On The Brink with Castle Island - Weekly Roundup 07/22/21 (The B Word, SpaceX owns Bitcoin, Stablecoins and Wildcats) (EP.231)

Episode Date: July 23, 2021

Nic and Matt are back for another week of news and deals. In this episode:  We debate the merits of the Merritt parkway We reflect on the B Word conference SpaceX owns Bitcoin We cover the Elonfolio Gensler covers tokens giving synthetic exposure to underlying securities Are stablecoins appropriately regulated? Can stablecoins learn from the free banking era in the 1830s? Is there a future for Ripple or Stellar as a bridge currency? What's next for US CBDCs? Content mentioned:  Gary Gensler's speech  Gerald Dwyer in AIER, What do Wildcat Banks tell us about Stablecoins?  Sponsor notes: This episode is brought to you by Withum, a top 25 accounting firm with a cutting-edge Digital Currency and Blockchain Technology practice. Wherever your company is at, from pre-seed to IPO, we have tailored solutions just for you. To learn what our advisory, tax and audit services can do for you, visit withum.com/crypto.

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

So out of this worry, we have something called a Bitcoin. Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And this episode is brought to you by Witham. Witham is a top 25 accounting firm. They have a cutting edge digital currency and blockchain technology practice. Wherever your company is from a stage perspective, from pre-C to IPO, they have tailored solutions just for you.

They have helped some of the largest companies in the crypto industry with audit, tax, and advisory needs. and they've also helped a number of our portfolio companies. To learn more about advisory, audit, and tax services, head over to on the brink. link slash withem. That's on the brink. dot link slash with them. Witham, they know their accounting over there. We love accounting on this podcast.

We're the number one crypto accounting podcast that's not specifically about accounting. If you're in this industry and you have an accountant that doesn't know about crypto, you're just in a world of hurt. So that's why you've got to go to Witham. Exactly. So this week was the, can we call it the regulatory, regulatory season?

Yeah, I took out the fud dice and I don't see Gary Gensler just taking down defy on the fud dice. We actually didn't have a panel for what's happening. So maybe that makes it true fud, like good, good fud. We have a lot to get into this week. We were down in New York this week. We had a nice little gathering. It was fun, fun to see people. people in the flesh. And then on the way back, we saw someone destroy a truck on the Merritt

Parkway. Oh, my God. Yeah. So there was a debate on Twitter because Alex Thorne over Galaxy doesn't like Merritt Parkway. But Teddy Fasaro, on the other hand, likes Merritt Parkway. Teddy's just, he likes everything in Connecticut. But the merit, if you're a truck driver and you're on the merit, you're on the wrong road. And we saw that. It just, we saw a truck hit the bridge and just eviscerate the truck basically. So it skimmed off the top of the truck completely.

It was like a can't being opened or something. You know, when I drove to Boston, when I moved here, I drove a moving van that was nine feet one inch tall and I didn't get the guidance about the merit parkway. And so I had one inch of clearance on some of those bridges Because the lowest one is nine feet two inches. That's no way to go through life. That's tough.

It was extremely stressful. I actually docked as I went under some of them. Yeah, you've got to take 95. So we saw a truck, yeah, right there. We saw a truck get completely scalped, basically. It was almost like a synthetic defy asset in two weeks when the SEC gets around to just taking them down. That's intense. The truck diver he looked pretty chastened.

But from what I've heard, this actually happens all the time on the merit. So opinions are divided on the merit, but I think it's a very picturesque and a nice road. I'm out on the merit. I'm out on it. Are you not? Okay. No, I'm not on it. That's fair.

I'm still merit-pilled. But yes, it is definitely a tough week for the regulatory side of the equation from a number of perspectives. I guess we can talk about that. We also produced some content this week. A lot of content. So you were, you spoke at the Ark Invest and Square, the B word conference, I guess. The Ark Invest and Square hosted that conference, which I guess you pre-taped it, but you did a nice talk on debunking the Bitcoin waste energy argument.

