We Study Billionaires - The Investor’s Podcast Network - BTC121: Bank Failures & Bitcoin w/ Steven McClurg (Bitcoin Podcast)

Episode Date: March 15, 2023

Preston Pysh sits down with Steven McClurg, who’s the CIO at Valkyrie, and just an all-around brilliant macro thinker, to talk about the multiple bank failures, what it meant for the broader economy, Bitcoin, and more. IN THIS EPISODE, YOU’LL LEARN: 00:00 - Intro 03:03 - What are the three things the FED is currently considering? 26:15 - Why Silvergate, Signature, and Silicon Valley Bank are different than many other banks? 31:29 - What rules from the Global Financial Crisis are currently impacting regional banks? 52:26 - Is there a concerted effort by Wall Street and the government to remove onramps to Bitcoin exchanges? 54:36 - Steven's thoughts on Custodia's bank application with the FED being denied. 57:00 - What's going to happen with the GBTC suit with the SEC with respect to the ETF application? 01:05:29 - What impact has paper bitcoin had on the market to date and Steven's expectation into the future? Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. Steven McClurg's Twitter. Steven McClurg's Company Valkyrie. Peter McCormack's interview with the GBTC CEO. Related episode: Listen to BTC112: Bitcoin Macro Mastermind 1st Q 2023 w/ Joe Carlasare, Steven McClurg, & Jeff Ross, or watch the video. Related episode: Listen to BTC088: FED Policy, Bitcoin Etfs, & Euro Dollar Impacts w/ Steven McClurg, or watch the video. NEW TO THE SHOW? Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts.  SPONSORS Support our free podcast by supporting our sponsors: Bluehost Fintool PrizePicks Vanta Onramp SimpleMining Fundrise TurboTax Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. Hey, everyone. Welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. So it's been a crazy week with multiple bank failures and many people in the industry referring to the Silicon Valley bank failure as potentially being a Lehman-sized event. So I sat down with Mr. Stephen McClurg, who's the CIO at Valkyrie, former experience at Guggenheim, and just an all-around brilliant macro thinker. And we recorded this conversation at the end of last week with everything that was

happening, what it meant for the broader economy, his thoughts around the impact of the Bitcoin on ramps going bankrupt like Silvergate and then we soon learned over the weekend signature bank. His thoughts on the Bitcoin ETF potentially getting approved due to the GBT legal action that's currently taking place with the SEC and much more. So with that, we're going to hop right to it and this is my interview with Mr. Stephen McClurg. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. So just an admin note before we start the show, Stephen and I, like I said in the intro, had this conversation Friday morning on 10 March, and it was looking like Silicon Valley Bank was about to fail and that it was imminent.

Also, signature failed later during the weekend. I think it was Sunday night that they announced the failure there. Also, the Federal Reserve announced a new program to prevent contagion over the weekend. This was a new bailout backup facility, however you want to refer to it. And it's called Bank Term Funding Program, the BTFP. And so what it does, evidently, is offer loans up to one year in length to banks, saving associations, and credit unions by pledging their highly impaired bonds to the facility. And in turn, they will get back the face value of the bond.

So if you had a bond that was trading at 90 cents on the dollar because it was impacted by inflation and it was selling off, no problem. You can just put the bond on deposit at their facility and you would get the full $1 back to be able to be used for people withdrawing their deposits. But here's the problem. What kind of incentives are we creating for banks when they don't have to actually account for inflation and hedge their risks for owning such bonds? This is a major component of running a free and open economy and most importantly a free and open cost of capital for the value of everything on the planet. Well, I guess we're going to see what type of disincentives pop out of this new and continuous manipulation of the markets. But with that quick admin note, here's my chat with Stephen. Hey, everyone.

Welcome back to the show. I'm here with Stephen. Stephen, it's always a pleasure having you on the show. Hey, it's always a pleasure being on your show, Preston. I'd rather be in person, but, you know, we've got to do what we have to do. Yes. Help me out here. There's a lot happening.

So I like to zoom out to start the show and really kind of pick your brain on how you're personally seeing the macro lens. And I mean, you can go out, you can zoom out as far as you want. But how would you describe where we're at in the middle to mid-March, 20, 23, Well, the thing is it's actually not that surprising where we're at right now. A lot of people thought that inflation was behind us. And I've kept saying, no, no, no inflation is not behind us. So maybe we'll start with inflation. How's that?

Yeah, I think that's a great place to start. Yeah, or even go even higher level. Let's just recap and remind everybody to number one, not fight the Fed. and number two, that the Fed has a mandate that's driving them right now. And that mandate is really, really focused on, number one, fighting inflation. Number two, getting unemployment to go up. And we're struggling there. And number three, I would even say that, you know, not to completely destroy the economy.

But that's a distant third, and they care less about that right now. So going back to inflation, I think a lot of people thought that, oh, yeah, inflation's over. You know, we've had lower CPI print increases. And I think we talked about this last time I was on your show that it's like, well, you know, we're not going to see 8% prints anymore. But the reality is, if you go up 8%, then you go up another 6, then you go up number 7, like, that's still a lot of inflation. but even though prices did stabilize a little bit, you've got to look at, you've got to look at future prices.

And there are two different groups of people or industries that I like to dig into right now, particularly, but anytime I'm looking at what inflation is going to look like, right? And that is farming and petroleum for energy, right? and if you talk to farmers and, you know, I know a lot of, I know a lot of farmers and a lot of big industrial farmers as well. And if you talk to farmers, they're going to say that labor cost is higher. Petroleum cost to them is higher. And that's an important part of, I would say, the manufacturing of food.

And feed has also gone up significantly. So you have all of these, and fertilizer, of course. So you have all of these factors, you know, fertilizer and feed are the things that feed the food that we eat, right? And if those things are going up and price, then your food is going to go up and price. And that's the basics of everything. Yeah. Right. And that's the thing that most people understand, too.

So like if it's some other nuanced thing that only applies to 10% of the population, maybe it's not as shocking. But I think this is so in your face when it's food that everybody understands it. Everybody's looking at the, if they even have discretionary spending and how it's eating into it. It's just so in your face. Yeah. Well, and the thing is look at basics, right? Like, you know, the basics for everybody is usually like milk and eggs and bread. Yeah.

