Unchained - The Chopping Block: Are We Back? The 'Low IQ' Response to the Potential Spot Bitcoin ETF - Ep. 561

Episode Date: October 26, 2023

Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest news. This week, the four discuss Bitcoin’s price surge over the past week amid growing optimism that a spot BTC exchange traded fund would win regulatory approval, an erroneous Wall Street Journal story about crypto funding to the terrorist group Hamas and AI and crypto illiteracy among leading U.S. lawmakers.  Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, TuneIn, Amazon Music, or on your favorite podcast platform. Show highlights:  the reasons why the price of Bitcoin has gone up so much in the last week whether Bitcoin is decoupling from the traditional stock and equity markets  why Robert is convinced that Bitcoin pumped this much due to the BlackRock ETF news what an ETF is and why it could be a big deal for Bitcoin whether the analogy to the gold ETFs works for Bitcoin how an inaccurate report from the Wall Street Journal about Hamas' usage of crypto sparked so much criticism within the crypto community why that crypto is not a good venue for illicit financing how the US political class is 'illiterate' about AI and crypto, according to Tarun Hosts Haseeb Qureshi, managing partner at Dragonfly  Robert Leshner, founder of Compound Tom Schmidt, general partner at Dragonfly  Tarun Chitra, managing partner at Robot Ventures Disclosures Links Recent coverage of Unchained on spot Bitcoin ETFs: Why a Spot Bitcoin ETF Will Probably Launch No Later Than January 10 Why It Looks Like BlackRock Could Win America’s First Spot Bitcoin ETF Bitcoin ETFs Unchained:  Bitcoin Soars Past $35,000 Amid Spot ETF Optimism Bitcoin ETFs Explained: What Are They & How Do They Work? South China Morning Post: China’s stock market fund outflows add to biggest capital flight since 2016: Goldman Regulation: Reuters: US lawmakers urge White House crack down on Hamas use of crypto after Israel attack Forbes: Elizabeth Warren Is Building An ‘Anti-Crypto Army’—Feeding Serious U.S. Bitcoin Ban Warnings WSJ: Hamas Militants Behind Israel Attack Raised Millions in Crypto Cryptoslate: Crypto community accuses WSJ of exaggerating Hamas crypto funding by 99% Learn more about your ad choices. Visit megaphone.fm/adchoices

I don't want to say we're back or we're so back, but, you know, as an industry, I think there's a little bit of animal spirits that are creeping into all the conversations. And I think it's energizing for investors, for founders, for speculators, for media, you know, there's some mojo coming back. Not a dividend. It's a tale of two quond. Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. I'm in the trading firms who are very involved. I like that eat is the ultimate

Defi protocols are the antidote to this problem. Hello everybody. Welcome to the chopping block. Every couple weeks, the four of us get together and give the industry insider's perspective on the crypto topics of the day. So quick intro is first. You've got Tom, the DeFi Maven and Master of Memes. Hi.

That's all I got. I don't know. I feel like people know my knowledge. Everybody, we decided to start doing this thing when we do the intro. Everyone says something. And that was all that Tom's got as high. So it's a good way to inaugurate this nutrition.

I'm a GM, so, yeah, I'm tapped out. Robert, Crypto Connoisseur and the Tsar of Super State. GM, everybody. There we've got Tarun, the Gigabrein, the Gigabrein and Gran Puba and Gauntlet. Erdush. And I'm Haseeb, the head hype man at Dragonfly. We are the early stage investors and we are the, we are early stage investors in crypto, but I want to caveat that nothing we say here.

Haseeb, you're giving yourself an upgrade. It's a full market, right? One of the big fund partners take kind of leaves, and all of a sudden now Haseeb's like, I'm the part. Look, I'm feeling giddy, okay? Numbers up again. Bitcoin's doing well. Suddenly, all of a sudden, we're cool kids again.

And I'm feeling it. I'm feeling excited. Are we, are we? Let me finish the disclosures. Let me finish the disclosures. Nothing we say here is investment advice, legal advice, or even life advice. Please see chopping block that xyz for more disclosures. Okay.

