The Wolf Of All Streets - Bitcoin And Tether Will Fuel The Next Bull Market l Paolo Ardoino

Episode Date: November 5, 2023

Tether has been arguably the most successful company in crypto, as stablecoin adoption increases and the company make billions. Is this what will drive the next cycle? Paolo Ardoino, CEO of Tether and Scott Melker discuss. ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/ ►►OKX SIGN UP FOR AN OKX TRADING ACCOUNT THEN DEPOSIT & TRADE TO UNLOCK MYSTERY BOX REWARDS OF UP TO $60,000! 👉 https://www.okx.com/join/SCOTTMELKER ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. USE CODE ‘2MONTHSOFF’ WHEN VISITING MY LINK. 👉 https://tradingalpha.io/?via=scottmelker ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/ ►►NORD VPN GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd Follow Scott Melker: Twitter: / scottmelker Web: https://www.thewolfofallstreets.io Spotify: https://spoti.fi/30N5FDe Apple podcast: https://apple.co/3FASB2c #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment..

I expected you to show up in a blue suit with a red tie now that you're the CEO, but you're still in a t-shirt like me. Tether has worked with 30 different law enforcement agencies around the world in 19 different countries, including US, including Ukraine, including Israel. Basically more heavily invested in treasuries than many of the largest countries in the world. I think it's extremely scary. Although we have a strong investigation team, we don't have 200,000 people. I have long made the argument that outside of Bitcoin, the killer app for crypto is stablecoins.

People in countries with hyper inflating currencies don't generally rush into Bitcoin or other cryptocurrencies. They have a thirst for dollars and they can't get them on the black market. They can't get their hands on cash. But what they can get their hands on is digital dollars. And the most popular one, of course, is USDT, also known as Tether. I once again had an amazing conversation with Paolo Arduino, now the CEO of Tether. And we discussed why the market cap of Tether has increased so much,

why in countries like Brazil, it's 80% of all crypto transactions, and of course, why there's still endless fear, uncertainty, and doubt surrounding the company. You don't want to miss this one. Paolo, first of all, congratulations. I heard you got a new job. Yes, thank you very much, Scott. So I guess it's probably more of the same for you, right? Yeah, it's the same old, same old business as usual.

So what's the difference between being a CTO and CEO? Great question. I think that now people expect, you know, less techie stuff and more business things. But I'm being always excited about strategy and business. I've been carried that over at Tether for the last two years anyway, right? So, and I'm a spoke person. So it just meets us. at Tether for the last two years anyway, right? And I'm a spoke person, so it just means I... I expected you to show up in a blue suit with a red tie now that you're the CEO, but you're still in a T-shirt like me. I mean, cool CEOs have T-shirts, wear T-shirts.

That's right. Steve Jobs and Mark Zuckerberg made it okay for everybody to just wear the same T-shirt that you and I are wearing right now every single day. But more seriously, obviously, congratulations on that. I know it's probably not a you had just reported that quarter and had done that obviously astoundingly well. We discussed the fact that that was largely because a lot of your money was in United States treasuries, earning high yields. Those yields have seemingly only gone up. And I saw that you guys had even another attestation more recently than even now a higher percentage of your holdings are in cash and cash equivalents? Yeah. I mean, the last attestation that was just published a few days ago is another, I think,

proof of our willingness to provide further and further public information. So first of all, another great quarter. So the net operating profits are still around $1 billion. There was a public disclosure of an investment that we made into mining, mining companies and mining opportunities, and a few other areas. As we stated in our attestation, our report, that is outside of the consolidated report. So it means that we didn't use Tether UADT reserves to perform those purchase and investments. So we took part of the profits of the last quarter in order to make this investment. So they are fully kept outside of the reserves, not kept at reserves or accountants reserves. So no one can say as well, but mining is tricky, it's difficult. So what if you lose all your equipment, it goes on fire, are you going to lose your money?

