The Wolf Of All Streets - Stables Systemic Risk | Ripple vs SEC | BlackRock ETH ETF | Crypto Town Hall

Episode Date: November 17, 2023

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I'm still a speaker, hey guys. Can you hear me? Simon, are you there? How are you? Very good, Mario. I hear you well. Cool. Carlo, good to have you as well. Good morning. Great to be on the panel. There's an important disclaimer, Carlo. I just want to make it very clear that Simon could be invested in the companies that you work at, and he could be invested in Twitter that we use right now. It's an important disclaimer that we always have to make to avoid any conflicts of interest. There you go. I've done it for you, Simon. Thank you, Mario.

Courtesy after doing shows together for so long. I have a company that may benefit from Ethereum or Bitcoin's growth. Disclaimer. Before we talk about the price of Bitcoin, Simon does own a significant percentage of Bitcoin, including equity. I don't know how, but he owns equity in the company as well. But let's get Gareth. Let me see who else is joining. So Ryan and Scott will not be joining today. So that will be a positive for the show. I think everyone's going to enjoy it. And I did prep the agenda this time. So I know what's going on

instead of relying on Scott. Before getting into the because gareth we're waiting on gareth to come up um the the stories that we're going to be talking about is um got the altcoin rally and they're blaming it on south korean traders so it'd be good to get some traders up here as well and we're going to talk about the sec and uh as a quick response here by the clo of ripple who says the sec is court, being criticized by judges for shady behavior, being rebuked by the government internal auditor, hiding info about meetings with a felon, becoming irrelevant on the international stage. I can't remember the gentleman's name, but he couldn't come up on stage, but we tried to get him on. But I want to dig into his claims on the SEC that we all love to love. And then we've got the Binance story. So we've got the – things just get harder and harder for Binance.

So we've got the counterterrorism official that worked there. He's left the exchange. Last fall, she's left the exchange. Sorry. We're going to dig into some of the allegations there. And then finally, the BlackRock filing for a spot ETF for Ethereum. Does anyone on stage, Carlo, William, Patrick, or Simon, wasn't that, was that a rumor?

I feel like we've talked about this before, but it was a rumor. Does anyone remember what the spot ETF story was before? Anyone at all? I think if I recall it, yeah, I think if I recall it correctly, there was news that BlackRock had made a filing with the SEC and also had registered a Delaware corporation, which signaled that they were planning to jump into the ETF. I think they formalized it as what the latest news is, their intent to go forward and do that. That's about my understanding of it but it doesn't mean

anything other than they're just pursuing it obviously it's not approved it wasn't the previous one they did the old ticker trick that that created the yeah wasn't that exactly wasn't wasn't that the story that someone created oh no that was the xrp was a trick i think that was a oh that was yeah yeah i'm losing track as well so there was like i don't sometimes like i don't blame the sec for for being so so skeptical from everything so someone came up with a ticker put it up for an uh for a spot etf for uh application by blackrock for xrp which is just hard to believe considering they haven't done one yet for ethereum and that got everyone excited i think xrp pumped by 15 and we did have michael who came on he said that you

know that could you know there could be some legitimacy to it um but um but yeah i think all of us kind of agreed that was married that's it's it's actually um just thinking about it now i don't know what's involved in registering one of those tickers but it seems like there's a market manipulation trick that can be done there where a trader could just figure out a way of registering one of these tickers um and then just doing a pump and dump trade yeah i think this is what the conclusion was oh sorry just to chime in on that it's my understanding that delaware is investigating that false xrp pump so there may be something coming from that as far as an investigation and potential prosecution

yeah they'll prosecute some private wallet that was behind it i don't know who it is or that it's gonna end up now guys we gotta blame it on spf so spf has internet in jail um but david you have any updates on that david i'm sorry i'm mute you can't hear you um david if you can't speak we got gareth up gareth how are you hey i'm doing well mario how are you good good do you hear the good news today uh what's the good news ryan and scott are not here man it's just me oh man that's i'm glad i'm on today then i get actually i can actually talk exactly exactly so it's not like i asked you for a market update and suddenly he's caught for us giving us an update but now give us a so so i have been uh you know constantly on planes for the last two days that's why we missed the

