On The Brink with Castle Island - Weekly Roundup 11/15/24 (Congressional agenda, FTX vs Binance, Polymarket raid) (EP.575)

Episode Date: November 15, 2024

Matt and Nic return for news and deals. In this episode:  Nic recaps his trip to Congress Vibes in Congress post election The likelihood for stablecoin and market structure bills What are the prospects for the Strategic Bitcoin Reserve What's happening in Devcon? 18 state AGs are suing Gensler and the SEC Gensler is hinting at retirement FTX sues Binance and CZ Sam Trabucco forfeits $70m in assets to the FTX estate Polymarket's Shayne Coplan raided by the FBI Doodles partnership with McDonalds The verdict on Fairshake's efforts in the election  OCP developments and how Congress will tackle it We review Trump's cabinet appointments so far  Sponsor notes: Coin Metrics, The Election Bull Run From the Perspective of Options Markets: Analyzing options markets to contextualize the election bull-run that brought BTC prices to $85,000.

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. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only is an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated.

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

So out of this worry, we have something called the Bitcoin. Welcome to Ron 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 Metrics Minute. In today's metrics minute, we're looking at options and futures market date around the rally. aggregate spot volumes across all exchanges reached 177 billion on November 12th. That was the second highest daily volume day on record.

Total's futures volume exceeded $400 billion. A significant buildup in OI has emerged for call options targeting the 90 to 120K price range. The implied volatility of seven-day Bitcoin options surged to, over 80% leading up to the election. After November 10th, the seven-day implied volatility rose again to 60% just as Bitcoin climbed over 80K. Quite the week for Bitcoin price action. That is your metrics minute.

Big week for the coin, huh? Unreal. I mean, I can't keep up. I don't even know where it is right now. Yeah, I think it's down on the day, but, you know, big, big move to the point where now you have people in your life that haven't talked about crypto in like three years and they're sending you text messages. We're at that part. Yeah, I mean, I have, Normie's asked me for meme coin picks. I don't know what to tell you. I don't have any. I'm sorry. I, I, for regular folks that

aren't in crypto meme coins are utterly toxic. That's like a third rail. Yeah. Just don't get zapped. So busy, uh, busy week. Mr. Carter goes to Washington this week. new admin comes in, all of a sudden you're on a flight to DC, just giving updates on how stable coins work. This is what a world we live in. I mean, the trip was actually planned before the election. It might have been one of those ones where I would have probably canceled it if it'd gone the other way. But yeah, I was never done one of those fly-ins before. I don't know how, you know, the industry trade associations and I don't know how they do that.

so much, take so much stamina to traips around Washington all day and talk to members. It's insane. I mean, there's a lot of questions, but one of the, one of the questions is there's a photo of you, a very official looking thing where you're giving a briefing in what looked to be a one of the main chambers, and you had a Diet Coke and a coffee at the same time. Talk a little bit about the strategy there. Oh, yeah, I was, I was absolutely vibrating. I was wired. I was double fisting, Diet Coke, cold brew,

double packed with Zins. That was a briefing for congressional staffers for lunch briefing. Basically, the deal is you, I guess you buy them lunch and then they have to listen

to whatever you want to talk about. Oh, it's like a launch and learn. Fair trade, I think. All right, so what are your takeaways? You met with some pretty

powerful people this week. Yeah, so this is the digital chamber that's set up. So shout out to the chamber, Perry Ann and the team over there. I met with, I want to say, 15, 16 members and senators. Almost all of them were sort of more favorable to crypto,

but certainly a bipartisan group and a bunch of Democrats, all of whom were favorable to crypto, which was great. You know, very positive vibes. Even among the Democrats, I mean, you know, common refrain we heard was, well, you know, didn't go our way, but as far as crypto is concerned, there's a mandate here. So the efforts of fair shake and the rest of the crypto space did not go unnoticed, that's for sure. There seems to be a lot of enthusiasm around a stable coin bill, the details of which are still

being hashed out between Chair McHenry and Maxine Waters. So TBD on that, market structure is expected to follow behind that. didn't hear much about the strategic Bitcoin Reserve, so to speak. That only came up in one of the conversations. So, sorry to disappoint the Bitcoiners, but that does not seem to be something that's on the agenda. I don't think Trump actually promised that. I went back and looked at it. So he said that there would be a stockpile, but that could easily just be not selling the seized Bitcoins.

