Unchained - Why Crypto Has a Good Long-Term Setup Right Now: Bits + Bips

Episode Date: March 4, 2026

A major war broke out in the Middle East, but Bitcoin didn’t break. One veteran investor says that price action reveals something important about where crypto stands today. --- Bits + Bips is spreading its wings Starting soon, new episodes will only be published on our brand‑new feeds. What you need to do: Click the links below. YouTube Apple Spotify X Smash Follow or Subscribe. 🎉 Done. --- The U.S. and Israel have struck Iran, killing Ayatollah Khamenei, and markets are still calibrating. Oil is climbing toward $100, yields are confounding textbook expectations, and when news first broke, Bitcoin dropped to around $63,000 before recovering to roughly $70,000 during Monday's session. Equity futures that opened sharply lower also reversed, ending roughly flat vs. Friday's close. What does that price action actually mean? Is the crypto bounce a sign of structural resilience, or is it moving in lockstep with a broader risk recovery?  In this episode, Steven Ehrlich sits down with Rob Hadick, General Partner at Dragonfly Capital, a veteran crypto venture investor managing hundreds of millions of dollars to work through what the Iran conflict actually means for digital assets. They also get into the stalled Clarity Act that could be crypto's biggest catalyst of the year, the rise of on-chain derivatives markets, and why one of the largest crypto-focused funds believes now is one of the best moments in history to be building in this space. Host: ⁠Steven Ehrlich⁠ Guest: Rob Hadick, General Partner, Dragonfly Learn more about your ad choices. Visit megaphone.fm/adchoices

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We'd love to talk, business. Hi, everyone. Welcome to another episode of Bits and Bips, The Interview. My name is Steve Ehrlich, head of research at Sharplink and also your host. And I'm here today with Rob Haydick, a general partner at Dragonfly to discuss everything happening in Iran, its ramifications for crypto and broader stratify markets, as well as a few other key topics impacting crypto today. So welcome, Rob. Hey, Steve. Thanks for having me. Yeah, absolutely. So a lot to dive into today. But before we start, Let's just take a brief moment to hear from some of the sponsors who make the show possible. Quick note before we get into today's episode.

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Please see Unchained.com backslash bits and bibs. And now with Rob, with all that out of the way, let's kind of like just dive right into it. Mark is today, I mean, it's the usual turmoil when there's some big source of Adjada in the world, the Israeli and U.S. attacks on Iran. Oil is up, I believe, over $80 a back. barrel, gold is up, the dollar's up. Bitcoin is actually kind of holding steady, even though it's not kind of keeping pace with some of the other safe havens. So just kind of lay out for us. Like, what haven't the last 48 hours been like for you? What are you saying?

Yeah. So it's an interesting time, obviously, for crypto, but the more like macro environment. And this was true before, the, you know, kind of escalation in Iran. I think actually, I've been stopping or I have not been calling into a war, but I think, Pete Hegseth and Trump both called it a war in the last 24 hours as well. And so I think we can start calling it to war in Iran. You know, over the weekend, we actually saw, I think, crypto hold up pretty well, surprisingly. And despite the fact that, you know, global equity markets were all down overnight. I think the, I think we opened, the SP opened down, like maybe a point in a quarter or so.

you know, obviously you mentioned that, you know, oils up. And it does sort of seem like we're in a situation here where there, the market is fragile, it's cautiously, it's really cautious right now, but it's not, you know, kind of falling off a cliff yet. People want to see what's going to happen in the, you know, over the next few weeks, you know, the original story outside of Iran, or at least kind of, you know, the first day was, hey, we've cut off a lot of the leadership and, you know, we expect this to be ever quickly. that now seems to be, I think, maybe not true.

I mean, I think even President Trump yesterday said that he expects this to go at least four weeks, which if it goes, if he's saying at least four weeks, there's probably likelihood that the time frame is actually longer than that, which means that there's a much higher chance of kind of sustained economic risk. Obviously, there was already a conversation around, you know, are we in a stipulationary period or are we going into one? and it's very clear that, you know, if we have sustained disruption and kind of oil production in the Middle East, and, you know, depending on what happens on the straight of her moves, then, you know, on the tanker side, like, I think that risk of him stagulation is even higher, right? And so from a macroeconomic productive, I think we're in a very precarious time at when the markets

are, you know, themselves is very fragile, as we saw, like, you know, what happened after the Cittrania report. So I think positive for Bitcoin and crypto and so much that, you know, we didn't, they've kind of held up and rallied it a little bit. And it doesn't seem like there's the crypto markets are as fragile. I know the equity markets are right now. But, you know, I don't know if the crypto markets will hold up to if we have like a real correction in the equity markets. Yeah. And it's, I think a really good sort of illustration of the turmoil that you're talking about is what happens is what's happening with the rates on the U.S. 10 years. because they're continuing to go down.

And it sort of seems a little like kind of orthodox in the world where the dollar is going up. So what do you make of that? Yeah. I think what's like very clear is that there's the market is concerned about it's already inflation. Right. And like I don't think there's any doubt in that. I think there's also and the market is concerned about, you know, the fact that growth might slow,

and we might have a, you know, in this statulationary period, could come. But at the same time, you look at, you know, Kevin Warsh coming in office, right? And he should take office at the Fed, like, you know, call like mid-May, right? And so I think like May 15th. And, you know, the question that the markets am trying to figure out about Warsh has been, is he, you know, he's been, you know, he's been a hawk at times, right, in his public statements. But there's also a perspective that, you know, maybe he's somebody who's like very close to the administration and clearly, you know, President Trump wants him to cut rates. And if that's the case, you know, how does he, you know, think about his, you know, personal views and how he might think about monetary policy relative to, you know, what should the administration would want him to do and how does he react to like political pressure?