And some people were calling you, you know, Bitcoin Carl Sagan. Was that CMS Holdings that said that? Yes. I don't really know who Carl Sagan. is. I think it was a compliment. It was a compliment. Okay, I'll certainly take it. It was a good conference. I think the arc team and the square team deserve plotts for putting it on. I don't like the name because I consider it vulgar by implication. I think it implies vulgarity. But beyond that, I thought it was a really good conference. And Elon admitted that SpaceX owns Bitcoin. That was a new thing. Yeah, that

didn't really get a lot of play, but that was interesting. That was confirmed. Yeah, that was not public knowledge before. He's the Elon portfolio. So he obviously owns equity in Tesla, SpaceX and I guess his other companies. It's the most zoomer portfolio conceivable. Then he personally owns Bitcoin, Eith, and Doge. And so that's that's his whole portfolio. He said he doesn't own any stocks. You know, Bitcoin, I don't think is really going to work. from a consensus level on some of these SpaceX rockets as they go to other planets in the next 20, 30 years. You know, the 10-minute block time is going to be a problem. That's correct. Bitcoin mining could not really achieve stable consensus between Earth and

Mars. That math has been done. I think it was Drew over at Unchained that wrote a good blog post about that a while back. Just put that as another reason not to buy Bitcoin. It won't work on Mars. So what's the point? I mean, it would work. It's just that you couldn't really mine profitably on Mars if the center of hash was on Earth. So you would just, you'd still be able to receive blocks and, you know, run a full node for sure. You just wouldn't be able to mine. I think it just means the brokerage opportunity, the centralized brokerage opportunity on Mars is enormous. It's not completely untapped.

That's a very good point. I don't even, I don't know what regulatory. The SEC probably has claimed jurisdiction over Mars already at this one. The New York Fed, I'm sure. I'm sure there's going to be a, there'll be a speech before the American Bar Association exerting influence and jurisdiction on that Mars planet. The long arm of the American securities regulator.

So that was a good conference. I thought Elon, And it was like sounding a little more mature, perhaps, than some of his prior statements. Kathy Wood impressed me, as she always does. And Jack Doris, who's great? Yeah, this is a terrific conference. You also wrote a piece this week for Coin Desk. So there's a paper that came out.

I guess we can talk about this now. So Jeffrey Zhang, who's an attorney at the Federal Reserve and Gary Gorton, I guess is the way he pronounced his name. He's a professor at Yale wrote a paper called. taming wildcat stable coins and it took kind of a negative view on stable coins and it compared them to the 19th century United States of what they called the free banking era kind of the pre-civil war era where there was no federal currency in the United States and you took some issue with this yeah you know listeners of the pod the Brink Nation the brinkers already know the problem with what they're saying in this paper because they've heard us talk about it on this

exact show before. The antebellum laissez-faire banking period in America was not true free banking. We've discussed this before on this show. It was not true free banking, and I guess these guys ignored the other periods of time where there actually was free banking. The successful historical epics of free banking in the 18th and 19th centuries, In Scotland, very successful, in Canada, in Sweden, in Switzerland. They're ignoring the successful laissez-faire banking episodes that are well documented in history. And they're focusing on the partially regulated, not true free banking instance that happened in the 1830s to 1860s in America. Come on. Talk about being a little myopic and, you know, little parochial.

Look out, look abroad. There's plenty of examples. The model has worked elsewhere, for sure. George Seljan jumped on that on Twitter and issued some clarifying comments. We may or may not be recording with George Selgin next week. That's me rubbing my hands. I don't know if you can hear that. I'm very excited.

George, of course, one of my Bitcoin heroes, even though we forgive him. He doesn't really like Bitcoin. He's still very important in the history of Bitcoin, you know, infamously being cited by Hal Fennie. But yes, George Raid his whole career out of making the point that state governance and regulation over the banking sector is not strictly necessary for the banking sector to deliver high quality of service, basically.

And the Scottish example is one that him and Larry White talk about. We had Larry White on a while back. Because the Scottish example ran from 1716, I believe, to 1844 with incredible stability, virtually no. state oversight. The notes traded at par, but they were mutually accepted among different banks. There were no bank runs. There are basically no financial crises. There was moderate deflation. You know, they delivered a high level of service effectively. And bank failures were extremely few. And when they did occur, depositors were actually made whole because the banks were

unlimited liability. Unlimited liability, not limited liability. So the shareholders and the banks got their fortunes kind of clawed back to make the depositors in the bank hole. That's just one example. So anyway, there is a robust literature covering other genuine free banking episodes. The so-called wildcat banking, which kind of refers to bank failures in Michigan in the 1830s, I believe, you know, like the banks were not free. They couldn't engage in branching, which means they couldn't expand nationwide. And so they couldn't diversify their sort of depositor base.

