The Wolf Of All Streets - US Regulators Are Trying To Kill Crypto | Will We Survive? Live Panel W/Joshua Frank (The Tie), Sidney Powell (Maple Finance) & Scott Dykstra (Space & Time)

Episode Date: May 11, 2023

Live panel with Joshua Frank (The Tie), Sidney Powell (Maple Finance), and Scott Dykstra (Space & Time). Follow the guests: Joshua Frank https://twitter.com/Joshua_Frank_ Sidney Powell https://twitter.com/syrupsid Scott Dykstra https://twitter.com/chiefbuidl ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►BITGET GET UP TO A $8,000 BONUS IN USDT AND GET MASSIVE DISCOUNTS ON TRADING FEES! 👉 https://thewolfofallstreets.info/bitget    ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

The title of today's roundtable is U.S. regulators are trying to kill crypto. But the original title before we change it was U.S. regulators are fucking crypto. And frankly, they are. We've seen a ton of companies moving offshore. Galaxy announcing today that they were doing so. The biggest market makers that we had in the space are gone, which means illiquid books, no volume and $5 Bitcoin order sending price up $75,000 directly to a million. Guys, it is a shit show in the United States. Is it over?

Will we survive? I'm discussing with today's amazing panel. I've got Sid Powell, Scott Dykstra, and Joshua Frank from Theide. Let's go. What is up, everybody? I'm Scott Melker, also known as the Wolf of Wall Street. Before we get started, please subscribe to the channel and hang your head in shame on the like button if you are, in fact, unfortunate enough to be an American like me. I mean, I just told you all the bad things that are happening in the United States. And I failed to even mention that the IRS is jumping ahead of FTX's unsecured creditors for like $80 billion. What? I mean, the insanity in this country. Imagine you were really psyched. Hey, it's going great. I'm an FTX creditor. I'm going to get like 70% of my money back. And then the IRS comes and steps ahead and said, not you, us first. I would be surprised if I wasn't a Voyager creditor myself and had not been bent over this desk so many times that I can't even recall my bad news in the bankruptcy process.

Proving that once again, not only is the United States trying to kill crypto, but they also just hate their citizens. They hate us. They hate us. Bankruptcy, scam, scam, scam. So now that I've laid that table for all my guests who now are probably ashamed to have joined us, I have Sid Powell, Scott Tarcher, and Joshua Frank. So I got a good giggle out of you. We got two Scots in hats. That's a first on the show, guys. You're witnessing history here. Scott, it's your first time here. Welcome to be here man appreciate you having me uh absolutely so uh how bad is this over here i mean it's about to go viral but we're about to see uh

it's so bad that congressman brad sherman is just trying to blame crypto bros for all the u.s's failures this morning you're about to see that all over the news i mean so this is what he said i don't have the quote in front of me we should bring up the video to be honest but i wouldn't want your guys eyes to burn out of your heads like the guy at the end of raiders of the lost ark we wouldn't want that but he basically said crypto bros have printed money to make trillions and they said and the u.s government also prints money but it's cool guys we're the u.s government we do all the time but we don't like when crypto bros do it that's for sure yeah i mean okay so but that's worth talking about though because let's be honest i know nobody here really wants to talk about meme coins but isn't he's missing the point with the united states

government part but crypto bros literally are printing money right now and making trillions, right? Absolutely. Yeah, well, actually, Tether earned like three trillion, so I don't know. Three trillion, you've made three trillion, but thank you for showing up still. Sid, you were going to say something.

Go ahead. Yeah, well, I think it's interesting that we saw Tether's latest report where they showed you know they were more profitable this past quarter than uh than blackrock was um so if that doesn't show that this is a profitable business that people are willing to pay for then i don't know what does um at least that you know hopefully um you know provides some incentive for financial institutions to start banking and servicing the sector. Yeah, I mean, the numbers on Tether, I'm scrolling down, were absolutely absurd. I know I tweeted it yesterday, but they basically, I don't have the exact number, but 1.7-ish billion they

made in the quarter and now have over 2.5 billion above their reserves above the reserve yeah so tether has kind of slowly dispelled all that fud right and and my favorite thing is when i tweeted about that isn't u.s dollar equivalents though probably in chinese uh commercial paper if i've if i if there was a lot of gold and other things on the balance sheet that wasn't u.s dollars and i don't know personally if i was putting my money in a stable coin i still would like to see it like just put it in treasuries like you can get enough yield from treasuries like why are you playing games you need to be playing games you're making gold i thought that they were in treasuries and cash at this point they had three they had $3 billion of it. Mostly, yeah. Yeah. But $3 billion is a lot.

There's gold. There's some secured loans. But I mean, I would suspect that these secured loans are loans that are over-collateralized with Bitcoin or something like that. Hmm. Interesting. So Josh, you're basically hinting, wink, wink,

you'd still feel more comfortable with USDC. Look, it doesn't say I'm not saying I'm uncomfortable with Tether. That's not the point I'm making. I'm just saying you think they have so much AUM. They're going to be printing so much money. Why not just keep it in cash equivalents? Especially, I mean, I sat down with Paolo two weeks ago, three weeks ago, and he was like, yeah, we're just killing it because treasuries are yielding so high.

I mean, treasuries are performing better than whatever gold they're holding. Scott, I'll share it. Here you go. Hold up. Oh, I'm going to pull up a screen on the round table. Look at this. We're venturing into new territory. What do you got there?

I can't read that. Can you see it now? Oh, wait, that's the wrong. I kind of see it. Here we go. I got the right tab. Oh, there we go. Yeah, yeah.