show apologies everyone missed the show yesterday i think the day before as well i think we missed it two days in a row um but give us a bit of an update because i know that it pumped one day i was on a flight dropped the same amount right right after when i was on the next flight um is that just basic uh basic volatility that we're seeing is there any reason behind the the ups and downs are based on any news um how's the volume looking we'd love a bit of an update gareth yeah i mean so so for the most part it's been in this like tighter and tighter pattern where we've been floating up and we've kind of hammered into this 38 000 level on bitcoin and then it gets rejected and then we come down to this kind of 36 ish level um the the last month or so there's a if you connect the lows there's a classic trend

line right there just sloping up and then we have the double top at 38 that we're kind of you know kind of wedging ourselves between on bitcoin. And the idea is that as a wedge pattern, it's either going to break out in the next couple of weeks or break down whether or not that's the culprit of a spot ETF approval or not, we'll have to find out. But one of the things I would just point out is that Bitcoin dominance came back and hit support. And so I would say that altcoins have probably short term topped here. If we saw some of those moves, they've just been incredible. But based on Bitcoin dominance, Bitcoin dominance should start bouncing here and starting to move back up,

which implies either that Bitcoin is going to start to lead to the upside or if Bitcoin stays here, the altcoins are going to pull back just a little bit. So you've actually seen some pretty big reversals already. Avalanche has a topping tail now on the daily chart after reversing its recent gains here. Solana is starting to come in pretty hard as well. So again, Bitcoin kind of boring right now, but it looks like the action in the altcoins may be topping here. And what are your thoughts on the report that the pump in altcoins is coming from South Korean traders? That's something we historically have seen all the time that they're leading those pumps, especially as we come out of a bear market. So the report

was put out by, let me see. So CryptoQuant put out a report that spot volumes on local exchange. So Upbit had a volume doubled since September and then Upbit, so they had, so Upbit, okay, yeah, Upbit, they constitute 85% of South korean volume and they've they've volume doubled so is that does that kind of is that expected does that mean anything i don't know if it means anything i think the altcoins were were kind of boxed into this bear market that was just so long lasting and it was just it was just brutal to be honest and so once they started to run there was just so much money whether it's's from South Korea or just around the globe, that was ready to just jump on board for this like, you know, this Hail Mary pass in, do we see leveraged exits, meaning that people get stopped out of these bigger positions because of leverage? And do they fall more sharply on the retrace? But yeah, in terms of South Korea,

I don't really think that plays a huge role. It reminds me of small caps. There's always someone in small caps stocks trying to pump them up. Maybe this is just South Korea doing it there. Why do you think altcoins are going to correct and that run can't continue? Yeah, so it's more about the velocity of the move. It doesn't mean that they can't go higher in six months or three months from now. It's just that at this point, they're starting to look tired. You're starting to get these wicks that form on the top, which is telling you bigger money is starting to dump into the buyers. And then it's also just kind of noticing that the Bitcoin dominance had pulled back pretty

significantly, but is now hitting support. So again, if we look at that Bitcoin dominance chart and you look at it as a technical chart, it signals a bounce in Bitcoin dominance, which generally should imply that all coins will underperform. And then when you match that up to these, yep. Continue, continue. I was just going to say, and then when you just match it up to some of these charts that have gone vertical two, three, 400%, you start to say, okay, a healthy correction is due for the all coins, you know, let's say 25 or 20%ace and then you have to reevaluate them if they're a buy at that point so when you say bitcoin dominance we're going to go to the panel um just one last question uh gary so when you say bitcoin dominance spiked up and that means out

