Unchained - Bits + Bips: Why the White House Says Crypto Must Grow in America - Ep. 951

Episode Date: November 19, 2025

Hosts Austin Campbell, Ram Ahluwalia, and Chris Perkins sit down with Patrick Witt, Executive Director of the President’s Council of Advisors for Digital Assets at the White House, to break down the latest updates in the crypto market structure bill and the political calculus behind it. Patrick discusses how Democrats have started to listen more actively, why DeFi remains one of the most complicated pieces of the bill, and how the administration is thinking about innovation versus incumbency.  Later, the group turns to markets: whether the Fed is shifting regimes, why institutions move slowly but decisively, and what catalysts could matter most in the months ahead. Sponsors: Walrus Hosts: Ram Ahluwalia, CFA, CEO and Founder of Lumida Austin Campbell, NYU Stern professor and founder and managing partner of Zero Knowledge Consulting Christopher Perkins, Managing Partner and President of CoinFund Guest: Patrick Witt, Executive Director of the President's Council of Advisors for Digital Assets at the White House Timestamps: 🎬 0:00 Intro 🚀 2:45 Why Patrick calls the Senate Ag draft a “big step forward” 🧩 4:43 How the bill tackles DeFi—and why it’s so complex 🏛️ 5:28 Why the presidency is putting so much weight on crypto policy 📜 7:01 What happens behind the scenes to move a bill like this 🔪 9:39 Whether the bill could get modularized (including pulling DeFi out) 💡 11:22 Why Chris says crypto is simply a better product 📈 13:37 The short- and long-term implications of passing a market-structure bill 🔐 15:22 The KYC/AML problem in permissionless systems 🕵️‍♂️ 22:12 Privacy: finding the balance between user protection and public ledgers 🗳️ 24:08 How Democrats have increasingly joined the conversation 🌅 25:27 Why Patrick is optimistic we’ll get a Senate vote this year 🤖 29:56 How Patrick sees AI + crypto converging into a major opportunity 📊 32:23 What’s happening in markets, and whether a regime shift is underway 🏦 36:40 How institutions are entering, and what keeps them up at night 🎤 38:46 Why Ram calls the Cantor Conference the best for digital assets 💥 41:53 What Paolo Ardoino revealed about the future of Tether 📉 44:43 Signals that typically mark a market top and why spotting winners is so hard ⚡ 51:38 Ram’s key catalysts to watch for the next market leg 📺 54:39 Whether 60 Minutes misrepresented CZ Learn more about your ad choices. Visit megaphone.fm/adchoices

Market structure, I would say, relative to genius, maybe a little bit more challenging, just because, you know, you look at stable coins, you know, $300, you know, $400 billion of market cap. This is the remaining 90% of a $4 trillion industry. And people recognize that this is really the piece of legislation that addresses more stakeholders, affects more business models, goes after, you know, some of the institutional kind of legacy piping of the financial markets. What's happening is markets are pricing in a world where the Fed isn't just ginging up liquidity. Maybe you're acting responsibly or something, right? The institutions are definitely here. They just don't move so fast. Hello, everybody.

Welcome to bits and bips, where we explore how crypto and macro collide one basis, one at a time. I'm your host, Austin Campbell, high scholar of zero knowledge consulting. And I'm here with two of my usual compatriots. Chris, the Golden Hand of Coin Fund, and Rob, the Maester Wealth, leader of Lugina. So today, I have to say we have one of our exciting guests that we've had on, and one who I am very much looking forward to hear from, which is Patrick Witt, the exalted advisor on matters of digital fortune. So we're going to discuss the latest in the worlds of crypto, macro, and Washington, D.C.

But first, just remember nothing we say here is investment advice and check, change crypto.com fits and bibs for more disclosures. So we'll get started thanks to our sponsors. Built by the team behind SWI, Walrus is the global data layer for Web3. And with the launch of SEAL, developers now get permission to access controls built right into that data layer. Together, Walrus and SEAL make Web3 data private, programmable, and verifiable by default. Learn more at walrus.xyZ. All right. Welcome back. Today we're going to talk market structure since we have Patrick here, and we'll start with that. So the market structure bill has been introduced into the Senate. Boozman and Booker released a draft of this. And to cover

some of the main points, this greatly expands CFTC authority to regulate digital commodities, building on the House Past Clarity Act. Lawmakers have emphasized the need for adequate staffing, bipartisan commissioners, and the ability to successfully implement the expanded regulatory powers. it is a meaningful, positive step towards establishing a comprehensive fit-for-purpose market structure framework for digital commodities in the U.S., according to the Crypto Council for Innovation. So I want to just leave it there since we have time to talk to a D.C. Insider and expert on this. So, Patrick, what would you say is going on with the market structure bill in the Senate right now? And what do you think the most important parts of this bill are? Well, thank you for having me on.

It's great to join you all. I would say right now we took a big step forward. I guess it was last week with the release of the Senate Ag portion of the draft. Kudos to Senator Booker engaging with Chairman Bozeman to put his name on that draft piece of legislation. And, you know, as anyone who looked through it can see, there are a number of areas still open for negotiation in the brackets. But it was a big step forward because as we talked about with Senator Booker, and his staff, this is not the finishing line. This is the starting line. And we got to get that draft out there so folks can engage with the different portions of it. We can hear from industry.

We can hear from the different agencies that will be tasked with implementing this legislation, get their technical assistance and take this forward towards a markup. I'm encouraged by what we've seen as we've, you know, during the shutdown, there was a strange silver lining where a lot of the competing priorities fell away a little bit. And we had an opportunity to engage with staffs on the Senate Ag Committee and also on the Senate Banking Committee. And we made a lot of progress. We started to air some of those areas of disagreement that are going to be the most challenging to get right, not because they're partisan issues, but because they're the stickier or more complicated parts of the bill. And I'm thinking in particular with the different sections

that address defy, those are still areas that we need to work through. But like I said, I'm very encouraged by what we're seeing from the partnership with folks on both sides of the aisle. They're asking the right questions. They're digging into the details of it. And I'm very confident that we're going to be able to get this across the finish line as soon as possible. So I won't necessarily commit to a date. I have seen Chairman Bozeman come out and say that he's targeting a December markup. We'll need to coordinate that with Senate banking and also with the Lieber Thune's office. But bottom line, we're moving in the right direction, very encouraged by the progress that's been made.

