On The Brink with Castle Island - Weekly Roundup 09/24/21 (Regulators keep talking about Free Banking, Twitter rolls out LN support, Biden's new OCC nominee) (EP.243)

Episode Date: September 24, 2021

Nic and Matt return for another week of news and deals. In this episode:  Latest on the infrastructure bill The latest on the platinum coin Zany things that financial regulators said this week Gensler continues to misrepresent the free banking era How bad was the wildcat banking era really? Why are financial regulators so interested in free banking? The SEC and CFTC are nearing the end of their fiscal year The prospects for 'pipe to crypto' Why miners are participating in 'demand response' programs Matt's 20-year-old cereal Twitter adds lightning tips and NFT authentication Binance is under CFTC investigation Biden's new OCC nominee is anti-bank, anti-crypto FASB takes comment on GAAP treatment of digital assets Content mentioned:  George Selgin on antebellum Free Banking Sponsor notes:  This show supported by Coinbase Prime, an integrated solution that provides advanced multi-venue trading, custody, and prime services for institutions. For more information see coinbase.com/prime This episode is brought to you by Withum, a top 25 accounting firm with a cutting-edge Digital Currency and Blockchain Technology practice. To learn more, 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 to Britain's ailing economy with a new round of Concentive Easy. You print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called a Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And this episode is brought to you by Coinbase Prime and Witham. More on those companies later in the episode. This is an active week. Active week. I had a two-hour commute today. I had an hour there and an hour back.

Do people do that still? Back to the office. It's crazy. Everyone's on the road. No one wants to be taking the train. That's the problem. We need a high-speed rail network in this country. We do. We do.

That's infrastructure. That's real infrastructure. Well, why wouldn't they put that in the infrastructure bill instead of just trying to crush the crypto industry with an infrastructure bill? You can't put real infrastructure in the infrastructure bill. That wouldn't make any sense. Makes no sense. What's going on with the infrastructure bill? I feel like it's been forever since we've bitched about the infrastructure bill. It might be torpedoed by the squad, the leftist. faction in the house that thinks it doesn't go far enough in terms of, you know, expanding the size of government. So that's a funny thing. So it might not, it might not cripple the crypto industry enough. So we're going to revisit. It's quite possible, yes. So there's a power struggle

happening right now. I guess we'll see how that plays out. There's also the debate over the platinum coin minting? Have you followed this to be? Oh yeah, we're back to the trillion dollar coin. Is this Rashida Taleb's idea? Well, you know, it's an idea that a lot of folks that want to expand government spending have, which is that we might as well do away with the antiquated debt ceiling, which actually I'm sympathetic to that, but I don't think we should be, you know, pursuing some of the programs the coin enthusiasts put forth. But yeah, the coin is gaining. salience is an idea in Washington. It's tough to tell. Is this a mainstream idea at this point?

I don't think so. It would be a way to legally get around the debt ceiling apparently. Well, there's an interpretation. And a lot of people have an interest in the debt ceiling not existing. But it's a fake, you know, completely contrived thing anyway. So the mechanics are, what exactly are the mechanics? The treasury would print a trillion dollar coin, keep it somewhere and then the country would borrow against that coin. Honestly, I don't know, but I think they should make a really big coin, not a small coin. I think it has to be at least eight feet tall. I mean, yeah, because otherwise you'd just steal it.

I don't know, even an eight-foot coin. I mean, I have a pickup truck. I could probably put that in. I could steal that coin. Eight feet? Easy. But you wouldn't really be able to spend it anywhere. No, I would.