coins retrace don't they shouldn't they be correlating like shouldn't out going to be retracing to allow for Bitcoin dominance to increase? Or essentially the top coins are the ones. So when you're looking at altcoins, I don't know what you consider altcoins. So we have to get a definition of, are you talking about top 500 coins, top 300 coins, or just looking at the top 200 on CoinMarketCap? And then just trying to understand what you mean by Bitcoin dominance increases that indicate. So that happens before altcoins drop yeah so so in terms of what bitcoin dominance is it's it's basically the market cap of bitcoin versus versus all the altcoins and again you could you know you could put the top 500 in there or whatever it is and it's just it's just

the the ratio so what's the market cap of bitcoin versus the altcoin market market yeah but that's what i mean gareth like so altcoins need to drop in price or Bitcoin is increasing price. So are you saying Bitcoin's dominance is starting to increase? Does that mean Bitcoin is starting to pick up and altcoins are lagging? That's why Bitcoin dominance is increasing and that's why altcoins will drop. So the reason Bitcoin dominance is increasing right now is Bitcoin is outperforming altcoins. Is that what you mean? And that's an early indicator. Exactly. It's about performance, right? So it means that there's multiple scenarios. One is Bitcoin could just stay right in this range of 36,000 to 38,000. But if altcoins drop 10%,

then Bitcoin dominance is going to go up. I mean, that means that the market cap of Bitcoin staying the same, the altcoin market cap is dropping by 10%. So there's that scenario, or Bitcoin could have a god candle on spot approval, and altcoins could just kind of go up a little bit, that would still be an increase in dominance. But I think what I'm expecting just based on such amazing runs in some of these altcoins is for the altcoins to start having 10, 15, 20% pullbacks, and Bitcoin probably stays here in this range in the near term. David thoughts? Yeah, I mean, as an investor, not necessarily a trader, you know, these moves are, you know, concerning. I mean, they haven't tracked the overall market at all. On the days of the market

has been a big and has been a risk on there when I say the market, sorry, equity markets generally. You know, this has, you know, we didn't see the same run in crypto, you know, the day this, let's call it CPI print came out. And there was, you know, a relief rally in terms of concerns about inflation, Fed rates, raising rates higher. Crypto didn't move at all on that day. Seems that crypto markets have its own rhythm right now, which is a good thing in terms of justifying it as an independent asset class. But there's really, at your point earlier about headlines, there's no headlines and there's no rhyme or reason. And these are big moves. I mean, the range is pretty big, you know, especially for Bitcoin,

in my opinion, you know, the up and down swing of, you know, call it five, seven percent, you know, in a given day up and down, I think has been pretty concerning, at least for me, over the past four or five days now. But concerning why, David? Because there's nothing to go ahead and pin that type of move on. There hasn't been any particularly negative headlines. There haven't been any particularly positive headlines. And to have, you know, five to seven percent swings, you know, in a given 24 hour period or less, you know, is it is is this is a trader's market right now. God bless all the traders. And I think they should go ahead and keep making money. You know, the altcoins have been on an incredible run. Can they continue to be on that run? I mean, I think the fundamentals are there for them to continue, especially if we believe that the Bitcoin ETF, spot ETF is coming. You know, BlackRock went ahead and just filed for, as expected, the Ether spot ETF. And then, you know, Rand's comments, actually, he made a bunch of days ago,

still continue to ring with me that, you know, potentially Solana is this market, this bull market runs Ethereum. Solana can continue to run as well, especially as we see maturity in the asset class and more institutional investors. But I got to tell you that these have been some pretty serious moves, both up and down, especially with respect to Bitcoin. Sam, what are your thoughts on what Gareth mentioned earlier in terms of his analysis and then the concerns that David's mentioning? Hey, thanks, Mario. You know, I don't really view Bitcoin dominance as a really great metric because market cap can be really manipulated and it doesn't take into account liquidity.