No, that is outside consolidated research, that is not at all impacting our research. So the excess research that we have on top of the 100 research that are back in USDT are still tally 3.2 billion dollars. So that is always our goal to make sure that the USDT token remains overly backed, overly collateralized. We are around 104%, 104% over-collateralized. So still we want to show our commitment to the strength, to maintain the strength of USDT. We have seen that USDT in the last two months have traded almost consistently, also in these last three, four weeks, because it traded consistently above the dollar and above the market price of our main competitor. So that also is almost a sentiment

of the market and also you know when there is something happening in the market people turn more and more to USDT. The other important part of our station is that Tether still holds around $72.6 billion in US treasury bills between direct exposure and undirect exposure. Just to clarify, I think it's important we got some questions in direct exposure is clear direct ownership of T-bills, undirect comes from only market funds and overnight reverse repos, holding collateral in US T-bills. So the total is $72.6 billion. So we feel put on the ball in Mexico, Australia, and UAE in ownership of US T-bills.

Stig Brodersen That's just astounding to me. I mean, we've talked about that, obviously, in the past, but the fact that you're basically more heavily invested in treasuries than many of the largest countries in the world should be an indication that you should be supported by the United States, right? I would say so. Yeah, I would say so too, but we've seen some pretty wild accusations coming once again from the government. I have to say I was really surprised. Obviously, we went through the entire fake news situation of Hamas being funded by terrorists and Elizabeth Warren's letter to Congress with 100 other congressmen and senators that we saw. Even after that was proven fake, Cynthia Lummis, who we all view as very, I think, open minded on Bitcoin, very crypto forward. She's proposed stablecoin legislation, had this curious letter that said that the DOJ should finish investigating Binance and Tether and effectively pursue charges. And it was based on fake news that it had been used to help fund terrorism.

Can you unpack that a bit for me? Because I found it very, very strange and surprising. Yeah, I mean, the term that I would use is sad because I think that Tatar more and more has been proven to be a good ally to the United States. I was mentioning just a few minutes ago how much of an interest we have in the US CBOs, so we consider that the most solid asset, the real world asset that someone could hold in its portfolio. And also, I strongly believe that, we strongly believe that the tether is helping the hyper-tolerization of the world. So, it should be considered.

Nevertheless, yes, you are right. A letter based on misinformation, well, they started from an article published by the Wall Street Journal that, the Wall Street Journal took weeks to retract because it was full of misinformation. That article was accounting for a level of usage of cryptocurrencies to help illicit activities that was off by 200 times right it's not like a small difference right so they did a really poor job and in uh in trapping those numbers and of course someone could argue that you know maybe it was a mistake my opinion was not really a mistake right there was a message that the wall street journal tries to send on behalf of their friends of the old establishment of the banking establishment. That's something that triggers at least my mind. So also the time they took, I mean, if I was a

journalist, right? So if I was a journalist, someone writes me, I know that Nick Carter pinged them many times saying, hey, your data doesn't even make sense, right? Your data is fully researched and there are common key analysis made a huge investigation and proved that that information was overly wrong. And so why you are not retracting the article? It took a week to write like a couple of lines and yeah yeah maybe the data was not was it nobody sees the retraction ever yeah exactly so i think was um potentially you know and this uh this article was treated with uh an ulterior motive in my opinion and you know that that's fine I think is in the end it's

you know they are I think it's a race of desperation of them no we'll see how it will play out but unfortunately the sad part is that you know it was used by by people in the US Congress to to pinpoint certain issues that again are based on information that is incorrect. So we have been public about the fact that Tether has worked with 30 different law enforcement agencies around the world in 19 different countries including the US, Ukraine and Israel. So we froze on behalf of different law enforcement agencies around the world, different accounts that might have been linked with the NISID activity. Over time, also considering the hacks, the DeFi hacks, the exchange hacks, who have been and are the vast majority

of these funds. And in total, we froze $800 million worth of Tether working closely with law enforcement. And when I see in the letter that it was alleged that Tether is not working proactively with law enforcement. That is completely wrong. We have been working proactively with law enforcement, with the Department of Justice. Probably we are going to share some information about that. We are we always been extremely dedicated to monitor also the secondary markets through instruments like Chainalysis. But the most important misconcept is that, first of all, Tether has a sophisticated compliance and investigation team in the company right uh our cco chief compliance officer comes from uh an important job uh in his previous life and has been awarded a few times and and this part

