Unchained - Why Wrapped Energy or Compute Will Be the New Store of Value: Bits + Bips

Episode Date: May 7, 2026

Missiles in the Strait of Hormuz. Brent jumps 5%. Bitcoin breaks through $80. The Bits + Bips crew reads the geopolitical tape — and explains why crypto is shrugging it off. --- Thank you to our sponsor! Coinbase One — coinbase.com/unchained Heads up! If you haven’t yet, be sure to subscribe to Bits + Bips, since the show will migrate there in a few weeks. Follow us on ⁠⁠⁠⁠Apple Podcasts⁠⁠⁠⁠, ⁠⁠⁠⁠YouTube⁠⁠⁠⁠, ⁠⁠⁠⁠Spotify⁠⁠⁠⁠, ⁠⁠⁠⁠X⁠⁠⁠⁠, ⁠⁠⁠⁠Unchained⁠⁠⁠⁠ and wherever you get your podcasts. ---- Iranian cruise missiles struck commercial vessels in the Strait of Hormuz, Brent jumped 5%, and Bitcoin broke through $80 — all in the same day. The Bits + Bips crew unpacks what the escalation means for crypto and macro positioning, why Ram stays bullish, and whether Paul Tudor Jones is right that Bitcoin is now the best inflation hedge. They also break down the Clarity Act’s yield compromise — with Circle up 16% — and why Austin argues banks may have handed asset managers a structural win. Finally, a U.S. court filing targeting Arbitrum’s frozen North Korean funds raises a bigger question: can you serve legal papers on code, and what does that mean for DAO governance? Austin Campbell, Ram Ahluwalia, and Chris Perkins break it all down. Hosts: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Austin Campbell (@austincampbell) — Founder, Zero Knowledge Consulting; Adjunct Professor, NYU Stern ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ram Ahluwalia⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, Co-Host, CEO of Lumida ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Chris Perkins⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, Co-Host, CEO of 250 Digital Asset Management Learn more about your ad choices. Visit megaphone.fm/adchoices

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All right, everybody. Welcome back. I am your host, Austin Campbell, high scholar of zero knowledge, here with my co-hosts, Ram Al-aulia, maister of wealth, the leader of Lumida, and Chris Perkins, the golden hand now of 250 digital asset management. We're going to start today with what I think is perhaps unsurprisingly the top news of the day, which is that Iran is the technician by not Austin. It's more moves.

So the latest from the straight. Iran fired cruise missiles at commercial vessels in the strait and allegedly U.S. Navy warships. I'm not getting any audio. Sentcom says no hits. and the Iranian state media claims otherwise. Tehran says that Trump's Project Freedom and Naval Escort mission violates the ceasefire. The South Korean Ministry of Foreign Affairs allegedly confirmed a Korean vessel

was struck by Iranian fire today in the strait. The U.S. Navy has fired on and sank multiple Iranian small boats after they attempted to interdict efforts to break the blocked aid. and Iran fired missiles at the UAE, striking the Fujira oil industry zone, which to be clear, is the primary export terminal on the Gulf of Oman that bypasses the Strait of Hormuz. It was on fire earlier today, sparking rumors that the UAE and allies may retaliate. So the market, unsurprisingly, not super happy. Brent was up 5% to about 114, WTI up to 105, intradite.

day. Kalshi traders are seeing an over 50% probability of 127 Brent. The UAE obviously has already quit OPEC, but there was an op-ed at Al Jazeera by Anas Abduen saying this is not about oil. It is the end of Gulf solidarity. And today, that has definitely spilled over into kinetic conflict. So, Chris, I want to start with you on this one, which is to say, what do you make of what's happening in the straight today? Before we get to more on the market reaction, what's happening in terms of the physical theater? Yeah, I mean, I wanted to start with the market reaction, because that's what's really fascinating here. I mean, come on. Bitcoin ripped through 80. It's now surpassed its 150-day moving average, which generally shows a regime change,

if we look through history. Ethereum's up. Like, crypto seems very, very resilient. Traditional markets are down a bit. But crypto is like is just like kind of tricking it. Off to your point, WTI is ripping, Brent's ripping. What's going on in the straight right now is a couple of things. The Trump administration is now, I mean, I mean, there's a million things to unpack, but all focus is on freedom of navigation. And the administration is approaching this almost through a humanitarian lens now and saying, hey, we're doing the right thing for the globe. We're going to help shepherd these ships through the strait. My understanding is they were able to bring two ships through the straight today, including

a mask, a Marisk vessel, again, with a focus on freedom of navigation and accordance with UN Chargers. So that's good. But against the backdrop, man, like, it feels like things are about to boil over. Iran feels like a caged animal. They continue to be decimated their, you know, they're, effectively, they're swelling with they're not able to export their oil that's going to impact long term their ability to pump out of the ground.

It's going to hurt if they're not able to get that oil out. It feels like this, you know, things are coming to a head. And who do they lash out again? They're lashing out at the Emirates again. It's fascinating. I was at Milken this morning here at the Milken Conference. And someone very, very senior was presenting from Madaw. a umubata today.