Is Defi a part of this product? It was in the House version. I thought it was desoped in the Senate version. I think Defi is more than half of the point of this. So are we going to see it in the final product? So Defi is in both the Senate banking version and also in the Senate Ag version. In the Senate banking version, it actually has a bit of stronger language than House clarity had around Defi.

All three different versions or text, if you will, have the Senate. the blockchain regulatory certainty act language in there. So there are definitely big portions of defy that are addressed in this bill. And yeah, we're encouraged by the conversations that are happening right now. But that's definitely a more challenging part of this bill right now. So Patrick, you're sitting there in the White House. It probably makes sense for people to understand your role and how you're bringing it all together. And, you know, where, you know, where's your focus, how do you get this thing done from your seat? You really help for us to understand. Yes, we're part of the White House office within the executive office of the president.

And I could be wrong on this, but I think we're probably the only office that's dedicated to one issue area, which is really indicative of the importance that the president places on this topic and getting it right. There's a lot of this that has to do with, you know, executive order drafting that has happened already. With the SBR, for example, and ending choke point 2.0 early on in the administration, there's follow-on actions that come from that. There's the Genius Act, which, you know, my predecessor, Bo Hines, my boss, David Sachs, were heavily involved in making sure that got over the finish line. And now there's the follow-on regulation, you know, the rulemaking that is directed by that legislation. Now we have the market structure bill, and then there's a number of other issues that are really follow-on or follow-through.

issues that were identified in the president's working group report on digital assets. So, you know, anyone that asked what we're up to, what we're trying to get done, it's either through legislation or through agency action, but that report is a very comprehensive guide to what we're trying to get done. It's the playbook for everything that guides us. All right. So I have a question on that front that I think will help people scope this, which is somebody who is somewhat involved in the stable coin side of things. I testified to the House a couple of years ago. I spoke a lot with people

what genius was going through. How big of an educational lift do you think things are in the Senate for market structure versus genius? Because I think one thing that's hard for people to see from the outside is that senators may be unsurprisingly have many, many concerns.

And crypto is just one of the competing things on the agenda. And one of the blockers we've experienced is not people being against, but just not being up to speed. I'd be curious where you see us in that progress. It's a great point. You're absolutely right.

A lot of folks, you know, they're not going to vote for something and ultimately put their name on something that they don't understand. So what you do there is you try and get them to kind of draft off of the folks that really do understand it. It's their particular issue area. Chairman Scott's been terrific. Senator Lomas, obviously a champion for crypto. Senator Haggerty during the genius passage was instrumental. So they trust their colleagues. They know which of their colleagues they really trust on certain issues and having them engage,

putting together the white papers, the one-pagers, the memos for those other senators that maybe it's not their top issue area, but they want to make sure that they understand it enough to be able to put their name on it and support it. So that process is happening. It is a process itself. You know, you've got to have a lot of conversations. You've got to spoon-feed it, you know, like, you know, step by step. But those folks, you know, as we get closer to a mark update and eventual passage, they're starting to really engage and make sure that they're asking the right questions

and getting the answers that they need to feel comfortable supporting this legislation. So it's happening. Market structure, I would say, relative to genius, maybe a little bit more challenging just because, you know, you look at stable coins, you know, $300 to $400 billion of market cap. this is the remaining 90% of a $4 trillion industry, and people recognize that this is really the piece of legislation that addresses more stakeholders, affects more business models,

goes after some of the institutional kind of legacy piping of the financial markets. And so folks want to make sure that they're not disrupting those in a way that's going to be destabilizing to the overall system. And that's a perfectly valid concern. It's our job to make sure that we're addressing them adequately and that we're meeting members where they are and providing the appropriate education. Hey, Patrick, with that in mind, is there any chance that you guys modularize this a little bit?

So, hey, defy gets way too challenging, but you want to get taxonomy out the door. Is there any possibility that that's the approach when everything else has been exhausted? You know, we haven't talked about that yet. There are definitely a number of issues in this bill. You know, there's token classification, spot market regulation of, you know, Bitcoin over at the CFTC, there's a number of different things in there. There's, you know, red crypto in the Senate version, kind of a safe harbor to allow for capital formation in the crypto space.

But Defi, we view as a very critical part of this. And, you know, Defi kind of gets lumped together, but I would say if you look at the BRCA as one part of it, that's definitely more of a red line. What we don't want to happen is to pass something or rather to not pass something that then causes the innovation in the space, the development of B-5 protocols or crypto at all to happen offshore. That's what you saw with the previous administration. They took a stance that ultimately drove this innovation offshore. That's the filter that we apply to any legislation, any regulatory action that we take is, you know,

you can't bury your head in the sand and expect that crypto is just going to go away or that you're going to be able to kill it, as evidenced by the previous four years, that's not possible. The cat's out of the back. This industry is going to grow. It's just a question of whether or not it's going to grow here in America. As the president said, we want to make this the crypto capital of the world, or whether the actions that we take or rather the actions that we don't take are going to drive this offshore.

So we want to make sure that we're maintaining our position in the financial system of the future. Chris, I want to ask you, is somebody who both invests in this space that has a pretty deep banking background on the back of what. what Pratchett just said, how real are the objections around this breaking things in traditional markets? Where could we potentially have problems? Where do you think maybe that's a little bit overblown? I mean, that's a great question. And the truth of the matter is, is that this is very disruptive technology. And I published a piece on this a couple of years back. And we need to be stay principles focused and the best technology should win. And like, I'm a fiduciary. We've talked about

this before. To the extent technology enables something like tokenization, which is simply a better product, then as a fiduciary, I should use it. But what we shouldn't do is say, hey, wait a second, this technology is going to be disruptive to all these legacy business models. Hey, Robert Leshner, a super state, just issued canonical equities on chain. So guess what? You don't need that legacy custody apparatus anymore. That's really bad news if you're legacy custodian. And yes, disruptive. But gosh, if we can figure it out and we can bring more utility, we can create better capital formation, then we should actually encourage the legacy players to use it. So like, this used to make me crazy. In fact, the settlement that you get, we talk about this all the time, Austin, the elimination

of Hirstat risk. Like, why isn't Basel? Why isn't BASB pushing and encouraging public blockchain use and elimination of Hertz that risk rather than trying to protect the old system. So, you know, I think a little bit of disruption is a good thing. By the way, like I've been, I spent a ton of time with traditional players. They get it. Like, they're investing. They're moving forward. Sometimes they wish they had a little bit more time.

