On The Brink with Castle Island - Weekly News Roundup 09/25/20 (Bank custody for stablecoins, two new congressional bills, "stablecoin" vs "cryptodollar") (EP.130)

Episode Date: September 25, 2020

Matt and Nic return for deals and the news of the week. In this episode:  The OCC clarifies that banks can custody dollars for stablecoin issuers Maker's flippening in collateral types, and what that means for the system Tether falls below 80% of stablecoin market share Two congressional bills propose to federally regulate crypto exchanges and tokens "Stablecoins" or "cryptodollars"? Cambridge AltFin releases their long-awaited cryptoasset benchmarking report The prospects for big tech antritrust What to replace the 60/40 portfolio with Content mentioned in this episode: OCC, OCC Chief Counsel's Interpretation on National Bank and Federal Savings Association Authority to Hold Stablecoin Reserves Coin Center, Two new bills in Congress would clarify agency jurisdiction over cryptocurrency Cambridge Center for Alternative Finance, 3rd Global Cryptoasset Benchmarking Study ECB Crypto-assets Task Force, Stablecoins: Implications for monetary policy, financial stability, market infrastructure and payments, and banking supervision in the euro area Apolline Blandin on OTB, Estimating Bitcoin's Energy Footprint

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 Concentive 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. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. We have this big options expiry tomorrow. Have you seen this? So there's like a record volume of options expiring tomorrow. And the best takes that I've seen online are that either the number is going to go up, the number is going to go down, or nothing is going to happen.

It's one of those things I see from trader, Twitter. the serious traders of Twitter that they always get excited about. The other thing in that category is like CME gaps over the weekend or something. And I just, yeah, I have a hard time like figuring out what that's meant to mean. I mean, I guess it doesn't mean anything as an early stage venture investor, but I find the coverage to just be hilarious because the articles would just say, hey, there's massive amount of participation here. And, you know, who knows what's going to happen?

Yeah. So maybe someone can DM us and tell us what the significance of a big options, Exbury is. Yeah, get in our, we should just, we should just have Dan back on. We can crowds with, yeah, Dan will tell us. Dan, if you're listening, please, what does it mean? Tell us what it means. More importantly, just tell us what's going to happen.

Yeah, that's really, we can actually just cut to the chase. That's the key thing. We had a couple of asset management folks on the podcast this week. We had Tom Lombardi, managing director at 3 IQ. crypto asset management firm focused on the Canadian market and also on RIA channel. So that was a fun conversation. Yeah, and I did one with Jeff Dorman, talked about their position on Gnosis and how they're trying to convince the team to make a tender offer to the token holders and effectively buy back

a lot of the tokens with their treasury, which was pretty interesting actually because, you know, know, technically or contractually, the token holders don't have a ton of rights here. But ARCA is saying there's kind of implicit rights and they do have an obligation of the token holders. So that one got certain corners of legal Twitter all a flutter, which to me is a mark of success. You know, if I can get the crypto lawyers excited about something, that's always good. Yeah, I pulled our Spotify listener stats and it's actually 98% of our audience is crypto lawyers. We're very heavy on the lawyers and the accounting firms, the audit firms. I don't know how that happened.

That's our bread and butter. The Jeff Dorman one was interesting because I had totally forgotten that the NOSIS token sale, they only sold 5% of the tokens, and it was over in like two minutes. What a crazy, that was a crazy situation. It was a classic 2017 era ICO where the structure of the token sale wasn't really that well understood. And actually, they suffered from their success because they were going to sell a certain fraction of the token supply or a certain dollar amount of tokens. And because the clearing price for the tokens was really high, they only sold 5%. So they should

have really done an uncapped auction is basically the point. But then they would have had an even bigger treasury and more arcas going after them for the treasury. So who knows? It's so funny. I will say the Tom Lombardi podcast was the best start to a podcast I've ever had. He showed up and he had a 1967 Red Sox commemorative mug that he was drinking out of. And we just spent the first five minutes just talking about the Red Sox. We didn't actually keep it on the podcast. But, you know, he's talking about Jim Lonborg, famous pitcher. It's now a dentist. Do you think he was just pandering because you're a Sox fan? No, he's a Sox fan.