to find someone that would honor the value of the coin. I could probably issue paper currency off of that coin, though, I'm thinking. That's true. Just like in the free banking era, actually, which brings us to today's one of our topics, which is zany things that are financial policy elites said this week. So are we going to talk about Gary Gensler, just really ignoring history or at least just picking the parts that fit his narrative. He doesn't seem to have a, well, first of all, it's clear that he's not a listener of the show,

because had he been, he would have been better informed of the history of free banking in this country. I might be happy that he's not a listener. We've said some really nice things about him in the early days, particularly when he was at MIT, but I don't know if our tone hasn't been as nice to him lately. maybe. That's true. But so what he said this week is he doesn't think there's long-term viability for five or six thousand private forms of money, which is honestly fair. But he then compared the crypto market to the so-called free banking era, but long-time brinkers will

know that the U.S. version of free banking pre-Civil War was not truly free. And it wasn't a a true instantiation of free banking. Everybody knows that at this point, okay? Gary's the last guy that doesn't know that. I mean, the fact that he didn't listen to the George Selgin podcast, that he would have known all of that.

I mean, come on, just read George Seljian's corpus starting with money free and unfree. It's quite readable. Read the works of Larry White. You know, I mean, can he even,

can Gensler even compare, you know, discuss the issues with the unit banking as compared with branching. I mean, this is basic stuff right here. It's really, it's a fascinating. The level of knowledge that you have to have to run the SEC is pretty breathtaking. I mean, you need to know how payment for order flow works. You need to know how China ADRs work. There's countless broker-dealer regulations. I mean, obviously, no one person can know all this stuff, but it doesn't surprise me that there may be not as knowledgeable about the crypto industry?

Well, I think the risk of going over your skis and treading into a space where you are poorly informed increases with the scope of your perceived mandate. And in Gensler's eyes, his mandate is every financial transaction that happens in the country, including, you know, things that don't look anything like securities, like stable coins. So that's the problem is that he's interested in everything. And, you know, there's a lot of nuance there, in particular with stable coins. Yeah, there's a ton of nuance. And part of the interesting equation here, we talked about this a little bit earlier in the week on our call-in after-party, which we did, the call-in after-party show, tune in.

We're not going to do one tonight. But we talked about the fact that Gensler has a 5% increase in his budget from last year. And the scope of things he's trying to do is really really. breathtaking. So he's asking for more funding. And if he gets it, then you can be sure that there's going to be a lot more activity in a bunch of these categories. So that is the constraint on all of this is that he probably can't implement his agenda if he doesn't get more funding. So I found the quote, and I want to just, I want to cover it. So in his recent talk, he said, we've experimented historically with private forms of money.

In the U.S., those you listening might remember something called the Wildcat banking era, which honestly, very, very few banks were so-called wildcats. Seriously, read George Saldron's stuff. We'll link it in the show notes. He continues from the 1830s to 1860s, and he even has the temerity to say, sorry for the history lesson, as if he has a command of the history,

which I found ridiculous. So he then says we had banks issuing banknotes and they competed. Philadelphia banknotes were different than Baltimore banknotes. And even within Philadelphia had different banks competing the like, well, that had a lot of costs, a lot of problems and so forth. And Abraham Lincoln put in place in oversight called the control of the currency. And he also continues to say private monies usually don't last that long and suggest that we need an investor protection regime.

So there's a lot wrong with this statement. First of all, there weren't really notes trading a discount that wasn't that common. Typically, the discounts reflected the cost of transport. They didn't really reflect solvency risk. The reason the banks failed was not due to the lack of regulation, but due to the presence of regulation, as we've covered ad nauseum on here. The banks failed because they're forced to hold state treasuries and instruments that the states asked them to hold. Also, the banks were unit banks, which meant that they couldn't diversify.

They couldn't grow their geographical footprint. So they'd undiversified creditors. And if there was a bad harvest and every client of the bank was a farmer in a specific region, the bank might fail. So the unit banking, which was a specific restriction placed on the so-called free banks during the period, made them fragile. And that's why you had the high rate of bank failures. Even despite that, you had certain extremely robust systems like the Suffolk banking system in New England. It was kind of a proto clearinghouse. And now if you compare this somewhat unfree free banking system to a true free banking system, like in Scotland, like in Canada, you had, you know,

very long-lived, stable regimes with low inflation and very infrequent bank failures and few financial crises. So I just can't believe that he's lecturing us on the history, despite not clearly having read the history. It's just unbelievable. It's just reframe it in whichever direction you want. He's a talented politician. A behavior like that, he could be Treasury Secretary in two years. The incredible thing to me is that literally everyone in his camp is repeating the same talking point about the history of free banking as if they all suddenly developed an interest in 1830s through 1860s banking history.