Yeah. Right. So, you know, you need fertilizer to grow wheat to make bread and wheat costs have gone up. I like to look at wheat and corn prices. We wheat can be a little bit manipulated because a lot of the wheat in the world is grown in the U.S., but a lot of it has also grown in places like Kazakhstan and Ukraine. So you've got those macroeconomic issues that kind of caused it to bump up and come back down temporarily. But corn is primarily in the U.S.

And corn prices continue to go up. you haven't seen that that spike and drop which people are saying oh yeah weak prices are coming down well no it's just sort of a reversion to the mean but corn and corn is a big part of feed okay it's a big part of everything in the u.s and and there was a period of time and you know everybody was joking around about the price of eggs right you know if you buy a car you know buy a dozen of eggs you're a rich person you know some of the memes were amazing yes oh yeah that's amazing um i'm actually eating eggs right now as we speak because Bitcoin is, you know, or at least was about 20,000 so I can afford eggs again. But what happened with eggs is the cost of feed went up a lot.

And then and then and then because the cost of feed was going up, the major feed manufacturers changed their formula. And when they changed the formula, the eggs weren't produced. I mean, the chickens weren't producing eggs as much. And it caused an egg shortage. Wow. Yeah. Not to mention we're not even talking about the nutritional benefits of whatever they're eating, right, flow and downstream. Yeah.

Oh, man. And by the way, I mean, I mean, really, really to dig in that the highest nutritional value of eggs is when the chickens are actually eating worms as opposed to eating feet. So just a side note from a guy who, you know, whose grandparents had farms when I was growing up. no I mean it's powerful and it's the stuff that that is totally lost when we're just looking at numbers and we're looking around the country and there's an epidemic of people just grossly overweight and you have to ask yourself what's what's driving this and it's the stuff that's not showing up in the numbers but but decisions that are being made in order to try to keep things affordable as nobody has any type of disposable income and when I say nobody I'm talking like what 90% of people People just are, you know, trying to make it day to day because they don't have disposable income. It's the stuff that's not discussed, at least in my opinion, it's not discussed. Yeah.

So let's go down the supply chain. I mean, I mean, we spend a lot of time with eggs, but I think it's important because it's a staple. Well, you brought up farming and energy, or your two main things that you're looking at from an inflation standpoint. What are your thoughts on the energy? Well, energy is really interesting because what I'm, I look at when, you know, I spent a long time analyzing energy and the trap, my tradfai life. And the main factor that I look at when I look at energy. And of course, I'm originally from Texas.

So everybody, you know, everybody's involved in the energy business where I grew up. My dad spent 40 years in it before retired. And the thing with energy is you really, you really look at. one thing, right? Well, it's a applying demand, right? But the most important factor that you always look at when you're looking at potential future energy prices is oil reserves in Cushing.

And a lot of people don't know what Cushing is, but Cushing is a small town in Oklahoma, and it's where the majority of oil is stored. And the way that you look at the supply in Cushing is you look at how much it costs

to rent the space there, right? So anyway, long story short, the supply of oil is going down. Our strategic oil reserves are going down, mainly because the current administration released them and actually sent most of it to China, which is really bizarre. So the supply of oil is down, but then if you look around you and you say, okay, what's happening, what's happening in the macroeconomic sense of what's working well? Well, people are going on vacations, right? There's a lot more travel.

You know, air travel is going up. Other types of travel has has spiked as well. China's opening up. Hong Kong just opened up. So there's a demand for travel. There's a demand for vacations. So you've got a lot of demand for, for petroleum at the same time that you've got a lower amount of supply.

So the supply and cushion is down. And then we'll kind of going a little bit down the chain. Well, are we going to replenish that supply? Well, no, because in a lot of areas, fracking has stopped. So you don't have the amount of fracking pulling oil out of the ground and sitting them, you know, to be stored to be processed later. and a lot of offshore drilling has also stopped as well. So this is going to cause a major supply chain issue in oil.

What was really interesting was? What time frame are you thinking, like in the next six months? Sooner. Sooner than that. Wow. Yeah. So yeah, it wouldn't surprise me if we saw at least a 50% uptick in the price of oil. Wow.

And it seems like the price is coiling. I have a chart here. I'll try to bring it up real fast. But it seems like the, it seems like the price is coiling a bit. And it looked like, you know, when the price really, really spiked in the, what was at the first quarter of 2022, really a year ago, it seemed like all of the, are you seeing the chart right now, Stephen? Yeah. Yeah. So this, the spike that we were seeing a year ago, it's saying in March exactly last year. This is when the buy. Biden administration stepped in and they were aggressively using the petroleum reserves in order to suppress the price. I would say around, what was it, October, they were saying that they were going to ease up a bit or that they weren't going to be releasing as many oil reserves. And now it seems like the price is coiling a bit here since, what is it, December. Yeah, 50% is a really bold call. I guess that's where I'm just kind of a... 50% isn't that bold of a call because if you look at your chart where it was

it was really naturally going was around the 120 to 130 area and we're at 80 today. Yeah, that takes you to 121. Isn't that bold of a call to say that yeah, we're going to 120? Yeah, no, that's where... That's where it's... That's where it's, yeah, that's the number. Wow. I actually think it's a pretty a pretty muted call.

I mean, it could, it could, it actually could go higher. You know, I actually think longer term will probably see 150 oil. Wow. But yeah, short term, I'm looking at 120, 1.25. Wow. Now, okay, so going back to our inflation discussion, if this happens, because the input to everything is energy. And so, I mean, I, I,

I just can't imagine what that's going to do to the treasury market. And I know that's where you were kind of leading us. Before we go there, before we go there, you had said, you had said three things that the Fed is hyper-focused on. One, is fighting inflation. Two, is raising unemployment. And then three was, don't destroy the economy, which wasn't nearly as important. That second one, like when you said it, I didn't want to interrupt you, but I'm thinking, how can that be part of their mandate as far as, like, having unemployment higher?

