The Wolf Of All Streets - The END for BEARS: Howard Lutnick says "I'm a fan of crypto" | Crypto Town Hall

Episode Date: December 13, 2023

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Got rugged for the second day in a row. I guess I'm the host for about five seconds. This crypto space has been taken over by Bitcoin. This thing sucks. What's up, Scott? Corey, this is the SWAT Bitcoin. This is my dream. It's like you're coming in with pirate radio from the middle of the ocean.

You're going to show up with a with a uh mascot and tell us uh you're mr robot bitcoin i love it have attitude i'm not even here go ahead the floor is yours no man no i dude i had a good spot with uh cnbc europe this morning those guys are intense you ever watch that uh squawk box europe it's it's another level maybe it's the british accents but uh yeah it's a very professional show and uh yeah i mean definitely crypto folk getting bullish on bitcoin i'm going on laura shen for the first time ever you would think i would have been on sometime in the last four and a half years but uh we're recording today for the first time so definitely the the bitcoin

narrative is punching through a little bit yeah i mean I mean, if it ain't going to punch through now with the ETF drive, man. Yeah, for sure. This is as good of a time as I think you could possibly get it. And obviously, I mean, we're going to talk about it, but Cantor Fitzgerald, I mean, Howard Luttnick, his comments yesterday were pretty astounding. That was hilarious. I don't think he had $90 billion because I think... No, I think it was the way he said it. Yeah, people are taking out of context his comments. He basically

said that he's holding, at Cantor Fitzgerald, some of the treasuries. They're basically custodying treasures for Tether and then separately saying they have $90 billion AUM. Right, right. But they have $60 billion in treasuries. Cantor does have like $75 billion of treasuries though because i'm not quite sure that's true i think people were just saying that uh people thought he was saying that they were holding 90 billion specifically of tethered treasuries and tether doesn't have 90 billion treasuries or whatever so no they don't you're right that's the total aum but my point is i think something like 75 is in treasuries and i

don't know that it's split up across anybody else i think it might just be 75 billion with with canter but it's still a huge number yeah i mean the tether truthers are just the struggle is so real right now yeah mario we're back you here yeah man i enjoyed talking to myself earlier we haven't gotten like yesterday we crashed twice enjoyed talking to myself earlier we haven't gotten like yesterday we crashed twice and had to give up we couldn't even launch a third time why is this happening to us yeah why is this happening to us you seem to be able to talk to 17 billion people yesterday my tuckers face glitched like crazy you didn't crash but it was even worse the mics kept muting at the beginning you didn't hear it at the beginning I did hear

that yeah I did I did hear that nightmare Yeah, I did. I did hear that. Yeah. By the way, I do want to circle back to what you were saying, because I thought that I was never a Tucker Carlson fan. But when he kind of came on and initially started talking about how since he's how cognizant, I should say, he was of the bias that he had by being a part of that network. And then once he left, he kind of started thinking more and realizing that maybe he was slanted in a certain direction. I thought that was really, really impressive and really, really bold of him to sort of admit. And I think, you know, like what he was saying is sort of the ethos of my entire life, which is a famous quote, not mine, but you know, strong opinions loosely held.

I think that you were making the point, but any truly intelligent person takes new information and processes it and makes decisions based on that and doesn't just stick to old biases. I mean, if we didn't have strong opinions loosely held and people like that, we wouldn't have a single one of these like powerful billionaires that's leading the Bitcoin charge, right? Michael Saylor, everybody's seen his tweets from like 2012 that were dismisses of Bitcoin, Paul Tudor Jones, Bill Miller, all these guys were dismissive of Bitcoin earlier in its history. And then they, you know,

as the asset matured and there was more information, they changed their opinion, right? So I'm always impressed with people who can, especially publicly, when there's a huge public figure say, hey, listen, I have new information. This is what I think now. Yeah, exactly. So like, you know, if we're really intelligent, Scott, we should also change our opinion over time.

So over the next couple of years, we need to start hating crypto again. We have to go through the cycle and then set liking it again. And the cycle repeats itself. So give it another year, we'll become anti-Bitcoin, anti-crypto based on that. But I agree with you 100%. I think the smarter you are, the more

you realize how much you don't know. And anyone that thinks they know it all are probably the worst people to listen to or talk to. And I hate interviewing. I don't have those people on stage to interview them unless I want to have a panel of debate. But yeah, it was a good interview. I think it's really worth it stage to interview them, unless I want to have a panel of debate. But yeah, it was a good interview. I think it's really worth it. Very different structure to the one. Elon almost jumped

on. He was unfortunate he couldn't make it. The Tesla meeting went overtime, which was a shame. But it was an incredible chat nonetheless. And Andrew Tate was meant to jump on again, but he fell asleep. So it didn't work out because he's in Romania. But yeah, so I'll let you take over the showman yeah but ladies and gentlemen the Larry King I swear I'll leave man I can't

mute you but I can jump off okay I do think we should talk a bit more about what this means for Tether to have Cantor Fitzgerald, CEO Howard Lutnick, saying that he's a fan of Bitcoin, but that they're holding these treasuries for Tether. I don't know. James, what do you think of this? We haven't had you on in a bit. We haven't been able to catch up. I mean, are we going to still hear Tether FUD? Is this finally coming to an end or is that just going to be an endless part of every cycle? This is great news. I mean, we've actually done quite a lot of research and published about Tether about a year ago because there was this huge question about Tether, such a systemic risk for crypto. And it had this commercial paper that was a bit, people didn't quite know enough about it. And, you know, if you were to think of Tether on a very simple basis, that it's a money market fund.