So he grew up in Connecticut. Yeah, he's a genuine socks fan. We do some NFL chatter here and there. We do. Unfortunately, Thursday night football is an incredibly dull fixture today. It's the Dolphins, Jaguars, which is just really not that exciting. I don't know. Yeah, I can't say I'm that excited about that.

All right, so we want to talk about some deals of the week? Yeah, there's a lot. There's some pretty interesting deals this week. A lot of defy stuff like always. Some non-Defi stuff too. So first one is APY dot finance, which is a defy aggregator. So hot right now. There is 3.6 million from Arrington, XRP Capital, Alameda, Coin Gecko, and some others.

Then the next one we had is Dune Analytics, which is a crypto asset data company. they make great dashboards for defy they raise two million dollars in a round led by dragonfly capital with multi-coin hashed coin-based ventures and DCG yeah and if you have used defy you're almost undoubtedly have used a dune dashboard but they are very very cool basically that you pull information on any Ethereum contract on kind of a real-time basis the interesting thing about Dune is that pretty much all the content is sort of user generated. So it's, you know, most of the charts and the dashboards are built by a handful of power users, just pro bono. And they effectively harvest that, they outsource a lot of the work in terms of being a

data company. So there's this really interesting network effect that developed. So super cool business. It's been built by two guys, which is kind of amazing. It blew my mind when I found that out. Two guys in Norway. That's right. So congrats to the Dune team. The next one we have is Nebulous. This is a Boston company. This is the team behind the SIA decentralized cloud storage platforms. They raised a $3 million round of financing. It was led by paradigm, had participation from existing investors at Bain, Bessemer, Collab Fund, Dragonfly, and First Star. Congrats to those folks. Yeah, if you file coin is getting a lot of press right now, but it's interesting. SIA is live. It works. It's been working for a while. I've used it. We actually had David

Warwick on the show a while back. So it's interesting to see Filecoin launching at a crazy full of diluted valuation when there are some other cloud storage platforms, blockchain. cloud storage platforms that are operational to work today. SIA was so far ahead of the industry as it relates to that dual token model. So having the utility token and then have the transaction fees spit off into an actual security token, very ahead of its time there. Yeah, totally. I mean, they designed that model, I think, in 2014, basically did a tiny token sale for SIA

funds out of their MIT dorm room. and at the time they didn't really know as a security. So down the line, they settled up with the SEC, which we've talked about a few times on the podcast. But having that kind of cash flow value creative token, which can be valued, I remember doing my own valuation, doing the earnings analysis way back in the day, that was really innovative, I think.

And you look at all these defy tokens, very similar concept, right? You know, there's a network that spits off certain cash flows and then a token is an entitlement to some of those cash flows. Saib did that in 2014. It's true. It's true. The next one is we have another Boston-based company here. So Boston, really a mecca for what's going on in this industry. So Purestake, which is a company founded by Derek U, who is actually Steve Kekinos's co-founder at their last startup Fuse.

So he has a blockchain node infrastructure company that's very actually. on Algarand as well as Pocodot. So they raised $1.4 million from Hypersphere ventures, Arrington XRP, hashkey, and Bitcoin.com. And they're going to be deploying what looks like a smart contract platform on top of Pocodot, so a parochain. So congrats to Purestake. Lastly, we have Nouri, which is a company building a blockchain-based market for carbon credits. They raised $4 million from Placeholder, North Island Ventures, and Tenney. ventures. If you're going to be on any other island other than the Castle Island, you want to be

