The Wolf Of All Streets - Bitcoin About To Nuke? | Crypto Town Hall With Bruce Fenton, Eleanor Terrett, Gareth Soloway, Jeremy Kauffman, David Tawil, Dave Weisberger, Steven McClurg & Others

Episode Date: July 18, 2023

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What's up, Gareth? How are you doing this morning? Hey, Scott. Long time no speak. I feel like it's been at least 30 minutes since we last chatted. A couple green candles. Yeah, we'll take it. Gareth, what's up, man? How are you this morning? I was getting the hundreds from Gareth, so I know he can speak. He's giving me the hundreds, but that's the trick I use when Mario tries to cut me off at the end of the stream. When Mario says, hey, Scott, give us a wrap up to end the stream.

And I know he's going to play a joke on me, and so I just start throwing up hundreds. It's my go-to move. I refuse to be the guy to wrap up the streams anymore. So we're just getting all the speakers up on stage here. Of course, everyone, I hope you're having a wonderful Tuesday. Obviously, a bit of a slow news cycle we're having at the moment, but that doesn't generally stay the case for very long since we've seen this market so many times.

And side dots. Yep. What do you make of Brian Armstrong meeting with a Democrat now that there's a BlackRock ETF, now that there's a BlackRock have partnered up with Coinbase, all of a sudden, you know, Brian Armstrong is meeting with a Democrat. So what do you make of it? Par for the course.

I mean, I don't, you know, the Democrats is such a broad. When I read those stories, I'm like, which Democrats specifically? These parties obviously have multiple factions, but I think things are obviously moving slowly in the right direction. These are meetings I think that he's always kind of been having. When I get news that says Brian Armstrong is taking a meeting with Elizabeth Warren or Gary Gensler, that's when I'll really start to have a major opinion on the topic. But I think, obviously, he's trying to strike while the iron is hot, right? I mean, the SEC is clearly on their heels. And if he can go apply political pressure, now is the time to do it.

So I'm not American. I don't really understand the politics as well as the Americans on this stream do it. I'm very interested to understand don't really understand the politics as well as the Americans on this stream do it. I'm very interested to understand why is Elizabeth Warren so powerful? What makes her so strong and so powerful? When I hear her talking, I mean, it's asking me that she's a blabbering fool, to be honest. What is it that makes her so powerful? How does she have so much political power?

Who's behind her? What's the story? Well, she's been around forever and she's on the right committees. I think she's the chair of the finance committee in the Senate. And the Senate is arguably the more powerful house in Congress. And I think she's just been around a hundred years. She knows how to pull favors. She knows how to pull strings and she's got everybody under her thumb. I think it's just the nature of politics in this country. But many, if you dig in really deeply, we've had guests who have talked about it quite a bit. But she is the person that, from a financial perspective, from a market perspective, people believe has the most power in all the Democratic Party, which is obviously why she's become sort of public enemy number one. And you have to listen very carefully when she says

things like that she's raising an anti-crypto army. I mean, many obviously think that Gary Gensler is effectively her appointee and that she's pulling the purse strings left and right. And David, listen, we could just go ahead and start talking about this right now before we get into the main topics. James, David, both of you have your hand up. Either of you, go ahead like Elizabeth Warren is the de facto leader. And part of, this is stuff I've heard from people in Washington, from my colleagues and other people who have contacts there. There was basically an agreement between Biden and Warren that Warren would have some power over the appointees in some of these positions, at the head of the FDIC, at the head of the SEC, all of these things. So all these jokes about Gensler being beholden to

Warren, some of it's a little extreme, but it's also not that far off the mark. I don't think it's far off. Yeah, it's not far off. He actually does basically report into her. He only got appointed, there was issues with his potential appointment, and his appointment kind of came down to the fact that he had to count, like basically bow to the left wing, the Democratic Party. So Gensler wants to be treasury secretary. He's a politician, first and foremost, as a regulator. Second. So his goal is to basically stay in line at the left wing of the Democratic Party because through them is his way to get to other positions. So it's it's it's that's an open secret in basically Washington. Agree. And we've had multiple conversations, both publicly and privately, where we speak with Democratic lawmakers, people around the country, literally in all kinds of different

constituents. And they all say, well, we're actually pretty bullish on crypto, but we can't really say it right now. Wink, wink, hint, hint, because Elizabeth doesn't like it. And we've heard that enough times that I think it's somewhat substantiated. David. Yeah. So let me jump in here. I actually have a longer history with Elizabeth Warren than most. So Elizabeth Warren has been in the Senate for 10 years. Prior to that, she was a Harvard Law School professor teaching bankruptcy. I'm a bankruptcy wonk by background. I studied bankruptcy law, practiced bankruptcy law. She's a very well educated person, very well spoken person. She may be worse than a career politician, which is an academic. And she's not an academic from the corporate side. Her focus in bankruptcy was consumer bankruptcies, which is a

very small and somewhat insignificant, albeit for those debtors, it's very significant that individuals that go bankrupt. But generally, in terms of the meaningfulness of bankruptcy, individual bankruptcy in the United States, it's not a very meaningful area, but that's where she comes from. And that's where her left-leaning tendencies start, which is, I see the downfall of individuals in bankruptcy. I want to see them be able to either restructure themselves, rehabilitate themselves, discharge their debt, and so on and so forth. And she took that torch very quickly in 2013 when she was elected to the Senate to start the Consumer Financial Protection Bureau. That was her brainchild and her baby. And frankly, it comes