Most money market funds are very homogenous. They just have treasuries and nothing else. Whereas Tether's mix, even still today, is quite eclectic. It has some equities, it has some Bitcoin, it has a lot of treasuries. I think actually that's okay. And they're now publishing an audit every quarter, which is quite normal and quite good now. It's quite encouraging.

I think it's really becoming much more credible and much more mature outfit. And so I think it's great to hear that headline. I've had a lot of people point out that it's not an audit. It's an attestation and then go kind of buck wild about how it's still not Tether being transparent. My view on this is, much like Binance, is that Tether, we're never going to see Tether's books from the early days because Tether probably wasn't fully backed. But under this microscope in this environment, I feel like they lasted long enough and got big enough to become exceptionally compliant under the radar

of regulators. That's my view. Yeah, it's just a maturity thing, isn't it? I think it was a young outfit. Young guys didn't really know much about money market funds set it up um and then suddenly they've got to comply with all these regulations and it's you know they've had a huge success and so it just takes a while to get up to speed with everything and now they are and it's great i think also you know on the back of the finance uh won't necessarily call the settlement but the what happened with the back of the finance, I won't necessarily call it a settlement, but what happened with the DOJ, the massive fine and the fact that obviously CZ somewhat turned himself in. I think it gives people a lot of confidence

that even if something did go down with Tether based on what they did in the past, that there wouldn't be an intention to shut them down. They'd pay a fine and life would go on. Right. I just think there's a lot of confidence in the market right now that even if, that the biggest player, we saw how that sorted out.

So there's nothing left to worry about. Exactly. You go after the company with the deepest pockets, i.e. Binance. And if they take the knee like they did, everyone else is going to follow suit. So, yeah. Yeah. Tom, go ahead. Yeah, I mean, Tether no doubt did some shady things early on in the crypto days, but it seems like they've cleaned up their act and they're making $2 billion a year, basically just sitting on their hands, right? And the team is small. It would be really,

really challenging for me to think that they're going to be taking excess risk with treasuries at these levels. They're just printing money. There's no other reason for them to take on excess risk. And if they have to pay a fine, great. There's no way they're going to pay a fine in the neighborhood of what Binance paid. But even a billion dollars, they're fine. They made a billion dollars while you were having that conversation about how many billions of dollars they were making. But the other side, obviously, I think we can move on from the Tether Fund, but is that Howard Ludnick, and we were just talking about this at the very beginning, but now we have a few more people here. Corey, I mean, he really was very pro-Bitcoin and somewhat, I won't say

anti, but dismissive of everything else, right? He said, Bitcoin centralized, that's the appeal for me here. It's the only one you can take with you. They didn't get into the others, but I'm assuming you somewhat share that opinion. Of course. I lost you on the tail end of your question there. I said something really important and impactful. Yeah, broadly, I mean, I'm assuming we're talking about, you know, asset-backed tokens. And I don't really have any issue with asset-backed tokens.

It's only as good, obviously, as the, you know, the third-party custody that has it in the vault, whether it's the dollars or the gold or the whatever. So choose your counterparties wisely. And then you're just talking about, like, what's the easiest way to trade that or to buy that. And I'm pretty much rails agnostic so it doesn't really matter to me uh at all so the only thing that would bother me is the same thing that would bother me uh in any market which is are people scamming so are they selling fake gold or fake dollars and you know but i'm not i'm not gonna go around trying to solve all the world's problems with scams. I pretty much only pay attention when there's a scam that is directly affecting Bitcoin in some way, like a Doquan or a Mashinsky or something like that.

Makes sense. The other sort of big news today, although it's curious that this is making headlines so massively right now because I thought that this was effectively sorted in September. But this is from Bloomberg crypto to be measured at fair value under new FASB rules. For anyone who hasn't been tracking, I can give you a bit of context. Effectively, we saw obviously Michael Saylor put Bitcoin on the balance sheet of micro strategies sparked the last bull run. Tesla did the same square did the same. But curiously, after Saylor famously sort of sat down with 2000 CFOs of major companies, nobody else added Bitcoin to the balance sheet. And the reason for that, it came out with basically the gap accounting rules, the way that companies had to account for that in their balance sheet

was to market to the lowest point that Bitcoin had effectively traded during that quarter. So it could massively affect your earnings for the month. You know, listen, if you bought Bitcoin at 30, and at some point in the quarter, it went down to 15. And it's back at 30. When the quarter ends, you had to market to 15 as effectively a loss. Well, fair, fair value accounting now means that they can market at the actual value on the day that they're doing it. It's a it's, I can't speak to how much demand there has been for putting Bitcoin on the balance sheet, whether that is something maybe there's people here with some inside baseball and insight into that. If there's people who have been waiting on the sidelines because of it. But this is one of those few cases where the IRS, the government absolutely got it right in our favor.