on the North Island. We like those guys. So there's also a whole bunch of news this week, more regulatory stuff. I don't know if this is because we have kind of a bias towards that, towards looking at policy developments, or if there's just a lot of policy developments as it relates to digital assets. But the developments keep developing. There's a lot of developments. And the good news is I think we're starting to get some clarity here. And we're starting to get clarity in a way that makes it a lot easier for market participants to transact. So makes it easier for large pools of capital to participate in this ecosystem, both in terms of holding Bitcoin and other public blockchain based assets, but also in terms of holding just US dollars on blockchains. So really, that's the latter is what,

we had this week. So the Office of the Controller of the Currency, which again is the regulator of record for federally chartered banks. So on Monday, they came out with an interpretive letter that basically says that banks can hold deposits that are serving as reserves for stable coins. So, you know, this might seem a little weird since obviously there are already banks in the United States that are holding deposits for USC and Paxos and Gemini and a number of other stable coins. But what this is explicitly saying is, to be clear, banks are allowed to do this activity. So I think there's a number of positive kind of second order effects that come out of something like this. Yeah, the question I've long had about this sector is about the way that those

stable coin systems will are perceived by regulators. And right now they're kind of being regulated like gift cards, you know, where basically the issuer KYC is someone who creates a stable coin or redeems a stable coin, so they have knowledge of that individual. But then when those stable coins are transacting between users on chain, the issuer slash administrator doesn't know much about that. And that's kind of, you know, buying a gift card at a store. Maybe there's some identity information collected there. Then you can just hand, pass that gift. card around acts as a bearer asset. And obviously the gift card issuer doesn't know about that. Kind of the same way stable coins work. The question is, is that going to last forever at some of these

U.S. base issuers? But so far, we haven't seen any movement from the regulators in terms of saying, no, that's not allowed. So, you know, here's kind of what I think here from a hot take perspective. So I think it's beneficial, this ruling is beneficial to existing stable coin issuers like Circle and Coinbase with the USDC product, Paxos, Gemini. I think effectively what you're going to have is just more competition from banks to do business with some of these folks. And, you know, previously it's really been the first mover banks that are really at the bleeding edge of the industry, the Silver Gates, the signatures, the SVBs that have been active in this space. And perhaps we're going to start to see more of these banks enter. Now, I think as a secondary thing, maybe some of these banks actually end up creating some of their own stable coins at this point. Now that we do have this clarity from the regulator, so it could be a double-edged sword is that more competition could be on the way.

I also wonder what this will do for the PayPal's, the visas, the squares of the world. This effectively puts a line in the sand and says this is a permissible activity and you can engage in these type of things. So I think probably you start to see more participation from some of the bigger banks and fintechs. If you look at the biggest U.S. onshore stable coin, U.S.D.C., their market cap passed two and a half billion recently. Yeah. So aside from Tether, I mean, U.S.D.C. is the biggest gainer this year in terms of adding supply. I mean, the problem is that monetizing a stable coin is a hard in a negative or low interest rate environment. typically the way you'd monetize it would be you'd collect the interest income on the float.

And there's not a lot of that to go around these days. But if that number swells enough, you could see that space getting more crowded, new issues coming in. Yeah, I think there are other ways to monetize it. I think, you know, Circle will be trying to monetize through the developer tools in that platform. I think you'll have others, you know, we've already seen exchanges, see this is a very interesting business line that can just keep more assets on their platforms. And so there's alternative

monetization schemes there. You mentioned USDC. I saw this week that they're now the number one collateral asset in Dye or in Maker. Yeah. Yeah. And I believe for the first time, more assets are kind of custodial or permissioned or similar to USDC as opposed to Ethereum. in Maker as opposed to liability-free collateral like Ethereum. So Maker has had this flippening in terms of the collateral types towards more towards USDC and wrapped Bitcoin. And obviously those are systems that have administrators and freezing functions. So there was a small outcry over that this week.

