← The Wolf Of All Streets
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- [00:00]
A
Morning, everybody.
- [00:01]
B
Welcome to Crypto Town hall every other day here on X at 10:15am Eastern Standard Time. What are we talking about, Dave? What do we got on the docket today?
- [00:14]
C
Not a whole lot. I mean, I guess we could be screaming, oh, my God. Bitcoin fell below 80,000. The world is ending.
- [00:20]
B
I didn't even know that happened.
- [00:21]
C
Yeah, our bags are on fire. Oh, my God. Oh, my God. Yo, yo, yo, yo, And. And whatever, stomping around. I mean, look, you know, oil's back up a little bit, people are worried about the war, etc. Stock markets are doing nothing. You know, gold is down a touch, silver is up a touch. It's basically people are waiting. I mean, you know, the spectacle of, you know, arguably one of the most ridiculously oligarchic. I hate to use Bernie Sanders word, but I can't come up with a better one. Trip to China, where effectively, corporate America is on Air Force One. Meeting with the premier of China to try to work out a series of trade deals across most industries is a hell of an interesting spectacle. And with the backdrop of the war, who the hell knows what's going on? Boy, would I love to be a fly on the wall in some of those meetings. And my guess is that things are going to get decided that none of us plebs are going to know anything about for years, but is going to really impact us. I don't think any of that has a damn thing to do with crypto. I think that today people are looking at the absolute absurdity of the harridan in chief, Elizabeth Warren and her friends throwing stupid amendments at the Clarity act, hoping to slow it down, because after all, why would they want to see progress in financial markets? I could go on a rant about that. I don't care which direction we want to go.
- [01:46]
B
You see, there are a thousand amendments proposed yesterday. 100amendments. Sorry, 100amendments proposed yesterday.
- [01:53]
C
40. Now, this is a woman who's barely gotten a bill passed in her entire career, but the only thing she does is obfuscate, literally. You're. You know, someone's going to come up with a great meme about just how pathetic it is. But, you know, some of these are absurd. I mean, the notion trying to get rid of section 604, which is really important for crypto. And if I'm not poking Carlo at this, I don't know. And Austin on this one, I don't know what I can do other than insulting their parents to get them to raise their hand. But now I see them I see
- [02:28]
B
them as listeners, by the way.
- [02:29]
C
Yeah, they were both speakers and now they got knocked down and here it is. I am not going to insult either gentlemen because I have respect for both. But just while they get themselves up or while we get them back up on stage, this is the section that very simply says that if you have no control over the funds, you are not a money transmitter. Which of course is completely logical. Makes sense. But of course she wants to get rid of that. Why? Well, because of the 0.1% of money laundering caught under the Bank Secrecy act and the thought that they need a cudgel to be able to effectively blackmail software developers to work with them to catch the bad guys. I mean, there are other ways to accomplish this, but that is what it is. I mean, you can, you can sugarcoat this as much as you want. I mean, Carlo, am I wrong? I mean, you know, I see you back up here.
- [03:18]
A
I mean, no, look, man,
- [03:22]
C
you're sad. I don't like sad, Carlo. I like fired up. Carlos.
- [03:26]
A
Good morning, Scott.
- [03:27]
C
Good morning, Dave.
- [03:30]
A
Good morning, Scott.
- [03:32]
B
Morning, Carlo.
- [03:34]
A
Yeah, look, for everyone who shows up here every day, believes in this tech and is fighting for this innovation, none of us are shocked by what we're seeing from Warren and her ilk. I just, thanks to my good friend Claude, did a quick summary and posted what her proposed amendments are. And they're predictably ridiculous. You know, there's several things about this that are annoying. Number one, it's predictable and annoying that they would throw these last minute amendments on something that's been actively debated for a year as a last ditch effort to kill blockchain innovation and adoption. It just to me reinforces that, look, this is not a perfect bill, but if you don't get something across the line legislatively in this session, you're probably never going to have this type of opportunity again in recent, in recent history. They are absolutely hell bent on making crypto a tool for surveillance and they want crypto to be a tool for control. And they are absolutely terrified at the idea of consumers having options, just the banks. Let's talk about the stablecoin component for a second because you're seeing just how absolutely desperate the banks are and the audacity of the banks to basically tell Congress that they don't get it. After all the back room negotiations to try and reach this compromise, and then Senator Bernie Moreno calling them out publicly and telling them that their position is pretty much disingenuous and they're trying to gaslight Congress at this point and then they come out and say that they don't want to talk about this stuff publicly on X because that's not the proper forum. Just tells you the amount of elitism that exists in the banking lobby and how they believe that it's beneath them to have to answer tough questions publicly from consumers. Bottom line, mark this thing up. Make a record of the votes and remember that record when you go to vote because the consumer deserves better than this bullshit. And in closing, today would be a good day to make your wallet your bank, or at least learn how to make your wallet your bank, because it's pretty clear what these people are up to.
- [05:59]
C
Do that. Carlo, could it be that someone wrote a book about that?
- [06:05]
A
Yeah, yeah, I know a guy who wrote a book and it's in his PIN tweet if you want to download it for free. That's my TED Talk. Thanks, guys.