from a place which thematically makes a lot of sense with everything that she argues for. Her argument is big business is incredibly bad for the United States. It crushes the individual. It goes ahead and essentially bankrupts them. I know from experience, she says. And so therefore, she is constantly on the side of the little guy. And she believes that all of her policies are going towards that. And then in terms of her power, I would say that she is one of the most well-spoken. I know, Rand, you don't like the way she speaks, but she's actually an incredibly educated, she's a Harvard professor. She's not an idiot. She may say idiotic things, but she sounds very good, especially when she wants to go ahead and prepare her remorse. And also, she knows how to grill the shit out of people. And that she got from grilling Harvard Law School students all day long for the tenure of her professorship career. Last thing I want to say, and this goes back to Brian Armstrong, BlackRock. I don't know if everybody noticed, but BlackRock went ahead

and today announced that they have appointed the chairman or the CEO of Saudi Aramco to their board of directors. BlackRock for a number of years now has been the do-gooder in the world, the champion of ESG, yada, yada. And it sounds like BlackRock's getting the message that if you don't make money, clearly they're the largest wealth management, asset management firm on the planet. But at the end of the day, they need to constantly be replenishing capital, building capital. Major capital in Saudi, I don't care what you think about them politically. I don't care what you think about their oil. At the end of the day, Saudi Aramco is now on the board of BlackRock.

Similarly, Larry Fink has changed his tune with respect to crypto, has recognized the validity and the value of it, and he is now championing it. And I think that that's- Yes, the champion of ESG. Yeah, the champion of ESG is now champion. Exactly. Well, the champion of ESG appoints the CEO, the chairman of Saudi Aramco to his board. I mean, once the PGA sold to Live Golf, it was over for people saying they wouldn't take Saudi money anymore. But that's a topic for a different day. I think we should start here with a market update.

Of course, we have Bitcoin about to nuke as the topic to get you guys in the room. Gareth, are you there? Because I would love for you to give us your quick thoughts on the market, and then we'll probably move on to the ETF after we do a market update. Go ahead. Yeah, absolutely. And thank you guys. So yeah, what we have right now, and again, the last few times I've been on the spaces with you guys, we've talked about that range from 30 to 31,000, where Bitcoin now has been stuck since basically before July, right? So going back to that pump up that we saw on the BlackRock News, it stalled right at 31,000, which interestingly enough was the high from April as well. So we know that's kind of a resistance point. It's also a resistance point going back to the lows from the 2021 bull market. When we dipped in that middle portion, after hitting 65, we went

down to 30, 31, we then rallied to 69. So that continues to be a huge level. Yeah, that was exactly actually, just for clarity, the low between the 65 and 69 highs was 28,600, which is why I'm actually watching that level here as well. Yep, absolutely. So one of the things I'm watching here is we're now dipping right to that 30,000 level and we hammered on it yesterday. It got saved and closed. The daily close was back above 30,000, which was very good.

Today, we're right on the cusp of that. So my concern is this, is that if we close below and kind of stay there for a day or so, you're going to have a lot of people starting to question the bull case and potentially throw in the towel, which could cause a cascade effect in Bitcoin's price action down to what you mentioned, that 28.5 level, and then potentially as low as around 26,700. The 26,700 level is amazing because if you connect the lows from January to the dip that we had in March, which was on the beginning of the financial crisis, that banking crisis, to the dip that we had in June, that's a trend line that slopes perfectly up to that 26,700 level. So again, your levels to watch here, number one is 30,000

on the downside. If it breaks that on a daily closing basis, start looking at 28,500. And then if that breaks, 26,700. I must say, Garrett, I was sick in bed a couple of weeks ago and I did your course. I did your training course. It is such an amazing course. It's such an absolute, absolute treat. I'm not a very good trader. I'm not a very good trader, as you well know. I'm much more of a long-term investor, but I've done Sniper

School, which is Sheldon School, and I've done your school, and I think I'm starting to really, really, really understand the chart. I must say I highly, highly, highly recommend it for anyone who hasn't done it already. Gareth, what's the chart. I must say, highly, highly, highly recommended for anyone who hasn't done it already. Gareth, what's the website? It's called Verified Investing, right? Yeah, verifiedinvesting.com. And thank you, Rand. That's really kind of you. I appreciate that. And I'm glad it's useful to you as well. And I know I've seen, by the way, from when I first met you

and I first came on in the bull market on your show to where you are now, night and day, amazing, amazing man. So I must say, I want to agree with everyone here that this rally's probably run out of steam. And I agree with the technical analysts that the fact that we haven't been able to break that 31,000 more or less level continuously or to close above it on the daily for a number of days is concerning. But the one thing that I am seeing is the sentiment on Twitter today is everybody believes this rally is breaking down. I haven't seen one account say that there's an upside target. Everyone believes that this rally is trading down. And what I've also learned, when everyone believes that this rally is trading down,

that's the point of max pain for the market to give you an upcan. So, you know, I agree with it. And I agree that we've been ranging between this 31 and this 29 or 28 or whatever the number is. Also know that the market does the opposite of what the majority of the traders in the market are looking for. And the majority of the traders in the market are looking for it. And that's the only thing that keeps me saying, you know what, I think this next candle is actually going to surprise everyone. Yeah, I don't disagree with that.

