Unchained - Bits + Bips: Could a Base Token Be Coinbase's Key to a Super App? - Ep. 905

Episode Date: September 17, 2025

This week on Bits + Bips, hosts Steve Ehrlich and Ram Ahluwalia speak with Blockchain.com’s Nic Cary and Franklin Templeton’s Max Gokhman. We talk about how the potential Base token would alter the L2 landscape, and who should capture the value if Coinbase becomes the backbone for DeFi. Also, whether Web2 and TradFi giants will buy their way onchain, why privacy infrastructure is overdue, and how TON’s superapp strategy could pressure social platforms to follow suit.  Plus: how Franklin Templeton is valuing L2s and other tokens, why the FOMC’s decision matters for crypto risk, and how tariff talk could spill into digital assets.  Thank you to our sponsor, Xapo! Hosts: Steve Ehrlich, Executive Editor at Unchained Ram Ahluwalia, CFA, CEO and Founder of Lumida Guests: Nic Cary, Co-Founder and Vice Chairman at Blockchain.com Max Gokhman, Deputy Chief Investment Officer for Franklin Templeton Investment Solutions Links: Unchained:  Base Will Likely Have a Token: Why Now, Who Wins, and How Big It Gets Base Starts to Explore a Native Token Timestamps: 🎬 0:00 Intro 🪙 5:13 The reason for Coinbase’s flip flop on a Base token 🌉 18:33 Should Blockchain.com launch its own L2? 🏗️ 22:05 Is Coinbase becoming the infrastructure layer for DeFi? 📊 25:13 How $1.5 trillion Franklin Templeton builds valuation frameworks for L2s and tokens 📱 30:33 Nic’s case for TON and its superapp strategy 🏦 34:00 Whether Web2 and TradFi giants will buy their way onchain 🕵️ 40:21 Why privacy infrastructure is overdue for crypto but never seems to work 📉 51:03 Surprising predictions regarding the next Fed rate cut 🇺🇸 57:45 Why Trump has a tariff backup plan, and what it means for crypto Learn more about your ad choices. Visit megaphone.fm/adchoices

I think from the perspective of base specifically, if it doesn't offer governance, if it doesn't really give you anything, then what's the point to owning the token? So I think they're going to need to answer a bad question. But Coinbase is likely to be a lot less careful than they were before in branching out and looking at other ways to expand their footprint given the change in the administration. And, you know, Brian Armstrong spent a lot of effort on cultivating that. I think now is the time he's going to try to reap the benefits of what you. So I think people around the dinner table are feeling paying around inflation. But the amount of apocalyptic predictions that were made in the spring by leading economists about how all this would cripple the American economy and we would be in, you know,

death rows of supply chain dislocations and, you know, there'd be urban and riots. It just didn't come to fruition. Welcome to another episode of Bits and Bips, exploring how crypto and macro collides, one basis point at a time. A lot to discuss today. We're going to spend quite a bit time talking about the new base token. Frankly, I'm not sure we've ever speculated so much about something that we know so little about, but that is the world that we live in.

And that's not going to keep us from speculating wildly. So let's go ahead. One early bitcoiner sold 30,000 BTC too soon, missing out on over a billion dollars. Don't want to make the same mistake? With Zopo Bank, eligible members can get instant cash without selling. their Bitcoin. Check out Zappobank.com slash Unchained for more. I am your host, Steve Erlich, high scribe of the Unchained Kingdom. And I am here with one of our regular co-hosts, Ram Al-Wali, the Maester Wealth leader of Lumida. Welcome, Ron. Hey, how's it going? And we have two special

guests today. Again, first we have Nick Carey, the unshackled lord of blockchains.com. So welcome, Nick. Thank you. We always enjoy when people get to hear about their game of certain nicknames for the first time. Why don't you just give us a quick overview of blockchain.com sitting around forever, but I want to just introduce yourself to the audience for a little bit. Yeah, thank you, Stephen. I'll try and be brief. So my name is Nick Carey, co-founded by Sherman of Blockchene.com.

We founded Blockchain.com. We like to say on October 15th, 2011, when the website was registered back then, there were only a few nerds on the internet that cared about any of this stuff, started off as the first place you could go to to look at the Bitcoin blockchain and built a block explorer. It kind of created a lot of the naming and the visual architecture for these things. Went on to build one of the first wallet services in Bitcoin, which became very popular with the early vintages of adopters. And we pioneered client-side security architecture that was basically non-custodial, meaning you could be your own bank, you could hold in your pocket the ability to send and receive directly on chain.

And that's been really in the ethos of the business ever since. We've grown a lot. The company now has offices all over the world in international financial services firm. They're still focused with those retail routes, but we also have an institutional business that's been growing very, very quickly this year. We now basically focus on doing custody, asset management. We have a whole digital asset treasury solutions team. It's very focused right now on these very exciting opportunity in the market and quite a bit more. And so very proud to be here today and happy to talk with all of you about what's happening in the markets.

I remember your walls from way, way, way back in the day. And I always used to, you guys always were one of the first that actually tracked the Bitcoin hash rate for charts. So whenever I was writing stories, I would always go to blockchain.com. You guys always had the up-to-date on that. Yeah, we still have those charts. And it's always a good one to look at. The hash rate seems to usually front-run price activity and basically adoption in the market, also really showing that the miners are being rewarded for their important work.

And so, yeah, we continue to offer all those things for our journalist friends in the industry. Gotcha. And Max, actually, let me get you your game of terms of the game. You are the first night of Franklin Teppleton investments. So you need to get some business cards. But before that, why don't you quickly introduce yourself and share it what you do with Franklin Teppleton? Yeah. Steve, and I don't know, I kind of thought Paladin, maybe, because I, you know, I joined Franklin in part to help spread the word about digital assets, and it was great to come from a digital

asset fund that I founded to actually a large player that is really leading in the space. And currently, Deputy Chief Investment Officer of our Solutions Group, we have about $90 billion under management, in everything from large, very bespoke mandates or sovereign wealth funds to target date solutions for, you know, ultimately individual investors. A lot of it is, in fact, almost all of it right now isn't TrotFi, but I think that's going to start changing and we're really working on innovating within the space along with the rest of our colleagues here at Franklin. Okay.

