On The Brink with Castle Island - Weekly Roundup 06/06/25 (Circle IPO, Singapore rules, Trump wallet?) (EP.632)

Episode Date: June 6, 2025

Matt and Nic are back for another week of news and deals. In this episode:  Circle goes public and has an explosive first day The IPO window is open Circle's vision for CPN Pump.fun is launching a token Will pump.fun cannibalize Solana? JPM will let clients use Bitcoin ETFs as collateral Strategy introduces new offerings Magic Eden's strange Trump wallet app announcement Truth Social Bitcoin ETF A K Pop Bitcoin access vehicle Korea's cultural renaissance Singapore's abrupt change in posture

Matt Walsh and Nick Carter are partners at Castle Island Ventures. All Vees expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only is an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated.

The federal government loans American International Group, AI, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called the Bitcoin. Welcome to you on the brink. I'm Matt Walsh. And I'm Nick Carter. Good trip to New York this week. New York is really the crypto capital of the United States right now. It's undeniable. I was talking to a reporter, and I ran my mouth a little bit about New York this week.

I said something along the lines. There was asking me about the circle move to New York. I kind of made a comment like, New York is the crypto capital of the world. Plus, in Massachusetts, you're dealing with Elizabeth Warren. She's the foremost antagonist to the entire industry. It's not exactly inviting startups to build big businesses. in her backyard. It is a tough loss for Boston that Circle left.

Really tough loss. You know, what's, what is the Boston crypto scene? They got Fidelity, State Street, kind of. State Street, State Street's not doing anything. Castle Island. Like, they do have Castle Island. What else? I don't know.

You get Stephen Lynch just trying to take down startups in the crypto space. It's not a very friendly place. Castle Island, CMS. CMS. B&Y Mellon, I guess, has an office there. Probably, probably. Yeah, it's not looking good for crypto in Boston. Well, we got flipside, we got coin metrics, we got all sorts of things.

There's a lot of stuff going on despite the politicians. But apparently someone's running against Stephen Lynch. We have to figure out if we like that person or not. In any event, let's talk about the Circle thing before we hop into the deals of the week. Congratulations to Circle. This is one of the, I'd say it was biggest IPO since Coinbase in the crypto industry. Yeah, extremely hot IPO. I mean, so it was meant to price at what, $31 a share.

Was that the anticipated price? It was anticipated lower and then I think it did price at 31. But it was anticipated in the 20s, went off at 31. Where is it now? As of right now, $84. And it tapped, it tapped 95. earlier. Wow. That's in the first couple hours of trading. I mean, that's unbelievable. That is unbelievable. I mean, it's a hard one to price, I think, if you're the banker there. So right now,

everyone's going to attack the bankers and saying, well, you left so much money on the table for existing shareholders. But I don't know, it's probably a little bit difficult to forecast demand on a name like circle. I mean, the market cap of the stock is $17.2 billion right now. I thought the fair value was $4 to $5 billion. Well, that was the rumored takeout, which I guess they were just rumors. But you have effectively an asset management business,

sitting on the treasuries, and then you have a payments network being built. And so you can ascribe value to both. It's interesting because most big IPOs recently have gone out below, they've been downround IPOs, but then they've rallied from the IPO. Circles different. They were, it was, well, I guess, was it a down round, the IPO price or no?

Still an up round. It looks like an upround to me. I don't know. Yeah, I'm not sure if all of the rounds were publicized there or not, but it looks like an upround. But the IPO window is well and truly open, which is very exciting to see. You don't get crypto IPOs very often. Could give Jeremy Allaire just a ton of credit, him and Sean Neville, the founders of Circle. but really just stuck with it for a long time.

You and I were going back and looking at the 2015 Bitcoin Expo, MIT Bitcoin Expo speeches, and just going through the exercise of, okay, what were people saying back then and did it come true? A lot of what Jeremy was talking about in 2015 happened. He didn't use the word stable coins, but he was talking about moving fiat currencies on the Bitcoin network. Yeah, they really hung in there pivoted multiple times. starting payments, kind of went to Bitcoin for a while, did the seed invest acquisition, got a little sidetracked with the Polonix acquisition, and then finally, I guess 2018 was when

the Stablequin was launched. Yeah, they raised some money for the Center Consortium, and then that turned into USC, I believe. Yeah, Center was discarded, just became USDC. And it, well, there's some other stable coins, there's EURC as well. And they finally made it back to payments on blockchains, and, you know, now they're the number two stand to do very well from the stable coin bill. So in a very strong position right now. Not a lot of ways in the public market to express a view on stable coins. And Circle is maybe the purest way to express a growth view. Yeah, I couldn't think of any other way, really, to get exposure to stable coins through stocks.