But you know what? There's some amazing partners, you know, across our portfolio and beyond that can really accelerate them. So may the best technology win is how I think about it. Yeah. And I'll pile into that and also say, I think. We saw this dance a little bit in the stable coin bill, where you had a lot of the legacy players saying, oh, my God, stable coins are somehow going to break the entire banking industry at deposit industry.

But the reality is we heard those same arguments with the launch of money market funds back in the day. And it didn't do anything of this sort. So a lot of the pleading that we see that, quite frankly, is just people being like, protect our business model, protect our business model, I think is overbought. to me, the question is we look within things like defy is, are we going to break anything that actually would fundamentally damage the experience of call it U.S. capital markets writ large. Rahm, I'm curious for your opinion here. If we get this moving and it works, what do you think the impact is on markets?

You know, I think in the short run, you may well see some pricing in. If you look at the Genius Act, that was a moment of peak excitement. And a lot of digital assets have sold off since then, including stable coin issuers like Circle. Now, some of that's anticipation of the unlock also. So I think it could be a seldom news event. This is more of a market's transition topic. But I think it could be. It could be.

It'd be a good hurrah. And then you, it's probably a lot of rotation. You know, every cycle, there's a new layer of capital that enters the system. In the last cycle in 2021, it was Michael. sailor and micro strategy. So what happens is the OG investor say, here you go, Michael, have my Bitcoin. And then what happens the next cycle, here's Tom Lee. Here you go, Tom. Here's my Ethereum. Here you go, Eric Trump. Here's my Bitcoin. And that's just the layer. That's the process of joining the digital assets ecosystem. That's the next layer. And BlackRock, here you go.

you have something close. So one, I think yes. Two. So, and Chris, this is a topic. I think you and I have been back and forth on a few times. But as we wait to see if we can reconnect Patrick, I want to raise the other, I'm going to call it, I think, predicted sticking point in this,

which is how do you think about K.YC. Aml and identity in this world? Because if I go and talk to very traditional markets people, right? Like I were to go talk. to the folks at one of the big banks or some of the large asset managers or DTCCC. They'll say, listen, to use ROM's example previously, like, yeah, Michael Saylor can buy bitcoins from whoever, and he can sell bitcoins to whomever, and that's fine. Bitcoin is, to some extent, just an object.

And as it moves around, we may not like the people who own it, but it is not, call it per se destructive of the system if the North Koreans end up in possession of a little bit of Bitcoin. We'd prefer they did, but like it doesn't cripple the system. I don't know that we can say that about stocks, right? Like if the North Koreans get a significant portion of Apple, they can't have a board seat is something that I've been saying previously. And I think one of the breakpoints in market structure ends up being, how do we conceptualize KY, C, A, ML, and those controls.

And also, if we think about them, to be honest, where do we put those? It's very different to say you need that in a protocol layer versus saying that you can attach that to specific tokens or at very niche, implementations. Chris, I'm curious, what do you think? Because, like, looking at the debate around genius, I predict that may be the breaking coin. I'm going to turn it back on you as a stablecoin guy. Why do we have a dual standard? And I know that was some of the stuff we're talking about last night when you were on 60 minutes. Why do we have a dual standard for stable coins versus other assets? Right. So Genius Bill thought it was acceptable. U.S. dollar hard cash. The issuer has to

KYC, the person to whom they issue that stable coin. And then from there, the onus is on the individual who holds that asset to make sure that they comply with loss, right? So if I have any tether, whatever, USDC, if I send it to the North Koreans, I've got a big problem in my hands because I just violated OFAC and sanctions, right? Same thing should go of securities, but why are we treating tokenized securities or why is there this desire to treat tokenized securities different? And I think it comes down maybe not to KYC so much.

Is it suitability? But like why the double standard? I would love to get your take. I mean, all right. So I wrote a paper with V about the structure of securities markets and the evolution of how we got from where we were prior to the paperwork crisis to where we are today. And I think some of the answer is just that we literally did not previously have

some of these capabilities. Patrick, welcome back. We're on everybody's favorite topic, which is KYC and AML. And so one of the things that I think is true of the current system is that fundamentally all of the banks are kind of looking at their feet with a flashlight. If I'm J.P. Morgan, if I'm City, if I'm Wells Fargo, if I'm B of A, I don't have access to the other people's ledger. I only have access to my ledger. And when you look at a global public ledger, even if it's pseudonymous, the amount of data that we can potentially take in is very different. And I think if you look at genius, okay, so back to senators who have been very constructive and call it middle of the road on crypto, Tillis had previously introduced an act in a prior Congress called the Enforce Act, where they very much tried to say, okay, it would be insane to tell everybody to KYC everything on a blockchain.