So in case you haven't noticed, Bitcoin is up. Bitcoin touched $35,000 yesterday. We're taping this as of Tuesday. I'm sure Bitcoin's probably at 60K plus by the time you're listening to this. No, so Bitcoin's up over 100% this year so far, despite the fact that a lot of people have been dooming and glooming for most of this year. Now, why exactly did Bitcoin go up so much? Nobody really quite knows.

It's kind of said that, well, maybe it's some ETF excitement, although the ETF has already been kind of barreling toward launch. There was a story yesterday that BlackRock, which is supposed to be launching their I shares, Bitcoin Trust, finally got a QSIP and a ticker. and that ticker was listed on DTCC as IBTC. And this seemed to get the whole internet excited that this was all imminent and it was about to happen. And then boom, Marcus just kind of went vertical. So it's been an interesting day.

Normally my Twitter feed is a lot of people talking about intense and kind of complaining about why there's no product market fit in crypto. And for the first time in a while, my feed was just people celebrating. Guys, how does it feel to finally be in a real industry again? You know, I don't want to say we're back or we're so back, but, you know, as an industry, I think there's a little bit of animal spirits that are creeping into all the conversations. And I think it's energizing for investors, for founders, for speculators, for media, you know, there's some mojo coming back. I think you have to issue an apology to the coin telegraph intern from last week who got

roasted for the false tweet. But, I mean, also, I mean, if you do think. the ETF is sort of the source of news. There was also the double fakeout, right, where it's like, the TIGRIO out list on DTCC. Then it got removed, and then it was just re-added like an hour or two ago.

And so I don't think anyone really knows what's going on. It's all been kind of silly. Well, the reason why the ticker matters is that supposedly this is one of the final steps before an ETF actually gets listed. Or it's, you know, it shows that BlackRock's like,

yo, this ETF is ready to go. Just give us the word, and then we're going to get it live. And I think made people feel like it's real. And to be, clear this is happening amidst a backdrop where equities are getting killed across the board. And so there was a period of time when Bitcoin was basically trading in line with equities. And every day you saw whatever the NASDAQ was doing was what Bitcoin was doing.

Now, a lot of that was mostly due to macro. I think it was rather than being tied to equities, it was more tied to interest rates. But interest rates have been kind of actually sitting, actually pretty negative. For a while, we've seen this story of hire for longer, which is that interest rates are not going to come down quite as soon as people thought. but crypto has been pretty resilient. And I think it shows a real decoupling between equities and crypto, which is good. That's part of the story that people have been wanting to tell about crypto for a long time.

I mean, I think there was an article yesterday or two days ago that we had the highest amount of capital flight from China, like ever from their Chinese equities market. I think it was like $75 billion. I forget if it was this year. I think it was this year annualized. So like, if it's that, if there's that much capital sitting out there, it has to go somewhere. You know, and I feel like crypto is probably the easiest thing for foreign assets leaving China to go to. So, you know, maybe it's a little too simplistic of a theory. The timing of it doesn't, yeah, the timing of it does not line up, right?

Like, clearly this is a U.S. regulation driven move. No, no, no. I agree. I agree. But that money has to get reinvested. And, like, they need any news to go, you know, I feel like, I'm not. not convinced it's like American dollars that push this up. I'm convinced. Rob, why are you convinced? Well, I'm convinced because so much of it has tied on a temporal

basis to the BlackRock Bitcoin ETF news. And, you know, whether it's like fact or, you know, causation or correlation or biases, everyone I've been hearing from on crypto Twitter, in telegram groups, like everybody is pointing towards the BlackRock ETF as their motivation for logging Bitcoin. And so even if there are other ancillary flows, you know, Bitcoin is directly causing people that you see on the internet to respond with like not even necessarily correct assumptions, but to say, well, BlackRock UTF is going to be approved. They're the big asset manager on Earth.

Bitcoin's worth less than a trillion. they manage, you know, close to $10 trillion, Bitcoin go up. And like, it's the low IQ response, but there's so many people making that response. Okay, let's take a step back. Robert, can you explain for the audience? What exactly is an ETF? We've been talking about this story for a long time, but we never actually really explained what an ECF is and why it matters that supposedly BlackRock is going to make one for Bitcoin.

