On The Brink with Castle Island - Weekly Roundup 02/24/23 (SEC vs Terra, Stables as Securities, the CoinBASE L2) (Ep.400)

Episode Date: February 24, 2023

Matt and Nic are back for the 400th episode of OTB! In this roundup:  Nic's Vespa story More on Ordinals Is embedding non-economic data in Bitcoin Satoshi's vision? How Ordinals accelerates efficiency improvements in Bitcoin More FTX crime family news SBF is hit with four new criminal charges Augustin Cartens claims that crypto has lost the battle against fiat NYAG vs Coinex The SEC alleges that UST is a security - does this implicate other stables? What can Congress do about Choke Point 2.0 or SEC overreach Rep. Emmer introduces an anti-CBDC bill Matt's baseball card collection Silvergate is the most shorted stock right now The SEC blocks Binance.US' purchase of Voyager assets

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 Concentuteease. You're 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 just told me you got a Vespa. I guess let's just start there. Oh, yeah. We're starting with the fun part. Let's just hop right in. What compelled you to get a Vespa? All right. So it was kind of like a compelled purchase. It wasn't, I didn't wake up one day and I was like, oh, I need a Vespa. So a friend of mine had a Vespa. And she left Miami. And she left the Vespa here with a friend.

And her friend got sick of custodying the Vespa. And so she said she's going to get the Vespa toad from her apartment if she didn't come and collect it like that day. Oh, wow. And so I was like, I'll go get the Vespa. So I had to like break into this parking lot. There wasn't any direct. I'd sneak in and extract the Vespa. and would have looked like I was stealing the Vespa to any onlooker

because I also didn't know how to ride the Vespa at that point. You just hopped on one without knowing how to ride one? Yeah, I mean, how hard could it be, I thought to myself. Actually not that hard, to be honest. And so I extracted the Vespa, I parked it in a different parking lot. And then my friend still had the problem of having a Vespa just stranded in Miami somewhere. So I told her I would buy it from her to deal with the Vespa problem. So I'm now the proud owner of a yellow Vespa.

So this morning, I went to go collect it from this other parking lot where I'd sequestered it. And there was no way to get it out. What do you mean? Well, because we'd used this system where it's like a long-term parking thing and there was an app. But so I get down, I'm trying to get it out of this parking. lot and there's no way to like scan anything there's no one there I hit the button there there wasn't anybody there I mean it's a vest but can you just walk it out a stairwell I mean it's like a scooter isn't it so that's what I did I wheeled it around the barrier thing turns out you can

just do that yeah yeah it's just a scooter yeah so I had to extricate it from that parking lot I mean, maybe I'll get some sort of insane ticket now. But so now I finally have the VESPA. Here, the only problem is I can't park it in my own building because I don't have the title rent registration yet. They won't let me park it in my building. So now it's just out there on the streets of Miami. Hopefully, you know, it doesn't get stolen or anything.

Is it a safe thing to ride a VESPA? So I ordinarily, yes, but the Miami streets are the least safe streets. streets in the world. People drive like total lunatics here. So I, if our D&O insurance providers knew, I'm sure they'd be hiking our premiums like crazy right now. I hope they're not listening. I hope you get a helmet. So you're just cruising around to yellow Vespa. Yeah, bright yellow. The aesthetics are great. Honestly, I recommend it. That's a bare market type of purchase there. Well, it was $4,000. So, you know, maybe not. Maybe not actually. I strongly recommend it.

There's a Vespa Club here in Miami, so I will be participating in that. I don't know what the Vespa Club does. Do you just, what possible activity could that entail? I don't know. Just hang out and look at people's Vespas. That's pretty, yeah, that's cool.

Yeah, I mean, okay, here's what I want to know. What do people do at car meetups? So that's a thing, right? For certain enthusiasts of certain kind of cars, you have a meetup? What do you do? I think you just I think you literally yep I've seen them happen I've driven by parking lots where they happen you basically just have guys just looking at each other's cars that's basically I don't

understand it for the life of me I don't get it you're like oh you want to sit in my car I'll sit in yours I'll take it out for a drive that's that's what it is and you all have the same car I believe at these meetups so you kind of already know the experience of having the car yeah it's like I don't know. I did this to my car. I have these hubcaps, you know, it's a very, it's a strange contingent there. No offense to the listeners that are in car clubs. Yeah, I'm sure it's, you know, we're going to get a lot of, you know, emails after this, like, oh, it's actually very enriching, you know, it's a really rewarding. I'm sure people will tell us now what the point of those car clubs is. Meanwhile, we go to meetups and talk about the op return in Bitcoin and we're casting us

