The Wolf Of All Streets - ETF Updates | SEC Sues Uniswap | 2024 Predictions | Crypto Town Hall

Episode Date: April 11, 2024

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All right, guys. So there's an important disclaimer I need to mention before we kick this off. Actually, there's a few disclaimers today. Let me start. The first disclaimer is it's 6.20 p.m. in Dubai. I live in Dubai. And I haven't slept since yesterday because we did a pretty big Elon space last night and then had a few spaces earlier today.

And then stayed up for this space because Ran and Scott are just too lazy. They're on a plane to do the space. So instead of skipping it, here I am. So if I sound like I'm drunk, it's because of severe sleep deprivation. That's number one. Disclaimer number two is Scott and Ran are not here.

That's the good news. And then the disclaimer number three is spaces is glitching. It crashed in the space we did last night and everyone are not here. That's the good news. And then the disclaimer number three is Spaces is glitching. It crashed in the space we did last night and everyone tweeted about it. And so if it does glitch for you guys, apologies in advance. But otherwise, we'll be a short space. We'll be two things we're focusing on, but we do have Eric. That was unexpected, but it's actually a really pleasant surprise. Eric, it's a real pleasure to have you because I want to get your thoughts. It's been a while we haven't

spoken. On the ETF performance, it seems to have blown through all expectations in the early stages. It seems to be stabilizing right now. People are saying it's starting to trickle and some people are, I think, foolishly showing a bit of concern, which I

think is just not, at least for me,, doesn't make sense. I'd love to get your thoughts on the ETF numbers, the inflows have slowed, but also GBTC outflows have slowed as well. Yeah, I think, you know, that's probably the best news is the GBTC outflows. As far as I know, and, you know, I have good, pretty good intel, all of the sort of, I guess, unlock is over. And now it's just a matter if some retail investors choose to leave the fund. But that will typically be more like a trickle than a big whopper. But who knows? I think the way I would look at it is if somebody's in crypto

or Bitcoin, and I deal with this a lot, There's a little bit of a crybaby thing going on here. Because if you told me at the end of one year, these ETFs would have 60 billion in assets and have taken in 13 billion in net flows, I would have said, damn, that's a good year. That's successful. So that's where we're at with three months. Also, the price of Bitcoin is up 55% since the ETFs launched, another 80% on just the approval hopes, right? The rumor. So if you stop now and we get no more flows, you'd say we net zero flows and the price of Bitcoin doesn't move at all, and it's December 31st, you should be thrilled. I would start with that baseline of that appreciation. And then I think you set your

expectations more realistically. So I think that this launch was so successful that it kind of spoiled some people to what like a real launch is. Let me put it this way. The worst ETF of the 10 is the wisdom tree one, and it has $88 million. That's the 20th most successful launch this year out of 157. Oh, wow. So even the worst one is a hit. So it's all about relativity and perspective. And I think that's how I'd look at it. If we ended now, it's already a successful first year. I was reading somewhere that BlackRock CTS broke some records. I'm just trying to see what the records it broke.

I'm sure you know what I'm referring to, Eric. Let me just try to find my notes here. You know what I'm referring to? Please, yeah. Yeah, so basically the big record is $17 billion in 50 days. The second ETF to get the most money after 50 days was Fidelity at $8 billion or $9 billion. Then there's a huge drop off. The next one's $5 billion. So out of, this is globally, so out of 10,000 ETFs launched in the world historically, iBit took in two or three times more than any other ETF after the first 50 days.

The other big number about iBit is that it's the second most flow-getting ETF of all of them. Again, this is not forget comparing them to new launches. iBit and FBTC are in the top 10 of all ETFs year to date. It's on a 62-day inflow streak, which is the most of any active ETF right now and top 20 all time. And then the big one is iBit accounts for, last time I checked, something about half of all of BlackRock's net inflows this year. And they have 420 ETFs or something like that. So, you know, Larry Fink, by the way, went on Fox Business. And you saw him ear to ear grinning, saying this is the most successful ETF launch ever. He never talks about individual ETFs. Go back and watch his clips. He's usually talking about the economy and the macro, maybe high level BlackRock stuff. He never mentions real individual ETFs.