What do you mean by that? Yeah. So if you, if you, and I'm just going to go, I'm just going to go simple, simple common man from, from the south right now, which, you know, if you, if you go to a restaurant or go to, you know, any, any, anywhere where it's within the service industry, there's a lack of labor. Absolutely. And it doesn't affect us. It affects the entire country. The service industry has a lack of labor and it's causing prices to go up. right so what the Fed is trying to do is is increase unemployment to help fight inflation

because aren't they going to make it worse they're going to raise the prices if we've got it's insane it doesn't make any sense yeah and by the way we do have it we do have an employment problem in the u.s right now it was it was mostly caused by it was mostly caused by action during COVID right and we can we can dig into the cycle there. It doesn't really matter. But, but the reality is, is we now have a lack of, a lack of supply of labor. And the Fed is doing everything it can to get there. But what's happening is, is the tech companies and the banks are laying people off in droves. And that's what's causing unemployment to grow, but it's only slightly grown because none of those people are going to go

work at the Waffle House. Yeah. Right. I mean, I mean, I would. I'd go work at the Waffle House if I needed money, any day of the week. But most people won't. I mean, the numbers really aren't coming up on the unemployment front at all. I mean, it's up a hair, but I mean, it's so in the standard volatility that like we're seeing all-time lows in unemployment right now. And so like I'm looking around like you go to, you go to any type of service based restaurant or whatever like you're saying. and everybody's short-changed, but we're at max employment. So like I'm just scratching my head and I'm just saying,

or is it because there's just people that are completely out of the workforce and they're not showing up in those numbers? Or like what's? And then the other thing I'm asking myself is, is it just this? Is it just like restaurants that are in your face that you can see the lack of labor? Or is this across like all industries that are dealing with these issues? And if so, like I don't get it.

It doesn't make sense. Yeah. I mean, by the way, I mean, we talked about the airlines a little bit earlier. It's affecting the airline industry as well. Yeah. So one of the reasons why we're having so many delays for flights or flights that are completely canceled is because of lack of labor to actually support, you know, planes flying, right? And if you think about it, you're like, well, you know, we're not losing pilots and flight attendants. Okay, you're not.

but think about all the people that take that it takes to run an airport to run, you know, to run an airline. You've got people that are having to, you know, handle luggage, handle catering. You know, the list, the list goes on. And those are the jobs that are hard to find people to fill right now. It's great. So Jeremy Siegel was, he had some quote yesterday on CNBC where he was basically saying, similar to what we're talking about right now is if they keep raising rates and they're trying to get after it by fighting inflation, they're fighting a problem by reducing the amount of monetary units in the system.

But the problem is you don't have enough people working in the system in order to sustain it. So like you're just going to accelerate inflation. You're going to make it worse. So that's your base case, Stephen, is that none of this is under control from an inflation standpoint. point. If anything, it might get worse based on your energy comments. And so are we in a spiral? I guess that's where we go next. Are we in a spiral that they're going to not be able to get under control or what's happening? Yeah, look, I think we're in a bit of a death spiral. I'll go ahead and throw the word death

in there to make it more dramatic, but a bit of a death spiral here because you're absolutely right. It's if you're, if you're, if you have a lack of labor and not all skills are transferable, right? I mean, I jokingly say I'd go work at the Waffle House. Well, you know, I waited tables in college. I know how to work at the Waffle House. If I had to, I would. But do I know how to go be a wildcatter and go fit pipes and weld and all the things that you need to do to get petroleum out of the ground? No. Do you? No. So if people in Silicon Valley and Wall Street lost their jobs, they're not working in the oil fields. So it's not really helping there.

First of all, second of all, that that lack of labor is causing supply in industries that people don't want to work in or people don't know how to work in. I think people sometimes think, well, you know, isn't it easy to find farm labor? No, it's complicated.

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Sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. Everybody in the U.S. has been conditioned to become a service, sit at a computer, you know, make digital file, whatever type job. And when you look around the world and you look at, like,

actual extraction of national resources out of the ground, like, this country is not there. At all. I mean, I'm one of those rare people that, you know, my grandparents, when I'd go and stay with them, you know, over the summers, they'd make me work on the farm, you know? Yeah, yeah. And not like, and not like a lot of work, but like just enough to know what I don't know. But like it's it's it's it's it's it's hard work. It's and number two, it's actually there's there's there's there's actual knowledge that you need to have to make it work.

So so yeah, these these skills are transferable. You've got a lot of people. I mean, look, you've got a lot of people laid off from tech companies. All they know how to do is, you know, monitor tweets and and, and ban people, right? Like, I mean, that's not very transferable. It's crazy. It's crazy.

We're really good at spreadsheets and charts. I mean, you take that away. It's like, what do we have left? So, I mean, all of this really gets into the supply chain, what the expertise is of G7 type countries versus the rest of the world that's supplying a lot of the elements in natural resources that are that are saying, hey, we're sick of receiving your digital units. We want paid in our own local units or we want paid in gold or we want paid in Bitcoin. Yeah, so where do you go additionally from your macro lens? So you started off with inflation, which I think is just the keystone of all of this and all valuation around the world starts there. What else would you say about this moment in time in March of 2023? Yeah. Well, to carry on from that, if oil's going up, I would say minimum 50%, food prices.

up minimum 50%. That's a lot of inflationary pressure. It forces the Fed to continue to raise rates. Now, what happens is as the Fed raises rates, and they're already backing up from their rhetoric a few months ago where they're like, yeah, it looks like we're getting this under control. We're going to slow down the rate of increases to the Fed's rate. But now they're sorting to change their stance a little bit,

It's like, who inflation isn't quite behind us. We're going to have to continue to aggressively raise rates. What that does is create pressure on the treasury market. And that's really where we're going here, right? So if the government continues to overspend and has to issue bonds that are now having to pay a higher rate of coupon in order to borrow against them, right? you have this it's it's almost an exponential curve of the amount of debt service that the US has to pay now there's only one way to offset that and that's to print more money right you print more money you cause more inflation so that's where the the death comes into the death spiral

that's where the death comes into it's going to take US dollars if all you're going to do is just continue to print more and more of them just to cover your debts. service. Yeah. Just to pay that down. Nobody's going to want that. And whose hands do you shove all the printing into as well, right? Because it seems like the banks and we're getting a real taste of this this week with Silvergate,

Silicon Valley Bank, they're getting thirsty. These banks are getting thirsty and they're thirsty for not a couple million, not a couple billion. But I think when you, when you zoom out, we're talking. in trillions that these banks are getting thirsty for as far as the liquidity that they're going to need in order to service all of their impairment on their balance sheets. So talk to us about that. And I guess start off with Silvergate because that's where anybody listening to this show

in particular is going to have an interest in knowing Silvergate. And then maybe we can talk about the broader context of why this is taking place. I've got an awesome quote that you posted on Noster here that I, that I plan on reading, so I don't want, don't take that away from me. Okay, I won't take that away from you. Go ahead. By the way, I posted that to an internal chat about back in June. Anyway, we'll comment on that later.

