The Wolf Of All Streets - MicroStrategy’s $42B BTC Buy Plan—Biggest Bet Yet? | Crypto Town Hall

Episode Date: October 31, 2024

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All right, everybody. Happy Thursday. Happy Halloween. A lot, obviously, happening in the world of crypto markets, certainly politics five days away from the election is the one that's blowing minds across the space at the moment, which is MicroStrategy's $42 billion Bitcoin buy plan. Biggest bet yet. If you missed the news, MicroStrategy, Michael Saylor, have effectively announced they plan to raise $42 billion, 21 in an equity raise, 21 in debt, I believe. I would imagine that 21 billion is not a coincidental number. For those of us who know that the total supply of Bitcoin will be 21 billion. Absolutely epic monster plan here to buy $42 billion basically of Bitcoin over the next

three years. Dave, can he pull this off? I mean, we've seen a billion here, a couple hundred million there. This is a little different. I mean, a billion dollars isn't what it used to be, Scott. The more we print, the less it means. A billion is the new million. Who knows? Maybe in 10 years, a trillion will be the new billion. Seems a bit ambitious, but people like Taylor don't tend to say things that they haven't gotten some indications of interest already

on what would actually be the uptake. So I guess we'll see. I mean, look, at some point over the next three years, I expect that number to actually be small relative to what other companies and sovereign wealth funds are gonna put into Bitcoin. But, you know, so you got to keep it all in perspective. Lou, what do you think? I think, you know, I'm a massive Michael Saylor fan.

We all are. Yeah, yeah, exactly. I quote him all the time. You favorite is you get Bitcoin at the price you deserve. Look, this is audacious. And all we can do is take a look at his track record. And I think he's done basically everything he said he was going to do. So my money is with Saylor. Yeah, I'm just wondering the mechanics of actually getting it done. Simon, would love your thoughts on this.

I mean, broadly, I think we all know that what MicroStrategy has done has been working, that adding Bitcoin to the balance sheet is a good idea. But this is a whole other level. Yeah, look, you know, Michael Saylor is a, I think, a classic example of manifesting something into existence. I think that's what he did at Bitcoin 2024. He was presenting to the world that some country is going to be the net beneficiary of Bitcoin. And whether it's China, America, you know, a sovereign wealth fund of Saudi Arabia, you know, Kuwait, whoever wants to do it, it is available for you. And so this latest announcement is just manifesting what he wants to happen into existence and up until this point everything he's manifested um has

happened and maybe this is the one ambitious one um that doesn't happen but i don't underestimate the guy and i don't underestimate the appetite to invest in somebody that has a proven track record of delivery. And so, you know, I think it's just announce it and then all of the pieces lined up in order to try and make it happen. And I think that's what he's doing here. I also think it's worth noting that he is putting himself in a position where if for any reason we don't get a Trump administration, which I think we will, and if for any reason that Trump administration doesn't implement a Bitcoin strategic reserve asset, which I think is a question mark, then in an emergency scenario, MicroStrategy would be the company to nationalize if you ever in an emergency scenario wanted to get that size of Bitcoin position. And I think that's kind of the play that he's playing himself to in the end, because it

would be the only way to get such a bitcoin position if america wanted it in a fast way yeah you alluded to obviously nation state adoption matthew siegel from van eck who's obviously on this show all the time was on squawk box in the last couple days um and he basically said that three, he listed Argentina, which actually decided not to join BRIC center, which we all know means Bitcoin mining and AI infrastructure across all BRICS nations. This seemed like a monster story that nobody's really talking about. This many countries are actually mining Bitcoin. Yeah, it is really. And when you combine that with, I know it's just a startup and an idea that may never happen, but the construction of the BRICS currency is a distributed ledger where every member of BRICS becomes a node operator. And you have to agree in a distributed way to contribute some real world assets like gold to the backing, the possibility of requiring countries to buy

Bitcoin in order to make up the backing of the BRICS cryptocurrency or the BICS fiat currency, whatever we want to call it at this stage. Very, very imaginative, but a real game theory that if America decides to not implement the Bitcoin strategic reserve asset, that the global south has the opportunity to play Bitcoin and do a Michael Saylor and force America into a Bitcoin strategic reserve asset. The game theory is getting very big right now, theoretically. And the GDP of BRICS nations, I think, actually exceeds that of G7 at this point, correct? And those are obviously, as we know, the global south still is on a population rise, while G7 largely has topped or is on a population decline. So a lot of people pointing to more GDP coming from those nations in the future. And Scott, it needs to be said, none of this is priced in.