What are the odds of that? That they're all enthusiasts of the period, but they all have the wrong talking point. Him, Warren, Lail Braynard, they keep saying the same thing. They do. I can tell it's under your skin. well yeah we just devoted the first ten minutes of our podcast to it I mean yeah they need to read our listen in our episode with with Seljan and with white just fix this listen to that'll fix it well we have a week left actually until the end

of the fiscal year for the SEC and the CFTC what do you think that means I actually wasn't aware of that but historically they do tend to leave the fireworks until the end, right? It's usually the last couple of days, there's big enforcement actions. Last year, it was Bitmex. Yeah, that was a monstrous one. I feel like we might have actually said what we, last year, we probably said something, well, we can go back and check. I think we might have said we're expecting something. I'm definitely expecting one or two things. I think, I think it's very possible that they ask Coinbase to take a very critical look at the assets they're listing. I don't think it would look anything like the BitMex action, but I think that's high on their

list of targets. I'm not going to speculate, but I think, you know, their eyes are squarely on defy some of these larger protocols and around how those protocols have raised capital. That's true. So that'll be interesting to see. Well, in happier news, Your paper that you've been working on with Ross Stevens for it feels like half a year finally came out. Bitcoin Net Zero. Congrats. Thank you.

It was half a year, at least, though we worked on it. And I'm very happy with the reception. I believe that I will be on CNBC Monday to talk about it. Some people didn't like it, which is okay. Who didn't like it? Some people thought that the model was too conservative in terms of Bitcoin's projected future energy. spend. There's a faction of Bitcoiners that think the energy spend is just going to go to the moon. Basically, it will never decline. And having run the numbers, I don't think that's likely.

I think at some point, given assumptions about fees and price and issuance, which is fixed, it is possible to develop a model which has the energy consumption peaking and then declining, actually. And, you know, that's not me insisting that the model looked like that. That's just what I think it'll look like. And so there was some debate around that. But, you know, the response was encouraging. And I was reflecting on it. And there's just been so much high quality scholarship coming out of the Bitcoin side of the house on this topic.

It's getting hard to ignore. That paper made me really bullish about Pipe to Crypto. Did you guys dig deep in that? We did investigate it for the paper. I mean, Pipe to Crypto is interesting because done right, it's effectively zero or negative emissions. Now, the question is how much scale can you achieve with Pipe to Crypto? Marty calls it bringing the market to the molecule. People have different names for it.

And there's scale difficulties, I think. maintaining extremely high uptime is probably a bit of a challenge. If you have a highly distributed set of well pads that you have co-located with gen sets, you know, it's a bit of work to actually manage all of them and, you know, keep them secure and things like that. So I don't know if it will ever, you know, be more than 20, 30% of the network. But I think it will definitely be a meaningful set, you know, a meaningful share of hash rate. And I think it will really peak the attention of some of these energy majors.

Well, even at 20, 30% of the network, that's tremendous growth from here. Yeah. I mean, the thing that I'm maybe more interested in right now, and we actually didn't really get to this in the paper, is the possibility for Bitcoin miners to act as a controllable load resource, which is not a new concept. People have been talking about it for a while, but I'm actually seeing evidence on the ground that it's happening. And that means miners which can dial down their consumption of grid resources in seconds. You compare that to an industrial load center like a smelting plant or a factory. It could take them hours and hours or days to kind of scale down their operations. And so having that real-time

responsiveness, if miners are a material share of the grid, means that the miners can react in real-time to offset other surges and demand from other grid consumers. And the miners get paid to do this. So, weirdly enough, as miners' share of some of these grids that are equipped with these demand response programs as their share grows, the grid becomes more stable and more resilient. And as you inject more renewables, specifically wind and solar into these grids, that destabilizes them. That's just the tradeoff you get with adding renewables. They're less predictable. So the miners can potentially offset that. That's one of the things I'm most interested in right now. That's fascinating. Follow up paper time. Take another six months. Dig into that one.