So you can see, you know, $3.4 billion in precious metals, $5 billion in secured loans, $2 billion in other investments, you know, a billion and a half in Bitcoin. So $69 billion, of course, because it's crypto, is in US dollar equivalents and the rest is not. I don't know why it would be so difficult just to put all of it in US dollar equivalents. Yeah, that makes sense. But you'd need a hell of a bankrum for this to be problematic at this point, at the very least, which I think is good uh so we obviously talked a bit about the general situation but let's get into some of these more specific things and how meaningful they are it was jump crypto and who was the other market maker that exited jane jane street by jane street

shop i mean weren't they the ones basically making this market on the large exchanges i got one one one thing to show you really quick on that, Scott. Let me know when it's ready so I don't put up more in peace again before we get to the other thing. Look at the hottest smart contract on Ethereum right now. Right now. This is over the last hour. So they pulled out of the U.S. Keep that in mind. They didn't pull out of crypto. So I think that's really important to note.

They are currently the hottest in terms of the amount of activity that they're doing on-chain over the last hour versus, you know, an average of the last seven days. One of the jump wallets, the hottest smart contract right now. So they are still interacting in crypto on-chain as we speak. It's just out of the U.s but keep in mind they were out of the u.s for a while they were already moving offshore this isn't like this isn't breaking news as it happened a day ago bloomberg might have gotten the story a day ago but a lot of these guys were already offshore that that that makes perfect sense so then what does it exactly mean to say moving out of the united states is that simply like a new office address

does it mean not making markets on coinbase and gemini i mean what does that really mean i i think it's i don't know on the on the making markets on u.s exchanges or not i'm not sure but i do know that they're they're going to be basically operating out of the other legal entities that they own right everyone has a cay a Cayman entity. A lot of these guys, like Galaxy had a Hong Kong desk already, right? Like Jump has a big Singaporean presence, right? So a lot of these guys have presences like Cumberland, which is DRW, primarily operates a lot of their crypto stuff out of London and has for years. So, you know, this isn't necessarily new for a lot of these guys. A lot of them are just forcing forcing people to to to to work offshore or move move offshore, which means no taxes to the U.S., which is fantastic for us as as U.S. citizens or residents. You know that we need more taxes.

But I mean, it feels like a lot of this is sort of just political theater. Right. I mean, Coinbase is not pulling their operations in the United States anymore, even if they open an exchange in Bermuda or if Brian moves his address. And these companies, as you said, are still operating here, Galaxy now, moving quote-unquote offshore.

So is this then, I guess, just all of them saying, see, told you so, to regulators, we'll move, like calling their bluff to some degree and then if so does that mean that this isn't uh really that meaningful i mean everyone has to consider right now it's an absolute witch hunt so i i agree it's political theater but i also see it actually moving like i operations you're right coinbase isn't going to move 4 000 employees out of the u.s right engineering it's in the u.s marketing u.s but like the the feeling right now is that u.s

regulators are coming after the the company not just the pet the pet they mean coin makers they're going after just like normal businesses that were already approved by the SEC seven fucking years ago. And it makes me want to move to Aruba too. Yeah, I wish I could do that. I wish I could do that. I think if you have, I mean, you've got the market makers and the trading firms kind of moving offshore. I mean, this just kind of brings it into line with a lot of projects. Like you might have some core contributors to DeFi teams and NFT and gaming teams based on Shure.

But now, you know, all the foundations are out of Cayman. The token issuers are out of BVI or Bermuda or some other jurisdiction that has sort of done the work to set up a framework for teams to operate safely. I think the thing that scares me is that this is the prop trading firms that are now doing this, right? The prop trading firms, because they're prop, and for anybody who doesn't know what that means, it's this thing, it means they're proprietary, it means it's their own money, they're not taking money from external LPs, right, or external investors. These guys, because they're proprietary, they don't deal with external money, they don't have the rep, Like if they lose money, it's their own money. They don't care. It's not external capital. There's not that reputational risk. The fact that these guys are shitting their pants a little bit is bad, really bad, because that means that for funds that have outside

capital, right, all these hedge funds, all these asset managers, these large institutions that we spoke about moving into crypto, if the prop trading firms, which are the most flexible that have been in crypto for years, are now getting scared, right? Imagine how the traditional funds feel, right? And so it is a bad thing. Don't get me wrong. I think the prop trading firms that were profitable, that were making money in crypto, that went heavy into crypto, will continue to do crypto. They'll just do it with outside, you know, through other legal entities. But I think your US-based hedge funds, you know, think about a $50 billion fund, you know, any $50 billion fund, right? They're currently managing $50 billion. They're taking a billion dollars a

year in management fees on 2%, right? It's not worth any sort of risk for them to get into crypto right now with $100, $200, $300 million. It's just a giant reputational risk. They're putting themselves in the crosshairs of regulators. It's just not worth it. Right. So I think like all these prop trading firms will continue to do business. You know, a lot of them already had offshore entities. They'll do a business offshore. My bigger concern is this just makes institutional adoption, you know, just pushes it out basically, you know, at minimum until the next election cycle. So you saying the harvard endowment doesn't want to throw all their money into pepe right now well the harvard endowment is prop actually their own money so that might be a little bit different but um they some of those allocators are still actually allocating

into crypto they're still investing in funds uh but it's certainly slowing. But a lot of those guys that have committed, what I'm suggesting more of is, you know, your black stones of the world aren't coming in and launching crypto funds next week, right? I mean, that's not, you know, and I'm not saying them individually, but there's not going to be a huge push in that area to move into crypto, which is something that we started to move towards. You know, if you remember, you know, with Paul Tudor Jones coming into crypto in 2020, that kind of spurred this last bull market, right? You know, obviously, Saylor came in and spent every penny he had and everyone else's pennies buying Bitcoin, which helped. But like, that's really what kind of started this, right?