versions on VESPA and car meetup groups. Yeah, I guess everyone's hobbies seem weird to outsiders. Yeah. Ours are pretty weird too. Yeah, I mean, our idea of a good meetup is listening to like Andrew Poelstra talk for an hour. Yeah, speaking of which, has he weighed in on the ordinal debate? I think he might have. I think I saw him posting something about ordinals, about how it's impossible to stop people

putting arbitrary data in Bitcoin. Yeah, he did. He added that tweet. I haven't seen any kind of longer form write-ups. So you had Casey Radamore on the podcast, speaking of Ordinals. I thought that was a great podcast. Yeah, Casey is an awesome communicator. I didn't know that he invented Ordinals because he wanted to put JPEGs in Bitcoin. I thought it was just something that he happened to invent. And then he sort of figured out that you could use it for arbitrary data insertion. But the whole thing, he planned the whole thing all along. I think this ordnals thing is going to get used for way more than just JPEGs. I think ordinals could be a great way for just time stamping, you know, things that happen

in supply chains or chain of custody type of things, proof of authenticity, tagging real-world collectibles to public blockchains. I think you could have all sorts of use cases for this. Yeah, there's been a fair amount of controversy over Ordinals in the Bitcoin space, regrettably, I have been at the center of that. I don't know why. But I think if you like Bitcoin, you should obviously like ordinals. Here's my pitch. First of all, it was Satoshi's vision. Okay, not to overdo it on Satoshi's vision, but Satoshi supported the insertion of arbitrary content into Bitcoin. Remember Bit DNS? Satoshi talked about that. So Satoshi was clearly not a monetary maximalists like Bitcoin's only for putting monetary data. Like Satoshi understood there's other ways

to add economic density to the blockchain. Two, it's good for fee revenue. And I don't understand the view that you want Bitcoin to be a wasteland with no transactions and no fees. I mean, I get that the whole, you know, it's like, oh, fees should be low so that adoption. But like there's other low fee ways to move money around blockchains. So I don't buy that argument anymore. And if you have more fees, that means your blockchain has more revenue. So more security budget. Also, Bitcoiners already years and years ago embrace the scaling model, like the layered scaling approach. So it's not like we're trying to go for tons of block space. It's low fee. Like we already settled on the scaling model, which is layers. So if fees rise, we happily bite the bullet and embrace other L2s,

whether it's lightning or something else. So I don't think Bitcoin can't deal with fees. Like we've already had fee crises and we already bit that bullet. So why the complaint now around fees going up is part of the deal we all opted into, basically. Ultimately, the free market, as you guys pointed out, will decide this. And it kind of goes to the, fact that people that say that Bitcoin's a finished product, it's really not a finished product. There's a lot of enhancements that can go into this. It sounds like there's a ton of enhancements around just the way the witness data works within this blockchain. You could have some sort of a soft fork here to make the block space more efficient,

it sounds like. Yeah, this is an interesting point is weirdly during initial block download, you're still processing witness data, even if it's not relevant. to you. And so there's an easy efficiency win where you could just discard the witness data. So ironically, by creating more witness data, ordinals increases the urgency of doing that kind of routine efficiency gain. I think it also is the thing that's likely to catalyze the emergence of roll-ups on Bitcoin. That would be great. Because it creates more urgency to create other kinds of L2s for efficiency wins, and if block space is congested,

which I think it will be for the foreseeable now, then it just creates that need. So, I mean, if you believe in layered scaling, you think it's inevitable, ordinals is just an accelerant. I thought that the best part of that podcast was when Casey said that the four megabyte blocks, he calls them ripping four megars.

That was pretty good. I think we're going to start using that. So I guess that's one thing people don't like is mining pools receiving transactional data out of band, so via email or something, and then mining it directly instead of picking transactions from the mempool. I don't know what the risk is there. Is it just that Bitcoin isn't following the mempool protocol? I'm actually very curious. What is the risk for miners accepting out-of-band payment?

or transactions. Well, I don't know what the risk necessarily is, but you certainly wouldn't want to have a dynamic where you need to know a miner in order to get a block, get a transaction done, right? So if you end up in a space where all of the large consumers of block space, the big exchanges and the custodians are just negotiating directly with miners,

I think that's not a great feature of the market. And then you're just an ordinary person you just can't get your block in. It takes you, you know, several hours to get a transaction process. That wouldn't be great. it's not egalitarian. I agree. However, right now it's pretty rare to have these transactions go directly to miners. Seems like Luxor is the early mover in that market. They're all in on ordinals. Yeah, they bought a company. Yeah, Ordinal Hub. They bought that this week.