I'll be giving a talk about it and then I'll think about a paper. So that was exciting. And from Nidig's perspective, it's clear that this energy consumption is something that they're hearing from a lot of their clients. So it's great to see the folks at Nidig really standing up and put in the work here. Yeah, there's no question that large allocators care about this. And I think it's just a matter of equipping them with the data and the reality on the ground, which is that miners are really pushing the envelope in terms of finding, sustainable sources. There's abundant evidence. And actually, it'll be interesting. Another thing that

happens to end the quarter is the new disclosures from the Bitcoin Mining Council. And I know, you know, they got a mixed response in Q2. I think Q3 will be really interesting, though. So we'll definitely keep an eye on that. This show is brought to you by Coinbase Prime. Coinbase Prime offers trading, custody, and financing tools for institution. Trade financing includes the ability to trade from cold storage instantly, as well as margin lending and shorting. Coinbase Cusity is battle tested with dedicated on-chain addresses and industry-leading insurance. As far as trading is concerned, Coinbase Prime offers sophisticated integrating trading tools, including real-time market data, smart order routing, robust analytics, and algorithmic

execution strategies. To learn more, visit on the brink.link slash Coinbase. 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-cede 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 thebrink.

link slash witham. That's on the brink. dot link slash with them. Do you want to get into some deals of the week? Yeah, so it was a big week for deals. Dapper, which is the company behind the flow blockchain, there is 250 million at a $7.6 billion valuation around led by Co2. Huge round there. Another big one is So rare.

This is the fantasy sports platform. They have NFTs integrated into the platform. They raise $680 million in a round that was led by SoftBank. We've bunch of monster rounds this week. Block Damon, which is the blockchain node infrastructure company, they raised $155 million in a Series B with financing from SoftB, Matrix Capital, Sapphire Ventures, and Morgan Creek Digital. Next is Ripio.

This is a company based in Argentina and they're a financial services company for the crypto asset market. They raised $50 million in Series B financing from DCG, BoostVC, and Tim Draper. Then we have Metrika, which is the blockchain monitoring company. There is $14 million from Neo Tribe, Coinbase Ventures, NYCA, SCB10X, and others. Next is a big one, One River Digital Asset Management. This is a crypto asset management firm. They raised $41 million in a round from Goldman Sachs, Coinbase, and Liberty Mutual.

This is a huge week for deals, honestly. Then we have grape network. They're building developer tools. On Solana, they raised 1.2 in a round led by multi-coin. Next is Kobo. This is a crypto asset management firm, asset management, hot category this week. They raised $40 million in Series B financing from DST, A&T Capital, and IMO Ventures. Then we have Orca, which is a decentralized exchange built on Solana.

They raised $18 million from Polychain, Three Arrows, and Placeholder. Next is Kava. This is a project building in the Cosmos ecosystem. they launched a $185 million ecosystem fund. If you don't have an ecosystem fund, are you really doing anything? And then lastly, a monster raise

in the mining space from Genesis Digital, which is a Bitcoin mining company based in Iceland. They raised $431 million from Paradigm, Stone Ridge, FTCS, Electric, Skybridge, and Ribbet. That's a big one.

