The Wolf Of All Streets - How The White House Tried To Kill Crypto And Failed | Caitlin Long

Episode Date: September 3, 2023

This podcast will shock you. Caitlin Long, the founder of Custodia Bank, reveals what happened in the White House and who the puppet master behind the ongoing attacks on crypto is. We continue with crypto regulation in each state, Bitcoin ETFs, and the future of Custodia Bank. You don't want to miss this episode, trust me. Caitlin Long: https://twitter.com/CaitlinLong_ Custodia Bank: https://custodiabank.com/ ►► 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 $10,000! 👉 https://www.okx.com/join/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: https://twitter.com/scottmelker Web: https://www.thewolfofallstreets.io Spotify: https://spoti.fi/30N5FDe Apple podcast: https://apple.co/3FASB2c #Bitcoin #Crypto #Trading Timestamps: 0:00 Intro 1:25 Operartion chock point 2.0 4:49 The system is corrupted 8:00 Elizabeth Warren connection 10:30 What actually happened in the White House 16:00 Wall Street, White House, Warren 18:50 19% of New Yorkers own crypto 21:30 Pro Bitcoin politics 27:30 Bitcoin price - $134,000 and halving 32:00 Bitcoin ETFs will not be approved 34:00 The states’ situation with crypto 40:15 Next big thing in crypto 44:15 Crypto banking relationships 50:55 Custodia 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.

19% of New Yorkers, all New Yorkers, own crypto. Steve Mnuchin hated Bitcoin, and so Trump's official view on Bitcoin was very negative. You know, the federal bank regulators saying, all right, we made a mistake, let's get to the table and start figuring out how to fix this. Because the son of the Speaker of the House and the niece of the President of the Senate were both telling their relatives, you got to fix this. It's, you know, it's the solution's not there yet. You're not actually seeing, man,

if we could just get the women in a room and hash it out. While few people are talking about Operation Chokepoint 2.0 anymore, it is still very real, and we're starting to get insight as to where it's coming from. I talked to Caitlin Long today, and she said that she has clear evidence that this is a

directive coming down directly from the White House, particularly from Elizabeth Warren Plants in the White House and the anti-crypto army. What you hear here is going to absolutely blow your mind. The White House tried to kill crypto. They tried to send Bitcoin to zero and they failed. The best part of this conversation is how we look forward to the very bright future for the industry in the United States. I think this is the perfect opportunity for us to get an update on Operation Chokepoint 2.0. It was all the talk six months ago, right? And then we had obviously Silicon Valley and everything that happened around the

banks. Now it's gone quiet again, but I have a feeling that doesn't mean it's gone away. It definitely hasn't gone away, but the initial shakeout definitely occurred. And of course, Custodia got caught up in that. We were the tip of the spear in what, in retrospect, was a very clear, all-of-government coordinated crackdown across all the federal agencies on the entire crypto industry. Some of it, actually, I would say much of it deserved, but not all of it, of course. And I do call out that some of the players who were the best in the sense that we literally begged to become federally regulated were treated the harshest by the federal regulators. And I would put Custodia in that camp vis-a-vis the Fed. And then, of course, Coinbase with the SEC, for example.

And what's interesting is I honestly, you know, we know a lot, there's a lot I haven't shared about what actually happened behind the scenes. And we do have receipts, so to speak, we have email. And it is, and we also had insiders come forward and tell us what happened. This was a White House driven event. And all the federal agencies fell into line on a Biden White House coordinated all of government crackdown on this industry. But what I think they thought was that they were going to kill it. And they killed parts of it. And frankly, those parts and some more needed to be flushed. But what they didn't succeed in doing, and they were never going to succeed, and I think it's hilarious that they thought they were going to succeed, was in making Bitcoin go

to zero. I know a lot of them think it's a zero. So the fact that it has been as resilient as it has just proves to them that they were wrong. And we saw the first ice melting. The Fed just recently announced a novel activities supervision program. Well, if you read what they said about custodia on January 27th, it was hell no 18 ways from Sunday. The door slammed shut on everybody except the big banks, which they had already approved, Bank of New York Mellon. But now they have a novel activity supervision program. And I saluted them for acknowledging they need help. They did. They do. And they said they would be going out to the technology industry, to banking, to fintechs, and to academics to get help. And they need it.

This isn't going away. And it's crystal clear they don't have the understanding that they need in order to deal with the risks. And I think for folks like me who are there, I've talked about this before, warning about the bank run risk and the bank run serving this industry last year. And I think that they thought I must I was speaking Greek. Yeah, exactly. And I think they thought I was speaking Greek. And maybe they now understand that they actually do need the help of people who know what they're doing and know how to separate the wheat from the chaff in this industry. Why do you think that they're doing that at this point? Do you think, I have this sort of outside impression, not necessarily on the banking side,

but that the SEC, White House, the Elizabeth Warren camp, that they push the pendulum too far in one direction and they're getting a lot of pushback, right? We've seen it obviously in Congress, but I think also just with the constituency citizens saying, look, you push too hard. We care about this. They really actually galvanized the industry, even behind companies that people didn't support like Ripple. And so it's my gut feeling is that they just push too hard and they're getting pushback and now they can't push as hard as they wanted to again. But do you think it's that? Because it doesn't seem like the Fed who said literally never to you effectively in January. It's surprising that now only seven or eight months later, you're sort of seeing at least the window cracked for you guys. Yeah. Well, not necessarily for us, right? I mean, again, they like the incumbents.