Did you see, so the last thing on this from me is that the SEC released a statement right after the OCC announcement. And, you know, people should check it out. We can put the link in our show notes here. But the letter is worth skimming. And effectively what it says is we agree with the OCC that a lot of these things are good to go. And I'm paraphrasing here. But it says basically, but some of these things are probably securities.

And so be careful of those. So I'm kind of reading this and saying, the SEC sounds like they have a point of view that certain stable. coins out there might not be, might not be kosher. The other interesting I saw this week relative to in the maker context was that they voted, the sort of holders of maker voted not to remediate losses sustained by users of the maker system when there are those liquidations at a zero price in March. So when the system kind of went high wire, the vote was to not not, not

make them whole. Yeah. So there was more grumbling around that. I think there's probably, we're going to see some campaigns to launch a pure version of Maker with only, you know, ether probably is collateral as opposed to introducing these kind of outside sources of collateral.

I think it's very unclear what would happen if USDC were to potentially blacklist some coins that were held in the Maker collateral pool. seems to me like that could have cascading effects and maybe kind of seize up the functionality of the contract entirely. If those coins couldn't move, they couldn't be liquidated. But I think Maker has done it because they have been trying to get dye to trade at par for a long time. So they pumped more USDC into the system, which effectively allows for that arbitrage to occur. where you meant die with USDA and you can sort of close the arm and get the peg back towards one. It's kind of a poison chalice in my view.

And I think the beauty of Maker was that it had liability-free collateral at the base. Yeah, it'll be interesting to see if blacklist situation came up how that would work. How about Brian Brooks, though? Man of the Year candidate here just steps into the OCC acting role and just starts immediately putting forth these very pro-innovation initiatives. I will admit I was not convinced by him when I met him. We were on a panel together back in the day at DC Fintech Summit.

And he said some pretty anti-Bitcoin things, dare I say. Well, dare I say. I think he's proving to be a big ally of the industry here. Yeah, I don't hold grudges. I'm extremely forgiving. Yeah, and I've come around to. the stable coin phenomenon since then as well. People like dollars.

I've been on the record. I've always liked dollars. Any dollars or tokenized dollars? Both. So stable coins are going to hit 20 billion, probably in the next couple of days, by the way. Yeah. So in the year 2020,

they will have gone from four and a half billion to over 20 billion. Here's another interesting thing. Tether, for the first time, is below 80% market share just happened. That's interesting. Is the industry diversifying away from Tether? Not completely, but sort of. With USC being the number two.

Well, when Libra launches, we'll have a, those numbers could be appearing to be very small. This is true. So there was some interesting bills introduced in the house this week. And so far, I haven't seen any. one read the bills and have histrionics and make fun of the language in the bill, although that could still happen. So that leads me to believe that the bills are actually fairly sound. So I'm relying on Peter Van Valkenberg's right up here from Coin Center, but I will say that it sounds pretty good. I have no idea if these are likely to pass. But the first one is called the

Digital Commodities Exchange Act. And what it looks like it will do is allow the CFTC, which is the regulator of record for derivatives to have an optional registration process for crypto exchanges. So basically, if you're a crypto asset exchange, you can opt out of the state-by-state money transmission license regime, and you can opt to go to the CFTC that would give you the blanket coverage to operate everywhere in the U.S. And it looks like there's some further language in this bill that would define a subset of tokens as pre-sold tokens. And it would make sure that those pre-sold tokens have to be operating on CFTC regulated exchanges so that they're not subject to market manipulation. So basically what they're trying to do here is ensure that investors do not

get their allocations and just dump onto the public. And what they're basically saying is that those type of tokens would need to fall under the CFTC regime as opposed to, you know, an exchange that's regulated state by state with the money transmission licenses. So I don't know. I mean, I'm sure there's, we'll hear people in the audience that say that this is not a good idea, but it seems pretty sensible. If you look at it from the perspective of as startups, it's very cumbersome to go through this state-by-state MTL process. And you would think, one would think, that going through just one regulator would be a faster path to market. Now, again, I'm sure that there are considerations here that we're not

addressing. Yeah. And I'm not like the kind of person that advocates for more federal regulation pretty much ever. That's, said, we know we've been there on a firsthand basis watching our startups trying to get these state-by-state MTLs. And it's this crazy, arduous process. They all have different rules. Some states give you a no action letter. Some of them, they all have different standards. Some of them have sort of digital asset specific rules. Some of them are more progressive than others. They require you put up these bonds. It's a colossal mess. And it doesn't really make that much sense.