And gosh, the amount of optimism in the crowd was profound. When you talk to business leaders in the Middle East or beyond, yes, this is a short-term geopolitical stress, but I can't understate the excitement about how the world is going to come out of this, the amount of focus on CAPEX, the amount of innovation and development in the GCC and beyond. And so the general sentiment is like, we're going to get. get through this. It's tough, but on the other side, it sounds like it's going to be a very, very, we're going to be in a very good place. So long story short, things are very, you know, it's a very

tenuous time in the Gulf. The United States Navy is doing God's work, continues to do God's work. I think you're also seeing a lot of psychological warfare. Iranian said they hit one of our, one of our ships, a cruiser or something, sent com's denying it. And so obviously, you know, having been in war, I'll tell you what happens is like there's a lot of stuff that happens on the ground. It gets filtered up and then you just hear a sound bite. So I guarantee you there's like there's a lot of hooking and jabbing on the ground. Yes, we took out like six or seven boats. We got to a couple of ships flow.

So, you know, the markets tell the truth over and over again. Obviously, there's stress on oil. Crypto feels really good. I still feel like we're kind of heading towards the end of this. And when I say the end of it, I don't mean the end of actions. I mean, I mean when this geopolitical event will reach a certain piece, like we'll reach stasis, where it kind of gets relegated to the back and the markets will take over again. So generally, lots going on.

Crypto feels very, very constructive again. I say this every week now, I feel. And it does continue to feel constructive. But yeah, let's go over to Rahm and love your take there, Austin. Yeah, I agree with what Chris is saying. I agree. Markets are constructive, digital assets. is constructive in many areas.

I think this trade of Hermuz as an issue is increasingly less relevant. I think the IRGC is beat. They're boxed in. The blockade is working. Markets are generally shrugging off high oil prices. Markets are one day from all-time highs, which was last Friday. So I think opportunities to buy the dip will be bought by a number of investors that continue to remain off sides.

That includes institutional investors. Overall things are good. You know, the earnings growth estimates for the next 12 months is 19%. And what we saw is 40% of the market cap report last Wednesday. Every single mega cap tech company beat, beat, and raised, which suggests that even that 19% may be an underestimate, meaning that they're sandbagging the numbers and they're holding back. So overall, I'd be biased, bullish, take advantage of weakness. A small pullback at the

beginning of this week is natural what we were expecting. And I would take advantage of that. I would remain overweight energy, though. I do believe oil prices will be higher for longer. They're not going to settle back to the $70 range. And that area is a bull market. And it's a nice inflation hedge also. Yeah, I just want to touch on the CAPEX that you talked about. So I think with the, I think in the AI space, data center space, we're seeing like 800 and something billion dollars of CAPEX spending. That's going to extend for multiple years. It's just not a one-off. And the amount of stimulus that this will bring with it across blue collar jobs even, you know, it's not just, you know, going to go into the hands of a couple of like private equity

firms, you're going to see job creation. And I think that's why there's a lot of optimism. You know, when I talk to the people here at Milken, it's the amount of stimulus that's going in, like the investment in this new infrastructure should be very, very good for the economy in the medium to long term. So a ton of optimism here. I'll add to that. It's a great point. I saw a data point that the demand for software engineers is increasing job opening software engineers increasing. since a lot of this AI apocalypse news is overdone, it's true that their headcount reductions at the mega-cap tech companies who are substituting labor for tokens,

but for the long tail of the economy, they need engineers to adapt workflows. Also, you're seeing that the tech ETF went up today because of software. So software is rallying too. Software's got a nice interesting correlation with digital assets. So that's constructive. I think the bottom's in for software also. Yeah, and you'll see as a repositioning, right?

Jobs will shift. Some will go away. Some will come. Some that we haven't heard of will be back and emerge. And so it's just a restructuring of labor markets. But I think, long story short, based on the amount of CAPEX going on, it should be, it should provide nice stimulus to our economy in the medium term. I think part of what's important to look through.

On the job. Yeah, Pentagon is ramping up spending as well. We saw that. I think they're talking to four of the big AI players now, two hyperscalers and two the LLMs. We haven't really seen Pentagon defense spending get involved in AI yet, some initial toes in the water. So that bit is coming online.

And this UAE, kind of the attack there that happened, what are they going to do? They're going to turn around them by American defense equipment, like Raytheon Patriot. defense systems and interceptors. So that leg of the economy is going to do well. Industrials are doing well. It's part of my weakness.

The inflation risk, their expectations are neutral. So as long as you have inflation, overall we all benefit from that. Yeah. And there's another region that we don't often talk nicely about here. Europe.

And like it or not, the Europeans, they're going to have to do some building themselves as well as they focus on their own internal security apparatus. They have to galvanize their manufacturing. So, you know, even if there is a decoupling and if the U.S. pulls back, you know, out of Germany or whatever, that could be short-term difficult on their economy. but they're going to have to reconstitute, and they're going to have to, again, build back a manufacturing capability

and self-sustainability, which also should be, you know, positive from a stimulus perspective. So that's something that they're going to have to do, and it's part of this greater theme. So, like, yes, we were maybe global and efficient, and now as we decouple and become more self-sufficient, you're going to have to do a lot of building.

There's going to be a lot of economic activity due to that rewiring. So it's pretty interesting from a macro perspective. How do we feel about Germany rearming here? Well, I'll hop in to say, yeah, I was going to say, I'll hop in to say, one, one of the things that the economy has been short on over the past, call it 10 years, has been physical, like, manufacturing needs. We've had to take this trend of building piece by piece, by piece by piece into the AI infrastructure, Chris, as you've been talking about, and committed capital to it the way that we haven't. Europe is now going to have to do the same thing with defense. By the way, they're doing nothing on AI, and they're probably going to have to build around energy

if these problems continue as well. So I'm actually going to say this. I think before Germany can really build out their defense industrial base to flip this back to the tour, do you, don't they need to fix energy first? Did we lose Rom? Yeah, I think we lost Rom. All right. Well, I was going to ask you, I can hear Chris.