So that's a great question. So I'll try to summarize what an ETF is. So an ETF is an open-ended investment vehicle. It's not a closed-ended vehicle that raises capital and then invest that fixed amount of capital. It has a flexible amount of capital that it invest. And the way it works is an ETF has a benchmark or a basket of what it's trying to buy, which is generally disclosed in the name of the fund and the prospectus. In this case, if we're using the Black Rock Bitcoin ETF as an example, its goal is to buy Bitcoin.

And when people want this asset, they can buy it, you know, whether it's going to be on, you know, Fidelity or E-Trade or Robin Hood or wherever they're able to access investments from a brokerage account, when they buy this ETF, it puts upward pressure or market forces on the ETF itself. And what happens is shares of the ETF are created and destroyed based on market demand. Every ETAF has an authorized participant or multiple authoritative. participants that effectuate the process of making new shares or redeeming shares of the fund. And what happens is when the price of the fund gets a little tiny bit over the fair value of what it's supposed to be, these authorized participants go out and make more shares of the fund.

And they do this by, in the case of a Bitcoin ETF, buying Bitcoin, stuff it into the fund and getting new shares, which they then provide to the market itself. And so using this structure, a fund is able to very easily take in, as much new demand as it can as people are able to invest in it without having to like launch another fund or increase an investment mandate. It can scale from zero to infinite essentially very smoothly and very elastically. And it's an important thing to note that ETFs are a relatively modern financial instrument. They didn't really exist until the mid 90s. They only exist because, you know, the SEC was, you know, willing to work with industry participants and

create new investment vehicles, but it's a relatively new structure. And it's conquered everything over the last 20 years. ETFs went from like an experiment to being a market dominating instrument. And so they've won the market because they're so flexible and they work so well. And so the public's perception of a Bitcoin ETF is that whatever amount of demand exists out there that's not currently flowing into Bitcoin because most people don't know how to sign up for Coinbase and they don't know how to buy Bitcoin directly or they're already set up with Robin Hood and E-Trade and Vanguard and the things they already use, that there's all of this latent demand. The bar is still a little bit too high.

And once there's an ETF, it's easy enough for the broad public to move their capital into it. And indirectly, every dollar they move in winds up buying a dollar of Bitcoin. And so the expectations are it's lowering the bar. It's making it easier. More capital is going to flow in. and that's going to lead the price appreciation. So, okay, we've talked before about that story, which is, okay, the bar is being lowered.

It's easier to buy it in your Schwab account or whatever. Of course, many of these brokers already offer buying Bitcoin. It's not easy necessarily, but, you know, like Fidelity has it, and you can buy it. And there's a bunch of folks who have partnership with Coinbase, so you can buy through CoinBad or whatever, things like this. It seems to me like the bigger story is more around institutions. And this, I mean, you know, for us, we speak to a lot of institutions.

And when we say institutions, we mean like, you know, family offices, endowments, these kinds of, these kinds of organizations. They have a really easy time buying Bitcoin if they buy it in an ETF. Because ETFs, everything they buy is through ETFs, right? For example, you want to buy gold. How do you buy gold? The way you buy gold is you buy it through the I shares gold ETF. That is the most liquid form of gold in the world is the gold ETF.

And so people are kind of analogizing that, okay, well, if, everybody in the world is buying their gold this way, and gold is gold, you know, Bitcoin's trying to replace gold in some sense. Maybe this is the way that we're going to see Bitcoin become institutionalized and the way in which eventually central banks or whatever are going to buy it is not by buying spot Bitcoin and having ledgers in a vault somewhere, you know, they're going to do it by buying ETFs the way that they buy, you know, all these other financial assets. That's the story. And I find that story to be plausible. The question really is how big of a deal actually is this in the long run? Well, I would posit that it's less a big deal than gold,

simply because what an ETF allows you to do is buy essentially an infinite amount of the asset, not infinite, but a crazy large amount of the asset with the same amount of difficulty as buying a small amount of the asset. Now, gold is something where even buying a small amount of gold and storing it is really difficult and really cumbersome prior to their being an ETF. Like if you prior to ETFs wanted to go out and invest in gold, often people are investing in gold miners because that was the easiest asset to gain exposure to them. And ETF makes you able to have the ability to drop as much capital as you want into gold at the click of a button into gold itself and not like some like adjacent investment that's correlated to it.