Yeah. I think we're, you know, you're talking about private equity and Circle at this point. So there was also some Castle Island content this week. Wyatt, our prolific podcaster, sat down with Isha Varshini at the Sele Foundation to talk stable coins. A good thing about Wyatt doing podcasts is people are now emailing me and saying, hey, I enjoyed your podcast with the guy from Sello, and I wasn't actually the person that did it. So I'm getting kind of fallout credit for some of these podcasts that Wyatt's doing. Yeah, you have a very different style. and a completely distinct voice from him.

So I don't know how anyone could really make the mistake. I don't know. I don't know. I'll take it, though. You got to take it where you can get it. Well, should we dive into some deals? Let's hop into the deals of the week. First one up is Rails. This is a self-custodial crypto exchange.

There is $14 million from Cracken Ventures, Slow Ventures, CmCC Global, and others. Then we have Dexari, a mobile first crypto trading platform. There is 2.3 million from Prelude, Lemniscap, and Finance US. Then it's 3Jane, which is a, credit-based lending protocol that raised 5.2 million from Paradigm, Wintermute, Coinbase Ventures, and

BREED VC. Then you have Avantus, a defy trading platform. There is 8 million from Pantera, founders fund, and salt fund. Aister AI is a decentralized AI development platform. They raised 2.8 million from Outlier and Web3.com

ventures. A sister with a 2Rs at the end. That's it. Two R's. Two R's. A sister. A.S.A. Neutral trade is a defy yield protocol. There raised $2 million from Ergonia, Skyland Ventures, and Black Pine. Here's an acquisition, Web3Oth. An authentication and wallet abstraction company was acquired by consensus.

Then you have variational perps trading platform. There is $1.5 million from Marana Ventures, Kaladan, and Zoku Ventures. Next one is called Hey Elsa. It's an AI co-pilot for crypto trading. There is $3 million from M31 Capital, the base ecosystem, Fund and MH Ventures. And Robin Hood completed the $200 million acquisition of the Crypto Exchange BitStamp. Robin Hood's really executing well, I would say, at this point.

I guess that took a while to close that deal. I'm sure it was complicated, but pretty impressive what they're doing on the product side in the crypto space. Their stock has been on an absolute tear as well. Has it? In April, they're trading of $34. They're at $73 today. I mean, just a huge rally in equity markets.

I don't know. Is it because we have a deal with China? Is it because the tariffs are illegal, apparently? I don't know what's going on. Big, big rallies all across the board, particular Robin Hood. Yeah, seriously. A lot going on. All right.

So we talked about the Circle IPO. I don't know. Anything else to say there? I guess the thing that immediately comes to mind is that now Circle has public currency to do M&A, which I'm going to be very interested to see what they do. Yeah, I'm actually astonished that they were able to escape the private markets gauntlet, not get acquired, not sell themselves, push through to the IPO. It looks like things are going well.

And yeah, they're going to have an advantage here, lower cost of capital. They can buy things. I think really the challenge for circle is can they diversify their revenue away from a net interest margin to anything else? Can they build a software style revenue from building this payments network? What else can they do? Can they grow their market share relative to tether? That might depend a bit on the market structure bill.

So that's the question because they don't want to be, you know, a hundred percent rate sensitive forever. That's not a good position to be in. So what's your view on the circle payments network, basically an overlay network on top of stable coins that does extract some fees? I think it's in the neighborhood of like 1% fee extraction is how that's contemplated. Will the market support something like that? Seems like they want to verticalize the whole space, the stablecoin sandwich, so to speak,

to go from fiat to stablecoin, transat, you know, orchestration and then out of stable going to fiat as well, which does make sense. I'm not sure if it's their role to play or someone else, but I think from a business, perspective, it makes total sense because they are just one portion of the stable coin sandwich right now. They're the very middle. And there's a lot of money being made at the edges. Yeah. I think there will be more than one of these actually built, more than one of these payment networks. Maybe it'll look like the card industry in some respects because, you know, just making these payments less frictionful for businesses is one big use case, I think. Just being able to easily

send stable coins, being able to have, you know, an ecosystem where you have known participants that you can connect to and you're already KYC'd on that B2B transaction, you're passing travel rule information back and forth, people would use that. Yeah, I do like a SWIFT for Stablecoins. Because stable, we've said this before. Stablecoins are settlement with no messaging, but payments are messaging and settlement. That's what a payment is. Really, a payment is actually just the message.

