Katherine KK (1:54)

So before we dive in, remember, as always, we're lawyers. But we're not your lawyers. Nothing you hear on Decks in the City is legal or financial advice, and it doesn't create an attorney client relationship for the fine print. As always, check unchained crypto.com so we have a few different topics today. We're going to talk about Canton, Nasdaq, we're going to talk about AI, we're going to talk about prediction markets and insider trading. But I want to dive into Canton as the resident Tradfi expert host here. Although V and Jesse Ardo slouch on tradfi understanding as well, I found this to be really interesting. The Canton Network. So I think you guys are aware of it. The listeners, if you're not aware of it, you should be aware of it. I have worked with Canton historically. I really like Simon Latort he was on the SEC Privacy Roundtable. There's a lot of really smart people, Bear, but Canton is a little bit controversial in crypto because. Okay, what is it? It's a permissioned chain designed specifically for regulated tradfi. It's actually owned by Digital Asset. I have to tell you, I think that's. That's a very confusing name of an entity. I have always disliked that name, but no offense to. Can't doubt our Digital Asset. That name is so confusing. It's owned by Digital Asset Capitalized, which is in turn owned by Don Wilson, the billionaire who started that giant global trading firm, drw. And they also have a prominent crypto arm, Cumberland. A lot of these entities are actually Chicago based. So Canton Asset. Oh, sorry, Jesse. Were you going to Chicago? Shout out. Yeah, I love it. Love it. So all of these have a very familiar trust model for tradfi. Right. So Canton made news the other day. And why did it make news? It's because it suggested adding Nasdaq. There was a vote as a super validator, which ultimately actually passed. Nasdaq is now a super validator on Canton. And Canton's price conveniently went up 18% after that announcement. So the idea here, not explicit but implicit, is that by making Nasdaq a super validator, Nasdaq will be more inclined to use Canton for tokenized equities long term. The counterpoint to this, and this was actually a little bit of a spicy discussion within the crypto GC bar, is this says, you know, negative things about the network if they essentially have to pay Nasdaq to join with no guarantee that Nasdaq will use it. I'll also actually float a fun fact that Nasdaq, along with a lot of other tradfi, are investors in digital assets. So Canton is essentially giving away some of the economics for adoption. And the adoption rate isn't entirely clear. And there's also the criticism that a salon or Ethereum network could really easily pivot into this whole structure, this kind of permissioned chain for tradfi, based on their rails and expectations, extended capabilities. If this whole experiment is successful. I want to hear from V and Jesse on thoughts around this. The one thing I'll also like, throw in as a counterpoint to my counterpoint, and I think a lot of crypto, you know, kind of forgets this, is that this structure is actually extremely on brand for traditional financial services. In tradfi, it's very common to give equity for participation. And that has actually long worked very well. There's a lot of success stories for this. And then I think the other umbrella question with the whole Canton structure, the whole kind of thesis of permission chains for tradfi is, will tokenized equity, which is exploding as we speak and will likely continue to grow, be dominated by tradfi and by these permission chains? Or will it, as was suggested by, you know, one of my degen friends, will it raid, like kind of ride the wave of retail from Asia and Africa and South America over the next 10 years? And that market, that retail market cannot by design be accommodated in any way by Canton. And in that case, the big elephant in the world room is kyc. So, Jesse D. I want to open it up to you. What do you think about this? Like, how do you feel about the permission chain environment, the NASDAQ super validator structure?

V (6:30)

To me, the big elephant in the room is actually the confidentiality piece of it, which I know there was a lot of pushback on. Like, a lot of the terms associated with the partnership weren't exactly clear. And that makes sense because NASDAQ can't like disclose everything, you know, the way that it operates. But it's also sort of interesting because it goes to what you're saying of like, but this is how traditional financial markets work. Like, there are a lot of agreements where we don't know all the terms of it. And a lot of things sort of run, quote unquote, off chain or behind the scenes because they either have to for MMPI or for shareholder reasons, etc. And it just comes down to like these two different visions of blockchain. Right? It's defi, which is starting from intermediaries are the problem. The goal is open access, encoded rules, anyone can verify. Right. Confidentiality should not be a thing in those. But then there's also institutional blockchain, which starts from the idea that like coordination and risk management might be the problem. So the goal is like efficiency and controlled participation. And it goes to, I think what we were talking about last time could. Crypto is dead. And sort of why it feels that way right now. Because to me, like, this isn't revolutionary in a lot of ways. Like, if you think about how crypto thinks about revolutionary, but it's building plumbing, which is very important, but without the sort of revolutionary excitement. I think people are starting to think like, oh, some of the excitement out of crypto is dead, when really we're just sort of building stuff to last.

