On The Brink with Castle Island - Weekly Roundup 03/26/21 (The most violent people on earth, Fidelity's Wise Origin ETF, can GBTC be saved?) (EP.198)

Episode Date: March 26, 2021

Nic and Matt are back for another blockbuster week. In this episode:  How Nic ended up being labeled the most violent person on Earth Fidelity files for their Wise Origin Bitcoin ETF The significance of Fidelity's filing today Can the GBTC product actually be redeemed by a majority of shareholders? Amendments to the GBTC charter Odds of the SEC finally seeing the light on the ETF Why an ETF approval is more urgent than ever The toppiest top signal ever making us nervous FATF is back with a vengeance Jack Dorsey includes a Blockclock in his Congressional testimony Is Bitcoin a battery? Content mentioned:  Peter Johnson, Crypto Credit Market Breakdown Nic Carter, The Frustrating, Maddening, All-Consuming Bitcoin Energy Debate Nick Grossman, Bitcoin as a Battery This episode is brought to you by Sovryn, DeFi on Bitcoin.

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 to 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. This episode is brought to you by Sovereign. That's Sovereign with a Y as in Yankee. Sovereign is D5 built on Bitcoin and secured by the Bitcoin network. Sovereign. Dot app lets you earn borrow and trade without giving up control of your coins. Connect your wallet and start earning interest on your Bitcoin today with Sovereign's lending facility. Pledge funds to the liquidity pool to earn a portion of the trading fees or trade with up to 5x leverage.

on the decentralized exchange. Visit sovereign. Dot app and put your coins to work. Stay sovereign. That's sovereign with the Y. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter.

And you are the most violent person on the internet. I am seated across from the most violent person on the web. Yeah, most violent person on Earth even. Geez, what did I do? It's going completely viral. so let's fill people in if they have not seen this on Twitter. You've been characterized as a very violent person. Well, we got to rewind a little bit.

We got to rewind because the story starts at the beginning. You can't start in media res, you know, like in an ancient Greek tragedy or something. You've got to start away at the beginning. So some weeks ago, this climate journalist, Eric Holt House, is actually pretty well-known or something. I don't know, wrote a substack article basically saying that Bitcoin was going to consume all the Earth's energy. But his analysis was super flawed. He basically had this idea in his head that Bitcoin transactions have an individual energy cost, which is false. And that Bitcoin scales by just pushing more transactions through.

and so that we would linearly scale up the Bitcoin energy cost. So if you extrapolated 300,000 Bitcoin transactions a day to 100 million or a billion transactions a day, that's just more energy than the Earth has. And so he was very alarmed about Bitcoin. So he's just flat out wrong. I mean, could have found out the answer to some of these things in about 30 seconds if he tried.

Yeah, he was arguing against a fake version of Bitcoin, like a made-up version of Bitcoin in his head. Now, to be fair, that version kind of sounds terrible. Yeah, no, I mean, if that's how Bitcoin worked, then, yeah, we should be against it too. So I am sick of hearing this argument because it's not just him that has a bunch of people have this wrong fictional Bitcoin in their heads. And so I wrote an article for CoinDesk, as one does, my third one on energy. And I just took him to task.

I'm like, no, this isn't how Bitcoin works. you don't actually need to add more transactions for it to scale up. Like we got this whole layered scaling thing going on. We'll talk about that later in the episode. Lightning, it's happening. And I thought that was the end of it. I was pretty polite, too, honestly. I wasn't mean.

And then yesterday, actually, I heard this from my sister. She texted me. She's like, I saw your face on Twitter. Like, what's going on? turns out this guy who's got half a million followers half million followers post the following tweet

he quote tweets a speaker announcement for me speaking at Bitcoin 22-1-1 he says these are the libertarian nerds who are currently torching our planet's clean energy future for fun and profit by any definition they are some of the most violent people on earth putting vulnerable and marginalized people's lives at risk for their own wealth

he literally thought you were trying to to melt down the world. Like, Dr. Evil. Yeah, you think some kind of super villain. And the thing, like, the thing that gets me the most about it is, like, it's such a random tweet for him to be referencing the speaker announcement of me at Bitcoin 20, like, how did he even come across that? Do you think he follows Bitcoin conferences? Like, what is this guy doing on Twitter?