Look at what they did to the startup. This is definitely a theme. There is a soft corruption in the entire financial system that is a very strong incumbency bias. And of course, by definition, nobody who's in digital assets is an incumbent because the incumbents, that wasn't where the innovation bubbled up. And so they really are ill-equipped to deal with it. And so I'm glad they're acknowledging that they need the outside help and they have this program now. But the other thing that happened, Scott, is it got kicked into the courts. So I don't necessarily know that the galvanization of the industry to their congressional representatives mattered that much. I haven't seen a lot of people flip from being anti to pro. Those who were pro before

FTX are still generally pro. And those who weren't. Yeah. Well, certainly those that had to give a lot of campaign donations back. Yeah. But certainly those that were anti, right. I don't think the, the Elizabeth Warren anti-crypto army, other than the, than, than the White House. And again, we do know a lot about the connections. I, I never heard of the person at the White House who did all this. And it all happened over the Christmas break and, you know, kind of got started in January. And, and, you know, it's again like, it's just crazy what happened to us when it all comes out, the political decision that got made, and the coordination, but that multiple supposedly independent federal banking agencies told applicants to withdraw their applications at the same time. And these applications were supposed to be standing on their own. And with the leaks we were dealing with, that the Fed would be voting us down two days before the vote even happened. And we know from

the conversations, including some of it in email, that the White House was involved. So, I mean, it's just, that's as much as I can say. There is more. But, I mean, it's just crystal clear that this was coordinated. But the reason I bring all that up is that there were Warren people who did it, Warren people in the White House who did it. And again, I've never, I had never heard of the name of the person who did it. But you look at the background and Elizabeth Warren connection. Okay. So like, I've heard this so many times from so many people, not this specific story, but even from other staffers and people on Capitol Hill who say, listen, we represent, or we work with Democrats who are very pro crypto.

We can't say anything. We're afraid of Elizabeth Warren. She is the most powerful Democrat in finance, period. She's pulling all the strings. She put in Gensler. She has her fingers in the White House. And listen, that's politics. I'm not even begrudging that.

It's just unfortunate that the singular face of the anti-crypto army is the one who happens to have the most control. Oh, definitely has the most control. Her acolytes. I mean, when I explained, there were folks in Congress who wanted to hear the whole story, and I did share the whole story with them. And when I explained it, it's like you said, everyone knew exactly who this was. And what I have been told, I can't confirm it, is that Biden didn't care about financial services policy. And so he outsourced it to her. And she's had a veto over all of the people who have been appointed to

financial services regulation. She's on the Senate Banking Committee. Right. So she is basically, you know, look, for whatever you think, I don't want to get political here, but President Biden is not working 18 hours a day. OK. And he's not the one who's tweeting about crypto, right? But that's the point, right? I mean, like who's really in charge, okay, in financial services, what I've been told I can't prove, prove it is that it's her. Okay. So it's so screwed up what's going on right now. And, but, but back to your point, like, does that really matter? Because we're heading into the presidential election, and I think it's going to be the craziest election

maybe in US history. We've got one leading candidate who's been indicted multiple times, and another one who's, there's a real corruption scandal, and is a humanitarian candidate. Like, I mean, this is literally, I mean, and literally like needs to be in a retirement home, you know, I mean, he's just too old for the job, even outside of any of that activity. The guy's obviously not fit for the job and Trump may not be either by that point. And then you get deep fakes and then you get all this stuff. But then, but like literally we, we know he's not in the weeds on all these decisions. So we kind of get a chance to peer behind the, the curtain and figure out who's making these decisions. Right. And one thing, I'll actually fill in a piece of the puzzle, because came forward told me that what happened around Christmas,

New Year's period, and that there was a power vacuum in the White House. If you had a strong president, what I'm about to tell you wouldn't have occurred. But the power vacuum in the White House was in the transition from Ron Klain to Jeff Zients as chief of staff of the White House, and from Brian Deese to his successor, who turned out to be Lael Brainard, but wasn't named a successor until after all this got done. Remember, she was a Fed governor, and she voted on the custodial application because she was still a Fed governor. Okay, that's all part of this whole politicization of the custodian decision. But it was the power vacuum of there being no White House chief of staff and there being, you know, a lame duck head of the National Economic Council who was leaving into that power vacuum filled this group of anti-crypto people who made their move. And and it's been massive. And but, you know, back to your point, right? Now it's all in the courts. What has happened since then is that the federal agencies have had this collective freak out over crypto. And now they find themselves in what I've termed bet the farm litigation

that was prompted by crypto, which I find hilarious. They literally have lost their minds. And they're in bet the farm litigation. That is the type of litigation that could clip their wings meaningfully. And they keep losing, the SEC specifically, but yeah. Well, yeah. I mean, the SEC is in a couple of those cases, right? I don't think they thought they were going to lose the Ripple case because if Ripple wasn't a securities, an unregistered securities offering- Their Coinbase, yeah, the Coinbase claim now has no water. Whether we agree with it or not, what's the security doesn't matter. If their entire premise of their case against Coinbase is all of these unregistered securities, and that doesn't hold water for Ripple,