Jesse (8:04)

Yeah, I think that's a really good point. I did want to focus on one aspect of it that I think is Kind of like underappreciated or even maybe boring to most people. But like, I think it's important to note here that this isn't just another situation of like TradFi deciding to build an L2 on like an existing blockchain, right? Like NASDAQ is joining the network to be a super venture validator, meaning that they're going to be directly involved in sequencing and ordering and the inclusion of transactions across like different systems. So to me this is basically a bet that institutions and regulators will care a lot about transaction ordering. Something again, that I think does not get talked about enough. But to me I think that is like the real market structure quite question, right? Like, transaction ordering sits at the heart of whether any financial market is fair and orderly and it sits at the heart of like really important regulations in the traditional securities markets, like reg. Nms. Like I think the way to look at it is in these markets ordering is power, right? It determines price and priority and liability. And I think it's something that institutions in particular who are going to be placing large orders, it's something that they're really going to care about, right? So to them, probably having NASDAQ involved in helping to order transactions is probably a big deal. I would think that that would inspire more trust for them. And also I think like, it might be a signal that they don't feel comfortable about how transaction ordering is currently done in public blockchains or that maybe they don't fully understand it because it's not always transparent. So actually to me, that is the real story here.

Katherine KK (10:02)

Well, and you make a great point and this is not a spicy take, but Tradvi, much like crypto, there is definitely a bit of a lemming vibe, meaning if, if an entity. And look, all industries are like this. Like the best example is the Theranos scheme where no one did appropriate due diligence because they knew a bunch of prominent venture capitalists and individuals had joined the board. So they shortcut their own due diligence and thus no one discovered the fraud. I'm not saying TradFi doesn't do due diligence, but Tradfi feels a hell of a lot more comfortable if NASDAQ is already at the table and crypto's the same way. Like how many people got burned in 22 because they're like, it's 3ac. They're great, they're, you know, huge. So this is somewhat of a lesson of like the heft and the value of these main stage, like long time trad. You know blue chip institutions and their engagement, like how far does that go for valid for the value proposition for the brand? And I think that's something that crypto is really grappling with and really struggling with right now. Where sometimes there's a perception that you deal with XYZ entity and you're selling out, or you have to make major legal and regulatory sacrifices, for example, to engage in a strategic partnership with JP Morgan. But are you getting value via that partnership with the brand and the announcement alone that is worth the theoretical sacrifices you're making. And there's a spectrum some people would not consider like the legal regulatory compromises as sacrifices. Some people would consider that maturation. So I think that the kind of NASDAQ is the elephant in the room as part of this, just given their brand and their prominence.

V (11:56)

Just to play devil's advocate for a moment. And I don't know if I have decided one way or another because I think both answers could be right and wrong. But if we, we've all been in crypto a long time, 10ish years for me, similar for you guys. Like if I joined crypto thinking it was just going to be to make NASDAQ more efficient or to make these big players just continuously rely on each other and say, oh, they were trustworthy 10 years ago, they're trustworthy now on chain, like is that accomplishing what we entered it for? For me, like, that's not the thing that gets me out of bed every morning. Although I do think it's really important to enable security for the other like uses of crypto. I'm just sometimes surprised when I step back and it's been, you know, 10 years and this is where we are. Although this is exciting when you, you know, peel back the onion and really think about what's happening, you know, from, from first glance, like there's not a lot of people talking about the Canton Nasdaq like collaboration because it doesn't have that like quick excitement to it.