He hates Bitcoin. What? I don't get it. Did he name searched me or was he following the Bitcoin 2021? Because the tweet that he's referencing has nothing to do with that. energy. It's not like he didn't quote to my article. So it was just like a completely random. And so the whole thing was extremely comical because it's got this like really goofy headshot of mine. I don't look particularly menacing. And so then of course Bitcoin Twitter did its thing and went crazy.

And they've been making memes all day. But yeah, this is one of the funniest. I would say a gift from the content gods, honestly. Because when I saw this, I just could not stop laughing. For the first 10 seconds, I was like somewhat alarmed because I'm like, wow, this guy is like really well known. and he's like really blowing me up on the TL. But then I realized that I could just ratio him multiple times. And that's exactly what I did. People have been surfacing some gem tweets that he's written in the past about Bitcoin. He has one from the 18th of February where he says, I finally figured it out.

Bitcoin is weaponized toxic masculinity. This guy doesn't have a good view of Bitcoin. I'll tell you that. I will say the merchandise store that we put up might have a nice little treat on this theme. Look, you could call us opportunists for doing this, but this is what the people wanted. So we did make, we made a mug with my face on it and his tweet on it because I think it's a funny juxtaposition. I think a lot of people think that. So that is available on our merch store right now, on the brink dot shop.

On the brink dot shop and they're selling like hotcakes. This whole episode is, it's tickled me. It's so funny. All I do is write coin dust, cost. columns. That's it. I'm a very pleasant person, I think. Well, so that was the big drama of the week. A lot of news happened this week other than just this little Twitter dust up, but I'm glad we could start with this. We also had a couple other podcast episodes this week. So we had Michael Greenwald, a former U.S. Treasury official on talking about sanctions programs. That one was a little bit controversial.

A lot of people taking the other side of that argument, but always good to have opposing views represented on the show. Yeah, I got a little ticked off towards the end of that episode and it ended somewhat abruptly. He'd said some pretty unkind things about Bitcoin. But, but it's always good to hear from the people that are in charge of sanctions and stuff to get their genuine views on how financial infrastructure should be weaponized. In his view, that's a good thing. Yes. So always good to hear the other side of that. And then later in the week, I did an interview with Dan Tapiero, who I've been wanting to have on for a while. And so we talked about the macro landscape, talked about his views on gold. Dan comes from a global macro background. It's been a very successful

fund manager in the non-cryptus space. And now he has a crypto fund called 10T Holdings. It's focused on growth stage infrastructure companies. So that was a lot of fun. Yeah, Dan, awesome guy and it's great to see crypto native growth capital too because there's a lot of seed in series a fund's not a lot of growth funds so excellent development for the industry and then you did chris brummer's podcast again on nfts fintech beat yeah i think i'm the MVP of that podcast now well you're also just super modest that's great hate to say it i've just by just judging by appearances i'm not saying my appearances are the best but i think i've had the most appearances on fittech beat Chris, of course, rumored to be up for the CFDC position.

I don't know. I don't know. We'll see. TBD, don't know. He brought me on alongside the General Counsel of the Center Consortium, and we talked about IP issues with NFTs, very similar to our NFT take on our last podcast on this show. Of course, the question is, what happens if you commingle IP, which isn't necessarily yours, to monetize, you know, what happens if there's, you know, other copyrighted content in an