So you sat down with Ray Hendy and Jake Lynch at L on Digital as well. That was a great podcast. It was great to have Ray and Jake on the podcast. They sounded very smart. We had people coming out of the woodwork telling me that they listened to that and that those guys sounded really sharp. So did there this was a deal a crazy week? I don't know what's going on. There's a lot of deals including some sieve deals too. Lots of deals this week. Yeah. The first one is chaos lab. So this is a automated economic security platform. So they basically run simulations for public blockchain protocols and point out where there are kind of vulnerabilities, I would say. So they raised $20 million from galaxy, PayPal, Bessemer, Theta Capital, third prime jump, Castle Island. So we're in that one as well. So congrats to the team over at Chaos Labs.

Next up, we have gateway.fm. An RPC services company, they raised 4.6 million from Lemnus Cap, CMT, the Lao, the Fantip Foundation, and Unstoppable Domains. Next one up is chain reaction. This is an Israeli company focused on semiconductors and related architecture for running cryptographic processes. They raised $70 million from Morgan Creek, Hancock. co-ventures, a treaties management, and others. Wow. So a semis company focusing on the crypto.

Yeah, I guess in the mining space as well as the ZK space, dedicated hardware it looks like maybe for zero knowledge, kind of homomorphic encryption type of stuff. Pretty cool. That is pretty cool. Next up we have Renegade. They're a decentralized exchange company. They raised 3.4 million in a round led by Dragonfly. Next up, we have Tiplink. This company enables NFT. to be sent via links. That's pretty cool. They raise 6 million from multi-coin, Sequoic, Circle, Paxos, and others. Then we have Superchain, a decentralized data indexing protocol. They raise 4 million from blockchain capital and Maven 11. Next we have Polyhedra Network, a zero-knowledge proof company that has raised 10 million from Binance Labs and polychain. Then we have Strider, a Web3 story-driven game startup.

they raised 5.5 million from makers fund, fabric ventures, Shima Capital, and Suburmean. Cato is the next one, Cato. They raised 5.3 million. They're an AI-powered search engine from Dragonfly, Sequoia, Jane Street, and others. Then we have done a crypto wallet startup. They raised 2.8 million from IDEO co-lab. Next up is that Luxor deal.

So Luxor is the Bitcoin mining company. They run a mining pool, right? they have acquired Ordinol Hub, which is a platform for trading Bitcoin NFTs. Then we have Afin. I don't know how to pronounce it. Afine.

Afin. Their defy5 protocol, they raised 5.1 million from HackVC, Jump Crypto, circle ventures and coin-based ventures. Next one up is here, not there. That's my favorite one of the week. That's my favorite name of the country. Here, not there.

Unique. That's a company focused on Web3 group chats and communities. they raised 25 million in a round that was led by Andrescent. I like the next one too, World Wide Web with two Bs. Two Bs, yeah. Yeah, that's a good. So this is not the World Wide Web.

We all know. This is a different World Wide Web. They're a Metaverse gaming company. They raise 10 million from Pantera. Tons of deals. There's a lot of dry powder out there, a lot of startups getting off the ground. So we have a new bit, I guess. Well, it's the same bit, but we have new special effects.

Yeah, so we're going to queue up FTX crime family news. Let's hit it. All right, that was great. That was listener's suggestion. Andrew, shout out Andrew for the suggestion. Andrew, thank you. We actually had talked about putting some music behind that FTX crime family news because there's always crime family news on this just rogue group of bandit.

Yeah, I think the more musical interludes we have on this show, the better. So keep them coming. Well, so a couple quick things on FTX this week. The rats are scurrying off the ship. So Neshad Singh, who one of the three founders of FtX, he is reportedly going to plead guilty for his role in breaking just about every law he could, basically, for the whole time that he was involved in FtX. So everyone's turning on Sam.