it's over for them against Coinbase, at least on that claim. But that's the point. Historically, federal agencies have always liked to keep a gray area in the outer bounds of their jurisdiction because they don't like to litigate it. They don't want federal judges making decisions about this. And you just talked about the SEC. I'm not going to talk about it vis-a-vis the Fed because we're the plaintiff in that, one of three plaintiffs now. There are multiple lawsuits on the same statutory issue, two of which are not crypto, against the Fed. But here's the interesting thing. I just saw in the MarketWatch article that came out about Fed master accounts this week, which was talking about a non-crypto fintech company that got a bank

charter and is having the same problem with the Fed that we did, they too sued. And there was a really interesting article that was referenced that I hadn't read yet. And it talked about how the bank regulation in the United States is corporatist. And that's correct. It is. This is part of the reason why you see that soft corruption of the system. The system itself is corporatist. It evolved to be that way. It got captured, if you will. But here's the interesting thing. He pointed out the, well, let me ask you, take a wild guess. How many times was the Federal Reserve sued in the decade between 2010 and 2020?

I literally have no idea. I wouldn't even be able to venture a guess, but I would guess they're getting sued a lot more now than they were then. Although that was a pretty dark, yeah. Well, no, here's the thing. Because these federal agencies were set up to be so independent that they're independent of even oversight by the judicial branch, except in certain areas. And so what happened is this paper written by Professor David Zerring of Wharton. When I started reading, I'm like, you know, I knew that basically it's impossible to sue the Fed.

The way that the Fed got set up by Congress, monetary policy decisions, just not subject to judicial review. The only oversight that they have is the Humphrey Hawkins testimony and just congressional, you know, Senate confirmation of Fed governors, and that's it. It's very, very light. So the Fed is used to not having its decisions reviewed on monetary

policy. But outside of monetary policy, in that entire decade, only two banks sued the Fed. That's it. Two lawsuits in the entire decade, one of which was over the constitutionality of a Consumer Financial Protection Bureau, CFPB. So it doesn't really count. So there's really one lawsuit in the entire decade. Now they're facing three and more are on the way. So this is what's happening, right? It's a very interesting dynamic where these federal banking agencies have had this collective crypto freakout.

And it's causing them to end up in, and now I'm switching back to talking about the SEC, to end up in this litigation that may clip their wings in terms of the powers that they thought they had, because it's never been tested by the court system before, because they're just not sued very often. Yeah, so much to unpack. That exactly aligns with my feeling that they push too hard, right? They just sued everybody and now they have to actually come up with the resources and they've already had their wings clipped, to your point, by Ripple. But I want to talk about the White House because it's interesting. We have this one sort of sentiment that the White House wanted to send Bitcoin to zero, crush the industry. But on the flip side, you have Wall Street wholesale trying

to get into the industry. And those two things are very much in conflict. And then you throw Elizabeth Warren in the middle, who obviously hates Wall Street, wants to regulate every billionaire and every couple. Well, maybe not. She's taking a lot of money. She hates Wall Street. She hates the ones who aren't paying her on Wall Street. She is manipulating Wall Street in the interests of her donors or whatever the actual narrative is. But that's a very strange interplay because you have her on both sides, but you have BlackRock might as well be the fourth agency, fourth branch of the government.

But then you have them trying to send it to zero from the White House or from Elizabeth Warren. How does that all work? And it seems like Wall Street's actually winning that battle. Yeah, it's such an interesting dynamic because you're pointing out the strange bedfellows, right? The alignment on Bitcoin is that the people who hate it are the corporatists in the Democratic Party, of which I would actually include Elizabeth Warren as one. Okay, I know a lot of people are surprised to hear that, but look at what she's actually done, not what she's actually said. And then like the neocons of the Republican Party, right?

The folks who think we're all terrorists until we prove ourselves otherwise. But it's the more ACLU old school wing of the Democratic Party and the more libertarian wing of the Republican Party who've joined forces to support this. So it is a strange bedfellows dynamic. And, you know, I think that struggle, by the way, we saw that in the Trump presidency, Steve Mnuchin hated Bitcoin. And so Trump's official view on Bitcoin was very negative. But now it comes out Trump owns some ETH. And he's

been, you know, involved in the NFT game. So long story short, I think it's just, it's strange bedfellows. You can't draw the normal distinctions. And so you have the aisle crossers or you have people like Cynthia Lummis from Wyoming and Kirsten Gillibrand from New York, who, by the way, I've been in an, in a, at an event with the two of them. They really like each other. I know. They really respect each other. I've interviewed both within like two weeks of the first bill announcement last year, not the new update. They love each other. They respect each other deeply, right?

Correct. Two brilliant women. By the way, I think Elizabeth Warren is brilliant as well. I've never met her. She was my law school roommate's favorite law school professor. And she is truly renowned for the work that she did in bankruptcy law at the time. So it's so interesting because I feel like, man, if we could just get the women in a room and hash it out, that some of this stuff might actually go away. But it's going to be fascinating to see if Warren backs off it because there was a very interesting, I think it was a Coinbase survey, 19% of New Yorkers, all New Yorkers, own crypto. 19%. That is not a small voting block.

