On The Brink with Castle Island - Weekly News Roundup 07/10/20 (More cryptodollars, the FATF explained, Coinbase IPO rumblings) (EP.100)

Episode Date: July 10, 2020

Matt and Nic cover the top stories of the week. In this episode:  Nic's viral Tweet  The Fed competes with crypto startups for talent TikTok influences the crypto markets Why supply metrics should be reexamined Why we wrote our cryptodollar whitepaper Chainalysis raises another round Coinbase IPO rumors USDC funds are frozen for the first time Can the stablecoin 'blacklist model' survive? Our FATF 101 and what their new guidance means for the industry What the 'travel rule' actually means why the FATF is worried about stablecoins The FATF fires a shot at decentralized stablecoins

Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars and all of a sudden people start to worry. So out of this worry, we have something called a Bitcoin. Bitcoin.

Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And you have a new bookshelf behind you. What do you got going on back there? Yeah, these are a bunch of children's books. So don't look too closely at the titles. But, you know, like you do a video call.

You got to get some books behind you regardless of which books. Speaking of good children's book, a shameless plug here. Well, I guess it's not my plug. but so it's not even shameless. But Sam Lesson's book, B is for Bitcoin that you gave me for my daughter. She loves it. She like reads. She picks it off the shelf all the time and just reads it.

Has she, you know, really digested the concepts yet? I'm trying to teach her the Cantillon effect. How do you say that Cantillon effect? Yeah. It depends. Yeah, Cantillon. I say Cantillon, but it is a French word. So.

Yeah, but she's getting there. Speaking of which, before we get into the substance of the matter, you had a big tweet, a big meme tweet, speaking of Kantian effects. Yeah, this is my number one most successful tweet ever. So, you know, I'm riding high right now. I'm feeling good. It was a good meme. It's a good meme about inflation, you know.

Anytime you can pull off a tweet like that, that's got to feel good. Honestly, I didn't expect it to get this big because I think, thought it was way too esoteric. Like, for a start, nobody knows what a cantyon insider is, because that's a term that like a handful of us just made up. So that's a made up term. Yeah, who made that up? Because I feel better about not knowing what that meant until very recently. Well, yeah, I mean, that's fair because like Nick Zabo said it. I said it in an article on CoinDesk, but it's not like a term that actually exists. But you can sort of guess it from context clues if you know what the canteon effect is. So.

Yeah, all right, that makes sense. I feel better. But yeah, this, this, like, me and I made got engagement from, like, people to work at the Federal Reserve and everything. Speaking of the Fed, they keep on hiring talented crypto people. I don't know if these are all public, so I'm not going to name names, but I have heard of several very talented folks going over to work for the Fed. And these people are blockchain crypto experts. Yeah, and you know it's not fair because they have unlimited money. So they can just.

finance, you know, unlimited salaries if they want. They're outbitting, they're legitimately outbidding startups for crypto talent right now. It's the craziest thing in the world. How do you invest in the Fed? With newly printed dollars, like the whole thing's perverse, okay, if you ask me. I mean, I just, we need to get long the Fed. I guess we already are long the Fed, so never mind. Well, there is a lot to talk about today, but before we do, and speaking of dollars,

why don't we talk about taxes? So tax deadline day is coming up on the 15th of July. It got pushed back this year. And if you are someone that is engaged with blockchain-based assets this year, if you've bought anything, sold anything, just want to be careful. And you want to use Zenledger. So head over to Zenledger.io. It's the best place to do your taxes. You can plug in all of your accounts. It'll give you a nice unified report. You just hand it to your accountant or your file it yourself, and you're good to go. And if you use the coupon code Castle 15, you get 15% off. And I'm pretty sure

if you use Castle 20, you might get 20% off too. We still haven't really figured that out. So get back to us on that, but I'm pretty sure it's 15. Yeah, give it a shot on the permutations. See what you get. And it's good tax software. So head over to Zen Ledger and get your taxes done. A lot of stuff going on this week. Yeah, there's all kinds of new developments.