I haven't seen a concrete proposal to have a stock, you know, like a go out and buy 5% of the network type of thing out of Trump. Lummus, yes. Yeah, that's exactly it. I think people are getting ahead of their skis on that. Also, it would need to be authorized by Congress. It's not something that the president could just do. And so, you know, the president has to work with Congress.

And Republicans have slim margins in both the House and the Senate. To make something filibuster proof in the Senate, you need 60 votes. They only have 53. So based on how hard it seems it'll be to pass, even something that's kind of unambiguous as a stable coin bill, something controversial, like Bitcoin Reserve seems politically impossible in my estimate. I'm not sure that the right strategy is to try to get one of these bills jammed through in this lame duck session. It just seems to me like the Fed has so much power in some of these

stable coin conversations around the caps at the state level. If you're operating under like a New York trust license, it's a very low cap. I think it's a 10. $10 billion. And it seems to me like the Fed is just going to want everyone to be a SIFI, ultimately. A lot of this is like Dodd-Frank era regulation that just brings more financial services firms under a too big to fail apparatus. And why would you want that if you don't need it? Yeah.

I think the odds of anything happening in the lame duck session are virtually nil. A lot of Republican members told us, you know, let's just wait. until we're in a position of strength in the 119th Congress, aka next year. And so the bills will still have to be bipartisan because the Republican majority is slim. But yeah, I don't believe that we will see crypto ledge before the years out based on what I heard. So good podcast week. Wyatt sat down with David Lowe, the founder of Hata, to discuss the digital asset market in Southeast Asia. here we are always talking about the U.S. market.

And we got a podcast about the Southeast Asia market, also on fire. Yeah, I mean, Southeast Asia is actually the global epicenter of crypto adoption. Everyone's there, by the way, for DevCon right now. And the one thing I keep hearing is how bad the traffic is in Bangkok. And apparently the way to get around it is you take a kind of an Uber where you sit on the back of a motorcycle. No, thanks. And that sounds horrifying. Nope.

I am not doing that. Not unhappy to be missing out on that experience. But have fun over there. Busy deal week here. So we got a lot to run through. Let's hop right into it. First one up, actually the first two are in the Castle Island portfolio. Notabene, which is a crypto transaction compliance platform.

They raised $14.5 million in a round that was led by DRW with participation from Winter Mute, F Prime, Aluminate, and others. Then also in our portfolio, Bitwise, the asset manager, they've acquired a testant, a leading institutional staking company. That's the second acquisition of the year for BitWise, and it brings their client assets to over 10 billion huge congrats to Hunter and the whole team over there. This is going to be one of those acquisitions that you look back on five, ten years from now and say, wow, BitWise saw where the market was going two to three years earlier than any other asset management firms. I don't know how you're not staking assets three, four years from now as a leading asset manager in the U.S. You can't do it in the U.S. by and large at the moment. Like Fidelity could not be out there offering staking on ETH because of the SEC's posture.

But there are parts of the world where you can do this. And it just makes a ton of sense for asset managers to be really intertwined with the staking community, either as a vendor relationship, but probably as like owning the infrastructure at some level, is my guess, for certain asset managers. So big shout out to Hunter and the Bitwise team here for seeing it early. Next up, we have a merger, ARCA and Block Tower to crypto investment firms. They also have hedge fund and venture products. They have entered into an LOI to merge the company. So it has never seen one of those before. Yeah, I've never seen one of those before. Yeah, I've never seen one of those before either.

Next one up is Utopia Labs, which is a stable coin payment processor. They're required by Coinbase this week. Then we have IDon. They're decentralized AI protocol. There is three and a half million from framework and cyber fund. Here's another acquisition, Vintr, I think it's VINTER, VINTA, was a index provider for crypto products that are acquired by KICO, a data and analytics company. Then you have zero gravity labs.

their crypto AI infrastructure layer. There is 40 million from HackVC, Delphi Digital, and OKX Ventures. Bethog, which is a crypto casino and sportsbook, raised $6 million from six-man ventures, will ventures, bullpen capital, and others. Then you have Brevis Network, a ZK Computation Network. There is 7.5 million from polychain, finance labs, and bankless ventures. TAC is a EVM network extension for Tron. they raised 6.5 million from hack VC, symbolic, and paper ventures.

