On The Brink with Castle Island - Weekly Roundup 11/08/24 (Trump wins, crypto candidates win, Election implications) (EP.573)

Episode Date: November 8, 2024

Nic and Matt are back with more news and deals. In this episode: Trump resoundingly wins the election A demographic realignment Polymarket versus the polls Podcasts and twitter versus the legacy media How did the pro-crypto candidates do? Trump promises to fire Gensler on day 1 How did the Fairshake PAC do? Review of key Senate races Will Trump execute on his crypto promises? Moreno defeats Brown in Ohio Will OCP2.0 finally end? What's the deal with Trump's Bitcoin reserve? How would the SEC change token issuance rules? How will Trump's election affect DeFi and cashflowing tokens? Why Tether is a big winner from the election Sponsor notes: Coin Metrics, Crypto Market & Polymarket Dynamics Heading Into Elections: In Coin Metrics' State of the Network issue 284, we analyze Bitcoin's (BTC) historical performance around prior elections and examine Polymarket data driven by 2024 elections.

Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guest 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, IG $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more to Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars, and all of a sudden, people start to worry. So out of this worry, we have something called the Bitcoin. Welcome to On the Brink. I'm Matt Walsh.

And I'm Nick Carter. And this episode is brought to you by Coin Metrics, and here is the Metrix Minute. For today's Metrics Minute, we're looking at an update on crypto markets around the election. Bitcoin hit an all-time high of 76-497 on November 6th, as Trump was declared the winner. Hourly Bitcoin volumes surged to $5.1 billion on election night. That's 10 times the typical hourly average. The AP called the election for Trump at 5.34 a.m. Eastern on the 6th. By which time his odds on Polymarket had held at 90% for over six hours.

Leading up to the elections, polymarket volumes peaked at from 1 to 4 a.m. Eastern, though some volume did spike during U.S. hours in response to key developments. Over the lifetime of the election market on polymarket, the average trade side was 976 for Trump yes compared to 276 for Camel Yes. It's an interesting one. more on polymarket in the coin metrics stated market that's your metrics minute yeah go over and read

that state of the market that's good they have a chart on the polymarket one minute probability on election day mapped against the bitcoin price for every minute mapped against the bitcoin one hour spot volume it's wild how fast these markets were moving yeah there's a lot to say about polymarket I mean, I was trying to do in my head the biggest winners from the election. I was thinking Elon, Tether, crypto in general, and Polymarket. Polymarket. I mean, props to Polymarket, just number one, from an infrastructure perspective. So if you work on the infrastructure team at Polymarket, great job.

I cannot believe that they stayed up. That API was getting smashed. It was stable. It was refreshing fast. I mean, it's incredibly impressive. So I was watching the election while I was down in my living room and my wife had the election on and I had the Polymarket parsec feed up. Yeah.

You know, the charting. And I was like, why am I watching TV right now? I'm getting the information 25 minutes earlier on Polymarket. I haven't like looked at the final data now, but I think I'm pretty sure the polymarket pre-election forecast on a state-by-state basis was 100% correct. Is that right? 100%. Even though Trump was only at 60% pre-election, if you just went with the liens, what the trader said on a per state basis, that was the final electoral map. Called it, basically. Nate Silver thought it was a coin flip.

That was tough. 80,000 simulations and decided it was exactly 50-50. Special no thanks to Nate Silver. I mean, this is a total vindication of prediction markets, a complete vindication. And this French whale, Theo. my gosh, this guy crushed it. And then did you see that they just outlawed polymarket in France?

So the thing is about our Theo, everybody thought Theo was an idiot. They're like, oh, he's this rich French guy, he's got too much money, loves Trump. He was doing his own polls. He was commissioning his own polls using the neighbor method. I mean, this is next level stuff.

Shout out Theo, if you're listening. I mean, this is the definition of alpha, like informed flow, right? So everybody thought, oh, this is whale. He's manipulating the market. It turns out he had a better insight into the real on the ground data than everybody else. And he priced that in. This is how market should work.

So for those living under a rock, I guess, a French guy on Polly Market put on, what was it, $40 million bet on trial? Yeah, 40. And, you know, so he won 40, I think. Yeah. I forget where exactly put it. But he commissioned his own polling. So he hired one of these pollsters and he said, I want to do the neighbor methods.

I want you to ask people, what do you think your neighbor is voting? Yeah, and this is a way to get around the shy Tory effect, which is, again, reared its head this election. I mean, magnificently so.

Like, the pollsters were getting wildly off in terms of Republican voting propensity. And so the idea is that if you're nervous, for whatever reason, of telling a pollster how you intend to vote, you're less nervous about talking about your neighbor.