People seem to think the crypto is back. Dogecoin thing. Are we even going to talk about that? The Dogecoin thing. Of all the coins. So if you haven't been paying attention, Dogecoin is pumped. because people on TikTok are talking about Dogecoin. So I don't think this is really the best thing for us to be talking about because who cares, but it's pumping.

Yeah, it's like if you're crypto hedge fund, you definitely had to have an analyst watching the Ponzi's in particular, the Ponzi's in China and seeing how many Bitcoin they're scooping up and so on. And now I guess you also have to have an analyst that's full-time monitoring TikTok to see what the meme coins are. You know, it's hard to be taken seriously. If you're talking about Paul Tudor Jones in one breath and then the next breath, you're talking about kids on TikTok making Dogecoin go up by 200%. You've got to be careful in this industry. Chainlink was originally caught traction on 4chan. I mean, it was just memed into existence, really.

Unironically, 100%. Yes. And it hit an all-time high this week. So I guess they're doing something right. I don't know. Well, we had a busy week. Why don't we first talk about just podcast this week? So we had Tim Rice on, or you actually did this one.

So Tim Rice and Ben from Coin Metrics. I always say his name wrong. So Sellermeyer from Coin Metrics, talking about a new methodology that they released. I think it's just Sellermeyer. I mean, I've known him longer than you, and I still can't say that right. So sorry, Ben, but a really good podcast appearance. He was on Lower Shinn, too. Yeah, he did the double.

So, yeah, they're talking about free-foot supply. So basically, you know, everybody knows that supply. is kind of wrong in some critical ways. They have this intuition that supply of crypto assets is really poorly done and unrigorously done. So CM basically stepped up and did the work. And they're like, look, we'll determine what is liquid and what is not liquid. And then we will subtract out the illiquid stuff and leave you just with the liquid supply for measurement purposes. Now, that doesn't replace the regular old measure of supply, but it's a complement so that you can have a better understanding of what the actual

economic significance of these things as. Yeah, and so I know that this matters for a lot of different reasons. And I think there's a little bit of confusion in the industry on why this matters so much. And so maybe from my perspective, why this matters, it's not about, hey, it's a different number than coin market cap. It's really not about that. You could think about this in the context of if you're an asset management firm and you're building an index product, let's say you have a top 10 index.

And you want to have a really good handle on how much of a particular asset you need to buy in order to have a real index. So if Bitcoin cash is, I'm just making up numbers now, 15% of a market cap weighted index, you know, you're going to have to go out and buy that percent of Bitcoin cash in order to, you know, run your product. Well, what if that number's wrong? What if it's really difficult to go out and get access to Bitcoin cash, that no one's selling it? What if, you know, a bunch of the supply is effectively just not activated because people have not ported over their coins after the hard fork? you're going out and you're artificially driving up the price of some of these assets with your buys.

And so you can't do this in the context of a regulated financial product. So that's why we have these robust methodologies for equities and for other types of, you know, quote-unquote traditional assets. So to me, that's like the most important thing here. I don't know if you share that view. There's lots of things here that inspired this. But yeah, I mean, that's probably the main one. And you know, equities went through the same thing. Like they started out by doing the naive total market cap,

and then a bunch of stocks got listed that had really low floats. And then indexes tried to buy those stocks proportionally on a market-cap-weighted basis. And there was a huge amount of tracking error because they were trying to buy what was in effect a tiny small number of shares relative to the implied economic weight. And so then they developed this free-float methodology. And so we've just borrowed from that capital markets concept. which is even more significant in the crypto industry, because we're talking about bare assets.

You can lose these things, or they could be forked. They could be held in foundation wallets. Or huge fractions of supply could be totally inert. So same exact issue in a greater magnitude in the crypto industry. Yeah, definitely. So I enjoyed that podcast a lot. That was wonky.