- [06:12]
C
Okay, well, we got, we got you fired up there by the end, but I mean, look, there's a bunch of individual issues here, every one of which is absurd. I mean, that's the thing. I mean, you know Caitlin Long, and it's too bad that, you know, we don't get her up here, but she once made a comment which has stuck with me in her fight to try to get a Federal Reserve master account for custodians. She made the point that most of the time when they make a decision one way or the other, it's two or three pages and that's it. But when somebody has really bad quality of arguments, they tend to make lots of them. And you understand that. Now as a debater, I sort of know that because one of my skills when I used to debate was I could speak faster than everybody else. That's not going to surprise most of the listeners, but you've never heard me do my 350 word a minute machine gun speaking. And so yeah, you would throw out a lot of crappy arguments, hoping to hide the good ones in the middle. The difference is here they have a lot of crappy arguments and none of them are good. And so the quantity is a tell that they know their position is bankrupt. So one has to look to see what they're trying to do. But there's two basic flavors here. Flavor. One is trying to get rid of privacy because they want government control. They want the Panopticon. They want, you know, central bank digital currencies. They want to be able to use whatever they can to know whatever we're doing. They don't want you to be able to, you Know, use cash. They don't want you to be able to use crypto as a method of cash. They like Zelle because they could find you if somebody uses it a lot, they don't like cash. And it's sort of the difference between, you know, the UK and Italy, for example. The Italians, left to their own desires, will never vote for the, you know, the stuff that the rest of the European Union was. It's very different Italy. There's ATMs everywhere and everybody prefers cash and we all know why. And you know, I used to trade Italian equities and I, at one point half their economy was black market. You know, it was the cash market. But people like their privacy and America is very much the same way. And so they don't want that and they don't want crypto to enshrine it. They're hoping technology will get rid of cash and allow them to control. So that's thing one that you were talking about. But I want to unconflate thing two, Carlo, because the other thing you were talking about was consumer choice. Not privacy, but just choice. The ability for the banks to control yields so that the government can control the banks and that the banking lobby gets what they want, which is more and more of this cronyus notion that they can be. That they can own the economy and own these verticals, that that's going to be lost. They have zero chance of succeeding in that. All they're doing is delaying. And so there's all sorts of actions going on here. So to me, those are two very different things. The second one, however, is why I believe clarity will pass. And I haven't been betting on prediction markets, but frankly, I'm very tempted to throw some money in there and just bet on it because it will pass. And the reason it's going to pass is after all this show trial shit goes on from Warren and her friends is the banking lobby has a lot of money and they want to undo what happened in Genius. And they're going to, because the crypto community knows that it doesn't matter. And so I think that that's what's going on here. But to me, seeing this theater play out is why the crypto market is off today. And it's irrelevant because the most important thing that happened this week is going to happen today, I guess, is Kevin Warsh being nominated. And the Powell era comes to a close probably on Friday. And Warsh is the new head of the Federal Reserve. Am I getting that right, Scott? That was a very long winded monologue.
- [09:49]
B
Hopefully you are getting it right that he was confirmed to the Fed board yesterday. Chair votes today. Powell's out Friday and what a mess was inheriting. I don't know, PPI came in hot, CPI came in hot yesterday. It's a pretty ugly situation. He's actually inheriting.
- [10:05]
C
Yeah. Yes. There's a lot to be said on the economic side too. So anyway, Tom, did I saw up. Yeah, yeah, I thought I saw that. I thought I saw a brief hand and then it disappeared.
- [10:17]
D
Yeah, yeah. I was just going to comment on the bill. I don't know if we wanted to move on.
- [10:21]
C
No, no, don't move on. It's important. I think it's probably the only real story today.
- [10:26]
D
Awesome. So I just retweeted this tweet I tweeted a few years ago about Elizabeth Warren's track record. She's had 338 proposed bills in her tenure in in Senate here and she's passed zero. So, you know, I wouldn't be too concerned. You know, the worst thing that Chat, GPT and Anthropic and all these others really did for the the same people of the world is it gave Elizabeth Warren an easier avenue to create a lot of noise and bills and waste a lot of paper. So, you know, I don't think we should be concerned about any of this stuff. But I do think there are some legitimate kind of pushbacks from the banking community here. Right. Like if I think there do, there does need to be a little more teeth around what constitutes activity, which is the key component of this stablecoin, you know, legislature here. You know, if you presume, if you do some level of activity, then you're able to get rewards, which, you know, they talk about being similar to credit card activity. I'm just envisioning Coinbase basically having a button that says like, hey, you know, make one transaction, quick round trip trade on your USDC and you can qualify for rewards. So I think there is an upholst for folks to be a little bit concerned. And there's also the ethics issue, which it seems like Trump is sort of pushing back against on having anything in there about that. But the reality is they're going to work through this stuff over the next day or two. It's very likely this bill is going to advance out of the Senate and then they're going to still have to rectify it with the other bills that are out there, you know, namely the Congressional bill. So once they have to marry those two things, I mean, a lot of Things are still going to be in flux and I bet those two provisions are still going to have a little more ironing out. Yeah, they still have to do agriculture
- [12:09]
B
and Senate banking before they even get to Congress to merge those two.
- [12:14]
D
Yep, exactly, exactly.
- [12:16]
B
Crazy process.
- [12:17]
D
So still a long way to go, but you know, hopefully by the 4th of July we'll be there.
- [12:21]
C
Yeah, look, my vote, what I was trying to get at in my diatribe was I think that the banks are going to successfully block pure holding of stablecoins from getting yield. Now, honestly, this whole thing is bullshit. I mean, I'm going to make it very clear. It is complete bullshit. It makes no sense whatsoever. It is giving them something they think they want. The reason why it will happen is because all the smart people understand that it doesn't make a damn bit of when they first did. And there's history here. And the banks only know the last war. Right. You know, the banks are effectively like the French in before Pre World War II who believed the Maginot Line, those big ass cannons that they had, you know, would protect them from a German invasion, not understanding. The Germans had these things called airplanes. And they can jump over the cannons, disable them, and then kind of march the infantry, you know, and the tanks past them. But, you know, whatever it is, effectively the same exact thing is happening here. The banks think, well, when there was brokers having money funds, Ooh, Scott glitched and dropped. Well, anyway, when brokers had money funds, you know, it made it impossible for them to compete with the banks who had the payment accounts. And so deposits weren't really impacted, they were impacted a little. But broker money funds weren't the same thing. It takes days to get money out of a money fund back into a payments account. And it's not very easy. You know, even today it takes days. Back when it was first passed, it took a week, literally a week for them to settle because they're securities. Well, with tokenization, you're going to get instant settlement if you want it. And so with instant settlement, you could have very little in a payment account and just instantly have an automated process. This is, oh, you're over. You would be overdrawn. You know what, you have an investment account. You gave me permission. We're going to sell the thing in the investment account immediately and move it to the payment account.