So stable coins totally invert that. They just do the settlement portion. They don't do any, there's no information being shared. You need that. You need that. As larger, more regulated counterparties start to use stable coins, they're going to want to be able to pass along, you know, important data pertaining to the transaction along with the actual financial payload.

CPN could be that. I think that's probably the vision. Yeah. It's swift for stable coins. that's needed. No one's built that yet. Well, I'd say, you know, no to Benet is kind of that, right,

with the travel rule handshake that they have there. And that's probably the dominant player in the industry at this point. So it'll be interesting to see how it evolves. I guess one other question is, what is the role of credit in stable coin transactions? The fact that you have to have the bearer asset to make the payment, it's very cash-like, obviously, in nature. But is there an appetite to have some role where credit is injected in the system and

participants in stable coins can just make a final payment at the end of every month or something like that? Yeah, I really like that. I actually like the idea of a flash loan for stable coin too. Like sometimes you just don't have your wallet handy and like, but you really need to like send a transaction. Like for some reason your coins are encumbered. I think some kind of like, like short term.

loan facility concept for stable coin payments would be really interesting. And my other request for startup here is reversible payments. So I know it's like very ironic. We're just asking to recreate the Web 2 payments stack. Yeah, and I'm not sorry. I'm never going to apologize about that. We're just doing it our way and like everybody else that says it's ironic, they're just going to have to deal with that.

I want reversible payments on stable coins. coin rails. Request for startup. That's an interesting concept. I haven't heard that. But yeah, the injection of credit, I think, would just make this a bigger ecosystem. You'd have more payments flowing through it. And then some sort of a role for who wears the fraud risk, you know, chargebacks and things like that. Yeah, that is the problem. Is reversibility or recourse does introduce the prospect of fraud. So pluses and minuses. Plus and minuses, but I don't know. Stablecoins has the potential, I think, to just increase the total number of transactions in the world exponentially. You make it economic to send these micro transactions.

Yeah, and I think we're going to have to create a richer taxonomy of stable coin transactions. People think of it as one kind of thing, but it's not going to be. There's going to be real specialization in different types of stable coin networks and the way the messages are being received. So it's not going to just be one thing anymore. It's kind of like you were to say electronic payments, like, well, what are you referring to? Like ACH, like Visa, Venmo. Like that's, so I think that's going to be stable coins. It's going to be this broad sector, but it's not going to be a specific enough term going forward.

All right. So let's move on from stable coins into meme coins, a pump. Dot fun, which is the meme coin launch pad on Solana, they are reportedly planning a $1 billion token sale at a $4 billion valuation. This is a platform that launched. in 2024, 11 million tokens have been minted on pump. Dot fund generating $700 million in revenue to the platform since inception. What do you make it? Can you explain why if you've made $700 million, you need to also launch token?

I could try to explain it. I don't have a good explanation. I'm guessing that that cash was not, like, dividended out to the sheriff. shareholders. And so the way that the shareholders themselves, the outside investors are making money is through the token. So I think it's like a structural reason like that. What do you think the impact is on Solana itself to have this presumably pretty big token? If they can actually raise a billion dollars for it, be this fulcrum for people that are going along meme coins as a category as opposed to buying Seoul? Yeah. I mean, it's potentially an issue. I don't know if pump token is going to be,

like the collateral for meme coins the way salana is today but like well maybe they'll launch an l1 or something and try and suck the liquidity out of salana and internalize it it's kind of like reminds me of like the l2's launching on eith and cannibalizing some of the volume from eith itself yeah that's what it reminds me of as well yeah we'll see what happens four billion dollars i don't know not investment advice. I think this thing is going to be down only from launch. Well, we'll see. That's what we would have said about a lot of things.

