Rahm Al Awalia (2:45)

start with one or two views. Yeah.

Austin Campbell (2:47)

What, what do you think is going on here?

Rahm Al Awalia (2:49)

Clips on repeat. It's the same view. The same view, guys. They thought about dats. Dats, I think I said two months ago, dats are in a death spiral. They're still in a death spiral. They're still in a death spiral. No view change. The higher level is crowdedness. Anything thematic is crowded. Had a Kol behind it. Bitcoin had Michael Sailor, Ethereum had Tom Lee. The quantum had what Cathie Wood. And there's more, there's each of these things had some influencer, had some crowding and that clouding is being unwound. And so the way move is rotate into things that are not thematic, things that sound very boring, unsexy, maybe metals, maybe waste management, maybe oil field services, things that have free cash flow. But I think the other part of it, you see a lot of economic, the effects of this economic populism is starting to weigh in on markets too. Like the, you know, Friday the Supreme Court ruled that the tariffs were unconstitutional, which is the right decision, the right ruling. And then you had the tariffs reset to 10% globally, that increased to 15%. You know, like markets are just tired of this volatility. I think the public is tired of it too. You know, I think, and when we look at that, I think people say what's the, how do we discount a Democratic win of the House? And that's negative for asset prices too. Think about how many themes Trump is linked to in public markets. He's linked to the AI theme, to the data center theme. He's linked to tobacco stocks. He's linked to nuclear energy stocks. He's linked to, he's linked to crypto directly. He's linked to financial deregulation. So yeah, it's, it's, you know, I think we had a nice reset today. We had a clear reset today. But I, I do think like how you position this year will be almost antithetical to what worked in the last two years.

Austin Campbell (4:51)

All right, so let me ask a couple of leading questions based on that one. Where is slash? Is there a bottom for dads or do you see the eventual end of the death spiral for these entities being most of them call it torn apart, shredded and taken out of public park.

Rahm Al Awalia (5:09)

The bottom happens and it'll present itself in almost obvious way. So you just have to wait for that moment. I can't tell you what that event looks like, but it's going to be when people like me see value. Because that's how it always is, right? When people are short something, they don't like it, they finally say, gee, that's. That's just too low. No, that has like that. You know, maybe I should go buy that. This has really come too far. That's when you start to see things bottom. Like there could be a local bottom now, by the way. It's possible. It's very quite possible. Just technically. Right. But is it the ultimate bottom? That's a different question. And a lot of people get chewed up in these bear markets trying to play hard games.

Austin Campbell (5:51)

So one of the things I've been watching in this space, Rahm, as we think about Bottoms, is also Gemini. And the reason I point at that one in particular is as we had the series of if Gemini had been in another industry, a stock that is burning a ton of money and losing money every year, even in bull markets where their competitors are making money and has control of the founders through the structure of the thing where they hold it tightly and so the public shareholders would never really be able to hold onto that sort of thing and affect change. Is the classic stock that is disfavored and in many cases won't IPO at all. But obviously that happened here and then the performance subsequently has been the sound of a balloon deflating. I kind of look at that as a bellwether for also what's happening with the DATs, which is to say many of these functionally just don't have a reason to exist as they are currently designed.

Rahm Al Awalia (6:45)

We get here real quick, at least one quick comment and pass them all to ami. But the irony about this cycle is that unlike prior cycles where you had VCs dumped on retail, you had them dump on themselves. The data issuers dumped on themselves. They thought they were taking the public money. You know what happened is this they fragmented liquidity needs to have a decentralized market or a small number of venues, whether it's Coinbase or maybe Uniswap where the trading happened. They took their asset and they put it into a public vehicle within market liquidity. Now it's all orphaned and that liquidity can't find itself. And so it's that it's. And it's got too much structure around it. Now Tom Lee's trying to buy something with Mr. Beast. The price goes down, does nothing. That's also bearish. So it is it is ironic. People believe their own BS way too much and kind of hung themselves with it. Omid, why don't you go in there?

Chris Perkins (7:41)

Here it comes.

Omid Malakan (7:43)

So first I I'll start with a nea culpa that I might have inadvertently minorly contributed to some of the early debt excitement because I co authored this blog post sometime, I don't know, year ago that kind of went viral where me and my friend explained how the one way in which non bitcoin DS could be useful is as giving exposure to fund managers through an entire blockchain ecosystem like Ethereum, Solana, et cetera in a wrapper. This idea that these are really their own economies and there's staking, there's defi, there's operating companies that it would be valuable to give someone if someone shows up and says well I want exposure to everything going on here, but I don't want to take the time to do the due diligence to figure out whether I should stake the coin or put it in defi and lend it out. So that was my naive thinking in the early days, but what was wrong about it? And of course all The MicroStrategy Post ETFs never made sense to me. I think we said that in the blog post that to have other bitcoin that's makes even less sense. But the things that I got wrong in retrospect was one my argument had an assumption of alpha, like whoever's running the debt actually knows what they're doing and they would be good at making decisions like how to deploy the coins, whether they're staking or doing DeFi. Two, even if they had alpha, you're talking about putting a hedge fund like investment strategy inside a public equity wrapper, which is probably a terrible idea because of the cost structure of a public company and also just the presence of daily minutely price discovery and liquidity. And the thing that I got the most wrong was just the propensity in crypto, unfortunately for every idea to go to its griftiest extreme. And the thing with the dats that to this day I think is the most outrageous because it both damned the DAT and whatever coin it was involved in was when they started it buying locked tokens from foundations and labs and whatnot, which proved a couple of things. One, clearly those tokens were not locked and two, the signal that sent to the market because so many of these crypto projects have stupidly launched with like a gazillion percentage of their token, you know, locked up or it's in an ecosystem fund or some other thing that has historically 100% chance of not working out. But you imagine you have all these what we used to call the low float high SVB projects and then they're sign like, oh well we had a bunch of lock tokens but we just sold some of those to the that to signal that sent to the crypto market is that none of those tokens are actually locked. So now the market has to digest this like oh, the supply that's available for sale is significantly higher than assumed. And the dats just became all about exit liquidity for labs and foundations. There were a couple of tokens that I think they did a sale to a DAT before the token even started trading. And I'm not going to name names, but that the kind of thing to me is like you do something like that, it's so irresponsible and reckless that from that moment on I just concluded this project will definitely fail.