- [14:12]
E
Boom.
- [14:13]
C
Now that technology, which is what crypto allows, is something the banks are not considering, which is why it doesn't really matter. Carlo, I got, I got someone tricky.
- [14:22]
A
You're absolutely Right. This is the banks desperately trying to preserve a moat around an antiquated way of moving and custodying money because they are afraid of losing their tollbooth economy. That's what I wrote about in my book. They're afraid of losing their tollbooth economy where they can extract money from consumers. If you don't have a sufficient balance in your account, if you move your money, if you receive a wire, they hit you with a fee at every single turn. And they justify this because they are a bank. And what they fail to realize is we don't need banks anymore in the current way that banks exist. So what you're seeing is the end of banking as we know it. It's going to all go to zero fees whether they like it or not. And the sooner consumers and merchants understand this, the better off they'll be because the longer they continue to park their money in this antiquated system, the longer they're playing this game with the banks where they're giving up money they don't have to and control they don't have to to the banks they know they're finished. And their, their desperation, sending 8,000 last minute letters and trying to, you know, arm twist Congress into changing this is clear evidence of that. I've never seen banks weaker and more vulnerable than I do right now.
- [15:43]
C
Well, I want to push back on one thing you said that I disagree with. I don't think that fees go to zero. I think banks will ultimately move from a deposit money, you know, deposit based economy to a fee based economy. I think that the notion of deposits, funding, lending, where most of it goes, goes away, is ridiculous. I think you will see banks, you will see there is a business where you can accept money, ring, fence it and invest it and take a spread. That makes sense. Right. And community banks, given the fact that just a simple stat community banks made last year on their loan portfolios around 5.75% where the average bank made their money on their investment portfolios around 4%. So obviously people will pay community banks to invest their money and they will take a nice spread and they'll make money at it. And then they don't have a lot of the other stuff. But the notion of a bank being able to take a deposit, take money, have deposits of zero, you know, paying their clients zero and investing it in Treasuries is, well, that's not really a very good business.
- [16:51]
A
Good for the banks, bad for the consumer.
- [16:54]
C
Right. So I think that you'll end up with a more of a fee based model and a spread based model, which makes sense, right?
- [16:59]
A
I think what I mean is the fees to move your money are going to go to zero and that's where they enjoy a lot of revenue. I agree with you. There are community banks and there are credit unions that do give consumers value on their money and they don't gouge them with fees. And I don't dispute, I've never said I hate banks or I'm anti bank. Banks do serve a purpose. However, banks, just like everything else, needs to evolve and that's where they're fighting tooth and nail. They don't want to give up an inch.
- [17:31]
C
Yeah, I think that that's sort of true. Tomer, we got another.
- [17:35]
F
Hey guys, what, what I'm about to say is not intended to try to disagree with what's been said, but to add another pile of information. I was actually just before this, this show, listening to a podcast by a well known bitcoin developer who's spending all of his time on the technology called Nostr, which is, which most people see as a decentralized form of Twitter, but it's really a lot more than that. It's a whole decentralized platform besides the, besides the money platform, which is, which is bitcoin. And there's a lot of venture funding or just donation funding from like Jack Dorsey to developers who are working in cohorts on making this stuff work. And it's amazing how diverse all of the initiatives are. Many of them relate to some of the stuff that we're talking about here, like different ways to pay people, different ways to charge people. Rather than making everything a subscription. Being able to create like one example that one of the developers was talking about. This is going to sound small but like to create a virtual jukebox where you can put in 200 satoshis or something and choose, choose the next song to play and people who are in the same area can listen to it. And it's a social thing. I'm not saying that's a killer app or anything, but there are dozens and dozens of initiatives to make payment easier. And I think this is what relates to the comments that were being made before where you don't need an email address and an account number where so it's easier for the developers to develop and have security. They're just relying on the, on the, on the bitcoin rails and the lightning rails and the Cash mints rails and so there's just a lot of interesting stuff going on. I don't expect anything to happen Quickly. But my background, I came from the newspaper industry and I watched the Internet take it apart and destroy it. And I've always felt that there's so much similarity in the banks. I'm finally making my point here. The banks are these deeply integrated jack of all trades. They do everything just the way that the news, the newspaper gave you news, it gave you national advertising, it gave you local advertising, gave you classified ads, it gave you local news, it gave you sports results, cars, it was everything, all integrated. And it was, and, and it was because they were the only entity in a given geography that had the infrastructure to distribute all of these things. And then the Internet came and took it, took it apart. Craigslist took away the classifieds and the job boards took away the career ads from the classifieds. An auto trader came and took away the auto ads from the classifieds and all the different news things sliced and diced it. And I think this is the fate of the banks and whether they know it or not is a little bit irrelevant because if they, even if they know it, they're going to fight it and if they don't know it, they're going to resist it through inertia. But it's coming and, and it doesn't happen all at once altogether. You know, different things, different things on the Internet, when it went to media took over, took over at different points in time. But gradually everything settled in. And I, I don't know the last time I saw anybody reading a newspaper, it's been, it's been years. But you know, 25 years ago, these were enormous, dominant, powerful entities. I'll stop there.
- [21:00]
C
Yeah, I mean, look, I think the analogy is a really good one. I mean, newspapers haven't gone away. Sadly, the New York Times is still available to spew the garbage that they're doing. You know, people Pulitzers on articles that are completely fabricated, yada yada. I subscribe to the New York Post because I love their sports coverage. So, you know, whatever. I mean, it's just that. But you're right, it's democratized that you don't have to pay for the whole thing. And I can't remember the last time I held a newspaper and got newsprint on my hands. So yeah, to that degree it's gone. But banks, the functions of banks that matter will survive the, you know, where they provide value, the other ones won't. Matt, welcome. Good morning. Good morning, guys.