That's becoming your Lynn Alden, nothing stops this trend. Dave Weisberger, none of this is priced in. It's not. I mean, it's not priced in until Bitcoin is at least within shouting distance of gold's market cap. And yes, from a speculator perspective, the speculators in Bitcoin have gotten their heads handed to them every time they've tried to FOMO in. But that doesn't mean that there won't be real buying on these narratives. And when that happens, that's when you get to price discovery. Go ahead, Lou. I'm not sure. Lou, mic I'm gonna mute you. Thought

you jumped in. Fred, go ahead, Carlo. And good morning, Scott. Yeah, I'm impressed with with what MicroStrategy is doing here. It's obviously novel. It's risky. Because this move of making this leveraged play to acquire more Bitcoin is great as long as we see positive upturn in Bitcoin. But if post-election we see a dip, well, that can obviously hurt the company's balance sheet. Things I think about from the legal perspective of this is if this gamble doesn't work, and I think it will work personally, but if it doesn't work, does this expose the company to potential class action lawsuit by shareholders saying that this

was a breach of fiduciary duty to investors and it was reckless because it's such a volatile asset class? I think we're going to see the opposite effect in my personal opinion. I think we're going to see more companies be emboldened to adopt this strategy. So far, it's proven to be a brilliant play, but I don't know how many companies have the risk tolerance for this because of their obligations to shareholders. You really need a pirate who's willing to be- Emboldened. Yeah, exactly. Emboldened or forced, right?

Just because the shareholders start demanding it one day. But I agree that MicroStrategy and Saylor was in a very unique position to do this that most companies are not, right? You have Microsoft discussing this. Go ahead. Sorry, Scott. Can I ask on that though?

But don't you think he's done sufficient disclosure to state that this is actually the business model. So, you know, I think he's done it. In the United States, you can sue for anything. You can sue anyone, anytime, for anything. Come on. A filing fee and a piece of paper. That's all a lawsuit is.

Yeah, but it feels like this is the business model as opposed to fiduciary duty to manage treasury. It feels like he's disclosed the business. But yeah, I take your point. I think it's groundbreaking. And you know, I'm curious to see how Microsoft responds to this, because we know, I was listening to your show this morning, Scott, and you were talking about the fact that, you know, Microsoft has this teed up as well. And who are the major shareholders in Microsoft, you've got BlackRock, and whatidelity? They've got a big voice at the table.

I would be curious to see how close the vote is on Microsoft adopting this similar strategy. Who's the largest one? Is it Berkshire Hathaway? Or who's the largest in MicroStrategy? I'm not sure. If it's Berkshire Hathaway, obviously that's not a Bitcoin supporter there. Right. If it's Berkshire Hathaway, obviously that's not a Bitcoin supporter there. Right.

But Carlo, it is important to note that Microsoft isn't talking about leveraging their balance sheet. They're talking about putting a small percentage of their balance sheet in, which might be more meaningful in the overall scheme of things. Agreed. Dave, that's exactly the point I was going to make. It's like the first months of MicroStrategy, right? I think that-

Unfortunately, Vanguard is their biggest shareholder. Yeah. That's a problem. Thanks. Yeah, thanks for the clarification. I think though that Dave just nailed the real talking point here, which is that Michael Saylor,

no, there's never going to be another Michael Saylor. Nobody else is probably going to pull off exactly what he did. But if that leads to companies across the United States, now that the accounting rules are more favorable, just adding a half a percent or 1% and sitting on it forever, that was the treasury asset adoption that we were all looking for in the past. The point being, you don't need to be Saylor. Maybe he needs to be that pirate Carlo alluded to or trailblazer to make it happen. But if Microsoft takes 1% of their cash and buys Bitcoin with it, and that's it,

that's way more than sufficient to get almost every company looking at it. I don't know if you guys agree, but I think that you can't expect there to be another sailor coming down the pipe. There's no expectation, though, to my understanding that Microsoft is actually going to do this. It's more significant that it's even a talking point, correct? I mean, Carlo, you haven't seen any indication that this would pass. Yeah, I don't think there's much hope that it will pass. But nevertheless, it's fascinating. Also interesting is the supply crunch that we're seeing with all the institutional demand on Bitcoin. That may inspire companies to hedge. And we may see this trend where companies