Great. So I think we need to start with the news everyone's talking about. Base is kind of sort of possibly thinking about launching a token, but they won't share any details. This is actually kind of funny because I've been asking Coinbase for years and years and years, and during my time at Forbes and now at Unchained, when are you going to launch a token? We don't see the need for a token. We're able to bootstrap growth without it. Or there was always the question, especially under the last administration,

would they see it as a security? That's not an issue so much anymore. And then what does it mean for holders of the coin, of Coinbase's stock? Does it dilute? We can still talk about all those questions, but at least now they have said that they are going to be releasing a token. Rom, I'm glad you had you joined.

What are some of your first thoughts? Yeah, well, let's just introduce the concepts real quick. So Base is an Ethereum layer two that uses what's called an optimist, what's called an optimistic roll-up technology. It was developed by Coinbase. It has the aspiration to be increasingly decentralized. I really think it was a very notable innovation. I remember writing about this in 2023. It allows Coinbase to offer services and have protocol like offerings and participate in the smart contract ecosystem. So that's one. The two is, you know, Coinbase generates fee revenue from usage of base, the sequencer fee revenue, also accrues in part to Coinbase.

One of the questions in the audience was, why are these not the same entity? Well, other people can get fee revenue too, presumably from owning the base token once the token launches. And it could encourage decentralization. That's my hypothesis. That's one way to try to answer that. It's a really clever idea from Coinbase's this point of view. I think if your Coinbase management, you know, all season is here. Bitcoin dominance is going down, right?

Ethereum is outrunning every digital asset or most digital assets, maybe except for like hyperliquid, let's say. It's outrunning top three tokens since the April bottom. So you're supposed to IPO now. This is what you're supposed to do. So Coinbase is doing that. It'll generate, looks like a mix of one-time gain from the sale of those tokens. It'll probably hold some ongoing residual for it. I think it's also important for Coinbase because Circle, which generates a significant chunk of Coinbase's revenue through the USDC fee income, meaning a significant portion of USDC interest income issued by Circle flows to Coinbase, that economic strength.

is going to come under increasing pressure due to the Genius Act and the rise of other competitors, right? We saw Gemini go public last week, for example. So, you know, Coinbase needs to do this. It's the right move on their part. Let me just add a couple quick things. And I'll go to you, Nick and Max, and just to address a couple of questions. Someone asked, why would point shareholders agree to this? Unless someone wants to correct me, I don't think they have a say.

It's entirely up to Brian and his team. So it does not matter what the shareholders think. And how are they not the same entity? Again, it'll depend on how this is constructed, but typically these tokens, I mean, they have no right to any underlying assets. They have no right to revenue. They have no right to vote in shareholder meetings. I don't know if there's going to be some sort of utility associated with this token.

But as Rahm also mentioned, base remains. highly centralized despite I think what you said ROM as an intent to try to decentralize it over the time but as far as I know they're still they still only have one sequencer which is basically like a minor or a validator and as far as I can tell I think every major L2 only has a single sequencer so that maybe they're not that unusual there but I would be surprised if this token has any governance I'd be surprised it's not gonna have any revenue I don't believe and we'll see what comes.

We'll see what comes with it. But I think Coinbase is going to be very, very careful to avoid upsetting their shareholder base through some sort of artificial dilution. Nick, I'm really curious to get your take on this. I mean, you guys, you're in exchange also, among other things. So you kind of sort of compete with Coinbase, but as far as I can tell you, you don't have your own L2.

Like, what do you think as a sort of a friendly competitor in the space when you see this? I think you're asking and interrogating the right things around decentralization, how shareholders would be served by something like this. Look, I believe this will probably come under a large amount of scrutiny, probably both from the shareholders themselves, but maybe even the SEC. But in a lot of ways, this is also evidence that the regulatory clarity that we've seen come out over the last 12 months is inviting innovation to come back onshore in the U.S. And for whatever that's worth, I think that is probably a good thing. Now, how it actually comes to market and what these products do, you know, as far as base comes, I think we are just kind of commenting on rumor and speculation today. I know the person that leads that project is a former blockchain.com person, so it's probably going to be pretty awesome, but, you know, who knows, we'll see. Okay. And Max, from your point of view, I don't, as far as I can tell, I don't think Franklin Templeton offers any products that give exposure to L2 tokens. Correct me if I'm wrong.

Not yet. And that is something that we need to, you know, find the right regulatory framework for, but, you know, I think from the perspective of base specifically, I agree with Nick, you are asking the right questions, as did the audience in terms of what does Vizdu relative to coin. And I think part of the flip side is if it doesn't offer governance, it's not like HUNY, if it doesn't really give you anything, then what's the point to owning the token, too? So I think they're going to need to answer about a question. But Coinbase is likely to be a lot less careful than they were before in branching out and looking at other ways to expand their footprint given the change in the administration. And, you know, Brian Armstrong spent a lot of effort on cultivating that. I think now is the time he's going to try to reap the benefits of what he sowed. Max, you said not yet.

Is yet the operative were there? Should I read into that? I would say you absolutely can read into that. Let me give you my view on it. I would love to offer diversify digital asset products. I think one of the biggest issues, especially when we look at the ETF marketplace right now, as well as a lot of other digital asset products that are kind of aimed at your everyday investor interested in digital assets versus the crypto natives and the GJANS is not enough diversification,

too much focus on BTC and then just a little bit of E. And I think we need to do more, but we need to have the regulatory rails established so we can run our trains on them. So that's my, you know, asterisk the read into it answer. Well, it'll be super interesting to see how Coinbase launches this token. You know, as we all know, Coinbase petitioned the SEC for rulemaking. And the SEC did not provide that. And there was litigation.

And so the questions on fee revenue and governance turn on securities laws. All this is coming back. I don't think this time it'll have nearly as much brain damage as I had before, but those decisions will play a role. I have no issue with this being a security, by the. It's going to have free cash flow and control rights to the owner. Then it is a security, and there's nothing wrong with that. I think that's part of it, right?

Like there used to be this, and when I've worked prior to coming here on a couple defy projects, there was always like this fear like, oh my God, are we going to pass the Howie test? And like, why should that be an impediment? The reality is that we have reasonable rules. We should say, yeah, it is a security. It's giving you cash flow. That's not a bad thing, right?