- [21:38]
G
Great space. Carlo continuing to kill it. The book, the stablecoin, all the information you're putting out on the timeline man, flowers and kudos to you. My question though guys, is what happens to self custody? I mean, I think that should be the big question. Cause the bill seems to focus heavily like on the exchanges and the brokers and the dealers and the AML rules and the regulated digital asset intermediaries.
- [22:00]
C
Well, that's the whole point of section 604. That's why I started with it. Okay, 604 basically says that if you build code that you're not a money transmitter. And so it explicitly, explicitly cars out. It's not perfect. There are lots of people who have criticisms about it. But effectively the bill protects the right to self custody. That's exactly why the amendments are being pushed. Because people like Elizabeth Warren don't like self custody. They want you to have to use someone that she could put her thumb on.
- [22:29]
G
Yeah, so will the banks sell access while discouraging actual Bitcoin ownership? You know what I mean? Like hey, we want you to buy Bitcoin, we'll custody for it, for you. But you can't hold it, right? Is that kind of the, the end game?
- [22:39]
C
I mean, you know it, when I hear words like that, it reminds me, just keep, keep in mind I spent almost 10 years at Morgan Stanley. I spent 14 years at, from Solomon Brothers through Citigroup. So I, I spent a lot of times within these organizations. They don't work the way that, that the Internet thinks they do. So inside the organization you have the people at the top, at the strategy level who want to delay everything. They want to slow everything down, but then they have one level down where they tell their people, listen, we're probably only going to be able to delay this shit, so we better figure out a way to compete. And so they try. And they're not very good at it. I'm not going to lie about that. But they're doing it. So what you're going to see, forget the policy conversations where it'll be delay and then if not delay, at least get what we want. And then if we get what we want, we'll participate. When they offer a custodial option, I think the market will force them to allow self custody. But there will hope, just like Coinbase does. Coinbase has a lot of people using them. Coinbase gives you the ability to pull your bitcoin into self custody immediately after you buy it. But a lot of people don't.
- [23:42]
G
So let me ask you a question then, Dave. So if we get to this point, what is going to be the incentive for me or anybody who has bitcoin to go to bank of America and say, okay, bank of America here, custody my Bitcoin. What's going to be the incentive that I get back? Are they going to give me their own stable coin or are they going to give me some sort of.
- [24:00]
C
The incentive for custodying bitcoin at a centralized custodian that is safe is if you die, probate's not going to be difficult for your, your, your assignees if the person that, that, that inherits your wealth doesn't know how to use a bitcoin wallet. The, the, the it, it's. So probate is clearly a big one. Another one is no one can wrench attack you because it'll be reversed, right? So they can't go in and say give me your keys or we kill you. And so it's the same reason why people don't leave cash stuffed in their mattresses in their houses. I mean, some do, but very few do. They leave banks and they get screwed for it because when they deposit money in a bank, banks often used to charge fees for that. The Swiss banks still do. So it's really security and safety. And then people will make their own decision of where to hold.
- [24:54]
G
And would these crypto deposits be f. Insured then do we know?
- [24:57]
C
Well, you don't need it. That's the thing that's interesting. People forget and this is. I'm gonna, I'm about to trigger Carlo again and I still see your hand. I don't know if it's a new hand. Car that's new. But the only reason for FDIC insurance is, is because of fractional reserve banking. It's because when you give your bank 100 bucks, chances are they only have $5 in their reserves of it. The other 95 are lent out or spent or done whatever for people to the guys who, who are floating on their yachts and going to, you know, traveling with, with, with Trump to, to see the premier of China. Those people get their bonuses. I mean they don't hold it. So you needed FDIC insurance for runs in the bank if you custody bitcoin. If the banks lend out the bitcoin and do fractional reserve banking on the bitcoin. That's a real effing problem, Carlo.
- [25:44]
A
Yeah, no, no, I just wanted to add to that, you know, I, I run my Stablecoin solution show every Friday on, on X Live and then I repurpose it as a podcast and I try to bring in my co host who. Dave, you had a great conversation with John Wingate over At Bank Social. And I like to bring John on because he talks about this very thing. He is building the back end for regional and community banks that you can self custody your crypto and then seamlessly move in and out of your crypto back into the bank ecosystem all in one banking app. So I agree with everything you're saying. It's. It's a hybrid situation where you can have the best of both worlds if you want it, but you can't have any of this if we don't get clarity because you have to have the clear regulatory framework for how custody of crypto works within the banking infrastructure. So check out John at banksocial if you want to learn more about that, because he is doing very innovative stuff in that. In that world. He's a. He's a big believer in self custody.
- [26:48]
C
Yeah, I think that, I think that, that what he's doing makes enormous, enormous amounts of sense and in. People need to understand what that means. I mean, the title of the show today is about, you know, Crypto Takeover Accelerates. The truth is it's not really a takeover nearly as much as it is. The technology's promise is being adopted. And how much of that is investable is a totally different question. But that's important. David.
- [27:13]
E
Yeah, Dave, it's an interesting topic that you just touched on here about, you know, custody, self custody. But I was thinking more broadly about building investor trust in terms of intermediaries in the system. I was at a Boston blockchain event two days ago and talked to a guy, Chris Rice, who advises the SEC on markets and trading and just raised the idea.
- [27:37]
C
I've known him for 20 years.
- [27:39]
E
Yeah, no, no, he gave a great presentation and we had a nice chat afterwards. But I kind of just raised a broad point, is that, you know, we had, remember, bank runs back in the 1930s, the Great Depression, you know, obviously the market crashes as well. We built up organizations like the FDIC for the banking system. We have SIPC for the security system. You know, I'm just thinking about looking at intermediaries and the extent to which people get their crypto just taken from hacks. I come at this from a security angle. What would be your thoughts on setting up a similar organization with regards to digital assets?
