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- [00:00]
A
Morning everybody.
- [00:01]
B
Welcome to crypto town hall every weekday here at 10:15am Eastern Standard Time on X. A bit of a, I guess we'll call it slow news day. But we do have quite a bit of stablecoin news which I think is going to be the norm moving forward until the end of time as we see further adoption of the most obvious use case of blockchain technology which is clearly stablecoins that are proven to be the killer app. The big story today, Visa launches stablecoin pilot for cross border payments and of course Swift partners with 30 banks to build 24,7 blockchain ledger for global payments. Looks like Swift finally deciding that they don't want to go the way of Kodak and Blockbuster and adopting a superior payment technology to the Rails that they are currently using that were probably made in the 1970s. This seemed like a very obvious move for Swift unless they want to be as extinct as the dinosaurs and going to be interesting to see how this progresses, who they partner with and how they use it. I think, Dave, we're going to get into this, but you made a great point on macro Monday yesterday and this is not to trigger any of the XRP army. It's not anti xrp. Just one of the biggest narratives that we had for XRP and Ripple was that they were going to be adopted by Swift. Right?
- [01:21]
A
I mean, yeah, I did an experiment yesterday. I was at a conference which was actually very interesting and I'll tell. I'll talk a little bit later about some of the conversations I had with some CFTC staffers and some other people involved in regulatory. It was the DATCOM conference in New York. We actually had Chris Giancarlo in the head of the crypto task force video when they were going to be there live. But because there was the roundtable yesterday which is also worth talking about, they weren't there. But I did an experiment to see if I could how much engagement farming I could do by one innocent tweet asking a question, question. And when I did it I thought, you know, this could get to 100,000 views. It's in the 80 thousands now. So it was right. Basically I asked the XRP army could someone explain to me what the value of XRP is since we were all told we should buy it for Swift. And yet here it is, chainlink doing a deal with Swift and not them, which of course means you get the link army, the XRP army of course, arguing at each other. You know, it's fun for engagement farming. It's terrible if you actually want to keep be able to use your notifications to respond to people's questions because it gets cluttered with spam. But the simple fact is the people who are buying XRP have no clue what they're buying. That's just a simple fact. Now that's not true about some mickle and others do understand but there are people who believe XRP as a token could be used as payments infrastructure. Now in 2017 it was being used as payments infrastructure because they just had a system which allowed you to buy XRP on one end and sell it on an exchange at another end. And that's fine. But when you compare XRP to stablecoins it's like you know, comparing a horse and buggy being driven over dirt fields compared to you know, trains running on train tracks or you know, whatever or like a bullet train in Japan. I mean it's not even, it's not even close. I mean there's so much more volatility in a token that's not pegged for use for payments. It is literally dead. So repeat after me XRP Army XRP has nothing to do with, with global payments as a token. Now the ledger that could be debated. You know, that's why they pivoted to a stablecoin. But it's amazing how so many of the people in that group think something. It's just, it's utterly insane as far as Swift is concerned. I mean the real question is, and this is the simple one, you know, they will go the way of Kodak by the way if people, if they're, they would if it wasn't for regulatory capture and the regulate regulators trying to keep them up because why do we need a centralized payments mechanism anymore? You needed it to quote Mark Yesko when the technology was trust because who would you trust? You want to trust one? Bank dikes don't want to trust each other. They wanted to trust a neutral third party. But with the technology of truth AKA blockchain where everybody could verify technology transactions, there's zero need for a centralized counterparty. So we'll see if people are going to pay fees to a centralized counterparty to trust them when there's no need for it. But I'm getting ahead of myself. That's going to take years to evolve. They'll probably figure out some way to make the regulators give them a monopoly which by the way is the biggest story today, which is what's going on in the stablecoin world. But I'll let you get to there when we get There we can continue.
- [04:28]
B
On the stablecoin conversation. I think it's an obvious one first. Mauricio, are you a listener or a speaker?
- [04:34]
C
No, I'm a speaker now, thanks.
- [04:36]
B
You're a listener to me. So I just wanted to make sure because I saw some emojis. I was like, he wouldn't just be listening, he's definitely on stage. I know he was invited but of course I don't see on stage, so.
- [04:47]
A
So I see Panos with his hand up. Amateo with his hand up. Both speakers. Maurizio is a speaker. Ally is a speaker also with his hand up.
- [04:55]
B
He just put his hand up. But Panos, his hand is not up for me, just for the record.