And it was a break from our accounting and tax podcasts, which I've gotten some feedback that, you know, two accounting and tax podcasts in one week, maybe that's too much. Well, we're going to do some more. So, um, yeah, it turns out that I guess we just kind of find it interesting, but we didn't plan to do this many. But hey, if you're at a big accounting or tax firm, just shout us a haul.

So I've just recorded, we've recorded two more podcasts, which are at least partially on the topic of auditing and accounting. So download numbers are, or not going to look good for those. Yeah, but this stuff matters, like proof of reserve. That is an audit concept, right? Right. Granted, not that many people care about proof reserve, but you can't stop me, Karen, you know, I care. You know what? Audit and tax, it's kind of like the soar system for this city that we're building here. You know, everyone wants to build the skyscraper, but, you know, the city doesn't look really elegant if you don't have sores.

And that's kind of what we like to invest in. Yeah, and there's sewage overflowing in the streets right now of this city, to be clear. So yeah, we need to we need some robust sores built out here. Well, the other thing that we did this week was we released the first white paper in the history of Castle Island Ventures. Crypto dollars, the story so far. I would say reception has been great. It has been good. For sure. Yeah, hopefully there are there are more white papers to come. You know, let's let's talk about this. So set it up, I guess, for people that haven't read it yet and, you know, talk about what, uh, you know, what's in there and why we wrote it and what the impetus was. So the main reason that we wrote this was because we wanted to analyze what most people call stable coins in just a much broader context. So stable coins kind of got pigeonholed a little bit. People thought of them as just a way to settle funds between exchanges.

And they didn't really think of them as dollars that just so have. happen to exist in an on-chain context. So we wanted to broaden the analysis there and be like, hey, look, there's actually something pretty significant occurring here. Now, that's not to say that, you know, the Bitcoin industry doesn't matter and that the only thing that matters is digital dollars. But we did want to give credit to what has happened here is a network of private issuers have issued dollars on-chain on multiple blockchains, adding up to about $12 billion. dollars. And obviously people have noticed this, but it hasn't really sunk in. Like to me, this is one of the biggest achievements of the crypto industry. Now, how enduring it'll be remains in question,

whether it can stay in this honeymoon period of, you know, relative autonomy of transactions and relative privacy, whether that can resist regulation is TBD on that front as well. But there is a pretty interesting phenomenon here. I mean, stable coins or crypto dollars have outstripped public blockchains in terms of transactional value on chain, right? So this is a real changing of the guard. Again, we're not saying that cryptocurrencies themselves are growing away, but they've been complimented by dollars on chain. And so we wanted to analyze that entire phenomenon. Yeah, there's so many reasons to be excited about it. I find myself getting excited about different things, depending on, you know, what I'm thinking about. But one thing to think about here that I don't know

that we have a ton of evidence for yet, but I think a lot of these projects that were attempted via ICOs in the 2017 era, they were trying to do essentially utility token networks to provision some sort of a digital compute or digital storage. You could imagine a lot of these networks that have kind of not worked since they had to introduce a native currency that people weren't familiar with it was difficult to distribute that currency. There's all sorts of securities laws, issues. You know, all these ideas were actually pretty sound and pretty interesting. And you could imagine a lot of them being implemented using stable coins or crypto dollars. So, you know, that was something I guess we talked about in the paper. We didn't talk about it too much because we want to keep it

factual. And that's more of a conjecture of prognostication. But I think the design space for new startup ideas is pretty broad here with stable coins. Yeah. And as you say, Like, we're not going to know if this is, if this hypothesis is true for a while. But I agree. Like, there's a lot of interesting ideas that were tried with these really kind of inefficient utility tokens, kind of dedicated app coins that probably do work when you have a stable value unit there. And, you know, there's just the broader point that stable coins are kind of having their moment. They, they're leveraging this global crypto financial infrastructure of wallets.

that makes sense and of exchanges in virtually every country. There have been some really big countries with key wins for the exchange industry, India and South Korea or two in particular. So, you know, this is a kind of a new state of affairs where crypto dollars kind of rode the Trojan horse of Bitcoin and Ethereum and Alcoins. And they're now, now effectively what we have is digital dollars like USD that is accessible to pretty much anyone in the world. through these local exchanges and these Fiat on ramps, that they can custody with themselves.