of the uh accounts um so as uh you know um as one of the ways that you can understand what is our our competitors and most of exchanges only act when they get a judge order. So, for law enforcement, obtaining a judge order takes weeks or months. And while Tether, understanding the importance of ensuring that an instrument like USDT is not used by bad actors, we rely on law enforcement letters that of course we verify and we make sure that they contain the right elements. Nevertheless, that is the proof that compared to our competition, compared to banks also, we have a better and more efficient standard of collaboration with law enforcement, again including the Department of Justice. So thinking that till today we never worked or we had, we needed a push, you know, or a slug from the Department of Justice to collaborate with them. That is not only did she send that letter, but then she actually

admitted in a Twitter thread afterwards that it was based on fake news, which she used to attack her political opponents, but then still didn't really apologize. I found it very strange. Luke, I mean, everyone makes mistakes. We don't, we don't need, um, we don't need an orgy at FENIC. Um, it's important that, uh, we all keep an open discussion also with, uh, with, uh, uh, members of Congress, um, so that we can at least explain what we are doing, how we are doing it, we wish we had the opportunity to explain our procedures that are, these are not marketing procedures, right? So helping bad actors is something that no one should do. And in law,

a company in the position of tether that is a healthy company is making good profit and so on, has everything to lose in not collaborating with law enforcement. And so that's what we did. We had also been criticized to be even too zero to be collaborating with law enforcement. So seeing that we get these type of letters from a group that anyway has sustained the usage, the good usage of cryptocurrencies around the world is quite sad.

Preston Pyshko You can't really win because you get attacked by both sides. We know that that's how the world works, but you get the legislators complaining on one side and then on the other side, you'll be told by the crypto community that you're not decentralized enough and that you should not be working with law enforcement at all. I think that everybody understands that. Can you actually walk me through a bit how these types of transactions or bad actors are actually identified? You sort of hinted at the fact that a lot of the time it comes from the government sending a request. Is there ever a time when you guys identify something that you think clearly might be from a bad actor and you report it in the other direction or you freeze it of your own volition?

Sure. Let me explain a little bit the details there. So first of all, we have as Tether, the primary market, the primary market is our pub. So when issuers, companies or created people that went through a thorough PYCAML process could in fact work directly with us with Tether. The process is extremely thorough. It requires a lot of documentation and in-depth analysis of the counterparty. We, in this moment, right, so Tether has only a limited number of active customers because the majority of Tether users, not customers, users are using secondary market blockchains, but most of the people are using exchanges to acquire USDT or sell USDT. just because they have a floor compliance department and they are in position then to collaborate with us, they are issuing everything directly USDT through that. Now, it's important to note that no one of our customers on the primary market ever being found in any sort of position to have dealt with

with pumps or seeding. Now on the secondary market that is the other part. Secondary markets mean blockchains and exchanges. Blockchains are you know transport layers for usdp and exchanges are then usually are central activities that they have their own customer base. So what we do is that we leverage Chain Analysis as a software, as a platform to identify and understand how USDT is being used on the secondary market. So I would say that most of the time, law enforcement, and of course, as I said, we work with 30 different law enforcement agencies around the world. So law enforcement have the capacity to monitor more frequently and deeply in the markets than a Tether team. Although we have a strong investigation team, we don't have 200,000 people.

So imagine all law enforcement agencies around the world, they have of course more capacity than C-Hawk. Of course, that is obvious. But nevertheless, it happened quite a few times that Tether identified suspicious activities before law enforcement and hence we communicated directly to law enforcement providing the context and providing our thoughts. So this process is called filing a suspicious activity report. Tether is registered with FinCEL, so it has an obligation not only to respond when a law enforcement agency contacts them, but also to file proactively suspicious activity reports. So we do both sides, right?