- [04:59]
A
Yeah, well, but Panos had his hand up first for me because we were living in the glitch, you know, that's what we're dealing with. But those are the only people I see as speakers. So if there's anybody else like David or others that are speakers, I, I don't see them.
- [05:09]
B
Yeah, I don't either. Panos, you can go ahead. You had yours. We'll just go down the line. Go, go ahead.
- [05:13]
D
Well, while we're on the subject of XRP killers, what is your guys thoughts on plasma, the new, the new blockchain that is built for stable coins? Like what?
- [05:26]
A
I'm.
- [05:27]
D
I've just started looking into it now but I just wanted to get mate. Probably Dave's most clued up on this but wanted to get your thoughts on it because I mean this is like.
- [05:37]
A
I have one thought, Panos.
- [05:39]
B
And it's backed by tether, right?
- [05:41]
D
It is backed by tether, yes.
- [05:42]
A
I have one thought. Stablecoin backing technology is going to be ubiquitous. It's going to be commoditized. I'm not saying you can't make money at it. I'm not saying. But you're not going to get tokens worth hundreds of billions of dollars backing a technology where the technology can shift. The stablecoin issuer can shift to another chain easily if the price of the first chain gets too expensive. We've seen it already. That's why Tron dominates. In the case of tether and I made the point. The other point that I made which drives people absolute bananas is if in fact you're saying xrp, I know I'm crashing on XRP and by the way, I still own some, so you know, whatever. But you know all these people who are hyperbolic on xrp, they're saying, well it's going to back RL USD which is going to be the winning stablecoin. It's like okay, maybe, except for Tron, literally. I did the Math. Tron backs 637 times the transaction value of stablecoin than XRP backs with RL USD. And that's even after a fairly rampant growth. So even if it grows a thousand times from here relatively, it would justify evaluation. That's 1/5 with XRPS is today. So my point on plasma or anything else is understand the token economics. What are you actually owning if you're actually owning a piece of a network that's going to generate fees in perpetuity? Okay, well now there's a use case if you're owning a token that's going to get burned at infinitesimal rates because it has to be cheap. Well, whatever. I mean it's. I can't think of a good analogy, but it doesn't make a whole lot of sense to me. Does that make sense?
- [07:17]
D
That makes sense, yeah.
- [07:18]
B
I mean I think we have plasma obviously announced, which is backed by Tether. We have Tempo, which is backed by Stripe. We have USDC or Circle proposing their own stablecoin, I mean their own Layer one as well. So I think that we're going to see a ton of this. But to Dave's point, stablecoins should eventually just, and the Rails are on just be commoditized. I don't think the user should care about what network they're using the stablecoin on or even what stablecoin they're using at the end state of this.
- [07:49]
A
The real value from all of this is going to be driven into two places. It's going to be driven into companies like equities of companies that can create better business models for people. I was talking with Ron Hammond yesterday at this conference and I won't go into detail now, but I basically proposed a business model that community banks could use which would be much more profitable than their current model with far less risk. And he was laughing but you know, and we can go into that, but there's lots of business models that can utilize faster, cheaper payments technology to create all sorts of new products and services. So that's one. And the second will be defi will be DEFI protocols and DEFI platforms that can allow people to use stablecoins to go peer to peer, most notably AI agents peer to peer in order to provide value to each other and you know, to link up what's going on. The idea that the layer one promoting this technology, which by definition has to be a commodity. I just don't get it. I really don't. Someone's going to have to explain to me why I'm wrong. I think it was Amateo Next.
- [08:56]
E
Morning Dave. Good morning Scott. Morning everybody else. I mean I think the main thing is that we're moving into the next generation of stablecoins which is essentially something that Dave, you and I have talked about a lot, which is once you get the initial infra down and you get approvals, you get regulatory green lights, it now becomes a performance based based market on the velocity at which they can move and the actual fees to use the chain. So when I look at plasma it looks like the next kind of obvious evolution of where this stuff heads, which is okay, now that the infra has been approved and we're there, we're now looking at how can you increase the efficiency, increase the velocity of these stablecoins. I think that we'll continue to see this trend. How much these institutions and banks are going to be willing to integrate all of these custom blockchains into their rails. I think that that will ironically probably just be abstracted away by chainlink where it's single settlements with multi chains and then it just becomes a competitive market. So I think it's very hard to put multibillion dollar valuations on these things because we don't actually know, we know where current adoption is, we don't know where the competitive market will be as things evolve. I think plasma likely has a strong competitive chance, especially with the innovation of Tether. But we're going to continue to see these massive improvements in blockchain efficiency which will have down tail effects to stablecoins and who wins remains to be seen.