So in theory, you get around this shy Tory effect. It makes all the sense in the world. And so this guy was an informed voter. And now I guess he's got to move out of France because he can't use polymarket anymore. I mean, thinking about the tax bill, too. He's even going to have a euro to his name after this. He's going to have to move to a tax haven. Yeah.

Just wild. It's like one of those guys that, you know, plays blackjack so well, he gets banned. from the casino. Yeah, but he's not going to get banned from Polymarket. No, he'll be in Dubai betting on the next one. Yeah, that's right. Well, we have a ton of election

stuff to talk about. We're recording this one late, by the way. Yeah, almost didn't make it. But what a week it's been, Matt? What a week it's been? I feel, I know there's a lot of people that are upset about this election, and we keep it in our lane talking

about impact on the crypto industry. But I actually feel physically like someone took their shoe off of my neck. Yeah. You're actually not the first person that's told me that this week. I was having heart palpitations for the past three or four weeks. This could have gone really bad for crypto. And we are about to see, I think, the golden era of this industry. I think people are massively underestimating how this is about to change. Yeah, it really was binary. It's unfortunate that it was. It didn't have to be that way, but it was.

It was sink or swim, and we're swimming, you know. For crypto, for crypto, it couldn't have gone better, could not have gone better. The world is about to change, and we'll kind of get into all that. But what a week. I mean, how late did you stay up on election night? Until 3 a.m. I think I got my worst aura readiness score ever the next morning. Yeah, it was similar. I think I was like 3 or 3.30. Pop right awake, though. But you know, the thing is, like, Polly Market kind of called it by like midnight, I want to say.

I know, but we were texting back and forth and saying, I mean, you were more confident than I was. I was just ready for the ultimate rugpole. That would have just been the worst. Well, yeah, because we were getting seasoned for this, what was it, the red mirage? that was what they're saying because that is what happened in 2020 yeah it was like 2 a.m. it all dumped right yeah some you know questionable ballots were discovered in the middle of the night so everybody had PTSD from that they're like oh no

new ballots who you found in the middle of the night no man I mean this election it couldn't have been more comprehensive or repudiation frankly of the I guess the old Democratic coalition like this is I believe it was a realigning election. Totally. Totally realigning election.

I mean, these parties look nothing like they did in the age of George W. Bush or even Obama. Yeah. People on either side of these things, it's completely realigned. The history books will be talking about this for hundreds of years. I totally agree. And you remember in AP history, you know, you'd talk about like these, there were like three or four big realigning elections in U.S. history.

This was one of them. This is the one where Latinos. They didn't break fully for Trump, but basically the Latino constituency is no longer a safe Democratic constituency. The Republicans are now the party of the working class. That's a real thing that happened. It's completely flipped. And anti-war. Yeah, that's right.

You have major, you have like Liz Cheney switching sides, RFK, Tulsi Gabbard switching sides, even formally safe constituencies like black voters. black men or that advantage is having way for the Democrats. I mean, the whole electoral mass has changed completely. I mean, great time to be a podcaster like us. Because the media landscape has completely changed. It turns out that Joe Rogan is one of the most powerful people in the United States. I know that we haven't even talked about that.

I mean, Trump, his content strategy was informed by Barron. Is that right? But yeah, yeah, this was talked about a bit. So Trump got one of his 27-year-old staffers. He's just like, hey, how do we reach, like, the young men of this country, you know, the ones that don't read, you know, the New York Times? He's like, well, you should go on, like, Theo Vaughn and the Nelk boys and whatever, impulsive. And then Trump's like, okay, okay.

But, like, running by Barron first. And so Barron picks out, or at least approves, handpicks the podcasts for Trump to go on. Bussing with the boys. Nelk boys, Rogan, Tucker, yeah, freaking Theo Vaughn. And, I mean, that worked, right? Like young men came out for Trump. I mean, the podcast format is so great because on a lot of these, it's just free-form conversation.

You know, it's hard to not come across your true self if you're sitting down with someone for three hours talking about anything that the podcast host asks you. Yeah, it's humanizing. I mean, look at the reaction to J.D. Vance. after he did Joe Rogan. Yeah. You know, like we hadn't really been introduced to J.D. Vance fully.

And he just came off across as a completely ordinary guy. Totally. Vivek was really ahead of his time on this. He came on our podcast. What was that? Like a little bit over a year ago. That's right. One of the one of the trendsetters came on on the brink.

Did great. Shout of the big. But I do think that is a, that is part of the new paradigm of being a politician now is you have to go on these podcasts. That's how people consume information these days. The Rogan views are astronomical on that podcast. I know.