- [28:18]
C
I personally don't think it's necessary. I think that what's necessary is clear bankruptcy laws, clear rules that if somebody commits fraud, they go to prison. Right. So in other words, if a crypto, the market will be fine. If, if in fact, you deposit your bitcoin in an intermediary and it's set and it's ring fenced and if they ever attempted to do anything with it without disclosing it, such as rehypothecate it or use it for something, they go to jail. That tends to stop most of the fraud. People ignore the fact that a lot of manipulation and fraud happens because people think they're going to get away with it. But it's really a teeny tiny percentage percentage, you know, in things like that. So I don't think you need deposit insurance. I think what you need is a clarity bill. What you need is the fact that you know, people like Elizabeth Warren. The question that she'll never answer is so you want to keep the system where FTX was allowed to steal money from FTX as well as many others. Right. You know, I won't go through the litany steal from Americans by lying to them because they were offshore entities that Americans used. You want to keep that as opposed to having an American regulatory system. And she'll never answer that question. She'll divert away from it. But the fact is that's what she wants. Why she wants it, I couldn't possibly tell you other than the fact that I think, well, I don't know, that's speculation. But the fact that that's what she wants matters. But does that make sense? David, do you understand what I'm getting at?
- [29:45]
E
Yeah, no, no, I do. I do have SIPIC for.
- [29:50]
C
Because the reason the SIPIC exists, it's not the fdic. They have, you know, the securities Industry Protection Corporation and it gives you the same sort of thing. But the reason for that is because broker dealers all, well not all, but a lot of them have principal trading operations, et cetera. And because that when you have securities you don't own. So you have your account at Charles Schwab, you do not. You think you own 100 shares of IBM. You don't street name. It's in street name, which means that Charles Schwab has a claim on assets that are owned by DTCC effectively and therefore in a bankruptcy it is non trivial to retrieve those. So they have Succipic, which gives you the explicit confidence that in this convoluted thing that they built. Because you don't actually own what you own, it matters. Now in the case of Bitcoin, you're going to own it, right? And so you don't need that. And so it could be done that way. Now to the extent you want to allow the bank to operate a digital credit stack like MicroStrategy does, as long as they disclose it. And you know that in the case of a bankruptcy that, you know, you are in the pecking order with the bank because now you've opted to get an enhanced yield product or something, that's fine, as long as you know what the risks are. That's the important thing. It's all about knowledge of risks.
- [31:10]
E
Yep. Well, I would just say that when you mentioned fraud, you know, we know the justice. The wheels of justice grind slowly. They caught up with sbf. What about World Liberty Financial? When do we get justice there?
- [31:24]
C
It's a great question. It's a really great question. Look, I am not an apologist for anything. I just haven't seen. World Liberty Financial is. Is literally doing exactly what a lot of other crypto projects done. I mean, you have a governance token that gives you bupkis, right? I mean, I've said on this space, and I'll say it again, I think Gensler is an evil genius. I think he was told by Warren to sabotage the crypto industry. And so he created this loophole, knowing he was creating this loophole called the governance token that gave investors no rights because they were not securities, and by doing so knew that people in the crypto world would use it to fleece investors. So it became a legal way to take advantage of people. And I think it was terrible for the industry. I think it was awful. And I think he achieved exactly what he was trying to achieve because as I said, Gary is a very smart man. And when a very smart man has the incentive to do something bad and it's legal, they'll do it. Because there's no morality in our government leaders. There have been studies, I was reading one yesterday that goes back and it talks about it. People act in their own perceived self interest. You know, these public servants that we have, quote, elected or appointed, very few of them act against their own self interest vis a vis, you know, the public good. Some do. There are a few. There aren't many. I mean, our friend John Deaton would be one of them if Massachusetts is smart and puts them in the Senate. But, you know, there are very few, so, I mean, it's a big deal. But that's what went on there. I mean, let's make no mistake.
- [32:57]
E
Excellent.
- [32:58]
C
Thanks, Matt. I see a bunch of emojis. Anything to add on that?
- [33:05]
G
No, I just. I thought that was a really, really great point, though. Yeah, sorry, I got, I got a call coming here. I got, I got a great question.
- [33:12]
H
Okay.
- [33:12]
C
Sorry, guys. Yeah, so I Mean, you know, when we, when we look at what's going on, it's a lot of theater. I mean, but you know, if you look at the markets, I mean, it's, it's a really interesting dichotomy. I mean, you know, there's green shoots in a lot of places. But Scott mentioned and others said that bitcoin dominance is much higher. I mean, I look at the bitcoin eth ratio and it's getting back down to low levels. I mean, you know, ethereum is. Looks kind of sickly here, relatively speaking, but most everything else is kind of hanging out. I mean, William, you haven't talked about this yet, but I know you care about ethereum and the ecosystem. I mean, how much of this do you think is just the calm before whatever happens when we finally get somewhere knowing where the crypto industry is going to go?
- [33:55]
H
Yeah, I think that's what you said. I agree with that. It's in a sitting mode. It's unfortunate. It's almost at the same place that it was five years ago from a price perspective, whereas from a market share and a adoption use cases, utility, you name it. And I keep writing about this day in, day out.
- [34:20]
C
Oh, can people hear William? Or is it. Or can you hear me?
- [34:26]
E
If I was a dog sensitive to high pitched sounds perhaps, but no.
- [34:31]
C
So you guys could hear me. But William, stop. He probably got a phone call or something. That's what usually happens when you get that. But I think the point that utility is increasing is kind of the point. I mean, you know, we were. There've been a bunch of conferences. I was at could consensus right after my trip to Italy, which by the way, Carlo, I forgot which one of your recommendations we follow, but. Oh, I remember, yeah, you gave me one really good recommendation. That food hall that's kind of tucked away was amazing, by the way, so thank you for that. But at consensus, the one thing that was the most important thing that I saw was a lot of friends. Like someone mentioned, you know, Chris Rice. Chris Rice, for those who don't know, was that he had. We lost you at like, I don't know, right in the beginning, William. It went away. So you may want to repeat your point. I was just trying to fill in.