So they'd get really concentrated portfolios of people that all had the same, you know, specific types of needs and, you know, behaviors. They were forced to hold state bonds in many cases. So the states forced them to hold state bonds, which were really not an instrument you wanted to hold. when the civil war started, a bunch of the states defaulted basically on their debt. And so the banks that were forced to hold these bonds went under. And so the failure of the banks wasn't because free banking, it wasn't due to an absence of regulation. It was due to the presence of regulation. Anyway, the Gordon and Zhang know this.

They obviously know this. Like if you're a student of history, if you're an economist, you've read a bit of monetary history. You know this. These are just historical, you know, facts in the historical record. So they're being very selective in ignoring the record to make a point against stable coins, which is unfortunate. Yeah. Well, we're glad that you're out there patrolling for these injustices. I just can't believe that this became a thing.

Like this was one of, you know, my weird, like niche topics. Like, yes, we never had real free banking in America. But then somehow this became like a really important part of like the contemporary discourse around stable coins and CBDCs. How is that even possible? Yeah. It's, well, it's definitely now it's getting Krugman and all of the mainstream economists are getting on it now. I liked it better when it was niche. I liked a better when the free banking wasn't being misrepresented.

Anyway, there's a good resource. I'm going to link in the show notes by Gerald Dwyer. Peace entitled, What to Wildcat Banks? tell us about stable coins, very good additional context. But yeah, read Saldjan, read White. There's a good literature out there. Just consult the literature. And then you made Alphaville today.

So Financial Times had an analysis of your paper that you wrote with Linda Jang from Georgetown, the DFI Protocol Risk paper. So that was nice to see you in the FT. Yeah, I was really happy with that, especially because it's Isabella Kaminska, who I've always respected as a writer, even though she has been a long time strident critic of Bitcoin, but she completely changed her tune recently, and she's much, much more amenable to Bitcoin these days.

And she was nice enough to write kind of a brief little review of my paper with Linda, which is on basically a paradox in DFI. Now, what the paradox is, you're going to have to read the paper to find out. So definitely check that out. Well, why don't we get into some deals? There was an enormous deal this week. So FtX, which is the Antigua-based cryptocurrency exchange,

they raised $900 million at an $18 billion valuation. I believe that's the largest Series B in the crypto industry of all time. The round included paradigm, ribbet, Sequoia, Insight, third point, Toma, Bravo, soft bank, light speed, altimeter. The list goes on and on. So it's just a star-studded investor group here at a really attractive valuation from an FTCS perspective. So congrats to the FTX team. Is that the largest private raise for a crypto exchange ever?

I think so. I think it is. What was the total amount of the Coinbase IPO raise? Well, Coinbase didn't go public via IPO. They went public via direct listing And then they raised a convertible note afterwards Yeah, so not really directly analogous But I believe the largest single

Private exchange raise ever Congrats to them OpenC Speaking of Monster raises We got a few this week OpenC Of course Platform for selling NFTs

There is $100 million In around Led Bay on Andreessen With participation from Coteau Michael Oivitz and others Next one up is Terraform Labs. This is a South Korean company. They're behind the Terra blockchain. There is $150 million for an ecosystem fund. And that was from Arrington, XRP, Pantera, Galaxy, and Block Tower. Then we have a SPAC announcement. So Core Scientific, which is a Bitcoin mining hosting company merging up with Block Cap, which is the biggest miner in America, Bitcoin. miner. They're going public via SPAC. That combined entity, SPAC merger with power and digital

infrastructure acquisition corp valuing the new entity of 4.3 billion. That would be the largest publicly traded miner in the U.S. Congrats to Darren Feinstein. Congrats to the team. At Corsign, block cap. They are totally under the radar. There's a very interesting story behind where all their mining occurs. Absolutely fascinating story. Are you going to tell it? I guess if you want to hear it. So back in the day, founder Darren scouted out all of these locations for energy in the U.S. and looked for the best hosting opportunities and found in the Appalachians these neglected energy resources that have been built to support the Manhattan Project of all things. lot of it was hydro down in the Appalachians. And they'd been kind of furloughed or they'd had some