That doesn't mean that that's going to be the issue they vote on, but it's a big enough issue that it starts to bubble up to the political consultants who have to say, look, we don't necessarily want to lose the millennials and Zoomers who really like crypto ahead of this presidential election, which is going to be just crazy, regardless of how it happens. Yeah. So then you have to then be curious as to why Elizabeth Warren would be heading this anti-crypto army. We can see even anecdotally, they're not adding more kernels in that army, right? I mean, it's a few people. It's the people who started it. There's no one new. But on the other side, you see plenty of people on both sides of the aisle, to your point, who are coming out anti-anti-crypto army, right? I mean, you saw the market structure bill passing bipartisan, Richie Torres, from the Bronx,

Democrat. So interesting. The younger generation is obviously passionate about this, or at least they understand why people would be. So how can this be politically possible for Warren and Biden and all of them? Or do they just not care? Or is there something more sinister and it's a different interest that they're representing? Oh, boy, I don't know. That's a deep question. And, you know, I pride myself in not being in Washington. You know, I did my internships there as a kid. I was a White House intern in 1990, 1990. No, 92. Sorry, it was when I was when I was in graduate school. Yeah. I kid. I was a White House intern in 1990, 1990, no, 92. Sorry. It was, it was when I was, when I was in graduate school. Yeah. I mean, I did a couple of internships at,

in the office of management and budget 88 and 89. So it was Reagan and Bush. And then 1992, I went back and did a White House internship. So long story short, it was, it was 92, 91. Obviously I'm my, my years are, are it was, it was under Bush. It was in the Bush White House. I worked for a Harvard professor who always hired one student from Harvard from the Kennedy School. His name was Roger Porter. He's still a professor there. And so it was still during the Bush White House. But anyway, long story short, Washington is something, is a place that I don't like being. I don't like it when I'm there. I don't like being, I don't like it when I'm there. I don't like staying there. And it's really funny because my, my significant

other and I, when we were there together a little while ago, he's, he said, I have this premonition that we're coming back here and we're going to be spending some time here. We do need you there. No, no, no. Well, it's actually really funny, Scott, because I am spending time with a couple of presidential campaigns on both sides of the aisle. You could probably guess because they're pro Bitcoin. And I have had a policy of leaving my own personal politics out of it, which I just don't spend a lot of time talking about and focusing on the pro Bitcoin politicians and working with them regardless of which side of the aisle they're on and where they are. And, um, and you know, there's some really interesting policy work being done. Uh, and will any, will either of these candidates break through? I have no idea. Um, but they're both very interested in fixing what we know is very broken, which is the, the, the incentive

structure in the current traditional financial system. They both clearly understand that Bitcoin is a piece of that, that it is about speech and freedom. And both of them are very interested in Fed reform. And we've had a fair amount of discussion about Fed reform as well. Okay. So let's talk about the election then, because I think it's an exact reflection of what we were just talking about, which is you have the gerontocracy, you have Biden and Trump. We don't know Trump's actual position, but they're outright against Bitcoin, at least vocally against Bitcoin. Now, RFK isn't young, but he's younger, right? I've hosted him. I'm assuming that's one of the people you're talking about.

He's on the Democrat side. Not going to comment. Right. Not going to comment. I'm not endorsing anyone. No, of course. I'm saying potentially talking to them. I know a ton of Bitcoiners are very publicly, Brian Estes and Perian and, you know, David

Bailey. Everybody's working with RFK. But then you have, as you get younger, right? And then to the Republican Party, we have Suarez, who I've interviewed both within a week of each other. We have a back Ram Swami. Right. And so I think that he, I think at first my impression for him was that it was a political talking point and now he's falling down the rabbit hole. That's kind of how I feel about it. And then, then DeSantis,

I think is somewhere in the middle. And I think it's solely a political talking point for him, right. Just score some marketing points. I don't know if that's your appraisal of each of them, because that's what I'm seeing from the outside. But it is interesting that the old candidates hate it, and the young candidates are all coming out for it, whether they believe or not. There is definitely an age breakdown. And we saw that, by the way, in Wyoming and all the stuff that got done back to in 2018. The Wyoming fix of the money transmitter law that got the whole Wyoming ball rolling was done because the son of the Speaker of the House and the niece of the President of the Senate were both

telling their relatives, you got to fix this. Bitcoin's a thing, right? It was the younger generation that was having an influence. And those two people are very effective people. And so, you know, when they were talking to their dad slash uncle about Bitcoin, they were being listened to by the elders. And then the elders kind of said, all right, there's something here. And when the young folks were the ones who showed up to the meet and greet, there were legislators who were telling me, I've never seen anything like this before. Usually it's the same old crowd. And this is definitely skewing, very diverse. It was definitely skewing young. But by the way, I've said this before, there was a Latina grandmother whose granddaughter drove her to the event and she was mining Bitcoin in

her garage. OK, so it was a real true mix of people. But the point is, it was not the usual crowd. And and there were 16 year olds who drove down from a small town called Newcastle in Wyoming to be there for that, too. So that shows you just the diversity of who showed up. But the other thing that was interesting, at least for Wyoming, is that one of the other politicians said, I've never seen people driving up from Denver. Usually it's Wyomingites going to the city, and something's different here, right? So that zeitgeist, if you will, I'm sure politicians are seeing it. Now, the horrific crimes and fraud that got perpetrated by this industry definitely left a sour note in everyone's mouth, mine included. And you can't blame anyone for overcorrecting for that in government as well. I mean, all the way. Yes. but I'm saying slightly. I think that there's a natural knee-jerk reaction to that for people who don't understand. Listen, I'm as

critical of them as any, but pretty tough situation. I mean, this is why the folks in charge tried this, let's kill it all and try to send Bitcoin to zero. That's a massive overcorrection that I'm just talking about. I can see why they would have said, maybe for six months. I'm not going to talk about this. I'm going to feel the herd. That was their strategy. Let's go after the people who were the most compliant, the ones who were literally begging to become regulated, the ones who did everything up the straight and narrow, and let's make an example of them. But it didn't work. So here we are. It's going to be crazy because remember also, I thought about this last night reading Pantera's monthly newsletter, which I always look forward night reading Pantera's monthly newsletter, which I always look forward to reading. And of course, they're starting to talk about the halving.