I can't hear Austin. Yeah, Germany's got an energy problem, do they not? Yeah, they absolutely have an energy problem. Their dependence on Russian gas and energy has been a huge issue. So where does this road go? And they also pulled back out of nuclear a while back. So they're going to have to figure it out. I think near term that's going to result in probably more dependency on U.S. oil.

at U.S. energy, I think, but medium term, you know, they're going, I think nuclear has to come back. Yes, solar, you know, you can get, you can do your best with solar and clean energy, quote, but I think nuclear is probably the way forward personally. Right. And so as I'm looking at that, right, we're playing through this whole sort of situation in Iran. And my, my central view is like their capacity is not coming back online for a while. There's going to be continued conflict in the region. Who knows what the timeline for resolution. is, is it weeks? Is it months? Is it years? I don't know. And that tells me that the energy build out globally is going to be a problem and something that the market will have to digest and that

people are going to need new sources of energy. And once they have that, they could then start moving forward and building all these other components. So, Chris, to your point, when I'm looking at the Cappex story, I think it's very bread and butter stuff. I think we're talking about like energy. I think then that legs into data centers. Europe is massively behind on those in the AI space. It's really the U.S. and China fighting that battle. And I think the restructuring that we're seeing here of Cappex is going to be spending in the United States on data centers while we're doing spending in Europe on energy. And that tells me as I'm looking at markets, if we're worried about valuations in the United States, are we in a world where earnings are going to catch up to the valuations as opposed to

valuations like prices coming back down to come to the earnings? Yeah. So, Rob, is this the time of the episode where you're critical of Sam Altman? I mean, you have to give him some credit. He's doubled down on data centers, right? He's gone totally long compute. And it seems like it's paying off. I don't know.

Maybe you got something right. pain off. I don't know if it's pain off. So they're falling short of their own projections. So Open AI projected to hit one billion weekly active users. They're behind Target. There's the wall. I think we're losing ROM.

Do you hear me also? Internal disagreements. I hear Rom slowly turning into a robot, which tells me Sam Altman is using OpenA.I. to sabotage. That's right. Absolutely. Can you hear me, Chris? Yeah, we got you a little bit.

You hear me or not? Yeah, yeah. All right. So Sarah Fryer, the president of OpenAI, is having some internal disagreement. She's trying to kick the IPO out to 2027, trying to bring expenses to plan. They're behind on their weekly active user's goal and their revenue goal. Google Gemini is the leading L.M. out there and Claude is growing quickly. So Open AI is in a rough spot.

But yes, we're going to keep criticizing Sam Allman until he sponsors this podcast or acquires one of the other. Now we, not we, you, my friend. Yeah, I was going to say, I don't, I don't think that's how TBPS pulled that off. All right. So, Chris, I want to go back to something you were talking about earlier and let's, in fact, drill a bit more on one particular topic here, which is Bitcoin. So Bitcoin, as you said, broke its 150-day average. But the one I want to talk about is Paul Tudor Jones, right, who came out saying that

Bitcoin is unequivocally the best. inflation hedge that there is more than gold. He's saying it's going to be really hard to make money in stocks over the next decade that the S&P reminds him of the 2000 dot-com bubble. So contra all of the optimism that we've heard here, he's thinking that the valuations and equities are still quite high, but he's very long Bitcoin. Now with that said, you know, and Cliff Asnus has been talking about this, that Bitcoin's correlation to stocks is now like 0.75 and like 0.9.5. And like 0.9. to NASDAQ, but I wanted to bounce this off you. If you've got PtJ calling the top on equities and calling Bitcoin the best inflation hedge, given his trading history, what do you

make of that? Like, what do you think is going to happen here with Bitcoin in that context? Look, I think he's right. And he was an early adopter, you know, came out long of Bitcoin many years ago, was one of the first real macro guys to come out. say, yep, Bitcoin is the solution here. And it really comes down to its fundamentals as a store of value digital gold. It's actually better than gold because we're not entirely sure how much gold is out there. Yes, I think people will tell you that you can put the amount of gold in the world in a pool. But gosh, there's a lot going on in space and there's a lot of innovation happening. So it's not a perfect known, you know, we don't exactly know how much gold there is or isn't in the

universe, right? And so, but Bitcoin, there's 21 million coins that can potentially come into existence, many of which have been lost or stole, like they're gone. You got Satoshi stuff. And yes, there's some, there's going to be a conundrum that happens as we try to navigate some of the quantum challenges, but it is a more pure commodity of limited value, of limited amounts, right? It's constrained in its size. And so in that sense, because we have a very similar, or social consensus, albeit, you know, gold has had that social consensus, not because of its utility, because people believe that it's precious for thousands of years. Yes, it's a shorter duration of that social consensus, but it's a pure store of value due to its limited quality. It's no limited

quality. And so I think he's right. And again, you know, as time marches forward, you know, look at the Bitcoin chart. It looks very constructive. It's been like, look at it against gold. since Iran began. It's a beautiful chart. If you do one thing, look at that chart. It's up and to the right. So again, like,

prior to that, when gold went on it, did its thing, people freaked out. They're like, wait, the narrative's been lost. It's really gold.

It's not Bitcoin. What have we seen time and time again? Bitcoin catches up to gold. It's a catch-up trade over and over again. I think long-term, he's right. It's going to emerge as a store value. It's,

and look, there are risks out there. There is was any asset class. But, you know, he's one of the greatest macro traders of all time. I think you got to listen to him and agree with him or disagree with him. He's got a perspective and I respect it. Money comes online. We're going to have quantum money.