I mean, it's the new informational stack. It's Twitter. It's podcasts and it's prediction markets. That's the information stack. And out is the pundits, the polls, TV. That's out. And this is the election that definitively proved it to people. I flipped over to ABC at one point

Probably like two o'clock in the morning that night And the host was talking about You know I guess you have to go on these podcasts now And he's kind of rattling them off as if he's never heard of them It's like those things do way more views than ABC these days Like yeah Like not even close I thought it was funny

If people on the left are saying well We gotta get her own Joe Rogan It's like guys Joe Rogan used to be He's a Bernie supporter Yeah he was very much a leftist it's just that he got disillusioned from the party. I mean, he's not even like a hardcore conservative at all. Like he tries to be pretty nonpartisan.

It's like you had him. You had Joe. God. Incredible. All right. Let's rattle through some deals and then we'll talk about the impact of the election on crypto. Speaking of a podcast, I sat down with Hadley Stern, chief commercial officer at Marinate Finance.

That was a fun one. So Hadley was the original head of Fidelity Digital Assets. also was a lead of B&Y Mellon's efforts in the crypto space. So this was a really fun episode. I've been friends with Hadley since 2014 and had never had him on the podcast. So that was 10 years in the making. Fidelity Mafia. When is the information going to do an article on the Fidelity Mafia

and what they all got up to? Yeah, I don't know. I don't know. There's a lot of people in the Fidelity Orbit who have gone on to do great things in Crypto. That's right. Well, on the news front, or deals, not that many this week. I guess they didn't want to compete with the election for their announcement. We have usual labs. They're a stable coin developer. There is 1.5 million from comfy capital, breed, VC, and Echo. Then it's Napcha AI. This is a crypto AI platform that raised $6 million from arch capital, cyber fund, and seed club. Then you have VLA, a data infrastructure company. There is 10 million from Block Tower and Credo.

Open Origins is a media authentication platform. They raised 4.5 million from Galaxy Interactive. Then we have Game Beast, a Web 3 gaming company. There raised 2 million from Tido Capital, a T-Fund and others. Great name there, Game Beast. Next one up is Phylac Security. This is an open source security protocol. They raised $4.5 million from nascent, figment, robot ventures, bankless, and breed VC.

Shout out to Odysseus and the team there. And lastly, we have Cytonic, a layer one blockchain. There is $8.3 million from Lennes, Cap, Lattis, and others. All right. So let's talk about this election and specifically the impact on crypto. I don't even know where to start here. But why don't we just start with the pro-crypto candidates? You know, this Congress has not to mention the presidency,

has all of a sudden turned very, very pro-crypto. Yeah. I mean, so it looks like the Republicans are taking the house. they're going to have the Senate 53 to 47 looks like obviously Trump will be the president and SCOTUS is

6-3 conservative majority and likely Trump will replace two judges who will retire during his term meaning it'll be younger 6-3 so the Republicans control every branch government and they're generally pretty pro-crypto

including Trump who's promised to be the Bitcoin president so as far as crypto is concerned couldn't be better. So let's talk about specifically here. Sherrod Brown, the head of the Senate Banking Committee, was defeated in Ohio. So he's been a senator for a very long time.

He is public enemy probably number two or three in the crypto space. So he is a real bad faith actor when it comes to crypto policy. Does not allow anything to come before Senate banking has been a constant thorn in the side. Obviously, Senate banking has oversight of the SEC. So he's just let the SEC run completely amok for years. And so this was a huge, huge win to see Bernie Moreno come out and win. Bernie Moreno, by the way, founded a blockchain company. Yeah, that's right.

Car titles on chain. Car titles on chain. So it's a guy who actually understands the industry. But some of this legislation that has been proposed over the past few years that has made it through the House, the only reason it hasn't gone anywhere in the Senate is because Sherrod Brown is tied at the hip with a lot. Elizabeth Warren, just two real bad faith actors that are not willing to entertain anything when it comes to this industry that have fabricated stories about crypto only being useful for

terrorist financing. They put out the false statement about Hamas. If you go on Stand With Crypto, you can see the, you know, I think it's like 45 discrete statements that are factually inaccurate about crypto that have come out of Sherrod Brown's, you know, mouth. So, you know, now he's going to probably go work at better markets. I call them Bitter Muppets. Bitter Muppets. So this is a remarkable, remarkable election. This is crazy.

This was my number one focus in the Senate. We won. I mean, but it's crazy because Moreno was down good 10, 15 points for almost the entire time. In the polls, he only flipped Brown in mid-office. October and even then it was a total deadlock. It's very, very close. It was within the margin of error. And then on election night, he wins 50 to 46. Incredible. Massive outperformance and against, you know, Moreno relatively unknown against one of the most long tenured senators, very senior long tenor. And the incumbency bias, especially in the Senate, is very high. Like incumbents just get reelected. It's what they do. So it's an incredible outcome for him. And in this race, you know, people debate the effect to which crypto had on the election.