Katherine KK (13:07)

Yeah, it's a great take, Jesse, because you're right, a lot of us got into this space because they saw a better way of doing things. A faster, more efficient, more innovative. Like I know my background was white collar defense. I defended a lot of trad entities. Like I've seen the inside of a lot of banks and asset managers and brokers. And through that experience I saw a lot of inefficiency and dysfunction that could theoretically be solved by this technology. So if we fall right back into tread by rails using like on chain technology, like Is that a. Is that fixing the problems we all got here to fix? And that's kind of a depressing, depressing question for Athlete New Year. Happy New Year. We're all exhausted. Actually, I'm not exhausted. I've had two fridge cigarettes today, which might explain why I'm feeling a little hopped up. That's what the young people call my beloved Diet Coke. So, okay, on that point, I do want to move to something a little spicier, a little interesting. I'm not sure if our listeners are aware of this, but. But Jesse is actually enormously brilliant in all things, but particularly on the AI front. She is always teaching VNI like what tools we should be using. And I know personally my understanding of agenic activity and how that is going to affect crypto has come leaps and bounds from just engaging with Jesse and pursuing a lot of the scholarship that is out there on this. And so this is my PSA to crypto, get on this, like, understand AI agents and AI activities because that is going to change the landscape for us all. But some big news, some big AI crypto news this week and I'm going to pass it to Jesse to tell us more.

V (15:00)

Yeah, first let me just say I don't think I'm like super smart on it. I just think I have no life. And so I spent a lot of time practicing and playing with it, including messaging you guys late at night and being like, look at this article, it's so cool. Okay, I gonna get everyone listening, excited about this because I cannot get enough of this topic lately. Essentially, there is a paper making the rounds right now from a huge player in the AI ecosystem called Google DeepMind. For those who aren't entrenched all the time in the world, DeepMind is a really important team in AI. They're behind AlphaGo Frontier, Agent Research. Serious work on how advanced AI systems behave in the real world. There's also an amazing documentary that came out last year about them. I think it's free on YouTube for those who want to watch it. They're not sponsors. I just thought it was interesting. But when DeepMind publishes, people in AI pay attention because they have like these amazing breakthroughs all the time. And honestly, crypto should be paying attention, especially with this paper. So what's the thesis of this paper and why are we talking about it on this podcast it says that the agent economy is coming and in a lot of ways it's already here. We're moving into a world where AI agents don't just assist humans, they transact with each other, each other. They negotiate, they allocate resources, they coordinate work. All the things that we've been talking about and I'm sure many people listening have experimented with already. But as agents continue to become economic actors, once they can spend money and hire other agents and make decisions continuously, not just rely on humans in loop, we need a different type of money and a different type of verification. So is this starting to sound at all familiar to anybody here? Because deep, DeepMind sort of point and thesis is that traditional financial infrastructure was not designed for this agentic activity or the speed that it's anticipated at. So that is pretty much them arriving at what crypto arrived at many, many years ago. So what do they say that they need? You need machine readable money, you need programmable payments, guys, you need verifiable identities for non humans. So once again, like to me, doesn't this just sound like everything we've been talking about in crypto for many years? And DeepMind explicitly mentions blockchain style systems saying that they're uniquely situated for the world that's upcoming. What's really important about this paper is like, we talk a lot about how crypto keeps trying to be like, hey, I, listen to me, we're important, we're still important. Like, don't just focus on AI. This isn't crypto people yelling into the abyss saying crypto fixes AI. It's a frontier AI lab saying if agent economies are real, which they say they will be, something like blockchain becomes structurally necessary. And the paper talks a lot about the dangers of not putting guardrails in for this agentic economy. Also similar to a lot of the like scholarship the three of us have published about on blockchain in specific. And so, you know, one of those examples of what these guardrails could be is in blockchain infrastructure. And actually like X402, which we haven't talked about a lot, but other unchained podcasts and other podcasts in the crypto space have talked about is a real live example of what can happen for agentic economies and crypto collaborating. And I'm happy to like dive deeper into what exploratory is and how it works. But essentially DeepMind is saying agents are transacting, will continue to transact. It's going to get more and more complicated. And X402 is one of the first pieces of blockchain infrastructure that makes this operational.

Jesse (18:39)

Can you give an example of like a real world, like use case or how that would play out?

V (18:45)

Yeah, Totally.

Katherine KK (18:46)

So it feels very abstract to me.