We are proactive in the way we can using the tools at our disposal. And also we are helpful voluntarily because this is the key, the key turn, right? So also in the letter written, it seemed like we needed to be forced into action. There is nothing more wrong than that. We always collaborated with law enforcement voluntarily. Yeah, that's a great explanation. Thank you for sharing it. It's interesting. It's almost like trying to punish Apple for the way that somebody uses an iPhone, right? I mean, you create the technology, but you can't help if a terrorist or a drug dealer uses an iPhone to do something illicit, right? And so, yeah, I don't understand how Tether should be held accountable for what two people do through a third party

that has effectively nothing to do with you, but you're still expected to police that. Yeah, indeed, we have to, I think, again, we have to also keep educating from our side, showcasing the tools that we have at our disposal and the fact that we are the good actors and we are much more efficient than the banking industry. The banking industry takes ages to do anything and to freeze parts. They have a limited view of what is happening. They don't have 24-7 type of, 24-7 ability of reacting, our reaction time average is 15 minutes, right?

So these are things that, you know, what, you know, I'm sorry for the Wall Street Journal, but, you know, they will never be able to compete because that is the old guard's science. Right. Well, let's talk about those transactions because there's been some pretty astounding reports of late. One was obviously about USDT adoption and usage in Brazil, saying that it made up 80% of all crypto transactions and was more than all other crypto transactions combined. So Bitcoin, Ethereum, other stable coins, all those transactions didn't even add up to how many were being done with USDT. So what does that say to you about the adoption of

your asset in places like Brazil, where there's a thirst, obviously, for access to US dollars? So that is actually the things that we should talk about. And of course, it was important to clarify this misunderstanding that went on for the last two weeks. But this is the potential of USDT. This is the potential of a currency that is actually being used by hundreds of millions of people, good people. Right. Tether, we account for in this moment, our estimation is around 300 million people around the world are using Tether to protect themselves from inflation, to have a fair access and easy access to banking services that they wouldn't have otherwise. And most of them, even if they would have some banking access, you know, they are not there to trade Shiba Inu, right?

They are not there to trade Doge. You can see that you said it was the 80% of all crypto transactions are USDT transactions. These people need help, need access to the dollar, the strongest fiat currency in the world. And so that's what Tether stands for. That is what Tether stands for, Staple for them. It's a lifeline, lifeboat that they can use every day to protect themselves, their family, their family's savings from the devaluation of their national currency.

That is what we should talk about. It's not just Brazil. Argentina has the same numbers. Also in Argentina, around 8% of auto-crypto transactions is a PTP. Turkey is the same. Right? We go in all the other countries in Central Asia, it's the same. And so these are stories that we need to hear more.

We need to pinpoint more because, you know, if there is a bad actor, we prove that we can catch it. But there are 300 million good actors that are using this technology and we should start to understand how it works rather than demonizing. I mean, Bitcoiners have long described that exact process and that exact problem as the reason that people in all of these countries should buy Bitcoin. But we see from the evidence that what people really want are dollars, right? And if that's a tokenized dollar, so be it, or that's even better for them, arguably. But why do you think that we're not seeing the same level of Bitcoin adoption in places with hyperinflation and where they need protection from their currency? Daniel Schmachtenberger Look, I think the issue with Bitcoin is that,

first of all, I'm a Bitcoiner, but the reality of things is that people have urgent needs. Bitcoin is harder to understand. People don't know how to hedge themselves with futures, right? So someone is selling groceries. Someone is settling is a, is driving a topsy, you know, they're a poor shirt. I'm some good taxi drivers. Well, have to the diverse that understand that, uh, have, you know, more interesting technology and trading for sure. There was majority of people in this war. They don't have time to understand trading and fundamental to reach

capital carriers, the astronauts. So they understand the dollar. in this world. They don't have time to understand trading and fundamentals of which cryptocurrency has from before. So they understand the dollar, they understand the dollar, they understand the gold, right? So those are the two things that they have been aware of for most of their lives. And so that for them means dollar means protection, means being able to protect their savings. And so Bitcoin is not yet understood by everyone. So I'm a Bitcoiner, but I'm trying to not be an obnoxious Bitcoiner that pretends that everyone should have a science degree and a math degree and an engineering degree altogether. And if they don't understand that is their fault.