Chris Perkins (11:23)

All right, enough of the doomsday guys. I'm starting off by saying if you didn't see the hockey game yesterday, you missed out. What an incredible experience. Sorry, did my Canadian friends second. Omid, you're also a fellow city, you're kind of a city guy. We crossed paths there. I remember years ago, Omid was holding up his helium deepen module and explained all the managing directors what he was doing. So here's a guy who's been around for a long time so happy that you're on. Look, my sense is that we're in a period of max uncertainty. And the fact of the matter is, is that risk assets, frontier risk assets like crypto and bitcoin don't like that. And we'll talk about it today. I think we're going to talk about it from the geopolitical Omid can't wait to get your perspective on Iran especially. But we got Venezuela, we got Mexico, things are going crazy. We have the tariffs, we have wars. Like markets just can't figure stuff. We got AI right. And there's just so much going on that's leading to so much uncertainty. Like I spent the weekend with my son setting up our cloud bot. Like that's pretty, that's pretty amazing breakthrough and like, and it really makes you think about just how big a change is happening in our space. So against that backdrop, look, what do we see over and over again? We see exuberance, right? Retail pours into something. Crypto's largely been a retail market. Crypto's not cool right now. Which I think is kind of bullish in certain ways. Everyone's messing around, getting their cloudback working, whatever. But as you start looking at the DATs, of course there's grift, of course there is exuberance, you know, But I disagree with Ron when he's talking about Tom Lee and Michael Saylor in the past tense, saying, had they had Tom Lee, they had. They still have them, right? Not all, like. And it's easy to talk in generalities because many of these projects are crap, just like the NFTs, you know, many of them were just garbage. But I do think that out of this shakeout, and one of the great things about bottoming is that these bad actors get shaken out. They go to find something else to grift, but that's where the value really can be identified. And I'll be honest with you, I was thinking about a couple things last couple days, and I'm weirdly positive. And I'll tell you why. I was like, why am I so positive? It's because I'm on the phone with institutions all day long. I'm on the phone with institutions all day long and they're like, yeah, gosh, did you see.

Austin Campbell (13:52)

But did you see?

Chris Perkins (13:53)

I saw this, like, big institutions. Did you see the zero launch? Oh, my God. That's a game changer for us. Oh, you know, these guys are doing great things with smart contracts. This is so interesting. And so, like, against that backdrop, you know, I, you know, I think my thesis is, yeah, retail's down and out, sentiment is awful, dats overblown, not dead, very in, like, they're operating at a really interesting intersection. You know, there's going to be a lot of public companies with crypto on their balance sheet. And, like, that's a thing, you know, are they going to use it maybe a little bit more thoughtfully? Yes. I actually like the beast trade. We could talk about that. But, you know, at the end of the day, I think we're bottoming. Bitcoin got hammered because the narrative broke down. Some of the early guys cashed out, and ladies and I was like, wait a second, you know, why isn't this working? It's acting like a risk asset. Look, at the end of the day, I think we're going through a cycle in crypto. The highs are high, the lows are low. We're at a low. And I think it's. I think we're going to move past it at some point. I can't tell you we're at the bottom, but I think we're getting there. Oh, here he comes.

Rahm Al Awalia (14:57)

Let me show you a data point. This is on ibit. You know, every quarter my team and I illuminated we go through the 13 of files, see who's buying what, who's selling. It's a great way to, to see what's going on. So you can see that top holders in ibit. So first off, Millennium's maybe the first name I recognize in the list. But you know, we also know that they're doing basis trades and they're doing trades with futures because they don't take really, they don't take net exposure. Right. So those guys don't really count. I see Rick12's wealth bought some bitcoin at the top of the market. It says the fundrating is zero. That's not a sign of confidence. I don't really see, I don't see skilled actors. I don't see big money buying. I bet these are small dollars. I think the institutions buying. The other thing you can see on that chart is when they bought, they're all down. They all bought at a higher price, they all lost money. They're not adding to losing positions. I think the institutions buying bitcoin and crypto is a myth. They didn't show up. Those that did, they got burned. They're not going to add to that.

Chris Perkins (16:00)

Again we talked about this. That's because of basis. How's basis trending? Um, Millennium can't, you know, Millennium can't go most, most institutions and by the way, I wasn't talking about just pouring into to going long on crypto and I think there's an ability to do that if you identify the project with the right fundamentals. I was talking about the integration of the technology which I think will lead to asset price. We could talk about value accrual but again like as institutions come into this space that the people that you're talking about, they can't go long, the assets too volatile. If you're at Millennium, you're down x percent a month. They'll show you the door. You need basis, you need features. Basis comes down then, then they have to pull back. So I, I, I think you need, I think a better metric would be one of of basis.

Omid Malakan (16:41)

Wait, Rom, how do you reconcile your view with the fact that the ETFs have still retained most of the money, the vast majority of the money that

Austin Campbell (16:51)

went in actually are there a lot

Rahm Al Awalia (16:53)

of net outflows from the ETFs I rec

Omid Malakan (16:57)

like on the, the far side Tracker, something like 60 something billion came in at the top and it seems like only 10 billion of it has gone out.

Rahm Al Awalia (17:11)

You know, I get electrical outages when I get asked hard questions. You want to figure that one out? I just wave someone over there.

Austin Campbell (17:19)

We should look.

Rahm Al Awalia (17:20)

I think, you know, prices will matter. You can talk about etf. It's just one channel for flow, right? A little lot of different channels. Flow. Overall, though, I'd say it reminds me of 2021 when there's a lot of discussion around treasuries buying bitcoin. It's like, oh, MicroStrategy is the first, and Elon Musk is here. Remember that? And I was like, well, who's in that?

Austin Campbell (17:39)

Who's the person that's going to announce

Rahm Al Awalia (17:40)

in the quarterly, Salem's going to talk to the board of Microsoft. Nothing happened. It's like sex in high school. Everyone talks about. No one does it. At least not in my high school. Maybe I went to the wrong high school, I don't know. But, oh,

Austin Campbell (17:55)

I knew this was going to be incredible. I mean, one thing I'll say on that front is one of the worst enemies of adoption of these assets and institutions coming into the space is crypto itself. Right? Like, as Omid was saying earlier, the amount of grifty actors in this space that are unpoliced is consistently a problem for getting, like, banks and RIAs and people like that to invest in these things. Chris, I know you've said things that I agree with about the Basel 3 risk committee being a problem in this space, needing to fix some of those sorts of holding issues. But, like, one thing I've noticed, and I think notably, we have some of the better communicators in the entire crypto space on this podcast right now is just that even now, today, when you go ask a lot of people, like, what is bitcoin and why would you buy it? The answer when you ask people in the crypto space to explain that to normal people is like some combination of word vomit and, like, religious evangelizing, and it just doesn't work. And so I think there is a long road to grind through a lot of that stuff, and that is making me pretty bearish in the short term right now. That's not to say I'm not a believer long term in bitcoin, but, you know, we had Nick Carter on here talking about the absolutely, like, underwhelming response to Quantum for bitcoin. I think crypto just is in the process of this causes a lot of bear markets of not just shooting itself in the foot, but, like, Stubbornly reloading and continuing to fire. Because like where, I mean, this would be my question, I guess, Chris, for you is where is the next leg of bitcoin buyers coming from right now? Like, I could see it 30 years from now, but in the next six months.