Some go up and some go down. Let's talk about J.P. Morgan, my favorite financial services firm to hate on, just because of the profound vitriol that Jimmy Diamond spews about this industry and saying he's going to fire anyone who works for him that touches Bitcoin. Guess what? He is back in the game. They are going to start offering Bitcoin. ETF backed financing.

They will allow their clients to borrow against their crypto holdings. They will also view clients' assets holistically, including cryptocurrencies. So change of tune, I suppose. Yeah, you know, what's funny is I'm a client. I know this isn't a popular review with you, but I'm a client of JPM private wealth. And I asked them last week if they would let me use Bitcoin for collateral. to engage in hedging. And the answer was very much no.

Well, you should call them back this week, I suppose. I can't believe that you're, you know, you've cited against me on this core issue. When Jamie Diamond... I mean, they're helpful. They're really, they're like good at their jobs. I don't know. It's useful.

Jamie Diamond did that. When was that hearing where Elizabeth Warren was just feeding him the layups to dunk on the crypto industry and he was just teeing off on the whole industry? I canceled my J.P. Morgan credit card that day, got rid of all my accounts, and I've been no J.P. Morgan ever since. I just feel like it's been a while, and you could maybe forgive and or forget at this point. I've softened a little bit, but I mean, hey, look, he's a great executive, but he was in the wrong side of that issue. Anytime you're tag teaming with Elizabeth Warren, you know you're in the wrong city. So, yeah, I'm going to circle back to them.

I still don't think they're going to like raw Bitcoin. They probably want it in an ETF format. Here's a thing with Micostrategie. So they keep launching weird new financial products. So first they were doing out the money offerings. Then they, I guess, innovated. They had these preferred share offerings, strike and strife. And now they've stride.

So what's your read on this? Are they getting increasingly more desperate? Are they offering better and better terms to investors to keep buying the stock? Yeah, I think this just tells you, I think, that some of these previously issued preferences are not going well. Preferreds or other not going as well as they might have hoped. And so this one has a 10% non-cumulative annual dividend. I don't think it needs to be paid.

How can you offer a dividend that you don't have to pay? I guess you can just put it in the offering memo that, look, we can decide not to pay this. I assume it just rolls to the principal or something. Do you have to pay it eventually? I think they would have to pay it eventually. I haven't read the fine print on this one, but it's getting more and more esoteric. He hasn't done common at the money offerings, common stock at the money offerings in a while. the premiums come down a little bit.

I don't think he's out of ammo, but it seems to be slowing down a bit. Yeah, the premium is at the lower end of its range. Let's pull up the chart here. It's been kind of range bound since February of last year. It ran all the way up to 3X in November last year on the election. And it's been hovering in the two range. now it's a bit below that it's about 1.74 so he has they have tapered off their purchases of bitcoin

lately uh although others have more than compensated for it so the rate of acquisition has actually been pretty steady through 2025 if you consider all of these bitcoin access vehicles pretty interesting so i don't know we'll keep an eye on this but whoever is working on this from a banker's perspective is just very busy over its strategy these days. I mean, there just must be one idea after the next. Similarly, we have 21 capital. That's the Bitcoin Treasury Company backed by Tether, SoftBank, and Canter. They raise another $100 million through convertible notes.

So they've raised $685 million now. Here's some news out in New York. So the New York Department of Financial Services has granted a bit license to Moonpay, the Cryptopayments Company. It looks like they're going to be able to operate in all 50 states now. Moon Pay is the 34th company to receive the bit license, which is more than I would have thought. It just goes so slow to get that bit license sometimes. But pretty interesting development there. And New York's not an easy one to get.

So congrats to Moonpay. Yeah, big congrats. Here is a strange thing. Magic Eden announced that he'd partnered with the Trump token team to launch the Trump Wallet app. basically a Trump branded meme coin wallet. And then the sons denied that this was happening. So any idea what's going on over there? I didn't even see that denied it.

So this came out, did it got announced it as like a press release or is it just a rumor? No, it was officially announced by Magic Eden. And then Eric Trump tweeted, this project is not authorized by the Trump organization said Magic Eden, I'd be careful using our name in a project that's not been approved as unknown to anyone in our organization. So something weird is going on. I mean, Magic Eden is a pretty sizable, a real company. So it's like either Magic Eden just hallucinated this whole thing or someone inside this Trump organization got their wires crossed. There's different units are not talking to each other. Yeah, that's not great. That's not great.