I kind of saw this coming. Really what's happening was Silvergate. And by the way, this applies to signature. It applies to Silicon Valley Bank is, you know, I guess back in the day, I used to run emerging markets, emerging market debt for Guggenheim. And one of the things that I invested in was, you know, non-U.S. banks, right? So I had to, you know, I had to look at, you know, the creditworthiness of a lot of these banks. And one of the biggest problems of banks outside of the U.S., particularly emerging markets,

is their deposits are heavily allocated to one sector. These generally emerging markets have, you know, one main sector that that drives that economy and their banks are going to be heavily allocated to it. You know, in the U.S., it's pretty diversified. Now, so I would always avoid banks that had too heavy of an allocation to a sector because if that one sector got hurt, you know, the whole bank, you know, its whole deposit pace would go down. What happened with Silvergate is they found a niche in one sector, and that sector was crypto, and they over-allocated. They didn't run good risk models. And they decided, oh, this is a great niche.

We're going to make a ton of money here. We're going to be the bank that services all the crypto companies. Well, it's great in a bull market, but it's pretty bad in a bear market. The problem with crypto, and I'm saying the word crypto on purpose, right, because they mainly focused on crypto companies like FTX is that they got a little bit over their skis. And the problem with that industry is that the crypto industry generally follows Bitcoin economics, which has a happening that happens about every four years. So Bitcoin runs in four-year cycles. We all know that.

but crypto closely follows that, you know, because of Bitcoin. So when you've got a winter that happens every four years, you know, you're going to have a problem every four years if you're too allocated. And FTX, they decided that, you know, they didn't do due diligence on FTX and Alameda. And that was also a really big problem when that went down. They should have worked a little harder there. Would you say that they were, would you say that they, it was beyond that it was neglect because, I mean, they were doing wires to Alameda. Isn't it Silvergate that was responsible for some of the, the, the wires that were going to even the wrong company? I mean, it was, it was neglect at the highest order, right?

Oh, absolutely. Yeah. Absolutely. So, so, so, so, so, so, so, so, so, yeah, they're, they're heavily weighted to one sector. and within that sector, they're heavily weighted to one company. And that's a problem. And, you know, so when, you know, when your entire deposit base basically shrivels up, the way that banks work is they grow their operations based on their deposit base.

And not only do they grow their operations based on the deposit base, they also make investments based on that deposit base because that's how banks make money. They take your money and then they lend it out to somebody else. well, when you're in a particular ecosystem, you might be holding things like mortgage-backed securities or other fixed-income instruments that have a yield, you know, and then they might also do some home loans, some auto loans, things like that. Some of the more reasonable banks will do those types of things. But the problem with Silvergate and signature and Silicon Valley Bank is they did a lot of venture lending. And so in addition to mortgage-backed securities that

that are now, you know, priced lower because yields have gone up. They're also upside down to some of these venture, you know, venture loans that they made. And that's kind of what leads more to the Silicon Valley Bank base. But no, Silvergate, you know, they just, they just over-allocated to one area. And you can't do that. You've got to have a diversified customer base and a diversified sector base. When we look at the problem, particularly at Silicon Valley Bank, it's looking like there's this much bigger, broader issue that's arising out of this idea of high quality liquid assets that were purchased at very low interest rates when we had low inflation prints that just seemed to always go lower for 40 years. and they all step into the market and they buy all these bonds and they put them on their on their balance sheet as high quality liquid assets, which they need to have 100% coverage based off of rules that came out of the great financial crisis.

The problem with this is when you buy these at less than 1% inflation prints and less than 1% yields on 10 year treasuries and you put them on your books, and then all of a sudden things start running to 5% plus. The prices of long-duration bonds get crushed 10, 15% right off the value that they purchased it for. And when you're lending and you might only have a 10% difference between what's out the door and what's come in as deposits, this creates just a massive issue, liquidity issue for banks. It seems like, based on what we saw yesterday with some of the indexes, that regional banks are feeling this pain more so than anybody else. And talk to us a little bit about this and whether this is a systemic issue, which I suspect you're going to say yes. But let's hear your thoughts on all this. Yeah, look, I don't think all regional banks are in trouble in this particular time period. you know, the problem with regional banks is they service a region of the country.

And usually that region of the country has a very focused, a very focused economic activity. Right back to which you. Yeah. It's just like the Silvergate situation because they're regionally focused. So yeah, the regionally focused in Silicon Valley. So it's all tech companies. Wow. Yeah.

Yeah. And mostly startups. Yeah. Yeah. And look, you know, if you look in other regions, the country. I mean, you know, for instance, we're, you know, in the south, you know, or the southeast, a lot of the focus is going to be in, you know, things like banking and insurance, sorry, farming and insurance and, you know, in Texas, you know, they might have a big, you know,

energy base. So, so regional banks generally do have a really high allocation to one, one industry generally. But they do try very hard to diversify their deposit base, and are generally a little bit more safe when it comes to what they lend out to. So in this particular price, I'm going to call it a mini crisis. It's not a real crisis. It's a couple of, you know, there's probably a handful of banks that are going to be in trouble here, and they're the ones that focused on tech companies. Because we go back to our comments earlier about unemployment, who, you know, which,

which firms are having the highest levels of unemployment, that companies. You don't see the contagion. So, I mean, you go on Twitter. Everybody's saying, this is the, this is the big one. This is the contagion event. And so you're pushing back on that. Help us understand how, explain your lens on why you don't necessarily see this as the quote unquote contagion event. Well, it's mostly focused on a few industries.