And, you know, right now you can drop a huge amount of money into Bitcoin with a click. Like that isn't as profound of a change. Whereas gold, I mean, just the storage difficulty and costs and cumbersomeness of the, physical commodity that takes up meat space was difficult. And, you know, one of the biggest advantage of the Bitcoin that everybody has been trumpeting for the last, you know, 10 plus years is that, you know, it's not heavy. It doesn't take up any space. And, you know, moving a million dollars of Bitcoin is the same difficulty as moving a dollar of Bitcoin. So I don't think the impact will be as big, but I still think it's going to be big. Yeah. And it is also true that like, look,

as much as we all think of Coinbase and these other organizations as being very trustworthy institutions, but in the perspective of a very, very large financial players, you know, if you're a sovereign wealth fund, if you're a central bank, if you're even just like a very large foundation or endowment, you don't think of Coinbase as a big trustworthy counterparty. You think of Coinbase as like, you know, what, $10 billion. Yeah, but the irony is that a lot of the ETFs are custodying at Coinbase. So you're sort of implicitly doing the same thing, even though you might not be realizing it, Mr. 30 IQ

ETF purchaser. 100 IQ. Once Black Rock is on board, it's sort of like you've got the full faith and credit of Black Rock, which is, you know, how much assets they manage? Like in the trillions,

there's the largest asset manager in the world, right? And so it's kind of like, look, if Coinbase's custody business goes under, like Black Rock is going to figure it out. You know, that's kind of more or less what you're assuming when Black Rock puts in on this thing. I get the liability shield insurance stuff,

but there is still some irony. that the person who didn't buy is like implicitly kind of taking CoinBases services. So they might as well have cut out the middleman. A lot of the advantage of this is not the actual underlying mechanics, but rather that you don't have to bring any of the stuff up to your investment committee. So when you're like, hey, we should go buy some Bitcoin. No one ever has to mention the word Coinbase. No one ever has to mention anything but BlackRock and ETF and yes or no and boom.

And that I think is what actually does grease a lot of the wheels of how Bitcoin ends up on more institutional balance sheets. Although very sophisticated market participants will understand the nuance of each ETF, what the small edge case risks are, and how to price it differently to physical, as well as other ETFs. I mean, the same thing happens in gold, you know, and other assets where there's multiple ways to gain exposure to one underlying asset. The most sophisticated hedge funds out there will be like ripping apart these documents

to figure out exactly how they work and why they work. And being able to put on, you know, trades of course. Like one thing we haven't talked about, which I actually think is worth mentioning, is that one of the other advantages of ETFs is that you can have derivative instruments tied to them. So an ETF could have a whole slew of options that trade on top of the ETF. And so what this will unlock is just new ways for people to like have complex, you know, positions built on top of Bitcoin that they might not already have access to. And so I do think, you know, some people are going to say, well, what is like the extreme edge case put worth on a Bitcoin ETF? that might represent the custody risk, you know, inherent in it and like be able to price this out in really interesting ways.

That's very true. Right now, if you want Bitcoin options, you kind of have to go to Deribit. And Deribut, obviously in Crypto Land, we're finding the Deribit, but if you want to get institutional capital, you know, buying and selling Bitcoin options, it's not going to happen on Derivit, most likely. I'm just not that convinced that the lit market derivatives are going to be better than the non-KYC market derivatives or like approximately non-Kyc. because not now.