And then you saw there are a lot of institutions that have come in that have adopted it we thought that number would increase more but this is really just sucking the air out of that from happening yeah but to that point josh like don't most of those you know the 50 billion dollar funds also have like a lot of offshore structures like it's pretty trivial for them to replicate what we're seeing with you you know, Galaxy and Jane Street and Jump. But I do take your point that I think there's a lot of contingent liability because even though they were trading their own balance sheets, you can see there's probably a lot of, you know, I don't know. There's probably like class action lawsuits looming on the horizon for, you know, some of the activity by those guys in Luna, for example. And I imagine that by offshoring, they can kind of hive off that risk, keep it in a separate subsidiary or a structure

where they can kind of insulate themselves from that. Yeah. Yeah, look, certainly these guys have offshore entities and a lot of them are trading crypto with offshore entities already. So my point isn't that there are top 50, top 20 hedge funds that are trading crypto today actively. And some of them are even trading 50 tokens.

There's a small number, but some of them are. But the number of new entrants is just flat. Are they trading Pepe? I don't know if any. There are actually a few that we probably mutually know that probably are trading Pepe. Yeah. You go to the volume and to the liquidity, right?

I mean, as sad as it is, if that's where it became a billion market cap coin, plus I'm sure that quite a few of them made profits, just like I'm sure quite a few people we all know made quite a bit and made us feel pretty bad about our lives and our choices. Not me. You guys, probably. So let's talk about a bit more positivity.

What would be actually a good scenario out of all of what's happening with this regulatory nonsense in the United States? I mean, we've seen that the Lummis-Gillibrand bill is likely to be reproposed in the coming months. They've said it's going to be leaner and meaner. I mean, would some sensible stablecoin regulation get us partway there? I do feel like a lot of this is still just rhetoric and that it's still not in the interest of the United States to just kill it. I mean, I was pretty shocked when I saw the Joe Biden tweet like two days ago that said literally like comparing what the Republicans want to do to crypto bros violating tax loopholes, like as if every wealthy person in the world is not utilizing the same tax loopholes

in the United States. The rhetoric is crazy right now, but Biden's's gonna die like next week anyways so i mean i'm just saying what's the what's the good scenario here if there's any silver lining it's that like what we're seeing at space and time is a number of like financial institutions uh major u.s banks that are coming in and they're building their own chains. They're building private ledgers. They're building like a US Web3, which is totally different, a complete bifurcation of the public Web3 we're used to, of the Pepe Ani. This is something completely different that we haven't seen before. These networks that are forming on private ledgers that we've been hearing about behind the scenes for like four or five years, but it's finally all coming together. So US is basically just building their own Web3. They're just building

their own private ledgers for all the banks to finally bring it. And then that's going to come to retail eventually, right? When these crazy like Greenfield, hey, I'm a major bank, I'm going to build a blockchain, comes to retail in like two years. We're just going to have a US Web3 that's just completely different than the Web3 of the rest of the world running on Ethereum. Scott, is that the Canton chain you're talking about, that demo-based one? Canton is just one of them, right? Canton runs on Azure's confidential compute framework, right? Confidential compute framework.

It's sharing assets between banks, but there's also banks building public facing retail chains as well. That'll probably come to light in two years or three years, whenever these crazy greenfield projects form. What I'm saying, Scott is like, we're going to get a new blockchain, a U S blockchain or some shit that's completely outside of like Pepe on E. So, I mean that, so that kind of leads us to the, like in it for the tech, right? Because that doesn't help anyone's coins or investments or a lot of things they believe in and this goes back to i mean after ftx collapsed i sent some angry tweet that said watch wall street's going to come in and buy up our entire industry for pennies on the dollar like watch so that's not necessarily what's coming but what

you're saying is effectively that they'll build their own rails. They'll keep it closed off. It'll be using the technology, but against the entire ethos of all the things we believe in. And they'll just use it. No, I'm saying they're going to keep it closed off today. In two years, that's going to come to retail. They're going to build all these public chains that are like the U.S.'s attempt to build our own. I'm not even talking about CBDC, right? Everyone's going to say, oh, it's not you're talking about a CBDC. I'm not even talking about CBDC right everyone's going to say oh it's not you're talking about a CBDC I'm not even talking about that I'm talking about

a single financial institution who has retail clients all over the US selling like their own chain as like their private ledger which is effectively like Coinbase's base except base went public right away like taking transactions that sounds

like the information highway, super highway theory back in the nineties, Scott, where it was like cable, like we're not going to have an open internet. We'll just have cable companies provide everyone with internet through their television sets.

And I don't know. It's just like, it strikes me as it's a really hard engineering problem. I just don't think the financial institutions can do it. I don't know. It's just like it strikes me as it's a really hard engineering problem. I just don't think the financial institutions can do it. I don't think like I think they'll net be losers of customers who kind of debank themselves or go to, you know, self-custody solutions. Let me ask you something. Let's throw out a random bank. Let's say Wells Fargo. I have no affiliation. If Wells Fargo had their own chain, which would be absolutely insane. We kind of bash it. Sid, would that make you feel more comfortable or less comfortable about Wells Fargo?

I have no strong feelings about Wells Fargo either way. Like I think I just don't think it'll get the distribution of the scale like i think they will struggle with the engineering problem of it we have um as a proof point in australia the um the stock exchange went through its own private blockchain uh project and then ended up just writing off the entire thing so i think wells fargo's would get written off well before it ever actually reaches retail consumption. You don't think these firms will wisen up and bring in like a space and time or a maple to help them?

Correct. I don't think so. Like you're talking about the innovator's dilemma at a firm that is not set up to incubate new technology. Like it's like saying that, you know, General Motors was going to successfully throw a bunch of balance sheet at producing its own electric car and take out Tesla. There is marketing or decision making. The average age of Wells Fargo board is probably above 65 at this stage. They don't even believe blockchain's a thing, let alone producing their own. I think it's also important to note that it's not the blockchain itself.