That's not workable because this is a new space. But on the other hand, it's also insane to tell somebody, hey, once something's out your door, you have literally no responsibility whatsoever, even though. you can now see a public ledger. So I'm curious, at least as I watch the progress of market structure, how quickly people can get their head around a middle road, which is to say something like, if I'm an asset issuer, I have a tokenized money market fund, I have a stable coin, I tokenize Apple stock,

and it trades even in semi-permissionless fashion, what obligations do I have to look outside my door and still look, call it out at the world, and determine, hey, I may not know specifically who that is, but that's a wallet that's like one hop from the North Koreans. Maybe I should do something here. Yeah, I think you're exactly right. There's an opportunity here to modernize, you know, enforcement, you know, supervision for these different agencies. You're exactly right that a lot of these different regulatory agencies don't have the tools. They're dependent upon third parties, market participants, you know, to provide, you know,

tip-offs, but as you said, everyone's just kind of looking at, you know, they're looking through one lens. They don't see the full picture. The other thing that this opens the door for is the opportunity to algorithmically do a lot of the oversight that needs to be done. There's a massive amount of data. Obviously, we're bringing a lot of compute online these days. It's an opportunity to kind of marry those two together. And for the folks that, you know, don't understand crypto space quite as much, some of those senators that want to make sure. that we don't pass anything that then threatens our national security or enables terrorist financing or cartel financing. You know, this is actually, you should be some of the biggest supporters of

this because from an enforcement standpoint and just from a, you know, get opportunity to actually ingest massive amounts of data and be able to do the kind of tracking them, but do it in a way that makes us more efficient and also increases kind of the hit rate on truly nefarious activity. Yeah, I'll pile on to that and say for any of the politicians or staffers listening to this, do not underestimate what Patrick just said. There are programs not just with the financial regulators, but also with the Department of Defense, looking at this exact process.

And a lot of what we're finding is as we create a richer set of data around this, where you can combine social media data with financial transaction data with blockchain data, you're going to capture a lot more, not less of the financial crime or the fact. that it's new and has been used by criminals does not make it worse. To some extent, it's a skill issue. There's much better tools for us to interdict. And it's the question of criming that ladder of like criminals versus law enforcement. Hey, Patrick, you're a vet. I'm a vet. I think we shared, you know, we share a lot of the same values. I remember how pissed off I was when I saw that Binance for, I think it was head of compliance. So you could barely buy an AK for 600 bucks.

that's fine to say unless you're on the other side of that AK, like I've been. But there's this interesting challenge between, you know, everything that Austin just talked about and the need for national security. At the same time, we're seeing Zcash going crazy right now and this really important part of finance, which is privacy. As you're talking to senators and congressmen and really trying to navigate that, how do you think about the balance of privacy versus the public? nature of blockchain, those discussions coming up along. And how do you navigate that?

You know, the discussions haven't taken place too much. It's more of, you know, just kind of monitoring crypto Twitter. You know, obviously the people that are in this space that understand what we just talked about, which is there's the potential oversight. People can, so government, you know, more data or more control over finances. We saw, you know, what can happen when you have financial actors that debank people based on their politics or based on their views on particular issues. So threading that needle is going to be a challenge, but, you know, I'm definitely mindful of the fact that we do need appropriate enforcement and we want to make sure that we're getting after bad actors, but at the same time, we have to do it in a way that preserves people's ability to control their finances, to transact, you know, with whom they want. That's going to be a process. I would say the technologies for privacy and the technologies for blockchain and oversight are going to run in parallel with one another. And it's going to be, I would say, an issue that is going to develop overshare that we're trying to appropriately balance individual liberties with the potential of this technology to be used for harm. How is the partnership on the Democratic side of the aisle looking for that in the Senate?

Because I know there were some fits and starts around genius, but ultimately there was a significant amount of Democratic support for that act. I'm curious how the feeling is right now with the caveat for everybody, this is not dispossed. positive at where we will end up, of course. You know, I'd say during the shutdown, we actually got a lot more engagements from Democrat senators, from their staffs. So the partnership has been good. There's the 12 Democrats that are signed on to their market structure principles. And they straddle both Senate banking and Senate ag and then some that are off both committees.

Part of the challenge right now has been a little bit of who are we actually negotiating with, you know, trying to negotiate with 12 individuals might be fine. If there's one designated leader or for particular issue areas, there's one person or two people who you can deal with. Right now, it's a little bit of kind of dealing with the entire group. And obviously within that group, they have varying opinions on certain issues. So as we get closer to the finish line, I think there's going to be subgroups that form to handle certain of these more tricky issue areas. But that's still a bit in flux right now. would say very encouraged by the partnership that we've seen from certain, you know, more kind of

crypto forward, you know, progressive in the, you know, small P technology sense and innovation sense. Some of those members, Senator Gillibrand, you know, Senator Booker on the ag side, they've been great and we're encouraged by the progress that's been made. All right. So another one. Chris and I both know Mike Seleck. The CFTC is an important part of the, you know, this bill, and obviously we've got to get him confirmed so that we have leadership over there that will be in place for this. How are we looking as we think about the impact of the shutdown to the Senate calendar to being able to get all these things through? I know December was on the table. Do you think that is, I'm going to call it a certain timeline, or is that when you would

like to hit, but this could leak into next year? Like just, again, being aware of a calendar, how do you see that playing out? I mean, I think Chairman Boseman recently said, you know, he's targeting a markup date in December. I think in talking with the leader's office, you know, it probably makes sense to have Senate banking and Senate Ag operate on the same timeline. So we'll need to check with Senate banking on, you know, how close they can hear to a December timeline. But, you know, the president wants this on his desk as soon as possible. A lot of that is a function of floor time in the Senate.

Getting it out of committee is one thing. But there's also going to be, you know, a process after that to get a final vote on the floor. So I can tell you, we're maintaining the pressure, gentle pressure, but consistent to try and move this process along and have those difficult conversations that we know that we need to have, whether that's, you know, hammering out token classification, defy, certain other provisions. We just want to get folks in the room. You know, our job in this is not necessarily to dictate to the Senate, you know, how to run their chamber. We're certainly not going to do that, but making sure that they understand. it's a priority for this administration and get the right folks in the room on issues where there are executive branch equities, make sure that we're providing them timely input, what we can live

with, what we can't live with, what are our red lines so that they have clarity and they know the space within which, you know, they can operate. So again, encouraged by the momentum and confident that we're going to get it done, wouldn't necessarily commit to a date, but I would say, you know, we're very optimistic that in the Senate at least, you know, a vote this year. So one of the problems in Patrick, you referenced it earlier was things like Operation Chope Point 2.0 and I'm going to call it the rogue actions of some regulators under the previous administration as they were dealing with the crypto space. How are you guys thinking about the interplay between we've got genius already passed?