You're going to see some successor to Bitcoin. That's quantum encryption resistant. And that'll be the next move. It won't be in the next few years. But that's what you want to keep an eye on. There's going to be some flurry of quantum money coins that are created in a few years time. I agree. The quantum risks, I think, are priced in at this point. Yeah.

You know, you should be biased bullish. Those risks are still legitimate. It's a question of time frame. Right now, you should be biased much. Yeah, look, I think your quantum point is interesting, but I think it's going to be a little bit different. So as I think of store of value going forward, it's really energy, right? That's what we're really talking about, you know, all these, these AI models, the LLMs, hyper-scholers, they're desperate for energy.

What is tokenization? What is Bitcoin? In a way, it's wrapped energy. Right? And so the way to think about it going forward, I think the next iteration of that store of value is going to be either compute or energy, which is, you know, one step downstream from that compute. But those are going to be the new commodities.

It's going to be wrapped energy, wrapped compute. And almost the next back stable coin will be back. by energy or compute, is that Bitcoin or not? But I kind of agree with where we're going wrong. It's hard to articulate exactly where it's going to land, but to me, that's the future. I think your point on digital assets as backed by compute is a super powerful one. I mean, we already use the term token to represent a unit of compute and tokens are priced in dollars. You know, Bitcoin is one-way energy. So I'm not of the view that Bitcoin is wrapped energy. it's not like the ability to convert kinetic energy to potential energy and back and forth again.

But compute and tokens and dollars are fungible and interchangeable. And compute should approximate the cost of energy production. And you should see money linked to that in some way. 100%. So I agree. I think that's the future. You know, the best digital asset might not yet exist. I think that's right.

And great point. on the, like the irony of calling the, these tokens for AI models, tokens, right? You're like, no, that's my token, man. That's my word. But it's, but it does actually show like this thing is converging, guys. AI crypto, AI quantum, quantum crypto. It's all coming together. They're all accelerating each other.

It's an amazing time to be alive. All right. So let me, I was going to say, pile in on this one and come back to a previous theme. that we've talked about here, which is micro strategy. And what I mean by that, Chris, is if we're going to take the bullcase for Bitcoin from here, that being we've seen a very constructive setup, I agree with you, it's had catch-up trades with gold previously. It's handled today relatively well compared to equities, which tells you that a lot of the

conflict risks are probably priced in in addition to the quantum risks. what do you make of STRC is the issuance machine coming out of micro strategy? And what do you make of micro strategy itself in a world if Bitcoin prices are going to be going back vertical? Like say we're back on the road to 12510. Yeah, look, I don't love talking about individual stocks or underwriting them on the show, but it's a dat. Right? Everyone hates dads, but they don't hate micro strategy. and I think you're starting to see some real financial innovation.

Yep. Using using, like again, what did we say? Securities are not a death sentence. And here you have a company that's been incredibly innovative around using the wrapper of an equity and doing some really cool things under that public framework. I just saw Tom Lee yesterday, my buddy Tom, shout out to you, sir. We'll get you on the show one of these days. doing amazing things in the in the in the ethereum space as well um and you know leveraging the organic yield of ethereum amongst other things uh to drive that ecosystem

and so i'm going to get a lot of crap for saying this but dats are not dead they're not dead and like wait till you see some of the reflexivity once once uh once tokens pick up and and again like nfts a lot of them are going to go the way of the dinosaur however some of them are going to figure it out. And you're going to see some real innovation as we come out of this bare market into the next cycle. So, yeah. Rob, you're on the other side? I own two Dats.

I own two Dats right now. So I think there are opportunities in DAT land. You got to pick them well. It's fundamentals, right? Like, you have to understand the fundamentals. What's going on under the hood? So. I think there are things you have to do to underwrite it.

the fundamentals you know I think technicals matter more than the fundamentals right now but fair enough you gotta look at both yeah sure but we talked about one

I think one or two weeks ago right we talked about like hype and that's related to hype I think that's gonna continue to do well but there's a lot of things that can do well now like it's it's hard not to be constructive

I mean given what happened Today, I do think it's very hard not to be constructive on that front, but I also want to, what's the right way to say this? I think one of the interesting things about the current situation that we're in is we're at sort of a collision of various market forces here. Chris, to go to a topic that you were referencing earlier, and I'm just going to pull this up right now, you were at Milken today in Beverly Hills. I think what was attendance there? It's like 3,500 plus people this year. It's pretty crazy, right?

They had to like bring it down. I think it's like normally five. I think they brought out a four, which is a lot of construction. Okay. And it's like, it's insane. Yeah. So the headline poll that I saw was the Milken Harris poll was

88% of business leaders agree. Companies can't solve AI workforce readiness alone. That we're going to need some sort of coordination and response. 41% of workers had zero AI support. last year, a big gap between saying and doing. Though now 69% of workers believe AI can create more opportunities than it eliminates with the right approach. Jensen was speaking.