Tahn, not Tron, I believe. Tahn. Did I say Tahn or Tron? Tron. Yeah, well, anyway, it's Tond. Tegraums one. We have FeroS, that's PH, A ROS, their layer one blockchain. They raised 8 million from light speed faction, hack VC and reforge. Then it's Pond, which is a decentralized AI model layer that raised 7.5 from archetype and coinbase.

Then folks finance their DFI protocol that raised 3.2 million from borderless capital and Algaran Ventures. And the last one is Hook, which is an EVM infrastructure development company. They're acquired by Caldera, a roll-up as a service platform. Wow, a ton of deals. And obviously, probably none of these deals got done last week. So I can only imagine what the next few weeks are going to look like in terms of net new deal announcements. Where to start on the news? I mean, so much is going on here.

So I had not seen this until we hopped on here, but you're saying that 18 states are suing the SEC right now over something? Yeah. Eleanor Territ reported at Fox 18, I guess all Republican states, 18 attorneys general, if you'll note the correct pluralization there, have sued the SEC and the commissioners accusing them of unconstitutional overreach and unfair persecution of the crypto industry that dropped just minutes ago. Wow. Well, that's a, that's good. Yeah, and at the same time, Gensler put out the text of a speech he intends to deliver, I guess today as well, where he's kind of hinting of retirement. If you read it.

That'd be a real shame. Yeah, losing one of the good ones, you know. It'd be a real, real shame. All right. Let's talk some more about. lawsuits, I guess. So the FTX estate has sued 23 parties here. So I haven't had a chance to read through all this, but Binance is one of them. So they sued Binance and CZ, alleging that FTC's 2021 purchase of equity from Binance, I think it was $1.8 billion,

was effectively like a fraudulent conveyance, so they want to have a clawback there. They're also suing Skybridge, which is really interesting. So there's, I actually read that one. John Ray was not very nice to Scaramucci in that lawsuit. A lot of main things. The FDX state suing Binance, alleging that Binance, you know, is trying to deliberately destroy FTCs and improve Binance market position. I feel like Binance was entirely within their rights to sell the FTC.

Yeah, finance was a shareholder. And, yeah, I don't see that one being a valid one. You can just sell the coins. if you want, you don't have to minimize the market impact. If you don't want to hold the coins, you can sell them. Sam was not very nice to CZ. And CZ did, you know, trigger the confidence crisis. But that's his right, my opinion.

Yeah, I mean, Binance invested in FDX. They had their shares repurchased kind of end of story. And it was in 2021. So I don't really see it on that one. The Skybridge one's pretty interesting. I'm sure, you know, the way these lawsuits, work is that you allege a lot of stuff and make people sound really bad but they made skybridge sound really really really bad so it'll be interesting to see where that one goes also in news

ft xalemate news sam trebuco has agreed to forfeit 70 million dollars worth of claims and assets including apartments and his infamous and crudely named yacht which i won't repeat on this podcast is a family-friendly podcast. So Sam has showed his face here, and he's giving, I guess, most of the assets back. And man, this guy got off easy. I mean, he has no yacht now, though. So that's tough.

Speaking of getting off easy, Gary Wang, zero days in prison, Sam as Mr.od. I don't know. I'm not happy about it. A lot of, you know, I guess he turns to his witness, obviously, and has been helping the government track down other parts of this case, supposedly. But it just doesn't seem right where the other two co-founders who were in the loop on the fraud didn't go to jail. Yeah. Elsewhere in, I guess, enforcement news, Shane Copland, founder of Polymarket,

had his home raided at dawn by the FBI. They took his cell phone and electronics. They didn't arrest him. I don't know what is going on over there. Seems a little rude. It seems like they're trying to intimidate him. I don't know why you need to do a dawn raid. Could have just, you know, call his lawyer or something, but that's what they did.