Chris Perkins (19:36)

Look, I. On the bitcoin front, it's, it's, it's, it's, it's narrative driven. And I think, you know, if you look at correlations between gold and bitcoin, bitcoin typically follows gold. I think it's about gaining that, that narrative back. This is a store of value. But like, I'd rather pivot to some of the other assets, to be honest with you. And, and if you think the next trend that I'm seeing, and I'm watching really carefully, I'm watching X402 stats, I'm watching EIP8004 engagement on. And what am I talking about? I'm talking about agent activity. Because the hot ball of, I don't know, it's not even a hot ball of money. A lot of focus now is on agents agentic activity. And I think one thing that could be the next leg up here is to start seeing some of this, I guess these predictions that the agents are now going to use these blockchain rails and so that could be the next thing. The other thing is we've talked about this in the past. You know, in a way, you know, what happened before COVID there was incredible uncertainty, incredible uncertainty. And then there was a ton of liquidity that came back into the system. You know, we're about to go through March Madness and March Madness is when everybody stops and they go after midterm elections. Right? And midterm elections are what everyone cares about. So the other thing that could lead to a nice leg up here is what's been impacting crypto for the last four years. As I've seen it, it's macro like, it's liquidity. And to the extent we've seen the liquidity picture shift, that would be another major. So anything that de risks this uncertainty increases liquidity. And the idiosyncratic new innovations, is it the agentic activity? Those are the things that I'm watching.

Rahm Al Awalia (21:18)

What about Erebor? Chris, you were at the event, was there Friday night?

Chris Perkins (21:21)

Yeah, I was at the event. It was pretty awesome. So Erebor, brand new bank led by Palmer Luckey, they just had an incredible event down at nyse. It was amazing. Yeah, look what you're talking about. RAM is like some of this foundational infrastructure that we lack. We don't lack great banking Rails and crypto that are fully integrated with stablecoins even though genius is becoming the law or is getting implemented. We don't like we talked earlier about basis we don't even have futures in most alts. You want to know why they're down 60 to 80%? Because no one can buy basis, no one can buy spot, no one can buy the DAT and sell the future. Like I think that's going to be another leg up for the dats.

Rahm Al Awalia (22:02)

So I was concept by the way I think a bank and digital assets makes a ton of sense. Great concentrate point. I'm a big fan of Palmer Luckey but let's go through a few numbers. $4 billion top of the market valuation. I think the net equity is 250 million talking 20 times price to book and Omid. I think you're at Citi what cities price to book I think it was below one I believe book to price in cities.

Austin Campbell (22:29)

Yes, that's correct.

Rahm Al Awalia (22:32)

So look you see like blue owls stocking crossed because they were making bad loans to tech software including to data center. What's Erebor's business model? They want to lend to GPUs that are depreciating where they have counterparty risk on Sam Altman. So this, this is the nonsense we saw in venture and in crypto. And what why you're seeing crypto correct fast is because it's liquid venture so it's repricing correctly and you still see a lot of nonsense in venture capital like insane valuations that are hiding out avoiding mark to market land stripe at 130 billion valuation while IODN is down 60% or PayPal is at 52 week lows at the 17% free cash flow yield. It's insanity. Mistakes were made, bad deals were done, prices were too high, the market caps didn't make sense and now we're coming to reality. It's the. It's the time for earnings yield free cash flow that is classic investing is

Austin Campbell (23:31)

back again though to be fair on that point, PayPal is probably a little bit too low. There was news that just hit about them potentially being a target for acquisitions. I think as of the time of me saying this they're up like 7%

Rahm Al Awalia (23:43)

about that we'll see but they're all down any payments company, right?

Austin Campbell (23:47)

Right. Some product.

Omid Malakan (23:49)

I.

Austin Campbell (23:49)

So I agree with that though part of that is being caused by stripe. Right. Like that is a PVP type situation. But I would say in the public market some of these things, by the way, we're seeing this with the AI disruption theme too. Like my favorite one, like today was a news article comes out and IBM's down 10% because Claude can optimize COBOL. Let me tell you, the optimization part is not the important part of cobol. Like I worked at a big bank. I worked at the same big bank as Omid and Chris, I also worked at another big bank. Chris has worked at multiple banks. Let me explain this to people who didn't understand that headline. That headline should tell you that person knows nothing about bank tech. Because the number one problem is these are like agglomerated Rube Goldberg machines that have been built over the course of 40 years where there's like a hamster that runs down a tube, that scares a bird, that flies, that rolls an egg down a chute, that makes like omelette, right? Like all of these things are happening. And the optimization of Cobal is not the important part. It's when you make a change, does it break any of the other stuff? That is the thing that they're optimizing for is don't break all the transactions. And so I think that is a severe misunderstanding of where value will be allocated in this market. Like another good example, EPIC not going to be disrupted by AI. Why? The software is terrible. Everybody fucking knows it. It's garbage. All of my family except for me works in medicine. Nobody likes epic. But you know what they're paying for the HIPAA compliance. Right. Like you've really got to understand these industries before you try to disrupt them.

Omid Malakan (25:26)

Yeah, I was thinking actually with this thing on Twitter making the rounds about like the what's going to happen in few years with mass AI adoption and all the disruption. And I have the same thought, Austin, that anybody who thinks that AI is going to be that transformative has never worked and start any kind of large bureaucratic organization. And I will say another mea culpa like from one thing we know from crypto is that the technology being ready to be used and society being ready to use it are two very different and in many ways unrelated things. And I feel like so much of the AI, the dupemorism, but also the whatever the opposite of that is, just skips the part where there needs to be massive social, cultural, legal changes to all the mores of how people live their day to day lives. And to me, no amount of greatness of the technology could force that to happen in a quick amount of time. And frankly even Chris, while I love your optimism the whole agentic commerce thing is starting to give me a little bit of like metaverse circa 2021 vibes where everybody just assumes that it will happen and spends all the cognitive time just thinking about the photo be impacted. But just as back then you just had to ask the question like, what does this mean? Like we're all going to spend 12 hours a day wearing a giant headset in a dark basement and this is the future of humanity. Like the, the same thing with the agentic thing. Like, I mean sure I can use AI to automate tasks that I do myself today, but unless I actually give it agency to go make hard decisions that I don't want to make, I don't see it being really impactful and I just don't see that happening now too. First of all, it's scary even to me. Second of all, like, what's the liability protection if my agent goes and does something illegal? Like how long is it going to take Congress and the courts to get around to answering that question

Austin Campbell (27:44)

30 for your agent hiring somebody to assassinate someone.