other industrial uses and sort of fallen into disrepair. And so he actually moved into a cabin in the Appalachians and just built up these facilities back again and turned them into the biggest Bitcoin mining resource in the U.S. So a direct line of continuity from the Manhattan project to present-day Bitcoin mining. That was a cool story. That did not disappoint. Yeah, I think it's cool, too. I think it's cool too. And, you know, Khorasai, they do disclosures. You know, they're, you know, classic kind of modern Bitcoin miner contrast with the largely

anonymous miners out in China. Korsai does disclosures about their energy mix. They're part of the Bitcoin Mining Council. And they buy carbon offsets. So, you know, eat your heart out, Elon is what I'm saying. But congrats to the Corside team. Next one up is Virtual Human Studio. That is VHS for short, the company behind the popular horse racing application Zedron.

This Zedron thing is very popular. Basically a kind of a gambling style game built with NFTs. They raised $20 million in a series A round led by Churning Group with Andreessen Horowitz and Red Beard Ventures. Next up we have Vincent, a series. search engine for investments and alternative assets. They raised $6 million from Jason Calcanus and DCG. Next one up is Thesis. This is a crypto venture studio.

They raised $21 million in a series A round from Parify, nascent, Fenbushi, and polychain. Thesis, the original home, or that's at least where keep originated from and fold. Correct. That is correct. then we have magic decentralized identity startup formerly known as fortmatic there is $21 million $27 million in a series A from Tiger Global and North Zone next one is Titan this is an investment management platform they don't have a crypto product out yet but they intend to release one and they raised $58 million in a series B round from Andreessen Horowitz general catalyst box group and others

So those are the deals, a lot of deals happening, despite some, dare I say, regulatory headwinds. So what's going on? What did Gensler deliver us this week? All right. So I think this is the news of the week. And I don't know, you know, it's gotten coverage. I don't know if it's gotten appropriate coverage because I do think that this will have major ramifications here.

So there was a speech by SEC Commissioner Gary Gensler. It was on Wednesday. It was before the American Bar Association. derivatives and futures law committee. That rolls right off the tongue. And the portion of the speech that I kind of took note of here, and I think a lot of people in the industry did take note of, is the following four paragraphs.

So I'm going to quote here, before I conclude, I'd like to briefly discuss the intersection of security-based swaps and financial technology, including with respect to crypto assets. There are initiatives by a number of platforms to offer crypto tokens or other products that are priced off of the value of securities and operate like derivatives. Make no mistake.

It doesn't matter whether it's a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities. These platforms, whether in the decentralized or centralized finance base, are implicated by the securities laws and must work within our securities regime. If these products are security-based swaps, the other rules I've mentioned earlier, such as the trade reporting rules will apply to them. Then any offer or sale to retail participants must be registered under the Securities Act of 1933 and affected on a national securities exchange.

We've brought some cases involving retail offerings of security-based swaps. Unfortunately, there may be more. So to kind of tease that out here, I think it's very interesting that it calls out stock tokens, stable value tokens backed by securities, and synthetic securities. And so my quick framing of this is let's look at centralized stable coins and decentralized stable coins. And there's a possibility here to interpret that some of these things may be securities. And before I kind of get your thoughts on this, what comes to mind immediately is the centralized stable coins that have underlying collateral that is commercial paper.

So these things are securities, this commercial paper. And so I wonder if the SEC is taking a look at these things and saying, look, it's backed by things that are securities. Does that make them securities? So thinking about tether or think about USC to a much lesser extent. The other thing that this brings to mind is platforms like MakerDA, which are decentralized. And he specifically calls out decentralized finance. These are collateralized by things that could also be deemed to be securities and could also bring them into the crosshairs. So what do you make of this?

It's hard to know. It's hard to know. The most expansive reading of what Gensler is saying here indicts so many of these structures in the crypto space. I'm inclined to read it more charitably, perhaps. But it would be odd to me if, you know, Fiat convertible stable coins were considered to be. securities. I know there's an act entitled stable coins are securities act, which was floating around a couple of years back, but, you know, it seems to straightforwardly fail the prong of Howie, which is expectation of profit, right? Like there's no return from holding a stable coin.

you stable coins don't typically even pass interest along two holders which they could do but they don't do um so if you hold a stable coin for any period of time you're looking at a guaranteed loss effectively unless the underlying sovereign currency rallies somehow uh so i just don't see it as satisfying that prong of howie regardless of uh you know regardless of interpretation I just, I totally dispute that. What do you make of the decentralized finance implications here? So specifically, you know, there's a call out here around assets that provide synthetic exposure to underlying securities.