We're still waiting on Trubuko and Romnik, but they're all falling. They're all going guilty. They're all going to testify against SBF. So no surprise on the Nashad won. Okay. And here's interesting. Sam McMahon-Fried has been hit with four new criminal charges. Campaign finance, I guess, related, some new bank fraud stuff. I mean, just bad boy city over there. Superseding indictment.

This is potentially an additional 40 years in prison. Yeah, I don't know. It's not good. The judge also had some pretty stern language for Sam regarding his use of electronic devices. I mean, he has until October to repair for this trial, I think. And it appears that some of that time he might spend stripped of his connectivity to the internet if he keeps us up. I mean, how is it the federal prosecutors are more lenient than the judge? The judge seems to be the only one that really understands that Sam can just free, he can just go out there and communicate freely here on all these apps.

And it seems like the judge himself is trying to cut down on this, whereas federal prosecutors may be not as on top of it. Do you think that he would accept the trade where he loses access to the internet, but he can still play Storybook Brawl? I don't know. Does he actually play these games, or do these games have chat features where he's negotiating bilateral to OTC deals on unlicensed offshore exchanges?

Because is there any world where he's actually just sitting there playing video games and not advancing past level one? I would like to hear from someone who has played Storybook Brawl. Is it a good game? Why does he like it so much? Please. Shoot me DM. Yeah, let us know if there's a chat feature because there has to be more to this.

Maybe it's just an incredible game. Well, I feel like we're always doing kind of negative regulatory stories, and there's a few of those this week. But maybe we'll start with something on the bright side. So Coinbase has announced that they are launching a layer two protocol on top of Ethereum called base. it looks like this will be built on open source technology that's being developed by optimism, and it will stand beside optimism. So it's its own roll-up on top of Ethereum. I think this is a pretty big deal.

It's going to be called base, as I said. So you get it. You have the publicly traded currency called coin, trades on the NASDAQ, and then presumably you're going to have a new token here called base. So you're going to have coined base. You get it? I mean, we don't know for sure if they'll have a new token. or do we know? We suspect that they'll have a token. They say that they're going to progress

towards community ownership and involvement. So to me, that would suggest that there will eventually be a native token. I'm sure there'll be a lot of regulatory questions there. But I think this is a big deal. I mean, this is creating a developer platform that can really have a tight integration it looks like with Coinbase. I applaud it. I think it's a huge move forward. It's a type of thing that probably doesn't get a ton of attention in a bear market, but could be really meaningful to the future prospects of Coinbase. I mean, I saw sentiment around this announcement be extremely high. So people are very excited about it. I think it's a pretty, it's a pretty groundbreaking deployment here. I mean, obviously, Binance has done this. They've forked Ethereum, basically, for Binance smart chain,

but this is more in line with layered scaling. Probably makes more sense from a technological perspective. probably does actually feed into better community participation at scale. You'd be able to actually run a note on this thing, presumably. So I think this could be huge. Yeah, the industry could use a win here. So excited to see where this goes. Not sure what they would use it for necessarily, because BSC, I don't think you'd want BASE to resemble BSC in terms of the usage characteristics.

I mean, you could just build a decks on this, right? you could, some of this could just be classic innovators dilemma in a positive way where they're actually cannibalizing their own central limit order book business by building something on a, on a layer two, like via decks, right? At the risk of asking questions about something I know nothing about, would it be a true dex if it was a captive chain that was mostly administered by Coinbase, though? But does it need to be a captive chain? why couldn't it be a chain

I guess it doesn't have to be just the BSC model where the validators are basically all BNance I would think that that would be a yeah that would be a bad outcome which is probably why they don't have a token out of the gate because they would be in full control of it and the SEC would have a lot to say about it

but if they can launch this thing get a bunch of third party developers building on it get a bunch of companies building on it and then have some sort of a retroactive air drop or something I would think that you'd be in a pretty good position to argue that you don't control the network. So pretty excited to see what happens. We will keep you updated on the base front. The rest of the news, I would say, is not as

positive this week. We started with a couple news articles that caught my eye. So our favorite regulator, Augustin Carstens, the head of the BIS, has claimed that crypto has lost the battle against fiat currency. So it's over and we can all go home. This guy, he doesn't look very healthy. I'm a little bit worried about him. He's Augustine Carson's. I don't know, man.

And he's really obsessed with cryptocurrency. Every time I hear this guy's name, it's in the context of saying something very negative about blockchains. You'd think that the bank for international settlements would like a currency that you could use to settle internationally. But they do not like it. probably the chief antagonists, as far as I can tell. How is that organization funded, the BIS?