And the fact that he's on there sort of like a proud parent says a lot about how much noise this ETF has made inside BlackRock as well. Yeah, I can see the Larry Fink. I'm not sure you guys on stage can see the request by the Larry Fink parody account. And really, he's split on whether to bring him up or not. It could be a massive flop or it could be a hilarious experiment. Eric, the question I have for you is how much influence

remember when BlackRock first filed for the ETF, a lot of people speculated that BlackRock would not file unless they knew that they can get approved and they have some level of influence over the SEC. If that's true, and please tell me if you don't think it is true. If that's true, though, then why are we seeing such low likelihood

that an ETTF will get approved? If the Bitcoin ETF was successful, a fair assumption would be like, hey, an ETTF will be at least, you know, have some levels of success, which means that BlackRock should try their best to ensure it passes, like influence TSC in any way they can or do whatever they can, lobby as much as they can to get an ETF through. But it seems that that ship has sailed. Yeah, look, I think, ironically, the success of the Bitcoin ETFs has kind of spooked and created some buyers remorse for all of the regulators and Democratic senators right you saw that letter they sent to against or saying

oh my God these ETFs are so successful you cannot do this again with any other coin so to me the political pressure is different this time around and it's not even something what's it sorry what was that letter they sent I know you tried to summarize it in's not even something what's it sorry what was that letter they sent I know you tried to summarize it in a certain way but what's the argument they were making basically two Democratic senators sent a letter and I think it was a letter that was informed by someone from the SEC because they talked about how the correlation of e-futures is lower to spot than Bitcoin futures is to Bitcoin spot. And I'm like, how would they know that? So it seems like there's just a movement inside the democratic side of government to not let any more Bitcoin ETFs out. I mean, sorry, crypto ETFs out. I think if the Bitcoin ETFs had been a flop,

they wouldn't care. But the fact that they're so successful and breaking all these records, I think makes them worried that, oh God, like we've created a monster. So I think that's a big part of it. Also, Gensler, in his heart of hearts, thinks ETH is a security, not a commodity. And that would mean that you wouldn't be under the 33 Act registered as a commodity. So it would be it's sort of in the wrong bucket in terms of filing if you think it's a security. And the third thing is there is no lawsuit. There's no loss in court. And it's up for debate whether Grayscale or anybody will even sue because, A, you take on some reputational risk with the government if you sue them, obviously. And Ether is probably not going to be nearly as big of a smash hit as Bitcoin was. And Grayscale

basically footed the bill to make BlackRock have this huge hit ETF. I don't think the will is there. So I'm pretty pessimistic. I think an ETF should exist. I'm very pro-ETF. I think you can put almost anything in an ETF and it'll do fine. But I'm just trying to give you my straight take. And the reason BlackRock's influence, I agree, they're big, they're influential, they have somewhat of a revolving door with uh the government but at the end of the day political pressure is is an important variable that was lower i think with bitcoin especially when genser thinks it's a commodity and we also know that blackrock doesn't totally always get their way because blackrock wanted in-kind creation

redemptions and the sec wouldn't give it to them so So it's not like they're, you know, control the government. I think that's true. Yeah, exactly. Yeah. And we do have BlackRock. BlackRock said, you know, I have one more question for you, Eric, and then go into the panel. We've got a pretty cool panel today because we've got, you know,

we've got three lawyers, going to be a big invoice, two lawyers or three on stage. We can discuss the SEC targeting Uniswap. Music came out today. We've got Isabel. I'd love to get an update on the Ordinals ecosystem. And of course, we've got Tom and Taylor to talk on the regular. Tom could talk about anything. Taylor about the regulatory side of things. And Fred, who could also talk about anything. But Eric, the last question I have for you on the ETF side of things. What are your

predictions for the rest of the year in terms of inflows and outflows and impact on market? I think it depends on what you think price will do. If price is flat or goes up, I see, you know, probably a steady stream of inflows. Because the higher the price goes, it will create more and more FOMO. Also, a lot of advisors are just slow to move. You know, they're more like, I wouldn't call them aircraft carriers, but they're not speedboats. Okay. Retail's like a speedboat. like a fish will bite on any bait. Advisors are a little pickier. So the more time goes by, the more they do due diligence, the more they see, you know,

the advisor next door actually is considering it, then I think you'll continue to see nice influence. If there's a big correction, you know, it could spook people for a little while. So I think it depends on price. But we've seen, you know, the price hold up. So it looks pretty stable. So I, that's my answer. I don't want to make any predictions that said, you know, our prediction when we went into this was that the flows would be 10 to 15 billion after the first year, there are 12 and a half billion. So they're already in the middle of our range after three months. So I would say our

predictions will probably be wrong in the end. How high that goes, I don't know. I think them making it onto the platforms will help. And if options are added to these Bitcoin ETFs, that will bring a lot of the trading crowd as well. So the good news for the Bitcoin ETFs is there are some of these other catalysts down the road, as well as just time. And time is going to slowly take care of the due diligence processes. The 13 Fs are going to show some advisors who bought it, and that might give cover to other advisors. All this will play out over the next 12 months. It's largely good. But again, a huge correction could cancel that out. Of course, good discussion. They just give the numbers for the audience.