When you're comparing Bitcoin's market cap against the market cap of every other cryptocurrency in existence, well, every other cryptocurrency, those market caps can increase because there's zero cost to creating new ones. And then they control the float. And since they're extremely illiquid, you can see really big moves in their market caps that then drop significantly weeks later because they're very, very illiquid. And so I think a better metric to look at is things like Bitcoin versus Ethereum, like a simple chart like that that's just looking at price. So I think the idea of Bitcoin dominance, it's kind of a flawed metric because it doesn't take into account liquidity. And that's extremely important to consider because Bitcoin is much, much, much more liquid. Bitcoin dominance, it's kind of a flawed metric because it doesn't take into account liquidity. And that's extremely important to consider because Bitcoin is much, much, much more liquid than every other cryptocurrency in existence. And so I don't look at Bitcoin dominance. I don't think it's a very great metric. I look at something just like at the price of Bitcoin versus Ethereum.

And if you look at Bitcoin and the Ethereum chart, Bitcoin's kind of hitting all-time highs. And so it's just a little bit nuanced, but I think the focus on Bitcoin dominance, it's kind of missing some important caveats. Nice. And one other thing as well is looking at the Bitcoin dominance increasing in your opinion, Sam, what does that mean for you? Is that something to be concerned about? Does that mean anything for altcoins? No, I mean, I just think the metric itself is flawed. And so I don't look at market caps of Bitcoin dominance. I think it's really just a function of liquidity, like I was mentioning. I think these recent moves in altcoins, you know, altcoins follows the king

and Bitcoin has performed really well this year. And usually altcoins move beta to Bitcoin. And since they are more illiquid, usually you see more explosive movements in these other altcoins. And so I think you typically see this where Bitcoin rallies. And then afterwards, you see really explosive moves in these more liquid altcoins afterwards. And so you have these little cycles that happen. And then if Bitcoin turns, then you'll see even more explosive downward price action on these altcoins. And so I think, you know, Bitcoin leads and then these altcoins usually follows. And so Bitcoin's performed really well this year, up over 100%. And so it's not really surprising to see these altcoins move.

Is there any chance, Sam, one other question before going to Simon and Carlo, is there any chance we see Bitcoin decouple from altcoins? I think it's a very interesting world to imagine that Bitcoin starts to act as a store of value and altcoins more of a risk asset. Yeah, you know, I do think we might see that just because Bitcoin does have a unique value proposition. I think all these other altcoins have different value propositions. And Bitcoin kind of has a monopoly on the whole digital gold store value, value proposition. And I think it should be kind of viewed differently monopoly on the whole digital gold store value proposition. And I think it should be kind of viewed differently. And I think that's one thing that we've seen during this bear market is kind of a better

understanding by the market that, you know, there are things that make Bitcoin different than these other altcoins. And there are different, you know, guarantees that it offers in terms of its security and its decentralization that these altcoins don't really offer, or there's just like different trade-offs is what I would say. And so I think you do see a little bit decoupling. I think you're seeing that in the sentiment shifts that have occurred from these institutions and some of the messaging that you're hearing when it comes to Bitcoin versus the rest of crypto and i

you know i just think there's trade-offs right and and i think more and more people are kind of understanding the trade-offs between bitcoin and these other altcoins simon yeah um i guess the other thing with liquidity is you've got to make sure you're only dealing with the exchanges aren't doing all the wash trading so um that's another way. There's like matrix to get there. But before you continue, Simon, what is the Bitcoin dominance right now? What coins is taken into consideration?

It's not all altcoins. Top what? Top 300 or 500? Does anyone know? Cool. For the Bitcoin dominance, what alt outcomes is taking into consideration i wouldn't take it no i wouldn't think no does it take everything sam like any any random person creating an outcoin that gets taken into consideration from my understanding it was the rest of the everything that's not bitcoin um it might be yeah but top 300 400 but i don't know if it matters yeah i think any anything

that passed this anyways is a drop of the ocean doesn't make much of a difference but yeah go ahead simon yeah i was just going to speak to um you mentioned it in the beginning i'm not sure if it's significant but you mentioned the whole south korean thing um historically what we've seen is when you have these jurisdictions where investing is very restricted um you end you know crypto went nuts in south korea because they have found an asset class that they could invest in it tends to be way more speculative short-term and trading related um but like so the when when people talk about the whole south Korean things, it tends to happen on the South Korean exchanges. So you can look at the volume there. But, you know, an example of the type of thing that happened in the past