Yeah, exactly. Like the reality, too. And I mean, this is one of things I often will tell folks who are. very nervous about kind of dipping their toe in is there's better governance almost by default in blockchain. So having a security on chain is better than having a security off chain. It's just we're so used to there being friction in intermediaries that we're a little afraid when it's peer to peer, but actually peer to peer done transparently is better, more efficient, cheaper. I agree. The gap is that the SEC needs a registration.

framework or an exemption, right? So when you raise money in private markets, the reg D exemption allows you to raise money from a credit investor so they're having to register with the SEC. That's an exemption. Or you have a filing if you're offering the security of the public, as when you go public and there's an S1 filing or under a Jobs Act regulation crowdfunding, there are different frameworks like reg CF and reg A. There's a gap in the regulatory framework. for this kind of token. So the SEC chair knows this. I mean,

the SEC chair was an advisor to digital asset companies when he was at Potomac. So I think that might be one hold up to the clarity that we're all looking for. Here's one thing that I'm, one idea I also had on the timing because I actually liked that Coinbase did not have a token for a while,

even though I feel like they may have just been trying to push I guess a boulder uphill. I mean, at some point, if you look at what happened to arbitram, I mean, ultimately, everyone kind of has to give a token to make things right for all the airdrop farmers. But the other big announcement that's kind of, that's happened recently when it comes to Coinbase, is their sort of revamped base app,

which is supposed to be like a whole reimagining of, like, their wallet to become almost like a, like an alley pay or like a super app. And I wonder if this is being done as a way, to try to bootstrap usage and growth of that. Because as you probably know, Nick from blockchain.com, it's hard sometimes to get people to switch wallets and hard sometimes to get people to really try something new.

So to me, it would make sense to use this as a way to incentivize people. Like you get 100-based tokens or whatever it could be worth in order to give this a try. Plus, I know, I mean, I don't want this to be an advertised, for base, but I mean, they're going to try to roll out a lot of functionality with this. So that's something I'm also trying to figure out. They're going to unlock that in the next stage of growth because overall, even still was looking at the Dune dashboard for base.

I mean, most metrics in terms of like transactions and new users and TVL and revenue, I mean, the revenue numbers, I think, are like 140 million, which for plain basis is nothing. But they're all trending upwards. So I wonder if that has something to do with the timing. But I'm curious if anyone else has ideas. Look, I mean, we've built the kind of longestanding infrastructure for non-custodial and decentralized wallets in the world. And that's been something we've kind of approached this whole market from.

I think Coinbase took the oppositional approach, which was built basically a crypto bank in the U.S. And everyone's sort of going in the opposite directions to build this super app world. So I'm not surprised by any of these developments. You know, a lot of wealth has been accrued to the protocol projects, you know, basically since 2018 forward. And so I think it's desirable to fuel, you know, L2s with a token. It makes some sense. And I think anything that helps make the pie bigger right now is really, really good. And so, you know, long story short, I'm not surprised by these developments, you know,

and I think the rising tide is rising all ships in this case. But a lot of this really does come from finally having a regulatory posture. in America that's inviting this innovation to happen here as opposed to foundations that are scattered all over the world. And for people that don't know, the pain points in centralizing control over these things over the past decade has caused catastrophic problems. And so it is really important that you get the decentralization right, that you get the incentives right, that the fees go to the network security participants, and balancing all

those things from an original position of desiring to have as much of it as you can, is difficult to do well. And so I do think these things should be approached with a high degree of just caution, especially at the earliest stages. Are you thinking about having, like, launching some sort of blockchain.com L2, or maybe if you don't want to go that far, as someone in the space that you've seen Coinbase do it, you've seen Crack and do it, you've seen Robin Hood do it. Like, what are the pros and cons in your mind?

Because I'm sure it's a huge amount of confusion to customers about what the hell these things do and why they have value. And so, you know, we focused on making a great customer experience, making it easier for people to use regular cryptos. And that's where we, you know, stay in our lanes for this stuff. We have a whole Web3 team, but the focus on that has really been around building out AI capabilities that merge with our wallet services. It's likely that those will need to have a lot of fluency with these L2 services and systems. And so to me, it is about kind of making sure you're at the end of the day doing the right thing for your customers and the product experience. And You dilute the competition out with all these thousands and thousands of alternatives.

It's like it's frustrating for CIOs. Imagine how frustrating it is for someone that doesn't have an investment officer, you know, title in their names. Yeah, I think the only thing proliferating faster than L2s are debts. So I agree. But I like Nick, your point around how the folks that start on one side of the spectrum are racing to the other and the folks on the other side racing here. So I will say this, Coinbase has a unique position with their L2 with base, and here's why.

Coinbase is one of the few institutions that straddles this bridge between the traditional finance world and the digital asset world. Often the digital asset world just interacts with itself. You'll have like an AVE or a compound provide financing to another asset or, you know, hyperliquid or JETA will interact with other protocols on chain. in a self-contained ecosystem. But Coinbase is also in the real world, and it has other capabilities. It can move money because it's licensed to move money. It inspires to be a bank. So maybe one day it can do FDIC insured lending.

They're doing lending now. Coinbase can make trust assurances by testing the balances in its omnibus wallet accounts. So Coinbase interacts with the real world. And there's this big trend around real world assets. In fact, there's a conference next week here in New York called the Real World Asset tokenization Conference. So Coinbase's base L2, I would say, is differentiated from the other L2s because they can pair the on-chain smart contracts with off-chain APIs

to perform operations in the real world. There's potential there. I would completely agree with that, Rom. I think there is a need to make the rails more efficient and you need your counterparty who's making them more efficient to be solid. And that's one thing Coinbase has done a lot of work on is building that credibility, you know, dealing with the SEC, I think out of all of the big exchanges in probably the most, you know, welcoming way, if you all, I don't know if that's the right adjective. And I do think

that institutionalization is critical because, Not only do you need the retail investors to come in, you need folks like us. You need the big institutions and the managers of those institutions to be able to interact with a market maker, with an exchange, with the provider of digital asset products before we started getting into tokenization. Yeah. I'll give you two quick examples. So one is Coinbase is a FiatRap.