Latest numbers for inflows and outflows. We do that in every space according to social value. The grayscale outflows were 17 million. I think this is the lowest ever, I think. While Bitcoin spotted here for the highest single-day inflows was Fidelity of $76 million. BlackRock, iBit had a net inflow of about $33 million. So inflows have slowed, but as you said, Eric, the good news is that outflows from GBTC have slowed significantly. Let's go to Zach. Zach, I see your hand up.

I'm not sure if you want to pivot to the SEC targeting. I guess you want to comment on what Eric was talking about first. Yeah, I wanted to quickly talk about what I see as some of the differences between the Bitcoin and ETH ETFs. I think when you asked the question about how important was BlackRock getting into the game, maybe that had some impact, but I think the much greater factor here was the SEC's loss in court to Grayscale on the pretext they've been using for 10 years to deny Bitcoin spot ETFs about market surveillance. And that was found to be arbitrary and capricious, which I think a lot of people did not think would happen. And that I think provided political cover for the SEC,

which has otherwise taken a very broadly anti-crypto stance to approve the Bitcoin ETF. If you look at Gary Gensler's comments after approval, he says, we don't take a view one way or the other on the merit of assets. And then it goes on to shit on Bitcoin for a while. So I think there absolutely is this buyer's remorse Eric was talking about. When it comes to the ETH ETF, I think there are a couple of differences here. One, there isn't sort of a loss in court, although the correlation issue is the same between the futures ETF and the spot ETF. But I think the recent news about the Ethereum Foundation getting inquiries about the securities law status of ETH post the merge is going to be the pretext for which a ETH ETF is denied.

I don't actually think that Gary Gensler in his heart of hearts thinks that ETH as currently constituted is a security. I think he probably knows that they would lose in court if that were ever tried. And that's why they didn't include ETH in these actions against Coinbase and Binance and Kraken. But I think it is a good delay tactic to say, listen, we're not clear on what ETH is, courts haven't definitively ruled on this, and so we're not going to approve a spot ETF for that reason. And if you're asking why the SEC doesn't want to come out and say that ETH is a commodity, even if they believe that that is the correct legal answer, I think it's

twofold. One is they don't want to create another feeding frenzy like they saw with the Bitcoin ETF. And the other is, and I think the more important one is they don't want to provide a roadmap for other assets that start as unregistered securities offerings like ETH did with this ICO to then become legitimized over time and fall outside of the SEC's jurisdiction. Because if ETH can do it, other things can do it. And you'll have crypto lawyers trying to dance through whatever loophole in the SEC's view that they would create there. All right. No one's jumping in to respond. Perfect. Zach, I want to pivot to, since you have the mic, I would love to get your thoughts and David and Preston on the Wells notice. We had another SEC Wells notice this time. The market doesn't seem to give a shit because we're in the

midst of a bull market, but we do have... So I'll read out a post here by Uniswap. They say the following, quote, Today, Uniswap Labs received a Wells notice from the SEC, and we're ready to fight. This is the latest political effort to target even the best actors in crypto like Uniswap and Coinbase. All Uniswap products and the Uniswap protocol are unaffected. We've got Uniswap CEO Hayden released a statement expressing his lack of surprise, but frustration, disappointment and determination to combat the situation. Let me read out the statement, the tweet by Hayden.

We should try to invite Hayden. Let me invite Hayden quickly now. I think he can join. Let me give it a shot. Hayden.eth.eth. And there we are. All right, cool. Oh no, I see Hayden Zadum.

Sorry guys, let me just invite Hayden. Hayden.eth.eth. All right, cool. All right, cool. All right, cool. All right, cool. All right, cool. All right, cool. All right, cool. and there are all right cool um i'm gonna say hayden is that i'm sorry guys let me just invite uh there it is all right if he comes on i'll read out his tweet here today uniswap labs received a well's notice from the sec i'm not surprised just annoyed disappointed and ready to fight i'm confident that the products we offer are legal and that our work is on

the right side of history, but it's been clear for a while that rather than working to create clear informed rules, the SEC has decided to focus on attacking long time, good actors like Uniswap and Coinbase all while letting bad actors like FTX slip by. When I first set out to build Uniswap, the goal wasn't to reimagine finance.

It was an experiment in radically, It was an experiment in radically decentralized, fully automated, on-chain markets. I didn't know if this would work or if anyone would use it. Fast forward to today, the Uniswap protocol has processed over $2 trillion in volume. That's crazy. Many thousands of teams and developers have forked our code or built on top of it. We built entirely new financial infrastructure that is transparent, fair, secure, and accessible, powering an entire industry. It's all by Hayden, who's the CEO of Uniswap Labs. Where is Zach?