In this race, crypto might have swung it. It might have been the difference, actually. Yeah. So you have to call out Fair Shake here and just say, phenomenal job. So Fair Shake is the crypto political action committee. They put an awful lot of capital into the space. And a lot of just crypto people in general donated to Bernie Marino. And this is a situation where,

it was existential, I would say. If Bernie Moreno was the head of Senate banking for the next four years, no market structure reform would have happened in the crypto space. You would not get a stable coin bill. You'd not get a market structure bill. He voted against Sab 121 being repealed. So everything that would protect consumers in this industry and actually allow entrepreneurs to build their companies in the United States, Sherrod Brown was against. And so the crypto industry played a great game. This is a situation where you have to play the game that's on the field, and that's what the crypto industry did.

Yeah. So we might have been more to say about Fairshake in a little bit here, but on the Ohio front, I'm going to give them a lot of credit. We did it, Joe, we did it. Montana, she-he-tester. She-he takes it over-Tester. I believe Shihi was also a recipient of, was he a recipient of fair shake? No, he wasn't.

So there's no fair shake money in that race. Yeah, there were crypto people that were donating to Shihi for sure, but that was not a fair shake race. The fact that Montana was so close is shocking to me. I thought it was like a deep red state. Well, Tester has been pretty moderate on a lot of issues, not crypto. But Tester was really high on the list of. antagonist to the industry has just repeatedly been saying that Bitcoin is only useful for fraud. This whole industry is a joke, that type of thing.

See you later, buddy. So Pennsylvania Senate has not been called. That's between McCormick and Casey. McCormick is standing with Crypto gives him a rating. Casey gets a C. It looks like it's going to go McCormick's way. But we don't know for sure. I mean, it's almost Friday here as we're recording.

this how have we not counted these things yeah i mean i'm in the great state of florida where we actually counted it like ahead of time i don't know or like back we went backwards in time we counted so fast like everything was counted by like six p i'm here yeah i don't understand other states can't count it for weeks like what's going on what is going on this is a situation that technology would be really useful to use i i don't who's counting these things Where is it like a three-hour shift where you just have someone like who's in kindergarten trying to count these things? I don't understand it. Arizona,

Carrie Lake, I mean, not to like get too much into like a political pundit podcast, but she has to be one of the least talented politicians active on the circuit today. I mean, the amount of support she's received from the Republican Party and she's squandered it. Absolutely squandered it. So anyway,

she lost to, Ruben Gallego, but the Democrat, who is also very supportive of crypto, so that's okay for us. Yeah, and I guess that dovetails into Fairshake. So Fairshake, as far as I can tell, was active in three races here. And so you had

Moreno who won. They actually gave to the Democrat in Arizona, Gallego, and so he won. And then they gave to Slotkin in Michigan who beat Rogers. And Rogers is very pro-crypto. So that was controversial. Like there was a lot of people in the

space that looked at that and said, look, why are you actively going against two pro-crypto people here in Kerry Lake and Rogers? And I don't know the reason, but I'd have to imagine that the reason must be, hey, we need friends on both sides of the aisle, right? That's kind of the gist of it. Yeah, I guess the analysis is like, well, we can be more impactful if we're seen as pro-crypto and somewhat nonpartisan, we can raise more capital and influence DC for over the long term.

Yeah. If we're able to do that. So I get it, but, you know, it's not like the Republican opponents in these races were anti-Crypto. Like, that would have been easier to countenance. But both Cary Lake and Rogers were strongly pro-Crypto. Stammer Crypto gave them A ratings. And by the way, they lost by extremely thin margins.

Carrie lost by 50,000. Rogers lost by 30,000. I mean, these are tight races. Close, close races. Yeah, I mean, that really probably did make the difference then. Yeah. The other one, Nevada Senate was very close as well. Sam Brown lost to Jackie Rosen.

They both got A ratings from Stand With Crypto. I mean, looking at the Stand With Crypto website, not a lot to complain about, to be honest. Now to a lot of winners with A ratings. So let's move over to the presidential. So obviously Trump is very pro-crypto. He's come out with a lot of, he's said a lot of things. And now we're about to find out if he does them.

And let's just tackle them. So Ross Albrecht being pardoned on day one, what do you think? I mean, he's got to do it. There's no way he can't do it. I think he'll do it. It was a very specific commitment that he made. He absolutely has to do that. If he doesn't, he's just going to cause such chaos.