say, you know what, maybe it is a good idea to put 1% into Bitcoin as a hedge, because we're seeing a supply crunch, which is going to have a price impact. And all this institutional demand is coming from very smart people in the traditional price impact. And all this institutional demand is coming from very smart people in the traditional financial sector. So maybe this proves to be a more palatable strategy. Yeah. Speaking of that supply crunch, I mean, we obviously know about the halving, which has an effect on a reduction of supply. But there was a report that OTC desks only have 3,000 Bitcoin for sale. OTC is over the counter for people who don't know. That's how most institutions buy and sell Bitcoin. They don't just

go on an exchange and YOLO in a huge market buy to fill their positions. But that was in June alone was over 90,000 Bitcoin were available for sale across OTC exchanges and on-chain data now showing that it's 3,000. Dave, you gave a thumbs down. What do you think of there? Market makers don't need to have inventory. They could easily be buying in the perk markets and the futures markets wherever. I mean, futures markets are more expensive. So obviously, if you're a good OTC market maker, that's not what you're doing. But as long as there's a functional derivatives market, you know, those sorts of hyperbolic, you know, inventory management sorts of things, they don't really matter very much.

So it's a nothing burger, in your opinion, even that large of a reduction from the 90,000s down to 3000 or so. Well, all it really says is there's less of a need from the 90 thousands down to 3 000 or so well all it really says is there's less of the need to borrow bitcoin right it's basically it's essentially they don't want to pay the borrowers but they don't need to in order to do their business that's all it really is where i said the vagaries of the market that kind of shifts around i love that you're on it i can tell you're on the elliptical trainer from doing this with you enough correct i know sorry guys no i know your sounds i know all of mario's like longevity uh sounds i can tell you if he's in like the weird headless sauna or if he's getting some

kind of like nad plus injection or something it's you know you do this long enough and you you know what your guests are up to. Panos, what are your thoughts on all this? Yeah, I think it's an interesting thing to say that they want to borrow $42 billion. Whether they do it or not is another question. I mean, I think it's possible that they do. But my questions are, if they get $42 billion, how are they buying the Bitcoin? If there's such a low amount in OTC desks, how would MicroStrategy be purchasing that BTC? And is Michael Saylor's strategy just to buy and hold BTC forever? Or does he have a risk management strategy for when we go into a bear market? I haven't really looked into

that yeah let me answer the how because that's that's well known they buy it algorithmically they're using coinbase's uh algorithmic desk um you know coin routes you know the company that i founded does the same and over three years that's not really a fall over over three minutes yeah they'd have to do an otc but in in a long period of time, buying it very slowly and disguised by algorithms is how they'll do it. Yeah, he's actually, you know, one of the things he laid out in that very early conference he did for all the CFOs was how you could do it effectively without moving the market.

So he actually, they've been relatively transparent about that uh to dave's point um so he doesn't actually buy otc which is interesting oh that's right and and anybody who's interested in that sort of technology uh hop on you know either dm me or hop on our website uh because we're actually looking for beta testers for our individual active traders within terms of that product. So just so you know, and that's CRX coin routes, you know, expertcrxterminal.com. Yeah. And like, obviously, if you look at the stock price of MicroStrategy,

it's really moving right now. I think a big part of that is due to Michael Saylor's strategy on buying BTC. But what happens in the next bear market, whenever that is in a year or so, does Saylor have a strategy to hedge against the falling price of BTC? Or is he just going to hold and buy more as the price is going down. Last time he held, but he had a lot less debt, but I'm not qualified to give an answer. Dave, I mean, do you know how that would be approached? I mean, you remember this bear market, everybody laughed because, you know, I think his average was 30 and price was down at 20. And there was these rumors that he would get

liquidated if it went below a certain price. Obviously, none of that was true. But I think he obviously had probably less debt than he will by the next bear market. Dave, do you know the mechanics of that? I have not read the bond covenants. In fact, I'm not sure how anyone will. But until you read those, you don't really know. What I had seen from the last bear market was despite his price, he wouldn't get liquidated until below $4,000.

So I have no idea how he's structuring the bonds and what users or investors are demanding. I mean, when he was questioned about it in the bear market, he laughed it off, right? When people kind of threw out these numbers and he was like, you have basically no idea how many creative ways we can refinance this debt or raise and to effectively lower our cost basis to nothing. So, but Pano said, if that's 42 billion,

I have no idea, right? It's a bigger number. So really hard to know what that would look like. Now, obviously, since we're talking about MicroStrategy's adoption, I don't know if you guys saw the story, maybe it was discussed briefly. I wasn't here the last two days.