We've got market structure hopefully passing. And then having the regulators treat things in a fair. ways so that industries are neither being called it favored nor disfavored inappropriately this time around. Yeah, I think Chris had mentioned this earlier. We want to be as technology neutral as possible. And we believe, as most industry observers, folks that know, you know, blockchain technology enables, you know, more efficient payments, you know, different business models that can pop up. And so we don't want to favor crypto, you know, at the expense of TradFive. But at the same time, we don't want to hold back a technology that holds so much promise because it's threatening to incumbents.

You know, that's the natural part of, that would be like passing regulations to prevent the development of railroads because, you know, the horse traders, you know, are concerned about what it might do to their existing business model. You know, that's just not the American way. We are forward thinking. We want development in this space and we want to make sure that whatever we're doing doesn't privilege one group over another, but rather allows everyone the ability to innovate and move things forward. So, you know, I'm encouraged by what we're seeing right now. You know, some of the traditional players are definitely, they're monitoring the space.

And I think they're also recognizing that there's opportunities for them to get involved in a way that maybe in the early days, you know, call it two or four or five years ago. You know, they kind of viewed this as a head-on threat. They're now viewing it as a way to modern. and update their own business models and get involved in the space. You've seen a wave of M&A happen recently. I think that's going to continue as folks realize that it's, you know, it's an opportunity for them to actually provide their customers with better service to tap into other, you know, business lines that right now with their current models,

they aren't tapped into. So folks are digesting that and evaluating ways that they can get involved. Last question for me. Your boss is obviously looking at AI as well. Are you seeing a lot of AI projects cross over into your world with crypto and policy wise? We're starting to a lot more. You know, the application of AI, large-scale compute,

as we talked about, you know, the open nature of public blockchains, all the data that is there, you know, the ability to tag together these two different technologies. I think the business models that will pop up in the space that marry blockchain and AI are yet to come. There are some in the space that are already starting to do that, but I think there's going to be some giants that are born out of the marriage of those two technologies. Amen. For my part, Patrick, we don't want to keep you over the time you said you had.

So I want to say thank you very much for joining us. I think for people who don't see inside the political machinery day to day in the United States, there's a tremendous amount of work behind the scenes to get all of these things done. Like you see people speaking and you see the votes, but the amount of hours behind all of that to make anything. move as events. So thank you for your work. We really appreciate it. It's a privilege and an honor. It's great to work with David, a visionary leader. The president sets the tone and he's made clear that this administration is going to be pro-innovation, you know, pro-technology development in the same way that, you know, the United States was the leader in the traditional financial system. We want to be a leader in the same way in the future financial system. I pinch myself sometimes.

I think I have the best job in government. There's more to come. All right. Thank you very much. Thank you. All right. So with that, we'll let Patrick go so that we are good to our word about not abusing his time and we'll let the ads go. We'll be back in a minute.

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So we are back and now that Patrick is gone, we're going to spend the next however long crying uncontrollably over the state of the markets. Ram, as I look at this, Bitcoin 91K and dropping, I could say things about alts, but I think Chris will just rage quit. So I'm just going to lob this one over to you. What are we seeing? What the hell is going on, man? Well, I'll take a step back and, you know, zoom out at the highest level, what's happened is that. Since the April lows, you've had an incredible rally in high beta assets. That includes digital assets, includes uranium, includes retail Twitter stocks like

hymns and hers. So that whole complex had an incredible rally. And the most crowded names in there are just selling off. Well, first off, that entire category, this high beta stuff is just selling off. Other themes like a data center theme are also selling off. So that's the broader, that's the broader title force that's impacting ascertains right now. What really kind of pricked that enthusiasm was when the Fed had a hawkish cut to the day that

was the top in the market. And you can see the CME Fed Farm Futures probabilities went from a 96% probability of a December cut to now it's a 45% probability of December cut. When that number gets to zero, you can say confidently that the news around the Fed has been priced in. So what's happening is markets are pricing in a world where the Fed isn't just ginning up liquidity. They maybe are acting responsibly or something, right? So that's one driver. Now, the other drivers are obviously the government shut down.

That's in our rearview mirror, of course. That's in a rare view mirror. But, you know, that added to this. Yes, that's what we are. We're seeing rotations. Healthcare is working. You know, I would say on digital assets specifically, what we saw over the summer was this IPO bonanza

around these digital asset treasuries. And, you know, IPOs are an exciting time because everyone gets excited. Everyone, how do I get access to next allocation? The early IPOs do well, the later IPOs don't do too well. And there's a lot of issuance and supply that the market has to carry, right? So that starts to weigh on markets. We're on the other side of that. A lot of these trade at discounts to NAV now.

And when new money gets burnt, when they touch the stove and said, getting a warm apple pie, they get hurt, they pull back, right? So that has changed of psychology and sentiment. You add to that, fear is around a four-year cycle and just the reflexivity of markets. I think where you are now is people will sell into rallies on digital assets. Are we oversold? Yes. You know, the fear and greed shows lots of fear. The challenge of that is, and I agree it is. Like, you will get some tactical rally, some point between now and your end. Timing that's extremely hard.

The knowledge is that when you've seen levels of fear that we've had and you haven't seen the bounce, you haven't seen that, then it's evidence that you do have a regime shift. You know, the other thing I would add to this is that we had a de-leverging event. We had a credit in October when you had this forced automatic de-leveraging. Recall back in 2021, we had two de-levergings. One was Luna. the second was FTX, Genesis, the whole complex. Those were two credit deal evidence.

We just had one recently. Those create confidence shocks, too. So that, yeah, there's a big party with the Genius Act, and you had these issues hitting the markets, and there's a broader impact of high beta selling down. So that's where we are. This is going to get digested. Well, pause there.

Yeah, let me chime in. I totally agree with what you're saying. I think there's a different regime change that's underway as well. When you talk about the ADL liquidation, that's largely a retail phenomenon, right? And I think to your point, crypto has largely been a retail-driven market since inception. I think there's a regime change coming. I mean, we can maybe talk a little bit about Cantor last week. But the institutions are definitely here.

they just don't move so fast. And so as they're marching forward and every day, I have a new meeting with a new, like, major institution thinking about how they're going to set up their settlement layer, you know, with a new layer two or whatever, like they're just methodically moving forward. We still have major gaps in market structure that need to be solved. I've talked about this over and over again like futures. How can an institution go into an alt or to an alt-dalt that if they can't hedge it out? It's too volatile for them.