V (18:48)

Still like a real world. The example is playing out. So basically you go on ChatGPT right now. ChatGPT enables you to like search on Instagram, not Instagram, Instacart and say I am a family of four, I'm a family of one and a dog. Let's do it that way. I'm a family of one and a dog and I want to be able to make my dog a birthday cake because. And I want the ingredients and I want you to put them in the instacart cart that I have for Costco. So right now chatgpt is pretty good at that. It can go into your instacart if you link it and it can put everything you want in that instacart but then you have to go and press go and purchase it and put in your address maybe and try and figure out what time to link it in. With an agentic commerce sort of situation, you could have the agent actually pay for it and you could say I'm going to give them a certain amount of money in order to be able to do this. And so that's what allows sort of the agentic model to be so successful and useful. And is a Toyota takes out the middle step and then it becomes I want you to order this every week for my dog. I want you to remind me when it's my dog's birthday and put it into Google Calendar and send a message to all my family to tell them to send presents to my dog. And this is what you should put in their Amazon cart in order to send presents to the dog. Right. And so some of that requires x 402 which means that it access to a website that you could only get access to if you pay money. Now historically this has been around forever, this like 402 payment required status code. But historically it didn't really make sense to implement it because credit card or any sort of stripe charges require at least like 30 cents or something which I think is. That's low what it is. And I think a lot of credit cards like it's not worth it if it's under $15 or something like that. But these micro payments allow for you to have like $0.12 to this website, another like $0.30 to this website. And the agent can sort of interact with multiple websites at once whether they require payment or not.

Jesse (21:01)

And then what's what, what would like blockchain and crypto. Like why would that be helpful or necessary in this world?

V (21:09)

Amazing question. So the Only thing that allows for micropayments right now is stablecoins. And so that's why blockchains are so important. And so it. Because right now you can't use your credit card, you can't Even really use PayPal in the same way. So in order to enable like this financial access for agentic economies around the world, no matter the currency, no matter how much payment they require, that you need stablecoins, you need something that allows for micro payments. It doesn't have to be stablecoin, but that is the best example out there for how you do it. And that's why, like the fact that AI and some big player is coming into the space saying, okay, this is happening. And one way that we can make sure that it's properly guarded and safe and like humanly verifiable for each agent that they have been authorized by somebody, we need to be on blockchain for that.

Katherine KK (22:08)

It's really interesting because it raises the broader question of like, if AI agents are going to be on chain, like market participants having influence, you know, what responsibilities do they have on chain? Or what responsibilities and what guardrails need to exist. And of course, what you're describing, humans are giving the agents instructions, but there's a little bit of a blurred line there in terms of how much authority you can give. I mean, we have the same issue in the context of any technology. But. Okay, run with me for this for a second. Has anyone seen the movie Wall E?

V (22:46)

It is a of Cars on dvd.

Katherine KK (22:49)

I mean, I had Wall E before I had children. This, this is an animated movie that is not just for children. Like, there is so much to take from this beautiful love story. But if you haven't seen it, the whole concept and this, by the way, I'll say this movie's probably almost 20 years old. And the whole concept is it's a post apocalyptic. The earth is destroyed in these very egregiously overweight humans live on a ship and they just ride around all day with screens in front of them, with robots doing all the things for them. So there's two things that I take from this. One, every time I'm in Vegas, I. I feel a little bit like I'm on the ship on Wall E. And two, like agentic activity. It raises the question more generally, like on chain, off chain, how much are humans going to end up doing at the end of the day? Or are we going to end up as Wall E characters where we just sit on a chair and then the agents do everything for Us, which is kind of a terrifying prospect.

V (23:50)

Everything about the Internet is about reducing friction in our lives. And that can be amazing, right? But sometimes without friction, we don't get used to what it's like in the real world. And the more that we are sort of like subjected to our data being taken from us, the more that these websites want us there and want us to stay there and want us to reduce the friction there. And so because of that, we are becoming so used to a world where it's like, if I don't get my thing delivered by tomorrow, what the heck is going on? If I like need to leave my house to go pick up dinner, I mean, I'm like yelling at myself right now, then like, I cannot believe that I have to do that. So the more that we engage with this technology and engage with it only on a computer screen in front of our face, I think the less that we're going to get used to what it's like to go outside in the Chicago winter or to sit in security at the airport, or get delayed, like all the things that like, come with being a human, honestly, which is sad.

Katherine KK (24:56)

And you're right, that's also the use case of crypto. It's to reduce friction, it's to make things faster and easier and cut out intermediaries. And of course, there's the very laudable goals of the democratization of finance, but at its core, a lot of it is about efficiency and reduction of friction. But there is something so beautiful about working with your hands at the end of the day and doing something that's hard and unpleasant, but conquering it. So I, I do sometimes, in a very intellectual, like, high level sense, worry that us as humans are going to lose that feeling of really, really, really working maybe physically and mentally hard and reaping the rewards there. So I guess that's a depressing conversation of what is life for another episode.