So I think that happens. And that was a key tenet to the libertarian convention. So that's a bigger issue than just crypto, really. I mean, there's a number of things that he promised. He promised to end the sort of like Democrat Biden crackdown on crypto. He wasn't that specific about it. He said Operation Show 0.2.0. He did say that.

So I mean, I'm assuming that ends. Well, that is very tangible. How would you end that? You would put in a new head of the OCC and you would say, you cannot arbitrarily go to banks and tell them that they have to have 15% deposit caps in the crypto industry. So you need to have fair access to banking. He's actually done this before. Yeah, he did pass the fair access rule.

Broksted. I mean, there's a lot of ways mechanically you could do this. You could pass a law. Like the Safer Banking Act actually is, I think it's Chuck Schumer sponsored bill. That one was meant to protect cannabis companies banking. But you could do piece of legislation. You could just tell the Fed and the FDIC and the OCC to knock it off. You just do that.

You just put new people there, right? Yeah, I mean, you know, replace Gensler. I don't know who the specific person at the Fed would be, but you'd probably find out. Replace Grunberg at the FDIC. I mean, he's got to go. Yeah, he's gone. I don't understand how he's still in office. Replace Sue at the OCC.

It probably solves itself. It solves itself, but you want something that's enduring. So you don't want to be fighting this battle four years from now if there's someone else in office who's hostile to crypto. So you want this in a statutory manner. It would be great to actually pass laws as opposed to impose a lot of this through executive decision-making. I agree.

I agree. And we need to show, I don't know, say we. The right needs to show the left that they are above this, that they're not going to just weaponize the banks against leftists. causes, you know, because nobody wants that. Because then it's just like this endless back and forth of using the banks against your enemies. Let's end that cycle, okay?

Yeah. Pass a law saying the banks have to be nonpartisan. The government can't pressure the banks into redlining certain industries. Pass a law. Because, yeah, otherwise, you know, you might have the next Republican going after abortion clinics or going after universities or non-profits via the banks. Forget it. Let's just pass along and end this weaponization.

So we talk about the banks, and I think people outside of this industry have no idea how big of a deal this is. Because I would say in terms of time spent with our portfolio companies, this might be the number one issue. It's like, how can I maintain my bank account or get a new bank account? We are constantly being confronted with this. So to imagine a world where as a startup, you can just go get a bank account, like you can do in every other industry. and you don't have to go through a like a five-month process to get a no. This is just going to promote so much more capital formation. You're going to see companies get started here because it's just easier to start a company.

Yeah. It's a huge deal. So other things, I think so OCP2O, I think that's dead. We'll see what happens there. He promised to fire against her on day one. I don't know if he can do that. what's the verdict on that? Well, I think what would happen here is on day one,

he would make Mark Uweta or Hester Purse acting head of the SEC, acting chairperson of the SEC. And at that point, Gensler gets demoted to a commissioner. My guess is Gensler's gone anyway. I mean, people were, some people were saying he was actually over, he was in Boston this week.

I wonder if he was taking some potential job interviews or something. Got to be big law. It could be a bank in Boston that's trying to do custody that doesn't know what they're doing. But who knows? And so I think he probably just steps away. So I don't know if it's technically fired, but I think he probably is gone. I can't imagine he would want to stick around as just a lowly commissioner when he's been the chair. So I think that happens.

He said that he would create a Bitcoin and Crypto Presidential Advisory Council. if you're listening, Trump, please put me on the council. Thank you. I'd like to be on the council. I mean, that's an easy one, right? That probably gets done next week. That can't be hard. He has said he will hold all of the Bitcoin that the U.S. has seized from financial criminals. Will the government have any Bitcoin by the time Trump assumes office? What do we know? Oh, can you imagine? So I have a suspicion that the U.S. government has been selling Bitcoin pretty aggressively here. I'd love to, I guess we'll find out, but I think they've been dumping it.

And obviously there's some that they can't get rid of because it belongs to Bitfenex, I believe. So they probably have to give that back. But I believe that would be a very easy campaign promise to keep. Yeah. We're not going to sell the rest of it. So not selling it is easy. Now, whether they are going to acquire it is a completely different question.

That is also something that he said. It's unclear. I think it's unclear. It's unclear if you promised it. I mean, so. I think he said in his speech that he will keep all the Bitcoin. He also said he would keep all the Bitcoin that the US acquires in the future, but he didn't say how they would acquire it.

Okay. Well, this is not on my list of things that I need him to do. No. If he wants to do that, that's fine. The thing is, like, all we need is the boot taken off our neck, and we just need to be able to do business. You just want to play by the same rules. Like, you don't need to go pump our bags that much. That's it.