So I think that's the other regime change that's coming that's actually positive. It just takes a lot of time. I mean, I'll also pile in and say, I think one of the things that you find would institutions show up, Chris, to your point, is that their concerns are not always identical to those of retail as well, right? There's probably a little bit more disciplined to process and accumulation at some cases, but also just like differential questions that are being asked. like, I want to hear what you guys have to say about the Cantor conference, but I'll say one thread

that I've constantly been getting as I talk to more institutional people getting into this space is questions about where is the value accrual, which is something I don't think there's been as much retail discussion about, you know, like to put the question plainly, is it possible that Solana is the platform of the future, but the value does not accrue to the token holders, right, is something that I don't think there's been a nuanced discussion about. So I do think, call it the total mine share approaching the space may not be the same kinds of mines as at the past, which could really change price action. But you guys were both at Cantor, right? Like what did you hear there?

It was the best conference for digital assets, bar none. In my view, I know we've all been to a fair share of conferences. A lot of decision makers, sea level, risk managers, leaders across the ecosystem. So it was called the Digital Assets AI and Energy Conference. You know, they had an open AI CFO talking about their energy needs and how they're how they're feeling that as well. They had a secretary, undersecretary of state talk about how Europe is falling behind due to their approach to regulation and really overregulation of technology and innovation. There was discussion on the need for energy, more abundant, cheaper energy, all forms of energy. and including and especially nuclear energy.

So, yeah, there was a lot of a, I thought it was very insight rich and just an amazing group of people that were together. Chris, what was your perspective? It was one of convergence. I agree, exceptional, exceptional conference because the people there, it was essentially the senior leadership and royalty of, you know, the entire crypto industry showed up. And like to me, the biggest theme was one of convergence.

You had the convergence of AI and crypto. You had the convergence of tradfi and crypto. And then the other thing I've been thinking about was, you know, I had, I met a ton of the dots. And it kind of all comes together because a lot of the people who are leading those dats are some of the senior people, most senior people in crypto, some of the, you know, the leading personalities, et cetera. So it was just this incredible group of folks with just, you know, a lot of. lot of gravitas, but a lot of convergence.

Like, to me, this was an institutional moment. And Cantor has been at the heart of a lot of capital formation, that's, etc. So, yeah, I mean, it was the conference, one of the top conferences I've been to in my life. So Cantor is the new Goldman Sachsnaz. And that's another other takeaway. I mean, they're the primary investment point for these digital asset treasuries. I read it recently that they're on pace to generate $2 billion in revenue. I think more than that.

I think I saw 2.5. Yeah. That's the subtext. You know, when Howard Lutnik joined the White House, he appointed his two sons as co-CEOs, and I believe the head of the equities business is also kind of leading there. But Cantor has positioned itself as the center of this.

Now, I recall also that Cantor is also doing investment for Tether. The CEO of Tether and Polly Market also presented, And I've been wanting to get into the tether equity for like years. Unfortunately, it's expensive. And it's like fully priced in my opinion now. And it's like the girl that got away kind of thing for me now. It's like I was the first one to find this thing.

We were all looking at it in our group and our circle. But now the whole world is looking at this thing as efficiently priced. But what I thought was there are a lot of insights out of his speech, follow the CEO speech. First off, their roadshow and messaging and delivering. was exquisite. They positioned tether as core to U.S. policy. Remember, over the past few years we've talked about the rise of the bricks, Brazil, Russia, India, and China, and their attempts to deplace the dollar. They positioned tether as dollarizing emerging markets. And they use the word about adding resiliency to the U.S. dollar system by creating more decentralization

of holders of dollars. I mean, like as an amazing, you're supposed to be behind Tether. Obviously, Scott Besson, the Tritistarchistector, gets that. And they talked about Tether Ventures. They talked about how the fastest-scoring stable coin is a gold-based tokenized product, which I was not aware of, that Tether also issues. So, you know, Tether, extraordinarily well positioned. They had to see a Polly Market.

Talks about now. Recall in the last admin, you know, Polly Market was narrowly shut down in terms of the inquiries they were facing from federal law enforcement. Now they just did a round. It was a $8 billion valuation. I don't think they have any revenue, by the way, $8 billion valuation. They went from zero to hero. So, yeah, no, it was a great conference. And, you know, this talked about the discussion of the future of betting markets and how you're going to see these event markets play more important role in hedging risk. Instead of looking for an indirect edge on, say, a political outcome, you can identify the market and express more precisely. It's a lot of thought-provoking

stuff. Yeah, I'll give you another example. On the complete other end of the spectrum, I heard Gary V come in and say, yeah, guys, I hate to break it to you, but your grandkids are going to be marrying bots, get ready for it. He's like, hey, it's no different than Tinder. Like, it used to be this, like, if Scarlet Letter, if you met your wife on the internet, now everyone does it. He's like, so get ready for it. And Danny Ives is like, don't worry about that. We'll make sure that they're humans if, you know, they're trying to, you know, come at you online. So, I mean, it was just very thoughtful conversations across the board. And again, but to me, it was all about convergence.

All right. So I'll pile in here. Actually, I think with both a comment and a question on the back of that, which is, Rom, you mentioned the amount of money that Cantor is making this here. But it's like a longtime banking person, I've got to remind everybody, investment banking cycles are highly very very very. and highly cyclical. That is not a forward, like, going number that you should just expect year after year. You're going to see large ups and down. So the two questions I take from what you guys are saying is, one, how much of this is call it real, real, like baked right now that we're very confident will work, will continue to work, and how much of this is just call it the hype

that you get at the higher ends of a cycle? Let me add to your point. First off, excellent point. it's cyclical, just like markets are IPO, investment banking underwriting fees are highly cyclical. That speaks to the debt craze that we just saw. Adding to that, there's also a presentation from Brad Garlandhouse, the CEO Ripple. They announced at their conference week prior that they had raised money from two of the most strategic and significant investors out there. Citadel is everywhere, by the way. The world is not ruled by Goldman Sachs. The world is ruled by Citadel.