You know, it's banks with deposit basis and tech and crypto. And I mean, that's, that's really it. you know, the other, other sectors of the economy are doing fine, and most other banks are diversified in their deposit base. It's just, it's a handful of banks that didn't, that, that didn't have proper risk management or focus too heavily on one sector. And those are the sectors that are, that happen to be failing right now. And so even though there's tons of counterparty risk, because they're so sector based, you think that, that it's not going to spill over into okay.

No, I really, I really don't. I know there's some calls out there to say, hey, the U.S. should bail out Silicon Valley Bank. No, they should not. They should not bail you out. Yeah, Billy, Billy, maybe he needs to cough up some more tears to get that one through. Exactly. Well, he also thought that Sam was a good guy, right?

Yeah, yeah, of course, of course. Okay, so as we're looking at this, so, you know, here's how I read your statement. higher for longer, get ready because they're going to keep raising rates. They're not going to be doing 25 bips or probably doing 50 bips. What else on top of that? And is that correct? Am I reading you correct with that statement? Yeah, absolutely.

And I'm very worried about inflation. I really have been saying for a few years now that we are going into hyperinflation territory. You know, we printed way too much money. We had too loose monetary policy for over a decade. And it's finally catching up with us. And we don't even have some of the higher numbers in the world right now. Like, you go to Europe. It's crazy.

Like, it is really bad. Yeah, that's right. Particularly, I mean, I was just in London this summer and I really noticed it. I mean, actually, I didn't really notice it because I was bringing dollars in and dollar was stronger than the pound. but I noticed that prices were going up on basics and that people were very upset about it. I got to read the quote. So this is something that you wrote back in June.

Banks may be in more trouble than in the rest of the market, I think. Most banks have been holding mortgage-backed securities on their balance sheet to generate yield. These securities probably yield 2 to 3.5 percent, the more senior tranches, and have seven-year expected walls. In rising rate environments, people don't refi nor move as much. This extends life of the mortgage-backed security. Also, rates are at 6% plus now, so these holdings have decreased in price about 10%. If banks sell these holdings, they're at a loss. Many regional banks have also taken up venture lending. Given the higher rates, these lines of credit can command, I've seen 9 to 12%. Imagine if you will, a block chain startup, taking a loan and buying, say, AVACs, or

Eath heavily on their balance sheet because they are in that ecosystem. Not too crazy to imagine someone doing that. I just spoke to an entrepreneur, and this is the good part, in the NFT space that raised a million bucks and spent 700K on JPEGs to get in the quote unquote club. I imagine some of those venture loans might be in trouble. It's insane. I'm getting a lot of flag from people from saying it's insane. But that's crazy. It's crazy. It's incredible. It's incredible. I mean, I don't know.

I'm speechless. I just, I roll my eyes like, what in the world? And how is there no due diligence after a loan has been made to some of these companies? I know they have to say what they're using the funds for when they're going for the loan. But then there's no like follow up or, you know, if I go out there and buy some monkey pictures, with the million dollars I raised. Like, how in the world is stuff like that possible? How is that possible?

You know, that's what happens when interest rates are too low for too long. Yeah. Yeah. You know, in a normal environment, you're buying, you know, I would say more plain vanilla. I'll call it plain vanilla type of bonds. You're earning a reasonable yield. You're able to maintain, you know, the operations and the deposit base for a bank. But when interest rates go too low for too long, you know, the riskier banks get a little bit more creative and how they generate a yield.

And now it's, now it's blowing it up in their face. I mean, a lot of these banks would never have guessed that interest rates would go to 5%. Yeah. I think if you if you stop time at that exact moment, while they were doing some of these things, they're making so much money at that moment in time that it totally clouds their judgment on bad times that will come two or three years later. And so the, but I guess if I was going to argue with myself, because that's me trying to justify how they get themselves into that position, how is there not a protocol that's been built

inside of these long-standing institutions that they guard against that behavior and that they guard against doing those things. It's just crazy to me. And maybe it's maybe it's a function of just fractional reserve banking. You know, I mean, at the end of the day, the whole thing is just rolling, rolling debt and there's the the amount of deposits never match the amount of money going out the door. So like maybe, maybe it's just a function of fractional reserve banking that this will always happen. And that's probably where. I stand. I don't know how you look at, if you look at 2008, right, some of the bigger banks that actually, you know, do have, you know, I would say more established processes and procedures

were also tanking. Yeah. You know, they, they just weren't thinking, you know, it was sort of like, you know, you sort of don't have a choice, but you actually do at the same time. You just have to be a a little bit more conservative and patient. But it is a mentality that, okay, well, you know, the bigger banks, you know, they, a lot of them are publicly traded. By the way, Silicon Valley Bank, Silurgate, they're all publicly traded. And the problem with the public markets is that you're living quarter to quarter. And you get angry shareholders if you're not doing things to boost your earnings on a quarterly

basis. So on the one hand, they're making bad decisions because they're being forced to by public markets. So that's, that's an issue in itself. The other one is they're just, in a lot of things, in a lot of ways, just being careless and don't have proper risk measures. But that goes back to 2007, 2008 as well, right? Or even before that when when people started getting involved in that practice, you know, you're always trying to outperform your peers, even if you're not a public company and you see opportunities and you're taking those opportunities while they last, but you're not thinking about the long-term risk that you're taking on during those periods of time.

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slash income. This is a paid advertisement. All right. Back to the show. Back to-jPEGs, right? I mean, you know, it's like, hey, I can buy a monkey JPEG for a million dollars and sell up for two million tomorrow. why wouldn't you keep doing that?

It's like a bond. They'll always go up in value. Well, people have this like psychological people think that when things are going up, they will always go up. Yeah. Well, I mean, that's where we were, I remember being in arguments with folks in 2020 with respect to the bond market when interest rates were, you know, sub 1%.

And they were adamant that it's just going to keep going lower. and that's why I buy these yielding nothing percent bonds is because it's going to go lower and it's going to go up in value if the yield pushes lower. It's like, all right, hey, keep picking up the pennies in front of the steamroller, man. I don't know what to tell you. But that also brings up another point on these banks, right? I mean, you ask the question, when bonds are at 1 to 2 percent, you can't make money as a bank buying 1 to 2 percent earning bonds.