It's also what's built on top of it, right? We have to talk about, well, what are the use cases? You know, anybody can fork Ethereum and have their own blockchain tomorrow, right? So is there anything actually built on it? Is anybody using it, right? I think, you know, and I know Scott and I agree on this. Like, Scott, you know, what is the number one killer use case of crypto right now? Stable coins. Stable coins. No, it's stable coins. Right. And stable coins built on Pepe, built on ETH. But yes, that's a global

thing. Right. That's the fact that anywhere, anybody anywhere in the world has access to a U.S. dollar equivalent. Right. In places that have incredibly high inflation. Right. And can transact and can transfer that money incredibly inexpensive inflation, right, and can transact and can transfer that money incredibly inexpensively and incredibly fast, right, that actually solves a real world use case. Having a private blockchain operated by a major bank doesn't solve for that. I'm sure they can be like, you know what, let's charge, you know, 7% foreign transaction fee because you're sending to a non-US wallet. And by the way, let's send that money, let's send that transaction to every single regulatory body anywhere in the world, right?

Let's broadcast that transaction. I don't think that that's what, you know, folks that are actually using crypto today, and there are some, there's not a lot. I think there's a lot, but that's not what those people are using it for. They're using it to, you know, if you live in Venezuela, in any country that suffers from high inflation, or if you're a foreign domestic worker in a different country, right, and you have to go to Western Union and spend three or 4% of the material amount of money to send money home. And like that doesn't solve that. These won't be speculation chains, speculators chains. These will be Venmo wire transfer chains. I'm going to Venmo Josh in Venezuela through this chain, which I don't know if that sounds, that doesn't sound fun, but that might be helpful. I hate to say this, but you know what really solves that? Stablecoins might be the killer use case, but stablecoins on Tron.

Yeah, $40 billion of the stablecoins deployed on Tron. I'm shocked. Shocked. I know. I mean, I think it's like the most underreported hidden under the carpet stat that we have in crypto is that the majority of stablecoins are sent fast and cheap on Tron. Yeah. Justin's just out in the islands, just the mayor of saranum island just chilling raking it in i think he actually got the ambassadorship and didn't announce it is what

i heard but yeah but i mean that's crazy funny i was at an event and i met a guy who was building it was like a stablecoin bridge between tron and i'd never heard of it but he showed me the volume that it's done and to your guy's point it incredible. Like it was eye-popping volume in stablecoin bridging there. It's crazy. If you look at most centralized exchanges now, certainly offshore ones, because anything not in the United States is offshore by definition, because we run the world. But if you look, the now default option for sending a stable coin is TRX. You have to actually toggle generally off of TRX to ETH to choose that chain because ETH fees are relatively high. So I'm assuming the exchanges want to push you towards the cheaper one. But more interestingly,

and Josh, we've discussed this before, but what you just described that we agree upon about stable coins, that was supposed to be the thing that Bitcoin fixed. Right. Was a solve for hyperinflation, low fees, remittances in El Salvador, all of these things. And now you can't even send Bitcoin for less than 40 bucks a transaction because of ordinals and BRC 20. And by the way, apparently now a sailor likes ordinals. I don't know if you saw that. Is he going to sell all his Bitcoin and buy ordinals and brc20 and by the way apparently now a sailor likes ordinals i don't know if you saw that is he gonna sell all his bitcoin and buy ordinals with it i don't know man but like so are we back to like really like our only major use case is cheap and fast stable coins and therefore the united states government should just give us some stable coin regulation and something i'd like you to

speak about is I know you guys had that booth with Shrapnel at ConsenSys and I think gaming is a really That booth was sweet. That was the one across from the tie. I played that game. That was awesome. We just did that, Josh, just to fuck up your booth. I know. You totally did. My booth

was so hidden in the corner and then you guys were all over the place. The Coin Desk folks told us we're across the street from the Ties. We said, all right, we're building a famous meme where it's like people are at a party and there's a guy in the corners like they don't know about hyperinflation in Venezuela. At the Ties booth. The only thing they knew about my date on Tron. But seriously, go ahead. Talk about it because it's a legitimate question. Okay.

So we've had years now of like shit games on chain that no one wants to play that were pure speculation. You know, literally dookie games. And then meanwhile, there's been like four or five, six major games that have been incubated with a lot of VC money. They're actually decent. Surprisingly good. Surprisingly fun games, more than just a Call of Duty knockoff, actually a decent game to play.

Got a lot of data. They got a lot of users that are about to onboard. Do I think these games are going to eclipse like Activision Blizzard or eclipse Riot or eclipse Epic? I don't know. But they don't need to. They don't need to. And I think they're going to get a massive market of gamers

like the 24 year olds that were trading pepe and just made two million bucks are now going to buy 100 grand worth of weapons on shrapnel on chain on some avalanche subnet i guess so so like you you you take that and then you see this world where like think about like web two games like roblox that have their own in-game market they They're doing like billions on some Stripe payments backbone or something. What if that backbone of a video game was one of these US banks or

MasterCards or Wells Fargo's future chains? I don't know. Maybe that's good for the US. You guys see the... Stripes come into the space doing their own on-ramp. Chances are it'll probably still be uh stripe crypto so what we did at consensus space and time built this crazy ass booth with shrapnel demoed the game showed everyone how epic it is space

and time's managing all their data and just showing all these crazy visualizations of what's happening on chain versus in game players like buying nfts and that converting to a weapon we're just trying to show like hey there's data that's coming from these games about buying nfts and that converting to a weapon we're just trying to show like hey there's data that's coming from these games about like nft transfers of like 24 year old pepe traders buying shrapnel weapons afterwards and like there's activity it's happening crypto's not dead web 3 gaming's not dead it's it's actually about to launch we're about to see over the next year like four or five major triple a games that raised like 100 million dollars of bc finally launching and garnering like this massive cult following of 24 year olds that love to shoot shit are either of them called alluvium or star atlas because i own a whole lot of those tokens dead drop all the fun ones so you think that we will legitimately see triple a game i mean i did

mess with shrapnel it was really cool so you think that uh these are going to be legit games that people maybe even outside of crypto will play and this will be sort of the bridge because i've had my doubts outside of crypto no i'm saying do you think it can bring in the call of duty people and the uh fortnight people they're good enough games for that. I think so. Yeah. Cool. Now, do you think the games kind of default to the like lower fidelity ones, like more like 2D style games?