I think DeSantis and Whitmer were there on workforce. You had Hagerty and Warner. I wanted to ask you specifically, since you were listening to this and then we'll hop over to Rob, as we're thinking about all of the themes that we're seeing in markets and this great restructuring and the AI buildout that you were referencing earlier with regard to Milken, where is public sentiment on that? Because if we're going to talk about technicals and animal spirits, we kind of need to take the temperature of like two-legged human beings. Yeah, look, I can't talk to, there was an opening here. The president of Milken Foundation came out

and talked about the world as we know it. And some of the challenges and the opportunities that we see. And they're both. Like, I think he mentioned. that 27% of kids have anxiety issues and things of that sort. Like, what are we doing about it? But I'm telling you, the overall sentiment amongst, and again, this conference has, like, serious industry leaders across every industry, CEOs, you know, everywhere, the sentiment was overwhelmingly optimistic, optimistic about the opportunity ahead, leveraging technology to solve some of the world's problems, health care,

things like that. Excitement about robotics. Excitement about, you know, that interface. Everything from, you know, interesting sectors. Energy came up over and over again. But overwhelming sentiment is like, yeah, we're facing some near-term challenges here, guys. Like, geo-politics are awful. But gosh, we're going to get through this thing.

And there's so many amazing things happening across the economy, you know, really powered by, number one, strong regulation. the countries where regulation is transparent, predictable results in capital inflows. Jenny Johnson was talking about that today. So why is Singapore doing so well? Because it has an amazing regulatory regime that attracts capital. Why is the United States doing so well? Because we have a transparent, predictable regulatory regime.

People can do business here and know what they're getting into. It attracts capital. And so you're going to see more focus on that. And the countries that get it right, they tend to do very well. and loud and clear now. So two different views on AI. I'll give you the public sentiment view and then anecdotal data, both of which conflict. The public sentiment surveys are pretty negative, especially from areas like lawyers and even teachers that have a lot to lose with AI, but also like just advanced professionals.

Also, the politicians, including a lot of the candidates, if not all of them in the next presidential election, seem to be biased negative around AI. due to the hike impacts on utility bills, it's an easy scapegoat to make and just point the finger at. Here's the other side, though, anecdotally, across old age cohorts, looking at my family, just when I go to the cafe,

I'm just seeing conversations around AI that really come from joy, including like my seven-year-old son, every night I ask him, hey, what do you want to talk about? I'm into bed. And last night, he's like, let's talk about it.

what is AI? And I remember last week he's like, hey, you work at AI. He doesn't even know what that means. It's something that he's talking about. He's heard of the term GPT. It's something that he's brought up. He's like, who's built AI? He has a natural curiosity around it.

And then also retirees. He's at a coffee shop. And I just overheard a conversation. These retirees talking about AI in like a positive, excited way. and they were engaging with it. So, you know, I think the adoption is, of course, it's strong. We see it in the numbers, seeing the data. The value creation is coming online in the enterprise world that can't get it fast enough.

We're getting rate limited by Claude. Talk for a week, Claude was smarter than me and presumably a lot of humans. My wife would tell you that's not a high standard. But I think now they rate limited it, so now it's not. But the demand and the usage and the value is there. and you're going to see consumer applications come soon. More consumer. Yeah, we'll see how we, you know,

wrestle with this as a political issue in the next cycle. It's a democratization of access to knowledge and data. Now, it's not always perfect, but people can now use it to learn things much more quickly, even your 70-year-old. Just like crypto is a democratization of finance in its purest form. So this should have,

elevate the human condition. Not everybody, but those who use it the right way, it should. I agree. I agree. My wife brought up the concept last week of like not contributed five tonight. She said, why do we need colleges anymore? Just, you know, focus on critical thinking and entrepreneurship in the age of AI. I think there's a lot of value in five to nine for other reasons, by the way, even beyond education for portability of wealth. So it's kind of a separate question. but yeah like everything's up for grabs which I like which I like I think the thing that I get I think we need to be focused on just not losing the humanity behind the decisions impacted by AI right we talk about like automated lethality I think you got to have humans the looper on all

of that but we're seeing the benefits here I am I'm I'm driving and not driving is amazing so we can all have a wonderful conversation together so the promise is there we got a lower health care it's percent of GDP and how many incremental years of life extension have we really gotten for all that spend? It's not clear we're getting the right side of the tradeoff there. You know, so the promises is tremendous. And obviously there's all the national security. If you, if you don't win an AI, you're on the wrong side of history as a sovereign. Yeah, I want to comment on your 529 comment. And I think that that entire, the whole college thing, I mean, needs to get disrupted for many of the reasons we can talk for hours and hours about. But the need for community, the need for

critical thinking, creativity is more important than ever. And I think the teams that win going forward are cross-disciplinary, right? We're going to, like, you know, in crypto and AI, it's been very tech, computer science dominated. As we move forward, I think we're going to reintroduce those humanity majors, literatures majors, the classics majors. because it's going to critical thinking and creativity will be at a premium. So that's, that makes me excited, actually. I also think there's going to be some significant opportunities in spaces that people aren't thinking deeply about.

Like, here's a good example. So my wife works in healthcare. She's the head of compensation for Memorial Sloan Kettering, which is like the major New York Cancer Hospital. And she is now running an AI working group and training thing to upskill everybody in HR, which is hopefully going to allow them to do things like onboard doctors and nurses faster, spend less time on all of these things to dedicate even more time to research and patients, which as it should be is the number one focus there. And one of the things that

she's been observing, Chris, to exactly what you're saying is once you start teaching people how to use this with their hands, that is to say, not talk to them theoretically, but like, how do you prompt this thing, what workflows are working? How do you build these? things people get increasingly excited about the potential of it and the possibility of it. I think what's going to, you know, a little bit like the advent of the personal computer going to happen here is the divergence between the people who train themselves in upskill and the people who refuse to engage with it will get increasingly large. But net net, that's a benefit for the world as we move forward.