I think people are very confused by that. And I think the market initially reacted in a way that said, hey, we think. think, you know, we're thinking about future monetary policy based on how, you know, things as he has said in the past. And now it seems like people are coming around to this idea that maybe, potentially, he's just going to give in to more political pressure. We'll see. I think there's, there's also the story we haven't talked about here, which is the AIPA ruling over at, in the Supreme Court, which, you know, obviously deemed that the way that we had, you know, kind of put forth terrorist was illegal and was kind of an expansion of, you know, executive power.

And then obviously, you know, President Trump came out right away and said, well, we're going to use this different legal justification to be able to put on terrorists for at least, I think it's about 180 days that he's allowed to, up to 15%. First, he said it was 10%. Then they're saying they're going to go and be up to 15%. What happens after that? We don't know. And so it's very clear to me right now that there's just more confusion in the market.

and ever, and you actually have different people who trade these different markets who are coming to different conclusions in a way that we happen to you. Yeah, I think so too. And I believe I actually briefly misspoke with the way I phrased the first question because yields are actually going up right now, which is sort of what you would not expect. Like bonds, obviously they move inversely with bond prices and you would think bonds would be coming up along with the dollar, but they're going in opposite directions, which is again, really epitomizes that source of confusion that you were talking about with Kevin Warsh coming in, the expectation of lowering rates, especially with inflation that seems to sort of be, I mean, it's not quite 2%, but it's not increasing,

like some fear as a result of the tariffs. But with oil and everything else happening here, that could just permeate through the entire global economy and challenge any efforts at cutting rates. If and when Kevin Warsh is even confirmed as Fedger, because who knows what's going to happen with Juni and Piro's investigation of Jerome Powell and everything like that. But yeah, it is really kind of, it's a tough juxtaposition. And I want to kind of broaden the conversation a little bit to just kind of get a sense of what's going to happen over the, I guess, the near to midterm. Because, I mean, as you mentioned and plenty of other commentators around the world have been discussing over the last 48 hours or so, the timeline on when this may or may not end is fluid.

And it seems like President Trump is once again trying to thread the needle that he, He didn't invent as well when he was able to extract Nicholas Maduro. The vice president essentially agreed to play ball and follow U.S. guidance. Guidance, I guess, is an interesting term for, I think, what the U.S. is dictating to her to do. But it's not quite, I'm not sure what is going to happen in Iran. I mean, as I think you mentioned, they've talked about regime change or not regime change. would they find someone within the IRGC or like clerical leadership that would be willing to work with the U.S. or because if it's going to be true regime change, that can be a lot bloodier, a lot messier.

And I don't see that happening in four weeks, especially if the U.S. wants to rely solely on air power as a way to sort of eliminate casualties, which just, again, I find it very hard to accomplish your mission in a country of 93 million people. So that's kind of my long preamble to the question of like, how are you positioning? How are some of the people you're talking about positioning in this environment, especially like looking at recent history, like the Liberation Day tariffs or even the bombing of Iran last summer or like where we have these like V shape recoveries that are pretty quickly? Maybe this is a different situation. Yeah. We're a little bit different than, you know, probably some of your listeners and the fact that like we take very long views. on the market, right? And we invest with the idea that like we will be in positions for, you know, at a minimum like, you know, call it a year, right? So for years, right? And so,

you know, we try to be opportunistic sometimes on like the entry point, but mostly it's around, okay, well, what do we think are the global, the global backdrop and the macroeconomic backdrop over some long period of time? And I think there's, there's a, there's two kind of answers to your question. I think the first is, well, I actually think it's quite positive that crypto and and Bitcoin held up quite well over the weekend, right, even at a time when you knew that, you know, equity futures were going to open down or trade down. And there's, you know, there's some conversation I'll say,

okay, well, you know, Bitcoin is a store of value. And so, like, you know, commodities are up, Bitcoin be up. But Bitcoin hasn't traded that way, obviously, for, you know, for months right now. And so I think it's positive that maybe it did, you know, have that correlation or traded that way. And I think it looks like, you know,

the type of trading you've seen, you know, around these events recently and around the Satrini article when I could be sold down, et cetera, implies to you that they're like, aren't necessarily like a lot of sellers left, right? You know, most of the people who are holding now are have much more like long-term perspectives, right? And so I think that's a good setup for, you know, being in crypto over some period of time. Now, that doesn't mean anything for like the long tail of alt tokens because like, you know, there's other structural issues there around what happens with market structure and, you know, whether or not these things should be worth, what they're worth,

and revenue and, you know, fundamental value and things like that. So I think there's that base. So that's really constructive. Now, I think in the short term, though, you know, to your point, right, there's so many things happening that are real risk, right? So the equity market kind of rallied after Nvidia really beat earnings and they gave, you know, good guidance in the future. And then, like, it faded that rally super mingly, right?

the equity market also when the Satrini article came out like a bunch of stuff traded down right away and like you know Satrini I really like the the rating that they do but this isn't like a household name this isn't somebody that everybody looks at and is like okay well like I definitely should be trading off of you know what they think and there was a lot in that article that was like just science fiction right and I remind me a lot of like Georgia Wells 1984 type of type of mechanic yeah no 100% right and so I think it's it's very is that there's a lot of fragility in the market too, right? And I do expect that, you know, kind of the long-term set up for, you know, crypto is so very good with potential for market structure, with how many, you know, kind of institutions are adopting. But you just, it's very hard, I think, to bet on crypto if you think that the equity market might take a kind of a real bath here.