It's just going to be like AAA on the console or on the computer versus like mobile games, right? That's the future. It's a complete bifurcation. It's either mobile or it's just fully like full first-person shooter, Unreal Engine. But, Scott, yes, these games rock. Yes, these games are going to onboard like maybe the best ones, a couple million users.

It's a lot. But the market, the transaction fees that that brings to whatever chain they run on are still nothing compared to what's been shown in Geneva on his Tron bridge. Yeah, I mean, that's true. If they do it on fast and cheap, it doesn't bring that much. But maybe, I mean, I guess the silver lining is that they have to find the rest of the ecosystem and start to care and it drives them to other places i mean which anecdotally like people can say whatever they want but doge has probably brought more people to bitcoin than bitcoin activities have brought people to bitcoin a lot of elon tweets that that probably made the biggest difference yeah which uh one way or another but it's funny i don't know

if you guys saw like it wasn't that long ago, maybe last month. I'm trying to find the article. Yeah. Hundreds of Roblox users may be engaged in money laundering court filing claims. So Roblox has actually been aggressively used for money laundering, but I don't hear Brad Sherman out on a rant against Roblox. Yeah. You've got like dangerous organizations playing Roblox games to like cash out.

Oh, so that's great. So now like gaming and crypto is going to bring us a whole other, you know, it's going to become the new Silk Road. Awesome. But Sid, I mean, you guys are building quite a few things that are going to bridge this to the real world, right? Anyone who didn't listen, Sid and I did a podcast, maybe within the last three weeks and went deeply into this. But you obviously have some serious optimism

about what's being built here and that we can sort of bridge it to the mainstream, regulation aside, obviously. Yeah, absolutely. We're seeing, I mean, to the point Josh raised before, stablecoins are an example of a real world asset where it's effectively a tokenized bank deposit or a tokenized T-bill holding. And what we've built and what we're launching in the next week is this cash management product, which is, you know, we lend to an SPV, the SPV buys T-bills, pledges them as collateral for the loan. So it's kind of like a tokenized repo. But when you look at how repos and these kind of instruments are limited in traditional finance, they can only, you know, they only settle at the end of the day. They only trade during US banking hours. So when you put this thing on a blockchain, you free up after hours liquidity and settlement in minutes. So it's like, you know,

it's a nascent small space at the moment, you know, that type of products, tokenized T-bills, tokenized repos. But I think over time, that's going to expand significantly. What organization wouldn't want the ability to get, you know, overnight interest rates after hours or on weekends and banking holidays. Do you think that that could actually see interest from the big banks and these companies? And I mean, Scott, you talked about them building, obviously, their own blockchain. So something like this would be extremely interesting. And that could actually help us in the sort of fight here against regulators and legislators. legislators i mean isn't that that would be the way to backdoor this right as if the institutions actually really start adopting it and then they're in bed with the legislators anyways i hope it backdoors it and i think everyone has this optimistic maybe maybe unnecessary

optimistic feeling that like a new regime in the u.S. in a year and a half flips things around, life goes back to normal. Meanwhile, these major financial institutions also release their public chains and maybe business is booming. I think, you know, nothing's going to drive action like the profit motive, right? And so, you know, we talked about the Tether report before, but if I'm a financial institution, nothing is going to be more enticing than seeing that some other company made a billion dollars and a quarter of profit just from holding you know holding cash and issuing a token against that that they didn't have to pay interest on i mean that's the banking business model like we actually saw a lot of banks um suffer because they were paying too

much out on deposits and like silicon valley bank you know then get put got pushed into uh longer dated bonds to try and earn interest because they had to pay out this amount you know like this whopping interest rate to keep depositors there um but if you're running a stablecoin business it's the inverse of that you pay nothing to your depositors right it's like it's it's a negative working capital business right so this actually makes a lot of sense right it's and it's to anyone who's been here you can scream from the top of the mountaintop about all of these incredible use cases and reasons that we should be tokenizing or financializing uh these people's assets but it

just seems like the regulators and legislators at least this this uh particular regime they just don't want to hear it which to me just means they're taking money from the banks let's be honest right i mean yeah but it's interesting like uh being at a couple of conferences these past two weeks what i heard was how keen you know banks are now they feel like they've got the green light in regions like hong kong for example to come and start offering these types of services so it's just um you just see regulatory competition between jurisdictions where if a bank can offer you know if a bank in hong kong can offer services to crypto companies and start issuing its own stablecoin, quickly it's going to induce other banks in other jurisdictions to lobby for those privileges.

Yeah, that makes sense. Stablecoins. It always comes back to stablecoins. I do think that we're going to get stablecoin regulation or legislation. Josh, am I crazy? I think that's the low-hanging fruit and that's what we might get at some point. We did see Hester Pierce last week in London make a comment that she liked the MECA regulation that the EU had passed and was interested in looking at similar regulation in the US. So I think it's definitely a conversation.

You know, it's definitely a subjective conversation. I think if Gensler gets his way, he'll just unilaterally pass it. Yeah, I'm sure. But it doesn't seem like anyone's stopping Gensler right now. Did you see the whole the Democrat uh meeting notes for for the the hearing uh today yeah they literally every democrat with a document that said here's what you're allowed to say about crypto and make sure that you confirm that gary gensler has power to regulate all of it that's literally like released meeting notes for anybody who didn't see this

before a meeting they were like i don't care what you think. This is what you're going to say. But interestingly, I want to say, I talked to Pascal from Ledger, the CEO of Ledger, yesterday for a podcast. It's going to come out next week. And he said that he's in Washington right now. I was like, are you in Paris right now? He's like, no, I'm in Washington. And I was like, how's that going?

He was like, it's actually amazing. He said behind closed doors that a lot of these legislators are actually willing to listen. They're kind of well-educated on it. And then it just seems like you can only say what you can say publicly, but that they're actually listening privately.