Zach, we'd love to get your thoughts on this since you had my class. We've got a David and Preston. How serious is this? Maybe even go to the basics. What is a Wells notice? And then we could dig into how serious that is because I know Uniswap is surprised to see what happened since. But I know it took an initial hit when that news came out.

Yeah, absolutely. So a Wells notice is serious. It is usually the step before the SEC would actually file a complaint and an actual lawsuit would start. This is the same thing we saw happen with Coinbase that they telegraphed ahead of time, they got this Wells notice, and the lawsuit followed shortly afterwards. So I think a lawsuit is definitely coming in this case. I agree with Hayden, you know, it's not surprising that this would happen,

both because of the, you know, the fee switch recently, which we talked about in a second. And because, you know, subpoenas have been flying flying around and the SEC has been telegraphing, they want to do enforcement actions in DeFi. So I agree it's not surprising this case happened. But there are two sort of important issues at stake for crypto in this case, I think, that are important to focus on. The first is about the nature of the UNI token itself. So in sort of the DeFi V1, lots of these DeFi protocols almost twisted themselves into pretzels not to reward their token holders because of fear of US securities laws. And we're starting to see a backlash from that in terms of tokenomics, where protocols are offering what they're calling real yield, which is yield denominated in stable coins or ether or something that is not correlated

to their own protocol the way that in 2021, we saw these like inflationary Ponzi tokens that paid out yield in their own token. And, you know, I think that makes for a much better product than the alternative where, you know, there's burning or some indirect mechanism of adding value. But it, you know, there we've talked about the Howey test before, there are sort of two battlegrounds on the Howey test, there is the where is the line between utility and investment, and then there is where is the line for sufficient decentralization. And I think, unfortunately, creating good tokenomics and delivering real yield makes it very hard to argue

that a person who's buying your token is not reasonably expecting to profit from buying that token. So the first – So go ahead. I was going to ask this, Preston. I was going to ask you, either you or David, or sorry, Zach. If you, David, or Preston would like to answer this one. What is Uniswap Labs? What is their relationship to the Uniswap desk? And what action could the SEC take? So what happens next? How will the SEC be able to target a decentralized exchange rather than the centralized

exchanges you've been focusing on? Well, they're certainly not going to stop the code from running. So Uniswap Lab supports development for Uniswap, the protocol, and further updates. But even if they were to, quote unquote, shut down Uniswap Labs, the code still

runs on-chain. People could still use it. They can try to geofence US users or something like that. But I don't think it's going to... It's definitely not going to affect the actual existing code that's on-chain today. I think there's a key difference between... In the architecture of Uniswap, right? And it'll be interesting to see what the SEC's theory is when they actually file their lawsuit. Because there are two things. So Zach talked about the token. That's one set of issues. The other set of issues is whether Uniswap is operating an unregistered securities exchange under the theory that some of the tokens that might be traded on that exchange would be regarded by US law as securities, which require registration of the exchange under the Exchange Act.

Now, when we say, okay, well, what's an unregistered securities exchange? Exchange has a very specific meaning under federal law. And I have helpfully pulled it up. And it's an organization association, a group of persons who provide a marketplace, excuse me, who bring together the orders for securities of multiple buyers and sellers and use established non-discretionary methods, whether by providing a trading facility or by setting rules under which such orders interact with each other when the buyers and sellers enter, entering such orders agree to the terms of the trade. The problem is, is that the way Uniswap works, it doesn't actually do that. So you have Uniswap labs, and I believe they maintain a UI and take a fee for that.

But they also have a huge uni treasury, which obviously was from the airdrop back in the day. You then have the backend, which is on the chain, which operates, you know, I will probably mangle the explanation, so I won't attempt to do it. But basically, it operates by people providing pools of liquidity. And then people trade back and forth with those pools rather than trading back and forth and having an order book or something like that. And there's a curve, right, at which certain liquidity is available at certain prices. And that's how people who provide that liquidity make money. That, in my view, probably isn't an exchange under that definition, right? It's just that Uniswap has published tooling, which people can then avail themselves of in order to carry out a function which is similar

to an exchange, but they're not actually operating an exchange in the traditional sense. So the SEC proposed some changes to Rule 3b-16 earlier, I think it was early last year, where they wanted to expand the definition of an exchange to encompass anything, including any communication protocol, which is used in order to buy and sell stuff. That was roundly pilloried by the crypto industry, because what it basically means is that Gmail, right under that definition is potentially an exchange to the extent that you, you know, sent or email or any other, any other. So there are other decentralized projects. I'm not going to name them here, lest I be accused of shilling. But there are other decentralized projects which push all that functionality out into the wallet. And so there isn't even a centralized UI. Everything's being pushed out to the client. So I think the SEC actually has kind of, on the exchange point at least, a bit of an uphill battle ahead of it. I'm not sure that the law is on their side. And I say this as someone who's usually pretty