I think there was a couple articles out over the weekend or some sell side reports, which we're trying to figure out, okay, well, if you fundamental, there's some fundamental value loss around, you know, a increase in inflation and a slowdown in growth because of the rise in oil prices. And depending on how long this goes on, like, you know, maybe we're looking at something like a 10 to 15% correction in the S&P. And if that happens, like, it's hard to see Bitcoin holding up, right, even, you know, considering all the really good like fundamental value that or fundamental backdrop that we're talking about at a time when there's just all of these other things that are unclear or when it comes to tariffs and when it comes to anything to do with, you know, AI risk and et cetera.

Yeah, it's funny. I think I saw an article in the FTA or the weekend that I think there was no better, like, representation of traders not knowing what to do than seeing the whole market trade down, like, 3% on a blog report or a blog that was published. So I think that kind of epitomizes things pretty well. So let's talk about it. I think it's important to know, just, you know, and I'm because I want to really. make this point, which is that the long-term outlook for the broader crypto ecosystem right now is probably as good as has ever been, right? And we continue to have this dislocation around,

okay, well, what are the, what's happening in the Wall Street in terms of adoption of tokenized assets? What's happening with stable point demand? What does that mean for, you know, real economic activity on chain? Like, you know, what, you know, if we get a market structure bill passed, now we can talk a little bit about that, but I think that's a little bit up in the air. But like all of these things are really good over the long run, if you have not. that type of time horizon. Yeah, yeah, and we'll get to all that because there's all really kind of good points. And I know most of my listeners are not day traders. They're the more long-term investors much like you guys are. But I mean, I was actually looking around Deribut this morning at some

of like the options position here. And I think it speaks a lot of what you just discussed. I mean, by far the biggest open interest is I think I'm put at 60,000, especially like settling over the next couple of days. But then once we kind of like span out, even to like the end of the month. I mean, they were talking about calls at like 90, 100. I mean, it completely switches. Like, there's very, very, very bare sentiment, or at least people trying to protect their downside over the next couple days, but then things certainly are changing. And that might also speak to what I was talking about earlier, how usually these like big, like acute conflagrations resolve themselves pretty quickly, be it the tariffs or the strikes on the Iranian nuclear

facilities last year. That's one thing I think Trump has actually done that the market's mispricing the risk of some of these issues that everyone thought were big red lines that maybe they weren't. And I guess it just depends on how much of a red line this one was. Well, I think it's, like, I'm not an expert in the military or in war or anything of that. And I won't pretend to be. But it does seem like pricing this like it's June again is probably pretty wrong, considering the fact that, you know, that was like very targeted military strikes. And obviously this time we've, you know, eliminated a large part of the leadership.

There's been a lot of, I think you can already kind of see the news shifting towards a negative sentiment this morning, right? Yeah. There's been, I think, you know, at first, you know, there was a idea that this would end really quickly. Then President Trump came out and said, okay, well, now it's four weeks, which probably means longer. And then you haven't actually seen the U.S. be able to enter Iranian airspace yet, which I think has been very surprising for people because they're, you know, to go and eliminate these, a lot of of these like missile silos. And again, like this is, this is what I'm reading from experts and some things that I'm getting,

but I'm not an expert myself. But a lot of these missile silos, you need actually like short range missiles to be able to go find them. So you need to be able to get the fighter jets and the bombers into Iranian airspace. And that hasn't happened yet, which means that we haven't taken down there, um, there are to vast systems,

right, to allow for that, right? Um, and you actually saw today, I guess like a couple of 15s that got shot down to Kuwait, uh, with accidentally it seems like, yeah.

Yeah. And so there's, there's a, there's, And it seems like, you know, reading between the lines that there might be some surprise at the, how expansive the Iranian kind of reaction has been, right? And, you know, an entire region and clearly trying to put some pressure on the ally, the economic footprint of the allies in the region and then what that means for us. And so that type of reaction and the longer this goes on before we can really start to, you know, get, you know, really take control of the Shravery Muses and, and. and there running in airspace, does, I think,

project out that this could be a, you know, kind of a quite long conflict. Yeah. Especially, I think, I think, I think it was, and said that we, we wanted to do regime change, but that the people that we thought would be good leaders, we actually, we killed. So I wasn't unclear if that was accidental or not accidental.

So it's very odd, the messaging right now. And it seems like there's, and there's, like, leaks coming out of the CIA that potentially, you know, we weren't prepared for, you know, the aerial onslaught. We're worried about, you know, running out of these interceptor missiles in the region. And so just reading the T leaves, it seems like there's a shift and, you know, how we're thinking about the length and how expanse of this water. Yeah. Yeah, I mean, it's, I mean, I'm not sure we've ever spoken about this.

I actually worked for the U.S. military for five years as a. Oh, I didn't know that. Okay. But I wasn't, I didn't do like combined weapons, like, combat. or that type of that type of analysis. So I'm not an expert in like taking down air defense is not type of stuff either. But one thing I do know from like helping our warfighters in Afghanistan and Iraq and other places is once the bullets start firing, anything goes. And when a regime like Iran feels that there seems quite accurately under basic existential threat, they're going to empty the chamber one way or another.

And it's hard to me, even when you have the best laid. lands and very clear objectives. It's hard, obviously very hard to achieve them, let alone sometimes when there's this type of confusion. But let's kind of turn things back to the markets. A couple of things I want to discuss before we get into a few other issues that are a few other topics not related to Iran. For one, it seemed, I mean, I don't know if basically the data earlier out from Deribit, et cetera, suggests that we're misprice in the market. I mean, you also mentioned, too, how if the rest of the market tanks, even if Bitcoin is structurally better, set up than other assets, it's still going to go down as well. But I mean, I guess maybe do you think

that the market is mispricing some of the risk when it comes to Iran because of how messy it could become? And then again, in a very not financial advice way, traders, people listening here might wonder how they can better protect their downside. What do you think are like one or two ways that they could do it if they so chose? Yeah, I think I think market's probably pretty correctly pricing and risk, to be honest. You know, the equity of market is only being down a little over a point, you know, I think makes sense, right? Bitcoin is actually up 2% over the weekend, right?