At the state of Florida, at least, it's not officially on the doc that you had two days, at the state of Florida, at least. It's not officially on the docket yet or proposed, but the state of Florida considering adding Bitcoin to the balance sheet for pensions. And we've seen a lot of things in crypto happen sort of at the state level that find a groundswell, go state to state and rise. I mean, Ron, we got you here, obviously, Blockchain Association. What do you think adding some Bitcoin to the balance sheet of a state here would mean? I mean, it's a pretty good development, at least on the state of Florida there. They've been very pro-crypto at the state legislature. And there's a lot of folks have been engaged on that front more on the state level.

So that's, again, more stuff from the states that does trickle up to D.C. But I will say the sentiment in D.C., especially around crypto and just, I guess you can call it a vibe check, it's going really positively, especially just within D.C. local media as well, saying that regardless of who wins is the most pro-crypto Congress. And we have a pretty awesome opportunity regardless of who wins the next two years, to get some stuff on the books. Now, to what extent that means to get on the books and to how far we'll be able to get, we'll see. But we are looking at a very significant round of policy

and legislative action next two years that's going to be critical for the industry. So buckle up. It's going to be taxes, stable coins, market structure. It's going to be very busy in D.C. for the next two years. We're five days away from the election, right? So how much clarity do well, assuming that we get clarity on the election winner sometime soon, how much does this affect your job personally? I mean, you guys, I'm assuming, listen, like I was talking to my buddy at a hedge fund. We went to the world series game the other night and he was like listen like we i have

i've had to structure a harris plan and a trump plan for our portfolio approach right so i can't imagine that's much different for anyone yeah no it's it's a whole um you know game plan here i guess we can call it war planning or you just have to envision different scenarios if it's a democrat house and a republican senate which that seemed like the only kind of baked in standard that we're having here is that the Republicans are likely going to have the Senate. But when it comes to the House and it comes to the administration, it's anybody's guess at this point. And that does have a lot of scenarios. But to your point, though, about like it could be a while till we find out, which is the general consensus in D.C. It could be even up till Friday, if not a week until we find out uh the final results here uh if it's that close and that can delay a lot of action in a

lame duck which that will affect stable coins um you know we have had good conversations on stable coins with a lot of leadership uh in both parties in congress there is a desire to move forward but we've seen this before where general political mess gets in the way, it derails everything else. And crypto is kind of one on those lists that's been derailed several times. So keep watching that. If the election is not decided by the night of or a day or two afterwards, the odds of stablecoin legislation getting done by this year start to decrease dramatically. And then you're looking at Congress restarting all in January, which would mean that we'd probably get those bills at the earliest, end of July, probably September of 2025. And again, that's at the earliest scenario. Right. But a lot of people are viewing stable coin legislation, whether obviously by the end of the year, I think is a huge question mark. But

let's say, you know, end of 25 or into 26 is somewhat inevitable. So how much does regime change or who wins matter for getting it, I guess? I think it's inevitable, but or for what it looks like. I think regardless of who wins in any scenario, stables is for sure something that I'm saying like on the books by this time next year,

I would say probably at the end of 2025, we will have stablecoin legislation on the books somehow, some way. But the whole details, it's still very unclear. But then the next step, that's where a lot of the question marks start to pop up. So, for example, market structure. And the Democrats win the House, we'll likely have Maxine Waters chairing Finance and Services Committee. And she was very much adamantly opposed to anything of creating a regulatory framework along security and commodity laws.

So if you look at market structure and the Democrats have the House, it's a very uphill battle. By no means impossible, but it does make it significantly harder to move market structure. But the first thing we're going to deal with is stablecoins does fall through by the end of this year. It's likely going to be taxed. And I've had several conversations with folks on Capitol capital hill about crypto tax uh on a variety of measures so it does seem like if we don't get disabled by this year they're gonna have a huge tax bill and that's when it's open season and crypto is part of that um both on the threat side and opportunities here we'll just have to see again who are the political players here the good news at least

that for taxes that we have some pretty strong Democrats to play defense for us if there are some bad provisions from a warrant or something to that effect. But tax policy is going to really heat up soon. So I would say market structure again is probably going to be that third bucket. And like that's one that's a maybe question mark. It really does depend on what the makeup of Congress is. And the Democrats have the House significantly uphill battle trying to get that done by 2026. My same friend who I was talking to said that he went to a lunch maybe a month ago with a Harris chief of staff or something.