I wish I knew. I probably should know. I'm guessing it's probably just a shareholder model and the top Western nations fund it. Yeah. So apparently we lost the battle. I don't know. It's over. So he just said, hey, it's over. Crypto didn't win. Fiat currencies ended up winning.

Fiat currencies are getting smashed for the past 10 years, by the way. If you just look at the purchasing power of the currencies, not good. Not that the cryptocurrencies are either, but... That is an incredibly premature victory declaration. Yeah. That's the kind of thing that marks the bottom of the bear market, I think. It's like a Paul Krugman declaring that the internet just didn't work back in 1995, just a little bit too early, a little bit too early.

But I don't really get too worked up about that guy, Carson's. I don't know. Like I said, I think that guy needs to really... I don't know. I hesitate to tell someone to go on the diet, but he just doesn't look. It's ablest, Matt. That's very ablest. He's just not a healthy looking guy. More news. So the New York Attorney General, they filed a suit against a crypto broker called CoinX. Have you ever heard of that thing?

No. Never heard of it. But I guess it was operating in New York City without filing the proper that license paperwork. So don't do that. They said that they're unregistered securities broker and commodity dealing broker. So you'd have to be out of your mind right now to operate an unlicensed venue in the state of New York. Like, what are you doing? So as part of this filing, they alleged that certain tokens were securities, including Luna. Did we talk about Doquan, did we talk about the Doquan SEC case last week? Or did that come out after? No, that came out after. I think that came out after. I think that came out after. So yeah, why don't we talk about it?

it. Well, it turns out he lied about basically everything. Not good. Not good for doing. In the Luna ecosystem. I mean, just lying through his teeth. And there were, you know, he apparently extracted $100 million out of that edifice as well. So that's how he's on, I guess that's how he's on the run, right? I mean, is there a Serbian hostel he's staying at that takes Bitcoin? Someone must be accepting this Bitcoin. So I guess it's confirmed that. that Doquan is a classic bad boy in the true sense of the word. But I think the bigger story here is probably the what's going to happen with the SEC. So the SEC is going to go after this,

and they already have the filed charges. They're going to allege that basically everything was a security, which it probably is. But what I sort of worry about is that the SEC uses this as a broad brush to create precedent in a case where no one's really going to come to the defense of Doquan here. I don't expect that you'll see a ton of industry groups stepping up and saying, oh, this wasn't a security, you know, and pushing back on the merits of that argument. So I worry a bit that the SEC just kind of wins this and then tries to go after like licensed, regulated stable coins that are actually doing things properly. Well, there's a huge difference between a real stable coin and whatever the hell it was that

Doe is doing over there. I wonder where the DOJ is in all this, because it's not just breaking securities laws. A lot of this was just straightforward fraud as far as I can tell and self-dealing. So I would hope that there would be criminal indictments on the back of this because Doe basically lied about everything, like the Chai partnership. Yeah, the Chai thing. The Chai thing blows my mind because I actually had a Zoom call with Doe actually because he wanted coin metrics to cover Luna data and we neglected to do that. And I remember him touting the Chai partnership all the way back then saying, yeah, you know, Terra, UST is really huge in terms of Korean e-commerce. We've, we've 300,000 users in Korea. Turns out that whole thing was 100% made up.

And they were mirroring the transactions on the blockchain to make it look like there was traction. And that was a huge part of the Terra story was that there was real usage. And so there was organic demand for the stable coin. That was a big part of the story. That was the whole thing. I mean, they raised capital on that. You had all these VCs saying, hey, this thing's huge in South Korea. There's this thing called Chai, which is this mobile app, right?

It was a payments app. And they were saying it was running on UST. It's like, no, it wasn't. I guess next time maybe go to Korea and, uh, and investigate this. I don't know. The next time a stable coin issue tells you this, I think maybe you'd just double check. Hey, you had all these light speed, all these big VCs that invested presumably on that premise. So it's, yeah, it goes to show you that, you know, this investor fraud was pretty rampant.

Yeah, I mean, he also had a secret bailout for Tara. I think it failed once and there was this covert bailout, which they didn't tell anyone about. actually Lucas Nuzzi coin metrics found a bunch of things with Basis cash. Doe's prior failed stable coin where there were also tons of irregularities in supply. So I guess the signs were there, but we didn't know that Doe was involved in basis cash. He did that anonymously. Yeah, which is a whole other story. So, I mean, the litany of complaints against Doe is very, very long.