is when we had the hard fork from Bitcoin to Bitcoin Cash, there was a complete manipulative, speculative attack tried to be implemented where they tried to show that the volume of trading and the price performance of Bitcoin Cash relative to Bitcoin in the early days was going to try and actually get everyone over to the other chain. And it was all done through massive manipulation on South Korean exchanges. But I don't want to stereotype or anything. So you're saying there's a real possibility that the altcoin pump that we've seen is just manipulation from south

korean traders as a possibility worth considering that's happened many times i haven't studied in this one but it's happened many times so and then how would they again like anything that comes to technical analysis i'm not a i'm not a not an expert in not a fan of either but the next one would be the the anything to do with manipulation so when you pump a market where's the manipulation like how how what happens if it is being manipulated what would they do next that just get the market excited then dump it on everyone else yeah it's just the time frame of the the typical type of investor so if you went through some of these south korean pumps and dumps um they a lot of them used to happen in China back in the day,

then it is very quick and then it cracks very quickly. So you just see a massive load of volume in a particular area, in particular exchanges, in a geographical location. And then it cracks quickly. Before going to Karl, I want to get your thoughts on everything and then start with the legal questions. Gary, I just want to get quickly your response on first what Simon just said regarding the Korean market and the risk of manipulation, but also Sam's points about the Bitcoin dominance and the importance of it. And have you looked at the Bitcoin dominance relative to ETH alone without anything else? Gareth? gareth hey yeah so so for me at least with bitcoin dominance the reason why it is important is because you know yes you're not taking into account the illiquidity of some of the tiniest

caps out there but at the same time really when you're talking about everything versus bitcoin you're gonna you're gonna zero in on the solanas which have 28 billion i mean that right there basically equates to everything else then add in some of the other ones as well. So I've actually had a lot of success charting Bitcoin dominance and the moves. In fact, when Bitcoin, when the altcoins moved, Bitcoin dominance had just hit resistance, which is pretty cool, kind of almost gave a signal that the altcoins were going to wake up. You know, again, in regards to some of the other stuff, I think that, you know, to me, the altcoin market is one is a market that is made up of a lot of the shadier things, the shadier tactics for the most part, obviously not the biggest 25 or so. But there's just this inherent kind of lottery, like playing the lottery when you get into these things.

And people aren't really looking at the components of the altcoins. Like, what is this altcoin do? What's the reason? What's my thesis for being an investor? It's more a lottery, like, let me get in so I can just dump it at a higher level, maybe at 10xs, maybe at 5xs. So that's what I'm always concerned. And some of the froth that we've seen in some of these altcoins is, again, to me, it's not the healthiest thing for crypto. Like, you want to see grinding higher. You want to see good quality people getting in because they want to invest for a long time, not because they want to make a quick buck.

And so, again, that's one of those warning signs in recent, you know, the last week or so in some of these altcoins that has me on edge also thinking we're due for an altcoin pullback. William, and then we'll go to William. Patrick, you're going to call because I want to pivot to legal. Go ahead, William. Thanks, Mario. Just a quick reaction about the altcoin correlation. I think the altcoins are more correlated to Ethereum. Whatever Ethereum does, the altcoins will follow

because most of them are... It's dominated by infrastructure, L1s, L2s, and that turf that's kind of still boiling. As you noticed a month ago when Bitcoin popped, the altcoins did not do anything. So that is more the correlation. And right now, Ethereum was facing a lot of resistance at 2100. Rightfully so, it's come down from that. So we're still kind of in a, I'm sitting on the fence basically on all of this right now.

