The Breakdown - A Bitcoiner Is Now on the Senate Banking Committee

Starting point is 00:00:00 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexo.io and produced and distributed by CoinDesk. What's going on, guys? It is Saturday, February 6th, and that means it's time for the weekly recap. This is a true weekly recap. I'm going to go quickly through about five different topics, so let's dive. in. We start as we must with GameStop. The last two weeks have been absolutely dominated by this story of this retail insurgency, or depending on who you ask, this very manipulable group who has been egged on by billionaires. There is a lot of competition right now around the narrative. And if

Starting point is 00:00:57 last week was the week that everyone started paying attention and media got on board with this story, this was the week that media started telling the story of the retail dream dying. On some level, there's truth to that, right? The line was broken on GameStop, which crashed down from the rarefied air of $300, $400 per share to the 50s and 60s now. In fact, in total, hundreds of billions of dollars were ripped off the market caps of all of the meme stocks that brokerage apps like Robin Hood have started blocking. However, as I mentioned the other day, still more than a third of those stocks are up by more than 100% on the year. And what's more, Wall Street Betts itself certainly hasn't given up. The memes are largely settling into the idea that their backs are

Starting point is 00:01:41 against the wall, and you can see some of the OGs of that community, almost feeling relieved that they're in that same position again. There's also a lot of people calling out the hypocrisy of the SEC potentially going after this internet forum when, for example, people like Bill Ackman went on TV last year to say hell is coming, and it was later revealed that he had a massive short position, which ended up being a phenomenally lucrative trade. What's the next phase? Well, the government has decided to wade in and try to sort out the mess. Treasury Secretary Janet Yellen even went on Good Morning America on Thursday to discuss it.

Starting point is 00:02:17 I think the verdict is still out on how much the politicians want to go after the hedge fund shortsellers versus one who, quote unquote, protect the little guy by adding limits to what they can buy, were trying to stop somehow their speech on these types of forums. Now, I will say that one concerning thing is that the New York Times is reporting that some regulators are going after Keith Gill, better known as Roaring Kitty, better known as deep-ficking value. We don't have a ton of information yet, but we do know that DFV has stopped his daily briefings about GameStop. As I discussed yesterday with Travis Kling, this is the type of story whose impact won't just be felt in the next week or the next month or even the next year. It's much more about the long-term

Starting point is 00:03:02 psychological change that it might provoke. Next on this weekly recap, a quick look at Michael Saylor and Micro Strategies Bitcoin for Corporations event. This was basically their event to open source their process for putting Bitcoin on their corporate balance sheet, and there were about 1,400 executives at this event. The internet sleuths found people from Salesforce, Mercado Libre, Smucker, the MGM Grand Texas Trust, which has 65 to 70 billion in assets, the University of Maryland endowment, New York Life, and SpaceX. We got some interesting number nuggets from people like Ross Stevens at Nydig, who said that they anticipate managing 25 billion in Bitcoin for institutional clients by the end of the year.

Starting point is 00:03:46 Now, I've listened in on a bunch of conversations on Clubhouse this week discussing this event, and the one thing that I'd say is that I think people have a slightly ambitious, sense of timing. People are anticipating in two or three or four months seeing a lot of the fruits of this event. And while I'd love that to be the case, Sailor has said that actually executing this type of plan takes 12 weeks at a minimum. And you have to think that a lot of these companies are still in the process of even making the decision in the first place. So I think it may be more like a six-month or longer impact. Of course, that doesn't mean that we're not going to see tons of corporate action vis-a-vis Bitcoin already. Another thing,

Starting point is 00:04:25 that happened this week was Visa announced that it with partner Anchorage was building APIs to allow traditional financial institutions, banks like Bank of America, Citibank, etc., all the people that you've probably banked with for your whole life, to offer crypto services like buying, selling, and holding. Just to reiterate something that I've said before in this show, but I really still think it's not super clear to people, I anticipate a huge, massive, multi-billion dollar financial battle to be the provider that helps these traditional financial institutions white label and offer this type of crypto service. Looking for the best way to stay on top of your investment game, nexo.io has you covered in three

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Starting point is 00:05:37 Next up on this weekly recap, a quick look at ETH and Tether. ETH this week hit a new all-time high in USD terms. Defi right alongside it has breached $35 billion in total value locked. Now, of course, part of that is the increase in price in Ethereum, and part of it is that defy tokens have been absolutely ripping. Even Yerne having an $11 million exploit couldn't slow the industry down. Some think that this has to do with excitement going into next week as CME is launching Ethereum futures on Monday. We also got some news Friday about Tether.

Starting point is 00:06:13 One of the central questions of the Newark Attorney General's case against Tether is a loan from 2018. In 2018, Tether opened a credit line worth $900 million for their sister company, Bitfinex, of which 7505,000, million dollars was used. In 2019, the New York Attorney General argued that Bitfinex lost $850 million after crypto capital their payment processor seized the funds and that they then use this credit line to account for the balance. BitFinex has paid back $100 million each of the last two years and just paid back the remaining 500. This is ahead of the November 5th, 2021 due date. Now, it probably won't change any Tether Truthers minds out there, but it's one more development in this on ongoing saga. Finally, let's conclude with one other exciting piece of news from this week.

Starting point is 00:07:03 Cynthia Loomis is the new Republican senator from Wyoming, and she is not only the first Senate member to publicly hold Bitcoin, she has been here for quite some time, buying it when it was first in the $300 or $400 range. Now, I don't know about you guys, but if we have a Bitcoiner in the Senate, I want to see them in a position of power vis-a-vis the issues that Bitcoin touches. Well, this week, Cynthia Loomis was assigned to the Banking, Housing, and Urban Affairs Committee, the Senate Banking Committee. This is one of 20 standing committees in the Senate. It was created at the same time as the Federal Reserve Act in 1913. It has 24 members, 12 Democrat, 12 Republican, and it has jurisdiction over a huge swath of economic issues, including banks,

Starting point is 00:07:48 banking and financial institutions, control of prices of commodities, rents and services, deposit insurance, export and foreign trade promotion, federal monetary policy, including the Federal Reserve System, that's a big one, financial aid to commerce and industry, issuance and redemption of notes. You get where I'm going with this. This is the exact type of committee where you want a bit-o-o-oiner. This is the committee where Libra got hauled when it was first announced. Loomis said, through my role in the banking committee, I hope to shine a light on many of these pioneering efforts and work with federal regulators to ensure that regulation of digital assets are structured to encourage innovation instead of stifling it. I also look forward to providing regulatory

Starting point is 00:08:28 relief to our community banks and ensuring that we have vibrant safe financial markets. On top of all this, Loomis is starting a financial innovation caucus to promote, quote, a proper understanding and responsible regulation of things like digital assets and emerging financial technologies. Her explicit goals for this caucus include countering the narrative of cryptos as a money laundering tool. She plans to meet with the Fed around stable coins and a potential central bank digital currency. She's even already had conversations with Treasury Secretary Janet Yellen, who she reports is basically an open mind mixed with balanced skepticism when it comes to digital assets. Right now, Cynthia Loomis is just one senator, but she's in exactly the right

Starting point is 00:09:15 place for her perspective that has been won through study over time to actually infiltrate and make a difference. Pretty exciting stuff. I hope you are having an awesome weekend wherever you are, whatever you are, whatever you're doing. I appreciate you listening, hanging out. If you like the show, please go rate and review it. It makes a big difference. And until tomorrow, be safe and take care of each other. Peace.

The Breakdown - A Bitcoiner Is Now on the Senate Banking Committee

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