NFT? How do you take that down? How does that get resolved? Big, big questions there for sure. So I enjoyed that episode. We had a huge deal week. I mean, every week is a big deal week. We're going to get into it. And just as a reminder, so we do these deals primarily, it started off to just highlight some companies that were growing in the space where, you know, folks who might be listening to this might be looking to break into the industry. These are typically the companies that are hiring. So it's good to keep an eye on who's raising capital because they will have jobs. And the first one up is a big one. So blockchain.com, the crypto asset brokerage company, they raised $300 million in a round that values the company over $5 billion. This round was led by DSTVY Capital

and Lightspeed. StarQuare, one of the more high profile Ethereum scaling project, They raised $75 million from Paradigm, Three Arrows, and Alameda, just a monster deal. That's a big one. Luca, which is the crypto asset accounting tax data company, they raised $53 million in a round that was led by Soros Fund Management. I'm going to look at pitchbook maybe and see if we're at the height of 2017 in terms of deal intensity. I think we're getting there, although there's fewer sort of massive ICOs, I think. Next one we have is Rio Games, RYU. They're a blockchain gaming company.

They raise 2.3 million from side door ventures, MGV Capital, Velo partners, and SIDA Ventures. Next one up is connect. Connect. Connect with an X. Connected. Connected. Connected. This is a project focused on cross-chain interoperability.

They raised $2.2 million from Polychain 1KX and Huobie. And we have espresso. That's not espresso. It's espresso with Z's. With a Z, emphasized Z. Z, as they say in the UK, Zeds. It's a blockchain data and automation platform. There is $2 million from Mark Cuban,

Arrington Capital, CMS holdings, and others. CMS on the board. Bingo. Yeah, that's the free space. That's the free space. Covalent, which is a decentralized data platform, they raised $2 million from Binance Labs, Coinbase Ventures, Delphi, and others. Next will be of Lolly. Everyone's favorite Bitcoin rewards browser extension.

They raised $5 million to Serena Ventures, 776 and some others. Huge congrats of the Lolly team. Next one up is my favorite name of the week, Sardine. This is an anti-fraud startup. They raised $4.6 million from XYZ Ventures, Coinbase, and a few others. honestly the crypto startup food names the food names they don't disappoint there's always something good i like this earlier one connect i like that one espresso is my favorite because a lot of people think it's express expresso but it's espresso with an s yeah that's a good one too that's a good one too okay so last one

we have recur an nfti platform there is five million dollars from the defy lines Joe lubin Gemini, Delphi, Volt, CMT, and some others. So good week of deals, good week of company names. Just let's keep it going. There's some big old news this week, too, big news. Big, big news. So we finally get to the big news of the week. Fidelity has filed for a Bitcoin ETF.

So FD Funds Management, which is a subsidiary of Fidelity Investments, our former employer, has filed for an ETF under the name, wise origin Bitcoin trust and this is big news they join the roster of other six other firms i think that have applied for ets have active applications but dare i say and we're biased we're biased because we like fidelity fidelity mafia this is the best name of all of the ETFs outstanding yeah so um so so let's talk about the name um So as Alex Thorne points out, and correct me if I'm wrong here, but I believe in Katakana, which is tough to say, I can't say that really well, which is Japanese. Satoshi means wisdom and Nakamoto means origin.

So wise origin, Satoshi Nakamoto. Pretty cool. Yeah, I actually got a few DMs about that. I don't really understand what kanji is or catacana for that matter. Apparently there's a fair amount of ambiguity in how you would translate the phonemes in Satoshi Nakamoto to semantic content in Japanese. So it's not 100% clear to me if, you know, Wise Origin is the accepted transliteration. Either way, it's very cool.

Very cool. Now, let's get into what this actually means. So Fidelity has filed for an S-1. So you should not interpret this as saying that there will be a Fidelity Bitcoin ETF trading anytime soon necessarily. So this is just a signal of intention that the manager, Fidelity, wants to engage in further conversations with the SEC on this topic. if they had filed for an S1 and a 19B4 filing,

they would have been signaling to start the clock, basically. So the way this works is that you can file the S1, you can have these off-the-record conversations with the SEC, and you can push forward. Once you file the 19B4 filing, you basically start an eight-month clock in which you can no longer have these off-the-record conversations with the SEC, and they're basically on the clock to make a decision within that time period.