No, it's our job to make it more understandable. It will take time. It will take education infrastructure. In the meantime, I think USDT is a great choice and also will bring more and more people towards digital wallets and And then from those wallets, they can also purchase it. I think we've talked about this before, but I just want to circle back to it. I'm always surprised every time I see where the volume of USDT is happening, because it's seemingly the mass bulk of it is on Tron, right? A chain that I think not many people talk

about. It's been a meme in the past, obviously. People joke about it, but at the end of the day, it seems like people want to transact in digital dollars fast and cheap, and they don't really care about anything else. Again, 99% of the people that are using USDT, those 300 million users that are on secondary markets that USDT is accounting for, it's part of our decentralized exchanges, of course. I would say that the majority are on centralized exchanges. The others that are not on centralized exchanges, they are using a solution that works, that is simple to use, is fast and cheap.

Tron had four years before we launched USET on Tron in 2018, Tron had four years of first mover advantage before the first series layer two on Ethereum came up. And so it's not the problem with Trump. It's a problem that people or the developers on the Ethereum side took so much time to develop an area two and now they cannot complain that the problem has increased market share. Preston Pyshko Yeah, that makes perfect sense. And there's also other technological complications to doing it on a layer two versus a layer one, right? I mean, it's just not that easy with UX UI versus just simply opening a Tron wallet, hitting send and receiving your money. Yeah, I completely agree with that.

Do you then think that other layer ones like Solana could start to take that dominance? Obviously, Solana right now has been moving massively in price, which drives all the narratives surrounding it as the new chosen or anointed blockchain. But we do know that, kind of like Tron, it's become much faster and cheaper than certainly Ethereum. Yeah, I mean, everyone has their different arguments for the different chains.

Again, the first over advantage is quite important, right? So it's hard to beat. So it's hard to take it out from away from Tron. The other and should now and something like a Tron must see. But, you know, I am a super agnostic when it comes because for USDT, blockchains are transport layers. If you were asking me, I would prefer Tron to be on liquid, for a block stream, and on RGB, that is a protocol that is, you know,

lightning assets, basically. That would be my preference. But in the end, it's a framework. People will use USDT on all the transport layers that we made available to them, and they will pick their best. Also, Tron has, I think, a simple advantage. For any integrators, it's super easy to run a Tron node.

It's a Java binary. You compile it, you build it, you run it. It doesn't consume many resources. And people will say, yes, it doesn't compute many resources because it's centralized. Well, I mean, a ton of other watchers are and do a certain degree. So, I mean, but again, and go back to the point that people, most of the people, most of the integrators don't have time to waste.

They want something that works. And also, USB-T is anyway centralized. So the fact that the transport layer is less or more centralized doesn't matter. Yeah, that makes a ton of sense because once you understand that Tether is centralized and that's not something that you apologize for, it's by design. Why would you really care which way you send it? You talked about the fact that you would rather see this on Liquid, RGB.

Obviously, we have not seen the proliferation of popular stable coins on Bitcoin. We have seen a lot more, I think, in the last six months interest in building things that exist in other places on Bitcoin. But why do you think we have not seen the popularity of stablecoins? Because it does seem like a very obvious place for it. Yeah, the difference, I mean, I'm kind of for sure today, I'm not attracting too much popularity, but I think the difference i mean i i'm kind of for sure today i'm not attracting too much popularity but i think the difference is that bitcoin and bitcoin sidechains don't have a spending budget

or a marketing budget so if you launch a new blockchain new layer one that has a token you are going eventually to sell part of those tokens to create a buffer in order to have a marketing budget that could use to list your token and have your blockchain supported by many exchanges. Because that process, adding your token on many exchanges could cost a million dollars to tens of millions of dollars, depending on what you want to do. So Bitcoin doesn't have a budget, right? So Bitcoin is something that everyone has to... There is proof of work, let's say, right?

So companies that are only in the Bitcoin space, they can only have a budget if there is capital for it. And let's say that there is no money creation. And so that, of course, makes things more difficult. But also, it's true that this is a marathon. And, you know, it only matters who wins at the end. So you think that in the end, we could see, obviously, stablecoins on Bitcoin winning? I tend to agree with you. And actually, I agree with your explanation.