Yeah, I just kind of feel like crypto has been in five years. I draw the line out. Particularly good at building its own derivatives markets elsewhere, right? Like, this is why I don't, I feel like the gold ETF comparison is kind of like useless. Because as someone who used to trade commodity futures, I will say that like I generally view the products in traditional finance is like shittier than crypto in a lot of ways. UXY is dealing with the fucking clearing agent, the CME, tell me. you that they're changing a order type and you can't argue with them. I honestly think the

derivatives market's actually worse in the traditional world and from a what you can do with that manner. So I kind of feel like we're going to just get boring vanilla stuff. Like look at the CME Bitcoin product. Like they don't even have like a good like good enough strip of like options on futures to make like a VIX on it correctly. Like the entire thing is like kind of useless. It looks like a kind of shit version of everything we see in defyver. But that's why a spot ETF is more exciting. Is that like the CME futures are not that liquid. Like there's not even like liquidity between calendar months at all. Yeah, yeah, yeah, but I don't know if this will, I think this will fix that, right? This is like some duct tape around a shit sandwich that is the current, you know, U.S. regulated crypto stuff. But I don't think this is going to be

some like grandiose thing. Now, will the ETF mean that there's going to be more people in their retirement accounts trusting it. I think this is more about the branding aspect of like people being like, oh, this is way more legit than it is about like market efficiency. I honestly feel like the crypto markets themselves advance themselves a lot faster than most things in traditional. I would argue that most people who leave traditional finance for crypto leave for that reason. They like they like they kind of can see that in it. Yeah, because crypto leapfrogs all of the tech of the last generation. And now it's like everyone's excited that like it's going back to the last generation of tech with exposure to a crypto asset.

Well, they're going to coexist, right? Like, there's going to be the global unregulated market for a long, long, long time. I don't think even in five years, this global overseas market is going to go away. But it's going to coexist with this regulated onshore market that's very clean and spick and span. And yes, it's kind of old and janky. But, you know, if you're like, look, I need to hedge this weird risk that I can't hedge through the CME, if you're smart enough and you're, you know, you have enough tentacles overseas, you can find a way to go on Binance or Derbit or whatever the future,

you know, whatever the last survivor of the Wild West is going to be and go hedge your risk over there instead. I think the more interesting thing to me is going to be the fact that the capital flows in crypto tend to have this like domino effect. It's like Bitcoin goes up. Old school Bitcoin holders start selling and buying other assets, maybe ETH, maybe Seoul, whatever. And then those have a much higher run because,

there's a little lower liquidity and there's this like trickle down kind of like Pachinko like thing going on. You know, you know that game that like you, you know. Yeah, yeah, yeah. Let's throw some Pachinko on the screen real quick for this. This is kind of how things move. Whereas in the traditional markets, oftentimes what happens is ads or removes from an ETF. So like, let's say I'm trading a biotech ETF.

If the biotech index person removes a particular name, then a ton of people who are tracking the ETF or like, you know, have to hold the ETF, have suddenly sell a ton of that, right? And a lot of the liquidity games in equities really depend on like the fact that like there's so much of this passive capital that people are sort of tracking and that completely changes the inflows and outflows. But in crypto, it's kind of different, right? It's like this Pachinko thing.

And I think that's sort of why I'm not sure how much the ETF influences the grand scheme of market structure. I think it just helps them like grandmothers, like, ensure that their 401k is slightly more crypto-heavy. Well, some grandmas and some pension funds. I think it's a little bit of both. Yeah. Yeah. Yeah. Well, that, that, I mean, those are related. Very indirectly, yes. Or I guess, rich it out directly. Okay. So, TLDR, number went up. Everyone happy. Let's hope it keeps going up because just for some very quick numbers for those of you who are playing at home. Bitcoin right now is up about 100% on the year. The NASDAQ, by comparison, is up about 35% on the year.

So Bitcoin has pretty dramatically outperformed the stock market, even despite the fact that the tech sector on the whole and the NASDAQ is pretty tech-heavy has been doing well. Bitcoin has just been crushing for the year. And of course, ETH, not far behind. Now, on the other hand, there have been some negative stories going around in the news. So, of course, there's a big conflict that is brewing in the Middle East between Israel and Hamas.