There's obviously a lot of assets in defy that fall under that umbrella. Yeah, I mean, it's like obviously he could be making a direct reference to a maker or synthetics. I mean, you know, no question. there's a lot of defy products which fall under that definition. The question for me is, is he seeking clarity around having these teams disclose? Or I guess like what's what's Gensler is sort of proposing here? Is he proposing that these kind of like derivative products trade only on regulated exchanges? or like ATS venues, is he proposing that, you know, die, which is the output of the maker system,

you know, somehow become enmeshed in the, you know, disclosure-based securities regulation regime? It's really unclear what the actual suggestion or output of this is. So it's kind of still quite opaque to me, I'd say. It's also going to be interesting just to see how this unfolds when you look at the centralized stable coin operators here. So Paxos, so Dan Bernstein, who's the general counsel and chief compliance officer of Paxos, same day. A couple hours later wrote this blog post, basically comparing the Pax token to Tether and USDC, calling out the fact that, you know, USDC in his mind is not regulated. And so now we kind of have this like mud slinging going up. on within the issuers of centralized stable coins that, you know, frankly, like, probably doesn't

help that much if you're, you know, if you're hoping for a good outcome here. So, um, that'll be interesting. Well, I mean, they are regulated, uh, under the money transmitter, um, kind of, uh, approach. And, uh, they, uh, are regulated by FinCEN as a money service business. So these stable coins are regulated, perhaps not. in the way that some would think is the most prudent, but there is certainly regulatory oversight. Now, are states best equipped to provide real oversight over stable coins in terms of them, you know, potentially custodying a large asset portfolio and, you know, trying to match the maturity and liquidity of that asset portfolio to the demands, potentially from holders of those

notes? that's a question. Doesn't mean that stable coins are banks. Definitely not. You know, I think there's certainly, you know, certain constructs, regulatory vehicles you could try and put together that reflect the reality of stable coins. My thoughts on this generally echoes those of George Selgin, who's looked for a light touch approach despite not being a crypto bull by any means.

But yeah, I mean, the stable coins, are regulated, just perhaps not in the way that, you know, paxes might want. Yeah, I think that's a great point. Certainly, in Circle and Coinbase historically as well have operated under the state-by-state MTLs. And so to say that they're unregulated, just wouldn't actually be true. Yeah, and one thing I'll say is, like, now we're getting into this contest where people try and, you know, show how liquid and near cash their cash equivalents,

that are backing their stable coins. So Paxos quite impressively is 96 cash and cash equivalents, 4% Treasury bills. USDC has a much broader asset portfolio. They've got some CDs, corporate bonds, muni bonds, some commercial paper, tether, much more commercial paper. You know, like interesting asset portfolios, you know, maybe not 100% liquid. maybe not 100% short term. So you know, you get three different schools of thought here. But I guess my point is there has to be a business model involved in issuing a stable coin.

And if you're holding it 100% cash, cash yields a negative rate right now. So there's no business model holding just cash. So, you know, for a stable coin issuance to be sustainable. from a commercial perspective, there has to be some element of net interest income effectively. And Circle, you know, they monetize their float at something like 11 bips. So it's not, you know, an exorbitant amount of income they're making. So, I mean, I'm pretty sympathetic, frankly, to Circle's asset portfolio. I think if you go, you know, maximally low risk and you just effectively custody in dollars,

you're being sort of excessively prudent, frankly. I mean, it's unlikely that you're ever going to deal with 100% redemptions. That doesn't seem like it would be likely with the USDC, for instance. So I think you can have a bit of an asset portfolio. Yeah, I agree. And certainly the market from a commercial perspective is speaking loud and clear in terms of what the preferred product experience actually is. And so you don't see a ton of adoption with the Paxon.