But Gareth, I want to just, going back to what you said as well, along those lines, talk about 38, 28, 5, 26, something. You're talking about those as if they're dips to buy. So, and I think, Ran, to your point, I think a lot of people are looking for a dip, but I haven't

heard anyone saying that the top is in. So I do think people still expect it to go up. But the sentiment is, Scott, the sentiment that I'm hearing in the market is, as soon as it dips, I'm going to be buying. That's what I'm hearing from everybody. So if I listen to the market, barring one or two people like Capo and that community, which have been calling Bitcoin down to 12 grand and still keep calling Bitcoin down to 10 grand, baffles my mind how people still follow that. But I mean, barring that, most people that I speak to are saying, when there's a dip,

we're going to buy. And if that's the case, when people talk about when the dip we're going to buy, then there just can't be a meaningful dip because people are just sitting on the sidelines with cash ready to buy. Well, but also keep in mind that that's where the market can make us all look a fool, right? Is that we're all ready to buy the dip and then the market's like, no, not so fast. We're going to flush it out even more. And I'll say this is that that 26,700 area, that's the connecting uptrend line of the recent lows going back to December of 2022 or early 2023. That would be the point where if we break that, that's where I would start to say,

uh-oh, this could get nasty because then you break the uptrend. And again, right now, where it's a very clear uptrend in Bitcoin, higher lows, if that starts to break, that then becomes in question yeah i disagree yeah ran my first instinct when you described that was that we get the bigger nuke not the earlier bounce but those are the only two scenarios when everyone's expecting one thing i mean i one thing i did notice today um and probably worth mentioning is that i've been trying to as i mentioned to you i've taken a position where i'm going long on solana and short on BNB token. Now, I explained that in one of my shows a couple of weeks ago as to why I'm doing that. It's a market move neutral trade because if the market goes up, I'm expecting them both

to go up together. And if the market goes down, I'm expecting them both to go up together. But I do think that Binance has got a few headwinds and I think Solana has probably passed its headwinds. So one thing I mentioned is I have been looking to take more on that position. The problem is that the funding rate on BNB is very, very high. Now, when the funding rate is very, very high, and it's high and negative, when that happens, what it means is that the market's expecting bad news on BNB. Now, I'm not saying that it's going to happen. I don't know anything. I don't have BNB. Now I'm not saying that it's going to happen, I don't know anything, I don't have any inside information. All I'm saying is the last time that I saw this was before we got the SEC action against Binance. So what I'm seeing is I'm

seeing a lot of fun in the timeline and I'm seeing a very, very, very high funding rate if you want a short BNB. And so that, I mean, I guess if you're looking for something that could nuke the market to below the 26 level, if you're looking for the fundamental story that could bring the technical story to life, if we did hear some bad news about Binance, that's one of the things. Though I must say, I do think that in the long term, the market, as every day goes by by the market is starting to price uh bnb fud more and more into the market in other words you know initially it was like you know the sec will never go after binance then the sec went off to binance now we're saying look the doj will never go after you know there's a there's a threat about the doj going off to binance initially it was like

never now it's like well maybe and soon it And soon, it will become, well, probably. And so, the market starts to become, you know, almost like starts to become okay. Yeah, I don't even think the market reacts majorly if there's DOJ charges against Binance at this point. Well, yeah, exactly. I think that's exactly the point. So, the more time that goes past, the more time people have to rationalize to rationalize again for the record i do think that maybe in in their past binance did some things that were maybe not exactly by the rule book as well as coinbase did things by the rule book but in general i think that they always run in good faith i don't think we have an ftx scenario

i just think it was a business that grew very quickly without the right systems and processes in place that didn't keep up. I remember in 2017, we all used to trade shit coins on Binance because Binance used to list in quicker than Coinbase. And that's where Binance got its market share now. And shit- And that's, by the way, why people started trading on FTX because they started to add perps in real time for brand new coins.

Yeah. So if you're looking for a fundamental story that can match that technical story, that's one of them. And I guess the other thing that could happen is we could get some kind of stock market correction, because I think Gareth will be the first guy to tell you that probably the stock market needs a correction too. We've been going- It's a lot of stock. Yeah, a lot of stock. I mean, and just to be clear is like, I'm a huge long-term bull on Bitcoin, but my biggest concern that I think no one's pricing in is that at some point, some of this economic data, and we saw economic

data today that was weaker than expected. The jobs still have been holding up, but at some point, if we did, let's say, drop 20% in the NASDAQ, how does Bitcoin hold up in that scenario? And I think that that's the case where we could see below 20s or even lower, where it kind of just freaks everyone out. Because right now, everyone's so bullish on Tesla, so bullish on Nvidia, so bullish on all these tech stocks. If that were to kind of be a rug pull down, then again, you have flight of capital overall. Right.

Guys, really quickly, we have a bit of breaking news. Justin Bitwise's spot Bitcoin ETF application is now on the federal register. James and Steve can obviously give us a lot more color on what's happening there. We'll come back to discuss the market further later Steve, we're going to talk about right now. It looks like maybe bitwise unless I'm wrong, that this is the similar getting third in line. So Steve, can you give us some color on what's happening there? Obviously you're Valkyrie and seemingly second in line, correct? Well, it all depends. And maybe what I'll do is talk a little bit about how 19v4 applications work. There's a lot of

speculation on Twitter and elsewhere about how they work and what it means and who's first in line and who's second in line. And I think most of it is wrong. James Safer is probably the only one out there that is actually doing it right.

And I'm glad to be friends with James because he's probably one of the smartest dudes I know. But I'll tell you how 19v4 applications work. A lot of people speculate that because something is filed on a certain day, then there's a drop dead date the SEC has to take action on it. Well, that doesn't mean that that's the day that the SEC takes action. It means that they have to take action by that date, and that action can either be approved, denied, or postponed until another date. Generally, the way that 19v4 applications work, it isn't necessarily who files first or who gets accepted by the SEC first.