So as another silver lining, he gave me actually quite a bit of hope that there's people in government who get this and who want to see it move forward now the caveat is he might have just been meeting with like warren davidson and like the three other guys who we already know love it but he had a lot of encouraging huh that's at least encouraging i found it very surprising josh you'll like this something else just completely pivoting he said that um they've now started indexing you know we've obviously speaking of correlations and you're a data guy we've seen a decreasing correlation of bitcoin

to the nasdaq obviously in an increased correlation with gold he said when you bundle the price of bitcoin with the sales of custody wallets of their wallets like during svb ftx things like that that it's almost like a hundred percent correlated to gold when you combine sales of self-custody devices and the price of bitcoin which i found incredibly insightful and interesting and i just now you guys don't need to watch the podcast just guys just ignore it when it comes out next week but i i found that extremely extremely uh compelling because we do have this sort of prevailing narrative still i think that bitcoin is just a risk off asset and that it's going to do whatever the nasdaq does but i don't know if that's good news. Bitcoin's correlation with gold is actually decreasing again.

Like this week? Give me some time frame. What offsets it? Does the correlation with the NASDAQ increase when that happens? I see you've got your screen here. Ready? There we go. So, I mean, 30, 60, 90, you know, one year, three year.

I mean, correlation is very low. That's not what I had read, man. How would there even be enough data on self-custody wallets to ever use? Oh, that's NASDAQ. What about gold? This is NASDAQ. That's NASDAQ. Yeah, that's not even correlated.

That's what I like. Give me that. Well, the S&P and NASDAQ over the last year have been significantly more correlated than gold. I mean, 0.5 on the NASDAQ, gold is 0.167. That's really low too though. It's way lower. Gold's correlation over every time interval is lower at this point

than the NASDAQ's at least. Do you think that, I mean, going by what Pascal said, and I can't obviously like vet that data, but I mean, do you think that we are seeing a real move towards self-custody?

I'm assuming that's just crypto natives. I think if the IRS gets in front of the line as a creditor, every single crypto native person is going to be, I am not putting my money anywhere unless it's on my own hardware wallet. Go ahead, Scott. I see the opposite happening.

Josh, like what you said logically makes sense. It's what you think would happen. Like that's what should happen, right? Like I should be going and buying a hardware wallet and moving everything. But like I think the opposite's occurring as better user experiences more options for for custodial more like like fidelity allowing me to invest my 401k in bitcoin now and like whole bitcoin in my fidelity account i just think the retail just goes like simply whatever path is simplest i didn't say reach out like i think retail just does that is the laziest

shit ever and buying a hardware wallet and configuring it it's like i wasn't i wasn't a person's willing to do i see a correlation the opposite direction no no i wasn't referring to retail i was saying if you had like if you are a creditor to to ftx and you are owed money because you had capital on ftx and all of a sudden the irs comes in and takes that money in front of you you're gonna be like are you fucking kidding me i'm not keeping my money on an exchange again right what does that have to do with the correlation between gold and self-custody nothing this is a different conversation we've moved on we've moved on scott keep up how do you do it i just don't see a correlation i'm coming back i mean i think

scott like anecdotally what you're saying is absolutely true especially new i think you have to sort of bifurcate the extreme crypto native believers and anyone else who's coming in for all these other use cases if you're coming in through gaming you're coming in through nft you're going for ux ui right it takes a long time for people to get the self-custody memo. But I do think that as self-custody does become easier, man, we abstract away the keys and all those things. And as you increasingly are able to interact from your own custodial wallet,

like if you can do everything that you can do on a centralized exchange in defy with like a robust order book and just sign it on your device that could i think get us much more further in that direction right now it's just not there you got it so so the answer is this it's not it's not going to be hardware wallets it's going to be venmo like apps that let you self-custody that you log in with like your fucking facebook login and self-custody on a Venmo-like app, but it will certainly not be hardware wallets. You just said it correctly. I disagree.

I think you're going to end up with a quasi hybrid of it. Already, we're using at Maple, we just started using Credo for this new pool we launched. We use an MPC, but there's a key held you know securely on my phone

so it's like a hybrid it's you know i'm not logging in anywhere with my email that's too unsecure but i think you'll see this like 2fa on people's phones and um you know with like the solana the saga mobile as well i think you'll increasingly see hardware devices blended in to like things that we carry every day whether it's your apple watch or your iphone or something like that doesn't necessarily make you have to wait out and do the pin on a ledger that's the bit that ledger's making with stacks i mean ledger i don't know who's been stacks but it comes out in june but they're literally stackable so you can have your wallet that you carry around to show off your nfts or a thousand bucks here but then

your real self-custody and they stack up and have this sort of incredible rounded screen. So, I mean, they're trying to make the iPod for self-custody, right? So maybe there does become a device, but I think Scott to your point, or Sid to your point, more likely it becomes something that's integrated into the iPhone, right? But Sid, I want to actually, so honestly, the three booths that I spent the

most time at and consensus were playing that game shrapnel. So your booth, I didn't even know that. I mean, I was just hanging out with Josh the entire time. So I'd be basically like was paying rent at the tie and then credos booths because like I did a full walkthrough with their team and met them and then just started hanging out and it was cool. So, Sid, can you talk a bit more about that technology and how that actually is changing things? Because I thought that was an incredibly cool, novel solution for self-custody. Yeah, Credo is great. So it's a self-custody MPC solution that is enterprise-grade. So we use it to secure a new pool that we set up.