And there was a story that took place recently from the Wall Street Journal talking about how Hamas had received supposedly a bunch of donations in the form of crypto. And this led Elizabeth Warren, a U.S. Democratic senator, who's known as being very far left in the U.S.,

to announce that she was going to try to galvanize her anti-crypto army, as she has previously called it, to try to get a new law passed to crack down on terrorist finance. financing and illicit uses of crypto. Now, the problem with the story is that despite the fact that the Wall Street Journal published this story claiming that 90 million plus dollars of cryptocurrency were received by Hamas,

this turned out to be incorrect. Actually, there was a story that was put out by chain analysis, which is the leading company that works with law enforcement and government agencies to try to track down the flow of funds in crypto. They're basically more or less the world experts at this stuff. They published an analysis that showed that this is totally wrong. this was the wrong way to read what was actually happening on the chain, looking at the events on chain,

which everybody can go see for themselves, what the Wall Street Journal used as evidence, which is the beautiful thing about blockchains that you can just go look at it yourself and see, ah, here's the sleuthing they did. And actually, they sort of misread the chain of transactions. And in reality, the amount of capital you should be attributing to Hamas is $450,000, not $90,000.

Wall Street Journal has not published a retraction, but everybody on crypto Twitter is mad at them because they seem to be giving fodder to people who are now spreading the story that crypto is once again being used to do bad things in the broader world. Any thoughts, reflections on this whole Hamas crypto stuff? Well, my reflections are really quite simple. For those of us that have been in the industry for a long time, you know, for law enforcement that's been working in the industry a long time, there's a public understanding that crypto is just bad

for illicit financing because it's so transparent. You know, circa 2011, 2012, when nobody knew how to do all of this stuff, yeah, everyone assumed that, you know, crypto was for bad actors and bad things. And that narrative has stuck. But to everybody that's like evolved from the 2011-2012 era, we know just fundamentally how bad of a tool it is for illegal finance. You know, for certain other things that's the only payment rails, like where people are what was that phrase

where they're like locking the computers? Ransomware. Ransomware. For ransomware. For ransomware. All right, grandpa. Yeah, yeah, yeah. Locking the computers. I feel like you should write ransomware for babies with that.

Right. Oh, good. For things like ransomware where there's no traditional payment rails available at all to ask for ransom. Yeah, like they use crypto. But all the crypto they use is radically transparent in like where it's going, you know, how it's being used and it's able to be tracked. You know, crypto's not great at illegal finance.

Hamas recognizes this too. They put out statements previously saying, don't send us crypto. It's too easily tracked and seized. I mean, Israel just asked finance to freeze all their assets of finance and that happened almost like on October 8th, like within 24 hours. Absolutely. And so the frustrating thing is to see misinformation that becomes the basis for more misinformation in this negative feedback loop because, you know, the Wall Street Journal runs

an incorrect story. I've now seen so many stories that cite the Wall Street Journal article as fact, which now there's not one story that's misinformation. There's 50 stories that are based on an incorrect publication. And we're winding up in a position where there's a factually incorrect narrative that's spreading. And, you know, this is just really frustrating. to see as an industry participant because there's such an understanding within the administration about combating misinformation in other sectors and in other places online where there's an embrace very clearly of misinformation that's happening with reporting regarding the use of crypto in terrorist financing. And that's frustrating.

I mean, look, for the Elizabeth Warren camp, this has always been her calling card, is that crypto's evil, technology generally is evil, big, somehow both big. big tech companies are evil and crypto just trying to disrupt traditional companies as evil. Basically, everything that is not, you know, I don't know, small business financing or her particular constituents is evil. So, you know, I don't think that she cares whether or not this story is true. It's like emotionally true. And I think that's the basis for them kind of taking this moment to grandstand and say, oh, look how crypto is so evil and it's doing all these terrible things. I totally agree with you, Robert. This story, the sense that people have,

that crypto is mostly used by thugs and terrorists and bad guys has really, it's incredibly sticky story despite the fact that the facts on the ground have changed. And you go talk to FBI agents, you talk to prosecutors, you talk to all these people, and they're like, yeah, using crypto for crime today is stupid. It is not a good idea because literally that means there is a public record that stays around forever, that if you ever mess up once, we can find it and we can track it down, or we can make it impossible. for you to cash out that money, which does not apply to almost any other form of currency.