So you got to stretch into. different areas. And the problem is instead of diversifying their portfolios and just several different areas of the fixed income market, they would focus on just one thing. They're like, okay, well, mortgage-backed securities, it's backed by the U.S. government, you know, it's secure, it's yielding a little bit more. I'm going to buy a bunch of that. You know, I know mortgages. I'm a bank. I get it. I think it's even crazier than that, Stephen, where if coming out of the global financial crisis, they have to have 100% of the high-quality liquid assets. And then they define that as U.S. Treasuries, what else are they going to stick on their, on their balance sheet when

we're at zero percent or half a percent on the 10-year treasury? They have to own this stuff, and they had to be buying it, and they had to be, it's crazy. It's crazy. But the thing is, there's other choices, right? I mean, look, if I was managing a bank portfolio, I would have been buying, I don't know, I would have been buying floating rate acid-backed securities at that time, right? Because when interest rates go up, you reset at a higher rate and your price stays stable. Yeah. That's a good point. But is there enough, is there enough of it to buy? Like if we take that mindset and we expand it and I'm not trying to, I'm not trying to justify these stupid decisions, right? Because you just, you just countered with a fantastic point.

But what's the market size of those relative to the Treasury market for? the amount of banks it would be chasing after these things. And that's not a good, that's not a good counter to your point, but I imagine it's a counter to my point because there's not a lot of supply. So yeah, but there's enough to where you can at least diversify away from only mortgage back securities. Yeah. And the justification of bankers is, well, we understand mortgages. We issue them all the time. Well, bankers also are notoriously bad at mortgages. I mean, if banks are so good at issuing mortgages, I wouldn't have been able to lock in 2.75% a year ago on my home. Right?

I mean, I saw the bond market going up. They did. They're like, oh, yeah, 2.75, great. I mean, they're losing money on me right now. Oh, yeah. I hope my bank doesn't go to business because of it, but whatever. Yeah, I mean, it goes to the short-term quarterly thinking versus, you know, long-term strategic mindset.

for people that are seeing the Silvergate meltdown, they're now looking at Signature Bank picking up the pieces. Signature Bank's stock price is getting pummeled. Is this just, is Silvergate just one and many defaults that are on the horizon? And then more importantly, what does that mean for the overall ecosystem and the liquidity, the rails to participate in, you know, going on to an exchange and buying Bitcoin. Yeah. So, so, you know, Silvergate, Silvergate really isn't a Bitcoin problem.

I mean, or Bitcoin wasn't the problem. Silvergate is a fractional reserve banking problem, you know, first of all. Their issue was, you know, as I, as I stated, they over levered themselves into one industry, which is never a good idea. And Silvergate suffering from it. Now, the deposits are going to be fine. I'm going to make that statement and be very clear. I've always said that.

The deposits will be fine. They might get frozen for a little bit. So, you know, if you want to take that risk, but that'll be fine. The bank itself is going under. I actually thought that somebody would come and pick it up for its deposit base, because banks are always looking for more deposits. really hard to find right now for banks, you know, increasing the deposit size.

But I think there's so much hair around it that they, you know, and people are fleeing so quickly, there's not much of a deposit base left. So I just don't know if there's any bidders. Silvergate, I mean, sorry, Silicon Valley Bank. Or no, signature. Signature. Yeah. So, so, so, so to get to signature, signature actually benefited from the Silvergate issue, but it's now following the, the Silicon Valley Bank issue, right? Because the Silicon Valley Bank issue has more to do with, you know, their mortgage-backed security portfolio and their venture portfolio.

And people are just afraid of what's under the hood at signature. And by the way, I don't know what's under the hood at signature. You know, it's, but it's enough of contagion risk to not want to keep deposits there. because again, you know, if you're keeping customer deposits at signature or Silicon Valley Bank, your deposits could get frozen. Your deposits are fine, but they could get frozen for a period of time and nobody wants that. We've seen what happens when, you know, in the exchange ecosystem, when you freeze things for a little bit, right? Like, you know, Celsius, even though it was not fine, once they started freezing their withdrawals

or delaying their withdrawals, that's when you get the run. and if there's ever a freeze, you know, it's, it's all over. And then your clients, you know, if, you know, if I have clients and I have my client deposits there, then they lose trust in me. And then they want to start withdrawing from me, right? Which is why we're very careful about, you know, what counterparties we use. You know, and like I said, we never use Silicon Valley Bank or Silvergate. We have used signature as a backup bank just because, you know, you should always be diversified.

But, but yeah, we don't, you know, we've got very little on deposits there. For a person who's hearing all this, it can sound pretty scary. And let's just say we're talking about the normal Bitcoin, the person who's doing their job, they want to put some money onto an exchange, they want to buy some Bitcoin and they want to claw it into self-custody. They're hearing this and they're saying the government, whoever is, is stepping in and wrecking havoc for these for these rails into my exchange. Is this a long-term systemic attack that maybe Wall Street and the government are working together to bring these down? Or are these,

are these just companies that have mismanaged risk? Are these rails always going to be there in some type of capacity or some kind of way to reach these exchanges? What are your thoughts in that area? I actually lean more towards it's a mismanagement of risk. I don't know, you know, this is hard to say. I don't know if there's some big government conspiracy to shut down the crypto industry. I believe that there's certain actors that are doing certain things, right? But I don't know if there's like a massive conspiracy behind it, like what a lot of other people are saying. I could be wrong, but I don't think that that's the case.

but I but I but I but I do believe the current administration is generally against against the crypto industry in general. I do believe there's certain politicians and certain others that are against Bitcoin. I mean, it's very clear you know, Elizabeth Warren is against Bitcoin and several other people are. But Gary Gensler, who's the head of the SEC is not against Bitcoin. I would I would categorize Gary Gensler as a Bitcoin Maximil. So, yeah, I don't know if there's this massive conspiracy there. I mean, even the CFTC is pro-Bitcoin. They're pro other digital assets as well.

I mean, they actually just came out and said, yeah, there's no way that Ethereum is a security. So, yeah, those are the kind of data points that make me believe that it's not some, you know, big conspiracy, but I mean, what do I know? There's been other conspiracy theories that have been proven right that has been quite shocking over the last few years. But I don't think that's one of them. Do you have any thoughts on Caitlin Long's situation with custodia in her application for people maybe not familiar? So she's having a bank startup.