The way it stands right now, there, as you pointed out, there are six companies that have filed S-Wauns. So you have Nydeg, Wisdom Tree, Skybridge, which was last Friday, which is also in the news, Valky and Vanek and Now Fidelity. And Vanek is the only one this time around who's already filed the 19B4. So their, you know, eight-month shot clock is basically going. So that's that. So I'd be curious to your thoughts on this, but my take on this is that this signals of, you know, that Fidelity thinks that the time and place is now.

They've outlined how the product works. It's, you know, looks like a great product. It has Fidelity, not surprisingly, has the custodian. The index and Calc agent work for the, for the reference rate is done by coin metrics. So shout out to the coin metrics team there. But my takeaway here is that, you know, Fidelity is pretty serious about this. I think this sets the stage for potentially a Gensler SEC to get in a room with some of the heavy hitters from these six firms and to really hash out where we stand in terms of the spot market surveillance and how the spot market works here. Because I think if you look back at the previous denials, Winklevoss was all about custody and spot market.

The bitwise denial was all about, you know, the spot market. So my interpretation here is that this sets it up to be a conversation that Gensel, will likely have to have here pretty quickly once he's confirmed if he is confirmed yeah i'm going to just reinforce your shouting out of coin metrics very exciting calc agent congrats coin metrics is on a few of these various trusts and potential etps um as the price of the entity doing the pricing we're putting together the index pretty exciting very excited fidelity has sat or has not done this They have been, as you know, listeners may know, Fidelity has been active, various levels of active in the Bitcoin space from 2014 to today, seven years, seven long years. That's more that's more than half of Bitcoin's existence.

They've been, you know, doing various initiatives in Bitcoin. But this 2021 is when they finally filed the ETF. The first Bitcoin ETF was the coin ETF. Gemini, Winklevoss, Underwriter, or the sponsor in 2016, if I'm not misremembering. So Fidelity had ample opportunities to go to market with an ETF, but they've waited till now to shoot their shot. That feels significant to me. Yeah, I think that there, who knows if the SEC is going to interpret if the market is ready or not? I certainly believe it is.

But yeah, you bring up some great points. So Fidelity has been, you're going to zoom out here, I think, 20 years from now, and you're going to see Fidelity as being among the kind of biggest, boldest movers in the public blockchain space, starting Bitcoin mining in late 2014, starting accepting Bitcoin for Fidelity Charitable, the largest charity in the country in 2015, launching custody, trade execution, tri-party lending in 2018, I believe. and now the Bitcoin ETF filing in 2021. And hopefully it's approved in 2021. We'll see. But we're biased alums. We're big fans here. But there's some real leadership and vision going on at Fidelity.

And that is something you're not seeing at a lot of these other long-only asset management firms. So it's super exciting. And there's a huge amount of urgency now, honestly, because the SEC completely dithered on the ETF decision. And it has made life more difficult for them because now there's a half dozen and probably over a dozen sponsors in a few months from now that are vying for ETFs. There's $40 billion worth of AUM sitting in these, you know, somewhat opaque, not very efficient, you know, Bitcoin and crypto tracker products that are tradable on the public markets. right now GBDC is trading an immense discount. So there's an issue of market efficiency there because it's not an ETF structure. And the SEC is now in the unfortunate position of having to be a kingmaker on one of these funds.

They'll probably have to approve a number simultaneously to avoid that perception that they are, you know, anointing a specific ETF for success because being first really, matters here. So they by waiting so long, now there's a huge amount of capital which is waiting to flow into these products. And it's just going to be a challenging transformation. But it's got to be high up on their agenda. There's no other commodity trust product. I mean, this is completely unprecedented, frankly. GLD, I think, had a few billion dollars worth of inflows in the first week. and that was considered a blockbuster, a Bitcoin ETF is going to have 20 plus billion dollar inflows within a few days.