- [10:47]
B
I think it's also worth noting as we go into this conversation that different, different companies will need these for different reasons. We've talked about it a lot but obviously Circle I think has very specific reasons they need their own L1, namely is that they're going to make a hell of a lot less money when interest rates come down and they need to find another way to make money to justify their high stock price. But number two is that if a stablecoin issuer wants everybody to use it for payments, it's unfortunately going to have to be extremely centralized and you're going to have to be able to roll back fraudulent payments or even just mistakes. I kind of always joke. 75 year old Peggy, who's an hour from retirement, who's doing payments for a midwestern company and accidentally sends USDC to a Solana address on Ethereum. That's not going to fly for a real company. Right. You need to be able to call customer service and get that fixed, for better or for worse.
- [11:42]
A
But, but, but there's such an easy answer to that, Scott. I mean, there's going to be. Everyone in crypto has this, this notion, I should say everyone. A lot of people have this notion that we need a completely disintermediated world. Horseshit. People need people. That's part of the problem with the whole AI narrative that there will be no jobs. Think of a company, think of a community bank, right? You're in your local company, you're in your local bank and you go, you sign up for an account, they're using stablecoins underneath it instead of fractional reserve banking. You don't deposit with the bank. They charge a small fee for services. What are their services? Their service might be to provide a loan. So they take a small spread out of the loan. By the way, that's what's happening in the mortgage market today anyway. Almost every mortgage originator doesn't actually service the loan. It gets done by this amorphous pool of global capital that finds into it, into securitized stuff. Think of a community banker who now provides a service for their community that says, okay, we're going to give you payments infrastructure. We're going to manually instead of it being instantaneous. You can opt for instantaneous if you want to, but we will give you the service optionally to hold up your payment. So human beings, or they'll probably use AI for it, but they'll provide a service where you can roll things back. They'll provide another service that says, we will ensure your purchases. Insuring purchases against fraud or deceit is another service. Credit card issuers right now bundle that with this massive 3% percent fee. What percentage would be fair for that? I don't know, maybe half a percent. I mean, whatever the number is, I have no idea. But these services can happen. The point is, it's like what did Amazon do in the early 2000s? Amazon was the only one to figure this out. First they figured out, just in time delivery and so they crushed it. Now every retail has figured the same thing out. So you. There are so many others, but Amazon got this early lead. People are going to figure out instantaneous movement without having to pay someone. To trust them is a very valuable service. But there are other services people are going to want. People are still going to want credit. People are still going to want the things you talk about. And so they'll be provided because that's how markets work. Markets, you know, create people, innovators, entrepreneurs will create those services. That's really the point that I like to make. And it's relevant for this stupid stablecoin conversation where the community bankers are being trotted out by the banking lobby reneging on the agreement they made when they passed the Genius Act. And so we'll get to that later. But I think. I don't know whether it was Mauricio or Ali.
- [14:03]
B
I think Ali still had his hand up. And I can't see Mauricio at all, unfortunately.
- [14:07]
A
But.
- [14:09]
F
Yeah, no, I was gonna add in terms of, like, the race of, you know, these stablecoin companies, who's gonna get used, especially in these big corporations, start to adopting these, you know, stable coins into their transactions and how they go about their daily operations. I think ultimately it's going to come down to how these stablecoin companies are going to offer more value beyond just the bottom line. For example, like Hyper Liquid, they kind of bid it out their builder to somebody that's going to invest back into their communities. So I wouldn't be surprised if some of these stablecoin companies decide to, you know, make an agreement where they're actually going to invest back into these other companies in different ways. And Shopify, that's using usdc, they announced yesterday that they're partnering up with Chad gbt. So now, like, if you go into chat, gbt, you can just message. I'm looking for a gray shirt that's meant for hiking. It's going to give you options and all that type of stuff, and you can just check out very quickly. And in regards to Peggy trying to, you know, get her refunds back, are.
- [15:25]
B
You, like, packing your luggage right now?
- [15:27]
F
Sorry.
- [15:28]
A
Oh, no, sorry.
- [15:29]
F
I was wondering.
- [15:31]
B
Yeah, no, I was wondering what the sound is. Okay, it must be Dave.
- [15:34]
A
You're outing me again. At least it wasn't me doing something.
- [15:36]
B
I like that you're attacking it. Oh, yeah, I don't even want to know. Go ahead, Dolly.