She's trying to be an FDI. Yeah. She's trying to bank with the Fed, have a direct account with the Fed. And the application was declined. I want to say it was declined back in the summer. June time frame maybe. It seems like she is being identified, maybe targeted with with her application. And then you have all these incumbent banks that basically get to do all this stuff.

And she's saying I'm going to be 100% back. She's doing everything by the, I would say by the book. And she's being denied and stopped at every, every block, which I just find ironic. Yeah. It's kind of interesting. But I will say this, it's not an easy process of doing what she's trying to do. I mean, if you look at some of the bigger regional banks, I mean, I'm sure that they would love to have direct access to the Fed window. And these are massive deposited banks.

And, you know, they, it's it's a long, arduous process for anyone. I think she's probably somewhat targeted, but I don't think that it's just her, right? So, you know, and I don't, yeah, the only thing I can say there is it's hard for any bank to get included in the club. There's only a few in the club. And banks way bigger than her are going to have issues doing it,

even if they have a very, I would say a very, I hate to say that we're clean. But like a clean deposit base because the reason I say it that way, because I'm sure the FDIC doesn't see or the Fed doesn't see a posit base based in digital assets as clean. So that's that's that's that's that's that's that's my comment there. But but yeah, I mean, I think I think it would be interesting if she could get her application through that. That'd be that'd be fantastic. I had a lot of respect for Caitlin. Yeah.

Just brilliant. And so upfront in in what right. looks like in being vocal about it. If there's anybody that policymakers need to latch on to that understands the industry better than anybody out there, it's her. And it's, it's very frustrating to see her sideline, I guess, from congressional hearings to just the policymaking at large. It's frustrating.

And we got senators up there talking about like running. an ice cream truck and how it relates to proof of work. I mean, it is, it is frustrating. Very, very frustrating. I don't know if you saw that clip. Oh, my God. Oh, my God. What an eye roll. Last time you were on, we talked about GBT, DCG, Genesis, the Barry Silbert conglomerate of pain. I said that about you. What are, what are your thoughts moving forward? And, in the, this particular space, particularly, you know, ETF. And if you can't comment, no sweat, but I'm just kind of curious how you see some of this evolving. Yeah. So I think the most interesting development has been the FTX lawsuit against Genesis in Grayscale. I mean, I'll say this.

When FTX went down, that's when my eyes kind of opened up that, wow, Genesis and Grayscale is involved in every bankruptcy that's happening in the entire ecosystem, right? They were involved with Celsius, Lockfi, Three Arrows, Voyager, now FTX and Alameda. It's not a coincidence, right? They over lever the entire system. FTX, you know, the team that's taking them through bankruptcy, that's taking the estate through bankruptcy is obviously seeing more than what all of us know. And they think it's definitely worth a, you know, a legal challenge there. So that's pretty eye-opening. It's pretty rare, I would think that a bankruptcy estate would go after a company like that. there's got to be a good reason.

I don't know what that is, but there's got to be good reason. By the way, I don't know if you saw the Peter McCormick interview of Sonashine. I didn't, but I saw that you had comment on it. So yeah, give me the rundown on it. That is probably the most interesting podcast I've seen in a year. Not because of Peter, that's for sure. No, no, Peter. No, it's, it was pretty eye-opening and you have to see it.

But TLDR is, you know, it seems like there's a lot more interconnectivity between Genesis DCG and gray scale than what's being let on. Wow. So that's pretty interesting. I need to get a listen to that. Yeah. Well, you know how Elon Musk is the CEO of Tesla, SpaceX, boring company? Maybe John Ray, who's the CEO of FTX, can become the CEO of FTX, DCG, Silver Gate, signature.

I mean, maybe he can be basically the Elon Musk of all the failed crypto companies. All of it. And after watching him being drilled by the House of Representatives, I like that guy. Yeah. No, I mean, I would support that. You have to know what you're doing to pick up the pieces of what this guy's dealing with. I mean, literally the whole company was being run by Signal app, you know, like. I can't even imagine what that was like stepping into it.

So I'm sure this dude's a beast. Yeah. So yeah, all jokes aside. I'll have to check that out. That sounds really fascinating. And so was Peter like grilling him? Like what was he trying to spin it and Peter wasn't behind it?

What happened? Oh, yeah, for sure. Really? I would say that look, the last 15 minutes were the most important 15 minutes. Oh, I'm checking us out.

You have to watch the whole thing. Yeah. Because he just he just leads them right into it. It's it's I mean, it reminds me of like, you know, the old school Barbara Walters interviews of dictators, man, like like just just leading them right into an ambush and then and then springing the trap. I've never seen any, I haven't seen something like that. I mean, I mean, we're talking, this is real journalism. I'm I love it. I've seen real journalism in decades.

I love it. Well, you know what? We usually don't do this, but I'm going to have a link to Peter's interview in the, in the, show notes here. Him and Danny. Exactly. I've got to listen to this. It's like for me to talk about somebody else's podcast.

No, it's cool. I love those guys. I love those guys. Oh, that's good. We'll have to check it out. But to answer really your question, it's, it's, you know, there's a lot going on there. And I'm curious to find out where it's all going to lead. And then, and then to get back to the ETS, you know, the, I actually, I actually,

think that there's a good chance that Grayscale might, might win the lawsuit. Now, here's the thing, though. A lot of people don't realize this. And, of course, Grayscale's not going to talk about it. But just because they win doesn't mean that they get an ETF. Yeah. I was talking to Joe Carlos Sarity about this exact point. And this is what he told me. He says, yeah, they could win. But that doesn't mean that they're going to get the ETF after all because it goes, I guess it goes back to the SEC for their decision and he'd be like, yeah, no, we still don't want to do it. Even after the ruling. That's nuts.

You could go all the way to the Supreme Court and they can say, yeah, you win. Okay, well, what do you win? Maybe some damages. What are your damages? And how do you prove your damages? That's right. Right? They can't.