So for cash management pool, it's going to be secured by Credo MPC. You can manage it on your mobile. So if you want to approve a transfer or whitelist an address, you can configure it to do a two of three, four of seven type approval. And every time one of those transactions goes through, the people who need to sign and approve it will get a notification on their mobile to do so. So for us, different from a Gnosis, for example,

where when I'm using a Gnosis multi-sig, I'll connect a hardware device and have to use the pin on the hardware device. This is much easier just being able to use my phone to approve it. So I think it's great technology that Credo's put together. And we see a lot more clients now using this too. So whether they're lending or depositing into a maple pool or borrowers who are drawing down loans um i think you know i think this self-cust and self-custody and npc technology is the future for institutional adoption of crypto right so do we think that your everyday user who comes in assuming these products get enough visibility that that process you just described or the evolution of it becomes simple enough that like

i just do that when i want to interact with defy buy meme coins uh buy nfts all this stuff because i mean that that could be the answer right there it it's pretty yeah because the the user experience is converging to what you do when you want to log into you know github or your google account you have like an authenticator app where you input a pin to open it up and then you punch in a bunch of numbers that qualify as 2FA authentication. So, you know, and you're always carrying around your phone with you. So it's just converged the user experience of using crypto with the user experience of using any other number of apps, including Google,

which now powers most of our lives these days. So I think it's a big step up in UX. And I think as well, the convention, everybody says, well, my grandma's not going to do this. But what happens instead is that you get used to it and then you get older and that becomes the new standard. And then the kids who are younger than you grow up with an even different standard think of all the things you do with your mobile that your grandma wasn't used to doing right like inputting your pin every time you want to open it up and call someone um these all just become standard like people's practices and habits adapt since basically saying he's becoming a grandma that's what i'm hearing my grandma bought coke for a nickel so rest rest in peace grandma great yeah yes no no not no not the

drink come on oh shit i mean the thing is right is like these that there's this this web like 2.5 and maybe this is maybe if you want to find correlations, maybe the correlation is like, okay, the US is building its own blockchains, plural, its own web three. And maybe that that web three for for retail and institutions, like you said, Sid is two factor off on chain, where there's so much abstraction away from like a single private key or an mpc like layers and layers of abstraction stacks of like okay there's the chain and there's someone then there's like an l2 and then there's an l3 and then there's an app and then there's an mpc wallet and then there's a bank and then there's your like 2fa with like your google email and like your your

oauth app and uh at that point like the blockchain is eight layers down anyways and so it's just a whole new it's just a new web three it's not what we're used to it's not you're not touching eth and buying pepe with your metamask wallet it's just something totally it's a it's basically venmo yeah i was on uh spaces with sandeep the other day and i've been on there twice from polygon it was like the zk syncs and the Optimistic Sync roll-up, NFT, SEO, PPIs. And I was like, dude, if we're saying any of this stuff a year from now, literally just kill me, A.

But B, we've completely failed. But to your point, it has to be abstracted away. It has to be. But the ZK EVM is like EVM equivalent. We're like, oh, man. Yeah, but who wants to hear that? Do you think that that's helping our cause? Can't you just say like,

we're going to make this stuff faster and cheaper and call it a day? They're targeting a different audience, right? They're targeting like the Scott Dykstra's who are like, ooh, tell me about that Z. They're not targeting the shrapnel player who's like buying weapons, NFTs on shrapnel. They're like, bro, I don't give a fuck.

Just like, give me my 2FA wallet. I'm going to own my own weapons. Apparently I'm going to play that game. Sorry. Go ahead, Josh. No, I was going to say, look, I mean, I agree with, with everyone. Like you're not going to have mainstream crypto adoption with the current user experience of crypto and how you actually interact with it, right? I think there are financial products that can operate with the current UX. Like I actually think the user experience of Uniswap and other DEXs is pretty great. Like it's very easy to get capital on

and start interacting with a DeFi application. I actually think DeFi, at least DEX is getting better. But I think for some of these broader interaction types, like remittances or sending money back and forth in a Venmo style or interacting with a game, I think a lot of that is also going to come down to like what Reddit did, right? Reddit built their own wallet for Reddit, right?

And I think you will have some level of native wallets to predict your applications. I think the challenge that we have as an industry or not as an industry or not as an industry, obviously it's not, it's not on us, but I think that a layer one has is figuring out like, okay, I am Ethereum, I am Polygon, I'm Avalanche, I'm any of these other blockchains. How do I get a user in the door and then retain them and get them to use other things on my chain? Because if it's so abstracted away like that, to your point earlier, I think Scott is how does the value actually accrue to the token, right? And I'm sure publicly

what they'd say, if Gensler was asking is that we don't care about the token price. And, you know, we just care about the utility of the blockchain. But I think, you know, if you're in this layer one race, or I don't know if it's a race or whatever you want to call it, right? You want people not just using you, like, you don't just want shrapnel on Avalanche, you want every transaction to occur on Avalanche. And you want people to be able to bridge money, two different games and different activities within the chain, right? And so it's kind of these competing priorities, where on one hand, I think the layer ones want all that activity to occur on themselves. But I think the consumer just wants an easy experience, right? What a problem is that we see is like outside of ETH, outside of Bitcoin, all the other, call them all L1s. I don't know if I agree with

that term, but other L1s, they actually lose the most, Josh, in that situation where you get these gamers in who buy assets on an avalanche subnet or on one chain and bridge the other and you know the bridges win whoever's taking real transaction fees wins the l1s lose like 0.0001 like cent of gas when it all adds up after the year they made like nine9 million the whole year or something for a chain with a market cap of, let's say, $10 million, hypothetically. We'll make like $9 million in transaction fees or gas fees after all of this. The bridges win. Jump wins, the layer zeros, whoever's bridging the assets because they just take crazy transaction fees.