It also doesn't make sense to regulate custodial exchanges as money transmitters. I mean, these are entities that hold effectively virtual commodities, digital commodities, on behalf of end users. They're not just being used, you know, as transactional intermediaries. They're custodying assets and they have specific obligations that go alongside that. I mean, we've always said they kind of resemble banks. kind of crypto banks. So to me, having CFTC oversight makes a lot more sense, having a federal regulator that's used to regulating these commodities venues in that capacity.

That makes a ton of sense to me. It's pretty obvious that the best way to classify something like Bitcoin, according to the traditional kind of asset framework, would be a monetary commodity, a synthetic commodity. Now, that said, there's a lot of tokens out there that very strongly resemble securities, and I guess that's the purpose of the Securities Clarity Act. And it seems like the bill is taking the perspective that Coin Center has maintained for a long time that pre-sold tokens prior to launch would probably constitute securities.

They look like investment contracts and post-launch. It's possible that these things could sort of evolve into commodities. and that there wouldn't be the presence of an investment contract there. Yep, agreed. And so that sort of dovetails into this second bill. So the second bill is called the Securities Clarity Act, and it doesn't seek to do anything above and beyond what the Howie Test has already established

in terms of what is a security, but it explicitly clarifies that the SEC's jurisdiction with respect to some of these token pre-sales. And so it also clarifies that outside of an investment contract, that associated asset is not a security. And so an example here would be if you'd bought Ethereum before the launch, it would have been a security. But once the network is built, you know, what you're holding today is not a security, if that makes sense. Now, I have issues with this, to be perfectly frank, and apologies to Coin Center.

So first of all, any issuer could get around this distinction about pre-mainnet, post-mainnet, by launching like a half-baked main-cent. net at any point and say, no, you know, we've delivered our tokens. We've delivered on that promise. And we're now free to the contractual obligation. So this is no longer considered relying on the efforts of a third party. But of course, you know, the team is behind these tokens work on them for extended periods of time. They don't just stop working once they've been delivered. So that would be one issue. The other issue is that there's a bunch of these post main net tokens which have been launched or kind of post contract deployment tokens which have been launched which have very much security like characteristics.

So, you know, a lot of the examples I would give would be some of these newer tokens in the defy space that give you an entitlement to control rights over the nature of the contract and they give you certain potentially even cash flow rights, you know, a slow burning dividend effectively those are kind of entitlements that we're used to in equities land so if you were to you know even if the network is live at the time those tokens are issued you could say there's a lot of analogies to to regular old securities so I don't know if I'm completely convinced by this pre post main net distinction as the real delineator for what constitutes an investment contract

So you're not sold. We'll see what happens, though. I just think you have to use a real kind of facts and circumstances on just a common sense test. And I don't think there's anything wrong with Howie. I think you can apply it to most of these tokens and reach a determination. But I would say that the SEC's enforcement pattern has not given us a lot of information because they've settled with some of these larger projects. They've taken a very punitive stance

as some of these smaller projects where there probably was the presence of fraud, but it's that vast middle that they haven't really weighed in on. It's the bulge of the bell curve. Some of these maybe more legitimate contracts where there still was no registration and there was a centralization

and the efforts of a third party, they never really weighed in there so that the industry doesn't really know whether to interpret the law as written or to interpret the enderper SEC's relative inaction as kind of assent or vindication of that model. So moving on, a couple of other things this week to round out the regulatory front. So the EU, the European Commission came out and announced plans to regulate crypto assets.