She was hosting basically, you know, a number of hedge funds and private equity and banks, basically the who's who of Wall Street. You know, and the pitch there, I'm not saying we should or should not believe it, but, you know, straight from their mouth to the largest players on Wall Street was that a Harris administration would look very different than Biden for Wall Street. It wasn't necessarily crypto specific, but was saying, you know, FTC, Lena Kahn is going to be gone no matter what. That was one of them. Genzer wasn't specifically mentioned, but it seems like at least they're telling the narrative that, you know, it's going

to become a much more friendly regulatory environment for these industries. Is that something you see any actual indication of? Or should we just point to what gary gensler is still doing and what you know the nikon is still doing and say listen this is this is all the proof we need that's been the the major issue and again uh most i do most of the republicans for the washington association my colleague uh david mulligan is democrats but we are very very close uh in communication all this stuff for strategy purposes but when it comes to conversation with the harris campaign uh and this, it seems like that the question mark on Gensler has always been something that we've been trying to drill down because if anything, we know that there's going to be a regime change. If Gensler's gone, a lot of things do start lining up in a positive

direction potentially. Again, we have Caroline Crenshaw, who is beneath him, the Democrat, and she's actually more left of Gensler. So you could say you're going to make Dave Weisberger puke if you say her name. He like summons his animal spirit. Go ahead. Yes, but she's in her nomination or renomination has been delayed a little bit. So, again, that all depends on what happens in a couple of days. But that's the thing we haven't been able to drill down. And that has been the most frustrating situation here is that, you know, Harris has talked about bringing new folks in,

both at the staff level and the agency level. But she hasn't really gotten specifics on Gensler. And again, especially for these really strong packs for crypto being the largest industry pack right now with like $200 million at play. And you have all the Wall Street money as well. And a very tight race here asking for one thing. We need a new head of the SEC that has a different direction than where Gensler's going. And that probably includes Crenshaw's direction is not ideal either. And we just haven't done that. Now, some folks have been saying, hey, look, we don't want to cross with the current Biden administration. And that is understandable. But at the the same time it's not resonating with

the industry um especially downtown and the lobbying circles uh because it is a pretty easy layup um and saying like you don't have to say who would replace counselor but just saying yes a new uh fresh face would be great uh for my administration if i were to win we just haven't seen that yet dave dare i ask you to jump in at the very idea of Carolyn Crenshaw? Well, I mean, she's basically declared herself as saying that if it's not fiat, you know, she's a modern monetary theorist who believes that the SEC should be using their regulatory power to enforce a political agenda and to to an extent that goes beyond gary so i mean there's not much else to say if that's if that's in play and you're in the crypto industry and you vote for that administration well you know elections of consequences which is if you talk to and i have any of the either the republican you know know, SEC or CFTC commissioners, and they all

use the words, their nice way of saying it is elections of consequences. So I'm going to stick to the high road and keep it there. Anyone who wants to know why I have feelings that Scott mentioned about Ms. Crenshaw, I wrote it. So there's a in on the blog.coinruts.com. I wrote a takedown of her absolutely horrifically badly done, you know, high school level failing paper, which was her dissent on the Bitcoin ETF decision, where she just made factual error after factual error in pursuit of her goal. So it is what it is. You know, she has an agenda. And frankly, the real issue is, I don't care what side, there should be no political agenda at the SEC.

They really shouldn't, whether it's right or left. And that's the most important thing. And we lost sight of that. And to be clear, for most of the time of the SEC, at least recent times, it's been relatively independent leadership and data driven leadership. And we've just lost that over the last 10 years. And that's the real problem. And just to balance it out on the Trump side here, because again, that's mostly where in the world I largely do the lobbying on for BA here. But we want to also make sure that, just because Trump has a really detailed proposal

and it is great for the industry, we want to make sure that when there is the crypto czar or the crypto advisory council or whatever, if Trump wins, whatever he lands on for what that crypto position is the crypto czar or the crypto advisory council or whatever the uh if trump wins whatever he lands on for what that crypto position is within the white house uh we want to make sure it's not like a bit a totally bitcoin max who's like we just need a strategic reserve and that's it uh you know there are plenty of other issues affecting all across the spectrum that the industry needs clarity on so you know we'll make sure we get the right people in um

if it even is a favorable administration there's no guarantee that this goes entirely favorable or goes to benefit the entire industry versus one sector. So we want to make sure, again, that the right people are in the right place. And it's been going very well on both sides of the aisle. Regardless of who wins, we're feeling pretty good. And that's a really rare feeling because two years ago it was FTX, and that was the bottom of the barrel for us. We're on and all the time we've had you on. It's got to be a year and a half now that we've had you and your associates on.