How many protocols would like to benefit from a Fiat Rath? The issue is you have Bank Secrecy Act and Any Money on BIA? to say AML, KYC, how many protocols would like be able to rent those services from Coinbase, for example, to broaden their total addressable market? That's a simple use case. I don't know if Coinbase is going to go after that or not, but they are playing this role of a digital bridge. And I do think over the next one or two years, you're going to see a number of these

infrastructure picks and shovel plays emerge that try to sit at that intersection. Rom, I think that's likely to, though, that, you know, basically the big financial institutions will start to see Coinbase more as a traditional threat to them. actually than this weird crypto thing that was just sort of like slowly finding its way into the U.S. market. And so, I mean, we see the other like protocols themselves responding to this. I mean, I think Salana is very interestingly positioning itself for one, the real world asset race, but then also making many partnerships with big tradfai institutions. And so it was going to be this sort of weird battle that sort of erupts between, you know, the incumbents, I would say these new

picks and shovel startups, obviously. And then there's going to be this sort of weird battle that sort of erupts between, you know, the incumbents, I would say, the foundations and protocols themselves. And then you've got, you know, sort of punk Bitcoin original still on the far end. That's just sort of murmuring along and really found its use case in that, you know, I would say store value digital gold argument. You know, I think the jury is really out on some of this stuff because I think what's likely is it as the big traditional financial services firms in the U.S. decide that they want to develop products or partner here, you know, that question of whether

they buy or build or integrate is going to be really, really interesting. So there's not a more interesting time to watch the capital market structure sort of basically evolve in real time. And we're going to be breaking news on this stuff literally every single day, I think, for the next decade. And so it's really important. I agree. Well, I think you hit your nail on the head.

It really is about the rise of the super app. That is the grand prize. Everyone wants to control the customer and they're racing to integrate a complete product suite, crypto and equities and bank-like capabilities. So don't want to put a pin in this discussion. It's really fascinating, but we do need to take a quick break to hear from the advertisers who help make the show possible. Selling your Bitcoin just to get cash? One early Bitcoiner did and missed out on over a billion dollars. With Zapo Bank, you can access up to $1 million instantly without selling a single set.

Eligible Zappo Bank members can borrow up to 40% of their Bitcoin's value. No stress, no selling, no buying back in. Use it for what matters most. Your dream home, your child's education, a getaway or that can't miss investment. With Bitcoin-backed loans, you're in control. Set your installments and repay in Bitcoin or US dollars, your choice. Enjoy competitive rates, zero fees, flexible terms, and no penalties for early repayment. And your Bitcoin stays safe, never re-hypothecated, relent, or pooled.

It's securely held until your loan is repaid. Check them out at ZopoBank.com slash unchanged. So Max, I want to go back to something that you actually said. I want to, that sometimes like the protocols that they come to you, they come to Franklin Templeton because of your massive distribution. Obviously, it's way too early to have heard from base yet, but I'm curious from your point of view, how do you think about it and the types of tokens, the types of products that your clients would want to invest in? It's, I mean, an L2 token, and it's probably even harder to use traditional sort of metrics to figure that out.

I was looking at the story today. Have you guys seen the reorg happening with Monaro that occurred on Sunday? I think something like 18 blocks got reord, and the blockchain is still up 5% in the last like 36 hours. I mean, that makes absolutely no sense to me if any of this is rational. And that's just an example of how, like, not to pick on Monaro or anything else like this, but you guys all know, a lot of this is based on fields, based on momentum, and very little, or sometimes less to do with hardcore fundamentals and price to book, price to sales, et cetera.

So how are you going to think about not just base, but other L2s that don't have the same type of metrics as even L1s? Sure. So short answer, and then I'll dive in, is we are trying to build up investment capabilities to value L2s the same way, and all digital assets, really, the same way as we value any other investment, which isn't to say it's a one-size-f it's all. We don't have, you know, our credit model used to value equities. In fact, we don't look at growth stocks the same way as we look at value stocks. So in the same sense, we're looking at multiple models that make sense for

the right tokens. For example, you know, certain tokens, you know, certain tokens, you can use just a simple DCF type cash flow model, and that can work well. Other tokens, you want to use a network-based model. Ethereum, I think, works well with that, where you're actually looking at things like network usage metrics, you're looking at transaction volumes. And then lastly, if there is one catch-all,

it would be that statistical model, which can still use some crypto-specific factors, but then also ultimately look at kind of a last, or regression and where are there similarities in other known asset types where we can project from that. But we're also building new models as well. We actually just finished up an early draft of what we're calling our six-factor model for valuing digital assets and we broke it out actually into six or sorry five sectors,

which would be cryptocurrency, smart contracts, defy, consumer culture. It's kind of like your ape coin central and things like that. And the six factors we're looking at are quality, which would be things like total supply relative circulation and inflation, daily active use. We're looking at size, which is just the log of market cap, growth factors, which a lot of the network factors I mentioned. And then we're looking at intangibles, which I'm using air quotes a little bit because we actually can make them very tangible. but it's things like GitHub activity, Reddit activity, certain words on X from particular followers. So we are doing a lot of work with AI and NLP at Franklin as well.

It's another area that I'm actually pretty heavily involved in. And there's a lot of really cool stuff we can use here. And then lastly, yes, momentum is a factor. It has to be a factor in digital assets right now, but it is one of six. It's amazing how far along these types of frameworks have come, by the way, if you considered how people were thinking, about these kind of things, Stephen in like 2017.

You know, when when people ask me, are the institutions here, I'm like, please tune in today because you need to listen. They are really focused on these things. And, you know, if there is a long tail of digital assets, but there are gems in these things. And there's a lot of ways to find them. Yeah, Ram? Well, yeah, no, you're right.

I mean, NASDAQ announced last week they're focusing on tokenization. That was one. Blockrock, was it either this, I think it was this morning announced there, they're focused on tokenization also. So you've got the largest asset manager in the world. You've got one of the largest publicly exchanges in the world. And then you've got the leading banks trying to figure out what they're going to. The banks don't know what they're going to do yet. So they are trying to figure out what they're confused during headlights, but they'll figure out something to do there. At the very least, they'll do lending. I'll tell you one signal to look at. I was at a conference last week.

And one, I don't know it's quite counts as alpha or not, but really pay attention to banks and acquisition targets and who they're going to be buying in the next six to, say, 12, 18 months. Because whatever they want to do, they're not going to be able to build it in-house on their own for the most part, unless maybe custody or something. So they're on the hunt for acquisition targets. And that's going to be a really good signal into kind of like what their strategies are going to be. That's going to be them sort of showing their cards. I think it's a great point, Stephen. Like there's the roll-up opportunity, you know, for the entrepreneurs out there, there's never been a better time to be building in crypto, I think precisely for that reason.