Dave, go ahead. Yeah, I mean, I think the thing that's interesting about that story, I'm just reading it. Thank you for the citation is the first bullet crypto to be measured fair value under new FASB rules. Okay, we knew that. The second bullet says rules go into effect in 2025. We know that. But the next fragment in that sentence is but earlier adoption allowed. That is, I mean, I'm almost speechless at how important that is. You know, we were all expecting that companies would not be able to think about putting Bitcoin on the balance sheet as treasury until 2025. But if in fact, you're able to change your accounting process in, you know, for the 2024 fiscal year, that's a very big deal. For people who don't

understand why this is such a big deal, effectively, when Michael Taylor sat down with 2,000 corporate CFOs, there are a lot of companies out there who have cash. Whether they repatriate cash or not, they have to figure out something to do with it. Sometimes they buy back stock, and we all know how much trouble they get in for that sometimes, you know, politically. But the fact is there's corporate balance sheets that are long-term corporate balance sheets. And the reality is, is with the old accounting treatment, holding Bitcoin on your balance sheet or any crypto is a total non-starter. It is a pain in the butt. It means that you literally can't value that position. You get only the downside and no upside for holding it on your balance sheet. Now, which basically meant that

every CFO went into every board of directors, and most of them were smart enough not even to ask the questions. The one that asked the questions got laughed at. And so there's an entire corporate balance sheet that now, if this story is true, and you can use this in the 2024 year, that now are freed from that and can actually consider it. What's important is this is what we would call necessary but not sufficient, right? It doesn't mean anything unless people have actual demand, but it removes a massive blocker, and that's why it's a very big deal. Yeah, it removes a blocker. And at the time we saw demand, I think the only thing that's changed, though, is that we've gone from ZERP to, you know, at 1.5% on long term treasuries. So the appetite for putting Bitcoin on the balance sheet rather than just buying treasuries might be

dampened, just conjecturing, but maybe I'm wrong. But, you know, what you're describing is not so dissimilar to the idea of the ETF. We know that we need it, we know that we need to have it, the question mark then becomes how much demand will there be for it, right? Kind of the same concept. Yeah, the only thing I would add is, and we talk about this all the time, is when we look at Bitcoin, and we talk about the cycles, and we talk about everything that's going on, there's really one super cycle here. Will Bitcoin reach global adoption as digital gold?

Right? You know, we can talk about it. When you talk with Mark Yusko, he explains this extraordinarily well. All of these necessary things are all necessary. They're all very, very relevant. Because what is digital gold? Digital gold is when companies, when sovereign wealth funds, when individuals, when pension funds, when all these people all start holding some Bitcoin in their portfolios. And one by one,

all the impediments are falling away. Yeah, Terrence, and then james i saw you also lifted your mic so terence and jay uh sure so um number one uh this only applies to gap reporting companies uh as you may know and then number two we have seen it we did see adoption at or at around the time that sailor had this conference or after with Tesla, the block, which is Jack Dorsey's sort of formerly known as Square. The Cash App is on the block and other projects. And I believe a couple others that used gap accounting in our public did adopt this. But it's not a lot.

It's not the tidal wave we would have thought because of the Gap Accounting that you guys are talking about. But Saylor was able to do it and other companies like him should be able to do it where the founder CEO controls the voting stock, right? And therefore controls the board because the board reports to the shareholders and the shareholders can vote out the board. So if you control the voting stock, you control the board. Mark Zuckerberg controls Facebook, for example. Evan Spiegel basically controls Snap. So they didn't do that, but Tesla, SpaceX, and the block did. And then we have seen at Swan businesses such as professional firms that don't do gap accounting, whether it's law firms or dental offices, doctor practices, they did that because they have reliable positive cash flow,

and they don't do gap accounting. So it seems to make sense to have Bitcoin, which is volatile, but with huge asymmetric upside, they would put Bitcoin on their balance sheet. And I think there's plenty of private companies that have Bitcoin on their balance sheet. I mean, even somebody just said Tether is taking 10% or whatever it was of their profits, not on top of their actual profits, not people get confused and think they're trying to back Tether with Bitcoin. But even Tether is buying Bitcoin massively with their profits. Yeah, the Tether guys really understand Bitcoin.

I don't think they're gap accounting. Private companies that are gap accounting, they're getting ready to IPO, right? So they're going to be reluctant to, they were reluctant to hold Bitcoin. The last thing I wanted to say was, Scott, I hate to say it, but to be clear to your audience,

I believe the accounting rules currently are such that Bitcoin is considered an intangible asset because they didn't know how else to characterize it. And intangible assets like goodwill and reputation and all that stuff, trademark, they get a one way downward ratchet. So you start out at $100 or whatever. It's a fair market value. If it goes down to 30 and goes back up to 200, it stays at 30 forever until you sell it. So that's the big problem with. I don't think that's accurate.