I think the biggest mistake you could make with AI right now is just doing nothing, right? Like you've got to engage with it, and either learn how to use it or learn where it's not good and where human skills will still dominate. All right. I think we're- Rob, we're losing you, buddy.

All right. Since we're losing Rom again, we're going to give him a moment to recover by going to our second ad break. So before we continue, a quick commercial break. You know what I'd do with a share of $1 million? Honestly, I'd probably buy a one-way ticket to an island,

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back with the Coinbase 1 card. If you trade crypto regularly, the basic annual membership can pay for itself. Hit a 14-day streak to get your share of $1 million. Plus, you still get 20% off the first year of Coinbase 1 annual plans and a $50 Bitcoin bonus when you spend $100 on a new Coinbase 1 card in the first 30 days. Don't miss your share of $1 million at Coinbase.com slash unchained. Again, that's coinbase.com slash unchained. All right, everybody. Welcome back. on the part where Chris and I get to talk politics, by which I mean, apparently there is a compromise on yield for the Clarity Act. So what's the deal? Coinbase says agreement has been reached, passive yield banned, activity-based stable coin rewards permitted, clearing a path to the long-stalled

Senate banking markup, circle jump 16% on the news, markets are pricing in stable coin legitimacy, A couple of comments from Coinbase from Far Yard and Paul Graywall, much of this debate was based on imagined risks, not real evidence. Carlo DiAngelo framed the carve out as a substantive crypto win disguised as compromise. I on my own Twitter account may have called it grindingly mediocre, but said that the industry should probably accept it in order to just move forward, given the context on the ground. And the tension was banks pushing this narrative of a passive yield band causing deposit flight risk. I don't, just to be blunt, think there's any credible research supporting that. But that was the argument. And yet crypto got an activity rewards definition, which, Chris, I think you and I both agreed

that was going to have to be preserved because otherwise you start implicating all the credit cards rewards programs and like gift cards and things of that sort. So I guess let me start with this. Did crypto win? Did the banks win? Did anybody win? It's like we're back to where we started, right? Like, I don't know.

I don't want to say I told you so, Austin, but I told you so. I said, like, this interest thing is going to get worked out. It's kind of dumb. And it is what it is. I think we're going to be in a place that's workable for everyone I get. I guess my question for you, sir, is that me, does this mean, does this mean that we can now liberate money market funds and send them anywhere we feel like? Okay.

So for one, I'm going to give a super hot take here, which is I think banks are a catastrophic loser in this like compromise because they are going to regret in the future that they cannot pay yield on stable coins because I will remind everybody, you could definitely pay yield on a government money market fund. in fact, you were required to do that by law. You do not have the ability to hold that interest back. And what that means, before you hop in, Chris, is that an asset manager, let's pick fidelity for the purposes of this discussion because they are launching a stable coin

and a tokenized money market fund could have a stable coin backed by their tokenized money market fund that for anybody who's got a wallet with them, you can just unwrap it when it's in there and you've got a money market fund paying interest. And then when you want to move it, you can wrap it again. So did asset managers not just dominate both the crypto industry and the banks here? Maybe this is very good for asset managers. Because again, we've talked about this over and over again. What's the difference between a treasury back money market fund and a stable coin? The wrapper. Risk perspective. Which was more risky? Right. And so like these worlds are coming together. We call one of securities so as it's regulated. We put more restrictions around it. Does that make

sense from principles-based perspective? I don't know. Here's the deal. Let's just talk clarity for a second. As we discuss, the interest piece has been worked out. And to my knowledge, in talking with policymakers, there are no technical gaps to passing this thing. No technical issues. However, now we're going to face the harder challenge. We're going up Hillary's step, as I like to say, at Mount Everest. Those are the political challenges. The political challenges now need to be overcome. Two things to be on the lookout for. Number one, commissioners, right? We only have a single commissioner at the CFTC. I think it's a little bit better on the SEC, I think. But we're going to need to have some additional commissioners introduced into the fray. That's a big part of the political

navigation. And then, of course, probably the biggest hill to climb of all, ethics, ethics, ethics. There's certain people that believe that the Trump administration and crypto go hand in hand. Again, are these, can we overcome these obstacles? Absolutely. Do I think we will? I do. I do. I think polymarkets around 62% at time of filming. I'm probably in the 50s still a little. I'm net positive. It's not a done deal. It's still a coin flip. But we got guys like Patrick Witt down at the White House working his tail off and Harry and the crew down there. So I think it gets done.

It's not going to happen overnight. As we saw at the end of genius, all the craziness happens at the end. It can go in either direction. I think it gets done, but it may take some time. Politics are technical is done. Politics are next. What's your take? Does it get done, sir?

So I remain skeptical on it getting done, but for completely non-technical reasons, exactly as you've just said. I would say the bill is currently constructed, certainly not perfect. There are some elements of it that I think could be better like the yield compromise, but there are some elements of it that are extremely good. One is just giving a taxonomy on who's supposed to do what with their hands, because part of the reason we're here in the first place is in America. we have, what is it, 19 regulators touching this stuff as opposed to one in most places. But two, you know, I'll remind everybody, part of the initial impetus for clarity, because work on things that were predecessors to what is now clarity probably started in 2017

is the BRCA, right? And making sure that we have clear, delineated lines of where are the boundaries on things like money transmission, wind is regulation attached to you? in the first place, what are your obligations, and just being able to know what the law is, regardless of what we think of it, is a very big win. I think all of that's good. I think the bill as constructed is reasonable to pass. I think you hit the thing that to me is likely to be the landmine here, which is how do we get around the ethics component? Because we can, I'll say we can probably break the Senate into four groups conceptually. Group number one is they want to pass this,

and they genuinely don't care about what Trump is doing, which will be some on the Republican side. I would imagine none on the Democratic side. Two is they're grudgingly willing to pass it on the Republican side. They don't love the bill. But if they can find an excuse that plays, maybe they duck back out of it. I don't think there's many of those. That maybe is just a handful of Republicans. But let's go over to the Democratic side.