And I think one of the really interesting plays here is going to be partially like how Fang reacts to all this. But then there are other players trying to do the super app maneuver. And we talked a little bit about how that's really like the big, you know, the big win here. And I'd be remiss not to mention it, but as a disclosure, I serve on the board. board of the Ton Strategy Company, which is the largest Telegram digital asset treasury company in the world. Telegram is the social media app that people in digital assets use globally. So if you go to a conference, they're not exchanging LinkedIn accounts. They're not sharing their phone numbers or old school cards. They're sharing telegram handles. And this product is huge rest of world and has almost

no market penetration in one of the biggest markets, which is the United States. And it is slowly marching its way into the U.S. market. They've just cracked a wallet for themselves in this country, and they've just been listed on Robin Hood and Gemini, among other places. So it's a really interesting one, because for one of the first times, you know, we're going to have this competition between the Silicon Valley Grates and I think this emerging markets leader, and really about building a user experience that covers all kinds of things, messaging, wealth, gaming, art, work, culture, and they have their own layer one. So for Max's criteria of things that are interesting, you know, it's important to note that this is a very global contest and that

because of the nature of where this, where the pockets of wealth have sort of decentralized into, it's going to be really interesting flow of funds, I think, and opportunities in the space. What was the name of that platform? You said it was an affiliate of Telegram or? No, no. So the Ton Strategy Company is a NASDAQ listed company, TonX. It stockpiles Toncoin. That's the only thing it does. And Toncoin is the native, uh, coin for the telegram application. So it powers everything in there. You can buy your username.

You could send people tether on time. You can send digital artwork, buy games, and much more, and create subscriptions with it. So imagine if, you know, WhatsApp had a native coin of some kind. Well, that's what they're done. What's the way on that point, it's a matter of time until WhatsApp does have an L1, right? Like, let's be realistic. Like, there's going to be a moment where, well,

don't want to be Blockbuster. The other social media's don't want to be Blockbuster. What I mean by that is exactly kind of like Steve was saying, Blockbuster had an opportunity to buy Netflix. They didn't. They tried to get into streaming too late and they failed. And so I think there's going to be this movement that starts happening kind of quickly. And from a investment perspective, that's the catalyst that I'm really looking at is,

when are we going to start seeing that wave of acquisitions? because at that point, you may want to be a little less, you know, discreet with what you're trying to get into. Because there's going to be, quite frankly, bad names and bad tokens that are going to get bought up by, you know, companies that are desperate to not be the last one. And so there's going to be a big unlock there. I don't know when it's going to happen. But I would be really surprised at five years from now, every major social media app doesn't have an on-chance. way of doing everything that you can do with Ton on Telegram. Yeah, I agree with that statement.

On the MNA front, though, I'll challenge you on that front. Where do you see the M&A happening? Like what category? If I look at firms that raise money in 2021, they raise at expensive valuations. I want to say Fireblocks was $7 billion plus. Falcon X was $7 billion plus. Chain Alice has set a price to sales ratio of 70 plus. Seven is the common theme here, I guess, right?

but these were expensive valuations. Those are price evaluations. You know, they've had a few more years to grow, but the growth rates will be lower, the bigger they get. So I think smaller companies that were priced right and never got excessively overpriced in 2021. Those are prime M&A candidates. But I think the leaders are,

I think they're still. a bit expensive. So let's put that into context too. You know, META has $78 billion in cash. So spending, you know, seven. And I mean, WhatsApp is actually a great example, right? Like at the time, I thought that was a crazy price. I kind of still do.

Still looks, now looks a good, great deal, like Instagram. Now it does. But like at the time, they probably overpaid by a huge margin, you know. But the reality is they can, easily afford to do that. So it's a, the bigger question is, and I think it's a fair pushback, like, what are we going to pick up? You know, but I think what we've seen with all, I mean, again, we're actually seeing it off matter right now with a lot of the AI hires, is it's an acquit hire. And it's buying up the team to get that capability in-house, you know, effectively, if you're

an investor in the thing, they're acquit hiring, it doesn't really matter what the rationale for BNA is, because you're still getting that premium. And the premium, are, it's not going to be the deciding factor. No one's going to look at valuation. I just like to say LUMID is not for sale, but at a certain price, everyone's for sale. So just, there you go. I mean, you're kind of proving my point there, right?

I think it's really interesting observation, right? So the Aqua Higher Play, smaller teams, it makes sense. You know, it all goes back to the super app, right? Meta tried with DM and prior to that Libra to have a native token power their app. so much sense, right? I have family members on WhatsApp, international friends there, and it's just easier to move money there. I don't think they want to put their hands on the money movement jar at this point. But if there was ever a regulatory climate where they should consider that, now would be the time. But I do think they need like a consortium, like a third-party consortium

to make it work, just given all the regulations on social media and non-banks conducting banking activity and the regulators and Congress, they don't want to see these big tech companies get bigger. I think that this is off banks more than tech companies coming in and say, hey, we'll do banking and we don't have to have all the overhead and all the costs, et cetera, et cetera. If all these years look at how the banks push back on certain aspects of the gene. And they will, right? Like they're going to defend their turf. We're seeing that across, I mean, if you think about anything related, just super macrocom and digital assets and AI,

you'll see significant lobbying effort on, you know, trying to prevent that progress. The reality is, as we've seen from history, you can stall progress, you can't stop it. Yeah, I think that's why like the breakthroughs on that stuff are gonna come from, you know, tech companies and startups, but not from big incumbents. Like there's just too much overhead there.

I mean, just anecdotally, blockchain.com trained and launched an LLM, very focused on crypto this summer called AskJune.AI. It is a privacy-focused AI, and we had the fastest 500,000 people ever in a product launch sign up to use that. And so the appetite for non-centralized services is real in the digital asset space, especially with all the vintages of crypto adopters from the past 15 years. So it is not clear to me that like Fang can actually compete necessarily for the hearts and minds effectively in this space because they do not have the operating track record of being here for 15 years. So we'll see.