Chris Perkins (27:49)

I don't disagree with anything you're saying whatsoever. Are we in a period of exuberance? Yes, I think it's still building. I don't think we've reached peak exuberance on what, what agents could be. Right. What I'm trying to say is that the foundation is getting built though. And I think out of that exuberance there's going to be bad things that happen. Plenty of grifters, like how many people are getting ricked off because sign up to my my poly market bot that's going to make you a zillion dollars overnight. Right, but that'll all get. What I'm trying to say is that underneath and it's not going to happen overnight, but the foundations are getting built and there's going to be something that comes out of it. That's all I'm saying.

Omid Malakan (28:26)

I fully agree with that by the way. And I actually, I think the underrated crypto bullish thesis is the simple solutions that we're going to need to solve all the AI induced problems that we're about to have. Like I literally last two weeks ago was involved with a real estate transaction where the financier was Freddie Mac. And a week before the deal closed, they asked for cancel checks and bank statements to double check the supposed income stream for a rental property. And I just laughed out a lot when I got this. I was like, wow, like even with Photoshop you could fake bank statements and cancel checks. But now you could just like any kind of document verification, right? And it's. This suddenly becomes an exist, an existential need very soon to say, no, we need a different way to authenticate money or balances or cash flows. And it's like, well, we happen to have this crypto infrastructure that's perfect for that.

Rahm Al Awalia (29:31)

You guys saw this at Trini article that went viral this weekend?

Chris Perkins (29:35)

Yeah, that's what he's talking about.

Austin Campbell (29:37)

Yes.

Rahm Al Awalia (29:37)

Yeah, exactly. A few, few quick observations, like one is markets right now have this contradiction, right? On the one hand, there's this AI apocalypse theme. White collar jobs are going to go away. On the other hand, you see the stock prices of Oracle down 60%, Microsoft down 18%, max 7 in a correction. Anyone lending private credit to data centers in a correction market saying, hey, I call bullshit on AI and markets saying then our AI is real and it's all going to fall apart. So part of this is like we underestimate what'll get done in 10 years, but overestimate in one year. This is an expectations mismatch gap. And that's happening.

Austin Campbell (30:13)

True.

Rahm Al Awalia (30:14)

We're not going to see humanoids in 5, 6, 7, 8, 10 years. We're going to see robots that shovel snow, robots that rake the leaves, that deliver packages. But to Yomit's point, agency and accountability and decision making, you know, we'll still be there. So a lot of this now is emotional, that's one. But also the reality of capital markets dependency that these data center companies have, I think that that is getting priced in. These software companies aren't going to go away, but many are still egregiously overpriced. Not all of them, but you still have like many like 60 times earnings.

Austin Campbell (30:52)

I think there's another part here which is that, and this has been a problem for crypto as well. Back to Omid's point about asking essentially, where's the there there on the metaverse is also, even if it's a thing, where's the value accrual, right? That is to say, the thing that everybody pushed the valuation up on in AI was the model companies. Is that where the money is going to come out? Because to me, the smartest play in AI so far has been Apple, where Tim Cook just sat on his hands, did nothing, didn't change his capex at all, waited to see who was doing the best job and then was like, well, I can go partner with you and get a really good deal out of it because I have all the distribution of customers, right? And sort of in a Similar way, like we've looked at crypto and there was the whole fat protocol thesis that I think as time goes on, it's becoming increasingly clear some of these protocols are going to be pretty skinny, that we may also have the value problem in AI of even if the aggregate valuation of the space is correct on average over time, which I think it's too high ram, as you said. But even grant that it's correct, do we have it in the right Earth?

Rahm Al Awalia (31:59)

100%. You know, Dario from Anthropic, expecting a trillion dollars in revenue in 2030. It's insane. And you can't, you can't get a customer segment breakdown, right? Chris, in Venture, you know, that's, you know, like, show me your forecast, show me which segment. Show me your pipeline, show me your customer. And the whole thesis is we're going to have a Factory full of AI PhD geniuses, just they make money. That's the thesis.

Chris Perkins (32:24)

So you're not, you're not going to hold his hand?

Rahm Al Awalia (32:26)

I'm not going to hold.

Chris Perkins (32:27)

No.

Rahm Al Awalia (32:27)

I would hold. I would hold both their hands, actually. I'm in the love universal consciousness camp, so I actually would hurt. I would. But there's more than life than just business and making money. But.

Austin Campbell (32:41)

All right, well, before we go too far down this rabbit hole, I am going to stop everybody here because we also need to have another word from our sponsors, and then we'll be back to argue some more or go down that rabbit hole.

Podcast Announcer (32:54)

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Austin Campbell (33:21)

All right, everybody, we are back. And now we're going to get to the second part of what we wanted to talk about in markets, which is tariffs. So the Supreme Court nuked the legal basis for tariffs, holding 6 to 3 for some definition of 6 to 3, given the concurrences that IIPA does not authorize tariffs in the way that Trump actually brought them about. Now, importantly, and if you read some of the dissents, this is not an absolute refutation of tariffs. It's a reputation of him having those powers under the current act he referenced, the White House pivoted to new authority, new numbers. Tariffs were at 10%, then raised to 15%. Rahm, you had referenced this previously. I believe, and the administration is shifting ToWards using Section 301 as a tool for replacement. However, there are going to be fights about refunds. There are trade deals in limbo, as the EU calls it, tariff chaos. And at the same time, all of this is happening. We have the classic, like, geopolitical activity starting to distract from the tariffs discussion and decision as Iran continues to heat up. So I want to ask on the geopolitical front, like, what did you guys make of the tariffs decision? And given Trump's predilection for managing the press, do you think this raises the odds of action to distract from this decision?

Rahm Al Awalia (34:48)

You guys want to go ahead?

Chris Perkins (34:49)

I think the Columbia. I want to hear from Columbia.

Omid Malakan (34:53)

Oh, I, this is all outside of my area of expertise. I, I, the one thing that trying to understand crypto for over a decade has taught me is how little I know about anything. So it has really, it's really humbled me on trying to opine on that.

Rahm Al Awalia (35:11)

That was saltbuties best FOSS forever. So I think you're on the right path.

Austin Campbell (35:15)

I, I actually think we're talking the greatest American philosopher, which is Yogi Berra. Predictions are hard to make, especially about the future. All right, well, let me, let me hone in a little. If we want to go to Omid first. Omid, what do you make of what's going on with Iran right now? I know you have some personal thoughts about that one, and I want to drill down on what that situation really is.