It just seems too obvious not to happen. Well, now that Tether has a good budget, then we are going to help taking care of it. Well, you guys buy a lot of Bitcoin too, right? Well, we believe in it, right? We believe that it's a great hedge that is Austin Sater, right? So we are kind of aligned in the vision that

in the end, with all the craziness that is happening in the world, it's hard to argue that there is something better than Bitcoin. And the price is confirming that at the moment. It doesn't always, of course, but it has been really interesting, I think,

to see Bitcoin rise double since last year, obviously at the bottom after FTX. Seemingly just went from 20, 25, 31. Here we are almost at 35 now, but in an environment, as you described, where the world seems to be on the decline, right? More wars, certainly a lot of global uncertainty around economics and markets. Are you surprised at all to finally see Bitcoin uncorrelated? I've always argued that it's

uncorrelated anyways, but some will say that it just decoupled. Are you surprised though, that it's been able to sort of do this well in this part of the cycle and in context of what's happening around the world? Well, I think it's kind of sad that the rise of Bitcoin can be correlated to geopolitical uncertainty. But the way it is, look at also gold. Gold, I think, on a Friday when there was the peak of uncertainty of potential attacks and so on, rose to above $2,000 per ounce. So all the assets that are considered as the hedge assets for, you know, potential global resets are going to always thrive in these specific moments in time.

Of course, that is the monopoly value of Bitcoin. Bitcoin is the money that can become money for everyday, is money that, you know, you can control, makes you free and strong. But also, someone could imagine that the fear of potential escalational conflicts could push more and more people towards Bitcoin and faster pace. Do you see a world where it's basically Bitcoin in your wallet as your savings account and Tether in your wallet as your money for spending? I know we've described Tether, obviously, as a savings technology as wellether in your wallet as your money for spending. I know we've described Tether, obviously, as a savings technology as well, certainly for people outside

the United States. But could you see a world where you've effectively opted out of physical cash or your bank account and you're basically holding Bitcoin for one purpose and then you're spending your Tether to get by every single day? I think so. I think that there are different ways to look at it. Definitely the saving part, I would agree that, especially with the consolidation of Bitcoin, it will take years, right? So right now, I think the market cap of gold is quite higher. The market cap of gold is around $12 trillion,

something like that. And Bitcoin is 700, 600, 700. So we feel quite far, right? So it needs to grow a lot in order to become more stable. Gold now is stable because the liquidity is so high and is so that for that it has a steady price. You know, the price is so high and is so diverse that it has a steady price. The price is stable. Now, Bitcoin will need to get to that stability in order to be a proper steady account, not for the believers but for everyone. Then on the checking account, I think USDT is great for the future.

I would argue that eventually people might also want to use something like Tether Gold to have, again, something that is still good for payments, could use like, you know, a sort of a layer two blockchain. And in the end, gold has been used throughout humanity as a payment system. So the concern is that the US dollar, given how much has been printed in this moment, might lose a little, not compared to the others, but in the end, at least absolutely, at least compared to Bitcoin, might lose purchasing power, right? So someone could argue that it's not Bitcoin going up, but it's the dollar going up and also the rest of the other. It's like the dollar going down and alongside with all the other currencies. Yeah, you talked about Tether Gold, which I think is a very interesting point there. We're also seeing that one of the main narratives, I think, in the space in general right now, and I think one that may drive part of this next cycle is RWA,

real world assets on chain. I was actually very surprised when I looked into the amount of tokenized T-bills and treasuries already on chain and who was doing it. Franklin Templeton is one of the largest asset managers in the world. I think they have 300 million in AUM in tokenized T-bills, and that's already up to a billion. So as total AUM, so there are 300 million of it, but there's a total of a billion with others like Maple Finance, et cetera. I mean, do you think that, I guess, as a next level of that question, Bitcoin and Tether in your wallet, do you think we can get to a world where so many real world assets are tokenized that you can basically just exist in this economy entirely and opt out? Well, that would be definitely a deal, but it doesn't necessarily pay well with securities laws. One of the classic points

that I or questions that I get is when Tether would share some interest. I know that some of our competitors are doing that, but sharing interest or it would mean that people would hold your token with the expectation of making money, right? And getting a yield out of it. And that makes it a security that makes it a financial product. And so, yes, we want to see a world where tokenization makes access to assets more easy. But also, this access to assets will not be free without AYC, will not be open to everyone, right?