So there's, I guess, multiple angles on this. One is, all right, let's say that you do have something. Yeah, why do you have to do a dawn raid here? This just looks very political, even though I believe Shane Copland is not a Republican, but obviously the polymarket platform had a lot of Republican activity on it, since it was presenting that Trump had a really good chance to win the election. So this just seems very outwardly political. So just from a smart politics perspective, if you're the FBI,

why wouldn't you have just done this in the normal course of business and gone to the lawyer and said, hey, we have a subpoena, we need this phone or whatever, you're just doing this to, like, screw with the guy, it seems like. Yeah. I mean, if I had to guess, you know, guessing that their gripe has to do with insufficient geo-blocking and allowing, knowingly allowing, obviously I have no information regarding the case. I'm speculating knowingly allowing, you know,

U.S. traders to trade on the platform. All right. In other news, Coinbase launched a Coinbase 50 index, which is a benchmark presenting 50 different digital assets that you can trade on the Coinbase Exchange. So did that one, I guess, a couple days after the election. So good timing. Tether has announced the launch of a tokenization platform, Hadron, that allows users to tokenize anything, including stocks, bonds, and loyalty points.

All right, why not? Then you have a, here's a McDonald's-related announcement. We don't do a lot of talking about McDonald's in the crypto space, but Doodles, which is an NFT brand collection, They announced a partnership with McDonald's to provide holiday-themed artwork on cups and other digital experiences. So there is a huge doodles, a wall, a graffiti wall, a mural. I guess that's what it's called a mural here in Miami. It's still here.

And every time I see it, I just think back to the Halcyon days of 2011. and back when people really thought these NFT companies were going to be the next Disney. 2021. 21? What did I say? 2011. Oh, yeah. We didn't really have NFTs back then.

And, uh, I mean, I guess pudgy penguins kind of delivered, you know, you can buy plushy in Walmart. You can buy pudgy, plushy. I personally don't have a lot of time for them, but I guess the children of today seem to like them. But, uh, I still, I'm still long-term bullish. on NFTs. I think it's just the regulatory landscape wasn't there because what people actually want is something that resembles

a security and that can pass on cash flows in an embedded way. I think ticketing is a great use case. I think these restaurant focused startups will probably do quite well with regulatory clarity. There's a there there. The speculative

fervor kind of brought in all the brands and then FDX just sent them all packing is my view. Yeah, Doodles I didn't love Well, there are a lot of NFTs That I have a lot of Negative things

I mean what happened to moonbirds Remember moonbirds Oh yeah that was a big hyped one Kevin Rose right Yeah and just I guess You completely abandoned it I mean there's a lot of stories like that

Doodles I guess they're still chugging along Good for them Still at it What is the most valuable NFT collection these days If I'd guess I would say Punks

Don't you think? Perctopunks? I would guess so. I haven't checked. There are some NFTs I would buy if I was in the mood. Like I think squiggles and Fidenzas are actually kind of interesting. Like I like the generative art ones. I still think that they're interesting.

Yeah, there's some cool ones. Well, we'll see what happens here. I think you'd have to get a fit 21 bill to, some of these really wouldn't work if they weren't actually secure. here it is, I think. So here's an interesting one out of left field. Canary Capital has submitted an S-1 to launch a Hedera ETF. That is a blast from the past. They've also applied for Salonet and Ripple ETFs. Hedera. Hedera. Remember, the hash graph? The hash graph. It's up there with was Iota, one of these hash graph ones, a DAG network? Was that what Iota was? Iota had a DAG.

I've actually used the Hedera blockchain, believe it or not. How was it? Because for my karate fight, I was paid partly in karate tokens, and those were on the Haderra blockchain. So I have been a monthly active user of the Hidera blockchain. It seemed fine. It worked. Well, this product might be for you. Maybe.

Maybe. Maybe the 401K is going in this. Yeah, I wonder what type of job. distribution this will have. But yeah, Canary Capital, new, new company, I guess they seem to be focusing more on these longer tail individual asset plays. So interesting. Well, let's talk about some of the post-election fallout here. I've been doing a lot of podcasts this week. I guess I do a lot of podcasts every week, but three that I would highlight for people. Frank Chaparro had Justin Slaughter on. Justin is the VP of Regulatory Affairs at Paradigm.