Omid Malakan (35:39)

So the, the human situation is unimaginably bad, and the regime has lost all legitimacy. It was never a popular regime, but it had enough legitimacy among certain sections of the population. But in the last year, between the accelerating collapse of the currency and the impoverishment of people and then the brutal, violent crackdown where they just murdered a lot of innocent people in horrible ways. So on the one hand, it feels unstable and untenable. On the other hand, it's not clear what the path forward might be with or without US Intervention, because one of the problems historically in Iran has been for whatever reason, there has never been really a viable organized opposition to this regime. And in the absence of one, it's not clear that even if the regime were to fall, what would replace it? And, and it's, there's a lot of scenarios, many of them even worse than what's happening today. Could be the government becomes even more draconian and totalitarian and extremist. Iran has significant ethnic minorities. They could just, the country could just start to break up, which then causes other regional problems because there are Kurds who Turkey would not want to see independence and so forth and so on. And I imagine this uncertainty is part of the reason that while the US has built up all this firepower in the area, we haven't done anything yet. Because it's just, it's not, you know, it's not like Saddam Hussein invaded Kuwait kind of situation. It's like we'll just go kick him out or put in or even like what was happening with Kosovo back in the 90s. We're like to exert pressure and the government will retrench. It's like this government either stays or falls. And both for the Iranian people and the US interests. It's not clear how either scenario would be positive and negative.

Rahm Al Awalia (37:53)

I thought you weren't an expert on me. You just laid out like a dissertation piece.

Chris Perkins (37:57)

He's one of the smartest guys in Iran that I know.

Omid Malakan (37:59)

All right, John, Nate.

Rahm Al Awalia (38:01)

Most who know damn teach. Those who teach don't know.

Austin Campbell (38:03)

Right.

Omid Malakan (38:05)

I will tell you the situation. There is a perfect, perfect example of why the world needs crypto.

Chris Perkins (38:11)

Exactly.

Omid Malakan (38:11)

Because yeah, even with like the trouble my family goes through on a regular basis to send money back through various hawala type organizations, if the money just ends up in a bank account over there, the banking system there is already very rickety. The regime falls, the banking system surely falls. So then it's like, what's the alternative other than the physical cash and stores of value that people are you. As long as the Internet stays up, which they have shut it down at some point, which to be fair, right, that's when crypto doesn't work either. But this ultimately shows why the world needs a independent digital financial system that's not affiliated with any government.

Rahm Al Awalia (38:58)

Well said.

Austin Campbell (38:59)

Love it.

Chris Perkins (39:00)

I could, I couldn't agree more. I mean, I was unfortunate to participate in both those conflicts you mentioned Bosnia and also in Iraq. And like to your point on Ricky Banks, I mean, remember they would supply the bank in Ramadi once a week with, with new currency and a few minutes later it would get robbed and like it was a complete breakdown. And like when I had to pay people because of damages, I mean, I wish I had stable coins. And I, I almost lost my life cause I have to go back and be like, okay, what happened? And they would wait for us, blah, blah, blah. So it does prove the case. Are you seeing an uptake, do you think, in crypto usage amongst the people?

Omid Malakan (39:37)

Yeah. So funnily enough, crypto in Iran has a outsized cultural Influence going by the measure of the soap opera that my mom and my aunties watch. There's every overly dramatic plot line also has some kind of a bitcoin reference to it or something. But there is uptake. I use it with sending money people over there. It still has not hit, I don't think has hit what you would consider critical mass. There's the other thing is like every failing currency regime and banking system has a problem where before whether bitcoin or stable coins really achieves critical mass, you have to literally get it in somehow. Like you need to get enough of this stuff in circulation in the hands of enough people in order for them to be able to substitute away from the domestic banking system and currency. But the countries that need crypto the most are the ones that also have the most draconian capital controls. So it's just like the slow bleed of things like bitcoin and tether into these economies until eventually there's enough that people could really start transacting in it.

Austin Campbell (40:55)

I mean as I, I'm, I'm an advisor over at a good digital and we look at this occasionally and they. It's fascinating because the problem is when you look just at the blockchain, everybody thinks things are pseudonymous. You know, nobody knows. But once you start integrating things like social media data and open source intelligence data sources and then back testing to the blockchain, you find an interesting amount of stuff. I would estimate right now there's already hundreds of millions of dollars of USD stablecoins in the hands of the Iranian people, right? And an unknowable amount of that might also be in the hands of the regime right now. There's some cross pollination between those two topics. I think some of the issuers are turning a blind eye to that maybe. But the reality is, as Omid said, the more this piles up over time, it's a little bit like a snowball rolling downhill, right? Like will any individual 1 million of stablecoins destabilize somebody else's banking system, especially if it's rickety, poorly run or the regime is extractive. But if that happens enough and that snowball gets big enough, will people substitute away? I think a big threat to a lot of these regimes that they're not really thinking through right now is dollarization because of the existence of US dollar stablecoins because many people are going to trust that over the local system.

Chris Perkins (42:14)

Amen. I mean this is why we're here, right? This is the crypto thesis that when trusted institutions breaks down you need to be able to pay people survive and live. And I think it's probably more acute there Omid in Iran, but it's happening everywhere, all over the world. So that's the long term thesis and that's why a lot of us continue to stay and build in this space despite all the grifters and issues that we fight through day after day. So yeah, look in Iran. Go ahead.

Omid Malakan (42:44)

No, something like a third of the world's population lives under capital controls. If you just add up China and India alone actually that were that almost right. And I find it hilarious, Chris, to your point, because I fully agree with you, this is one of the things I love about crypto and a lot of academic policy circles, people talk about things like what Austin just described as a problem. Yeah, it's a pro. But if you know anything about any country that has these kind of capital controls like Iran is that it's just a system for organized theft because the elites and the people connected to the government all have ways of getting plenty of money out. They also have access to the official exchange rate, which is usually complete bs and it's the ordinary people who don't. And to me it's like when people say, well isn't it a problem that like all these countries are going to dollarize? I'm like a problem for who? The people who no longer suffer terrible economic repression and can now actually could store some of their wealth. It's definitely not a problem for them. Is it a problem for a corrupt government that prints and borrows too much? Yes, that's why they should stop printing and borrowing too much.

Chris Perkins (43:51)

I think it's time for us to write an article to our friends at the bis.