- [15:40]
F
Yeah, yeah, no, I was just gonna add. So, like, Shopify, their cryptocurrency policy on refunds basically just says here, like, they don't have automatic refunds for crypto payments through Shopify and that you'd need to refund these payments manually through the payment gateways that they use. So they're. They're using Coinbase and Stripe to facilitate all of this. So I. There's probably going to be a lot more volume coming in for USDC with this chat. GBT Partnership.
- [16:13]
B
Mauricio, did you have your hand up and are you present? If not, you're on the spot, so you need to say something.
- [16:19]
C
No, that's. Hey, Scott. First of all, Dave, you're fired today, man. The ripple troll extraordinaire. I loved it. And all the other points I just echo almost entirely. I think my two points on this is, number one, there is a very interesting Senate hearing tomorrow to examine the taxation of digital assets. And my sense here is that this is going to land somewhere along the lines of we're going to basically tax everything that's not a stablecoin as a commodity or an equity. And basically stablecoins are fine for payments. Because the point here is that the US wants people to use stablecoins as payments. That's the one they benefit the most from the point of view of having people going and buying their debt, it's not beneficial to them. So I think they're going to lay the incentives such that people want to pay with stablecoins only and it doesn't necessarily make sense to pay with other things. So I'm watching that one or I'll be. I'll be following that one closely tomorrow at 10am for anyone that wants to check it out. And then the other point I'll make is that I saw a few points from Coinbase and Brian Armstrong that seem to be lobbying really hard against this pushback because it appears that basically banks, as we've mentioned in spaces before, banks are really pushing back on this idea of paying rewards to the distributors. And I don't find this surprising, but I really am interested to see how this shakes out and, you know, in the context of the infrastructure bill or the Clarity bill as well. So I'm not sure, you know, people that are better versed in this sort of legislative battleground can, can have a better guess than me as to whether this can get pushed back or not. But I do says that there is this massive pushback from the banks to basically stop the ability for people like Coinbase to pay interest on stablecoins. And I think that's actually pretty unique to Coinbase given the circle relationship. So this, for me at least, I haven't seen other stablecoins being as loud or as sort of upset at this. But I'm curious to see anybody else has any thoughts.
- [18:26]
A
It's a very big deal. I was talking with Ron Hammond yesterday and he's pissed, and mostly because he helped negotiate the original Genius act prohibition on, on interest and the, the Fact is the banks are going back on that deal. That's how he looks at it. The the truth is it isn't going to matter. And I explained to him why, and I'll explain to the whole audience why. But it's what they're doing and it dovetails very nicely with the title. So Visa is going all in the Stable Coins but the chip. But the credit card providers are go or have a carve out in the law that they can provide rewards for their services. So what will happen? Credit cards may have their margins hurt a little bit by stablecoins but they'll be able to keep so you know, it's sort of like they'll be able to give rewards and even when they're not giving credit just by using Stable coins on it for payments and nobody else will. So the way it's being set up is it's an unholy alliance of the banks who want to protect their deposit base, which I just to put, to put this in a number, it's between 20 and $30 billion of a federal subsidy to the banks by keeping the, you know, their entire structure the way it currently is and a subsidy to the credit card companies who will still be allowed to provide rewards, but upstarts won't be able to do so without doing without using the credit card. So like if you consider Gemini for example, so I have the Gemini Bitcoin rewards card. Well, they're using MasterCard because they want to use the MasterCard network. But they're in a position, I'm sure, where MasterCard gets a lion's share of the revenue and Gemini gets a smaller thing. Gemini doesn't really have any other place to go to get it done. But if you imagine a world where stablecoins are ubiquitous and that's the payment infrastructure and then you set yourself up as a payment processor, you know, you're a bank, you can offer payments through stablecoins and you can offer rewards by having people keep assets at, you know, either in the stablecoin or just on your platform. Just kind of generic platform wide rewards. Those are the sorts of things they don't want to have happen. But it's an absolute 100% regulatory use to help the rich and stop the average American from collecting interest. And it's the most regressive policy I've ever heard. And it's amazing that it's the progressive Democrats that are the ones that are leading this charge. I mean some of them are ignorant and that's what Ron said. He thinks some of them just literally have no idea of any of this stuff. And they just believe what the banks tell them. Others are just evil. They just, you know, they, they push their. Their own agenda. So that's what's going on. It's a very big deal. So Coinbase is. They're leading the charge for the industry, but they did. This is not the first time they've led the charge for the industry, let us not forget. But it goes way beyond Coinbase. I mean, I. Look, I talked to someone from Kraken yesterday. They're. They're literally on exactly the same page with Coinbase on this. I didn't talk to anyone from Gemini yesterday, but I can imagine where they're coming from. But it's not just them. I'm sure, sure Vlad at Robinhood feels the same way. Right. So it's, it's a, it's, it's a big deal. And what's at stake here in the short run is proof or question. Will this administration allow laws to get passed that specifically hurt the average person and help the bonuses of the, of the bankers? And I hate to be populist about this, but this is true populism. And this is not. I mean, if Austin Campbell were up here, he'd be saying the same thing. You know, this is Republican, Democrat, doesn't matter. This is not party lines. This is just the big guys versus the small guys. And it is actually a very important battle. And why we really care is because if it gets too heated, they're trying to do this to trip up or delay the Clarity act, which both sides want for lots of reasons. Ali.