Most other times, if you get your money out and you do your getaway, you have the money. It's done. Unless they catch you, it's game over. And crypto is the one thing that we're still discovering. I mean, that's why you have something like Zach XPT, who's going out discovering all these frauds and scams. There is no such thing as that for, like, the normal world. There's nobody who's just sort of looking around on the internet and being like, ah, I can tell that this person is stealing money from their customers and something, something, something.

it's only possible because it is so easy to divine these things by looking at the actual record on the blockchain. So it, yeah, it is frustrating to see, but in a sense also unsurprising that this is how, you know, political actors are using the present moment to their advantages. Tom, you got a hot take? I don't have a hot take. I mean, I think it was exactly what Robert said, like Hamas themselves, who said, hey, don't know it's crypto. And actually the crypto contributions have fallen off massively in the past, like, two years. So basically nothing. All this stuff is kind of very heavily backdated or backweighted anyway.

So, yeah, I mean, it just feels like people tell the story that they want to tell independent of the facts. Yeah, I do feel like the U.S. political class's ability to be so illiterate about both AI and crypto is one of the most fascinating things I've ever observed. It's like actually kind of shocking. I mean, the EU seems pretty illiterate about AI, of course. Is there any political class that's good at these things? I feel like you go to Asia. It's totally different, right? Like, at least they... Really? In China, I just not see much better. At least like Singapore, India, at least there's like a light bulb going on in people's brain

everywhere else. It's like, oh, we elect 90-year-olds who have like two neurons, two functioning neurons and maybe sometimes zero because they keep freezing on TV. I mean, yes, but even like a couple years ago, the Japanese Minister of Technology had never used a computer and refused to use a computer. And that was a big story. That does sound crazy. That's nuts. That's pretty legit. Wow.

Yeah, I look, I kind of, yes, maybe. I think also at the same time, like you have a lot of push within the administration to try to crack down on privacy. There was a story a little bit earlier about FinCEN creating a new designation for mixers and basically try to rope in a lot of other categories of things in Defi or just normal type of wallet behavior, such as for example, anonymous. your address after, you know, like sending something to a fresh address, them considering that to be mixing activity, which is kind of crazy, right? Obviously, that's just a baseline of good opsec, which there's no nefarious reason behind doing that is just wanting to make sure that it's not very easy to track down what you're doing, just for your own financial privacy reasons, it's not because you're trying to obfuscate or create some big anonymity set for yourself. And so at the same

time, like, there is this very intentional seeming understanding from the administration about what they're doing and how they're targeting different at, like they're trying to sort of crack at the, or chip at, I should say, the boundaries of how we think about the industry and where the regulatory surface area should lie. So I think it's kind of both. In some sense, I guess there's enormous ignorance, but there's also very clear and tactical strategy behind trying to erode at the legal and regulatory boundaries of what we're doing in crypto. Yeah, I mean, if you take that kind of like 500,000 foot view, right? Like, crypto's trying to disrupt some notion of, like, societal trust.

And, like, obviously that's going to, like, bristle certain feathers of people who are gatekeepers of societal trust. But at the same time, I don't even think the gatekeepers understand the power they have and don't have, which is, like, even more embarrassing to me. They kind of just, like, try to, like, they can, I feel like they don't even understand, like, the powers of, like, this Elizabeth Warren thing. like they don't need to understand the idea that you can like freeze most of those assets that they're adding up right they're just like oh we added up number number big post number to wall street journal

wall street journal dumb they write it you know like i'm just trying to give you the like you know very simplified view of this but it's just kind of like it feels like that's the entire like brain process and it doesn't even feel like it's bothering to be even slightly more strategic like you would think that if they wanted to do an attack that yes this is successful but that they could have added a little more defense mechanism into the evidence. And there was like none. It was, it's just like, I don't know. It strikes me as like just misguided.