And also Fortress. Fortress is a very shrewd and thoughtful credit fund. Now, that amount's been occurred recently. That deal, my guess is what struck likely months ago. And so if I look at that, usually at the top of the market, you have deals that get done that just don't make any sense. I'll add to the mix. Aribor. We saw an Aibor. This is a bank that just got an OCC charter. Palmer Lucky's name was slopped onto the PowerPoint. point wasn't really a founder. I've heard from seed investors in that business. It was an overshop deal. It put Palmer's lucky face on it. I got a $2 billion valuation. So these are the

kinds of silly things you see near tops of markets. I talked to a friend who's launching a venture fund. He's a founder of the successful Digital Asset Protocol, met in Miami. And I said, you know, you're now the 581st venture capital firm in digital assets. There's 500, do we really need another one? So these are the things that give me pause. And then when you look at hype versus substance, the promise and tokenization is incredible, but the hype is ahead of the delivery. So I think, I think these are some of the reasons why you may have seen a top in digital assets and why you're going to see, I think, some rotations ahead. Yeah, at the same time, the foundation is still hardening.

So I was at that conversation with Garlinghouse as well. I mean, what's an episode with us if we don't mention Ripple, right, guys? But he made the point as well. He's like, I used to be the second largest market cap. And then I think I dropped the five solely because of people like Gary Gensler and Austin's friend, Amanda Fisher, you know, really came after him. So, like, my point is, is that at the end of the day, you are seeing a lot of, despite the near term, you know, cyclicality and maybe some of the hypeness that you're talking about, ROM, you still have this foundation that's getting set that that is a very positive tailwind that remains. Right.

Like in the internet, you know, the dot-com bubble, there was legitimate innovation. There was all legitimate. The internet did transform e-commerce. It did transform financial services. It did transform medicine. Now we have telehealth now. it all happened. Timing still matters in markets.

So, right. I would also say, I think this is back to the dichotomy at times between investing in actual economic progress. Right. It can totally be the case that a market is massively overvalued, but the technology or businesses are still massively important. Right. And that is part of what we saw in the original tech bubble, De Bram. Your point is like, yeah, that. may have traded it stupendous multiples that were not justified at the time, but that's not a

refutation of the internet. That's a refutation of some individual variables there. What I'm trying to pick out of this, and I'll be honest and say, I don't have an answer yet, is ignoring maybe Bitcoin, are the things we've seen, the things that will have captured the value 20 or 30 years from now? I'm not certain that the answer is yes. I'm also not certain that the answer is no, but it's one of those like nobody, in 1999 at the peak of the previous tech bubble was being like TikTok, right? Like that just was not a thing. That's a great point.

Also, not allowed to that. It's hard to identify the winner. Look at how incredibly competitive payments is. You've got the old guard trying to be relevant with J.P. Morgan and tokenized deposits. And by the way, they have a credible team. You've got Citibank at the CEO level talking about tokenized deposits. Then you've got PayPal involved. You've got Stripe entering the scene.

Western Union team. I'm going to put up with Solana. The competition is so intense. Can you identify the winner? At least we can identify Amazon. Maybe you were early by a year. But Amazon was the emerging dominant market leader. And they got to a point where they didn't need to issue new shares.

So if you know that, then you can hold your nose in and hang on. I don't know that I can identify the winners in this market. I don't know if you guys see winners. It's an incredibly competitive market. It's a well-financed market with high valuation. So, you know, I want to choose the games I can play where I have an edge. I don't know that I have an edge in picking the emerging winner. And, you know, we talked about, you know, one of the use cases is trading.

Now hyperliquids on the scene. Hyperliquid is, which I think is a really compelling story, by the way, out of what I see out there. But now you've got Astor backed by Binance. They're on the scene now. Part of me he thinks is like, is this the DUI-D-X from 2021? Then someone else shows up a quarter from now. So it's just a challenging, challenging market, just to, I think if we're being objective about it. Yeah.

And remember, most of these projects, Bitcoin on Ethereum aside are less than five years old. So people forget how early it is. The other thing is that, you know, if you're a developer in the space until a year ago, you may have gone to jail. And as that starts de-risking, you're going to see some of the 30 million developers in the world, say, wait a second, this convergence thing is happening. Every company is adept because it's holding a digital asset in some way, shape, or form. I need to be part of this. So, like, I think we're really, really early in the cycle.

I think you're going to still see the TikToks and the Facebooks. Could it be some of these projects? For sure. Some of them have beautiful product market fit. Prediction markets are on fire right now. I mean, I just saw an entire segment on Sunday, the Boomer Sunday CBS, whatever I watch, and there's polymarket and cal sheet all over it. So you're seeing a material shift in the narrative, and a lot of these technologies,

like prediction markets are now mainstreaming. That's exciting. Is it 16 minutes the equivalent of the Economist magazine cover where it's a rearview mirror? And now the now grandma and Target knows about prediction markets. So I think there's an Inuit tribe in Alaska that may not have heard about Kalshi at this point, a polymarket. I think they just found out. You just found out last night, right? Yeah.

I'll say the board case is this. It's always good to ask ourselves, what's the, what's the bull case? So I'll lay out that side of thing. So people don't have to take Prozac or psychedelic, sort of the latest thing is here. Sir, Conan in. That's all right. think it was shrooms. Wasn't that what Brian Johnson was doing?

Brian Johnson, that's the new thing. That's new theme, new theme, new me. So one is you're going to have a new Fed chair, and that Fed chair will be dubbish, and that Fed chair will be able to influence policy, not set policy. Obviously, there's an open market committee that sets policy, but they're going to have a big thumb on the scale. And Steve Moran is now a member of the FOMC. He's an outlier in that view.

but you'll be less on a set. That's a significant consideration. That's one. Two is this talk about this $2,000 stimulus. Again, requires congressional approval. Congress like suspend. Midterm elections are coming up. Does something like that happen?

If yes, you're going to get an impulse. I think assets get sold into that impulse. I don't think sustainable. It's not the same. It's going to be a magnitude of 2021 back-to-back-to-back trillion dollar stimulus. but I think there will be an impulse. So that's two. Third is the promise of AI innovation is real.