So, legislatively, I don't know if Trump promised any legislation. He basically said that they would do a lot within the first hundred days. I think what we would want would be stable coin bill and market structure, without a doubt. Yeah, stable coin market structure and get rid of sex. 121. So let's talk about what actually happens here at the SEC. So my guess is that the first wave of impact here to the crypto industry is going to be via no action letters. So new head of the SEC comes in. There's some rumors that Dan Gallagher is a potential pick there. He's the chief compliance and chief legal officer at Robin Hood. There's been some other names bandied about.

But my guess is that you have an acting commissioner. That acting commissioner probably gives Coinbase crack in DRW, gives all of these firms that have been entangled with the SEC, some sort of no action, exemptive relief to operate their businesses until you get some law. That would be an enormous deal. It's hard to understate how big of an impact that would have on the space to just free up all of the market participants.

They're acting in good faith. It's not like they're defrauding anyone. They're just being charged with having tokens on their platform that could be securities. It's unclear if they are. So just let them operate, spending less legal fees. Like this would really move the needle. Then that would also theoretically,

I guess you could start to do that with protocols. So you could give Solana a no action letter. I don't even know who you give it to at this point. But, you know, you could start to just give exemptive relief. And the impact on the market there would be, it's really hard to quantify how big of a deal that would be. It would be a huge deal. And I think you do that for a little while as you were in parallel working towards sensible legislation. So something like a market structure bill.

So I guess the question is, if you wanted to create a disclosure regime around tokens and start as the SEC, start to treat them a bit more like or pseudo equity and codify them and allow for some means of token issuance that is compliant. Do you need legislation for that? Or can you just write some new rules? No, I think you could write new rules. And that's probably what the SEC should have done, even dating back to like the Clayton era. And maybe it was a little bit too soon to get into it. But as the SEC, you have pretty broad, exemptive relief.

So you could be putting out no action letters and you could, parallel be writing rules and you could be soliciting feedback through comment periods and things like that. So now does that hold up over time? I guess that's the question. Right. So if you automatically like flip back to a world where Gensler comes back in four years and just could he tear him up, I guess that's more of a legal question. Yeah. So I mean, we may not be a matter of waiting for Congress. But this Congress will be empowered to act. I mean, it will be a fully fully were hardly being controlled for at least two years. I would be shocked if there's no crypto legislation. You need to get the legislation because it's just too big of an industry and there's too many unknowns.

So this is, I sound very bullish on this podcast because I am very bullish. This is a market that has almost no banks or broker dealers doing anything despite the fact that a lot of them have like 100 people internally that have built out scaled up operations to be able to hold, trade, do things with digital assets, it's all about to change. A bunch of these guys are going to get no action letters. They're all going to be pushing to be in the space. I mean, they're all lobbying hard. All the big custody players that actually know what they're doing want to custody these Bitcoin ETFs. So we're about to live in a world where all of these players come into this market. What do you think that looks like? Think about the total addressable market of crypto in the

United States. It's going to like 5x here over the next year. Personally, I'm excited. for U.S. banks to deal with stable coins. I think that's great. I mean, that's going to really make stable coins far more efficient and connected to the financial system. So that's what I'm looking for too. How about the impact on defy and cash flow generating tokens? Yeah.

So, I mean, I've been making this case for a while. I think fundamentally valued tokens, tokens that have cash flows associated with them, or implicit cash flows will catch a bid here. I think that sector actually did do very well yesterday and today. So I think that's already kind of coming true because the theory being that you don't have this paradox anymore as a token issuer where you're trying to strip out the things that make a token good in order to make it not look like a security.

So now you can, in theory, you'll be able to embed those cash flows into the token, through whatever mechanic it is, give the holders the token real governance rights, and not be taken out buying the woodshed and shot by the SEC. So we can finally do equity-like tokens. Pseudo-equity is what I call them. I think the sector is going to do well. Defi's had a tough couple years without a doubt,

and I think it'll do well. I think it sucks the energy out of meme coins. I don't know people don't like it when I say that, but I think it's true. I don't know. You think that competes for the same use case? it I just think there's like a

you know there's a finite amount of capital in the world and whatever is the meta is the meta and something's not the meta it's not the meta so yeah yeah I mean we'll see we'll see what happens I couldn't be more bullish I think as far as crypto is concerned

it's like impossibly bullish like I can hardly wrap my head around it to be honest yeah this is just this is shaping up to be quite an exciting year And I think you just see more companies get off the ground doing things that involve tokens because you have a clear framework. Like how many times have we spoken to entrepreneurs that are, you know, working at big tech companies? They have a really good idea, but they're like, this thing would probably be a security and there's no secondary market trading for securities.