- [22:06]
F
Yeah, I was going to add to. That was kind of the sentiment mentioned in yesterday's roundtable that they had. There was one gentleman, I forgot his name, his name. But he was basically talking about how the rest of the world. Right. Eu, Canada, Australia, they already have clarity in terms of how they need to operate. And the US Is kind of lagging behind in terms of this regulation and what to follow and adapt. So they're kind of playing catch up now with the rest of the world. And I heard you mentioned Robin Hood. So Robinhood, they're, they're offering their tokenized stocks in the EU right now, but not in the US So they're also trying to gain attraction and get some more clarity in terms of offering more services for US Customers to come.
- [22:51]
A
Yeah, and we could go down that rabbit hole. But when you talk about that, that roundtable, they talk more. There were some fights. So evidently I have to go back and watch it. I don't know if anyone has. Scott, did you record it? I know you were streaming it.
- [23:03]
B
Which record? Which. Yeah, I think yesterday. It's on my channel. It's, you know, it's recorded there, but. Okay, it can be replayed. The video on there.
- [23:17]
A
Yeah, yeah. Because evidently there were some interesting fights. I mean, I, you know, Ian, you know, the CEO of Coin Routes, and I penned a letter that's on the SEC website, the crypto task force. It's right up. It's literally the first one you see when you look at public comments. And effectively what we wrote, you know, you can bo. The TLDR is don't take the current equity or securities rules for trading and apply it to crypto because crypto is already more efficient for institutions because they don't have those rules that create, that are effectively counterproductive, create lots of costs and make it harder to trade. And, you know, the data is quite compelling on this and I'm sure that, that, that it had to be in the public record, but they weren't even at that level. They talked a little bit about it. What they're really trying to figure out is where the, the big news out of the, that roundtable is that they're not going to waste their time trying to merge the CFTC and sec. They're just going to try to harmonize rules and work together, which that's fine, but so be it. That's what came out.
- [24:19]
B
I didn't see any hands. Can you, Dave? Holly?
- [24:28]
F
Yeah, I can, I can add a little bit more. So they did talk about like, you know, leverage, margin, the trading. They also focused on prediction markets as well, a little bit in terms of gaining more clarity in terms of what events they can actually allow on their platforms. And I know one of the, one of the issues that weren't really delved into was the sports side of these prediction markets, because in America, I think you guys have like a lot of different regulators when it comes to gambling, sports betting, that's kind of governing that side of stuff, but in terms of like the retail side. So I think in the next three to six months, we'll probably see, you know, what the max leverage can be on some of these platforms. Liquidation risk disclosures and maybe like other KYC checks to make sure they're trying to protect the users of these different platforms as, you know, derivatives and perpetuals become a popular thing in crypto.
- [25:30]
B
Dave, did you see this other story about Double Zero?
- [25:35]
A
No. What was the story?
- [25:36]
B
Because this is kind of Big news, but it's a little bit above my head. So Double Zero was issued a no action letter for two Z by the sec. Did anybody see this or get the opportunity to dig into it? Because it's basically the first of its kind no action letter from the SEC on a token launch in the United States. So Tuzi does not have to register as a class of equity securities. And programmatic flows of Tuzi on the 00 network are not securities transactions.