The promise of payments innovation and lowering of transaction costs and real-time settlement is also real. So that's what your bill case would look like. You've obviously got a good seasonality right now. And things are technically oversold. I guess another thing I would throw in on the bullcase front is that everybody is incredibly bearish right now. Right?

Like if you look across Twitter, if you look at sentiment, if you look at fear and greed. Everybody, like, I don't have a single person in any of my timeline and any of the chats that I've been big. Like, Bitcoin is totally going to 250K. Like, we still believe that. Right. And so score that is at least one for Michael Saylor not going down as the MySpace Tom, right, of this space in time. But, you know, counterpoint every once in a while, everybody's bearish and it's right.

So like C FDX. All right. Well, Chris, you had one topic you wanted to troll me about for a bit, but I think we're out of time today because we have fulfilled our contractual obligation to mention XRP or Laura will get mad at us. Yeah, but good job last night on 60 minutes. If you guys didn't see it, Bitten Bits own Austin Campbell was there front and center. What was that like, Austin? Okay. So, Chris, you've done this before, too.

And one of the things I think you don't see from the outside is that they record a huge amount for a show like 60 minutes. They've probably got half an hour of tape of me. And then they use like 12 seconds of it. Right. They basically find the best things that you've said that fit into the narrative to tell a story. What the guy I think is super interesting, though, and probably you don't see this from the outside to the point of this starting to become mainstream, though, is as I've been dealing with the media for years, the level of understanding here is getting significantly higher.

So they were looking, you know, as a reporting team at how to tell the story. And literally I was like teaching them how to use Arkham. And then they figure out, oh, wait a minute. I can track all these wallets on chain. I can see all of this data. I can use all of these tools. It is a whole different level of sophistication. And so I would tell everybody who thinks that was an anti-crypto piece to pump the brakes

go back and listen again for when anything negative was said about crypto as an industry, and I think you're going to have a very hard time finding it. I'll take that side of it. Okay. So one, the way they portrayed CZ, they didn't introduce him as the founder of the most successful international digital assets exchange. They portrayed him as they said, it's a acary. He is legally a felon.

but to summarize someone with one word without sharing the full picture. Then they use the term, quote, when he walked out of prison, the imagery around that. Every single time, they were factual, but paying a brush where they were advancing a perception that they wanted to be honest to hear. The third one, they're talking about, you know, they were talking about CZ and Binance financing like Hamas and a lot. stuff. But they did it through, well, firms that violate BSA and now may be known to do. It's like, but the way they string these words together, it was, I thought that was just unacceptable and it was completely slanted and biased from that perspective. Even the last closing, they said, when, you know, there was a $2 billion investment, they made it look as if $2 billion.

dollars transferred into the family in the Trump family. The reality is that it was a source of liquidity on Bynes 4 pool. Yes, there's a commercial relationship. That's accurate. That's correct. But someone that's not in the industry or is critically thinking about this and can parse the language would walk away claim of the $2 billion wire transfer. And this is not accurate. So I thought I thought, but hold on. That's that's not the point I'm trying to make. And here. the media shift. So I agree with you that I think they were painting Binance in a negative light in light of this activity. But my point is they weren't carrying that over to the entire crypto space. Like if everything you said is true, nowhere in there did they imply like Coinbase is

doing this or like, you know, Whipple is doing this or like Ethereum Foundation is doing this. And in past pieces, people would be like, well, look, this one person in crypto did this bad thing and the whole space is exactly like that. I think. think we've leapt beyond that to the point where now there's becoming differentiation between actors within the space, which is a sign of maturation of a space within the world, right? Crypto is not just like one big ball that every, like SBF, same as everybody else in crypto is not the thing anyone. Yes.

I mean, look, what's their main headline? Their main headline story isn't around crypto, right? the headline is a commercial relationship between Trump, World Liberty Financial, and some others. So I guess, but Chris, what's your take? You saw the show last night. Hey, any press is good press for the industry in a way. I'm serious. Like, you know, the fact that we're even talking about crypto and it's hit, you know,

the most mainstream audience of all, it's probably pretty good. You know, 50% of the people that watch, I mean, probably not 50% are Republicans, but every Republican who watches that is going to say, president did nothing wrong. I'm overgeneralizing it. And they're even getting more entrenched on getting excited about crypto. So like, I think by and large, whatever, like, are we surprised? People are looking for juicy stories. But the fact that crypto is part of the mainstream narrative is not.

not bad for our space. And I think its brand is cleaning up in time. So, you know, we're becoming less and less fringe by the day. Quick question for everyone here. It can be short form response. Was the pardon of CZ appropriate given the facts and given historic oppression standard? I would say yes. I will say no. I'm on record as having said no. Like, I'll say it this way. Okay. I think there was unfair double standards between CZ being sent to jail and bank executives not being sent to jail. But I have pretty firmly been on the side of yes, and we should send those bank executives to jail. So I will, yeah, I will agree with you that CZ was not treated in the same way as bank executives.

But I don't think that should exonerate CZ. I think the CEO of some of these banks or their chief compliance officers should have been doing jail time. There was violations at BSAML. No question. not to speed at that. And sometimes knowingly at the banks as well. Like if, so here's a good example.

If you guys are familiar with the HSBC case, where like literally had dudes rolling up with boxes the exact size of the teller window with round numbers of bills and just shotguning like 30 of them through. And then HSBC being like, seems fine. Like, how could you have that fact pattern and not send anybody to jail? Right.

So I think we're seeing the same. I say, look, if you're, it was mistreatment, it was disparate treatment of individual that didn't match the historical precedent for similar deficiencies in an AML compliance regime. And if you're going to have rule of law, you should have fair treatment. So, but, you know, six minutes and talk about that. Yeah, that's the part they cut out of Austin's part, right? As you probably talked about that for 25 of the minutes. Well, I was going to say, I did talk to them about that heart. I would tell you, I think if you were to shoot the 60 minutes team doing that up with

Truth Serum, they would have wanted all 60 minutes for that story because it's pretty complex here at all. Yeah, cool guys. All right. So on that note, we will be back next week. So thank you for joining us for this episode of Bips and Bips. Until then, everybody, take care.