And eventually it could be a commodity, but there's it just like, why do I want to spend all my time fighting the SEC or, you know, being put in jail for. launching this thing. So I think you'll just see more innovation come to pass here. So I don't know, is there anything else on the election or? I guess we just spent like a half an hour on the election, but I guess the wrap up is like, we're back. We're so incredibly back. Put the word, put the word out there. We're back up. A year ago or five years ago, I could never imagine we would have a president that's making specific claims about being Bitcoin president, the crypto president, that you have a crypto pack swinging key races.

You have so many incoming senators and representatives that are a validly pro-crypto. They're bending the knee. You have Democrats saying we're never going to war with crypto again. We're scared now. It's not worth it. It's true. It's not worth it. It's not worth it.

Fair shake raise $78 million, I think, this week for the midterms. You'd have to be out of your mind. I mean, Stephen Lynch, watch out, buddy. Just don't poke the bear, you know. Just don't do it. It's not worth it. We're not even threatening anyone. It's just like mechanically, if you harass crypto and you're in a tight race, we will raise money.

You'll lose. It's just, you know, don't do it. Paul Graham, founder of Y Combinator, put out a really good tweet. So here's replying to an Andrew Yang tweet about, you know, mistakes that the Democrats made. And Andrew Yang said one of the Democrats' biggest mistakes was antagonizing Elon. They said he's done more for the earth than electric cars than any other human being. Paul Graham comes back and says their biggest mistake was antagonizing the entire crypto community. This was entirely unnecessary.

There wasn't some other constituency that they're trying to win points with by doing it, which is so true. It's like, all right, you're going to do all this anti-crypto stuff, Elizabeth Warren? We haven't even mentioned her. like whose vote are you going to win by being anti-crypto? Yeah, I mean, you know, I think you probably acknowledge that progressives are generally anti-crypto or like the left, the further left elements of left are anti-crypto,

but you're not going to like extra win their support because you came out against crypto. It's just, it's like a no-win proposition. It's like, are you going to raise more money by being anti-crypto? This is insane. I mean, in Elizabeth Warren, it's too bad. John Deaton gave her a good run. I think he got like 40% of the vote.

Yeah, I think it was close for for Massachusetts, right? Yeah, that was a good showing. So, you know, he, and he equipped himself quite well in this. He had two really good debates. He got the issues out there, exposed her for the fraud that she is. So some actual news happened this week, aside from the election. There were actually a couple pieces of news here. Yeah, there was news.

I mean, to release a press release this week, you know, props to to the companies that did it. So Citigroup and Fidelity International, they announced a proof of concept to use blockchain technology for real-time digital FX swaps. We already mentioned this, but Andreessen and Coinbase are re-upping to Fairshake, another 23 and 25 million, respectively. Those are for the midterms. So crypto-haters on notice. Keep that one going. So we have a UK pension advisor called Cartwright that has apparently begun recommending 3% allocations to Bitcoin. in their defined benefit plans, that's pretty interesting.

That's, I haven't seen that in the U.S. yet. Yeah. Next up, very interesting. Coinbase submitted a bunch of FOIAs to the Biden's FDIC, asking about how they implanted Operation Shookpoint 2.0. And the judge actually compelled the FDIC to release. It wasn't the text of these letters, but it was summaries of these letters. letters that the FDIC sent to a bunch of banks.

Operation chokepoint 2.0 was real, Matt. We're going to get to the bottom of this. It was real. We're getting more information on it by the week. I mean, how do you actually get all these emails? What if you spelled Operation Chokepoint deliberately and correctly as you're doing Operation Choke Chokelaping? Well, gave in mind, that was something that we came up with as the industry.

But you get my point. It's like you're doing. doing keyword searches here and people are not idiots. Yeah, so it turns out there were paper trails. I actually was pessimistic about Coinbase's ability to get these foias, but there are paper trails. The FTC wasn't shy about harassing these banks. And I just have a thing, I got the feeling, Matt,

that we're going to get to the bottom of this. I think, you know, now that Trump is in, I think a lot of people are very mad about it. A lot of people very high up are very mad about it. And I think, I'm not saying people are going to prison over it, but I think we are going to get the facts. It's probably not as bad as some of the people that went to like Epstein Island, though. Yeah, I mean, in terms of like scandals that I'm mad about, you know, COVID probably takes the biscuit for me. But yeah, look, I think choke point is on the radar.