And I know we're having some more, I think, tomorrow. I've never heard you say that. I've just never heard. Hey, we're all feeling great. Things are wonderful. That's true. We can probably get enforcement action before you know it. That's right.

But the thing is, now we get all these enforcement actions and nobody cares. That's part of the feeling better about it, right? I mean, these things just come and go in the news cycle in five seconds anytime the SEC comes after someone at this point. Do you remember, you know, just under two years ago, financing Coinbase on back-to-back days, what that felt like? It's a very different environment. True. Although I will say the other thing that's been kind of a new feeling at least from my perspective personally is there is seems to be no looming major blow up on the horizon at least within the industry in the circles i'm talking to like there's no binance um like looming uh

issue i mean tether you can say is probably one uh it seems that they're doing a huge pr push and a lot more dc interactions um interactions from all the sources I'm talking to. So I'm not sure how that plane's going to land. That's probably the next big one. But there's really no Celsius or things we're hearing within the industry, at least in DC circles, that are causing us stress a little bit.

I think a lot of those bad actors either are currently litigating or have gone through the justice system. So that's been a very different feeling that we haven't had. Again, something could surprise us, but that has been a very different feeling in DC that we've had in a long time. Not sure if you guys saw, but CZ actually did a panel. You mentioned Binance, and he joked that the prison guards had asked him for what coins to buy, but he didn't have internet, so he couldn't give them an answer. Did you see that?

The funny thing is they they they headlined it with a breaking like it was some really major event. Breaking news. No Internet in jail. Right. Everything's breaking news because it's 2024. I mean, you've been listening to all of this, obviously. We brought you up. I mean, what are your thoughts on the discussion so far? Yeah, I mean, you know, I think the U.S. regulations have a long way to go. You know, I heard that the SEC and, you know, Gensler and the whole drama going on.

You know, particularly, I think he's quite aggressive. When he tries to answer questions, he leaves a lot more, you know, open discussions and misunderstandings, in my opinion. One thing that I'd like to maybe say and consider, because I, you know, always mention regulations when we talk about a lot of the crypto adoption and onboarding, to look at the EU. Because in Europe, they have put in a little bit more on regulations on the crypto side, as well as some activity with stables and stuff like that.

I've seen a little bit more advancement. I quite forgot the name of the system there, but the EU system has got some quite regulations. So that's one way to look. Yeah, that's one way to look. And I think with the political landscape, you know, regardless of the of the political winner, blockchain needs to be integrated into our daily lives. It's going to be an integral part of the future of transactions and banking systems, in my opinion. But they have to put a cap on it and it has to be done the right way. Overall, I think regardless of who is in charge, you know, it's going to take its course and it will happen. And I believe that the front facing like somebody like Gary Gensler needs to be kind of like a dog in a way, kind of very aggressive so that the position of the United States or the U.S. dollar doesn't show weakness, but also shows maybe openness to some adoptability. Gary Gensler has been a dog. It's just the very small little pet kind of Elizabeth Warren. Go ahead, Simon. I'm sorry, I have to be a bit more aggressive and conspiratorial.

Gary Gensler's job was done. His job was to allow a fraud like Celsius to grow to a multi-billion dollar growth play and a you know a fraud like ftx and you know let's remember spf was the only person that got a meeting with gary gensler when coinbase couldn't even get a meeting and so the job was to allow these uh frauds to grow and once they blew up because the fed said inflation is transitory then hyped rates in order to blow up Silicon Valley Bank and execute Operation Chokepoint 2.0 in order to take out all the crypto friendly banks. And once the industry was embarrassed, hand over the industry to Bank of New York, Merlin, to BlackRock and approve the ETFs. And he did his job to perfection, which is to protect the vested interest that laughed at our industry until they realized they couldn't beat Bitcoin, so they joined Bitcoin. And there was no consumer protection.