So it's a different track for play. Again, these are going to be assets that are regulated. will not be open to everyone. So it's a different track for play. Again, these are going to be assets that are regulated. I'm pretty sure that the current tokenized PBLs, you cannot... Maybe I'm wrong, but I'm sure that... Well, I'm almost sure that you cannot buy them on your own. So because they are securities. So again, as securities, then sure, you can buy them,

you can hold them in your wallet on-chain, but if the issuer fails, right? If the issuer, imagine that, okay, maybe the US TBL starts to split, we think that they're still in the same, but imagine that you have a TBL or like a bond from a small company. Sure. You can hold it in your wallet, but if the company goes bust, you have lost your money anyway. That's the point of, there is a huge distinction between having a decentralized asset, like Stimicoins or like T-mills or whatever, using a decentralized capital layer like a blockchain or having real decentralized tokens or coins like Bitcoin, right? So, blockchains are great for many use cases. They are cool for also real world assets,

but they don't necessarily are going to add more protection to the holders of the real world assets because they are inherently centralized. And where do you think central bank digital currencies fall into this, Nix? Nix Xie So I think the CBDCs are interesting, but I'm not really bullish on those. First of all, I don't think they are going to be a threat to Tether. I just think that they are hard for government to make that that then happening right the part of course

china is this payment way but europe i know that they are win-win in having in having a digital euro but that is uh extremely difficult from them for multiple reasons first of all they could completely kill european banking system because they would take away 30% of all transactions from the banks and people will, so all the people working on the banks will be in trouble. That is the first thing. Second, then you would be in a situation where as a customer right now you can choose your bank, you can choose your credit card. So any transaction, you know, you buy a coffee, right, at the coffee shop, and you, now your transaction, your purchase stays with you and your bank or your credit card. Imagine a world where suddenly all the transactions are settled with the bank.

And now, this would rule that the governments could know at any point in time, imagine based on your purchases, the way the day people can know where you are. So imagine suddenly, governments could know the exact location, the exact ambit of each one of their citizens. I think it's extremely scary, right? So it's not you will have more of the filter of a bank. You can think of whatever you want about the bank, but at least it's acting as a filter between you and the government that might not be necessarily super nice. Yeah, the privacy aspect of it is terrifying. I was just curious if it would impact directly private stable coins if they tried to ban them or anything like that. To be honest, the United States, I think, has made it exceptionally clear that they have no

intention of moving towards a central bank digital currency anytime soon. I love that, you know, obviously people in the crypto community are very passionate about this and fearful of it. But you alluded to how difficult that would be. And in my mind, once you turn that switch on, you can't turn it off. So they would have to be very sure that it worked perfectly. And I mean, I think just the scale of doing that is so astronomically hard to imagine that it's just not coming anytime in the near future in the United States. Yeah, it's for a central bank is like playing 5D chess game with the entire economy, right? So sure, you can be brilliant and the biggest genius in the earth, but if you make a mistake,

there is no, it's really easy to make mistakes because it's hard to predict. It's like a butterfly that's wings somewhere in the world and a catastrophe happens somewhere else. So you will know it's going to be hard to play the ball if something bad happens. Imagine if we get a central bank digital currency and then the wallets are used to fund terrorism, then what's the government going to do? Yes, exactly. Who are they going to go after, right? When you think about it in that level, the fact that they come after Tether as a company or any of the actual assets or the technology that are agnostic is so seemingly absurd.