Yeah, and there's no way that they're going to be a kingmaker. I mean, I have no inside knowledge, but it just would be inconceivable to me that they would approve fidelity only or an idea only. So my guess is that they approve a handful of these at the same time, and then it just becomes an execution game and who can light up those distribution channels. Now, Fidelity has some of the best distribution in the world, so that's going to be, they're going to be one to watch there for sure.

But some of these other folks are executing really, really well, too. And so it'll be really exciting to see how this goes. You mentioned GBT. I mean, the discount just continues to perpetuate here. I think you're going to start to see some real rumbling. I mean, you're already seeing some real rumblings around people that have invested in GBT or underwater. It must not be a pleasant time to be. over at gray scale right now.

So I think you're going to have to see some action there pretty soon. This is kind of changing the topic off the ETF, but what do you think is going to happen here? Yeah, I mean, it's actually starting to look pretty bad, frankly. And the more time that passes without the good folks at Grayscale doing something about this, the worse it looks for them. Because the inefficiency, which was previously premium, which is more tolerable now at a discount, you know, that raises a lot of questions about their ability to shepherd this product back to par. And I get a lot of DMs about people that own GBDC that are pretty panicked

about it, frankly. So I did do a close read. I did a close read of the trust documents, the S-1 and the various trust charters today to ascertain what possible. recourse GPDC holders have. And what recourse do they have? I mean, what's the threshold for like voting out the sponsor or redeeming the trust, all that good stuff? So I completely have egg on my face because I think on previous podcasts I said that a simple majority would be sufficient to amend the trust charter, thus opening the door

to a activist to come in, buy a lot of shares and convince shareholders to vote out the sponsor, namely Grayscale. and then, you know, undertake some sort of redemption mechanism. That appears to actually not be the case. Based on my read, I would love to hear other experts' opinions on this. Please get in touch if you have, you know, a direct knowledge. Based on my read of the documents, it looks like there was previously a 75% threshold for shareholders of GBDC to, basically, basically,

basically force the liquidation, force of redemption. They took that out in the Fifth Amendment of the trust charter. I'm getting the precise word wrong. In 2018, I believe, or 2019, they actually took out that clause relating to the 75% threshold. So as I read it, I actually don't see direct codified recourse in those documents for the shareholders of GBDC. So an activist campaign, I think, would have to be more informal and have to take the form of sort of pressure. I don't think, I don't see as very simple, straightforward mechanism to basically break open the piggy bank and get the coins out.

So, you know, I guess the good news, though, is that. all of the interests are aligned here. Digital currency group does not want to see this thing trading at a discount. It makes it impossible for them to raise capital. You'd have to be an absolute fool to invest at NAV and then immediately just take a bath on this and not be able to sell it on the secondary market for at least par. So they can't raise capital into that product,

even if it was open with this trading at a discount. So they're going to want this to change. I guess there's a few ways it could happen. They could put a redemption mechanism in. They could start to buy it. So they've signaled that they're willing to buy up to $250 million. To my knowledge, they haven't done that yet. I mean, I don't know how we'd check that.

But I haven't seen any like 8K filings that would indicate that they've done anything there. It's possible they have. That's kind of like Hank Paulson saying they have a bazooka or something. You know, that's sort of what they did. And of course, they could convert this to an ETF, which, you know, you can't do that yet. So in my mind, it's sort of the redemption mechanism or, you know, throw capital at it to close this. And I'm a little bit surprised that you haven't seen more people start to pile onto this trade because, you know, it's a pretty good trade when you think about it. I mean, they hold Bitcoin there.

They're very reputable company. They use great custodians. So, you know, you're basically buying Bitcoin at a discount. Yeah. I mean, yeah, I think it isn't a no-brainer. if you expect gray scale to be responsible and engineer a favorable outcome here, which I do expect, I think buying GBDC at a discount makes sense. Not financial advice, but it's a-

The deeper the discount gets, the more attractive it looks. If you think there's an ETF approved this year, then most likely the fund is rolled up into an ETF product by grayscale, at which point it trades at par. But the deeper the discount goes, the more urgent it is for that ETF approval. So hoping the SEC takes that into account too. So let's move on to another news item. Anthony Scaramucci's Skybridge Capital also filed for Bitcoin ETF. And he's only going to get about 20 seconds of this podcast because Fidelity filed for one.