And if you look at their model, it shows Bitcoin crossing 100,000 around about the time of the US presidential election in 2024. OK, and I made the joke, I guess my laser eyes will have to come off right about the same time as the presidential election. Satoshi did this on purpose, folks. Satoshi aligned Bitcoin halvenings and bull markets to the U.S. presidential cycle. I mean, yeah, it makes sense. It's six months before every single time.

And anybody who's watched any halving cycle knows it takes about six months for that supply reduction to really start to play into the market. That's interesting. I literally never thought about that. And $100,000 wouldn't even be aggressive for that point in the halving cycle, right? I mean, you could be at $120,000, $150,000 easily. Yeah, their price target, I think, is $134,000 is where it peaks out in the next cycle in early 2025. But, you know, we'll see if these models hold true. I think they will, because for very fundamental reasons, the halving has a huge impact. And,

you know, we're going to have this debate. It's starting to happen now about the efficient markets theory. Well, wait a minute. Everyone knows like this is one of the most well telegraphed fundamental events in finance is that Bitcoin is going to go through a halving. And then what happens if you really understand the mechanics, the miners shut off the machines that right now are wildly profitable, but stop being profitable the moment the halving occurs. Okay, so that isn't something anyone trades ahead of maybe because there's a better well, there's a more developed futures market now than there was in the last halving. Maybe the miners have hedged it, but I kind of doubt it because the miners have

gone through an incredible shakeout, as you know. Some of them filed for chapter 11 this year. I don't think they have the capital to hedge it out. I don't think they have the capital to hedge it out because they spent so much at the top of the last bull market buying equipment that's now down 90%. Not only are their assets of the Bitcoin down 90% or went down 80%, but the value of the equipment they bought at the top of the market that they have to put online. Right. Correct. Correct. And the hash rate just keeps growing. We're pretty close to the all-time high in the hash rate, which is definitely a deviation from previous cycles. But what that's going to say is I think in some ways the halving may have an even bigger impact because all those machines

that they were so desperate to plug in in the last six months, some of those are outdated and they will get shut off. And so it's not like it's easy, except out of the futures hedging, it's not like it's easy to trade around this. And just like last time when everyone's easy, except out of the futures hedging, it's not like it's easy to trade around this. And just like last time when everyone's like, oh my gosh, efficient markets, everybody knows this is coming, it's priced in. My gut tells me we're going to have a repeat. It wasn't priced in until afterwards. And you need the shakeout to occur of all those miners turning machines off, some consolidation in the mining. You're going to have some people having to sell Bitcoin as for sellers in that post halving dynamic, which has happened every single time.

And then it gets roaring. And it's right before the presidential election. And I was going to say, we're three for three on those cycles repeating. That's not a huge pool of data, but three for three. And the reason I giggled is because inevitably the halving will come and people don't understand it. We'll say it was a sell the news event. You'll see the miners selling because they have to. Price will go down a bit and they'll say, see, it was wrong. And that's literally part of the cycle. And then the J curve hits. Yeah. It's not like the supply reduction comes into play the minute the halving happens.

And people just think it's Bitcoin supposed to go to 100,000 the day of the halving. Correct. Correct. That's absolutely correct. And then everybody's going to be piling in. So I know we've ended up talking a lot about politics here and it's fine. Again, I am not taking sides. I am pro-Bitcoin. I am helping people who are pro-Bitcoin to help. And from all sides of the aisles, I always have. And from at national and state level, I tend not to do local type stuff. But I have gotten involved with, you know, when people reach out for help, you know, I think it's part of one of the things that we can do to help get more support is talk to the politicians who are in a position of power who can, who are in a position to help.

And so it's what I do. And, you know, we're getting, we're getting now to a realization that Bitcoin is going to be in probably another roaring bull market right into the presidential election. I wonder if the anti-crypto army understands that dynamic and what that's going to do to the millennials and the Zoomers. And it could be, I mean, listen, it'll be devastating because even the few boomers who held on will be really excited about Bitcoin by that point. And they might even start paying attention to candidates who speak outwardly against it. So to your point, it's going to be extremely interesting. Yeah, indeed. And by then, you know, I mean, again, I actually am skeptical that there's going to be much on the coming out of Congress or much change at all in the executive branch.

I don't think the SEC is going to approve the Bitcoin ETFs, the spot ETFs. I think they're fine with the cash settled futures. So now all eyes are on the ETH cash settled futures ETFs. That's coming, I think, because they're comfortable- They don't have the grounds to reject it. It's the same as the Bitcoin. There's not a market manipulation issue as there is in the spot ETFs. And let's face it, they're not wrong.