Yeah, the amount of capital being allocated to mining is just just enormous. I mean, it's concerning in terms of its scale. I think I would be a little concerned if I was a big investor in public miners because there's a capital cycle, as with any commodity mining space. But it's just breathtaking. The number of listings, SPACs, private raises, is huge. We need some more foundries in ASIC manufacturers, though. Well, we're probably not going to get any. If anything, the ASIC lifetimes are going to extend because there is less capacity at the foundries

and the miners are finding more creative ways to put the ASICs to work with energy resources which are commensurate to the age of the ASIC. And so this is something I discovered at a recent mining conference. There's a presentation from Compute North, which is really interesting, talking about life cycle mining, whereby at the top of the line, ASICs go to you know, more expensive and high uptime data centers, and the really old near-obsolite A6 go to the cheapest sources of energy, which are oftentimes intermittent off-grade renewables. And so the A6 cycle through these different types of energy assets as they age, so you can squeeze more juice out of them. And that's why you've S-9s, which are seven years old,

which are still operational. I think I have what is the one that I have an S4 do you really yeah from 2014 yeah 2015 maybe could I just attach that to my Peloton at this point is there any way I can get some use out of that thing it wouldn't do much for you but there are S-9s that are still active yeah the S-9 is just a great machine huh that thing is still going It's a beast. It's a beast. I think the one you have is more a collector's item now. Yeah, that's a doorstop at this point.

Maybe I should put that on my bookshelf. It would probably look better than the Wheaties that you inexplicably have up there. That's a Tom Brady Wheaties box. What are you talking about inexplicably? From when Tom Brady was 23 years old, just winning championship. Sounds a lot like Tom Brady of last year. So the Wheaties are like 15 years old plus 20 years old? Are the Wheaties 20 years old?

Yeah, that's, well, who's on that? Lawyer, yeah, that's the first year, I think. That's, um... So you've 20-year-old cereal on your bookshelf? Yeah, it's not like it's unwrapped. I mean, it's still in the thing. Could you eat it? I mean, could you eat it if you...

Yeah, if you're starving. Yeah, if you're starving to death, you could definitely eat. You think it's still good? I have flutty flakes there, too. They're unopened. I don't know. if you should be storing serials for that amount of time. I'm just waiting for the cycle to come around when that's worth like a million dollars.

All these things come in cycles, you know? I think NFTs have warped your concept of collecting things. I was on to collecting things well before NFTs. That's true. Well before. Yeah. I'm surprised that you weren't, you didn't end up being some kind of NFT whale on account of your collector's impulse. I mean, I was too busy investing in infrastructure companies.

Waste of time. Missed out in a big way. Well, we had some big news this week from the Treasury Department. They've labeled a Russian crypto exchange suex.io. I've actually never heard of this exchange, but they've been designated with this SDN, specially designated national tag, which puts them on the band list. So no one in the United States can send money to this venue. And apparently this has been an exchange that's been a hotbed of illegal activity for ransomware money laundering.

Was this a known operator? I'd never even heard of this thing. I hadn't heard of it either. But I'm guessing you don't want to be specially designated by the Treasury at any point. It doesn't sound like a good thing. No, it's a bad thing. I think there's a PDF that has all of the people that are SDNs and doesn't look like a friendly list. It's not like a cocktail party list of people.

So in happier news, Twitter did two pretty interesting things today, actually. First of all, they added tipping via lightning. I turned it on for me, so feel free to, you know, no one's tipped me yet. I don't understand what's going on. No one sent me a tip yet. So it's frictionless, you know, you can do it instantly, global settlement. So that's an option. they also added or will add NFT authentication, which is a genius move because people were

already using NFTs as their AVIs, but of course, you know, it took a bit of work to verify that, you know, you truly own the punk or whatever and they're going to presumably make it such that, you know, you get a little checkmark on your NFT or your somehow profile links to the NFT. Either way, they're going to allow you to prove ownership of the NFT to third parties, which is totally in line with the way people were already using them. So two pretty great product decisions from Twitter. That's really cool. So how does the tipping work? So you link up an external account? You have to use strike, I believe. You may, it may work with other lightning services, but yeah, you can, it's iOS only, and I think it's mobile only, but yes,

feel free to shoot me some sets. Well, and now I can, I was always worried that someone would take a, you know, copy of my Wicked A Bone Club NFT. Now I can authenticate that I, in fact, own that. Well, I mean, it can still be stolen from you, or you mean, you thought someone would plagiarize it and right click and save the image and then. Use your and then use mine. Yeah. But treasured.