The L1s, they just- just well some of the l1s retail bag some of the l1s own their own bridges too so keep that in mind um but but that doesn't necessarily go to the token holders that goes the the legal entity that owns it but i do think like there are some tokens that are trying to solve for that like avalanche to your point earlier like with subnets right each subnet needs you know validators right and the validators need to purchase a vox token to actually validate on the subnet and if you have a large number of things you know a large number of subnets that have launched the theory or the idea is that that's going to take a large number of tokens out of circulation right so i think some guys are trying to think about these issues right but the

challenge is yes is the token actually worth anything for any of this stuff is obviously. I think the bridges are an interesting one because value, you know, it's like you have a highway. Somebody can't replicate the highway and dump it in the exact same spot. Whereas with bridges between blockchains, you can actually have an infinite number

or maybe not an infinite number, but you can have multiple bridges, right? So does it just become a commoditized product where they get competed down on price like it's hard to see a lot of these business models not just getting replicated to the point where they're forced to compete you know compete in a race to the bottom on price that's why i tend to think that the value will accrue at the application layer rather than this you know rather than fat protocol thesis i agree at the application layer i mean another conversation i think i was having with anatoly from solana which i think comes out

this sunday but he kind of we were talking about whether these things even needed tokens josh right you want the value to accrue to the token but do you even need one and he was like well you know like opens he listed off like five companies open c and such he's like none of these have tokens and they're the winners in crypto right now like the pigs and shovels that don't even have them like that actually like scott you said like you're just you're they're making money like actual you're you're describing space and time now like space and time is a pig and shovel it's a massive database for all the blockchain that other protocols run on like we We intend to drop a

space and time token, but we need regulatory clarity. In the meantime, we have advisors or folks in the industry saying, do you need a token? You take transactions. With the equivalent of subscription model transaction fees, you have revenue, Scott. Do you really need a token? I want to drop a token because I want to build a community because it's fun. That's why we're in Web3. There needs to be a space and time token. The question is, how, when do I got to, do I need to move to Aruba to make that happen? Do I need to go become the mayor of Geneva just to drop a token? Right now, I see no regulatory clarity. I live in Southern Cal, I live in LA. I'm not going to go sit in front of the IRS, sit in front of the

SEC in front of Gensler and try to beg him to let me drop a token. We're picks and shovels. We have great revenue. Our business is growing. Advisors are saying, Scott, do you need to drop a token? I want to. Yeah, but right. So, I mean, I totally agree with that and get that want and need are two very different things. But I guess the point here is that tokens are for fun or therefore, let's be honest, instant liquidity. Right. It's just a hell of a lot easier for these projects to get a VC. If they say you'll have 10 percent of your investment back three months, three weeks from now. Right. I also think there's a world in which in which these tokens can accrue value to the token holders. Like Uniswap has a large number of fees right now.

Uniswap tokens aren't accruing. Wow. Look at that, that, that, uh, that comment, Sid, your mom. I didn't do that. My producer liked that so much that, uh, Sid come back anytime you're welcome. Yeah. Um, no, my, my point is like Uniswap accrues a ton of fees, right? I mean, I can, I can pull the data up if we want, but hundreds of millions of dollars, if not higher in fees, right? All those fees are currently going to LPs, right? Theoretically, Uniswap could turn on that tap and accrue fees to token holders.

But the problem is that can't happen within the confines of current regulation, right? Because immediately that becomes a security. So there's actually a world in which, like in the case of Uniswap, the Uniswap token could be worth something, right? It can be worth a significant amount of money. There's a significant transactional volume

that occurs on Uniswap, right? But today it's not just because, you know, they can't, you know, they can't turn that tap on because, you know, immediately the SEC would go after them. While we're doing comments, Scott Casino says, why not add Bitcoin or satoshi's to your game instead of making your own shit coin why scott oh to me not to specifically but there's clear

answers to this by the way but this is a clouds are resident bitcoin max i think it's a fair question i mean to be fair we are i mean like there's look there are new projects coming out that do like shit like restaking or or something where like space and time doesn't in the short term until there is regulatory clarity until we are ready to drop a token and put it in a maple pool and whatever else like there are ways that we can leverage bitcoin and eat and and have some about some public chain value accrual that we can leverage Bitcoin and ETH and have some public chain value accrual that retail can participate. We can build a community while we figure out our token plans. That's fair. Yeah. But I mean, yeah, tokens, I think, are useful. We're just in this trough of the bear markets. Everybody's saying that they're not. But then as soon as the market picks up again,

everybody's saying, why don't you have a token? But if you look at what it can do, it can subsidize customer acquisition costs, can be used for M&A activity. Polygon bought a company using their token. We did similar, actually, when we moved on to Solana. And then cap you know, cap table management for employees. Like if you're an employee at DCG

or one of these other large companies, if you have an exit, then you have to sell your equity at like a 50% discount. Tokens, you don't have to do that. So it's just more efficient. And that's purely just because of an inefficiency with illiquidity in private cap tables. So tokens unlock that. So they do solve problems. It's just to Josh's point, there's a ton of regulatory opaqueness around how they should be treated and what are the consequences of having one yeah i think maybe the inherent challenge there is that in the few cases where

people use them properly you're 100 right but then 99 of people just take it as a excuse to print some money and uh yeah and uh yeah you know and make a meme uh overnight and move on guys i can't believe it's 10 30 that's an hour that was was the most fun, entertaining panel. I feel like we should just do this all the time and Josh and maybe invite John from... Yeah, we need to bring John on. I'm bringing John on to my podcast next week.

Skid Sid has been a fantastic guest in the past. To talk shit about the markets, that will be a very interesting podcast. There's going to be nothing positive discussed for very interesting. There's going to be nothing positive discussed for an hour. It's going to be great.

We were, for Sid and Scott, it was me, Josh and John from Blockworks. He's editor-in-chief of Blockworks, right? And we were sitting, having some drinks at Consensus and we came up with a podcast or show idea called Talking Shit and then Coins in parentheses.

And that was going to be the name of our show. I feel like you guys could talk shit coins with us. It can be bigger than three men. I love it. Guys, listen, everybody, please follow all three of these guys. They're awesome. Scott, it was nice to meet you. I'm glad it was the first time. You're literally welcome back

anytime. We accept people who just want to print coins for fun here. We don't judge. Scott, it's been an absolute pleasure. Awesome. Josh, as always, everybody else, I'll be back tomorrow. It's Friday,

so we rant about news on Friday. Should be a good time. I know Josh had to go. Later, guys. Everybody, see you tomorrow. Peace, guys. Thank you.