I could be wrong, but I don't, I don't think that's accurate. I think it's during the, I, yeah. Yeah. I don't think it's a fair value.

Yeah. With fair value. Yeah. yeah with fair value yeah certainly with fair value accounting i think the point is that you can market to the value at the time but go ahead james i know you had uh yeah i was um i mean if we think back to the credit crisis back in 2009 everyone was moaning about fair value accounting and why people were using it and it was an inaccurate representation of the book of a company. And so it's kind of like a double-edged sword. In a good market, it's great to market, and in a bad, it's not. And, you know, I don't know at the moment what a fair value approach actually means.

Is it they take one quarter average of the price or something like that? But it could make companies' balance sheets look a bit kind of unhealthy at certain times in a down market so yes it's it i do think it's really progressive having this and great for bitcoin but it can be both good and bad depending on market conditions damn yeah i mean that's. I mean, that's actually literally the opposite of the truth. The fact is the current way, it's always, if in a down market, it goes down, it's on your balance sheet is down, and you can't do anything about it. It stays there. It's like that is literally the price forever. So the difference here is now it's ups and downs like every other

asset. And yes, in a down market, sure, you know, your assets go down and people who buy things, that's okay, as long as you get the upside. The fact is, is in the old rule, you literally didn't get the upside. And that's why it was so incredibly bad. It was heads I lose, tails I lose, which is literally why nobody on no public company, no gap reporting company could consider it. And so, yeah, there's no doubt no one is any sane person. And James, you and I agree on this. We agree on the ETF, on what inflows are likely to be. We agree probably on this as well. Nobody is really talking about corporate treasurers going out and doing what Michael Saylor is doing in Moss. What we're

talking about is some percentage that you might put in an asset that you, you know, for funds you don't need for the long term in an asset to try to preserve purchasing power, particularly companies that have foreign subsidiaries that are, have lots of exchange rate risk. So, you know, it's really, it's a small thing. These are all small things that all add up. And that's the point, but it's very important to understand the new accounting rule eliminates heads I lose, tails I lose. No, that's a good point, David. I mean, I wasn't aware of that point. Yeah, Dave, I have a question pivoting slightly from this.

I want to talk about everything that's going on with the SEC. Maybe I'm putting you on the spot. But we have this article from the Wall Street Journal that's not necessarily crypto related but the sec uh is obviously on the attack against or with crypto legal hurdles stack up for gensler's sec group of hedge funds sues the sec in hopes of overturning a pair of rules related to short selling and securities lending uh i don't know if you have more clarity on that or if anyone else here does, but it seems like everybody, he's not just unpopular with us. No, I don't know this case. I'll have to read the rule later and maybe we can talk about it next Monday, you know, after I have a chance to read it.

I know of at least six rules that the SEC has proposed that are either that will end up in court. I have made this point multiple times. I mean, I'm still on Security Traders of New York's board. So, I mean, I'm in the TradFi world. You know that, Scott, which is probably why you're asking me the question. I've talked to CEOs of various companies. There's never been a time in history that I can remember. Now, I'm not that old, but I go back a long way, sadly. And that the CEOs of big fund managers, retail firms, high frequency trading brokerage types, bulge bracket, you know, multi-bank brokerage types, prop traders all agree. They virtually never agree. And if you look through the history of SEC rules,

there's going to be dissents and there's all sorts of stuff, but there's almost never universal condemnation. The SEC has produced a lot of rule filings. They've done a lot of proposals. They have a lot of rules they're trying to go effective. Whether it's the ESG rule, whether it's the market structure batch, there were five rules, three of which are going to end up getting litigated. Many of these things are going to get litigated because they're all basically looking at West Virginia versus EPA. And the industry is saying, listen, this is wrong and we want to fight it and they're going to fight it on those grounds. So this particular rule I haven't looked at, but in general, before this SEC, because I've talked to SEC chairs and been friends with people down there for a while, the SEC avoided lawsuits pretty much like the plague.

They would like to get industry consensus first. In this particular case, you know, basically against the public interest, in my opinion, and the opinion of very disparate parts of the industry. I'm willing to have them spend more of my taxpayer money to go after the SEC when available. Just just putting that out there. Zach, go ahead. I just think one of the important pieces of context for these types of suits is that the current Supreme Court is more skeptical of the administrative state than the more left-leaning Supreme Court we'd had before. And so potential litigants here are looking for points that they can rack up sympathetic cases where they can say, listen, SEC, you've overstepped your bounds. You're using authority that really belongs with Congress and not with the executive branch, you know, that delegates authority to the agencies.