V (25:45)

No, I think on that point though, Katherine, it does speak to crypto and what we're trying to do or sort of like all speed of payment, right? We're trying to make things immediate. You know, you could think about crypto, you could talk about UPI or pix, right? Like immediate payment. There's amazing things about reducing the friction and increasing speed to T plus zero, right. But what comes with that is more fraud. And so it's trying to figure out how do you take those efficiency gains while simultaneously, like including the guardrails that are necessary? And does having some sort of a delay allow us to protect people more I don't know if that's a sufficient trade off, but it's at least worth considering.

Katherine KK (26:29)

Yeah, I feel like that is like.

Jesse (26:31)

Literally our life's work in crypto is just figuring out how to preserve a lot of the benefits. Right. So I would add like to me the, the benefits of crypto and why I got into crypto aren't just because, you know, I think it makes things more efficient and cheaper and all of that. I actually think crypto offers a lot of structural advantages that make things more like fairer, like more fair. But yes, it's always about balancing all of the benefits of it against like the unique risks that come with it or like the risks that it uniquely enables. Right, absolutely.

Katherine KK (27:06)

And you know, again, the question is, do we need to make everything so seamless that it. What is the point of a day to day? But again, that's a little bit more intellectual. Okay, so on that note, I think we have one more word from our sponsors and then we'll be back to talk about our prediction markets.

Mantle Representative (27:26)

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Katherine KK (28:22)

Okay, fantastic. During the break we were just expounding on the beauty of Wally. So that's your real takeaway for today. Go watch it. My other favorite animated movie is up. Well, we'll work that into an episode in the future, but on a different note. So we've talked about prediction markets on this show. We one day plan to have a prediction markets specific episode because I think there's still a lot of confusion around the legal landscape of prediction markets. But today we want to talk about something a little bit different. There has been a lot in the news which we're not going to have time to get to today relating to some very interesting world of vets. And we're talking about the US engagement in Venezuela. And in the hours before the US announced the Capture of Nicolas Maduro. Betting activity on Polymarket spiked very sharply on questions about his removal from power. And there was one account that made something like half a million bucks in profit. Uh, so it raises the question of, wait a minute, did they have, as you will know from our episode where we talked inside your trading material, non public information that could constitute insider trading or some form of fraud to use that to make money on polymarket. So I'm going to pass it over to V. V, how do you feel about this? Like our prediction markets. Okay. On the insider trading front.

Mantle Representative (29:54)

Okay.

Jesse (29:55)

So I'm going to give a very crypto answer to this, which is, well, maybe, but also as a landmark answer.

V (30:04)

That's a lawyer answer, A crypto lawyer.

Jesse (30:07)