Before that, he was at the SEC, I believe, as a senior advisor, he's a Democrat. So he was just talking about basically just what the Biden administration's posture towards crypto has been historically. And that was a really frustrating one to listen to because, you know, you're obviously hearing from a Democrat and he's saying, look, these guys just never took it seriously. Like they did not engage with the industry. They didn't see it as something that was viable. They said that, hey, this is all just speculation.

And it sounds like a lot of people on that side of the aisle were totally blindsided by how crypto came out in force in these elections. Yeah, I think basically what the Democratic calculus was was post-FTCS. They either decided that it was over or they decided that they could kill it off, that it was sufficiently weakened that they could kill off the domestic crypto industry and never worry about it again or they just forgot about it entirely. And it came roaring back as it does. should have known better guys. It always comes back. And they were caught completely unprepared by the Blitz, the crypto voter block,

which I'm still waiting for data on. I'd love to see how exit polls revealed crypto preferences, whether that's swung any of these races, I'm sure it did. And the quantum of capital that crypto brought to bear, which based on some of my conversations in D.C. this week, I know for sure that influenced some of these races, not just Ohio.

others too others too so shout out to the fair shake guys again i think i guess we lob some some barbs their way last week but i'm looking them with a new pair of eyes this week i mean fair shake you have to look at as just a great great operators i mean i know it's controversial on the two democrat picks that actually won there so the nevada race and the michigan race um and they supported the Democrats who I guess had a ratings but weren't as pro-crypto as the Republicans so fair shake has taken some criticism there but the record is crazy I mean the Bloomberg reported they initially reported 48 out of 48 I don't can't possibly be the case still I mean even if it's like five losses you're looking at that you're like this is

Hall of Fame level win ratio yeah I mean that's that's like I don't know you give me a sports analogy, but Brady in early career Brady or something. I mean, it's unbelievable. Early, middle, and late career Brady. I mean, yeah. Shout out to Fairshake. That was crazy. And the gratitude and the goodwill in Washington is real, by the way. It's totally real. Both sides of the aisle. Both sides the aisle. Well, that leads me to my second one, which Larsh ended a great episode on Unchained with Coinbase's Fariar, Shurzad, and Kara Kalbert. And they just talked about the fair shake side of this.

They talked about the stand with crypto side of it and just how decisions were made. And I am just, anyone who comes at me and says, hey, the role of money in politics, this doesn't seem right. It's like, hey, man, crypto is just playing by the rules here. So if your policy is that this industry should not exist, don't be surprised when we get mobilized here and fair shake gets formed and we take the fight you know to you yeah i mean take it up with the supreme court little piece of law called citizens united you got beef with them not us okay these are the rules of the game we weren't mobilized before we are now yeah sure it took washington

by surprise by the way it's going to happen again it's going to happen in the midterms and the one after that so you know crypto is is finally punching back and and it's working. Now we get into kind of just picking up the pieces. So Mark and Driesen and Ben Horowitz have a show called, I think it's called The Mark and Ben Show. That was a really good episode. They don't do a lot of episodes,

but they did an episode a couple days ago that hit the nail on the head just in terms of how bad the Biden administration has been for startups in their portfolio. And we've certainly seen this, but they talked about Operation Chokepoint 2.0 and just the constant conversations with portfolio companies who are just losing, bank accounts arbitrarily with no reason.

You know, you'd be looking at a startup and you'd be interested in doing a deal and say, hey, we can't get a bank account. Like, we can't even get a wire in for this. You'd have to, you know, find some other way to get us the capital. And we can't meet payroll because we don't have a bank account because we got deplatformed. So we can't actually pay our people. So that's what's been going on in this industry is that, you know, employees at

companies have not gotten paid certain weeks because the company lost their freaking bank account. So on the choke point front, I had a side quest in Washington this week, which was regarding chokepoint. So I can't say who I talked to, but I was given assurances that it's going to end for sure. So Trump himself said he would end it, but then we also have interested members of Congress that are very keen on ending it. So I would assume come Jan 3rd, is it Jan 3 is the inauguration? No, isn't it the 20th? Oh, 20th. Sorry, I don't know how I got that wrong.