It generally is who's right. So a 90B4 application can be simply created and filed for a bunch of people. And the information in the filing may not be what the SEC is actually looking for, whereas another filing might be exactly what they're looking for. So, and then the other circumstances, what if they're all pretty much the same, right? When they're all pretty much the same and they're all filed around the same time, the SEC could very simply just, you know, all the ones that are correct or all the ones that answer the questions the SEC is asking for, they could just say, all right, we're going to let them all go at the same time, regardless of when it was filed, regardless of when the date is that they have to answer by.

So it is actually possible that all go at the same time, the handful that actually answer the questions and have substantial information in them all go first at the same's five or six that are all, you know, accurate, they could just choose one that they like the best and let it go first, aka BlackRock. They could do that, absolutely. And generally when people talk about, you know, which filing was first, and that's generally the order that things are picked in, that generally has to do with S1s,

not the 19b4 application. So S1 is the actual ETF filing that the issuer files, right? The 19B4 is a rule change for an exchange. So anytime that you talk about, you know, order, it's usually the S1s, not the 19B4s. Interesting. James, this is all he does is cover this stuff.

I'm sorry, Jay. I'm sorry that your job is to have to do this all day, James, but have at it. Yeah, I've lost a lot of brain cells reading about this whole process and trying to keep up with it. But before I say any of this, and I agree with everything Steve said, they're deadlines. They're not, this is the

decision, the date that the decision is going to drop. In the past, they have denied multiple on the same day, even though their deadlines weren't for weeks. So that's not out of the order. The other thing I want to say is like, the SEC can pretty much back into whatever the hell they want to, right? Like they could argue that they're approving this because this filing had something they specifically they were looking for. Like the SEC can, if they really want, they can do kind of

what they want to do. The one thing I will say with this federal register, Bitwise is ahead of this week. Like if we're talking clock and just what's going first, Bitwise is the first of this most recent wave. ARK21 shares is technically months ahead on the same timeline um there was talk around twitter and in my like world of fin twit that if they put all these on the federal register on the same day it might be an indication that the sec is leaning towards approval that's what we i was looking for i thought the odds were pretty low but it was something i was watching for because it would basically be the sec kind of showing their hand that they're getting ready to possibly approve these just putting them all in the same timeline.

There won't be any questions. They didn't do that. Bitwise was first today. And then theoretically, we should see all the others posted to the Federal Register tomorrow, which is like when the official official clock starts. But really, as far as I'm concerned, it starts when they post it to the SEC website. And then 99% of the time, six days later, it's posted to the Federal Register, which again is when the clock actually starts. But I agree with everything Steve said in that the SEC can just decide on all these at the same time. They could give them all the go-ahead because all of them are going to be in this 19B4 process. Now, I think that the decision will either come within... So basically, the courts are going to decide on this GBTC case, right? Then the SEC will have, from my understanding, like 45 days

to respond, either deny for other reasons or approve. So I think within 45 days of that GBTC decision from the federal judge panel, we'll have an answer on whether these things are going to be approved. And then the next area is ARC 21 shares. They're filing the final deadline. We're estimating to be around January 10th of 2024. My personal view is that if they don't get approved on that day, that I don't think any of these are getting approved. So basically, I think they'll get approved. And if ARK 21 shares gets approved, say they go a day earlier, then they'll just approve all the others right after. Because for the most part, as far as I'm concerned, there isn't super strong differences between

them aside from where they're listed. Steve and Valkyrie are going to be listed with NASDAQ, obviously. They're partnered with iShares. They were the first ones to do that surveillance sharing agreement with Coinbase. So there's arguments the SEC could make that they were the first ones to get the SSA. Who knows? But really, I'm just going to go back before I stop talking that the SEC can kind of like, they can finagle like however they want this to play out in reality.

Yeah. So if the SEC is allowed to do whatever they want here, the one place they've clearly not been able to do whatever they want is deeming things securities because Gary Gensler was very disappointed yesterday in the Ripple decision. I've got to imagine there's somebody else on stage today who's a little confused. Jeremy, considering library, obviously, you guys were deemed to security. You kind of ended up being the whipping boy of the SEC. And now the SEC is on their heels with the courts. What do you make of it, Jeremy? That was a great setup for someone. Well, I'm sure everyone loves it when I just

rant against these people. It's obviously tremendous for them to take this loss. And I think the biggest thing that this does, because I actually think it's legally debatable, all this stuff, wherever we all play out, but that's what's important, actually, is that it's clearly legally debatable. So this line that Gendler's been going around saying about how the rules are clear,

I mean, you just can't give this line at all anymore. You just can't do it. And so I actually do not, I know, I just, I don't take the opinion that it actually is clear. I still don't know what I can do. I wish my own government would tell me. I wish someone would tell me. I wish third parties, you know, if they believe that library can be traded and sold and so on legally, I wish that they would, you know, start doing that. I mean, there's still, you know, regardless of of this ruling there is still a huge chilling effect in the industry that's coming from the sec everyone is still very scared about what they can

and can't do and so while you know i'm very happy to have gotten this victory i mean it is it's it's still in my view a pretty small piece of of what we need if we actually want to be able to freely trade and use uh cryptocurrencies uh use cryptocurrencies in the US. Yeah, so I must say, I read the court transcripts for the hearing. I think it was Coinbase against the SEC. There was some kind of preliminary hearing or something like that last week. And I read the court transcripts. And one of the things that struck me about the judge