And so it's been kind of sideways. You know, obviously this, you know, I'm not an expert and a lot of what's happening on the option side right now. But, you know, it seems very clear that people are trying to protect, you know, like in near term downside or long term structurally, you know, bullish. That all makes sense to me, right? because, you know, this is happening in real time. I think when you put that in kind of context of everything else that is happening on the,

on the rate side, on the, you know, the AI, you know, concern side. I mean, obviously, you know, we talked about the Satrini article, but, you know, one of the things that happened, maybe it was Friday, is that Block came out and said they were going to cut 40% of their workforce, right? That is the largest correction or largest layoff. and I think S&P history for a company of that size, of a public company. Right. And like that, you know, it's not clear for sure that that will happen, you know, across all of these other, you know, all of these other companies.

But it is, you know, sort of a canary and coal mine of maybe there will be actually a lot of layoffs, right? And what does that mean for the economy in the market if it does? And that's a longer term risk. But it's, you know, that sign people are trying to now price that end, right? And so I think there's just so many things happening and so many variables that's impossible to, you know, really isolate, oh, Iran risk versus, you know, risk of everything else. right. And so it seems pretty correct to me at the moment. And I think like cautious with the right, you know, in the near term, with the right outlook over the long term makes sense. I think there's also, we've been on the crypto side, we've been trying to price in the likelihood of a market

structure bill. And if you look at polymarket today, I think it's, you know, 52%ish, right? The people I talk to on the hill, if they're not in crypto, but they, you know, happen to be close to it are more bearish than that, you know, call it like, you know, 35, 40%. If you talk to, you know, a lot of the lobbyists in crypto, they're more bullish than that, but of course, like, you know, that makes sense, right? And so there's just so many variables happening right now that I think it's really hard to make sense of the market and it's moving so quickly, right? Yeah, absolutely.

A couple more market questions. Then we're going to get to clarity and a few other topics. for one, I feel like Bitcoin for the most part, most of the time has been unfairly punished when bad things happen over the weekends because it's typically the only asset that is trading. But we are now moving into a world where there's tokenized stocks, other tokenized assets that do trade 24-7, gold, et cetera. I know especially for stocks, it's very, very early days for them. but I'm curious if you saw anything interesting over the weekend with how any of those assets are traded or if not, like maybe just prognosticate a little bit on how like once those markets become bigger and more liquid, that could sort of like impact the way that assets trade over the weekend when incidents like this occur.

Yeah, I mean, that is a very interesting topic too because if you look at what happened on hyperliquid over the weekend, Right? There's a significant amount of trading volume. What's that? Oh, it's a rocket. I mean, I think, I think hype is up. Yeah, I was going to ask you about height. I think it's up like 12% since the, since the tax began. So maybe maybe. Yeah, a traded channels about this morning, but it was up like, yeah, it was it was 10, 12% of the weekend. Yeah, it might be the state haven asset and crypto these days. Yeah. Well, and because it's clear. And what has happened, right, is these these hip three markets, which is, you know, trade XYZ, which is where they're doing. a lot of the tokenized commodity perps and the tokenized stock perps and etc. We've seen significant significant uptick and volume on the commodity side and on the

on some of the rates and like that side as well. The stock volume hasn't been quite as high. It's been much more around commodities. I think at one point Silver did itself like in a 24 hour period

like a third of all hyper liquid volume. right. And so oil this weekend was like absolutely one of the most, the most highly traded asset. But these markets still do have like some structural issues in terms of allowing people to take risk over the weekend because how are the market makers going to hedge out that risk? Like, you know, there's still, you have these kind of buffers put in on trade XYZ where, you know, they don't want to allow these things to trade more than 10% over the weekend one way or another because of the fact that, you know, if you, especially if it's equities, if you, if you like limit open and things move really quickly, you could just, you could have like

mass liquidations, right, even just on that, like, that hole there. And so there's, there's a lot of structural issues on it as well. But the derivatives and the perp side, or the purpose side for the, for the commodities, have been much easier for people to market make because of the fact that these are markets that you can more easily, you know, whirl with the sun and that they are open for much longer periods of time than equities. Equities is a harder problem to solve. And so I think we're going to continue to see that grow. Hyperliquids doing awesome. But I think there's, the long-term outlook continues to be better for assets that have, are more highly correlated across global markets versus our, you know, call it individual assets in the U.S. market or, you know,

a European market, etc. I also tend to be, I think, relatively bearish on the current state of spot equity on markets, right, and on chain right now. The way Spot works today for most of the products, so, you know, like a crack and bought a thing called. X-O-XORs. Yeah. Sorry.

And there was, you know, there's Ando and there's a few others. and the way they work right now mostly is that it's some sort of, you know, SPV that, you know, somebody has to go and, like, you know, put it in order to that SPV and then SPV, it goes through a U.S. broker dealer and that U.S. broker dealer then buys the thing. And, you know, during like off periods, you can't necessarily redeem. And so there's these dislocations that happen. And it's very clunky and it's really hard to, like, scale that product. And so I'm much more bullish on the derivative side.

and I think we've seen that happen today. I think there's a future where, you know, call it natively issued stock on chain, where it's its own primary market. That I think has a much better chance of growing than the current state of what has happened on these kind of like, you know, SPV rappers that exist on chain. Okay. No, good explanation. It sounds like we could probably have a series of podcasts on that topic then.

Yeah. So one more question, and then we'll move on to a few other topics. But I'm just curious. is there one or two charts, markets that you're really going to be paying attention to over the next, excuse me, a couple of days to get a sense of what's happening. It could be crypto, commodities, equities, anything.