And that's a pretty underappreciated thing. That's a new thing. Dollar-based savings is not really something that's available in lots of these countries. So I think we're going to see an explosion of innovation here. We're going to see lots and lots of startups built that just treat stablecoins as a relatively unencumbered financial rails for cross-b border settlement, for B2B settlement. You know, there's definitely some some potential landmines in there, you know, some regulatory questions that are very much unanswered. But I think the proof of concept has been proven

out at this point. Yep, agreed. Well, great. So why don't we transition into the normal course of events here and talk about some of the deals that happened or that were announced this week. So the first one is chain analysis. So a lot of folks will know chain analysis. They're the crypto analytics company. They focus on compliance regulatory. They raised some additional capital, a series B extension, $13 million from Ribbitt and from Sound Ventures. So it looks like this capital is kind of for them to continue their work with governments. Obviously, chain analysis is sort of one of these products that if you're building a regulated financial services firm, you just have to have it.

Either you have to have to have one of their competitors, elliptic or cyphor trace. There's really no two ways about that. So good to see these folks, you know, continuing. And I know this is a controversial company because people don't like the screening stuff, but these guys are not going away.

Yeah, I finally think they're actually becoming more indispensable in the industry, to be frank. If you read the new, fat have actually published two people papers in June, which we'll actually talk about one of them later in the episode. These on-chain analytics, this concept of the travel rule, tracking funds on-chain. This is something the regulators are taking a keen, keen interest in, and exchanges are actually pretty much all going to be brought to heal as far as I can tell, at least the ones that

regional or local regulators have influence over. And then the next deal was Wintermute. So this is a market-making firm. And they actually specialize in defy and kind of longer-tail assets. So they raised $2.8 million in a round led by Lightspeed venture partners, Jeremy Liu over there at Lightspeed. So congrats to those folks. You know, market-making firms, I think, are probably doing really well,

given everything that's going, especially these guys, if they're focusing on Defi. Talk about an area where there's been a lot of activity lately. It's been a good year for Defi, for sure. I mean. So transitioning into some news, this is more of a, kind of a, what would you call this? This is this Coinbase news. This is kind of a report from Reuters, definitely not confirmed, but the report goes that Coinbase is readying themselves for an IPO.

What do you make of this? Yeah, I mean, I'd like to see more confirmation for sure. I think we kind of all expected Coinbase to be one of the first U.S. crypto companies to go public. it's probably a more kind of transparent offering than some of the other crypto companies that have we've seen go public like canaan which has been really controversial yeah those those don't count those like mining ones don't they're yeah those are pretty sketchy but yeah i think this is kind of a key milestone for the industry really like you know u.s homegrown really significant business with lots of revenues that people depend on probably one of the

biggest custodians of Bitcoin in the world, if not the biggest. You know, finally going public, that's going to legitimate the asset class in the eyes of a lot of investors. Like, Coinbase being public means that there will be a huge amount of transparency into their metrics, their numbers. That'll be an interesting way to track the adoption. It's going to be such an interest. There's so many positive byproducts here. You know, you're going to see, first of all, this is going to be a milestone for the industry. It's a big company. It's going to get public. You're going to have people that you know, probably leaving Coinbase to start their own startups after this. You already have a little bit of a Coinbase mafia situation going on with a bunch of folks that have left to start

things. You'll see more of this. You'll start to see more people doing angel checks. So all of the things that really come with big companies having exits will have a positive impact, I think, on the industry. And I guess not to mention the fact that Coinbase is sort of, you know, has so many strategic options ahead of itself, so many areas of growth, so many pockets of this industry where they actually don't even play yet. So it'll be interesting to see what that public story is in the S-1 around what are they focused on. Do they want to get into institutional?