Answer, maybe, but also as a like strictly legal matter, probably not. Prediction markets really fall under the securities laws, right? They're event contracts. They're not treated like stocks, they're treated like event derivatives or a form of regulated betting. So the, the classic SEC insider trading rules which we talked about, I think on like episode three, don't, mostly don't apply. Right. So under the CFTC framework, which is how the major prediction markets in the US are regulated today, trading on non public information isn't automatically illegal unless you can prove fraud or manipulation or breach of duty, which is a way higher bar and pretty much, I mean, I would say never really enforced in practice. So something that could get you indicted with respect to insider trading in the stock market can be totally legal in a prediction market. And it's not because the lawmakers decided to legalize insider trading in this area. It's because the law just hasn't caught up yet. So I think like the, the platforms would, you know, they would point to, well, we ban trading or betting on confidential information in our user terms of service, which is nice, but obviously it's not the same thing as having actual laws against it. And then I think the more interesting question for me is like, how would you enforce it? Right. Traditional insider trading detection depend and prevention depends on the ability to actually identify who the insider is. I mean, that goes without saying, right? So if you can't tie a trade, or in this case a bet, if you can't tie a bet to a real person, you obviously can't prove that they breached a duty or misuse confidential information or stuff like that. So in TradFi, regulators can more easily tie a trade back to a person because you can't trade securities anonymously. Right. Every brokerage account requires kyc. We talked about this, but lots of companies have internal policies to monitor who can access what information. They restrict employee trading during certain time periods when the company has possession of certain mnpi. So all of this makes it possible to go after insider trading and to prevent it. The problem with prediction markets is that not all of them do kyc. Right. I think Kalshi does it because it's CFTC regulated in the US and my understanding is that they'll do KYC when they expand globally as well. So this would probably make it easier to go after insider trading because at least you can identify the person who traded. Polymarket's new US app that they just launched also does kyc. It's US regulated, but I believe it still has an offshore version of its platform that historically has not done kyc, which means you can, you know, connect your self toasted wallet and just basically start betting. So this I think makes it not just hard but in some cases basically impossible to go after insider trading if all you have is an anonymous wallet address. And then, you know, insider trading isn't the only issue that arises. Right. There are also concerns about manipulation and like market integrity. Things like these markets for the most part have pretty thin liquidity right now. So like it's very easy for a whale to move prices and things like that. So you know, we've already seen like other instances of where questionable data sources or suspicious looking timing directly affected outcomes. So I think at some point, you know, if these markets aren't regulated so that we can go after some of this stuff, it sort of stops being like wisdom of the crowd and like a source of truth and becomes like whoever showed up first with the biggest bag or whoever had like confidential information and betting on it. So I did want to mention briefly, prediction markets as you guys know, have totally taken off and I think they're just going to continue to get bigger. And so it's starting to draw the attention of Congress. And Representative Richie Torres of New York recently floated draft legislation to go after insider trading in prediction markets, specifically with respect to federal officials. Right. So the bill would make it illegal for federal officials, including lawmakers, political appointees, executive branch employees to trade on prediction markets when they have material nonpublic information about government actions or political outcomes. So basically just applying insider trading logic to this new market category. So it doesn't go after potential insider trading of all kinds in these prediction markets, just the kinds that federal officials could potentially engage in because they have access to non public information and in some cases like potentially classified information like state secrets. So I Mean I think the law.

Katherine KK (35:06)

It'S a great, it's a great point V on that bill. Like and I know Jesse has you have some thoughts on this but explain to me someone how is that bill non controversial like it, I mean now I just for our listeners I will say we've referenced this before. It takes a lot to make a bill become a law. Like so sometimes even a bill that everyone agrees with. Like a great example, Daylight savings time. There is an overwhelming support of ending daylight savings time in the US and there was a bill supporting this. But unfortunately that bill somehow has never gotten traction mainly because it's not a priority. I mean I hate hate daylight sakes time. But like, like Jesse, how is this not controversial? Like this is this should happen because what what I think no one wants to see and there are good people at polymarket and Kalshi and I'll bet you those people don't want retail users effectively greatly disincentivized and screwed by people who come in with this inside information. And you know, if someone's making money, someone's losing money.

V (36:16)

Well I don't think that we should ever approach Congress with this will pass because it should pass. So that's like the first thing I'll say. And then I also just want to add like Richie Taurus is a big crypto advocate and so he has been a really important face on the Democratic side for and just generally for the crypto industry. So I take this bill as like an amazing step and a no brainer in many ways. I think there are certain like aspects of it that could be a little bit hard to enforce. Like it's if you possess MMPI or you could reasonably obtain information that might be MMPI even if you don't have it in hand. That being said, like if we were able to work through that and the KYC issue that V was like importantly noting, I think that like this is actually essential not just for the credibility of crypto but also for the government. These kinds of trades are the thing that piss me off the most. It like really grinds my gears when stuff like this happens and then we just move on and then it happens again. Because if a federal official is trading on an outcome tied to government action because they have classified information or just even any information that the public doesn't have access to that is monetizing state power. And in this circumstance in particular, it pisses me off because it's not just happening in like a random government action. This is the implication of a dictator being taken A brutalist dictator that has hurt many, many people in Venezuela. And instead of, like, focusing on that aspect, they're creating profiting off of it on a prediction market. And I think it makes anyone in our government not. I don't even know if this is someone in our government, but the fact that it's the appearance of someone in our government is bad enough to sort of detract from credibility that we should be having for, you know, officials in government.

Jesse (38:14)

Yeah, I think also, like, the. I mean, this is a kind of a broader concern about prediction markets. But, like, I think right now, like, a lot of these markets, like I mentioned, are not that liquid, but if they continue to grow at the rate they've been growing, they are going to become really liquid and like, really impactful markets. Meaning they won't just be like a good way to predict outcomes, they're actually going to start influencing outcomes. Right. Like, the incentive is already there. And so I think, especially when you're talking about federal officials who are in a position potentially not just to profit from these kinds of incidents, but actually influence or like. Yeah, to actually influence or like, encourage the outcome. That is like a really dangerous place to be. So I think, like, somehow this stuff needs to be regulated or it's going to turn into a black mirror episode.