So sorry about that. But congratulations on the Bitcoin ETF filing. Think it's awesome. Look, you know, the Muge, nice guy, but I'm on Team Fidelity here. No disrespect. Next one up is the CFTC on Friday night came out with this. They ordered Coinbase to pay a $6.5 million fine related to false reporting around wash trading activity on their platform that was going on between January, 2015, and September

2018. It looks like the company was operating bots that were like trading against each other. so not great. Light coin. They're trading light coin to make it look more liquid. Yeah. So you can't do that, it turns out. But we know that virtually every offshore shady exchange does it.

Every single unregulated exchange. Well, I shouldn't say everyone, but most of them probably all them because there's just no controls. Yeah. That is kind of the difference between an onshore regulated exchange and an offshore one. Eventually, the regulated one, eventually the regulated one. ones get found out and they've got a good incentive not to do this stuff. The unregulated ones on the other hands purchased the naming rights to the Miami Heat Arena for $135 million. So FtX, which is an offshore exchange, they also have a U.S. subsidiary.

They purchased the naming rights to the Miami Heat Arena for $135 million. So congratulations. I think it is a bad signal. It feels a little bit like dot-com, you know, Super Bowl commercials, but maybe we're at the top of this market. Who knows? Yeah, I don't want to call the top, but I was kind of hoping this would fall through because to me, this is the topiest top signal I've ever encountered in the crypto markets. So I was hoping it would get delayed another six months or something. If you were looking to not call attention to yourself, would you be doing this? I mean, it's kind of like, you know how the myth of Icarus is like, involves him flying too

close to the sun. This is like inside the sun at this point in terms of attracting attention to yourself, which you don't want, frankly, if you're a Binance or a bitmax or who it will be or an FTX. So it doesn't strike me as the wisest decision at the end of the day. Well, maybe, you know, the NBA is an international sport. And so there's probably a lot of people internationally, not U.S. citizens watching the NBA, the Miami Heat. a lot of international residents, you know, to join FTX platform. That's that's the logic there. Right.

Well, in sobering and regulatory news, FATIF are back. FATIF. They're back with a vengeance. These guys, these guys, man, they try to kill the party. The Financial Action Task Force, FATIF, which is a global, I'd say, intergovernmental agency. It is not democratically elected. You know, member nations don't need to take their advice, but generally do. They released a draft of a new rule, of a new guidance, I guess.

It's called guidance for a risk-based approach to virtual assets and virtual asset service providers, VASPs. And as Peter Van Valkenberg of Coinbase pointed out in his awesome analysis on Coinbase.org, which everyone should go check out, it's highly problematic, this guidance. And, you know, if taken literally, and if it's not changed and if it's adopted, so usual caveats, who knows if it will be, it would seriously ramp up surveillance obligations of non-custodial entities. So people that are running node operators or decentralized exchange software, developers of this software, it would put all sorts of onerous guidelines on them in terms of record keeping and knowing the other side of transactions. it would also put some restrictions on peer-to-peer transactions using privacy technologies. So think about Zcash, Manaro, Tap, Route. It would also recommend that VASP, which are brokerages and exchanges,

it would subject them to the travel rule, which on every transaction, not just transactions up to a certain or past a certain dollar amount. So the long and short of it is it's pretty ugly. It would probably, if taken literally and if adopted, again, caveat. I don't know if it will be. It would pretty much kneecap Defy is my interpretation here. I mean, this guidance, if you take it seriously and literally, has negative implications by my read for pooled liquidity in Defi,

for key sharing arrangements such as multi-sig custody, for privacy coins for sure, for routing networks like Lightning. I mean, you name it, anything interesting. about cryptocurrency, anything innovative, new, interesting. Fadoff is trying to effectively outlaw that. So not really sure what the solution is here. If you want to learn about the history and the origins of Fadf,

if we did do a good episode with Zach Kellman on the topic, who's an expert in sort of like various regulatory purchase to AML and KIC. So recommend that episode. I'll link it in the show notes. But yeah, this is very perturbing, frankly. I mean, you'd hope that common sense prevails here and that the coin centers of the world really mobilize around this. And it's our obligation to support great organizations like CoinCenter

that do rally around this. But, yeah, I mean, if you took this literally, you'd just kind of never get out of bed in the morning because nothing is possible. You can't start businesses in this industry. So speaking of regulatory investigations, this transition. Not sure it really works, but anyway,