Patrick, your thoughts and how's DeFi looking? Yeah, I wanted to build on what Gareth said about altcoins being due for a pullback. Just if you look at the past 30 days of the top 100 coins, literally only two are down out of the top 100. And of those ones that are up, 28 are up more than 50%. So I think saying that we're overdue for a pullback is an understatement. And as far as DeFi, actually positive news in that stablecoin liquidity that's backed by US dollars. So USDT or USDC actually increased on a three-month timeframe this month for the first time since February 2022. Yeah, we're talking about this as well in, I think, last week,

that there's new money coming in. I think every indicator points that new money is coming in. And the last thing I have, I think that's enough for the market. I think we've covered it enough. I want to try to keep today's show short because, obviously and Scott are not here and I've got a flight shortly. So let's move on to Carlos' thoughts and everything. Now, I know what I want to ask you, Patrick. One last question is, and that's for everyone else.

So I read a report. I didn't read the report, but I read a headline. The latest report of the Bank of International Settlements, BIS, studied 68 stable coins and concluded that none of them can always remain pegged and cannot be redeemed in full. Can anyone, I haven't read the report, it's too long. It's a 68, no, sorry, 68 stable coins. It's a multiple page report. I don't know how many pages.

I can send it to anyone and maybe we can cover it in Monday's show. But can anyone offer a very, you know, kind of a quick overview if you can and probably simon i'll expect you to jump in on this one on why they would say stable coins in their opinion cannot remain pegged cannot always remain pegged and cannot be redeemed in full yeah i haven't read the report but i'll take some guests um well firstly is that they they invest significantly in some degree of illiquid assets.

And so, therefore, if there was a run on the stable coin, like we saw with USDC, when they had money in Silicon Valley Bank, then you can't necessarily sell all those assets down. That's why they hold a lot of them in treasuries. But then there may be some kind of discounted situation in treasuries as well. So just like we saw during the Silicon Valley bank situation. The other thing is to note is that although they are designed to peg the dollar, they are actually also an ultra, ultra efficient market. So if they de-peg, they de-peg for a reason um and it's much better than a bank deposit because you know that there may be a reason for that um and so when you know usdc did de-peg it was because there was risk in the banking system and it had three billion dollars

of um deposits at a bank that was in distress they are also designed to de-peg when there's an issue which is a really improved form of understanding the risk behind your dollar michael sorry i i glitched out simon carlo jump so yeah interesting legal developments this week kind of a slow week i would say overall but on Monday, I testified before the Treasury's public hearing concerning these proposed digital asset panel, as well as counsel for OpenSea. And I was very happy to see Treasury responding with very pointed questions as far as the concerns about privacy and how perhaps they can improve upon this proposed regulation. So I'm hopeful there. Also interesting development we had this week. I reported about this mutant ape planet NFT developer pled guilty in federal court in Brooklyn.

That was a alleged rug pull, three million dollars in a rug pull scheme connected to an NFT. And the founder of the company. Yeah, it was a mutant ape. That's someone that owns mutant ape. Yeah, you got to. I don't know if it's me. It sounds like a mutant ape right now. Yeah, it is mutant ape. It is mutant ape, what? That's someone that owns a mutant ape, what exactly? Yeah, you got to, I don't know if it's mutant. It sounds like a mutant ape right now. Yeah, it is mutant ape. It is mutant ape.

Yeah, I took off my headset. So what's the mutant ape thing? Who's that person? What did they do? So mutant ape was a NFT that dropped and promised all kinds of things. But again, it was owned by the board API club, the biggest.

No, no, absolutely not. No, this is a spin-off project that was charged as a rug pull and the defendant in that case pled guilty to wire fraud charges. So that's just another development in space. This is beautiful news. I don't want to be happy when someone else is going through pain,

but it's just nice to see people being held accountable. It's another example. So they were arrested in the UAE? I believe they were extradited back because this defendant appeared in federal court this week and pled guilty to the charges. So they've got him in custody and made a formal appearance in federal court.

Wow, that's great. If anyone in the NFT community has seen some NFT PFPs there, if you did anything shady, you should worry. So it might take a year, it might take three years, it might take five years, but the Feds don't mess around. So that's good news that we got there. I did see, Joe, I'm not sure of any more updates on the legal side. I do want to go to Joe quickly.