- [26:07]
A
I can't comment on the specifics as I haven't read it. What I can say is I've said this before on the show and it's in. This is sort of arcane, but effectively the SEC has made it extremely clear that they're going to use no action or what they call exemptive relief to allow innovation. That's something that matters. Now. What they're not going to do, what they're not going to do is allow tokens that are equities or bonds to be traded without the proper disclosures, etc. They may offer, they may, who knows what they're going to do in terms of lending disclosures or you know, writing, you know, different types. But the basics is they're going to use no actual relief for this and they're particularly interested in, in helping Defi grow. And Paul Atkins was surrounded. Eleanor Terra did a great, had a great tweet about it yesterday, you know, showing a picture of him being surrounded by reporters as he talked about it being their highest priority. And what he really wants to do is allow for Defi innovation as, as middlemen and agents to do so in a much quicker, cleaner way. As long as you can understand it. But the basic principles of SEC regulation are not going to change. And that's the thing that everyone needs to understand, understand. So you need to, you know, disclosures are relevant, people are still going to be liable for false and misleading statements, you know, etc. And as far as when it gets to trading, it'll be the best execution and fiduciary responsibilities and segregating assets, none of that's going to change. But the way that the rules are written, as we've all talked about, were written, look, they were written in the 40s, you know, in the 30s and 40s and then again in the 70s. And then there was the market structure that happened 25 years ago. And really there's been no changes since then. So now all of this new technology is after it and so they know they need to make changes.
- [27:55]
B
Yeah, I think this is really interesting. It says it represents four months of constructive engagement with the SEC to establish a clear framework for compliant token launches in America and a landmark moment for the crypto industry. I mean, so I haven't dug too deeply, I'm just reading like what, what I can as we go here but the 2z token powers value transfer incentives and security across the double zero network. That sounds like any gas token for layer one or layer two, right?
- [28:23]
A
Yep, it does. So eventually it will help. Anyway, I see you probably don't see Maurizio's hand up.
- [28:30]
B
I do not. He does not exist for me.
- [28:33]
A
His hand is up. Maurizio.
- [28:35]
C
Thank you, Ali. I think you were actually ahead of me. You want to go first?
- [28:39]
A
Sure, sure.
- [28:39]
F
Yeah. No, I was going to add for the double zero. So I think it's like a Deepin project, so decentralized physical infrastructure and I think it's, it's bullish for Deepin or utility tokens because now it's like if a token's value and distribution are tied to like using or providing network services, you know, now it looks like the regulate regulatory bodies are there might view it outside of securities registration, which is a very good thing. And in terms of how it might look like a security if it wasn't like it could be if they were trying to do fundraising, you know, if they tried to sell the tokens to, you know, fund the build of their Deepin projects, if they're trying to promise any profits, yields or buybacks, different things in that nature. So I think overall it's, it's very bullish for deep end projects.
- [29:33]
B
Mauricio.
- [29:35]
C
Yeah, Dave, this is actually a question for you and just because you're so well versed in this, I think when you look at this announcement from 00 and you look at the guidance from the SEC saying yeah, we want things to go on chain. Do you really believe in a world where people can just have self custody of stocks and no kyc, no AML trading of stocks in these Defi Dexes? And I asked because when I look around, at least the ones that I've looked at all these efforts by some of these defi pools to create what they call institutional defi has not really been picked up a lot of volume or traction and again this is the cynical view and I'd love to get some more informed thoughts on this.
- [30:23]
A
This was discussed at length yesterday, the tl, you know, by a variety of people, regulators, non regulators, including the person who just resigned, who you know is running the NY DFS to Wyoming to the federal side, the TLDR is this. Most people believe that all KYC and AML is going to happen at the stablecoin level. So when you put fiat introduced into the system or taken out of the system, you'll have to kyc that all vendors who accept accept stablecoins as payment for services obviously know their customer because they're their customer. Right. And so that's how they're going to do it. That so if you, once you enter you get money into the system to buy whatever Tesla stock and now you sell Tesla stock for some other stock, what's going to happen is the platforms themselves are going to have to be open and transparent so that they can do the similar same thing they do in the brokerage world in terms of wash trading and manipulation and that sort of thing. That's more of what will happen. So the answer for AML for KYC is going to be at the, at the gateways in and out and for merchants or, or brokers who are using it, you know the being able to do transfers in defi. Look, let's face it, the other thing they really care about is the government. If you're good, if you're trading an asset and you have capital gains, they want it to be reported. So there's going to have to be and blockchains are open. So the question is how does that happen? That's that that's the issues they're trying to work out now. But no, it's not going to be a free for all where you can buy. You know, that's why this tax hearing is so important and Bitcoin is so important because if Bitcoin never has gets any capital gains relief then effectively you can never use effectively prevents you using it to spend it. And it means that, that when in if, if it's an inflation hedge that inflation becomes an a literal overt tax as opposed to a covert tax. And I'm not sure how far they're willing to go to do that. But there's a lot of issues around this.