Do they want to get into, you know, obviously they're in-institutional, but I mean, do they want to get into prime brokerage more aggressively? Do they want to get into derivatives? You know, do they do stuff in defy? I mean, there's just so many things that they could do. It'll be interesting to see how they frame it. Yeah, and I saw that they, it was actually rumored that they would do a direct listing, which is kind of the,

novel thing that some of these tech companies are doing, which makes me wonder, you know, a lot of companies that go public don't strictly actually need the public markets capital, right, because they have virtually an unlimited ability to take on capital in the later stage private equity markets. So it's interesting that they would potentially be looking to be and behave more transparently, you know, with all of the requirements that come with being publicly traded. Coinbase, you know, to publish a list of how many users they had on the platform, then they stopped publishing it. Yeah, they stopped publishing it once it got over like $20 million or $25 million.

Something like that. But yeah, you know, I'll wait for more confirmation on this, but that would be a huge, huge milestone for the industry for sure. Definitely. So another story this week, and it relates to stable coins, is that Circle has confirmed that it has frozen $100,000 of customer funds on the USDC network and the action was taken at the behest of a law enforcement request. And it was funny, when this came out, you and I had a quick back and forth and I, you know, I said something about Tether. And then, like, two hours later, it was a story that broke that Tether had had similar, you know,

things happening on their platform. So what's your, you know, what's your read on this? Yeah, some people were at least feigning or, you know, claiming to be shocked by this. I don't think this is surprising to anyone. this has been known that all of these stable coins, with the exception of maybe die, have these blacklisting mechanics in them. That's how they all operate. Certain stable coins actually operate on a whitelist basis. So I believe DGLD is an example, the gold-backed coin, which owners of that one actually have to be whitelisted in, so that's much more restrictive.

But for the most part, all of these Fiat-backed stable coins or crypto dollars, they have blacklists. You can look at them. You can see the contract. Tether has blacklisted plenty of funds. They did a $1.30 million blacklist back in the day. And, you know, it's pretty unsurprising that the Center Consortium blacklisted an address. There are questions about what would happen if you had some. you know, USDA or some other stable coin locked up as collateral in a defy contract and then

it were to be blacklisted and effectively frozen, what would happen? Would there be kind of contagious spillover effects from that? That is not clear to me. But yeah, I don't think this, you know, should have been much of a shock to anyone. Everyone knew that, that this functionality existed. Yeah, I mean, for me, it was kind of a nothing burger, right? If you were, if you're a criminal, using one of these networks, you're pretty stupid. Well, the freeings have been really infrequent so far. I've been shocked that there hasn't been, there haven't been more requests to freeze coins,

you know, given that the possibility exists to do that. And I think this is really a critical question. Can the blacklist model survive? And I hope so, because it's much more permissive and it grants much more autonomy than the whitelist model. If all stable coins move to a white list model, from this model, then they're going to be much, much less useful. Yeah, to me, the whitelist model is the intranet, right?

It's just the use cases will not be as profound here. It's just going to be really hamstrung. It's effectively permissioned. Yeah. And like the interesting thing about crypto dollars, we talk about this in the white paper, is this notion of permission pseudonymity, which, well, that's one of the interesting things for sure, but it might be one of the most interesting things, basically means that even a currency which has an administrator and issuer, they can authenticate and KYC the people who

create and redeem those coins for dollars in a bank account, but they have kind of limited insight to what the rest of the network is, and they're not necessarily even interested in those transactions that are within the transactional graph. That's the doctrine of permission pseudonymity, which some analysts have talked about. And the question is, can that survive? and I'm optimistic and hopeful that it can because it means that we actually have a reinstitution of a real standard of digital cash on the internet which resembles the way that physical cash works,

which would be pretty cool, if true. I'd say for all of us in this industry, we better hope that people like Jeremy Allaire continue to educate regulators on this. I mean, he's done a great job of explaining some of these concepts to very important and powerful folks, so hopefully that continues. Yeah, and we're coming up on a critical time for stable coins.