Obviously, along the lines of what you titled the space, SEC Chair Gary G comments and pointed to inconsistency in the way they've proceeded. You know, the same song and dance we've all heard. So that was an interesting development as well. No new legal developments with respect to the Ripple case that I'm aware of, other than the trial setting coming up. But other than the fact that the the uh the counsel for uh ripple uh pushed back uh adamantly concerning some things that you're referring to the tweet he put out let me read it out again um the sec is losing in court being criticized by judges for shady behavior being rebuked by the government's internal auditor hiding info about meetings with a felon becoming his brutal becoming irrelevant on the international stage i love that tweet um so is that what you're referring to carlo yes uh that

partly uh the the that was in response this is stewart alderati who's ripple's chief legal officer uh he chimed back after ginsler gave these remarks he essentially talked about what his mandate is and how he believes in the historical arc of the sec going back to joseph p kennedy and had some pointed quotes one of which he puts on his wall from former supreme court justice frank footer kind of reinforcing that they are there to protect the consumer and and ferret out fraud in the security sector so no surprises but but just a lot of push back in the crypto sector to what he said at that at that uh speaking engagement is my audio better now or still bad no you're good now cool i've just reset the headset um joe i appreciate coming on

um we can touch on the legal points quickly but i think joe you came on when we were talking about the stable coins with simon is that correct yes that's correct i would love your thoughts on that please yes so i i don't know how deeply you went into it because i've joined in a moment uh i'm only but i thought it was fascinating the two uh citations that were brought up in the prospectus that block rock filed uh they made a comment about tether and USDC. The USDC one was pretty interesting because one of the systemic risks for the ETF that was identified by BlackRock was this issue of USDC and where they're holding the reserves. And they specifically cited the $3.3 billion that was kept at SVB that they sort of intimate without saying it directly, that although USDC was designed to

keep the stable value at a dollar, it fell below a dollar for several days. And they disclosed that they were holding these funds at SVB. And they also referenced other potential financial institutions, which are holding assets, which are used to back the collateral. So the overall tenor of their comments was that these are really new products. There's not sufficient regulatory framework in place, at least according to BlackRock. And because of that, you have to realize, because they're the anchor of the entire industry, according to BlackRock, the decoupling, the depegging of these, you know, theoretically pegged tokens to the dollar could propose systemic risk. And they also, you know, brought up the, you know, well-documented New York AG agreement from February of 2021, where effectively Tether admitted that it made false statements about its underlying reserves and also made sort of a mea culpa that the fact that their earlier statements about whether Tether was fully backed was, in fact, untrue.

And that's from the New York AG agreement that was well documented. It's old news. But what's the solution for this, though? What's the solution for the stable systematic risk? Are we looking for something and use stablecoin by one of the big guys? We already have PYUSC. It's not gaining any traction. Well, to be quite honest, I don't think there is a solution because even if you have a bigger entrant into the market that provides a more verifiable, more regulatorily compliant token

that is theoretically pegged to the dollar, you'll still have these other players out there that are operating. And I don't expect them to just go away. I mean, I don't foresee, absence of some change in the law or some very serious criminal action that's brought forward, which I don't anticipate, that Tether is just going to disappear tomorrow. It will always sort of be in this marketplace for the foreseeable future. And from my perspective, I think, you know, once you have liquidity sources that are quote unquote questionable, you will always have the market tainted, right? And that's what BlackRock's disclosing. They have to disclose that to investors that, you know, one of the risks

of this marketplace is this, you know, boogeyman out there that we don't fully understand simon yeah this is an ultra ultra interesting conversation we should have deeper on another space but we could do it we could do it on monday because i i do just a heads up i do have to to jump off in it in a couple of minutes otherwise because i have to catch a fight or nick zabo will kill me and miss this fight so we'll do it like another another four or five minutes get your thoughts time slots and we could wrap it up okay cool well i'll give you a few soundbites for monday anyway perfect sorry i just got someone coming in my room uh blissful let's see sec man um the yeah so well the the interesting thing here is i think the biggest risk with stable coins is not actually the risk on the crypto market, but the risk on the banking market.