Yeah, so I'm not a huge chart guy. And so I, because of the way we invest. But listen, I think what's happening to your point around religion? Even just like an indicator, or like a piece of news that you're. Yeah. So I think the most important thing for the markets right now is what is the likelihood of this thing lasting a long period of time or of it be de-escalated pretty quickly. And so, you know, you saw President Trump come out, I think it was yesterday morning and say that, hey, the Iranian new regime wants to talk and potentially there's, you know, possibility for, you know, some sort of de-escalation. That was refuted right away, right?

Right. And so I want to see if there's any change in that conversation and what comes out in the media around them. I think you'll see the yield curve react pretty quickly. That'll probably be one of the first things that will react quickly to that and then oil prices. Right. And so I think those tell you a lot about what the likelihood is of the, you know, of a sustained conflict that affects a bunch of other parts of the economy. Right. So, you know, if oil starts rockily enough to, you know, You know, people start to think there's going to be, you know, huge supply chain issues. And oil starts getting close to $100, which people are talking about, right? That implies to you that there's going to be massive amounts of issues and, you know, in broader economic situation, which should theoretically also be bad for, you know, call any risk asset and click crypto. And so that's what I'm most focused on right now is what is the, how does the conversation evolve on de-escalation?

And if you start to hear President Trump and the Israeli media talk about, talk about, you know, sustained conflict, you know, further, you know, call it U.S. member deaths, unfortunately. We had a few over the weekend, you know, things around, you know, continue to increase the amount of bombing, et cetera. That is all an indication that we expect us to be a sustained conflict. That will have broader macroeconomic effects and will have broader effects on the market itself. Great. All right. So we're going to switch gears here, but before we do so, we're going to take another quick break to hear from some of our show's sponsors. Quick note before we continue with today's episode, Bits and Bips now has its own dedicated home.

We're spinning off from Unchained and launching a standalone podcast and YouTube channel focused on the Fed, macro, AI, and how it all collides with crypto. If you want to keep up with our weekly live streams and macro meets crypto breakdowns, make sure you're following Bits and Bips directly. We won't start publishing until March, but getting set up now means you'll be ready on day one. You can find the new Bits and Bips channels at Unchained Crypto.com slash Bits and Bips. You can also find us by searching bits and bips on YouTube, Apple Podcasts, Spotify, or wherever you listen. All right. So I said we were actually going to move off of Iran, but one quick tangent before we do so. I wanted to just briefly talk about Dubai. It's one part of the world that has really sort of tried to promote itself as a crypto hub. It hosts a major crypto conference that I believe is coming up soon.

End of April yet. Yeah, and I mean, on top of that, I mean, it has a crypto-forward regulator. It put out one of the first regulatory regimes on crypto and has really become a base for a lot of big crypto companies and players. Just the way the war is right now, I mean, there was even, it may have been, I don't know if it was inadvertent or not where it landed, but a major hotel was hit over the weekend. And if, like, Dubai, the UIE is a part of the world. that is not immune to retaliation from Iran. I'm just curious, like, what you think that might mean for its feature as a crypto hub, at least in the short term and, and, yeah, I mean, what the impact on crypto could be.

I know there's also a lot of investors in Dubai that companies are turning to court. Yeah. I do also think this is sort of a wait and see conversation, right, which is, it seems like the, what hit the Fairmont on the palm was, like, debris. So there was a missile that was launched that was that shot down, some debris ended up hitting the Vermont. Terrible, right? And I think, like, you know, it's quite sad that that happened. I also expect that we will learn a little bit more about, like, what the actual, or the reason that the Iranians have been, they seem to have been shooting purposely at some other hotels.

Now, what came out of, like, Iranian state media over the weekend was that the U.S. government had moved like assets and people into hotels and out from out from some of the bases and so these were you know military operations uh that's iranian state media which is always going to yeah i feel like i i mean i'm not an expert on international law but if that's true i feel like that's a war crime if if you hide things in civilian areas so so yeah but then i think there was a something that came out of the state department today that said there were some people in like barren in a in a in a hotel but it's unclear about that happened and so it's like it's all very The problem right now is, and this is a tangent, X is a great place to get information, you know, and then the adrenalineer media is, and it moves much quicker than, you know, call it listening to New York Times or Washpo or like whoever that person is that you think about.

But there's also so much propaganda and so much fake stuff that's like very, very hard to know exactly what's rude and what's not. And so the best thing you can do is ingest as much information as possible and then try to figure out what's your. Or we'll see. You know, there's a lot of smoke that needs to close. clear. I think on Dubai specifically, though, listen, it's been a place where we've seen a lot of focus on tokenization. We've seen a lot of focus on, you know, building a startup ecosystem there. Abu Dhabi as well, right, like the Emirates has been, you know, very forward thinking.

We've seen a lot of new people move to, you know, ADGM regulated entities as a while. And, you know, I think if it ends here, that probably doesn't stop some of this, you know, momentum. But if this goes on for a while and we continue to see destruction and, you know, the surrounding regions, yeah, it oppositely is going to be tough because you're not going to have the expac community be as robust. People are just not going to necessarily want to move there. And so, well, it's wait and see. Now, on like token 249 in Dubai, you know, I actually had a lot of our portfolio companies who were reaching out and I'm not supposed to go and speak there in, you know, eight weeks or so.

And that are, you know, kind of, you know, party line has been, let's wait and see what happens. But certainly if there's still going on four weeks from now, the likelihood that that conflict is going, or that the conference is going to happen in Dubai is very, very small. Yeah. It's going to be a huge hit to, you know, to the kind of the ecosystem there, at least in the near term. Yeah. Okay. All right.