Jack Dorsey testified in front of Congress today and hit a block clock in his kitchen. Now, we thought that we did like a promotional job on block clock. That thing exploded. They must be sold out. They've been sold out. There's a wait list. I own so much coin kite.

Garrett's preposterous. I think I'm their best customer. But yeah, how gutsy is that? He had the stats per dollar, like the most esoteric method. you could put on there because nobody knew. I saw a lot of confusion on Twitter because people were like, well, what is this weird clock

that's not showing the time? It's showing something much more important than the time. I wonder if he runs his own Twitter account because he was liking tweets during the panel. Yeah, I know. I think he was doing what a lot of us do on, you know, tedious Zoom calls, which is, you know, Bitcoin Twitter stuff

is just so happens that he was on the phone with Congress. Oh, man. He's great. Love it. All right. So in Regal Tour News, the Illinois House Committee on Financial Institutions, they passed a bill this week that would create a charter for special purpose trust companies. Kind of reminds me of the Wyoming one. This is not passed yet, but it could be passed as early as May.

And it looks like it would just set the stage to make it easier to run a digital assets business in the state of Illinois, which is great. All right. Welcome on board, Illinois, Wyoming. Special no thanks to. New York and my DFS. You're not in the Cool Kids Club. Not at all. Well, Nick Grossman had a good blog. Bitcoin is a battery. Nick Grossman, one of my favorite bloggers. He needs to blog more. He's got a great site. Everyone should check out Bitcoin as a battery talking about, I guess this is kind of the other side of your violence is just kind of like the renewable story around Bitcoin. Yeah. I mean, a lot of people

don't like it when you describe Bitcoin as a battery. It's not a literal battery. Like you can't redeem Bitcoin for physical energy. But I think the analogy works. Or you could say it's an energy sponge. Yeah, you can't like transport it. I mean, I saw people getting pretty literal and his mentions. It's like, guys, come on. Yeah. What's a metaphor? What's an analogy? I have some creativity. Have some imagination. Yeah. Come on. Blockworks had a great profile on one of our favorite people in industry, Christine Sandler, who's head of sales and marketing over at Fidelity Digital Assets. That was a great piece. Shout out, Christine.

I liked Peter Johnson of Jump Capital, his blog post on where interest rates in crypto come from. A lot of people don't understand. In fact, I'd say most people don't understand where the interest rates come from. Yeah, Peter Johnson's one of the clearest thinkers in terms of market infrastructure and kind of where the puck is going in terms of how this whole market works from the plumbing. perspective. So definitely check out that piece. That was great. I will go on the record and say that when the GPDC premium flip to discount, I did mention that I thought interest rates would be hit by that. And lo and behold, interest rates have contracted now. So it's kind of those interesting

emergent features of the market where two apparently disconnected things are actually pretty tightly linked. Yeah. Interest in Bitcoin is surging in Turkey because the Turkish lira is down about 15%. It's really at historic lows, actually. So all of these indicators around people's interest in Bitcoin, you know, the local Bitcoin's volume, et cetera, et cetera, is surging in Turkey at this point. Yeah, Turkey, very high per capita penetration with Bitcoin,

already very vibrant Bitcoin market there. Gold is obviously very culturally important in Turkey, So very much primed for this demonetization of the lira. It doesn't look like that's going to get any better anytime soon. Erdogan fired the one central bank governor that was trying to hike interest rates. He was trying to pall vulgar it, but he was unceremoniously hired, fired, rather. And now people are deserting the currency for Lira or for gold and Bitcoin. Now on the gold topic, I wanted to draw your attention to a great tweet, courtesy of Matt Hogan, from Bitwise.