stable coin. You don't see a ton of adoption with the Gemini stable coin. So you're really seeing that surge on the USDC side. So Bank of New York Mellon joined a consortium of six banks backing a new crypto trading platform called Pure Digital. What do you make of this? Well, it's nice to see some more of these banks coming into the cryptocurrency side of this market. A few years ago, you would have seen a lot of consortiums, but it would have been a lot of enterprise blockchain consortium. So it's good to see some positive developments here. Banks holding spot continues to be just something that they're largely afraid to do and don't believe that they have regulatory clarity in certain fronts under the Bank Holding Act

to hold spot. So there's a lot of R&D work going on. There's a lot of people on the inside of these big banks that are trying to figure this out, and I'm sure they will. This is largely in the lab at this point, but eventually these will be big businesses. Also in bank news, J.B Morgan finally allowed their clients to buy GBC on the platform, I believe. Yeah, it was in a manner where you'd have to ask for it. So they can't be kind of actively pushing it onto their clients.

But that is a good development. I, you know, harkens back to when Jamie Diamond said that if anyone at the firm was involved in cryptocurrency, who would fire them. So a lot of people would have been fired if they did this a few years ago. How the Turntables. Tides have turned. Is that how the turn tables? How the Turn tables. Yeah, that was deliberate.

Robin Hood is paying a $30 million fine after New York State investigation into its financial compliance and cybersecurity practices. Does this have to do with their crypto trading unit? Yeah, there wasn't a ton of detail on this, but the headline did say their crypto business unit. So it looks like Robin Hood settled a bunch of stuff, you know, kind of on the eve of the S-1 filing here. So file this one under that category. That's a material fine. That's a material fine.

Yeah. Next one up is we have a private equity deal here. So Advent International, which is one of the largest private equity firms in the world, actually based in Boston, has teamed up with the Stellar Development Foundation. It looks like a stellar development foundation is, of course, the nonprofit. behind the Stellar Protocol. So there's a report this week that the two are in touch to acquire MoneyGram, which is the large money transmitter remittance company that, you know, we all know took money from Ripple.

So this is pretty fascinating. It looks like MoneyGram is on the block and Advent and Stellar have a bid here. Well, MoneyGram has been like teetering on the edge of bankruptcy for some time. and Ripple buying their equity at an enormous premium and providing them these payments effectively allowing Ripple to use Moneygram and PR kind of kept them on life support for a while but I believe that has now ceased given the SEC investigation

and now looks like Stellar has kind of decided to use the MoneyGram asset for PR purposes. Well, Stellar has a war chest over there. That development foundation is very large. And so they have the ability to do big deals. This would certainly be a big deal. And MoneyGram has distribution. So, you know, maybe the strategy here is let's buy some distribution and let's start throwing stellar through those pipes. I think I'm ready to move on from the payments tokens of yesteryear. Obviously, their hypotheses were not borne out.

The only payment-style asset that really succeeded on public blockchains with stablecoins. And the success of stable coins just, you know, I think illustrates the hollowness of this theory that people would use volatile assets as a bridge currency. It just didn't happen. And we have to acknowledge that at a certain point. When do you like we have $120 billion of stable coins out there? No one's using stellar Ripple as bridge currencies for remittances, not in a not meaningful size. I once told someone that I did not believe that Ripple would be an effective bridge currency and they got really upset at me and they asked me, well, what do you think would be better?

Like donuts or something? And I was like, no, like Fiat currency maybe. Like where did the donuts? It's just such a ridiculous thing to say to someone. I love donuts. Yeah, they're not, they're not, I don't think they're good either. Probably they're just as, they're just as good as Ripple, but they're, you know, they're pretty bad at being a bridge currency. Yeah, there was, you know, there was a good three or four years there when people really kind of believed the hype about Ripple being a bridge currency.

And sorry to say, didn't, didn't turn out to be that way. Did not happen. Well, we have another Bitcoin ETF filing. This one is from GlobalX, their large asset manager, and they are the newest one on the scene. So we'll see if we get a Bitcoin EDF. I've lost count of them. What's their sentiment on Bitcoin ETF? I feel like it fluctuates from roof to week.

This week I'm pretty down on the sun. I would say it ticked down a notch on my internal barometer. Yeah, no, it went down. Sentiment is down in the Walsh household as well. I think that, you know, the SEC is probably just going through Coin Gecko and trying to figure out what's a security right now. Probably don't have time for this Bitcoin ETF thing. It's just a lot of defy tokens to take a look at. I mean, there I was feeling good about, you know, a panel of Kathy, Elon and Jack Dorsey, you know, proclaiming their love for Bitcoin.