critical of crypto projects saying, oh yeah, we're going to appeal this all the way up to the Supreme Court on Howey and blah, blah, blah. And most of the time when you're dealing with Howey analyses, the facts are not so friendly. So I think Uniswap putting up a fight is good for the industry. I think the SEC here is really operating at the outer limits of its legal power. And arguably, it's overstepping those limits, depending on who you ask. And so yeah, I think they've got a real fight on their hands. And fortunately for the industry, Uniswap, I assume, has the budget to pay for that fight. Yeah. I just want to touch on what Preston said. I think this is the key point. Aside from the question about the UNI token, which I think will be difficult for you to swap labs, just given the

yield mechanism, it's going to be hard. I think the much more important precedent in this case is what Preston talked about, which I think you could sum up as where is the legal line between a financial institution that is doing a regulated financial activity, like transmitting money on behalf of other people or acting as an exchange, and then code where that stuff is happening on a peer-to-peer basis, right, through bonding curves, through automated market makers, etc. And if we get good precedent that there is a important legal distinction between the two, which is sort of most lawyers' current understanding of the law, that will allow for a lot of innovation in crypto and a lot of non-custodial stuff to not have the same KYC AML regulations, the same sort of SEC jurisdiction that like a regulated financial

firm would have. If we lose on this point, that's a real problem. Yeah. So that's my question. Zach and David, what do you mean if you lose? So if we lose, because obviously it's not as binary as losing or winning. It could be somewhere in the middle. How could this turn out? How long will it take? And what impact do you think it will have on the industry? Well, I think that's one of the more interesting things is the timing of this. Now, obviously, Uniswap isn't new.

But we're heading into a presidential election year where right now there's the strong potential, if you believe the odds, that there's going to be a change in leadership. So frankly, there's a chance here that the Wells notice goes out now. You're looking at at least six months to a year before the lawsuit. They get time. They're going to go back and forth a little bit. But ultimately, it's interesting. I agree with what Preston said. This is testing the bounds. I'm going to throw out the token argument for a second and just focus on the decentralized exchange aspect. You know, this was coming. We all knew this was coming. It's part of the Gensler plan that they are going after these exchanges. And I think what, you know, Mario, when you were

reading it and I was I had my one little note written here, they claim and in everything, it's two trillion dollars in value processed. I don't care. And obviously, I'm not a huge fan of the word decentralized. There are a lot of people who don't believe that. Well, there aren't a lot of people listening to this particular town hall. There are a lot of people who don't believe that, well, there aren't a lot of people listening to this particular town hall. There are a lot of people in government, especially anti-crypto people, who believe decentralization is a problematic myth. And they're going to keep going after people while this administration is in power to make sure that they can limit the crypto and choke point let's call this 3.0 if we start getting successful uh how would they but then how would they do this like if it's decentralized exchange what resources do they have to be able to to cry to crush it within their legal means

and would it work because the whole concept of decentralization is not having one point of failure. I'm probably the worst person to answer this question because I can jump in here. I mean, they'll go after Uniswap for operating the front end. In terms of the back end, they might turn around and say, so in order to hit the back end of the Uniswap platform, someone needs to, generally speaking, because of the way Ethereum works, they need to host an application, which then is hooked into via RPCM points to some provider of full node services like Infura or an AWS or something like that, which is running the

Ethereum full node and will relay the transactions from the user to the chain. Ethereum is really difficult to use entirely locally just because reasons, but particularly running a full node is a very sort of weighty application for someone to run at home on consumer hardware. So the SEC has figured this out. And what they're doing is they're going after front end providers and they're saying, you facilitate these transactions. And it'll be interesting to see how exactly they choose to do it with Uniswap, you know, if, when they decide to do that. So they're going after the front-end providers, right, because they know, ultimately, if someone wants to go run a full node, the SEC isn't going to stop them. But that's not 99.9% of the users. We saw that also with, there were some enforcement actions

in August of last year where the SEC went after Open, Deridex, and ZeroX. And those are all front end providers, right? And they said, you're providing front ends. This wasn't the SEC, excuse me, it was the CFTC. So that's been the strategy. It's been basically to cut off the pathways rather than playing whack-a-mole on a token by token basis and they're doing the same thing with the centralized exchanges with coinbase and Binance they're trying to cut off the bridges where retail is getting into crypto interesting what we've been talking about for so many years uh Fred just seems to be materializing is that as we get closer and closer to decentralization, the centralized, the centralized, the very centralized entities and anyone that's being threatened by decentralization is just coming together and starting to crush it any way they can.