Come Jan 20, it'll end. The new picks for FDIC and OCC will end at day one, if I'd guess. I would expect to see legislation at some point, actually, de-politicizing bank access. So this isn't just a crypto thing. This is what I've been saying the whole time. It's not just a crypto thing. It's all industries.

And the Republicans could turn around and try and do their own choke point, right? But I don't believe they will. They're going to just make banks a neutral payment infrastructure as they ought to be. And now this next part depends on who gets the committee assignments. But if certain individuals get the key committee assignments, then we can also expect to see subpoenas investigations into what happened, backwards looking. so not just on a go forward basis ending choke point but on a look back basis actually getting to the bottom of what happened

so when I heard that I was basically ready to run through a brick wall because it really felt like my apotheosis I love to hear that so what do you think of the most important committees here House Financial Services Senate banking all right so if I was to do a list here or maybe I'll just tell you who I want Tim Scott for Senate banking, and I want French Hill for House Financial Services. I think French Hill, who's been on this podcast before, would do a great job carrying the McKenry torch. Yeah, I'm incredibly impressed with him. So yeah, fingers crossed there. And I do believe we'll see justice in this life or the next, hopefully in this life.

Well, it would be great to get some of these executives from the banks to actually be able to go on the record. but that's been a huge challenge. Yeah, so I also got some clarity on that. So in theory, if Congress, if a committee calls a hearing, they can waive the confidential supervisory information prohibition. So this is this weird loophole that the federal financial regulators are using to keep their communications with the banks from coming out, because they label it all C.S.

and then in theory you can give the executives the bank executives that are called to testify an assurance that's waived but in practice actually like never happens or it's like really really hard to get that part i don't quite understand procedurally why so that's what i called for at the end of my most recent article on choke point that's what i would want i know that there are affected executives that are willing to testify kind of depends i think on the on the political will and Congress and some of these really opaque, you know, political knife fights that are happening behind the scenes on the committees. Yeah.

Well, glad to hear that there are folks that are looking at this because, yeah, we need to figure out what happened here and just make sure it can't happen again. So the White House is going to ebb and flow between Democrats and Republicans for the next, however many years this country is around. And you just don't want to have one side of the aisle, political. licensing banking infrastructure. You just want to make a law that hopefully people don't break to ensure that you can't have industries that are just picked over and and some that are, you know, just punished arbitrarily. Totally. Break the cycle, guys. Rise above. Break the cycle.

What do you make of the various cabinet pick so far? We've, RFK has just been nominated for health and human services. So I guess Trump stuck to his deal with RFK Jr. Yeah, so I guess he's not going to be able to do much on the Bitcoin front in HHS. But he could make seed oils illegal, that. Oh, that's right. Yeah, I think that would be great. Hadn't even thought of that. Treasury, we don't know for sure yet.

Lutnik's making a late charge for Treasury, but it looks like it'll be Scott Bessent. Is that right? I think it could very well be Lutnik. Yeah. I think it could very, I think they would both be great. I think Lutnik would be incredibly bullish. for sure um and then uh marker rubio for state florida boy yeah that one was not that surprising to me shout out florida talsy for i don't exactly know what the title is but basically the head of

intelligence yeah yeah intelligence agency oversight you know i will see how how trump's able to confirm some of these appointees i don't i don't think all these are going to get confirmed Matt Gates for Attorney General. I thought it'll be a fight without a doubt. Yeah, I don't know if that one's going to go. We'll see. I do you think Trump will be kind of unleashed in the second term? Because, you know, he's not going to face a hostile, you know, legal apparatus this time around.

People kind of, you know, he's been investigated already. I don't think he'll see the same distractions over Russiagate, impeachment, et cetera, that hobbled him the first time. I think he's focusing on loyalists with these appointments, you know, as opposed to last time around is kind of focusing with people with, you know, real chops and credentials,

not to say these ones don't. So I think it's going to be a very different vibe, Trump 2.0. SEC rumors are not really abounding. I'm kind of surprised at that one. Yeah, so Giancarlo denied the rumors, or rather took himself out of contention. for SEC today.