So let's switch gears. finally. And I want to talk about clarity. There was supposed to be, I think the White House put a deadline, an unofficial deadline of, I believe, last weekend to come up with some sort of compromise between the banks and crypto, in particular to yield on stable coins. Clearly, that has passed. I don't necessarily think of it's just because of what happened with Iran. It seems like this is a bit of an intractable conflict, but you're tracking it closer. than I am. So what are you hearing? Yeah, so I talked about it a little bit before, and I was wrong earlier.

We did trade back up over the weekend from low 50s to polymarket is now at 70%. That clarity gets packed. So I hadn't checked it in two days. It really depends on who you ask right now. So there, you know, kind of for context, and I'm sure a lot of your listeners know this, but, you know, there was this clarity actually passed by the house last summer. summer, their Senate had to mark it up. There was a Senate banking committee markup that came out, you know, I guess it was about a month or so ago, that had this, you know, call it new language around yield, right? For there's a few other things in it that the industry is very

against around some of the conversation around, you know, tokenized assets and how exactly we think about them. Also things like developer protections and making sure that developers can't be treated as criminals if their software is needed for nefarious activities. And so there's a few things that people are really focused on. But that yield language was kind of this new thing that got certain people, and especially Coinbase, kind of really up in arms, right? That, you know, and then, you know, Bright-Armshund tweeted about the, you know, that markup and not being, you know, very happy with it, not being able to support it. And that through the negotiations into a little bit of what I would say

kind of overdrive because they what everyone thought they were kind of like locked in arm moving hand in hand there that started to you know I think create

some division within within Congress you then got an ad committee markup that was much cleaner and much more like clarity or like what the you know the industry

I'd hope to see but you have to reconcile all those too and you have to get it to the floor for forgive me I'm sorry I might be wrong wasn't one of the markups

canceled or did they both ended up happening. So what happened is the ACMECD market was supposed to come out on a Thursday, like a couple days after the banking committee. When Brian Onghung came and tweeted and said he couldn't support the banking committee markup,

it pushed it and it pushed about two weeks. But then it did eventually come out. And then it. Yeah, it just got pushed about weeks. Rather, thank you. And so that Markov's out now as well. But the banking committee, and because the banking lobby is so interested in it, they're the ones that are driving a lot of this

conversation around yield. So now there's been a couple of roundtable sessions at the White House on, you know, trying to reconcile this language with the industry and with really the banking limits, the banks doing this. And over the weekend, there was some news or some, because some conjecture came out that essentially said that, you know, Coinbase, the industry, and the White House representatives and the government representatives think that we're at a good, you know, kind of middle ground. We're at a really good resolution point, but the banks are still being kind of heartlined, right? And so we need to get the bank banking lobby and the banks themselves to say, okay, this resolution works for us. And the

main thing in my mind, and, you know, this is a little bit different depending on the U.S. is it's certainly important that we be able to still be able to do revenue share and allow people to fund things like reward programs and loyalty program through revenue from the stable coins, right? That is really, really, really important. The question that the banking lobby has is they don't want there to be, you, the, the issue is to be able to send you all directly, programmatically to call it end consumers. But the, you know, where we fall in the middle of those two kind of extremes right now is what we are negotiating. And the banking lobby has said, okay, well, like, listen, we actually don't really care if clarity happens. And if we don't really care if clarity happens, we're going to take the most hardline stance, but just try to do. entrench ourselves on our regulatory mode and say that no revenue whatsoever from stable coins should be allowed to ever pass on to a consumer. And that's also what the OCC initial rules said last week when the OCC put out their first guidance based on, you know, Genius Act. And so if we, if there can be enough political pressure from the administration and, you know, call it the,

you know, broader government apparatus to get the banks to get to somewhere in a middle ground here, I think the industry is there. And if that happens, the. rest of everything that's still open. There's like five open items or so. All of that is solvable. This is the main issue. Yeah. I mean, I do wonder, I mean, everything you said just makes perfect sense.

But I do wonder that what is that common around that you can find a solution to, even if it's not making everyone happy, find something everyone can live with. Because, I mean, banks pay virtually nothing to depositors. Yield that gets passed on to stable coin holders is for a half percent. some. I mean, I mean, that would just eviscerate bank nims and it's like economically unsustainable for them. So this

like you could argue that this is sort of existential to the entire banking model. I mean, I'm curious like what the type of situation, what they could live with regardless of how much pressure gets strong armed by by Washington. And obviously this is something that we all

won. I mean, frankly, there's a good chance. It is the, the and maybe the only, the biggest, maybe the only catalyst that will be bullish for crypto this year. But it's just hard to figure out, like, everyone's trying to figure out, like, what that might look like. And I am, so if you've any other thoughts on that, I mean, please share it. But too, you said that the odds ticked up from 50 to 70% on polymarket. I mean, I know sometimes markets can be manipulated, may not be the right word, but they can move based on certain traders putting on positions. I'm, I'm going to just

ask you to speculate wildly here and wonder if you have any idea what was behind that. Like, was it, is it a series of positions? Is it one major position that moved the market? I'd love to kind of just given what happened, it would seem that luckily he would go down, given that the deadline was missed and we're at war now, but it ticked up. Yeah, I think on the polling market side, it looks like there was quite a lot of trading. Okay. Around 7.30 this morning that took it up from, you know, call it low 60s to 70.

and then, you know, over the weekend, it had been from 50s to the 60s. Over the weekend, that was a little bit of what I talked about, which is I think David Sachs and a few others tweeted that, like, hey, we have an agreement or we have a place that we think is acceptable for all parties. We just need the banking lobby to kind of walk through the door

and to say, okay. That's it we just need, though. Yeah. But I think that got people excited, which is that like David Sachs is out tweeting about it right now. and a few others. The, you know, to your original question, okay, well, what gets people, what can the banking lobby live with?