The eyes of the world are kind of fixed on them now, in particular, the FATIF, the standards body for anti-money laundering and anti-counter terrorist financing. Yeah, so let's talk about that. All right, so I did a little bit of homework this week, actually. I kind of wanted to do a one-on-one on the FATIF because people kind of understand that they're important,

but they don't really know exactly what they mean and how they work and what their guidance been. So I basically prepared some notes. So the FATF is a, as I said, anti-money laundering slash counter-terrorist financing organization. They're based in Paris. They're set up by the G7. Most developed countries are members.

They're a standard setting body, so they publish recommendations. And then it's basically up to local enforcement agencies to actually implement them. So the FATIF doesn't directly enforce it. any of their recommendations. But they're very powerful because de facto, they're kind of a arm of the U.S. and most transactions happen in dollars. And so the U.S. effectively decides what happens. The other thing is, if you don't comply with the FATF regulations, you can get

blacklisted or gray listed. So the FATF blacklist has North Korea and Iran on it right now. and the gray list is a handful of countries that they that are basically on their naughty list. So actually Iceland is on there right now for some reason, which I don't know why. Pakistan, Zimbabwe, places like that. And if you're blacklisted by the fat if banks basically won't do business with banks in your country because they're sort of scared to and also because the compliance costs are really, really high. They have to do tons of extra kind of diligence. So that's the FATIF. And then in June 2019, their attention turned to crypto, and they coined all this strange

jargon like VASPs. So VASP is a virtual asset service provider. And so that's what basically they consider exchanges and custodians and kind of deposit taking intermediaries to be. And in their opinion, they said, that VASPs, they were beholden to the travel rule, which is this idea that if you are an entity that is transacting on behalf of a customer with another kind of regulated entity, you have to pass identifying information about that customer to this counterparty.

So you can't just pass funds. You have to pass funds plus a bunch of metadata about whatever customer is doing that transaction. So that's, you know, that's a pretty stepped up level of diligence and level of information sharing that they decreed that effectively exchanges have to do. So it's kind of a really big deal. And that holds for transfers over $1,000. So this kind of caused a big stir because it meant that exchanges or that whole industry was going to have to develop a swift of sorts, It's like a messaging service to securely share information on their customers when they're a big transaction. So that's really tricky, and they actually haven't really implemented it yet.

And so then what happened was they did a 12-month review of these recommendations, and that was in June 2020, so last month. And they also published in June this report, which was really interesting to read, called the report to the G20 finance ministers on so-called stable coins. So they did a whole report on stable coins specifically because they're kind of freaked out by stable coins. Well, we should have interviewed them for our crypto dollars piece. Yeah.

So I recommend reading it. It's pretty readable, although you kind of have to cross-reference it because they use all this jargon. But they don't like the term stable coins. They sort of have this pejorative so-called in front of every instance of stable coins. But anyway, the key points from this piece are they're more worried about stable coins than they're worried about virtual assets or cryptocurrencies because empirically people use stable coins transactionally more.

So that's number one. Number two is they recognize that there is a spectrum of centralization, which kind of affects enforceability. So they acknowledge that more decentralized stable coins are harder to enforce against, which is, you know, people kind of know that. And that more centralized stable coins are easier to enforce against. But they also think that centralized stable coins are more likely to be mass adopted. So they're actually not that worried about decentralized stable coins because they don't think they're going to get that much traction, which is interesting. They might think that the peg won't hold, right? Yeah. So they're super,

skeptical about the fully decentralized stable coins. So they're just not even that concern about it. They read that base coin white paper and they said this thing's not going to work. Yeah. I mean, if you look at the track record of the like, you know, the senior shares coins, that's like probably a fair, fair assumption. So what they do say is the administrators of centrally controlled stable coins are virtual asset service providers, no surprise. So you're beholden to all of the vast rules that they've laid out in other documents. Yeah, so that's not a big shock. So basically, if you administer a stablecoin, you're effectively a virtual asset service