is that the judges in these cases are looking for any type of precedent. So the one thing that the judge said, the judge said something like, are there any similar cases or anything like that? And the library was obviously quoted quite a bit. The judges rely very, very much on past ruling from other judges. Now, I think that what we got with Ripple and the SEC was we finally got a ruling that is in our favor,

as opposed to, if you look at all the previous cases, the previous cases all strengthened the SEC's case. What struck me when I read this is I said, hold on a second. If the SEC goes after a whole lot of weak cases, I'm going to say weak cases, I'm saying cases that are not as well funded as the Coinbase case or the Ripple case,

which means that the SEC is coming and can basically bulldoze them. And I'm sure in Library's case, you guys must have felt the same way that you didn't have as much money as the SEC. You could only make use of the resources that you had in order to defend. And maybe if you had more resources, you guys could have presented something better, something stronger. Maybe the outcome would have been different. But what struck me was just how important these legal judgments are in weakening the SEC. I wonder how you feel about that. Well, I think there's two separate processes and they're remarkably decoupled. You have the actual legal process that's playing out of what is the law of, you know, of circuit courts and eventually the Supreme Court. And then you have this process

of public perceptions. How do people think reality has changed as a result of these things happening? Right. And, you know, and they're both important because when public perceptions don't match the law and a bunch of people start doing things, frequently what happens is the law changes, okay? I mean, I think one of the best models for the cryptocurrency industry is what happened with DraftKings and Fantasy Sports, right? You had something that everyone thought this was illegal, right? Young sports would have been like thought this was illegal, right? Like young sports would have been doing online gambling a decade ago if they thought they could have gotten away with it. And DraftKings was like, well, we're just going to do it. And then

enough people used it. And what happened is they changed the laws, right? And so, you know, regardless of how the legal reality has changed, if millions of Americans start doing something that they think is legal, it's very hard for the government to then say, no, no, no, no, no. Look, we have a court over here. You can't do this because you can't really put that back in the bottle. And so I think one of the best things that could happen is even if there's something that, well, we're not sure if it's legal or not, if this causes a bunch of people to go out and start doing it, that is great because that is one of the things that will actually make it legal. Do you think that if you had more money, the outcome of your case would have been different? More money? I mean, I honestly think

if I had just been a little bit smarter, I mean, I think I misunderstood key things about how a court and a trial actually work. And I think if I had just taken more time to learn some of these issues better myself, I think I could have done it myself better. So I mean, would more money have helped? Absolutely. I actually think given the amount of money we spent on the case, I could have deployed those resources better and just done a better job with the money I had. But yeah, of course, more money would have been helpful. And there were times where people asked us sometimes why we didn't do X or Y. And yeah, definitely money was part of the answer. I mean, I told our counsel, I was like, hey, we can't let this stretch out forever. We

can't afford this to continue to go on. It's killing the business. And I encouraged them to play it a little bit faster so that we could get through it one way or another and that may have um you know that may have have have heard of that i don't know you know but i think all of our accounts and bits like that so you know yeah yeah please just to this exact conversation i just pinned a tweet up in the nest for meta lawman james mur talking about the transcript of the pre-motion conference in SEC versus Coinbase, because this is really relevant. This is one of his favorite quotes from the judge. The judge said this, this is in the pre-motion for Coinbase, what is the difference between those that are not securities and those that are? And how has that been communicated by the SEC to the investing

public and to those involved in the space so that they know that this type of asset may implicate the securities laws and some other crypto asset may not. The SEC lawyer answers, paraphrasing, all they need to do is judge is read the 1946 Howey case about the Orange Groves, to which the judge said, I'm just trying to figure out how folks involved in the industry can know that a particular crypto asset with which they are involved is or is not going to be found at some later date by the SEC to be a security. Guys, this is the judge in the Coinbase case

who, by the way, shares an office building with the judge from the Ripple case. The SEC is just getting absolutely... I read that whole transcript. I think it's something like 60 pages or 66 pages. I read the whole transcript. It's like watching a crypto media. If you understand crypto, it's actually quite...

You listen to these lawyers talking. You side with... Obviously, I sided against the SEC with Coinbase. But I mean, it was actually super, super, super interesting. And again, I think the judge came out many times and said something like, well, how are we to know? It's impossible to know uh etc etc um the the other interesting thing about that case is how they look at staking so one of the things you probably would have heard is that coinbase have shut down staking in a couple of states recently um and i think that's

pressure coming from those individual states um and it's quite interesting to understand how the SEC views staking versus how Coinbase views staking. It's like they're worlds apart. Steve, I see you have your hand up. Okay, go ahead, Bruce, and then Steve. real quick. Don't forget the definition of security is not just Howey. Howey is a piece of the part that relates to investment contracts, but it also includes stocks and bonds and other evidence of debt. So staking would, you know, debt is the security, you know, when you have it as a tradable instrument. So the Howey thing doesn't even necessarily matter. And the XRP issue may be completely separate from the issue of whether staking is a security. I mean, the simplest example would be if somebody creates a token and makes a bond

and says, you're going to loan us money and we're going to pay you back the token plus 10 that's clearly a security in my opinion and i think it would be in the sec and the court's opinion as well yeah what what the what the i mean that's a lot what i was just going to say i mean i've you know bruce and i have both been in the financial services industry for you know decades now and um but i want to walk you through because people keep saying well how do i know i don't know you know like you know anybody that's been around long enough knows that any investment that you make on behalf of clients