I don't think that we should take so much of a lesson from that broader theme and apply it to what's happening in crypto. I mean, I think, you know, crypto A is something that Gary Gensler is especially concerned with and is, you know is a real mission of his. And I don't think they're as likely to back down on this. And I think there's a lot of support, unfortunately, in both the White House and Congress to take aggressive action. And then, frankly, like these big marquee cases they're doing against Coinbase and Binance and Kraken, I think those are going to be very, I know this is an unpopular opinion, I think those would be very hard cases to defend, given the number of tokens we're talking about

here. The idea that none of these are legally investment contracts is going to be really hard to defend in court. Zach, I don't necessarily disagree. I want Sean Deaton's opinion on that, actually, John. But I think it's also important to note that by the time any of this is litigated, Gensler will probably be long gone and we'll have a completely different sort of slant from the regulators. I mean, these are course cases that are going to be years down the road. Yeah, I think a lot's going to be decided. January 17th is the oral argument in the Coinbase motion dismiss, which normally motions dismiss, you know, 90% of the time you can say are going to be denied. But Judge Phelan has, she's indicated

a lot of sympathy towards Coinbase. And so how that oral argument goes, we're going to get some insight in whether she would seriously entertain granting that motion to dismiss. I know a lot of people out there say, oh, there's no chance. I disagree. I'm not saying that it's going to be granted. I'm saying that it has teeth to it. And I think that when you're talking about secondary market sales, the SEC is the one that has a much harder time prosecuting that case than defending the case. It doesn't mean that every token on Coinbase listed or Kraken is not an investment contract, but they don't have any precedent to establish it in the secondary markets. Primary sales, staking, those are different categories. The motion to dismiss, let me make sure I'm clear, the harder part for Coinbase to win the motion to dismiss is on the staking side of the house.

But we'll see. And I think that's going to be very interesting if she gives us any further insight in how she's leaning. Is that harder because Kraken already sort of paid their fine for the staking thing? Well, you know, and I don't know the staking, like, facts with Kraken. I know there were some people. I know even Joe Lubin came out and said that it was a good decision or supported the SEC's effort in that specific instance. But, you know, I think that the, you know, Kraken thought they were

buying peace. And unfortunately, they weren't. And I also think that, listen, Elizabeth Warren just introduced her bill. And it doesn't matter that she hasn't got one pass. She's only had one pass out of 358 bills. I'm not suggesting her bill is going to fly through the Senate and pass, but she's creating the narrative. And there's danger that certain elements of that bill could find its way in some other legislation. And she's garnering support to create the narrative and i believe we're going to see more enforcement actions gary ginsler is doing everything she wants him to do it's an election year coming up and uh i think we're uh you know whether they go after tether for the pre you know the early years i don't know but do not be surprised if we don't see another significant enforcement action filed.

I definitely think we will. I mean, cracking cracking is a massively significant enforcement action. And literally nobody even talked about it because it came out at the same time as the Binance DOJ situation. I just I agree with you 100 percent. I just don't think the market cares anymore. And frankly, if the prices of these assets keep coming up, going up, and I'm not saying for good or bad reason, nobody's going to care at all because the sentiment's going to change and it could become politically unpopular. But Zach, I know you wanted to respond. I just want to respond on the staking question. So I think the facts at issue there, I think if you ask, is staking itself constitute a scurries offering under the law? I think in some cases, the answer is pretty clearly no. I think base layer like Ethereum staking, if you run a validator

node, what's going on there is you are providing a service to the Ethereum network. You're being paid for that service. That's different than a securities offering like a stock or a bond. At the other end of the spectrum, if you look at what BlockFi was doing, where they call it staking, but really it's more like you're investing in a hedge fund, that seems very clearly to be a securities offering. And then there are all these things in the middle, right? There's on the one hand, there what the exchanges like Kraken and Coinbase are doing, there are some protocols like Lido and RocketPool and some of these sort of liquid staking derivatives. And what we're trying to find out now is like, where are courts going to draw the line between the type of staking that is not a securities offering

versus the type of staking that is. And in the Kraken case, there were some particularly bad facts for Kraken. Kraken had a lot of authority to like determine what how much of the yield it was paying out and its strategy. Coinbase is a little bit more sort of keyed to what's happening on the actual like proof of stake layer ones. And so Coinbase maybe has a bit more sort of keyed to what's happening on the actual like proof of stake layer ones. And so Coinbase maybe has a bit of a better defense, but definitely the Kraken precedent is going to be hard. The idea of staking as a service. Yeah. Go ahead, John. I was going to say, I don't disagree with anything Zach said. I think he articulated pretty well. Yeah, I think that we all know that what the block fives of the world was

doing was not staking, right? And they barely advertised it as that. I think you're right, Zach, that where it's going to come in question is staking as a service, even if it's literally just the platform staking on your behalf, if they're taking any fee for that, that's not directly staking. I mean, is that effectively what you're saying? Yeah, what I'm saying specifically is the more that like either a protocol or an exchange is literally just staking. I mean, is that effectively what you're saying? Yeah, what I'm saying specifically is the more that like either a protocol or an exchange is literally just staking on your behalf and passing on whatever native rewards like Ethereum is providing, that looks less like a securities offering. And you have to run both the Howey test and what's called the Reeves test, which is like, are you basically buying an Ethereum denominated bond? The more they're just passing on the