I think they should be able to live with whether or not they can. I know, I'm not close to, you know, Brian One-in or Jamie Diamond, but I think they should be able to live with is an agreement that the issuers can't programmatically directly send yield to an end holder, right? Because their perspective is that, well, if you want to do that, then you are a money market fund, you are a security, and you are operating like a bank or you should be a fully regulated bank to be able to be able to, not just a charter bank, and you should be able, and you should be, these and should be regulated as securities, right?

So, okay, well, so if we take that off the table, that's fine. But in my mind, not it's not fine for everybody, but in my mind, that's fine. But they should be able to live with an idea that, okay, well, companies make revenue from this. Companies should be able to do revenue share agreements with this the way like Circle and the Coinbase has today. And then Coinbase should be able to do with their revenue, whatever they want in terms of loyalty and rewards and cashback and anything else to their own customer. Like that feels to me like a very logical solution that everybody should be able to live with because that already happens in a lot of ways, right? And so there's if we get in a situation where we literally try to carve out the revenue from a stable coin issuer and say that can't be used for a loyalty or reward program for passing back, cash back to and then consumer, that's regressive. That's not just like, it's not just like, oh, we're for predicting the status quo.

It's actually hurting current fintech. Yeah. And that's crazy to me. And anyone would accept that is like nobody should accept that. And the OCC putting out that guidance last week as well, like that, that I think put a lot of people on alert as well. Because the there's, okay, well, what happens in clarity is one point. But even if, let's say this, we get to an agreement in clarity, but then the OCC says, hey, well, in our rulemaking ability relative to genius, we are putting this in there, it doesn't matter. It's a moot question, right? And so we have to now fight the

fight on both, you know, kind of both sides, both on the rulemaking side with the OCC and also on the, on the legislation slide here at clarity. Yeah, it's, it's really tough. I mean, I try to have sympathy for both sides. I mean, I've been in crypto for over a decade. I also used to work at Citibank. And I mean, I can, I mean, the banks, I mean, their deposits are insured. They pay into that insurance. They have like orders of magnitude, more regulatory overhead than then crypto exchanges and it's a whole mess. But I think you distilled it pretty, pretty nicely. Like at some point,

banks should, or anyone should be able to pay, share rewards with customers if they want to. I mean, that's the competitive environment. So I don't know. We'll see. I have one more topic I want to discuss, but before I do, is there anything else related to clarity or DC that you wanted to mention before we move on?

No, I mean, I think that's where we are today. The, you know, you asked me before, like, what am I hearing? You know, that's 70% for clarity on polymarket is much higher than I would say I'm hearing from people on the ground that are, you know, maybe, you know, less economically, you know, directly aligned that are saying, hey, like, realistically, I think it's, you know, maybe a coin flip or maybe slightly less than that. And so that said, like, listen, I think we're all, you know, in the industry, we all want to get a deal done. but it has to preserve certain things. It has to preserve developer protections. It has to get somewhere that makes sense for yield. It has to make sure that these tokenization wrappers do not, you know, get treated so differently that they're, you know, you can't actually use them as like, you know, performing collateral, things like that.

And so if all that gets, gets solved, I think, you know, there's a, the last open point is going to be that the Democrats want, a some sort of like ethics language in there as well. I am told that that'll get solved and the White House understands that and the administration sees a path forward there and that that won't kill the deal if we get the other stuff. And so that that's a good sign. But I think it has to happen by Memorial Day. I think if you don't get a vote for by Memorial Day, I think we're in a really tough spot. I'd actually like to just, I don't know if press is the right word, but just maybe explore a little more

the ethics thing because that is a big that is a very big issue that that's central to Democrats and I know Patrick Wood I guess the I figured his exact title but he's basically the White House's point man under David Sachs for all things crypto. He

gave a comment I think in going to ask that an ethics pledge was sort of off the table but it sounds like there is a little bit of wiggle room so can you expand on that at all? Yeah I my this is me reading between the lines. I don't know anything, you know, personally. This is also

when I'm being told by people on the ground. And so Patrick Hoyt is the, I think the deputy chief of staff at the OPM, the Office of Personal Management. But to your point, he's working, is kind of let the lead man on all of this, all of this conversation. He's leading all the negotiations between the. He's leading all the negotiations for the administration and the White House when it comes to in trying to find a path to yield in Clarity Act. And the thing that we have on our side here is that getting this passed is a core part, it's a very important to the administration. It's very important to the White House. And typically, when something is very important to the White House, something happens because the Republican senators who want the support of the White House, they want to do what their leadership wants them to do, which the president is.

That helps them in the future and in the party apparatus, etc. And so the fact that it's very important to the White House is a good sign, right? And what I have been told is that, you know, this, hey, listen, we're not absolutely not going to do any ethics language whatsoever is sort of an opening posture. But is not actually where they're at. There's there's some place to, you know, get something that, you know, Elizabeth Warren probably won't be happy with, but some Democrats will be happy with. but some Democrats will be happy enough with, right? And get, and that the White House can live with as well. But we'll see.

I mean, we haven't gotten to that point. Yeah, that is not going to even be talked about until we get the other stuff solved first. Understood. Okay. All right. Great. Well, yeah, thanks for that. Just last bit here.

I'm curious. Congrats. I mean, your firm raised. I believe it's your fourth fund. Fourth fund, yeah. And $560 million, which is pretty sizable. $650. That's what a 650.

So even more sizable. So congratulations on that. As you, I mean, as you very well know, I mean, back when I was at Forbes, especially in the earlier part of this decade,

I mean, it seemed like every week we were getting an announcement about some VC fundraising billions or accelerator fund from one of the foundations behind a blockchain, like nine, 10 figure things. That hasn't happened quite so much.