Now they can't. Ape. Right. I don't know if you were ever at risk of that, but it does, honestly, I think it closes a really important loop. So, because people were using NFTs to demonstrate status. And this is a way to actually cryptographically prove that you do own the thing. I mean, is Twitter going to make money on any of these great ideas? That's the question.

The tipping is zero fee. So. absolutely not it's a perplexing business in the sense that it adds so much value to the world and it doesn't capture a lot of it I think it captures a fair amount

I mean it's a big company it's not as big as you know some of the other web 2.0 monoliths its market gap is 53 billion yeah what's the market cap of Facebook much much larger but

Twitter is unique that's what's what's so great about Twitter. Wouldn't you rather found a company that creates a lot of value and captures very little of it? I mean, that's kind of the goal. I mean, he's done a great job with that company. I think he's done a remarkable job.

There's also a lot of issues, so it's got to be a stressful job. Yeah, I don't envy Jack. In other news, Binance is apparently being investigated, for insider trading and market manipulation by the CFTC. Oh, well, this could be one of the fiscal year ends next week type of conversations, but that's never something you want to get investigated by, for, bye.

Yeah, and there's a lot of exchange news. FtX has established subsidiaries in Gibraltar and the Bahamas. I would probably take the Bahamas post. If I was putting my hand up, working for FTC, I'll take the lead there. But then you're kind of like an exile. Like I don't know if you'd really want to live there. In the Bahamas. Yeah.

They're just in and out. In further exchange regulatory news, Coinbase is apparently going to sell blockchain analytics software to DHS. Yeah, so this was pretty controversial this week. A lot of people didn't like that. Well, they have not historically shied away from doing this kind of thing. I think it's probably an attempt to just win brownie points with the government. I mean, is that not the explanation here?

Or do you think they need the money? No, I think they have that business unit, right? They bought the analytics startup. That was pretty controversial a couple years ago. Hacking team. Yeah, the hacking team startup. And so this is them, you know, basically competing with chain analysis and TRM on this category, I think. It's very de minimis revenue right now, which I think, you know, raised eyebrows.

because it's a lot of exposure from a reputation perspective and not that much revenue. Yeah, it was somewhat overshadowed by two other stories at a Coinbase. So they launched Coinbase Prime, which is excellent. This institutional team over there is doing a great job with that product. So they officially launched that this week. And they also announced that they're not going to launch Coinbase lend, which, you know, I guess you can understand that they don't want to go. to war here with the SEC, but there are a lot of people in the industry that were hoping that

Coinbase would go fight that battle, you know, given how well capitalized they are. So last Friday, towards the end of the day, they came out with a blog post saying that they're going to step down from that. Too bad. Yeah, it was disappointing. I think a lot of people were hoping they would be kind of the ablative shield and go to war on that, but I suppose they decided it wasn't worth the cost. But yes, congrats on launching Coinbase. Miss Prime. They also do happen to sponsor their show. They do, but we do use the product. Yeah. Independently of that, Washington is concerned about stable coins, as they always are. They're really, they're very concerned about stable coins. I think this all amounts to how are these

things going to be regulated? And, you know, are these things securities? Do you look at these things through the lens of money market mutual funds? Should they be regulated like those? Should they be regulated where only banks can actually, you know, issue stable coins? There's a lot of big questions on the horizon here. Well, the money market mutual fund concept is sort of a relevant analogy, but it's also not. So stable coins, I don't believe there's a single stable coin with a capitalization over a billion that pays interest. The business model is that the issuers of the stable coins collect. the interest on the deposits, which they deploy into, you know, treasuries and in some cases

commercial paper, and they keep it for themselves. They do not pay it out to note holders, which is similar to the way that it worked with the free banks, actually. In certain unusual circumstances, free banks did attach interest to the notes when they had to suspend convertibility during periods of distress. But stable, coins like free bank notes don't pay interest. A money market mutual fund in theory has a yield. It is probably negative for most maturities in real terms, but it has a yield. So that is obviously a security because there's an expectation of profit, although again, it's not much of a return in today's environment. Stable coins don't pass on that yield or return to the holders of the