Oh, did that just happen? I didn't see that. Yeah, just hours ago. That's too bad because I think he would have been great. Yeah, and so I don't know if you had an interim SEC chair. I mean, I still don't know how exactly Trump would architect Gensler's removal. I think Gensler stayed till the better end last time when he was CFTC chair. Did he really?

I think so. I mean, I think how this would work in practice would be you'd just demote him, wouldn't you? Yeah, just like give him an office that's like a broom closet somewhere and see how long you last. Yeah, I don't know. I can't see Gensler wanting to stick around. I mean, the guy's got to have some like code to himself. You're just going to stick around and be a punching bag. Like he can go do something else.

Yeah. Go work for a big law firm that's litigating against the SEC like everybody else does. Well, I'd be really surprised. if he ends up in a law firm, because I think you're going to end up in the situation with wherever he goes that people are going to be quite upset at the firm that hires him. And so I think it's much more likely that he would go to like better markets or one of these industry groups. If you've rewind, how many years has he been in office now?

Genser since the beginning, yeah, four years. And this podcast's been around the whole time. You remember? We were actually kind of excited. Do you remember? Yeah. Yeah. We thought, oh, this guy kind of gets it.

We thought he would be good because he'd taught the class at MIT. How wrong we were. How wrong we were. Well, it was, we were clearly wrong, but it was also he was quite dishonest, I think, with some of the things that he had said before he got elected, right? And some of this is on video when he's at MIT, making assertions that later he takes a different stance on. But I think the view was that he would, he would be a good SEC chair.

because he understood blockchains and that he would propose rules and that you'd end up getting something like a market structure bill maybe out of that rulemaking, plus they would ask Congress to take action on certain items. But that didn't happen. And you wonder if part of the reason that didn't happen was just the Elizabeth Warren factor,

that he sort of made this unholy alliance to try to get Secretary of Treasury and she was the meal ticket and it just didn't work out. Yeah. I think something that will be revealed is that the Fed was exercising significant power in the Biden admin in terms of actually behind the scenes the whole way. I don't know if we're going to get a rotation at the top level there.

Well, I think Powell can stay until 2026. So I don't think he's going to go anywhere. I don't know. Is he, I mean, is he the one at the Fed? that is trying to exert pressure on some of these politicians, as we've kind of heard whispered, that the Fed wants more oversight of stable coin issuers and would be slapping a SIFI tag on a bunch of these issuers

if they went and issued their own stable coin. Yeah, my understanding is that Fed and Treasury are doing a lot behind the scenes. A stable coin bill may not actually be bullish, frankly, based on some of what I've heard. we need the right stable coin bill, not just any old stable coin bill. So stay tuned. But I do think the Republicans

will do their best to preserve the state pathway for issuance to inhibit the most onerous sort of like AML measures that might be asked of a stable coin issuer. But yeah, it is possible if you get a stable coin bill. It's not actually a good thing, frankly. Yeah, I mean, this state pathway,

why is there a $10 billion cap on this? that. I mean, $10 billion for a lot of money. $10 billion is not a lot of money to hold as a stable coin issuer. Stable coins are massive and they're going to be a lot bigger. Yeah. So the cap traces to a Dodd-Frank rule, which was a $10 billion threshold for something or other. So that's where it's where it comes from. A little fun factoid that I learned in Washington this week. By the way, it's been 14 years since Dodd-Frank. $10 billion ain't what it the dollar doesn't go as far as it used to go right so this is a problem with thresholds right the real value of that threshold keeps declining every year with inflation

i have not haven't looked it up but 10 billion dollars today is probably half of what 10 billion dollars was in 2010 right so this is the same issue with the cash transaction report threshold uh issued what in the Bank Secrecy Act 1970? Yeah. 10K then if inflation adjusted it's about 70K today

but we're still stuck with that 10K so the real value of the threshold declines over time. It's a real bummer that legislation just builds on top of other legislation like a lot of flawed regulation is built on top of Sarbanes Oxley

a lot of it's built on top of Dodd-Frank a lot of it's built on top of the BSA the Bank Secrecy Act. It would be great to have a, do you think the Doge Department of Government Efficiency would take a look at the BSA and just say, like, this needs reform? A la basura. Yeah, I mean, the BSA is something that I think the Supreme Court could find to be unconstitutional. See, that, they, yeah, I would think so.