I think the other thing that's kind of interesting that I've observed about Congress is there's like this cadre of econ slash law professors who are all super modern monetary theory stands who are like the ones who are like pushing the anti-crypto stuff with legislators and people in Congress. And I feel like those people are just mad that MMT didn't work, right? Like, I feel like the soft landing stuff is like kind of an indictment a little bit of like some of their initial thoughts of like we can keep printing forever. So there's this very funny cultural overlap I've observed between those who are like writing these like half-baked crypto things and those who are, you know, of that ilk

and all of them are a bit air-headed to me. I feel like there's a little bit of bombastic retort with little bite. If you start asking like 20 questions, and maybe that's sort of where I stand on this. That's not really a spicy tape, but I was just a rant. Well, you know, the one thing that people love about the show is that we're politics experts. Yes.

That's especially American politics. Everyone on crypto Twitter is just like an expert in New Field every few weeks, right? Yeah, every week there's a new topic that we're all experts in instantly. Yeah. I've been in a lot of telegram groups that became experts on the Middle East pretty much overnight, which was very impressive because it takes a lot of knowledge to know a lot about the history there. But anyway, to not embarrass ourselves any further, I think we're going to keep this show short today because it's a bull market and we're all celebrating.

You know, we could use a win. I will just say one thing. A lot of people on crypto Twitter have been very excited about this account that's been getting a lot of attention named G-W-A-R-T. There's been roasting a lot of people on crypto-t Twitter, a lot of V-C-s, a lot of founders. I mean, I've been roasted by Gort for months at this point. Well, that's funny, it's funny you say that because we did just get confirmation that actually Taurun is Gwort. Not true. No, we didn't get confirmation.

We got strong evidence that what suggests. We got a very strong tell that Taurun is Gwort. I hear that the Wall Street Journal is trying to hire Haseeb. Well, I'm known for my journalistic excellence, so that's very thoughtful of them. So anyway, you heard of your first, Turrude is Gwirt. Go ahead and shout that for the rooftops. No, it is true. It is true.

Look at that. Look at that. Look, he's trying to. I think if I were actually funny on the internet, then you could give, you can maybe plausibly make a case for that. But Gwart is a little bit too clever, like in a way that, like, I don't even aspire to be because I feel like it would be painful to be that good at. The humility, the humility.

You see, it's coming off of him. He's trying to throw us off the scent. But, you know, America, not America, I guess what? Internet, you decide. I'm excited for the Twitter army to be on your case. When after this episode comes out, being like, no, you're wrong. All right. Present all your evidence.

Present all the evidence on Twitter. All right. If you feel like we've gotten this one wrong, write in. and we'll present the results next time. Also, if there, you know, as someone who, unfortunately for this quarter has been going to a conference every other week, I will say one thing we haven't covered a lot of, mainly because of SBF and legal stuff and boring stuff, is technical content or things of that nature. So if you are listening and there's anything you want us to feature, you know how we had like an MEV episode earlier this year, probably need another sort of roll up episode. anything you want of that form, definitely right to us. Yeah, we're going to need an intellectual palate cleanser.

Thankfully, it's a week off from, Robert, how does you create those fireworks? What was that? So somehow my computer, if you like make hand motions, sometimes it turns into like, I honestly can't explain it. If you're watching the episode on YouTube, you'll see this. It's actually quite embarrassing. If you're just listening and you have no idea what just happened. That's some real granddad stuff.

I love that. That's awesome. My computer, bro. Yeah, my computer just started doing it. I don't know. Let's call Best Buy, see if they can come look at it. That's great. Also, can we get a dolly of somebody locking a computer, like, just like a criminal coming in and locking computers?

Ransomware. Yeah, we're going to need that. We're going to need that as a ransomware illustration. Well, I just like the idea of, like, computer security for babies. And, like, it's like, ransomware locks on computers. Yeah, it's great. I love that. It's good.

We're going to have to get that for crypto cybersecurity at some point. Maybe we can get started to do it. I feel like that would be, I feel like that would be perfect. Anyway, all right, we're going to go ahead and wrap. Thank you, everybody. We'll be back next week. Yeah.