right you have to write up your investment thesis that way if there's any question whatsoever and the SEC comes through and they're doing either their annual review or they're investigating something, they say, well, why'd you make this investment? Well, you pull up the paper that you wrote that says, here's my investment thesis. Same thing in the crypto industry. If you're investing in a token on behalf of clients and you're doing it in a vehicle that, say, doesn't allow securities, you need to have solid evidence of why you believe it is. Now, the SEC could come back later and say, OK, we deem this to be a security. Well, what safeguards you is that you put actual thought into it. You maybe even have, as far as a legal opinion, you might have your compliance officer opine as well, but you've written up a thesis of number

one, why you made the investment, why it's a solid investment. Number two, why you believe it was not a security when you made the investment. Here's all the reasons why. And by the way, just like Bruceuce said how we test is not you know the the only body of work that governs what a security is uh and and that's and that's what you do and i think coinbase actually did a pretty good job of of you know in the early days making a list of here are all the you know different tokens out here and you're the ones that we think are not securities are the ones that we think you are and here's the test that we apply it's good work not under that now the other part is is defy right defy i again agree with bruce um you know when it comes to staking there's two different types of staking

there's there's staking being network you know um where you're actually you know in proof of stake you're you're you're staking the network itself. And then there's also separate from that. And this is where there hasn't been a whole lot of bifurcation by regulators. But separate from that is where you're entering into a staking pool. And that, I truly believe, is a security because you're creating essentially a security contract. It's no different. Is that effectively like staking as a service,

Steve, like staking as a service, like crack and effectively gotten in trouble for it. Yeah. It's basically putting forward a, a token, essentially lending it right. You're,

you're earning money for lending it. Somebody else is borrowing it and pay. That's not borrowing. That's not the case. That's what a DeFi pool looks like. Staking to the network to support the network is a completely different topic. And that probably wouldn't be a security. Yeah.

So Coinbase's arguments were on staking as a network. So staking Ethereum or staking Slotnir as part of a Vendator and their argument in the preliminary hearing was that all they're doing is providing a software service to allow, to basically take people's tokens and allow them to what's the word, stake them to the network.

And I think that's the staking. I don't think, as far as I know, Coinbase don't do the other type the staking. I don't think, as far as I know, Coinbase don't do the other type of staking. Sorry, I lost sound there. Ran, were you addressing that specifically to Steve? Yeah, I mean, can you hear me? Yeah, I hear you.

That's the big argument. Around staking, whether it's an investment service or not an investment service. Coinbase claim, it's not. Anyway, I think what's going to happen with these things is the courts will resolve them over time. I think the crypto community has at least now one ruling in their favor, which means up until now i think gary gensler was just swinging blindly and now he just can't swing blindly anymore i don't think he can come out and do another solana cardano you know 12 tokens or securities anymore because i think the court's pretty much cutting off his hand yeah i i 100 agree with that joe do you agree with that because uh you're obviously our contrarian prettyian pretty often when we come in and of themselves are securities, and those are

defined by statute. In other words, Congress said, we're going to make sure that these types of things, bonds, other instruments, that they're understood to be securities. And in the context of Howey and investment contracts, which is generally what we're talking about here, it's a very different test, right? And the test under Howey, and this is not my opinion, this is, you know, in the case law, it's on the SEC's own website when they're talking about the framework for digital assets. They describe that the focus of the Howey analysis is not on the instrument itself, but on the transaction. Okay, exactly what is occurring. And under certain transactions, we're going to imply by law, a contract that transforms it into a security. So one instrument in itself can be both a security and not a security,

depending on what transaction is involved with. For example, Bitcoin, I think most people, most part of participants say, that is not a security, right? But if I loan Scott my Bitcoin, and I say, Scott, I'll give you this Bitcoin in exchange for a 5% yield, and you go out and assess counterparties, you lend it out. Suddenly, that is transformed by virtue of the transaction into an implied in law contract, an investment contract. So it's really important when we're talking about these things like, well, can this thing be a security? Can this thing be a security? Can it not be a security? The answer is it can

always be a security. The question is what transaction is involved? So this is what effectively the judge ruled in the Ripple decision. The judge ruled that in the original sales, that basic transaction was an implied in law investment contract, which they had to pay, they had to register for. They couldn't raise that kind of money without going through the proper regulatory channels. So the idea of, I think somebody was referencing the judge in the Coinbase suit, and I think the judge's question, what she's really getting at is, does the SEC's position, is it that a thing in and of itself can be a security? And we don't really have clear guidance

from the SEC on that. They've never really taken a position. I mean, like I said, I can show you passages from their own website. They're the masters of not taking a position. Yeah, yeah. Is Ethereum a security? Well, there's a reason for that. There's a reason for that. The reason they don't taking a position. Yeah, yeah. Is Ethereum a security? Well, there's a reason for that. There's a reason for that.

The reason they don't take a position, just to give you the other side, it's always important to steel man the other side. The other side is that we're not going to give clear guidance that this is or is not a security because what I just said earlier, that under certain transactions, it can be a security. For example, XRP, right? Certain transactions, it can. So what market participants need to know, they need to know that in the

particular transaction that's occurring, does it fit the bill for how? If not, then you're good. And so far, I do not think the SEC has taken a clear position ever that a token in and of itself can be a security, which is really important and it's meaningful. I think the most meaningful thing to me in this case is that the judge Torres has made the decision the appeal is going to take a very long time. So the narrative, whether true or false right now, is that all of this stuff is not securities and people are going to proceed forward. Well, keep in mind, I'm not saying they're right or they're wrong. I'm just telling you that when we see everybody relisting these coins and we see them talking about moving forward and we see the price action reflecting it, I think whether it, uh, however it sort of plays out in the wash at the end at this exact moment, that's going to be the narrative and the view. Yeah. I just have a question for Joe.