I mean, I think very few people actually have an understanding of the BSA, but it is, it adds a lot of cost and complexity of the financial services system. Without, like. much. It just means you file mountains of paperwork and no one ever reads it. And I would wonder if there would be some sort of a case to be made that it violates First Amendment rights for individuals. So by the way, Sab 112, I didn't talk about this, but I asked a few folks in Congress why there was no discussion of a reprise of the Sab 121 overturn.

And basically, the new SEC, chair, whoever it is, could just undo it with a stroke of a pen. So actually don't need Congress to do that. It's expected it just goes away day one. Yeah, it was funny. I was doing a PowerPoint slide the other day, and I had a list of things that are likely to happen just under the administration and other things that need legislation.

And sub-121, you know, it could be either, right? But, yeah, I think you're right. I don't think there's any need to do a bill if the new head of the SEC will just make it go away. I think Mike Flood's bill was the, you know, easiest one to pass. So I guess you could pass that, but, you know, what's the point if you can just kill it with one stroke of the pen? Yeah, easy come, easy go. I mean, it was imposed by fiat and it can go the same way. Any bank in the U.S. that is in the custody space right now for

traditional assets that is not building crypto custody is so far behind. It's not even funny. Bank of New York Mellon is going to crush these other banks. I mean, once the banks are able to to do business. This is the thing. People think it's crypto versus the banks. That's so not true. The banks want to do crypto. They're raring to get involved. They have been hamstrung. Sab 1-2-1s, kept them out of it, choke points kept them out of it. The Fed's guidance on banks and stable coins kept them out of it. They want to do crypto, you know? And once they do, I mean, the stable coin sector is going to explode, assuming it's, you know, largely untouched by legislation. U.S. banks able to be those nexus points between fiat and stables.

I mean, the whole thing is going to get so much more efficient. I can't wait. I'd knock on State Street a lot, but it is shocking to me that State Street does not have a crypto custody thing that they've been public about and that they own SSGA, which is one of the largest asset managers, and they just didn't do a Bitcoin IDF. Like, they just totally missed it. Talk about missing an opportunity. There's still time.

There's still time State Street. You can still do something. I mean, they pivoted the whole team to AI. A bunch of their people that were working on the blockchain lab, all of a sudden were AI people post-FDX. They took Jason Calcanus' advice, blockchain people that pivoted to AI. By the way, how about Paul Graham's tweet

at the depths of the bear market here saying, a friend who he trusts has told him that there's about to be a systemic event in crypto. What was he talking about? That's an all-time tweet, an all-time bottom. That was the Pico bottom, too. What did he see? I'll tell you what I think he saw.

I think he might have been referring to Genesis halting withdrawals. I think it was around the same time. Because it was in January 20th, January 23, I think. Is that what it was? Maybe it wasn't Genesis then. I thought Genesis halted withdrawals right around the same time. Maybe he was talking about something there, but that was an all-timer. So Bitwise had an interesting memo, courtesy of Matt Hogan, calling for B.

coin 500k we're going to put that in the show notes i mean a few months ago might have seemed ludicrously bullish doesn't seem so crazy anymore doesn't seem so crazy anymore and by the way that's not even gold parity gold parity is 900k a coin 900k a coin that's insane yeah because i i actually had this outdated uh view of what gold was worth i just looked it up it's 17 trillion now i thought it was 11 trillion gold's rallying so gold parity keeps climbing. The gold parity per coin price keeps rallying. I mean, I think it could happen. I'm not going to say super cycle, but I think it could happen in the next decade. Incredible. Love it. All right. Well, I think that's it for the week. It has been an exciting one,

and I think next week will be an exciting one too. So everybody have a safe and healthy weekend. We will see you on Monday.