- [32:21]
C
Yeah, I see more than one challenge with that model and maybe this is me coming from Venezuela and seeing all the aftermarket things that people do to when the government sets up these unreasonable or criminal restrictions, people typically just find a way around it. And I can see a world where you buy a regulated stablecoin and you KYC on the way in, but then you do a side deal on cash and you know that stablecoin now goes to someone else and I just don't. It's just very hard from a tracking perspective. Again, maybe someone smarter than me has figured this all out, but I just have a hard time seeing it being that way.
- [33:05]
A
There are challenges for sure, Maurizio. I mean, look in Italy, you know, there's a reason why Italy may be the only country in the EU that is, is not pushing other than the fact that their Prime Minister, you know, doesn't want it. Tricking, wanting to have a central bank currency and, and digital ID tracking. Because Italy still has a black market, right? They have, you know, for a long time, you know. You know, if tax rates are confiscatorial, if that's the right word, people black markets will proliferate. If they're not and it's not worth the trouble, it's not worth the risk, then they won't. So there's, there's a lot of moving parts to it, but the basics of the stablecoin issuers being the, the place where most of the KYC is going to happen I think is real. But you're right, I mean there's nothing stopping any of that. But if you're caught, there's, you're going to get punished. And in this AI oriented world, I don't know about you, but my, my viewpoint is if there's one, one organization you don't want to screw with, it's the irs.
- [34:07]
B
Sorry, go ahead, Mauricio.
- [34:10]
C
No, that's it. I'll let someone else go.
- [34:11]
B
And then. Maurice Amateo.
- [34:14]
E
Yeah, I was going to say this is really a fascinating conversation because it's like how do you actually regulate an open and permissionless ecosystem and monitor this stuff while embracing innovation? This has always been the toughest nut to crack and why this policy and regulation implementation has taken so long. So I've sort of always surmised that it's going to be on the on ramps and off ramps. Those are the registered entities that have the means to actually process this stuff. There's a lot of technology that's required in aml. You have to run addresses, things are tracked, they're labeled, it's pretty robust. So you need good infra to do this and you can't really expect.
- [34:58]
A
You.
- [34:59]
E
Know, some kind of meme coin defi exchange to actually perform that function. It's just not realistic. So yeah, I think that's really interesting. And one thing I also wanted to note, and I'm curious to get Dave and Scott your feedback on this, but with the visa news on the stablecoin work that they're doing in Their announcement, they're treating stablecoins as cash equivalents. And of course we always know that in theory. And I was just wondering, is this one of the biggest cash equivalents of stablecoins that we've seen in terms of being adopted and embraced? Because it seems quite significant to even just embrace that language and de risk the concept that it's anything less than a cash equivalent.
- [35:51]
B
Dave, you can take that one. Dave, I'll just tell you I have to actually run for another recording. I know we're going to probably transition at 11, but I'm moving on.
- [35:59]
A
Well, in the last two minutes where we turn it over to Buzz, I mean, I think the answer to that question is yeah, you're right, it's a big deal. You know, they're trying to come to grips with this. You know, there's two goals. The way to understand how this stuff is going to work is at least in this administration. They want stable coins to become ubiquitous because that allows that's a purer buyer of Treasuries than bank deposits. Right. So they kind of understand that. They also understand that the only way for us to get out of our fiscal mess is grow baby, grow. And what's the best way to do to grow to encourage small business and deregulate. And so all the kinds of businesses that we're talking about are the ones they're trying to get to. So yeah, that's what I think. Hey Buzz, are you almost ready?
- [36:53]
G
I am ready, but we don't have the sponsor yet up on stage. So I'll follow your lead. If you want to keep keep going, we can do that. But if you guys are near the end, we can also shut her down. But I do see a hand up.
- [37:06]
A
Dave.
- [37:08]
F
Yeah, no, just last thing. So I noticed I saw strategy. They made like a really small bitcoin purchase that they announced for about $22 million dollars. So about 196 bitcoin. Do you think this is because they want to free up more profits for their quarterly reporting and month end reporting? Or is this just maybe the, the dry powder running out a little bit?