I'm just wondering what you think about, you know, will the SEC ever take a position on this or is it kind of their job to be deliberately sort of vague? So, you know, with, with times changing, with technology changing, they can kind of be, you know, not so concrete down the line. They kind of sow that sort of discord to be like, all right, well, we can change our minds at some point if we feel it necessary.

Do you think they'll ever take a staunch position? Yeah, it's a great question. And it goes back to, no, I don't think they'll ever take a staunch position because their positions are taken in cases and they're taken with respect to specific transactions. And if you were to tweak the fact pattern just ever so slightly with what the Ripple decision was, you could easily make the argument that secondary market sales were in fact investment contracts.

Let me explain how. One of the big reasons the judge points to is that she talks about a blind order book in which the programmatic sales were only 1% of the daily volume. Meaning that in the overall market space, Ripple's influence in the programmatic sales was de minimis, right? It was less than 1% or 1%. What about a situation, and this is how case law is always developed, where the issuers of the tokens are doing programmatic sales that account for half of the daily volume? There are hundreds of tokens right now where the issuers of the tokens sell on spot exchanges and secondary markets, and they make up over half of the daily volume. Does that change Judge Torres' analysis?

Does that mean in that context, a secondary market sale would in fact be an investment contract? I have my own views on this, but I'm not a court and I'm not a judge, right? So a judge in a different circumstance, as the case in most securities litigation, can come down the other way. They can say, no, we think these secondary market sale tokens are, in fact, investment contracts. And this is how case law develops. And the real problem here is that case law that's developed, case-by-case decision, creates confusion and vagueness in the space. And it would be a heck of a lot better if Congress just got off their butts and acted and passed some sort of legislation so that we don't have piece-by-piece litigation on certain issues with lack of market clarity. Look, I must be honest, I'm so legal about them.

I think our discussions have been so illegal in nature since the whole Ripple case. I think we're so stuck in the weeds of illegal that we've forgotten to look around and see what's actually going on. And if I do look at what's going on, you've got Solana coming back to pre-FTX levels. You've got Matic on the pump again.

You've got Cardano on the pump again. I guess that that's just going to carry on until such time as we get some kind of more clarity through more cases. I think until then, people are deeming that it's business. I wouldn't say business as usual. I'd say business with caution.

Right now, it's old season. Or back to business. Yeah, it's back to business. I mean, I must say, while this has all been happening, and people have been talking about this, we've got XRP pumping, we've got XLM pumping, we've got Matic pumping. I'm actually just going to quickly log on to Banter Bubbles

and quickly just look at, I'll just quote you some on the monthly. So let's just quickly look on the monthly. You've got BCH 123% up. You've got Compound 146% up. You've got Celana up 62.35%. You've got Stellaana up 62.35%. You've got Estella 62.5%. You've got Pepe up 60%. You've got Ivory up 40.3%. You've got Changning up 33%. So for now, it seems like it's business. What did you say, Scott? Open for business again. What was it?

Back to business. I just think we went through this phase over the last year and a half. I can't even say how long at this point because it all blurs together, where all of a sudden, you know, Gensler and the SEC is sort of an uptick in rhetoric against all coins and the whole conversation about securities. And like I said, I don't think that we're very clear on what is or is not a security. What I do think it's clear is that the industry is taking it as if these are not securities. Let's go. Yeah. I think with those, we can sit here and we can debate the legal discussions ad nauseum. And I think we have done that already.

We can carry on debating what we think and what we think. I think time will sort it out. I think it's back to business on the market. I think if you look close enough on the markets and you can develop a whole lot and understand the narratives that are pumping, there's a lot of money to be made in the interim. And I think if we keep focusing on the legal arguments, we'll never get there. Yeah, I agree 100%. It's hard to talk about anything else. I think that the real bottom line is no matter how deep we get in the legalese, what matters, certainly what matters to us because of the way we approach this market is how the market

is taking the news and what that's going to mean for the market in general. I really believe that regardless of whether it's the truth or not, we know how people interpret news, that now it's open season. I really think so. Gareth, I mean, before we go, Gareth, what do you think? I mean, obviously we talked about Bitcoin. Do you have a particular feeling on what altcoins will do now in light of sort of this obstacle being lifted?

Gareth's been on Benjamin Cowan's show very often, so I suspect he's going to tell us that he thinks Bitcoin dominance is going to go up. Yeah, I'm not sure he's going to tell us that he thinks the dominance is good. Bitcoin dominance is going to go up. Yeah, I'm not sure he's here anyways. Anyone else? Final thoughts here? I think one quick point on your point, Ran, about, you know, all we think about is legal. I mean, that's a shame.

You know, all props to my, you know know many good friends who are lawyers who are uh hopefully doing well financially in the last several years with this but other than that it's it's ace and a whole bunch of other people have to spend just hours and hours and hours they're dealing with this legal stuff without without clarity i mean you know you have a company like now i mean i i hear you bruce company like... No, I hear you, Bruce, but it's just, I think, we've spoken about this legal case, and it just feels to me like,

you know, there's no progress that we're going to get now. We've heard the case over and over and over and over and over again, and I think we are where we are, and we must just let the legal processes take their course, no? Well, remember,

we should remember, though, that the root of all of this pain and suffering is, as with almost everything bad in the world, it's politicians. It's politicians, busy- remember, though, that the root of all of this pain and suffering is, as with almost everything bad in the world, it's politicians. It's politicians, busy body, nanny state politicians, and in this case, people who have been dead for half a century. That's who is causing this pain right now. A bunch of pen-headed idiots who, back in 1933, who grew up without cars, whose fathers and grandfathers were Civil War veterans, they got together in 1933 and decided there ought to be a law. That's what causes problems across