revenues and maybe taking a small cut for allowing you to stake lower amounts, that looks less like a securities offering. The more they have discretion in terms of how much of the yield are they passing on, like what is their staking strategy? Are they operating different staking pools and validators making decisions on your behalf? The more discretion they have, the more it looks like a securities offering legally. And just discretion they have, the more it looks like a security is offering legally. And just quickly for clarification, where was Kraken in that spectrum? My understanding was that they were effectively kind of towards the beginning of that, right? The less securitized side of that spectrum. Well, I mean, they were clearly not far enough there that they felt like

they wanted to fight the SEC on this. I think the bad facts for Kraken that made it look more like a securities product was the discretion specifically that Kraken had. And a lot of the question was around Kraken would reserve the authority to pay out different yields as part of their staking as a service product that didn't necessarily match what the underlying protocols like Ethereum were paying out at the time. And I think Coinbase is really more keyed to what the natural yield would be from staking. I mean, I think Coinbase is being exceptionally careful on all things at the moment. Terrence, go ahead. Yeah, I wanted to, if we're done on staking, I wanted to go back to what Zach said about

the Supreme Court composition and what John said about Warren and her bills and tie those two together a bit. I've had it. Okay. So I think just because the more conservative Supreme Court we have now than before is skeptical of the SEC, that doesn't mean they're going to be skeptical of this bipartisan Warren bill and FinCEN and the DOJ as they go after alleged or actual money laundering, terrorist financing, Hamas, financing of Hamas, right? I think that may have accelerated and caused a bit of a tipping point in what politicians and the mindset that people have. So if the Supreme Court is, as I suspect, more authoritarian than freedom-loving, then they are going to do things like censor what they call unhosted wallets, which are just wallets, really, or self-custody, and censor other things and require KYC, AML.

And that would be bad for freedom. It would be quite bad for Bitcoin, Monero, and other coins that people hold with the expectation that I am holding a digital bearer asset, as opposed to something I hold at Coinbase custody or something. Those are largely fake narratives. That's the problem. Go ahead, John. I was just going to say, notice Terrence said bipartisan. That's why I think there should be concern and attention and not dismiss it as, oh, you know, she's never got a bill passed and this has no teeth and no chance just because of the of the fsc and the con we have lindsey graham joining her uh the guy from west the entire center banking

and also basically the entire set of banking committee at this point right absolutely and you've got uh the the independent center i think uh i forget his name now, in New Hampshire. You've got the guy in West Virginia who was a Democrat. I think he turned independent now. So there's at least nine senators from both parties on board. And so, like I said, it's all about the narrative. And the eventual introduction by Warren, which he's already went on record to say that she's ready for a CBDC in the United States. Yeah, she also is saying on her road tour right now that North Korea is funding half their nuclear program with crypto.

So we know that she doesn't care about the truth when she's making her claims. And she started the Hamas terrorist narrative based on a Wall Street Journal article that was very quickly debunked and even retracted, but hasn't coincidentally decided to retract that herself, right? Tom, go ahead. Okay, John, finish up and then Tom. Yeah, okay. No, I'm just gonna say what people need to realize is what I say is the narrative. When we get outside of everyone on this line, and you go into the real world, like I said, I've spoken to state legislatures, several state legislatures. And the questions are 2013 questions. I literally say, well, I hear Bitcoin is only used for terrorism and for the cartel and blah, blah, blah, blah. And so that's what I meant by controlling the narrative, because when it gets out outside of crypto Twitter, most people don't know shit about crypto. Don't still don't know shit about Bitcoin. A hundred percent, Tom.

Yeah, I totally agree. Most people don't understand this stuff. And you can just look to your holiday party discussions in the upcoming weeks and have little people know about this stuff. So it is about the narrative. Elizabeth Warren is just the worst and as a massachusetts resident it frustrates me to to no end there is the opportunity that charlie baker actually might run um i know he's has another job right now but you know if he did run the early polls were showing he actually might unseat her but pretty unlikely but uh you know hopefully we can keep our fingers crossed there

what i will say though is that um you that there is some momentum in the Senate. But if this came back to the House, which it has to, I don't really think the momentum in the House is there to actually pass something like this. So it's more about the narrative and the underlying pieces of this bill that could filter into other bills. So, you know, crypto lobbying needs to continue to improve to kind of get the message out there about this. And I know fundraising has gone up, but it's, we need to sort of get the message a little more clear than Elizabeth Warren has been really preaching. Yeah, I mean, I don't see anything meaningful crypto or otherwise getting through this Congress, Senate and President anyways. Right? I mean, just because to the point you just made, but I think there could be a world where there's some kind of compromise between the