So a lot of people think, well, what happens if there is a run on the dollar and people exit the dollar for Bitcoin? You know, won't that just lead to the banning of Bitcoin like the government did in the 1930s with order 6102? and Matt actually says those analogies don't hold. Quote, the government seized gold in the 30s because it was on the gold standard wanted to conduct QE. It wasn't because gold was a competitive threat to the dollar. The government doesn't need to seize Bitcoin to conduct QE. I thought this is a really fascinating point.

The government needed gold because there was an explicit linkage between the gold and the dollar. After they seized everyone's gold, they revalued. gold, they revalued the dollar relative to gold. So they were in the midst of the Great Depression. They wanted to lucid monetary policy. That's kind of why they needed to acquire lots of household gold. In fact, long before Order 6102 went into place, households were being encouraged to turn in their gold. And in fact, they did that. People felt a patriotic duty to do that. They voluntarily surrendered their gold. A lot of differences today, you know, first of all, we don't have a, enormous crisis like the Great Depression, literally the worst financial crisis in U.S. history.

We don't have a somewhat totalitarian president like FDR was. We don't have this national unity either, frankly. I mean, who's going to heed the government's call to like turn in their Bitcoin? Can you imagine anyone doing that? Yeah, I mean, I wish I had some. We don't have a political infrastructure sufficient to enforce a ban like that. I mean, you think about some of the unconstitutional stuff. that happened in the 30s, the internment camps in the US, right?

So very different political landscape today. So I just don't think that is where we are. I don't think that historical analogy is sort of replicable or addressable today. Yeah, I mean, unless we're on a Bitcoin standard, right? Yeah. In that case, maybe things would be different. But as far as I know, no Western central banks own Bitcoin yet. yet.

All right. So did you see this Times Magazine profile on Michael Saylor, Microstrategy CEO? He's going mainstream now. And he bought some more coin today. God bless him. He bought more. Yeah.

Was it today? Did he buy more today? He bought 15 million at the end of last week. Well. He's always buying. I mean, hit refresh. He might have bought some more. Lost track.

Probably bought while we were recording this episode. So I think that's it for the week. We'll see how these libertarian nerd mugs go over. Yeah, buy our merch. It supports the show, I guess. Does it support the show? On the brink.com. Mostly I just have boxes of merch now.

I actually think you're the number one consumer of the merch. I like giving them away. Yeah, so we made the merch not really to make a return. Probably cost us more than we'll make from it. But mostly because we want to be able to bring memes to life on short notice. Yeah. So when something really funny happens, I want to turn it into a physical collectible. We've got a great, great back-end guy who's doing all this.

Shout out to our back-end guy, who we're not going to say his actual name. We're not naming him. No, we're just going to call him the back-end guy. All right, yeah. So, yeah, because we're not really that good at this merch stuff. Like when I sold the dice, I fulfilled them individually. Yeah. It was the worst decision of my life.

It was so bad. So anyway, we have a professional operation now. So we can almost guarantee that you'll probably actually get the merch if you order it. It's a really high probability that you will get the t-shirt or the mug if you order it. I can virtually guarantee you that you will almost certainly get it. My favorite mug is the magic internet money wizard. very special place in my heart. This mug, this image is responsible partly for me being a bitcoiner.

That's what you got you into it, huh? In case you wonder how I make decisions, this is a big part of it. Oh, I'm going to tease something. I did a really big podcast, a third party podcast. That should be out next week. That's the biggest one yet. That's your biggest one yet. I'm really jealous because that's one of my favorite ones.

It's not Rogan. This is my path to Rogan. Yeah. So we'll see. We'll see. We'll see. We'll see. All right, everyone.

That's it for the week. We will see you on Monday with another episode. Have a safe and healthy weekend.