- [35:23]
H
Right,
- [35:25]
C
yeah, but I, I can hear you now. Even though you show, you show as a listener.
- [35:31]
H
Can you hear me?
- [35:31]
C
Can you? Yeah, we hear you. Can you hear us?
- [35:34]
H
I can't hear anything.
- [35:36]
C
Okay, hold on.
- [35:39]
H
Well, sorry about that then. I'll just shut up until I hear.
- [35:45]
C
Can't. Can't hear William. Okay, hold on. I'm gonna do this. Let me sit, let me see if I can try to do the, the thing and I, I don't, I want to, I don't remove from speakers. Okay, removed him and now I go down to listeners and I ask him to speak. We'll see if this works works. We'll see if that works. Okay, then we can hear what he has to say. If he could come back up. William?
- [36:10]
H
Yeah. Yeah.
- [36:12]
C
Can you, can you hear us now?
- [36:14]
H
Yeah. Yeah. Did I, when did I drop off? What was I saying? I'm not.
- [36:18]
C
I think you said about three words and you went blank. I, I mean this platform is always adventure.
- [36:24]
H
Sorry about that. I, I noticed later when I was rambling, what I was saying is I, I agree with what you said, David. It's, it's mindboggling. As to why Ethereum hasn't done well from a price perspective, many have pointed out it is about the same place it was five years ago from a price perspective. But when you look at its adoption from a utility and usage point of view, it's, it's easily five to ten times more than it was. So it's really mind boggling. I was, I made a, I wrote a post yesterday comparing ETH to the US dollar. If you want to think of ETH as money for those that do, which is. It's part of it, it's a component. Why is the US dollar so valuable? As we well know, it's not just because it's being used in the U.S. it's because it's the currency of choice for pricing oil, for pricing commodities. It's the largest, it powers the largest stock market market in the world. You name it, it's denominated in dollars. So the analogy could be said for Ether in the on chain economy, ETH occupies a large share of the cryptocurrency economy from a velocity point of view, meaning how much, where it moves and how much of it moves. It's currently in the order of $2 trillion on an annualized basis and when you look at stablecoins, only 8 trillions in one quarter of 2026. So there's a lot of movement of eth. The analogy being the US dollar moves and ETH moves as well, so it should be valued more more. And I'm mind boggled as to why it's not.
- [38:19]
C
Well, I think my, I'll give you my answer and Carla, my answer is it's very similar to what happened in the Internet bubble. So you had this situation where people were valuing companies based upon absolute complete bullshit metrics, but they were those metric, you know, eyeballs, yada, yada, yada, stuff that didn't make any sense, you know, but there was value there. So if you look at companies that actually were able to build a network that got people to look at their stuff and keep them looking at their stuff, eventually they were able to monetize. But if you look at the actual assets, they went up huge, they crashed huge, and then the ones that actually were able to start monetization did extraordinarily well. So investors learn from that and so they start building those things up again, etc. So in the, in the first place, first crypto bull market five years ago, a lot of things, Ethereum among them, got up to crazy heights that needed to grow into where they're going, and now they're in that grow into it possible situation. The fact that it hasn't crashed anything close to what did in the Internet bubble is because people see that they can have a chance to grow into it where it grows into it. Well, that's the issue. And honestly, I think Ethereum would have crashed significantly more. I think Ethereum would be like five, somewhere less than a thousand, probably about five to 800 somewhere like that if Tom Lee didn't jump in and do what he did or. And nobody else did the same thing. So. But that doesn't mean that it belongs there. That doesn't mean that it might not be an incredible asset if in fact it continues to grow. But I think that's what happens in markets. So I saw Carlo and then Tom, but William, you're free to comment first.
- [39:55]
H
I mean, it would be a bit of a stretch to say that if it wasn't from Tom Lee, Ethereum would be five to a thousand, as you said. I mean, if that, if you believe in that, where would that put the others? Imagine, I mean, Solana would be at 20 bucks if you want to take the ratio. There's nothing peculiar.
- [40:16]
C
Treasury bought it and nobody jumped in when they did. I don't know where it would be, but it would be.
- [40:21]
H
It was not just Tom Lee. It was sharply. And I mean, it's, it's part of it. BlackRock is also supported pouring it. Yep. Yeah. I mean, stretch.
- [40:34]
C
I think it's a little, it's a little hyperbolic. I get that.
- [40:37]
H
Okay.
- [40:38]
C
To get people's juices flowing and that's my job.
- [40:40]
H
Yeah.
- [40:41]
C
Good job. Okay. Carlo, then Tom.
- [40:45]
A
Yeah. This is kind of out of the box thinking on ETH, but I've been studying a lot lately on the X402 innovation. For those of you familiar, you know, the Internet was created with several HTTP protocols 404, 403 for a bad site. 402 was supposed to be the payment component of the Internet and it was impossible to implement it because you couldn't do it with traditional credit card payment Rails, you couldn't adapt micropayments. So then Coinbase innovates and comes out with this X402 built over base which is obviously an L2 of Ethereum. And now you open the door to autonomous agents being able to pay themselves in micropayments. And that I think is going to be the future of movement of money and exchange of money over the Internet protocol. And I think Ether needs to pivot from being quote sound money to being much like we are now starting to see funds that are valuating compute in the AI sector. ETH is the plumbing. ETH is the delivery mechanism. And I think its core value and the way it needs to gain revenue is from that component from being the core key smart contract executable, battle tested railway for the entire agentic AI business model that's about to come on very strong.
- [42:20]
C
I think that, that.
- [42:21]
H
Sorry, yeah, I need to jump in there. Like what tells you that it's not,
- [42:26]
C
you know, and it's all of the other.