I mean, bring it on, the more the merrier, but also, like, in my view, the culture in those companies is antithetical to how the foundations of these capabilities were developed in the first place. And so it's going to be difficult for them. I want to build up on what Nick is saying, because this is a huge point on culture, right? So if you think about every tech company, it's built on a very hierarchical model. right you know tim cook before him obviously steve jobs mark Zuckerberg right um sergey and larry and you know et cetera et cetera it's always very founder centric and that is pretty much an antithesis to

actually innovating because unless one person can be an omnigenius and i think we've seen from Elon but that's not actually possible then you're going to need someone from the outside And that is crucial. The other part of it, which is why I think the thing is going to not, you know, have quite as sharp of a tooth in the, you know, not too distant future is they're fighting amongst each other for AI dominance. And that's it. That is their pre-battle right now. And they are spending a lot of money on that as well. So there's going to be need for startups to emerge, show capability.

And then, yeah, then they may get bought up. Well, yeah, I agree. So the big tech firms are competing for AI dominance. They're also competing to provide bank-like services. They've always wanted to do that, right? Walmart applied for what's called an ILC charter, which allows you to be a bank without being subject federal reserve supervision in the 2000s. The big banks block them through lobbying.

I think you should have more competition. I'd be all in favor of having competition and lowering barriers to entry. So stable coins start to give an access path to provide banking. services. The privacy point, Nicholas, could you just elaborate a little bit more on that value proposition? I think privacy is super interesting value proposition. Yeah. So, I mean, if I wanted to think about that, I would say like the most important conversations I have happen in the context of privacy being established by default, the conversations that we have with our wives and husbands and brothers and sisters, the conversations we have with our medical practitioners, the conversations

we have that are privileged with lawyers and with best friends that we explore philosophy with and geopolitics and, you know, the differences of opinion about things. And so you have to have privacy by design from the very beginning. It's not something you can bolt on later. And a lot of the, I would say the incumbents in the AI space, you know, have been training on people's behaviors and data. We've watched this show. We know what's going to happen. They're going to weaponize and monetize all that data against us and use it to sell us a bunch of stuff. We don't. need, but that we can't convince ourselves otherwise because we've helped shape the decision making process.

And so it's very, you know, people need to understand, like, how this stuff will be, will be monetized, but get back to first principles with it. And for us, you know, blockchain.com started with this stuff, very focused very early on, not custodial, privacy first, privacy enhancing technologies to empower users to have more control and sovereignty over their most precious instruments, which is their money, their identity, and the future of their intelligence. And it is a huge battlefield that's not really being spoken about enough. Max, I'm excited to hear that you guys are concentrating on that.

Because in financial services especially, but across those other categories, whether it's healthcare, legal services, or even in, you know, friendship groups. If you don't have privacy by design in the first place, the whole thing's compromised. And I want to expand on that real quick because one of the things we've also been doing is talking to financial professionals like advisors about what their role is going to be. And one thing we're letting them know is in the future, you're going to see your clients actually monetize their data. And as I look at the younger kind of generation that came about being digital native, cryptonative, and really AI native, they get it. They understand that their data is worth something.

They're not giving it away so they can get a 10% discount on a pair of sneakers. And that is critical because there's going to be new revenue streams. It's one reason when, you know, I wasn't super excited about Metaverse, but I was excited about the concept of like Mona in the centerland because you can actually game and then have a clear pathway to monetizing your grind in, say, like a world of Warcraft or Minecraft or whatever kind of craft, but it actually can become a way of freelance economy for the future workforce. And in an area when we need to generate data to train AI models at an exponential pace,

at an era where preferences of aggregate consumers are extremely important, you know, anytime I go into Web 2.0, I'm giving away data. So a lot of people right now don't care. I think they're going to start caring when they start seeing hyper-targeted advertising, and we're going to start seeing AIs that kind of look and act like them. That's going to start changing, and they're going to say, wait, A, I'm really concerned about privacy too. If I am giving this data away, I should be getting people.

paid for it. And that is going to create a whole new way of even thinking about what investing is for the average person. Yeah, I think privacy is a great value proposition. On the one hand, I'll talk about two years here. On the one hand, most people will give up privacy for convenience, which is what they've done with these mega cap tech companies. They'll surrender privacy for convenience. It's a classic security versus convenience and rights tradeoff. On the other hand, the cryptography and anonymity and a decentralized internet are linked to the concept of privacy. And there's going to be a high intensity user base that values that. But from a regulatory perspective, and I'd love to get your all's opinions on this,

is like ever since the tragic events of 9-11, or 24 years past that now, you've had Patriot Act, you've had the Bank Secrecy Act, you've had the KYC AML regime, which has been so strong so as to, for example, twist the arm of the Swiss banking system. So like Swiss private banks aren't private anymore. You know, UBS is talking about leaving Switzerland. UBS, the number one global asset manager, wealth manager. And of course, the leader in Switzerland

is about leaving the country. It's not longer even differentiating anymore. So can that concept of privacy as a value proposition for customers survive in a world with that regulatory backdrop. I think this also goes to the issue of, is crypto going to become FinTech? Or is crypto more of a self-sovereign kind of branch

and is distinct from FinTech, meaning that individuals can self-custody using the tools of cryptography? I would add a couple things to the privacy discussion because I've been following it for 10 years within the world of crypto. Actually, the very first article I ever wrote on crypto was about privacy back in 2016 in the international business times looking at how it

aligns with what was to become the GDPR in Europe. And honestly, I feel like privacy is kind of like a tragic issue for lack of a better term, because crypto is tailor made for things like privacy by default and letting users provide consent, revoke consent, use smart contracts to set terms and conditions and like types of remuneration, all sorts of stuff like that. But at the end of the day, like Rob, you said, like people don't care because they want they want convenience. Like, no one ever reads those boxes and God knows what's in them. And even when it comes to crypto, I mean, two, let's say three blockchains that I follow and root for have almost no usage.

Like talked about Monaro already today that they just got 51%. I've written multiple stories on Zcash. And I think Zcash is phenomenal. I'm a big fan of Zucco. But at the same time, if you ever look at how many transactions on Zcash are actually shielded, it's a very, very, very small percentage, which means people aren't using it for its intended purpose. Or look at NIM, which is sort of meant to be the decentralized VPN that is actually private. I don't know how many of you guys have ever looked at VPNs, but most of them sell user data or they're not nearly as secure as they're meant to be.