There is the Elizabeth Warren-led group who hates blockchain with the fury of of a thousand sons and wants nothing to do with this and will not vote for this under any circumstances. You know, there's no amount of facts that will persuade them and we just have to accept that. But then there's the group you need to get this passed. And that's the Democrats who are probably largely willing to deal on crypto, but their bigger problem is call it ethics and the administration writ large. Now, getting that group on board, Chris, I think you would agree with me is going to be the key unlock to actually moving this from technically correct to politically viable. And what I'm looking at there and why I'm a little bit worried is I think any ethics

compromise that's going to get past, the Republicans won't let it be something that just targets the Trump family. So we're probably looking at comprehensive ethics reform for Congress and maybe federal employees. Like, what is your take on what the art of the possible is there? So Trump and his state of the union address mentioned the Stop Insider Trading Act twice. Yes. And I think that's was his way of getting in front of that saying, hey, let's look at this holistically, you know, across why are we signaling out a single asset class? And frankly, that's probably a better way to do it. And yes, I think most people would agree that ethical issues should always be reformed and attacked. So not an easy path forward, but they're, but that's what's going to happen. I also think I'm

I'm generally bullish on overcoming this because the president has a lot of political chips in D.C. He's got more than anybody. And he has to choose how he's going to spend them. And, you know, if you remember at the beginning of Operation Epic Fury, he came out and what did he talk about? While the bomb started flying, he's like, past clarity. And so I think he's going to put a lot of those chips on the table that may hurt his agenda in other places. But I remain confident. There are two other things that I'm focused on in clarity.

one that came up, I've been watching closely, is this thing called Section 505. This could restrict the SEC's ability to provide an innovation exemption or some exemptive authority. And so, like, having lived through Dodd-Frank and when I was building businesses within Dot Frank, oftentimes technology moves faster than regulations in the law, particularly regulations. And so one of the key differences between our regulation here in the U.S. and some overseas regulators is that our regulators have this concept of exempt of authority. So they're like, hey, you know, the regulation was like this, but the conditions have changed on the ground too fast. And so we're going to exempt this old regulation.

We'll go through proper rulemaking. We're just not going to enforce it for now because it's going to let because we're focused on principles. So 505 seems to constrain that a little bit. And so that's something that we're focused on. And then last but not least, the one thing that I'm dying to see in markups is I want to see a recovery program where we can recover stolen assets from bad guys. Yes, I call it privateering as well, but I'm supposed to call it recovery program now, public, private partnership recovery program. So please write your congressperson, your congressman, your cover. on public, private partnership, recovery program asset. There's got to be a way to make this

a pirate acronym when we pass the bill. We'll figure it out. But come on, man. Like, the great news about this today was King John Un came out and said, oh, you reptilian media, we're not stealing anyone's crypto, which is great. So this is not an escalation now against North Korea, DPRK. They're, you know, they're doing their own thing. We can actually go after the criminals. So, So again, those are the two things I'd like to see, maybe some focus on 505. And then on top of that, we got to address the security situation, you know, every week. April is one of the worst weeks for hacks. $600 million.

I'm not sorry. No, I agree with you on that. And like it continues to spawn complicated situations because like, look, clarity or not, the security landscape continues to be a problem. In fact, I mean, Chris Arbitrum is a good example. of this, right? So what's going on there now is the Arbitrum Security Council froze funds that were related to the North Koreans theft from Kelpdala. Let's call it what it is. That's just straight up theft, right? And what happened is now in U.S. courts, a lawyer has shown up seeking funds for the

victims of a decade old's judgment against the North Koreans for terrorism. One, reminding you how long they've been a problem for. But two, attempting to seize money that was linked to the Kelt Dow exploit. So I'm going to say a couple of things here from people in the industry and then I'm going to make a point about this as well, which is one. Avey has said this flags existential risk to Dow governance autonomy if judgment creditors can reach treasuries. Now, with that said, if this is correct, that existential risk is real. Peter Van Valkenberg of Coin Center said the real president, is whether U.S. courts can reach decentralized treasuries. Sanctions enforcement will become a tool of Dow control.

Bantag said it's theater. Dow's don't have legal personhood. You can't serve papers on code. But I want to make the point to everybody. Dow's are a name that we throw around in crypto without thinking terribly hard about them. And whether you're acting as a partnership with de facto control or truly decentralized, the facts and circumstances. as matter. But I think there are two points in the legal discussion that were missed that are

important to raise. One is, what is the actual legal status of these funds? There is a very big difference here. If we take the Coda's law, exploits are working as intended, and that is how things work on chain. One good exemplar of that actually might be some of the Mango markets decisions, because in that case, I'm going to tell you a weird but coherent outcome is that the North Koreans became the legal owner of that so that in this case, the plaintiffs actually might have a legitimate claim about a judgment and taking control of those. The other one is to say, no, this was theft. And if this was straight up theft, that is not the North Koreans property. Chris, I can't steal your car and then have somebody unrelated come after me for a previous judgment

and take your car, right? And then essentially reverect. victimize you. So I think part of what we're skating on to with this territory and it relates to the recovery thing is exactly what the hell is going on here. So I want to start with this, because I know you've actually thought about this space a lot as you've looked at companies, which is what is going to be the future of, call it not just Dow actions, but Dow structure here. As we move into a world where courts are getting significantly more cognizant, I think, you agree with me, a Recovery Act would only further that. How are people going to have to think about these concerns in Defi and is the industry ready for it? Yeah, I think we've talked about this before.