- [37:32]
A
I hate to guess. I, I, I. There's so much stuff that goes on. If you're running a public company, you have, you have a lot of masters. I mean remember bitcoin's been ridiculously non volatile and as a result their strategy, which is based on monetizing volatility, is not really available. So it's a question of what's the best thing to do for shareholder value and who's the largest shareholder. Well, guess what, the guy who runs the company. So we'll see how he does it. But you know, I've seen so many hyperbolic takes on the web, particularly on X about this that I don't even want to comment until you can look through the financials. I've seen far better way. There are far better people who have done the forensic accounting work than me. Sorry for you if that's not answers. Anybody on the panel have anything.
- [38:26]
F
Yeah, I guess, I guess either way the, the whole financial engineering for this, it's pretty interesting of how he's doing it and essentially he kind of laid it out as okay. If Bitcoin is appreciating more than the rates that you're borrowing, then you can just keep doing the, the borrowing fiat and just getting more Bitcoin. I think you might have a call too.
- [38:51]
A
Yeah, no, it's my wife's phone. No, I, I look, that's a Dave.
- [38:55]
G
That'S an old school ringer.
- [38:57]
A
Yeah, I, I call it the boomer phone. Dave.
- [39:02]
G
Is that, is that a home phone that you got going on there?
- [39:04]
A
Oh, no, no. If you iPhone has that as one of the rings and so there are people who do that. But yeah, yeah, I'll be back in my office tomorrow. So I won't have this but yeah, Buzz did is who is the, the account Because I see one person requesting to come up for the sponsor.
- [39:20]
G
I think the sponsor is called Eve Dex.
- [39:24]
A
Okay, so is Carson Beard part of the sponsors? He's the only one that's requesting right now. Will you research that?
- [39:32]
G
I will research that right now.
- [39:34]
A
Okay, so you know, other than that, I mean just to put up, put a bow on it. What's the things that are going on that matter and everybody should understand this is not. When Coinbase says call your congressman, call your senator, they're not lying. It is actually important because this notion of trying to block is, is there is very, very real and it will gum up the works. Now the truth is it won't matter in the end and I tease this in the beginning, the reason it won't matter is this. If you're a trust, if you're a bank, if you're, you know, in the end Kraken has a banking license and Coinbase is I, I don't know if they have it or not, but Gemini certainly does. They'll, they'll all get them. You can offer a, you know, a payment, a platform for people that imagine the following. You say, okay, you can deposit your Money in stable coins, cool. As long as you maintain a minimum balance of, you know, a thousand bucks or something will let you use the payments rails and you're going to have these other investments on the side. And we'll create an automatic sweep function for overdraft. You can have a $10,000 overdraft for free. And if in fact you don't have enough in your stablecoin balance, we'll debit your tokenized money market funder, we'll go debit your Bitcoin account, whatever. We will take the money out and push it, you know, out in the payments infrastructure. So it would basically mean you don't need to keep huge deposits. You keep your deposits in interest bearing investments but make it as a sweep. There's nothing that could stop that and that is where it's going to go. But the banks haven't figured this out yet and you know, Coinbase knows it, but it's more work and it creates more headaches and tax accounting and tax reporting. So they're trying to fight it but eventually that's where it's going to go anyway.
- [41:13]
F
Do you think it's only going to be like a few stable coins to rule them all or do you think there's going to be multiple stable coins a la carte for each company based on how they're going to go with their strategy for yield and all that type of stuff?
- [41:29]
A
Well, I mean I imagine that if I were, if I am broker dealer X or Coinbase, Kraken, whatever. So it is going to be, the big war is going to be between the, the, the older crypto firms and the, the tradfi firms. But I think if you're the firm just like right now, you know, I hate to mention ftx but they, they made it really easy and a lot of others are now doing similar things. They're basically to treat all stable coins as dollars internally and you deposit it and whatever and they do that for you. Scott made a point earlier which is really important, which is nobody, you're not going to get scale. If people have to decide I want to do a stablecoin transfer and I'm going to have to choose the network and go through all that. It's going to need to be abstracted away but of course it will be right. It's going to be the service providers that abstracted away and for the most part those fees are going to be extended extremely low, if not zero because there's no reason for them to be high. That's what I think okay, well, I. I. Buzz, I'm gonna need to jump, so I. I gotta jump.
- [42:28]
G
I. I gotta jump too, my friend. No, no sponsor here yet, so if you need to wrap, we can wrap her up, my friend.
- [42:34]
A
Okay. Any closing words from anybody else? Because I do need to go. Okay, well, we'll see you all tomorrow at 10:15. Hopefully. And hopefully we won't be as glitchy or we'll figure this all out. Take care, everyone.