Or they're run by intelligence agencies and they use the collected. Or that. And like, I mean, they're not, like, they're private, private and name only. And if people really cared about that or those issues, especially in an industry like this, that should be more, that at least it should cater towards, I would like, I would see at least one of those projects really take off. And I haven't yet. So it's upsetting to me, honestly. And I've written negative stories about Zcash and those companies. And I know I've heard some feelings with my stories, but I get it because I had to be objective, even though personally I root for them.

And I think one thing that's a paradox you're exposing, Steve, is you need transparency for privacy. That's exactly where if I'm using a VPN, how do I really know that my data is private? But when I'm using any service that's where I can't validate what happens to my data end-to-end, my personal assumption as a consumer is my data is not private. So end-to-end encryption is key. And short of like very small workflows like sending a message on signal or telegram, you know, anytime I'm transacting in anything, I don't know if I have control of my data. can validate that with certain L2 projects.

And I think that's where there's a lot of interest in for me in those kind of defy utilities, where they really show with transparency and thereby actually give me privacy. Yeah. Look, I heard a quote this year, and I wish I could attribute it. Maybe we can figure out who it was later. But it was something like along the lines of, the problem with the world today is that we have paleolithic emotions, medieval institutions, and godlike technologies. And this is the challenge of this transition we are going through now.

And to the privacy point, like, Ram, I bet, you know, would be convenient to leave all your doors and windows open, but I bet you still lock them, right? And so crypto has this way of once every cycle teaching people a painful lesson about trusting counterparties, putting too much faith in some, you know, new thing, some bridge, some, you know, cryptography that hasn't been, you know, well tested in the battlefield of the market yet. And so one of the things I get back to Stephen, when I think about even some of the projects I've rooted for that didn't always get there, they're still pushing the envelope. And to me, you know, there's a large, a large spectrum of ideas and offerings in this space.

And, you know, the market is raging today in a way that I have never witnessed. And after, you know, almost 15 years of working in this space, if you had told me that in, September of 2025, crypto would be worth $4 trillion. I'd say, I would really surprise me. I didn't think we would be there by now. But I think this thing is speeding up. And it's very obvious to me that the market will continue to grow. It will face challenges.

But the original privacy, you know, the original privacy advocates were absolutely right to do everything they could do and shrine decentralization, privacy, and security into the original protocols. and, you know, we're bearing the fruits of those things today. And so I don't think they all failed. It just didn't always succeed to the extent we may have imagined that they might. Yeah, I think that's well said, Nick. And just to put a bow on the Fang discussion, I was in the car with my nine-year-old yesterday,

and she kept asking me why Siri is so bad and asked me why anyone would buy an Apple phone when the virtual assistant doesn't work. So I feel like Tim Cook might have some bigger things to worry about than just getting crypto right. But I want to get to one more big subject before we start to wrap up. I don't know if you guys have heard. I'm sure you have FMC's meeting this week.

We're going to get a rate decision on Wednesday, I believe. And it looks like there's going to finally be a cut. Also, it looks like Wisa Cook will be able to participate, unless anyone else has heard anything differently. So I do want to, a lot of people watching this and listening, are figuring out what to do, depending on if it's a 25 or 50 point cut, our risk assets, crypto, are they going to pop, et cetera? So I kind of just want to hear what you all have to think.

I mean, Rom, since I think you're the only one that really manages money actively here, why don't we start with you? But then Nick and Max, I'm curious, like, what you guys are seeing on your platforms and what you're hearing from your clients. It's, you know, if you look at what happened to last year, We had three back-to-back-to-back adjustment cuts. And it looks like you're set up for another set of adjustment cuts here. That's happened because we saw non-farm payrolls and negative revisions over the past few months.

I think the way to approach this is rate-sensitive names. We've been talking about that for a while, like small caps, like mortgage refinance. I think the last time I was on the shore, I talked about better mortgage, for example, lower long-term rates and lower short-term rates are going to help small caps benefit. I think there could be a short-term effect on digital assets, but unless you get a significant downward move-in rates along the lines of what Trump is looking for, I don't think you'll see a lasting kind of impulse to digital assets, notwithstanding the positive kind of Q4 seasonality effects that you generally see. I think this key-for seasonality effects will actually be more important. I'm out of the view that you actually

need these rate cuts, by the way, but they'll do them anyway. You're kind of seeing what happens with every cycle. You know, something goes bump in the night, and it's probably statistical effects and economic adjustments. We have record earnings growth. We have strong productivity growth. There's obviously a lot of political pressure to cut rates, and you're seeing, you're going to see those rate cuts happen, and that's fine. It is what it is. Just have to position appropriately. Why do you think we don't need them? I mean, I know that there's been various revisions on past jobs data. Inflation came in, I think, a little hotter than, I guess, people were hoping for.

How do you sort of weigh all that? I think the lower non-farm payrolls data is explained by lower demand for workers due to higher productivity, which is actually a positive. That's disinflationary. It drives corporate earnings. Also, lower growth in supply of labor through immigration. The third factor is a really interesting factor. I'm trying to tease out is, is there an impact of tariffs on small businesses who drive the bulk of job creation?

The big tech companies are doing just fine. And those layoffs don't really even matter. When those coders get laid off, they're going to go raise at an insane valuation and start a company and hire 10 other developers. I'm not really worried about it. They're going to drive productivity growth. But small businesses are taking the brunt of tariffs. I'd want to understand more to what extent terrorists might have dampened their job creation. But I still think it's a secondary, not a primary factor.

But look, if your population growth isn't growing at the same rate, it was a different set of policies, you're going to have a lower chen rate of population growth. Lower rates can't change that. That's a structural phenomenon. So it's a band-aid trying to address an issue to misdiagnosis. Nick, what are you? All of that, guys. Yeah, and just small clarification, Steve, we do actively manage about 90 billion.

That is not a small family. But I mainly, I do want to, on that note, push back a little bit against ROM in terms of small caps. I do agree we are going to get a 25-bip cut. the Fed looks at the Fed Fund futures, by the way, they never surprise when you're this close. They will make sure that their speakers come out. None of this is, you know, off the cuff remarks. But yes, we're going to get a cut. I also agree we don't really need a cut yet.