And this is where we're going to see the outcome of it. I think in the long term, we know that decentralization will win. But the question I have for you, Fred Fred is in the short term um or short term is the next three years obviously it won't have much impact in this bull market as uh other panelists have said I'll take at least a year before we start seeing um some movement um on this uh on this case but what impact would it have on the on the on the industry in the next two three years in your opinion Fred well it's going to come down to whatever the rulings are, and it's going to move very slowly. And I think a lot of the panelists are absolutely right in

how it plays out. I would say that one of the reasons there's less of a concern is we're now getting some case law being built up over time. So just remember a few weeks ago, we had the Coinbase wallet case, which I would say is pretty similar or has a good similarity to what's happening with Uniswap, where the judge in that case said, hey, Coinbase wallet is not going to be a broker because of all the reasons why it's not. Which is it doesn't arrange the financing, hold customer funds. It doesn't get into independent asset evaluations. The court specifically in that case looked at Coinbase wallet and said, OK, it facilitates price discovery, but that's not to the level of routing or making investment recommendations. So not a broker. It does get a commission, but that's not the

sole factor in turning the wallet into a broker. So it's going to come down to what Uniswap does. I've got a good understanding of it, but I'm not an expert on how it operates. What would concern me a little bit is that because it's built on Ethereum and has smart contracts running through it, that there's going to be the argument that if you control the smart contract, then you have some more level of control that gets you to this level of broker-dealer. And so I think that's something to watch there. And on the other side of it, for other projects, if you've got an AMM function that's built into the blockchain itself, well, then you'd have less of a factor there that you are acting like a broker, dealer, or an exchange. So I think for where it goes three years down the

road, to answer your question, I think the more you can build in these functionalities into the whatever blockchain or network itself, the more you're going in these functionalities into the whatever blockchain or network itself, the more you're going to be able to get away from these, you know, claws that the SEC is trying to use. And then obviously it just depends. And Fred, linking it to a broader question as we get closer to the elections, that fight of the centralised world fighting the up and coming decentralized world and that we're a part of. How do you think it's going to turn out?

Kind of a more holistic view on the battle. I mean, that all depends on where all the money goes. And in my opinion, where it all goes. Because right now, the reason that DeFi,, DeFi, crypto in general is getting attacked is because it's the whole nature of blockchain. And, you know, the concept around Bitcoin, which is peer to peer decentralization. And I mean, when you're starting to go after money, that's when, you know, everybody, US, you know, Europe, any other countries, you know, you're messing with their money, you're messing with

their power structure. So I think if it's built into, I don't like this aspect of it, but I think if it's built into the traditional world and they all start getting their peace, then it's going to be more and more harmonious and it's going to work out better. But, you know, right now, if you see the SEC and you saw the letter that I think Eric was talking about earlier that was sent, you know, there are all these powerful money people are saying we can't let this happen. You know, this is going to destroy our kind of model for how we run the money game. And, you know, if they just try and shut it down,'ll be a huge fight i think crypto is ultimately victorious but i think it's more of a fight that causes a lot of casualties if it if it becomes acrimonious like that and i think the etfs are stepping that right direction

way that that centralized world the incumbents um instead of becoming enemies they just you know have their own piece of the pies, you said, Fred, and that kind of diminishes the, the, the likelihood that there's a broader crackdown on crypto over the next few years. But William, and then we'll go to Shashank. Actually, I'm going to Shashank first. William, I'm going to go to you afterwards. Can I go over a few other questions for you? Shashank, I know you've been tweeting very heavily and you might have a more

technical understanding of, of how a crackdown on Uniswap would look like. I would love your thoughts on this Wells notice. Yes, if we see, I mean, it's like I'm going to compare it with what the Indian government did here in India. So, you know, it's like there was a huge crackdown on crypto exchanges in India way back in 2018 and before. And they tried to ban Bitcoin and all the cryptocurrencies. But later on, these people came forward, you know, like fought against the government. And, you know, it's like they won. But then the government tried to make it harder by imposing a crypto tax of 40% in India.

So right now, if you, you know, it's like if you pose a capital gain on cryptocurrencies, you have to pay 40% tax. Before that, what they also tried was they pressured the bank not to, you know, it's like allow transactions of people who try to exit the crypto like if you get take an exit from you know it's like uh of cryptocurrency from a centralized exchange and then transfer it to your bank account your bank account is going to ban you so uh again it's like uh what tom also said uh i think it was present person also said that you know it's like they're gonna take down front ends which has happened in india as well like uh they have banned kraken and there are a few other exchanges which didn't comply to them. They just blocked their URL. So if you are with Indian IPs or Indian ISPs, using Indian ISPs, then if you try and open Kraken right now, it won't work for you.