Not a ton of clarity here in terms of what's going to happen, but it seems like there's some efforts to create a unified approach and not have regulatory fragmentation across member countries. So we'll see, you know, if there's more to opine on that in the coming weeks. And then I don't know if you saw this one, but the European Central Bank, the ECB, released a paper on stable coins. I thought it was pretty good, actually. So it was called stable coins, implications for monetary policy, financial stability, market infrastructure, payments, and banking supervision in the euro area. And my big takeaway here was they don't like the term stable coins. They want an alternative phrase. What do you think?

Yeah, if only, you know, there was a fund out there that had written a really in-depth white paper arguing specifically for the usage of the term crypto dollars as opposed to stable coins. That is our donation to the ECB. Call them crypto dollars. Problem solved. Yeah, and here's why crypto dollars is superior to stable coins. First of all, stable coins is redundant, kind of. You don't call them stable dollars. You just call them dollars. It's sort of imply that they're relatively stable. Cryptodollars, on the other hand, is a homage to euro dollars.

And euro dollars, for those you don't know, are effectively dollar liabilities of the bank system that circulate outside the confines of the U.S. And so that kind of implies that they're less encumbered, there's less, obviously less federal oversight. They're not really beholden to the Federal Reserve system. So in the same way, crypto dollars, most of them also are issued by banks outside of the U.S. Or they're issued against liquid crypto collateral. And so they are also structurally less encumbered.

You can do more with a crypto dollar than you can do with a digital wallet on PayPal, for instance, or Venmo. The other thing is that crypto kind of connotes a bare asset nature of the thing. So I know some people don't like the prefix crypto because it seems kind of shady. But that's kind of our, and the last thing I'll say is that euro dollars, weirdly enough, can actually be used to refer to other currencies that are issued outside of the sovereign issuers domain. So you have euro dollar euros and euro dollar yen and so on. So in that same spirit, you could have crypto dollars, which are pound denominated or yuan

denominated. So we're not trying to make this kind of a solely, you know, U.S. American term. If you look at the kind of the analogy to euro dollars, it can be used to apply to other currencies. I think it's really funny that we are the fund that's trying to call them crypto dollars. And, you know, we didn't invent crypto assets. we call them crypto assets as well. And ARCA, our good friends over at ARCA, Jeff and David and all those guys, they're big on

this digital asset thing. They think that crypto scares people away. They could be right. Who knows? They will put out a poll. Yeah, I guess that's the big rivalry now between the two funds. The reason I don't like digital assets as much is because virtually everything is pretty much digitized already, you know.

We don't have physical share certificates floating around. I mean, it's pretty much all digital. So to me, digital doesn't have that much kind of lexical richness to it. It doesn't add much to the term. Crypto just sounds scary, though, to some people. It does sound scary. But what crypto literally means is obscure. And that's kind of the whole point of crypto dollars is they give you slightly better pseudonymity, et cetera.

Well, let us know what you think. It's a very important debate. Hop into our Twitter mentions and let us know which one do you favor. So you must have been really excited today because the University of Cambridge Global Cryptoasset benchmarking study came out. That's true. I was excited. I am good friends with these people. Apolline, who is the head of that research organization, came on our show a while back to talk actually about their methodology for how they ascertain the energy mix of Bitcoin Minutes. which they talk about in the report.

So if you read the report, you're impressed by the data, which is incredibly impressive, by the way. You want to hear more about it. Listen to that show we did with Apolline, which is really great. You know what? I just love this report. It's the third year running that they've done it.