I've been very balanced in what I've said about the SEC. Sometimes I've been very critical. And sometimes in the face of, you know, a lot of crypto Twitter being critical of the SEC, I'm the one saying, hey, they called this one right. There is, this isn't black and white. There is a lot of crap in this industry. I was debating with one of the early, early Bitcoiners, is it 90% of the industry or 99% of the industry? That is crap, right? And a lot of it has been flushed out, but not all of it yet. And I don't know how much more we have to go, but there are still some highly leveraged

business models. I mean, we just saw Prime Trust fail six weeks ago, right? Fail. Fail. Fraud. Yeah. Well, we'll see, right? They're in chapter 11 now, right? And there may be knock-on effects of that. Yeah. Yeah. It's bad. And honestly, I guess I can knock on wood and say, I'm actually surprised that that hasn't been a bigger talking point for regulators and legislators since they were a registered, regulated, trusted custodian. A custodian failing or committing potential fraud seemed like it would be a bigger deal than a lot of the other collapses, but it didn't touch retail in the same way.

It didn't touch retail. And to be honest, it is a big deal. It is a big deal. Huge deal. Behind the scenes because it's going to chill the state regulators on this. Now, switching gears a little bit, we just saw states, the states have pushed back, right? The states have been the ones creating a welcoming and enabling regulatory regime. The two states that I'm alluding to are New York and Wyoming. Again, Gillibrand and Lummis working together. This is no accident. And we saw the PayPal stablecoin announcement go forward. That was with state approval of NYDFS issuing it out of Paxos Trust Company and NYDFS Trust Company. But why is New York comfortable? Why is Wyoming comfortable? And why is a state like Nevada having challenges? Because New York and Wyoming put legal and regulatory guardrails in place. So now they actually have like,

why is Custodia not launched on Bitcoin custody, even though we filed our 60-day notice in April? I've talked about that before, because we have to wait to go through a regulatory exam before we can turn it on. Okay, that wasn't a requirement of the trust companies in Nevada. There were no rules in place. idea that the crypto industry can go to states that are revenue hungry and get a trust company charter for $500,000 in capital. That is just crazy. And if the state has no guardrails for this new regime, then the chance is that something bad might happen. Okay. And when I say guardrails, one of the most important things very few people realize is that the supervisors have to have an exam manual. That's the roadmap for the supervisors of the financial institution

to go in and examine it and make sure that it's lawful and that it's complying with all the rules and regulations that apply to it. Wyoming supervisory exam manual is 752 pages. Okay, Wyoming took the time. And by the way, New York did similar things. Because by the way, some of the same people who've worked on it on the regulatory side. Okay, so they're going in eyes wide open. Here's how it's going to be done right. So I love the fact that you're seeing some states push back against the federal government. One of my tentacles inside the Fed told me that the Fed tried to block, they tried to discourage the PayPal stablecoin from being issued. It didn't have the authority to do it. Okay. And New York said, just go. And so PayPal just went. So, you know, there's some pushback against this overreach

from federal regulators. If you're not going to create the open pathway, then the states are going to do it and they're going to do it lawfully and knock on wood, they're going to do it right. But to your point, there are some states that didn't take the time to put a legal and regulatory regime in place. That took years. Of course it was Nevada. Of course it's the casino, the casino state. Oh, I've never made that connection. I really feel for them. And by the way, this is part of the reason why I think they ended up in voluntary Chapter 11, because I looked at the statute in Nevada for receivership of a trust company,

and there's virtually no law. So the whole thing, basically, when there's no law, there's no statute, and there's no case law precedent, it means every little thing is going to get fought over in court. And it's going to take years to go through court. So putting it in Chapter 11 speeds up the process, but it's actually worse. Chapter 11 is pretty much always. I just went through it with Voyager, as you know. Of course. Voyager, as you know, I mean, you know, we, we could have gotten 75% of our assets the first

day and we end up with 36%, which is actually 24% of their value because the assets went up only because lawyers got paid. Only because lawyers got paid. Well, but that's the thing, but this is, but this is what happened. Chapter 11, the primary goal of chapter 11 is to bring assets into the estate. The primary goal of a state receivership process is to protect the customers. Huge difference. But the problem in Nevada is that they didn't have a true state receivership process that says, here's what the receiver does in order to, like, what are the clawbacks? What are the preferences?

The kinds of things that come up in Chapter 11, they didn't have that in place. Wyoming put that in place for the speedy banks. New York has that in place for its trust companies. There's a very interesting question. And I just got asked by a big law firm to, to, uh, he's going to put together a symposium on the bankruptcy of trust companies. What does it mean? Because in crypto, a lot of the companies that are custodians are trust companies because the banks haven't, the bank regulators have been blocking, right? The FDIC won't insure, the Fed, as we experienced, won't become, and we experienced both the FDIC and the Fed turning us down. Okay. So we're a state charter bank, but a bank is a bank, right? Banks have to comply with a certain number of rules and they have special treatment in federal

bankruptcy. Namely, they cannot, cannot be a debtor in federal bankruptcy court. In other words, cannot be dragged voluntarily or involuntarily into Chapter 11. They stay in state receivership. But what's interesting is that New York has special receivership guidelines that Nevada doesn't have for its trust companies. And I just had this debate yesterday with the head of a financial institutions group at a big law firm. And he said, let's do a conference on this. What if a New York DFS trust company failed? Does that state receivership regime hold? Or because federal law preempts, can they be involuntarily removed into federal court and then you're in Chapter 11?