They got them delisted from app stores and play stores. So, of course, when they will see that they cannot win this thing with Uniswap, they are going to take different routes to third parties, et cetera. I appreciate that. William, I know you had your hand up earlier, and then I'm going to go to Tom and Fred with one more question before getting into originals up there. But Isabel. William? Yeah. So I was involved with Kik and Kin when they were served the Wells Notice by the SEC a few years ago.

And just as a reference point, it took two years between the time that they issued the Wells Notice until the judgment was made. Exactly two years, September 18, and the judgment came in October 2020. So it's going to be a long process and maybe longer for this one because this is more complicated. What the SEC is trying to do here is to hit not just the securities laws,

but there's also the, like, what's an exchange, what's DeFi, proper reporting requirements. It might be more complicated. I mean, for me, and this is not a surprise, the SEC is losing all credibility here. My only, my prediction here, a bit optimistic, uh this this thing gets dropped uh after the election uh i don't think they're gonna run with it completely and and as the as others have um and worst case worst case they will they will be fined because that's how these things end, with a fine. And then another worst case, in a few days,

Uniswap can relocate to anywhere, Hong Kong or take another jurisdiction, and the exchange will be reopened almost on the same level. So it's like they're rocking a mole. So if anything,

the crypto won't be really harmed. Unistrom won't be harmed that much. What will be harmed is the U.S. retail market. Yeah, and then there's a lot of ways to get around it via whatever, VPNs or something. And at the end of the day, there's another component here is taxes. I'm sure that the Treasury and whoever is whispering in the ears of the SECA, there's people here, $2 trillion of transactions. We don't know how many are coming from the U.S. Are these people paying their taxes?

That's why they want all this reporting and all this scrutiny going to the DEXs. But if that's all it is, then, yeah, I mean, we should be reporting taxes if you have made gains on DEXs, if you've made trades on DEXs. But that's another issue. You don't go and choke the whole thing just because you can't get a handle on people reporting their gains. So, I mean, they've lost all credibility at this point. Let me go to Isabel. Isabel, can you hear me?

Yeah, hi, absolutely. Well, it's good to see you on stage. I saw in the audience, I thought I'd have to bring you up. Just give us a quick Ordinals up there. It was a complete segue for my discussion right now. Totally a segue. The Bitcoin ecosystem has been gaining a lot of attention, so maybe you can give us a general overview because I don't care who the audience is.

I think everyone would like at least a bit of alpha. Yeah, I'm happy. And I actually think it's kind of relevant. I was listening to the discussion and, you know, the reality of the situation is where they're going to try. I mean, what I'm hearing from the folks on stage is where they're going to try to hit Uniswap and these other organizations on the DeFi side are where there is centralization on Ethereum, basically, right? So, you know, node operation is really difficult for Lehman. That's much less the case on something like Bitcoin. You know, basically every point of like major centralization critique that you have about Ethereum relative to Bitcoin is going to be a vulnerability in these kinds of cases, which I think is just going to drive more liquidity and more interest into Bitcoin technologies. And,

you know, we're going to see kind of more and more of a rise of this kind of slowly growing obsession with, you know, L2s on Bitcoin and everything else, right? So, you know, in the post-Ordinals universe that we're in, since Ordinals came out about a year ago, you're seeing a ton of investment coming into not just Ordinals, but like, you know, all of these applications on top of Bitcoin that pre-Ordinals people just thought were impossible, right? People just didn't think DeFi could be a thing on Bitcoin. People didn't think NFTs could be a thing on Bitcoin. And now we're seeing an enormous amount of effort, you know, since Ordinals kind of came out and kind of proved otherwise.

We're seeing a ton of interest in kind of taking Bitcoin out for a spin and seeing what it can do, kind of reviving it from its previous profile as, you know, maybe a boomer coin or whatever. So, yeah. So, you know, I think Bitcoin's in really, really interesting position this cycle. And Ordinals is obviously top of mind on that narrative. Ordinals has been, I think I mentioned last time on the space, kind of ripping all year. We had a really big weekend. There was another big BRC20 push most recently in the past couple

days. Ordinals' biggest 10K PFP collection recently hit 0.9 Bitcoin apiece in the past month. That would make it the most valuable NFT collection after CryptoPunks. So yeah, Ordinals is definitely leading the charge on this sort of. What's the, what's the, what's the, what's the, what's the floor of the,

the Ordinals PFP versus CryptoPunks in dollar terms? In dollar terms. So. Approximately. So I think right now CryptoPunks in dollar terms. In dollar terms? Approximately. So I think right now CryptoPunks, so they're each 10Ks. I think each CryptoPunk is currently trading around, I want to say. 160K. I think it's 160K.