So you've got that great time series evolution. And they take a survey approach. I mean, they surveyed hundreds of industry organizations, miners, exchanges. wallets, et cetera. So they do this really deep survey model. They have the ability to marshal respondents from all over the world. And so as a consequence, I think their data is really good. And the 2018 report they did was responsible for what was in my opinion the best estimate of the number of crypto users worldwide. And that's, people talk about 35 million

crypto users or 130 million crypto users, that comes from that 2018 report, which I often cite as the best estimate. And so they have a new updated estimate on how many crypto asset users they think exist worldwide. And the headline figure is about 101 million. And the way they get that is they look at how many, they ask a representative sample of exchanges, they ask them how many KYC'd accounts they have. And there's probably some nuances in terms of active accounts, inactive accounts. Either way, they ask them how many KYCed accounts they have and how many non-KYC accounts they have. And they give you a range. So the range between KYC and non-KYC this year is 101 to 191 million. Presumably some of those non-KYC accounts don't map to one individual each time.

You know, probably people have multiple accounts. It's much harder to have KYC'd multiple accounts. And this is up, so that 101 million figure is up from 35 million in 2018. Now, some critics pointed out, well, actually what happened in that time was the regulators got really serious about making sure every exchange did KYC, which is totally the case. But so to me, that most likely means that that 35 million figure was a low ball in 2018, and this 101 million figure is closer to the truth. But either way, if you had to ask me roughly how many crypto users there are worldwide,

I would probably defer to this figure. I'd tell you something in the range of $101 million. It sounds about right. The rest of the report is really cool. They cover the, and they have an estimate of how much renewable energy powers proof-of-work mining. They basically find that it's about 40%. They use geolocation. They built a project with mining pools to determine where they're mining.

they looked at local energy mixes. I mean, it's really sophisticated, in my opinion. So there's just an amazing wealth of data in this report, and I strongly recommend you all read it. I knew you'd like it. Yeah, I mean, I've liked the previous two years. I'm a big fan of Gina Peters and Apolline and Michelle Rocks, who initially kicked off this project.

It's just a very credible research organization, and they're not ideological in any way. So their commitment is really to the truth, which is why I trust their numbers. The other report that I'm waiting for is the Bank of Canada's report on Bitcoin Awareness in Canada. They've done that three years running. They have a very sound survey, a sampling methodology, in my opinion.

I'm looking to see what that number is this year in terms of Bitcoin adoption. Because, again, they've done it three years in a row now. Canadian Central Bank definitely knows their stuff as it relates to public blockchain assets. Oh, yeah, we might have an interview coming up on that basis. But yeah, they're one of the better central banks when it comes to crypto. Did you see this Fred Wilson blog post this week?

I thought that it was really good. It was talking about the monopolies that are the Apple and Google app stores. And it was talking about some of the issues that Coinbase has had with their wallet. And it just really drives home to me the fact that, you know, if we can get a system that does not have to go through Apple and Google in order to introduce consumer applications, this industry would just be in a lot better shape, I think. Yeah, it's clear that everyone's basically sick of it, whether it's DHH or Coinbase or Fortnite. everyone is sick of Apple being extremely domineering in terms of how you can make payments on the App Store and the Wild Garden. To me, the question is, is it possible for the market to develop an alternative and force more of a liberalization of their rules? Or is it going to have to come from the state? And is there going to have to be an antitrust case?

So my guess is that you'll probably have to see an antitrust case that says that you need to open this up to third-party app stores. that's my best guess. I guess the alternative would be that Apple and Google would proactively allow that. But I think from their perspective, they're arguing that, you know, we are doing these checks, making sure that there's not malware in these apps. And, you know, if we allow third parties to do that service, then we're not going to insure the phones or something. It's a sticky situation. Yeah, I think that Angie Dress is not only very very,

very likely. I liked Chmoth's take on it. He's fond of saying that we're in the equivalent of the gilded era and we're going to move into the equivalent of the progressive era where corporate power is going to be decentralized a little bit. And to me, Amazon, Apple, and Google and Facebook for that matter are prime targets for antitrust. I think the FTC has been asleep with the wheel for the last 10 years and they've let some of these acquisitions go through. I mean, in particular WhatsApp and Instagram, the mind boggles. I don't think that would have been possible in the 90s. So I think we're long, long overdue for some real antitrust here.