A lot of pensioners lost their money. And Gary Gensler is a bad actor that was not acting in the American people's best interest. And I think it was a complete abuse of his role that was a failure to the consumer, but a winner to the banks. Fred is a huge fan of Gary Gensler. Fred, you're probably his number one fan, right? Haven't sued them at all. I love that guy. You know, he's just the only thing that would have made me happier is if his twin brother was in there instead of him.

Okay, so Fred sued the SEC a few times, guys, for anybody who doesn't know my sarcasm. Go ahead. You know, it's, I think what's interesting, and, you know, this kind of plays into Simon and, you know, what he thought was the ultimate goal, which I think that's a good take, is that we've got the money now in the political system from the crypto world. So something's going to happen that's positive.

And that's what Ron is talking about. But the issue is going to be what he alluded to, which is who that's giving that money is going to be making the decisions when the new administration is getting stacked. And so is that going to be a maxi only type scenario? Is everybody going to be involved at the table? It also just makes me question, was it just poor organization from the beginning in the crypto industry that there was such a failure? I mean, because things really started going in 2017, 2018. Was there such a failure that they missed all these election cycles, 2018, 20, 22,

before they started just pumping the money in there, because that is just the easiest way to get what you need to do to navigate the political system in the U.S. now. And I just never understood why it took until now to get that quarter of a billion dollars of money flowing. Ron? Yeah, I can assist here. So I was a Hill staffer, so worked on capitol hill for uh about five years uh so i saw a lot of the early days of crypto so since 2015 i was on capitol hill until about 2019 2020. um the money was definitely an issue uh i we were kind of at least the member of congress i worked for uh and a few other of the really pro early crypto members they would maybe get like

five thousand dollars a year from crypto organizations. You know, a lot of it was more about the, I support Republicans and this guy is supporting my industry and here's like a grand. But it was minimal, very, very, very, very minimal. And, you know, at least the folks at Fairshake and the CEOs got together and said like, hey, this is how we're going to have to play the DC game. As much as we like to disrupt a lot of systems here, there are some systems that you have to play the game sometimes. And it has been effective. Now, mind you, again, it has come with controversies, too,

when you've got a lot of money in play. A lot of people are saying, where's my cut? And a lot of people have been pro-crypto and change their mind, vice versa. But that was a major issue in the early days. And I'm glad that the execs finally realized this is how you play the DC game, unfortunately. But it took a while. And you also have to remember, they didn't even hire lobbyists. When the broker rule came out in 2020 for the infrastructure bill, it was about six lobbyists. It was a very small group of a BA, Coin Center, and a few other companies like Coinbase. But it has grown tremendously there since. But we're still being outspent by the banks on the lobbying side.

At least on the PAC side, we're strong. But the results speak for themselves at least a little bit in terms of attention for DC from the PAC side here. And now the lobbying side will have to kick in for the next two years to really show their worth. And that's where the battle's going to be. Great summary, but so depressing. So, Ron, the answer— How much money have we given? It's so sad that that's so out.

The answer was just, they didn't realize that's what they had to do. We didn't know that we had to buy them all. Sorry. Well, I mean, to be honest, that tweeting was enough to change a member of Congress's mind. Like, guys, it doesn't work. No one in D.C. cares that a CEO in 2017 is shithosting. That just doesn't matter. Politics moves too fast. So, yeah, there was a lot of learning curve for the industry.

But I want to just stress, though, on the lobbying side, behind the scenes, we've been getting a lot of big wins against the banks. So a lot of times, take the stablecoin bill, for example. I mean, a big push is to try to get banks only to issue stablecoins. And of course, there's the bank lobby pushing that. But we've been able to, behind the scenes, get that done with literally a quarter of the resources, a quarter of the people.

And it's gotten to some moving across the finish line. So we'll see how it all plays out. But for a small, scrappy bunch, we've been proving pretty effective. So now with this cash injection, we'll see where the final product is next two years. Lou, you were jumping in. Yeah, I was just going to say, I saw Jerry Brito, the head of Coin Center since 2014. He's been doing speak recently. And, you know, one of the things he talked about was how great it is to

have all these new lobbyists, you know, for the industry in DC, he said, but it's a double-edged sword because we used to have a very unified message. And now we have 20 messages. Ron, is that any comments on that? I can definitely comment on that. That is true. You know, when the individual companies do hire their own lobbyists, it's been, again, great. I've been an individual lobbyist for Ripple for a year. So I understand you got to work on your company's civic issue. So we have some members in the BA who, they only care about stable coins. They don't care about market structure and vice versa, or only care about NFTs. But at the end of the day, there is some cannibalization sometimes where people are trying to take out other parts of the industry.