From 2025, the Bank of International Settlements has put a regime where central banks and those issuing central banks digital currencies can back and buy stablecoins and add them on their balance sheet. And so when you go direct from, you know, you ask, how do you solve it? Well, the way you solve it is that your dollar is no longer worth a dollar. When you're going from direct from the government issuing bonds to stablecoins and taking the bank out of the middle, market pricing is how you solve it. Because if there is risk in that, it gets priced into the market and your dollar is no longer worth a dollar. But that creates risk within the system because if people migrate over to stable coins away from bank deposits, then that creates the type of speculative

attack that we saw in the 2023 bank run crisis. It's a major, major issue. And there is reasons why they should be concerned it's traditional banking rather than crypto sam yeah great points by joe and simon i i think first off the title of this paper is amazing will the real stable coin please stand up shout out to eminem i thought that was hilarious yeah we got it we got it guys we got it you got it sam and and uh joe Simon, Carlo, and anyone else. I want to have this conversation on Monday. I think it's a very important conversation.

I think it's more important than the back and forth between Ripple, SEC, just for the East. So yeah, quick thoughts on it, Sam. Yeah, real quick, real quick. I think they wrote this. You got to think about the incentives of the Bank of International Settlements. They've been trying to paint these privately issued stable coins as risky, specifically around counterparty risk and liquidity risk and what is actually, you know,

the makeup of their reserves that back them because they want to paint the picture that a CBDC is the only, you know, quote unquote, stable coin because it's backed by the central bank itself that technically doesn't have counterparty risk and liquidity risk like these other privately issued stable coins. And the Bank of International Settlement is one of the ones driving pretty much all central bank digital currency developments through the biz innovation hub. And just last week, we saw the Bank of England come out and say they want stable coins fully backed by central bank deposits. That's what they want. And so they want to write... Who said that? Who said that's fine? The Bank of England just last week said that they want stable coins fully backed with central bank deposits. It's one of the only ways that they can be safe. And so Joe brought up the anchor

of how BlackRock thinks USDC is the anchor of the crypto market. Well, the central banks and the Bank of International Settlements think that they are the anchor of trust in the global financial system and they want control via CBDC. So they are the anchor of trust in the system because that's what they believe. And they want to paint all these privately issued stable coins as risky and unstable. And that's why they put quotations around stable coins and other speeches and transcripts. So this paper is not surprising, but you just have to think about the incentives of who's writing it. Yes. So on that point, just go ahead, William. Yeah. I mean, I chuckled when I saw the headline. Really, we should compare this to the U.S. dollar. I mean, is there any currency that is stable all the time? I mean, the U.S. dollar versus euro was up and down 8%, 10%. I think it should be, are stable coins stable enough?

That should be rather the measure, not are they stable all the time. Yeah, I find the whole topic pretty laughable after what we saw in the last few months with Silicon Valley Bank and the banking sector. But I'd love to go deeper into this on Monday because I think this is an important topic. I think this is the last spectrum that the government, the SEC could attack if they want to target crypto. And we've talked about the concerns we had with stablecoins. We've talked about Tether a few times.

But I think this, not sure whether there's a deeper agenda as, I think it was, Sam, you were saying, a deeper agenda with this report. But, you know, I'd try to get some time to read it on the plane. Otherwise, for everyone, we will end the show a bit early today because I do have a flight to catch and the guys are not here. Put out in the comments, no joke, I don't want to mess around with Scott and Rand. Put out in the comments how great the space is and put us in that go extreme with it say it's actually a really good space not to hear rand and scott scott's voice dominating put it is start taking jabs at them i want to have fun with it on monday otherwise really appreciate you all joining and uh sorry for missing the last uh day or two in terms of shows we're back to daily shows on monday we're

all back online thanks a lot for the panel and we'll see everyone on monday have a great weekend everyone bye