- [42:27]
A
I'm not saying it's one or the other, I'm not saying it's not one or the other. I'm not saying it's not sound money. But I think if, if it's looked at as the plumbing, the infrastructure, I think there's more value to build on it and increase its token price based on the fact that it is what it is. I mean it is the backbone of smart contract execution and it's battle tested. But I think it is more of a compute layer than a currency layer, if that makes sense. And I'm just. This is something that just popped in
- [42:57]
C
my head, but I, I don't want to jump in. And Tom's been patient, has had his hand up.
- [43:02]
F
So
- [43:04]
D
yeah, you guys know I've been an ETH bull for quite some time, so I echo a lot of what William feels and Carlo is sort of expressing there. You know, in my mind this is really just sort of a mental model shift on how we value these assets. I think it's absolutely hilarious that we invent a new asset class, but we want to go back to the old valuation models that we've been banging the drum on for decades. You know, DCFS were invest invented what, 70, 80 years ago? So is it weird to think we can build a new financial model for some of these esoteric assets like digital assets are? I think it's fundamentally silly to look at them on a cash flow basis, particularly when adding more cash flows is increasing fees for users on the network and reducing network effects which you're trying to build with these assets, particularly in an area where you have race to zero fees, particularly in AI and agents at all those things. So, you know, I honestly just, I had a head, a reflection the other day. I, I am very surprised, almost in disbelief that Tom Lee could buy 5% of all ETH and 32% of all ETH outstanding on exchanges, which is an even bigger number, and the price go down, right, or basically be flat. And the only reasons I could really think of were, well, one, this is sort of the exit liquidity for OGs, which the data sort of bears out. And then two, it's really this mental model framing. We have to start thinking of new ways to value these assets. And I propose one, and just in broad strokes, it's really understanding that ETH secures x amount of value, say it's a few hundred million today, the asset itself, because it's a blockchain and it's proof of stake and you have to use that as security on the network. To secure the network as sort of an attack vector, it has to be worth eth the asset, some portion of that total aggregate value that the network itself is securing. So you could dive in and say, okay, if ETH is securing a trillion dollars, it should be worth maybe a third or fifth or an eighth, whatever it is, to potentially acquire the amount of ETH needed to attack the network and gain some level of control over those assets. And it's not always clear as that. It's not always I acquire enough eth, I can attack the asset directly. But there's some logic there that I think makes a lot more sense than just saying, like, okay, we need to do a DCF on the fees that Ethereum is making today. So for me, it's a lot about a mental model shift on how we think about these assets and then understanding that there's a new framework that's needed here. And I think ETH is just kind of coming around to that reckoning. And I think, hopefully, knock on wood, a lot of the OGs who needed the exil liquidity and wanted it probably used tum le purchases to Actually facilitate that.
- [45:47]
C
That, that part seems, seems very, very clear. I can't tell Carlo and William, I see both your hands up. I have no idea if they're new.
- [45:53]
A
Mine's legacy.
- [45:57]
H
No, just a quick one. I mean I think you have to think of Ethereum as many, many things. It's not just one thing, the same as the Internet. It's not just one, one thing. And it's all of the above them, the money aspect, the infrastructure aspect, the smart contract aspect, the agentic aspect, and so on and so on. And that's where the difficulty lies in terms of understanding it. And it took a while again going back to the Internet to have it understood the way it is today. And it's going to take a little bit longer for us to understand a general purpose, multi purpose blockchain like Ethereum is. Because it's not just a one trick pony. It is, it does multiple things at the same time and depending where you touch it you will. Again, the elephant analogy. Depending where you touch, you'll describe it in one way or the other and that's really the main thing.
- [46:59]
C
Yeah, no, I think that's all true. I mean we could go out, you could go out and start looking at valuation points of view. But the truth is the market isn't going to evaluate the supply demand dynamics of Ethereum until it's very, very clear. It's always been on the hope and the momentum. Your point is that moment momentum is manifesting and therefore you should be more certain of it. And that's okay. I mean I have no problem with that. But it's a question of models and it's a question of what's the value of this thing. And the conversation about money is what gets, that's what gets the Bitcoin maxis to call Ether a shitcoin. Right? And I have a problem with both. I have a problem with people on the Ether side saying, well, it's money. Money is something, something that you know, most people believe should be divorced from the, the state would be a better thing. And that's a very large part of Bitcoin's credo. But would you trust something that was created by a foundation and distributed? You know the interesting thing about Bitcoin as a digital commodity, and that's why the whole thing about satoshi is such a big deal, is that it's truly decentralized and no, truly decentralized, yeah.
- [48:15]
D
Another piece of none of this stuff is money. I think we just need to look in the mirror. Anyone who's still saying that in 2026 I think is just calling themselves out. I mean the dream and the vision of being able to spend a bitcoin or satoshi or whatever or even an eth to buy something is maybe useful in certain settings. Like okay, NFT is great, but long term sustainable. I think it's very much proven that these assets are way too volatile to make that happen. So store value.
- [48:39]
C
Yes, I disagree with you more. We could actually go down this. But look, my mental model, Tom, and you've heard me say it, is that bitcoin is an option trades like an option on its own potential to become money, to become a stable store of value. Until it actually gets to that point, it's not there. Like gold. Today no one's spending gold. Right. Why? Well, because it's a pain in the ass for starters. Right? You're not bringing your gold bar and shaving off a little bit to buy a cup of coffee. It's just not happening. Or you have these little tiny little gold coins, but it's because it's a pain in the ass. But gold was money for thousands of years.
- [49:20]
D
Yeah, but we've certainly evolved beyond that. And I would even say it's not the portability of the asset, it's the volatility. More than that. I mean if I hand you my gold ring and you know exactly how much it is, you have to worry about all the intricacies, the price dropping 8%, 10% today, I have to liquidate it, I have to do all those other things. I think it's more the volatility. And if you want bitcoin to stay at one relatively stable level or ether, whatever. Yeah, I think that's totally fine and calling the money at that case. But then I think it degrades a lot of the other properties that make the asset actually useful. So I personally have never thought of these assets.