And I think the answer is probably yes, they can be. It's never been tested. OK, but then once you get into Chapter 11, what happens is exactly what you just said. You get you basically get strong armed. You take you you want your money now. Here's how much of a discount you're taking. And in the case of of the of Celsius, the custody customers, the judge said those custody assets belong to the customers. So he came out with the right decision. Those assets belong to

the customers. But because of the possibility of preferences, he said they couldn't have their assets. And so the creditors committee got together and agreed to take a 27.5% haircut just so they could get their money out now. That's what happens when you go in chapter 11, right? And so this is like, I think that one of the next big things in crypto is going to be, people are going to be doing counterparty credit risk analysis on their counterparties. And those of us who've been super careful and who have really done the work and have been slower to get launched, But because we're complying with a far higher regulatory standard

and we're examined and we have basically bank level, it's in the Wyoming Speedy Banks case, we have to have bank level programs. And in Custodia's case, we went even further. We put in what's called a regional bank style risk management program, something we told the Fed we would do based on feedback. And we did it even though we didn't have to. Regional banks are 50 billion and above. And we had that in place before we took our first deposit. Okay. So, you know,

this kind of stuff is ultimately really going to matter to people, I think, and especially to fiduciaries. And this is where there's going to be a separation, I think, of those that have regulatory theater and those that truly adhere to customer-friendly regulations. And there's going to be a separation coming in the next bull cycle for that. And I'm really psyched for Custodia that we always knew we were not going to be building for the next bull market, but we're ready. We're here and ready to scale and launch. Not yet with Bitcoin custody is coming soon, but we're in 25 states now for our US dollar services and adding more every day. It's interesting because what you just described with Prime Trust and just in general with the trust, once again, and custodians once again, is that funnel to the quote unquote trusted parties that are the chosen few, right? So if we start to see

crypto native custodians failing, doesn't that just mean we end up with Bank of New York, Mellon and State Street and the biggest custodians once again, right back in the Wall Street system into their arms. Which is exactly what the bank regulators want. Right. Again, we talked about the soft corruption of the favoring of incumbents. That's the way the system has evolved. And it's a problem. Because when something so innovative and disruptive like Bitcoin comes along, they look at it and say, how does this fit within our bank examination

manual? The answer is it doesn't. And you need something new. And it's so interesting because we have a Fed advisor, a Fed lifer who's been advising us. She and I've done some joint op-eds together. Her name is Katie Cox. And she looked at that novel supervision examination program, novel activity supervision program that the Fed announced a couple of weeks ago. And she said, all right, something's up because normally when the Fed announces something like that, they've been working on it for six months. You get, you know, board contacts listed in the announcement so that if anybody has within the Fed system has any questions, they know who to call. Normally it's already updated in the exam manual that, you know, how the, how these novel activities are supposed to be examined. And, and it wasn't. work on it when they were at Promontory, a big consulting firm, that's out there.

It's public source information. And so I wouldn't be shocked to see a lot of the Wyoming approach adopted by federal bank regulators when they actually do put it in the exam manual. But needless to say, this is still a very evolving industry. And I just it's going to be so much fun in the next, you know, 18 months because we're going to get these big court decisions and a Bitcoin having and a presidential election that's going to change the political dynamic in Washington. It's just going to grab the popcorn. Now that you line it all up in order, it is just going to absolutely be insane. As you've said, is there still a problem for exchanges and companies, even individuals in the United States, to find banking relationships?

It seems like it's gone away because nobody's talking about it. But like I said at the beginning, I know that it hasn't. I mean, Binance US, we don't need to unpack Binance. But obviously, they lost effectively all of their banking relationships. And now it was just announced that they're having to go to Moonpay for people to be able to even withdraw funds that are on. It seems like as a customer of Coinbase, I saw after all of this happened, every week, it would be like change your wire instructions, and it was going to less familiar bank to less familiar bank to less familiar bank. So, I mean, after Signature and after these banks collapse, I mean, is there anything left for us? Are people still

gambling on working with exchanges? I mean, what's the situation? Well, no, there are. And it's a good question. I've always said Ryan Selkis at Masari has pointed out that there's a single point of failure exposure in this industry, which is the concentration of US dollar on and off ramps. And he's been talking about that for years. And he was talking about it in the context of silver gain and signature. So while everybody's so focused on the SEC, I, like Ryan, have been saying, hey, our real risk is not- You told me that a year and a half ago in person in Miami before any of this was even an inkling. You said, forget the SEC, forget the CFTC, look at the FDA, the FDIC and the banking relationships.