Code is not law, law is law. And that's, you know, I know there's a lot of libertarians that wish that it was different, but that's not how it works. And if you're a centralized actor using defy, you're subject to the law too. I think, you know, I'm of the opinion that developers, they should not be subject to sanction. That's freedom of speech. Decentralized technology is technology. It should be left alone. But entities and people that use that will be held accountable.

Now, this is a really interesting debate. And Stani, the founder of Aves, come out and said, dude, that's not the, that's not the, that's not North Korean possession. Like, no, they stole it. So why are you laying a claim to stolen assets? It's not theirs. But it's a fascinating part of law. It's cutting edge.

And at the end of the day, it's something that we're going to have to, we're going to have to sort out. But law is law. I think an interesting point on Mango. And like, we have to watch case law and see how it's going to evolve over time. But hopefully we come out with something that's very reasonable and the money gets returned to the people who were stolen from. No, I think to your point, as a starting baseline here, if we can't take assets that were taken in actual theft in this case or potentially insignificant exploits and return them to call it normal two-legged people, my prediction is over time that proves to be an existential problem for developing a decentralized ecosystem. And the reason I say that is, well, deep subject matter experts might be willing to engage with that system, e.g. the Stani's of the world. I think it will be very difficult to get the average person who knows they are not a deep expert to use on-chain finance if the answer is finders, keepers, and if something breaks, you lose your money. Because they're not going to have the time to be experts or do due diligence, right? Like back to our old haunt. This is why things like rating agencies, auditors like financial regulators exist in the first place.

Because if you told every American, there's going to be no FDIC, go fully underwrite your bank's loan program before you put any money in the bank. Most people would just take their money out of banks. So as a starting point, I would ask you to sort of volley back on this. How do you see that evolving for the industry? Can we get mass adoption without getting to good answers here? It depends on how you. you're using the technology, I'm a strong believer that anyone in the world should be allowed to

use decentralized finance. They should do their own research and AI is making that better. I think AI is going to come up with, you know, people say AI is a threat to security. Well, guess what? It's also a humongous benefit for security because it's going to tighten a lot of those loops. And so I think in time, as we close these security gaps, investors need to have good disclosures. and need to know the risk that they're going to take, not only market risks, but operational risk, hacking risk, et cetera, people should be allowed to use decentralized networks, unimpeded. That said, for many institutions, and for some people, frankly, they love intermediaries, and they want to keep using intermediaries, and that's okay. And some of those intermediaries can provide value-added

services. What are some of those services? Well, they can mitigate and provide enterprise capabilities when it comes to operational risk management, et cetera. So different strokes for different folks. And I think you're going to see, like today, almost all of our financial services market is intermediated. As time goes on, you'll see less and less of that. But there's still going to be a need for intermediaries going forward, in my opinion. I definitely agree there will be a need for intermediaries.

Just like this is a specialization of labor point, most people don't have 40 hours a week to monitor this market or more. And so you're going to need somebody to do it for them. And that's fine. That's how market is. Right. Like none of us are on here arguing that everybody should be building their own car if they want to drive anywhere.

Why would you think the same thing about finance? But you do raise a very important point, which is where I think the divide is going to get complicated for the industry is I think we're going to need to find ways to preserve the values of decentralization while potentially, to be blunt, making it simpler and safer for people to functionally use that. Like the chain with the least exploits, Chris, is probably Bitcoin, right? There's very little going on there. The attack surface is not large, right?

Like ignoring potential future quantum risk, it's primarily people. I was going to say it's the state actor gets its hands on a quantum computer. Then maybe that shifts. And it's maybe the largest of all time. But I'm just joking. I think that the community will figure that out. But my point is more on the surface area to attack. like part of why we're not seeing these hacks in the Bitcoin ecosystem is what is there to exploit,

right? And so simplicity may be part of the cure here as well. But I guess where I'm getting to, and I wanted to rope this the reason I brought up. Isn't that the opportunity? You're talking about, you know, the challenges. I mean, that's the opportunity for startups. Yes. Abstract. Abstract the user experience, make it easier for humans and agents. It's make it more secure, make it more transparent. that's why it's an exciting time to be in venture. There's still so much to be built. And yeah, go chase your shiny new toy and learn about AI. And then bring it back to crypto and let's build something really special.

Well, I think this is the other point I wanted to get back to with clarity and bring this back around is the only way we're going to get concrete answers to many of these things are if we have a legal framework where people feel comfortable to build things here. because to bring up a project that we talked about earlier, one of the most successful, most adopted, and most valuable crypto-native projects of all time is hype. And hype was built by Americans who left America to build the protocol. So if we can't do a much better job of getting these people back to the country, I think long-term we have an economic problem in this space. Amen.

All right. Then on that note, we will go ahead and call it a day here. So thank you very much for joining us for this episode of Bits and Bips. We will be back in one week to discuss more about how the worlds of crypto and macro and AI are colliding. Until then, everyone. See you, buddy. Thank you for watching and hope you enjoyed this episode of Bits and Bips. Just remember, nothing we say here is investment advice.

And please check Unchained Crypto. dot com slash bits and bibs for more disclosures.