- [49:58]
C
Well, it's not the reason. Look, most people who buy bitcoin buy believe it's dramatically undervalued and therefore they don't use it to spend it because you have capital gains, you have all sorts of things. The volatility, I mean, look, what you're basically saying is the only thing that can be money is something that's manipulated to have low volatility. The dollar would have enormous volatility, has had enormous.
- [50:19]
D
I don't think that's wrong. I don't think that's wrong.
- [50:22]
C
Right. So you want something that's manipulated. There is a reason why. So there are a lot of countries out There that have dollarized their currency. They do it specifically for that reason. But what does that mean? That means they are forced into manipulation. Is that good or bad? I don't know. You can have that discussion. I mean in their cases, most of the places that have done so have reaped benefits from doing so. So that would argue that you're right. But it's a really interesting conversation and it doesn't really impact most of everything else we talk about, which is what's the utility and, and what's going on and who's going to own it and who's going to control it and where is it going to manifest. William, is that a new hand?
- [51:03]
H
No, no, that's an old one.
- [51:04]
C
Sorry, you can never tell. So I mean. Yeah, but I mean the money conversation is different than the utility conversation for damn sure. And I think that was Carlos point. Carlos point is that the plumbing, the infrastructure that's being built that's getting used by pretty much every firm. I mean, you know I were on, I was on this space and we were listening and there were people a year ago saying there's no way big institutions are going to use public blockchains because they're going to build their own. And we saw Circle, they launched their own. But that's a very specific case. The reality is most big firms don't want to build something their own for a couple of reasons. They want to be deniable, they want to say listen, if it breaks it's not my fault and it's very expensive. They don't want to spend money to build something when they don't have to. So that's really the question. And here now we're kind of in the situation where we've already seen the financial firms have pretty much all said listen, we're going to build on Ethereum. Some are building on Solana, some are building on a few other things, but they're not really building their own. Right, and that I think is Carlo and Williams point and yours as well about where Ethereum is going because a lot of people are opting to use it. Am I getting this right guys? Because you're more the bulls than I am.
- [52:22]
D
Yeah, I would say directionally correct. There are more challengers than I think William sort of led on to or that we all appreciate. I mean Canton, really strong traction, tempo strikes, blockchains that are coming out. I mean there's a number of others that are seeing stablecoin RWA level adoption and trying to grab a piece of the pie for themselves. Now I don't think any of those solutions are really credible because. Because they're not decentralized and they are captive to this one party. So if you're a competitor, why would you want to use that network? Unless you form some sort of consortium, which has failed a number of times here in crypto. So I don't think those are legitimate challengers, but they are out there and they are accumulating a lot of assets today.
- [53:03]
C
Yeah, well, I mean, Canton has a specific thing which is there are lots of use cases. I'll give you one. So let's say you're talking about stock owners, ownership. Nobody. Who. Well, I shouldn't say nobody. The big players in the industry like the fact that you can accumulate a position without the world knowing you're accumulating a position. That. That is extremely helpful for two use cases. Use case one, I'm an investor. I'm gonna. My plan is to buy 100,000 shares of something, or let's say 10 million shares. Let's make it easier. I want to buy 10 million shares of this company to. In my port portfolio, I bought the first million. I don't want the price to ramp up like crazy because people know I have 9 million left to buy. And so that's an important use case, and we all understand that. One second one. I want to buy. I am looking to buy a control stake in a company. I don't want the world to know about it until after I have completed the acquisition of my control stake. And so we have rules that do that in the equity market. And I don't think anyone's arguing that there's anything wrong with that. That's the choice of market participants. Canton allows that. A lot easier than using a public blockchain that doesn't. That isn't permissioned completely. And so, yeah, I mean, but that's different. And, you know, Scott had interviewed Arthur Hayes this morning, and he was shitting on Canton because he said, well, it's not really private like zcash. And that's true, but it's not about privacy in that case. It's about a very specific thing. But there's all sorts of use cases in finance. And Tom, you're involved in a lot of them. And so, you know, that's why you, you will have differences, and that's why there will be more than one blockchain. Don't you agree?
- [54:42]
D
I do. I. I do think we'll eventually coalesce on Ethereum or Solana or one of these decentralized networks. Being the preferred asset ledger base just because they are credibly neutral and not favoring one individual party. But I still think we're in the kind of shakeout phase as we kind of re explore this. Let's call IT Corporate Blockchains 2.0, which I classify Canton as, even though I might get a lawsuit thrown at me. How litigious those guys are. Yeah, yeah, yeah. I think we're still, unfortunately, in another shakeout phase again, which, you know, William brings up a lot of good points, but I think people want clear, very simple narratives, which is where bitcoin is won. And Ethereum, Solana, and all these other assets are still extremely muddled and nuanced. And anytime you have nuance, particularly in an age of hot takes and quick hits, it's really, really hard to explain that to people. So we're still on the path.
- [55:37]
C
Yep. I agree. I agree. Well, I think we're kind of at time, so unless anybody has anything else to say, we're going to call it for now. Anybody have any last words? Carlo, anything else you want to say?
- [55:49]
A
Other than no, But I think tomorrow will be an interesting day as we see this markup hearing at I think 1015 Eastern.
- [55:56]
C
Yeah, it'll be. It sounds like it's going to be contentious, so I guess it should be interesting theater, but that's what it is, theater. But let's see. Anyway, everyone have stay safe out there. You know, it's.
- [56:07]
H
It's.
- [56:08]
C
I guess bitcoin is falling. People are panicking, but, you know, whatever. Anyway, we'll. We'll see you all again on Friday morning, and hopefully we'll have something to talk about from the hearing that's about to happen.