And with UST, the SEC also alleged that it was a security, which I actually said on Twitter, I'm fine with because UST, people were basically buying it to put it in Anchor. There wasn't really any other use, you know, the chai stuff apparently was de minimis or nothing. And so if you were buying UST, even if UST itself didn't have an embedded yield, the main purpose of buying it was to get the yield from Anchor or, to redeem it for Luna, I guess. And so I'm just kind of okay with it being alleged to be a security by the SEC. It wasn't really used as a stable coin the way that, you know, USDC is. Yeah, it's a slippery slope though, right? Because you wouldn't want the same argument to be made towards USDC in the context of saying, well, you just take USDC and you put it into a defy pool and you get yield on it. So it's a security. I mean, they look similar, but that's, it's very different because you can use

us DC for all sorts of things cross-border settlements are being and people do and people do right so that's what lawyers call facts and circumstances and i yeah that's actually my main concern around the reeves test which we talked about uh regarding stable coins is are they primarily used as a conduit for investment but the thing is couldn't you then just allege the cash is the security because you use it to buy stocks with i mean you know so that would be a silly argument i think i think if the SEC had had its way, everything would be security. A smart lawyer could make the case that all kinds of non-interest-bearing stable coins are securities because they're often used to buy investment products.

But I don't think that would be ground in reality. Also, stable coins not paying interest. To me, that's the kill shot. I mean, they just don't pay interest. And all the other types of notes in the Reeves test, those were interest-bearing. I mean, I think to that point on the SEC, Gus Coldebella, who's over at True Ventures, has a great kind of tweet thread.

Maybe we can put it in the show notes. We'll put it in our newsletter as well, just on this broader SEC, you know, crypto crackdown and what's going on here. And his point here is that this should be a real wake-up call to Congress in the White House. So you had this stable coin bill that was being attempted under Waters and McKenry

in the last Congress. Haven't really heard much about it. But basically what's happening here is the SEC is just going after defendants who kind of won't fight and they're going to crack down on a bunch of people and try to basically just write the law, I would say. So they're kind of flagrantly sticking it in Congress's eye. And really it should be Congress that comes in and says, you know, whether or not stable coins should be securities and what the market infrastructure should look like. You shouldn't

really just have this situation where an agency that doesn't really have a mandate to go in there can just create policy. And you certainly wouldn't want to be in a world where, you shouldn't want to be in a world where, as we've said, stable coins are going to be huge for just the further entrenchment of the dollar internationally. So if you think about this from a geopolitical perspective and what's in the best interest of the United States, having the dollar be used for stable coins in a public private partnership used everywhere in the world certainly would be to the benefit of the U.S. dollar if you're able to have some semblance of surveillance over the centralized issuers. That would be great for the dollar. You wouldn't want to be in a world where China comes in with

some sort of a stable coin that ends up being the dominant, you know, second and third world country, so to speak, utility. But if the SEC just comes in and kind of goes heavy-handed on these stable coins, maybe that world doesn't happen with US dollars. Maybe it does happen with China's version of it. And so why would the SEC get to make that decision versus an act of Congress? I mean, that's really, I think, what we should be talking about here. Yeah, and I have the same reaction to all the harassment some of the banks that's happening by the bank regulators is ultimately it's Congress's role to rein them in because it looks like legislation being written by regulators, which is not the job of regulators, which is to enforce a law, not to make new laws. But it seems as Congress

is deadlocked, that the regulators have now taken upon themselves to become extremely creative about interpreting the law. And I think ultimately the reckoning should come from Congress who sees that they're going around there, they're going outside of their mandate. So I hope, I don't know what the prospect of that Stablecoin bill or even a market infrastructure bill being introduced. I haven't heard much of you. No, the, speaking of bills, though, our favorite member of Congress, a Republican whip, Tom Emmer, introduced a bill yesterday. outlawing CBDCs in this country, which I was pretty, pretty glad to see.

I don't quite know what the prospects are for that one, but I like the initiative. I do like that. Let's get a stable coin bill going and let's get a market infrastructure bill going. I think you just need, you know, Congress to come in and tell the SEC, hey, you have 90 days to come up with a framework here and we want to report. So while we're complaining about our regulators, I want to bring your attention to an absolute clanger issued by Federal Reserve Governor Christopher Waller. Did you see this one? No. So this is a comment he made in a conference recently.