provider. But what they do say is that implementing an AML CFT, CFT's counterterrorist financing program for stablecoin administrators could include, quote, for example, limiting the scope of customer's ability to transact anonymously using the so-called stable coin. So they're kind of hinting at the fact that for centralized stable coin administrators, they believe that it might be in their obligations to stop all anonymous transactions using those coins. So that's kind of a blow against this doctrine of permission pseudonymity. And then the last big takeaway for me was that decentralizing the governance of a, in theory,

decentralized stable coin is actually maybe not enough to kind of get them off your back. So there's an interesting quote in here. The fatif is aware of proposals for establishing so-called stable coins that once launched and able to function on their own would immediately dissolve the entity that created it. That is, they'd move from a centralized to a decentralized arrangement. The body that creates and promotes such a decentralized platform would likely qualify as a financial institution or VASP. So, I mean, to me, that's just a clear call-out of Maker, right? I mean, who else, what else could they be referring to? They're taking a shot of Maker without referencing

maker directly. Huh. So basically, they're saying that even if you claim to be decentralized governance or if you actually are decentralized governance, they'll kind of take a lighter approach of that test and be like, look, if you're even running the governance system here, we still probably effectively consider you the administrator of that system. That'll be interesting to see how that plays out. You know, all of these travel rule discussions are really coming to a head. And another big question, and I don't think it was talked about in that report, is, you know, say that there were travel rule violations in the past,

some of these exchanges, for instance, if they had, you know, violations. Are those enforceable? I mean, that's a big question to me. Are these going to be retroactively punished? Or is this just an ongoing thing? And I just throw that out there, and I don't think that either of us know the answer to that. But to me, that would be, that's something worth understanding. Well, they talk about sunrise periods in the travel rule and position.

So my interpretation of that is that there isn't retroactive enforcement and that they are giving VASPs a buffer in order to incorporate this. And also, you know, there aren't any mutually acknowledged standards for actual information sharing because it's really like a non-trivial thing to do. So, you know, to share lots and lots of like very sensitive customer information, bilaterally or multilaterally, whenever there's these settlement transactions. So it appears that there's a certain amount of leniency in the imposition of the travel rule because, again, that infrastructure just doesn't actually exist right now.

Yeah, well, that's some good travel rule talk. Good job there. Yeah, I had to finally learn what that was. It's like, you hear about it for years and like, okay, what actually is this thing? Turns out it's immensely cumbersome regulation, which is going to be super annoying for any exchange of compliance. Well, I'd say I've spent thousands of hours of my life talking about the travel rule and learning about it. And, you know, hey, what's another 20 minutes? Yeah.

And unfortunately, these are the things that people in the industry are going to have to know and care about for better for us. So, you know, I never really thought I would be going deep on the Fadoff, but here we are. All right. So I think that's a good place to leave it. Any plans for the weekend? I'm going to edit two podcasts that I recorded just before this one. Pretty good. We got some great podcasts on the horizon here.

Yeah, we're going to continue on this trend of audit-related podcasts. which I'm not going to apologize for because I find it to be pretty interesting. Well, we did a really good podcast yesterday with a certain trader in this industry that I think a lot of people know. It was not Dan, but someone that people will tease it. It's probably going to be coming out in a couple weeks,

but I think it's going to be a popular episode. You know, I found out that Dan has been doing other podcasts, so he's podcast cheating on us, which is super not cool. He does the Masari. one, right? Yeah, he's doing, he's been, he's done a few. Yeah, he did Luke Martin's podcast too. Anyway, but Dan, you know, never forget who catapulted you to crypto podcast circuit superstardom. That was us. Just save your best material for your, uh, for your circuit on the Castle Island podcast.

All right. Well, I think that's it. Everyone have a safe and healthy weekend. And we'll see you next week.