Yeah, exactly. And the biggest Ordinals collection, which would be, I think, is the second largest NFT collection period of all chains after that. It went up to about 70k, 65k a piece, and now it's retraced back down to about 35. Cool. You're still a long way away. Yeah, yeah, yeah. CryptoPunks is a hard one to overtake, you know, but I do think it's interesting that, you know, relative to other Ethereum NFTs, you know, it seems that there's a huge amount of liquidity going into all of those. So talking about just one last question, you're talking about DeFi and Bitcoin, which wasn't even a topic just a couple of years ago. We're big investors in Portal DeFi. So it's a big disclaimer there.

But how, first, I can ask you directly about Portal DeFi. How are they doing? disclaimer there. But how, first I can ask you directly about Portal DeFi, how are they doing? I haven't checked up on them in a while. And how's the DeFi ecosystem in Bitcoin? And then I want to go to Fred and William, just kind of get their thoughts on the markets this year before we wrap up. Yeah, so I am not particularly familiar with Portal. I should do a little research and dig in. But what I will say is on the Bitcoin DeFi front in general, what we're really seeing from kind of big VC investment standpoint is just this obsession with scalability and programmability on Bitcoin, right? Like, how do you make Bitcoin

programmable? And how do you scale it? And the technologies that I think folks are most interested in right now, and this is not totally new. I think previous cycles, there's been discussion about this as well, is what's going to be the L2 that actually works, right? know, trust less bridge basically between Bitcoin and some accounting model that can do transactions at faster speeds than 10 minute blocks, right? And ideally, you know, cheaper, faster trading, basically, that can trustlessly settle back down to Bitcoin layer one. That's, I think, the obsession right now of investors is like, which, you know, if it is it another blockchain? Is it a separate technology, something like lightning? You know, what is the thing that's going to make Bitcoin scalable, and actually make Bitcoin usable for faster trading and ultimately payments as well? You know, not just make Bitcoin a store of value, but make it a medium of exchange, which, you know,

right now, it's it just doesn't really have the muscle to do that because of, but make it a medium of exchange, which right now, it just doesn't really have the muscle to do that because of a variety of reasons, including cost. So yeah, so that's sort of where we're at, I think, on that. Fred, to kind of wrap it up with some predictions for the year. William, I asked you, I think, a couple of days ago that question, but Fred, we haven't had a chance to get your thoughts on where you see the markets in the next few months. Cause that's something that the audience always asks in the comments. Yeah. I would say, uh,

before you jump into your twin bed in your studio apartment for some well deserved sleep, Mario, uh, my price predictions would be, uh, I, I, I promise you, you gave me a bit of chills for a second. I literally just walked into my house about 20 seconds ago. I just put my bag down and you said this. I'm like, I literally froze. I'm like, was he watching me from the windows that I walked past you by accident? But I'm glad it's just a guess. I figured it out. But yeah, go ahead.

I would say that, you know, I went back and looked at the havens and, you know, it's interesting. The time of the month, it went from December to July to May. And now this year, it's going to be April. And then you look back at everything else. It's just if everything goes the way it's gone in the past, we're going to get a little bit of a dip after the halving, which would be... And that can run from anywhere from a month to two months, three months. So I'd expect, you know, Bitcoin to go back down, you know, maybe to the low 60s if everything plays out the way that happens. And then it's a long slog, again, by halvings or two. And then we're going to be in that sideways action and then, you know, blast off end of the year, early next year. And, you know,

how high is it going to go this time? I'm hoping, you know, well above 200, but that's, you know, we're months and months away from that, but in the next two months, I think we're going down to the low sixties. Okay. Fair. I think this is a similar prediction to what we heard yesterday. We had a lot of people kind of give us their predictions. I think William, we, we, we asked that question a couple of days ago as well. Um, but, um, yeah. And I think one thing that, um, Dave, Dave Weisberger said on, on us, on our stages, the longer and others agreed,

the longer we'll have this consolidation period, the longer we just sitting in that, you know, in that range of whatever you want to look at the range but just no no massive spike and no massive um you know bloodbath and the longer the the healthier the bull market will be is that a fair uh a fair uh kind of statement fred yeah I mean, you know, it's still going by every past cycle until it doesn't. And so I'm still banking on past

this prologue. Cool. Well, guys, we'll end it early. I'm pretty exhausted. I do need to get some rest and hopefully that you

enjoyed the space and we'll see you again tomorrow. I think Rana, Scott will land by tomorrow, so they should be online. Scott will be and Randa will both be So that should be online. Uh, Scott will be,

and they'll both be in Dubai talking 2049. My team will be here as well. Obviously I live in Dubai. I'll be speaking at the event. Um, so feel free to hit us up if you want to catch up and, um, yeah, we'll see you tomorrow. Thanks a lot, everyone. Thanks a lot for the panel. Bye everyone. Thank you.