notes. In fact, that's kind of the whole business model. So if there's no expectation of profit, I just don't see how are you applying. I know there's the other test, what is it, the Reeves test? The Reeves test. I believe there's also a notion of earning of return or profit. That's more with a debt instrument. I also, I don't see stable coins as giving you a financial return. they are just tracking the performance of the dollar. And so I think the stable coins or securities concept is incredibly troubled and unlikely to win in court. Well, it'll have to be taken to court if it goes that direction. So someone will have to fight that battle.

It looks like a number of these stable coin issuers are leaning into the idea of being banks, though. So that's something that may be a defensive measure, but it looks like that's where the wind is belonging. So we're going to need a new type of charter though to because stablecoins are not banks in the traditional sense. They're not really doing maturity transformation. They typically just hold high quality liquid assets on a one-to-one basis with banks, you know, they have varying degree of maturities. And so, you know, it's a kind of a different business. So you would hope that the OCC would create some sort of charter or the states would, which reflects the nature of the stablecoin activity. But the OCC is going in a curious direction.

Well, there's a new head of the OCC or soon to be. Well, not yet. Not yet. Yeah. So actually, she's very contentious, so she might not actually get it. But she's likely to be nominated. Salé, S-A-U-L-E-O-Merova. She, if you want to get a sense of her views on things, she has written a lot of papers, 35, at least. And I would recommend reading some of them. Her general stance is anti-Big Bank, pro-expanding government power, pro using financial regulation to shape society. So a highly interventionist approach, which is basically the opposite of how Brian Brooks was when he helmed the OCC. We'll see how that one goes on.

So the Senate could potentially stall or block the nomination. So that's one thing to keep in mind. This is turning into all regulatory all the time, but there was a DC Digital Chamber of Commerce comment letter to FASB. this week that we attach our signature to as well, just seeking some clarity under, I guess, really just improving the gap accounting treatment for digital assets was what this amounted to. Yeah, this is a very important concept, which is pretty esoteric, but I think we've talked about it on the show a number of times that digital assets are treated as intangibles. It might even be a subcategory of intangibles.

So you can never really mark them to market when they're held on your balance. cheat as a corporate, you can only mark them down. And so they're in the same category as weird stuff like Goodwill, I think. Yes. And it doesn't make sense. They should be treated as commodities. I mean, you know, the way they're accounted for implies that there's not an ability to price them, you know, and price them at a fair value. But of course, there is. I mean, it's one of, you know, crypto is an incredibly liquid market with 24-7 pricing. So this is one of, you know, One of Michael Saylor's pet causes, he talks about it a lot. He believes it's a disincentive for corporates to hold it because if you're doing gap accounting,

you can never really recognize a gain on digital assets held. And that doesn't mean that equity analysts can't, you know, do non-gap accounting and understand the nature of your balance sheet, but it's just an accounting headache and it's unnecessary. Yeah, it doesn't make any sense. I mean, you can price these things 24-7 in an IOSCO compliant reference rate framework. So why can't you just, you know, go with that? Yeah, so we submitted, well, we were part of the letter, I guess, that was submitted.

Is there still time to submit letters, or has the window closed? I don't know. Either way. Hopefully, the authorities take this into account and make a change here because it really is egregious. I think that's all we have for the week. What's up for next week? I think we're going to be all the NFTs all the time next week. We're going to run Christian from Evaluate Market on Monday, talking about NFTs.

They have a data and analytics business that is at the forefront of this technology. Maybe we'll get some more NFT announcements next week. We will see, hopefully not as sour from the regulatory environment. Maybe things will be sunnier next week. Well, it's the last week of the fiscal year. so don't bank on it. All right, everyone, have a safe and healthy weekend, and we will see you next week.