congressional side that wants to pass a market structure bill or stable coin regulation. And, you know, what is happening in the Senate and what they're trying to push. And maybe there could be some underlying sort of sinister parts in an agreement there. I think that would be more of a concern if they sort of come together and negotiate and some of this gets in there. Go ahead, Dave. Why is it not working? Sorry, I'm in trouble. Sorry, fat fingers. I think the interesting thing is we all remember when the infrastructure bill came out, the incredibly, it wasn't successful ultimately, but it showed the first stirrings of how many people would actually care about things like miners and validators and whatnot being included. I think that is a very, that needs to

happen again on a sustained basis. Because really, where the industry is going to win is going to be, you should be able to, like, you know, Warren Davidson is the to win is going to be you should be able to like you know warren davidson is to keep your coins act you should be able to hold your assets yourself without having to be forced to pay an intermediary to do so that really is the narrative and it needs to be that way and when if you take miners and say that they're responsible for transactions when they have no ties to customers if you say people can't hold their own wallet, that's going to be a problem. Now, that said, people in the industry need to understand that there's been a fight that's been lost already, which is cash, right? If you want to try to go, it used to be you could walk with a briefcase full of cash and buy a building or buy a condo or buy a house. You can't do that anymore. And the reality is, is there's going to be compromise onto the fiat on and off ramps and

declaring wallets that have transactions over a certain size. Those things are probably going to happen, but those are not death blows. Whereas the act as currently written based on my read of it would more or less make it impossible to have a public blockchain and so really the fight needs to be picked and it needs to be and that education campaign is very important i agree i think we've wrapped that one up should we talk about trump's nfts guys anybody have some opinions on this amazing mugshot collection it'd be serious hold on you're being serious trump launched a new nft collection a third one round three the mugshot collection? Hold on. Are you being serious? Trump launched a new NFT collection? A third one.

Round three, the mugshot. I'm glad you're back. The mugshot collection. I think if you look at the website, it's amazing. I think on the website you get a piece of his suit. If you buy 47 of them, you get a piece of his suit, which is amazing. I bet he got the mugshot in because everybody wants that.

But I think that it literally says like the greatest piece of american memorabilia in history or something like like can we like literally if you get scissors and cut up the constitution and sent it out with nfts that would not be as cool as trump's mugshot nft a sorry to use expletive, how the fuck is he doing this without the SEC coming after him for an unregistered securities offering when we've already seen stoner

cats and impact theory get attacked. The guy, the guy, two seconds, the guy is facing 90 whatever felonies. I think the SEC is the least of his concerns right now. So he's basically raising money right now. He's basically raising money right now. No, I don't. But I don't understand why on a genuine note, when he launched his first NFT collection, I know the people that launched it for him, I should have asked him, I never

understood why. But there's barely any money in it. How much did he raise in the first one? I think it was like $5 million in E eth or something that was sitting in his wallet if i remember the report he made a lot of money because it's a it's a licensing deal right i'm assuming it's not like trump was like yeah let me let me go get my solidity on and fucking mint these things like is the guy couldn't you know and he hates crypto i i would make a bet like I don't know, there's no way to vet this bet or no, I would bet that Trump himself has no idea that these are crypto. No, Danish, please explain what is going on. I'm just excited that somebody found an actual use case for NFTs. Finally, someone's actually using nfts again and and yes scott how the fuck is this guy not gonna go to anyways how is how is this not considered illegal like i don't understand how this is not

how does he keep getting away with this i don't understand like we got a lawyer on stage yeah i mean this is his third one so I don't think he's too nervous but he's selling collector trading cards and you know even now you buy 47 you get a physical one which is funny right it's like the selling point was digital but

if you buy 47 you get a physical one but what I think you just can't forget about is that this is NFTs mainstream you need a crypto wallet. You need a polygon wallet to trade these things in any effective way. So I think this is huge for crypto. Do not spin this. Please do not.

Guys, come on. The crypto folks can spin anything. You're spinning this as a positive? As far as adoption. Let me look. Hold on. We have one of Trump's biggest fans, a long time Trump voter, Ed Krasenstein. I'll let you come up. I'd love to get your thoughts

on this decision, Ed, considering your close relationship with Trump and his team. So I'm just saying you need to invite Ed. It would be good to get your thoughts. I know you're pretty close to him. Terrence? Ed's pretty far right for this conversation he might be biased yeah yeah he's kind of yeah trump is becoming too liberal fed hilarious uh real quick um so i'm very happy that trump is doing these nfts outside of bitcoin

because we have a lot of ordinals and inscriptions on Bitcoin, which in my view is totally clogging up the network. There's spam attacks. The only data that needs to be on Bitcoin is the ledger itself. You don't need things like Chancellor and Brink. You don't need movies or JPEGs. But before Darius says,

I like the pivot, but that's not what we're talking about. I don't like the pivot. I like that Trump is doing this outside of Bitcoin. So I hope more people from the Ordinal's world follow his lead. Follow the president. Bitcoiners, you guys can make this about. Hold on, hold on.