Yeah, unfortunately, yes. So you talked about the first mover advantage of Tron, and that's the reason largely that they're so popular and so many Tether transactions happen on that chain. Do you think that's part of the success of Tether itself? Because you guys were sort of the first large stablecoin that you had the first mover advantage. Because when you look at market cap, you guys are obviously absolutely crushing everybody else, A. And B, you talked about also the fact that even in the current market, often it's trading at a premium, right? Which shows you that people value it over other options.

We at Tether use the concept of real worldworld ecosystem. Right? And Edouard today talks about real-world assets. But we think, and I'm going to say the third thing that would not make me gain popularity today, but so the real-world ecosystem beats web 301 right so web 3 is one is an ecosystem that of course is cute could open doors to progress in in gaming and different things but again people's lives are made by other things they need other tools they need they need other types of infrastructure that are more essential to their families, right? So you never see in Tether doing web play, road shows, and this and that, not because we are not looking at them, but our focus is in building real-world ecosystems. That's what we are doing having co-founded Keet as a peer-to-peer channel. We think that you can easily grow to one billion users.

We are doing many other projects similar to Keet, to keep building our ecosystem that is made by simple applications. Of course, it needs a lot of work, but it will be made by simple applications that can fulfill needs of being in the day-to-day people lives. I want to give you a fourth chance to say something unpopular. So I'm going to set you up.

We've heard about the flippening many times of Ethereum flipping Bitcoin in market cap. Do you think that Tether could ever flip Bitcoin in market cap? No, but maybe Ethereum, yes. Do you think that Tether could ever flip Bitcoin in market cap? No, but maybe Ethereum, yes. Okay. Well, then I made you… See, now I could have given you four and five in the same sentence. Let's talk about that. How do you think that Ethereum could… I think it could, by the way, too, but the caveat being that I don't think it matters at all which one has a larger market cap and it's a stupid narrative. Yeah. it's all, look, it's all folklore, right? So we are humbled with the market cap we have. I mean, we are not measuring our success with the market cap. We, of course, it's good.

It's profitable. But in the end, we, as I stated, I think at the beginning, the vast majority of what Tether makes remains in the company, gets reinvested in graph capture, in ecosystem. You know, we believe that that is the only thing that matters, right? So, you know, we think that there are many other projects that deserve to grow in the future. So we don't like usually to participate to religion wars when it comes to this technology. I don't like to get into the religion wars either. It does feel like though, right at this moment, I write a newsletter every day.

And literally today's newsletter was about the most unpopular asset, the most hated asset right now being Ethereum. It just seems like we're in that part of the cycle now where irrationally everybody's chosen that's the thing they hate because it's just not doing as well as Bitcoin and price. And I just look back four years in the cycle and every time and it just seems like we're exactly where we're supposed to be. Are people in for the tech though and not for the price? No, yeah. Well, they're always in it for the tech, though, and not for the price? They're always in it for the tech, except for when the price is down.

That's why everybody always, they really loved their NFTs, which were a deep part of their soul when the price was up. But now that they're worth a penny, you don't see as many people, I guess, identify with them. Before I let you go, any other final thoughts? Anything else we might have missed here? Well, Jester is going to be adopting Bitcoin in El Salvador.

I'm going to be there next week. So if you're around, come and see me. I'm happy always to talk to a nerd. Yeah, well, these days it's good because when you go to the conferences, it is only us nerds, right? It's not like tens of thousands of retail people with Bored Ape t-shirts on anymore. It's just developers.

Yes. Yeah, never mind. I like my crowd. Yeah, it's nice and quiet. The bear market, they always say, is a good time for building. But I can't, I'm not going to lie and say I'm not really looking forward to the next Raging Bull market because it's a lot of fun as well. Yes, it's fun as well.

Yes, I cannot deny that. All right, Paulo, man, thank you so much as always. And one day, one day we're going to start a show without having to talk about the newest flavor of fun against Tether. I didn't even intend to do it again, to be honest. It's not like that's why this was scheduled. But I feel like it's like now just our recipe to knock it out

at the beginning and get it out of the way so we can have a real conversation. Well, thank you very much, Scott, for giving me always a way to go through all the FUD and explain what's going on. Thank you for doing it.

Appreciate it. Thanks, man.