That's not great. And then what's the other Trump-related news this week, that there's an ETF coming or something? True Social is doing an ETF? Yeah, they have submitted their UTF for approval to the SEC Commissioner that Trump appointed. So, you know, I'm running out of ways to say conflict of interest, but yeah. Yeah, what is the ETA? Is it a Bitcoin ETF? Yep.

Okay. I don't know why we need that specifically. already have them. But yeah, best of luck. Best of luck. There is a new Bitcoin Treasury strategy. It's K-Wave media. They are a NASDAQ-listed K-pop media holding company, which intends to sell $500 million of stock

to finance Bitcoin purchases. All right. One of these, every single week. How many different assets do you think we'll have here in these strategies? You know, we've got Bitcoin already, Ethereum, Solana, how many more? We're going to have one for every stock market on the planet, for every coin. For every single coin, okay, interesting. There's 30 million coins.

So the permutations are really endless. They truly are endless. Our ability to talk about it every single week is not endless, though. I'm getting a little sick of talking about them. Can you name a K-pop band? No, what is K-pop? Korean pop. Okay.

Is it just like boy band stuff? Yeah. No. What's your favorite one? Yeah, BTS is the famous one. BTS? Have you not heard of BTS? Are they good?

No, I've not heard of them. They like did a song with Coldplay or something. That's how I know about them. I don't know. I'm looking at a list of K-pop bands. I don't know any other ones. But BTS are like one of the biggest bands in the world. actually.

The biggest boy band in the world, apparently. Did they tour in the United States? It's not something. I haven't seen them play at Jolad Stadium yet. BTS tour, yes. They are coming, you're in lock, Matt. They're coming to L.A. on the, well, they did already.

So they're in Paris right now. They did play in New Jersey, Chicago, and L.A., so you just mess them. All right, I guess I'm just out of the loop on this. Yeah. They are actually one of the biggest bands on the planet. I mean, Korea is having a bit of a cultural renaissance, I would say. Korea's a big crypto market, too.

Yeah. So they did that movie Parasite. That's Korean. Do you see Parasite? Did not say that one. Squid Games. That's Korean cultural export. K-pop.

That's actually all I can think of right now. Huh. But yeah. It's cultural. It's like Japan and, you know, in the 90s. They were like exporting a lot of culture. Now it's Korea's turn. Yeah, they're doing pretty good on the crypto exchanges, too. The volumes are crazy.

And now they have their own micro strategy as well. Well, here's some other developments. Singapore's central bank, they released, I guess I would classify it as a sudden regulatory directive, basically saying that locally incorporated crypto businesses must stop their quote, digital token services to overseas markets by June 30th. Under this framework, the regulator is not expected to grant many more licenses due to some heightened anti-money laundering concerns. Singapore was once viewed as a very hospitable framework. I wonder if this starts to change the equation a little bit. Yeah, we actually heard this from some of our Singapore-based startups, and it seems to be really problematic, very abrupt. And there's no grace or sunset period here. if you are a Singapore-based crypto business and you offer services to foreigners, not in Singapore,

you are out of luck, it seems. Yeah, so I think you're going to see some folks leave Singapore. It's kind of funny. You would have thought that the, so like, tier one financial centers would actually follow the U.S.'s lead and becoming more pro-crypto. But Singapore is an exception. The EU has gone a completely different direction. I mean, I'd say Mika is quite.

bad overall. So not everybody is actually following the U.S. lead here. Singapore has had some bad incidents, though, right? So I wonder if part of this is based on, you know, they provided a home for the three arrows fraud. They had some of those lending firms

blew up in Singapore. I feel like Tara Luna was had some Singapore affiliation. Some Nexus there. Yeah. Yeah. Suu, man. He never got his due. Suzoo.

Suzues, he's still around? Whatever happened to Kyle Davies? I think they launched this token, like ox, ox token that's something sort of exchange. I think it had like a messy blow-up. But yeah, I mean, they're running around. You know, I think they live in Taiwan now.

All right, so I think that is it for the week. We'll keep an eye on this, circle stuck. This thing is just moaning as we're recording. Yeah, my thoughts and prayers with the Circle employees and former employees that are locked until September. It'll be a white knuckle ride. Well, congrats to Jeremy and the circle team over there.

And that's it for a must. Have a safe and healthy weekend, and we will see on Monday.