Rahm Al Awalia (43:54)

Yeah, no, I digress. No, I think you're all spot on enjoying that discussion. I think your technology is causing destabilization of these dictatorial regimes on three axes. One is money. Talked about decentralized money as an alternative. Two is access to information. You know, we used to have Radio Free America projecting American propaganda, which I stand for, to the Soviet Union. Now you have Starlink and Iran is trying to take down Starlink because it's a mode of communication. And then the third is coordination and that's through things like social media and other kinds of channels. Right. We used to see flash mobs like 10, 12 years ago. If you guys remember that Boss Ronson let it. But those three are driven by technology, not by military. So you know, the what's the what's the expression? In the long term, things tends towards justice, like, technology is playing an important role in creating freedom for people.

Austin Campbell (44:53)

I would also say on that front, and this is a specific, important point about crypto and decentralization, as those technological tools get harder and harder to interdict without straight up turning the Internet off. To go back to the previous discussion, it becomes existential for these regimes. I remember. So when I was at Paxos, we did some research on this, and the only country I was pretty certain where none of the citizens owned our stablecoin was North Korea. Right. And if you're telling all of these regimes and the people in all of these countries that to avoid this sort of disruption, you must become North Korea and completely impoverish yourself by any global or modern standard. Because, like Chris, not only do they get the claudebot that you were setting up with your kid, they don't even get the Internet. Like, you don't get Google, right? So you've got to roll it all the way back to, like, 1920. I think the economic, like, call it gravitational pull of this technology is too strong for many of these people to resist. I think what's raising the question for me, you know, and I would be curious to everybody's opinion, is what is the path of travel to get there? Because what I worry about is in the long run, I think we probably get to a better place. I'm actually still a very big optimist about the future in technology, but there could be a lot of bloodshed down that road as a lot of these regimes collapse. I mean, we're seeing that in Iran right now.

Rahm Al Awalia (46:17)

Does Trump make a move? That's the big question. I'll put something on the table. Let me know if you accept or reject this hypothesis. The lower Trump's ratings, the more likelihood

Omid Malakan (46:26)

of action,

Rahm Al Awalia (46:28)

especially the Epstein files in the backdrop, which will cost them the.

Chris Perkins (46:32)

I agree on Epstein. Watch Tuesday, the State of the Union address. See how the public responds, how polls respond, because, like, we're about to go into midterm season. They're the underdogs. We'll see what happens.

Rahm Al Awalia (46:45)

What do you do when your polls are down? You create play action. Right.

Austin Campbell (46:49)

I would also say the tariffs thing is another good reason that he'd want to take the news cycle to something else. And, you know, whatever call it positives or negatives people have about Donald Trump, you have to understand that guy really understands media and has used it significantly more effectively than most modern American presidents. He's very good at shutting up when the news cycle is unfavorable to the other side and doing things when it's unfavorable to him to move it along.

Chris Perkins (47:15)

Definitely has bar control.

Austin Campbell (47:18)

All right, let's talk a little bit more about stablecoins. Cause here's one to go back to the horrible bureaucracy that we've talked about. The U.S. securities and Exchange Commission updated broker dealer guidance to allow a 2% haircut on certain proprietary stablecoin positions. Previously, a lot of firms were applying 100%, meaning they didn't count towards any of the capital that you have to hold. Now 98% could count. This puts them essentially par with money market funds. Commissioner Peirce said this change makes it more feasible for brokers to engage in tokenized securities and other crypto activities. It is informal staff guidance, though formal rulemaking could be forthcoming. What do you guys make of the SEC bringing stablecoins? Call it inside the perimeter. Rom's electricity failed.

Rahm Al Awalia (48:14)

Former chairman Gary Gensler refused to create clarity between stablecoins and money market funds. This creates clarity and it's common sense and it's simple and it's good policy. So thank you SEC chair Paul Atkins, for creating clarity and letting builders build a hundred percent.

Chris Perkins (48:36)

And I think, you know, we've been talking about how important it is to get clarity done. That could be another nice catalyst to shift the market temperament. But you don't need clarity act to close a lot of gaps that exist which mean you know, what's a security and what's a commodity. Hey, let's get the regulatory capital like appropriate for, for, for broker dealers. This is a no brainer, like what's the purpose of genius if you don't have reasonable capital levels? The big issue though remains. You know, this is lovely. I like it. Great job guys. Like, thank you. But the bigger issue is bank liquidity. And I think all of us have been at banks. I don't know about you guys, but I used to be raked over the coals over by regulatory capital consumption because that's what drives the bank's roe. And you can compare your business to any other business based on an roe. So my job was always Perkins. Get the reg cap down, get the net income up. You're consuming way too much regulatory capital. What does this mean for crypto? Until Basel, until the bank regulatory capital is adjusted, it's going to be really. It'll continue to suppress the liquidity potential. And guys would love for you to correct me, but last time I checked, Basel bank reg is super punitive. Even if you use a public blockchain. You get whacked, you go into the second category and it's just like, sorry guys, no public blockchains, even if you are a stable coin.

Omid Malakan (50:04)

Yep.

Austin Campbell (50:04)

So. So. Well, I'm going to hop in here and say the Basel III guidance was never formally implemented by US regulators. I think they are working on rulemaking right now around this, Chris. Basically. Okay, so as one of the few guys at a bank who did not get raked over the coals about my reg cap because I spent a huge amount of time already optimizing it. Oh, come on, that's me.

Chris Perkins (50:28)

I optimized it too.

Austin Campbell (50:30)

We'll get there. My dude, I ran. This is not a joke. A business that at one point had 100 billion of derivatives notional outstanding with less than 50 mil of red cap. All right, I'll explain how another day. Point is, one of the things that's very important within the Basel III framework is a thing called the full look through or partial full look through method for securities. Which is to say if you've got a box, don't stop at the outside of the box. That's stupid. Open the box and look at what's inside the box box. If you look at Genius stablecoins, these things are specifically designed in the rules and regs to be a box holding one of the following physical cash, fed reserves, bank deposits, T bills, or overnight reverse repo. It should, if we're thinking about institutional security settlement, be totally possible to build a stablecoin that is just a box of T bills where you can only create it by putting T bills in or destroy it by taking T bills out. That has a 0% risk weight for bank capital. There's no reason under the current rules with Genius that should be impossible. It's just a trust deposit. I will call it right now. I think U.S. banking regulators will be there by the end of the year and that's going to be transformative on January.

Chris Perkins (51:44)

I agree. We're just not there yet. Right. Because there's still a lot of punitive treatment for public blockchains. So that has to get faced. I'll say another. I'll tell you another secret. You know, as we go into clarity right now, the banks are complaining about losing deposits, right? And they can't loan. Well, guess what? The reason why they can't loan is because of the red cap for their loans. That's why private credit started. Right? It was a red cap, red cap. It was the same issue. So I think there's a solution to yield on stable coins. And it's dollar for dollar. You lower the Reg cap and that satisfies a lot of the problems anyway, I don't want to get too technical.