So I was sort of happy about that. but yeah, the rest of, yeah, the regulatory elements are definitely not good. Yeah, there needs to be another run on the fud dice. Yeah, maybe we could do V5. I don't know. I mean, is there still appetite for fud dice? Are there new fuds? For those of you who don't know what we're talking about,

you can go to on the brink. Dot shop and you can check out the fud dice. We won't explain the whole story, but you roll the dice and you get some fud. Yeah, it was, you know, it's a physical meme, basically. The Wall Street Journal had an article on yield farming, entitled Crypto Yield Farming's Chase High Returns, but risk losing it all. It had a pretty nice animated graphic.

I thought this was a really good article. The fact that yield farming was being covered in the Wall Street Journal was surprising to me. I thought this was a pretty good piece. They took a shot at Mark Cuban for, farming and getting rug pulled on his farm. Yeah. I mean, you know,

if you publicly admit to farming like total, you know, farming on low integrity farmland, and getting the rug pulled out from under you, then you're probably going to get it. If you're a billionaire, you might get ridden up in the WSJ. I don't think Mark Cuban's that worried about it.

I think he's just fine. He called for regulation afterwards, so it seemed like his feelings were hurt. But yeah, yield farming in the WSJ, who to thunk it? Well, we have yield farming in the WSJ, and then we have central bank digital currencies in the New York Times. So there is an op-ed, and they basically advocated that the U.S. should do a CBDC. They highlighted the fact that you'd be able to have frictionless interest rate policy, you'd be able to surveil for illicit transactions. So a lot of people would say those are reasons not to have a CBDC.

DC actually, but New York Times, you know, wants one. Yeah, I wasn't happy about this article. I mean, I think it was useful in the sense that it's kind of like in a James Bond movie where the villain monologues for 10 minutes tells you what their plan is. That's kind of like what this article is. They're telling us what they intend to do with the CBDC, and it's not pretty. You're going to send you money with an expiration date. Yeah, I mean, and I tweeted this, but, you know,

you know, this wasn't at my university, but a bunch of my friends went to school in Maryland, University of Maryland. And the system there was that your cafeteria account, your balance, would be liquidated to zero at the end of the quarter. That's how it worked. That's how it worked at my school. So you, yeah, you went, so you went through this. And, you know, the effect on that is it does not, it doesn't have a good effect on society. It causes like carnage as you reach the end of the quarter or whatever it is. I mean, gluttony. And, you know, it's, it's not a good model. It doesn't lead to sort of, like, you know, proportionate consumption. So this notion of adding demurrage into cash and turning

dollars into something more akin to like EBT, like food stamps where, you know, they're conditional and what you can spend them on, it's just anti-human. And adding a, you know, giving central bankers the tools to really granularly impose their experiments on us, like with negative interest rates on cash, is also horrifying. We should be giving them less power, not more. So I don't, this whole thing, you know, is deeply concerning to me. I don't know. I used to just stockpile gator rates. I thought it was fine. But I mean, the system would have an exit valve, you know, because the problem is, is like there's like capital controls in the cafeteria because you can't buy store value assets. so you can't buy gold or you can't offshore your wealth from the canteen situation.

So you have to convert it into something that's like moderately store value. Yeah, that was Gator. So I guess that was Gatorade for you as good as gold. Yeah. Stockpile that Gatorade. But yeah, it's a good point. We're going to get these central bank digital currencies. They're going to be cash with expiration dates.

There's going to be negative interest rates exerted on people. It's going to be, we're going to see how this goes. Yeah, I'm not happy about it. And one thing Elon kept talking about in his talk was all of their reserves held in Europe, we're just getting nailed by negative interest rates. So people are waking up. They don't like negative interest rates. Let me tell you.

All right. So I think that's it for the week. We'll have an episode on Monday. We haven't had as many interview podcasts, but you'll have one on Monday. Yeah, sorry, we've been remiss low these last few weeks. but we do have an episode. It's with Michelle Rocks, who is at the Cambridge Center for Alternative Finance.

We're talking about their new data release. If you're a Bitcoin Energy Wonk, you're going to love it. If you're not, you'd probably be a little mystified by it. But it's a very important episode. Well, we will see you on Monday. Everyone have a great weekend.