the board. Everything from why we're fat because we're eating seed oils, to why people are getting shot, to why, you know, you can't go to Target in San Francisco without it getting robbed. It's always politicians. These pinheaded clowns, we don't even know their names, a bunch of people in 1933 all got together, oh, we got to really protect the investor. And if you look at the other things that that Congress passed, a bunch of crap, a bunch of junk, one of the worst Congresses in history, 1933 and 34, two of the the principal acts they passed a whole bunch of junk and here we are 90 years later still paying for it that's the lesson we should have from this bruce i have this argument every day today is the last game that i want to talk about it

i think from but just yesterday you said you wanted more regulation so it's important because you keep competing about it and then and then have more regulation regulation because this regulation argument is so stale argument about how we how congress is bad is so stale and to be honest i want to get out the real business of altcoins and which altcoins to buy and which altcoins to sell because that's why i'm here i'm not here to talk about the legal the lawyers will carry on doing illegals and i think what i want to talk about is i want to talk about altcoins. And I want to talk about which altcoins to invest in and whether I think the markets are going to go up and down. And so I think tomorrow we'll prepare a show where we go and we talk about altcoins. And we talk about

investing. And we talk about what we should be doing. I just think that we can have these legal arguments every day. We've spoken about the BlackRock ETF and the BetWise ETF for the last 15 days, and we've said the same thing for the last 15 days. We just had different sides of the argument. I think it's time to move on to actually different business, bigger business, other business. Let me know in the comments. If you guys are in the comments, let me know what you guys think. I'm also open to hearing from you, Scott, and maybe the rest of the speakers. I just can't imagine talking more about ETFs and talking more about case precedents when there's nothing actually going on. Joe has his hand up if he wants to tell you more about the ETF and case precedents. No, I actually don't.

But I think it's germane to what you're talking about, Ryan and Rob. Ryan, and the idea that I think is interesting here is that if it is correct, okay, and let's just put the legal area aside, let's just assume it is correct, that tokens in and of themselves cannot be securities, which it seems to be what Judge Torrance ruled. Then what that opens the door to in the coming cycle is aggregations of tokens and let me explain like one of the dominant themes of the investing world for the last 30 years has been passive indexation right indexing uh you know stock including the sb500 fund or other etf type vehicles and and obviously if you're indexing securities you're effectively launching a new security so one one thing that some market participants that I've talked to, both officially and unofficially, have talked about for the next cycle is the passive indexation model instead of coming to crypto. If these tokens in and of themselves are not securities, why won't folks just at large aggregate them?

What prohibition is there on that? The FTC can't really step in if they're taking the position the token's in and out of itself. So you could buy the top- The check index, the metaverse index, the NFT. Yeah, the check point index. The companies that we've been seeing them surrounding. Exactly. So like the old John Vogel say or praise,

you don't need to pick the winner. You don't need to pick the needle in the haystack. You can just buy the haystack. And that's an interesting concept. I don't think it's come to crypto yet. And it may be something that comes in the next cycle, given some of these precedents that have come down. Yeah, I think that that's definitely something we just see. Guys, you may have just noticed that a very, very red logo of a podcast mic has appeared on stage. That's crypto underscore town hall. That is where eventually we will be hosting all of these conversations from in the future. So please. And we're also going to get that account much more active.

So you have a reason to follow it. But the reason to follow it is because if you want to know when our spaces are going live, that's the account we will be launching from. So please, I see a little purple heart happening on it and everything. Please go follow that account because we don't want you to miss these conversations in the future when we do migrate off of Mario's account and over to that one. So, so, Ran, the bottom line, I think your summary here, I can't hang up on you, so you don't have to worry about it. I don't have that power. Is it you want to start talking about markets a little more? Yeah, I want to start talking about markets. I want to start talking about which markets, which narratives are moving. I'm noticing a couple of narratives

that are moving, and I think it's important that we share it with the communities. I think there's one thing we'll talk about tomorrow is that I think there's a new narrative in the markets that's as big as meme coins, if not bigger than meme coins. And I think that most people aren't even, you know, people are making hundreds of Xs. And I think that, you know, I think we should probably introduce it to the crypto family and talk about them. Can you give us a hint? Give us a hint. I want to go make 100 X.

Oh, no. Just tune in tomorrow. Tune in tomorrow, Scott. Tune in tomorrow. I'm supposed to be in the know. I'm in the know, yeah, but I think we'll do it tomorrow. Also, I think we'll spend

a lot more time actually talking about different cryptos and different narratives that are running, different sectors that are running, why they're running. There's an L2 narrative

in Ethereum, a 2 narrative that's happening. We'll talk about why that's happening. I think until there is real legal news and until there's real progress in the ETFs, I don't want to hear more about the ETFs now. I've heard it a million times. It just sounds the same to me every single day.

All right. Well, I'm sure it'll come up and it will be breaking news in the future. But yeah, for now, I think that we've beat it, beat that dead horse and continue to beat it. So listen, guys, that's all we got for today. Obviously, a kind of a shorter show, but a really great insight, I think, and gave us some inspiration for tomorrow. So, Ren, any final words before the ghost of Mario lets us go? I think we'll see everyone tomorrow. So, Ren, any final words before the ghost of Mario lets us go? I think we'll see everyone tomorrow.

Alright. Now I'm hoping to get the alpha from you that I don't even know about as a host, so I'm looking forward to it. Cool, guys. See you tomorrow.