Yeah. That's so broke. That's insane. How is that possible? Yeah. That's why I say this whole thing is Kabuki. Right. it's it's like all right look over here and we're collecting fees over here and we're not going to open and we're not going to open it up for redemptions they could be doing this they could do doing both things simultaneously they can be filing for reg in exemption to get to offer redemptions to their clients instead you know while they're while they're doing the SEC great but no they're they're just it's it's all theater it's all hey look over here um we're we're we're fighting

for you guys, you know, we're fighting for an ETF for the ecosystem, you know. I mean, when we think about it. We're going to be pointers over here. Meanwhile, we have a Bitcoin cash trust that you can buy. Yeah. Ethereum Classic. No, I'm not buying it. When we think about it from the lens of incentives, the US currently has the global settlement

layer with the US dollar. It should make sense, not that I'm saying it's a good thing, but it should make sense that they're reluctant to allow something like this to be so turnkey for anybody's corporate treasury or whatever to just step in and buy an ETF that tracks the spot. I think that's the battle we're up against. I think we're absolutely in a fight. I think the last year and a half demonstrates that we're in a fight and we know what comes after the fight stage.

But would you agree, Stephen, that we've, been in a battle over the last year and a half, whether it's, whether it's organized or indirectly organized. What, what are your thoughts? Yeah, I would agree with that to a certain extent. I think, I think for us, you know, I think different people are in different fights. You know, I mean, I try to think about the two, the two fights that I care about the most, the fight for Bitcoin. right. I think, you know, I really care about that. And that has been a challenge globally, right? I mean, if you look at what happened in Canada, if you look at what's happened in other places, a little bit in the U.S., that's been a bit of a fight. But the other fight is really, you know, our industry. And we actually don't see that as much as other people do. And it's mainly because when we do things at Valkyrie, we kind of look at, okay, well, what are the rules? What are securities laws?

You know, what are the, what are the, we're, where are the bounds. And we kind of understand where the boundaries are. And we try to stay just within those bounds. I mean, we're a registered company. So we, we stay within clear boundaries. A lot of people will say, well, we don't know what the boundaries are. We don't know, you know, there's no clear guidance. Well, actually there is.

There's a, there's a, there's a lot of guidance in, in securities laws. and, you know, if you want to stay within them, great. If you want to go into the gray areas, that's your business. But, you know, get ready. Yeah, get ready for the fight, you know. So we haven't seen the fight as much as other people have in that particular sense. Our main fight has been against bad actors. Yeah.

Right. You know, the bad actors being, you know, the Celsius and the block phi and, you know, the FTX and the genesis of the world. How do you see, and this is my last question for you because I know you got to run. When you think about paper Bitcoin, I know Caitlin has talked about this a lot in the implications of having paper Bitcoin. Do you think that this has been a major way to suppress price over the last couple years? do you think that this is an issue moving forward that we don't have a spot ETF to kind of offset

some of maybe what's happening in the futures paper you know USD settled markets what are your thoughts around that? Yeah you know I'm I'm in the minority when it comes to thoughts on a Bitcoin spot ETF and I hate to say it like this because we're also in the business of launching ETS and we're trying to get a Bitcoin spot ETF.

But, and so that's how we make money. But on the other side of things, I'm a true believer in not your keys, not your cheese. So, you know, buy your Bitcoin, hold it locally. If you can, not everybody can. And that's why we offer funds and ETFs that at least some do and some attention. attempt to hold Bitcoin for the people that don't know how to do it themselves. But I would rather educate people on how to purchase Bitcoin, how to hold it on your own hard wallets. Um, you know, I'm, I'm a big fan of the Lightning Network. You know, we, we get a lot of trans, you know,

I love, I love Noster because I love the, uh, it's unreal culture of like, uh, sending, sitting sats to people. It's, it's, it's, it's crazy. Like, I got, I got, I got a few sats even this morning just just from you and I going back and forth which is kind of bizarre I had a person usually I spit it all at Bitcoin part listen to this so yeah I love their the way they have things set up there um a person this morning on the Oster they zapped me 21 sats 21 sat they did it 21 times and my phone just went Bing Bing Bing it just kept it's like what is this person doing it's hilarious it's crazy I mean, they're literally throwing pennies at you.

Yeah, they're just like hitting you on the head with a penny. Just like, bing, bang. It's hilarious. But it's fun to do. And then you just throw back out of them. It's kind of cool. It's a blast. But I guess my point is it's like, okay, you know, I don't, I just don't think a Bitcoin

ETF is as relevant as it would have been five years ago. There's, it's too easy to buy Bitcoin today. It's too easy to use the lightning network. It's too easy to, there's so many. available to you to set up your own, either hot wallets or cold storage, and there's too many people available to help you do that. I mean, this is,

and by the way, I hate, I keep talking about Bitcoin Park, but it's a really cool place, you know, that those guys set up. Like, if you wanted to say,

hey, I need some help moving $20 worth of Bitcoin onto a ledger, if you showed up there, somebody will show you how to do it. Yeah. Right? And there's places like that everywhere,

where it's like, yeah, let me help you. It's just a really cool community, but globally, too, globally. Yeah. I mean, even a year ago, it wasn't as easy to do it. And now it's just, it's easy to buy Bitcoin. Like, what do you need the ETF for? Come on. Yeah.

Yeah, well, I think it just comes down to the technical competence. Like if your grandparents or somebody who just, there's no way they can, they can figure out how to even, they're struggling to turn on their phone, right? Like, that's where that type of vehicle, I think, is, is appropriate. But, um, and if people are can, if they have a, a person of technical competence to assist them and maybe help them with the custody, that's more optimal for sure. But if, you know, yeah, there's all sorts of situations out there.

As the years go by or the months go by, the relevance of needing one goes lower and lower. Hmm. That's that's that that's all. It's still relevant, but it's just not as relevant as it was a year ago or even five years ago. Yeah. Oh, Stephen.

Thank you so much. for coming on. A lot of these, a lot of this banking stuff can get really confusing and difficult, and you are just a sound source of knowledge to have these discussions with. And I just really appreciate every time that I get a chance to talk with you. So thank you, sir. Oh, man. I love hanging out with you too. Thanks for having me. Absolutely. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for We Study Billionaires. The Bigger Bitcoin-specific shows come out every Wednesday, and I'd love to have you as a regular listener.

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