I do think it's something that the incoming admin will try and get to the Monmo. I agree. Okay. So here's another, here's a pretty interesting announcement. So Anchorage, bullish, Galaxy, Crackin, Nuvei, Paxos, and Robin Hood have all banded together. They're going to be launching something called the global dollar network, which is a new stablecoin network. It has a U.S. flavor and a non-U.S. flavor. I think the non-U.S. flavors are around kind of how the interest is passed on. But we have a rival stable coin here. It's actually fascinating. I mean, that's a really significant insortionium. There's some real names in there. And I guess they're going after, whether it's Tether or USC, they're going after the prize. I think you're going to see a lot of new entrance in the

stablecoin space. And it's going to be, you can't have like 40 stable coins that are all functionally relevant on centralized exchanges. So it's going to be interesting to see how the winners are crowned here. I mean, it's an incredibly intense race to be the king's stable coin. And by the way, this is something we didn't talk about. The winners from the election, Tether won so big in this election. Howard Lutnik, I mean, he's sitting on all the treasuries for the backing here. Lutnik is the chair of Trump's transition team. He holds all the treasuries for Tether, and he loves Tether.

Like when he does his TV interviews, to ask him about what the weather's like and be like, and by the way, Tether is great. I mean, nobody likes Tether more than this guy. So, you know, a week before the election, the DOJ was leaking weird insinuations about how they were going to sue Tether. I mean, you just have to assume it's not happening now. No, I'd be shocked if that happens out. Lutnik also has a Bitcoin lending, a loan operation, right?

So he's giving cash loans against Bitcoin collateral at scale. I don't know if that's actually kicked off yet, but this guy has a lot of interests in the crypto space. Yeah, I mean, and you know, I keep got, I got this question. from like four or five journalists last week. Like, okay, well, Trump said all this stuff about Bitcoin, crypto. You're going to follow through. I'm like, well, just look who he's got around him.

Look who he's surrounding himself with. Jady Vance. He's a tech guy. He's a VC. He owns Bitcoin. Like, he gets it. Vivek. He obviously understands crypto.

He's on the crypto circuit. He appeared on this podcast. He spoke at all the crypto conferences. He gets it. RFK Jr. I mean, you can't be more pro-Bikcoin than RFC. gay junior uh Howard Lutnik he own he's like got all the tethers he owns bunch of bitcoin like he loves it i mean i there's probably other names that i'm forgetting right now but like

trump trump's inner circle are all deeply crypto-pilled people talsy i mean whether trump himself gets it or not immaterial to me like these are the people that i mean he launched a defypher project Yeah, that's true. Like, he likes crypto so much we had to ask him to dial it back a little bit. Yeah, I mean, this guy launched the World Liberty Financial. Like this, he's literally the founder of a D5 project. Yeah, I mean, he's more pilled than, frankly, most people on crypto Twitter. So, yeah, it's like it's such a weird question.

Like, he's going to follow through on it. Like, is a penguin going to go catch fish? Like, it's all he's ever wanted to do, frankly. Yeah, I mean, you get it, you know. The other, we keep on. going back to the election. I think we're done with the major news of the week. So that was a big stable coin launch. Anchorage also got their payment license in Singapore. So congrats to Anchorage, big week over there. The other thing is, you know, this election has made me reflect on just

who stuck by us when times are really bad. Because this is, ever since FTX collapsed, this has been some dark, dark days for a lot of people in the crypto space. So venture capital dried up in terms of downstream financing, really hard time for a lot of startups because a lot of their potential customers couldn't come in the space. All the politicians were hostile initially, for the most part. But people like Tom Emmer deserve a lot of credit, really sticking by the industry, fighting for the causes that he believed in. Patrick McHenry, who's unfortunately departing moving on to the private sector. But some of these folks that actually put their necks out there when it wasn't very popular to do so,

that deserve a lot of credit. Yeah, for sure. And like, when I look back, it doesn't feel that traumatic or anything. It just feels like we took it week to week. And it was like, yeah, okay, another exchange went down, another bankruptcy, another insolvency, another collapse.

Everyone hates crypto, press hates us, whatever. But looking back, it was a pretty tough couple of years there. Wake up to a new Wall Street Journal headline. Oh, Sherrod Brown, and Elizabeth Warren and just made up something entirely fictitious that we're going to spend the next month answering questions about to our limited partners. Yeah, I think we forgot how tough it was.

It's not like we ever felt like it was over. I never felt like it was over. I mean, I certainly felt like, I mean, we were talking about who on the team is moving internationally. Oh, yeah. I mean,

in terms of losing the election, yeah, I mean, if we'd lost the election, we would have had to make some tough decisions about like where the first. fund is domiciled and stuff like that without a doubt you get to stay in miami it's great yeah i don't want to leave america like we're based here we invest mainly here i'm really glad we get to keep doing what we

do i am too um all right well it is a uh it is a very good week to be in this industry so congratulations to everyone that stuck it through and i think we're going to have a lot to talk about here in the coming weeks. Oh, yeah. So that's it. We will see you back on Monday for a new episode. A safe and healthy week.