I swear, everything will be coming back to Ordinal. And please explain why Trump, what's the strategy behind it maybe you advise them on launching an nft collection i don't know yeah i was definitely an advisor there um i i think it's hilarious i think it's i think he's just trying to raise money i think he's having some financial issues and he needs money so he's releasing this collection i don't know you know the argument about it being a violation of securities law i don't know i i don't know. You know, the argument about it being a violation of securities law. I don't know. I don't think this is much different than just trading cards, as long as he's not trying to sell it as a security. Like some of the collections have in the past and where they kind of promoted as security. I don't think what he's doing is something the SEC is going to come after him for.

And like like somebody else, I think, Mario, said, he's already has like 91 indictments. I don't think the SEC is going to add on. Yeah. And just to be clear, I don't think these should be unregistered securities offerings. I'm just saying that the SEC has already gone after two people for similar offerings and that they would probably view it as such. I want to be clear. I wholesale think the SEC can go suck it. I also think about the Venn

diagram of the overlap between the type of person that would buy these fucking trading cards and the type of person that actually would understand enough about crypto to be able to do it. Can you pardon yourself from an SEC lawsuit?

I don't think so, but that'll be a great story for crypto. I launched an NFT collection, and when I get sued by the SEC, I pardon myself. I've never seen so many crying emojis on stage as I'm seeing right now, and I got to say, I'm here for it. I think I love it. I don't know why I didn't ask you that. Do you think, if you had to guess, if you had had to bet do you think the next president will be trump uh i don't know i'd say right now it's 50 50 sure what the polls say that's not what the short is yeah yeah but i mean

like can we really trust the polls right oh god and the polls never run for the, can we really trust the polls right now? Oh God, Ed, the polls never run for the Democrats. Can we just be honest? When was the last time the polls actually helped the Democrats? Can we get a 70-year-old to be the Democrat leader? I'm even okay with 70. Can we go to 70? I'm okay with going down only 10 years instead of, you know. Literally, I think, Danish, I think exit polling the day before Trump

won had Hillary Clinton at like 70% or something. I mean, this is like, we are just living in denial world. It's okay. It's okay, Ed. It's okay. We'll have four more years of Trump and the world will go back to what it is, I guess.

Well, at least my NFTs will go up in value if he wins because I'm buying 47 of those and going to a cocktail party at Mar-a-Lago. And I'm getting a piece of that too. What NFTs do you own, by the way, Scott? Maybe we can wrap it up with that question. What the fuck is an NFT? No, there's one collection that I really like

because I'm very good friends with the artist, Micah Johnson. So I own the whole Aku collection that I had bought. I haven't checked them particularly, but I don't generally own NFTs. Just because, not even because I'm as dismissive of them as Rand or anything, just because it was never a market that I fully understood or thought that I had any edge in. So for me, it was just very easily avoidable. Scott, the problem is nobody understands them.

It's just you think... Utility, Donnish. Utility. It's the utilities. Utilities. But I would buy... I think I could buy some Trump NFTs, though, just for the lulz. But Trump still owes me like $3,000 from a DJ gig at Trump Golf Course in New York from like 2010. So literally, they should just send me a few of these.

I've never paid anyone literally ever. Go lawsuit for the $3,000 just makes for a good story. Scott Melcher. I don't think I would if you ever make the accident of Googling me and Donald Trump, you'll get a lot

worse than that because I went to school with his son and on a private Facebook post to just my followers. I called him I said that he was called diaper Don when we were in college because he was so drunk and he pissed himself every single night at Penn. It was a known phenomenon and I called him diaper Don. And some like reporter literally somehow screenshot my Facebook post to my friends. And it went national as news. I had Bill Maher and Anderson Cooper calling me and stuff right before the election.

And yeah, it was pretty wild. Nobody ever called to vet the story, if you're wondering how the mainstream media operates. The part of the story also had been that I saw him slap his son so maybe that was the bigger part of it but yeah it's all maybe yeah i think that was a big man if anyone asked me about you i'll sometimes get asked like how scott like i'm like he's like the most chill guy that somehow random shit keeps happening to him for some weird reason he's like attracts the most random shit and this is another example um you just gotta be out there in the universe, bro.

Secret in you, you know. Law of attraction. I don't believe that's something. Okay, wrap it up. I just want to know how many Ed's going to buy. Ed, are you going to buy them before we go? Ed, are you going to buy? Are you going to buy any NFTs?

I would say I will not be buying them. I'm kind of tempted, but I'm going to pass, I think. Do it for PR purposes. Do it for PR purposes. Make a tweet and let it go viral. Find a little angle, you and Brian. I'm going to buy it, yeah. Maybe I'll do a burnt Banksy on the GameWorn mugshot.

Oh, that's smart. I'm going to launch the Gavin Newsom Creaming Up San Francisco collection. And if you buy 47 of them, you get an actual piece of a homeless person's clothes. It's going to be great. Great way to get. I think we need to wrap up.

Before I say anything stupid. Yeah, OK. Last year, please drop. Bye.