But, and VC funding has sort of, I think, migrated from a lot of smaller projects, like some, like doubling down on some of the bigger plays that I've already proven successful. But I'd love for you to just spend a minute or two and, sort of explain the rationale for, I mean, aside from just your VC funds, so you want to keep raising funds, like, why now it was the right time, why 650 million? And like, what are some of the areas that you're really targeting with this new fund? Yeah, absolutely. On the why now,

I think we've been pretty good at raising in times of where the market is at a place where you want to put money to work, right? And so I wouldn't say necessarily in bare markets, but the way VC should work, and it's very odd that it doesn't work this way, is that you should deploy a bunch of capital when markets are bad, and you should probably not deploy as much capital when markets are good because prices are higher, right?

But, you know, what happens is... So, about the anti-Michaelseller model. Exactly. Well, happens is the opposite lot because, you know, there's, you know, more entrepreneurs enter the space, you know, when, when prices are up, there's excitement. You know, LPs want to put more capital to work when, you know, prices are up. There's just like more excitement, right? So when there's fear, people don't necessarily want to give you money.

So the key is to raise the money from the LPs when prices are up and then deploy it when when prices are down. And we try to do that. And so, you know, the way venture, fundraises work, and so everybody knows, is, you know, we announced yesterday, or sorry, last month, but the, it takes some period of time, and you have to have, you know, you have first close, and you do a couple of closes after that. So I guess about, you know, call it, you know, close to a year, which is very typical, right? And so in 21, to your point,

in 22, people were closing funds in like three, four, five months. That never happened in the history of venture, and it has not happened since. And so, you know, we were able to raised during this time when there was a lot of excitement about what a new administration would bring, what Genius Act would do for the space. And then, in things like Polymarket, which were large investors in, you know, got their investment from ICE. And now it strikes us that the time is now for us to go and actually give a lot of capital to startups who are, you know, really excited about building during this period where there's not as much distraction in FOMO, et cetera. So we think it's a perfect time to go to go shopping and go invest right now.

To your point around, and actually before I even pivot to that, I talked about this earlier, but there are so many structural tailwinds behind our space ring down. What comes to stable, when it comes to tokenization, when it comes to real world businesses building on top of blockchain rails when it comes to the product market fit, we're seeing with some of the defy with things like hyperliquid and a lot of these vault products. It is, in my mind, one of the best times to be building in our space, especially around any sort of financial product. And then we're certainly to see some, you know, call it innovation or at least some

experimentation around, you know, crypto AI. And we'll see what happens there. Right. And so I think it's a perfect time to be building in our space, especially, and I think really the only other two spaces that are as exciting would be, you know, call it AI, maybe AI robotics and biotech. And I think that's it. I think that those are the only areas that, like, be on the edge of in frontier tech right now.

So I think it's an awesome time to putting money to work when we be building. And I think on top of that, you know, you asked, well, why $650 million? Well, you know, we, our last one was also $650. We had done the same exact thing that we did last time, which is we went out with the $500 million target. And then we put on what we talk about with our LPs, a hard cap, because the LPs aren't you to get it too big. And so we said, okay, well, hard cap it at $650, 500 million dollar target. We filled it all the way to our hard cap.

And why'd we do that? We did that because the LPs were obviously very bullish on wanting to back us and we were lucky enough to have, you know, really convicted investors. But also the reason we're not allowing ourselves to go bigger than that is our perspective is that this space is still not so big that you can, you know, invest, you know, call it a billion, one and a half, two billion dollars and, you know, protect returns, right? And so there comes a, I ought to say this to a lot of people, which there comes a time in every asset manager's life, where you become every venture capitalist life, where you become either an asset manager and you solve for the 2% management fees, or you say a venture capitalist and you focus on the 20% carried interest

because you get really good returns, right? So you've seen this play out and call it traditional venture two where Andrezen Horowitz goes and they raise $15 billion, right, or some more than that. And, you know, I think you look at the returns of their funds and I can almost certainly tell you that across every vertical that they're in, they're not the best returning fund, right? But they have this big media organization.

They do a lot of portfolio support. They have a, you know, they have kind of all of these assets and management knowledge and do so many different things, right? And then you look at like a benchmark, which has continued to raise, you know, call it $400 or $500 million for years, like 18 funds now. And you look at their returns and their returns are consistently better than, you know, the entries and stuff the work. There's just not enough places to put all that money that.

Correct. Yeah. And so we try to thread that needle of being big. enough to do, we do, we have great portfolio support team. We have a, you know, large talent team that does all of this hiring where we've got, you know, teams in Washington that are, you know, working with our, you know, our portfolio companies and, you know, trying to help them navigate what's happening in D.C. And so we try to be big enough to have enough management fees to support all of that, right, while also protecting the returns. And not necessarily. I mean, I think, you know,

there's been, you know, a lot of conversation. There's been some, some, some, articles around, you know, other firms raising even more money again right into the billions of dollars. And, you know, I think you probably do have to expand your aperture a little bit if you're going to put one and a half to two, two and a half billion dollars to work today. And we still believe that there's enough opportunity in our space that we should be heavily focused on the thing that we know we do well, which is stable coins, crypto, you know, the, you know, the kind of the intersection of the two, the financialization of new market rails, right? and kind of the digitization of our rails, you know, coming into tokenized assets and being on

blockchains. And so that's what we're really excited about. Yeah. I guess raising aperture is sort of euphemism for lowering standards. It's either that or you look at, you know, call it other verticals. Or just going to completely different verticals that have nothing. Yeah. Okay. All right. Well, I think this is a good place to end it. Rob, is there anything that we didn't discuss that you wanted to share? I think you heard it for me throughout the podcast in this interview, but I am very bullish from where we're going over time. But short term, you know, there's a lot of things that we don't know, right? And so I continue to be, you know, cautiously optimistic and very optimistic

over the long term. All right. Great. Well, thanks so much for joining. Well, obviously, I have to have you back another time. Thank you to everybody for watching and listening. Thanks, Steve.