Austin Campbell (52:21)

Well, I would also point out. Okay, so I've been critical about this on X. I'm going to say it here. I think ome of all people will appreciate this the most. It would be super helpful if the bank policy people could correctly answer the following question, which is when a stablecoin is created, is a bank deposit destroyed? Because the answer is no. I'm going to tell you right now that entire debate is based on the that fact false premise. And I think it's knowingly false by many of the bank lobbying people. Stablecoins do not change the amount of deposits in the system. It's unch right, you buy a stable coin by having Omid give Chris a bank deposit and then Chris gives Omid the stable coin. Chris, you then take that stable coin and invest it in a bunch of things that you pay for by using the bank deposit. Right? All of this is something moving from pocket A to pocket B. We're not creating or destroying deposits here. And that whole debate is just complete insanity.

Rahm Al Awalia (53:15)

Just zooming out. By the way, I enjoyed that. We're probably the only podcast where four people can talk about bank regulatory capital and you got that's like point losers. But you're right, Chris brought up the point, right.

Austin Campbell (53:27)

Private credit.

Rahm Al Awalia (53:28)

Private credit was born out of regulatory capital. The federal regulators after I have kicked risk out and now you've got the $5 trillion asset class where publicly traded companies 52 equals and it's linked up to AI and data center. I mean the highest level, what you're seeing is one industry at a time turn into a publicly regulated utility. First it was just the utility. It was actually the utilities, the waterworks companies, then the banks in 2008 and now it is becoming the Amazons and the Microsofts and the Metas of the world in terms of high debt, high capital intensity and more regulation or they call it and fines and pressure on how they can charge and the impact of the utility grids. And now with the rewards debate, it's again it's more. It's like healthcare. It's become a regulated industry as well. How you charge for customers like I, we've gone too far. I think that's the thing we should take a step back and say does. Does top down federal government and regulation really know best?

Austin Campbell (54:32)

I mean if you look at what happened post crisis. So this is the 2008 thing. It is the classic example of regulators fighting the Last war they looked at what went wrong and said, you know what was bad? Credit and swaps, especially credit default swaps. Because that's got both of those words in there, those were super bad. Right. And you end up with this framework where thankfully, due to the work of the cftc, swaps still kind of work. Okay. Despite the best efforts of Dodd FR Frank. So thank you. To many success and CFTC people on unfucking that one. But credit, no, it was just a risk weight and they got it wrong. So here is sort of how warping those risk weights are to the system. If I'm at a bank and I own a US treasury of 10 year duration, I hold zero risk weighted assets. And by the way, for those who are not fixed income traders, 10 year duration basically means if interest rates move 1%, the price of that bond moves by 10%. If I own investment grade credit of one year duration, I take like an 80% risk weight on that. Right. That pays me about the same yield as mortgage backed securities like agency mortgages. Those because there's a government guarantee through Sandy and Freddie are at 20% and God knows if you get into high yield, it's even higher than 80. So what this means is that I hold four times the capital to have a Coca Cola bond than I do to have agency mortgages, even though the agency mortgages have significantly more interest rate risk to them than the Coca Cola bond. We've just gotten the Basel III framework wrong because we over blamed credit. And by the way, if you look at things like Silicon Valley bank blowing up because they got very long into duration using mortgages, this is why. Because it's uneconomical for them to just get into carnival percent.

Rahm Al Awalia (56:24)

Wait, Austin, are you saying that the federal government has created an incentive for banks to buy debt issued by the federal government? Is that what I'm exactly.

Austin Campbell (56:34)

Wouldn't you know, the EU seems to feel the same way about European debt

Rahm Al Awalia (56:39)

and created the seeds of the next crisis, Father March crisis, the overreaction to the last war.

Chris Perkins (56:47)

So, so coming from someone who was running a credit derivatives business at Lehman Brothers.

Austin Campbell (56:52)

Sorry, let me just.

Chris Perkins (56:55)

Now I think look, for the people that are listening, bank reg is like really challenging and confusing. Your eyes glaze over when you start talking about it. But that's the beauty of some of these tools we have now, you know. And what's the tldr? It's like if you understand this stuff, they're very important to the banking sector. You want to understand what, how crypto responds. It responds to liquidity. You want to understand how liquidity is impact, look at changes to these rules. Because if you're in a bank, that's everything. It tells you what business is good, what business is bad.

Omid Malakan (57:23)

I want to know at what point somebody wakes up and concludes that having the entire economy run on a highly levered banking system that is built on, not only is it highly levered, but it also just has natural duration mismatches because of maturity transformation. That's just a bad idea.

Austin Campbell (57:42)

Is it? Okay, so I'm going to hop in here and play the counter argument to that one, which is, I don't think that is a yes or no answer. I think that is a question of degrees. Because on one extreme is like everything is 50x levered, the duration mismatch is horrible and any minor volatility nukes the system. But on the other end of that is like landed feudal era stock. There's no lending and we don't have enough credit creation. There has to be a happy medium between those two endpoints. So I'm going to say some words that every bank in America are going to hate. But that seem to do a pretty good job with this problem by putting the right activity on the right balance sheets where it should happen. Glass, Steagall, right? Like at what point do we need to look at, hey, maybe the highly volatile trading activity which by the way I was part of, I'm for it, it should exist. But should it intertwine with the payment system and deposit insurance? I have questions.

Chris Perkins (58:40)

I love Omid. So I love your takes on the difference between tokenized bank deposits and stablecoins which are pertinent here.

Omid Malakan (58:49)

Tokenized bank deposits are not a thing. No, they really, they do not exist. And as far as I know, nobody knows how to actually create one because it's not clear how you do deposit insurance on a actually tokenized bank deposit. All right, if I, I can have 10 wallets and put $250,000 in each one. So this would be a very easy way to circumvent the FDIC limit. And if somebody says, well we'll just kyc everybody, then your tokenized bank deposit is a complete and utter waste of time. Just through people bank accounts like you're

Rahm Al Awalia (59:24)

saying, because FDIC Insurance doesn't expand to the tokenized deposit.

Austin Campbell (59:29)

It's $250,000 per person. It attaches on a legal person basis at the bank and it has to be specifically identifiable funds. Like when I was at Paxos, to Palondo Mead's point, we Tried to give people pass through insurance on the bank deposit component and it was basically impossible. You had to just leave it on the exchange in a segregated account. Couldn't use it for anything.

Rahm Al Awalia (59:53)

So you could do non FDIC insured tokenized deposit with the.