I mean, so you have the antitrust coming down the pipeline, presumably, and then you just have a ton of innovation around some of these public community-owned networks. And whether or not they work at scale, you know, who knows, but things like Erbit, things like Blockstack, you know, if any number of these things work, then we're in a fundamentally different paradigm that doesn't rely on some of these data monopolies. I would say their rapaciousness is the pressure that made the Web 3 movement as popular as it was. But they've become even more rapacious in the last few years. And I don't think there's been the killer app in Web 3 just yet for better, for worse.

So you mentioned Shamath. He had a great tweet yesterday. I don't know if you saw it, but he said the conventional approach to investing for retirement with 60% equities, 40% bonds. Your goal is to look at that. Now you obviously have bonds at zero. So does that, you know, 40% bucket go to zero with it? And if so, what do you replace bonds with? And he, he proposes, you know, some of these alternative asset classes, crypto, cars, art, baseball cards. So I kind of agree with that and might be a good time to dust off the baseball card collection.

Yeah, I've been listening to a lot of macro voices podcasts recently, and it kind of cracks me up because a lot of the guests tend to pretty much say the same thing. You know, we're going to get zero rates or negative rates for the foreseeable future. And our debt-to-GDP ratio kind of mandates that we have an uptick and inflation, which would reduce the real burden of the debt. And the consequence of all that is that people that hold bonds or hold treasury bonds are going to take a bath over the next decade. They're just going to get crushed. You know, they'll receive all their coupon payments in nominal terms, but in real terms they're going to lose massively. And I think I don't see an alternative to that. I fundamentally do not see an alternative to that.

Effectively a soft default. Not to give financial advice, but owning bonds seems like the craziest thing to me. me. Lynn Alden has written some great thought leadership, for lack of a better word, on this topic. I'll take a small amount of credit for kind of introducing her into the crypto scene. So I was a big fan of hers and asked her to come on the show. And after she did our show, she went on this tour of all the crypto podcasts. And she's just been on the circuit ever since. But I pretty much listened to most of them. They're great. Yeah, she did Peter McCormick. She has a very, it's a very, it's a very accessible way that she explains some of these ideas. But it's so important too because like these concepts are really tricky.

And I think, but they affect pretty much everyone. So we need we need theorists and commentators like her. All right. So I think that's it for the week. Heavy on regulation this week. Yeah. We'll try to we'll try to not do that next week. But yeah, that's, you got to, it's what happened.

That was in the news. They keep on putting stuff out in the news, you know. We'll talk about whatever's in the news that week, and it was all the regulators week. Yeah, Defi kind of cooled off a little bit. As we expected, I think we said two weeks ago or something that the fees were going to kind of kneecap defy, and we'd have a de-leveraging, which totally happened, by the way. So I think it's cyclical. It's cyclical with Defy.

People pay high fees. They get disenchanted. six week later they forget about the fees they come back for more yeah um we'll see i mean i saw nfts was hot for a quick second this week that i don't even know what was the catalyst for that i mean that was like a 24 hour period where all the discussion was around nfts there's some project that allows you to um get a loan against your nfti so you can get an ether loan like collateralized by your crypto kitty i feel like that would be questionable in terms of the quality of the mark to market there if it's a

low volume NFT. Yeah, it's probably just a, you know, one of these experiments just to prove you can do it. So we'll be back next week and we have a really good episode on Monday talking about a company that is capturing stranded energy and turning that into Bitcoin, one of the coolest podcasts that I've ever done. Yeah, we've been talking about this idea for what seems like years. It's never really actually been done in production, you know, at scale. So maybe we're turning a corner there. I think we are. So tune in next week.

We'll have at least two podcasts next week, two interviews. We're starting to get a backlog. Oh, yeah. Yeah. No, we're up in the cadence now. All right, everyone. So have a safe weekend. And we'll talk to you on Monday.