He said, quote, if people want to hold such an asset for any crypto, then go for it. I wouldn't do it. But I don't collect baseball cards either. However, if you buy crypto assets and the price goes to zero at some point, please don't be surprised and don't expect taxpayers to socialize your losses. End quote. Okay, this is insane because no one is asking for a taxpayer bailout in crypto. We know that's the deal.

We know there's no bailout. Who's asked for a bailout? No one asked for a bailout. Who asked for a taxpayer bailout? But why is this guy not a baseball card collector? What's his deal with baseball cards? That was his best analogy. I actually went back and listened to his whole commentary.

So his whole point was something with no intrinsic value can have a positive value on a sustained basis. If you're using it, he kept referring to Samuelson, I guess an economist from the 50s. Oh, yeah. If you're using it to as a basically means to store wealth in expectation of future trade. and so he was saying baseball cards can have value on that basis, which I don't think that's why baseball cards have value. I think they have value because they're scarce and because people want to collect them.

I can tell you what. I think I've talked about this on the podcast before, but when I was a kid, probably from the age of like six to, I don't know, 12, maybe a little bit later even, every spare dollar that I earned on my paper route went into baseball cards. I spent an incredible amount of money.

money. If I just put that into an index fund back then, that would be a very wealthy man. And I've just box. Do you still have them? I have tons of them, yeah. But they were debasing it the whole time. So it's the money supply of baseball. So I've got a ton of, you know, Wade Boggs, rookie cards are great. But when there's zillions of them printed, what are you going to do with them? I think you should revisit that collection and see if you have value there. Well, I have, yeah. There might be some gems. There, I think there are some gems. I think there are some jams. I've got a Derek Jeter kind of minor league card. It's a pretty good card.

I've got some good stuff, but it's, I got to tell you, they printed too many of those things. And there was a better use of that money. As far as I understand, the market for collectibles did roof in the last couple of years. I think it probably sold off a bit recently. But I honestly, I think you should just go through them.

Spend a weekend. You might have a, you know, a couple hundred K just laying around in your basement. I, Yeah, I'm thinking about it. I do have quite a bit. It might take me more than a weekend. But man, that really taught me about digital scarcity at a very young age.

So anyway, I want a special no thanks to Chris Waller for that really bizarre statement. Again, we're not asking for taxpayer bailouts. That's the whole point. There's no bailouts here. There's no bailouts. I don't know. Where did you get that idea from? I don't know.

I think the people are, you know, calling the Silvergate tapping into the federal home program a bailout. But it's like, come on, guys. That is an established. They're playing within the rules of the game. Yeah. As established. They're bank. They're allowed to touch these things.

And they withstood a 70% drawdown in their depository base and survived. Which is incredible. Yeah. That's remarkable. They're apparently, Silvergate is the most shorted. stock in America today. Yeah, I saw that. And there's some big names on both sides, right? So I think Soros is short and Citadel's long. I'm on Ken Griffin's side of this one. Yeah, I am too. I am too.

Not investment advice. Okay. So a couple other things. So the SEC has objected to finance U.S. attempt to purchase the bankrupt assets of Voyager. They're basically saying that the platform has unregistered securities on it. So I don't know what's going to happen. These poor customers of Voyager are here. They keep on thinking that they have a deal. I think 97% of the customers have voted in favor of having Binance just expedite this liquidation. Basically what's going to happen would be finance pays to get the user accounts. They would allow withdrawals and they would just kind of hope that some people stick around and trade sort of the rationale for the deal. It looks like the SEC is going to block it. It just really

hurts the people that had money on Voyager. Yeah. I don't see the consumer protection rationale of blocking that transaction. Yeah, I think that's not great. The list of companies that could actually buy that asset is pretty small because I think you have to have state MTLs. All right, so I think that's it for the week. Kind of a light news week, but I think this Coinbase one is one that will keep an eye on.

This could be one of the bigger product launches, probably in the history of the crypto industry, if they get this right. So definitely one to keep an eye on. We'll be talking more about it, maybe doing some podcasts on it in the future. And we have one for you on Monday with the repeat guest. Not many folks are repeat guests on this podcast.

We'll be talking about Mavie and the MMPL. So stay tuned for that. Looking forward to it. All right. Have a safe and healthy weekend. We will see you on Monday.