Katherine KK (39:16)

Well, and you're right, the, the point and, and this was implicit in what you were saying, but just to make it explicit, is that insider trading generally impairs market liquidity. It creates information asymmetry, which is problematic. Wider spreads, lower depth, it's bad for all market participants. What, it's what no one wants. And it's also why, of course insider trading is illegal, even if it doesn't affect the market. Like a lot of insider trading, like, the, the amounts at issue are not going to have any effect whatsoever on the market. It doesn't, like, take that to make it illegal. And I'm talking obviously in the securities context where it is actually insider trading. Yeah, but that's. I think that's problematic.

Jesse (39:58)

Yeah. And I think just like, as a basic matter of fairness, like, it, It's. I think it's in society's interest to make sure that these markets are regulated, but it's also in the interests of the platforms themselves. Right. Like, I sound like such a broken record and I feel like I say this all the time, but, like, people aren't going to participate, participate in markets that they don't trust, so they're not going to be placing bets. Just like you wouldn't place a Sports Bet. If you thought that, like, the game was rigged. Right. I mean, it's. It's very simple, actually.

V (40:25)

Yeah. And, like, aren't we trying to get market structure passed? Aren't we trying to get, like, a, like, bipartisan support for crypto? Because this gives critics, like, the cleanest possible narrative that the industry is not about building neutral infrastructure, but arbitraging proximity to power. Really? And I think that, like, if we can't support a bill like this, I'm not saying this is a perfect bill, but if we can't support these kinds of bills, then how can we go in there and say we want a safe market structure where everyone can operate equally?

Katherine KK (40:58)

I don't understand it either, because I feel like we're at this weird time where we're like, a preteen begging for a phone, and the grownup is like, well, you can have it if you demonstrate that you're responsible. And so instead of just being really responsible and going to school and coming home, we're, like, going to smoke weed at our friend's house. Like, this is what's happening in crypto right now. Like, can we not just behave at this critic? Take advantage of this collaborative, transparent regulatory environment, strive for the best possible conduct to prove that there are many people like us in this industry, which there are. Instead, there are a lot of people doing naughty things quite loudly, which is frustrating for a lot of the builders. So maybe that was a more graphic way of. Come on, come on. Okay, so I want to move to a slightly happier topic, and that is this week's crypto good news. And this is a really good one. Please. I want to encourage everyone engage with us. V and I are on Twitter. We can remind you of our handles in the show. Notes on other pieces of crypto good news to be featured. Also, if you have questions about what we're covering or topics you want us to follow up on. Follow up. Mention us, ping us. We want to hear from you on that. I just did a tweet thread, for example, on how the US has jurisdiction over Maduro, in case anyone is curious. But let me pass it to Jesse to talk about our crypto good news.

V (42:40)

This is the cutest good news we've had yet, so everybody needs to go to. I didn't know about this until this week. It's called potherium.com spelled like a little puppy paw. So essentially, it is a positive approach to animal welfare through donations of crypto. And they've donated almost $500,000 to charities and nonprofit organizations via crypto channels to support animals in shelters and like injured animals as well. And I spent most of my free time, I'm not on Twitter, as you just said, but I spend most of it on Instagram looking at puppy photos and like looking at dogs and shelters and trying to save them. And so this gives me, and hopefully anyone who also likes animals as much as I do, a positive crypto way to donate. So I have no affiliation with them, they're not sponsors, but they seem pretty cute.

Katherine KK (43:39)

I love that so much and I want to honor them in honor of my just turned 14 year old rescue dog, Piggle, best dog name ever. So shout out to all the rescues and the people supporting these organizations and it's a great use case yet again for why crypto is out there doing good things. Doing.

Jesse (43:59)

Is very cute. But where's Asher?

V (44:02)

Almost an appearance. He's his eighth nap of the day in my bedroom.

Katherine KK (44:09)

And for those who are listening, we were hoping to have a guest, a cameo from, from Jesse's furry best friend. But maybe another time.

Jesse (44:18)

Next time.

Katherine KK (44:19)

Well, that's it for today. Thank you so much for joining us and we will see you next week as usual on Decks in the City.