crypto trust charters, framing the moment as a centennial turning point in the definition of a bank itself.
Quote:
"Crypto is forcing the conversation around what is a bank? For the first time in well over 100 years." – Dan [03:15]
[10:13] Chris: Shares a personal routine of living on crypto and stablecoins day-to-day, demonstrating how new payment paradigms already exist abroad but face barriers in the US (e.g., tax policy and access).
Quote:
"I live on my crypto card. I spend my bitcoin every single day and get cash back effectively in bitcoin. It just works. Anywhere you can spend Visa, I tap it." – Chris [11:01]
[09:23] Matt, [21:27] Carlo, [24:57] Adam:
Quote:
"This could be the beginning of the PayPal moment, really, for stable coins, where they move from crypto trading to everyday settlement layers." – Matt [09:44]
"I think the way that's going to happen is that there's going to have to be a massive change in the point of sale tap and pay mechanism... once they get digitized dollars that can flow seamlessly, that's going to spark massive demand for Treasuries." – Carlo [23:50]
[25:34] Carlo & [25:56] Adam:
Quote:
"I think it has to be adoption by consumers around the world through education... If you're going to wait on the banks, that's going to be a long wait." – Carlo [26:19]
"Most people just don't have the aptitude to even begin that process. They just have their bank card, they just want something simple." – Adam [25:56]
[26:58] Vic, [28:49] Scott, [30:11] Lou:
Quotes:
"All these USD backed stablecoins. It's about dollarization of the world and having the US dollar continue be the world standard, which it is." – Vic [27:11]
"There's an irony that bitcoin was created as a hedge against fiat and the killer use case of the underlying technology is hyper dollarization." – Scott [28:49]
[38:32] Carlo, [40:05] Carlo, [40:13] Lou & [40:23] Dave:
Quote:
"AML is a huge boondoggle of record keeping. ... this is all just outdated and frankly unnecessary anymore if we're going to really move to seamless, fast transactions." – Carlo [38:32]
"It's a feature, not a bug." – Lou [40:21]
[20:53] Dave, [44:47] Matt, [47:23] Dave, [51:08] Carlo:
Quotes:
"We have a system that has some capitalist tendencies, but we have a crony system where big companies get to write rules that freeze out smaller companies and capitalism for the poor and socialism for the rich." – Scott [41:28, paraphrased]
"If you think we're going into a tightening cycle with reduced liquidity to hawkishly try to control inflation ... you can't possibly believe that." – Dave [48:24]
"Every print cycle needs a catalyst. ... They just need an excuse because it's inevitable they're going to do it." – Carlo [49:51]
The dialogue is rich and forward-looking, framing the Fed access question as much more than regulatory red tape—it’s an existential battle over the future of money, banks, and global commerce. The hosts and guests argue that the coming months may see the U.S. catch up to crypto evolution already underway worldwide. At stake are not only new business models and user experiences, but also the very structure of financial power and the ongoing future value of the dollar (and Bitcoin) in an increasingly digital world.