And I think doing anything above the minimum is really setting a horrible precedent for Powell. But I think it's not enough to save small caps, even though they've done exceptional. well. And I think partially there is that cliff that they've, you know, gotten themselves to right now. Small caps as I'm in look at my terminal are up 14.6% or so year to date versus the NASDAQ up 12.3. So they're beating the tech companies. They also have trailing earnings that are about minus 10% relative to plus 10% for large caps. And they also have an enormous debt load. So if you assume that the Fed cutting short-term rates is going to kind of, you know, bull-flatten the curve, I can see a valid thesis there. My view is you're going to see kind of a weird bare steepening up the curve where, yes, the short end is going to go down.

But the long end, which is where that debt of small caps lives, that is actually going to go up in part because the economy is slowing down. We're also doing massive deficit financing. And the only way we're offsetting that deficit from the big, beautiful bill is by. tariff revenue, which actually hurts small caps because they don't have lobbying power like large caps do. And they're basically just pure price takers. Let me rebuttal. I love this, by this. I'll rebuttal real quick. So September of last year, the Fed cut 50 bibs markets, CME futures anticipated 25 bibs. So there is a surprise. Yes, you'll get cuts. Question is magnitude. When that surprise happened, the long end, to your point,

went higher because the bond vigilantes like Drucker Miller said, hey, this is inflationary. That was the first time that happened, by the way. In general, when the Fed cuts are short under the curve, except for the last year, that moment, the long end follows. So the reason why the long end is dropping now is because markets see lower nominal growth rates and disinflation beyond this tariff indigestion. So I think small caps will still do well. One thing just to throw in the wrench here, I'm curious you guys, Rahm and Max,

I believe Trump has appealed to the Supreme Court to get, I guess, was that special court's ruling that as tariffs were illegal revoked or, I guess, thrown out. Do you have any sense on when that's going to happen? And if so, how does that play all this? Because the U.S. government would have to all of a sudden pay back billions in tariffs that were collected. it's not so much a question of whether, you know, Trump is going to get his tariffs through because there's multiple channels in which he can do it. If the Supreme Court does rule against him, which I actually find fairly unlikely, you know, probably less than a 30% chance that they

would rule against him. He has other avenues. It will take time. There may, you know, there's going to be a question of when you have to actually pay back. I think the court, even if it rules against him, and say, okay, you know, we know you're going to try another way of doing this. We don't want to straddle the government with bureaucratic fees. So I expect they'd say, once you've exhausted all other avenues, then yes, you have to pay everything back. But there's, there is going to be a way for Trump to put on most of his tariffs, not all of them. There's going to be some that are going to be difficult, but, you know, Section 230 is different from the reciprocal tariffs. And there are other avenues as well. So I really don't think tariffs are going away unless Trump wants them to go away.

But, Rahm, I'd love to hear a few dissent. I think I don't have a read on that. I think it's a fair read. I think the final ruling is June of next year. I'd love to see the tariffs go away, but I don't think that's going to happen except for China. Keep the tariffs on China other than that. If that happened, though, it's obvious surprise. But it's very difficult for me to get a read. I think your conclusion is right that if Trump wants tariffs, he'll get tariffs, you'll find a mechanism to accomplish Not an expert on that section, but I mean, for what I can tell, there's other avenues, like, they're slower and some may require an act of Congress or, like, there's certain, like, deadlines or like we're after a certain period of time. So I don't, but, but I mean, ultimately, Max, you're probably right, especially with this Congress. He could probably get whatever he want to done anyway.

Especially before the midterms, right? Because think about June, right? Now we're really in midterm season. Are you going to want to be the GOP congressman who challenges Trump on tariffs? Yes, it's better for your constituents for tariffs to go away, because tariffs are in my view and the view of most economists bad for the economy and people are starting to feel that gradually. But upsetting Trump is more dangerous than upsetting your constituents. Well, I had maybe just a different little perspective. We didn't use to talk about FOMC rate cuts and crypto calls.

So this is a new territory for some of us. But, you know, the Oracle of crypto and the polymarket.com shows a 91% probability of a 25 basis point cut. I think, you know, the markets are speaking around that. You also spoke to, you know, how the positioning is being made around it. So I think we can probably anchor a little bit around that. But I think it's worthy to mention that, you know, small businesses are definitely feeling some pain. I think people around the dinner table are feeling pain around inflation. But the amount of apocalyptic predictions that were made in the spring by leading economists about how all this would cripple the American economy and we would be in, you know, death throes of supply chain dislocations and, you know, there'd be urban and riots. It just didn't come to fruition.

And so, you know, I think, you know, speaking just about the atmospherics of the conditions we're going into this fall with, you know, Ron made a great point. like Q4 has seasonality effects for crypto. I'd love to probably spend more time to get into why those things happen, but it's algorithmic, it's seasonal. There's a part of the Bitcoin cycle factors into this. You've got a flight to safety, I think, where people are wondering where they should put some of their money in every holiday season. People talk about that kid.

They know that bought some Bitcoin in 2013. And then, you know, you've got a huge amount of money that's going to get deployed through these digital asset treasury companies. And it's going to buy up a lot of the layer one, layer two tokens. And I think it's going to really be an interesting market force in 2025. If, you know, 2024 was really dominated by the ETF argument, you know, this time we've got a bunch of different arguments. It's stable coins, it's regulatory clarity, it's debts, it's fundamentals.

And it's all the other things we talked about optimistically about how markets can grow with this technology and basically building a better, cheaper, faster system. is more accessible and future proofing right now at the highest level, the American economy, but putting dollars on the internet. So a lot of things all coming together here. And so I think there's some good reasons to be optimistic cautiously. And I would just add on what Nick said, which is, you know, aside from $175 billion in Bitcoin and Ethereum ETFs that didn't exist.

And now with the dads, all of that is constraining supply. So, you know, just econ of 101, right? If you have less supply circulating, it is going to be upward price pressure. So I think that's interesting. And then as bigger institutions start trading in this, it starts centralizing the transactions as well. And I think that is going to be also positive for, you know, maybe not so much liquidity, but it should definitely create tighter spreads and reduce a lot of the arbitrage opportunities that maybe worked well for crypto hedge funds,

but made bigger players more cautious on actually getting into the space. All right. Well, look, this is a really fascinating conversation. Ram, as always, and Max and Nick for joining. We'll be thrilled to have you back again at some point in the future. Thank you to everybody for watching and listening. And for all the great questions that we got today as well,

we always like to see those so we make sure we're hitting topics that people are interested in. everyone next nick rom have a have a great day thanks everyone for watching