Omid Malakan (59:57)

Yes, yes, but now, now combine that with having secondary market price discovery on a bank liability and I'm not talking theoretically, just during the couple of weeks ago during the recent Covid selloff, tether depegged in the secondary market because it was trading I think maybe, maybe 10, 20 basis points below me. Less right. Was like at 998, not a problem for tether generally. But imagine that was a tokenized bank deposit and somebody goes on Twitter and says hey, why is the deposit of this bank trading below a dollar? Yeah, that would cause a bankrupt.

Rahm Al Awalia (60:37)

Well, yeah, no, yeah, I agree people.

Austin Campbell (60:40)

It's commercial paper funding at that point, right? Like you have a very short dated rolling thing. And by the way, people get paid interest on commercial paper. The reason they'll deal with tiny amounts of volatility is you're getting paid for it. The bank deposit pays you nothing. So if it breaks the peg at all, run away is like logical.

Rahm Al Awalia (60:57)

This was 19th century wildcat banking. People have forgotten that deposits are perpetually maturing par instruments. And with the secondary market or if you had real credit risk that need not be the case,

Omid Malakan (61:11)

but I think very easily what people would do is you would short a bank stock, then you would, you would first accumulate a bunch of its deposits slowly. Then you would short the stock. You would dump the tokenized bank deposit in defi somewhere and then you would point to it and say this has depec this bank. And then you would cause a rub.

Rahm Al Awalia (61:33)

The fix for this is Berkshire Hathaway reinsurance. That's what you do. You get third party insurance and reinsurance to step in and create private insurance.

Austin Campbell (61:43)

But what's the cause?

Omid Malakan (61:44)

Someone has to pay for that.

Rahm Al Awalia (61:45)

It's their because if you can't get insured then you're not going to be able to take in low cost deposits. And right now you don't have accountability because if you have FDIC insurance, it's like Oprah. You get a charter, you get a

Austin Campbell (61:57)

charter, everybody, you get a charter, everybody get a deposit.

Rahm Al Awalia (61:59)

Go make loans to rapidly depreciating GPUs. We got the taxpayers got your back.

Austin Campbell (62:04)

This is the direction you need to

Rahm Al Awalia (62:05)

go into though from policy by the

Austin Campbell (62:08)

way, I will say there is a market that works that way and it works, works fine. It's called the insurance market. Like for people who don't know, insurers, for the most part, they're taking in risk on the front end. They're writing policies, they're supposed to be diversified. But every insurer's got two brain cells to rub together. Writing certain kinds of peril knows, well, if there's a giant earthquake in California or a huge hurricane hits Florida, I probably lose money on all my policies at the same time.

Chris Perkins (62:34)

Oh, shit.

Austin Campbell (62:35)

And what they do is they go and buy something called reinsurance. And to go all the way back to sort of the joke here, who are people buying that from? Literally, Berkshire Hathaway, right? Munich Re, Swiss Re, like large global financial conglomerates. There is obviously a parallel to having a banking system that the way it works is you have some degree of distributed banks and then you have people essentially providing the deposit insurance that discipline those banks. Because one of the most common ways insurers are forced to wind down or merge or go out of business is the reinsurers cut them off because they think those people are chuckleheads.

Rahm Al Awalia (63:12)

Go ahead.

Omid Malakan (63:12)

I still don't understand why I would want that tokenized bank deposit, even if it's reinsured. Everybody who makes this tokenized bank deposit argument just ignores the obvious fact that if you could get a stable coin, it's just better. Unless the tokenized bank deposit pays more interest than a stable coin. But demand deposits are supposed to be, or deposits in general are a cheap source of funding for banks. So if you. It's like if the interest rate on it stays what it is today, I don't want it. I'd rather have a stable coin. If the straight on, if the interest rate, the yield on the tokenized deposit is higher than what it is today, the bank doesn't want to issue it.

Austin Campbell (63:55)

So here's the counterpoint to that because, like, what you've hit on is just the government versus prime money market fund debate. One, the premium that people demand take the bank credit is lower than people would expect. It's not like 5%, it's like tens of basis points. If you look at prime money market funds, to back to the point you just raised on interest rates, the solution if that starts happening and banks have to completely raise their cost of funding is lower interest rates, right? Like essentially you're just rebalancing between base rates and credit spreads. At that point, you can bring rates down. Like this is completely within the control of the Federal Reserve, which is why it's particularly funny to hear them complain about it, because it's like you are the guys causing the problem. You don't get to light the house on fire and then say that it's a fire hazard.

Rahm Al Awalia (64:41)

Yeah, I think there's a value prop there, Amit. I think one is they can, you know, the current deposit rates would be enough. The value proposition is convenience for the end customer. Right. Amazon and its supply chain network would love to settle and tokenize deposits to minimize the opportunity cost of not earning interest income.

Omid Malakan (65:00)

Why is that better than them settling on a yield bearing stablecoin?

Rahm Al Awalia (65:05)

You can't have a yield bearing stablecoin. That's just not what stablecoin is. It's a zero interest stablecoin per the.

Austin Campbell (65:12)

No, no. I'll hop in here and say let's zoom ahead like 5, 10, 20 years. As a final point, I think we will have yield bearing stablecoins. I think bank deposits will still dominate, but bank deposits will be paying a higher rate of interest than the yield bearing stablecoins. I would also gently tell the bank policy people, bank deposits that you tokenize are stable coins under genius. So if you want to keep things in bank deposits, maybe let yourself pay yield. But that aside, I think we're just going to see a replication of government money market funds and prime funds and it'll move on chain and the system will evolve around that.

Omid Malakan (65:51)

I disagree. I think a yield bearing stable coin that you can a money, a tokenized money market fund that you could bring payments would radically change the nature of the financial system. We don't use banks today because we like banks. We don't use banks to pay because they pay us enough to use banks. We use banks today for one reason and one reason only. We have to. And once there is an alternative, the there's still going to be banks, right? The world is always going to need financial intervenes that provide certain services, offer leverage, et cetera. It's just going to have to be radically different than the banks today. And I feel like almost every time I'm talking to somebody about a tokenized bank deposit, it's a little bit like the old days where people be like, well, today we send letters in the through the U.S. postal Service, tomorrow we will send email in the same way. And it's like, no, tomorrow we're going to have real time instant chatting. Because in a digital world that's possible. And I just think we are way too tethered to this mental model of the role that today's banks play in society.

Austin Campbell (66:59)

Pun intended. All right on that cliffhanger. Because we're going to have to come back and debate this. So, Mead, we'll have to have you back. We are out of time for today, so we're going to go ahead and stat and we wrap up for now. So first of all, Omid, thank you for joining us. That was really enjoyable. Appreciate your time. And two, thanks to everybody for joining us for this episode of Bits and Bibs. We'll be back in one week to discuss more about how the worlds of crypto and macro are colliding. Until then, everyone, good luck with the snow.