It's the banks. Exactly. Right. And, you know, so, so a lot of industry companies did hit the wall again with this coordinated crackdown, but the banks themselves, I, you know, I wish some of the stuff that, that I've been working on behind the scenes over the last couple of years would come out publicly. Some of it, some of it has. I started talking about bank run risk at the banks that were holding stablecoin reserves in 2020. And in the end, that's not exactly what took Silvergate and Signature down, but they both had pretty severe bank runs, not just from the crypto industry, but from other tech forward depositors, right? And so I was pretty darn close on warning that risk. And I'm hoping that it does all end up coming out someday, just when and how

much I was warning, look, you got bank run risk at these banks. You cannot take demand deposits for an industry that moves at the speed of light and turn around and invest those demand deposits, if you're the bank, into term assets. So what has happened? I'm aware of the crackdown that the federal regulators have taken. There's a lot of unwritten rules behind the scenes. This is always how it happens in the bank regulatory world. So I pretty much know what's going on. It's not literally zero. In some cases, the banks decided it wasn't worth it and they've completely pulled out. But there are still some banks serving the industry and they're willing to take the risk. And it's great. I've mentioned

Custodia has multiple partners. I salute those partners. I'm grateful. We have been examined up and down so many times sideways from every angle, especially because of what the Fed said publicly about us, which was very precedential. The Fed had never done anything like that to a bank in public before. So all right, great. Here's the threshold we have to exceed. And we did. And we have multiple bank partners who've done all the due diligence. They know exactly what the Fed said about us and have done all the due diligence. And I'm so, so grateful that we do have the partners that we have. So it does tell you that Operation Chokepoint 2.0 is real, but it wasn't complete. And part of the reason that it couldn't be complete is because

it's not legal for bank regulators to say you cannot serve an entire industry. But yeah, it's crystal clear. I mean, again, I know some of the stuff that's happened, it may come out of just incredibly unethical things that have taken place from pressure that's been put on banks to stop serving this industry. And some of the ones that decided it wasn't worth it threw in the towel. Others said, no, this is a lawful industry. There are good players in it. Let's figure out how to separate the wheat from the chaff and move forward.

And just like I used to say for Silvergate and Signature, we should all be grateful that they took on that risk. There are a new group of banks, it's a small number, but a new group of banks that are doing that. And thank goodness, because they're going to keep the industry alive, but I hope not get captured by the criminals. My gosh, there were, I think, 13 in total banks that got hoodwinked by FTX and were clearing wires that were meant for FTX into Alameda's account. Okay, that's fraud. And there were two GSIBs that were on that list. The FDIC said, I think it was 13 banks. Well, if you then go look at the FTX creditors list and figure it out who those 13 banks were, it was pretty obvious which 13 banks they were. And two of those were GSIBs.

And so they got caught up in the FTX fraud. Everybody in the banking industry is way more focused on all of these issues than they were before. And so the good players, I think, can break through. And the fraudsters, I pray, are going to have a far harder time. I fear that because there's so much of this activity that's been pushed offshore, that we're going to end up with even more fraud and even more- Oh, of course, we already are. But more whack-a-mole kinds of things, right? Where risk shows up in the banking system in places where the bank regulators didn't see it. If I were them, I would welcome parties who are at the table who are saying, all right, let's be totally transparent. Let's roll up sleeves and

figure out how these two ecosystems are going to interact with each other because they're not going away. And what we should hope, what does success look like? Success looks like neither ecosystem hurts the other. Unfortunately, what has happened is that both the traditional banking system hurt the crypto ecosystem and the crypto ecosystem hurt the traditional banking system. And that's a regulatory failure. But I unfortunately don't see the solution quite yet. The door's been cracked open, to use your analogy. But the solution's not there yet. You're not actually seeing the federal bank regulators saying, all right, we made a mistake.

Let's get to the table and start figuring out how to fix this. Before we conclude, so then what's the future like for Custodia? Where do you stand? Obviously, you have some litigation. You've alluded that before you're doing business, right? You just don't have the Fedmaster account and can't do it the way that you want. So what's the status and what's the future look like and what could change that could actually get you potentially that account and open the doors? Well, we definitely pivoted. We have a very interesting business without a Fedmaster account.

We have an even more interesting business if and when we do get that Fedmaster account. And we also own the patent on tokenized bank deposits. We have not gone forward with that product yet. But that product, of course, is not going away. And so stay tuned. Right now, we've got a really interesting business with US dollar services, money market services, and Bitcoin custody coming. To be clear, we are not operating in all states. So check Custodia's website. And not all products are available in all states. But check our website for updates. And we're off to the races.

It's very exciting. But moving forward, where can everybody follow you? And then obviously, you just alluded to the website. So keep checking on the website. Where can everybody follow you? Your insights are incredible. And I see you're pounding the pavement here. You're really out here speaking on our behalf and I love it. Yeah, thank you. Twitter, I won't call it X. It's always going to be Twitter to me. Twitter to me. Exactly. At CaitlinLong underscore LinkedIn. And then of course, for Custodia, custodiabank.com. Perfect. Caitlin, we got to do this more often. It's been too long this time. I think we talked like five times in one month when the banks were collapsing, but I don't want these issues to

disappear. Like I said, there's this time-based preference where people just forget about something no matter how big it is just because it's been a few months and think it's gone away. But it's unfortunate to know that it hasn't, but good to know that we're still talking about it. Yeah. But you know what was fun about this episode, Scott, is I feel like we're starting to actually look ahead and you're seeing it in some of the people who've been around a long time who've lived through crypto winters. We're coming out of it. And instead of talking about the near term fires that have to be put out in this industry, of which there still are many, what are we talking about? We're talking about 18 months from now. And I love that. Yeah, I love it too, because there

was a while there where maybe they thought they were going to succeed and they clearly haven't. So I'll take the win and look to the future. Thank you so much, Caitlin. Thank you. Good to be back. Let's go.