I mean, remember FTX. Sam was literally lobbying to give her to DeFi. And we had to lobby against Sam. He's not a part of the BA, but we had to lobby against Sam in the industry because he was trying to push for that. So it would be not good for the whole ecosystem. So that's been a battle, I will you know with now 50 plus lobbyists a lot of my time has now been shifting to uh making sure we're all organized on consistent messaging uh and also i will say but the upside though is that now we have a lot more of a bench to play from so for example like

if there's a member who really cares about national security like we have people who worked at the doj and the fbi who are in crypto who can speak their language and communicate a message way more effectively than this silicon valley tech bro uh that comes in and is a democrat talking to a republican like that it's stuff like that where it's like that even if it's a good message it just isn't going to resonate as well as someone who really shares a lot of the either ideals or the backgrounds of the person, staff, or member of Congress you're talking to. And that has been incredible. So plugging and playing the right people versus just like throwing everything at the wall with the very few resources we had has been a game changer. But I will fully admit there is sometimes some cannibalization among various company interests, and it's uh the role

of trade association like ba to like kind of like hey guys we are all in this together uh because in dc they don't see d5 c5 uh they all see us as one thing and that's crypto simon you were trying to jump in earlier uh i forgot what i was saying carry on it happens to the best of us um i just it blows my mind to hear it just laid out so clearly how much money uh you know drives everything in politics not that we didn't know that i'm not naive obviously but it's pretty funny that uh the message is effectively illiterate if it doesn't uh is it irrelevant unless it comes with a check so it's a good what's cool i think i think it's reflective of the fact that we are building at the birth of an industry you know it's a 15-year industry and it's exciting because imagine if you were sat around you know in 1910 designing the creature from Jekyll Island, and you were trying to figure out

how to get the right structure in, in order to create the Fed. You know, that's kind of where we are right now, but we're doing it not from a centralizing force, but a decentralizing force. So whereas the Fed banksters were trying to design the creature from Jekyll Island, you know, we're designing how do we create the anti-creature from Jekyll Island where everybody can self-custody, everybody has constitutional values in mind, and then how do we play the political process now that both the vested interests of the incumbent system, the banks,

are also part of the system, but at the same time we're trying to preserve interests of the incumbent system, the banks, are also part of the system. But at the same time, we're trying to preserve some of the freedoms, life, liberty, and Bitcoin ethos that it gives to the market. And we're all involved in that. And it kind of requires a bit of the anarchist, but also the adults in the room that know how to make something like that happen. And it's just very exciting. And we're learning from scratch how it gets done um and it you know you have to follow the money you have to push your money through and it's kind of just us experiencing that in real time as this industry

grows yeah i mean it makes sense that we didn't have people spending that much money in 2014 or 16 or 17 because it wasn't really an organized industry. And it's small. I think, Simon, you're right that it just speaks to the maturing of the industry and the fact that we've gotten to the point where it's that important that it's happening now. I mean, I can personally say for, you know, we have the election coming, but you take a look at what Saylor's doing and the demand for the ETFs. I think BlackRock has had record days the last few days, over 800 million in inflows just yesterday to the Bitcoin spot ETFs on a day when Bitcoin price was down. I mean, it's scary to say, but I really, at least for Bitcoin itself, the crypto industry may be different.

I see nothing but tailwinds for Bitcoin right now. It's usually a good top signal. And sitting here consolidating under an all-time high right below that, it got within, I think, $300 of an all-time high. Pretty bullish to me, even though it's sort of drawing back today. Guys, I think we've covered everything. We got to save our energy for more political conversations in the coming days. Once again, everyone in the audience, 5,580 of you last time I checked, every one of you should be following every single person on the panel because they're awesome. And that's why they're here. So go give them a follow.

And otherwise we will run it back tomorrow, Friday, 10 15 AM Eastern standard time. Thank you everyone. Thank you so much to the guests. Thank you, Dave, for always gracing us with your elliptical machine, inspiring us to exercise. We appreciate you guys. Have a.m. Eastern Standard Time. Thank you, everyone. Thank you so much to the guests. Thank you, Dave, for always gracing us with your elliptical machine, inspiring us to exercise. We appreciate you guys. Have a good one.